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THE SITUATION ROOM

Republican Cannibalism; GOP's Humbling Moment; Behind the "Witchcraft" Uproar; The Presidential Blues; Aftermath Of Republican Upset In Midterm Elections

Aired November 6, 2010 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR, THE SITUATION ROOM: Election earthquake aftershocks. For Republican s it's a new dawn. This hour, what the GOP will do with its new power. I'll talk to top Republicans, Rudy Giuliani, Michael Steele, and Senator-Elect Rand Paul.

President Obama's facing up to the role in the Democrats' shellacking, his word. Some nervous members of his own party fear he still doesn't get it. Missouri Senator Claire McCaskill opens up about the Democrats' mistakes. Add Bill Maher to the people second guessing the president. The comedian and political satirist wonders where the great communicator went.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm not recommending for every future president that they take a shellacking 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 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.

(END VIDEO CLIP)

BLITZER: Welcome to the 2012 campaign. It began the minute the Republicans won control of the House of Representatives on Tuesday, and expanded their numbers in the Senate and state houses across the country. Both parties now are positioning themselves for the next election and challenges to the president by Republicans. And maybe, maybe, even from within his own party. I spoke with the former New York City mayor and former Republican presidential candidate Rudy Giuliani about Tuesday's results, and what happens next.

(BEGIN VIDEOTAPE)

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? You see how fast the world of politics can change from 2008 to 2010. RUDY GIULIANI, FMR. MAYOR OF NEW YORK CITY: And the blame can shift.

BLITZER: Republicans can take a thumping, or shellacking, 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 great advantage. This class got elected for specific reasons.

BLITZER: The class that got elected last night?

GIULIANI: Yes, you have elections for all kinds of reasons. Somebody is popular, unpopular, a fad. They got elected because the American people that voted for them, were 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 edges unless they get a Republican president, a Republican Senate in two years. So I think they have to look for other ways to work with the president.

BLITZER: You agree with Mitch McConnell that the most important thing the Republicans have to do right now is defeat Barack Obama for a second term?

GIULIANI: I don't agree with that. That's the most important thing Republicans have to do two years from now. Not now. I have always felt -- I ran in a lot of elections. The day that the election is over, you now sit down, because you have some time to get something done. 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: What is the compromise you see?

GIULIANI: You just extend it two years.

BLITZER: For the rich people? Extend it for everybody?

GIULIANI: Extend if for everybody. 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. Here's why I think that's important. For the same reason you were discussing the Fed putting money into the economy. You don't want to take money out of the economy right now. I know it sounds nice. Take it from the rich people, but then that money goes to Washington, doesn't get used as efficiently.. You're better off having that money sitting there with rich people, so they can invest. This is all about encouraging people to invest.

BLITZER: You acknowledge there's nothing really they can do to repeal the law on health care?

GIULIANI: Nothing they can do to repeal-

BLITZER: I mean, they could pass legislation in the House, but they can't repeal it?

GIULIANI: They may want to do that to satisfy their base.

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

GIULIANI: I would not do that first thing. 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. Republican s saying we'd like permanent, but will take two years. The American people really like that. Everybody gave up something. It's something that's good. It's something that works.

BLITZER: So people in Washington than work together at least on some issues? You notice that 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: I didn't see that as a big issue in this. The social issues were not in this. Maybe that's an area in which Republican s can ease up a little bit.

BLITZER: You support gay rights.

GIULIANI: I do.

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

GIULIANI: My feeling about "don't ask, don't tell" was in the middle of the height of the Iraq war not a good time to do it, we are 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. It seems to me it gets my party out of this anti-gay -- the feeling that we're being unfair to people who are gay. There are a lot of gay people that are economic conservatives. I'd like to have them vote for us.

BLITZER: Log Cabin Republicans.

GIULIANI: 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 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 --

BLITZER: You support abortion rights for women?

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

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

GIULIANI: Well, we've got to see who the nominee is.

BLITZER: Do you think she'll run?

