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Illinois Governor Fills Obama Senate Seat; Israel Weighs Gaza Truce

Aired December 30, 2008 - 18:00   ET


SUZANNE MALVEAUX, CNN ANCHOR: Happening now, breaking news: a play by the Illinois governor not to let his scandal to taint his new Senate appointee. But top Democrats want Rod Blagojevich and his Senate choice to simply go away. We just got reaction from president- elect Obama.
Plus, a truce proposal that's on the table in the Middle East. Will Israel take a break from its deadly assault on Palestinian militants?

And the Republican Party prepares to throw a political bombshell at President Bush, at issue, multibillion-dollar bailouts and whether they smack of socialism -- all 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 THE SITUATION ROOM.

It's a fresh show of defiance by the embattled Illinois governor, Rod Blagojevich, today named his choice to fill Barack Obama's former Senate seat. It is the same seat that he's accused of trying to sell to the highest bidder.

Well, we just got reaction from president-elect Obama.

To the breaking news, our CNN's Ed Lavandera and Brianna Keilar are standing by.

But, first, let's go to our senior White House correspondent, Ed Henry.

What is Mr. Obama saying about the selection of the former Illinois attorney general for his spot?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Suzanne the president-elect is lashing out, making clear he's not happy about this, saying in a statement we have just gotten in the last few moments -- quote -- "Roland Burris is a good man and a fine public servant, but the Senate Democrats made it clear weeks ago that they cannot accept an appointment made by a governor who is accused of selling this very Senate seat. I agree with their decision, and it is extremely disappointing that Governor Blagojevich has chosen to ignore it. I believe the best resolution would be for the governor to resign his office and allow a lawful and appropriate process of succession to take place. While Governor Blagojevich is entitled to his day in court, the people of Illinois are entitled to a functioning government and major decisions free of taint and controversy."

You can hear right there the president-elect clearly not happy with this latest move by the governor. It shows this rupture in the Democratic Party continues -- Suzanne.

MALVEAUX: Thank you, Ed.

Governor Blagojevich insists he was required to appoint a successor to president-elect Obama, despite warnings from Democrats that his choice would be tainted by scandal.

CNN's Ed Lavandera is following the story.

Ed, obviously, there's plenty of outrage over this appointment. How are they reacting?

ED LAVANDERA, CNN CORRESPONDENT: Well, the outrage is almost universally against the governor. And in fact it was such a bizarre press conference that took place just a few hours ago that, at the end, the governor inviting and bringing in an element of race. As he left the press conference, he pointed to reporters and said, don't lynch the appointer.


LAVANDERA (voice-over): The chutzpah shocks even the most passionate critics of Governor Rod Blagojevich.

GOV. ROD BLAGOJEVICH (D), ILLINOIS: to not fill the vacancy would be to deprive the people of Illinois of two United States senators, to deprive the people of Illinois of their appropriate voice and votes in the United States Senate.

LAVANDERA: Blagojevich's lawyer had said the governor wouldn't fill Illinois's vacant Senate seat, but there he is now, the scandal- tainted governor standing by his pick to become the next Illinois senator, Roland Burris.

BLAGOJEVICH: Please, don't allow the allegations against me to taint this good and honest man.

LAVANDERA: Burris is a former Illinois attorney general who ran against Blagojevich for governor in 2002, but the two quickly became friends. Burris was a key member of the governor's transition team.

Some Illinois Republicans describe Burris as a Blagojevich crony who has spent years working as lobbyist. Between his wife, his firm and himself, he's donated about $15,000 to Blagojevich's campaigns. But just a few weeks ago, Burris said the governor should be removed from office. He's not saying that anymore.

ROLAND BURRIS, FORMER ILLINOIS ATTORNEY GENERAL: I am humbled to have the opportunity, and promise the citizens that I will dedicate my utmost effort as their United States senator.

LAVANDERA: The appointment sent shockwaves across political circle in Illinois, many expressing dismay, outrage. And one Republican official says the governor is a very confused person.

UNIDENTIFIED MALE: It's time that he get the message the people of Illinois will not tolerate his antics any longer.

UNIDENTIFIED MALE: This is really to some degree theater of the absurd. This is Governor Blagojevich thumbing his nose at the rest of the world.


LAVANDERA: At least for now, there's only one lone voice of support that we have heard at all today. And that was Illinois Congressman Bobby Rush, who, in another bizarre moment in the press conference, actually walked out of the crowd and up to the podium and expressed his support for the appointment, saying that Roland Burris would be the only African-American in the Senate, and, because of that, he felt it would be a good appointment -- Suzanne.

MALVEAUX: And, Ed, what do they do next now?

LAVANDERA: Well, that's what many people are scrambling to figure out.

Remember, there's also the process of impeachment going on. But that's still going to take several weeks. It would be a couple of months probably before that -- there was any resolution to that.

Short of the governor resigning, people in Illinois are counting on Senate Democrats to block this appointment. And Republicans are hoping and pushing for a special election. But so far that has not gotten any traction.

