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One-On-One with the President; Lawmakers Mull 4 Percent Loan; The Economy's "Dr. Doom"; Pleasure Boats Sail Away

Aired February 3, 2009 - 17:00   ET

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


WOLF BLITZER, HOST: And to our viewers, you're in THE SITUATION ROOM.

Happening now, breaking news -- the president's hand-picked choice to reform America's health care system is out. Former Senator Tom Daschle withdraws his cabinet nomination amid a growing controversy over his tax records. What it means for the new administration -- that's coming up.

Some Republicans want to tweak the president's economic recovery plan to make it easier for you to buy a home.

How does a 4 percent mortgage sound?

And CNN's Anderson Cooper in the Oval Office one-on-one with President Obama. We have the interview. You'll see it here.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Let's go right over to the White House.

Our Anderson Cooper has just emerged from the Oval Office.

He spent some time with the president of the United States -- Anderson, we're going to be having that interview. That's coming up on your show later tonight, also here in THE SITUATION ROOM.

I guess the question is how did it go?

ANDERSON COOPER, CNN ANCHOR: It went very well. There were a number of interviews that he did with some of the broadcast anchors and myself. He was very forthcoming in his answers. We can't go into exactly what he said at this point, because it's embargoed until -- until later this evening.

But I asked the president a lot, of course, about Tom Daschle -- whether or not the president felt he messed up on the nomination process -- whether the president felt that he himself messed up in the nomination process.

I also asked, obviously, about the latest on the economic stimulus plan. I found out the president's plans for what he's going to announce tomorrow. And, also, a lot of personal questions just about life in the White House, about the search for the dog, about whether the president has smoked or not since entering the White House and a lot of other questions.

He also had some pretty provocative -- interesting, I should say -- answer on the term "war on terror" and whether that's a term that he will be using in the future -- Wolf.

BLITZER: All right. It sounds great.

But what -- I know you can't tell me about some of the substance, because that's embargoed until the 6:00 p.m. Eastern hour.

But what was his mood like?

Did he seem happy, depressed, relaxed?

What was the sense you got just from the brief time you spent with him the Oval Office?

COOPER: You know, he's energetic, which is interesting. I've actually never been inside the Oval Office before, so it was my first time. It's actually a lot warmer than I had imagined. I heard the president likes to keep it very warm and it was quite warm.

It was -- it's interesting. I mean, it's a very hushed sort of atmosphere as you walk toward the Oval Office. And when you see the president sitting there it's, frankly, a little surreal for the first -- for someone who's going there for the first time.

But, you know, he's very engaging and he was certainly there. You know, it's been a tough day for him -- obviously, a lot in the news.

This was an interview which was planned starting yesterday. They did not anticipate the news on Tom Daschle breaking today. So it was certainly, perhaps, a different kind of interview -- or the substance may have been a bit different than what the president and his team initially thought it was going to be.

But the president certainly answered the questions forthrightly. And it was, I think, an interesting eye-opening interview.

BLITZER: Did you get a sense he was taking accountability -- personal responsibility -- because, as you say, a lot of us woke up, we were pretty surprised to hear Daschle stepping aside today?

COOPER: I think he made -- makes a big point of trying to get that across and I think you'll see that in the interview tonight.

BLITZER: All right. So all in all, you saw a guy who is -- who is ready, as somebody said yesterday -- ready to rumble to get this economic stimulus package through. Because I assume that was the major reason why he wanted to meet with all of the TV networks, to make the case that there's a dire economic situation in the country right now and the Senate has to follow the House's lead and pass legislation and do it quickly.

COOPER: Absolutely. That was the initial idea, I think, from the White House. We were free, of course, to ask any questions we wanted. And I asked a wide range of questions.

In particular, I asked what actually keeps him up at night and is there something that keeps him up at night. And you'll see that answer tonight (INAUDIBLE).

BLITZER: I assume that he's deeply worried about -- I think the last time you interviewed him, there was a hurricane down in Louisiana, the Gulf Coast. Fortunately, we don't have to worry about that right now. But I assume at some point down the road, he'll be worrying about hurricanes, wars and all sorts of other stuff, as he -- as he's got so much on his agenda.

But did you get that sense -- that burden of -- that enormous burden is on his shoulders?

COOPER: We -- yes. I mean, we talked -- you know, he's not -- I wouldn't say his shoulders were -- you know, he certainly seemed on point and not burdened. But, you know, talking with him, you wouldn't get the sense that he's burdened.

But he's quite -- quite open in this interview about his thoughts and, as I said, about, you know what, if anything, keeps him up at night.

BLITZER: And Anderson is going to have the full interview later tonight. "ANDERSON COOPER 360," 10:00 p.m. Eastern. We're going to it coming up here in THE SITUATION ROOM, as well.

Anderson, good work.

Thanks so much.

COOPER: Thanks, Wolf.

BLITZER: Let's go to Susie Roesgen right now.

