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Pres. Obama Vs. Justice Alito; Pitch Black after Sunset; It's All about the Independents; Why Suspects Targeted Senator Landrieu

Aired January 28, 2010 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, Rick -- thanks very much -- President Obama reaches out to Republicans on this the day after the State of the Union address. But there's plenty of partisan feuding over his criticism of a U.S. Supreme Court ruling and Justice Samuel Alito's very visible reaction.

Plus, a U.S. congressman is accused of funding lavish golf trips with money meant to be used for scholarships. Our Lisa Sylvester investigates big concerns about Congressman Stephen Buyer's foundation.

And why Haitians are still in the dark over two weeks without electricity. It's only adding to their suffering and their struggle to rebuild.

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

President Obama took his State of the Union message to Florida today. But back here in Washington, there's one particular moment during his speech that has a lot of people all fired up right now.

Call it, if you will, President Obama versus Samuel Alito. It happened when the president criticized the Supreme Court's recent ruling of campaign finance reform.

Listen to the president and watch Justice Alito, in the audience, shaking his head.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests, including foreign corporations, to spend without limit in our election.


BLITZER: All right. Take a look at Samuel Alito. Again he seems to be saying -- if you can read his lips -- not true, not true. When Supreme Court justices attend the State of the Union address, they usually try not to react to political statements made by the president.

Let's bring in our senior legal analyst, Jeffrey Toobin. He's the author of the brilliant book on the Supreme Court, "The Nine."

What's the answer here, Jeff? A, should the president have said what he said with justices of the Supreme Court present? And B, should Justice Alito have reacted the way he did?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: I thought both of them behaved entirely appropriately. Look, the Supreme Court is in the center of our politics, whether it is Bush v. Gore, Roe v. Wade or the decision last week about campaign finance.

These are intensely controversial issues. And presidents, since Andrew Jackson and even beyond, have had a lot to say. Sometimes critical about the Supreme Court. But if Obama is going to attack the Supreme Court in front of the Supreme Court, I don't see why Samuel Alito shouldn't have the opportunity to mutter something back.

I thought both of them were within their rights and it was a terrific civics lesson.

BLITZER: There's a little history between these two men at the same time. Tell us about it.

TOOBIN: Well, when Obama was a senator, he voted against Alito's confirmation. When President-elect Obama visited the Supreme Court for a courtesy call the week before he was inaugurated last year, eight of the nine justices showed up. Not Samuel Alito.

The first act of Congress that President Alito -- President Obama signed was the Lilly Ledbetter Act which helped plaintiffs in employment discrimination cases. That case -- that law overruled the decision written by Samuel Alito.

So there is quite a bit of history, as you point out, between these two guys.

BLITZER: All right. Thanks very much. Good analysis. And Jeff has an excellent analysis, a piece that he posted at which I read this afternoon as well. If our viewers want more good stuff from Jeff, that's where they can go.

President Obama's returning to the White House after his trip to Florida. He was there to pitch his $8 billion plan to build a high- speed rail system. Says it will create jobs and help revitalize the economy. The times his town hall meeting in Tampa sounded like the speech last night.


OBAMA: We rebuilt an economy in which hard work and responsibility are rewarded and businesses are hiring again, and wages are growing again, and the middle class can get its legs underneath it again.


OBAMA: We will not rest until we build an economy that's ready for America's future.


BLITZER: The president and top administration officials are right now fanning out across eight states and the District of Columbia today and tomorrow to promote high-speed trains as well as other critical issues for them.

Now to Haiti. Aftershocks are adding to the misery there. A shipping pier in Port-au-Prince sustained damage yesterday reducing the number of container ships that can be unloaded there and rebuilding critical infrastructure is being slowed by new damage.

CNN's Ivan Watson reports on efforts to get electricity turned back in the capital.


IVAN WATSON, CNN CORRESPONDENT (voice-over): It's been two weeks since the lights went out in Port-au-Prince. Pastor (INAUDIBLE) is looking for a candle.

UNIDENTIFIED MALE: Look, we found one. Somewhere. OK.

WATSON: Night after night, this is what families face in a city that has no power.

UNIDENTIFIED MALE: This is the way we live now in Haiti.

WATSON: After sunset it's pitch black. In the darkness, residents get ready to sleep out in the street. Often with little more than the glow of a cell phone to light their way.

The moment the earthquake hits, Safeguards shut down the city's electric power grid. Now teams from the state electric company are trying to repair the damage. Engineer Jean Claude (ph) says the earthquake destroyed 30 percent of the infrastructure at this distribution center.

