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Obama Questioned in Illinois Corruption Scandal; California Going Broke?

Aired December 23, 2008 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Happening now: A new report reveals that Barack Obama was questioned by investigators in the Illinois corruption case, new information in the scandal surrounding the governor accused of trying to sell Obama's former Senate seat.
Plus, drivers trapped in freezing rushing waters, desperate calls for help, and dramatic rescues from a road turned into a river. Well, we have those 911 tapes.

And an icon of the religious right vents surprising criticism of President Bush. This hour, my interview with Pat Robertson and his equally surprising remarks about Barack Obama -- all of that and the best political team on television.

Welcome to our viewers in the United States and around the world. Wolf Blitzer is off today. I'm Suzanne Malveaux, and you're in THE SITUATION ROOM.

The Obama camp says its just-released review shows that there was no inappropriate contact between the president-elect and the Illinois governor or their aides. We have new formation about Obama's contacts with the investigation into the governor accused of waging a corruption crime spree.

Our senior White House correspondent, Ed Henry, is with Obama in Hawaii.

Ed, what are you learning from the transition team? Obviously, new information is coming in.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: You are right, Suzanne.

In fact, some new information we learned, a surprise buried in this new report, which is that the president-elect and two of his top aides last week were interviewed by the prosecutor in this criminal investigation, Patrick Fitzgerald, last week, but were told that what they told the U.S. attorney was that they were involved in absolutely no wrongdoing.

(BEGIN VIDEOTAPE)

HENRY (voice-over): Team Obama eager to try and turn the page on the controversy over its contact with embattled Illinois Governor Rod Blagojevich. SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENT-ELECT: It has been clear that the president-elect has had no contact with Blagojevich and/or anyone on his team, that he has asserted, and you will find in the report being released today that there has been no inappropriate contact by any member of the Obama staff or the transition team with Blagojevich.

HENRY: This matters because of the lingering questions about whether top Obama aides like Rahm Emanuel had any role in the so- called pay-to-play scandal, allegations the governor tried to auction president-elect's Barack Obama's seat in the Senate.

Democratic officials say their internal investigation shows there was limited contact and no wrongdoing, leading vice president-election Joe Biden to suggest there is no there there.

BIDEN: I don't think there's anything to exonerate.

HENRY: On the same day of the report's release, the transition team scheduled a Biden event on the economy, not that they are trying to change the subject or anything.

BIDEN: We need a robust and sustained economic recovery package. There is virtually no disagreement on that point, with economists from left to right agreeing that the greater threat in the economy lies in doing too little, rather than in not doing enough.

HENRY: He issued a warning to the Democratic Congress about not loading the package, which could reach $775 billion, with pork projects that may do little to stimulate the economy.

BIDEN: That we will not tolerate business as usual in Washington.

There will be, let me say it again, there will be no earmarks in this economic recovery plan. I know it's Christmas. I know it's the Christmas season, but President-elect Obama and I are absolutely, absolutely determined that this economic recovery package will not become a Christmas tree.

(END VIDEOTAPE)

HENRY: Now, the report does show that Rahm Emanuel, the incoming White House chief of staff, did recommend to the governor that Valerie Jarrett be appointed to the Senate seat before Emanuel learned that the president-elect did not want to make and a recommendation like that.

Emanuel later pulled back when Jarrett took a top White House job. And the report says that when Emanuel had subsequent discussions with the governor's staff about other potential appointees to that Senate seat, there never was a quid pro quo discussed. They say basically that there never was a discussion, if you appoint this person, then the governor will get this monetary value or anything else.

So that is why they are really trying to turn the page on this whole investigation -- Suzanne.

MALVEAUX: OK, Ed, thank you so much.

This report again is the Obama transition's team's accounting of its contact with scandal-ridden Illinois governor.

I want to talk more with this with CNN senior legal analyst Jeffrey Toobin.

Jeff, in looking at this report -- we have both been studying it this afternoon -- does it look like that basically Barack Obama, as well as Rahm Emanuel, are cleared of any wrongdoing, any inappropriate contact with the Illinois governor's office?

JEFFREY TOOBIN, CNN SENIOR ANALYST: Well, one way of looking at it, Suzanne, is that the Obama transition has investigated the Obama transition, and found out that the Obama transition did nothing wrong.

Certainly, that is the conclusion of the report. And I think, based on all of the evidence that we have seen so far, including most especially Patrick Fitzgerald's complaint against Governor Blagojevich in the first place, there is no evidence that the -- anyone connected to Obama has done anything wrong here. So, this simply reaffirms what we have already heard so far.

MALVEAUX: Is this controversy over? Can they -- can the Obama team put it behind them now? Is there anything else that they need to demonstrate or to show when it comes to the contacts that they had between their transition team and the Illinois governor?

TOOBIN: Well, I wouldn't overstate how big a deal this has been already. It has been somewhat of a distraction. It has been in the news. But, based on public opinion polls, no one seems to be worried too much about this, holding it against Obama or his staff.