She's working an important story. Republicans proposing that mortgage rate goes down to 4 percent for all those who qualify. This would be a way, presumably, to jump-start the economy.

Susie Roesgen is joining us right now from Chicago -- all right, explain the pros and cons, Susie, of this -- this proposal.

SUSAN ROESGEN, GULF COAST CORRESPONDENT: Well, you know, Wolf, it does sound great.

I mean 4 percent guaranteed?

That just sounds great. Right now, the average home mortgage rate across the country is about 5.25 percent.

But Republican senators are talking about possibly lowering the rate to just 4 percent guaranteed.

(BEGIN VIDEOTAPE)

BETH RYAN, REALTOR: A bedroom on this level.

ROESGEN (voice-over): We all know that if you can do it, this is a great time to buy a home. Prices are way below what anyone would have imagined a couple of years ago.

But GOP leaders in the Senate are talking about locking down the home mortgage rate across the country to just 4 percent for a 30 year loan.

According to the proposal, the savings for the average family would be around $400 a month. That's nearly $5,000 a year.

Realtors like Beth Ryan say the floodgates would open for many more potential buyers.

RYAN: We have buyers that are on the sidelines and can't make decisions and that, I believe, would prompt them to move forward and get out there and start looking some more.

ROESGEN: But mortgage lenders are making it tough for many people to qualify to get a loan.

Steve Daniels, a senior writer for "Crain's Chicago Business," says lenders don't want to get stuck with anymore bad loans.

STEVEN DANIELS, "CRAIN'S CHICAGO BUSINESS": The days of easy credit, when anybody with a pulse could get a loan, were bad and led to this situation. On the other hand, if you were late with one utility bill payment over the course of, you know, your lifetime, you shouldn't -- you shouldn't be dinged for that.

RYAN: Would you like to see the basement?

ROESGEN: Right now, a 4 percent mortgage cap is just an idea -- not one that potential homebuyers can bank on.

(END VIDEO TAPE)

ROESGEN: And, Wolf, as we've seen today, some senators say they want these ideas in, but other senators say, hey, the more ideas, the more costly the stimulus bill becomes and we've got to take more out.

Also, Wolf, some people debate those numbers.

Would it really be a $400 savings for the average family or would it be less than that?

In any case, it's intriguing. It's something that the senators believe if they can get housing -- mortgage rates down, then people have more money in their pocket and that would stimulate the economy, by giving people some money to buy more -- Wolf.

BLITZER: Susie Roesgen in Chicago.

Thanks.

And there are signs that home sales may be bouncing back, at least in some parts of the country. Nationwide, pending sales of existing homes were up more than 6 percent in December. But new home sales continue to slump, down more than 14 percent that month.

Regionally, sales are strongest in the South and the Midwest. The Northeast continues to dip, as does the West. But sales there in the West are actually up more than 17 percent year to year.

Repossessions are soaring, especially one particular kind.

(BEGIN VIDEO CLIP)

BOB TONEY, PRESIDENT, NATIONAL LIQUIDATORS: They need their house to live in and they need their car to get to work. And the boat is certainly not a necessity.

(END VIDEO CLIP)

BLITZER: Boat repossessions up dramatically, and including, especially, in Florida. We're going to go there.

And with Tom Daschle out, a new name is being floated for Health and Human Services secretary -- Howard Dean. Jamal Simmons and Tony Blankley -- they're here to weigh in.

And the Venezuelan president, Hugo Chavez, takes a swipe at President Obama in an exclusive interview with CNN en Espanol. Details of what he's saying coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's go to Mary Snow right now.

She's working on a story involving an economist known as Dr. Doom -- Dr. Doom because he actually predicted this economic meltdown.

A lot of us are fascinated by what he -- what he's saying now about the future, given his track record of -- over what's happened over the past year -- but, Mary, what are you picking up?

You've actually spoken to this guy.

MARY SNOW, CNN CORRESPONDENT: I have, Wolf.

And he's seeing 2009 as sort of a black hole. You know, this once obscure professor has built a track record for himself on economic forecasts. His latest outlook is grim and he offers specifics about government plans to boost the economy.

(BEGIN VIDEOTAPE)

SNOW (voice-over): He's known as Dr. Doom because of his dire predictions. Critics once scoffed at economist Nouriel Roubini, a professor at New York University. But his forecasts have been so on target, his opinion is now sought out, from Capitol Hill to the World Economic Forum.

His warning for 2009 -- things will get worse before they get better.

NOURIEL ROUBINI, CHAIRMAN, RGE MONITOR, NEW YORK UNIVERSITY: There's a risk of a near depression, but not an outright one so far.

SNOW: And he says, don't count on the stimulus package to produce results this year.

ROUBINI: Unfortunately, the recession and the financial crisis train has left the station. Even the best policies might have an effect maybe next year. But this year is a lost year for economic growth.

SNOW: At the heart of his concerns -- the banking system. Roubini worries that the total credit losses may amount to $3.6 trillion. That's more than twice the amount of some earlier estimates. The bottom line, Roubini says, many banks are insolvent, that some should be shut down and others taken over by the government.

