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President Bush Promises Auto Bailout; Illinois Governor Speaks Out

Aired December 19, 2008 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: President Bush tells U.S. carmakers help is on the way. He's finally signed off on a multibillion-dollar bailout, but will auto executives be back soon asking for more?
Plus, president-elect Barack Obama defends his plan for jump- starting the economy. I will ask the best political team on television, is he being up front about the costs?

And the Illinois governor's dramatic show of defiance. Rod Blagojevich finally speaks out and vows to fight corruption charges. This hour, his remarks and the backlash.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Right now, the U.S. auto industry is getting the bailout it has been desperately seeking for months, in fact. President Bush today announced a rescue plan for General Motors and Chrysler. And it will make more than $13 billion in federal loans available almost immediately.

Our senior correspondent, congressional correspondent, Dana Bash, has been working the story.

And it is important. It's a huge breakthrough for these automakers potentially.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It is a huge breakthrough for them potentially and this is definitely something that is uncomfortable for the Republicans and the White House, whose first choice would be to let the markets work their will and that basically would mean if they failed, the companies failed and went bankrupt, so be it. But adding to the collapse of the auto industry, adding that to president's already tarnished legacy just 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, Obama applauded the president's decision to help the auto companies and warned executives not to squander their chance at reform. But throughout the weeks of intense debate over this, Obama has not used his political capital at all. He has intentionally stayed on the sidelines, but that obviously is going to change. This is going to fall squarely on his lap. He is going to decide whether or not to choke this new lifeline to Detroit.

BLITZER: It's an enormous issue. And it's going to be right at the top of his agenda. He has got a little time to think about it, but not a whole lot.

Thanks very much, Dana, for that.

Automakers aren't asking only Washington for help. GM, Ford, and Chrysler, they are also seeking financial help from Canada as well. Volvo and Saab have asked Sweden for cash. GM's Opel division wants aid from Germany. And Chinese automakers have asked Beijing for a bailout.

Meantime, the European Union is taking the initiative to try to help carmakers stay competitive over there. The 27 E.U. member nations have set aside more than $6 million of a $252 billion economic stimulus plan to help 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 his labor secretary, Congressman Ray LaHood to be his transportation secretary, and the former Dallas Mayor Ron Kirk as his U.S. trade representative.

They will play a key role in his efforts to jump-start the U.S. economy. No doubt about that.

Our national political correspondent, Jessica Yellin, is in Chicago.

Jessica, the president-elect today defended his proposed economic stimulus plan, which is a very ambitious plan.


And he defended it aggressively. He said, look, he has to fix this hemorrhaging economy and that means writing a massive check.


YELLIN (voice-over): One trillion dollars, it is a lot of money. Some economists are predicting that will be the final cost of the stimulus plan Obama's economic dream team is working out right now. The president-elect doesn't like that number.

SEN. BARACK OBAMA (D-IL), 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 deficit that is probably above $1 trillion. And so, look, I'm a taxpayer like everybody else. And I don't want to see money wasted.

YELLIN: While Obama won't say how much he does plan to spend on the stimulus, a top Democratic official tells CNN, it could cost up to $850 billion. The money will be used to rebuild crumbling roads and schools, support a new green economy, and create or keep 2.5 million jobs. The president-elect vows not to spend the cash on political pork.

OBAMA: 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.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: And yes, he admits, it is going to add to the deficit. He says he will focus on that eventually.

OBAMA: We are going to make some difficult choices on the budget, and I'm going to make sure, by the way, that some of those difficult choices are under my watch and not just somebody else's watch.

(END VIDEOTAPE) YELLIN: Now, Wolf, Obama aides have been meeting with congressional aides up on Capitol Hill to work out the stimulus. We are told by one congressional aide that they think the package will look a lot closer to $600 billion So, $850 billion vs. $600 billion, looks like there is some tough negotiating ahead -- Wolf.

BLITZER: Jessica Yellin in Chicago, thanks very much for that.

And another strategy we're following right now, someone is apparently trying to scare some of the nation's governors. Federal officials are investigating suspicious acts and now they are asking for your help to figure out what is going on.

Brian Todd is here in THE SITUATION ROOM looking at this story.

