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From Iraq to Afghanistan; Interview With Virginia Congressman Eric Cantor

Aired January 27, 2009 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: And plans to buy a luxury jet grounded. Wall Street feels the pressure to end its high-flying ways -- why greed isn't good after the bailout.

And the Pentagon chief on America's most pressing military challenge -- Robert Gates prepares Congress for a shift in priorities from Iraq to Afghanistan -- all of that and the best political team on television.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

The Obama White House now expects the president will get something out of his trek to Capitol Hill today, some Republican support for his economic recovery plan. But Press Secretary Robert Gibbs would not predict how many GOP votes the package would eventually get when he faced reporters just a little while ago.

Our senior congressional correspondent, Dana Bash, has been covering President Obama's talks with House and Senate Republicans today. Let's go to Dana. She's up on Capitol Hill with more.

It was a very dramatic gesture on the part of the president, as you know, Dana, to reach out directly to the House Republicans and then the Senate Republicans.


This is his first trip to Capitol Hill. And his first trip did not include any meetings with Democrats. But I have got to tell you, talking to Republicans going into the meetings, I could not find anybody who said, at least who said in the House, that they would vote yes tomorrow, and same goes for the Republicans when we talked to them coming out of this meeting.


BASH (voice-over): Barack Obama spent two hours and 37 minutes at the Capitol, entirely with Republicans.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I don't expect 100 percent agreement from my Republican colleagues, but I do hope that we can all put politics aside and do the American people's business right now.

BASH: The new president's walk across the aisle in the House and the Senate a carefully choreographed move to show he's making good on a promise for bipartisanship.

But several GOP lawmakers said that, behind closed doors, the spirited discussion and critical questions did not lead to much common ground for his nearly $1 trillion economic stimulus plan.

REP. MIKE PENCE (R), INDIANA: The bill that House Democrats will bring -- bring to the floor tomorrow will literally be a catch-all of traditional pet programs and more government. The only thing it will stimulate is more government and more debt. And the president heard that message today.

BASH: Mr. Obama got an earful from several GOP lawmakers, complaining they have been shut out by his fellow congressional Democrats. Several told him his tax cuts were not deep enough and misdirected, one Republican lawmaker complaining his plan gives tax cuts to Americans who don't pay income tax. On that, Mr. Obama would not budge, one GOP source saying he responded, "Feel free to whack me over the head because I probably will not compromise."

OBAMA: There are some legitimate philosophical differences with parts of my plan that the Republicans have and I respect that. In some cases they may just not be as familiar with what's in the package as I would like.

I don't expect 100 percent agreement from my Republican colleagues, but I do hope that we can all put politics aside and do the American people's business right now.

BASH: The reality is, Mr. Obama didn't have much of a shot at changing GOP minds. Before he arrived, CNN is told that House GOP leaders urged their rank-and-file to vote against his stimulus plan. Even moderate Republicans tell us they're wary.

REP. JIM GERLACH (R), PENNSYLVANIA: Not intending to be a rubber-stamp for any particular president, regardless of whether they're Republican or Democrat.


BASH: Now, several GOP lawmakers in the House and the Senate say that Mr. Obama did not come with any concrete promises to listen to or actually to take some of the Republicans' concerns and make some concessions. That did not happen at all.

However, Wolf, we are told that he did say that this is just the beginning of the process, this vote in the House tomorrow. We understand that it will probably not get a lot of Republican support, but he did say that he would go back and talk to his advisers, at least, on one of the Republicans' biggest gripes, and that is that this tax cut plan does not have enough in it for small businesses -- Wolf.

BLITZER: Dana Bash, thanks very much. And we're going to be hearing extensively from President Obama this hour. Stand by. He's got lots to say. Meanwhile, up on the Hill, the defense secretary, Robert Gates, was trying to set the stage for a major troop buildup in Afghanistan. It was the Bush administration holdover's first session with lawmakers since joining team Obama.

Our Pentagon correspondent, Chris Lawrence, is here with details.

And it was pretty significant, what he told lawmakers.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Exactly, Wolf. Secretary Gates told them that the U.S. military now has a new focus.


LAWRENCE (voice-over): Defense Secretary Robert Gates left no doubt: The American military has shifted its focus.

His team is outlining several options for President Obama to get out of Iraq. The fastest is 16 months, but their priorities are elsewhere.

ROBERT GATES, U.S. SECRETARY OF DEFENSE: There is little doubt that our greatest military challenge right now is Afghanistan.

LAWRENCE: That means, if President Obama gives the OK, plans are in place to deploy at least 15,000 more troops to Afghanistan.

GATES: We could have two of those brigades there probably by late spring, and potentially a third by midsummer.

LAWRENCE: The general in charge of Afghanistan says, big picture, he needs about 30,000 more troops. And, for the first time, Secretary Gates indicated, that is about the limit to what he would support.