MALVEAUX: OK, Ed Lavandera, thank you so much.

Now to Capitol Hill, where Democrats wanted Governor Blagojevich to go away. Well, instead, he defied them by announcing the U.S. Senate appointment.

Here's our congressional correspondent, Brianna Keilar.

And, Brianna, what are some of the Senate Democrats saying about the announcement now?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, Suzanne, they say they will block this appointment of Roland Burris.

Democratic leaders in the Senate say they don't question Burris's ability. But they said in a statement today that, "Under these circumstances, anyone appointed by Blagojevich cannot be an effective representative of the people of Illinois and as we have said will not be seated by the Democratic Caucus."

So, leaders, Democratic leaders in the Senate, believe they have this power under the U.S. Constitution to block this -- Suzanne.

MALVEAUX: So, Brianna, do the Senate Democrats, do they see an opening here, an opportunity?

KEILAR: Yes, well, they do.

Democrats, of course, they just want the governor to step aside for his successor to take over and appoint Barack Obama's successor, who would then be a Democrat. But this other route that Ed mentioned, the special election, that is what Senate Republicans are a fan of, because anyone can run. That would give a Republican a chance at Obama's empty seat, for instance, Republican Senator John Cornyn.

This is the incoming chairman of the committee that's sole aim is to increase the number of Republicans in Senate. He said: "Leadership in Washington and Springfield decided to play politics with this Senate seat. And, unfortunately, the people of Illinois are now paying the price." He said, "The next senator of Illinois should be chosen in the light of day through a special election and not in the backrooms of Washington or Springfield."

But Democrats, they want to keep this seat so badly, Suzanne. In the Senate, of course, the simple majority just doesn't do. You need 60 votes to steamroll your opposition. Democrats, they have 57, two others including Obama's seat, still undetermined. And if they can get those, they have only got to win over one Republican to get their way on votes.

MALVEAUX: High stakes.

Thank you so much, Brianna.

And they may be out of power, but they're making it clear that they're not out of the picture. Republican lawmakers are warning that they're a force to be reckoned when it comes to Democratic spending plans.

But Republicans are also squabbling among themselves. Some have strong words for the way party colleagues have dealt with the financial meltdown.

And she's raised controversy at home. Now a former congresswoman is raising eyebrows for her ties to the Gaza crisis. Cynthia McKinney talks about being on that aid ship that had a close encounter with the Israeli navy.


MALVEAUX: Massive bailouts for Wall Street and Detroit, they're not sitting well with many leaders within the Republican Party. They're saying enough is enough to the economic policies of President Bush and some GOP members of Congress.

CNN's Samantha Hayes joins us now.

And what are some of the top Republicans doing to take a stand on this, Samantha?

SAMANTHA HAYES, CNN CORRESPONDENT: Well, Suzanne, some members of the Republican National Committee have strong words for the way that the economic crisis has been handled.


HAYES (voice-over): Out of the White House and in the minority on Capitol Hill, Republicans have a lot of work to do, and some leaders are starting with criticism within.

A proposed resolution that has been circulating among members of the Republican National Committee says the recent bank bailout under President Bush and adopted by some GOP members of Congress amounts to nationalizing the nation's banking system and is another dangerous step closer towards socialism.

The proposed resolution to be voted on at the RNC winter meeting in January was drafted by Republican National Committee vice chairman James Bopp Jr., who hopes the RNC will use it to steer members of Congress in a more conservative direction.

JAMES BOPP JR., VICE CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: Well, we lost our way with the economic policies over the last few years. We didn't fight government spending. We didn't fight earmarks. And then we participated -- at least some of the leadership participated in these bailouts. You know, these bailouts were opposed by the American people.

HAYES: If accepted, Bopp says the resolution would be a more aggressive role for the RNC, which is also preparing to elect a chairman next month. One of the candidates for that position, Chip Saltsman, recently caused a conflict within the ranks after mailing members a C.D. of racially tinged songs, one of them about the next president.


UNIDENTIFIED MALE (singing): Barack, the magic Negro...


HAYES: The incident turned into bad P.R. for a party trying to move forward.

RON BONJEAN, REPUBLICAN STRATEGIST: We are somewhat wandering in the wilderness right now. And there are lots of opportunities for Republicans to take advantage of, to point, to say, oh, let's go in this direction or let's go in that direction. They are trying to find themselves.


HAYES: And that proposed resolution also calls for Republicans in Congress to stand against president-election Barack Obama's proposed public works program -- Suzanne.

MALVEAUX: Thanks, Sam.

Republicans on Capitol Hill may be out of power, but they're not out of the picture. They're flexing their remaining political muscle in the hope of reining in Democratic spending next year.

CNN congressional correspondent Brianna Keilar joining us once again.

Brianna, tell us what the GOP leadership is saying.

KEILAR: Suzanne, they are saying that Democrats' plans to inject a huge amount of money into the U.S. economy right after Barack Obama takes power could be a huge throwaway of taxpayer dollars.