GIULIANI: I'm ready to give Sarah Palin a fair shot at it. I don't agree with those Republicans who anonymously said to Politico, you know, that she should be stopped, or killed, or whatever ridiculous thing they said. That's the worse attitude to have.

BLITZER: Have you gotten to know her at all?

GIULIANI: I know her, sure.

BLITZER: 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, 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.

BLITZER: As someone who ran for president, do you think she'll run? You know what it takes to go to Iowa, New Hampshire.

GIULIANI: You want my guess? Pure guess?

BLITZER: Yes, you're Rudy Giuliani.

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

BLITZER: Before I let you go, on the issue of terrorism, how is this president doing? We've had this terrorist scare in Yemen, 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.

BLITZER: Why?

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

BLITZER: Like what do you mean?

GIULIANI: Well, like for example, Christmas Day, guy gets arrested. 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 bomber?

GIULIANI: Yes. He is talking to you for a half hour, they cut off his talking. Who knows what we would have gotten out of him if we talked to him for three, four, five days? It takes a long time to piece all this information together. No reason to treat him like a domestic criminal. He's a war criminal. If these people had pulled off this attack, would we treat them as domestic criminals?

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

GIULIANI: You never know how good the information is once you've interrupted it, you have given him a chance to confer with counsel. You have given a chance to get information from other people. You have no idea if he's giving up high-value information, his low-value information, he's just gaming you. As an ex-prosecutor I would never stop an interrogation in the middle of somebody talking, and give them a chance to start rethinking how they could play me.

BLITZER: So, you don't give them good marks on this?

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

BLITZER: In England and Dubai?

GIULIANI: 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.

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

GIULIANI: If they didn't, one or two of those planes could have blown up in the United States. 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.

(END VIDEOTAPE)

BLITZER: A Senate Democrat is admitting her party doesn't always get it. Stand by to hear what Senator Claire McCaskill's take is.

And Republican and Tea Party favorite senator-elect Rand Paul, on his number one priority once he's sworn in as a U.S. senator.

(COMMERCIAL BREAK)

BLITZER: She was a lightening rod for criticism during the midterm campaigns, but even as some fellow Democrats were calling for her to step aside, the outgoing House Speaker Nancy Pelosi has announced she will run to become the minority leader for the Democrats.

In a letter to her colleagues, Pelosi says, I'm quoting her now, "Our work is far from finished." She says her decision is "driven by the urgency of protecting health care reform, Wall Street reform, and Social Security and Medicare."

In the meantime, Democrats have had a stunning rise, and stunning fall, in just a short period of time. They've reached the peak and now they've seemingly fallen off a cliff.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, Democratic Senator Claire McCaskill of Missouri. She's joining us from St. Louis.

Senator, thanks very much for coming in.

SEN. CLAIRE MCCASKILL, (D) MISSOURI: Thank you.

BLITZER: I want to play two little clips. This is what I said exactly two years ago, two years ago today, the night that President Obama was elected president. Followed by what I said the other night, two years later. Listen to these two clips.

(BEGIN VIDEO CLIP)

BLITZER: And CNN can now project that Barack Obama, 47 years old, will become the president-elect of the United States.

CNN is now ready to make a major projection that Republicans will take control of the House of Representatives.

(END VIDEO CLIP)

BLITZER: Wow. What a difference two years makes, Senator McCaskill. How did that happen? What did the president and his fellow Democrats do wrong? The single most important thing that allowed that dramatic change?

MCCASKILL: Well, I think a couple of things, Wolf. One is a very, very difficult economic climate. And people are very impatient. And, frankly, disillusioned with the party in power whenever there are economic hard times. I think that has something to do with it. Also a drop in enthusiasm on our side of the equation.

If you look in Missouri on Tuesday we had a million fewer people vote this Tuesday compared to two years ago. We had less people vote in this election than we've seen in a midterm election in a decade. So, clearly a lot of folks have not shown up. BLITZER: Why couldn't the president and your fellow Democrats get those people out and vote? Why were they so unenthusiastic about voting for the Democrats?

