Return to Transcripts main page


President Obama: "I Took A Shellacking;" CNN Projects Colorado Senate Race; Palin's Scorecard; The Fed's $900 Billion Stimulus; Former NYC Mayor Rudy Giuliani Interview

Aired November 3, 2010 - 17:00   ET


WOLF BLITZER, HOST: Happening now, President Obama gets what he calls "a shellacking" in the sweeping Republican mid-term victories. The president admits he hasn't delivered on the historic change that he promised and says -- and I'm quoting him now, "It feels bad."

Plus, the drama isn't over. CNN has just projected that the Democratic incumbent, Michael Bennet, has defeated his Republican challenger, the Tea Party favorite, Ken Buck, in a bitter Colorado Senate battle. More critical races have yet to be decided. Stand by.

And if you thought election season was ending, think again. 2012 is right around the corner and the presidential campaign stretch is just beginning.

I'm Wolf Blitzer.


A steadfast, but somewhat humble President Obama is taking responsibility for the brutal lashing voters gave his party at the polls. The president has extended an olive branch to the newly crowned Republican leadership in the House, but cautions that he doesn't man to rehash the same political battles of the last two years.

Our White House correspondent, Dan Lothian, is standing by. He's got more.

We saw the president come into the East Room of the White House for this news conference. He seemed sad. He seemed almost a bit depressed. But he said it's time for compromise and he's ready.


And I heard that message repeated on a conference call that I just got off of with Organizing for America. The president speaking to supporters and volunteers, saying that it was a tough night, that he did not want to sugar coat the results. And he said what it showed is that Americans are frustrated, that they still want change, but that he had to figure out how to give them the change that they want. The president, at that press conference today, which lasted for about an hour, really reflecting back over the last two years and saying that he felt that there are a lot of things that perhaps he could have done differently.

But perhaps the most memorable part of the president's press conference today is when he gave a very brutally honest assessment of what happened last night.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm not recommending to every future president that they take a shellacking like they -- like I did last night. You know, I'm sure there are easier ways to learn these lessons. But I do think that, you know, this is a growth process and -- and an evolution. And the relationship that I've had with the American people is one that built slowly, peaked at this incredible high and then, during the course of the last two years, as we've, together, gone through some very difficult times, has gotten rockier and tougher.


LOTHIAN: Now what the president would not accept is that the election last night was a repudiation of his entire agenda, saying that he still believes that it was about the economy, that people are frustrated at the pace of the economic recovery.

He pointed out that had unemployment been at 5 percent instead of 9.6 percent, then Americans would feel much differently than they feel right now.

The bottom line, while the president is talking about moving forward and working with Republicans, he didn't appear to be on the verge of making any big changes -- Wolf.

BLITZER: He did suggest, though, that he's ready for some sort of negotiations -- some sort of compromise on the Bush tax cuts of 2001 and 2003, which expire at the end of this year if nothing is done. He seemed ready to see if something could be worked out.

LOTHIAN: He did, Wolf. I think compromise is the big word that we're going to hear a lot of now over the coming months, the president saying that working with Republicans, it won't necessarily be easy, because Democrats and Republicans have two different views.

But he did say on that issue that he was willing to sit down with the leadership on both sides of the aisle to come up with some ideas, to figure out the best way to go forward.

And on health care reform, even, the president still believing that it was the right thing to do, but also open to any ideas that Republicans might have to make it better.

BLITZER: A humbled President Obama, I think we can fairly say.

Thanks very much, Dan Lothian, over at the White House.

Meanwhile, in a number of states, the election isn't over yet. More key Senate races have yet to be decided. In Washington State, for example, it's a cliffhanger between the Democratic incumbent, Senator Patty Murray, and her Republican challenger, Dino Rossi.

In Alaska, a dramatic three-way battle among the Republican incumbent senator and write-in candidate, Lisa Murkowski. The Tea Party favorite, Joe Miller, and the Democrat, Scott McAdams. We projected McAdams will come in third.

In Colorado, though, only a few moments ago, CNN projected that the Democratic incumbent senator -- the appointed senator, Michael Bennet, has defeated his Republican challenger and Tea Party favorite, Ken Buck.

Let's go straight to CNN's Mary Snow.

She's in Denver, Colorado and she's got the details.

We heard Michael Bennet come out even before the formal projections declaring victory.

MARY SNOW, CNN CORRESPONDENT: Yes. Wolf, you know, last night, it ended on a cliff hanger. This morning, "The Denver Post" called the race. And the campaign for Michael Bennet said that after that was reported, they took a look at the map and decided to come out and declare victory, even though Ken Buck has still not conceded defeat in this race.

It was a bitter race, to the very end. And Senator Michael Bennet spoke here earlier, saying in terms of what to take away from this victory, he says it would be a mistake to say that people in Colorado are deeply divided.