(On camera): All of Port-au-Prince gets electricity from here.

UNIDENTIFIED MALE: All of Port-au-Prince.

WATSON (voice-over): His team is trying to salvage some equipment. He hopes within a week the station may start working again. But no one seems to know when the diesel generators will go back on at this electric power station.

The workers here don't even know if the generators have been damaged. And frequent aftershocks seem to be causing more problems.

(On camera): So this is new damage they're just pointing out. They didn't have this last night. A ruptured water pipe here in the basement of an electric power station. He says it's not good.

(Voice-over): Experts say even before the disaster, Haiti's poorly run electricity grid only supplied a fraction of the power needed to light the city.

(On camera): Before the earthquake, Jean Claude is telling me that these neighboring communities only got about eight hours of electricity every 24 hours.

(Voice-over): By 6:00 p.m., the sun sets. And Port-au-Prince is once again shrouded in darkness. The pastor lights his candle. Fortunately nature lends a helping hand. There's is a full moon tonight shining over this shattered city.

Ivan Watson, CNN, Port-au-Prince.


BLITZER: We're standing by for Jack Cafferty. He's coming up in "The Cafferty File."

Also David Gergen and Gloria Borger on the independents. They might be the most vocal voting group, most influential, at least right now, in America. Talking about the independents. Their support for President Obama is slipping. Why? We'll tell you.



BLITZER: Let's check in with Jack Cafferty. He has "The Cafferty File." Jack.

JACK CAFFERTY, CNN ANCHOR: They almost tore the Democratic Party to shreds the first time around. But some are hoping for a Hillary Clinton/Barack Obama rematch in 2012.

When President Obama brought Clinton onboard as a secretary of state after a long and bitter and bruising primary battle, a lot of people saw it as a smart move. Unite the party, get Hillary on board, get everybody on the same page. It was compared to when Abraham Lincoln brought his team of rivals into his Cabinet.

Fast forward a year. There is a piece in "U.S. News & World Report" this week suggesting that a lot of Democrats are worried about the ongoing decline in President Obama's approval ratings.

When you add in the recent losses by Democrats in Virginia, New Jersey and Massachusetts, and the president's unsuccessful bid so far to get health care reform, well, it has some of the Democrats running for the hills.

Similar circumstances helped the late Senator Kennedy challenge the incumbent Democratic president, Jimmy Carter, in the primaries in 1980. Kennedy lost and then so did Carter in the general election.

For her part, Clinton tells PBS that she is, quote, "absolutely not interested" in running again for president. But in the same interview she suggested she is going to be only a one-term secretary of state. Hillary Clinton says considering the demands of the job, eight years would be very challenging.

Well, no doubt all of this is helping stoke the chatter about Clinton leaving the Cabinet sometime during the president's first term, maybe over a matter of principle, so she can then be in place to challenge Mr. Obama in the primaries in 2012.

That would be very good for us. For Hillary's supporters, it might be wishful think. But history suggests it's never a good idea to count a Clinton out.

So here's the question. Should Hillary Clinton challenge President Obama in 2012? I hope she does. Go to and post your comment on my blog -- Wolf.

BLITZER: I just want to be precise, Jack. When you say very good for us, you mean journalists because it would be a good story, is that right?

CAFFERTY: Yes. It would be like, you know, another high-speed train wreck. I love those things.

BLITZER: Yes. OK. Just wanted to be precise. All right.

CAFFERTY: What did you think I mean?

BLITZER: I don't know. That could be open to some interpretation. That you were supporting Hillary Clinton over Barack Obama.

CAFFERTY: I don't support anybody.

BLITZER: I know.

CAFFERTY: Except you.


BLITZER: Thank you. Thank you very much. Good to see you in New York yesterday. All right, guys. Thanks.

We get back to Jack in just a moment.

When President Obama addressed the nation last night, some Americans needed more convincing than others that he's leading them in the right direction. Those all-important independent voters have lost a lot of confidence in this president since he took office.

Look at this. His approval rating among independents has fallen from 76 percent about a year ago to just 43 percent now. One concern among independents, the tone right here in Washington.

We monitored a group of voters in Columbus, Ohio as they watched the president's speech.

Check out the yellow line at the bottom of the screen to see how the independents reacted when the president spoke about partisanship. (BEGIN VIDEO CLIP)

OBAMA: We're tired of partisanship and the shouting and the pettiness. They know we can't afford it. Not now.