MCCASKILL: I think that the expectations were very high and people were disappointed because they expected so much. The president inherited a much bigger mess than was anticipated during the months that he was campaigning. We had to do emergency things because of the big economic crisis.

And people didn't really feel the crisis until after we'd done them. So it was like, hey, you may have done stuff, but it hadn't helped me. It felt like to too many people we were helping all the big guys and weren't helping the little guys.

BLITZER: Some Democrats, like Evan Bayh, for example, the retiring senator from Indiana say, you know what, the president, sure health care reform is important, but jobs, jobs, jobs. That's what the American people wanted. He spent a year on health care reform when he could have been devoting that energy to creating jobs.

MCCASKILL: Well, I don't think there's any question that the fact that the recovery has been slow and difficult has been a huge problem for the president. And the communication should have been better. And maybe the timing of things wasn't perfect. But at the end of the day, health care cost is a huge factor in how competitive we are in terms of the world market.

It's a huge factor on whether or not somebody can hire someone else, or whether they can provide health care benefits. So I get what Evan is saying, and I do think we have a communication problem, but I think it was a combination of factors that led a whole lot of people to decide, you know, I don't want to have anything to with any of them. I'm just not going to vote this time.

BLITZER: But the president is such a great communicator, he got himself elected president of the United States, in part, because of his of communications skills. Maybe it's beyond communications and maybe there's an element there the American people simply didn't like. You remember some of those town hall meetings, you had in Missouri, on health care reform and you got hammered a little bit.

MCCASKILL: You know, there's no question that people are frustrated and there's a lot of negativity. And the negative message is always -- and the message for, you know, like throw the bums out, is always a message that resonates, especially in difficult economic times. So I'm not quarreling that there is frustration and anger and cynicism out there. The president is very inspirational. At the same time, when he got to Washington, he had to roll up his sleeves and wade into some really -- a political swamp. And I'm not sure that he was ready for that kind of mano-a-mano combat.

BLITZER: Your fellow Democrat Robin Carnahan, she lost to Roy Blunt, a conservative Republican in Missouri. She lost by a considerable number of votes. What are you going to have to do? You're going to have to pivot, I suspect, in Missouri, if you want to get re-elected in 2012. You are you hoping, for example, that the Republicans nominate a Tea Party supporter to challenge you?

MCCASKILL: You know, the nice thing is I don't have to pivot. I've been very independent from the day I arrived in Washington. I think I'm the last Democrat left in the Senate after Russ Feingold was defeated that won't take earmarks. I co-sponsored the spending cap with Senator Jeff Sessions, from Alabama, to try to bring down spending in Washington.

I voted against my party with some frequency because of my independence. I just have to remind Missourians that I am independent. And that I try to call them like I see them. Sometimes my party is wrong on some things.

BLITZER: But you're widely associated as one of President Obama's best supporters and best friends.

MCCASKILL: Well you know, it's one thing - I mean, I admire the president. I'm proud of what he has accomplished as an American. I was honored to campaign with him, but he knew, in fact, in the conversation we had when I decided to support him, he said, I know that this door swings both ways, Claire. And you'll tell me when I'm wrong. I've done that, and will continue to do it when it's necessary.

BLITZER: We are out of time. But give me one example when you said no to the president.

MCCASKILL: I said no to the president on the omnibus spending bill, I said no to president on cap and trade. I said no to the president on a number of appropriation bills.

BLITZER: Claire McCaskill, Democratic senator from Missouri. She hopes to be the Democratic senator from Missouri, after 2012.

We appreciate you coming in, Senator.

MCCASKILL: Thank you very much.

(END VIDEOTAPE)

BLITZER: Does the Republican Party Chairman Michael Steele deserve credit for the party's stunning turnaround in this election? I'll ask him.

And Republican Senator-Elect Rand Paul tells me the president may be unfit to be making decisions.

(COMMERCIAL BREAK)

BLITZER: Mixed results for Tea Party candidates on election night. One of the darlings of a movement came out a big winner in the Kentucky senate race.

