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Dems to President Obama: We Need You; Immigration Flap Rocks Governor's Race; Thune For President in 2012?

Aired September 30, 2010 - 17:00   ET


WOLF BLITZER, HOST: Thanks very much, Rick.

Happening now, President Obama hears a surprising plea from the Democratic leaders in Congress. They watched him in action with voters in react days and now there's something they want him to do to help them win on election day.

Also, he's got a shot at being the next president of the United States. This hour, Republican Senator John Thune tells me whether he's serious about a White House bid and whether he thinks Mr. Obama is doing anything right. And McDonald's serves up a warning for its employees. The fast food chain says it's got some tough choices to make about health care coverage as the new reform laws take effect.

Will its workers get burned?

I'm Wolf Blitzer.


The nation's capital may be on the brink of a whole new day, with change in the works over at the White House and at a midterm election that could change the balance of power. A little more than a month before America votes, President Obama is about to lose his right-hand man and one of his closest political advisers. Sources tell CNN that the White House chief of staff, Rahm Emanuel, will officially step down tomorrow to run for mayor of Chicago. The president is expected to announce Emanuel's exit in the East Room of the White House. The president also gave something of a sendoff today to Democratic Congressional leaders. He met with them behind closed doors over at the White House, as lawmakers head home for the last big campaign push before the election.

Let's bring our senior Congressional correspondent, Dana Bash -- Dana, you've been speaking with some folks who were at that closed door meeting with the president.

What are you learning?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, Wolf, multiple Democratic sources tell CNN that Democratic Congressional leaders used that strategy session at the White House today to press the president to be more aggressive in helping them campaign in these final weeks before November's elections. Now, I'm told that House Speaker Nancy Pelosi spoke up and said that Congressional Democrats really want to see him do more of the kind of rally that he held in Wisconsin this week, where he amped up the rhetoric for Democratic policies and against Republicans, especially when it comes to the issue of jobs and the economy.

Now, I'm told that in this meeting, the president made clear that there will be more campaign events coming. More are already actually on the books beyond the three rallies that have been announced publicly in Nevada, Pennsylvania and Ohio. Now, Wolf, these sources we talked to insist the tone of the meeting was not hostile.

However, Democratic Congressional leaders did want to hear the promise directly from the president's lips that he was going to help them. I can tell you that Congressional Democratic sources that I've I talked to, for some time, have expressed real frustration that the president had not been out there enough arguing for his policies target they voted for and making a cogent case against Republicans. And one of these sources that I talked to today said, look, people have moved past these minor disagreements. They just want him out there in a big way on the stump because, in the words of one of the sources, we need it -- Wolf.

BLITZER: But, Dana, the president certainly isn't as popular as he -- as he once was. And some Democrats are openly trying to distance themselves from the president.

So why do these Democrats want him out there so badly?

BASH: It's true. You know, and the answer is because Democrats I talked to say they still feel he is their best campaign spokesman for them. He's got the bully pulpit. And not only that, when he's on, he's on, they say. And Democratic leaders really wanted him to -- wanted to hear from him and wanted him to hear that they appreciated that he's -- when he's out there, especially when he's laying out the arguments on the economy, warning against what would happen when -- when and if Republicans take control. And one of the things that we're told the Democratic leaders talked to the president about in today's meeting, Wolf, was that they understand they have a real problem in revving up an unenthused Democratic base to go out and vote. And that's critical. And the Democrats really think that the president can help with that.

BLITZER: Dana Bash, thanks very much.

Let's get to some ugly allegations tonight -- right now, rocking the California's governor's race. Republican candidate, Meg Whitman, spoke out today about the revelation that her former housekeeper was in the United States illegally. Whitman is denying Nicky Diaz Santillan's allegation that she knew for years -- or should have known -- about her status as an undocumented worker. We also heard once again from Santillan and her famous lawyer, Gloria Allred. They say they have a smoking gun.

Our national political correspondent, Jessica Yellin, is here working this story for us -- Jessica, what exactly is Meg Whitman saying today to try to strengthen her case?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Well, first, Wolf, she emphatically denies all the charges. Whitman denies that she mistreated Santillan. She denies that she knew Santillan was illegal until last year. And she has also been answering the question, well, why didn't she turn her in when she found out she was illegal?

She answered that question repeatedly in a 45 minute press conference today.


MEG WHITMAN: I'm very fond of Nicky and I didn't want to make an example of her. And it's not, you know, an obligation of the employer to -- to turn in illegal employees. And I, you know, just thought I'm not going to make an of Nicky.


