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Obama Chooses Top Spy; Burris: 'Appointment is Legal'; Israel Splits Gaza in Two

Aired January 5, 2009 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. Barack Obama chooses a top spy and tells the nation the economy can't wait until he's sworn in. This hour, the president-elect's new Washington power play. Stand by.
And Roland Burris says he's the junior U.S. senator from Illinois whether you like it or not. The disputed appointee tells me whether he plans to make a scene if he's barred from the chamber tomorrow.

And the Obama daughters' first day of class in Washington, D.C., how their private schooling compares with public education right here in the nation's capital.

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

Right now, President-elect Barack Obama is diving into his new life in the fishbowl in Washington, D.C., even before he moves into the White House. And he's adding to his inner circle, the breaking news we're following on the additions to his national security team.

Let's go to our Senior White House Correspondent Ed Henry. He's working the story for us.

These are critical choices, Ed, in rounding out the entire national security team.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: That's right, Wolf, especially in a post-9/11 world. And what's so fascinating is that the president-elect has picked a real power, Leon Panetta, to be the CIA director. And what's fascinating about that is his name had not really been out there. He's sort of a surprise pick.

He has no real intelligence background, someone's who's kind of not a known quantity in the intelligence community. A lot of experts were saying you've got to get somebody with a lot of experience at the CIA.

What I think is going on here from talking to various Democratic strategists is they wanted to think outside the box. And they were worried that if they picked anyone from the intelligence community, it would have been seen as somebody who is part of what Democrats think was the problem with the Bushes. Specifically, being tied to the so- called torture scandal, the enhanced interrogation techniques. The Bush administration insists it's not torture.

So, they basically are trying to get someone who is not from that community, is not tainted in their eyes, but is known as a good manager. And you'll remember Leon Panetta very effective as White House chief of staff in the Clinton years, someone who was a member of Congress, ran the House Budget Committee. So what they're trying do is get someone with management experience, go in and try to shake up the CIA and be seen as somebody who is an outsider.

Then they also have retired Admiral Dennis Blair. He'll actually be Leon Panetta's boss as the director of national intelligence. He's less of a surprise. His name has been out there for a long time. He's a very highly respected, known quantity in the intelligence community, but what is really interesting is the fact that the president-elect decided to go with someone who is not well known in intelligence circles to run the CIA. A little bit of a gamble, but he's trying to shake it up -- Wolf.

BLITZER: He knows a lot, Leon Panetta, about receiving intelligence since he was the White House chief of staff.

HENRY: Absolutely.

BLITZER: A recipient of that presidential daily brief that the CIA put together. So he's not only a good manager, but he's a good expert on intelligence.

Let's talk a little about issue #1 right now, the economy. The president-elect spent some time with the speaker of the House today.

HENRY: That's right, Wolf. What's interesting, I was on that plane last night with the president-elect from Chicago to Washington. His aides were pretty giddy as they sort of -- it all sunk into them, the enormity of the task at hand. But that giddiness now giving away to the seriousness of the challenge and the fact that the economy is still issue #1.


HENRY (voice-over): Welcome to Washington. The trappings of power include Air Force jets at the ready. And the views are sweet, especially when you drive past the spot where you'll be sworn in January 20th.

But President-elect Barack Obama did not come to Capitol Hill to celebrate.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: The inauguration stand is being built in the background, but the reason we're here today is because the people's business can't wait. We've got an extraordinary economic challenge ahead of us.

HENRY: A crisis so extraordinary that for the first time, Obama aides are revealing his stimulus plan will include a massive $300 billion tax cut, money in the pockets of millions of Americans. While details are being worked out, the president-elect campaigned on a tax cut for people earning less than $200,000 a year, $500 for individuals, and $1,000 for families. REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: We'll be hitting the ground running on the initiatives, some of which you described, to address some of the pain being felt by the American people.

HENRY: But Republicans will be crucial to making support for the new president's first major initiative overwhelming. So he's sweetening the plan with business tax breaks as well -- a credit for companies hiring new workers or holding back on layoffs, more flexibility to write off net operating losses, and money for new expenditures such as equipment.

OBAMA: Right now, the most important task for us is to stabilize the patient. The economy is badly damaged. It is very sick. And so we have to take whatever steps are required to make sure that it stabilizes.

HENRY: But Mr. Obama is already dealing with a cabinet shake-up. Governor Bill Richardson is denying any wrongdoing but says a grand jury probe would have been a distraction. While team Obama is downplaying the exit, the president-elect vowed just last month Richardson would be key to selling the economic plan.

