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Talking Economic Reform in Virginia; House and Senate Working Out Stmulus; Csatro Rags Emanuel

Aired February 11, 2009 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Thanks very much. Breaking news. President's economic rescue plan clears another major hurdle. House and Senate negotiators announced the deal just a short while ago. We are going to get reaction from the White House and tell you what's in and what's out of this recovery plan.

Also this hour, the CEOs of big banks face some furious lawmakers. At issue, how they're spending their bailout money and how they can win back the public's trust.

And the Las Vegas mayor accusing President Obama of saying something harmful and outrageous. And he wants an apology.

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

ANNOUNCER: This is CNN Breaking News.

BLITZER: But first the breaking news this hour. A new deal on jump starting the economy has been struck. The price tag is down a little bit and House and Senate negotiators hope they can send a rescue package to the president for his signature very, very soon.

Our White House correspondent, Dan Lothian, is standing by. But let's go to Capitol Hill first for all the details. Our senior congressional correspondent, Dana Bash, is on the story for us.

All right, Dana. Tell us how this played out.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Well, I can actually tell you how it's still playing out, Wolf. And this is new information that we're getting. You saw right here where I'm standing at this podium, Senate leaders and these --- centrist senators come out and speak, but conspicuously absent was the House speaker, Nancy Pelosi.

This is supposed to be a Senate/House deal. Well, the reason why she isn't here is, apparently, I was just told, that there are still some minor things to be left out. And as we speak the Senate majority leader is on the other side of the Capitol in the House speaker's office trying to work out those things.

So House speaker was not here. They are trying to work out those minor details and what I was told is that what was announced, again, here just a few minutes ago is something that the Senate is confident that they can get through the Senate. And why is that? Because it is something that those three critical votes, those three moderate Republicans that the president needs signed on to.

And listen to what Arlen Specter said about this $789 billion deal that they worked out over here.


SEN. ARLEN SPECTER (R), PENNSYLVANIA: Lots of naysayers on all side but the Republican moderates struck an agreement for $870 -- $780 billion. $780. And the fact is that we hung tough and it was modified only in the case of absolute necessity.


BASH: Now that was Arlen Specter speaking just, again, moments ago. There were certainly a lot of back slapping from the senators, talking about how difficult, how excruciatingly difficult it has been, Wolf, for them to come up with what they believe is the right mix of spending and tax cuts that everybody was very different perspectives on spending on education, on infrastructure, and again, on tax cuts, can come up with in order to get the minimal votes to pass the House and Senate.

They are hoping that they can get this final detail done with the House and make sure that this really is a done deal between the House and Senate so that they can start voting on this perhaps as early as tomorrow, Wolf.

BLITZER: They always stay the devil is in the details. We'll see if the speaker signs off on all of this. There was one version the House passed, a separate version, a bigger one, that the Senate passed and now they've reached the compromise.

Talk about the details, what is in, what's out.

BASH: Let me just give you a couple of examples that we are hearing from our sources. And again, they are still -- these details are still coming available to us. One of the most interesting things, I think, to most of our viewers will be the tax cuts. In particular, President Obama's -- one of his top priorities to the campaign has been what he called a make-work-pay-tax-cut.

Well, in order to get the overall number down, he agreed to reduce that. So it was $1,000 for families, now with $800 for families. It was $500 for individuals, now it is $400 for individuals.

Give you another example of some of the changes here. We've been talking about a major rub between House Democrats and the Senate has been spending on education. Because the Senate really did slash a lot of money on education, primarily because those moderate Republicans said that they didn't think it stimulated the economy.

Here is what we know about spending on education. $54 billion in aid to states. Now that is intended mostly for education and other services. Within that $10 million is supposed to be for governors and local officials to spend on school modernization and repairs. Now that is intended to make the House Democrats happy because there was a cut in school construction.

School construction has been one of the major sticking points here. House Democrats wanted it, over in the Senate, they didn't want it. That is part of the compromise and how to get money to the states for education and please mostly Democrats that this will fulfill their priorities.

BLITZER: I'm sure there's a lot of details that we're going to go through as well. But stand by, Dana, we're going to get back to you.

I want to go to the White House right now. Our White House correspondent Dan Lothian has been getting reaction to this deal, a tentative deal now worked out between these House and Senate conferees.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. And so far no official comment from the White House. I can tell you this, Wolf, that the White House has been very careful not to get out in front of this deal while Rahm Emanuel, the chief of staff, has been in -- he has been involved in the negotiations.

The president really still wants to take a look at this final deal. Take a look at the details before going public with any kind of comment on this. But what the president was doing today is getting outside of -- Washington again, going to Virginia, at a construction site where he was laying out how money from the stimulus bill will be used.


LOTHIAN (voice over): Overdressed for a dusty, windy construction site, the president used this backdrop to make a visual point. This is where the stimulus plan meets the road.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There's a lot of work that needs to be done on our nation's congested roads and highways, crumbling bridges and levees, and crowded trains and transit systems.