GATES: I would be very skeptical of any additional force levels, American force levels, beyond what General McKiernan has already asked for.

LAWRENCE: Secretary Gates asked for more surveillance and reconnaissance equipment in Afghanistan, but admitted, overall, the military will have to make do with less money.

GATES: The spigot of defense spending that opened on 9/11 is closing.

LAWRENCE: But the hunt for al Qaeda continues. In a rare move, Secretary Gates not only admitted U.S. missile strikes into neighboring Pakistan; he said they won't stop.

GATES: Both President Bush and President Obama have made clear that we will go after al Qaeda wherever al Qaeda is. And we will continue to pursuit that.

SEN. CARL LEVIN (D-MI), ARMED SERVICES COMMITTEE CHAIRMAN: Has that decision been transmitted to the Pakistan government? GATES: Yes, sir.


LAWRENCE: By next year, the Pentagon expects to give troops two years at home for every one year deployed. But they will still be shouldering the burden in Afghanistan.

More Americans going to Afghanistan would add to the number of NATO coalition troops already there. Three nations contribute the most, the United States, the United Kingdom and Germany. But there are 39 nations contributing to the NATO troop coalition. A majority, 26 countries, are contributing fewer than 500 troops.

Wolf, I know a lot of high schools with more students than that.

BLITZER: Canada does have a significant contribution as well.

LAWRENCE: They do.

BLITZER: Not one of those modest contributors.

LAWRENCE: They do.

BLITZER: Chris, thanks very much.

Let's check in with Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Former President Jimmy Carter is telling the Associated Press that Israel will face a catastrophe unless it revives the Middle East peace process and establishes an independent Palestinian state.

It's a sentiment that we have heard from Carter before. And he's saying it now as he's making the rounds pitching his new book on that very subject.

But timing is everything. President Obama sat down for his first formal television interview since taking office with the Dubai-based Arab-speaking network Al-Arabiya. It's a calculated move for the president to make good on his promise to improve Muslim-American relations in the wake of the Bush administration.

In the interview, he told Muslims that Americans are not the enemy, and he vowed to hunt down terrorist groups who kill innocent civilians, while respecting laws.

The interview comes as the president's newly tapped special envoy for Middle East peace, former Senator George Mitchell, is on his first trip to the region to meet with Arab leaders.

Perhaps, like clockwork, the three-week-long -- the weeklong cease-fire between Israel and Gaza that halted three weeks of fighting was ended when Palestinians detonated an explosive device at an Israeli army post and Israeli helicopters fired back in response. Some things don't change much. Here's the question: Are the chances for peace in the Middle East any better with President Obama than they were with President Bush? Go to Post a comment on my blog.

BLITZER: And, Jack, we're going to be playing extensive excerpts from the president's comments on the Middle East with Al-Arabiya. That's coming up this hour, what he has to say about the Israeli- Palestinian conflict and a lot more. You're going to want to hear it.

And tomorrow here in THE SITUATION ROOM, Jimmy Carter, the former president of the United States, will talk about the Middle East and a lot more. Stand by.

You need economic help now. The president says one thing could stand in the way.


OBAMA: The key right now is to make sure that we keep politics to a minimum.


BLITZER: If politics could be the problem, can the president find the economic solution by working with Republicans? You're going to hear what the president is saying about his economic strategy at length. That's coming up next.

And the number-two Republican in the House was in part of that meeting with President Obama. What's his reading of the president's intentions? Republican Congressman Eric Cantor, he is standing by live.

And spending vs. tax cuts, which could do more to fix the economy? You may be surprised.

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


BLITZER: President Obama went to Capitol Hill today to try to deliver two things he says the American people want, economic recovery and political unity.

Here's what he had to say about his separate meetings with the House and Senate Republicans.


OBAMA: We had a very constructive meeting with the House members, members of the Republican Caucus.

I'm a little bit late for my Senate colleagues -- former Senate colleagues.

And the main message I have is that the statistics every day underscore the urgency of the economic situation. The American people expect action. They want us to put together a recovery package that puts people back to work, that creates investments that assure our long-term energy independence, an effective health care system, an education system that works. They want our infrastructure rebuilt. And they want it done wisely so that we're not wasting taxpayer money.

As I explained to the Republican House Caucus and I will explain to my former Senate colleagues, the recovery package that we've proposed and is moving its way through Congress is just one leg in a multi-legged stool. We're still going to have to have much better financial regulation. We've got to get credit flowing again. We're going to have to deal with the troubled assets that many banks are still carrying and that make the -- that have locked up the credit system. We're going to have to coordinate with other countries because we now have a global problem.

I am absolutely confident that we can deal with these issues, but the key right now is to make sure that we keep politics to a minimum. There are some legitimate philosophical differences with parts of my plan that the Republicans have and I respect that. In some cases they may just not be as familiar with what's in the package as I would like.