OBAMA: I think the notion that somehow the commerce secretary is not going to be central to everything we do is fundamentally mistaken.


HENRY: Now, Obama officials say do not expect a new cabinet pick for commerce secretary this week. They're not quite ready because this is a bit of a surprise, this little shake-up that they're having to deal with. But they're trying to turn the page.

They're also saying you're going to have to wait a little longer for this economic plan. Originally they had high hopes that maybe the Congress could get it through early enough that during inaugural week, the new president could sign this new bill with a real flourish. But instead, they're realizing now that they're probably going to have to push it back into early or mid-February because this is going to take a longer time to sell this and get it through the Congress -- Wolf.

BLITZER: Ed Henry is our senior White House correspondent.

Ed, thank you.

The man tapped to replace Barack Obama in the Senate also is trying to get started on his new job, but Roland Burris comes to Washington today knowing that some fellow Democrats in the Senate may try to shut him out. Still, Burris insists he's not in any way tainted by the scandal surrounding the Illinois governor who appointed him.

Let's go to Capitol Hill. Our Senior Congressional Correspondent Dana Bash is working this story.

It's a complicated story. And it puts a lot of Democrats in an enormous predicament right now, Dana. What are you hearing? DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It sure does. And it's a predicament that they absolutely do not want to be in, especially right now, when they want to welcome the new president and a new agenda. So I have actually learned that despite the fact that Democrats say that they will not seat Roland Burris, there is a new deal floating through the Democratic leadership in the Senate to actually allow Burris to become a senator, if -- if he would agree it would only be temporarily.


BASH (voice-over): One less defiant stop at the Chicago cameras before getting on the plane to Washington.

ROLAND BURRIS (D), ILLINOIS SENATE APPOINTEE: With all of the crises that we have in this state and in this nation, and Illinois needs to have a full complement of representation, and that's what I'm seeking to do.

BASH: But even before Roland Burris left Illinois, official word that as of now, he will not be sworn in as U.S. senator. The secretary of the Senate formally rejected his certificate of appointment because the Illinois secretary of state has refused to sign it.

Burris insists he is undeterred.

BURRIS: No, I'm not bothered by that because the appointment is legal. Why don't you all understand that what has been done here is legal? I mean, that's legal. I am the junior senator from Illinois.

BASH: Burris says he will still come to the Capitol Tuesday with new senators. But because Democratic leaders are refusing to seat him, Burris will likely have to come into the building with the general public, stopping at the appointment desk.

Though Burris and Democratic leaders insist there won't be a scene, this is an unwelcome drama for Democrats. And CNN has learned that some Democratic leaders are considering a compromise idea -- allow Burris to be sworn in as U.S. senator, as long as he agrees it will just be a caretaker position, he will not run for the Senate in 2010. A Democratic source familiar with leadership discussion says it's just one idea, but one that could assuage Democratic concerns that Burris' association with Governor Rod Blagojevich makes him so tainted, he would lose the Democratic seat if he ran.

AMY WALTER, THE HOTLINE: Their long-term goals are keeping a blue state blue; right? It would be not only embarrassing to lose a Senate seat that is the president-elect's former Senate seat, but in a state that has really such a strong Democratic tilt, and where Republicans, quite frankly, have not run particularly strong in years.


BASH: And Democratic leaders, have, of course, been adamant that no senator that Governor Blagojevich would appoint would be legitimate. Therefore, for this idea, this compromise idea to fly, the Illinois lieutenant governor would have to publicly or really politically bless the idea of appointing Burris.

Now, yesterday, the Senate majority leader, Harry Reid, he did say -- did seem to indicate that he was open to a negotiation, or at least a compromise on this particular idea, Wolf, of allowing Burris to come in as long as he promises not to run in 2010. A spokesman for Senate Majority Leader Harry Reid says that there is no comment at all.

BLITZER: Dana's going to watch this story for us.

Dana, thank you.

And stand by for the one-on-one interview with Roland Burris. I'm going to ask him how far he will go or won't go to challenge the Senate's refusal potentially to seat him.

In Illinois, meanwhile, a federal judge today gave prosecutors an extra three months to bring an indictment against the governor, Rod Blagojevich. The judge says he granted the extension because the case is so complicated. Court papers reveal thousands of wiretaps of the governor in the corruption case which includes allegations that Blagojevich tried to sell President-elect Barack Obama's former Senate seat to the highest border.

Welcome back, Jack Cafferty.

He's got "The Cafferty File."

Jack, I hope you had some R&R and you recharged those batteries.

JACK CAFFERTY, CNN ANCHOR: Well, I'm just sitting here listening to this crap coming out of the state of Illinois, and it's like you go away for two weeks and nothing changes.