LOTHIAN (voice-over): The president says with money flowing from the stimulus bill infrastructure projects in Virginia and other states will create millions of jobs.

GOV. TIM KAINE (D), VIRGINIA: Here on this project, we can add hundreds of on-site construction jobs.

LOTHIAN: Vice President Joe Biden was also on the road and on a bridge in Pennsylvania. That's in need of repair.

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: This is a significant move on the road to creating the 3.5 to 4 million jobs that we need, that we're losing as well as, as well as beginning to lay the foundation for a -- for a strong economy so when we do rebound, we are investing in things that are needed anyway. LOTHIAN: Even as the White House was talking up infrastructure projects that will benefit from the stimulus bill, Press Secretary Robert Gibbs was facing tough questions about Tuesday's rollout of the bank bailout plan. A day that saw the stock market plunge by nearly 400 points.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Yesterday's speech and framework were not designed for a one-day market reaction. The plan that was outlined was ready.


LOTHIAN: Gibbs points out that when you look at what happened with this plan that was rolled out yesterday you have to look long term, not on what happened on one day but what is in the best interest for the overall health of the economy long term.

I can also tell you this, Wolf, that the White House did invite transportation secretaries from just about every state here to Washington to talk about how they can put money from the stimulus bill to work very quickly and infrastructure projects. One transportation secretary, rather, from California said that the economy is on fire. And we are the people who can help to put the fire out -- Wolf?

BLITZER: Dan Lothian at the White House. Thanks.

Let's bring in our senior political analyst, Gloria Borger. Looks like he's got a win, the president of the United States, only 11 Democrats rejected it in the House. All the others were with him. All the Democrats in the Senate were with him. He brought three moderate Republicans onboard. But this is still a win for him.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, so far, yes. I mean assuming he doesn't have a revolt from -- some House Democrats on this.

Look, the new president was really driving this process in a way I don't think we've seen in a long time. He put his personal prestige on the line. He personally negotiated some of this, I'm told, calling members of the Senate up. And also, sending his chief of staff, Rahm Emanuel, up there into the wee hours of the night to negotiate this final deal.

At the outset, Wolf, they were a little slow off the mark at the White House here. They lost the spin wars on what's in the stimulus package. In the end, he went to the American public, he sold it and he sold it on Capitol Hill.

BLITZER: Stand by, Gloria. We will be talking again. I want to go to Jack Cafferty right now for "The Cafferty File" -- Jack?

JACK CAFFERTY, CNN ANCHOR: Wolf, getting this bill put together is one thing. Before we break out the champagne, though, we might want to see if it works and nobody, nobody, is offering a guarantee on that. In fact, there are people out there who are suggesting that if the economy doesn't start to show some sign of life fairly quickly, the American public might begin to sour on the euphoria surrounding the man from Illinois.

For example, a headline in the "Financial Times" this morning - "Has Barack Obama's Presidency Already Failed?" It's a rather startling question posed by "Financial Times" columnist Martin Wolf. He writes how in normal times it would be a ludicrous statement. But because we're living in times of what he calls great danger, it's worth looking at.

He says right now a lot of the blame is still being heaped on the previous administration, and rightfully so. But if the Obama administration does not act swiftly and strongly enough, it will inherit the blame at some point. He says doing too little is now far riskier than doing too much. And suggested that if the president cannot fix the economic meltdown, the rest of his presidency is pretty much over.

According to Wolf's column, both the stimulus package and Tim Geithner's banking plan seem to be hoping for the best when what they really need to do is expect the worst. Wolf says he's surprised the new president let Congress pretty much write the stimulus package and he sees the new banking proposal as too indecisive, too optimistic. Wall Street agreed. The market went in the toilet yesterday after Geithner got through with his presentation.

Meanwhile, a CNN Opinion Research Corporation poll out this week shows an American public looking very favorably on the president who has an approval rating of 76 percent, big number, that includes a whopping 97 percent of Democrats, even 50 percent of Republicans, but people are not nearly as fond of this stimulus package. Only 54 percent support the Senate bill. If more and more Americans continue to lose their jobs, it's unclear how long Mr. Obama can keep these numbers up.

Here's the question: If the economy doesn't start to improve, how long does President Obama have before the public turns on him? Go to and post a comment on my blog -- Wolf?

BLITZER: Jack Cafferty, thank you.

Bank CEOs in the hot seat right now. Members of Congress are demanding answers from the heads of the major banks. Also, they want to know if they're squandering federal bailout money, that will be our tax dollars, and the public's trust. One CEO confessed to a big mistake.

Plus the mayor of Las Vegas accusing president Obama of saying things that could make his city's economy even worse.

And in our strategy session, why is Fidel Castro writing about the White House chief of staff, Rahm Emanuel? We'll tell you right here in THE SITUATION ROOM.


BLITZER: We want to get back to the breaking news. Looks like a deal has been reached between the House and Senate members on this economic stimulus package. This debate, though, over this -- the economic plan has been intense over these past several weeks.

