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Rescuing the Rescue Plan; Interview with Michael Steele; Outright Fraud on Taxpayers; Badminton Diplomacy with Iran; Twisting on the Economy

Aired February 2, 2009 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Brian Todd, thanks very much.

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

Happening now, as America's economy flounders by the day, the president taking some heat from both sides on his economic rescue plan.

Does he have the muscle to force it through Congress?

We'll hear from CNN's Candy Crowley and Paul Begala is standing by live, as well.

Right after his election as the Republican Party's first African- American chairman, Michael Steele said that anyone in the way would get -- and I'm quoting him now -- "knocked over." I'll ask him who that warning was meant for.

And ping pong paved the way for U.S. ties with China -- will badminton open the door to Iran?

I'm Wolf Blitzer.


Happening right now, President Obama is meeting behind closed doors over at the White House with the Democratic leadership.

Let's go straight to our senior White House correspondent, Ed Henry.

He's working the story for us -- Ed, tell us -- take us behind- the-scenes.

What's going on?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Wolf, a critical meeting for this president. As you know, last week he spent a lot of time reaching out to Republicans on the Hill. Now he has a chance to go behind closed doors with fellow Democrats at a critical stage in these stimulus negotiations.

We've already seen Speaker Nancy Pelosi show up; Harry Reid, the Senate majority leader, expected, as well. All the top Democrats And the Republicans on the Hill trying to sort of sow a little dissension. Mitch McConnell, the Senate Republican leader, suggesting maybe this is a chance for the president to call in the Democrats -- maybe to call them on the carpet a little bit and demand some changes to the legislation that's working around the Hill.

Republicans, as you know, pushing for more mortgage relief in this stimulus package; also, talking about tweaking the tax cuts -- trying to pull out more spending projects.

But the president today, appearing with the Republican governor, Douglas of Vermont, tried to insist that there really are very small differences here between the two parties.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There are still some differences between Democrats and Republicans on the Hill, between the White House and some of the products that's been discussed on the Hill. But what we can't do is let very modest differences get in the way of the overall package moving forward swiftly.


HENRY: Modest differences, according to the president.

But as you know, in addition Republicans demanding more changes to this stimulus package, you also have some conservative Democrats like Ben Nelson of Nebraska insisting that they want to turn this from a spending bill, as he call it, to a jobs bill -- sort of make some major changes to it moving forward.

That's why it's going to be critical coming out of this meeting in about a half hour or so. We're expecting the Democratic leaders from both chambers to come to the microphones here and talk about the president's latest thinking on all this. It's going to be a clear, important signal to watch -- to see whether the Democrats come out saying they're going to make more changes or whether they're going to dig in and stick with the plan they have right now -- Wolf.

BLITZER: We'll have live coverage of that.

Let us know as soon as they start walking out of the West Wing.

HENRY: I certainly will.

BLITZER: Ed, thanks very much.

We have a special guest right now, an old friend, Michael Steele. He's the new chairman of the Republican National Committee. He's joining us in THE SITUATION ROOM.

Good to have you back, Mr. Chairman.

MICHAEL STEELE, REPUBLICAN NATIONAL CONVENTION CHAIRMAN: It's good to be with you. BLITZER: Did you ever think, in your life, you'd wind up the chairman of the Republican Party?


STEELE: No. Not at all. That's why I said that -- the first words out of my mouth was, you know, as a little boy growing up in this town, who'd have thunk it?

I mean this is such an awesome moment, to head the national party and to be able to move it in a new direction and to do some things that, quite frankly, we've gotten how to do. And that is communicate a message, build a grassroots team and go out there and engage the people of this country.

BLITZER: And you were very blunt...


BLITZER: your speech when you won -- I think on the fifth or sixth ballot.


BLITZER: But you did manage. You had formidable opponents running for the chairmanship.


BLITZER: I'll play a clip of what you said.

STEELE: All right.

BLITZER: We had live coverage here in THE SITUATION ROOM of your own remarks.

STEELE: All right.


STEELE: We're going to bring this party to every corner, every boardroom, every neighborhood, every community. And for those of you who wish to obstruct, get ready to get knocked over.


BLITZER: All right.

Who did you have in mind?


BLITZER: Because when I heard those words, my ears perked up.

STEELE: Well, I know they did for you. I had Democrats and Republicans in mind. Within the party, there are those who don't want to let go of status quo, don't want to let go of the opportunity to engage more broadly. It doesn't mean that we are less conservative in our values and our views. But it just means we update them and make them relevant to a new audience -- the voters out there, as we saw played out in this past election.

And to my opponents outside the party, who want to live and, you know, play on the old playground of old ideas and name-calling and rhetoric.

I don't have time for that. I'm trying to -- to build a dialogue, create a dialogue between conservatives and liberals in this country, because that's what we are right now (INAUDIBLE)...

BLITZER: Because you've made it clear that you believe in what Ronald Reagan used to talk about -- a big tent...

STEELE: Absolutely.

BLITZER: ...Republican Party.

STEELE: Absolutely.

BLITZER: You don't want to push away those Republicans who support abortion rights for women or who might even might support gay marriage.