Here's a little bit of what he had to say.


SEN. MICHAEL BENNET (D), COLORADO: What I've heard over and over is that the aspirations we all have for our families and our communities are so much more shared and so much more powerful than the trivial issues and false choices that the politicians and TV talking heads try to divide us with. People don't want to eliminate government and they don't want big government. They want an efficient, effective government that works hard for them or gets out of the way.


SNOW: But his fellow Democratic senator, Mark Udall, who is also here, summed it up this way in terms of the takeaway. One, voters want to see the economy back on track. And two, the message was that they want to see lawmakers work together. Now, Republican Ken Buck, who was favored by the Tea Party, still has not conceded defeat. And as far as we know, up until now, the candidates have not spoken to one another.

Earlier today, the campaign released a statement saying, we're still looking where returns need to be reported, as well as provisional ballots, before making any decisions. An announcement is expected later today. But, you know, Republicans were not eager to talk, because they were very optimistic that they were going to win this race. And Ken Buck had even said that he felt that he had a comfortable lead going to this race.

So many outside groups had contributed money to this race that the Sunlight Foundation had said it ranked number one in the nation in terms of the money spent by outside groups on the Colorado Senate race. One of them was American Crossroads. That's the third party group advised by Karl Rove.

So, really, a number of groups seeing defeat today in Colorado -- Wolf.

BLITZER: A big win for the Democrats in Colorado.

All right, Mary. Thanks very much.

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

What's on your mind -- Jack?

JACK CAFFERTY, CNN CONTRIBUTOR: The dust settling from the historic Republican win from yesterday, but it's not going to take a minute, you know, for attention to begin to turn toward 2012.

The end of the mid-terms always marks the unofficial start to the presidential race. And by the looks of some Republicans, well, they haven't waited for the end of the mid-terms. A lot of the potential GOP contenders already laying the groundwork, visiting key early voting states, places like Iowa and New Hampshire, courting donors, building up their fundraising operations and testing their message.

Some of the hopefuls include a lot of familiar names -- former Massachusetts governor, Mitt Romney, who ran last time; Minnesota Governor Tim Pawlenty; former Arkansas governor and Baptist minister, Mike Huckabee; former House Speaker Newt Gingrich; Louisiana Governor Bobby Jindal; and, of course, the former Alaska governor, Sarah Palin, who recently proclaimed, quote, "We can see 2012 from our house," unquote.

What about President Obama?

After his party took a beating -- a real beating yesterday -- the president has two years now to fix what went wrong and secure a second term, assuming he wants one. The biggest challenges for the president will be fixing the economy and rebuilding the coalition of voters that put him in the White House in 2008. The president carried Independents way back when, but they have since abandoned the Democrats big-time.

If the economy doesn't turn around, if the jobs don't come back, it's going to be a real uphill battle for his reelection. A recent Associated Press/Knowledge Networks poll suggests 47 percent of Democrats say President Obama should face a primary challenge for the nomination. Where's Hillary Clinton?

Kuala Lumpur, I think.

In the meantime, enjoy what will surely be a very short break from the posturing and the speeches, the polls and the debates, the fundraising, the mudslinging and on and on.

Here's the question -- how ready are you for the start of the 2012 presidential campaign?

You know where to go so go there.

BLITZER: You mean, like New Hampshire and Iowa and South Carolina?

CAFFERTY: Yes, wherever.

BLITZER: We'll be going there, Jack.

CAFFERTY: You'll be going there.

BLITZER: Pretty soon.

CAFFERTY: I'm too old to move.

BLITZER: You're not too old.

All right. Stand by, Jack.

Democrats got a thumbs down from voters when it comes to the economy. I'll ask a top Republican to grade the president and his party on the economy, the war on terror and a lot more. The former New York City mayor, Rudy Giuliani, he's here in THE SITUATION ROOM. We'll talk with him live.

And the Tea Party favorite, Christine O'Donnell, is blaming, at least in part, her defeat in the Delaware Senate race on some fellow Republicans, which she calls their "cannibalism." That's a direct quote.

And even if the White House doesn't push through another huge economic stimulus package, the Fed may be filling the void to the tune of hundreds of billions of dollars.


BLITZER: The votes are being counted in several races. And believe it or not, the campaign for 2012 is already getting underway, with likely president candidates stumping in New Hampshire, Iowa, South Carolina. They're only just getting started. Get ready for what's going to be a wild Republican presidential season.

Joining us now to discuss this and more, our senior political analysts, David Gergen and Gloria Borger. Guys, thanks very much -- David, if you were a Republican thinking of running in 2012 for the Republican nomination, what's the most important lesson you'd draw from last night?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: You'd better get a lot of sleep and a lot of exercise because this is --

BLITZER: That's always a good lesson.

