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THE SITUATION ROOM

SOS on Economic Relief; President Obama's First Strikes; In Hillary Clinton's Footsteps

Aired January 23, 2009 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, President Obama tries to light a fire under congressional leaders to give Americans economic relief. Will his efforts to reach out to Republican critics pay off?

The new commander in chief's first military strike. The Obama administration sends a tough message about the war against terrorists in Pakistan.

And in Hillary Clinton's footsteps. The newly appointed United States senator from New York says she has great shoes to fill, but she doesn't have the name or the fame of a Clinton, or Kennedy, for that matter.

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

Right now, President Obama and congressional leaders of both parties agree on this much -- the economy needs fixing and it needs fixing fast. There's less consensus on how to achieve that and how much to spend. So today, Mr. Obama's asking skeptical Republicans and other lawmakers for their feedback and their urgent cooperation.

Let's go to the White House. Our correspondent Dan Lothian is following this critically important story.

Dan, what happened?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. And the focus today was on the economy, but CNN can also now confirm that President Barack Obama will be signing an executive order shortly, we believe, that will reverse a Bush-era abortion policy. It's called the Mexico City Policy, also known as the Global Gag Rule.

This is something that was put in place by President Reagan back in 1984. And what it does is prohibit U.S. money from being used in any international family planning groups that promote or provide any information about abortion. Obviously something that Planned Parenthood, other groups like that embracing, but some conservatives who don't believe that tax dollars should be used for abortion of course not happy about this.

So CNN confirming that that will be taking place sometime this evening.

On the economic front, though the president continues to try to build support in Congress for that massive stimulus package. Today, leadership from both parties came to the White House. They heard about an economy that is not only in critical condition, but getting worse.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Mr. Obama says the economic crisis has to be dealt with rapidly, and $825 billion will be a significant jolt.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Moving this recovery package through to create three to four million new jobs, that is going to be absolutely critical.

LOTHIAN: The president sat down with top congressional leaders, Reid, Pelosi, Boehner, McConnell, a bipartisan effort to find common ground.

OBAMA: I know that it is a heavy lift to do something as substantial as we're doing right now. I recognize that there are still some differences around the table and between the administration and members of Congress about particular details on the plan.

LOTHIAN: White House Secretary Robert Gibbs promises the bulk of the billions would be put to work quickly.

ROBERT GIBBS, PRESS SECRETARY: And 75 percent of this money will be spent in the next 18 months to create jobs and to get people working and to get the economy moving again. Absolutely, it's stimulative.

LOTHIAN: And Obama's budget director sent a letter to Capitol Hill promising unprecedented levels of transparency. But there are skeptical Republicans who see the $825 billion package as a moving target that's way overpriced.

REP. JOHN BOEHNER (R-OH), MINORITY LEADER: We believe that spending nearly a trillion dollars is really more than what we ought to be putting on the backs of our kids and their kids. Because at the end of the day, this is not our money to spend. We're borrowing this money from our kids.

LOTHIAN: Republicans want deeper tax cuts and reassurances that there's some reality behind the millions of jobs Mr. Obama is promising. But even with the skepticism, one leading Republican signaled that the deal, however it ultimately looks, will get done.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: I do think we'll be able to meet the president's deadline of getting the package to him by mid-February.

(END VIDEOTAPE)

LOTHIAN: Now, next Tuesday, Mr. Obama heads up to Capitol Hill to meet with House and Senate Republicans to listen to their concerns as he continues to try to push through this stimulus package -- Wolf.

BLITZER: And what a job it will be. Thanks, Dan, for that.

Gloria Borger, our senior political analyst, is here in THE SITUATION ROOM.

You've been checking with some sources. What actually went on inside that room?

GLORIA BORGER, CNN SR. POLITICAL ANALYST: Well, it's interesting. In talking to both Democrats and Republicans, what you find is that there's a sense that there's a different tone in these meetings.

I mean, Wolf, you and I remember congressional leaders trek down to the White House, everybody's got their canned talking points, and there's not really any kind of philosophical or intellectual exchange of ideas. People coming out of these meetings on both sides, they're saying, you know what? We're having a real and honest debate.

Let me give you an example. There was a substantive discussion about refundable tax credits for low-income people. Democrats say you ought to give these people tax credits. Republicans say they don't really pay income taxes so they shouldn't get this refund. And there was a good debate, a good discussion about it, and after the discussion, I'm told that President Obama said, "I won and I guess I'm going to have to trump you on that one."

Said that to the Republicans.

BLITZER: I assume that Nancy Pelosi and Harry Reid, the Democratic leaders in Congress, feel the same way.

The question is, how are the Republicans going to react?

BORGER: Well, it's interesting, because they're not speaking with one voice at this point. I mean, you have John Boehner, Republican leader in the House...

BLITZER: Who's the House leader.

BORGER: ... coming out very forcefully and saying, look, there are lots of things we don't agree with. But, on the other hand, another member of the leadership, Eric Cantor, in the House had an idea about some more tax cuts, and the president's going to send some of his White House staff to meet with Eric Cantor and see if maybe some of those ideas can be incorporated.

On the Senate side the leader, Mitch McConnell, seems to be a little bit more willing to work with the president, but folks in the White House are sort of taking a wait-and-see attitude. They're not sure where this is going to wind up.

BLITZER: All right, Gloria. Thank you. Don't go away. You'll be back.