Certainly, the story is not over. There will be an indictment almost certainly soon. There may be a trial. Rahm Emanuel very well might be a witness in this trial. But in terms of implicating anyone connected to Obama with criminal wrongdoing or even politically embarrassing behavior, it has not happened yet, and it certainly doesn't appear like it's going to happen.

MALVEAUX: OK, Jeff, thank you so much -- Jeffrey Toobin.

Breaking news on the economy from California, which could go broke in two months. Governor Arnold Schwarzenegger warns that the state's infrastructure is at risk. And he warns of painful steps ahead.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: That I hate to laying off anybody, because every person that gets laid off, I see that person being out there and not being able to provide for their family or having no health care and all of those things. That is terrible. That is why I made an offer to them and said, let's all reduce the salaries or do something so that we save some money there.

(END VIDEO CLIP)

MALVEAUX: I want to go straight to CNN's Dan Simon.

Now, the governor just held a news conference. And, Dan, you got a pretty good sense of how bleak the situation is that the governor is painting. What did he say?

DAN SIMON, CNN CORRESPONDENT: Well, of course, the governor is trying to pressure the lawmakers to end their partisan differences and come up with an agreement here.

But I can tell you that, just throughout the state of California, this budget mess is reverberating throughout the state, as state leaders have to decide what gets top priority in terms of funding. And I can tell you that here in San Francisco, for example, the situation has created enormous stress for a group trying to help homeless teenagers.

Take a look.

(BEGIN VIDEOTAPE)

SIMON (voice-over): By February, the state of California, the eighth largest economy in the world, could be broke, that according to the state controller, John Chiang.

JOHN CHIANG, CALIFORNIA STATE CONTROLLER: If we continue the current trends, we run out either on February 27 or February 28, and we have to well understand, this is a weak holiday season. There have been a huge number of layoffs announced that we will experience at the beginning of the new calendar year. And so things look like they are going to be worse.

SIMON: Here is what happened. The bad economy created an enormous deficit in California, a projected $42 billion within 18 months.

The legislature and Governor Schwarzenegger have been unable to reach an agreement on how to solve the crisis. And that has created some unintended victims. Case in point, a proposed homeless shelter for San Francisco teenagers. That was the plan for this empty space, to build a shelter to help runaways or kids abandoned by their parents. But now its future is in limbo now.

(on camera): So, your funding is frozen right now?

SHERILYN ADAMS, LARKIN STREET YOUTH SERVICES: Our funding is frozen.

SIMON: Sherilyn Adams heads Larkin Street Youth Services, which is building the shelter designed to house 20 homeless teens. The state of California agreed to kick in $1 million, about a third of its overall funding, but that million bucks is on hold for the foreseeable future because California is running dangerously low on cash.

ADAMS: I thought, that can't be. That can't happen. We worked so hard for this project, and to have it just suddenly, like not -- this can't happen. This can't go wrong, not now, not this critical project for our youngest youth.

SIMON: One immediate response to the budget crisis, a freeze on funding for about 2,000 statewide projects, including the Larkin Street shelter.

(END VIDEOTAPE)

SIMON: And that abrupt funding cutoff will last until June of 2009. And some of these projects are -- are considered quite vital for public safety.

For example, about $70 million has been earmarked to repair some levees in flood-threatened areas throughout the state of California, Suzanne. So, that is why you are seeing Governor Schwarzenegger talk about this issue in a very public way and -- and speaking in terms that the citizens of this state can relate to.

And it is a very real, scary situation that this state is facing.

(CROSSTALK)

MALVEAUX: It sounds like a dire situation. Dan Simon, thank you so much.

Some drivers in Maryland are suddenly trapped as trees and a wall of water come crashing their way. You will hear the 911 calls as they happened.

And Caroline Kennedy wants a high-profile job, but apparently doesn't want the high-profile scrutiny. Find out what she is holding back.

And a prominent Republican criticizes President Bush, but praises Barack Obama. And he has a disturbing prediction.

(BEGIN VIDEO CLIP)

PAT ROBERTSON, HOST, "THE 700 CLUB": We have got some bad things lurking in the wings. So, I wish it weren't true, but it is.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MALVEAUX: If you listen closely enough, you might think that Barack Obama is a Republican, and President Bush is a Democrat.

Well, clearly, it is not the case, but some well-known Republicans are offering high praise of Obama, while offering low opinions of Mr. Bush.

(BEGIN VIDEOTAPE)

MALVEAUX: Joining us now, Pat Robertson.

Thank you so much for being here with us on THE SITUATION ROOM. Happy Holidays to you.

I want to start off -- obviously, Barack Obama just four weeks away from becoming president. What do you think the first thing, the most important thing he needs to do?

ROBERTSON: Well, I think he has to take hold of this economy. We're in serious trouble. And I understand Barney Frank wants to move legislation forward even ahead of the inauguration. But I think it's getting the economy moving and making sure people have jobs. That's going to be the first, second and third priority, I think, for the new president.