ROUBINI: If you don't like the dirty "N" word -- nationalization -- call it government takeover and control of the banks.

SNOW: That would entail cleaning up banks and eventually selling them back to the private sector.

Talk of nationalizing banks has already raised hackles on Wall Street. But Roubini doesn't shy from controversy. As early as July 2006, he warned of a high risk of recession. By February 2008, he wrote on his Web site of the rising probability of a catastrophic financial and economic outcome.

He says intellectually, he feels vindicated.

ROUBINI: I'd be happy to be the first one to call for the recovery when there is a sustained one. Maybe at that time people are going to call me Dr. Boom. The important thing is to be realistic rather than be delusional about what's going to happen.

(END VIDEO TAPE)

SNOW: For now, though, Roubini says he thinks there could be a weak recovery, possibly growth next year. That's if the right policies are taken -- Wolf.

BLITZER: What's his prediction as far as unemployment is concerned?

SNOW: He thinks that unemployment will peak at about 9 percent next year. That is pretty much in line with other forecasts that we have heard. And the unemployment rate now, of course, is 7.2 percent. We'll get an update on that on Friday. BLITZER: Mary Snow, thank you.

The economic crisis certainly has business booming for repo men, both on land and water. That's especially true in Florida.

CNN's John Zarrella is there.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Sunbathing on the deck -- when it comes to boating, it's a familiar image. But there's another not so pleasant image these days on Florida waters -- this.

CHARLIE CLARKE, REPOSSESSION AGENT: North. Let's head north.

ZARRELLA: That sinking feeling -- the sight of your pleasure boat going bye-bye -- repossessed.

TONEY: And Florida is the biggest state, by far, of repossession orders in boats we take back.

ZARRELLA: Bob Toney, president of National Liquidators, says repossession orders skyrocketed about the same time the housing and job market began crumbling.

TONEY: They need their house to live in and they need their car to get to work. And the boat is certainly not a necessity.

ZARRELLA: Most of the boats lined up hull to hull here at the marina in Fort Lauderdale are in the 30 to 40 foot range. New, they'd sell for a couple hundred thousand dollars. At auction, they'll bring about half that. National Liquidators gets a percentage of the proceeds.

(on camera): There are no less than 500 boats here that have been repossessed. Now, a couple of years ago, they would pick up maybe 25, 30 boats a month. Today, they're repossessing about 150 boats a month.

CLARKE: All right, slow down, man.

ZARRELLA (voice-over): This day, Charlie Clarke, a repossession agent, is going after a 42-footer in a marina. If the owner is there and they run into trouble, the team will simply back off.

CLARKE: We're not authorized to have any kind of confrontation with anyone in the -- in the process of recovering the boat.

ZARRELLA: But no one at the slip. They untie the boat, tie it to the tow boat and take off. The only snag -- at first, the engine won't start.

CLARKE: Let's keep working on it to get it going. But in the meantime, just keep moving.

ZARRELLA: Like most of the boats seized, it's only a few years old, in good shape. Many end up overseas -- Korea, South Africa, Australia. Even with shipping costs, there's still a bargain there. They'll sell within about 80 days. A good thing, Toney says, because he's running out of space fast.

John Zarrella, CNN, Fort Lauderdale, Florida.

(END VIDEO TAPE)

BLITZER: An actor's foul-mouthed tirade caught on tape. It's shocking even Hollywood insiders used to celebrity bad behavior. We have it for you.

Plus, a volcano -- it's ready to blow at any moment. There's growing concern in nearby Anchorage, Alaska. We're going there live for you right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There's a story just developing right now.

I want to bring in Zain Verjee, who's got the details.

What's coming up -- Zain?

VERJEE: Well, Wolf, we're learning that a United Airlines plane hit a bird. United is saying that the plane actually took off and then landed on another runway. It returned safely to Denver airport. An airline spokesperson says that a bird struck its right engine almost immediately after takeoff. But everyone is OK. There are 151 passengers and crew on the plane. Nobody was injured. And the plane was heading to San Francisco.

Wolf, in other news, for the second time this year, Al Qaeda's number two man, Ayman Al Zawahiri, has released a message. The audiotape condemns Israel for renewed attacks and criticizes Western support of Israel. Israeli war planes bombed the Gaza/Egypt border today following a Palestinian rocket attack in Israel. Al Zawahiri also criticizes President Obama for not mentioning Gaza during his inaugural address.

Detroit's former mayor is now a free man. Camera flashes greeted Kwame Kilpatrick as he walked out of jail early this morning. He served 99 days after a text messaging sex scandal led to his arrest. The messages contradicted testimony he gave in a 2007 whistleblowers trial that he and a staff member were not having a romantic relationship. Kilpatrick is now looking for a job. He reportedly has a prospect in Texas.