BLITZER: Let's bring in our senior political analyst David Gergen and Gloria Borger.

Does the president, David, have the pulse of what independents want?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Wolf, that statement had part of the pulse of what independents want. Certainly in Massachusetts and I think elsewhere, it's also true that many independents, especially in the tea parties, are very angry about government spending and the growth of government. The sort of sense of becoming (INAUDIBLE).

And that the president did not discuss very much last night. I think a lot of independents said yes, he's got it right on jobs. He's got it right on all the bickering and partisanship and backroom deals. But what about the rest of it? What about big government?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Right. Well, and also, I think -- the president looked at the polls. These people are very smart. I mean that speech was tailored last night for independents voters. But I think what independent voters also want is to see accomplishments.

They want -- they want to see things getting done and, you know, problem is you pass a stimulus package it's kind of like fixing a roof. It's something you have to do. You spend a lot of money on it. But it's not something you get to sit and enjoy and look at every day.

So I think they want to see some other things come down the pipeline and maybe one of those things could be a scaled-back health care plan.

BLITZER: Well, I'm -- on this whole issue of reaching out to independents aggressively, David, does that automatically mean he's going to alienate his base?

GERGEN: Not necessarily, Wolf. It is -- it takes great skill if you're a big tent party, you're president of a majority. You know Reagan as president had to do some things, he did some things that he wanted to for his conservative base but he also governed to the middle, say, on arms control and reductions of -- with the Soviet Union.

So I think that a president does both. And one of the striking things last night, for example, was Don't Ask, Don't Tell statement and we learned today now that that's going to have a quick follow-up next week that Secretary of Defense Gates and others at the Pentagon are going to be talking to the Senate next week to see how that -- you know, how that could be pushed forward.

Well, that's a -- that for his base, especially for many engaged in his base who have been sort of disappointed at the lack of action. That's a good thing. Even as a president reaches out to the middle on process in Washington, as we just saw.

BORGER: And he also...

BLITZER: Hold on, Gloria, because I want to show our viewers this picture. You're seeing a picture of Air Force One. It just touched down here at Andrews Air Force Base outside of Washington. The president just coming back from Florida. So we'll show you that picture as he walks down those stairs while our conversation continues.

I just want our viewers to know what we're talking about. But go ahead and pick up that thought.

BORGER: You know, and to follow up on David, I mean, he also, though, reached out to Republicans to a certain degree last night while he was partisan but he talked about offshore drilling, he talked about nuclear power. Those are two issues in which the Republicans applauded him.

So you know, you saw the beginning of a reframing, saying, look, I can reach out to you on this issue. And maybe we can -- you know, we can work together in the future. And the Wall Street issue is the one that's a little trickier because he puts Republicans in a box on that and that's an issue -- independents want.

BLITZER: All right, let me play this little excerpt and then we'll talk about it. Here's what the president said last night on this specific issue.


OBAMA: I hated it. You hated it. It's about as popular as a root canal. But when I ran for president, I promised I wouldn't just do what was popular. I would do what was necessary.

And if we have allowed the meltdown of the financial system, unemployment might be double what it is today. More businesses would certainly have closed. More homes would have surely been lost.


BLITZER: All right, David, you saw that yellow line going down and down. That's the independents line. And here the president is now on the tarmac at Andrews Air Force Base. Heading over to marine one, I believe, to go back to the south lawn. White house. He's heading over to Marine One, I believe, to go back to the south lawn of the White House.

But go ahead in and pick up that thought.

GERGEN: Sure. But what we saw was very striking when he started talking about the bailout, which is very unpopular on the right. There's both independents and Republicans, they're negative -- you know, starting going down, you saw those both lines going down.

And that goes to the strand of independent thinking about part of the problem is not just process. Part of the problem is too much government. Whether it's the health care bill, which they've rejected or the bailout or what have you.

I just want to say one last thing, though, Wolf. My sense is that this president is trying to appeal across a big spectrum. Or as Bill Clinton, when he was in trouble, after his first two years, did go I think much more affirmatively towards the center.

And I think this president has left open to a variety of people has he come far enough in my direction or departed too far from me in the big ten approach he's taking. Whether it will work or not, in other words, I'm not sure.

BLITZER: David Gergen and Gloria Borger, guys, thanks very much.

Here's an update on that great divide between red and blue he spoke about yesterday over the past decade. The presidents have always worn either a red or a blue tie when they gave their annual address to Congress.