MALVEAUX: You had actually predicted in the beginning of the year that we would be in this financial mess. You said in January, I also believe the lord was saying by 2009, maybe 2010, there's going to be a major stock market crash.

You predicted a recession. Why?

ROBERTSON: Well, I don't know why, but that's -- you know, I go away to pray at the end of each year and sort of try to ask for some leading guidance as to what's going to happen and what I'm supposed to be doing. And this came to me last -- the end of last December, that we were going to have a serious downturn.

I'm afraid that it looks like 2009 is shaping up to even be worse than this year. We've got some bad things lurking in the wings. So I wish it weren't true, but it is.

MALVEAUX: Do you think that the president now is handling it correctly with all of this bailout money, these loans to some of these private industries and these banks?

ROBERTSON: Suzanne, I frankly think that this TARP has been mishandled, mismanaged. I am not at all pleased with the way they have done it.

I know they needed a rescue, but they pulled a number out of a hat, $700 billion. They didn't know exactly what they needed, and they haven't spent it helping the consumers, helping homeowners. It's all going in to shore up the balance sheet of the banks and the banks aren't lending. So I don't, to me, think it was well done.

MALVEAUX: Who do you think actually dropped the ball? Do you think it was the president, the administration, or perhaps the automakers, the banks? Do you blame anyone in particular?

ROBERTSON: Well, it's hard to assess blame. But over the years -- I hate to be critical. I mean, I am a Republican, and this is the president of the party that I'm a member of. But I think we've had some serious goofs along the way. The Katrina matter was terrible. The rebuilding of Iraq has been terrible. The handling of the economy right now has been terrible. It hasn't been handled in what I would consider a professional manner.

MALVEAUX: How would you grade the president in light of all of the laundry list that you've just listed there?

ROBERTSON: Well, you know, history may accord him a higher grade than his contemporaries, and I think he's hoping for that and we are. But I believe I would look at about a C-minus right now if I were grading him.

MALVEAUX: Are you looking forward to an Obama administration, a change?

ROBERTSON: You know, I am remarkably pleased with Obama. I had grave misgivings about him, but so help me, he's come in forcefully, intelligently. He's picked a middle-of-the-road cabinet. And so far, if he continues down this course, he has the makings of a great president. So I'm very pleased so far.

MALVEAUX: What do you think of the pick as Rick Warren, the evangelical leader, as the one to deliver the invocation at his inauguration? Obviously, a controversial pick. And there are some conservatives who believe that, perhaps, he's being used as a pawn.

I want to give you this quote here by Tony Perkins of the Family Research Council. He says, Let's hope that Rick Warren will use his channel of communication to the new president to press him for more pro-family policies, rather than simply being used by Mr. Obama to make political inroads with evangelicals.

Do you think that Warren is being used by Mr. Obama?

ROBERTSON: I don't think so. I think Rick is an extraordinarily able person. Has he a huge church. His book on "The Purpose Driven Life" is one of the all-time bestsellers.

He's a very dynamic individual. And I don't think he's going to be anybody's pawn.

He has his own agenda and I think he'll stick to it. But after all, all he's been asked to do is give an invocation. He isn't asked to endorse Obama. He's going to stand up there on the steps of the Capitol and he's going to say, God, please bless this country, and he will do that very well.

MALVEAUX: There are others who are upset by that pick. Obviously, there are some gay activists who have expressed concern about it because he's not for pro-gay marriage.

This from Colin Powell, what he had to say about the Don't Ask, Don't Tell policy about military exposing their sexuality, saying that they're homosexuality in the military. He says, We should reevaluate it.

(BEGIN VIDEO CLIP)

COLIN POWELL, FORMER SECRETARY OF STATE: 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 a law. Congress felt that strongly about it. But it's been 15 years and attitudes have changed.

(END VIDEO CLIP)

MALVEAUX: Do you think it's time to put that policy aside and to let gays serve openly in the military?

ROBERTSON: Well, you know, I think I would leave that to the field commanders. And it seemed to be the unanimous decision of the military leadership that the question of open homosexuality in the barracks and showers and all the rest of it was not a good thing for the discipline of the troops. That was their policy, and President Clinton is the one that put that into effect.

I'm not sure that we ought to change that. It's worked pretty well so far.

(END VIDEOTAPE)

MALVEAUX: Nearing the end of his term, President Bush hands out pardons to some who have served their own terms in prison.

Plus, new information in the Illinois corruption scandal, including word that president-elect Barack Obama was interviewed directly by the office of the U.S. attorney, Patrick Fitzgerald. The best political team on television tackles that one.

And the lavish gift she could not keep -- what Condoleezza Rice is leaving behind when she hands over the reins to Hillary Clinton.

(COMMERCIAL BREAK)

(NEWS BREAK)

MALVEAUX: Nine-one-one tapes capture the terror of drivers trapped as water consumes their cars, their phone calls for help and the remarkable rescue operation.