In fact, one U.S. senator says, and I'm quoting, "it stinks." That would be Senator Lindsey Graham of South Carolina. He was among those who thought the plan had simply too much spending.

So what does he and other Republicans think now that the House and Senate negotiators have reached this agreement on this economic recovery bill?

Senator Graham is joining us now from Capitol Hill.

Senator, thanks very much for coming in.


BLITZER: If someone said to me over the past few weeks, you know what, the president is going to reach out to moderate Republicans, mavericks, I always assumed the two senators from Maine, Olympia Snowe and Susan Collins, would be onboard. Arlen Specter, he often goes with the Democrats on sensitive issues.

But I always assumed that John McCain, a maverick, and Lindsey Graham, probably, would be there as well. But the two of you came out swinging. You hate this deal. Why?

GRAHAM: Well, number one, it started in the House very poorly. This bill was not written by a bunch of economists focused for creating jobs written by House appropriators with the attitude we won, we write the bill. You couldn't pick up one Republican in the House and you lost 11 Democrats. You lost more Democrats than you picked up Republicans. That's not bipartisanship.

John and I had an alternative that was $415 billion that had tax cuts for business, and tax cuts for individuals. It had spending on food stamps and unemployment insurance benefits and infrastructure projects. The compromise between $415 billion that every Republican voted for in the Senate, in 790, whatever the number is, is not a bipartisan compromise.

So we're disappointed in the process and the substance.

BLITZER: What...

GRAHAM: This bill creates more new government than it does new jobs.

BLITZER: What does it say to you about the new president of the United States?

GRAHAM: I think what happened in the House kind of threw -- I think he should have probably written the bill but the House started with a spending bill that was unfocused on creating jobs. Twenty percent of this bill hits the economy in the first year. If it can't come out within a year, or 18 months, it shouldn't be in this bill.

There are a lot of programs in this bill that are policy changes, they're unrelated in creating a job, and I think we've lost the focus. We throw in everything but the kitchen sink in this bill and not focus on creating jobs.

BLITZER: He says, he says, the president, don't let the perfect be the enemy of the good.

GRAHAM: Right.

BLITZER: Isn't this better than nothing?

GRAHAM: No. This was worse than nothing. This is a trillion dollars over the next 10 years. And when the economy gets better, the interest on this bill is about $400 billion. I think it would have been better to start with housing. It would have been better to start with banking. We've taken about $800 billion in the name of stimulus to grow the government, not create jobs, and we've done nothing about the underlying problems with housing and banking.

You're throwing good money after bad until you fix the banking problem and the housing problem. So I think it had been better to do nothing on stimulus, start with banking and housing where you have a real chance to jump start the economy, then do stimulus.

BLITZER: Listen to what the president said about what this will do. Listen to this.



OBAMA: Governments are sealing -- seeing more people filing unemployment claims, signing up for Medicaid, requesting government services. And all the while, people are spending less, earning less, and paying less in taxes. So across the country, states need help. And with my plan, help is what they will get.


BLITZER: Doesn't South Carolina need some help?

GRAHAM: Yes. But there's only one taxpayer. This is not money we found under a tree in Washington. The money we're sending back to the states came out of the same wallet that the money going to the states came from. So, yes, South Carolina needs help. I'm all for infrastructure spending. But it's got to be shovel ready.

I'm for helping people sign up for Medicaid. There's $90 billion in the bail. All you need to do is get people eligible for Medicaid in terms of new enrollees is $11 billion. I'm not for $75 billion slush fund for states that can be spent on anything they want to spend it on including budget problems because we've got our own budget problems and you're rewarding states who have done very little to trim up their own budget...

BLITZER: South -- yes.

GRAHAM: ... and punish states that have done things at home.

BLITZER: South Carolina will get money out of this bill.


BLITZER: Should South Carolina take the money?

GRAHAM: I think that, yes, from my point of view, I -- you don't want to be crazy here. I mean, if there's going to be money on the table that will help my state, but I've got a job to do up here, and that is to try to help people and not damn the next generation. We had a $415 billion package to help people who have lost their jobs, that cut taxes, that create new jobs. We've got a spending bill, not a job creation bill. And we're being all things to all people.

We've dug a hole for the next generation of young Americans they can't get out of. Total cost of this bill is over $1 trillion and it's not going to create jobs as much as it does throw government and when you send the money to South Carolina, that's not going to create a job for the national economy. It's going to help a bunch of politicians balance their books and not create jobs in South Carolina.

BLITZER: One final question. We're almost out of time, Senator.


BLITZER: Where do you see yourself cooperating with President Obama down the road? On which issues -- because in the past you've worked with Democrats on comprehensive immigration reform.


BLITZER: On CAFE and finance reform. Where do you see...

GRAHAM: I -- I can give you...

BLITZER: What issues will you be his partner?

