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President Obama in GOP's Lion's Den; Supporters: NYC Can Handle 9/11 Trial

Aired January 29, 2010 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Rick, thanks very much.

Happening now, President Obama's differences with House Republicans laid bare in an often testy question and answer session.

Did GOP lawmakers walk away feeling heard or dismissed?

This hour, the political climate right now -- and how an upbeat economic report may figure in.

Plus, the Obama administration rethinks plans to try 9/11 suspects in New York. I'll speak with two political figures with very strong and very different views on this subject -- the former New York mayor, Rudy Giuliani, and Pennsylvania Congressman, Joe Sestak.

And choking back tears, Republican Congressman Steve Buyer calls it quits. We've been digging deeper into questions about his charitable foundation and whether he's been short-changing needy kids. Stand by for more of our reporting and Buyer's reason for calling it quits.

I'm Wolf Blitzer.


It started with a prayer and a vow to try to work together, but it quickly became clear that President Obama and Republicans still don't get along. The president agreed to answer questions from GOP lawmakers on their turf -- a House Republican retreat in Baltimore.

This will give you a flavor.

Listen to this -- a flavor of the session and a flavor of the tension.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The easiest thing for me to do on the health care debate would have been to tell people that what you're going to get is guaranteed health insurance, lower your costs, all the insurance reforms, we're going to lower the cost of Medicare and Medicaid, and it won't cost anybody anything. That's great politics. It's just not true. So there's got to be some test of realism in any of these proposals, mine included. I've got to hold myself accountable. And I guarantee the American people will hold themselves -- will hold me accountable if what I'm selling doesn't actually deliver.

REP. PAUL RYAN (R), WISCONSIN: Mr. President, a point of clarification. What's in the "Better Solutions" book are all the legislative proposals...

OBAMA: I understand that...

RYAN: ...that were offered...

OBAMA: I've -- I've actually read your bills.

RYAN: ...throughout 2009.

OBAMA: I understand that.

RYAN: And so, rest assured the summary document you received is backed up by precisely the kind of detailed legislation that Speaker Pelosi and your administration have been busy ignoring for 12 months.

OBAMA: Well, Mike -- wait. Hold on. Hold it a second. I don't...

RYAN: Well, it's -- it's...

OBAMA: No, no, no, no, no, no.

Hold on a second.


OBAMA: Yes. You know, Mike, I've read your legislation. I mean I -- I take a look at this stuff and the good ideas we take. But here's -- here's the thing -- here's the thing I guess that all of us have to be mindful of.

It can't be all or nothing one way or the other, all right?


BLITZER: We're going to have a lot more of this remarkable exchange the president had with House Republicans. That's coming up in THE SITUATION ROOM.

But let's bring in our Congressional correspondent, Brianna Keilar.

She's in Baltimore.

She watched it all unfold on the inside.

You got some reaction from Congressman Paul Ryan, who's a rising star in the House Republican leadership.

What did he make of this whole opportunity today for the president, in effect, to go into the lion's den? BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, as you know, Republicans have been fighting very hard against a label of being the "party of no," of not having solutions. This is what Democrats have said about them.

And so Paul Ryan and a number of other Republicans that we spoke with today thought they had a really huge win, just in the fact that President Obama acknowledged that they do, in fact, have proposals.

Here's what he said.


RYAN: I'm very pleased the president said he had read my plan and called it a very credible plan. We've sent it to him a number of times, but we've never had any dialogue from the White House. This is the first time I've talked to the president or any of his senior advisers about how it works.

So the fact that we're just now beginning a dialogue and an acknowledgement of the ideas we've been proposing is a good step in the right direction, because all last year, the ideas and the solutions we've been sending to the White House have been largely ignored.


KEILAR: But President Obama also seemed to be able to make a really effective point, as Republicans would call him out on different issues, be it energy and climate change or health care reform. He would almost go through and list for them and say this where we have common ground and here are some of the things in these bills that I think are in line with what you guys want.

So the point he was making, Wolf, is that he feels Republicans have objected more to his ideas -- more to Democrats' ideas on politics than on principle -- Wolf.

BLITZER: All right, Brianna.

Stand by.

Brianna is watching this in Baltimore.

President Obama faced Republicans armed with a new and much better than expected economic report. The gross domestic product rose -- rose at an annual rate in the last quarter of 5.7 percent. That's the fourth quarter of 2009.

That's the strongest growth in more than six years and it marks the second straight quarter of positive economic growth. That's not only considered a sign of economic recovery, but that's considered by economists a formal indication that the recession is now over.