KEILAR (voice-over): A Democratic leadership aide tells CNN, a vote on a new economic stimulus package in the House now is likely as soon as the second week of January. We're told Democratic leaders are still talking about a package focused on infrastructure spending, with a price tag ranging from $500 billion to $600 billion, but spending as much as $775 billion, a number being mentioned by the Obama team, is very possible.

The biggest hurdle, though, is the Senate. And the Republicans leaders there moving too fast is a guarantee that money will be wasted. GOP Leader Mitch McConnell says, a stimulus package with bipartisan support will "require the consideration of alternative ideas, public congressional hearings, and transparency, not a rushed partisan take-it-or-leave-it approach."

To get enough Republicans on board, Democrats and the Obama camp are reaching out to moderate Republicans, such as Maine's Olympia Snowe, trying to persuade them that those hundreds of billions will be well spent.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: If we're building a road, it better not be a road to nowhere. If we are building a bridge, it better be because an engineer identified a bridge that has a structural weakness and that has to be dealt with. That's going to be the care with which we embark on this necessary process.


KEILAR: Republicans aren't as of yet threatening to block this economic stimulus package. They also say Democrats and members of the Obama team that are hammering out this plan haven't asked them for input yet -- Suzanne.

MALVEAUX: OK, thank you, Brian.

Bill and Hillary Clinton plan to ring in the new year in a very big way. You can look for them tomorrow at the stroke of midnight in New York's Times Square.

And you thought housing prices couldn't fall any lower? Well, wait until you see the latest numbers. CNN's Ali Velshi tell us if there's a bottom to the freefall.

Plus, a brand-new report from NASA on the horrifying last moments of the doomed space shuttle Columbia and its seven astronauts.



MALVEAUX: NASA has just released a graphic report detailing the last minutes of the doomed space shuttle Columbia, which broke apart on reentry in 2003, killing seven astronauts.

CNN's John Zarrella has seen the report and he has the details -- John.


JOHN ZARRELLA, CNN MIAMI BUREAU CHIEF: The NASA report released is about 400 pages long. Now, it's important to point out that much of what's in this report had already been released. And this is really a compilation of old information and new information.

And what NASA is stressing in this report is what they call going from problem-solving to survivability, that astronaut training in the future and current astronaut training, at a point -- there comes a point in time where they have to say, OK, we can no longer solve the problem. We have to try to survive this accident.

What they found in their investigation was that, With the Columbia astronauts, the bottom parts of their bodies were restrained properly in their seats, but their upper parts of the their bodies were flailing around, that the restraints did not hold them. So, once the vehicle began to come apart and the main body of the crew cabin and the front of the space shuttle separated from the rest of the vehicle, that, at that point, as their bodies were being -- flailing around, they were suffering blunt-force trauma.

At that same point, the vehicle's crew cabin began to depressurize and the astronauts lost consciousness and ultimately dying of hypoxia, loss of oxygen, and the blunt-force trauma.

NASA has issued about 30 recommendations in this report on how to improve safety, and including better restraint systems, which to some degree are already incorporated in the space shuttle vehicle, but will also be incorporated in the next-generation vehicle, the Orion vehicle.

What they did say, though, in this report, that given the current technologies, that this kind of accident, no matter what they would have done, wouldn't have been survivable, that the astronauts would have died.

Of course, the vehicle disintegrated on February 3, 2003. On ascent, on liftoff, a portion of debris penetrated the left wing. They did not know that until reentry began. At that point, hot gases entered that wing, and the wing began to fall apart, ultimately leading to the complete deterioration of the space shuttle Columbia and leading to its disintegration over Texas.

John Zarrella, CNN, Miami.


MALVEAUX: Well, new evidence today that the economic downturn is far from over. New numbers show the biggest annual dip in home prices on record. And the slide shows no signs of hitting the brakes just yet.

Our CNN chief business correspondent, Ali Velshi, explains what's going on -- Ali.


ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: These numbers we are looking at, they are put out by S&P and Case-Shiller. There's a two-month lag on these, so these are October's numbers.

And you'll remember, Suzanne, as bad as it looks, October was right in the middle of the credit crisis. And probably nobody who was buying a house.

Now, Case-Shiller looks at 20 major cities around the United States. The yellow houses are where the drop is between zero and 10 percent. The orange houses are where they're between 10 percent and 20 percent. And the red ones are where the drop in home prices is more than 20 percent. Now, average in October, compared to a year earlier, homes were down 18 percent. But take a look at the major centers: San Francisco, Los Angeles, San Diego, Las Vegas, Phoenix, Miami, and Detroit. Those are places where the drops were all greater than 20 percent. In some cases, 31, 32, 33 percent.

Part of the thing here, Suzanne, is that many of these places faced foreclosures, and foreclosures and short sales, which is where you give your house back to the bank and you settle up your mortgage, even if the house is worth less. They tend to exaggerate the numbers. So there's some sense that once we get through that, you may not see these dips.