I don't expect 100 percent agreement from my Republican colleagues, but I do hope that we can all put politics aside and do the American people's business right now.

All right?


BLITZER: President Obama speaking on the Hill.

Let's get some reaction from the Republicans.

Representative Eric Cantor is a representative from Virginia. He's the number-two Republican in the House of Representatives, the minority whip.

Congressman, what was it like when he walked into this room full of Republicans? What struck you most about his message?

REP. ERIC CANTOR (R-VA), HOUSE MINORITY WHIP: Well, what struck me most, Wolf, was the fact that, frankly, it's the third time that he has met with Republicans, actually, in the last couple weeks.

And that is encouraging, because I think he's trying to deliver on his promise of changing the way that Washington works. So, we welcomed him. We -- we listened to what he had to say.

And, really, now, you know, this vote that will take place tomorrow in the House is just a first step in the process. And I'm hopeful that we can get a stimulus bill that -- that actually stimulates the economy, which means it would preserve, protect and create jobs. BLITZER: You -- before the meeting, you were urging your fellow Republicans to vote against the measure tomorrow. Do you still feel like that after the meeting?

CANTOR: You know, Wolf, and this is the message that we delivered to the president.

Somehow, his goal of trying to change the way things work here in Washington has not seeped through to the congressional Democrats. In fact, the bill that they are bringing forward to the floor tomorrow does not do what we need to do to stimulate the economy.

There's $850 billion in the bill. Most of it is spending on projects that may be laudable. You know, you may want to fund, you know, a $300,000 sculpture garden in Miami. You may want to put $200 million towards replanting the grass here in Washington, but, frankly, they're not items that are stimulative.

We're in, as the president has said, unprecedented economic times. We have got to get some relief for the families of this country. This bill is not the way to do that. We're trying to help.


BLITZER: I will take that as a no. You're going to vote against this measure tomorrow. You want your fellow Republicans to vote against it. The White House now saying they believe some Republicans will support it.

You're the whip. Your job is to count votes. How many Republicans in the House do you believe will support the president?

CANTOR: Well, Wolf, we don't ever talk about numbers before they happen.

But I will tell you, I'm very encouraged by the discussions I have had with members here, in their earnest statements that they want this bill to produce results. And that's what we want to do, join with President Obama and get the bill right.

I agree. We are in urgent, urgent times. But we can't sit here and just borrow $1 trillion, which is what it will be by the time it's done, $1 trillion that we don't have, in order to fund programs that may be nice, but that don't do the job, which is stimulate this economy, protect the jobs we have, and create new ones.

BLITZER: Eric Cantor, the number-two Republican in the House, thanks very much.

CANTOR: Thank you, Wolf.

BLITZER: Can the U.S. make a difference in the Middle East?


OBAMA: Ultimately, we cannot tell either the Israelis or the Palestinians what's best for them. They're going to have to make up -- some decisions.


BLITZER: In a special message to the Muslim and Arab world, the president tells why the U.S. must nevertheless act right away.

Plus, a $35,000 commode and $87,000 area rug -- why corporate greed is out and thriftiness is in.

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


BLITZER: We're getting ready to hear from President Obama. He's dramatically reaching out to the Muslim and Arab world. Stand by for in-depth comments from the new president.

Meanwhile, the new treasury secretary, he's beginning his job by taking on the worst economic meltdown since the Great Depression. That's no small challenge for Timothy Geithner. And he knows it.

Let's go to our White House correspondent Dan Lothian with more on this, what, first full day on the job.


And Mr. Geithner is promising to push for transparency, accountability and also oversight in how the TARP money is spent. And he's also now working to try to fix this battered economy.


LOTHIAN (voice-over): If the bad U.S. economy is a runaway train, Treasury Secretary Timothy Geithner has just been thrown into the locomotive -- stopping the train loaded down with job losses, bank failures, and a mortgage meltdown his priority number one.

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: We're at a moment of maximum challenge for our economy and for our country. And our agenda, Mr. President, is to move quickly to help you do what the country asked you to do.

LOTHIAN: In his first official move as treasury secretary, Geithner targeted lobbyists and special interests, putting new rules in place that will limit their influence on the $700 billion rescue program and try to ensure that politics plays no role in how money is handed out.

This comes amid criticism that some companies, like General Motors and Wells Fargo, ramped up spending on lobbying the government for more money last year, even as they were getting billions of dollars in taxpayer-funded bailout .

In a statement, Geithner said, "American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system." GEITHNER: I, Timothy F. Geithner...


GEITHNER: ... do solemnly swear...

LOTHIAN: At his swearing-in ceremony, a reminder from the president, as if he needed one, that the task ahead is daunting.