We have the Israelis doing a ground incursion in Gaza. We have an economy that's teetering on the brink of depression. We have wars in Afghanistan and Iraq. And we have these morons in Illinois, Blagojevich and Burris and the rest of that Democratic trash heap, for want of a better word, saying hey, look at us, pay attention to us. Aren't we cute?

I mean, what a distraction to the new president, the first African-American ever elected who is going to be sworn in, in two weeks, and he comes from a state where these people are just simply an embarrassment.

OK. On to other things.

President-elect Obama, congressional Democrats working on a plan to offer businesses and individuals $300 billion in tax cuts. Forty percent of it come from an emergency stimulus package expected to total in the neighborhood of $775 billion.

Can you spell deficit? Mr. Obama wanted the stimulus package on his desk when he assumes the presidency in two weeks, but this is Congress he's dealing with. And now we're being told, well, they can't possibly have anything ready for his signature before early February.

Meanwhile, the economy continues to suffer big time, and predictions are that without serious help, things are going to get a whole lot worse. The tax cuts are supposed to be for businesses -- the tax cuts for businesses are supposed to be the incentive Republicans need to get behind the stimulus package, which is in turn supposed to create jobs, jump-start the economy and eventually help to turn things around. The largest piece of the plan comes from the campaign trail.

Remember something Mr. Obama called making work pay? He promised tax cuts of $500 per person and $1,000 per family. Economists point out those rebate checks that were sent out last year designed to get people to spend money didn't work out so well. And it remains very much an open question whether any of this other stuff will work. What we are reasonably certain of is, if nothing is done, things are going to get worse.

The question is this: Is now the right time for additional tax cuts?

Go to and you can post a comment on my blog.

I understand you were off the last two weeks as well. Is that true?

BLITZER: Yes. I certainly got my batteries recharged. And I see, Jack, you did as well.

CAFFERTY: Well, let's hope. I'm an elderly gentleman, but I try.

BLITZER: You're doing a great job.

All right, Jack. Stand by. We're going to have a busy, buys, but exciting year.

Right now, Israeli tanks on the attack in Gaza, dividing and isolating Palestinian militants. Our Chief International Correspondent Christiane Amanpour, she's in the war zone. She's standing by to join us live.

And new questions about the timing of Israel's military offensive and whether uncertainty about President-elect Barack Obama was a factor.

And as the Obama girls start private school here in Washington, we're going to be taking a much closer look at the state of public schools here in the nation's capital.

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


BLITZER: As Israel continues its ground operations in Gaza, it's essentially split it in two. Thousands of Israeli troops backed by tanks are isolating the northern part of Gaza from the southern part.

Also today, seized control of some high-rise buildings and attack (ph) houses and smuggling tunnels at least 40 airstrikes. Hamas, meanwhile, fired more than three dozen rockets and mortars into southern Israel. That according to the Israeli military. Both sides, in the meantime, are also defying calls for some sort of truce or cease-fire.

Let's go to our Chief International Correspondent Christiane Amanpour. She has more on what's going on.

Christiane, it looks like there's no end in sight, at least not now.

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, not now, despite the upsurge in diplomatic activity. The French president has been here. Prime Minister Tony Blair, formerly of Britain, is here doing mediation. And obviously the United States and Egypt and those countries are involved as well. And there is word that a Hamas delegation might go to Egypt in the next 24 or so hours.

But both sides in this ground invasion in Gaza are also stepping up the ante. The Israeli government, the Israeli military dropped another load of leaflets on Gaza today saying that Hamas has been testing them and that they will use much more and create -- and inflict much more pain, Israel will, if Hamas continues. For its part, Hamas has also been putting out defiant statements on television.

But what is happening is that there are increasing numbers of civilian casualties, according to officials and hospital officials, including a Norwegian volunteer doctor in Gaza. And that, in turn, is putting pressure on the Israelis, as Tzipi Livni, the foreign minister, told me yesterday that it would. She knows and the Israeli government knows that the casualties and the pictures that are going around the world is going to be putting pressure on them in the next several days -- Wolf.

BLITZER: We're showing, Christiane, our viewers some live pictures from Gaza City, of a building there on fire. We're trying find out what exactly happened there. It looks like that building, at least what's left of it, is about to completely disappear.

But tell us a little bit about these intense diplomatic efforts under way. A lot of visitors coming to the region right now to try to stop this fighting.

