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Barack Obama's First Executive Orders; Drama on Capitol Hill; Obama's War Plan; Kenya's Favorite Son

Aired January 21, 2009 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: And to our viewers, you're in THE SITUATION ROOM.
Happening now, President Obama gets down to business. And the first order of business -- fixing the economy.

Can the new administration save America's biggest banks without taking them over? The commander-in-chief huddling right now in THE SITUATION ROOM over at the West Wing of the White House with his top military advisers, as he looks for ways to start shifting the focus of America's wars from Iraq to Afghanistan.

And more than a million people turned out for the inauguration. It only seems like all of them also had some cameras. They caught some stunning images you're going to see for the first time right there.

I'm Wolf Blitzer.


ANNOUNCER: This is CNN breaking news.

BLITZER: All right, let's go to breaking news right now.

Our chief White House correspondent, Ed Henry, is working a story.

He's getting some new information.

What are you picking up -- Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, CNN has learned that tomorrow Barack Obama, the president, is going to issue three more executive orders. Specifically, one will close down Guantanamo Bay, the U.S. military prison at Guantanamo Bay, within one year. This is according to a senior administration official and a Congressional aide.

A second executive order would formally ban torture by requiring the Army Field Manual be used for terror interrogations. This would effectively end the Bush administration's CIA -- so-called enhanced interrogations program.

A third executive order, according to these officials, would order sort of a systematic review of all detention policies, procedures -- all the cases that have come before. There's been a lot of controversy about this, obviously.

And we're told that this hour, right now, as we speak, the new White House counsel, Gregg Craig, is behind closed doors with House Republicans on Capitol Hill telling them about these executive order that are coming, trying to consult with them, trying to give them a heads-up, because the Obama administration realizes there's going to be a lot of thorny legal issues to deal with.

In fact, House Republican leader John Boehner today put out a statement saying: "The key question is where do you put these terrorists? Do you bring them inside our borders? Do you release them back into the battlefield?"

Guantanamo Bay, that U.S. military prison, has really become sort of a lightning rod -- a symbol for critics of the Bush administration who went -- who feel that they went too far, that they may have used torture in terms of handling some terror suspects and trying to get intelligence information out of them.

As you know, former President Bush and other top officials have repeatedly denied that torture was ever used. This is going to be a dramatic move tomorrow -- three executive orders from President Obama, we're learning, that will try to show a clean break from the Bush administration in how you execute the war on terror -- Wolf.

BLITZER: He said he would do it and now he's doing it.

All right, Ed, thanks very much.

Americans, but there are, are split over whether the U.S. should close the detention facility at Guantanamo Bay. But support for doing so has increased dramatically since 2005. Back then, only 36 percent thought that the detention center should be closed. But look at this. In our brand new CNN/Opinion Research Corporation Poll, 51 percent favor that move, 47 percent think the government should keep those facilities open.

Drama, meanwhile, on Capitol Hill today, as one key Obama finally sails through the Senate and two others hitting some hurdles.

Let's go to senior political correspondent, Candy Crowley, who's watching all of this unfold -- Candy, what do we know?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, right now -- right now what we know is he's won one. Hillary Clinton, of course, has been confirmed as the new secretary of State.

But there are still plenty to go.



UNIDENTIFIED MALE: We will come to order.

CROWLEY: Not exactly.

TIMOTHY GEITHNER, TREASURY SECRETARY NOMINEE: These were careless mistakes. They were avoidable mistakes. But they were unintentional. I should have been more careful. I take full responsibility for them.

CROWLEY: As President Barack Obama prepared to meet with his economic advisers, his wing man was missing. The confirmation of Timothy Geithner as Treasury secretary got hung up when it was revealed he didn't pay Social Security and Medicare taxes for the four years he worked at the International Monetary Fund, which doesn't deduct.

An IRS audit for two years turned up the mistake and he paid up. The two unaudited years were outside the IRS statute of limitations and Geithner did not pay -- not until days before he was nominated as Treasury secretary.

GEITHNER: I did what I thought was the right thing at the time, which is the IRS told me what I owed...

UNIDENTIFIED MALE: Yes, I understand.

CROWLEY: This didn't satisfy everyone.

UNIDENTIFIED MALE: Would you answer my question rather than dancing around it, please?

CROWLEY: Geithner will be late to the table, but eventually his nomination is expected to be confirmed.

In all, eight of 15 Barack Obama cabinet nominees still await confirmation. Make that seven, with the just-in confirmation of Hillary Clinton as secretary of State.

Of those still waiting, Attorney General-Designate Eric Holder may get the roughest go-over. But he, too, is expected to go through.


CROWLEY: And on the policy front, today, Barack Obama heard from two sides. David Obey, the Democratic chairman of the House Appropriations Committee, said he wasn't sure that $825 billion stimulus package was going to be enough.

At about the same time, House Republican leaders were revealing that they had written Barack Obama and asked the president for a meeting to suggest that the package is too big.