In Pakistan, meanwhile, the first apparent U.S. missile strike since Barack Obama became commander in chief. At least 17 people were killed. And the world is getting an early sample of the new administration's war on terror.

Let's head over to the Pentagon. Our correspondent Barbara Starr is standing by.

What happened, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, the president is now exercising his authority as commander in chief, and the world is watching.

(BEGIN VIDEOTAPE)

OBAMA: I do solemnly swear...

STARR (voice-over): Just as President Barack Obama was sworn in Tuesday, General David Petraeus was in Pakistan pressing top officials yet again to crack down on militants. The first side the Obama administration's not going to ease up on the hunt, two CIA missile strikes Friday killed more than a dozen people in the tribal region. There have been some 30 strikes like these over the past year.

The new president is making clear the deteriorating security situation in Afghanistan and Pakistan will get more attention.

OBAMA: This is the central front in our enduring struggle against terrorism and extremism.

STARR: CNN has learned from a top U.S. official the missile attacks are authorized under a covert program which has been briefed to Mr. Obama. The reason for the program's existence? To target and kill senior al Qaeda and Taliban leaders and keep survivors on the run. Suspects may be tracked for weeks before strikes are called in.

Under George Bush, the president did not have to approve each strike beforehand. It's believed Mr. Obama, for now, has the same arrangement, according to U.S. officials.

Even during the campaign, candidate Obama made clear he wouldn't hesitate to cross Pakistan's borders.

OBAMA: If we have actionable intelligence about high-value terrorist targets and President Musharraf will not act, we will.

STARR: In an interview Friday with Wolf Blitzer, Musharraf, now out of office, said Pakistan doesn't expect the U.S. strikes to stop.

PERVEZ MUSHARRAF, FORMER PAKISTANI PRESIDENT: Nobody in Pakistan is comfortable with the strikes across the border. There's no doubt in that. Public opinion is very much against it.

(END VIDEOTAPE)

STARR: Now Wolf, these strikes came one day after President Obama announced some renewed diplomatic initiatives, appointing a new envoy, Ambassador Richard Holbrooke, to the region, but many people in that part of the world still are very opposed to the U.S. missile strikes, and diplomacy may have a long way to go -- Wolf.

BLITZER: Barbara, thanks very much. And we spoke extensively with the former president, Pervez Musharraf, about these missile strikes and a lot more. My exclusive interview with the former Pakistani president coming up. It's his first major interview since leaving office. We spoke earlier today.

You'll want to see that coming up here in THE SITUATION ROOM.

Let's go to Jack Cafferty right now for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: President Obama's hopes for broad bipartisan support for his $825 billion emergency stimulus package have run into consensus interruptus. The president wants the emergency bill on his desk by Presidents Day. There's an obstacle in the way, though. That would be opposition from some Republicans, and that seems to be growing by the day.

Now they're complaining they've been shut out of the process of writing the legislation. They're pointing the finger at the Democrats for ignoring President Obama's call for bipartisanship.

We are in the middle of the worst economic crisis since the Great Depression. Voters made it clear they're sick and tired of partisan warfare in Washington.

Is anybody listening?

Today, President Obama met with GOP leaders to hear their concerns. House Republican Leader John Boehner said he and his colleagues think the package is too expensive and too slow. Republicans want tax relief in the hands of Americans right away. The president said he will take the Republican concerns under consideration.

White House Press Secretary Robert Gibbs said President Obama will go to Capitol Hill next week. He will meet with Republican lawmakers, try to get this thing done.

Here's the question: Are Republicans making a mistake by opposing President Obama's stimulus plan?

Go to cnn.com/caffertyfile, and you can post a comment on my blog.

BLITZER: Good question, Jack. Thank you.

After weeks of speculation, New York's governor has finally chosen Hillary Clinton's successor to the United States Senate.

(BEGIN VIDEO CLIP)

REP. KIRSTEN GILLIBRAND (D-NY), NEW YORK SENATOR-DESIGNATE: I aspire to follow in her footsteps knowing her shoes I can only hope to fill.

(END VIDEO CLIP) BLITZER: But at least one New York lawmaker isn't pleased with the appointment of Kirsten Gillibrand. We're going to tell you about the boycott of her announcement ceremony.

Stand by.

And new fuel for critics of plans to close the Guantanamo Bay prison camp, a free detainee who's believed to be back in the business of terror.

And it looked like a live performance, but now we know the music was on tape. A practical move or an inaugural embarrassment?

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

(COMMERCIAL BREAK)

BLITZER: A congresswoman from upstate New York now has been tapped to fill Hillary Clinton's Senate seat and to fill the void left when Caroline Kennedy took herself out of the running.

Let's go to Mary Snow. She's in New York. She's been working this story for us for a long time.

All right, Mary. Set the scene.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, it caps off weeks of speculation, jockeying, not to mention political drama. Governor David Paterson appointed Congresswoman Kirsten Gillibrand.

(BEGIN VIDEOTAPE)

GOV. DAVID PATERSON (D), NEW YORK: Kirsten Gillibrand.

(APPLAUSE)

SNOW: Kirsten who? Kirsten Gillibrand. Get used to her name. She is New York's new U.S. senator, a 42-year-old congresswoman and mother of two. Unlike her predecessor, Hillary Clinton, Gillibrand isn't a household name.