AMANPOUR: Well, it seems that what's happening, certainly Tzipi Livni and the Israeli government officials, when we ask them about cease-fires, I mean, she positively bristled. She says, look, I'm not even going to put us and Hamas in the same package. They're a terrorist organization; we're a legitimate government. But what does seem to be happening is that there are diplomatic efforts under way to try and figure out not just a cease-fire, but one that is backed up by at least some kind of political framework, a framework which would see international monitoring of the Gaza/Egypt border, potentially international presence in some parts of Gaza. Potentially, eventually Palestinian Authority presence. In other words, the elected president and his party, Fatah, are moving back some officials either on the border or elsewhere. And also, some kind of long-term solution to this smuggling of weapons that has been going on in Gaza.

Obviously, very, very dire need also for humanitarian aid and more medical supplies. There's deep concern about the lack of water, the lack of medical supplies. And the numbers of bodies, dead and injured, are piling up at the hospitals there -- Wolf.

BLITZER: Christiane is monitoring the situation for us.

Stand by, Christiane. We'll get back to you.

Meanwhile, Israel obviously is acting right now. And during this unique period, as President Bush gets ready to leave office, Barack Obama gets ready to take over, here's the question: Did Israel plan it that way?

Let's go to the White House. Elaine Quijano is standing by.

Questions being raised about the timing of this Israeli incursion, this Israeli operation, Elaine. What are you picking up?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, that's right, Wolf. Analysts say that one factor in all of this is Israel's upcoming election in February, but another, the United States' own political calendar.


QUIJANO (voice-over): Even as Israel carried out ground operations inside Gaza, President Bush did not urge restraint.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I understand Israel's desire to protect itself and that the situation now taking place in Gaza was caused by Hamas.

QUIJANO: Leaving no doubt, he views Israeli action as a matter of self-defense. The president again blamed Hamas, saying it provoked Israel's response with its continuous rocket attacks against southern Israel.

BUSH: Instead of caring about the people of Gaza, Hamas decided to use Gaza to launch rockets to kill innocent Israelis. And Israel has obviously decided to protect herself and her people.

QUIJANO: Some say it's that unwavering support and President Bush's short time left in office that factored into the timing of Israel's campaign. JON ALTERMAN, CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: With the Bush administration, I think they say we know these guys, we've worked with them for eight years, we can pretty much predict what they will do.

QUIJANO: Another possible factor? Uncertainty about President- elect Barack Obama, who is already facing pressure to decry Israeli action.

RIYAD MALKI, PALESTINIAN AUTHORITY FOREIGN MINISTER: Disappointing that President-elect Obama refused to comment on the situation in Gaza, despite the fact that he commented on the situation on the bombing in Mumbai, in India.

UNIDENTIFIED MALE: I think the Israelis look at President-elect Barack Obama and they're a little uncertain. It's not that they don't think they have a stronger supporter, but they're not as sure where this is going to go.


QUIJANO: Now, with just over two weeks left until inauguration, the Bush administration continues to call for a sustainable and durable cease-fire, meaning a severely weakened Hamas in Gaza, unable to lash out at its neighbor, Israel -- Wolf.

BLITZER: Elaine, thank you.

Elaine is at the White House.

Out of virtual house confinement, back to face possible justice. The man accused of one of the biggest financial schemes ever goes to court. But wait until you hear what Congress did for the first time today.

And the winner is -- in Minnesota's drawn-out Senate battle, that's still not entirely clear, but you're going to find out who is being called the winner right now.

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



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

Happening now, the president-elect is promising tax cuts for the middle class, but can the country afford it? Breaking down Barack Obama's stimulus plan, what it means to you and whether it will really work.

And during this turbulent time, a big setback for Obama's transition team. His commerce secretary designee drops a bombshell. Why he's bowing out. We have more information coming in on Bill Richardson. Plus, Barack Obama as a restaurant critic? We have the TV vault video to prove it.

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

He stood in the center of a news media frenzy in Chicago on his way to Washington, but Roland Burris will be here any moment now, arriving at Reagan National Airport, and insists no one is going to run him away from what's rightfully his.

In his own words, he's the next senator from Illinois. Others, however, say, not so fast. Is an all-out fight at the Senate door coming up next?


BLITZER: And joining us now is Roland Burris.

He's the man that the governor of Illinois wants to be the next senator from the state of Illinois, succeeding Barack Obama.

Mr. Burris, thanks very much for joining us here in THE SITUATION ROOM.

BURRIS: Wolf, it's my pleasure. And to all the CNN listeners, Happy New Year.

BLITZER: Thank you very much. And Happy New Year to you.