You know, Wolf, once Barack Obama said he didn't assume that being president will be easy. And now, on his first day as president, it certainly isn't.

BLITZER: And I assume it's going to get harder every singe day given the enormity of the challenges, Candy, that he faces. Thanks very much. Don Lemon is still here in Washington. He's joining us now -- Don, you know this man, because you covered him for a long time when you were an anchor back in Chicago. He doesn't have a whole lot, as John McCain used to say -- or other Republicans, I should say -- used to say executive experience. But he's really been thrust into this executive mode on this, the first full day of his presidency.

DON LEMON, CNN ANCHOR: Wolf, he certainly has been. What you have to remember about Barack Obama, what makes people relate to him is that he can draw people in, that he relates to the every day American. And he spoke about that as much in his speech when he confirmed or at least swore in his senior staff, when he said he's going to make changes in government and the way they do business. And they're going to be transparent and put tools into effect, including the Internet, where everyday people can reach out and they can hear those concerns. So that's where his strong suit is.

The executive stuff, many believe, will come along with the job -- he'll grow on the job. And, of course, he has some very, very worthy and capable people around him -- Wolf.

BLITZER: A lot of good talent there.

Don, stand by.

We're going to bring you back.

Let's check in with Jack Cafferty once again for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Most of them want to do it. Presidents -- our presidents, during the inaugural parade, often like to get outside the confines of their bullet-proof, bombproof, everything-proof limousine the Secret Service lovingly calls "the beast." It gives them a chance to get close to the people who, in many cases, have traveled far and endured a certain amount of hardship for the slight chance they'll get to see the president up close and personal.

Jimmy Carter was the first to do this in 1977. When the nation's new first couple exited the car yesterday, people began screaming and cheering along the parade route. It was like Elvis had suddenly appeared in the middle of Pennsylvania Avenue. It was amazing.

And while the Obamas appeared quite relaxed and seemed to enjoy the interaction with the crowd, don't kid yourself. For the Secret Service, it was a very, very tense time, because when he's exposed like that in these pictures, they can't guarantee his safety.

You could almost hear the collective sigh of relief when our new president decided to return to the safety of the presidential limousine.

Barack Obama lives inside the presidential bubble now and he doesn't have the freedom that he enjoyed prior to noon yesterday when he became the leader of the free world. Here's the question: Was it brave or foolish for President Obama to leave the limo and walk several blocks during the inaugural parade?

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

You know, that presidential bubble went a long way to perhaps ruining the second term of George Bush. He wasn't even able to go out into a restaurant in Washington to have dinner because of his -- his very high disapproval ratings and the fact that, you know, they just felt it wasn't worth the potential hassle of running into the public.

BLITZER: President Obama insisting he's going to go out, go to the local restaurants, and, in fact, he's going to try break that bubble, if at all possible.

But I've got to tell you, as a former White House spokesman correspondent, Jack -- and you know this -- it's not easy.

CAFFERTY: No, but Clinton did it. Remember, he used to jog to McDonald's and get that cheeseburger.

BLITZER: Yes. He used to do that when he was running for president in Little Rock.

CAFFERTY: Well, I guess that's true. Yes.

BLITZER: And you know what?

He didn't always have the cheeseburger. A lot of times he just had some decaffeinated coffee. But everybody thought he had a cheeseburger.

CAFFERTY: Well, he looked like he had the cheeseburger.

BLITZER: "Saturday Night Live," they always say are you going to eat those fries, you know?


BLITZER: That was...

CAFFERTY: That's right.


CAFFERTY: Do you want fries with that?

BLITZER: Stand by.


BLITZER: Jack will be back.

President Obama's first meeting with his top U.S. military commanders -- how will they implement his promise to bring U.S. combat forces home from Iraq? The strategies, the risks and much more.

And the president's economic plan -- the principals, the politics, the public opinion all coming together -- which one could tip the scales?

Plus, Hollywood moves east -- at least for one day. The stars align here in Washington for the inaugural festivities. We'll tell you what happened and what's likely to happen in the days, weeks and months to come.


BLITZER: The reviews are in on the first lady's inaugural outfit -- so what the critics are saying about her chokes -- that's coming up. I think you'll be interested.

But first, we're continuing our coverage on this, the first full day of Barack Obama's presidency.

The president held an urgent huddle with his top military commanders, reviewing strategy for the war in Iraq -- a conflict he has pledged -- pledged so many times to wind down.

Our Pentagon correspondent, Chris Lawrence, has more.


CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): In the room was President Obama, Defense Secretary Robert Gates, chairman of the Joint Chiefs, Admiral Mike Mullen, and General David Petraeus. By video phone, the commanding general in Iraq, Ray Odierno.

Pentagon officials say they've been working on a number of strategies, including ways to implement Obama's goal to get out of Iraq in 16 months and assessing the risks involved.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We will begin to responsibly leave Iraq to its people.