And, Wolf, it just keeps getting worse for American workers. Five companies announced more than 8,000 job cuts today -- the biggest cuts coming from PNC Bank. Retailers and factories also took a hit. Despite the job sinkhole, the stock market really rallied today. The Dow closed up 141 points -- Wolf.

BLITZER: Zain, stand by.

We're getting back to you. I want to go out to Anchorage, Alaska right now.

Our Jim Spellman is on the scene.

It looks like a volcano not far from where you are, Jim, is about to blow.

What do we know?

JIM SPELLMAN, CNN CORRESPONDENT: Scientists, Wolf, up in Anchorage -- I'm actually in Kenai, just about 100 miles south of Anchorage. Scientists up in Anchorage tell us this could blow within days. Mount Redoubt is 10,000 foot high behind me here. And this thing is getting ready to go.

They've been measuring seismic activity -- small earthquakes, as well as flying over it everyday and seeing gas emissions coming out of the top. And they say it's ready to go -- Wolf.

BLITZER: So are any of these communities -- the populated areas, including Anchorage -- you say it's about 100 miles away.

Are there in any serious danger?

SPELLMAN: The -- it's really more of a nuisance. What's going to happen is ash will come out and blanket all these communities in the central part of Alaska here. About three hours after it erupts, ash will start falling on Anchorage.

It's more of a nuisance, really. People will have to wear gas masks for a short time -- paper masks, rather. And it can clog up car engines. And it's abrasive. You want to keep your pets out of it.

The real danger, Wolf, though, is for aircraft. In 1989, Mount Redoubt erupted and it sent -- 40,000 feet up in the air it sent up these particles of ash. And it's really silica, which is glass that has melted, then when it's magma inside the volcano, forms solid. It becomes solid. And then what it does is it enters these super hot jet engines, coats them and -- with glass, basically -- and shuts them down.

In '89, a jet engine -- four jet engines on a 747 were coated and shut down. The plane plummeted. It was barely able to get restarted before crashing.

So one of the things the researchers are doing by keeping such a close eye on it is being sure that they can close air space, cancel flights as soon as they know there's ash in the air, stop any hazards like that from happening -- Wolf.

BLITZER: All right, Jim, you be careful up there, as well.

And let us know what's going on.

Jim Spellman is on the scene.

A volcano about to blow in Alaska.

He became one of President Bush's biggest foes. Now in a CNN exclusive, he's already picking on President Obama.

(BEGIN VIDEO CLIP)

PRES. HUGO CHAVEZ, VENEZUELA (THROUGH TRANSLATOR): The wool has been pulled over his eyes. He has just arrived -- because he doesn't know a whole lot about energy issues.

(END VIDEO CLIP)

BLITZER: Why Venezuela's Hugo Chavez says the U.S. won't be able to kick its oil habit.

And the pope taking heat for lifting the church's ban on a bishop who denies the Holocaust -- the latest to weigh in, the chancellor of Germany.

Plus, did President Obama take a dig over at Jessica Simpson?

We're going to tell you about the latest uproar online.

And remember, we're standing by for Anderson Cooper's interview in the Oval Office with President Obama. That's coming up soon, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Inside the Oval Office one-on-one with President Obama -- the mistake he admitted to Anderson Cooper. That's coming up.

And a launch into space that America is not celebrating. Ahead, a potential threat and why a campaign promise may come into play sooner than President Obama expected. And another leader takes a verbal swing at President Obama -- why Hugo Chavez says Mr. Obama has a lot to learn.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Let's get back to the story of Tom Daschle -- announcing today he's withdrawing. He's asking the president to withdraw his nomination as the secretary of Health and Human Services.

Let's go up to Capitol Hill, where our senior Congressional correspondent, Dana Bash is standing by.

It's caused a lot of surprise, a lot of shock, I would say, at least among many circles, up on the Capitol -- at the Capitol -- Dana.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. And that's primarily, in talking to so many senators about this this afternoon, Wolf, because of the fact that Daschle was their former colleague. And that pretty much assured that he would have been confirmed.

But it was clear that the price for Senator Daschle and his friend, the president, was too high.

(BEGIN VIDEOTAPE)

BASH (voice-over): In the halls of the Capitol, this is how it sounded when Democratic senators got the news about Tom Daschle.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: I'm in shock. I didn't know that. I don't know what happened.

SEN. MAX BAUCUS (D), MONTANA: I was all stunned. I thought he was going to get confirmed.

SEN. TOM HARKIN (D), IOWA: I'm too emotionally upset right now to even talk about it.

BASH: Democratic senators distraught that Daschle withdrew his nomination because the former senator is one of them.

SEN. HARRY REID (D-NV), MAJORITY LEADER: Senator Daschle is like a brother to me.

BASH: In fact, this picture says it all -- Daschle standing with his former colleagues, listening to them stand by him, after an hour- long closed door meeting about his tax troubles.

SEN. KENT CONRAD (D), NORTH DAKOTA: I strongly support the confirmation of Senator Daschle. I've served with him for 25 years.