The president says he still needs to do more to stop the flood of job losses. At a machine company in Baltimore today, he pushed his plan to give small business tax breaks if they hire more workers.

CNN's Stimulus Desk has been investigating the billions already spent to jump start the economy.

In this face-off with Republicans today in Baltimore, the president dismissed suggestions that there are better ways to create jobs.


OBAMA: I am not an ideologue. I'm not. Well, it doesn't make sense -- if somebody could tell me you could do this cheaper and get increased results, then I would say great. The problem is I couldn't find credible economists who would back up the claims that you just made.


BLITZER: All right. Let's bring in our senior political analyst, Gloria Borger, and David Gergen -- I was impressed, David, that in the aftermath of the State of the Union Address, they allowed cameras inside so we could see this robust give and take between the president and the House Republicans.


Who made that decision?

BLITZER: The White House. I'm told the White House made that decision. Originally, it was going to be closed door, but the White House, I'm told, pressed to -- to let the cameras stay in. Originally, they were only going to have the cameras in for the president's speech and then invite the journalists to leave. But you know what, they changed their minds and they let the journalists and the TV cameras in throughout.

GERGEN: Well, that was -- that was an excellent decision. And I think most Americans would -- are going to welcome the fact that the president has -- has sat down or talked in a -- in a -- within a robust debate format with these Republicans, that they've exchanged ideas. It seemed civil, even though they have sharp differences.

That is -- that, in itself, is a step forward over where we have been.

But I also have to hasten to add, much now depends on what they do...


GERGEN: ...not just what they say.

BORGER: You know, I -- I -- I think it's interesting, because if you watch this entire discussion, each side was saying stop caricaturing me. You just heard the president say, "I'm not an ideologue." And Republicans were saying, we're not the party of no. We -- we have given you ideas.

And this kind of discussion on -- we -- we don't know where it's going to lead.

Clearly, you know, they suggested how about across the board tax cuts?

The president said no. He clearly -- you know, they have different ideas about the budget, about spending, about the stimulus package.

But they all heard Independent voters, because this was lifting the veil a little bit and having the kind of discussions -- they got heated, but they weren't calling each other names. And it's the kind of policy discussions that the American public really would like to engage in.

BLITZER: And the president, David, says he's open to having this kind of discussion with the House GOP once a month.

GERGEN: Well, he -- he said in the State of the Union he would like to sit down with Congressional leaders from both parties once a month. That's not exactly revolutionary. It used to be sort of the standard practice in Washington.


GERGEN: But, you know, it's a practice that, unfortunately, has, you know, disappeared and now is being revived. And that's -- it's -- that's good news, as well. It will be interesting to see if they would open some of that up for debate, as well.

But I -- if -- the -- this is good. But I do think, Wolf, we -- we cannot get past the fact that there are deep differences of principle and deep differences of -- of policy between the president and his administration and these Republicans. And he says, I can't find any credible economist who would agree that...

BORGER: Right.

GERGEN: ...across the board tax cuts really work. Well, there are -- the Republicans have -- will point to a -- a number of credible economists, starting with a fellow like Marty Feldstein, for example, the head of -- the head of the Bureau of Economic Research until very recently and one of the world's best economists, who believes, as do many others, that leaner government, less taxes, less spending actually provides more vitality to the economy.

So there are just deep differences about how you do things here that -- whether they can bridge those or not, I don't know.

BORGER: Well, and it's going to...

GERGEN: But talking to each other is good news.

BORGER: And it's going to be whether smaller is going to be better, you know.


BORGER: They're going have to not have these huge bills and the president says, this is what I want to do on capital gains for small business, this is what I want to do on tax cuts for small business. And they might not like it, but they might have to buy it.

BLITZER: Let's keep...

GERGEN: Yes, but those (INAUDIBLE)...

BLITZER: Let's keep those TV cameras inside these meetings in -- in the coming weeks and months.

I suspect that that may not necessarily happen, but we can always -- we can always live in hope, right?

GERGEN: You know, Wolf, there's another part to this, though, too, and that is from the House Republicans' standpoint. It's not just a question of whether the president will sit down with them, it's also a question of whether Nancy Pelosi...

BORGER: Right.

GERGEN: ...and her top lieutenants are actually going to sit down and try to find common ground. They feel, in the House, that they've been shut out to -- to a large extent. Nancy Pelosi feels they've been recalcitrant.

There has to be -- you know, the -- the real -- the ground -- where the -- where the real arena is, is in the House itself. And I think the president is going to need to bring his Democratic leaders into this conversation in the House if they're really going to, you know, start closing the circle and make -- and see if they can reach common ground.