GILLIBRAND: I realize that for many New Yorkers, this is the first time you've heard my name and you don't know much about me.

SNOW: Gillibrand did gain attention in 2006 when she beat a four-time Republican incumbent to win her congressional seat in upstate New York. President Obama called to congratulate her, calling Gillibrand a wonderful choice, but one New York Democrat says she's furious over the selection.

Congresswoman Carolyn McCarthy, a staunch advocate of gun control whose husband was shot to death, opposes Gillibrand because she has been endorsed by the National Rifle Association. McCarthy opted out of attending Governor David Paterson's announcement.

REP. CAROLYN MCCARTHY (D), NEW YORK: Well, it's definitely a boycott because I believe that he's making a very bad choice as far as picking somebody that in my opinion does not represent New York State.

SNOW: Gillibrand vowed to work with McCarthy to reduce gun violence.

It was just the latest chapter in a rocky selection process, and Governor Paterson was asked about divisions among Democrats.

QUESTION: How are you going to knit this back together after a tumultuous four weeks?

PATERSON: I'm not going to knit at all.

SNOW: Paterson did not address the bitter fallout over Caroline Kennedy's withdrawal or the weeks-long guessing game over his choice. He did address his process.

PATERSON: I remember President Bush saying that when he selected Vice President Cheney. They say I struggled, I wrestled with this decision. I retrospect, I wish I had not shown all of you the wrestling match.

SNOW: One New York political observe says it's left a scar.

DOUG MUZZIO, BARUCH COLLEGE: It was a circus and he wasn't a good ringmaster. It was a six-week soap opera, and one minute he made up his mind, one minute he didn't.

(END VIDEOTAPE)

SNOW: Now, the governor said that he was about 95 percent sure about his pick by Monday, but only sealed the decision in the early hours of this morning. Gillibrand will be sworn in when she returns to Washington -- Wolf.

BLITZER: All right. Thanks very much. That chapter closed. Now on to the next chapter.

Meanwhile, the woman Gillibrand replaces, Secretary of State Hillary Clinton, she's settling in at her brand new job over at the State Department, rallying her diplomatic troops and revealing her top priorities.

Let's go over to our Foreign Affairs Correspondent Jill Dougherty. She's over at the State Department.

I guess this is, what, her second full day on the job? Is that right, Jill?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Second day, exactly. And today, Wolf, she's been working the phones, she's been talking to leaders around the world, especially the Mideast, Europe and Asia, and even as the administration begins reviews of a number of foreign policy hotspots.

(BEGIN VIDEOTAPE) DOUGHERTY (voice-over): Hillary Clinton is back on the campaign trail. This time to take back power and resources for the State Department.

HILLARY CLINTON, U.S. SECRETARY OF STATE: My goal is to make sure we match the mission and the resources.

DOUGHERTY: The message drew cheers from staff at the U.S. Agency for International Development.

The U.S. military is now doing jobs that used to be done by diplomats, like handing out dollars to support small business in Iraq. Clinton says that should stop.

CLINTON: Captains and majors and lieutenant colonels are giving unfettered resources through the Commander's Emergency Response Program to spend as they see fit to build a school, to open a health clinic, to pave a road. And our diplomats and our development experts have to go through miles of paperwork to spend 10 cents.

DOUGHERTY: Just two days on the job, Clinton is flexing her muscles. Traditionally, a new president visits the Pentagon first. Instead, he visited the State Department. And a verbal slip by the vice president showed how the new team is putting diplomacy and Hillary Clinton in the lead.

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: In a moment here, Mr. President, you're going to announce two new powerful weapons in our -- or I guess the secretary is going to announce two very powerful weapons in our diplomatic arsenal.

(END VIDEOTAPE)

DOUGHERTY: Now, this isn't war between the State Department and the Defense. After all, Defense Secretary Robert Gates agrees that State should have more responsibility. But it could be an early signal of the competition to come over who defines foreign policy -- Wolf.

BLITZER: We'll see how that turf battle sort of breaks out.

Thank you, Jill, for that.

Let's check another member of team Obama right now. That would be the new agriculture secretary, the former Iowa governor, Tom Vilsack.

Zain is with us to take a look at the Department of Agriculture.

It's a pretty important job, Zain.

ZAIN VERJEE, CNN STATE DEPT. CORRESPONDENT: It is, Wolf. And just a short while ago, I spoke to Secretary Vilsack himself about what exactly he's been doing today.

Vilsack says he's been setting up his own office space and trying to get his team together. This morning, he got an IT briefing. He says he met with the Inspector General's Office about its work and its oversight of the department.

He was briefed on civil rights cases that were filed against the department. And then he reviewed crop and weather reports as well during his day.

He told me, too, that yesterday, he went to the entrance of the building and introduced himself to all the employees coming in -- Wolf.

BLITZER: What did he say his top priorities were?

VERJEE: Well, there was a long list. Vilsack said he's going to be reviewing agriculture regulations. One of his other priorities is really to implement the farm bill that was passed by Congress. He also wants to get more nutritious foods and programs for children. And among many things he said, he wants to modernize food safety -- Wolf.

BLITZER: Here's a piece of advice -- if he hasn't done it yet, he should meet with some of his predecessors, especially Dan Glickman, the former agriculture secretary. He'll get some good advice on what he can expect.

Zain, stand by. We're coming back to you for more.

Zain Verjee reporting.