(BEGIN VIDEOTAPE)

BLITZER: Rand Paul is joining us now. Congratulations, Doctor Paul. I'm sure you're thrilled.

RAND PAUL, (R) SENATOR ELECT, KENTUCKY: Thank you, Wolf. Yeah, we're all smiles down here in Kentucky. Everything's good.

BLITZER: Did you hear from Jack Conway? Did he call you to concede?

PAUL: He did. He was very gracious and he wished me luck, and I wished him luck also.

BLITZER: No more hard feelings? Because it was a bitter campaign, there were some ugly name calling going on. I assume you're over that?

PAUL: I think a little distance in time will make us forget that.

BLITZER: At one point you didn't even want to shake his hand. Let's move on and take a look at where you're going now. You're come to Washington, D.C. What will be your top priority as a United States senator from Kentucky?

PAUL: I think the number one priority is we need some fiscal sanity in Washington. The budget's out of control. We cannot sustain $2 trillion debts, $2 trillion deficits. Even the Federal Reserve Chairman Bernanke says $2 trillion in a year is an unsustainable debt. We really have to tackle this. I think it's going to take a serious adult conversation. And we need to be willing to look at the entire budget.

I think we also need some new budgetary rules. I'm in favor of having a balanced budget amendment. I think both parties have proven themselves untrustworthy when it comes to balancing the budget.

BLITZER: You know a lot of Democrats, at least some Democrats, are saying if you eliminate the Bush tax cuts in 2001 and 2003 for everyone, go back to the tax rates that existed during the Clinton years, you'll save over the next 10 years $4 trillion, to be able to reduce the deficit and the budget and the debt by $4 trillion. What do you say to those folks who say go back to the higher tax rates?

PAUL: I would say that they must be in favor of a second American depression. Because if you raise taxes to that consequence, that's what will happen in this country. Raising taxes in the midst of a recession would be a disaster for our economy and anybody who proposes such a policy really, is, I think, unfit to be making decisions.

BLITZER: What if they just raise taxes on the richest, those making more than $250,000 a year?

PAUL: Well, the thing is, is we're all interconnected. There are no rich, there are no middle class, there are no poor. We're all interconnected in the economy. You remember a few years ago when they tried to tax the yachts. That didn't work. You know who lost their jobs? The people making the boats. The guys making $50,000 and $60,000 a year lost their jobs. We all either work for rich people, or we sell stuff to rich people. So just punishing rich people is as bad for the economy as punishing anyone. Let's not punish anyone. Let's keep taxes low and let's cut spending.

BLITZER: Is there going to be a Tea Party caucus in the U.S. Senate?

PAUL: If I have my way, yes, there will. That's one of the things I will begin working on tomorrow morning.

BLITZER: What about your dad? Is he there, the congressman from Texas? Is he celebrating with you tonight?

PAUL: He was here electronically. He had his own party in Texas, and we have talked. I told my mom this evening that I'd like to have a joint swearing in party. So we'll let the House and the Senate come together for a day.

BLITZER: I spoken to your dad, Congress Ron Paul on many occasions. He's very, very proud of you. Once again, congratulations Doctor Rand Paul. The next United States senator from Kentucky.

PAUL: Thank you, Wolf.

BLITZER: Appreciate it very much.

(END VIDEOTAPE)

BLITZER: The former Delaware Republican Senate candidate Christine O'Donnell says she's a victim of, quote, "Republican cannibalism". We'll talk about that in our strategy session.

I also talk to the man who had a big impact on that race in Delaware when he released old video of Christine O'Donnell talking about witchcraft. The comedian Bill Maher joins me with his take on the Tea Party and what went wrong for President Obama.

(COMMERCIAL BREAK)

BLITZER: 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.

(BEGIN VIDEO CLIP)

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 was is it's a symptom of Republican cannibalism and other areas where the establishment Republican didn't win their 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 ticket. Had the leadership reached out or accepted my reaching out to them we would have united much quicker, but we spent the first several weeks reaching out to other Republican leaders earning their support.