President Obama has certainly kept that tradition going, choosing Republican red last year and again last night. Was it a fashion statement? Or was it a political statement?

Couldn't help but notice the Vice President Jose Biden and the House Speaker Nancy Pelosi, they blurred the line a little bit between red and blue. They both wore a variation of purple.

New information on the breach of Senator Mary Landrieu's office. What the suspect's attorney says they were doing there. That's coming up.


BLITZER: Lisa Sylvester is monitoring some of the other top stories here in THE SITUATION ROOM right now.

Hi, Lisa. What's going on?


Well, car rental companies Hertz Enterprise and Avis say they will temporarily suspend renting out the Toyota models recalled for sticking gas pedals. Enterprise Holdings which includes the enterprise Alamo, and National Car Rental, this affects about 4 percent of its fleet.

This come as Toyota raises the number of vehicles recalled for sticking gas pedal problem. At least 5.3 million are now affected.

And what should you do if you're a worried Toyota owner? Well, our Mary Snow will have options coming pup.

And the world lost a literary icon today. Legendary author, J.D. Salinger has died. Best known for his novel "Catcher in the Rye" which addressed themes of rebellion and alienation. Salinger himself lived for decades in self-imposed isolation in New Hampshire.

Through his literary agent, Salinger's family says he died of natural causes. J.D. Salinger was 91 years old.

And take a look at the scene on Florida's famous Alligator Alley. Take a look at this. That was this afternoon. The interstate that cuts through the Everglades doubled as an emergency runway for this single engine piper.

The pilot told officials about engine problems. The two people onboard, fortunately, they were not hurt. But the rough landing did snarl traffic.

And Transportation Security Administration is looking into whether one of its agents was asleep on the job at New York's LaGuardia airport. Someone snapped a photo of the resting officer and posted it online.

It's unclear if the agent was on break at the time. There she is there. Meantime, being reassigned to desk duty pending the outcome of investigation.

We'll have to see how all of that works out -- Wolf.

BLITZER: All right, Lisa. We're going to get back to you soon. You're working on an update on that alleged tampering of the phones in Senator Mary Landrieu's office. I'm anxious to hear what you've come up with. Stand by. We'll get back to Lisa shortly.

The Florida governor, meanwhile, Charlie Crist, was widely criticized by some of his fellow conservative Republicans for the hug he gave President Obama last year. So what did he do today when the president arrived in Florida? Stand by.


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

Some call it the Louisiana Watergate. New details on the scheme to allegedly tamper with Senator Mary Landrieu's telephones. What the suspect's lawyer is now saying. Stand by.

President Obama takes his State of the Union jobs pitch on the road as he tries to strike a balance between more spending and more jobs.

Also ahead, are your stimulus dollars going towards fraud? We're taking a closer look. It's a CNN exclusive.

I'm Wolf Blitzer, you're in THE SITUATION ROOM. Now to that politically charged criminal case in Louisiana. Those four men arrested for allegedly trying to tamper with the phones in Senator Mary Landrieu's office. A defense lawyer in the case is now speaking out.

Let's bring back Lisa Sylvester. She's working the story for us.

Lisa, what are you finding out?

SYLVESTER: Wolf, what we are learning new details about what might have been the motivation and why Senator Landrieu's office was targeted. The four men, Joseph Basel, Robert Flanagan, James O'Keefe and Stan Dai -- you see them here in their mugshots.

Well, J. Garrison Jordan's office, one of the attorneys involved, said their idea was not to intercept or wiretap Landrieu's calls. That they wanted to do was to get embarrassing video of her staff handling constituent calls.

And there's a little bit more background behind all of this. Conservative critics, they have been complaining for weeks about not being able to get through to the senator's office to voice their views.

The Family Research council is among those saying, you know, that their members would just get a busy signal when they tried to call.

BLITZER: Lisa, you're also learning more about the connection between these four men. Right?

SYLVESTER: Yes. That's right. You know one common link is a conservative group called the Leadership Council. This group is based in Arlington, Virginia. And it's a group that really grooms young conservatives to try to spread their message by starting college newspapers and using social networking.

James O'Keefe, the man who actually became known with his video sting of the liberal grassroots group ACORN, he actually taught there in 2006 in the beginning part of 2007. Joseph Basel, when he was a student at the University of Minnesota, received a $500 grant to start a conservative newspaper from them.

And Stan Dai also received money from the Leadership Council to start a similar paper at George Washington University.