BLITZER: All right, guys. We're going to leave it right there.

But you know what?

This was about as close as the U.S. system gets to the British House of Commons -- the question time that a British prime minister goes in there, answers questions from the opposition. It was very, very cool to see it in Baltimore today. Let's hope there's more of this down the road.

All right, we have a lot more coming up here in THE SITUATION ROOM, including moving those 9/11 trials away from New York elsewhere. The Obama administration seems to be rethinking its strategy. Rudy Giuliani and Congressman Joe Sestak have very different views. They'll be here.


BLITZER: Let's get right to Jack Cafferty for The Cafferty File -- Jack.

JACK CAFFERTY, CNN ANCHOR: There's been a change of heart at the White House, which is now considering moving the 9/11 terror trials away from New York City. This about-face comes after New York Mayor Michael Bloomberg and other state and city politicians yelled long and loud about trying Khalid Sheikh Mohammed and four of his fellow dirt bags at a courthouse near ground zero, which was an idea that made absolutely no sense from the beginning.

New York's worried about costs -- $200 million a year is the estimate for a trial that could go on for years; plus the general disruption to life in Lower Manhattan. That part of the city is complicated enough on a daily basis.

It's estimated they would need 2,000 security checkpoints to be set up, along with additional protection in other parts of the city.

How stupid is the federal government sometimes?

The Fed said they would reimburse New York City for costs.

What about the business owners, who could literally be driven out of business by this kind of disruption?

There are better ideas. Almost anywhere is a better idea than downtown Manhattan. These would include, for example, the Military Academy at West Point or a military base in Upstate New York or a desert island in the middle of the South Pacific.

This fierce opposition to this plan to hold those trials here in Manhattan caught the Justice Department off guard.

Now there's a surprise -- somebody in Washington being caught off guard, tone deaf?


Now, one law enforcement official told the New York "Daily News," quote, "It's like a half-baked souffle -- the plan is collapsing."


Here's the question -- where should the trials of the 9/11 terror suspects be held?

You can go to and post a comment on my blog -- Wolf.

BLITZER: Apparently, they never really consulted with Mayor Bloomberg or the police commissioner, Ray Kelly. They just notified them they -- they wanted to do it.

What I was surprised at is originally they responded positively, but now they've changed their minds, Bloomberg and Kelly.

CAFFERTY: Well, it's like the day they flew Air Force One up here for that photo-op, remember?


CAFFERTY: And didn't tell anybody in the city about that, either.

BLITZER: That was a...

CAFFERTY: I mean, I...

BLITZER: That was a mistake, too.

CAFFERTY: That was disgraceful.

BLITZER: That was a mistake, too.



CAFFERTY: I would think.

BLITZER: OK. All right, Jack.


Jack is going to get your e-mail and we'll share it with you.

Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now -- Lisa, what else is going on?

SYLVESTER: Hi there, Wolf.

A conservative activist is defending his scheme involving Democratic Senator Mary Landrieu. James O'Keefe and three others are charged with entering her New Orleans office under false pretenses to commit a felony. Two of them posed as phone repairmen. O'Keefe, who previously targeted advocacy group, ACORN, says he only wanted to investigate complaints that constituents calling her couldn't get through. And he says he could have used a different approach, but he insists that he did not try to wiretap her office. Landrieu calls his explanation "feeble."

Anti-abortionist activist Scott Roeder has been found guilty of first degree murder. A jury convicted him of gunning down Dr. George Tiller, who performed late-term abortions. Roeder testified he felt Tiller was a danger to unborn children. The jury took less than an hour to research a verdict. Roeder faces a mandatory sentence of life in prison.

And as Super Bowl fever grips New Orleans, a fight is brewing over the phrase "who dat" and who owns it. Many stores are printing t-shirts with the phrase. But the NFL says it has a trademark on the famed slogan and it is now ordering them to top selling the shirts. Saints fans, however, say it's a phrase they have been using for years and it doesn't belong to anyone. Meanwhile, Louisiana Senator David Vitter blasted the NFL for its, quote, "ridiculous position."

And I always wanted to be able to say that, Wolf, on -- on camera, "who dat."

BLITZER: "Who dat." Bad -- bad grammar, bad punctuation, but it's a popular phrase.

Lisa, stand by.

I know you've got a report -- a follow-up to the report you did on Congressman Steve Buyer, the Republican Congressman from Indiana. Yesterday, his charitable foundation. Today there has been a major development. He's resigning from Congress. Lisa is going to have a full report on that and a lot more when we come back.