By the time we did earn not necessarily the party leadership's support, but some prominent figure support, we had about two weeks left.

(END VIDEO CLIP)

BLITZER: Let's talk about that and more in our strategy session. Joining us now two CNN political contributors, members of the Best Political Team on Television, the Democratic strategist James Carville and Republican strategist, Alex Castellanos.

Republican cannibalism she blames for her defeat at least in part. Does she have a point?

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: Tasty. If the Republican establishment was that powerful, I thought she 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 in to Delaware to help her.

CASTELLANOS: Well, one of the things we've learned this election is that the Tea Party candidates, they can be bad candidates, too. We've had bad Republican candidates in Nevada, where otherwise I think we'd have an acceptable Republican. We would have beaten Harry Reid --

BLITZER: Those Republicans who thinks Mike Castle could have beaten Chris Coons and the Republican Party would have been better off if Christine O'Donnell would have gone away?

CASTELLANOS: No, I think, hey, Mike Castle would have been that much of a better candidate. He should 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 the races. This kind of vitality actually energizes the party. I'm glad she ran, but she wasn't a good candidate and she lost.

BLITZER: If there are good Tea Party candidates and there are bad Tea Party candidates.

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: Yesterday, was not a good day for our party. Lost, you know -- to say it's sad, not that sad, I'm going to really miss Christine O'Donnell and Sharron Angle. There was part of me that liked that morale. I mean, Christine just gave me a reason why I'm going to miss her so much.

BLITZER: You don't think they're going to be on television as political pundits?

CARVILLE: I hope so. Any time that they're out there, it's going to be entertaining. We've got Sarah Palin. We've got Michele Bachmann. We're going to have -- there's a cream out there and we're just waiting for it to rise to the top on the Republican side.

CASTELLANOS: I think the other lesson I've said before is when you do a commercial denying that you're a witch, don't dress in back.

BLITZER: If you're a professional --

CASTELLANOS: One of the worst commercials of the year.

BLITZER: Was that an idiotic commercial?

CARVILLE: Wolf, it's one of those things when you heard about it and it was sort of like it was on, like, saw it on the computer. I said, somebody's faking it. My original thinking was this is some guy in a garage in a basement or something having a good time. I thought it was fake.

CASTELLANOS: But the energy 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 Republicans --

CARVILLE: They flubbed, you know, cost them Senate seats definitely in Delaware, Nevada, Washington state, Colorado. They bought a lot of --

BLITZER: The party favorite in Nevada lost to Harry Reid. I think in part, correct me if I'm wrong, because Hispanics came out and voted big-time for Harry Reid.

CASTELLANOS: I think because Hispanics did apparently they didn't like Chinese food as much as some people thought. Because Angle confused --

CARVILLE: That was a great point in the campaign.

BLITZER: Sharron Angle thought that Hispanics looked a little Asian.

CASTELLANOS: And also it wasn't just that. Harry Reid I think put together a tremendous get out the vote organization that got out the Hispanic vote and got out a lot of union vote in that state. That's really what delivered I think the margin for him in that state.

BLITZER: Are you surprised he won?

CARVILLE: You know, I thought, generally when you have a wave of this magnitude which is huge, you lose all the close ones. That was the case as we were going west. We lost Pennsylvania. Put up a fight in Illinois. We lost Illinois.

At that point I fully said, we'll come close in Colorado. We'll come close in Nevada. We'll probably come close in Washington State, but won't 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. It was a different kind of phenomena. 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?

CARVILLE: He's going to have to, yes.

BLITZER: If he wants to get re-elected?

CARVILLE: He doesn't have a choice. The reality is he took a shellacking, his word, is a good adjective. It was the right word. You don't take a play from the playbook. You take the play from the constitution.

They also -- it's going to be easier for him to move to them than it's going to be for them to move because they have some right wing people that take the paint of you, man. These are strong guys coming in here.

CASTELLANOS: He looked like his dog died in the press conference.

BLITZER: He was not a happy guy.