OBAMA: You have got your work cut out for you, as I think everybody knows.

LOTHIAN: Mr. Obama said Geithner has his deepest trust and full confidence, and again stressed that the economic turnaround will not be quick.

But at the conservative Heritage Foundation, questions about how the recovery with Geithner leading the way will play out.

J.D. FOSTER, HERITAGE FOUNDATION: The American people are not known for their patience. The president is going to have to move very quickly in putting in place policies that will work to stimulate the economy. Unfortunately, I'm afraid their policy is not only not going to be hopeful in getting the economy back on its feet, its -- their policies are actually going to make matters significantly worse.


LOTHIAN: Geithner was confirmed despite some personal tax issues still unresolved. The Senate vote was 60-34.

What's interesting is some of that opposition came from Democrats, like Senator Robert Byrd. It raises the question, though, as he moves forward to try and turn this economy around, will he be hampered by his past? -- Wolf.

Thanks very much, Dan Lothian, at the White House.

The Obama administration still is in transition at the highest levels. The new White House consider 20 positions to have what's called Cabinet-level status. President Obama's nominees for 14 of those jobs have been confirmed by the Senate and they are now all at work.

But six Cabinet-level posts still are pending. Five nominees haven't been confirmed yet. President Obama still needs to name his choice for commerce secretary, since Governor Bill Richardson dropped out of that. For now, though, holdovers from the Bush administration are filling those vacant positions.

The president is diving into the Middle East conflict in a major, major way. And in a brand-new interview, President Obama talks about a time frame for a Palestinian state and sacrifices Israelis may have to make. Plus, corporate executives are having their expensive rugs and other perks pulled out from under them -- the growing pressure on bailed-out companies to cut out luxuries.

And an important new show of support for the president's choice to be the attorney general of the United States from a Republican senator who had seemed to questioner Eric Holder's integrity.

Stand by for the best political team on television.


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

Happening now: The stock market finished higher, despite the beating the job market took again today. Six more companies announced job cuts, totaling more than 10,000 jobs lost on this day alone.

Former President Bill Clinton made millions off of foreign companies. The Associated Press is reporting that the former president earned $6 million in speaking fees last year. Hillary Clinton disclosed the earnings to prevent any appearance of a conflict of interests with her new job as the secretary of state.

And the FBI's secret recordings revealed -- state senators involved in the Illinois governor's impeachment trial got their first listen to the wiretap tapes.

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

President Obama has given his first television interview since becoming president -- the topic, problems in the Middle East, especially achieving lasting peace between the Israelis and the Palestinians.

The president spoke with Al-Arabiya Television. It's largely geared to Arab and Muslim audiences.


OBAMA: I think the most important thing is for the United States to get engaged right away.

And George Mitchell is somebody of enormous stature. He is one of the few people who have international experience brokering peace deals. And, so, what I have told him is, start by listening, because, all too often, the United States starts by dictating, in the past, on some of these issues. And we don't always know all the factors that are involved.

So, let's listen. He's going to be speaking to all the major parties involved. And he will then report back to me. From there, we will formulate a specific response.

Ultimately, you know, we cannot tell either the Israelis or the Palestinians what's best for them. They're going to have to make up -- some decisions. But I do believe that the moment is right for both sides to realize that the path that they are on is one that is not going to result in prosperity and security for their people, and that, instead, it's time to return to the negotiating table.

It's going to be difficult. It's going to take time. I don't want to prejudge many of these issues. And I want to make sure that expectations are not raised, so that we think that this is going to be resolved in a few months.

But, if we start steady progress on these issues, I'm absolutely confident that the United States, working in tandem with the European Union, with Russia, with all the Arab states in the region, I'm absolutely certain that we can make significant progress.

HISHAM MELHEM, AL-ARABIYA TELEVISION: Now there is an Arab peace plan. There's a regional -- regional aspect to it. And you have indicated that. Will there be a kind of shift, a paradigmatic shift?

OBAMA: Well, here -- here's what I think is important.

You -- you look at the proposal that was put forth by King Abdullah of Saudi Arabia.

MELHEM: Right.

OBAMA: I might not agree with every aspect of the proposal, but it took great courage...

MELHEM: Absolutely.

OBAMA: ... to put forward something that is as significant as that.

I think that there are ideas across the region of how we might pursue peace. I do think that it is impossible for us to think only in terms of the Palestinian/Israel conflict and not think in terms of what's happening with Syria or Iran or Lebanon or Afghanistan and Pakistan.


OBAMA: These things are interrelated.


OBAMA: And what I've said -- and I think Hillary Clinton has expressed this in her confirmation -- is that if we are looking at the region as a whole and communicating a message to the Arab world and the Muslim world that we are ready to initiate a new partnership based on mutual respect and mutual interest, then I think that we can make significant progress.