BLITZER: You just heard Jack Cafferty and me talk about the upcoming trials of the 9/11 suspects -- the detainees. And New York City mayor, Michael Bloomberg, is now against 9/11 trials in New York City per se. The Obama administration is considering holding them elsewhere. That's what we've been told.

Coming up, a Democratic lawmaker will give us his opinion.

But first, Rudy Giuliani was the mayor of New York on 9/11. He's a strong and vocal opponent of holding these trials in New York.

I assume, Mr. Mayor, you're happy the trials apparently are not going to be in Manhattan.

RUDOLPH GIULIANI, FORMER NEW YORK CITY MAYOR: Well, I'm very happy that the administration saw the error of their ways. I think that this was a decision that, from the beginning, inevitably had to be changed. I said about a month ago the president would change his mind about it, he just didn't know that at that point. And I think now he's going to change his mind about having it in a -- in a civilian federal court at all, because (INAUDIBLE)...

BLITZER: Well, before we get to that, let's -- let's talk about maybe moving this trial to Upstate New York, out of New York to a military base, for example?

Would that be -- that's appropriate -- I assume you'd be happy with that?

GIULIANI: No, I'd be happy with this case being tried in a military court, where it belongs, for many reasons, including the reasons we saw in Detroit when the Christmas Day bomber was arrested, questioned and then the questioning was prematurely cut off in order to give him Miranda warnings, which, as a former federal prosecutor and Justice Department official, makes no sense to me.

BLITZER: But there have been hundreds of...

GIULIANI: Why you would want to cut off... BLITZER: But there...

GIULIANI: Why you would want to cut off a terrorist in the middle of spilling his guts makes absolutely no sense other than some ideological purity you're trying to achieve.

BLITZER: But there have been, what, hundreds of terror detainees or terror suspects tried in the civilian courts successfully, including the World Trade original bomber from back in 1993 and a lot of his cohorts. They're all serving time in jail.

GIULIANI: Well, who said that was a good idea?

I mean, in retrospect, at the time, we didn't know any better. But the reality is we didn't realize at that point that we were at war. And the 1993 bombings were followed by another attempt to destroy Manhattan, then the actual successful bombing of the World Trade Center, attacks in Africa, attacks all over the world.

BLITZER: So all the...


BLITZER: ...all the civilian trials during the Bush administration, including the shoe bomber and others, all of those were a mistake, to do those in civilian courtrooms?

GIULIANI: No. No, no. Some -- some can be done in civilian -- in civilian courts. But you -- you have the worst possible case scenario here. We have a person who's a foreigner. We have a person who participated in -- in an attack from outside the United States, hatched outside the United States, plotted here and then accomplished against the United States. It's the worst attack in the history of this country. And what's the purpose of doing it in a civilian court?

In order to show fairness?

The president of the United States and the attorney general have already announced that this man is guilty, that he will be convicted and if he isn't convicted, he will be kept in prison for the rest of his life anyway.

So what are we doing?

This is a public relations gimmick to try him in a civilian court after the president has announced that he's guilty already.

BLITZER: Because the -- the argument, I guess, some have made -- at least it's been made to me -- is that if he's found guilty, Khalid Sheikh Mohammed, the mastermind -- the self-proclaimed mastermind of 9/11...

GIULIANI: Correct.

BLITZER: ...if a civilian court finds him guilty...


BLITZER: ...a criminal court, before the whole world watching all the testimony, all the evidence, he's sentenced to death and he's executed...


BLITZER: ...that would be, for the world, for America's reputation as a recruiting tool against al Qaeda, much better than if a military court were to do the same thing.


BLITZER: I -- I see you're smiling. But the argument...

GIULIANI: Does that make any...

BLITZER: in a military court...


BLITZER: ...he wouldn't have all the -- the benefits that he would have in a civilian court.

GIULIANI: That's not going to make...

BLITZER: That's just what...

GIULIANI: That's not going to make a darned bit of difference to the terrorists who want to kill us and -- and murder us. And it is, if you followed that precedent all the time, the way they're doing, it is going to cut off questioning and intelligence, as it did on Christmas Day.

And, finally, all of that will mean nothing because the president of the United States and the attorney general have, in a very unprecedented way, already announced that he's guilty and he's going to be found guilty. So his conviction is not going to impress anyone.

They've also announced that if he isn't found guilty, he'll be kept in jail for the rest of his life.

So tell me what's going on, Wolf. It makes -- as a former federal prosecutor, the way they've handled this from the very beginning, makes no sense to me.

BLITZER: All right...