SEN. JOHN KERRY (D), MASSACHUSETTS: And if you know Tom Daschle, and know him well, as well as we do, you can understand exactly what happened here in very human terms.

BASH: The reality is that Daschle likely would have had the votes to be confirmed as Health and Human Services secretary. But as a longtime member of the Senate club -- the Democratic leader for 10 years -- Daschle knew victory would come at a cost.

SEN. JOHN ENSIGN (R), NEVADA: The fact that he didn't pay his taxes until just a couple of weeks ago is very problematic.

BASH: Republican John Ensign and other GOP senators on the Finance Committee promised a bruising confirmation hearing -- questions about Daschle's taxes and his work on behalf of the health industry he would be overseeing.

ENSIGN: That doesn't pass the smell test, I think, to most Americans. And that's part of what President Obama promised to clean up here in Washington, as part of his administration. And we just don't see that happening.

(END VIDEO TAPE) BASH: Now, that warning we heard from Senator Ensign and other Republicans was proof that even if they decided to vote for Tom Daschle, in the end, they knew they had a platform to challenge the central premise and promise of Barack Obama's campaign and his presidency. And that is that he says he will do things differently here in Washington.

BLITZER: Dana, thank you.

Let's talk a little bit more about Tom Daschle. Right now, Democratic strategist Jamal Simmons is joining us, as is Republican strategist Tony Blankley. Tony, by the way, has a new book that's just come out, entitled "American Grit: What It Will Take to Survive and Win in the Twenty-First Century."

Tony, congratulations on the new book.

TONY BLANKLEY, REPUBLICAN STRATEGIST: Thank you very much.

BLITZER: Let's talk a little bit about Tom Daschle.

How does the president -- and we're going to be hearing from him shortly. He just sat down with Anderson Cooper. And I know they discussed the Tom Daschle issue. How should the president be dealing with this kind of embarrassment right now?

JAMAL SIMMONS, DEMOCRATIC STRATEGIST: Well, the quickest thing to do is to handle it fast. Get everything over today as soon as possible. Keep moving. Get a new nominee out there as fast as possible so people have something else to talk about. The last thing you want to do is have two or three days of having to discuss what happened to Tom Daschle. Who took him down, when he decided to leave and all the ins and outs of this.

BLITZER: You know something, Tony, about crisis management. You used to work for Newt Gingrich. What advice do you have?

TONY BLANKLEY, REPUBLICAN STRATEGIST: I think he played it wrong. He should have personally told Daschle that, regretfully, he doesn't -- this information, he's got -- he can't be in there. Letting Daschle step down, because Obama has branded himself as the high ethics man. He needed to do either that, which I think he should have done or showed he's tough and he's going to stand by his guy. Instead he stayed in the middle. He waited three days and let Daschle accept responsibility to withdraw. I think he played it wrong both ways.

BLITZER: Do you agree with that?

SIMMONS: The danger here is that, you know, Barack Obama starts to look like, you know, things get a little tough, then he'll just cut the line and keep moving each time. At some point he's going to have to stand and fight. We saw that with Tim Geithner. He didn't have to do that again. I think they are hoarding all their chits for when the big fight comes and when the big fight comes, he's going to have to stand there. BLITZER: You are shaking your head, Tony.

BLANKLEY: I mean it's not the end of the world, but this is a mistake. He's got Richardson, Geithner, that woman Killefer and now Daschle. That's a bad set to have in two weeks. I think he should have been much more decisive.

BLITZER: Today is exactly two weeks since he became president of the United States. How do you assess these first two weeks?

SIMMONS: The anniversary of the two-week mark.

BLITZER: The black tie event. Go ahead and tell us how you think these first two weeks have gone?

SIMMONS: I think the first two weeks have been good in many respects. He's gotten an economic plan through the house, even though it was a partisan line vote. He does have a big democratic majority. He doesn't need republicans. He's been extending himself a lot to republicans. He's had them over to the white house for the Super Bowl, had them for cocktail parties. Today they got Judd Gregg. So there will be a republican -- another republican in the cabinet. He's really extending himself.

There are a lot of democrats who are not feeling so good about this. I fielded a lot of e-mails today from people nervous about the Judd Gregg appointment and what that signals. But once Barack Obama stops doing that and the republicans keep smacking his hand back and saying no thank you, not voting with him, I think you'll see movement that said we tried to flirt with you. You didn't want to dance.

BLANKLEY: I think Obama played it wrong on the house stimulus bill. It's not a good bill. He endorsed it. I think he should have leaned on his allies there and cleaned it up there rather than letting it clean up in the senate. That's a bill was so bad it dropped a 40% approval after one week. And the republicans are not in any great fighting shape, but the fact they can bring it down to that level so quickly, he was too passive in letting the speaker put in all that pork. He doesn't want that. I'm sure he's going to try to get it out in the senate. It was a missed play, a passive play.