STEELE: Well, no, absolutely, because they're probably with us on 80 percent of the other things that are very, very important. Particularly when you look at the economy and you look at some of the other issues that we're confronting.

But it doesn't mean at our core that we're less conservative because those folks join in the fight with us. Those -- that's still a central part of who we are, you know?

But the reality of it is the world is changing. You know, it's like a political parade going by. Barack Obama has hijacked the drum major. He's leading down the road and we're still in the room trying to figure out what time the parade starts.

BLITZER: You basically lost the northeast part of the United States.

STEELE: Absolutely.

BLITZER: You mentioned that in your remarks the other day.


BLITZER: I think in New England, in the house of representatives, there's not one Republican member of the house.

STEELE: Not one. And there were 16 eight years ago. And we're down to zero in 2009. So my challenge and my opportunity to work with the state parties in the Northeast, to let them do what they need to do to be successful and win those elections. Case in point, we've got a special election coming up in the 20th District. Congresswoman Gillibrand is now going up to the senate...

BLITZER: In New York State.

STEELE: New York State. That's a seat that we should be able to go in and be competitive and win. I want to put -- make it a focal point right out of the box and see how we do.

BLITZER: What about Barack Obama, the president of the United States?


BLITZER: He's very popular right now.


BLITZER: He's got a lot of support -- a lot of enthusiasm out there.


BLITZER: And you're going to be challenging him, presumably, on a lot of these issues.

STEELE: Yes, absolutely. You know, Barack is just a great leader. There's no doubt about that -- you know, a good communicator.

But just...

BLITZER: Have you ever met him personally?

STEELE: Oh, yes. Oh, many times. Many times.

But the fact that he's got a 70 percent job approval doesn't mean that his -- his policies are 70 percent right. What it means is we've got to look at these things critically, just as the House Republicans did last week on this so-called stimulus bill, which I think is nothing more than a spending bill, and come to the table with some sound alternatives to (INAUDIBLE)...

BLITZER: You're taking a big risk, though. If you block it -- if you vote against it -- and you did in the House...


BLITZER: the Senate and it gets through anyhow and it works...

STEELE: It's not going to...

BLITZER:'re going to...

STEELE: But, Wolf, it's not going to work.

How does...

BLITZER: You don't know that.

STEELE: Of course.

How does it work when you're spending a third -- you're putting a third in tax cuts and two-thirds in new spending?

How does that work?

BLITZER: But if there's an economic recovery and there are jobs created...

STEELE: Are you taking into account inflation?

And, first off, the government doesn't create jobs. Let's get this notion out of our heads that the government create jobs. Not in the history of mankind has the government ever created a job.

Small business owners do, small enterprises do, not the government. When that government contract runs out, that job goes away. That's what we're talking about here. And those two to four million jobs that are projected won't happen. Trust me.

BLITZER: Listen to James Carville, the Democratic analyst.

STEELE: Oh, I love James.

BLITZER: You know James.

STEELE: I know James.


And he said this about Rush Limbaugh.

Listen to this.



JAMES CARVILLE, CNN CONTRIBUTOR: It's not the Democrats or the president that are elevating Rush Limbaugh. It is the Republican officeholders who have deemed him his daddy. He is the daddy of this Republican Congress right now.


BLITZER: So is he?

STEELE: No. Rush Limbaugh is a private citizen who has shared private opinions on the airwaves of America through the First Amendment. He can say what he wants to say. Yes, he is a voice for Republican conservatism, for national conservatism.

But I think the reality of it is the president has elevated Limbaugh. Limbaugh expressed an opinion.

As president of the United States, why do you want to address that?

Are you that afraid of what Rush Limbaugh and what he has to say or does it really matter in the day to day of what you're doing with respect to policy?

Rush is laying out -- just like a lot of conservatives are -- where this administration is getting off track. And I think that's a legitimate talking point for him.

BLITZER: We're almost out of time.

But what can you do, if anything, to bring some minorities into the Republican Party, whether African-Americans or Hispanics?

STEELE: Well, we've got one.


STEELE: So we're well on our way.

BLITZER: That's not -- that's not going to be enough.

STEELE: That's not enough. As we had 36 at the convention. We're going to build from there.

Look, we have black Republicans, Hispanic Republicans all across this country. What we need to do now is to engage in a very honest way, to dialogue. That's why I said before, you know, the party, up until now, hasn't given a damn about the -- about black Republicans. It was an easy write-off.

Not anymore. We're going to engage through media. We're going to engage politically and other ways that are going to afforded to us to get that vote.

BLITZER: We hope you'll be a frequent visitor here in THE SITUATION ROOM.

STEELE: I hope so, too.

It's good to be back with you.

BLITZER: Congratulations.

STEELE: Thank you very much, Wolf.

BLITZER: Michael Steele is the chairman of the Republican Party.

Appreciate it very much.

The first lady, Michelle Obama, in her first public appearance outside the White House and starting a new tradition for the Obama administration. We're going to hear from her in her own words, so stand by.

And we'll also take you behind-the-scenes at the White House, where young people are now pulling some critical strings.

Can they advance the president's agenda?

