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THE SITUATION ROOM

Bernard Madoff Guilty Plea; President Obama Takes on His Party; 'Terrorists to the Bone'

Aired March 10, 2009 - 15:59   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, prisoners accused in the 9/11 attacks declare they're terrorists to the bone. They're mocking the U.S. and calling war crimes charges badges of honor.

President Obama takes on some of his party's most powerful supporters by offering rewards to the best teachers. The worst ones, he says, should be fired. This hour, his plan to stop the decline of America's schools.

And war games triggering real threats of war. North Korean troops right now on alert, accusing the U.S. of planning an invasion.

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

ANNOUNCER: This is CNN breaking news.

BLITZER: But first, the breaking news we're following right now, a plea deal for the alleged swindler Bernard Madoff, accused of one of Wall Street's biggest frauds, if not the biggest fraud ever.

This is Bernard Madoff as he left the courthouse today. We're now told by his lawyer, who told the judge that his client will plead guilty later this week, probably on Thursday -- Thursday -- to 11 counts, including money laundering, perjury and securities, mail and wire fraud. All of this -- all of this could result in a prison term of up to 150 years in prison. He's 70 years old right now.

CNN's Allan Chernoff is on the story for us.

All right, Allan. Tell us what's going on. Why has he decided to go ahead and plead guilty?

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Well, Wolf, what's happening here is that Bernard Madoff has decided on his own -- on his own he has decided that he is going to plead guilty to those 11 criminal counts that carry a maximum term of 150 years in prison. The government is emphasizing this is not a plea bargain, not a deal, not a quid pro quo with the government. Often, that's what you see, but that's not happening over here.

A hundred fifty years the maximum term, 11 counts. The plea expected on Thursday -- Wolf.

BLITZER: So if it's not an agreement, a plea agreement, he is just going to plead guilty, does that mean he doesn't necessarily have to cooperate with the prosecutors? And as a plea agreement, as you know, Allan, part of the plea agreement, you get a reduced sentence. In exchange, you have to tell all, and if the prosecutors determine you are lying, then that plea agreement is off.

If there's no plea agreement now, can he remain silent, in effect, as far as his wife or sons or others who may or may not have been involved in this scheme?

CHERNOFF: Wolf, an excellent point that you bring up. Precisely, the government clearly would like to get some cooperation from Mr. Madoff.

He has claimed that he pulled all of this off by his own, this alleged $50 billion fraud. That estimate his own estimate, his own number. Very few people -- no prosecutors believe that at all.

They've been investigating. They believe that many people were involved. They'd like to have the information from Mr. Madoff.

We don't know if they've gotten anything out of him. But as you point out, it's Mr. Madoff who here has made the decision, and the judge just a few minutes ago wanted to be sure that Mr. Madoff was aware that -- of exactly what he was doing, and aware also that his attorney had no conflicts of interest -- Wolf.

BLITZER: All right. We're going to get more on this story from you and our other reporters and analysts.

Allan, thanks very much.

The Dow Jones Industrials, by the way, take a look at this, up 379 points right now. They are still doing some final tabulation. It could change, but it's almost 400 points. A huge day on Wall Street after several days of negative activity. A big day on Wall Street.

We're going to have more on this part of the story coming up as well. What is going on that triggered this uptick today? We'll explain that. That's coming up.

Meanwhile, it's a carrot for America's teachers and a poke in the eye for some powerful labor unions. President Obama today embraced the idea of paying educators based on how well they perform. And he acknowledged it's a proposal that doesn't often sit well within his own party.

Let's go to our White House Correspondent Dan Lothian.

Dan, the president laid out his vision for education reform, and he is clearly willing to take on some entrenched elements in the Democratic Party like the teacher unions.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. And the reason is because he believes that the U.S. is falling way behind other countries. So he wants to give education a boost, he says, from cradle all the way through college and into careers.

Now, he rolled out this overhaul for the education system here in this country, but the one thing that was getting a lot of attention today is his push for teacher merit pay.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): President Obama is raising the bar for teachers, but he also wants to raise their pay. There are strings attached.

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: Good teachers will be rewarded with more money for improved student achievement and asked to accept more responsibilities for lifting up their schools.

LOTHIAN: It's a controversial plan that, when tested on the campaign trail before members of the National Education Association, got a smattering of boos.

OBAMA: Find news way to increase teacher pay that is developed with teachers, not imposed on teachers.

LOTHIAN: Mr. Obama knows there's resistance. He acknowledged the friendly fire as he unveiled his education plan before the U.S. Hispanic Chamber of Commerce.

OBAMA: Too many supporters of my party have resisted the idea of rewarding excellence in teaching with extra pay, even though we know it can make a difference in the classroom.

LOTHIAN: Those supporters the president is referring to are union members, the teachers union, a powerful voting bloc that helped get him elected. Some just don't buy that merit pay works.