The governor of Illinois essentially tells his interrogators, take that. Wait until you hear Governor Blagojevich's partial revenge against lawmakers who could kick him out of office.

And what do young trendsetters now have in common with the pope? They all have videos on YouTube.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're just getting this information into THE SITUATION ROOM. Zain Verjee is working the story for us. It involves that US Airways plane that made that forced landing on the Hudson River.

VERJEE: We want to show you some video, Wolf, just moments ago. It's pretty dramatic.

An engine -- one of the engines from the US Airways plane that crashed into the Hudson River last week has just been pulled up. There you can see a crane. And it's just come up out of the water.

The engine, as you know, Wolf, fell off the Airbus -- of the plane just as it skimmed the water and crash-landed. Investigators are saying that they found remnants of birds in the engine -- Wolf.

BLITZER: What a story that is. Fortunately, everything -- all the passengers were OK.

There's some other news you're following as well, Zain.

VERJEE: Yes. A Maryland teenager who shot his parents and brothers to death has been sentenced to four life terms. Sixteen- year-old Nicholas Browning could be eligible for parole in 23 years with good behavior.

Browning killed his parents and his two younger brothers in February as they slept. He then went to a friend's house to play video games.

And a horrifying story out of Belgium, too, Wolf. A knife- wielding man went on a rampage at a daycare center near Brussels, killing two children and a female worker. Twelve other victims, 10 of them children, needed surgery for their stab wounds. Police arrested a suspect at a supermarket. Residents tell The Associated Press that the man has a history of mental problems.

And embattled Illinois Governor Rod Blagojevich has come out blazing at a news conference. Just minutes ago, he told reporters that he is being denied his right because he cannot call the witnesses he wants at his impeachment trial.

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH (D), ILLINOIS: We're going to challenge the legislature. Do you honestly think that my successor will challenge them when they try to raise taxes or my successor will challenge them when they want to do certain things that might not be good for the people but are all about taking care of those lobbyists and special interests in Springfield? This will have a chilling effect on every governor in the future.

(END VIDEO CLIP)

VERJEE: Blagojevich's impeachment trial starts Monday in the Illinois Senate. He says he will boycott the proceedings because they're not fair -- Wolf.

BLITZER: Zain, important news and good news. I want to alert our viewers, there's going to be a SITUATION ROOM Saturday night, 6:00 p.m. Eastern, here on CNN, in addition to Monday through Friday. A one-hour SITUATION ROOM debuts tomorrow, 6:00 p.m. Eastern.

We've got a good interview with Jay Rockefeller, the outgoing chairman of the Senate Intelligence Committee, and that emotional interview I did with General Colin Powell on Inauguration Day. A lot more coming up.

Set your TiVos or whatever, 6:00 p.m. Eastern, every Saturday, THE SITUATION ROOM, right here on CNN.

President Barack Obama wants to close down the detention center at Guantanamo Bay. Could that put you at risk? Wait until you hear about a terror detainee who was set free then allegedly tried to kill Americans.

And President Obama's doing something that will make it easier for many women to get abortions.

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

(COMMERCIAL BREAK)

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

Happening now, the arm-twisting begins. The administration tells some skeptical Republicans the $825 billion stimulus package is not excessive, it's a jolt, they say, the economy needs and needs right now.

Deadly airstrikes in the first week of President Obama's administration. The Pakistani military says it's not the way to win the war on terror. You're going to hear what the former president of Pakistan thinks. My exclusive interview with Pervez Musharraf, his first since leaving office, that's coming up here in THE SITUATION ROOM.

And women voters helped Barack Obama win the White House. So why are some women's groups already very discouraged with his presidency?

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

But first, Gitmo, the prison camp there, the detainees, some of whom have been released already -- and some of those released detainees apparently returning to the battlefield at al Qaeda.

Brian Todd is looking into this story for us. A very sensitive story, with enormous ramifications.

BRIAN TODD, CNN CORRESPONDENT: Absolutely, Wolf, and the timing of this news extraordinary -- just as a new president takes office and starts to reverse policies on detainees, an indication of just how difficult it is to handle captured terror suspects.

(BEGIN VIDEOTAPE)

TODD (voice-over): A key debate in the president's decision to close Guantanamo Bay just got hotter, the controversy over tracking detainees who are set free.

A U.S. counterterrorism official tells CNN this man, Ali al- Shiri, released from Guantanamo in September of 2007, is now believed to be a key leader in al Qaeda's operations in Yemen. The official says al-Shiri may have been involved in a car bombing outside the U.S. Embassy in Yemen last year that killed nearly a dozen people.

Analysts aren't surprised if he's there.

STEVE COLL, PRESIDENT & CEO, NEW AMERICA FOUNDATION: The fact that he's in Yemen reflects where al Qaeda is regrouping on the Arabian Peninsula. TODD: But between Guantanamo and Yemen, al-Shiri, a Saudi national, was in Saudi custody in a government rehabilitation program.

A Saudi source tells CNN he escaped from that facility, even though experts say the Saudi reeducation programs are the best.

Terrorism analyst Ken Ballen has been to one, interviewed dozens of young men who have gone through. Ballen and other experts say, at these centers, Saudi officials help young jihadists reintegrate into society, giving them and their families financial help, finding them jobs, even finding wives for some. Ballen says they also bring in religious scholars to hit home one important message.