GERGEN: -- this is going to be a hard, long campaign. It's already started. But you've got to be able, Wolf, now to bridge the gap between factions in the Republican Party. It's especially important that you be able to listen to, talk and understand and be empathic with a Tea Partier, even if you're not one.

But you also are going to have to earn the respect in the rest of the party.

BLITZER: Because if you don't have that Tea Party support, on the Republican side, you're not going to do well.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: No. You need the Tea Party support if you're going to get nominated. That's the -- you know, that's the problem. So you get the Tea Party support and their Republican primary voters -- very, very conservative, fiscally conservative.

And then, on the other hand, if you're going to -- if you've got to appeal in a general election, you can't just have the Tea Parties supporting you. So you have to be able to talk about government, I think, in a different way, not just say government is bad, government has to get smaller, government has to get smarter and government has to be more responsive.

BLITZER: Sarah -- Sarah Palin, the former governor of Alaska, the vice presidential nominee, she was very active in this campaign season. A lot of the pundits think she was one of the winners in this campaign season --


BLITZER: We're going to put up on the screen some of those she endorsed who won, some of those she endorsed and campaigned for who lost.

But do you believe, A, she was a winner and, B, she will run?

GERGEN: I believe, A, she was a winner. She's come out as the de facto queen, if you would, of the Tea Party, a powerful force. And if you look at the endorsements, I think they'll prove that in the gubernatorial races in particular, she did very well. She split.


BLITZER: Her candidates won six Senate races, sixteen House races, six governor's races, candidates she endorsed and campaigned for. She lost four Senate races, eight House races and two governor's races.

GERGEN: And if you look overall, that's -- you know, President Obama batted about 500, she batted a little better.

BORGER: What's really important about what she did is take a look at how successful she was in the primaries, because she ran against -- she had candidates who were up against establishment and established Republicans in lots of states and her candidates took -- some of whom went on to lose, I might add -- but her candidates took out the establishment.

So she has now set herself up as the person who's going to be watching their congressional Republicans, see how they behave, see how they act. And if she doesn't like it, she's going to be very vocal about it and speak for one branch of the party. And any candidate, any candidate who runs for president in the Republican Party has to be very well aware of that.

GERGEN: Wolf, I don't think she's going to run. I still don't think she's think she's going to run.

BORGER: You don't?

GERGEN: I think she's making way too much money. I think she's having a lot of fun. And she could be the queenmaker or kingmaker. But I think Romney and Huckabee both came out pretty well out of this process. But the person I'm keeping my eye on, and I would have never said this two years ago, but someone who could unite the factions of the party, Jeb Bush.

BLITZER: A lot of people are looking at Jeb Bush right now, the former governor of Florida. You know what? There's already been two Bushes in the White House.

BORGER: You can just hear Obama saying, do you want another Bush? Although, as you know, David, for years and years, people have said Jeb Bush is the person in that family who really should have run for president. I think it's a little early on that, but I do think state of Florida, right?

GERGEN: And he -- when Marco Rubio --

BORGER: Hispanic voters.

GERGEN: -- won that Senate vote last night, when he went up on stage, who was the first person to greet him?

BLITZER: Jeb Bush.

GERGEN: Jeb Bush. He campaigned --

BLITZER: He campaigned aggressively for him and Marco Rubio won a major victory.

BORGER: I think he'll change his name.

BLITZER: I would argue that Marco Rubio has emerged as one of the biggest, if not the biggest winner yesterday in Florida.

BORGER: Could be.

GERGEN: We'll be seeing and hearing a lot more of him now than Christine O'Donnell.

BORGER: He's going to be -- he's going to be -- you know, it's interesting. He may be the Hillary Clinton of this class, the person that everyone kind of follows and says how is he behaving. And I think he's going -- I was told somebody who works before him, he's going to get to Congress and take a page from Hillary Clinton's playbook, which is act like the junior senator, do his work, get -- be a workhorse.

BLITZER: He gave a really excellent acceptance speech last night.

GERGEN: Sure did.

BORGER: He did. He did.

BLITZER: All right, guys, thanks very much.

Ballistic test results are now in from a shooting in a Coast Guard building in Virginia right outside of Washington, D.C. We're going to tell you what they reveal. Stand by, other news coming up.

And up to $900 billion is about to get pumped into the U.S. economy. We're going to tell you who's doing it and why.

Stick around, you're in THE SITUATION ROOM.


BLITZER: President Obama says voters who rejected Democrats in this election may have seen the stimulus package as an overreach, his word, by the party. But now there's word that the Federal Reserve is pulling the trigger in his own version of a huge economic stimulus package that will pump, get this, up to $900 billion into the U.S. economy.