GIULIANI: The best thing for them to do is to straighten it out. They've straightened out part of it. What they should do now is try him in a military court. The worst attack in the history of this country, plotted, ultimately, on foreign soil. He should be tried in a military tribunal. It was good enough for Lincoln, it was good enough for Roosevelt, it should be good enough for Obama. We should not give terrorists more rights than they absolutely need to have. They don't need any more rights. A military tribunal is Constitutional and it is perfectly fair.

And after they've already made these intemperate comments about the trial, they're not going to impress anyone with a trial in a civilian court.

BLITZER: All right, well, we'll get a different perspective, I suspect...

GIULIANI: I bet you will.

BLITZER: ...from Congressman Joe Sestak, a Democrat of Pennsylvania.

A -- and we'll -- and he's going to be coming up next.

Mr. Mayor, always good to have you here in THE SITUATION ROOM.

GIULIANI: Always a pleasure.

Thank you.

BLITZER: Rudy Giuliani with his point of view, and he feels very passionate about it, which is understandable given what he went through on 9/11.

All right, we'll get the other side when we come back.


BLITZER: We just heard the former New York mayor, Rudy Giuliani, make the case why he thinks trying the 9/11 suspects in a civilian courtroom is a bad idea. We reported the Obama administration is now thinking about moving any forthcoming trial out of New York City.

Let's talk about that with Democratic Congressman Joe Sestak of Pennsylvania.

He's a retired admiral in the U.S. Navy.

Congressman, thank you very much for coming in.

Would you be satisfied if this trial, A, moves out of New York and goes, for example, to a military base in Upstate New York -- a civilian trial?

Would that be OK with you?

REP. JOE SESTAK (D), PENNSYLVANIA: I guess it would be acceptable. But I'd be surprised that we'd have to do it. I've heard these comments that it will take 2,500 checkpoints or police officers.

I served in the White House when al Qaeda was a problem, as director of defense policy. I drove past the White House the other day. You could almost throw a stone and hit the White House.

We're able to protect that bastion of -- of our society, so to speak, quite well. I don't know why we can't do it in downtown New York City.

BLITZER: But a lot of the...

SESTAK: That said...

BLITZER: ...a lot of the residents and businesses down in Lower Manhattan, they don't want it. They think it will disrupt their lives, the value of their property, their businesses and they want it out. Now the mayor and the police commissioner want it out now. So I assume that's OK with you.

SESTAK: I would accept it. I would like to see it there because quite -- we've tried twice on military courts that have been deemed un-Constitutional, struck down by the Supreme Court. And I'm tired. Quite frankly, I'm disappointed that we have a criminal that isn't being brought to justice in front of U.S. Citizens, to where the death penalty or locking him up forever, whichever they decide, isn't being done And I had always felt the great strength of New York City is its toughness. And I would have liked to have seen him brought there, but would I accept it if that's deemed logistically more easy to do? Sure, but let's move on to justice, because we need it brought about.

BLITZER: You heard Rudy Giuliani make the case that even if you put it to a civilian trial on a military base, near WestPoint, for example or in WestPoint or some military facilities in upstate New York, he thinks that, too, is a mistake, just have a military commission or tribunal deal with Khalid Shaikh Mohammed and the other self-proclaimed masterminds of 9/11. You were in the military for more than 30 years. What's wrong with letting them do it?

SESTAK: You know, I was also head of the navy's antiterrorism unit and was on the ground for a short period of time at the beginning of the Afghanistan war. I saw all these individuals brought in. Obvious they were brought in for $2,000 bounty. Do I want them brought to justice? Absolutely. I know military courts, as I said, they've been struck down twice for the way they've been brought about. Do we have to wait a third time? Second, I don't find differences between the two. For example, military courts are open to public, military tribunals are. They show them on TV. The same protections for classified information under the classified information protection act is done in civilian courts as it is done in military courts. So let's get about it. We have an opportunity here no longer to delay justice, so bring them into where President Bush did bring in 200 terrorists and actually said just a few years ago, when he was in Copenhagen, President Bush said he wanted all these terrorists brought into America to be brought tried by a federal court. So let's do it.

BLITZER: What do you think, Congressman, of the way the Obama administration is making these kinds of sensitive decisions, a year ago the president said to Gitmo the prison camp could be shut down one year. He's failed to meet that deadline and now it's open-ended. We don't know what's going to happen. Then he said the trial will take place in lower Manhattan. Now apparently they have to walk away with this. What's your assessment of the way this administration makes these kinds of sensitive national security decisions, making promises and failing to deliver? SESTAK: Wolf, you have a point, but I'm also disappointed in Congress. Those senators and those Congress members that three years ago were calling for sitting down Gitmo, but yet all of a sudden becomes almost at times a political issue, where is the courage? Congress? So that the president would help stay the course. Yes, I wish that he would stay and persist through in New York City, and I wish we had been more allies in Congress that shows that any prison like Gitmo that's creating more prisoners outside its walls, then you can hold inside is cost ineffective. Close it. I'm a rick magmatic guy. If that's happening, close it. If it's because the executive branch didn't think this through, I wish they had found out those facts beforehand, no, look. If you're going to pursue an idea, then let's stay the course if it's right and you thought it through. Frankly that's why I'm back on TV, arguing as I did when it first came up, they should be brought to New York and frankly why I've argued that Gitmo shook shut down when it's so ineffective.