YELLIN: Now, clear -- clearly, she's trying to show a compassionate side while also maintaining her "tough on illegal immigration" policy position. But the bottom line, Wolf, this was crisis P.R. 101. She took every question. She's been doing a series of interviews to try to put this behind her.

BLITZER: She -- Gloria Allred...


BLITZER: -- who is the lawyer for the housekeeper in question, she says that Whitman is not telling the truth.

YELLIN: That's right. First of all, Whitman appeared with her husband by her side, claiming that her family never received a letter from the Social Security Administration telling them that her former housekeeper's Social Security number was bad.

But Gloria Allred, the celebrity attorney, held her own press conference. And, in a dramatic fashion, produced what she said is a letter from the Social Security Administration to the Whitmans dated April 2003. And there is a handwritten note on the bottom of that letter. That handwritten note says, "Nicky, please check this out."

Well, Allred says that's the writing of Dr. Harsh, Whitman's husband. And she says this is the smoking gun letter. She says it basically proves that the family knew that their housekeeper was illegal, Wolf, and did nothing about it.

BLITZER: Illegal immigration has been a big issue in this campaign.

YELLIN: Absolutely. I mean, in California, illegal immigration might be the biggest issue after jobs.

But another major issue in the race is just Latino outreach. That's because about 18 percent of the state's likely voters are Latinos. And Meg Whitman has been working very hard to woo those voters. So it really can't help to have video like this video we're showing behind me from yesterday's press conference, video of this playing. It's a former Latina employee, Wolf, saying Meg Whitman wasn't nice to me. It's just not what a candidate would want in the final days of the campaign.

BLITZER: Yes. All right.

Thanks very much.

But she's trying to do Damage Control 101 -- go out there, answer the questions and be blunt.

YELLIN: That's right, putting it behind her as best she can.

BLITZER: All right. We'll see how that works out for her.

Thanks very much.

Pakistan takes drastic action in response to a NATO attack and kit could have a big impact on U.S. and Allied troops.

Also ahead, we're going to tell you why thousands of Americans will be out of work by the end of this day.

Stay with us.



BLITZER: Jack Cafferty is here.

He has The Cafferty File -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: All the president's men -- and some of his women -- are headed for the exits -- or at least a lot of them are.

White House Chief of Staff Rahm Emanuel out the door Friday, going back to run for mayor of Chicago.

And Emanuel is not the only one -- a member of President Obama's inner circle, also known as the Chicago Mafia, who is leaving or has left the administration.

Senior adviser, David Axelrod, plans to return to Chicago after the midterms to start working on the president's reelection campaign.

The president's economic team also pretty much history. Larry Summers, the head of the National Economic Council, going back to Harvard. Peter Orszag, the budget director; Christina Romer, head of the Council of Economic Advisers, they both left.

Over at the Defense Department, Secretary Robert Gates, who also served under George Bush, suggesting that he plans to step down some time before President Obama's first term over.

Of course, working for any administration a very tough job -- the hours long, the pressure intense. And it's not unusual to see a lot of turnover in these positions. In President Obama's case, his approval numbers are sinking and his party faces an uphill battle in the midterm elections. But he now has a chance to bring in some new blood and maybe turn things around a little.

The replacement selections could be critical, depending on who he picks. President Obama might be able to deflect criticism that his administration is insular and out of touch -- or not.

Here's the question -- how important are the people around the president?

Go to and post a comment on my blog.

BLITZER: The answer is they are very, very, very important. All right, Jack.

Thanks very much.

By the end of the day, thousands of Americans around the country will be out of work. That's because a federal program funding those jobs expires and Congress did not extend it.

Let's bring in CNN's Mary Snow.

She's got the details for us -- all right, Mary, what's going on?

MARY SNOW, CNN CORRESPONDENT: Yes, a lot of hopes were dashed, Wolf, about this program. It's a program that was designed to help low income Americans find work. It was paid for by stimulus money and that money only lasted until today.


SNOW (voice-over): For 57-year-old Greg Wilkerson, working at this non-profit organization in Philadelphia has meant the difference from living in a shelter versus an apartment. After struggling to find work, he was hired in May, at $13 an hour, to do outreach work and help steer the unemployed to services they need. He tells us it's a job he desperately needed.

GREG WILKERSON, LOSING JOB: I'm a single parent. And, you know, it helps me take care of my son and pay my bills. We have a roof over our head right now. And that was something, you know, we had a problem with before -- a stable, a stable living environment for my son.

SNOW: But now Wilkerson is among thousands out of work because the stimulus money used to subsidize those jobs has expired. About $1 billion was used under an emergency fund for the temporary assistance to needy families. The Center on Budget and Policy Priorities, a group that advocates for low and middle income families, estimates that nearly 250,000 jobs were provided across the country in both the public and private sector, with programs in 11 states ending now.