Let's bring in our chief correspondent Ali Velshi who's looking at this who is looking at this.

Another stimulus package? This one does not need Congressional approval. The Federal Reserve can do whatever it wants.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: The big secret is the Federal Reserve has already pumped trillions of dollars in to the economy without it going through debates or anything like that.

This is $600 billion and then maybe another $300 billion. It's going to take several months and let me explain to you how it happens. It'll be a regular amount of money that the Federal Reserve will take and give to banks.

Now how does it do that? Banks have bonds, government bonds. So the banks will give those bonds back to the Federal Reserve. In exchange, they will get money. That money will then be used to be lent to other banks and to consumers and to businesses.

The idea, right now, credit is very cheap in America, but it is not readily available. Banks are only lending to businesses and consumers with very strong credit. If there's more money in the system, there's a feeling that banks will lend more of that money.

And as you know, Wolf, one of the criticisms we've heard from small businesses is that they're not expanding because they have great difficulty in getting access to credit. So there's some hope that this availability of more money through the system from the Fed through the banks to businesses and consumers will spur some growth.

The other side of this equation, of course, Wolf, is growth won't start if there isn't demand and that's the jobs problem that we've got. But this is the Fed's idea, pump a lot of money in the system with regularity until the fall of 2011, so a one-year program, and hopefully get that out there.

The criticism, of course, is where does this money come from. The Federal Reserve can print it, you're creating more money, and that generally has the effect of devaluing money. That concerns people because does that mean inflation is coming later. But that's the plan right now. It's called QE-2, you might hear it referred to as that, quantitative easing, the second installment.

BLITZER: The theory is it will strengthen the sluggish economy and potentially create some jobs.

VELSHI: Potentially. If businesses decide that because they can get a loan, they'll expand, they'll buy the store next door, they'll build a new factory, then they hire more people. Those people have a salary, they now create demand.

It's an interesting theory. All sorts of ideas are out the window after the financial crisis that we've had, but this is the one that the Fed is going to try.

BLITZER: Ali Velshi, appreciate it very much. You did an excellent job with those polls, those virtual polls.

VELSHI: That was some fun technology. Excellent working with you.

BLITZER: The exit polls, thanks very much, Ali.

Ali Velshi is the best.

He ran for president of the United States in 2008, now the former New York City mayor, America's mayor, Rudy Giuliani, he's here in THE SITUATION ROOM. We'll talk about what happened yesterday. He'll give us some advice to share with Republicans heading to Capitol Hill. And many are Tea Party candidates who ran against Washington. Will they be able to work with the GOP establishment?

Stick around, you're in THE SITUATION ROOM.


BLITZER: The Republicans are certainly celebrating an historic election win. They picked up at least, at least 60 seats, a net gain of at least 60 seats in the House of Representatives last night. That's the biggest gain since 1948, and more than enough to reclaim the majority.

Democrats held on to the Senate, but just barely. Republicans picked up at least six more seats in the Senate.

Where will the GOP go from here? Let's discuss in THE SITUATION ROOM with the former mayor of New York, he once ran for president of the United States, Rudy Giuliani.

Thanks very much, Mr. Mayor, for coming in.

RUDY GIULIANI (R), FORMER NEW YORK MAYOR: Nice to be with you in person.

BLITZER: What's the single most important piece of advice you can give Republicans right now from the lesson they should learn from what happened yesterday, looking ahead to 2012, because you see how fast the world of politics can change --


BLITZER: -- from 2008 --


BLITZER: -- to 2010 --

GIULIANI: And the blame can shift.

BLITZER: the Republicans could take a thumping --


BLITZER: -- or a shellacking, as -- whatever word you want to use -- in 2012.

How do you avoid that?

GIULIANI: Well, I think, first of all, this is either a problem or -- or a great advantage. This class got elected for specific reasons.

BLITZER: The class that got elected last night?

GIULIANI: Yes. This is the -- you have elections for all kinds of reasons. You know, somebody is popular or unpopular, a fad. They got elected because the American people that voted for them were fed up with heavy government spending, big debt, high taxes and Obama Care. And these people that elected them want them to do something about that.

Now, they're not going to be able to do something about Obama Care, except maybe at the -- at the edges, unless they get a Republican president and a Republican Senate in two years. So I think they have to look for other ways to work with the president.

BLITZER: Would you agree with Mitch McConnell that the most important thing the Republicans have to do right now is defeat Barack Obama --


BLITZER: -- for a second term?

GIULIANI: I don't agree with that. I -- I believe that's the most important thing the Republicans have to do two years from now but not now. And I always felt -- and I ran in a lot of elections, call it -- the day that the election is over, you now sit down, because you have some time to get something done. And this is the year coming up to get something done. They should put off the presidential election. Stop thinking about it for a while.