BLITZER: We'll continue this discussion. Congressman Sestak is seeking the Democratic senatorial, he has a fight with the incumbent Arlen Specter, now a Democrat himself. Thanks for coming in.

SESTAK: Thanks for having me, Wolf.

BLITZER: All right. We have an update on that story that Lisa Sylvester shared with all of us yesterday. This Republican Congressman from Indiana at a charitable foundation he created apparently hasn't given any money to any kids yet as it was supposed to. Today he's announced he's resigning.


BLITZER: One thing you want to know, is the stimulus plan creating jobs for you? CNN's been digging all week. We've assigned hundreds of our journalists to answer that question. Let's bring in Tom Foreman, over at our stimulus desk at the CNN Center. What's the latest, Tom?

TOM FOREMAN, CNN CORRESPONDENT: We're looking up in Connecticut, $70 million to build and repair a railway trestle bridge that was in deep repair. Here's the bridge we're talking about, $7 on million seems like an awful lot. The company doing it was A.I. Engineers, Inc. And it seemed like a lot and got our attention because they said, as we went through the stimulus desk here, that this has saved 25 jobs and could create 100 more as this goes into the long-term phase. As we've gone through these 15,000 pages of projects, we found ourselves saying that doesn't seem like a whole lot for $70 million, but the company says it's more than just a matter of a few jobs now. There's a spillover effects to suppliers throughout the region. They think it will be money very well spent and that bridge will be working again. That's up for you to decide we've moved up to checking out more than $9,600 million of your money, and we'll keep doing it.

BLITZER: You know what they say, a billion here, a billion there, after that you're talking real money. That's what they say in Washington. Tom, thank you. We're digging into how your stimulus dollars are being put to use, chasing an energy breakthrough. Let's bring in our national political correspondent Jessica Yellin. She's taking a look at this part of the story.

What are you seeing here, Jessica?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: We looked into a special agency that's supported 100% by the stimulus. Their sole purpose is to find labs and companies working on new types of batteries for the future, if we can get that to run. They're developing alternative in systems, but at the same time they're trying to create major new industries with many new jobs that could in theory power our economy into the future.


YELLIN: They may not look like gamblers but these PhD's are placing bets with taxpayer money.

ARUN MAJUMDAR, ADVANCED RESEARCH PROJECTS AGENCY DIR.: What I would say is that let's leapfrog over today's technology and invest in tomorrow's technology and create jobs at the same time.

YELLIN: They're using stimulus dollars to fund new energy technologies, and they're hoping to hit on a breakthrough to radically change the way we power our lives.

MAJUMDAR: Let's say a few of them are successful. That would be game changing; it would change the landscape of the energy field, not just in our country, but globally.

YELLIN: It's called ARPA-E, the Advanced Research Projects Agency, and it's part of the department of energy.

MAJUMDAR: Our goal is to get the innovation, have the U.S. with the technology lead and really create jobs.

YELLIN: The agency was created under President George W. Bush in a technology-driven economy.

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: To make sure that we're research oriented in a technology driven economy.

YELLIN: But first funded by the stimulus package to the tune of $400 million. So far ARPA has invested in 37 projects at an average of $4 million. Among them, $8 million to develop a new high- efficiency windmill using less space to generate more power that in theory would make wind power the blowout energy of the future.

UNIDENTIFIED MALE: We're engineering the foot straps plan.

YELLIN: Four point five million dollars to a biofuel company that's trying to transform plant waste into the next version of gasoline. And almost $7 million to a lab building a battery that would store massive amounts of electricity on the power grid, which is key for a transition to renewable energy. Much of ARPA's staff came from the private sector.

Help filter through who will get the actual funding.

DAVID DANIELSON, ARPA-E PROGRAM DIR.: Exactly. Once we select the projects, then it's our job to on a quarterly basis fly out and see how they're doing.

YELLIN: The Department of Energy got more than $19 billion in stimulus money to invest in new technologies and renewable energy. Critics, including energy analyst Kevin Book, are wary.