Plus, Barack Obama's choice to say the opening prayer at his inauguration stirring fresh criticism and praise. The best political team is standing by to assess the fallout.

And in his last days in office, President Bush pardons 19 people convicted of a variety of crimes. We will tell you if there are any big names on that list.

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now: The drive to work becomes a battle with quite -- and fast-moving wall of water. In suburban Washington, D.C., trapped motorists wait frantically to be rescued one by one. We have the video and the powerful 911 calls.

The pressure mounts on New York Governor David Paterson. Will he appoint Caroline Kennedy to succeed Hillary Clinton in the Senate?

And Christmas miracles come in all shapes and sizes. Well, we will tell you about the 60 miracles that came this season, well, in oatmeal and chocolate chips -- all of this, plus the best political team on television.

Wolf Blitzer is off today, and I'm Suzanne Malveaux, and you're in THE SITUATION ROOM.

Breaking news: A frantic 911 call from a woman trapped in her car after a suburban Maryland road instantly turned into a raging river, that is just ahead, but, first, a look at the rescuers' desperate struggle to save the motorists from that deadly current.

Our CNN's Brian Todd, he has been on the scene all day in Cabin John, Maryland.

And, Brian, this really was kind of an extraordinary event to see from early morning all the way until now. There is still water that you told me that is running on that road.

BRIAN TODD, CNN CORRESPONDENT: Sure is, Suzanne.

And it was very dramatic. There are still response teams behind me clearing debris from this area, still water cascading down the road, but it is in stark contrast to the very, very dramatic rescue operation that we saw earlier.

(BEGIN VIDEOTAPE)

TODD (voice-over): This video tells it all. Water slams a rescuer's boat as he tries to pull a woman from her car with virtually no time to spare. Moments later, time runs out on him. The boat is engulfed, and park police have to save the rescuer.

UNIDENTIFIED MALE: A current like that can kill instantly.

TODD: A current triggered when a 5.5-foot-wide water main burst open during the morning commute. A wall of water rushed down a steep incline, trapping several people in their cars. Helicopter rescues were very dangerous. As a woman climbs out of her car and grabs for a basket, the wind slaps white-capped water all around her.

Victims describe a harrowing sequence that came in an instant.

SHARON SCHOEM, RESCUED FROM CAR: All of sudden, I just saw a bunch of muddy water and rocks and parts of trees, and coming toward me, and I tried to turn around. But, as I turned around, I was unable to turn around because the force of the water was just too high.

TODD: Another woman scribbles a note for rescuers to contact a family member. Officials say some victims were treated for hypothermia, but all were rescued.

(on camera): We're right at the edge of River Road, where the water main break really was at its worst earlier today, about four to feet deep behind me when it was at its worst point. You can see the water is still gushing down the road.

These are two of the cars that were stranded. People had to be airlifted out of these cars.

We're going to go down the hill this way. And you can see four other cars that were stranded. One of them still has the windshield wipers going.

And we're told by rescuers that the depth of the water hit about four or five feet at its worst point this morning, but the depth was not the problem. It's the speed with which the water is going downhill.

(voice-over): Veteran rescuers said they'd never encountered anything like this.

LT. FRANK DOYLE, MONTGOMERY COUNTY FIRE & RESCUE SERVICE: We train for river rescues every day and we train for flood rescues on the road. But you never expect to find something like we found today, with the mound of water coming down the road with multiple cars stuck.

(END VIDEOTAPE)

TODD: All of those cars have since been extracted from the scene, though it took response teams hours to get to the main valve that broke because it was under water for much of the day. They eventually did shut that valve off and we're told that many of the residents around here have gotten their water service restored -- Suzanne.

MALVEAUX: Brian Todd there all day.

Excellent work.

Thank you, Brian.

The Montgomery County Fire & Rescue service has released the 911 calls from this extraordinary incident.

I want you to take a listen to this one. This is from a woman who was trapped in her car.

(BEGIN AUDIO CLIP)

UNIDENTIFIED FEMALE: Fire and ambulance.

UNIDENTIFIED FEMALE: Yes. Where are the (INAUDIBLE).

Are those guys coming?

UNIDENTIFIED FEMALE: Yes, ma'am. We are on our way. We're working now to get the boats out to you.

Are you in one of the vehicles?

UNIDENTIFIED FEMALE: Yes.

UNIDENTIFIED FEMALE: OK, ma'am.

Is your vehicle -- is it moving or is it -- is it...

UNIDENTIFIED FEMALE: Yes. It's moving backward. The water is washing it away on us.

UNIDENTIFIED FEMALE: OK.

Do you have water in your vehicle, ma'am?

UNIDENTIFIED FEMALE: No. I did not open the window.

UNIDENTIFIED FEMALE: OK.

And what kind of vehicle are you in?

UNIDENTIFIED FEMALE: I'm in a Subaru.

UNIDENTIFIED FEMALE: What color is it?

UNIDENTIFIED FEMALE: Green.