All right, give us the -- your reaction, because we're just getting word as we speak that the secretary of the Senate says she can't accept your appointment yet, because the secretary of state of Illinois has not yet certified that you in fact will be the junior senator from Illinois.

What's going on?

BURRIS: Well, Wolf, we know that, under Illinois law and constitutional law, that the secretary of state can in no way veto a legal action of the governor. So, that signature is only perfunctory and ceremonial and puts a seal on it for recording and filing purposes.

But we're in court now on that issue. And we're hoping and praying that the Illinois Supreme Court will give a writ of mandamus forthwith that that signature is to be placed on the -- on the document.


BURRIS: It's certainly been received by the -- yes, I'm sorry.

BLITZER: I was going to say, have you been in touch with the Illinois secretary of state and asked that that certificate be signed?

BURRIS: Oh, well, yes. I talked with the secretary of state beforehand. And he advised me that, because that of his commitment to the people, that he had said he would not sign it. And so I would certainly respect his position, though I disagree with his position. And we're hoping then that the Supreme Court will cause that matter to take place.

BLITZER: Because, as all of our legal experts say, this is a close call, whether the U.S. Senate can in fact reject your nomination, your -- your designation as the junior senator from Illinois, and that could go to the courts.

But walk us through what's about to happen. You're about to get on a plane to fly to Washington. And all the new senators are supposed to be sworn in tomorrow, when the Senate convenes. Tell us what your intention is.

BURRIS: Well, Wolf -- Wolf, I intend to be sworn in. I will present myself to the Senate tomorrow afternoon, or tomorrow morning. And, should they turn me away, I will then, you know, proceed to leave.

And then my lawyers will have to assess what the next course of action will be. But in no way will we go there to try to create any type of a confrontation, any type of a scene. And we're in touch with Senator Durbin's people. And, naturally, we're in touch with the sergeant at arms of the United States Senate.

And, by the way, that gentleman is from Illinois. Terry Gainer was from the Illinois State Police when I was the attorney general of our state, and so we know Sergeant at Arms Gainer very well. And we're not looking for any type of, you know, hostile environment or hostile situations.

BLITZER: Because, yesterday, Senator Durbin, the senior senator from Illinois, and the Senate majority leader, Harry Reid, they both said they were open to -- quote -- "negotiating" with you on this. So, tell me what -- what there is to negotiate.

BURRIS: Well, I am the legally appointed senator. And what we have been trying to get everyone to recognize, that the governor of Illinois has serious problems. God knows he has problems. But he is still the governor. He made a legal appointment. And that's, you know, end of it. Close the books. That is a legal appointment.

And, based on that, I'm hoping that the Senate of the United States will honor that. I mean, it's just that simple.

BLITZER: The -- the lieutenant governor of Illinois, Pat Quinn, he told a radio station in Chicago -- and I'm paraphrasing now what -- what -- what he said -- he said, the state of Illinois, in his words, has become an international laughing stock because of what's going on.

How do you react when you hear those kinds of words?

BURRIS: Well, Wolf -- Wolf, I presented myself, so that this would not be the case. There's no one in this state who is -- you know, in the Democratic Party, who has the experience that I have in representing our state. I spent 20 years in Springfield. And I have been born and raised in downstate Illinois, went to school in Illinois. I know the state. I know the people.

And I look upon my appointment by the governor as a solution. And it is all the other, what I would assess to be, you know, the politics of a subject that keep this matter going. All the people have to do is recognize that we now have a junior senator who's ready, willing, Wolf, and able to go to work on behalf of the 13 million people of our great state.

BLITZER: Some of the pundits in Chicago and in Illinois have suggested one of the things they could negotiate, referring to you and the Senate majority leader, perhaps making a commitment only to serve for two years, and not seeking a formal election in 2010.

Is that -- is that reasonable, from your perspective?

BURRIS: Well, Wolf, if you look at my record, I won four times statewide in Illinois. And I have never lost a race to a Republican.

The races that they're talking about are Democratic primary races, where you have got the party apparatus at work. And -- and, thereby, we don't have Republicans and independents voting in the Democratic primary. Whenever I get out of a Democratic primary, guess what, Wolf? I win. And I lead the ticket. My three as state controller, I was -- or -- two terms -- I was the stop -- the top vote-getter.

When I ran for attorney general, we had a gentleman running for governor. A Republican won the governorship. Right below was a gentleman running for secretary of state. A Republican won the secretary of state job. But in between was the attorney general's office, and I won over a very good Republican candidate.

That lets you know what the people of Illinois think about Roland Burris, because I get independent voters, I get Republican voters, and I get the base of Democratic voters. So, I don't know what they're speaking of in reference to they want someone who can be elected, you know, in 2010. I have not made a decision in that regard yet. But, if I do, guess what? I will win.