Plus, the brothers whose homemade ad took the prize in the Doritos Super Bowl contest -- how they did it on a shoestring budget.


UNIDENTIFIED MALE: Free Doritos at the office today?

UNIDENTIFIED MALE: I think that's a yes.



BLITZER: A new government commission is trying to account for the billions of dollars misspent in the rebuilding of Iraq. They're calling in a case of -- and I'm quoting now -- "outright fraud on the U.S. taxpayer."

Our Pentagon correspondent, Chris Lawrence, is working the story for us -- Chris, they're -- well, I want to go right to the piece, because I'm not sure that we have Chris Lawrence.

But let's listen to Chris' report and then we'll discuss.


CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): A new report sums it up -- the U.S. has wasted billions reconstructing Iraq.

SEN. CLAIRE MCCASKILL (D), MISSOURI: This has been a massive failure.

LAWRENCE: That report is called "Hard Lessons".

But has anyone learned?

Thirty-two billion American dollars are devoted to rebuild Afghanistan. And here's what the inspector general there says taxpayers are getting -- incoherent strategies, fragmented reconstruction plans and money left unspent.

MCCASKILL: If we do not find accountability, then, really, we have added to the problem of wasting taxpayers' money.

LAWRENCE: Here's an example of how hard it can be to rebuild in Afghanistan. The U.S. helped construct a road connecting Kabul to the rest of the country. Now the Taliban are using that paved road to rob travelers and launch attacks.

The team that audited Iraq's reconstruction is recommending ways President Obama can avoid the same mistakes in Afghanistan -- don't attempt massive rebuilding projects in the middle of Taliban violence; reduce the reliance of contractors and give some jobs back to the military; and make sure contracts are an extension of the president's political strategy.

STUART BOWEN, IRAQ RECONSTRUCTION AUDITOR: What it means is don't build projects for building projects sake, build projects to advance U.S. interests.

LAWRENCE: Stuart Bowen says planners must avoid mistakes like the ones he found in Iraq, where the U.S. wasted $40 million building this never finished prison.

BOWEN: The United States can restructure and resource its effort so that Khan Bani Sa'ad doesn't happen again somewhere out near Kabul.


LAWRENCE: Now, the U.S. has helped to improve a lot of Afghanistan's communication, schools and health care. But analysts say unless you have more oversight, its reconstruction will have the same problems as Iraq's -- too few eyes looking at way too much money -- Wolf.

BLITZER: That's pretty shocking, when you think about it.

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

Let's bring in Zain Verjee right now -- Zain, you're working on a fascinating story.

A lot of us remember ping pong diplomacy...


BLITZER: practiced by the U.S. in China early on in the early 1970s. And all of a sudden now we're hearing about, what, badminton diplomacy?

VERJEE: Exactly, with Iran. I mean this is such a contradiction, Wolf.

Iran and the U.S. -- they're not talking to each other. There are nuclear tensions, tensions over the Middle East. But at a lower level, there are contacts.

Today we learned that the U.S. is sending a women's badminton team to Iran this week to compete in a tournament. There are going to be 12 people -- the team managers, the coaches are going along, too. And the Iranian badminton team will come to the U.S. in July. They'll be going to California.

BLITZER: Let's hope the U.S. team wins.

(LAUGHTER) BLITZER: But let's -- let's talk about precedence, because there have been some sports exchanges over the years between the U.S. and Iran.

VERJEE: Exactly. There have been. The State Department has been doing these sort of people to people exchanges since 2006. You had the U.S. wrestling team going over to Iran to compete against an Iranian team. You know, wrestling, Wolf, is a really big sport in Iran. And an American wrestler in Iran is kind of like Michael Jordan going over there.

You've got Iranian artists that have been to the U.S. as well as one of the Iranian water polo and basketball teams.

And these exchanges can really have an impact. You mentioned the ping pong diplomacy between the U.S. and China. That was in 1971. And that really served to open up those diplomatic doors and open -- open high level government to government dialogue, so...

BLITZER: We'll see if badminton diplomacy can do the same.


Do you play?

BLITZER: I played it when I was a little boy and growing up in Buffalo. We went to place called Crystal Beach in Canada and we used to play a little badminton.

VERJEE: All right.

BLITZER: But I was never very good.


BLITZER: That's why I went into journalism. Otherwise, I would have been a professional badminton player.

VERJEE: I played with my dad.

BLITZER: I'm sure, in Kenya.


BLITZER: It was huge.

VERJEE: Yes, it was.

BLITZER: Thank you, Zain.

It's the Super Bowl ad audiences loved -- the Super Bowl ad that the audiences loved.


UNIDENTIFIED MALE: Will I finally get that big promotion? UNIDENTIFIED MALE: Promotion?

Not in your future.


BLITZER: We're going to hear from the brothers who made it for relative pennies and now have won -- get this -- a million dollars for their work.

Plus, Michelle Obama launching a new tradition on her husband's behalf -- we're going to hear from the first lady raw and unfiltered, in her own words. That's coming up.


BLITZER: We want to go back to the State Department.

Our foreign affairs correspondent, Jill Dougherty, is standing by.