GRAHAM: Social Security. We can't do it without bipartisanship. And this bill is not bipartisanship. If this becomes the new definition of bipartisanship, we've lost our way. But he's going to need help from Republicans on Social Security and closing Guantanamo Bay, what to do with the detainees.

I think we can move them back into the United States as long as we're smart about it. He's going to need help on earmark reform, budget reform. He's going to need help on banking and housing. And I want to help him. I want him to succeed but this bill started in the House, it became a monstrosity of a spending bill. It has lost its focus in terms of creating jobs and I can't help him here and I'm sorry. But this is a bad deal to the American taxpayer.

BLITZER: Lindsey Graham is a Republican senator from South Carolina.

Senator, thanks for coming in. GRAHAM: Thank you.

BLITZER: How did peanut butter become deadly? Officials from the peanut company at the center of a salmonella outbreak were grilled today. But wait until you hear how they answered questions.

And is Sarah Palin thumbing her nose at some prominent conservatives? A bit of a mystery why she won't appear with some of them.

Stick around. You're in THE SITUATION ROOM.


BLITZER: Deb Feyerick monitoring some other important stories incoming to THE SITUATION ROOM right now.

Deb, what's going on?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, taking the Fifth at a congressional hearing, the president of a peanut company and a plant manager accused of knowingly distributing food tainted with salmonella.

Stewart Parnell and Sammy Lightsey refused to answer questions from lawmakers about their alleged (INAUDIBLE) widespread salmonella outbreak, denies that was linked to the outbreak today. More than 600 people have been sickened by the contaminated food products.

And Bernard Madoff's wife allegedly socked away millions right before her husband's arrest. State officials in Massachusetts say Ruth Madoff withdrew more than $50 million from a brokerage firm linked to the disgraced financier's New York company. The bulk of it was reportedly taken out the day before her husband turned himself in on fraud charges.

Prosecutors and Mr. Madoff's attorneys agreed today to push back the deadline to issue an indictment until the case next month.

And a U.S.-led anti-pirate patrol captures its first group of suspected pirates off Somalia. Navy officials say seven suspects were caught in the Gulf of Aden after a commercial tanker made a distress call saying they were under attack. The anti-piracy task force was created in January to help crack down on pirates who have been hijacking boats in the region. has named Will Smith most bankable Hollywood actor. The Web site surveyed 150 industry professionals to compile the list of Tinsel Town's biggest money makers. Smith was the only star to capture a perfect score possibly because his blockbuster films are known for dominating the July 4th box office. "Independence Day" and "Men in Black" raked in hundreds of millions of dollars and they were great films. Wolf?

BLITZER: Why I'm not surprised. I love those films. I know you did as well. All right, Deb, thanks very much. Here's a question. What's happening in Vegas isn't necessarily staying in Vegas. The city's mayor is so angry about something President Obama said he is going public. He's calling the president's words outrageous. He's also demanding an apology.

And some CEOs of big banks grilled on Capitol Hill today. Do you feel the same way one lawmaker feels?


UNIDENTIFIED MALE: America doesn't trust you anymore. I, for one, between myself and my various campaigns and my own personal business stuff, I get a lot of money to put in banks. I don't have one single penny in any of your banks. Not one. Not one.


BLITZER: To our viewers you're in THE SITUATION ROOM. Happening now, the human side of the economic crisis. Everyday Americans struggling to make ends meet and they are asking the president for help. You're going to find out what happens after their town hall pleas.

The president's economic stimulus plan. Many unemployed workers are counting on it to generate jobs. But it won't be simple. The fierce competition for stimulus cash. That's coming up as well.

And the first lady's fashion. Michelle Obama graces the cover of "Vogue" magazine. We're going to take you inside the photos and tell the fascinating stories behind the extraordinary shoot.

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

Let's get back to the breaking news right now. Lawmakers say that it will immediately help provide jobs in these, the recession, House and Senate negotiators, only a little while ago reaching tentative agreement on the economic recovery bill. Price tag $789 billion.

Now the lawmakers who worked on this deal hope they can send it to the president of the United States and do that within the next couple or three days. The president hopes to sign it.

Listen to President Obama earlier in the day in Virginia.


OBAMA: We passed a version of the American recovery and reinvestment plan through the House. Yesterday we passed a version through the Senate. Now we've got to get a final version to my desk so that I can sign it and so that here in Virginia and across the country, the people can use it.

In Virginia, the unemployment rate has surged to its highest level in more than a decade. And might have been a lot worse were it not for the leadership of Governor Tim Kaine and former governor, now senator, Mark Warner.

Unemployment claims have doubled in recent months compared to the last year. Nationwide we've lost 3.6 million jobs since this recession began, nearly 600,000 this past month alone.

These are the people I talked to Elkhart, Indiana, on Monday, which has lost jobs faster than anyplace else in America, with an unemployment rate of over 15 percent.

They are the people I met yesterday in Fort Myers, Florida, which has been among the places hardest hit by the foreclosure crisis.