Illinois an exception.

GOV. PAT QUINN (D), ILLINOIS: I don't wouldn't see 26,000 people lose their jobs.

SNOW: Illinois' governor has temporarily extended the program with the state's own funds until Congress acts. But that's a big if. An effort by Senate Democrats to extend the program for three months was blocked. Republican opponents have been resisting more spending, saying that it would add to the ballooning deficit.

But Wilkerson is having a hard time reckoning with billions in bailout money.

WILKERSON: I wish they would think about, oh, we don't have the money to save large corporations. We don't have, say, money to -- for the auto industry.

SNOW: As Wilkerson now looks for work, it comes 14 months into a recovery. Economists say the economy isn't as strong as it should be and the intent of short-term stimulus programs was to prevent people from being unemployed for too long.

DIANE SWONK, MESIROW FINANCIAL: The hope was that if you could keep them reemployed on a short-term basis, they wouldn't lose as many of the soft skills they need in the labor force to get reemployed later on, as the economy picked up. The problem is, there aren't those jobs there now to replace the ones that we're losing.

SNOW: As Wilkerson faces getting his last paycheck, he's struggling to hold onto the stable life of his son he now cherishes.

WILKERSON: That's what I'm saying -- will we regress now?

You know what I mean, telling my son that the probability of a shelter is not too far away. And this is a real life situation.


SNOW: It's very heartbreaking. Greg Wilkerson told me he's applied for more than a dozen jobs. Now, in the State of Pennsylvania, where he lives, it's estimated this program created about 12,000 jobs. This also included summer jobs. This is just one of many states -- Wolf.

BLITZER: It's a heartbreaking story, indeed. And we wish him good luck.

Thanks, Mary, for bringing us that report.

Some may consider them a political odd couple of sorts. Ahead, we're going to tell you why GOP lightning rod Sarah Palin is now teaming up with her party's chairman Michael Steele.

Plus, he has a shot at being the next president of the United States, Republican Senator John Thune isn't shying away from holding his own party accountable.


SEN. JOHN THUNE (R), SOUTH DAKOTA: I mean, there's plenty of blame to go around. Republicans obviously contributed to where we are.



BLITZER: Fredricka Whitfield is monitoring other top stories in THE SITUATION ROOM right now.

Hi, Fred. What's going on?

FREDRICKA WHITFIELD, CNN CORRESPONDENT: Hello to you, Wolf. Hello, everyone.

Well, U.S. military officials say Pakistan has closed one NATO supply route into Afghanistan following the killing of three Pakistani soldiers. Pakistan says the troops were killed when three NATO helicopters crossed from Afghanistan into its air space and attacked a military post. NATO says its forces thought they were firing on insurgents. The U.S. embassy is talking with Pakistan to now resolve this situation.

And a small glimmer of hope for the ailing economy. The Commerce Department reports that the country's gross domestic product which measures economic activity grew at an annual rate of 1.7 percent during the second quarter. That's slightly better than economists expect it and the report shows consumer and business spending being up, but analysts caution that the pace of growth is still quite slow.

And former Alaska Governor Sarah Palin is teaming up with GOP Chairman Michael Steele to help raise money for the party. The 2008 vice presidential candidate who has recently been at odds with some Republicans will join Steele for fundraising rallies next month. The move is partially viewed as an effort to mend fences. The price tag for a private meeting with Palin? As much as $30,400.

And screen legend Tony Curtis has died. The Oscar-nominated actor starred in more than 150 movies, including hits "The Defiant Ones," "Some Like It Hot," and "Spartacus." Curtis was married six times, most notably to film star Janet Leigh. His daughter, actress Jamie Lee Curtis, has issued this statement saying, quote, "My father leaves behind a legacy of great performances. " Tony Curtis was 85 -- Wolf.

BLITZER: He was really, really something. All of us grew up watching him in the movies.

WHITFIELD: Yes, what an incredible body of work.

BLITZER: I know. It's amazing. Al right, well our condolences to his family. Thanks, Fred. Thanks very much.

Sort of like tax cuts 101. Does the president's economic adviser have his facts straight, though? James Carville and Bill Bennett, they are both here, they're standing by live for our "Strategy Session."

And Republican Senator John Thune tells me what he'd do if he runs for president and wins.


THUNE: I think that all areas of the budget have to be scrubbed. Clearly the entitlement programs are going to have to be reformed.




Happening now, a political confrontation explodes in New York pitting a Republican gubernatorial hopeful against a reporter. We will have the fallout.