BLITZER: So, at least this point, you're not -- you're flatly rejecting this notion of making a commitment right now not to seek election in 2010?

BURRIS: Oh, you know, I -- this is the first time it has come up.

When I made my press conference about three weeks ago, you know, I was thinking in that regard. And guess what my friends and supporters said to me? Roland, we don't need somebody to warm the seat. You know, you have a statewide base. You have been elected statewide four times. So, you know, we want you to run in 2010. So, I'm taking that all under advisement.

BLITZER: One quick question on the issue of race, because it's come up.


BLITZER: Is there a racial involvement involved in this whole -- in this whole uproar right now?

BURRIS: Wolf, some people may speak to inject that in.

But permit me to say this. I have never, in all of my years in public service, injected race into any of my campaigns or any other way. I was elected. And I ran up and down this state. I was the first black elected. Even when they did -- remember, they told Barack Obama he was really out of his mind to be running for president, that the white folks weren't going to vote for him?

Well, in 1977, they told me the same thing. Can you imagine, 1977, you know, to 2007? Well, I got that same type of a reception, primarily from blacks. If I would had listened to them, I never would have been elected.

But my belief and faith is in the 11 million -- within the 11 million people of Illinois, now the 13 million people. And I have never, ever played the race card at any time.

BLITZER: Roland Burris is on his way to Washington.

Mr. Burris, we will see you here in Washington in THE SITUATION ROOM. Good luck.

BURRIS: Thank you so much, Wolf. Thank you. My pleasure.


BLITZER: And we have new information on a breaking story we have been following, Barack Obama's CIA pick. Right now, a top Democrat, the incoming Senate Intelligence Committee chair, is not very happy. We will tell you why.

And we will go live to Capitol Hill, where there's another story coming in as well, word of a soon-to -- word of a soon-to-be -- soon -- travel arrangement that the vice president-elect, Joe Biden, is preparing with some Senate colleagues. We will tell you where they're going in the coming days. This is important information.

And Barack Obama's daughters, they begin their costly education at a D.C. private school today. What are they getting that Washington public school students won't be getting?

We have details right here in THE SITUATION ROOM.


BLITZER: Let's get back to our top story, the breaking news. The president-elect decides on someone to be the CIA director. That would be Leon Panetta, the former Clinton White House chief of staff. But not everyone seems to be that happy about that, including one very influential member of the Senate.

Dana, what is going on?

BASH: It is a stunning statement that we just got from the incoming chairman of the Senate Intelligence Committee. That is Dianne Feinstein.

She is not happy about this at all. And I will read you the statement she just released.

She said: "I was not informed about the selection of Leon Panetta to be the CIA director. I know nothing about this, other than what I have read." She went on to say: "My position has consistently been -- been that I believe the agency is best served by having an intelligence professional in charge at this time."

So, there you see there are two reasons why she has put out this statement, again, that I think there's no other word to describe it, but to say it's stunning.

I'm told by an aide that she didn't know that this appointment was going to come down until one of her aides gave her a copy of "The New York Times," that was reporting it today.

And the other interesting thing here is that Leon Panetta, like Dianne Feinstein, is from the state of California. And I'm also told that they actually have a pretty good relationship. But, still, she is somebody who believes that -- that the person at the head of the CIA should have long ties to the CIA and the intelligence community. And, clearly, she thinks that Leon Panetta is not the person who has it.

She's going to be in charge of his confirmation hearing -- Wolf.

BLITZER: Yes. You would have thought that somebody would have given her a courtesy, at least, a call, to let her know what was going on.

All right, we will follow this story, as well, Dana. Thanks very much.

Touching family photos, as Barack and Michelle Obama sent their two little girls off to their first day in school here in Washington.

Let's go right to Brian Todd. He's looking at this story for us.

And, Brian, the difference between the very excellent private school that they're going to be going...


BLITZER: ... and the public schools here in Washington, pretty stark.

TODD: They are very stark, Wolf. And, because of that, the Obamas are probably going to be vulnerable to a familiar criticism for incoming presidents and their families. They say one thing about reforming America's public schools. Then, they turn around and put their own kids in private schools once they get here.

But the Obamas and others like them may simply feel, the alternative is not an option right now.


TODD (voice-over): Barely peering over the door of her heavily guarded SUV, Barack Obama's youngest daughter gets her first glimpse of school day routine, daily convoys to Sidwell Friends, the alma mater of Chelsea Clinton, the Nixon daughters, Teddy Roosevelt's son. It will cost Sasha and Malia's parents about $28,500 a year for each of them.