It's an important day over there. The secretary of State, Hillary Clinton, has been formally sworn in. There was a ceremony. You saw it live here in THE SITUATION ROOM.

But her department is now issuing what's being described as a threat assessment -- the first threat assessment from his new administration.

What do we know -- Jill?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, this is called the Worldwide Caution. It's issued every six months. This is the newest one. It just came out a few minutes ago.

It's a very detailed report getting into security threats, terrorist threats, etc. in various parts around the world.

And one thing that is very interesting, it says the worldwide recession could create social unrest, as well. It goes into some of the attacks that we've seen and the violence this year -- Gaza, for example, raising tensions; India, the attack in Mumbai; attacks in Pakistan; etc.

And then it says that Al Qaeda continues to plan attacks, demonstrations, violent action in Europe, Asia, Africa and the Middle East. It includes, the State Department says, suicide attacks, assassinations, kidnappings, hijackings and bombings.

It also notes that terrorists could use conventional as well as non-conventional weapons. That, of course, would include biological, chemical weapons. And it says that American citizens traveling abroad should exercise caution, especially in places like restaurants, hotels, offices, sporting events -- places where Westerners gather. The State Department is suggesting that they have a high level of vigilance and also that they register with the embassy in the country in which they're located -- Wolf.

BLITZER: The bottom line, if you're traveling around the world, it's always a good idea to check in with the State Department Web site for these travel advisories -- especially in some of those hot zones.

All right, thanks, Jill, very much.

Jill Dougherty is over at the State Department.

Arm twisting on the economy -- but does President Obama have the muscle member to -- have the ability to muscle some members of his own party?

Democratic strategist Paul Begala on how the president is using his power.

Plus, up to a billion dollars of treasure at a secret location in the bottom of the English Channel -- but will American explorers get to claim finders keepers?

And stunning images of the people behind-the-scenes in the new Obama administration and the stories behind those images.

Stay with us.



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

Happening now, from key chains to cuff links, President Obama seems to be everywhere -- maybe a little bit too much, as far as the administration is now concerned. The White House wrestles with protecting the president's image without spoiling public enthusiasm.

A sign of the times -- more than a thousand people camp out for days for a shot at 35 firefighter positions in Florida.

And at Heathrow, it's shut down -- London paralyzed. Britain is hit by its most powerful snowstorm in almost two decades.

All that still ahead in our next hour.

I'm Wolf Blitzer.


Barack Obama came into office with a strong mandate and extraordinarily popular appeal.

Let's go to our senior political correspondent, Candy Crowley.

She's checking in with us.

The first priority is the economy -- as all of us know, the economy, Candy, clearly in a mess right now.

How is he doing when it comes to wielding his power, which is rather significant?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely. And he's wielding it in some very interesting ways and, you know, in some fairly traditional ways. And that is that his staff and the president, behind closed doors, are obviously trying to shape this bill, as it now is in the Senate.

They would like to see fewer -- they want to, as they say, "narrow the target" -- that is, get out some of those things that Republicans are complaining about that can't really be justified in terms of job creation.

They also are looking, perhaps, at a few more tax cuts in the plan.

So while, on the one hand, you hear lots of praise from the White House, particularly from Robert Gibbs, the spokesman, this morning about, well, the House plan is along the lines of what President Obama wanted, you're also hearing, and, yes, it will be changed in the Senate.

So we are just now kind of getting to crunch time, remembering that, first of all, the Senate has to pass its version and then it goes into those conference committees. And that's where the rubber meets the road and the president can really try to shape and say this is acceptable and this is not.

BLITZER: Candy, you've covered the Senate for a really long time. You know anything important in the Senate really needs 60 votes. The Democrats, if you include the two Independents, they have 58 right now. And it's not even clear that all of those Democrats will support this $800 billion or $900 billion piece of legislation.

The question is this, if the Republicans stay united, what do the Democrats do?

CROWLEY: The Democratic leadership, at this point, doesn't believe that the Republicans would filibuster this bill. Remembering that this is still a party -- the Republican Party -- that is trying to get itself together. They will be allowed many, many amendments. As you know, the Senate is a different animal than the House, where you can really set the parameters of debate.

The intention right now and the intention that the White House has sort of signaled they want the Senate to have, which is let the Republicans have their say. Let them put those amendments out there. They don't really believe -- and I must say, politically, it would be really interesting to watch the Republicans try to filibuster this bill, assuming -- and we all believe that those economic figures are going to keep coming out and putting more and more pressure on the Senate, and, indeed, Congress to do something.

BLITZER: All right, Candy. Thanks very much.

Certainly that threat of a filibuster is out there.

Let's talk about that and more with our CNN political contributor, the Democratic strategist, Paul Begala, and the Republican strategist, Kevin Madden.

Guys, thanks very much.

I heard Mitch McConnell, the Republican leader in the Senate, yesterday say pretty clearly -- I don't know if it's a hollow threat or a real threat -- anything important that has to get through the Senate usually requires 60 votes.

PAUL BEGALA, CNN CONTRIBUTOR: Right. One of the things the military says is honor every threat. And so I think President Obama and the White House need to honor that threat. And it is, I think the piece of their communication strategy on this where they have fallen short. And that is, it's the old Henny Youngman rule.