What is going on, Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, as you will recall, more than 40 governor's offices, several U.S. embassies overseas got suspicious envelopes earlier this month, letters containing white powder

Now, in every case, the letters were tested and the substance found not to be harmful. Still the FBI takes this kind of threat seriously and is reaching out for help. In a very rare move, the bureau is actually sharing some of its evidence with the public.

Now, here it is behind me. You're going to see this. An important note here. The FBI believes one person is behind all these mailings and you can kind of see what they're talking about here, two examples of envelopes, one here sent to Michael Easley, the governor of North Carolina, the other sent to the governor of Connecticut.

And you can see that these are nearly identical. Another crucial piece of evidence, the postmarks showing all the letters were mailed from the Dallas area. You can see those there. That North Texas one also designated we're told from the Dallas area.

And this is very interesting here, the return addresses. Whoever sent these wants to make recipients believe they are coming from FBI offices. Here are four examples. The addresses are all FBI offices in Dallas, El Paso, misspelled there, and Houston, and San Antonio.

FBI officials do not -- they are clear here -- they do not believe this is the work of an FBI employee. They say based on these markings, if you have information that could lead them to the person who sent these letters, call 1-800-CALL-FBI. You can also call the Postal Inspection Service at 877-876-2455, or you can contact local law enforcement officers, Wolf, whatever is convenient for anyone out there in the public. They just want help with getting to whoever sent the letters.

BLITZER: What was the content of these letters? What did these letters say?

TODD: There was a note in each one of them. And FBI officials say it is the same note every time. They are not releasing the content of the letter, because they say basically the message is not clear. It looks to be kind of going all over the place. They don't really think the content is that important at this point.

BLITZER: But so far all the powder or whatever, that has proven to be harmless?

TODD: That is right, but they just think this is a very threatening thing and they need the public's help.

BLITZER: Brian Todd, thanks very much for that -- Brian working the story.

The governor of Illinois steps into the ring, and comes out swinging.


GOV. ROD BLAGOJEVICH (D), ILLINOIS: I will fight. I will fight. I will fight until I take my last breath. I have done nothing wrong.


BLITZER: The Illinois governor is blasting back at his critics. How ugly might this fight get? Our senior legal analyst, Jeff Toobin, is here. We will discuss.

And a new report says some FBI agents (INAUDIBLE) paid to work even at times when they were partying, and this audit makes some other eye-popping claims.

And there's a new twist in the last election of 2008 here in the United States, an election involving Al Franken and Norm Coleman. Guess who is ahead right now?


BLITZER: The governor of Illinois essentially says he is mad as ever and he is not going to take it anymore. Today, the scandal- ridden governor broke his silence, saying he is innocent, that no one will run him out of office. And he is blasting what he called a -- quote -- "political lynch mob."

CNN's Susan Roesgen is in Chicago looking at the story for us.

All right, update our viewers. What is the latest, Susie?

SUSAN ROESGEN, CNN GENERAL ASSIGNMENT CORRESPONDENT: Well, the latest is after Governor Blagojevich was arrested and taken away in handcuffs, Wolf, almost two weeks ago, now he has come out fighting.


ROESGEN (voice-over): Critics demanded that he speak, and, at last, he did. BLAGOJEVICH: 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.

ROESGEN: This is not the chipper, smiling governor we saw jogging a few days ago.

BLAGOJEVICH: I'm going to just loosen up.

ROESGEN: This is a guy the feds are trying to nail on corruption charges, and he is fighting back.

BLAGOJEVICH: I will fight. I will fight. I will fight until I take my last breath.

MATT MURPHY (R), ILLINOIS STATE SENATOR: And, again, speaking on behalf of the vast majority of the people of the state of Illinois, who were hoping to hear, rather, fight, fight, fight, resign, resign, resign, unfortunately, that is not what we heard.

ROESGEN: Even before his arrest, the governor's approval rating among Illinois voters was just 13 percent. Next week, state lawmakers will resume considering whether to impeach him. But the governor, though he may be unloved, is still in charge.

BLAGOJEVICH: It's kind of lonely right now. But I have on my side the most powerful ally there is, and it's the truth.

ROESGEN: The truth of that statement may be decided in court.


ROESGEN: And one more thing, Wolf. Of course, because the governor is still in charge here, he still does have the right to appoint a successor for the Senate seat left open by president-elect Barack Obama.

Whether he will really do that or not, that would be a pretty gutsy move, even as defiant as he was today, so we will have to see whether he does try to do that.