BLITZER: Is there a compromise on the extension of the Bush tax cuts --

GIULIANI: Yes, absolutely.

BLITZER: -- that you see?

What is the compromise you see?

GIULIANI: You just extend it two years.

BLITZER: For the rich people?

Extend it for everybody and for the middle class?

GIULIANI: Extend it for everybody. And there's a reason for that. The reason for that is --

BLITZER: Will the Republicans go along with extending for the people making more than $250,000 a year for two years?

GIULIANI: I think they'd like three. I bet they'd take two. And -- and here -- here's why I think that's important. For the same reason you were discussing the Fed putting money into the -- into the economy, you don't want to take money out of the economy right now. And I know it -- it sounds nice, take it from the rich people. But then that money goes to Washington, it doesn't get used as efficiently. You're better off having that money sitting there with the rich people so they can invest. This is all about encouraging people to invest. BLITZER: But you acknowledge there's nothing really they can do to repeal the law on health care?

GIULIANI: There's nothing they can do to repeal it --

BLITZER: They could pass legislation in the House --

GIULIANI: Oh, no --

BLITZER: -- but they can't repeal it.

GIULIANI: And they -- and they may want to do that to satisfy their base.

BLITZER: But is that going to be -- is that going to be a -- a distraction from the real issue right now, which is creating jobs and improving the economy?

GIULIANI: Yes, I would not do that first thing. I would try to -- I would try to accomplish a few things first. Get some credit with the American people that you got some things done. Obama -- Obama compromising, going ahead with two years, Republicans saying we'd like three -- we'd like permanent, but we'll take two years, I think that would -- the American people would really like that. Everybody gave up something. It's something that's good. It's something that works. I think they can --

BLITZER: It shows that people in Washington work together at least on some --

GIULIANI: Yes, there are areas --

BLITZER: -- on some issues. You noticed at the news conference, the president said he hopes maybe during this lame duck session, they can eliminate the "don't ask, don't tell" policy that bars gays from serving openly in the military.

Would you support that?

GIULIANI: Yes. I didn't see that as a big issue in this -- the social issues were not in this. So maybe that's an area in which Republicans can ease up a little bit and not --

BLITZER: But you support gay rights?

So you --

GIULIANI: I do. I support gay rights.

BLITZER: You would get rid of the "don't ask, don't tell?"

GIULIANI: Well, I -- I -- my -- my feeling about "don't ask, don't tell" was in, in the middle of the height of the Iraq War, not a good time to do it. We're not in the middle of the height of the Iraq War. Afghanistan is a different kind of thing. You could probably accomplish it now. It's eventually going to happen. And it seems to me that it gets my party out of this anti-gay, the feeling that we are being unfair to people who -- who are gay. After all, there are a lot of -- there are a lot of gay people that are economic conservatives. I'd like to have them vote for us.

BLITZER: The Log Cabin Republicans.

GIULIANI: The Log Cabin Republicans are some of the strongest economic conservatives you're going to find, some of the biggest national security hawks you're going to find. We would like them in our party.

BLITZER: On -- on some of these other social issues, like abortion rights for women, is there room for moderates like you in this current Republican Party?

GIULIANI: I hope so. I mean I -- I'm --

BLITZER: You support abortion rights for women?

GIULIANI: I do. And -- but it didn't cut down on people wanting me to go campaigning for them. I was in 17 states, almost 50 campaigns. I think I was helpful. I think I helped some people --

BLITZER: You are ready to --

GIULIANI: -- raise money --

BLITZER: Are you ready to campaign for Sarah Palin in 2012?

GIULIANI: Well, well, let's see who the nominee is. I'm -- I'm --

BLITZER: Do you think she'll run?

GIULIANI: I'm ready to give Sarah Palin a fair -- a fair shot at it. And I don't agree with those Republicans who anonymously said to Politico, you know, that she should be stopped or --

BLITZER: The word maimed, I think.

GIULIANI: -- or killed or whatever --


GIULIANI: -- or whatever ridiculous thing they said. That's the worst attitude to have.

First of all --

BLITZER: Have you gotten to know her at all?

GIULIANI: I know her. Sure.

BLITZER: And what do you think? GIULIANI: I took her to the baseball game that created the controversy with Letterman, when Letterman said that her daughter was impregnated by A-Rod --


GIULIANI: -- and it created a big furor. Yes, I've gotten to know her. She has a perfect right to put her candidacy out there. There are going to be 15 of them, I think. And let's see what the --

BLITZER: As someone who ran for president, do you think she'll run?

Because you know what it takes to go to Iowa and New Hampshire --

GIULIANI: You want my guess?


GIULIANI: Because it's a pure guess.


GIULIANI: This is --

BLITZER: You're Rudy Giuliani.

GIULIANI: My guess is yes.