But this is the 27th straight month of decline. Home prices in these 20 cities are now at March 2004 levels -- Suzanne.

MALVEAUX: So, Ali, what about the government's efforts here to shore up confidence among consumers and investors? Is any of that working?

VELSHI: Well, we've got new numbers on consumer confidence and they're more current. These are not October. These are November numbers. And boy, that number is way down.

Thirty-eight. It's a scale of 1 to 100. We were expecting it to come in at 459, which is pretty low anyway. Thirty-eight is where the number came in.

Take a look back to last December. The number was at 90. 6 out of 100. That's when the recession started. We still thought -- the consumer still thought there was a future in this, and it's declined every single month. There was a little bit of a blip there in August, and then, of course, the financial crisis hit in September. You can see that.

And now we're at 38. That doesn't bode well, because this is what consumers think not just of what the economy is doing right now, but a few of the questions on the survey that gives us these numbers indicate what consumers think is going to happen in the next few months. It talks about the economy and it talks about jobs.

Consumers in America are not very optimistic right now. We'll see if that changes under a new administration, if there's a stimulus package that comes in that makes people feel more hopeful. But right now we are going into a new year with American consumers not very optimistic at all -- Suzanne.


MALVEAUX: Thanks, Ali.

There may be a break in the Israeli air assault on Palestinian militants. This hour, new information on the fighting and a truce proposal that is on the table. We will have a report from the conflict zone.

Plus, she's been known to rock the boat in Washington politics. Well, now a former congresswoman finds herself in the middle of the Gaza conflict.

And will Barack Obama be able to say "So help me God" when he's sworn in as president?



Happening now: breaking news, word of a possible temporary truce in the fighting between Israel and Hamas, as a former U.S. congresswoman finds herself in the middle of an international controversy.

Also, the embattled Illinois governor defies just about everyone by filling that Senate seat that he's accused of trying to sell. Well, what's the prosecutor's next move? The best political team on television is here to discuss.

Plus, celebrities who fell victim to what could be the world's biggest Ponzi scheme, well, they're now revealed. Which stars were taken in by Bernard Madoff?

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

Israeli officials say the government is weighing a 48-hour halt to the air campaign to let humanitarian aid in to see if the Palestinian militants will stop their rocket attacks.

Our senior -- CNN senior international correspondent, Nic Robertson, is live from the Israeli border town that has taken the brunt of the rocket attacks over the years.

Nic, what is the mood there? And tell us what is happening.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Suzanne, if you look at the house over my shoulder there, a local firefighter lives there. He came back from his shift this morning, had been in bed for a couple of hours, and a Hamas rocket hit the roof of the building -- 12 of those rockets landed in and around the town here today.

People we talk to say that they're glad that the government is going after Hamas to try and stop these rockets coming. But some residents also told us that the situation, they felt, was one that they needed to talk, that there needed to be peace, that killing just brought on more killing.

And, tonight, we have seen Hamas fire their longest-range missile ever out of Gaza, firing it almost 30 miles into the northern town of Beer Sheva. They also fired other missiles this evening. The indications are that, while Hamas has stepped down some of its missile firing, it is showing that it can still fire missiles further than it's fired them before, an indication that it appears and its spokesman already said today that it is ready to continue this fight -- Suzanne.

MALVEAUX: And, Nic, we are obviously seeing those rockets are falling deeper and deeper inside of Israel, miles and miles from Gaza, also inside Gaza, those Israeli strikes punishing, making some of those towns just rubble.

What are you hearing about a possible cease-fire here, even if it's just temporary?

ROBERTSON: You know, what was interesting today, while Hamas continued to fire some rockets, down a little over previous days, Israeli missiles were also down a bit -- a relatively lull -- a relative lull in Gaza.

Israel's defense minister has said he will consider a two day cease-fire for humanitarian re-supply for Gaza -- a cease-fire suggested by the French foreign minister, Bernard Kouchner. That is under consideration.

But while the defense minister here is considering that, we've also heard this evening that Israel's cabinet has agreed to call up another two-and-a-half thousand reservists for the possibility of further conflict. That's in addition to the six-and-a-half thousand already called up -- Suzanne.

MALVEAUX: Thank you, Nic.

We'll be looking for any possible signs of air strikes. Thanks again, Nic Robertson.

Gaza's history has been shaped by both Israel and the nation on its border, Egypt. Egypt occupied Gaza during the 1948 War and held it until Israel captured the territory in 1967.

Israel occupied Gaza until 2005, when the Palestinian Authority took over. Well, the Palestinian Authority shared control with Egypt of the only crossing along the Egypt-Gaza border.

But when Hamas took over Gaza in 2007, Egypt joined forces with Israel -- helping it seal off Gaza's borders.

But Palestinians blew open the border barrier in January and thousands poured into Egypt. Egypt briefly opened the crossing this weekend, but re-closed it after the deadly clash. Egypt says it will not reopen the crossing until the Palestinian Authority, now essentially exiled to the West Bank, regains control.