CARVILLE: He lost an election. It looked like a bad night.

BLITZER: It's not good to lose. All right, guys, thanks very much.

Bill Maher taking Democrats and President Obama to task. My interview with Bill Maher. That's coming up.

And the Republican Party Chairman Michael Steele. Is the GOP willing to reach a compromise on key issues with the president? I'll ask him.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: We've now seen four months of private sector job growth above 100,000, which is the first time we've seen this kind of increase in over four years. Now, that's not good enough. The unemployment rate is still unacceptably high and we have a lot of work to do.

(END VIDEO CLIP)

BLITZER: The latest numbers show the economy added 151,000 jobs last month, but the creeping increase in employment is too late for the dozens of Democrats who went down in defeat in the midterm elections.

One of the biggest winners on election night was the chairman of the Republican National Committee.

(BEGIN VIDEOTAPE) BLITZER: Michael Steele may be the happiest man in Washington right now. The Republican Party chairman is joining us now from the GOP headquarters in Washington.

Mr. Chairman, congratulations to you and your party. You obviously did very well yesterday.

MICHAEL STEEL, REPUBLICAN NATIONAL COMMITTEE CHAIRMAN: Yes, Wolf, thank you very much and it was actually in many respects a very humbling moment. Because when you think about where we were just over a year ago, where the cover of "Time" magazine screamed "Endangered Species" in reference to the GOP to what happened last night, it is quite an amazing turnaround.

I think a number of things are the reason for it. One, we had to acknowledge, first, our own past missteps as we moved away from principles like the contract with America and try to do Democrat light or big government Republicanism.

It spawned to what we saw emerge last year in the Tea Party Movement. To growing and grooming candidates who were able to go out and reconnect us to our base, reconnect us to our principles and articulated policies that the American people wanted to hear.

BLITZER: Are the Republicans ready to sit down and cooperate, compromise, have some Slurpees with the president?

STEELE: Yes. I think they are. You know, look, I think that the president said that he wants to do that. I know that the Republican leadership in the House and the Senate said from the very beginning that's something they wanted to do when talking about health care and talking about a finance reform.

So fully expect when the new leadership emerges in January, they're going to be more than willing to come down to the White House, sit at the table, have a few Slurpees, but most importantly talk about the people's business and making sure we're not growing the debt, spending dollars the American people don't have and infusing government into the lives of everyday folks.

STEELE: But you realize you don't have the ability to repeal health care reform if the president wants to use his veto pen.

STEELE: That's very true. Again, that is why building a consensus toward what works and doesn't work in this current monstrosity of a health care bill, a bill that most members, many of whom lost their jobs last night, had never read but fought for.

Why it's going to be so important to go back through? For example, the president, himself, today acknowledged he had this whole, you know, IRS 1099 $600, you know, expense piece. That's a little bit much.

We can probably deal with that and get it out of there, but as Mitch McConnell and others have said, there's more to it than that piece. I think that's where the grand discussion is going to begin in January. BLITZER: There seems to be some competition, you can correct me if I'm wrong, between you and the RNC on the one hand and Karl Rove, Ed Gillespie -- their American crossroads operation on the other hand.

It seemed to be a little bit competitive there. Who was more important in getting Republicans elected?

STEELE: We're all important because this is a team effort. You can't do it one without the other. Look, I was very happy for American crossroads. It's about time to have a Republican 527 out there that can go and compete with the big boys that are on the other side.

We've been 10 years out of the loop on that. The Supreme Court's ruling allowed for the creation of these types of entities and it was very refreshing to have them there. We are the Marines. We do the ground game. We're able to put the building blocks in place for voter turnout, get out the vote phones and those types of things.

Those dollars they can raise, which are basically corporate money, large dollar donations, which I can't take here at the RNC. They are able to do. They can put that into independent expenditures to run TV ads and the like.

BLITZER: Do you talk to Karl Rove?

STEELE: Yes. I mean, Karl and I see each other from time to time. Gosh, you run in the circuit. Yes, I do run into Karl from time to time. Is there --

BLITZER: Is there a coordinated strategy?