KEN BALLEN, PRESIDENT, TERROR FREE TOMORROW: That perspective is that jihad, holy war, is defensive. It's not to try to convert other religions and other people. It's only if Muslims are attacked. Therefore, many of the -- what al Qaeda does is not really a legitimate jihad, in the minds of learned Islamic scholars.

(END VIDEOTAPE)

TODD: But Ballen and other experts say they're still not all that surprised that the program didn't work with Ali al-Shiri. They say that not everyone can be de-radicalized.

And Ballen says the percentage of these young men who go back to the battlefield from the Saudi centers is only about 5 percent, much less than the recidivism rate for criminals in the U.S. -- Wolf.

BLITZER: I don't understand how these guys, they go back to these countries, like Saudi Arabia, and then they're supposed to be watched, and, then, all of a sudden, they escape?

TODD: Well, that did happen here. Now, this particular man is apparently very deceptive and very disciplined.

And, remember, it wasn't just the Saudis who couldn't hold him. He was released from Guantanamo. According to this document that we have from the U.S. Combatant Review Board, he told American officials, if he was released, he was going to go back to Riyadh, back home, and work at his family's used furniture business. This guy and people like him are very good at being con men. They can get through the system.

BLITZER: Yes, well, not good.

All right, Brian, thanks very much.

Meanwhile, another reversal today in the controversial order of President Bush, earlier, President Reagan, on abortion and how it should be treated by international organizations.

Let's go to our senior political analyst, Bill Schneider.

Bill, how is President Obama now trying to handle this really sensitive issue? WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Wolf, with an abundance of caution, to coin a phrase.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): President Obama is up front about his support of abortion rights.

OBAMA: I am pro-choice. I believe in Roe v. Wade.

SCHNEIDER: But he deals with the issue, as his press secretary has said about a different matter:

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Out of an abundance of caution.

SCHNEIDER: In 1984, President Reagan issued a ban on government funding for international family planning groups that promote abortion. One of Bill Clinton's first acts as president was to lift the ban. President George W. Bush's first executive order was to reinstate it on January 22, 2001, the anniversary of Roe v. Wade.

President Obama is lifting the ban once again. But Mr. Obama waited until after the anniversary of Roe v. Wade, when abortion opponents were marching on Washington. He tries to treat value differences with respect.

OBAMA: If you believe that life begins at conception, then -- and you are consistent in that belief, then I can't argue with you on that, because that is -- that is a core issue of faith for you.

SCHNEIDER: He says he wants to find common ground.

OBAMA: Surely, we can agree on reducing the number of unwanted pregnancies in this country.

SCHNEIDER: Will President Obama also reverse President Bush's ban on embryonic stem cell research?

OBAMA: I usually prefer a legislative process, because those are the people's representatives.

SCHNEIDER: Why such caution? Because President Obama saw what happened when his two predecessors acted boldly on social issues. The country became bitterly divided. Obama wants to turn the page.

OBAMA: ... that the stale political arguments that have consumed us for so long, no longer apply.

(END VIDEOTAPE)

SCHNEIDER: And, speaking of turning the page, President Obama wrote in his book "The Audacity of Hope" that he wants to move beyond -- quote -- "the psychodrama of the baby boom generation, a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago" -- unquote -- Wolf. BLITZER: And we just got official word, only seconds ago, Bill, that he has now formally signed that executive order. So, that is now a done deal.

Bill Schneider, thank you.

It offers hope that people who are paralyzed might one day walk again. The Food and Drug Administration has cleared the way for the first human trials of human embryonic stem cell research. That's from the company set to do the tests, which could start this summer. Researchers will see if the stem cells are safe to use in patients with severe spinal cord injuries and if those patients show any signs of recovery.

The human cells that will be used were authorized for research by former President George Bush back in 2001.

Believe it or not, cellist Yo-Yo Ma and pop star Ashlee Simpson has something in common, the new dust-up over the inaugural performance that looked live, but wasn't.

And Sarah Palin may be ready to tell all. Stand by for our "Strategy Session." We have new information.

And, later, my exclusive interview with the former President of Pakistan Pervez Musharraf -- tough questions about the terror threat in his country right now.

(BEGIN VIDEO CLIP)

BLITZER: But you acknowledge that there are al Qaeda and Taliban bases now established in Pakistan?

PERVEZ MUSHARRAF, FORMER PAKISTANI PRESIDENT: Yes. Yes. Yes.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP)

BLITZER: The music was fabulous at the inauguration, but there's now a little bit of a controversy.

Let's go to Kate Bolduan to tell us what is going on -- Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Wolf.

Well, you know, music was such a big part of the celebration of the inauguration, choirs, marching bands, even Aretha Franklin. But, with one performance, there may have been more to it than meets the eye. (BEGIN VIDEOTAPE)

BOLDUAN (voice-over): We all know lip-synching.

Remember Milli Vanilli?

(MUSIC)

BOLDUAN: And Ashlee Simpson on NBC's "Saturday Night Live."

(MUSIC)

BOLDUAN: But cello-synching?

(MUSIC)

BOLDUAN: The world watched renowned musicians Yo-Yo Ma and Itzhak Perlman, along with their two colleagues, perform "Air and Simple Gifts" by John Williams during the inauguration, but only the people within earshot heard it live.

The rest of the world heard a taped performance prerecorded two days earlier, a spokesperson for the Inaugural Committee says, because of the cold weather and the effect it has on instruments.