GIULIANI: I believe she's going to run for president. She sounds to me like somebody who's running for president.

BLITZER: On the -- before I let you go, on the issue of terrorism, how is this president doing?

We've had this terror scare in Yemen and these parcels that were intercepted.

What do you think of this administration's record in fighting terror?

GIULIANI: I don't think it's very good.


GIULIANI: And I think that they are inviting increased attacks by their weakness in dealing with Islamic extremist terrorism.

BLITZER: Like what do you -- what do you mean by that?

GIULIANI: Well, like, for example, on Christmas Day, a guy gets arrested. A guy gets arrested for committing, I believe, an act of war. They treat him like a domestic criminal. They give him "Miranda" warnings. BLITZER: The Christmas Day --


BLITZER: -- the -- the bomber, yes.

GIULIANI: Yes. They give him -- he's talking to you for a half hour, they cut off his talking.

Who knows what we would have gotten out of him if we had talked to him for two days or three days or four days or five days?

It takes a long time to piece all this information together. There's no reason to treat him like a domestic criminal. He's a war criminal.

If -- if these people had pulled off this -- this -- this attack, would we treat them as domestic criminals?

BLITZER: You know, they say --

GIULIANI: We should treat them as war criminals.

BLITZER: -- they say he's been cooperating all this time and they're getting a lot of information from him.

GIULIANI: You never know how good the information is once you've interrupted it, you've given him the chance to confer with counsel, you've given him a chance to get information from other people. You have no idea if he's giving up his high value information, his low value information, he's just gaming you.

As an ex-prosecutor, I would never stop a -- an interrogation in the middle of somebody talking and give them a chance to start rethinking how they could play me.

BLITZER: All right. So you don't give them good marks on this.

GIULIANI: But no, no. I do give them good marks on this, on -- on the -- on the interception of the two devices. I think --

BLITZER: In -- in England and Dubai.

GIULIANI: I think the -- I think it shows that our intelligence apparatus -- and I give Bush and Obama credit for this. And they don't get a lot of credit often, jointly. Our intelligence operations now are much, much better than they were before.

Here's the problem -- that's the good news. The bad news is they never should have gotten through it.

BLITZER: Well, the -- the good news is the Saudis helped out and they gave a crucial piece of information, which resulted in the interception of those bombs.

GIULIANI: And -- and if they didn't, one or two of those planes could have blown up going over the United States.

BLITZER: Absolutely.

GIULIANI: So our interception system leaves a lot to be desired.

BLITZER: Mr. Mayor, thanks for coming in.

GIULIANI: Thank you.

BLITZER: It's good to be in New York.

GIULIANI: Thank you.

BLITZER: We're going to take a quick break. We have a lot coming up on this, the day after the big election in the United States. We'll also check top stories after this.


BLITZER: Back to politics in a moment. First, Kate Bolduan is monitoring some of the other top stories in THE SITUATION ROOM right now. Kate has new information in the series of shootings in the Washington, D.C. area. This is very disturbing stuff. What do we know?

KATE BOLDUAN, CNN CORRESPONDENT: More to tell you about. Ballistics tests confirm a shooting in Virginia is linked to four other shootings in the past few weeks, all of them targeting military buildings in the area. The latest shooting happened early yesterday morning in the town of Woodbridge. A bullet hit a recruiting station in a strip mall damaging some glass. Fortunately, no one is injured, no one has been injured in any of the incidents.

And Iran, well, it denies it has executed a woman who has been sentenced to be stoned to death for adultery. The country's official news agency quotes a top Iranian official as saying the 43 year old woman is in good health and still in prison and her case is being processed. The Iranian authorities were reportedly given the go ahead to execute her as early as today.

And a federal indictment claims two men in Missouri funneled money for terrorist operations in Somalia. One suspect allegedly discussed the Somalia extremist group al-Shebab in code language and used fictitious names to send money to the group's supporters through legitimate businesses. The second man faces conspiracy charges. The indictments come a day after three men in California were charged with providing support to the al Qaeda-linked terrorist group. Wolf?

BLITZER: All right. We're going to get back to you shortly, Kate.

A young star is born in the Republican Party thanks in part to the tea party. We're going to Florida where the newly elected senator, he's going to be the senator, Marco Rubio is celebrating victory. He's got a huge future ahead of him. Plus, Latino voters gave Harry Reid the boost he desperately needed to keep his job as Senate majority leader. But what will they expect in return?


BLITZER: In the critically important battleground state of Florida, two key wins for the Republicans, in the Senate and in the governor's office. The governor's race going down to the wire with Republican Rick Scott now claiming victory after Democrat Alex Sink waited until this morning to concede.

Let's go to CNN's David Mattingly. He's joining us from Broward County in Florida. You're in Ft. Lauderdale. I guess the Republicans must be thrilled that they captured the governor's seat as well as the Senate seat.