BLITZER: We will see what happens to this Democratic governor.

All right, Susie, thanks very much.

So, what might happen next, not only politically, but legally?

Let's go to our senior legal analyst, Jeff Toobin.

What do you think? Where does this goes from here, Jeff?

JEFFREY TOOBIN, CNN SENIOR ANALYST: Well, I think it goes back to court.

He is challenging the U.S. attorney, Patrick Fitzgerald. Make your case against me. And, in the next couple of days, it goes back to the Illinois legislature to pursue the impeachment case, which may turn out to be a more time-consuming and complicated undertaking than it initially appeared.

BLITZER: Well, that could take weeks if not months to go through an impeachment process, and we don't know how long it could take the U.S. attorney, Patrick Fitzgerald, to go ahead with legal proceedings against him.

TOOBIN: Well, the legal case will certainly take months and months, because, remember, he has only been arrested on a complaint. He has not even been indicted yet. Presumably, if the usual procedures are being followed, the case is now being presented to a grand jury and he will be indicted, probably within the month.

We will learn more about that case, but that is undoubtedly a complicated case that will take months to get to trial. The Illinois legislature has never impeached a governor. They have to figure out what procedures to be used, what evidence do they want to hear.

They have a new legislature coming in at the beginning of the year. Do they have to start over? All those questions are going to take time to resolve and, in the meantime, he is governor, exercising whatever powers that I guess he chooses to exercise. That is one of the real mysteries here. How does he continue to exercise the powers of governor?

BLITZER: If you read -- and I know you did -- that 76-page criminal complaint, the two specific charges that he leveled of potential criminal wrongdoing had nothing to do with the highly publicized matter of potentially selling Barack Obama's Senate seat.

TOOBIN: Right.

One of the charges relates to selling the Senate seat. The other one relates to essentially selling the right to engage basically in the Tribune company, where they say he tried to use state funds to get reporters fired there.

And the first part of the case is probably the most powerful, if not exactly the sexiest, which is the straight pay-for-play accusation, that he sold government contracts in return for campaign contributions. Those are fairly traditional accusations, and legally not all that complicated. We will see if the government can prove it -- can prove it, but I don't think, legally, there is going to be any chance of getting them thrown out.

BLITZER: Because the one charge as you say was involving "The Chicago Tribune." The other one, he was withholding money, state money, supposedly to a children's hospital unless he got some money in return. What does that have to do with the selling the Senate seat?

TOOBIN: Well, it has nothing to do with selling the Senate seat. It is an entirely separate charge, and it just shows the magnitude of the challenge to his defense, because imagine going to a jury with -- if the facts are as Fitzgerald alleges they are, where he is accused of withholding $8 million from a children's hospital, a children's hospital, because he didn't get $25,000 in campaign contributions.

What jury is not going to be repelled by that evidence? That is why he is in big trouble, but he is innocent until proven guilty, and he is still governor until he is impeached and convicted.

BLITZER: I'm sure his lawyers are always telling him, don't give up the governor's seat, because that is good leverage you might need down the road.

TOOBIN: This is a guy who knows about leverage. And the governor's seat is his absolute best chip, because Patrick Fitzgerald may say, look, I recognize that it is important to get Illinois government functioning again and I might even accept a better plea bargain for him in return for his resignation.

So, giving up that governorship is something that a calculating guy would never do. Now, if he were concerned about how Illinois government were functioning, the taxpayers' interest, maybe he would step down, but that does not appear to be his priority at the moment.

BLITZER: It looks like there's not going to be a successor to Barack Obama in the U.S. Senate, at least for a while.

We will watch that closely with you.

TOOBIN: Absolutely not.

BLITZER: Jeff, thank you.

A long day's tough police work. The FBI has a tough job in Iraq, or do they? An investigation shows millions of dollars in overtime paid to agents who were partying.

And you have heard the names, seen the people, so why are critics saying Barack Obama's Cabinet does not have enough diversity?

And the passing of the man known as Deep Throat and how he really felt about the secrets he revealed in the Watergate scandal.

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



BLITZER: A flip-flop in the Minnesota Senate recount, new information coming in on how and when this last contest of the election year may be decided.

And the president-elect suggests his economic improvement plan won't cost $1 trillion. Do his numbers add up? The best political team on television is standing by.