So, we asked the experts. Herman Burney teaches as George Washington University and has played the jazz bass for 20 years. He says it doesn't surprise him at all.

HERMAN BURNEY, JAZZ BASSIST: The strings are cold. I don't know if you want to feel them or not, but they're...

BOLDUAN (on camera): Yes.

BURNEY: Yes, they're a little bit colder. So, I think that the strings have contracted some and the bass has contracted a little bit. So, usually, when I'm tuning the base, those two pitches would be right dead on. But I don't know if you could hear it, but they weren't.

BOLDUAN: (voice-over): Organizers say the piano couldn't hold tune for extended periods of time below 55 degrees. So, the quartet decided, after their sound check in freezing temperatures, they would use the recording over their live performance to ensure the quality of the piece.

But the question remains, should the audience have been informed it was prerecorded?

ROBERT BAKER, GEORGE WASHINGTON UNIVERSITY: And they were playing along with themselves, in effect. It's not as if they were misrepresenting themselves. I'm a good singer, but, if I went up and sang something, and it was really Domingo's recording, that would be unethical, to do that. So, we have that fine line. They were entirely on the right side of that line.

(END VIDEOTAPE)

BOLDUAN: Now, organizers -- organizers say it is normal procedure for all performers at the inauguration to lay down recordings beforehand, as a precaution. Even Aretha Franklin, we're told, did so.

But only the quartet decided to use the recording. And, Wolf, I think what -- the rub here, though, was that it was talked about and -- and shown live no TV, and people didn't know it was tape at the time.

BLITZER: And whatever it was, it was gorgeous. It was beautiful.

BOLDUAN: It sure was.

(LAUGHTER)

BLITZER: It was fabulous music.

All right, thanks, Kate, for that.

So, what was it like for Barack Obama only moments before and after he became president of the United States? We have revealing photos of history in the making. We're going to show them to you.

And is Sarah Palin looking to make a few million dollars? Wait until you hear what she's reportedly doing right now.

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

(COMMERCIAL BREAK)

BLITZER: Let's get right to our "Strategy Session." Joining us, the Democratic strategist Paul Begala, and the Republican strategist Ed Rollins. He's a former campaign chairman for Mike Huckabee's presidential campaign, both CNN contributors.

Ed, let me start with you.

What do you think about Governor Paterson's decision to name Kirsten Gillibrand the next United States senator from New York?

ED ROLLINS, CNN SENIOR POLITICAL CONTRIBUTOR: I think, from a Republican perspective, it's the best choice we could have. She doesn't scare anybody off. We have an excellent opportunity of picking up her seat, because it's been a Republican seat.

I don't know her well. She may turn out to be a great candidate, but she's not Mario -- she's not the Cuomos. She's not a Kennedy. And she's not going to chase Republicans away. And she's got to raise a lot of money.

BLITZER: Paul, I don't know if you know this congresswoman, now a senator. I don't know if she's formally been -- she has been formally sworn in. But what do you think? PAUL BEGALA, CNN POLITICAL ANALYST: I actually think it's a great choice for the Democrats.

I think Ed and I might have to both saddle up our ponies and meet there in New York State.

(LAUGHTER)

BEGALA: I know her a little bit. She represents a very Republican district. Ed makes a good point. It could be problematic for the Democrats to hold that district.

But she is a Democrat who has won in a blood-red district. She's a prodigious fund-raiser, a very, very able person. I would not, as we used to say -- as President Bush used to say, I would not misunderestimate Kirsten Gillibrand. I think she's the new star of the Democratic Party.

BLITZER: Does Caroline Kennedy, Paul, sort of fade away, go back to the low spotlight she had before the last month or so?

BEGALA: Yes.

You know, she is an intensely private person. I was always surprised that she was interested in perhaps public service. It's, of course, in her family's DNA. And she comes from just the finest family in America. But I am not surprised that a very private person, at the end of the day, decided to stay in private life.

BLITZER: There's some speculation that the president could name her to some United Nations ambassadorial post for human rights or education, something along those lines, like UNESCO, for example.

Ed, what do you think?

ROLLINS: I would hope she doesn't go away. I think she paid a very heavy price by this. And -- and there was a lot of experience.

And I think she was misguided a little bit. But I think she is -- she is a magic name. The Kennedy family has been a very important name to Democrats and to America. And I would hope that there's someplace for her where she could give back.

I -- but New York politics, starting at the top, running for United States Senate, and particularly you have got to run twice in a four-year period, it's a tough, tough arena.

BLITZER: What does this decision say about the governor, Paul, David Paterson?

(LAUGHTER)

BEGALA: Well, it shows that's he's his own man, that he's a very deliberative person, and really did seem committed, both to Upstate New York, which has not been represented in the Senate for an awfully long time, but also to a woman senator. I think he has clearly looked at some men, probably Andrew Cuomo, the attorney general. But I think it speaks very highly of him that he's willing to take a chance.

One last thing about Caroline Kennedy, if I could nominate her. How about the Court of St. James? Her grandfather, Joseph P. Kennedy, was Franklin Roosevelt's ambassador to Great Britain. It would be wonderful symmetry for this very elegant, very able, very diplomatic woman to represent America, perhaps in London.

BLITZER: You think that's a good idea, Ed?