BLITZER: Some people thought he was doing it for bargaining purposes knowing he had this in the house, knowing it was going to be changed in the senate and changed in the house senate conference committee report. It's part of the politics of the marketplace if you will.

SIMMONS: One democrat said to me he went through this. How many republican votes is he going to get by let going some of the spending he's going to have to let go of. There has to be some product at the end of this process. I think what people want to see is some republicans come on board. If the republicans don't do it, if the republicans don't come and help, they'll start to look intransigent and they will not be cooperating with the overwhelmingly elected president.

BLITZER: We're going to leave it right there. But before we have a ton of email, tell the viewers why you are wearing a tuxedo.

SIMMONS: It's black history month. Tonight is the opening of a dance theater. I'm going to the ballet.

BLITZER: Excellent. Enjoy. Thanks very much. I wonder if that other former ballet dancer Rahm Emanuel is going to be at the ballet as well. If he is let us know.

SIMMONS: We'll be looking up in the presidential box at the Kennedy Center to see who is in it.

BLITZER: Thanks very much, Jamal Tony. Congratulations, Tony, on the new book as well.

The actor Christian Bale of "Batman" fame comes totally unglued on set. Listen to this.

CHRISTIAN BALE, ACTOR: Kick your [expletive]! I want you off the [expletive] set, you [expletive]!

BLITZER: And that's just the start. It's a tape that's gone viral on the internet. Details of what set him off coming up.

And the Venezuelan president, Hugo Chavez, says President Obama is having the wool pulled over his eyes when it comes to oil. The longtime U.S. nemesis gives an exclusive interview to CNN in Espanol.

And President Obama candid and on the record with kids.

(COMMERCIAL BREAK)

BLITZER: He called President Bush the devil, but he might be ready to turn the page with President Obama. Zain Verjee is here. We're talking about the Venezuelan president Hugo Chavez. He's speaking exclusively to CNN in Espanol.

ZAIN VERJEE, CNN CORRESPONDENT: Right, that's right, Wolf. Venezuela's leader is really trying to figure out how to deal with President Obama. Chavez is hot and cold.

(BEGIN VIDEOTAPE)

VERJEE: Hugo Chavez is ready to slap down the new president when it comes to talking oil.

PRES. HUGO CHAVEZ, VENEZUELA (through translator): The wool is being pulled over his eyes. He has just arrived because he doesn't know a lot about the energy issues. I don't know how he's going to achieve what he has announced, but it's very difficult for the U.S. to lower its dependency on oil.

VERJEE: In an exclusive interview with CNN in Espanol, the Venezuelan president says no matter Obama's alternative energy plans, there's no way America can break its oil addiction.

CHAVEZ (through translator): I don't think U.S. will be able to shake off the oil in the short term because one, it's like oxygen in the air. You need it to survive.

VERJEE: President Chavez has been a thorn in the U.S. side for years, slamming President Bush, his policies, even calling him the devil. Now he says he wants to mend fences with the U.S.

CHAVEZ (through translator): I am ready to speak with the U.S. president. Perhaps we can start a new period of respect and relations that would be constructive. I have faith that it may be possible, but it depends on the U.S. on the president's attitude, attitude of the secretary of state and the administration. We will not accept a lack of respect from anybody. We demand respect.

(END VIDEOTAPE)

VERJEE: Some experts say criticizing President Obama isn't going to be easy for Chavez. He's not President Bush and President Obama is actually really popular in Venezuela. So it won't be a good strategy for Hugo Chavez to go after Obama.

BLITZER: It will be fascinating to see how this relationship develops. Thanks, Zain, very much.

Pope Benedict XVI is taking some heat for lifting the Catholic Church's ban on a bishop who has questioned the Nazi holocaust. Some of the sharpest criticism is coming from Germany. Now Germany's chancellor also speak out. CNN's Frederik Pleitgen is in Berlin. Fred?

FREDERIK PLEITGEN, CNN CORRESPONDENT: Wolf, Angela Merkel made these comments at a press conference here in Berlin. Now the German leader is usually very diplomatic about her redirect but in this case, she had some very strong words for Pope Benedict and the Vatican. She said she expects a harsher rejection of holocaust denial from the leader of the Catholic Church.

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): The pope and the Vatican have to make unambiguously clear there can be no denial of the holocaust and that, of course, there must be positive interaction with Judaism as a whole. Through my point of view, this clarification hasn't happened sufficiently yet.

PLEITGEN: Of course, all of this is a reaction to the rehabilitation of Bishop Richard Williamson who in an interview, said that he doesn't believe gas chambers ever existed. Now he has since apologized for these remarks, but he's never retracted them. Of course, all of this is hitting very close to home here in Germany. Denying the holocaust is a crime in this country, and many Germans feel that a pope who is German and who actually witnessed Hitler's rule in this country should have come out more forcefully condemning Williamson's remarks. Wolf?

BLITZER: All right. Frederik Pleitgen, thanks very much. He's covering the story for us.