And hard rock and hard time, how music is being used as supposedly torture inside the U.S. military prison at Guantanamo Bay. We will explain right here in THE SITUATION ROOM. (COMMERCIAL BREAK)

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

Happening now: a new twist in that cliffhanger election, the Senate battle in Minnesota between Al Franken and Norm Coleman. It is still undecided one month into a recount. Now one campaign is making a serious new allegation.

Also, watching movies, drinking cocktails and more, all allegedly while on your dime. We are investigating an eye-popping new audit of FBI agents in Iraq.

And critics charging there is not enough diversity in Barack Obama's Cabinet picks -- all of this coming up, plus the best political team on television.

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

The political drama unfolding in the last election race to be decided and it is taking on right now a new twist. It is the race between Republican incumbent Senator Norm Coleman and Democrat Al Franken.

Let's go to New York. CNN's Mary Snow has been watching this race for us.

What's the latest, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, for the first time, Al Franken has taken the lead in the race. At last count, he had a 251- vote edge in an unofficial tally. It's being counted by "The Minnesota Star-Tribune." But expect more drama.


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.

TONY TRIMBLE, COLEMAN CAMPAIGN ATTORNEY: 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.

MARC ELIAS, FRANKEN CAMPAIGN ATTORNEY: 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.

LARRY JACOBS, UNIVERSITY OF MINNESOTA: 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 expects legal fights to stretch out the contest.

JACOBS: 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: Now, officials will be working throughout the weekend. But the Minnesota secretary of state cautions the process is nowhere close to being finalized -- Wolf.


All right, Mary.

Thank you.

The Minnesota Senate recount is certainly no laughing matter. But in the course of tallying all those ballots, there were some lighter moments. And they were all captured on video.

Our Internet reporter, Abbi Tatton, is looking at some of them -- Abbi, what are you seeing?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, what do the Flying Spaghetti Monster, Brett Favre and Lizard people have in common?

Well, if you've been following this recount, you'll know that they've all been suggested as write-in candidates on Minnesota ballots, leading to some bizarre moments this week.

In this video, you'll see that state canvassing board, together with the lawyers for both campaigns, debating whether Lizard people could be a real person.


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


UNIDENTIFIED MALE: And therefore it 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, 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. You don't.



TATTON: Now, this debate went on for some minutes. They finally decided that this ballot that was for Lizard people and Al Franken should be thrown out as an over vote. But it didn't matter for Franken, because a few minutes later, he made it up when they voted that a Al Frankenstein should be permissible -- Wolf.

BLITZER: Abbi, thanks very much.

And this is interesting footnote. Let's 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, and that sparked two recounts.

In the first, result the result flipped, the Democrat winning by 10 votes. Another flip after the second recount -- the Republican winning by two votes. The Senate then stepped in and 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.

FBI agents who were in Iraq are now facing some serious allegations that they charged millions of dollars in overtime for activities like watching movies and going to cocktail parties.

Let's go to CNN's Brian Todd once again.

He's been looking at what these investigators are coming up with. It's pretty shocking.

TODD: It is, Wolf. Those investigators are slamming an FBI bureaucracy that they say not only allowed agents to abuse the overtime pay system, but encouraged them to.

(BEGIN VIDEOTAPE) TODD (voice-over): They're tasked with doing America's police work in Iraq. FBI agents investigating kidnappings, training Iraqi police and collecting forensic evidence on bombings -- crime scenes that are a little different from those back home.

CHRIS HAMILTON, FORMER FBI COUNTER-TERRORISM OFFICIAL: Those are very difficult situations. You could get it and you had to get in and get out very quickly.

TODD: But a new Justice Department audit says while doing all that, FBI personnel in Iraq for years violated federal rules by abusing overtime filings. An inspector-general's report says FBI employees uniformly claimed to have worked 16 hours a day, seven days a week during their three month rotations in Iraq, even though many of them didn't work nearly that much.

It says agents and other employees claimed overtime for eating meals, watching movies, even going to cocktail parties: "Several FBI employees claimed the time spent at the cocktail party was work, because it was a liaison effort that brought various benefits to the FBI."

How much did the excessive overtime and adjusted pay cost American taxpayers?

$7.8 million between 2003 and 2007, the auditors say.

The report says many FBI agents believe they should have been paid all that overtime, because they were often on call at odd hours and because of the danger. One agent who ran the FBI's post in Baghdad previously told CNN about that.