These are the folks looking for work, and these are the folks who want to work.

At the same time, look around us. Look at this construction site right where we're standing. We're surrounded by unmet needs and unfinished business in our schools and our roads, in the systems we employ to treat the sick, in the energy we use to power our homes.

And that's the core of my plan, putting people to work doing the work that America needs done.

We're here today because there's a lot of work that needs to be done on our nation's congested roads and highways, crumbling bridges and levees, and crowded trains and transit systems. Because we know that with investment we can create transportation and communication systems ready for the demands of the 21st century. And because we also know what happens when we fail to make those investments.

We've seen the consequences of a bridge collapse in Minneapolis. We've seen the consequences of levees failing in New Orleans. We see the consequences every day in ways that may be less drastic but are nonetheless the burdens on local communities and economies. Time with family lost because of longer daily commutes. Growth held back by streets that can't handle new business. Money wasted on fuel that's burned in worsening traffic.

These are the problems that the people of Northern Virginia understand acutely. Governor Kaine understands it acutely. And your governor has worked valiantly to relieve these transportation pressures while at the same time facing enormous budget pressures.

What's worse? Now, states are facing acute, new responsibilities during this recession. Local governments are seeing more people filing unemployment claims, signing up for Medicaid, requesting government services. And all the while, people are spending less, earning less, and paying less in taxes.

So, across the country, states need help. And with my plan, help is what they will get. My plan contains the largest investment increase in our nation's infrastructure since President Eisenhower created the national highway system half a century ago.

We'll invest more than a hundred billion dollars and create nearly 400,000 jobs rebuilding our roads, our railways, our dangerously deficient dams, bridges and levees.

Here, in Virginia, my plan will create or save almost 100,000 jobs, doing work at sites just like this one. Where we're standing, that could mean hundreds of construction jobs. And the benefits of jobs we create directly will multiply across the economy. For example, this kind of infrastructure project requires heavy equipment. Caterpillar, which manufactures the machines used in this project, has announced some 20,000 layoffs in the last few weeks. And, today, the chairman and CEO of Caterpillar said that if the American Recovery and Reinvestment Plan passes, his company would be able to rehire some of those employees.


BLITZER: President Obama speaking earlier.

Once again, we're following the breaking news. The House and the Senate, they have apparently reached a deal on this final version of the economic stimulus package, $789 billion. We are going to have more on that coming up shortly.

Meanwhile, they're likely responsible for your home loan, your credit cards, and other financial products. So, what exactly are they doing to help you? That's one grilling the CEOs from eight top banks faced from lawmakers today. They are forced to respond to the anger many people out there feel.

Let's go to our congressional correspondent, Brianna Keilar.

It was pretty lively during that hearing today, Brianna.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: And, Wolf, it was really an act of contrition on the part of these CEOs today. Yes, they defended themselves a little bit. But they spent a lot of time listening while members of Congress vented.


KEILAR (voice-over): Outside, angry protesters, inside, angry lawmakers...

UNIDENTIFIED MALE: None of us. America doesn't trust you anymore.

KEILAR: ... fed up with the CEOs of Wall Street's biggest banks, banks that received billions in taxpayer dollars, like Vikram Pandit, Citigroup, $45 billion, John Stumpf, Wells Fargo, Lloyd Blankfein, Goldman Sachs, $25 billion each.

And, still, credit is frozen, amid reports some of these banks spent big bucks on executive pay and corporate perks, like Citigroup's purchase of a $50 million foreign-made corporate jet.

VIKRAM PANDIT, CEO, CITIGROUP: We did not adjust quickly enough to this new world. And I take personal responsibility for that mistake. In the end, I canceled delivery. I get the new reality, and I will make sure Citi gets it as well.

KEILAR: A pledge to lawmakers, like committee chairman Barney Frank, still working to convince Americans of this new reality.

REP. BARNEY FRANK (D-MA), FINANCIAL SERVICES COMMITTEE CHAIRMAN: In an effort to get the credit system functioning, things will be done that will be to the benefit of the institutions over which you preside, because there is no alternative. But you need to understand, as I think many of you do, how angry that makes people.

KEILAR: The eight CEOs tried to quell the outrage, calling some of it justified.

UNIDENTIFIED MALE: From Morgan Stanley's point of view, you know, if you go back and play the clock over again, you definitely would do it differently.

KEILAR: It wasn't enough.

REP. GARY ACKERMAN (D), NEW YORK: We listen to you, and we hear words, words, words, and no answer. It seems to me and -- and to some of us that this money hasn't reached the street, that you are not loaning it out.


KEILAR: But these CEOs insisted their companies are lending money and lending more because of the bailout funds -- Wolf.

BLITZER: Brianna Keilar up on the Hill for us.

Once again, we are following the breaking news. We are getting some more information on a potential snag out there on this tentative deal between House and Senate conferees on the economic stimulus package. Stand by. Dana Bash is up on the Hill. We're going to go to her in a moment.