They would ask -- he was a borscht belt comedian.

And they'd ask him how's your wife and he'd say compared to what?

How's your -- how's your economic recovery plan, Mr. President?

Compared to what?

In other words, I think he needs to keep reminding us that, according to Senator McConnell, Republicans would be happy with nothing. They will be happy with the status quo. They'll be happy with the policies that got us into this.

And so go back to those sorts of distinctions that he drew so powerfully in the campaign between change and the status quo.

BLITZER: Do you think they would filibuster this?

KEVIN MADDEN, REPUBLICAN STRATEGIST: No. I think that -- I think that what Mitch McConnell is doing is laying down a marker. But I don't think that the party would -- would ever risk being seen as the party that is holding up economic recovery.

What we do want to be seen as is being stewards of the taxpayer, you know, the stewards of fiscal discipline. And this whole debate, you know, provides us that opportunity to make sure that we're not just putting up a stimulus bill and voting on it because it's a stimulus bill, but instead, we're going to vote for a bill that's actually going to do what many of the people are saying that it's supposed to do, which is create jobs.

And where it doesn't create jobs, we're going to work to take some of that out and try and make a better bill.

The Democrats have to come to the table and work with Republicans in the Senate side, though, unlike what we saw on the House side.

BLITZER: Is the White House managing this well right now? Look back to '93 when Bill Clinton came in and there was health care reform. Remember what happened, on that front? His economic plan did get through without any Republican support back in '93 and it caused some grief for the Democrats, some Democrats who were seeking re- election in '94. But go ahead and tell us how you think this White House is working this issue.

BEGALA: The proof of the pudding is in the eating. At the end of the day, it won't matter how many Republicans voted for it or how many Democrats voted for it. It will matter how many jobs are created. If you talk to the folks at the White House, that's what they keep directing you back to. The number here is not 60, they'll say it's 4 million, the number of jobs the president says he can save or create.

But in the here and now, as we try to reach toward 60 in the Senate, I do think they need to do a couple of things - one, compare and contrast, between the old failed policies of the past and the new ideas that President Obama has. And second, I think they are allowing the contents of their bill, which has tons of really good stuff in it, to be picked apart. There's going to be cats and dogs in every one of these.

BLITZER: There is some junk in there, as you know.

BEGALA: And there always is. Economists call that the leaky bucket theory. Right? There is always stuff. It happens on any major piece of progress. There's always going to be some things that don't work out. But focusing back on the jobs that are created, what this plan will do, if I were them, I would say, is make America healthier, wealthier, stronger, safer; and go through how those four categories apply.

BLITZER: I think Paul makes an excellent point, because if it works, whether the Republicans support it, or didn't support it, if a year from now, millions of jobs are being created as opposed to being lost, then - everyone wins, to a certain degree.

MADDEN: James Carville always says, "If "if and buts" were "beers and nuts" we would all have one heck of a party. So, the "if" part is the hardest part for any of us to predict. I think President Obama is getting a lot of credit, both from Republicans and Democrats, for actually trying to enter in a bipartisan spirit up on Capitol Hill in order to get things done.

But the big looming challenge he has is that you could drive a Mack Truck through the gulf of what President Obama is saying and how Capitol Hill Democrats are actually acting when it comes to crafting this bill and actually making it a bill that is actually going to create jobs. Rather than larding it up with all of this big spending that's going to grow the size of government.

Many Democrats and many liberal interest groups see this as a once in 25-year chance to actually grow the size of government, and start doing some of the social engineering that they've always wanted to see. That's the big challenge, whether or not he can take on his own party.

BLITZER: Let's talk about Tom Daschle for a minute. He's been nominated to become the secretary of Health and Human Services. Now he's got some tax issues, as all of us know. He's meeting behind closed doors with members of the Senate Finance Committee even as we speak right now. How much trouble is he in?

BEGALA: I think he's going to be OK, from the Democrats' perspective. I think he will be confirmed by the Senate for a couple of reasons. First off, that his a clubby place and he was the Senate majority leader. That helps. But the more positive way to say that is they respect him and they know him. They are better able to judge the length of his public service, because it's been in their midst, than if he had been a governor or corporate executive, or general, from other different venues.

I think he will be OK. I think it's important to these Senators that Daschle self-reported. He came to the committee and said, hey, I made a big mistake here. That matters. It's like with your kids. You know, if my son broke Charlie my window playing baseball in the front yard, Broke the window in my office. He came and told me. Guess what? Charlie didn't get in trouble. I said, good, son, at least you know how to hit a baseball. And you know how to tell the truth, you came to Daddy and told the truth.

BLITZER: How much trouble is he in?

MADDEN: Look, my father never cared about the story. He was still mad that the window got broken. Look, I think it is - I think he will pass. I think you're going to see enough bipartisan support up there where he actually will get confirmed. I think the reason, being that it's a clubby atmosphere up there, and everybody knows him, that is a tough sell to make to the person who actually makes less than the money that he owes in taxes. I think a lot of people are going to have a hard time swallowing the vote.