DENNIS VAN ROEKEL, NEA PRESIDENT: Depending on the definition, the answer is probably no, if they mean that it's an arbitrary, subjective decision by some person about who gets more and some gets less.

LOTHIAN: But the NEA doesn't think that's what the president means now.

VAN ROEKEL: He talks about rewarding teachers for performance. I don't take that as some of these failed merit pay plans of the past.

(END VIDEOTAPE)

LOTHIAN: Clearly, the largest teachers union isn't ready to pick a fight with a very popular president. But, Wolf, you know, the president was very clear in what he was saying today, that any teachers, that good teachers out there, should be rewarded and the bad teachers, well, they should be fired -- Wolf.

BLITZER: The president also spoke about the possibility of having longer school days. Give us the background. What's going on here?

LOTHIAN: Well, first of all, Wolf, I can tell you, this is not something that my kids would embrace. And the president himself said that his own daughters would not find this very popular. But he did talk about how other countries had longer school years, perhaps even a month more than here in the United States.

And so he was saying that as part -- we should look at this as an option -- longer school days, or even additional weeks added to the year, because he believes this would really help students here in terms of learning. And again, Robert Gibbs today was asked about this, and he pointed out this is another option for the president, but really it boils down to the states and the school districts that would have to deal with this -- Wolf.

BLITZER: I'm going to be speaking at length about all of these issues with Arne Duncan, the education secretary, later here in THE SITUATION ROOM. He's going to be joining us. We'll speak about longer school days, longer school years, among other subjects.

Here's one reason President Obama appeared at the U.S. Hispanic Chamber of Commerce today. Twenty-three percent of children enrolled in kindergarten through 12th grade here in the United States are Hispanic. Whites still make up over half of all public and private school students, 15 percent are African-American, 4 percent are Asian.

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

A busy news day once again here, Jack.

JACK CAFFERTY, CNN ANCHOR: Indeed. THE SITUATION ROOM is a beehive of activity.

"The U.S. economy has fallen off a cliff, is going through a death by 1,000 cuts. And those who think it will recover this year are delusional." Those are all quotes from a couple of the sharper financial minds out there.

Nouriel Roubini, a professor at New York University's business school, told CNBC there is no hope the current recession, which is already 15 months old, will end this year. He says it will more than likely last into 2010.

Roubini says most of our financial institutions are entirely insolvent and the government should temporarily take over the banks, clean them up, and get them working again. Although he says there will be a light at the end of the tunnel, Roubini believes things will probably get worse before they get any better.

And if that's not a dismal enough assessment for you, there's Warren Buffett, also talking to CNBC. The billionaire investor described the current economic crisis as an "economic Pearl Harbor" and says the economy has fallen off a cliff.

He says you can't turn it around on a dime, and that a turnaround will not happen quickly. Buffett predicts unemployment will get worse before it gets better. He says inflation has the potential to be worse than it was in the 1970s. Buffett suggests that five years from now, five years from now, the economy will be running fine.

Five years. That's a long time for the millions of Americans who are already suffering and have been for months without jobs, with rising costs for health care and education, and with decreased home values and mounting foreclosures.

So here's the question. How will you cope if the current recession lasts for a number of years?

Go to cnn.com/caffertyfile. You can post a comment on my blog.

A pretty gloomy assessment from a couple of pretty bright guys.

BLITZER: Yes. A lot of smart economists out there. There are a lot of them scratching their heads, wondering what next?

All right, Jack. Thank you.

A new round of suicide bombings in Iraq. A trail of blood that could affect President Obama's plans to bring the troops home. Can the U.S. get out on time, and will it cost more lives?

Plus, the growing ranks of America's homeless, it's not just adults on the street. The number of children without a roof over their heads right now astounding.

And later, he blackmailed some of Europe's richest women.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (voice-over): When the man dubbed "The Swiss Gigolo" entered the courtroom, he was smiling. Asked what he expected, he said, "I have no idea." Helg Sgarbi soon found out."

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Five suspects in the 9/11 attacks have now unleashed new threats against the United States, predicting the U.S. will fall like the twin towers did more than seven years ago. And they staunchly defend, even brag about, the acts of terror that ended almost 3,000 lives.

Let's go to CNN's Elaine Quijano. She's working the story and has more -- Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Wolf, in a chilling new response to the U.S.' accusations against them, five 9/11 terror suspects, including Khalid Shaikh Mohammed, the mastermind behind September 11th, say the accusations are badges of honor that they carry with pride. They also scoff at the United States' efforts to protect its citizens, saying, "Your intelligence apparatus, with all its abilities, human and logistical, had failed to discover our military attack plans," the detainees said. "Blame yourself and your failed intelligence apparatus and hold them accountable, not us."

Pretty strong words -- Wolf.

BLITZER: Yes, very strong. So what has the U.S. done to prevent these kinds of intelligence failures?