ANDREW BLAND, FBI SPECIAL AGENT: I'm a former Army Airborne Ranger, you know, middleweight boxing champion at West Point, former SWAT team member. But the experiences that I went through in traveling from the Green Zone to the Red Zone were amongst the most fearful in my entire life.

TODD: The report doesn't blame individual agents for the excess. It says FBI management told them to do it. The bureau accepts the findings, says a number of changes have been implemented and the overtime policy was discontinued.


TODD: FBI officials tell us that policy was designed to encourage agents to volunteer for duty in Iraq, but they admit it was a flawed system that was allowed to remain in place for way too long -- Wolf.

BLITZER: So is the government going to try to get back any of that $8 million?

TODD: It doesn't look like it. The inspector general's office says that because the recordkeeping was so bad, they can't give an exact calculation of who was paid what and when. So it looks like that money is gone.

BLITZER: All right.

Brian, thanks very much.

President-Elect Barack Obama -- he's defending his massive stimulus plan while facing some criticism over the cabinet.

Does it lack diversity?

I'll ask the best political team on television.

And President Bush makes history with a new portrait -- what sets it apart from the rest?


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




BLITZER: President-Elect Barack Obama defending his massive stimulus plan, but is he being up front about the real costs?

Let's talk about that and more with our political contributors, Dana Milbank of "The Washington Post" and Steve Hayes of "The Weekly Standard." Also joining us, Perry Bacon of "The Washington Post."

What do you think, Dana?

You know, you heard $600 billion, $850 billion, some saying a trillion dollars.

You know, in the end, what?

DANA MILBANK, CNN CONTRIBUTOR "WASHINGTON POST": A trillion and it will just keep on going from there, don't you think?

I mean there's -- there's really no countervailing pressure now. And I think particularly now that President Bush has said it's OK, it's all right to bail out these auto guys, I think everybody is going to be...

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Was he ever a countervailing pressure?

MILBANK: I -- well, maybe for a very brief period of time. I mean, we do have a $10 trillion national debt now.

BLITZER: Everybody knows -- you know, everybody -- I think almost all of the economists agree, Steve, you need some sort of economic stimulus package, given the state of the U.S. economy right now.

HAYES: Sure. I think, you know, that's right. The difference is how you do it. And I think there are Republicans who are saying look, what we really need to do is more tax cuts. You need more growth -- do things that are going to contribute to economic growth. Grow the economy. That will help stimulate the economy and it will, you know, overall, end up helping lower the deficit.

BLITZER: Perry, let me play this little clip of how the president-elect phrased his objectives today.

Listen to this.


OBAMA: Because a lot of times, presidents say well, we're going to -- we're projecting that we balance the budget -- oh, and, by the way, it doesn't happen until two presidents from now. And so nothing ever changes. We're going to reform how spending takes place, but it doesn't start until I've left office.

But we're going to start it now.


BLITZER: Well, they're going to try, but with nearly a trillion deficit projected for the current fiscal year and if they're going to spend $600 billion or $800 billion for another economic stimulus package in the coming year, that's going to be pretty hard.

PERRY BACON, "WASHINGTON POST": I think he broadly hinted there he's not going to reduce the deficit a lot in his first two years. And we're spending $800 million to -- on the restructure projects and the stimulus, you won't reduce the deficit for a long time, which he essentially conceded in that point, I think.

BLITZER: Yes. It's...

MILBANK: Well...

BLITZER: Go ahead.

MILBANK: Well and he's saying we, by necessity, have to binge now and then we're going to go on our diet after we're done with this. It's just like I had several cookies in THE SITUATION ROOM off-camera, but I promise you, on January 1st, it's all going to change.


BLITZER: You're going to go on that diet right after New Year's Eve.

MILBANK: Absolutely. I promise.

HAYES: I didn't have any cookies. BLITZER: Yes. You know, the whole nature, though, is he's also saying -- and he says we're going to scrub all these infrastructure programs, no more pork, no more bridges to nowhere.

HAYES: Yes, well, and this is where I think it will get particularly interesting, because you've seen the mayors, among other people, put out huge lists of projects that they would call infrastructure spending. And most -- the same people would call them pork projects. But you've got things like, you know, $6 million in Miami for a splish-splash water park -- things of that nature that, if they end up in the final bill, Barack Obama is going to end disappointing some people and that could be -- that's where he'll have a fight.