A controversial political figure here in the U.S. is raising some eyebrows in connection with the crisis in Gaza. Many people remember former Congresswoman Cynthia McKinney for a dustup in which she allegedly slapped a Capitol Hill police officer.

Well now it turns out that McKinney was on board a ship that was rammed by an Israeli patrol boat while trying to deliver humanitarian aid.

Our CNN's Brooke Baldwin is following the story -- and, Brooke, what was McKinney doing aboard the ship?

BROOKE BALDWIN, CNN CORRESPONDENT: Suzanne, Cynthia McKinney told CNN she was there on a peaceful mission. But we did a little digging and found out that she secured that seat on the S.S. Dignity because someone else backed out. And she sent this e-mail -- I've got a copy of the e-mail that she sent to her friends just yesterday, alerting them that she would be heading to Gaza, alerting them of her mission -- or, as she referred to it, as a humanitarian undertaking.


BALDWIN (voice-over): Cynthia McKinney taking center stage, this time on a humanitarian mission.

CYNTHIA MCKINNEY (D), FORMER U.S. CONGRESSWOMAN: Our mission was a peaceful mission to deliver medical supplies. And our mission was thwarted by the Israelis -- the aggressiveness of the Israeli military.

BALDWIN: McKinney was on board a ship -- the SS Dignity -- owned by the Free Gaza Movement, a Palestinian-rights organization based in Northern California. It had set sail Monday from Cyprus to deliver three tons of medical supplies to war-torn Gaza.

The group's co-founder, Paul Larudee, says he invited McKinney on the mission after some of the original passengers had canceled. Larudee said McKinney was a supporter of the group for years and wanted to take the trip a year ago, but couldn't.

Most remember her infamous incident at the U.S. Capitol two years ago, when a police officer accused her of slapping him. Weeks later, the former six-term controversial congresswoman from Georgia sparred with CNN's Soledad O'Brien.


SOLEDAD O'BRIEN, CNN SPECIAL CORRESPONDENT: Congresswoman -- and forgive me for interrupting you...

MCKINNEY: We have 250...

O'BRIEN: But I believe we can't have this...

MCKINNEY: No, but you shouldn't interrupt me, Soledad.

O'BRIEN: Well, until...


BALDWIN: Two years later, McKinney ran for U.S. president on the Green Party ticket. While that was always a long shot, McKinney may have better luck drawing attention to the current crisis in Gaza.

MCKINNEY: I would like to ask President-Elect Obama just to -- to say something, please, about the humanitarian crisis that is being experienced right now by the people of Gaza.


BALDWIN: McKinney's parents declined to speak to CNN today, saying their daughter should speak for herself.

We also found out McKinney might be bound for Gaza in another two days, as the group plans to attempt their mission in a new ship once again -- Suzanne.


Thank you, Brooke.

Brooke Baldwin.

Hurricane Katrina -- was it the final nail in the coffin when it comes to President Bush's legacy?

Former top administration officials are giving a blunt and often unflattering assessment.

Plus, it's the move a federal prosecutor was trying to block -- the Illinois governor fills the Senate seat that he's accused of trying to sell.

Well, what does the U.S. attorney do next?


MALVEAUX: Some former insiders are giving a blunt assessment of the Bush administration -- one that's especially unflattering to the president and vice president.

CNN's Brian Todd joins us live -- and, Brian, tell us about this story.

BRIAN TODD, CNN CORRESPONDENT: Well, Suzanne, it's a classic case of former White House aides, once they're a couple of years removed, feeling they've got nothing to lose by venting.

Now, to a group that's been slammed from everything to the Iraq War to Hurricane Katrina, this will sound very familiar.


TODD (voice-over): A president with blinders on and an inner circle who manipulated him -- in a new so-called oral history, "Vanity Fair" magazine disperses some stark, if not unfamiliar, assessments of the Bush White House.

Colonel Lawrence Wilkerson, Colin Powell's chief of staff at the State Department, on the assemblage of Powell, Dick Cheney, Condoleezza Rice and Donald Rumsfeld early on as the president's security team: "It allowed everybody to believe that this Sarah Palin-like president -- because, let's face it, that's what he was -- was going to be protected by this national security elite."

We asked the White House for a reaction to that remark.


TODD: Larry Wilkerson says Cheney was at the root of those early perceptions: "He became vice president well before George Bush picked him and he began to manipulate things from that point on, knowing that he was going to be able to convince this guy to pick him."

An aide to the vice president called that "another false assertion from a longtime critic of this administration."

Wilkerson is one of several former aides who later turned on the White House given prominent space in the "Vanity Fair" piece. But as the writer points out, they also spoke to people who had no ax to grind.

TODD PURDUM, "VANITY FAIR" MAGAZINE: And who speak, in many cases, to the president's good qualities -- his enormous sense of personal loyalty, his kindness, his work on AIDS in Africa.