QUIJANO: Well, since the attacks, the U.S. has passed laws aimed at improving intelligence sharing among agencies. But a new bipartisan report by The Markle Foundation says old habits die hard.

(BEGIN VIDEO CLIP)

ZOE BAIRD, PRESIDENT, THE MARKLE FOUNDATION: Unfortunately, the nation still is very much at risk that we don't know what we know, that there are too many pockets of information that doesn't get shared with other people who are looking at the same problems. So we have called on the president and the White House to make this a real priority as they are looking at how to restructure their own national security undertakings and what priorities to give to different problems.

(END VIDEO CLIP)

QUIJANO: Now, Obama intelligence officials admit that more needs to be done, but they say intelligence sharing is improving. And they point to the National Counterterrorism Center as one example of that. But so far, the administration has not signaled any major shifts in intelligence policy -- Wolf.

BLITZER: Elaine, thanks very much.

Let's get right to Senator Lindsey Graham of South Carolina. He's a member of the loyal opposition. He's got strong views on national security issues, domestic, economic issues, a whole lot more.

Senator, thanks very much for coming in.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Thank you for having me, Wolf.

BLITZER: Has U.S. intelligence improved since 9/11, based on what you know?

GRAHAM: Well, absolutely. The Terrorist Surveillance Program has allowed us to monitor the enemy's activity. We've got better cooperation with our overseas allies. We've had -- we've reorganized our intelligence community, the director of National Intelligence reports directly to the president.

Yes, we've modernized a lot. There's more to do, but it's been a bipartisan effort.

This is one area where I think Democrats and Republicans generally agree. Intelligence in this war is more essential than any other war. You have to hit them before they hit you.

BLITZER: I was intrigued by a retired Russian general's comments to the McClatchy newspapers about Afghanistan. You've been there several times, know the subject well, Senator Graham.

This Russian general, and given the history of Russia's awful history in Afghanistan, says what the U.S. is doing is following in those mistakes of Russia, the old Soviet Union. "I believe as sincerely as American officers do now that we were fighting there to help make our country safer. After the war, as a politician, I could see this war had been pointless."

Is it pointless, what the U.S. is doing in Afghanistan right now?

GRAHAM: That's a ridiculous comparison. Our soldiers are there to help the Afghan people. And the Afghan people know it.

I applaud the Obama administration for sending more troops. I've been there many times and I've talked to Afghans all over the country. They understand the difference between the Russians' intention and ours. And we want to help that country not only not be a safe haven for terrorists to attack us, but give the Afghan people something they never had before in a long time, and that's freedom and prosperity.

The Afghan people know the difference between a Russian soldier and an American soldier. And that's why we're going to win in Afghanistan.

BLITZER: Should the U.S. be reaching out to elements of the Taliban, whether in Afghanistan or Pakistan, trying to wean them over as the U.S. did with al Qaeda insurgents, or at least sympathizers, Sunnis in the Al Anbar province in Iraq?

GRAHAM: You know, in every civil war in every society that breaks apart, there has to be some reconciliation. There may be some Taliban elements that are reconcilable within Afghanistan and Pakistan -- certainly others will not be -- but, yes, that's an option on the table as long as it's not appeasing the bad guys.

What they did in the Swarth (ph) area of Pakistan, agreeing to apply Shariya law to that region, I think, is a give to the Taliban and the insurgent terrorist groups in a way that's not helpful. That's a sign of weakness, not strength.

BLITZER: I interviewed Tom Ricks of "The Washington Post." He's got a new book entitled "The Gamble" that just has come out about General Petraeus and Iraq. His earlier book "Fiasco" was on the situation in Iraq.

And he told me this -- he said this is what he sees as a potential best-case scenario outcome in Iraq. You might be shocked to hear him. Listen.

(BEGIN VIDEO CLIP)

THOMAS RICKS, AUTHOR, "THE GAMBLE": It's probably not going to be a democracy. It's probably not going to be that stable. The best- case scenario was probably a strongman somewhat like Saddam Hussein.

(END VIDEO CLIP)

BLITZER: Wow. I mean, that's pretty gruesome if you think about it. GRAHAM: Yes, I think he's wrong. I think he's dead wrong.

I think he's been right about the fiasco part of the early invasion and the mistakes we made, but I think he's underestimated the Iraqi people. He underestimated our ability to bring about security, which has led to political reconciliation.

No, I think he's dead wrong. And I think the elections in the fall will show that.

BLITZER: All right. Let's talk about the economy right now. Issue # 1, the economy in a crisis.

When it comes to the economic crisis, is there anything in these first 50 days of the Obama administration that the president has done that you like?

GRAHAM: Yes, I think he's done a couple of things. His budget, he puts means testing of Medicare on the table. When I reach retirement age and receive Medicare benefits, based on my income, I think I should have to pay a larger premium because I can afford to.

He's put AMT tax relief into the budget. He's done some good things.

But quite frankly, the spending bill, the stimulus package was way too large. It created more government than it did jobs.