LAWRENCE: There are 14 combat brigades in Iraq now. The Pentagon's recent plan was only to withdraw about two brigades over the next several months. To meet the new president's goal, they'd have to speed that up to about a brigade a month.

U.S. commanders are reluctant to commit to specific drawdowns more than six months ahead of time, because security can be uncertain and Iraq's upcoming elections could change its political leadership.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: If there's one thing we can know about Iraq, it's that the future is never exactly what you expect.

LAWRENCE: Military analyst Michael O'Hanlon says this meeting could give the president options, so he's not as tied to his campaign promise of bringing troops home. O'HANLON: Which is, frankly, to begin to develop -- I hope -- a little bit of wiggle room on exactly what it means to get out of Iraq in 16 months.


LAWRENCE: Now Obama's plan already allowed for a small force to stay behind and support Iraq's government.

By the way, the heads of the Army, Navy and other services have had some concerns about these long, repeated deployments. They were not included in this meeting, but Pentagon officials tells us that they will soon have a chance to express their views directly to the president -- Wolf.

BLITZER: And he is the new commander-in-chief, and they should.

All right, thanks very much, Chris, for that.

The president also has made it clear he wants to shift the focus of America's two wars. As we noted, there are now about 143,000 U.S. troops left in Iraq. There are 34,000 U.S. troops right now in Afghanistan. But I suspect more will be on the way.

President Obama's first order of business -- the economy. Wall Street was up today, recovering from a brutal Inauguration Day loss. The financial sector led yesterday's plunge. Bank of America fell 20 percent. Citibank fell 29 percent. And State Street plummeted nearly 60 -- 60 percent.

Let's go to live to CNN's Mary Snow. She's in New York watching all of this for us.

A lot of concern on what's going on -- Mary.

MARY SNOW, CNN CORRESPONDENT: There certainly is, Wolf. And the picture is bleak enough that economists say the Obama administration needs to take bold steps and take them quickly. And as one economist put it, doing nothing is not an option.


SNOW (voice-over): Despite the era of optimism in Washington, Wall Street is increasingly worried about the banking industry. With banks wracking up billions in losses, many economists say the Obama administration needs to act quickly. But options are few.

Britain is moving toward nationalizing some banks -- leading to fears the same might happen in the U.S.

CHRIS MAYER, COLUMBIA BUSINESS SCHOOL: That idea that the government just take over the banks entirely, I think, is not only dangerous politically -- that is, we really don't want the U.S. government running our entire financial system -- but, also, I think, is likely to be ineffective.

SNOW: Some economists point to success in Sweden. Back in the 1990s, it nationalized banks to deal with its financial crisis.

One former FDIC commissioner notes while it worked, Sweden had fewer banks to take over.

WILLIAM SEIDMAN, FORMER FDIC CHAIRMAN: We have, you know, a couple of hundred big banks and thousands of small banks. And obviously the government doesn't want to take all of those over.

SNOW: Another idea -- some economists say the government should create a so-called bad bank. Simply put, the government would buy toxic assets from struggling banks and segregate them.

SIMON JOHNSON, FORMER IMF CHIEF ECONOMIST: You want to take them out of the picture. So the government is buying those assets from the banks and is giving them cash or Treasury securities in return.

SNOW: One major challenge -- putting a price tag on those troubled assets. One economist doesn't see any of these options really working.

MAYER: I think we have to keep the banking system alive. And there really isn't much of an alternative to doing it other than injecting capital and trying to generate some private capital and then working to fix the housing market in a serious way.


SNOW: And, Wolf, during confirmation hearings today for Treasury Secretary-Designate Timothy Geithner, Geithner was asked about creating a so-called bad bank that we just mentioned. He acknowledged the idea was under consideration, but difficult to get right and stressed the need to have the least cost to taxpayers -- Wolf.

BLITZER: What enormous challenges going on on the economy right now. These banks obviously in deep trouble.

Thanks, Mary, for that report.

Few -- few traveled farther.


BLITZER: And few know the pride they feel at seeing Barack Obama sworn in. They came all the way from Kenya to witness history.

And the world watched as former President Bush departed Washington yesterday. But today you'll see it very differently, thanks to our I-Reporters. I think you're going to want to stick around and see what they have in store.


BLITZER: People came from all around the world to witness the Obama inauguration. Kenyans were especially extremely proud.

CNN's Zain Verjee is joining us now -- Zain, I think you were watching with an unusual and extraordinary interest, because you're from Kenya yourself.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Yes, Wolf. And Kenyans are so excited. They say essentially that President Obama is part of their DNA. We caught up with some Kenyans who live in Virginia, but they were out in full force on the Mall, too.


VERJEE (voice-over): A group of young Kenyans praised the man they claim is their favorite son.

DENNIS GAKUNGA, KENYAN: It's an understatement to say that the world has actually changed. It really has just changed just like that.