KEVIN BOOK, ENERGY CONSULTANT: Turning science projects that nobody wants into products nobody can afford to buy is a terrible idea. The question is whether or not choosing which projects should be commercialized belongs to the government. They've made the wrong choice almost every time.

YELLIN: If they hit on a winner, how much does the taxpayer get for that investment? Does the U.S. retain any ownership stake?

MAJUMDAR: No, these will be privately owned companies, we won't have any equity stake. We just want to enable them to really flourish.


YELLIN: So what has ARPA-E done so far? They've committed $151 million to 37 energy companies and labs. You'll ask, how many Johnson Ridge Observatory has that created? Oddly the department of energy refused to tell us how many, believe me, we asked. My amazing producers and two interns called all 37 companies and counted at least 346 jobs will be created by the end of this year with the department of energy's program. Now, they emphasize to us, Wolf, this is not about creating jobs right now, this is about investing in companies that will create many, many more jobs in the future.

BLITZER: Has anything like this ever worked before in the government?

YELLIN: Well, good question. DARPA is the same thing at the department of defense, and their research helped create the technologies that invented the internet. So the idea is to hit on some new technology that would have as explosive and revolutionary change as the internet.

BLITZER: Only in Washington could we have this conversation, Jessica.

YELLIN: Exactly.

BLITZER: That was good. Thanks very much. Good report.

Chad Myers is also working an interesting development. Is it possible that a similar kind of earthquake that ravaged Haiti could be developing in the central part of the United States right now? He's got new information when we come back. (COMMERCIAL BREAK)

BLITZER: In a region racked where poverty, there's a real chance that what happened in Haiti could actually happen in the United States as well. What if a fault returning through one of the poorest parts of America suddenly ruptured? CNN meteorologist and severe weather expert Chad Myers is looking at the possibilities. Chad, where is this?

CHAD MYERS, METEOROLOGIST: All the way through the delta, from about St. Louis right on down into Louisiana, an area that doesn't get many earthquakes. That's kind of the problem. A rule of thumb in geology, if you get a lot of earthquakes, they're probably going to be small. Kind of like a pressure cooker popping off the pressure. If you don't get many earthquakes, the one that you get could be big, and that's what happened in Haiti. The one that they had in a couple hundred years was a very large earthquake. There's a fault running through Haiti, this fault ruptured.

There's not a fault so much in the central part of the United States. There's what's called a rift. Think about a rift with your family. That means you're getting separated, not getting along very well. There's a rift right through the center part of the country, this part is moving faster. 200 years ago there was a big earthquake through the new Madrid fault zone. That new Madrid fault zone runs right through from St. Louis down to Memphis and a little bit even into Louisiana. This is the area that we're talking about. It may be this year, it may be 50 years, it may be 100 years from now that a large earthquake could occur here in the U.S., but literally there's no way to know that's going to happen. There's no way to predict an earthquake there.

Somebody tried. If you go to Google, a guy named Iben Browning, back in 1990 he said all the planets are lining up, the most gravitational pull on the earthquake, and we could have a large earthquake. Millions of dollars literally was spent on getting emergency equipment and all these personnel here waiting for the earthquake that never happened. He died in 1991, but we've had earthquakes since then, just not the big 7.0 that he was predicting. It is obviously still possible, Wolf.

BLITZER: Is the science getting any better at all in terms of predicting earthquakes?

MYERS: Good question. There are sensors that can go down into wells, whether it's oil or water wells. If those sensors pick up the increase in radon, that's the gas you don't want in the house. If they pick up an increase in radon, that could be a precursor to the fault shifting, that precursor of the gas moves first, because it's easier to move gas than it is to move dirt and so as that gas moves, that could be a predictor, still to come, 10, 20 years out, but that could be a predictor for earthquakes. That would be nice to even have 30 seconds' notice to get outside of the building rather than to be inside.

BLITZER: Chad, thanks very much. Good description, good explanation.

We have a lot more coming up in THE SITUATION ROOM, including a new develop, a rather dramatic development on a satire we shared with you yesterday. Our Lisa Sylvester reporting on a Republican Congressman from Indiana, and a charitable foundation he created. Today the congressman announces he's resigning from Congress. Stand by.