Plus, he helped bring down one president. Just ahead, I will ask the legendary journalist Bob Woodward what President Obama is doing right and wrong.

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

Stand by for my interview with one of the stars of the Republican Party, the South Dakota Senator John Thune. Check out our SIT ROOM guest page to see what makes him so interesting right now.

Thune could be a top contender for president in 2012. He won office back in 2004 by defeating a major political heavyweight player, Tom Daschle, who was then the democratic leader of the Senate. Right now, Thune is the number four Senate Republican. He's running for a second term in the Senate without any democratic opposition.

Thune bills himself as a pro-business and anti-tax and anti- abortion leader. Like the current president, he is a rabid basketball fan. And get this, he ranked in the top five of "Huffington Post" list of sexiest U.S. senators.

(BEGIN VIDEOTAPE) BLITZER: And we're here with John Thune, the Republican senator from South Dakota.

Senator, thanks very much for coming in.

SEN. JOHN THUNE (R), SOUTH DAKOTA: Nice to be with you, Wolf.

BLITZER: Are you seriously thinking about running for president in 2012?

THUNE: Right now I'm seriously trying to elect Republicans to the House and the Senate in the midterms. Like a lot of people, I'm interested in public service and want to do as much as I can to change the direction of this country and will give some consideration to that after midterm elections.

BLITZER: Because I know you've discussed it with your wife.

THUNE: Well, this is true. Anytime you talk about something of this consequence, that's -- she's one of my closest advisers, obviously, and somebody I would consult on everything.

And we've had a good amount of encouragement from people in our state, as well as others around the country who are looking for someone to step up, and I think there are a lot of folks who are very interested in changing the direction of the country and that's what I hope to do. And whether that means me being out there or others, we're certainly going to be involved in that.

BLITZER: Well, walk me through a little bit, your decision making process. What goes into a decision like this to run for the Republican presidential nomination?

THUNE: I think that -- and, of course, I've not been through this process before, but just in terms of -- as people have talked to me, encourage me, my colleagues, as I said, people in my state, people elsewhere around the country, you want to know, obviously, that there are people out there who think that you are up to doing the job. And then, obviously, you have to ask yourself, do you really want the job?

And clearly, there's a tremendous amount of work that goes in, not only to run in the campaign, but if you were successful, this is going to be a very hard job. There are going to be hard decisions ahead in that job. And so you have to -- that's the first question you have to answer.

And then, secondly, I think you have to make sure that your family is on board with that if that was something you were going to entertain doing.

And then I think you have to get down on a very practical level and say, can I raise the money. Is there support out there? Do I see a pathway to get there?

And those are all questions I think any candidate has to content with or deal with if they're thinking about particular race.

BLITZER: And presumably you'd make a decision shortly after the midterms early next year?

THUNE: I think early next year probably would be more likely. I think there will be a lot of -- there will be a huge vacuum after the midterms and people will be rushing to fill it and you'll have a lot of candidates.

And there could be a very big field. Like I said, I have not made any decisions about this. But my guess is that there will be a lot of folks who will be snapping up personnel in Iowa and New Hampshire and other places like that and taking very assertive steps in that direction.

But I think that, you know, sometime next year is plenty early. I think these campaigns get very long. I think people get very weary of them, and I think it's probably an advantage not to launch too early.

BLITZER: Would it be a factor if Sarah Palin announces? In other words, would you want to be challenging her?

THUNE: I think that if she were to get into the race, it would clearly change the equation for a lot of people. I mean, she is --

BLITZER: Explain how that would happen.

THUNE: I think that she is someone who has a tremendous following out there. And particularly in some of the early states, this is not a campaign where you start out and you run nationally right away. It's all sequence and you have to get through certain states, and she has a big following.

But if I were to decide to do it, I would go all out. I'm not sure that at that point you can change or make a decision predicted upon who else may be in the field. But she clearly is a formidable individual and someone who, if she got into the race, would have a tremendous presence in it.

BLITZER: And would discourage, do you think, other Republicans from getting into the race?

THUNE: I think it -- I'm not sure that it would discourage. It might discourage some because there's so much space out there, and I think people fill different space sort of on the political continuum in Republican Party politics.

And so, it could be -- she clearly would have an impact. Whether or not she would discourage others from running, I don't know.

BLITZER: What you're biggest problem with President Obama right now?

THUNE: Well I think the problem with President Obama -- and I like him personally, I came into the Senate with him -- is his agenda. If you look at what's happened in the last 18 months, government has expanded at a greater rate, a more dramatic rate, literally than any time since the 1960s. And I think he views government as really being the solution and being the answer.

BLITZER: You know the national debt doubled during the eight years of the Bush administration.