Last fiscal year, the D.C. public school system spent $11,284 on each student, among the top-spending school systems in the country. Does it make an impact?

KEVIN CAREY, RESEARCH AND POLICY MANAGER, EDUCATION SECTOR: DCPS is one of, if not the worst, performing school districts in the United States of America, even when you compare it to other urban districts that have a lot of the same challenges in terms of poverty.

TODD: Experts say much of D.C.'s money is spent paying teachers above the national average and on sending kids with disabilities to private schools outside the district, because the system can't handle them.

A tough reformist D.C. school chancellor named Michelle Rhee has started to turn things around over the past year-and-a-half, firing several dozen principals, including the head of her own daughter's school, canning hundreds of teachers, who according to school officials, didn't meet the fed's No Child Left Behind standards.

That's a program Barack Obama has promised to upgrade.

OBAMA: We have to provide the funding we were promised, give our states the resources they need, and finally meet our commitment to special education.

TODD: Can the D.C. school system be fixed enough for Mr. Obama and others with means to want to send their own kids there, say, within four years?

CAREY: I think it probably takes close to a decade to turn around a truly dysfunctional urban school system.


TODD: Kevin Carey says Boston and New York are examples of that, successful turnarounds that took eight to 10 years to complete. The common denominator each time? Same mayor, same reform-minded school superintendent in place the entire time.

So, Wolf, under those standards as well, D.C. is just getting started in trying to turn things around. It may take a while.

BLITZER: It's an enormous challenge here in the nation's capital.

Brian, thank you.

Barack Obama says there's a time to party, but also a time for very important work. As he huddles with congressional leaders today about the people's work, is he violating one of his own rules, to let there be one president at a time?

And, apparently, Barack Obama knows who he wants to be his next top spy. But why this pick, Leon Panetta? We have more on the story.

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


BLITZER: And the news is coming into THE SITUATION ROOM.

The vice president-elect, Joe Biden, is taking one last overseas trip in his role as the outgoing chairman of the Senate Foreign Relations Committee, even though he already has given up his Senate seat. Biden will be leaving later this week on a fact-finding mission to Southwest Asia. his spokeswoman says details of Biden's trip will be released once it's in progress, for security reasons.

Let's discuss this and more in our "Strategy Session."

Joining us, our CNN political contributor, the Democratic strategist Donna Brazile, and conservative commentator and editor in chief of the Cybercast News Service, Terry Jeffrey.

It's interesting. Biden is going to be taking along on this trip fellow Democrats, including John Kerry and Jack Reed, but also Susan Collins -- she's a moderate Republican from Maine -- and Lindsey Graham, the conservative Republican from South Carolina, arguably John McCain's best friend in the Senate.

DONNA BRAZILE, CNN POLITICAL ANALYST: Yes, and Sue Collins is a -- is a great choice, because she's a moderate. And, in order to get something done, the Democrats will have to at least pick off two or three moderate Republicans.

So, I think it's a great trip. And I hope that they get to see enough of the world, so they can come back and tell the president- elect just what's going on.

BLITZER: And that part of the world, as all of us know, is pretty intense right now.

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: Well, you know, it used to be a joke that what vice presidents did is, they attended funerals of foreign leaders. And Dick Cheney changed that model, much to the chagrin of many Democrats in this town.

But Joe Biden has a lot of experience in foreign policy. As you say, this may be the most important region in the world for the United States, Pakistan, Afghanistan, Iran. This is a hot spot that we have to pay attention to. And I suspect he may be going to Afghanistan.

BLITZER: Well, we will see. And, obviously, for security reasons, they're not going to spell out his itinerary, together whether these other senators. But it's -- it's going to be important.

What do you make of Senator Dianne Feinstein questioning now Leon Panetta's choice -- the choice of Leon Panetta as the incoming CIA director? She's the incoming chair of the Senate Intelligence Committee, which has to go through confirmation hearings.

BRAZILE: Someone clearly dropped the ball. I don't know if it was the congressional liaison that didn't give her a heads up, or perhaps no, you know, one took her calls when she gave her own two cents in terms of who should be the -- the next CIA director.

But, Leon Panetta is a great choice. I think he's smart. He's energetic. He knows his way around town. I'm sure he will figure out the responsibilities of the CIA director. But, clearly, someone dropped the ball on this.

BLITZER: It's as if some -- some people maybe in -- in the Obama transition just assumed every Democrat is automatically going to fall in line, no matter what they decide to do.