TODD: But one former aide describes the handling of Hurricane Katrina as a low point.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And, Brownie, you're doing a heck of a job. TODD: Former Bush pollster Matthew Dowd: "Katrina, to me, was the tipping point. The president broke his bond with the public."

Former counselor to the president, Dan Bartlett, a consistent defender of Mr. Bush, says of Katrina: "Politically, it was the final nail in the coffin."

JOHNDROE: As the president has stated many times, the response at first was not -- was not what was needed. But that is why he made repeated visits to the region to help with Gulf Coast recovery.


TODD: But Katrina was the point where we started to see the president's approval ratings head to historic lows. We're going to show you that comparison. After September 11th, he'd spiked at a 90 percent approval rating.

The Iraq War took a huge chunk out of that.

Then in 2005, after Katrina, we see it at 45 percent.

Move ahead to just a few days ago and Mr. Bush's approval rating one of the lowest for any president -- 27 percent -- Suzanne, he never recovered after the Iraq War.

MALVEAUX: And, Brian, it's odd to see people -- you've covered the Bush administration for years. They never spoke out before.

TODD: Right.

MALVEAUX: And now, a lot of criticism.

Do they anything to say about the management of the Iraq War?

TODD: Well, that's all over this piece, as you might imagine.

Here's one from Canada's former foreign and defense minister, Bill Graham. This is about dealing with Donald Rumsfeld just before the war broke out: "Rumsfeld was not about listening and being cooperative."

When we contacted his aide -- an aide to Rumsfeld said that they had no comment.


Thank you, Brian Todd.

So was Hurricane Katrina the final nail in the coffin in President Bush's legacy?

Joining us to talk about that and much, much more, CNN's political contributor, David Brody, senior national correspondent for the Christian Broadcasting Network; Karen Tumulty of our sister publication, "Time" magazine; and Jeff Johnson, host of "The Truth with Jeff Johnson" on BET. They're all part of the best political team on television.

Thanks for being with us on THE SIT ROOM.

I want you guys, first of all, to listen to the Illinois governor earlier today, when he basically announced his appointment.


BLAGOJEVICH: To not fill the vacancy would be deprive the people of Illinois of two United States senators, to deprive the people of Illinois of their appropriate voice and votes in the United States Senate. Please don't allow the allegations against me to taint this good and honest man.


MALVEAUX: OK. So there's still allegations against Blagojevich.

Jeff, I'll start with you.

How does this impact his own case, whether or not it's impeachment that he's looking at or this possible complaint?

JEFF JOHNSON, BET ANCHOR, "THE TRUTH WITH JEFF JOHNSON": Well, I think he thinks it's going to cover him by saying look at what I've done, I've done a great job, I put somebody up there that was clean. But I think, at the end of the day, that is he's done wrongdoing, then they're going to go after him for that wrongdoing. And this or nothing else is going to save him.

MALVEAUX: How does this complicate the situation, Karen, for those who are in Illinois, who are looking at this?

There's a lot of political pressure on them to move this thing forward either way.

KAREN TUMULTY, "TIME" MAGAZINE: Oh, and it's a real problem for the Democrats. I mean, basically, this is a nominee who conforms to every Constitutional requirement. He's a resident of the state. He's a citizen and he is over 30 years old. And all the precedence would suggest that if the Senate does attempt not to seat him -- or even if the secretary of state attempts not to certify him -- that they're going to end up in court.

Who has the most pressure on them now?

Is it -- is it Harry Reid and the U.S. senators or is it those inside Illinois right now who are looking at this conundrum?

DAVID BRODY, CNN CONTRIBUTOR, CHRISTIAN BROADCASTING NETWORK: Well, I think they all have pressure. But I think Harry Reid, clearly, has some pressure to keep the Democrats together on this.

I mean I think what Blagojevich has done, Suzanne, is open up a Constitutional fight, as Karen was talking about. There is the race issue, as well, coming into play. I mean we saw some of that from Representative Bobby Rush today in talking a little bit about this or all of these senators -- these white senators going to deny the seat.

So there are a lot of issues here. But I have to tell you, Blagojevich -- I mean, if this is a chess game, I mean this is a -- I mean this is a great move by him, if you're looking at it from that. He took the queen today, if you will.

MALVEAUX: So how does this race play into this?

Anybody, feel free to jump in here.

TUMULTY: Well, this is the -- this is the replacement of the only African-American senator in the Senate with another African- American. And I think who's going to be in a difficult spot here is the Congressional Black Caucus.

JOHNSON: But this is also a -- a recommendation that's a good one. This is someone who served the citizens of Illinois. This is someone who served with distinction. So they don't -- he doesn't just meet the requirements. He served the people of Illinois.

And I think the voice that isn't being heard is the people of Illinois. Those are the people that need to be calling Harry Reid's office. Those are the people that need to be calling the people within their state, saying how they feel about who Blagojevich has put up and not allow us as pundits or anybody else to decide for them what needs to happen next.

TUMULTY: Though he hasn't been...