ROLLINS: I think it's a wonderful idea. I don't think her grandfather served us very well. It was right -- right around World War II. It's how he got rich, though. He basically got a tax on the Scotch distribution in this country. It's how he became rich.

(LAUGHTER)

ROLLINS: I think she can serve and serve well in that kind of a capacity.

I think the key thing here is, Paterson, I think, showed some weakness -- Paul, you may disagree with me on this -- in the course of the last six of seven weeks. And he is kind of an accident.

And I think, to a certain extent, both of the state of the state, and this particular performance today, which wasn't -- I think it may encourage someone like Rudy Giuliani to get in here. And we may have a little bit of hope in a state that we didn't think we had much hope a few months ago, meaning Republicans.

BLITZER: Well, we will see what happens on the political front.

Sarah Palin, the governor of Alaska, Paul, there is word now she is getting ready to sign a multimillion-dollar book deal, which, of course, is her right. What do you think about a tell-all book by Sarah Palin?

BEGALA: Well, it would the best thing to happen to Democrats.

I would buy it or I might just maybe go and borrow it from the library.

(LAUGHTER)

BEGALA: But I would want to read it, because I -- my guess is, she's already been remarkably disloyal to John McCain, who is the man who put her on the map by pointing her on the ticket.

But maybe she can -- I saw one report that she's asking for $11 million? Maybe she can use that to pay for all those clothes that she still hasn't paid for, the $180,000 worth of clothes that she was wearing, but has never paid for. Maybe she could pay for that.

BLITZER: Well, she could pay for a lot more if she gets $11 million. I will say that.

What do you think about the political ramifications, though, Ed, of Sarah Palin potentially writing this kind of book?

ROLLINS: The problem with $11 million Saudi, they want -- they want all the juicy stuff.

I think she ought to write a book. I think it ought to be a substantive book. She could have some about the campaign. But if she wants to have a future in politics -- and she certainly can -- she needs to make it more uplifting. She needs to kind of reintroduce herself. That's not a book that Paul wants to read, but I certainly think it would do her a lot more good than just basically going out and...

(CROSSTALK)

BLITZER: Maybe she does both. She writes a substantive, wonkish kind of policy book, and then makes the $11 million on the tell-all.

ROLLINS: Well, she will do a little tell-all. There's no question. I think she still has some bitterness, particularly towards the staff, who she felt didn't treat her well.

At the end of the day, they're not important people. She's an important person. And I think she has to be very careful not to hurt herself.

BLITZER: Paul, you were on the outside looking in. Was she mistreated by the presidential campaign staff?

BEGALA: Oh, no, not at all. I mean, are you kidding me? I mean, they...

(CROSSTALK)

BLITZER: I mean, when they let her go on that Katie Couric interview?

BEGALA: Right.

(CROSSTALK)

BLITZER: And then do another one, and a third one, even though the first one was a disaster?

BEGALA: Yes, I would not have had a different strategy. I would not have hidden her from the press for so long.

I think that -- and then they started with the network anchors, as you will recall, with Katie Couric, and Charlie Gibson at ABC. I would not have started at the top like that. I would have probably had a very different press strategy for Governor Palin.

But they -- the staff were not the ones who told Sarah Palin not to read any newspapers or to tell her that she could see Russia from her backyard, or any of the other really idiotic things she said in the campaign. I mean, she is the one who made a fool of Sarah Palin. She didn't need any help from the staff.

BLITZER: We will leave it there, guys. We can continue this conversation. And we will talk about that and more.

(CROSSTALK)

BLITZER: Thanks.

The U.S. gave an ally, Pakistan, some $10 billion worth of aid over the past several years, but wait until you hear the former president of Pakistan explain that that wasn't nearly enough. Pervez Musharraf, my exclusive guest, his first major interview since leaving office, that's coming up here in THE SITUATION ROOM.

And revealing photos of the first family before and after they became the first family, we have them, and we're sharing them with you.

And, today, I made an appearance, sort of, on "Live With Regis & Kelly." Wait until you see what happened.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Many Americans grabbed their cameras and cell phones to snap the moment Barack Obama became president.

But "TIME" magazine photographers captured images no one else had.

(BEGIN VIDEOTAPE)

BLITZER: Joining us now, our colleague Callie Shell of "TIME" magazine, our sister publication.

Callie, you had unbelievable access to the new president of the United States on Inauguration Day. And I want to show our viewers some pictures that you took.

Now, turn around. Take a look at this one. Where was he? What was he doing?

CALLIE SHELL, PHOTOGRAPHER, "TIME": This IS in the Capitol in his holding room before he was supposed to go out for the swearing-in.

And he has -- he had taken off his flag and he was putting his flag pin back on. He's not actually checking himself out. He's trying to make sure that the American flag is sitting straight.

BLITZER: And he's been wearing that American flag a lot lately.

SHELL: So...

BLITZER: All right. Let's move on to another picture that we have. Take a look at this one and -- and give us the background.

SHELL: This is in the Green Room of the White House. And they -- the two families had come together -- four families -- before the...

BLITZER: That's Michelle Obama and Laura Bush.

(CROSSTALK)

SHELL: And Laura Bush. And Laura is actually giving Michelle a tour of the artwork, because Michelle, the first lady, is going to update -- you know, is going to do art.

And Laura had acquired a couple of Jacob Lawrence pieces, and she was showing them to Michelle, and just showing her around the White House and trying to make her feel comfortable...