Now, Israel is a strong ally to the United States. It will not stop being a strong ally to the United States. And I will continue to believe that Israel's security is paramount. But I also believe that there are Israelis who recognize that it is important to achieve peace. They will be willing to make sacrifices if the time is appropriate and if there is serious partnership on the other side.

And so what we want to do is to listen, set aside some of the preconceptions that have existed and have built up over the last several years. And I think if we do that, then there's a possibility, at least, of achieving some breakthroughs.

MELHEM: Now there is an Arab peace plan. There is a regional -- a regional aspect to it. And you've indicated that.

Will there be a shift, a paradigmic shift?

OBAMA: Well, here's what I think is important. You look at the proposal that was put forward by King Abdullah of Saudi Arabia.

MELHEM: Right.

OBAMA: I might not agree with every aspect of the proposal. But it took great courage to put forward something that is as significant as that.

MELHEM: Absolutely.

OBAMA: I think that there are ideas across the region of how we might pursue peace. I do think that it is impossible for us to think only in terms of the Palestinian-Israeli conflict and not think in terms of what's happening with Syria or Iran or Lebanon or Afghanistan and Pakistan. These things are interrelated.

And what I've said -- and I think Hillary Clinton has expressed this in her confirmation -- is that if we are looking at the region as a whole and communicating a message to the Arab world and the Muslim world, that we are ready to initiate a new partnership based on mutual respect and mutual interests, then I think that we can make significant progress.

Now, Israel is a strong ally to the United States. It will not stop being a strong ally to the United States and I will continue to believe that Israel's security is paramount.

But I also believe that there are Israelis who recognize that it is important to achieve peace. They will be willing to make sacrifices if the time is appropriate and if there is serious partnership on the other side.

And so what we want to do is to listen and set aside some of the preconceptions that have existed and have built up over the last several years. And I think if we do that, then there's a possibility, at least, of achieving some breakthrough.

MELHEM: I want to ask you about the broader Muslim world. But let me -- one final thing about the Palestinian/Israel theater. There are many Palestinians and Israelis who are really frustrated now with the current conditions. And they're losing hope. They're disillusioned. And they believe that time is running out on the two state solution, because, mainly because of the settlement activities in the Palestinian occupied territories.

Will it still be possible to see a Palestinian state -- and we know the contours of it -- within the first Obama administration?

OBAMA: I think it is possible for us to see a Palestinian state -- I'm not going to put a time frame on it -- that is contiguous, that allows freedom of movement for its people, that allows for trade with other countries, that allows the creation of businesses and commerce, so that people have a better life.

And, look, I think anybody who has studied the region recognizes that the situation for the ordinary Palestinian, in many cases, has not improved. And the bottom line in all these talks and all these conversations is, is a child in the Palestinian territories going to be better off, do they have a future for themselves and is the child in Israel going to feel confident about his or her safety and security?

And if we can keep our focus on making their lives better and look forward and not simply think about all the conflicts and tragedies of the past, then I think that we have an opportunity to make real progress.

But it is not going to be easy. And that's why we've got George Mitchell going there. This is somebody with extraordinary patience, as well as extraordinary skill. And that's what's going to be necessary.


BLITZER: The president of the United States in that interview with Al Arabiya. He's reaching out to the Arab and Muslim world.

We had a technical glitch in there, so you saw one of his answers repeated twice. We apologize for that.

Meanwhile, the president was on Capitol Hill today trying to rally support for his stimulus plan -- his message to Democrats and Republicans.

Plus, he grilled the attorney general nominee at his confirmation hearings. Now the top Republican of the Senate Judiciary Committee has a change of heart.

What's going on?

We'll explain that and lots more, right here in THE SITUATION ROOM.


BLITZER: President Obama today meeting with Republicans on their turf, trying to broaden support for his economic stimulus plan. Joining us now to talk about that and more, our CNN political contributor, Tara Wall -- there she is on the right -- of "The Washington Times;" our senior political analyst, Gloria Borger -- she's all the way on the left; and our CNN political contributor Dana Milbank of "The Washington Post"...



BLITZER: He's right in the middle...


BORGER: Oh, yes.


BLITZER: And that's where I think he wants to be.

All right, guys, let's talk a little bit about reaching out, Gloria, to Republicans on the Hill. There was an image -- he walked out to a microphone on the Hill. You know what, I didn't see Nancy Pelosi standing next to him or Harry Reid. He was there by himself, because today is the day he's meeting with Republicans, as opposed to Democrats.

BORGER: Yes. Republicans are saying they've met more with Barack Obama than they did with George W. Bush or with Nancy Pelosi. And so he wants to change the tone in Washington. I'm not so sure that he's changing anyone's mind. There are true philosophical differences about what should be in this stimulus package.

But I think he clearly wants to go out there, for political reasons, also, and say, look, I made the effort, I went to the Hill, they decided to reject it.