President Obama with some pretty frank language on the latest cabinet stumble. Our own Anderson Cooper sat down one on one in the oval office with the president. We're only moments away from that interview right here in THE SITUATION ROOM.

And an actor goes off on a foul-mouthed rant.

BALE: You do it one more [expletive] time and I ain't walking on this set if you are still hired. I'm [expletive] serious.

(COMMERCIAL BREAK)

BLITZER: Sunken treasure potentially worth a billion -- a billion dollars. CNN's Don Riddell is in London with details of a pretty amazing find in the English Channel. Don?

DON RIDDELL, CNN CORRESPONDENT: Wolf, this is like something out of a kid's adventure book. It's got all the elements for a Hollywood blockbuster, historical intrigue, undersea explorers and an absolute Jackpot of sunken treasure.

(BEGIN VIDEOTAPE)

RIDDELL: They might not look particularly threatening, but these American explorers have been compared by some Spanish officials to 21st century pirates. And they've now got their eyes on some 18th century British bounty. 330 feet below the waves of the English Channel lies the "HMS Victory" which when it sank in 1744 was the pride of the British fleet and the envy of the sea faring world.

GREG STEMM, ODYSSEY MARINE EXPLORATION: The "HMS Victory" mightiest ship in the world, most technologically advanced shipwreck in the world, having gone lost, with all souls without a trace would be the equivalent of our most advanced nuclear aircraft carrier disappearing, without a trace, literally.

RIDDELL: The quest of odyssey marine exploration is the subject of a documentary produced for the Discovery Channel and watching developments particularly closely is the family descended from the ship's captain.

UNIDENTIFIED MALE: Well, it's absolutely astonishing. My family, for about ten generations, had remembered the passage and knew that he died 265 years ago out on the sea there somewhere in the channel. And now we found out exactly where it is.

RIDDELL: Historians and maritime archaeologists are excited, too, not to mention the marine company's financial backers. They've recovered the gold on board could be worth as much as a billion dollars. And that's where the piracy angle comes in. In 2007, odyssey salvaged treasure worth roughly half that amount from a galleon. And were then sued by the Spanish government. That case is still pending. Already, odyssey have recovered two brass cannons but there could be dozens more left on the sea bed, not to mention the gold, of course.

UNIDENTIFIED FEMALE: Be careful with those ropes. Could be gold.

RIDDELL: Finders keepers is one of the first laws you learn in the schoolyard, but it's never quite that simple in maritime law. Odyssey is work with all parties that may have a claim. In the meantime, they aren't telling anyone precisely where the Victory is.

(END VIDEOTAPE)

RIDDELL: The wreck was discovered purely by chance, thought to be some 50 miles from its last known position. But quite where it's all going to end up definitely remains to be scene. Wolf?

BLITZER: All right. Don, thanks very much. What a story that is.

Meanwhile, a profanity laced celebrity tirade caught on tape. Even by Hollywood standards, this one is truly shocking. Here's CNN's entertainment correspondent Brooke Anderson. Brooke?

BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT: Wolf, one of Hollywood's biggest stars is caught on tape completely losing his mind, throwing a fit on a set in a profanity laced tirade.

BALE: I want you off the [expletive] set.

ANDERSON: It's one of the most talked about scenes from a movie today, but this is no scripted scene. Instead, actor Christian Bale, star of the "Machinist" and the "Dark Knight" loses his temper and goes ballistic on the set of "Terminator: Salvation."

BALE: If you don't shut up for a second, all right?

ANDERSON: In the nearly four-minute outburst, Bale explodes on the director of photography for apparently distracting Bale while shooting a scene.

UNIDENTIFIED MALE: I was looking at the light.

BALE: Oh, good for you. And how was it? I hope it was [expletive] good because it's useless now, isn't it?

ANDERSON: Entertainment website tmz.com which reports the audiotape was sent to an insurance company by the film's executives, obtained the recording.

HARVEY LEVIN, TMZ.COM: You hear Christian Bale just go ballistic at a director of photography who apparently walked on to a shot and kind of spoiled it. They were concerned because bale was threatening to walk, and if that happened, it could torpedo the film. We're told it actually went to the insurance company because there was this concern.

BALE: You do it one more [expletive] time and I am not walking on this set if you are still hired.

ANDERSON: Bale's vicious tirade reportedly happened last July. In an unrelated incident that month, Bale faced assault allegations reportedly from his mother and sister. Charges were never filed. Terminator Salvation has wrapped filming and is scheduled to hit theaters in May. For now, Warner Brothers, the studio behind the familiar and like CNN, owned by Time Warner, tells CNN no comment. And Bale's publicist says she's got nothing to say. But by the looks of this musical parody already posted on You Tube, this infamous rant will be talked about for a long time to come.

(END VIDEOTAPE)

ANDERSON: Anger management expert who treats Hollywood insiders said talent agents are dealing with out of control actors more often and are encouraging them to get help so that studios will work with them. Wolf, back over to you.

BLITZER: Okay, Brooke, thank you very much.