BRODY: Actually...

TUMULTY: ...a strong candidate statewide. He's run a number of times and lost statewide. So for hanging onto the seat, which the Democrats want to do, this could be a problem.

BRODY: And this is a drip, drip, drip scenario for the Obama -- incoming Obama administration. It's been there since day one and we need to hear more from him as this goes forward.

MALVEAUX: I wanted, also, to bring up here -- obviously, that Blagojevich -- he had actually made this move because he did not -- well, the prosecutor made this move because he didn't want Blagojevich to -- to actually name a successor. And now he has. He's essentially trumped him. He's called his bluff.

What happens now with Patrick Fitzgerald?


BRODY: He goes back into laboratory and tries to figure it out. Honestly. I mean, I think everything is extremely murky at this point. I don't think anybody really knows. And maybe Pat -- Patrick Fitzgerald -- if he does know, he's not going to reveal his next move for a while. And I think right now, all eyes are on him because I don't think anybody is quite sure what -- what's going to happen at this point.

TUMULTY: Yes, we don't know what's on these tapes.

BRODY: Right.

TUMULTY: And, really, that's what's going to be the basis for the case, not anything that happens subsequent to Governor...

JOHNSON: Absolutely.

TUMULTY: ...the governor's arrest.

MALVEAUX: President Bush -- now we're hearing from Dan Bartlett, many of President Bush's other top advisers who are criticizing him, saying that Katrina really the final nail in the coffin, that he was basically ineffective.

Are they throwing him under the bus here?

What are we to make of all of this kind of hand-wringing and navel gazing, this kind of thing?

BRODY: Well, you know, I think there are a couple of things to think about here.

First of all, as it relates to weapons of mass destruction and the Iraq War, I mean if you go back to that point in the Bush administration -- and even, as some of the polls are suggesting and as you saw in the previous piece that we just -- we just saw, there were problems from Bush from, really, day one, when all of that started.

So Katrina a nail in the coffin -- sure, you can make that argument. And, of course, they would know best.

But, really, this has been a P.R. disaster for the Bush administration all throughout. I mean, it's "Brownie, heck of a job," it's the "mission accomplished" banner, it's not having an articulate strategy talking about the Iraq War and where this is going.

I think it's been real troublesome.

JOHNSON: Well, but I think Katrina was the first time where Bush actually was separated from the American people. Clearly, there were missteps and there were things that were done wrong before. But Katrina was the moment where he was seen disconnected from the people that he was supposed to be serving.

And so it really was that nail. Of course, there were things that happened before. But Katrina is what killed him with the American people.

TUMULTY: But it also hurt the party, because one thing the Republican Party has had as very much part of its brand identity was competence. And Katrina really was the moment at which not only the president, but the party, lost that.

MALVEAUX: I want to switch, real quick, gears.

Cynthia McKinney -- we saw her out on the boat there obviously trying to -- what looked like j deliver some humanitarian aid to Gaza.

Does it help or does that hurt?

BRODY: Well, like I said, I mean, if you line up 10 people on a street, I don't think -- you know, 10 out of 10 probably would have no idea who she is. Maybe nine out of 10 would have no idea. So I think Cynthia McKinney, as it stands alone, isn't that big of a deal.

What's the bigger deal is what's coming for the Obama administration as it relates to the humanitarian aid that she talks about and the Palestinian concerns that they have. Because he needs to be seen as a friend of Israel.

And then, of course, you have all of the articles -- I mean it's like "Groundhog Day" -- all these articles are rewritten again about how the Palestinians are suffering, which they are. But Barack Obama is going to have to walk a fine line between going with that type of a mentality that's out there and the reality that's out there and, at the same time, trying to be a friend of Israel. It's tough.

MALVEAUX: Karen, Jeff...

BRODY: It's tough.

MALVEAUX: ...does he need to make it a top priority?

TUMULTY: I don't know that this has broader consequences. I just think it's another testament to Cynthia McKinney -- these -- McKinney's ability to make herself the center of attention even in a war.

JOHNSON: Well, despite the controversy around her, I think that she has addressed relevant issues and issues that are important and issues that certain segments of American people don't feel like enough elected officials address.

So, I mean that notwithstanding...


JOHNSON: ...there are some people that have supported her.

But, however, I think the broader point and the larger point is how does Barack Obama deal with this?

How do we deal with what's going on there?

And how is the media continuing to play...


JOHNSON: ...the card one side against other?

MALVEAUX: We've got to let it stand there.


MALVEAUX: Thank you so much, guys.

Thanks very much.

He's a former president and she's almost certainly the next secretary of State.

So what are Bill and Hillary Clinton doing New Year's Eve?

Well, we found out.

Also, details of the lawsuit that could force huge changes in Barack Obama's inauguration -- who filed it and what they want removed.

And he allegedly bilked wealthy investors out of billions of dollars, including some celebrities. Bernard Madoff's Hollywood victims are now revealed.