THUNE: Well, I think Republicans can be -- I mean, there's plenty of blame to go around. Republicans, obviously, contributed to where we are. But the President can't divorce himself from what he's done since he's been in office.

And in the last 18 months, if you look at the massive health care plan, the stimulus bill, the cap and trade bill, a lot of policies have been put in place, or at least proposed that I think are very detrimental to job growth and economic growth. Right now, that's the thing I think most Americans are most concerned about.

BLITZER: You say you knew him in the Senate. Did you know him well?

THUNE: We worked together on some issues. I didn't know him well, he wasn't there that long. But we did come in together and like I said, I think he's a -- personally, I like him, but I think he has a very different view about how to solve problems and how to get the economy back on track than I do.

So there's a clear contrast, I think, in terms of where he wants to lead the nation and where many Republicans, who may decide to challenge him in 2012, would lead the nation.

BLITZER: Do you believe he's a Christian?

THUNE: Sure. Yes, I believe that.

BLITZER: Do you believe that he was born in the United States?


BLITZER: Why do so many Republicans according to all of these polls not believe, A, that he's a Christian, or that he was born in Hawaii?

THUNE: Well that's a really good question and I'm not sure I know the answer to it. But I think most people that I encounter accept that.

To me, that's not the issue. The issue is his policies, what he's doing to create jobs, grow the economy and deal with what I think is a major issue in the minds of most Americans. And that is the growth of government and the size of government.

BLITZER: I want to get to that in a moment. Do you think Republican leaders have a responsibility to be more assertive and dissuading Republicans from believing he is not a Christian? He wasn't born in the United States?

THUNE: I think one when the issue comes up, my answer certainly is, you know, look, those issues -- those issues are settled. Let's talk about his agenda and let's talk about why it is important that we set a different direction for the country. That's what we ought to be focused on.

BLITZER: All right. Stand by. We are going to find out if Senator Thune thinks President Obama is doing anything right. More of the interview coming up. Inside Rahm Emanuel's exit as chief of staff at the White House; we'll have the latest on his possible replacement and how the White House will change.


BLITZER: Members of the U.S. Senate are leaving Washington D.C. to hit the campaign trail back home but there's a taxing issue hanging over them. More now of my interview with Republican senator and possible 2012 presidential hopeful John Thune.


BLITZER: Let's focus on tax cuts for a moment. You adjourned. You didn't extend continued the Bush tax cuts for the middle class before leaving for this recess. The president says you are holding that hostage to keeping these tax rates for those making more than $250,000 a year, the rich, the top 2 or 3 percent of earners in the United States. Does he have a point?

THUNE: I think that if they had wanted to do that they could have. The house can pass it. The house has a rules committee. They could have brought a bill to the floor that shielded people under $250,000 from tax increases, passed it through the house, sent it to the Senate. We would have had a debate about it at the Senate because many of us believe we ought to extend the tax relief for all Americans, not just those at that income tax level because you impact so much of the small business income at the higher two top marginal income tax rates. But I can't -- I don't think you can blame Republicans for that. The Democrats control Congress. They have huge majorities in both the House and Senate. If they wanted to do that they could have. I think the reason they didn't Wolf is because they are very divided on this issue.

BLITZER: If - it would have been a vote. Let's continue the Bush era tax cuts for those making under $250,000 a year, which I suspect most people of South Dakota and will leave aside the 2 or 3 percent the richer Americans. How would you have voted on that?

THUNE: I think in the Senate, the House is very different, obviously. They are going to have a structured approach. The Senate is very free flowing. We would have offered amendments to extend it for everybody. It is a hypothetical to suggest that we - you might have just had a vote on limiting the tax increases to those that are above that income threshold. I represent a lot of small businesses and even though you say 3 percent, that's still 750,000 small businesses across the country and it will impact a lot of small businesses in my state.

BLITZER: You are concerned about the national debt, the big budget deficit. What, if anything, are you ready to deal with social security, Medicare, defense spending?

THUNE: I think that all areas of the budget have to be scrubbed. Clearly the entitlement issues have to be reformed and that's an issue that's going to require I think some strong bipartisan cooperation and leadership. And the discretionary side of the budget, I propose going back to 2008 levels, indexing it for inflation. You save half a trillion dollars just by doing that. That's a small part of the budget. The big part of the budget now is the entitlement programs and that issue has to be addressed. I think defense budget, Secretary Gates said he wants to find $100 billion in savings and they're scrubbing that budget. There are things we can do better and more efficiently and the acquisition process that -- I think would need to be very strategic about how we spend military dollars and make sure --

BLITZER: Most federal spending goes to Medicare, social security, and the Pentagon. And national security. If you don't deal with those three areas, you are not going to save a lot of money.