The omnibus bill before us today increases spending by eight percent, and the budget he's proposed for this nation, I think, is a radical, reckless exercise in fiscal discipline. A trillion dollars increase in taxes that doesn't go to reduce the deficit, but increases spending, and it triples the debt.

So overall, I would give him poor marks in terms of financial management. But there are some ideas, like health care reform as being a priority and Social Security solvency, I do agree with him and want to help him where I can.

BLITZER: What about nationalizing banks? You caused a stir a few weeks ago...

GRAHAM: I sure did. Didn't I?

BLITZER: ... by saying that maybe should be on the table right now. Explain what you mean.

GRAHAM: OK. Here's what I mean.

We're going to do a stress test on the major banks. And we will understand how they will be able to perform in sort of worst-case scenarios. And here are the options for the country -- continue to write checks to banks regardless of their financial situation.

I think that's a bad idea. If there is a needy bank that can be made healthy by further capitalization, more money will get them on their feet, and they've got a chance of making it, let's do it. If a bank can fail and not take on the general banking system with it, let that happen.

But there may be banks that are too big to fail or, you know, just liquidate overnight, but have no chance of making it in the long run. They're called a zombie bank. And in that situation, it would be better for the government to come in and seize the bank, not to run it long term, but basically to take the good parts of the bank, sell it off to the private sector to create a healthy bank, and better manage the toxic assets that made it a zombie to begin with.

I think that's an option that has to be on the table. Call it what you like. I think that's just a reasonable alternative that may be necessary and in limited classic cases.

BLITZER: We're out of time, but do you have a bank in mind you are referring to?

GRAHAM: Well, the stress test will tell us more.

BLITZER: OK.

Senator Graham, thanks very much for coming.

GRAHAM: Thank you.

BLITZER: Fear of death hangs in the air. A volcano's lava goes up, smoke and ash come down. Now many people nervously watching for signs of damage.

Also, this from CNN's Tom Foreman...

TOM FOREMAN, CNN CORRESPONDENT: Wolf, it's an astounding number. One in 50 American children this year will be homeless. One in 50.

In just a moment, though, we'll break that number down and tell you why you should take it seriously. But it's also not quite what it seems -- when we come back.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: It's something no child should ever have to go through, but unfortunately, far too many children are.

Let's go to CNN's Tom Foreman. He's looking at this critically important problem.

FOREMAN: Yes, Wolf, there are new numbers out today from the National Center on Family Homelessness, making a really astonishing claim here that one in 50 American children in the course of a year is homeless. Boy, it's astonishing numbers.

And when they compare the threat of homelessness, what states are doing to stop it, and how many kids are actually homeless, they say these states are the worst for it: New Mexico, Texas, Arkansas, Louisiana and Georgia. These are the biggest problems.

But you have to look very carefully at these numbers to make sure you are getting the full picture, because it's not just people who you might think of as homeless. For example, in this study, they are including people who are what they call doubled up, meaning you had problems with your home, you moved in with a sister or you lived with your parents, and you have children there. They are counting those children as homeless. Now, this is a standard that's been accepted by other people, but it might not be what you are thinking of.

They are also counting people who live in trailer parks and motels and campgrounds, people who you may again not think of as quite homeless, or may be somewhere in the gray area and between.

They're also including people who are the children of migrant workers who, by definition, are on the move all the time. So you may not call them as having a regular home.

And they are counting people who are in foster care, children who are on the way, hopefully, to a permanent home. And, of course, they are counting children who are living in cars, living in shelters all the time, or perhaps just flat-out living outside somewhere.

Nonetheless, that's how they came up with this number of one in 50. It sounds astonishing, but it includes an awful lot of things -- Wolf.

BLITZER: So what are the real problems, Tom, associated with this?

FOREMAN: Boy, there are real problems. No matter how you get to this number, the issues are the same. And they are important.

Take a look at this.

Among the complications that happen to children who don't have a real solid home, chronic health problems. You can easily see how that would happen. Hunger or skipped meals, poor performance in reading and math. No surprise there. Failed grades, and often dropping out of high school.

Wolf, it was a very explosive study, and the big aim here is to get the attention of the federal government to say, while you are trying to help things out in our economy and in our society, look at this issue of homeless children, or children with substandard homes, and see if you can help them -- Wolf.

BLITZER: It seems every day more and more stuff on the agenda. All critically important.

Tom, thank you.

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

Happening now, a stunning claim. A congressman says your taxpayer money that's supposed to bail out U.S. banks is being sent to other countries. Citigroup now accused of loaning money to Dubai. Wait until you hear where two other banks are allegedly investing their money.

Kidnappings and killings, murders and mayhem. Could the drug- fueled violence in Mexico spill into the U.S.? Is the U.S. doing enough to prevent that?