BLITZER: And he said -- Eric Tanner, the number two Republican in the House -- you just saw him here in THE SITUATION ROOM -- he said very nice. Appreciate the gesture. But he's urging all the Republicans to vote against the president's plan.

MILBANK: Yes. I was there listening to these guys as they came out of the meeting. And to a member, they were all saying, we really appreciate it and he's not getting my vote.

WALL: Right.

MILBANK: I'm hearing maybe he gets single digit...

BLITZER: In the House.

MILBANK: ...Republican support in the House, which is extraordinary. And it's sort of a slap in the face for him coming up and doing this.

But he -- he does get some bonus points for being sort of a post- partisan president, although I think the Hill is now post post- partisan.

BORGER: Right.


BLITZER: Beyond that. But, you know, some of the Democrats are saying, you know, if these Republicans, especially in states like Pennsylvania or Ohio or your home state of Michigan -- if the moderate Republicans vote against this, they're going to have a big price to play -- to pay.

WALL: Well, I don't know about that. I mean, listen, they're actually listening to their constituencies. And, you know, the tone of the American people -- a recent poll showed that 60 percent of Americans feel like there's going to be too much government spending. And I think that they want to make sure they're tapping into who their constituents are.

And, quite frankly, for all that Barack Obama has done -- cooperation, respect, bipartisanship -- it's Nancy Pelosi that's -- that's ending it for him and that's causing him the toughest problems with Republicans. I mean that can't be ignored. And I think there is a spirit of bipartisanship...

BLITZER: But you would have thought, Dana -- and let me let you weigh in. The president is not calling for any tax increases among this -- in the $825 billion package.


BLITZER: The Republicans, presumably, normally, would like that.

MILBANK: They would. And I suspect some of what's going on here is bargaining. And that is, they're saying, right, we're going to vote down this proposal, then it goes into this conference. We'll get a few concessions out of it, then we can all pile in as one big bipartisan happy family.

BLITZER: And will they meet in the end, when there's a signing ceremony in the Rose Garden, Republicans and Democrats, and make nice?

BORGER: Maybe.


MILBANK: A few Republicans.

BORGER: I don't want to go out in a limb, but, look, there are philosophical differences here. But don't forget, in the end, it's important for everyone to have a good economy, because if there isn't a good economy, they're all in trouble politically. Now, obviously, Barack Obama will assume ownership of this economy no matter what. BLITZER: Eric Holder -- let's talk about him. He's going to be the next attorney general of the United States -- by all accounts, especially after we heard from the ranking Republican on the Judiciary Committee, Arlen Specter.

Listen to what he said back on January 6th and what he's saying now.


SEN. ARLEN SPECTER (R-PA), JUDICIARY COMMITTEE: There is also the issue of character. And sometimes it is more important for the attorney general to have the stature and the courage to say no instead of to say yes. At no time did I challenge Mr. Holder's integrity. It was a question of judgment and a question of independence. And all factors considered, as I say, I've decided to vote for him.


BLITZER: All right. He's going to vote to confirm Eric Holder, which I think paves the way for his confirmation.

BORGER: Right. I mean even if -- with all due respect to Arlen Specter, even if he had voted against Holder, I think Holder still would have -- would have been confirmed. But it's very clear that Holder did well at his confirmation hearings. So there's going to be a lot of controversy over torture and those sorts of questions.

But, in the end, I think that Arlen Specter may have made a political decision that this wasn't a fight he wanted to have.

BLITZER: Tara, what do you think?

WALL: Well, you know, listen, I think, obviously, Specter backed down a little bit. But at end of the day...

BORGER: A little bit?


WALL: But, listen, at the end of the day, yes, I mean, the confirmation was a foregone conclusion. I think he saw the writing on the wall, regardless of some of the concerns that conservatives had about Holder.

MILBANK: And I think this is the Specter M.O. He did the same thing with Alberto Gonzales. He barks like a big angry dog and then, in the end, he rolls over and you scratch his belly.

BORGER: And he's up for reelection.

BLITZER: (INAUDIBLE). But he is up for reelection.

WALL: And he's moderate.

(CROSSTALK) WALL: He's a moderate Republican, anyways.

BLITZER: Yes. No, he's a very moderate Republican. And I think it's fair to call him, on many issues -- and you've been up on the Hill a long time, Dana, a maverick.

MILBANK: That word has been used on occasion for others.


BLITZER: It looks like, Tara...

BORGER: He'll have to change (INAUDIBLE).

BLITZER: ...the president is going to get almost -- I can't see, except for Bill Richardson having to drop out for unrelated reasons, for whatever they were, he's going to get his team in place fairly soon.