THUNE: I think that if Republicans are given the reins of leadership in the House or Senate or both, we will have to govern in a way -- at least put forward solutions whether or not the president goes along with them or not, that deal with these long-term challenges.

BLITZER: What would you do differently than the Bush administration over eight years and six of which there were Republican majorities in the house and Senate? What would you do differently next time around?

THUNE: I think that -- clearly the spending issue was something that Republicans sort of lost their way on. I think we are going to have to make hard decisions and there are good examples of how that has been done. Chris Christine in New Jersey has made some hard choices. I think the people of his state support it because they know it is necessary. I think the people of the country now know if they didn't know before it is necessary because of the huge deficits.

BLITZER: Biggest change you would do would be -- you would be willing to cut spending more than President Bush and the Republican leadership did then.

THUNE: We have to. We have to join the debate on entitlement reform and hopefully we can get bipartisan cooperation on that because it will take that. These issues are to big now, consequences are too great. If we don't get things turned around we are at a tipping point in my view. I think we have about five years to correct some of these budget issues or this debt is just going to overwhelm us.

BLITZER: The tea party movement, are you with the tea party movement? Are you part of the tea party movement?

THUNE: I don't know what it means to be a part of it. I certainly agree with most of the things they are for. I think they bring great energy to our party and to our candidates. And I think that the things they want to see accomplished are things we agree upon. Yes, I agree with them on -- maybe not on every policy position but certainly most.

BLITZER: What, if anything, has President Obama done that you like? THUNE: I think the president has -- done things in a few areas. Some of the things he is trying do in education are really good. I think that, you know, calling for accountability and trying to Arne Duncan has done a nice job over there. I think in terms of some of the foreign policy issues, a lot of support from Republicans with respect to Afghanistan. There are a lot of areas where he has demonstrated weakness on foreign policy. But I think that the president - there are certainly areas where I agree with him. I just think if you look at it in the totality, the big issues facing the country today which are jobs and economy, spending and debt and some of these national security issues that we're headed in very different directions.

BLITZER: He is 49 and you are 49. He was a first term senator when he ran. You are a first term senator. You're up for re- election. You don't have an opponent right now. You might be running. There are a lot of similarities. Do you think you are ready to go on a one-on-one debate with the president of the United States?

THUNE: I think if I made a decision to do that and I haven't, I would be ready. Absolutely. I think that this is -- politics is a tough business. I describe it as a full contact sport. You have to be prepared to get in there and mix it up. I have been through a couple of hard-hitting bare-knuckles Senate campaigns so I'm not unaccustomed to that level of debate. If I decided to move forward with that I certainly would be prepared for it.

BLITZER: Senator, thanks for coming in.

THUNE: Nice to be with you, Wolf. Thank you.

BLITZER: Good luck with that decision.

THUNE: All right. Appreciate that. Thank you.


BLITZER: An Indian holy site at the center of a religious firestorm right now. Why the opposing faiths may soon have to share it.

Plus, was top White House adviser David Axelrod the target of a deadly attack in Washington, D.C.? There are details of a new report that are just coming in to THE SITUATION ROOM.


BLITZER: Fredricka Whitfield is monitoring some of the other top stories in THE SITUATION ROOM right now. Fred, what's going on?

FREDRICKA WHITFIELD, CNN CORRESPONDENT: Hello again Wolf. Hello, everyone. Well, an Indian court is ordering that a disputed holy site be divided between competing religious groups. The court ruled that Muslims, Hindus, and a local sect, will each get part of the land. In 1992, Hindu extremists destroyed a Muslim mosque on the grounds, triggering some of the worst sectarian violence in the country's history. Muslims say they will appeal the decision to the Supreme Court.

And opium production in Afghanistan has dropped significantly. A new U.N. report says a plant infection targeting poppy crops in the country's war torn southern region is the primary cause. As a result, the price of the drug is now on the rise. Opium is a major source of funding for the Taliban insurgency.

Former President Jimmy Carter has been released from the hospital after recovering from a gastric viral infection. Mr. Carter was admitted Tuesday after falling ill during his book tour in Cleveland. His office says that he will resume his schedule this week with a meeting in Washington. And the former president turns 86 by the way tomorrow. Happy birthday to him.

And a new reprieve of sorts for the fading space shuttle program. Congress just passed a bill authorizing NASA to launch an additional shuttle mission. President Obama is expected to sign the $19 billion bill. It would delay the shuttle program's retirement date four months to June of 2011. That's not expected to affect plans to lay off more than 9,000 NASA workers, including over 1,200 due to lose their jobs tomorrow. Wolf?