BLITZER: Yes, it's amazing...

SHELL: ... and showing her that this is your new home and how wonderful it is.

(CROSSTALK)

BLITZER: Anyone who's been to that home, been to the White House, sees the art, it's really amazing.

(CROSSTALK)

SHELL: It is. And they have -- I have to say, the Bushes worked very hard, you could, to make sure they were comfortable there, and anything the girls could do for them to make it great, anything they could do.

(CROSSTALK)

BLITZER: Take a look at the next picture and tell us what this is. We obviously see the vice president. He's suffering from a back injury after moving some boxes, moving into his new home in McLean, Virginia. And he had to come to the inauguration in a wheelchair.

SHELL: Yes. And this is in the Blue Room, where they were having tea and coffee. And the first lady and Mrs. Cheney are standing there.

And Joe Biden was, you know, having a conversation. And I think the vice president was just frustrated. He wanted to go. But -- so, it's basically the four families come together. They talk a little bit and chat and just kind of -- they already know each other.

(END VIDEOTAPE)

BLITZER: We thank Callie Shell of "TIME" magazine, our sister publication, for that.

As many of you know, I spent a lot of hours on Inauguration Day with colleague and friend Anderson Cooper. My name came up today when he co-hosted "Live With Regis & Kelly." In fact, you could say I was right there with Anderson and Kelly Ripa.

Listen to this.

(BEGIN VIDEO CLIP, "LIVE WITH REGIS & KELLY")

ANDERSON COOPER, CNN ANCHOR: I'm sitting next to Wolf Blitzer, who's hogging all the space heaters. They had -- they had...

KELLY RIPA, CO-HOST, "LIVE WITH REGIS & KELLY": That Wolf Blitzer.

(LAUGHTER)

COOPER: Yes.

We're basic cable, so we could afford like two space heaters. And Wolf has them both. So, yes, finally, I...

RIPA: How you suffer for your craft.

COOPER: Oh, I know. Exactly.

(LAUGHTER)

COOPER: Exactly.

RIPA: So, did you get -- were you able to wrestle away the space heater from Wolf?

COOPER: I finally was able to -- we splurged, and we got a third space heater. And...

RIPA: You did.

COOPER: So, yes, I was very happy.

RIPA: I got you a present...

COOPER: You did?

RIPA: ... speaking of Wolf Blitzer.

Yes, I don't know if you even were aware that they had these fantastic bookmarks.

COOPER: I have seen these.

(LAUGHTER)

RIPA: But I got you a Wolf Blitzer bookmark.

COOPER: Wow. Look at that.

(LAUGHTER) RIPA: Let's...

(APPLAUSE)

RIPA: Let's recreate that inaugural moment.

(LAUGHTER)

RIPA: "Well, Anderson, I'm toasty warm over here by my two -- count them, two -- space heaters."

(LAUGHTER)

RIPA: Anderson, what do you say?

COOPER: I'm not going to play this game.

(LAUGHTER)

RIPA: "Wolf, I'm cold."

(LAUGHTER)

RIPA: "Wolf, I'm cold. I'm 'A.C. 360.' Don't make me A.C.-720 you right here and now."

(LAUGHTER)

COOPER: Are we done with that?

RIPA: Yes.

COOPER: So, I...

(LAUGHTER)

RIPA: I -- we...

(END VIDEO CLIP)

BLITZER: I got one of these for Jack Cafferty, too, a little Wolf Blitzer bookmark.

Jack, when I see you next, I'm giving it to you for the books you're reading.

CAFFERTY: Thank you very much.

Until then. the...

(LAUGHTER)

CAFFERTY: ... the question this hour: Are Republicans making a mistake opposing President Obama's stimulus plan?

Melissa writes: "The GOP got us all into this mess, so they just need to shut their mouths now and let the Democrats fix it.

Teri in Florida: "They will not accept any responsibility for their actions in bringing our country into this mess. Their arrogance led us here. Their egos won't let them change. They saw how well their plan of stopping any progress worked after their 2006 losses. Now they are living with their 2008 losses, and they are still just 'staying the course'. Let's see how many more seats they'll lose in 2010 if they keep it up."

Joey in Yankee Lake, New York: "Not at all. It is full of pork. A lot of things in there are not stimulative. If the Republicans don't stand up, the Democrats will run away with all the money for their special interests. It's a mistake to have one side make all the decisions."

Jason in Oakland writes: "As a matter of policy, always a good idea to do something that the GOP opposes, unless they try one of those reverse-psychology thingies."

John in Connecticut: "No. We all saw what happened when Democrats failed to stop the conservative movement across Washington. A liberal agenda can be just as detrimental."

And Bruce in Saint Paul writes: "Let me see if I have this right. The Republicans are OK with money for Wall Street with no benefit for the country at large. They favor keeping the tax cuts for the wealthy and lower capital gains taxes. But they won't be able to swallow a bill that tries to get money back to the poor peasants. Didn't they get the memo? The Reagan revolution is over. We have been trickled down on enough."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. Look for yours there, among hundreds of others.

BLITZER: Thanks, Jack.

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

Happening now: President Obama steps up the pressure, urging congressional leaders to quickly pass his economic recovery plan. He wants almost a trillion dollars. Will he give a little to get a lot?

He admits al Qaeda has bases in his country, so how does he feel about the Obama administration's first missile strikes in Pakistan?