But do I agree with Paul, that right now the momentum seems to be with him. He seems to be winning the perception argument that he's up there and trying to be as open about these mistakes. But I still think it's going to be a very hard vote for a lot of folks to make.

BLITZER: A lot of these Republicans, you mean?

MADDEN: Republicans and Democrats.

BLITZER: You think Democrats?

MADDEN: I mean, if you have people up there saying that Tim Geithner ought not be - they ought not to confirm him because votes - you know, because of problems paying taxes. You'll have the same problem with Mr. Daschle.

BLITZER: Dana Bash is up on the Hill waiting for him to emerge. Once he does, we'll go there. Thanks very much. He's behind closed doors, Tom Daschle, right now. Michelle Obama rallying staffers over at the Department of Education today. Her message of thanks and a new tradition unveiled. The first lady speaking out in her own words.

Plus, what's it like in the new Obama White House? We have stories and pictures from behind the scenes.


BLITZER: The first lady, Michelle Obama, was over at the Department of Education today for a meet-and-greet session with agency staffers. Something she says we'll be seeing more of. It was part pep talk, part thank you. Listen to this, this is what she said.


MICHELLE OBAMA, FIRST LADY: I am a product of your work. I wouldn't be here if it weren't for the public schools that nurtured me and helped me along. And I am committed as well as my husband to ensuring that more kids like us and kids around this country, regardless of their race, their income, their status, the property values in their neighborhoods, get access to an outstanding education.


So as Arnie (ph) said, this is the first stop in many. I'm going to be visiting agencies throughout this administration to do just something simple. And that's to say "thank you." Thank you before we even begin the work, because so many of you have been here struggling and pushing for decades. And Barack and I want to say thank you for what you've done.

We're going to be making investments. I shouldn't say we, but the administration "we" With these investments we're going to create good jobs, as we renovate and modernize more than 10,000 schools, and improve the learning environment for about 5 million children across this country.

We'll be able to increase Pell Grants and make college more affordable for seven million students and give nearly four million students tax credits for tuition. Imagine that.


And with these investments that we hope to make through this stimulus package, we'll be able to prevent future layoffs, and education cuts in hard-hit states. We need to keep teachers in the classrooms throughout this time.


BLITZER: The first lady speaking earlier today over at the Department of Education. Let's bring in Soledad O'Brien for a little analysis of what's going on.

She's going to have an incredibly great opportunity to use her bully pulpit for the causes she's so passionate about and certainly education is right up there.

SOLEDAD O'BRIEN, CNN SPECIAL CORRESPONDENT: Yes, an incredibly great opportunity because in so many ways, education is in kind of dire straits, especially public school education, dire straits in this country.

She talked about her own nurturing that happened in public schools. She went to Whitney Young High School, a magnet school. And she talked about the three-hour trek in her day to get to school and back. But if you compare that school, that had a very high graduation rate, the number of kids who went off college, extremely high, to your average school in Chicago, something like 61 percent of African- American boys will not graduate from schools in inner city Chicago public schools. Those numbers are absolutely impossible.

So I think what you got from her was that tone, that "thank you" combined with the "now roll up your sleeves," because there is a lot of work to be done. She talked a little bit about the stimulus package and, of course, really hit those same issues over and over again. Talking about the school renovation, talking about money for special ed, talking about investing in Head Start. You heard her talk about the Pell Grants.

When you look back at the Pell Grants, Wolf, you think, you know those haven't really been updated. When Pell Grants started in '72, covered like 60 percent of what a student would need. Because there have not been in updates over the years, now that covers a third of what a student might need. I think they're trying to bring education into modern times.

And certainly in the inner city, it's needed -- and outside of the inner city, too. I think the biggest issue is going to be the idea that education is a civil right, education as the new civil rights issue of our generation. That's very consistent with what she's really been pitching, not only in the campaign but of course in her relatively brief time as first lady, Wolf.

BLITZER: We can only hope her story, and her husband's story, will inspire a lot of young kids out there to do their homework and study a little bit harder, and get the job done and see that there can be a road to improvement.

Soledad, thanks very much for that. Soledad O'Brien joining us.

A pair of amateurs hit the jackpot with their homemade "Super Bowl" ad. Their commercial now a smash hit. The two brothers, by the way, are a million - a million dollars richer.

And the real West Wing, stunning images of the people behind the scenes in the new administration, and the stories that go with them. Stay with us. You're in THE SITUATION ROOM.



UNIDENTIFIED MALE: Free Doritos at the office today?


I think that's a yes!


BLITZER: That was a popular commercial during the "Super Bowl" yesterday. Let's bring in Brian Todd, because he's taken a look at the story behind the story with this commercial. Two young guys, they made a bundle as a result of their creativity.

BRIAN TODD, CNN CORRESPONDENT: They absolutely did, Wolf. You know as well as I do that Steelers win last night was not an upset, but the old pros on Madison Avenue were upset by those two brothers for top honors in the ad wars.


TODD (voice over): Three times provide to be a charm for brothers Dave and Joe Herbert, from Batesville, Indiana. It was the third time they tried their talents in the Doritos Crash The Super Bowl contest, that puts amateurs head-to-head with Madison Avenue. Five finalists were brought to a VIP box in Tampa to watch the game and to see who's add would win. You can see the reaction when the Herbert brothers saw their ad run.