BLITZER: Four-month extension for the shuttle. All right. Fred, thanks very much.

Jack Cafferty is asking how important are the people around the president of the United States? Jack will be back in a moment.

And one of the president's top economic advisers is giving lessons on the Bush tax cuts. James Carville and Bill Bennett are both standing by live. They will grade his work.


BLITZER: Jack is back with the Cafferty file. Jack?

JACK CAFFERTY, CNN CORRESPONDENT: Question this hour is how important are the people around the president of the United States?

Elaine in Illinois says, "Pretty darned important if he's planning on making any correct decisions in the near future. If he keeps surrounding himself with the political hacks and economic geniuses that he chose to start with, he will be toast. Or lame duck for his remaining time."

Danny in Tennessee writes, "I think what we see here is the classic case of rats deserting a sinking ship. Who Obama replaces him with is really irrelevant at this point. The Democrats have had four years to change the course of America and all they succeeded in doing is driving the bus over the edge of a cliff. They can try to blame it on whoever they want. The fact is they controlled Congress the past four years. America is not willing to give them another four."

Eric writes, "You're always judged by the company you keep."

Ron in Minnesota says, "The people around the president are the filters that decide who the president sees, what the president sees, and when it is seen and for how long it is seen. If that doesn't explain the importance of these people, I don't know what does."

Beth writes, "They can make or break a president see, just ask Jimmy Carter. That bunch of idiots cost him a second term."

Annie in Atlanta writes, "The president's numbers are sinking in part because liberals like me are offended by people like Rahm Emanuel disparaging the president's base. And Summers and Geithner that may have had a hand in enriching their wall street buddies at our expense. The people surrounding the president have to be in touch with the mood of the country. That means us. Us poor slobs who are obviously good for nothing but eating cake and voting every couple of years."

Edwin writes, "It is really important. Remember the presidency is an institution, not a man. And having the proper team makes the difference."

Paul in Hawaii writes, "The S.S. Team Obama was struck by an iceberg named tea party. The rats are not sticking around waiting for the lifeboats to be lowered."

If you want to read more on this, you will find it on my blog,

BLITZER: We are getting more information on Rahm Emanuel and his successor. We will have that at the top of the hour. Jack, thanks very much.

We are investigating possible health care cuts from McDonald's employees. You can certainly get a burger and fries but will you get answers? And I'll talk to veteran journalist Bob Woodward about Obama's wars and why he thinks that the president's promise of change has fallen flat.


BLITZER: Let's get right to the strategy session and joining us are our two CNN political contributors, Democratic strategist James Carville and national talk show host Bill Bennett. We had a lengthy interview with John Thune. Let me get both of your reaction and I have a specific question, James, for you. Are Americans ready for another first-term senator as president?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: Well, I don't -- I mean, that guy makes a case. I don't think that is going to be like a real problem. I mean, and if he can get the Republican nomination, look, but I thought it was a very good interview and I was kind of vexed as to -- he had to know that you were going to ask him about that, and he sort of, really, I don't know if he didn't deny the sense that he is going to run for president, but I'm surprised he did it before election day. That's all. That's my only thing but it was a great interview and I clearly enjoyed it.

BLITZER: He made it clear that he is seriously thinking about running for president, and lot of the Republicans think that he would be an attractive candidate.

BILL BENNETT, NATIONAL TALK SHOW HOST: Well, I agree with James, it was a good interview, Wolf, very good interview. It struck me, he is more voluble than I thought last time and more forthcoming and says more. I think he has been practicing more. He is pretty impressive. Look, with Barack Obama, you can say throw out the rulebook. You know, you needed a lot more experience, and one first-term senator, and maybe that rulebook is gone, but maybe after the experience of Barack Obama, you want to reinstate the original rule which is that you should have more experience before you get the presidency, but he is impressive. Look, anybody can run from any position, and he has as good a shot as anybody. And again, good job.

BLITZER: What jumped out at me, James, and I want Bill to weigh in as well, he said if Sarah Palin runs, that could be a game-changer for a lot of other Republican potential candidates because she is so formidable, and strong within the Republican Party.

CARVILLE: Well, he is calculating, and understand that he is from South Dakota in that, you know, I think that he is calculating that he can do quite well in Iowa. I'm surprised that he was talking politics as much as he did. He was not afraid to delve into the arcane political strategy of the she runs or maybe other people would not run. I just was, I was, again, I thought it was a good interview, but I was surprised that he would be talking about this, and usually tradition dictates, gee, I have not thought about that and I will deal with that after the election, but he was forthcoming and you had to -- I would be shocked if he didn't run.