DAVID MATTINGLY, CNN CORRESPONDENT: That's right, Wolf. And Rick Scott is it a true political maverick. He'd never run for public office before. Now this businessman is the governor elect for the state of Florida. He was pursuing a strategy of directly attacking the policies of President Obama. And then every chance he got, he would try to link his opponent, Alex Scott, to those policies.

By doing this, he was able to tap into that deep voter dissatisfaction here in Florida with the 11.9 percent unemployment rate and the second highest rate of mortgage foreclosures in the country that's right here in Florida. But, still, it gave him the narrowest margin of victory. It wasn't until mid-morning until he found out he was truly the winner and it was a long night before he came out and spoke to his supporters.


RICK SCOTT (R), FLORIDA GOVERNOR-ELECT: There were plenty of pundits, politicians, and insiders who said this victory was impossible. But the people of Florida knew exactly what they wanted.


MATTINGLY: Now, the defeat of Democrat Alex Sink and her concession speech appealed to Scott saying to work very hard to bring Florida together after the sharply divided election. She spoke directly to him saying, remember, 2.5 million Floridians did not vote for you. So, Wolf, Rick Scott has a lot of fence mending to do as he takes this office.

BLITZER: And it wasn't even close for Marco Rubio. He crushed his two opponents and is going on to the United States Senate.

MATTINGLY: That's right. He ran a very strong race. There was never any doubt, really, of a Rubio victory last night. And he's expected to figure prominently on the national stage during his campaign he hit all of the right notes for the tea party supporters and for conservative Republicans. And his name tossed around in a what-if fashion of a vice presidential contender on some future GOP ticket. This is before, Wolf, he has even gotten to Washington.

BLITZER: He's a big winner indeed. Thanks very much, David. David Mattingly in Ft. Lauderdale for us.

While Republicans certainly celebrate some sweeping victories across the country, the tea party candidate, Christine O'Donnell, she was the Republican nominee in Delaware, is charging her own party with, quote, cannibalism. You're going to hear what she's saying on this day. Stand by.


BLITZER: The tea party favorite and former Delaware Senate candidate, Christine O'Donnell, the Republican, has a scathing message for the Republican establishment following a bruising double-digit loss to her Democratic opponent, Chris Coons.


CHRISTINE O'DONNELL (R), FORMER DELAWARE SENATE CANDIDATE: When you look at our ticket, it was a straight ticket loss for the top statewide Republicans. If it were about me personally, my margin would have been much greater than it was. This honestly what I think it feels is it's a symptom of Republican cannibalism. In other areas where the establishment Republican didn't win the primary, the local Republican parties united right away.

Solidarity goes a long way. Unfortunately, that never happened in Delaware. And I think we felt the impact all the way down the ticket. Had the leadership reached out or accepted my reaching out to them, united much quicker, but we spent the first several weeks reaching out to other Republican leaders, earning the support, and by the time we earned the not necessarily party support, but prominent figure support, we had about two weeks left.


BLITZER: Let's talk about that and more in the "Strategy Session." Joining us now are two CNN political contributors and members of the best political team on television, the Democratic strategist James Carville and the Republican strategist Alex Castellanos. Republican cannibalism she blames for her defeat at least in part. Does she have a point?

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: Tasty. If the Republican establishment was that powerful, I thought she just beat the Republican establishment in Delaware, so I don't think so. Look, she seems to be a nice young lady --

BLITZER: When I saw her in Delaware she was complaining to me that the Republican Senatorial Campaign Committee never came into Delaware to help her.

CASTELLANOS: Well, one of the things that we have learned this election that the tea party candidates can be bad candidates, too. We have had bad Republican candidates in Nevada where otherwise an acceptable Republican, we would have beaten Harry Reid.

BLITZER: So you don't think that -- you are one of those Republicans who think that Mike Castle could have beaten Chris Coons and the Republican Party would have been better if Christine O'Donnell would have gone out?

CASTELLANOS: No, if Mike Castle was that much better of a candidate, he would have beaten Christine O'Donnell but he didn't so this is why we have primaries to fight it out. You don't expect to win all of the races, and this energy raises the vitality of the candidates. I am glad she ran but she wasn't a good candidate and she lost.

BLITZER: There are good tea party candidates and there are bad tea party candidates.

JAMES CARVILLE, CNN CONTRIBUTOR: Well, yesterday was not a good day for a party that lost huge in the house. Two things that made me sad, and not that sad, but I am going to really Miss Christine O'Donnell and Sharron Angle, and there is a little part of me that sort of liked having them around. As evidence is that Christine just gave me a reason why I am going to miss her so much.

BLITZER: You don't think they will be on television as political pundits?