UNIDENTIFIED FEMALE: OK, ma'am. We have units on the scene and they're working to get you guys now, OK?

UNIDENTIFIED FEMALE: OK.

Yes. I'm so scared.

UNIDENTIFIED FEMALE: OK.

Ma'am, how many other vehicles are there with you?

UNIDENTIFIED FEMALE: I cannot see now because the water completely blocked my -- my windshield. I can't see.

UNIDENTIFIED FEMALE: It's out -- it's outside your windshield?

UNIDENTIFIED FEMALE: Yes. The water is (INAUDIBLE) on my windshield.

UNIDENTIFIED FEMALE: OK...

UNIDENTIFIED FEMALE: I cannot see anything now.

UNIDENTIFIED FEMALE: OK.

And there's no water in your vehicle, though?

UNIDENTIFIED FEMALE: No. There's no water in my vehicle yet. UNIDENTIFIED FEMALE: OK, ma'am.

Just keep the windows closed and we're coming to get you now, OK?

UNIDENTIFIED FEMALE: Yes.

Can you hurry up?

I'm just so scared.

UNIDENTIFIED FEMALE: Do you want me to stay on the line with you?

UNIDENTIFIED FEMALE: Yes.

UNIDENTIFIED FEMALE: OK.

And you said you're -- what was...

UNIDENTIFIED FEMALE: I'm in a Subaru, green.

UNIDENTIFIED FEMALE: A green Subaru?

UNIDENTIFIED FEMALE: Yes.

UNIDENTIFIED FEMALE: OK, ma'am, stay with me here one second. I'm going to let our -- our units know what kind of car you're in, OK?

UNIDENTIFIED FEMALE: OK.

Can you hurry up?

(END AUDIO CLIP)

MALVEAUX: Dramatic moments today when U.S. Park Police had to rescue one of the rescuers, using a helicopter to lift him to safety. The Park Police trains the local rescue unit to work with helicopters and the Park Police itself is involved in some 100 swift water rescues every year. The service sent a helicopter to assist in the wake of Hurricane Katrina and it helped rescue passengers after an airliner crashed into the Potomac River in 1982.

Some new developments in the scandal involving the Illinois governor. President-Elect Obama speaks to the U.S. attorney about his contact with that governor. And the transition staff compiles an internal report.

The controversy over the inaugural invocation -- how the invitation to Rick Warren could have some positive impact.

And an important symbol in the ceremony -- the bible Barack Obama will use to take the oath of office.

(COMMERCIAL BREAK)

MALVEAUX: More on our top story now -- the report just released by the Obama team saying there was no inappropriate contact between the president-elect and the Illinois governor. It also revealed that Obama himself was interviewed in this investigation.

Is that surprising and does the report vindicate Obama?

Well, we're back with the best political team on television -- CNN political contributor Stephen Hayes of "The Weekly Standard;" CNN political analyst, Roland Martin; and "Time" magazine's Karen Tumulty.

I want to start off with you, Roland.

If there any surprises here that came out with this report, Obama was interviewed by the prosecution's office. They say no inappropriate contact here. The only contact was between his incoming chief of staff, Rahm Emanuel, with the chief of staff of Blagojevich, as well as Blagojevich himself.

Is this surprising to you?

Does this basically clear the Obama team?

ROLAND S. MARTIN, CNN POLITICAL ANALYST: Well, I mean, it confirms what they had been saying and that is, they had no inappropriate contact or conversations. One of the things the report does say, though, is that Dr. Eric Whitaker was approached by somebody in the governor's circle. He is a close friend of the Obamas. But, more importantly, Whitaker also used to be the head of the Department of Public Health there in Illinois. So there's a previous relationship between this governor and Whitaker.

And so it's not surprising at all. And, look, folks may still have questions. But the -- I think the Obama folks are very comfortable that there is no wrongdoing. And so for them, it's a matter of moving on.

MALVEAUX: Karen, is there any surprise that there would contacts, that obviously Rahm Emanuel would be talking to the governor's team there, that that would happen and they would be talking about the open Senate seat?

I mean, as long as there's no mention of money, a quid pro quo, it doesn't seem like that would be a surprise that there would be those kinds of conversations.

KAREN TUMULTY, "TIME" MAGAZINE: Not at all. And don't forget, on top of that, Rahm Emanuel is an Illinois Congressman who is on the verge of resigning his Congressional seat. So there are plenty of reasons that he would have had these conversations.

What I was really struck by in this report, though, was that if Blagojevich and his staff were making these overtures, trying to get something out of Obama, they certainly were being subtle about it. And so I do wonder where this leads the Fitzgerald investigation.

MALVEAUX: Steven, this is really an internal report. We should remind viewers of that. They're investigating their own. They're simply asking questions among each other. It's not really sworn testimony and it's not based on transcripts from the FBI's taped conversations between these two groups.

So what kind of weight does this report have?

Is this really just a political gesture?

What does it mean?