VERJEE: The new president of the United States.

ADOYO OWUOR, KENYAN: He does set a model for anyone who wants to succeed.

VERJEE: The group braved the crowds and the cold, insisting they witness this moment, proud of the Kenya connection to the president.

OBAMA: From the grandest capitals to the small village where my father was born.

NIKATHA KIMATHI, KENYAN: When he mentioned Kenya, I felt, as an individual, acknowledged.

VERJEE: Obama's Kenyan relatives flew in, including his step- grandmother.

NIMO MATHENGE, KENYAN: This is a possibility for her that I don't think she ever imagined that she would be alive to see.

VERJEE: All part of an event that has sewn together two countries.


VERJEE: Kenyans have been celebrating all night long, Wolf. There's just so much excitement, both in Kenya and from Kenyans like those here living in the U.S. -- Wolf.

BLITZER: I'm sure there is.

All right, Zain, thanks very much.

With more than a million people in Washington for yesterday's inauguration, the Web certainly is flooded with views from all angles, including some things our TV cameras didn't actually get to pick up.

Let's go back to our Internet reporter, Abbi Tatton -- Abbi, what are we seeing?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, first of all, we're just going to show you the picture from the way back -- all the way toward the Lincoln Memorial here, as recorded by iReporter Ariel Goldring. You can hear the cheers go up when Obama was announced. This is when he first walked out on the stage -- cheering, flag-waving, even though these people had been waiting out there for hours and they were a long, long way from stage.

That, the moment when Barack Obama was introduced, it was a very different picture. A very different noise, as well, when President Bush -- who was still the president at that point, was introduced.

Take a look and take a listen to how the crowd reacted and what they recorded at that point.


TATTON: This recorded in a YouTube video -- chanting and, at some points, booing in some of the YouTube videos that we've seen today, at the moment the outgoing president was introduced.

All of this recorded and put online from all these digital cameras that were out there on iReport, on YouTube, on Flicker.

People recording what they saw and, in some cases, what they didn't see.

I'm going to show you a YouTube video now of a whole crowd of people who didn't get in. These people were ticket holders -- purple ticket holders. And at this point, you can hear them chanting, "Let us in! Five, six, seven, eight, open up the purple gate!" as they were holding their tickets. But they just couldn't get to the front of the line -- Wolf.

BLITZER: I know. There were a lot of disappointed people who had tickets and couldn't get in. But you know what? I guess stuff happens. It was remarkably smooth, given the extraordinary number of people who were here. Abbi, thank you.

Don Lemon is still with us. He was down on the Mall. He spent a lot of time there with folks. What are they saying to you?

Was there a theme that kept coming up when they saw you -- Don?

LEMON: The theme was I am so proud of this country right now. And I -- I can't believe how nice everyone is -- how -- what a sense of community we have here.

And just, you know, to sort of piggy-back off Abbi, you didn't get to see the faces of people watching the screen when Sasha and Malia, those children, would pop up. They would -- everyone would just go ah.

And they would look at this couple dancing, you know, last night at the balls and say you know what, she looks beautiful.

There was a sense of community and spirit here in Washington that many will take back to them , Wolf, when they go back to their respective home towns and home cities. But, yes, it took a long time to get in in some places. But even with that, people were still very peaceful. It was amazing.

BLITZER: Yes. They were remarkably patient given the enormous number of folks.

Don, stand by.

Fixing the economy -- why President Obama may have to juggle some principles and politics. And then there's the way the public feels about all of this. There are new poll numbers coming out, along with our own Bill Schneider and Paul Begala. Stand by.

And Michelle Obama's inaugural outfit gets rave reviews. We're taking a closer look at the young fashion designer who put it altogether.

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


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

Happening now, the struggling economy priority number one for President Obama on his first full day in office. His economic team pushing a stimulus plan on Capitol Hill.

But do Americans support it?

Revealing new poll numbers straight ahead.

A matter of ethics -- President Obama gives his staff new marching orders -- unveiling rules against lobbying and government secrecy. You're going to hear everything he has to say today.

And the story behind the dress -- why Michelle Obama's inaugural outfit took some people by surprise -- even the little known designer who made it.

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

The debate over the economic stimulus package may be the first test of how Barack Obama balances principles and politics. And public opinion may be potentially what could help tip the scales.

CNN's senior political analyst, Bill Schneider, is once again joining us with some brand new poll numbers.

Are we seeing any compromises right now in President Obama's new proposed recovery plan?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Wolf, there is a big tradeoff between the economics and the politics.


SCHNEIDER (voice-over): Spend we must, President Obama says.

OBAMA: At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.

SCHNEIDER: Does the American public support big, new federal spending on construction projects and economic assistance?

Yes, 58 percent -- although most Republicans balk at the idea.

REP. MIKE PENCE (R), INDIANA: House Democrats apparently believe that we can borrow and spend our way back to a growing economy.