JOE HERBERT, CREATED WINNING DORITOS AD: When we saw our commercial air that was incredible for us. To get the million dollars you had to get number one on the ad meter. We had no idea that was even possible, really. Three quarters later after the game we hear that we did it. We're going crazy.

TODD: Not bad considering each 30-second spot during the game goes for $3 million. And they did it with low-brow humor on a shoestring budget.

DAVE HERBERT, CREATED WINNING DORITOS AD: We shot it at a local YMCA. They let us come in on a Sunday when they were closed. We bought the vending machine online, on eBay for $400; $100 or so to buy five panes of glass to take five takes of the glass to break. Really our biggest expense was buying our cast and crew food. We spent about $700 on that.

TODD: And they end up winning $1 million for all this. The brothers say they will share those winnings with those who helped them, including that cast that worked for food. They're also shopping around a movie script and hope the money will help them get it off the ground.


TODD: And remember, Wolf, it's interesting these two guys say they were unemployed by choice leading up to this. One of them quite his job, the other sold his business. But it was a big gamble for them to do this. Clearly it paid off. BLITZER: Certainly did. All right, Brian. Thanks very much.

There's also a new technology being released from Google right now. Abbi Tatton is here to tell us about this.

What is this technology?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, at this point we've gotten used to Google Earth that lets you see a bird's eye view of the world. Now we're being introduced to Google Ocean. That was rolled out today.

Let's show you how it works. You can zoom over the ocean. We're around by Hawaii right now and then plunge beneath the surface and explore what's down there with 3D maps. At this point we're looking around an underwater volcano. The team at Google Earth were challenged a couple a years ago by oceanographer Sylvia Earl, who said, OK, you've mapped the Earth. You've done the dirt. What about the two-thirds of the globe that is underwater. This is the result.

Google partnering with 100 different organizations to add layers of information; marine conservation groups, surfing organizations, National Geographic, to give you images that you can follow along. Certainly a lot more to build on though, Wolf, because such a small percentage of the world's oceans have been explored.

BLITZER: Interesting stuff, though. Fascinating. Thanks very much.

T-shirts, hat, buttons, it seems the image of President Obama is everywhere. But now the White House is moving to protect it.

And they're the people running the show behind the scenes over at the White House. We have their pictures and their stories. All that and more coming up, right here in THE SITUATION ROOM.


BLITZER: Joining us now, Maureen Orth, she's the special correspondent for "Vanity Fair" magazine.

You have a new cover. It's a pretty nice cover, about the new president of the United States.

Maureen, thanks very much for coming in.


These pictures by Annie Liebowitz, the photographer, are great pictures because it says a lot about the president and first lady. Let's talk about this picture first. This is when they got out of the limo.

ORTH: Right.

BLITZER: And they were walking down Pennsylvania Avenue. Who can forget that moment?

ORTH: That's true. They both got out and the crowd went wild. Annie was in a truck following a little bit ahead of them. She shot that actually from the street in Pennsylvania Avenue, I think several blocks before they got to the White House. They were going to view.

BLITZER: Look at those huge smiles.

ORTH: Yes.

BLITZER: They are obviously holding hands, and very excited.

ORTH: Just total energy. That was such an energetic day all the way around.

BLITZER: Then she did a group shot of the incoming Cabinet, at least most of them. Take a look at all of these pictures, if you go all the way to the left, Tom Daschle, whose nomination is a little bit of trouble as we speak right now. How difficult was it to get all these people together in one room?

ORTH: Can you imagine. We were getting these people and some of the busiest days of their whole lives, and we actually shot several different days. We shot several people together, we stuck some people in. And what Annie does is she has a backdrop, then she has this wonderful assistant, Katherine McCloud (ph), who works at "Vanity Fair" who is about six feet tall and stands just like the person who would be standing next to them.

BLITZER: So, in other words, not all these people were there together?

ORTH: No. We could not get - we only got Hillary Clinton the day after the inauguration, right after her confirmation hearing, when we were despairing we would get the last one. But we got her.

BLITZER: I love the picture of Susan Rice in the middle, the new U.S. ambassador to the United Nations.

ORTH: She's a tough cookie. She was so funny. When we were taking her picture, she said to Annie, if you don't make me look good, I'm coming after you.


BLITZER: And she's serious about that. I know Susan Rice rather well.

Let's go to what you call the brain trust, the next picture. There they are. David Axlerod, and Peter Rouse, Rahm Emanuel, new white House chief of staff, and Valerie Jarrett.

ORTH: They are the people that are the closest part of the inner circle. Obviously, David Axlerod, who was the chief strategist of that nearly flawless campaign, then Rouse who was his Senate chief of staff, who's referred to sometimes as the 101st senator, then of course we have Rahm Emanuel, the chief of staff, and then Valerie Jarrett, who is really best friend.

BLITZER: She is best friends with both of the Obamas. There is no doubt about that.

Let's go to the next picture, the economy team. You see Larry Summers, the new White House chief economic advisor out there, he's sitting down, Timothy Geithner, new secretary of the Treasury.