Even as President Obama says he's working to fix the economy, the mayor of Las Vegas is accusing him of making matters even worse for his city.

And, in our "Strategy Session," the Louisiana governor, Bobby Jindal, takes on a big job for his party, his challenge, and why he was chosen over Sarah Palin.

And a homeless woman's emotional appeal to the president gets a very quick response. And she's getting help right now. We will tell you what's going on -- right here in THE SITUATION ROOM.


ANNOUNCER: This is CNN breaking news.

BLITZER: Let's get right back to the breaking news.

Is there or is there not a deal between the House and Senate conferees over this nearly $800 billion economic stimulus package? There might be a little snag under way right now.

Our senior congressional correspondent, Dana Bash, is working this story.

It's getting complicated. What do we know precisely, Dana?

BASH: Well, we know precisely that the bottom line is that this seems to be an agreement between the House and the Senate, and the House has not officially signed on to this.

In fact, Wolf, the -- the Senate majority leader, Harry Reid, he has been in the House speaker's office, on the other side of the Capitol, for nearly an hour, for nearly an hour at this point, trying to convince her and, more precisely, some of her rank-and-file, to sign on to this deal, and to sign on to it because he's arguing it is really the best he can do to get this through the Senate and to the president's desk.

And I -- we mentioned earlier about -- about funding for education. And I want to put that back up on the screen what we talked about, because this really is the snag that Senator Reid is talking about with the House speaker, $54 billion in a fund for education mostly, but also for other services. Ten billion of that is supposed to be in this deal crafted in -- primarily in the Senate -- is supposed to be for governors to repair schools, to modernize schools -- modernize schools.

Well, what they wanted over in the House was not that. They wanted a direct amount of money for schools to be constructed. And this is -- it sounds like a minor thing, but it actually is a really big philosophical difference in terms of the role of the federal government.

These three Republicans here say, it is not our job to really tell school districts what schools they should -- they should build. And, over in the House, they say, it is our job to do that, especially if it should be targeted to low-income areas.

So, that's the holdup at this point. Again, it sounds minor, but it actually has been something that they have been grappling for days and days. They are saying that they hope that, in a -- in a short order, that they are going to convince the House speaker and her rank- and-file to go along with this. But it is not there yet.

And literally -- literally -- as we speak, the Senate majority leader is in the House speaker's office, trying to convince her to accept this deal.

BLITZER: Dana, stand by. We are going to get back to you.

I want to continue the discussion of the breaking news. Right now, joining us in our "Strategy Session," Jennifer Palmieri from the Center for American Progress, used to work in the Clinton White House, and Republican strategist and CNN political contributor Alex Castellanos.

I can't imagine this snag, as sensitive as it may be, would prevent this deal from going forward.

JENNIFER PALMIERI, CENTER FOR AMERICAN PROGRESS: You would think that they would not -- that the majority leader and all the -- the Republican and Democratic senators would not have gone to the cameras to say that they had a deal if they hadn't worked it out. So, I would expect that they would work it out.

And it is pretty remarkable that it is only Wednesday, and -- and that has been tough negotiating -- that they have got this done.

BLITZER: It usually happens in these House-Senate conferees. But when all is said and done -- and I'm sure Jennifer will agree -- these are, after all, Democrats.



Yes, the partisan bickering is now going on within the Democratic Party. They should be able...

PALMIERI: It is not partisan bickering. It's policy differences, Alex.

CASTELLANOS: They should be able to -- they should be able to -- They should be able to work this out. He's going to get what he wants.

BLITZER: All right, let's talk a little bit about Bobby Jindal, the very popular governor of Louisiana.

He has been picked, as you know, to give the Republican response to President Obama's address -- he's going to addressing later in the month a joint meeting of the House and the Senate. This is a great honor for Bobby Jindal. He was picked over, for example, the governor of Alaska, Sarah Palin.

CASTELLANOS: Yes, he was.

Now, last time I checked -- correct me if I am wrong -- we lost the last election on a ticket that Sarah Palin was on.


CASTELLANOS: I don't think people are -- Republicans are looking backwards.

When you look at statewide offices that Republicans have won, major offices, anywhere in the country the past three years, there is one, Louisiana, Bobby Jindal. And in a state where we had lost confidence in government, perhaps more than any other state, he has restored it. He has cut taxes.

And giving this kind of speech, this is what Fred Thompson did responding to President Clinton when he first came to the Senate, and it put him on the map. It will be interesting to see if Jindal can do the same.


BLITZER: He's very popular.



BLITZER: He's of Indian ancestry.


BLITZER: And some say, you know, for the Republicans, he could be their Barack Obama.


I don't imagine there was a lot of debate within the Republican Party about whether or not Jindal should do it. I'm not sure who else you give it to. Palin -- Palin is too polarizing, and she lost.