BLITZER: Perry, you cover Congress.

Do you see any inclination -- serious inclination up there that they're going to do away with these appropriation earmarks or the pork barrel spending, as it's called?

BACON: I think this bill is going to be full of some projects people object to. Republicans are already looking forward to sort of picking out the five or 10 most egregious, sort of wasteful spending and sort of attacking those and saying this doesn't make sense, this bill is too big and here's a symbol of why we shouldn't have an $800 billion stimulus plan.

BLITZER: It's a -- it's going to be a tough situation.

Now, some people out there are complaining about the nature of the cabinet that Barack Obama has basically put together. Some women's groups are suggesting not enough women in these positions.

MILBANK: I find this really extraordinary. I mean, I suppose that people will complain about anything. But here you have the first African-American president, five women in the cabinet.

I mean what exactly are we looking for here?

I mean, admittedly, it's a disproportionately number of basketball players in the cabinet. But in terms of ethnic and gender groups, I mean what's the guy supposed to do?

BLITZER: What do you think?

HAYES: Well, you know, I mean one argument -- if you want to play interest group politics, one argument would be that women represent more than 50 percent of the population, they should have more than 50 percent of the spots. I mean I don't buy the argument, but I think that's the danger you get into.

I, of course, think there are too few Republicans with only two.


BLITZER: You notice, Perry, that four men are talking about whether or not there's...


BLITZER: ...there are enough women in the cabinet. There's something wrong with this conversation.

BACON: I think one of the critiques we're seeing already is what you saw with Rick Warren this week, too, who was not a (INAUDIBLE) being involved in the inauguration. And so there's feelings among some liberals that there's not enough sort of -- sort of real left-wing voices in the cabinet. And that's sort of one critique you're hearing.

People think Hillary Clinton is a centrist and there's some sort of liberal voices that want to -- want to have a voice of their own in the cabinet, who feel like Obama has not picked enough sort of real progressive voices.

MILBANK: You know, Obama really overcame identity interest group politics in the campaign. It's sort of rearing its head, as they say, now. And I -- I think Obama is doing a good job to resisting that, because it is the substance of the policy, not the representatives, from which group.

BLITZER: We'll leave it on that note, guys.

Thanks very much.

Guantanamo detainees say they were subjected to an unusual form of what they call torture. That would be rock music. And now they're suing -- yes, they're suing. We have details.

And the secret source who set in motion the downfall of a president and changed the nature of politics and journalism forever.

Stay with us.



BLITZER: Let's check in with Lou to see what's coming up in a few minutes right at the top of the hour -- Lou, what are you working on?

LOU DOBBS, CNN ANCHOR: Wolf, thank you.

Coming up, much more on the president's plan to rescue General Motors and Chrysler -- billions of dollars in government loans.

What happened to that orderly bankruptcy we were hearing from the White House?

We'll examine the political and economic impact of the president's decision.

Also, President-Elect Obama's choice of a free-trader as U.S. trade representative is raising eyebrows and new concerns about a possible North American Union. That union could be implemented without the consent of the American people or Congress if the elites have their way.

And we'll be examining another controversial choice for the president-elect's cabinet -- nominating an outspoken, pro-amnesty, open borders advocate to be Labor secretary. We'll tell you what that appointment is all about and what it tells us about the president- elect's agenda on immigration.

Join us for all of that at the top of the hour, all the day's news and much more from an Independent perspective -- Wolf, back to you.

BLITZER: See you at the top of the hour, Lou.

Thank you.

Heavy metal, rap and children's songs -- that's what some former detainees they used -- they say that was used to torture them while they were held at the U.S. Naval base at Guantanamo Bay in Cuba.

CNN's Kareen Wynter has been following this story for us -- Kareen, exactly what are these former inmates charging?

KAREEN WYNTER, CNN CORRESPONDENT: Well, Wolf, they're saying that this alleged method of torture -- it's not only inciting outrage, but also action on their part.


WYNTER (voice-over): Guantanamo Bay's U.S.-operated military prison -- it's known for a lot of things, but perhaps not this...


WYNTER: from Nine Inch Nails.

Or this...


WYNTER: ...songs from Rage Against the Machine.

But some former detainees can't forget it. They're alleging that U.S. officials used audio clips of heavy metal, rock, rap, even children's tunes, to psychologically torture inmates inside this detention facility.