Now the leadership institute appears to be distancing itself from these four individuals, you know, saying that they don't condone anything that would break the law.

The fourth individual, Robert Flanagan, we have some background about him as well. His father is actually the acting U.S. attorney from Shreveport. And he has written several blogs critical of Senator Landrieu and her position on the health debate and he was writing for New Orleans based conservative group called the Pelican Institute of Public Policy. Flanagan is listed on their Web site as being a guest -- or rather I should say, O'Keefe was listed on their Web site as being a guest speaker there last week. And the title of that speech, "Exposing Truth, Undercover Video, New Media and Creativity."

And also late this afternoon, one more development. We got an e- mail, an exclusive from Amanda O'Keefe. She is James O'Keefe's sister and she told us, quote, "We the people have a responsibility to seek the truth, to try to see through the corruption of the government, the Legal system and the media. And reveal what's really going on."

So there's a lot of pieces here and I'm sure that as this story continues, too, Wolf, we'll get a lot more information. We tried to reach out to Senator Landrieu's office. We're still waiting to get response from her on this latest development, as well as we've also reached out to the other attorneys involved. And we're waiting for call back from them -- Wolf.

BLITZER: All right, we're going to check back with you. Thanks very much, Lisa Sylvester. Working that story.

Let's move to Florida now. We are talking about the governor, Charlie Crist. The president of the United States. They were there together today but is Charlie Crist sort of trying to distance himself somewhat from the president because of his support for the economic stimulus plan last year? Will it hurt his chances for re-election?

Joining us for our strategy session, democratic strategist and CNN political contributor Paul Begala and the former chief of staff for the president of the United States, George W. Bush, Andy Card. Thanks very much for coming in. Look at these pictures. This was the picture to a certain degree last year when the two men met. I think we have it right there. That was last year. I think -- at one point, yeah, there he is. You see the hug they got over there. And then today it was more of just a strictly handshake. There it is. At the airport. How much does this hurt Charlie Crist? He has a tough conservative challenger for the senatorial primary, Marco Rubio.

ANDY CARD, FORMER CHIEF OF STAFF TO PRESIDENT BUSH: I may be old school but always show respect to the president, the office of the president. I think it is right important the governor to greet the president when he comes to into the state and no matter the party or philosophical differences may be. It is a matter of respect.

BLITZER: Jeb Bush, Republican, the former governor of Florida, he was on the "Today" show earlier today. He agrees totally. Listen to this.


JEB BUSH (R), FORMER FLORIDA GOVERNOR: I would go when the president comes to the state, I think it is more than appropriate. It is not a sign of support. I wouldn't necessarily have embraced the stimulus plan that did not have support in the state and campaign for it and put Republicans in a vulnerable position --


BLITZER: President of the state comes for billions of dollars for high-speed rail system for Florida, it is appropriate the governor shows up.

PAUL BEGALA, DEMOCRATIC STRATEGIST: Right. Andy is right. Governor Bush is right. That's what do you. It is interesting, Jeb made the -- I would not have embraced the stimulus plan. Well, the symbol of that, though, embrace, the picture, that --

BLITZER: Actual hug.

BEGALA: Here is today. You see, we have the secondhand come in here. Left hand coming around. But I can't see -- I don't think Governor Crist, he is not doubling up. President is doubling up.

BLITZER: No man hug.

BEGALA: No man hugs. There is a history of this. Joe Lieberman lost his primary in Connecticut, Democratic Party, in part because of a famous picture where George W. Bush hugged him. I think he kissed him which was creepy. In a manly way.

BLITZER: I think that was at the state of the union address.

BEGALA: State of the union address.

BLITZER: Let me show you numbers. Look at the numbers. Quinnipiac poll. Marco Rubio, 126 percent. Now it is down to 44 percent for Charlie Crist. 47 percent for Marco Rubio. These are among registered Republicans. Charlie Crist got -- he has his hands full.

CARD: He has. He made a mistake in embracing President Obama. Not just president but policies early on. Florida does not agree with the way President Obama's leading this country. I don't think Florida voters do.

BLITZER: Do you think Florida Democrats disagree --

CARD: I think Florida voters not standing behind the president on a lot of the health care initiatives and other initiatives now.

BEGALA: Here is the thing, though. All the pundits, except Andy and me, voters want bipartisan in a pig's eye they do. Charlie Crist is a bipartisan Republican. He endorsed the president's economic stimulus plan. He says now he didn't. He did. He even did the bromance hug there. That's bipartisanship. How is he being rewarded? He's getting beat by the more port is a Republican. Republicans in Florida. At least the Republican Party wants no part of bipartisanship.