But what is he going to say? I mean, I think that's -- that's the big question. The -- I know that Republicans in the House and Senate who are opposing the stimulus bill are proud of themselves for holding their caucus together, mostly, in the opposing the stimulus bill. But I'm not sure why they think...


BLITZER: I suspect he's not going to have any problem coming up with a rebuttal or a response to the president.


CASTELLANOS: He -- he is a new generation. He's...


PALMIERI: But what he's going to say? What is his alternative vision?

CASTELLANOS: Well, the Republican -- Republican alternative to the Democratic big-spending plan is pretty clear. And it's -- a lot of it is what Bobby Jindal has done in Louisiana.

PALMIERI: It's the same tax cuts that people rejected, though. I don't see why...


CASTELLANOS: No, actually, actually, actually, it is pretty simple. It depends who you want to do the spending.

The Republican philosophy has been let -- you know, not to borrow money and give it to Washington to spend, but instead cut spending and...


CASTELLANOS: ... spending.

BLITZER: But you have got to admit...


BLITZER: But you have got to admit, over the past eight years...


BLITZER: ... the Republicans don't exactly come to this discussion, shall we say, perfect.


CASTELLANOS: Well, did Republicans spend too much?

PALMIERI: With a perfect record.

CASTELLANOS: Yes, we did. Is that an excuse for Democrats to spend even more at a perilous time like this?


CASTELLANOS: Look, you know what Bobby Jindal does?

PALMIERI: But their tax cuts -- but their tax cuts didn't work. And, yet, that is what they're continuing to propose.

CASTELLANOS: Bobby Jindal actually agrees with Barack Obama on one important thing. And that's what -- what Obama said during the campaign was prosperity comes from the bottom up.

Now, of course, he is doing top-down prosperity -- give to it Washington, it will get to you -- now. But that's still the Republican message. I think you will hear that from Bobby Jindal.


PALMIERI: But you don't have any means...


BLITZER: Like President -- like President Obama, Bobby Jindal -- I have spent some time with him -- he's a very intelligent guy and is formidable politician, a very -- he used to be a member of Congress.


BLITZER: And he's still in his 30s.


PALMIERI: Right, 37.


PALMIERI: Younger than me.



CASTELLANOS: It's not good to have candidates who are younger than we are.



PALMIERI: The president isn't, though.

He is really appealing, but what -- you know, but what is he going to say?

BLITZER: Here is something interesting...


BLITZER: ... and I know particularly interesting to you, Alex, because -- since you were born in Cuba.

Fidel Castro, remember him? He has a signed -- a column out there going after Rahm Emanuel, saying some sort of strange things about the White House chief of staff.

"What a strange surname. It appears Spanish, easy to pronounce, but it is not. Never in my life," Castro writes, "have I heard or read about any student or compatriot with that name among tens of thousands."

What's going on with the former president of Cuba?

CASTELLANOS: Well, I guess for a -- possibly a dead tyrant, he still writes a fairly interesting editorial.

BLITZER: It's pretty interesting. I read the whole thing.


CASTELLANOS: It's, you know, German philosophers and Rahm Emanuel.

I think one of the things that's going on here is, Cuba is looking, is this an opportunity, with a new administration, to provoke debate, to insert itself in the dialogue? They are seeing now that America's backing off from Guantanamo. Can -- can they get that territory back, like the Panama Canal? Can they engage the United States and somehow start a debate, so they could take a little more turf in terms of -- of economic help, opening -- an economic opening? So, I think what you are seeing here, any kind of dialogue with Cuba, they see as an opening. The problem with -- the challenge, I think, for President Obama is, he's all things to all people. The left in the Democratic Party wants him to open it up. He got tougher, though, during the campaign. And there are a lot of votes in Florida that he can't afford to offend.

BLITZER: but there could be an opening now...


BLITZER: ... between the U.S. and Cuba, given what President Obama said during the campaign.

PALMIERI: Right, that he wants to lift the -- there's now restrictions on Cuban Americans being able to travel -- families being able to travel. And he want to lift the restrictions on families being able to travel, which seems to me a good middle ground.

Obama did get more Cuban American votes than any Democrat has ever gotten in the state of Florida. You know, it was still in the 30s in terms of the percentage, but -- but it was -- but I think there might be (INAUDIBLE) better, obviously. It might be a generational change in terms of Cuban Americans...


BLITZER: Always great to hear from Fidel Castro.


BLITZER: And he signs this column himself.

PALMIERI: It was a truly a fascinating column.

BLITZER: All right. What a column. If you haven't read it, it's a good idea to go ahead and read it. You will have a laugh.

All right, guys, thanks very much.

We are going to come back after this quick break and -- and take a look at what happened to that woman and that man who asked those intriguing questions yesterday at that town hall meeting in Fort Myers, Florida, what they asked the president of the United States for help, and what happened after the town hall. Stay with us for that.

Also, we have got the photos. The first lady is on the cover of "Vogue" magazine. And we are going to speak to the editor at large.

Stick around. You're in THE SITUATION ROOM.