WALL: He is. I mean, there hasn't been -- you know, there hasn't been a lot of controversy. I do think the fact, though, that 30 Republicans did vote against his nominee yesterday -- I think that that -- look, there are going to be concerns when you have -- when you have certain nominees. But overall, I think Republicans, conservatives, everyone right now is very confident that he has a good team that's going to move us forward in the right direction, at least in the short-term. We'll see what happens for the long-term.

BLITZER: Guys, thanks very much.

From shareholders to the White House, CEOs are hearing the same message -- the days of lavish spending over.

But are they listening?

Plus, he's graced the cover of countless magazines, but never like this -- President Obama on the cover of "Mad" magazine.

CNN's Jeanne Moos is getting ready to take a "Moost Unusual" look.


BLITZER: The Obama administration is putting its foot down on those banks and other financial institutions that take taxpayer dollars.

Let's go to Mary Snow.

And she's working this story.

Growing pressure on these companies that take our money to do what -- Mary?

MARY SNOW, CNN CORRESPONDENT: Well, they're doing all kinds of things. And they're certainly under pressure, because Wall Street is under fire for having a tin ear toward Americans' outrage. But there are signs that message is starting to sink in.


SNOW (voice-over): Citigroup's plan to buy that $42 million luxury jet, seen here on Dassault Aviation's Web site, took a hard landing. The bank reversed itself after coming under pressure from the Obama administration.

Citigroup has already accepted $45 billion in bailout money.

"Fortune" magazine's Andy Serwer calls it a new era.

ANDY SERWER, MANAGING EDITOR, "FORTUNE" MAGAZINE: These companies and these executives -- especially the ones that have taken bailout money -- have got to realize that, you know, they're under the microscope in a totally different way right now.

SNOW: John Thain, the former CEO of Merrill Lynch, now owned by Bank of America, raised eyebrows following reports that he spent $35,000 on a commode for his office -- not to mention an $87,000 area rug. In an interview with CNBC, he admitted he spent more than $1 million in office renovations and called it a mistake.

JOHN THAIN, FORMER CEO, MERRILL LYNCH: I apologize for spending that money on those -- on those things. And I will make it right. I will reimburse the company for all of those costs.

SNOW: And in a sign that lavish living continues past bailouts and bank failures, deed records show that Richard Fuld, the former CEO of bankrupt Lehman Brothers, sold his $13 million Florida mansion to his wife for $100. While his reasons for doing so aren't known, some attorneys say he could have done it to protect his wealth from possible lawsuits or bankruptcy.


SNOW: Graef Crystal is an executive compensation expert. He says while Wall Street executives may rein in excesses with the spotlight on them, he doesn't see big pay packages going away for good.

CRYSTAL: They aren't going quietly in the night, I don't think. They're going to start giving themselves more stock awards or seeing consolation prizes here and there.


SNOW: But for now, bonuses are under scrutiny. New York's attorney general today subpoenaed former Merrill Lynch CEO John Thain as part of a probe into $4 billion worth of bonuses given to employees late last year -- before Merrill was taken over by Bank of America. And Thain is leaving Bank of America -- Wolf.

BLITZER: Mary, thanks very much for that.

Let's go to Jack Cafferty right now. He's got "The Cafferty File" -- Jack?

CAFFERTY: The question this hour is: are chances of peace in the Middle East any better with President Obama than they were with President Bush?

Most of you seem to think they might be.

Mike in New York: "Not a chance, Jack. Every president since Truman has tried and failed. Clinton had the best deal they're likely to see worked out with the PLO, only to have them walk away at the end. Until so-called moderate Muslims renounce the terrorists who set the agenda, there will be no peace."

Tripp in Pennsylvania: "Obama is intellectually more capable of responding to the needs of both Israelis and Palestinians than was Bush. Also, the acting and probable new prime minister of Israel, Tzipi Livni, seems ready to address the removal of Jewish settlements from the West Bank and reform Israel's apartheid-like treatment of Palestinians. It may be bleak, but now there is once again hope."

John in Colorado: "In attempting to start a dialogue with the Arab world, Barack Obama is certainly off to a good start to right the wrongs of the Bush administration's dealings in the Middle East. But I doubt his chances for a lasting peace are any better. The roots of the problems in that area are a complex mix of religion, social structure, poverty of the masses and politics beyond our ability to change -- at least in the short-term."

Sue writes: "I've heard peace between Israel and the Palestinians since I was two. I'm 62. I've yet to see it. Having televised to Israel, Egypt and Jordan in recent years, my impression is the gap and distrust is almost genetic. My most vivid impression is the unhappiness in the faces of the people we saw in those Muslim countries. Their lives are so hard. And they blame us. For them to accept our mediation would require this country to renounce Israel. There's no chance of that. So getting deep into that situation is a waste of time and effort."