Now, some of them are seeking damages.

RHUHEL AHMED: It's very scary, you know, to -- to think that you might go crazy because of the music -- because of the loud noise.

WYNTER: Former prisoner Rhuhel Ahmed filed a lawsuit against the U.S. government, claiming that the officials tortured him with head- banging music for hours while held prisoner in 2003.

AHMED: After a while, you don't hear the lyrics. All you hear is heavy -- heavy banging. It sounds like metal is clashing against metal. That's all it sounds like. It doesn't sound like music at all. So after a while, it just plays with your mind.

WYNTER: Chloe Davies is with the British legal charity Reprieve, which represents dozens of former and current Guantanamo Bay detainees, including Ahmed.

CHLOE DAVIES, REPRIEVE: Prisoners were left in pitch black with constant music 24 hours a day for days, weeks and months at a time. And some of the music included Eminem and Aerosmith.

WYNTER: Davies says some of the artists whose music was allegedly used are protesting. Rocker Tom Morello of the group Rage Against the Machine sounded off at a recent solo concert.

TOM MORELLO, RAGE AGAINST THE MACHINE: They used music torture the prisoners in Guantanamo Bay, like sleep deprivation. And one of the bands that they used, unfortunately, was Rage Against the Machine.


WYNTER: Another artist, Trent Reznor of Nine Inch Nails, said: "It's difficult for me to imagine anything more profoundly insulting, demeaning and enraging than discovering music that you put your heart and soul into creating has been used for purposes of torture. If there are any legal options that can be realistically taken, they will be aggressively pursued."

The Pentagon wouldn't respond directly to the allegations of torture involving music, but said in a statement to CNN their policy has always been to treat detainees humanely and conduct interrogations "within the parameters set by U.S. policy, the law of war and the Geneva Conventions, with trained, disciplined personnel" and "we'll continue to take seriously the need to question terror suspects who have information that can save lives."


WYNTER: And, Wolf, Reprieve -- they also want to send a message to the upcoming Obama administration on the alleged torture tactics being used at these military facilities -- Wolf.

BLITZER: Kareen, thanks for that.

Using music, by the way, as a way to pressure people is nothing new. A well-known example involves the dictator, Manuel Noriega.

When the United States invaded Panama in the late 19 -- in late 1989, Noriega hid out in the Vatican embassy. He couldn't get away from the blasting music. He surrendered 10 days later.

(VIDEO CLIP) BLITZER: And in 1993, the FBI blared Christmas carols, among other tactics, to force the surrender of the cult leader, David Koresh.


BLITZER: The month long Branch Davidian standoff ended in tragedy, though, when a fire broke out. Koresh and dozens of followers died.

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 had kept secret for three decades.

Here's 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're 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 Justice 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" for 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: 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: Howard Kurtz.

Thanks very much.

Eight years of stress, turmoil, hard work all erased -- why people will see a much more relaxed man when they look at President Bush in the future.

We'll be right back.


BLITZER: President Bush wanted to look relaxed and now he does in his smiling portrait, unveiled today over at the National Portrait Gallery here in Washington. The painting was inspired by pictures taken of the president at Camp David.


BUSH: It's a tremendous honor to have my portrait added to this gallery's presidential collection. This is one of only two institutions where portraits of every president, starting with our first George Washington. That means this exhibit now has an interesting symmetry -- it starts with George W. and ends with George W.



BLITZER: And this was a first. Never before has the Portrait Gallery revealed the president and first lady's paintings before they left the White House.


LAURA BUSH, FIRST LADY OF THE UNITED STATES: Thanks for working to unveil these portraits early, while President Bush is still in office. Upstairs, I saw that Dolly Madison's portrait is praised for offering a glimpse of the aging Mrs. Madison. That's exactly the type of compliment I was hoping to avoid.


BLITZER: There it is -- a lovely portrait, indeed, of the first lady. And, by the way, that portrait shows her doing something she's championed during her time in the White House and before -- and that would be reading.

And there's the portrait of the president of the United States.

This note -- please join me Sunday morning on "LATE EDITION." Among my guests, Congressman Barney Frank and Congressman Eric Cantor. We'll discuss Congressional oversight of the financial industry, among other subjects. "LATE EDITION" airs 11:00 a.m. Eastern on Sunday.

Until then, thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.