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": I think it is mostly political. I mean, basically, what this does, I think, politically speaking, it presses pause. Because what is likely to happen, I think, is we'll take this report and we'll look at it when we get more from Patrick Fitzgerald and we learn more about the kinds of other conversations that have been taking place.

So I think, you know, as a political matter, this doesn't really solve anything one way or the other. It doesn't sort of thumb the scale.

The only thing I would say is that the problem -- the potential problems are in inconsistencies. And there, I think, remain some inconsistencies in the Obama team's story on this.

MALVEAUX: I want to turn the...

MARTIN: (INAUDIBLE)...

MALVEAUX: Oh, go ahead, Roland.

MARTIN: One thing that really jumps out is not necessarily even this report today, the fact that the U.S. attorney is asking that House panel in Illinois not to even consider criminal charges. So, sure, we may -- we'll wait to hear what Fitzpatrick has to say. But it may be a long time because, again, this is an -- it's an ongoing investigation. He is not going to reveal anything until he is ready to go to court. So this might be a year, 18 months off, before we hear his side of the story.

MALVEAUX: OK. Real quick, we want to change gears and talk about Rick Warren, the Evangelical who was invited to give the invocation for Obama's inauguration. Still controversy that is brewing over that. Two editorials in "The Washington Post." E.J. Dionne today saying: "Although I support same-sex marriage, I think that liberals should welcome Obama's success in causing so much consternation on the right. On balance, inviting Warren opens more doors than it closes."

Karen, do you agree?

TUMULTY: You know, it's amazing that Barack Obama -- I've never seen one politician have so much trouble with pastors.

You know, I don't think so. Barack Obama has said from the beginning that, you know, he is going to listen to people, even people with whom he disagrees. And the fact is that he and Rick Warren actually agree on a lot of things, as well. So I really am sort of mystified by -- by what a controversy this has become.

MALVEAUX: Steve and Roland, I want both of you to weigh in on this one. This is the counter argument from Richard Cohen today. He says: "The conventional thing to say is that Obama has a preacher problem. First, the volcanic Jeremiah Wright and now the transparently anti-gay Warren. But the real problem has nothing to do with ministers and everything to do with Obama's inability or unwillingness to be a moral leader. Sooner or later, he might just have to stand for something."

Real quick, Stephen, your response. And then Roland.

HAYES: Well, I don't know -- you know, I don't know about -- as it relates to this particular controversy, I don't think that that's necessary applicable.

But broadly speaking, I think that Richard Cohen is right. I mean, I think Barack Obama has made it through the election and through this transition period as somebody who has not taken -- has surprisingly been able to not take a lot of hard stands on issues which will change when he becomes the decider.

MALVEAUX: Does he need to take a stand on this, Roland?

MARTIN: Suzanne, he's already taken a stand. He's on record as saying that he does not support gay marriage. Richard Cohen -- let me just speak to the point. He doesn't know what the hell he's talking about.

He doesn't have a preacher problem. He's also not a moral leader. He's a politician. We look at moral leaders as pastors, folks in that vein. It's understanding what their roles are.

And the bottom line is, he has taken a position on it but there's nothing wrong with him saying

I'm going to reach out to somebody who I disagree on other issues.

And, also, Melissa Etheridge has also said it makes since to reach out to somebody who he might disagree with to have common ground, common conversations, because we might learn something from one another.

MALVEAUX: We're going to have to leave it there.

Roland, Stephen, Karen, thank you so much for joining us here in THE SITUATION ROOM.

Election day may feel like a distant memory, but not in Minnesota. That is where the Senate race is still undecided -- where the vote count stands and when it may be finally decided.

A day of forgiveness -- a look at who received pardons from President Bush.

And a holiday gift to some laid off workers.

(BEGIN VIDEO CLIP)

RITA DEVAN, LANCE EMPLOYEE: I walked into the garage last night and my husband says, "You actually smell like a cookie again."

(LAUGHTER)

DEVAN: He said, "Boy, I missed that smell."

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MALVEAUX: "LOU DOBBS TONIGHT" is coming up right at the top of this hour.

Lisa Sylvester is in for Lou -- and, Lisa, what are you working on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Suzanne.

Coming up at 7:00 Eastern, no discussions of a deal between the Obama team and Illinois Governor Rod Blagojevich. That's according to a new report from the Obama team.

And whistleblowers put an end to Medicaid double billing at a major national pharmacy chain. We'll have that special report.

And paying more for the pleasures of life -- states desperate for cash are now taxing the things that make you feel good. We'll have that story.

Please join us at the top of the hour -- Suzanne, back to you.

MALVEAUX: OK.

Thank you, Lisa.

By most accounts, Caroline Kennedy is at the center of a media circus. Reporters are questioning her, critics are blasting her and supporters are encouraging her efforts to become a senator. But amid the scrutiny is some urgency to get this thing wrapped up fast.

Our Mary Snow joins me.

One prominent New Yorker really wants the thing decided soon.

Who is it -- Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Suzanne, it's New York Mayor Michael Bloomberg. But the man who's making the final decision says he feels no rush.