Paul in Indiana writes: "November the 4th, the entire world celebrated the outcome of our elections. I'm sure the people in the Middle East were thrilled by the results. I'm not sure President Obama can make a difference in that war torn part of the world. But I don't think he'll have to dodge any shoes when he visits there."

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

BLITZER: All right, Jack.

Thank you.

Let's check in with Zain Verjee.

She's monitoring some other important stories incoming into THE SITUATION ROOM right now -- Zain.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, a man considered one of the greatest American writers, John Updike, died today. He also had more than 60 novels, short stories and poems published during his lifetime. Some of Updike's most famous works is his rabbit series, which earned the 76-year-old two Pulitzer Prizes. Updike had been battling lung cancer.

A rough landing this morning for a FedEx cargo plane in Lubbock, Texas. The twin turboprop aircraft crashed short of the runway and caught fire. The plane landed in a freezing mist, but authorities aren't sure if weather was a factor. But both crew members walked away safely.

And, Wolf, something happened at a California hospital that's only happened one other time in the U.S. -- eight babies. Eight born to one mother. Now, doctors have a pretty amazing update. The octuplets are all breathing on their own. Doctors went into yesterday's delivery thinking that there were just seven babies and the eighth was sort of a surprise. The six boys and two girls all weigh less than four pounds. Eight babies -- Wolf. Eight.

BLITZER: Well, we want to congratulate that lucky, lucky family.


BLITZER: Thanks very much.

Picking names -- eight names, that's going to be fun, too.

VERJEE: Eight names.

BLITZER: All right, Zain.

Thank you.

There's no question that the president of the United States has a very stressful job -- taking over the country when the economy right now is in a mess.

But as our Jeanne Moos shows us, some have a "Moost Unusual" view of President Obama.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): When President Obama said...

OBAMA: The time has come to set aside childish things.

MOOS: We hope he didn't mean this childish thing. Sure, he's graced a million magazine covers. But "Mad" shows him as we've never seen him -- "The First 100 Minutes" -- surrounded by dire headlines, smoking five cigarettes simultaneously while chugging Pepto-Bismol and popping Excedrin -- not quite the way the official White House photo depicts him. But some complain the magazine personified by Alfred E. Newman missed something with its Obama caricature.

(on camera): You know, you have gotten some criticism for not making his ears big enough in this, you know?

JOHN FICARRA, EDITOR-IN-CHIEF, "MAD" MAGAZINE: He is -- he does have big ears. There's no question about it. He even mocked himself about the Alfred E. Smith Dinner about his ears.

MOOS (voice-over): The Alfred E. Smith Dinner named after a former New York governor.

OBAMA: As it's often been said that I share the politics of Alfred E. Smith and the ears of Alfred E. Newman.


MOOS: President Obama is always joking about his ears. When he visited Mt. Rushmore, he was asked if he'd like to see his face up there.

OBAMA: I don't think my ears would fit.

MOOS: "Mad" did accentuate Obama's ears the first time he appeared on its cover, right after his nomination.

"Time Magazine" named this morph of Alfred E. Smith and Obama one of the top 10 magazine covers of 2008.

(on camera): What is this?

FICARRA: This is what we call the celebrity snap.

MOOS (voice-over): Readers send in photos of themselves posing with celebs holding "Mad."

FICARRA: So here we have a former president, Mr. Bush, holding up a cover that says "Mad 20 Dumbest," of which he was in that.

MOOS: Ah, the Bush years supplied plenty of covers for "Mad" -- some of which must have made Republicans mad.

But the magazine industry is in trouble and "Mad" isn't amused. It was just announced it would be reduced to quarterly publication.

FICARRA: We pretty much get feedback that one out of every three issues of "Mad" is funny. And we decided just to print those three or four a year. It will be fine.

MOOS: It will be fine -- that's what the president must be saying while he tries to save our butts.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE) BLITZER: With unemployment at a 16-year high, look at this long line in the cold in a job fair -- just one of our Hot Shots, pictures from tomorrow's newspapers, coming up next.


BLITZER: Here's a look at Hot Shots coming in from our friends at the Associated Press -- pictures likely to be in your newspapers tomorrow.

Over at the Capitol, the statue of George Washington is seen in Statuary Hall.

In Chicago, people stand in a long line in the cold in a job fair. The unemployment rate is at a 16-year high.

In Kentucky, a man catches some air as he sleds down a hill.

And in India, a woman performs a Republic Day dance at the presidential palace.

Some of this hour's Hot Shots -- pictures worth a thousand words.

We want you to check out our political podcast. To get the best political team to go, you can subscribe at

Tomorrow here in THE SITUATION ROOM, the former president of the United States, Jimmy Carter. He'll be among my many -- my guests.

I'll ask him for the advice he has for President Obama. That's tomorrow in THE SITUATION ROOM.

I'm Wolf Blitzer reporting.

Up next, LOU DOBBS TONIGHT -- Lou.