BLITZER: All right. Right over to Lisa Sylvester where she is working a very worrying story that just coming in. What are we learning about, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Well, the story is just breaking right now. The Associated Press is reporting that a flight that originated in Newark, New Jersey, headed to Bogota, Colombia, has been diverted to Jacksonville, Florida. And apparently one of the passengers and his or her name appears to be a match on the terrorist no-fly list and they are looking into whether it is somebody who is indeed a suspected terrorist or a mismatch. We are making calls on the story, and we don't know at this point which airline is involved, but we will bring you the latest developments as they come in

BLITZER: To recap, a flight from Newark to Bogota, their name matches the no-fly list, and when they discovered it, they diverted the flight to Jacksonville, Florida to, check to see if this passenger is the same name or similar name on the no-fly list, is that correct?

SYLVESTER: Yes. Airlines are not supposed to be issuing boarding passes, and doing the checks, but we will find out if there is somebody who is indeed a suspected terrorist, but that plane indeed is being diverted.

BLITZER: Thank you, Lisa Sylvester working that story. Over to Jack now with "The Cafferty File" --Jack?

CAFFERTY: Where should the trials of the 9/11 terrorists be held?

Zach writes from Washington: "Trick question, they should have been dealt with in the same way that FDR dealt with German spies that landed on our shores, interrogated and killed them before the Supreme Court knew about it."

Dan in New York writes: "Mlitary court? Why give the terrorists the rights of Americans? They deserve to be hung, and that's all they deserve. I live in upstate New York and I don't want them in my backyard either let alone inside of the country."

Howard writes: "I'm a criminologist who has visited the prisons and courtrooms internationally and Germany has the model we should use. They have a terrorist court located in a small town with a secure courtroom, bomb-proof, and translation machines and secure cells for transporting prisoners back and forth from the courtroom to the cells. So build one in a rural area that needs economic development. We will have to use it again."

Elaine writes: "Where the crime took place, and not downtown Manhattan, but at least in New York, and give us the chance to do our duty."

And Frederic in Chicago writes: "These are the same dirtbags who have already cost America tons of money of grief and why impose more on the city of New York especially in this climate. The trials should be held where it costs the least, in the military courts."

Jackie agrees: "Gitmo. They are already there."

Janice writes: "There is only one reasonable place for this trial, the arctic and if it is not available, the Antarctic."

And Steves says: "Announce their release and then drop them off in Times Square and New Yorkers will take care of the rest."

If you want to read more go to my blog on -- Wolf?

BLITZER: Jack Cafferty, thank you.

We have more coming up now in THE SITUATION ROOM. Pot is so mainstream in California there is even now a marijuana superstore for growers. Dan Simon is there. Stand by.


BLITZER: An emotional announcement by Congressman Steve Buyer. The Indiana Republican says he will not run for reelection this fall. If Buyer's name sounds familiar, it is because we reported on questions on his charitable foundation yesterday. Lisa Sylvester has been working the story for us.

All right. Lisa, update our viewers what happened today.

SYLVESTER: Well, complaints have been filed with the IRS and the office of Congressional Ethics asking them to look into a private charity founded by Representative Buyer. We've been looking into these allegations of potential conflict of interest but today, there has been a new major development.


SYLVESTER: Indiana Congressman Steve Buyer with his wife by his side announced this will be his last year in Congress. Buyer's reason is his wife's health.

REP. STEVE BUYER (R), INDIANA: Joanie has been diagnosed with what doctors call an incurable autoimmune disease. While Joanie's sister died from this disease 21 months ago, I'm not going to call it incurable.

SYLVESTER: Representative Buyer did not elaborate about the wife's illness, but said she'd been advised to de-stress her life. Buyer has been in Congress for 18 years and easily won re-election for nearly all of his terms, but as we reported here yesterday here in THE SITUATION ROOM, recent questions have surfaced over a charity he started. The Frontier Foundation was set up to give scholarships to Indiana students. More than $800,000 raised, but no scholarships yet awarded. Buyer's foundation did however hold fundraising golf events in places like the Bahamas and Disney World and most of the donors are companies that have issues before the committee he serves on, the Energy and Commerce Subcommittee on Health. He denies any impropriety and says the accusations against him are politically motivated.

BUYER: Politically the easiest thing for me to do would have been to run again especially with the present wave that is coming from the American people that are eager to take back their country.

SYLVESTER: Representative Buyer today making today's announcement did not address the issues with his charity and left without taking any questions. Buyer's district strongly leans Republican. His decision to not run again throws the Republican field wide open. On the Democratic side is David Sanders who has been defeated twice by Buyer and is running again this year.

DAVID SANDERS (D), INDIANA CONGRESSIONAL CANDIDATE: People would come up to me and say: "I'm a life-long Republican, I'm not going to support Congressman Buyer again because of this foundation. So I think it was a serious concern.

My thoughts are that I wish him success in his future endeavors and that my heart goes out to him and his family.

SYLVESTER: Buyer will complete his term.