(BEGIN VIDEOTAPE)

SNOW (voice-over): New York Governor David Paterson has been visiting U.S. troops overseas, but couldn't escape questions about Caroline Kennedy thousands of miles away. In a conference call from Germany, he was asked about political rumblings in New York over Kennedy versus other contenders for Hillary Clinton's Senate seat.

GOV. DAVID PATERSON (D), NEW YORK: What I'm trying to keep away from is lobbying, coercion and distracting information.

SNOW: One opinion on timing is coming from New York City Mayor Mike Bloomberg.

MAYOR MIKE BLOOMBERG (I), NEW YORK CITY: It's up to governor and I think the governor should make a decision reasonably quickly because this is just getting out of control.

SNOW: Bloomberg says he's not endorsing Kennedy, who worked for the city's Department of Education, but defended her.

BLOOMBERG: The fact that she comes from a family with an illustrious history of service to this country, you certainly shouldn't hold it against her.

SNOW: Bloomberg's comments come as New York Democratic Congressman Gary Ackerman stepped up his criticism of Kennedy, taking aim at her on CBS' "Face The Nation" for not facing the press.

REP. GARY ACKERMAN (D), NEW YORK: They've basically Sarah Palinized her, if I can coin a phrase.

SNOW: Kennedy has only taken a few questions from reporters. She submitted written answers to some news organizations, including "The New York Times." But she declined to provide "The Times" with information about financial disclosures -- something that would be required if she were running for election.

Kennedy's spokesman says: "If Governor Paterson were to choose Caroline, she would, of course, comply with all disclosure requirements."

The watchdog group, Center for Responsive Politics, says Kennedy would only be subjected to disclosure rules if she is appointed. But other people being considered hold elected office and have public financial records.

MASSIE RITSCH, CENTER FOR RESPONSIVE POLITICS: And so she may want to put herself on an even playing field with them by submitting to this sort of disclosure, even though she doesn't really have to right now.

SNOW: And one veteran New York political reporter sees the scrutiny only growing.

FRED DICKER, "NEW YORK POST" STATE EDITOR: Well, this has galvanized the New York political establishment. Democrats, interestingly enough, are not rallying to Caroline Kennedy's side.

(END VIDEOTAPE)

SNOW: As government -- Governor Paterson, that is -- has said he doesn't plan to appoint a replacement until Senator Hillary Clinton vacates her seat when she's confirmed by the Senate to become secretary of State -- Suzanne.

MALVEAUX: OK, Mary.

Thank you so much.

On our "Political Ticker," President Bush has granted 19 new pardons to people charged with a variety of crimes -- none of them especially high profile. One went to Charles Winters, who helped to smuggle weapons to Jews fighting in Palestine in the 1940s. Winters died almost 25 years ago.

New word that the Minnesota Senate race may not be decided until after the new Congress convenes January 6th. State election officials gave a progress report on the recount today and Democrat Al Franken currently leads Republican incumbent Norm Coleman by just 47 votes.

The Bible used by President Abraham Lincoln when he took the oath of office is being pressed into service again. In January, Barack Obama will be the first president since Lincoln to be sworn on that book -- part of the Library of Congress' decision.

Obama also declared his candidacy for president from the steps of the statehouse in Springfield, Illinois. Abraham did the same almost 150 years ago.

Well, Secretary of State Condoleezza Rice has been showered with diamonds, emeralds and rubies. But as she leaves office, well, she may have to leave behind all of that.

Our Zain Verjee is back again -- Zain, it's a shame that she's got to leave it all behind, but tell us what it's all about.

ZAIN VERJEE, CNN CORRESPONDENT: Well, Suzanne, they say diamonds are forever. But in Condi Rice's case, it's more like here today, gone tomorrow.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): Bush administration policies are hated in much of the Middle East, but that didn't stop long-time Arab allies from adorning Secretary of State Condoleezza Rice with jewels fit for a queen -- worth more than a quarter of a million dollars.

In January, the king of Jordan showered the top U.S. diplomat with an emerald and diamond necklace; plus, a matching ring, bracelet and earrings. The price tag, according to the State Department, $147,000.

King Abdullah of Saudi Arabia topped that this past summer, giving Rice a ruby and diamond necklace, also with matching earrings, a ring and a bracelet -- worth a dazzling $165,000.

Just all that bling alone makes Rice one of the U.S. government's top gift getters. She even outdid the Bushes.

The Saudi king gave First Lady Laura Bush an $85,000 sapphire and diamond set and gold artwork worth $10,000.

The inventory, prepared by the State Department's Office of Protocol, also revealed more modest offerings -- a $6 assort president of nuts and fruit given by the Dalai Lama to Mrs. Bush. Some that are downright odd, like the abs exercise machine President Bush got from the prime minister of Singapore. And a cute one -- pillows with the names and pictures of the first dogs -- a gift from the Japanese prime minister.