BLITZER: If someone said to me six months ago that Charlie Crist is going to have trouble getting that Republican nomination to run for Senate, I would have said what? He's a very popular guy. CARD: Lot of people -- independents waking up to say wait a minute, let's pay attention to the policy. Not just the politics. Independents are making the difference. They are the ones helping the Republicans motivate change.

BLITZER: Good way to end this conversation. We will con. We have a lot of time between now and the primary and general election. Guys, thanks very much for coming in. We have a lot more coming up. Including what's happening in Haiti right now. New developments. Stand by.


BLITZER: A short while ago the Senate voted 70-30 to confirm Ben Bernanke for a second four-year term. Earlier there were more than enough votes then to filibuster on his nomination. Still this is one of the closest confirmation votes ever for a fed chairman. At least half a dozen Democrats, including several up for re-election voted against president Obama's nominee. Bernanke faced strong criticism from lawmakers for bailing out Wall Street while supposedly allowing Americans to suffer in the recession. That was the argument. Didn't hold water. The Senate confirms Ben Bernanke. By the way, stocks, Dow Jones down 115 points today.

President Obama gave members of Congress their marching orders last night on jump starting the economy and creating jobs.


OBAMA: People are out of work. They are hurting. They need our help. I want a jobs bill on my desk without delay.


BLITZER: Let's bring in senior Congressional correspondent Dana Bash. President said this is priority number one, legislatively speaking getting the jobs bill to his December.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. In the Senate, this is where the issue is. Top Democratic senators told me today they actually do have consent sauce a package $08 billion towards that jobs bill. There is a problem, big problem. It all leads back to losing the Massachusetts Senate last week. And that's the president might want a big jobs bill but Democratic sources say they simply can't pass one right now. For two reasons. One is simple math. They don't have a filibuster-proof majority. Also, politically, they say the last thing voters want right now is another big government bill. They think that would hurt their Democratic candidates right now. So I'm told they are going to break it up into small pieces and, in fact, next week, we should expect, according to the sources I'm talking to, Democratic leadership to come out with the first package probably about $30 billion of things that will most likely try to lure Republicans. Focus on tax credits aimed at small businesses.

BLITZER: We will check back with you. We will check in with Jack Cafferty. Lot more when we come back.


BLITZER: With President Obama focusing in on the economy last night in the state of the union address, there's a lot of talk about when whether the president's economic stimulus plan really worked and whether your money is being well spent. Our ongoing investigation into the stimulus plan gives you some smart talking points, facts about what's working and not working. American recovery and reinvestment act will cost the government, meaning all of us, $862 billion over the course of several years. Our senior correspondent, Allan Chernoff, has been following the report.

Allan, what have you discovered?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Washington is making sure the stimulus money is spent properly but already finding signs millions of taxpayer dollars are not going where we would expect them to.


CHERNOFF: Kentucky construction magnate Leonard Lawson on trial this week for allegedly bribing a state official during the past decade to win big projects. That didn't stop Lawson family companies from winning $24 million in federal recovery act contracts. Lawson Companies should have been suspended from bidding for stimulus work within 45 days after Leonard Lawson was indicted, according to a department of transportation rule, even though he pled not guilty. It took the department ten months to act after the Lawson firms had won the contract.

REP. EDOLPHUS TOWNS (D), OVERSIGHT & GOVT. REFORM COMMITTEE: When people see folks getting away, getting contracts even after they have been indicted, that to me does not help in terms of getting rid of waste, fraud and abuse.

CHERNOFF: Auditors for the inspector general of the department of transportation warned that there's a perfect storm for contractors intent under fraud in the government. Given the billions in recovery act dollars Washington is doling out. CNN has learned that federal investigators already finding evidence of bid rigging and recovery act contracts for the federal highway administration. Prosecutors are examining cases where contractors appear to have been colluding with each other to win road improvement jobs and new paving and expanding streets and highways. No criminal charges have been filed yet.

But the department of transportation inspector general has 25 criminal investigations under way. But dozen of which have been referred to the department of justice for prosecution. Other cases involve what the government calls disadvantaged business enterprise fraud. Companies owned by minorities or women bidding for contracts after taking a cut passing the work to a nonqualified contractor. Inspectors general at all federal departments and agencies are aggressively searching for stimulus fraud. Certain that corruption will affect recovery act spend. WAYNE MCELRATH, EPA ACTING ASSISTANT INSPECTOR GENERAL: Fraud will occur. Typically we see false statements, false claims, conflict of interests and antitrust violations.