BLITZER: The mayor of Las Vegas always outspoken, but he is sending a message to President Obama right now not to pick on his city -- the dust-up coming after the president complained about corporate junkets to Vegas at taxpayer expense.

Brian Todd is all over this story -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, as we all know, Las Vegas always has many reputations, but one that it is reeling from right now is the perception that it's this mecca for the wasteful corporate junket. That's something President Obama has hit on recently. And he is getting some real brushback for it.


TODD (voice-over): On its face, it seemed like the president was just stepping up again for us taxpayers, hitting execs whose companies are taking the bailout money for those pricey corporate trips.

OBAMA: You can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayers' dime. There's got to be some accountability and some responsibility.

TODD: But a fellow Democrat who runs Las Vegas isn't buying in.

OSCAR GOODMAN (D), MAYOR OF LAS VEGAS: That's outrageous. And he -- he owes us an apology. He owes us an -- a retraction.

TODD: Mayor Oscar Goodman's town is reeling. Las Vegas reports a heavy drop-off in visitorship from last year, layoffs at casinos, and one of the country's highest foreclosure rates.

Wells Fargo, Citigroup and Goldman Sachs, all of whom are getting TARP money, recently pulled out of meetings in Las Vegas. And the mayor says they can't afford more cancellations.

GOODMAN: If they change their mind and go someplace else, if they cancel, and at the suggestion of the president of the United States, that is outrageous.

TODD: Mayor Goodman also wrote a letter to the president, said he would ask the entire Nevada congressional delegation to get Mr. Obama to -- quote -- "stop this kind of talk."

So far, no formal response from the White House. But Senator Majority Leader Harry Reid, a member of that Nevada delegation, said White House Chief of Staff Rahm Emanuel clarified the president's remarks to him.

SEN. HARRY REID (D-NV), MAJORITY LEADER: President Obama's criticism was aimed at the potential use of taxpayers' funds for junkets. Now, we gave a lot of money to these banks. They shouldn't be taking junkets with any of that money.


TODD: Still, what riles the mayor is the perception issue, the assumption, he says, that all of this so-called incentive travel to Las Vegas is wasteful. He is asking for the president to, in the future, refrain from calling out individual cities or destinations to make his point -- Wolf.

BLITZER: All right, thanks very much -- sensitive issue for the mayor of Las Vegas and for the folks out there as well.

A failed candidate for governor talks about his political future. Will humorist Kinky Friedman have the last laugh?

Later, she asked President Obama for help, and now she's getting it -- how a homeless woman is faring after her emotional appeal.

And Congress investigates tainted peanut products, and the owner of a company is in the crosshairs. He's refusing to talk. We will tell you what is going on right here in THE SITUATION ROOM.


BLITZER: On our "Political Ticker": The author and humorist Kinky Friedman is considering another run for Texas governor.

This time, he says he is serious -- Friedman telling the Associated Press he learned some lessons from his fourth-place defeat to Governor Rick Perry back in 2006. He ran last time as an independent, but says, this time around, he would rather run with the Democrats' help. He also says he won't be cracking so many jokes.

The president's surprise choice to be CIA director is a step closer to getting the job. Today, the Senate Intelligence Committee unanimously voted in favor of Leon Panetta's nomination, even though he's had no direct experience in the intelligence community -- the full Senate expected to confirm Panetta, possibly as soon as tonight.

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

CAFFERTY: The question this hour is: If the economy doesn't start to improve, how long does President Obama have before the public turns on him?

Joe in Denver writes: "I can't believe you would even ask this question. It took years to get into this mess and it will not be fixed in a month. President Obama hasn't even seen all the rooms in the White House yet, and you want to question his future effectiveness. The greatest economic minds have been brought together to help shape this stimulus package. If this group can't come up with solutions, then who can?"

Barbara in Indiana says: "Given his gift of communication, his determination, raw energy, and grace, he will have a much longer acceptance period. But what's more important is that he's setting the right example, so that we can all possess these skills in life. I'm very optimistic" -- perhaps a bit smitten.

Rick writes: "Unless something is done to provide jobs, which still has not happened -- there is no sign of it happening -- there is no hope for Obama being reelected. Throwing money at this problem, without solving the basic problem of no jobs in America, is likely going to become known as Obama's folly in time." Ken in Jefferson City, Missouri: "The president has six months to a year. If things don't show improvement, he will lose all credibility and his reelection. The people of this country simply don't have the patience to wait."

Joey in Seattle writes: "Honestly, it all depends on the media. After all, they already helped shape the American public opinion of the stimulus bill by giving the Republicans the microphones almost 24/7. If the media want to paint Obama as the new bad guy, then it shall be so. I personally feel it is more important to be honest and open, because the stakes are too high to play headlines with these stories."

And Rodge writes, "Was that just a stupid question or a political wish?"

I would like to think it was neither.

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

Got a lot of e-mail on this question, Wolf.

BLITZER: Not surprised. Jack, thank you.

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