And Colin Powell tells American children to listen up. He says -- and I'm quoting now -- "Pull your pants up, straighten yourself out." Why this harsh message? What's going on? Colin Powell, he'll be here to explain.

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

Fifty days ago, you saw the image. Since President Obama's inauguration, you've seen bill signings, economic battles, applause and presidential ridicule.

How do you think the president of the United States is doing right now?

Our Senior Political Analyst Bill Schneider is joining us.

Bill, they always say there's a honeymoon. Assuming there is a honeymoon, how is he doing?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, we're halfway through the traditional 100-day honeymoon. And like nervous in-laws, we can call in and ask, so, how is it going?

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): How is President Obama's honeymoon going? Very well, thank you.

His approval rating has dropped a few points from last month, but it's still over 60. That's a little higher than the last three presidents after 50 days and about the same as President Reagan. Many on Wall Street and some in Washington are becoming impatient.

REP. ERIC CANTOR (R-VA), HOUSE MINORITY WHIP: It's as if the administration or the congressional Democrats feel that it's a part- time job to address this economy. I mean, that's the emergency now.

SCHNEIDER: But the public feels confident that President Obama can get the economy back on track, reduce taxes for the middle class, and create or save 3.5 million jobs.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Yesterday, I -- I held a fiscal summit where I pledged to cut the deficit in half by the end of my first term in office.

SCHNEIDER: That pledge, not so much. Fewer than half believe Mr. Obama will eliminate waste and fraud from the federal budget. Only a third think he can cut the deficit in half.

Back in 1996, President Clinton said:

(BEGIN VIDEO CLIP, 1996)

BILL CLINTON, PRESIDENT OF THE UNITED STATES: The era of big government is over.

(END VIDEO CLIP)

SCHNEIDER: Democrats talked about limited objectives.

(BEGIN VIDEO CLIP)

AL GORE, VICE PRESIDENT OF THE UNITED STATES: I want to restore a meaningful safety net.

(END VIDEO CLIP)

SCHNEIDER: But look at the initiatives President Obama has put on the agenda in just his first 50 days: the economic recovery plan, remaining funds for the financial rescue, a plan to revive the automobile industry, mortgage assistance for homeowners, health care reform, a bigger federal role in education, new energy investments, and a bigger U.S. commitment to the war in Afghanistan.

This is not small-bore politics.

(END VIDEOTAPE)

SCHNEIDER: One thing President Obama does have going for him, it's not his bad economy. In the "Wall Street Journal"/NBC News poll, 84 percent said Mr. Obama inherited the bad economy.

Well, when will it become the Obama economy? Most Americans expect the recession to last two years or more, which means they expect to see signs of recovery right around the time of the 2010 midterm election -- Wolf.

BLITZER: Bill Schneider, thanks very much.

One of the president's campaign pledges is being tested and doubted right now -- at issue, charges of genocide in Darfur and what the president might do to stop it.

And a spike in violence in Iraq are raising new fears that the U.S. withdrawal might get sidetracked.

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

(COMMERCIAL BREAK)

BLITZER: Suicide bombers on a new killing spree in Iraq, at least 25 killed in today's attack on Baghdad alone. And the violence could -- could -- take a dangerous toll on President Obama's plans to end combat operations in Iraq by August of next year.

Let's go to our Pentagon correspondent, Chris Lawrence. He's working this story -- Chris.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Wolf, 12,000 U.S. troops are going to be leaving by the fall. And the U.S. commander in Iraq is considering whether to bring another brigade home by the end of the year. But what happens to the withdrawal plan if Iraq's last few weeks are just the beginning?

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): In a matter of days, a suicide bomber broke up a reconciliation between tribal leaders; another drove his motorcycle into a crowd of potential police recruits, and a car bomb tore through a cattle market -- three attacks, more than 70 dead.

LIEUTENANT GENERAL LLOYD AUSTIN, DEPUTY U.S. COMMANDER IN IRAQ: There are things that can pull us off track and cause -- cause violence to -- to really reignite in a -- in a greater way.

LAWRENCE: These attacks were in areas that are supposed to be peaceful. But it's northern Iraq that really concerns U.S. commanders. There, tensions are rising over who controls the oil and the cash that comes with it.

LIEUTENANT GENERAL MICHAEL MAPLES, DIRECTOR, DEFENSE INTELLIGENCE AGENCY: Control of disputed areas, particularly in Nineveh and Kirkuk, may be the greatest potential flash point in Iraq for 2009.

LAWRENCE: Some analysts say more of these attacks could damage the upcoming national elections.

NORA BENSAHEL, SENIOR POLITICAL SCIENTIST, RAND CORPORATION: They could have a disproportionate political impact, and I think that's a lot of what the insurgents are hoping to get out of these.

(END VIDEOTAPE)

BLITZER: Chris, what are military officials telling you about this spike in violence?

LAWRENCE: Well, Wolf, one of their U.S. commanders there says that they are close to sustainable security, but they aren't there yet. He says they do have contingency plans if the violence keeps spiking.