CHERNOFF: Latest stimulus fraud scorecard ten months into the recovery act. 4740 audits and 106 active investigations and 25 cases accepted for prosecutorial review. And investigators say that they are only just beginning. Every department is training federal, state and municipal workers in fraud detection. And anticipating that corrupt contractors view recovery act funds potential gold mine.


CHERNOFF: As one investigator put it there are lots of eyes watching this money.

BLITZER: There's another project tied to the economic stimulus plan, Allan, you are looking at.

CHERNOFF: It happened today. The New York state comptroller Thomas Dinapoli rejected a stimulus contract $27 million for a company L&L painting was going to do highway paining in New York State. The comptroller said this is a company that has had help and safety violations and was turned down by the New York City school construction boards and also has very close ties to a company they paid fines for misrepresenting itself as a disadvantaged business enterprise. L&L Paint had no comment to CNN.

BLITZER: Allan, thank you very much. Keeping them honest as we do so well.

More on our continuing investigation into the stimulus spending. Only CNN could and would do this. We signed hundreds of our actors, reporters, producers, editors, photojournalists to answer basic questions. Is the plan working? Where is all of the money going? CNN Tom Foreman is at the stimulus desk work this for us. You are drilling down specifically, Tom, on one project in Wyoming.

TOM FOREMAN, CNN CORRESPONDENT: Yes. Going up to the Cowboys Stadium, way up here in Wyoming just north of Colorado. A beautiful place, right under the capital. There is a program here, $1.7 million going to the department of housing and urban development to various public service organizations statewide. What were they there to deal with? They were dealing with the issues of homelessness there. Well, you look at Wyoming. Many people may say there aren't that many people there compared to other places, homeless problems. Public housing in that area, one of the way that's try to deal with it.

What they were looking at here in Cheyenne was trying to keep people from becoming homeless and if people did become homeless in the state because they are living on the edge of poverty, how can they get them back into a home as soon as possible? Funneling funds to the people, trying to keep these people in homes, all in the belief by doing this, Wolf, even though this would create only a few jobs, maybe, if any at all, the reality is that it would keep other people from getting into worse times where they would have to rely more on some kind of public assistance and cost us all more in the long run, Wolf. It is one of those things where it is not so much about creating jobs but supporters would say it is about an economic benefit to taxpayers.

BLITZER: How many people has this project affected?

FOREMAN: Well, it is interesting you should say that. They had $1.7 million involved. Only spent $350,000 so far. They say up to this point, they have helped 104 households or a total of 680 individuals. So, Wolf, you can imagine if those people hadn't been helped and slipped into poverty and homelessness, this could be a serious issue. We are going to keep working on our desk here as we have all along. Our whole team here. They have been checking into more and more of the projects. We told you all these books full of every one of them and I want to show thank you total as we go over here. We add that project in, $1.7 million up in Wyoming, our total board over here on the stimulus desk, number of projects we have so far checked out, more than $8 billion. The number keeps going. We try to get people a sense of where your tax money went and whether or not you think this was worth it.

BLITZER: Good work, Tom. Thanks to the entire team down at the CNN center. We will take a quick break.

My exclusive interview with the former Supreme Court justice Sandra Day O'Connor. She has a lot of strong views.


BLITZER: Getting right back to Jack for Cafferty file. Jack?

CAFFERTY: Question this hour generating a lot of mail. Should Hillary Clinton challenge President Obama in 2012?

Richard writes, "Damn right she ought to challenge him in 2012 and she should have beat him in 2008, but everybody wanted change. Now we are giving up dollars and change to finance the mess we are in."

Brandon in Iowa Falls writes, "Hillary was my first choice in the primary and I wound up voting for Obama in the general, but in my heart I feel that Hillary would have been a better president, and I am for her challenging President Obama in 2012. Bring it on."

Rachel says, "Absolutely not. I was behind Hillary in the 2008 elections, but this rivalry would not only boost the Republicans, but hurt the Democrats. Let her run for vice president and switch with Biden."

Fasil writes, "Jack, why are you instigating a rivalry long forgotten. It is only the first year of Obama's presidency, give him a break."

Dewayne says, "Who cares? The Republican lie machine combined the recent supreme court decision to open the doors for the unbridled spending by corporations and the ultra rich will define who wins major elections in the near future and it won't be Democrats."