JEFFREY: Well, it's all the more remarkable, considering Senator Obama was a colleague of Senator Feinstein in the Senate. He knows how focused she is on this issue.

But, you know, let me just put something on the table. When -- when Leon Panetta -- you know, Leon Panetta is a good guy. He has a lot of great experience in Washington, but, as Senator Feinstein points out, not intelligence experience.

When he was chief of staff to Bill Clinton, that was a time when the CIA was retrenching particularly on human intelligence, Wolf. We found out later that our main source of information about what was going on in Iraq in those years were the U.N. inspectors, who, of course, were kicked out by Saddam, and couldn't come back after we bombed him.

We also found out later that we didn't track al Qaeda well during those years. So, I think that Leon Panetta, when he comes up, he's got to explain to the United States Senate how he's going to make sure that the United States is tracking those threats to us that are going to come out of that exact area of the world that Joe Biden is going to be visiting.

BLITZER: And, his boss, nominally his boss, the director of national intelligence, the incoming new director of national intelligence, Admiral Dennis Blair, retired U.S. Navy, he is a solid intelligence professional, a lot of experience in that area. BRAZILE: Look, I think he's a great choice.

And, you know, Terry talked about the intelligence failures starting back in the 1990s. We have witnessed that. And, clearly, the country experienced it at 9/11.

I think Leon Panetta's a good manager, and he's someone who is going to do a great job, with Admiral Blair, in making sure that we have the strongest possible intelligence unit.

BLITZER: The immediate need for the Obama team will be to work with Senator Dianne Feinstein...

BRAZILE: I'm sure they have her number.


BLITZER: ... and make sure -- and make sure they get that issue resolved.

BRAZILE: Oh, yes.

BLITZER: That's not a good way to start this confirmation process.

Guys, thanks very much.

BRAZILE: She knows her business.

BLITZER: Yes, she does.

BRAZILE: She's smart, too.

BLITZER: Just ahead, we're standing by to hear from Al Franken. He's going to be speaking live. Is he going to be the next U.S. senator from Minnesota? We have new information coming in. Stand by.

And also this: Should Jeb be the third Bush to run for president? Even his father thinks the timing may not necessarily be right, but, if he wants to, go ahead.

And, later, Barack Obama's secret life as a restaurant critic, stand by for that -- right here in THE SITUATION ROOM.


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

CAFFERTY: The question this hour is, Wolf, is now the right time for additional tax cuts? The Obama administration contemplating $300 billion in business and individual tax cuts as part of a three- quarters-of-a-trillion-dollar stimulus package.

Mitchell in Arkansas writes: "Not for the wealthy. President- elect Obama said he would roll back the Bush tax cuts for the wealthy. He's already compromising that away. Someone has to pay, or we just go farther in debt. If Obama starts going back on campaign pledges, he will lose his support quickly."

Donna in Florida writes: "No, no, no. We need to spend all of the money on creating jobs."

Romnak in Kentucky writes: "Yes, yes, yes. As a small-business man, I need my share of the bailout, so I can keep my crew working. I'm a home builder. I do remodeling, restoration. Now is the time for everybody to keep prices low and reasonable, and even discount them, just to keep everybody going.":

Jean writes: "If tax cuts are reduced to a bargaining chip, then we are up the creek. This is a sorry state of affairs."

Phillip writes: "Now is definitely not the time for additional tax cuts. What this country needs now is good old-fashioned Keynesian-styled fiscal stimulus, public works projects that put people to work -- and thereby paying taxes. The infrastructure of this country is falling behind that of the rest of the industrialized world. President-elect Obama needs to look less at Lincoln and more at FDR."

Ken in North Carolina writes: "The economy will begin to make its turnaround now that you are back, Jack, but the proposed tax cuts will help even more. I used my last one to stimulate the economy. And I know it worked, because the sales clerk smiled when I gave her my money."

If you didn't see your e-mail here, you can go to my blog at, and look for yours there, among hundreds of others -- Wolf.

BLITZER: Jack, thank you.

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

Happening now, the breaking news we're following: Israel and Hamas shrugging off calls for a cease-fire. Casualties mount, as Israeli troops and tanks split Gaza in two, while dozens more rockets raining down on Israel from Hamas in Gaza.

A new town, a new temporary home, and a new school -- as the Obamas make the big move, the president-elect gets down to business, even before starting his new job.

And the first big setback for the Obama transition team -- Bill Richardson sheds some light on his bombshell decision to withdraw as a Cabinet nominee.

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

But let's begin this hour with the breaking news coming in from Minnesota, where the state canvassing board has now certified recount results in that U.S. Senate race.