But when I asked him, "Don't fewer troops mean fewer contingencies?" he admitted that it does reduce the military's options.

BLITZER: So, could the Iraqis, Chris, ask the U.S. to stay past the current deadline?

LAWRENCE: They could. Now, the U.S. commander in Iraq says that he has not talked to the Iraqis about that. He says, right now, he still believes they want the U.S. out by 2011, but he also added, "I never say never."

BLITZER: Chris Lawrence, at the Pentagon, thank you.

And this note: Almost two decades after the first Gulf War, a U.S. Navy review board has now changed the status of the first American pilot shot down in Operation Desert Storm.

Captain Michael Scott Speicher now is listed as missing in action, a move that essentially gives him up for dead. There had been controversy over the possibility that he might have survived and been captured by the Iraqis. A final decision on Speicher's status will be up to the next secretary of the Navy, who has yet to be named by President Obama.

The charges of genocide in Darfur may be a sore point right now, at least for some inside the Obama administration. As more blood is being spilled, the president is facing increased pressure to intervene somehow.

Our foreign affairs correspondent, Jill Dougherty, is looking into this situation for us.

And I guess the question is, has the president, so far -- it's 50 days into his administration -- lived up to his campaign promises?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, that's exactly what they are asking. Darfur advocates are asking, where is the Barack Obama that they saw during the campaign, talking tough about Darfur?

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): Nearly 300,000 dead in Darfur, more than 2.5 million homeless now left to fend for themselves as international aid workers are thrown out of the country.

As candidate, Barack Obama vowed he would act quickly to stop the bloodshed in Darfur.

(BEGIN VIDEO CLIP, OCTOBER 7, 2008)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We can only do it if we can help mobilize the international community and lead. And that's what I intend to do when I'm president.

(END VIDEO CLIP)

DOUGHERTY: But, seven weeks into his administration, the situation on the ground, if anything, is worse -- Sudan's president, Omar al-Bashir, striking back after the International Criminal Court indicts him for war crimes.

ROBERT WOOD, STATE DEPARTMENT SPOKESMAN: We are concerned about the aftermath of the expulsions of these NGO workers. And we want to make sure that we are taking the prudent steps necessary to make sure that, you know, our personnel are -- are, you know, out of any potential harm's way. DOUGHERTY: The State Department is allowing U.S. diplomats and their families to leave Sudan amid the violence. And it's warning Americans not to travel to Sudan, citing possible terrorist threats.

(BEGIN VIDEO CLIP, OCTOBER 7, 2008)

OBAMA: And there was...

(END VIDEO CLIP)

DOUGHERTY: But what happened to Mr. Obama's campaign pledge to stop the violence?

(BEGIN VIDEO CLIP, OCTOBER 7, 2008)

OBAMA: We could be providing logistical support, setting up a no-fly zone, at relatively little cost to us.

(END VIDEO CLIP)

DOUGHERTY: Officials say they are considering pushing for a no- fly zone, but Darfur advocates are anxious for the president to show global leadership. At a White House meeting with the president and vice president, actor George Clooney urged them to name a high-level envoy for Sudan.

GEORGE CLOONEY, ACTOR AND ACTIVIST: It's not about government money. And it's not about government troops. It's about involvement. It's about diplomacy. That's what's become -- that's what the issue is here and that's what we have been talking about.

(END VIDEOTAPE)

DOUGHERTY: And now a senior administration official tells CNN that they will have a Darfur envoy in place in the coming weeks -- Wolf.

BLITZER: But there are some senior positions at the State Department that require Senate confirmation and haven't yet been filled.

DOUGHERTY: Absolutely.

In fact, the top envoy -- the top diplomat on Africa has not even been nominated yet.

BLITZER: So, they're going to -- they have got their hands full.

DOUGHERTY: Yes.

BLITZER: There's no doubt about that.

Jill, thank you.

(CROSSTALK) BLITZER: Someone has taken to calling the current president of the United States -- and I'm not making this up -- "George W. Obama." Is the new commander in chief acting like the old one? Donna Brazile and Dana Perino, they are standing by for our "Strategy Session."

And, at long last, a big surge for stock prices today. We are going to look behind the numbers and whether there may be more gains ahead.

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

(COMMERCIAL BREAK)

BLITZER: The U.S. Senate right now moving closer toward a vote on a massive spending bill, about $400 billion. It's been stalled for days in large part because of outrage over lawmakers' pet projects.

Let's check in with our congressional correspondent, Brianna Keilar, for the latest.

Have they decided when, if there's going to be a vote in the Senate, Brianna?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, we're expecting it to be here in the next few hours, a vote on this overdue spending bill that would fund the federal government through the end of this year, as you said, $410 billion.