Did President Obama make a dig at Jessica Simpson during that interview just before the Super Bowl with NBC? Some are saying that online. Let's go to Abbi Tatton. She's working the story for us.

All right Abbi. Clarify what did he really say?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, there was a mistake in an NBC News online transcript. Because of that, posts like this started appearing in the last couple of days. President Obama calls Jessica Simpson fat on national TV. No, he didn't. Here's what actually happened. At the end of the interview, NBC's Matt Lauer asked President Obama about this front cover of Us Weekly saying you are not on it. You got replaced by Jessica Simpson. This according to the transcripts online was President Obama's response. Yeah, who is losing a weight battle apparently. Well that's what the transcript said but take a listen to what he actually said.

MATT LAUER, TV TALK SHOW HOST: You got replaced by Jessica Simpson.

PRES. BARACK OBAMA (D), UNITED STATES: Yes, who is in a weight battle apparently. Oh, well.

TATTON: He is just pointing to the headline about the weight battle and said nothing about losing the weight battle. In some parts of the web it persists online. One blog post I saw today, I guess Jessica Simpson voted republican. Wolf?

BLITZER: Abbi, thanks very much.

What is lifelike inside the white house? President Obama answers kids' questions in a school visit a little while ago. We have the videotape. Stand by for that.

A much more serious note, CNN's Anderson Cooper with the president inside the oval office late this afternoon. You are going to see the interview coming up at the top of the hour here in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Some Washington, D.C. school children got the surprise of a lifetime today. The president of the United States and the first lady stopped by a charter school to read the children a story.

OBAMA: I didn't start off being the president. How did I start off? First, I really always thought that it would be neat to be able to help people who were maybe they're poor or they don't have good schools or they don't have good housing. So I worked in neighborhoods to try to make life better for people. Then eventually I decided after I got my law degree I became a lawyer and I decided that maybe I would run for office. So first I ran locally in Illinois where we are from in Chicago and then eventually I ran for the United States senate and I was working on Capitol Hill and then finally I decided I would run for president.

MICHELLE OBAMA, FIRST LADY: The first thing he did was work hard in school and he listened to his parents and his teachers, most of the time.

OBAMA: Most of the time I did that. How about you?

UNIDENTIFIED MALE: There's something I want to ask you. Do you have a favorite superhero?

OBAMA: I do. Spiderman and Batman were my two favorites. Those were my two favorites. How about you? What's your favorite?

UNIDENTIFIED MALE: My favorite is Batman and --

OBAMA: No Superman? Okay. Fantastic. Go ahead.

UNIDENTIFIED FEMALE: When did you first want to be the president?

OBAMA: I didn't think about being president until I was much older. I think when I was your age I wanted to be an architect. It's sort of like being a construction builder. I wanted to design buildings. I thought that would be interesting.

UNIDENTIFIED MALE: What is it like living in the white house?

OBAMA: It's a nice house. A big part of it is like a museum, the first floor. There is a bunch of rooms like a gold room and a blue room and a red room where people have big dinners and then there is a bowling alley and a movie theater. And there is a floor shop and a place where they make candy and chocolate. And I have to keep my kids from going down there. But it is one of the most important houses in the country. We feel like we have a real big responsibility.

OBAMA: Not to break anything.

OBAMA: Not to break anything. We live upstairs.

OBAMA: Basically the -- it's the people's house. Everybody owns the white house. We just borrow it while we I'm president and Michelle is first lady and when we are done the next president will come in. The people own it. Because it's really a symbol of our democracy.

OBAMA: Anybody can visit. Have any of you visited the white house? That's something to talk to -- you should come and visit. You come and visit. They have tours and we are going to try to do some special fun things for kids there. Hopefully you guys while we are there get to come and visit. We have one more. The first lady can. Yes, my dear.

UNIDENTIFIED FEMALE: Is it true there is an office called the oval office?

OBAMA: Yes. That's my office. Can you guess why it's called the oval office?

UNIDENTIFIED FEMALE: It's shaped like an oval.

OBAMA: It's shaped like an oval! That is exactly right.

BLITZER: The president and first lady at a local charter school earlier today. His economic plan by the way calls for expanding broadband internet.

I want to bring Lou Dobbs who is keeping an eye on all the items in the recovery plan and the stimulus plan as it's called. What about this idea of expanding broadband around the country?

LOU DOBBS, CNN ANCHOR: It's like so many things. I have to comment. As you and I both know, there will be controversy following President Obama's reference to while we are president talking with those kids, every husband in the country know what is he meant by that. He has my commendation for saying it correctly, as a husband myself.

Wolf, tonight we will have a lot more on the government's massive spending and borrowing bill. It's disguised as a stimulus bill but already it's losing massive public support. We are taking a close look at the legislation for you to let you know exactly how your money would be spent if this thing went through the way it's set up right now, and we are urging the senators to do the same. That is, read it and carefully go through it. It looks like they've already began to do a little thinking.