BLITZER: Well, I asked him the questions and he answered the questions, and he didn't duck them.



BENNETT: Yeah, no, that is right. I think that -- I disagree a little bit. I think that -- I don't think that Sarah Palin entering scares anybody or runs anybody out. You have to distinguish between Sarah Palin as celebrity as somebody who comes and charges things up, and Sarah Palin as, you know, the likely candidate of the Republican party. I just don't think she is. If you look at the polls, you will see nationally for Republicans, you know, she is not at the top of the list. She is very popular, and she certainly can draw a crowd, but I don't think that if she got in she would run other people off and not the Pawlentys or the Romneys or the governors, I don't think.

BLITZER: Well -- James, a quick point? I want to make mine.

CARVILLE: Well, the Republicans want to go out to raise money and not run for president to kind of go out to kind of be a sort of secondary figure, but I don't think that Sarah Palin views herself as a secondary figure, and I don't think that she wants to go do that, but we will wait and see. I hope she runs.

BENNETT: There is great percentage, James, in her not being perceived as being a second-level figure, and you understand that, too, right.

CARVILLE: I think that she wants to be, and run with the big dogs here, but we will see.

BENNETT: We will see.

BLITZER: And as I said before, she would do very well in Iowa and certainly well in South Carolina and maybe not as well in New Hampshire, but we will see with a lot of time to talk about that. All right. Let me play a clip. Austan Goolsbee is the new chairman of the president's counsel of economic advisers. He's got a video he put out on the White House web site. I want to play a little clip of it. Listen to this.

AUSTAN GOOLSBEE, CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Obama would preserve a couple thousand dollars a year tax cuts for virtually all Americans and even for people making a lot, they would get to keep the tax cut on the first $250,000 of their income. Under the Republican plan, however, people making more than $1 million a year, you are going to be getting a tax cut of more than $100,000.

BLITZER: All right. What do you say to -- he used to be a professor of economics at the University of Chicago, so he is good with that white chalkboard and all of that. Do millionaires deserve a $100,000 tax cut, if you extend the Bush era tax levels, Bill?

BENNETT: Well, I think they do if you look at all of the facts. There needs to be another chart. If you take more of somebody's taxes, obviously, you are getting more to come in. However if you take more of somebody's taxes what is happening to the money that could be, or you could do other things with that money. If you want to give tax breaks to people under $250,000 that is fine, but why not give tax breaks to people who create jobs and hire people? Why haven't the Democrats brought this bill if they feel so strongly about this, why haven't they brought this bill? One of the reasons is two or three dozen Democrats want to extend all of the tax cuts.

BLITZER: Go ahead and respond, James.

CARVILLE: Well, first of all the one thing about the Bush tax cuts, they manifestly did not work. Let's agree that the rising tide is supposed to live all incomes at the height of the Bush recovery.

BENNETT: They worked.

CARVILLE: They did not work.

BENNETT: They worked six years.

CARVILLE: And across the board, we can all stipulate --

BENNETT: Six years growth. No, we can't. Six years growth.

CARVILLE: I am sorry, and I am speaking while you are interrupting me, Secretary. They did not work. Incomes went down from 2002 to 2007, and when Bill Clinton came in with the real economic plan, we had exploding incomes in this country, and so we can all stipulate if people want the tax cut, just because they want the money and put a $70 billion on the deficit. So, we know it works, a Clinton-type plan, and we know what doesn't work a Bush plan.

BLITZER: All right.

CARVILLE: And that is what the Republicans want to go back to.

BLITZER: Bill, go ahead and respond.

BENNETT: Well, we can meet on capital reduction gains and other things that Clinton did, but if you look at the history of tax cuts, and increases, you will see that 90 percent of the time when you decrease taxes even on the high earners, you increase the revenue to the federal government and that is about 90 percent true historically.

CARVILLE: No, the income tax revenue did not. Under Reagan, it didn't. If you raise more payroll taxes, you will get more money. But if you have a expanding tax base, the people have gone through this, and if you cut, it is $3.7 trillion these Bush tax cuts are going to cost, and the biggest contributor to the deficit are the wars and the tax cuts, and get rid of the tax cuts and get out the wars and we will get rid of the whole thing.

BLITZER: Bill hurry up and respond because we've got to go.

BENNETT: Why do three dozen Democrats oppose the ending of the tax cuts, and why did Peter Orszag write a piece saying keep the tax cuts, doesn't he know what you know?


CARVILLE: Well, for two years, be honest, he said he will get rid of them all.

BENNETT: Two years will do, that would be fine.

BLITZER: Bill Bennett, James Carville, to be continued, guys. Thanks very, very much.