That's about $30 billion more than last year. And just a sampling of some of the things in this bill: $2 billion that would go to the FDA for improved safety of food and medicine, as well as $3.2 billion that would go to state and local law enforcement agencies for crime prevention, also $3.5 billion that would go to U.S. airports to increase safety and ease congestion.

Senate Democratic leaders are confident -- they say they are confident -- that they have the votes to pass this. But it is expected to be a squeaker, Wolf, with little Republican support. And we will bring you that vote when it happens.

They need 60 votes; is that right?

KEILAR: That's right.

BLITZER: OK, Brianna, thank you.

The headline reads, "George W. Obama." Why would a newspaper op- ed article mix the current president's name with the former president's? Because the writer says there are striking things they have in common.

And is President Obama trying to be a maverick? He's taking on a loyal Democratic group. Is that politically smart?

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

(COMMERCIAL BREAK)

BLITZER: He's now been in office 50 days. So, what grade do you give President Obama? How is he doing on the economy, the wars in Iraq, Afghanistan? What about leadership?

Submit your I-Report questions to ireport.com/situationroom. Then watch tomorrow's show to see if your video made the cut.

We will be right back.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

BLITZER: Want to go right to Brian Todd. He's working a story.

The man who was going to be in charge of one of the most important positions in the intelligence community, Brian, gone.

BRIAN TODD, CNN CORRESPONDENT: He is.

His name is Chas Freeman, Wolf. He was appointed by the director of national intelligence, Admiral Dennis Blair, to head what is called the National Intelligence Council, a crucial position, not well-known, but very important, because this is the job that pulls together all the intelligence from all 16 U.S. intelligence agencies, and puts together what is called the national intelligence estimate for the president and for the DNI.

It's a crucial document. Some very important documents in that role have passed before us about Iraq and Iran that have been very controversial. So, this was a very crucial position.

This man, Chas Freeman, has just withdrawn himself for consideration for that job, because he's been very controversial. Former ambassador to Saudi Arabia, he is said to have some ties to the Saudis. He headed a think tank here in Washington that got funding from the Saudi government. He's also -- there's been some concern shown because of his criticism of Israel.

He wrote in an e-mail in 2006 about Israel's -- quote -- "brutal oppression of the Palestinians that shows no signs of ending." He is also a former U.S. diplomat in Beijing. And there was a -- there was a -- there was an e-mail that he wrote that seems to at least somewhat understand the crackdown in Tiananmen Square in 1989.

That was that e-mail that I referred to earlier. It wasn't about Israel. It was about China, in which he said that the Chinese seemingly had a right to crack down on dissidents who they felt were disrupting the functions of government, all that succedent to just build upon Chas Freeman. Today, he pulled his name from consideration for that post.

BLITZER: And Brian is going to have more on this story coming up later here in THE SITUATION ROOM.

Brian, thanks very much.

Let's get to our "Strategy Session."

Joining us right now, our CNN political contributor Donna Brazile, the Democratic strategist, and the former White House Press Secretary Dana Perino.

Guys.

Dana, welcome to THE SITUATION ROOM.

DANA PERINO, FORMER GEORGE W. BUSH WHITE HOUSE PRESS SECRETARY: Thank you.

BLITZER: Good to have you.

Is it smart, Donna, for the president to be taking on the teachers union right now on some of these very sensitive issues when it comes to education reform, like being able to fire teachers?

DONNA BRAZILE, CNN POLITICAL ANALYST: Well, first of all, Wolf, there's really no fight here, because the president has engaged the teachers to come into the room to look at his proposals. They are involved.

I talked to officials at both unions today. And I say, did you read the speech? Did you see the speech?

They applauded the president's speech. And, in fact, Randi Weingarten put out a statement today, the president of the American Federation of Teachers, and she said that she wants to work with President Obama.

BLITZER: We will see how long that love affair lasts.

BRAZILE: Well, the devil is in the details, as you well know.

BLITZER: When it comes to charter schools and when it comes to other issues, we will see what goes on.

Let -- let's talk a little bit about the former president, the man you worked for, President Bush. He was passionate about education, No Child Left Behind, worked with Senator Kennedy on that. But then, all of a sudden, the funding was not as significant as Senator Kennedy and the Democrats would have liked. What went wrong?

PERINO: Well, I don't think -- well, I -- first of all, I think what went right, which is, we returned accountability to education.

And I think what's great about the announcement today by President Obama is that that is going to continue. I think one of the things that will be interesting...

BLITZER: The testing.

PERINO: Sure -- well, accountability. I think that the whole philosophy of making sure that -- holding teachers accountable and making sure that kids can read -- No Child Left Behind was a great bipartisan effort, and it wasn't wildly ambitious.

That children should be able to read at -- read and write at their grade level is not wildly ambitious. I think one of the questions is going to be, on education, is not so much this bill, although Donna is right -- the devil is in the details. It's, what will Senator -- I'm sorry -- excuse me -- my first time back.