SCHNEIDER: The president's plan also includes big tax cuts.

What happens if we add those to the mix?

Public support up to 71 percent.

And the consensus broadens. Republicans say tax cuts, we're in.

REP. MARY FALLIN (R), OKLAHOMA: We on the Republican Study Committee believe that borrowing and spending is not the answer and that the quickest and the proven method to stimulate our economy is by cutting taxes.

SCHNEIDER: Without the tax cuts, the economic stimulus plan is a partisan plan. With the tax cuts, it becomes bipartisan. That's the politics. What about the economics? Are tax cuts the most effective way to stimulate the economy?

We asked people if you're taxes were cut by $500, what would you do with the money? Only 20 percent say they would spend it, that's not much of a stimulus. The rest say they'd pay off bills or save the money. No stimulus there.

Tax cuts broaden support for the stimulus plan but may not have as much economic impact. The tax cuts are in the plan because President Obama promised them and because he knows that, for any new policy to survive over the long term, it has to have bipartisan support.

That's not economics. That's politics.


SCHNEIDER: The plan will certainly increase the deficit. Now, by nearly two to one, American say the government should balance the budget even at a time of recession and war. Have the American public ever said it's OK to run a deficit? Yes, narrowly, in January 2002, just a few months after the 9/11 attacks -- Wolf?

BLITZER: Love those statistics. All right, Bill, thank you.

Let's get to more now on President Obama's inaugural speech and other subjects. We're joined once again by Don Lemon. Also joining us are CNN political contributor, the Democratic strategist, Paul Begala, and our other CNN political contributor, the Republican strategist, Ed Rollins.

Paul, you've written a lot of political speeches over the years. Were you satisfied, thrilled, disappointed with how the president did yesterday?

PAUL BEGALA, DEMOCRATIC STRATEGIST: I thought it was a terrific speech. Everything he needed to do, you know, this was the transition moment, and not only in our government, but from what Mario Cuomo used to call, the poetry of campaigning to the pros of governing.

And I thought he struck just the right tone. It's very muscular, particularly for a Democrat, you know, which we sometimes get accused of being wimpy. A very strong speech on international affairs and just as strong on domestic. He -- he gave the old Heisman to President Bush. It was a very tough stiff-arm to the former administration, but then he also, I think, managed the expectation.

That's probably the most important communications goal that he has, is to manage expectations, to tell people this is going to be difficult and that we have to put aside childish things, as he said, quoting St. Paul's Letter to the Corinthians, and move on and take responsibilities. I thought it was a great speech. I loved it.

BLITZER: Ed, what did you think?

ED ROLLINS, REPUBLICAN STRATEGIST: I thought it was extraordinary speech and -- for two reasons. Unlike Paul, I'm not a speech writer, so the words are not as important to me as the presence. He had a very, very strong presence. He walked in front of two million people. No American, no American leader has ever walked in front of two million people.

And he had great presence. I could see him as the commander in chief. I could see him talking to the American public, giving them straight talk, telling things are going to be tough. We're going to move away from the Bush administration. He was very courteous to Bush throughout the day. But I thought it was an extraordinary speech and I -- compare it to many of the great ones, Ronald Reagan speech in 1980 and others.

BLITZER: He does have those unique communication skills, Don. You pointed it out many times. We certainly saw it unveil during the primary, the general election campaign. And I -- think it's going to be one of his secret weapons, at least, in the short term.

LEMON: Absolutely, Wolf. And I think we're all in agreement here on this. I think what many people, you know, historians and pundits, wanted was this sort of soaring rhetoric and inspiration.

Barack Obama's job and his campaign team's job was to get people, to inspire people to go to the polls. This was a but-look moment. And as a parent I'm sure you know, you tell your kids, you know, you can do everything, you inspire them to move on and try to achieve everything, but look, here's how you accomplish it. And I think that's what Barack Obama did yesterday. He did what he needed to do. He was stern, he was real, but the inspiration came before the election to get people to go to the polls and involve people. Many African-Americans, many people who felt disenfranchise in order to go out and support him.

BLITZER: Hillary Clinton tomorrow will be sworn in as the nation's secretary of state, Paul, at a formal ceremony at the State Department. She's given up her seat in the United States Senate, 94- 2. Wow. Didn't seem like she had much of a problem in the full Senate.

BEGALA: No, and even most of her ardent critics in the Senate admire her for being the thorough, disciplined -- patriotic, obviously, person that she is. And so, I was impressed and proud of that. Particularly, I think it's meaningful to those of us who love Hillary, like I do, to see Senator McCain, you know, just 10 weeks ago who lost the presidency, stand up and endorse her, vote for her, and in fact, wag his finger a bit at Senator Cornyn of Texas, the Republican from Texas, the senator who delayed that confirmation for just one day. But even one day, it could be very important in our national security.