CARVILLE: I hope so. I certainly hope so. Any time they are out there, it is going to be entertaining, but we have Sarah Palin, we have Michelle Obama, and a few, that there is some cream out there and we will wait for it to rise to the top on the Republican side.

CASTELLANOS: I think the other lesson is that when you do a commercial when you are denying you are a witch, don't wear black.

BLITZER: You are --

CASTELLANOS: One of the worst commercials of the year.

BLITZER: Was that an idiotic commercial?

CARVILLE: Well, Wolf, it is one of those things that you heard about it, it was sort of like, a thing on the computer and I thought, well, somebody is faking it. That is my original thing, that some guys in a, you know, garage in the basement or something having a good time. I thought it was fake.

CASTELLANOS: But the energy that the tea party brought to the Republican Party this year, a lot of those 60 seats, that kind of energy showing up in Washington, you don't win them all, but the Republicans did win a lot.

CARVILLE: Well, Alex is right. They flubbed, and cost them Senate seats in definitely Delaware and Nevada and maybe Washington State and Colorado, but they brought a lot of energy.

BLITZER: And in Nevada, the favorite lost to Harry Reid, I think in part, and correct me if I'm wrong, because Hispanics came out to vote big time for hr Harry Reid.

CASTELLANOS: Hispanics did and they don't like Chinese food as much as other people's views.

CARVILLE: Well, that is an angle.

CASTELLANOS: And it was not just that, but Harry Reid put together a tremendous political get out the vote organization that got out the Hispanic vote and go out a lot of union vote in that state which delivered the margin for him in that state. Were you surprised he won?

CARVILLE: You know, I thought when you generally when you have a wave of this magnitude which is huge, you lose all of the close ones, and that was the case as we went west. We lost Pennsylvania, close, put up a valiant fight, put up a valiant fight in Illinois, but we lost Illinois. At that point, I thought we will come close in Colorado and Nevada and we will probably be close in Washington State, but we are going to make it. Then we started winning those. In '06 and '08 every close race the Democrats won. In '94 every close Senate race the Republicans won, and it was a different kind of phenomena, and this is the first time.

BLITZER: Does the president now need to go to the Bill Clinton playbook and deal with triangulation and all that if he wants to be re-elected?

CARVILLE: He does not have a choice. The reality is he took a shellacking, which his word is a pretty good adjective. It was the right word. You don't take a play from the playbook. You take the plays from the constitution. They also - it's going to be easier for him to move to them, because they are right wing people coming out.

CASTELLANOS: And he looked pretty bad night.

BLITZER: And it was not good to lose. All right guys. Thanks you very much.

Alaska's dramatic Senate battle is a cliffhanger right now. Are they any closer to a winner? We are going to Anchorage. Stick around.


BLITZER: Over to Jack Cafferty who is back with the Cafferty file, Jack?

CAFFERTY: Yes. The question this hour is how ready are you for the start of the 2012 presidential campaign? It doesn't matter how ready you are. It is right around the corner whether you are ready or not.

Joe says, "I don't really care anymore. As long as these two parties remain in power, we will have the same old same old. Same partisan bickering and the nasty campaign ads and ugly rhetoric. Hard working Americans get fooled by the mirage that either party can fix the country's problems. I am sick of it all."

David says, "Shame on you, Cafferty, for even bringing this up just a day after such a trying election period ends. The wounds are still fresh and you are already getting started on creating new ones. Let's allow the voters to heal" -- I'm not going to read that.

David in Cleveland, "We need a break, coach, please, no more for a while."

John from San Francisco, "Of course, it is time to start in on the 2012 elections. Unfortunately, if the Republicans can't remove Sarah Palin from the list of contenders we won't have a true race for the presidency. Obama will win it hands down and nothing that we do will mean much of anything."

Nancy writes, "I actually think that the 2012 presidential race began for the Republicans one second after President Obama was elected. They have been in constant campaign mode since which is one reason that nothing is getting done in the country."

Ed writes, "Great, we have all of the losers from the last election running again. That is real exciting."

Wade in Las Vegas, "This is like the TV show "Lost" nothing happens, but people are still excited for the next episode."

And Michael in New Mexico says, "The day after the election and you are already lining us up for the next one, why don't you hammer nine-inch nails into my eyes?"

If you want to read more, go to the blog, that is where it will be. Wolf.

BLITZER: Thanks very much, Jack.

Happening now, election earthquake aftershocks. For Republicans, it is a new dawn. For Democrats, it is a new reality and what to expect when the dust settles. Tea party tidal wave conservative candidates sweep to victory, but some of them seriously stumble, and lose, and how the newcomers distaste for compromise will play in Washington.

And a decision may take days in Alaska after a Republican write- in candidate makes a stunning comeback against the tea party upstart.

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