Tina writes from California, "I still think most Americans backed the wrong horse in 2008, but maybe a wasted vote, but I wrote in Hillary Clinton on the ballot and I refuse to take off her sticker on my car. It is a matter of principle."

Charles in Ohio writes, "No, President Obama will be a two-term president. What are you trying to do, cause trouble?"

And Debbie writes, "I think Hillary should run for vice president again, and if lucky she will face Sarah Palin and "Saturday Night Live" ratings will go through the roof."

If you want to read more go to my blog on file.

BLITZER: A lot would write that "Saturday Night Live" ratings would go through the roof.

CAFFERTY: And maybe it will help the one-act play we have going here.

BLITZER: No doubt, Jack. Jack Cafferty with the Cafferty file.

Lisa Sylvester is looking into an Indiana Congressman and charitable organization. Standby, we have new information.


BLITZER: The Republican Congressman Steve Boyer of Indiana is under fire for actions or lack of actions of a charitable organization he founded. Let's bring back Lisa Sylvester. She's been digging on this story.

So the allegation is that the foundation has not given money to clarity, but funded what, some golf trips? What is going on here?

SYLVESTER: Yeah, that is exactly right. And you know, Wolf, they were held at nice sunny destinations, including the Bahamas and Florida, but now at least one Washington watchdog group is calling him out.


SYLVESTER: Indiana Congressman Steve Buyer is an avid golfer. These pictures from News Com show him at a charity event in 2006. But now the Frontier Foundation he founded is under fire. It has the mission of providing scholarship money to Indiana students, but according to the tax records, the foundation has not given out a single scholarship in six years. The group for ethics and responsibility in Washington says that instead, they have spent hundreds of thousands of dollars on golf tournaments in the Atlantis resort in Florida and the Bahamas. In 2007, $20,590 was spent on fund-raising travel alone. That was nearly half of the foundation's annual expenses. And in 2008, $22,000 spent on travel, almost one- third of the expenses that year was spent on travel. MELANIE SLOAN, CITIZENS FOR RESPONSIBILITY & ETHICS IN WASHINGTON: It is outrageous that the representative is pushing this charity and holding lavish golf vacations at the expense of Indiana needy kids who are trying the go to college. Here he is saying that he is there, and he is going to try to help the kids, and what he is doing is going to play golf.

SYLVESTER: Buyer in his defense said to keep it solvent the board decided to raise $100,000 before giving out scholarships, but later upped it to $1 million which is a goal that is not reached yet. That is not unusual practice according to the Council on Foundations.

ANDREW SCHULZ, COUNCIL ON FOUNDATIONS: A lot of organizations start and realize to be greater effective, they need a greater endowment to have a growing concern, but I would say that $1 million as an endowment for a scholarship program is about right.

SYLVESTER: So far, they have raised some $8,000, but spent more than $200,000. Citizens for Responsibility and Ethics in Washington also question the source of the donations. The companies who have contributed to the Frontier Foundation are a list of who's who in the health industry including Eli Lilly and the pharmaceutical giant Phrma who has contributed $200,000, and both who have contributed to his campaign committee. He sits on the house energy and subcommittee on health, the Congressional panel with oversight of the health industry. In a CBS interview, he insisted there is no conflict of interest.

REP. STEVE BUYER (R), INDIANA: The corporations in which provided support where I said were original companies. Please do not assume that if a company contributes to the foundation that somehow that is some sort of influence on what I'm about to do.

SYLVESTER: Citizens for Responsibility and Ethics has filed a complaint with the Congressional committee and the IRS asking for an explanation. In response, Buyer's office issued this statement, "This complaint has been filed after the matter is being resolved. Crew is a liberal front crew who has a reputation for using ethics for allegations of political attacks. Their complaint is a rehash of old news articles. After review, I sought guidance from the standards committee, and this matter is already being resolved."


SYLVESTER: I spoke to the house ethics committee and they said they could not comment about this. But in corporation documents it lists his daughter as the president of the board and his son, Ryan, as a director, and though they are both unpaid. And his son, Ryan, also works for Phrma as a federal affairs manager. Phrma says that the donation is at no time asked for anything in return. And Eli Lilly says the foundation has a worthy cause of giving out scholarships, although a spokesman told me that they weren't aware until recently that no money had actually been given to students. Wolf.

BLITZER: Lisa, thanks for that report. Good work. Thank you very much.