So I thought it was a wonderful moment in that Senator McCain, Senator Lindsey Graham, the conservative Republican of South Carolina, who also took the Senate floor and called for his colleagues to support Senator Clinton. So it was a wonderful moment of bipartisanship.

BLITZER: Only two Republicans, Jim DeMint of South Carolina and David Vitter of Louisiana, actually voted against her. The others who were making noises, they all voted to support her.

ROLLINS: I think there's great respect for Hillary. I mean the truth of the matter is a couple hundred more delegates, she'd have been sworn yesterday as the first woman president, may not have been quite as exciting as Barack's, but she's certainly qualified to be secretary of state. I think that the -- she represents this country well. I think she represents this president well. And I think that's what it's all about.

BLITZER: As you look at David Paterson, he's got to make a major decision about Caroline Kennedy or someone else because the clock is the ticking. They're going to lose a United States senator, Don, tomorrow in New York state, and they've got to -- he's got to decide. Apparently, his press secretary says by Saturday he'll make -- he'll make up his mind and have a decision.

LEMON: Yes, he's got -- he's got to decide by then. But most people were saying they don't know who to hedge their bets towards because David Paterson is very much his own man and will decide whoever he thinks should get that seat, whether or not the public agrees with him or not.

We had this conversation with the Reverend Al Sharpton, Wolf, over the weekend during the inaugural coverage, who is very close and knows David Paterson -- I should say very close to Caroline Kennedy, and he couldn't figure out, you know, one way or another, which way David Paterson would go.

BLITZER: We'll wait and see. There were a few snags today. I guess that's to be expected, Paul, as we watch what's going on at the White House. Doors weren't necessarily working. But on this first day, what do you think overall? How did he do in terms of the symbolism and the message he's trying to convey his -- the first full day of his presidency?

BEGALA: Well, he -- first off, he kept his first big promise on the campaign, which was on day one, assemble his top military leaders and commanders and begin the process. A long -- it will take 16 months, of redeploying our forces out of Iraq. That was -- that was central to his candidacy. Today he fulfilled that promise.

But then he led on ethics. He's no longer just preaching. Now he's acting. He is holding his White House staff to an extraordinarily high level of ethics, which is something he also campaigned on.

And then a surprise today. And I think one politically actually could be very powerful. He announced that he's capping the pay for senior White House officials. This is at a time when Americans are appalled to see some of these big banks that are getting funds from the taxpayers then spending out money on bonuses for fat-cat executives.

He's leading by example. He's saying big shots in my government, in the White House are going to have their pay capped. And I think it's a wonderfully powerful symbolic move in a recession to say even the big shots in the White House are getting their pay capped.

BLITZER: It's a very symbolic move, but Ed, frankly speaking, it's miniscule in terms of dealing with the deficit or -- or the long- term national debt.

ROLLINS: You take it a day at a time. You know, just got their desk dust off and obviously pencils sharpened and ready to go to work. And they'll be there many, many long hours tapping the problems.

It was one other thing he did today that I thought was very symbolic. It was just a tiny gesture, but when Biden started to make a little bit of fun of -- Chief Justice Roberts yesterday, the president, very quickly, sort of said we're not going to go there.

I think he is setting a tone that's a very important tone, and that tone...

LEMON: He didn't react to that moment. You are very right. I watched that, too, as well. He didn't react. He was -- he kept a straight face and didn't let it go any further. You are exactly right.

ROLLINS: He didn't. He just -- he cut it off and he's setting a tone. And the tone -- there's going to be partisanship. I mean we'd be naive to think there's not going to be partisanship but there's a tone of how we get along and it doesn't have to be personal and I think to a certain extent, you can respect each other's points of view.

This president, if continues on this path, will go a long a ways towards being a very effective communicator and keep that support of the American public and there'll be people who'll give him the benefit of the doubt over time and vote for him.

BLITZER: We're going to play that videotape of Joe Biden saying what he said about the chief justice and we're going to show the reaction of the president, how he reacted. At least I got the impression, I think, as you guys did as well, that he was irritated with what the vice president was saying, but we'll play the tape, show our viewers, that's coming up, guys.

Thanks very much.

The clothes she designed, chosen by the first lady, Michelle Obama, for the inauguration.


ALINA CHO, CNN CORRESPONDENT: You found out when we found out.

ISABEL TOLEDO, DESIGNER: That you've got it. I mean I got the same excitement, the same feeling you felt I was feeling at the same time.

CHO: Oh no, I think you were feeling something different. I mean she was wearing your design.


BLITZER: You're going to meet the little known designer now on the fashion spotlight. What are -- what the critics are saying about the first lady's pick.

Plus, stars are out for the inauguration. Hollywood comes to Washington.

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


BLITZER: Was it brave or foolish for President Obama to leave his limo and walk several blocks during the inaugural parade? That's our question to you this hour, the "Cafferty File," Jack standing by with your e-mail.