ORTH: And that is Peter Orszag, who is the secretary -

BLITZER: He's the budget director.

ORTH: And then --

BLITZER: Christina Romer.

ORTH: Christina Romer, who is the chairman of the Council of Economic Advisors. And you know, Larry Summers told me this was an amazing moment, once in a generation, for economic policy makers and they had to take advantage of this post-inaugural period. And then Orszag said, you know, we've really got to make government cool again.

BLITZER: When Annie took the picture, all four of them, all of them were together.

ORTH: Absolutely.

BLITZER: She didn't have to cut and paste or anything like that. Let's go to what you call the Green Team, the guy in the middle, the former Senator Ken Salazar, who will be secretary of the Interior.

ORTH: Right.

BLITZER: These are the people who want to make America green.

ORTH: They are amazing. On the left here is Professor --

BLITZER: Steven Chu.

ORTH: He's a Nobel prize winner from Berkeley. He says he really wants to change people's minds about energy use. Then you have Carol Browner, who was the head of EPA. She is now the climate czar. If you can remember for eight years, we sort of have been told there wasn't a climate problem. Now you have --

BLITZER: Lisa Jackson.

ORTH: Lisa Jackson on the end who says we have got to make all these issues grassroots issues.

BLITZER: She is going to be the EPA administrator.

ORTH: And they want a green America. They really do.

BLITZER: I want to show you the next one. I like to call this one the youth of America, over here. You have some of the young people, the news tracking team on the left, the campaign advance team on the right. These are the kids who put it all together.

ORTH: Yes. These guys, nobody's over 25 years old. They stay up from 3:00 a.m. to 3:00 a.m. just culling all the newspapers and TVs and the blogs and everything so there can be a rapid response to whatever's going on. Then these are the kids that are organizing the press and keeping everybody going and on the trail. These kids just have flat out worked their hearts out.

BLITZER: Then we have some more. Look at this. On the left over here, you see what we call the logistics team, including Reggie Love, he's the personal aide to the president. Wherever the president is, Reggie is.

ORTH: And then, of course the president says Reggie's a lot cooler than he is. Then there's Alyssa Mastromonaco, who is the scheduling person, and then Marvin Mickelson, who is also the trips organizer. They had to do this amazing logistics for two years for the campaign.

BLITZER: Finally, the communications team.

ORTH: Right.

BLITZER: There they are. Everybody by now is familiar with Robert Gibbs, who is all the way to the right with his arm on the podium.

ORTH: Right. And there is the young speechwriter, John Favreau, who is right down on the bottom, who is the major speechwriter. And then you have Eleanor Rand, who is the

BLITZER: Communications director.

ORTH: The head of the communications team. Then you have Dan Pfeiffer who said change was always the mantra, no matter what. That's what they --.

BLITZER: Button this up for us. Take a look at all these people.

ORTH: Right?

BLITZER: The inner, inner circle of this new White House.

ORTH: Right?

BLITZER: What goes through your mind, looking ahead, over the next four years, maybe eight years?

ORTH: They came to play. They really want to change things. I wonder how much you can change the sort of glacial society of Washington, but they think they have been elected to make change. And they are taking this terrible economic time we're in and all these problems as a challenge, not something to bring them down, but something to really reverse course, and go ahead. So we'll see what happens, if they can fulfill these promises. They're ready to rumble. BLITZER: I'm sure they are. It will be pretty exciting. Maureen, thanks for coming in.

ORTH: You're welcome. Thank you.

BLITZER: Please thank Annie Liebowitz for those great pictures, too.

ORTH: Aren't they great. Yes, I will. Thank you.

BLITZER: One section of the economic stimulus package that's raising Republican eyebrows is some $2 billion set aside for national parks across the country. Let's bring in Lou Dobbs. He's looking at all these issues out there.

I know you have a lot more coming up in an hour on your show, but what do you think about this proposal to do something to help the national parks?

LOU DOBBS, CNN ANCHOR: Well, first of all, as so much of the stimulus package, it's a good idea and some of it worthy of support. And tonight, as you suggest, we will have a lot more on the government's massive spending and borrowing legislation, because that's what it is, principally. Spending and borrowing; they will have to spend about $800 to $900 billion and have to borrow about half of that in interest to pay for it. Because all of that money will have to be borrowed. We are going through the legislation line by line to see how your elected officials will be spending our money.

The Senate now taking up the debate, in fact. We found the Senate has put aside another $800 million for the national parks, while the House has put aside nearly $2 billion. By the way, that's just about the annual budget of the national parks service, just about $2 billion. While preserving our national parks, as I said, may be a worthy cause, no one can tell us whether that money would actually create a single job, or in any way stimulate our economy.

That's why it is the subject of "Lou's Line Item Veto" tonight. Please join us at 7:00 p.m. Eastern on "LOU DOBBS TONIGHT".

We hope you will also let your elected officials know just how you feel about all this while there's still time. Urge your senators to -- this might annoy them, but do it anyway - to actually read the legislation -- Wolf, back to you.

BLITZER: We'll see you in one hour, Lou. Thank you.