(LAUGHTER)

PERINO: What will President Obama say about D.C. vouchers? And what -- will he stand with the children and the parents of Washington, D.C.? And I think that's an issue we haven't heard from him yet on.

BLITZER: It takes all of us -- a lot of us a lot of time to get used to the new cast of characters.

(LAUGHTER)

BLITZER: Let's talk a little bit about that, maybe, because Jackson Diehl -- he is a writer for "The Washington Post" -- he wrote this in "The Washington Post," an op-ed page article entitled "George W. Obama."

"Washington has spent the past couple of weeks debating whether Barack Obama's ambitious agenda and political strategy are more comparable to those of Franklin Roosevelt or Ronald Reagan. Oddly, hardly anyone is talking about the ways in which Obama is beginning to resemble the man who just vacated the White House."

Wow.

BRAZILE: I think that's a huge stretch, because, most days, we sit here and talk about how President Obama is reversing many of the initiatives of President Bush. And, so, I don't think there's any comparison between the two leaders.

BLITZER: Do you see a comparison?

PERINO: Well, I think what Jackson Diehl is talking about is foreign -- on foreign policy.

And I think that these issues just -- people start to realize that they are much more complex than a sound bite will allow, and that, when it comes to some of the foreign policy issues, and -- there's not going to be that much change, because that just doesn't change that quickly.

BLITZER: Because, on -- she's right -- on Iraq and Afghanistan, he's moved, apparently, pretty much to accepting what was at least the Bush administration's stance in the final months of the Bush administration on Iraq and Afghanistan.

BRAZILE: Well, you know, this president inherited a huge mess in terms of the economy. And that's where most of his focus -- but, on foreign policy, we will begin to see changes.

The vice president today was over in Europe, talking about some of the dialogues that he believes the administration would like to initiate to rebuild our alliances.

BLITZER: Because a lot of Republicans, they hate what he's doing, maybe, on the economy, but they like what he's doing on Iraq and Afghanistan, including John McCain and Lindsey Graham.

PERINO: Sure.

I think but one of the -- one of the challenges, I think, on foreign policy that the Obama team is going to run up against is on trade. And you saw a story today about the Obama people trying to maybe be a little tougher on trade.

Well, one of the reasons we don't have a Doha agreement is because we were too tough when it came to the agreement. So, free trade is going to be important and I think that's going to be a -- waters that they're going to have to navigate very quickly -- very carefully.

But, when it comes to other foreign policy issues, there's going to be more similarities than differences when it comes to those issues. I think, on -- domestically, we will see more differences.

BLITZER: Guys, we are going to leave it right there.

Dana, welcome.

PERINO: Thank you.

BLITZER: Donna, you are always welcome, of course.

BRAZILE: Of course.

And, welcome, Dana. Welcome back.

PERINO: Thank you.

(LAUGHTER)

BLITZER: OK, guys, thanks very much.

North Korea is on high alert right now, claiming U.S. war games with South Korea show an invasion is in the works.

And the best day for stocks in this 2009, and there may be just one man to thank for it. What happened? We will tell you -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is joining us with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour, Wolf, is, how will you cope if the current recession lasts for a number of years?

Thomas in Missoula, Montana, writes: "The same way we have always coped in an economy and society that favored greed and spending: by keeping current with our payments and by not borrowing money we don't -- we can't pay back for crap we don't need just because some loudmouth from Madison Avenue tells us we should."

Robert in Lake Jackson, Texas: "Seriously, that's not a legit question that I'm willing to entertain. We will not take that long to come out of this. The worse may not be completely over, but we have already begun to recover already. It's just going to take us a little while for things to level out. And, when that happens, the downward turns will stop, and it will be a rocket sled to the top.

Gary writes: "Never thought I would be happy to see gray hairs, Jack. Cheers from the safe haven of fixed-income retirement. And Godspeed to the young people."

Abby in Denver: "This is the first year I'm attempting to grow a vegetable garden, go to grad school, enjoy my family, and maybe get some chickens."

J. in Illinois: "It will take -- I will take it one day at a time, just like I did for my first 71 years."

JoAnn in San Diego writes: "We have to think about how our parents and grandparents fared during the Depression. The bottom line is, they made it. They became entrepreneurs. They figured it out. I am not saying they didn't suffer, but I believe it made us a stronger nation. Maybe that's what we all need: less designer purses, fast food and fast cars."

And Ed writes: "We will survive by eating Republicans. They have gotten fat enough, and I'm told they taste just like chicken."

If you didn't see your e-mail...

(LAUGHTER)

CAFFERTY: ... here, you can go to my blog at CNN.com/caffertyfile, and look for yours there, among hundreds of others.

That last e-mail is one of the better offerings we have had in quite some time.

BLITZER: You're absolutely right, Jack. Thanks very much.

(LAUGHTER)

BLITZER: Jack has got good viewer e-mail, as he always does.

And, to our viewers, you are in THE SITUATION ROOM.