But first this. Rave reviews for Michelle Obama's inaugural outfit and the little known designer who made it is now in the spotlight.

CNN's Alina Cho has more.


CHO (voice-over): As millions waited to get a glimpse of now President Obama, the world was also watching the first lady. When Michelle Obama emerged, the fashion world applauded. A nod to her love of color, she chose non-traditional yellow, with wool lace by American designer, Isabel Toledo. Hardly a household name until now.

TOLEDO: It was a dream come true for me. It really was. I was so happy. Really, really happy.

CHO: Cuban-born Toledo has been designing clothes for 25 years. She was also briefly the creative director for Anne Klein.

Michelle Obama is a fan so Toledo sent sketches, made the dress and matching coat and then she waited like the rest of us, until her mother-in-law called and said turn on the TV.

(On camera): You found out when we found out.

TOLEDO: That you've got. I mean I got the same excitement, the same feeling you felt, I was feeling at the same time.

CHO: Oh no, I think you were feeling something different. I mean she was wearing your design.

TOLEDO: She was -- and I was so happy to see how beautiful she was.

CHO (voice over): Not since Jacqueline Kennedy has there been so much excitement over a first lady's fashion choices.

PAMELA FIORI, EDITOR-IN-CHIEF, TOWN AND COUNTRY: We want to see what she's wearing and we want to, we want to follow her.

CHO: Fashion insiders say that's because Michelle Obama dresses like the rest of us.


JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": I'm guessing about 60 grand?


LENO: Sixty, 70,000 for that outfit?

MICHELLE OBAMA, FIRST LADY: Actually this is a J.Crew ensemble.


CHO: When she's not wearing J.Crew or the GAP, the First Lady often chooses American designers who are not well-known. And there's nothing like a presidential seal of approval.

MARY ALICE STEPHENSON, CELEBRITY STYLIST: Everything that Michelle Obama puts on turns to gold for that brand. CHO: For Toledo and her husband, Ruben, Mrs. Obama's endorsement doesn't mean fame and fortune, it means they can continue what they love -- designing clothes.

(On camera): If you could talk to Michelle Obama right now, what did you -- what would you say to her?

RUBEN TOLEDO, ARTIST: I hope you were warm and I hope it was comfortable. And boy did you look great.

CHO (on camera): Warmth definitely was a consideration. The seamstresses actually tried on the coat to make sure that Michelle Obama would feel warm in it. And a little bit more about the outfit. That yellow, Toledo calls it lemongrass and said she chose it because it's happy and optimistic.

Another tidbit, when she was asked to make the coat and dress, Toledo initially wasn't sure she could finish it in time. The wool lace was made in Switzerland. It had to be shipped. Then everything had to be measured, cut and stitched together.

It was a real group effort, but remember, we are talking about the new first lady. Somehow, they all made it happen.

Alina Cho, CNN, New York.


BLITZER: I want you also to check out the beautiful dress that Jill Biden, the wife of the vice president wore last night. Look at that, stunning indeed. I must say the designer, Reem Acra, what a dress by Jill Biden. She looked lovely. So did the First Lady.

First daughters, Malia and Sasha, are also getting high marks for their outfits. They came from J. Crew's children's division, the Crew Cut. The company says both girls picked their outfits from a collection designed especially for them. J.Crew is touting it on their Web site today and despite anticipated high demand for the garments, the company says it's not offering the exact outfits, but similar pieces will, repeat, will be in their fall catalog.

Those girls look adorable, I must say.

Fashion and celebrities go hand in hand and the Obama inauguration was no exception. CNN entertainment correspondent, Brooke Anderson, is joining us with more on that -- Brooke?

BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT: Wolf, I know you saw this firsthand. The entertainment industry flocked to Washington for the inauguration, and now the question is, will they answer President Obama's call to service?


ANDERSON (voice-over): Hollywood came out in force for President Barack Obama's inauguration. They sat in the cold and then exchanged the long underwear for formal wear, as they celebrated the new first couple.

This kind of star power hasn't been seen in Washington since the Clintons courted Hollywood eight years ago.

RICK SCHRODER, ACTOR: Very few came to support President Bush's inauguration. And this is, like you said, it's -- the stars keep walking by. And...

UNIDENTIFIED FEMALE: It's like the Emmys or something.

SCHRODER: Yes, like going to the Golden Globes.

ANDERSON: They said they were drawn by their chance to see history and because they support and believe in this president.

JOSH GROBAN, MUSICIAN: You know, I -- we were all standing there like -- kids. I mean we all felt like, oh my god, there was like -- you know, we -- I don't get star struck, but our eyes were popping out of our heads to meet this guy.

ANDERSON: Many of them say they want to respond to the president's call to service. David Arquette hosted an inaugural benefit for Feeding America and has high hopes for the new administration.

DAVID ARQUETTE, ACTOR: It gets people to sort of see what is truly important. What you want to spend your time doing. How you can motivate people to get out there and do something. And it's up to everyone to sort of follow through.