(END VIDEOTAPE)

VERJEE: They can't keep the extravagant gifts, Suzanne, just the memories. They have to hand in the expensive stuff in accordance with federal law -- Suzanne.

MALVEAUX: OK. Cherished memories then.

All right, Zain.

The holiday season is in rough times and more stressful than usual for many this year. But dozens of people in one Ohio town -- a Christmas miracle. We're talking about jobs and much, much more.

And special "Hot Shots" -- getting home for the holidays -- a cross-country trek in pictures.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: It's one of the busiest travel days of the year. But a lot of people are going nowhere. Snowstorms in the West, brutal cold through the country's midsection are really hampering transportation.

But CNN's Susan Roesgen did manage to get on board one flight and she describes the experience.

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SUSAN ROESGEN, GULF COAST CORRESPONDENT: We're here in the Denver airport. Some people left the gate area because they were told it was going to be a two hour delay. But now they've found out that this plane is boarding.

We've got a woman here, she's breathing heavily, walking as fast as she can, carrying a lot of bags.

You folks are going to Chicago today.

UNIDENTIFIED FEMALE: I've been waiting here for a 10:10 flight and they never announced the flight. And I D1 and I don't understand what's happening, because the -- the plane that we're getting on landed about an hour-and-a-half ago.

ROESGEN: These are some pictures I took of the Pitchman (ph) family. You see Amy and Matt. And Matt is carrying Amy's pretty pink suitcase. And there's Molly, the one that wanted to take a nap.

Molly is hanging in there. Thanks.

How are you doing?

UNIDENTIFIED FEMALE: I've been better, but I'm going to make it.

ROESGEN: We're jammed in here like sardines -- or maybe like Christmas cranberries or something. Every seat is taken. And we'll all be home for Christmas -- if only in our dreams.

Susan Roesgen, CNN, somewhere between Denver and Chicago.

(END VIDEOTAPE)

MALVEAUX: Well, just in time for the holidays, a sweet gift for workers laid off when a cookie bakery closed. Well, they got their jobs back.

Our chief national correspondent, John King, reports from Ashland, Ohio.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT (voice-over): Oatmeal cookies fresh from the oven -- 20,000 pounds worth in a 10 hour shift. Chocolate chip in this line -- a bakery shuttered just days ago now bustling, with 60 eager employees who had expected a Christmas on the unemployment rolls.

Kathy Sexton had told her children it would be a very modest holiday.

KATHY SEXTON, LANCE EMPLOYEE: And they understood. They said, that's all right, mom. You always want to give them more, but I didn't think I would be able to.

KING: Like many small towns, Ashland is struggling. And things have been especially bleak since Archway Cookies was abruptly closed in early October by the private equity firm that owned it.

UNIDENTIFIED FEMALE: ... That shutting down the operation was the only course left to take.

KING: Then the Lance snack company bought Archway at a bankruptcy auction. Last week, 60 workers were asked to return immediately -- hopefully the rest in the months ahead.

TERRY MOWRY, LANCE EMPLOYEE: It's hard to describe. I mean, you just saw life being breathed right back into the faces of these people. KING: Terry Mowry in the first wave, as is Rita Devan.

DEVAN: I walked in the garage last night. My husband said, "You actually smell like a cookie again."

(LAUGHTER)

DEVAN: He said, "Boy, I missed that smell."

UNIDENTIFIED FEMALE: Hey, I don't know any more answers than what Jenny (ph) knows.

KING: Two months ago, workers felt betrayed by bosses who at first said there would be more work in a day or two -- then changed the locks.

DEVAN: They were just -- kept taking and taking and taking until there was nothing more to take. And they didn't care that they were putting 300 people out of work at the time.

KING: Things are very different now. When it promised to reopen the bakery, Lance handed all former Archway employees an early Christmas gift -- a $1,500 prepaid debit card.

DEVAN: I was crying. I'm like, pinch me, pinch me. And then it just kept getting better. You're getting your seniority. And I'm like -- and you're going to get you a card tonight. I'm like, what are these people doing? They don't know me. They don't know us. They didn't know any of the Archway people.

And they're giving each and every one of us $1,500?

SEXTON: It was awesome. My first thought was, I can give my kids a Christmas.

KING: Lance CEO David Singer says the gift cards were a way of letting Ashland know the new owners are different.

DAVID SINGER, CEO, LANCE, INC.: And we wouldn't do it willy- nilly. We do want to make money. But this is the pool of folks that we intend to hire. And we just wanted to let them know who we were. It's great to see these folks come back to work. We're proud of -- of what we have been able to do.

KING: These are Lance cookies sold to big chains like Target and Wal-Mart. But Archway production will resume soon. And the new owners say if the new orders keep flowing in, more jobs will follow.

John King, CNN, Ashland, Ohio.

(END VIDEOTAPE)

MALVEAUX: We want you to check out our political pod cast. To get the best political team to go, subscribe at CNN.com/situationroom.

I'm Suzanne Malveaux in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT."

Lisa Sylvester is in for Lou -- Lisa, have a good show.