MALVEAUX: Samantha Hayes is monitoring the stories that are incoming into THE SITUATION ROOM right now -- Sam, what are you working on?

HAYES: Well, Suzanne, a lawsuit is seeking to remove all religious references from the inauguration of President-Elect Barack Obama. Michael Newdow, who tried to have the phrase "under God" removed from the Pledge of Allegiance, is joining the lawsuit. Newdow wants the phrase "so help me God" eliminated from the oath, saying that wasn't how it was set out in the Constitution.

A teenager who was once at the center of a racially charged assault case is recovering from a self-inflicted gunshot wound. A police report says Mychal Bell tried to kill himself over media attention on shoplifting charges against him. Well, two years ago, Bell was one of six black teens facing felony charges in the beating of a white teen in small town of Jena, Louisiana.

A U.S. bankruptcy judge is ordering the release of $28 million to cover expenses in the liquidation of Bernard Madoff's investment firm. Madoff is accused of running a Ponzi scheme that bilked investors of some $50 billion. Representatives for the federal trustees presiding over the liquidation say the funds are needed for employee salaries and other costs.

Now, actor Kevin Bacon and his wife, actress Kyra Sedgwick, are among the people who were bilked. And Bacon's publicist confirmed the couple had investments with Madoff, but refused to say how much money they lost. Other investors in the entertainment community include a charity linked to film director Steven Spielberg -- Suzanne. MALVEAUX: Thank you, Sam.

On our Political Ticker, Hillary and Bill Clinton plan to ring in the new year -- well, in a very big way. The secretary of State nominee and the former president will push the ceremonial button that lowers the New Year's Eve ball in Times Square. They'll join New York Mayor Michael Bloomberg in the festivities tomorrow night.

Forget his policies, well, how is his golf game?



OBAMA: That was pretty good, right?

UNIDENTIFIED FEMALE: That was beautiful.


MALVEAUX: Ah, but hold on. One golf pro says not so much.

CNN's Jeanne Moos takes the "Moost" Unusual look.


MALVEAUX: Well, he's the next leader of the free world, but how is Barack Obama's golf game?

CNN's Jeanne Moos takes a "Moost" Unusual look.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): Hawaii -- a golfers paradise, except when the press is watching your every drive, your every toss, your every bite, your every swing.



MOOS (on camera): You think you could you do something for Obama?

UNIDENTIFIED MALE: I definitely could.

MOOS: Could you?

UNIDENTIFIED MALE: I would love to have him here.

MOOS (voice-over): But unfortunately for this golf pro at New York's Chelsea Golf Academy, Obama is out there -- probably bent out of shape at the press scrutiny of his golfing -- something every president has had to endure. Golf is a game that doesn't take orders from even the commander-in-chief.


MOOS: The little white ball ignored the president, as did the cat that parked itself in front of President-Elect Obama's golf cart and had to be shooed away. UNIDENTIFIED MALE: The cat won't move.

MOOS: At least the public showed him more respect.


MOOS: Obama shushed the crowd so as to not disturb his golfing buddies.

About that swing of his, we showed it to our pro.

(on camera): If you had to grade Barack Obama?

UNIDENTIFIED MALE: It was like a C plus.

MOOS: A C plus?


MOOS (voice-over): Apparently, there are issues with his posture and his swing pass.

(on camera): And he's going out here...

UNIDENTIFIED MALE: And creating a big loop.

MOOS: And then going like that?

UNIDENTIFIED MALE: That's pretty good right there.

MOOS (voice-over): Beginner's luck that soon went bad.


MOOS (on camera): A big difference.

(voice-over): Like a certain someone in Hawaii.

The president-elect did have some nice shots.


OBAMA: That was pretty good, right?


MOOS: When a lady in the crowd yelled: "Better than your bowling," President-Elect Obama agreed, saying, "Much better."


MOOS: And just as he used body language to urge the bowling ball to stay on course, he used body language in vain on the golf ball. So what if Barack Obama is no Tiger Woods?


MOOS: At least we never saw his ball end up in the woods.

As for all those divots -- wait a minute that's no divot. That's the president-elect's BlackBerry -- an addiction even stronger than golf.

Jeanne Moos, CNN, New York.


MALVEAUX: We want to go right to Ed Henry, who is with the president in Hawaii with some news -- Ed, what do you have for us?

HENRY: Well, the president-elect -- his transition officials are confirming for the first time that he and his family will be moving to Washington, D.C. this weekend. We knew they would be coming soon. It's going to be this weekend.

At first, we're told by officials, they'll live in a Washington hotel until January 15th. Then they will move to Blair House, across the street from the White House.

The officials are saying they're going to Washington early for two reasons. One, because their daughters will be starting school in the next couple of weeks; and, secondly, the president-elect wants to be in D.C. to work on that economic plan -- Suzanne.

MALVEAUX: All right.

Ed Henry, thank you so much.

I'm Suzanne Malveaux in THE SITUATION ROOM.


Kitty Pilgrim is in for Lou -- Kitty.