ANDERSON: And for many Hollywood heavy weights, the inauguration signals a renewed friendship between celebrities and Washington.

JAY-Z, PERFORMER: He needs the support of Americans. You know, I'm going to -- I'm just going to continue to work with him. And you know, he just needs the support.


ANDERSON: Other celebrities on hand included Faith Hill, Denzel Washington and Mariah Carey.

And Wolf, we heard numerous stories of stars who couldn't trade on their celebrity for VIP treatment this week. The only name that really got you anywhere in D.C. was Obama -- Back to you.

BLITZER: Thanks very much, Brooke Anderson, with that.

And as you've seen, Barack Obama has had a very busy day. He unveiled what he's calling his rules of the road to his White House staff. You're going to go -- you're going to about to hear what he had to say in his own words. Stand by.

And it's her first full day as first lady of the United States. So what's on Michelle Obama's agenda? We'll tell you what her aides are saying she's tackling first. Lots of news happening today right here in THE SITUATION ROOM.


BLITZER: All right. Let's check in with Jack Cafferty. He has "The Cafferty File" -- Jack?

CAFFERTY: Question this hour: Was it brave or foolish for President Obama to leave the presidential limousine and walk several blocks during yesterday's inaugural parade?

Janice writes from South Carolina: "It was brave and wonderful. I can't say I wasn't concerned for him. But he couldn't very well give a speech about the need for all of us to grow up and be brave to face the challenges that lie ahead and then stay inside his car."

Greg in Arkansas writes: "Neither. Nothing like a cheering crowd, a brisk walk and some breath of cold afternoon air to pump up the adrenaline for the job he was getting ready to start."

Gail in Alabama writes: "He's taking too much for granted. In his mind everybody's elated about him being the new president, which is not so. It was a very foolish thing for him to do."

Dave in Brooklyn writes: "It was both, but necessary. He had to show courage, which often is indistinguishable from stupidity, as we have seen. The other would have been the greatest tragedy in our history if something had happened."

Donald in Canton, North Carolina: "The D.C. bubble crippled George Bush. It's not foolish if anyone's penetrated that security barrier yesterday. It would have been a miracle. Everything was well under control or the Secret Service wouldn't have allowed it."

Mertis writes from Georgia, pardon me: "I think it was brave even though they chose one of the most secure areas along the route to take their walk. Whether we want to admit it or not, his biggest threat isn't from people in other countries. His biggest threat is from some nut case right here in the U.S. Hence the beefed up Secret Service from day one of his campaign and the new armored tank dressed in Cadillac clothing."

John of Vermont says: "I don't think brave or foolish enters into it at all. I think it was the right thing for him to do."

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

BLITZER: Jack, thank you.

President Obama issuing some sweeping executive orders on his first full day in office, including one that hit many of his staffers right in the wallet.

And the president's pick for treasury secretary getting grilled by senators over his $34,000 tax mistake. We have his apology, explanation and a lot more coming up.


BLITZER: One of former President George Bush's final acts in office commuting the prison sentences of two Border Patrol agents who shot and wounded an illegal immigrant. Lou Dobbs has been following this story for a long time.

Lou, I wonder how you reacted when you heard that news.

LOU DOBBS, CNN ANCHOR: Well, first, Wolf, I reacted with relief. And I -- think George Bush -- I thank George Bush for doing the right thing to -- to try to correct a terrible wrong.

By the way, they didn't shoot an illegal alien, they shot an illegal alien drug smuggler who was fleeing the scene of a crime with $1 million in pot. And the evidence that he was a continuing felon smuggling drugs was sealed by the trial judge.

It was a horrible miscarriage of justice. And I think we're going to see a press by these attorneys, representing these Border Patrol agents, the Border Patrol union, and their families to continue to try to right this wrong and to win these men a full pardon.

BLITZER: You know -- so what happens next? What do you think?

DOBBS: Well, the first thing is to get these men out of prison because the orders states that their sentences shall end on the 20th of March, and therefore there's a certain amount of process that has to be carried out here. But the Bureau of Prisons needs to release these men immediately.

They have been wrong in the -- entirety of this process. There's no real good reason of any kind, there's no excuse to keep these men in prison until March 20th. They should be freed and freed immediately. Their family, their friends, all of us are extraordinarily relieved.

And -- but one of the important messages here is, hundreds upon hundreds of thousands of Americans made their voices heard on this issue. And to them, I say thank you. I know the families of both of Ignacio Ramos and Jose Compean extend their gratitude as well.

But to those who made their voices heard and declared their -- demand for justice here, I just say with -- from the bottom of my heart, Wolf, thank you all.

BLITZER: Lou Dobbs is going to have more on his story coming up in his show in an hour from now. Lou, thank you.

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

Happening now, President Obama's executive order. This hour, the closing of the prison camp at Guantanamo Bay next on his agenda.