STEELE: No. I was about to say. Good question. No, no, no, not at all. Not in the context of what we're doing politically. But in terms of our families and, you know, our hopes for the country, yes. But in terms of what American crossroads does and what we do absolutely not, the law prohibits.

BLITZER: Are you ready to tell our viewers right now whether or not you want another two years as chairman of the party?

STEELE: Nope.

BLITZER: Why not?

STEELE: Because I'm not ready. I haven't decided what I'm going to do yet.

BLITZER: When are you going to decide?

STEELE: Probably in a few days or weeks. I don't know. I want to savour the moment here, Wolf. This is precious time after all the hard work. I want to thank our state chairman and national committee men and women out there who helped us build this ground game.

This was not something done in isolation. Those folks who have had the most to contribute to this win, you know, let's savour that moment. Let all of us enjoy the hard work. We know there's much more hard work to do and we'll get to that.

But right now, last night was special. It took a lot of effort to go from '06 and '08 to the victory we saw last night, 61 seats in the House is unprecedented, hasn't happened since 1938. We're just glad here at the RNC to have played a part in making it happen.

STEELE: Very modest Michael Steele. Appreciate it, Mr. Chairman. Thanks very much. We'll stay in close touch.

STEELE: You got it, friend.

(END VIDEOTAPE)

BLITZER: Even presidents get the blues especially when voters sent them an angry message. Stand by our Jeanne Moos on Mr. Obama down but not out.

The comedian, Bill Maher is laying blame on the president for not fighting the socialist label hard enough.

(COMMERCIAL BREAK)

BLITZER: The comedian, Bill Maher made an impact on the midterm election by releasing the old video of Republican Christine O'Donnell admitting she once dabbled in witchcraft.

O'Donnell lost her Senate bid in Delaware, but Maher's concern about the political system and the fate of the Democrats lives on. I asked the host of "Real Time with Bill Maher" on HBO, what's gone wrong for the democrats?

(BEGIN VIDEOTAPE)

BILL MAHER, HOST, "REALTIME WITH BILL MAHER": Well, I mean, partly it is the Democrats' fault. They don't do very good at dragging about their achievements. This Congress, which I'm sure is going to be tarred as a do nothing Congress actually one of the more successful congresses in recent memories. Probably not since Lyndon Johnson is 1965 has a Congress achieved so much.

You know, somebody here at the office the other day brought in their credit card statement and somebody else brought in a statement they got from their health insurance company. Both of them said, you know, when you get statements in the mail, you think what's the bad news now.

Well, actually when you read the health care statement, yes, you can keep your kid on the plan until you're 26. They can't throw you off the rolls because they run out of money at the hospital, you know, pre-existing conditions, that's out the window. They can't throw you off of that. These are really good things. Same thing with the credit card thing. There's a whole list of things.

BLITZER: So is it just a matter of communications?

MAHER: Well, that's part of it. Also it's part -- a part of the problem, of course, is your competitor there at Fox News filling people with misinformation. Somehow people have not gotten the message, for example, that Obama gave you a tax cut.

All they hear is that the stimulus bill was some sort of socialist program to run up the debt. Almost half the stimulus program was tax cuts and people just don't seem to be able to get this information in your head.

BLITZER: But he's such a good communicator, the president.

MAHER: I'm sorry.

BLITZER: I said the president, you know, got into office because he's such a powerful communicator and he delivered a message that clearly resonated back in 2008.

MAHER: Well, he seems to have forgotten some of those communication skills. That's true. We cannot blame it all on Fox News. He should have been out there more telling people, bragging about what he and his administration and the Democratic Congress have done for them.

They did things that actually made their lives better, health care, credit card reform, things like this, the banks can't get in middle now if you get a student loan. That's $90 billion that was saved.

You know, you kind of go on and on down the list of the ways people's lives are practically made better by a Democratic government that actually fights for people as opposed to corporations.

But somehow that idea doesn't carry the day. The Tea baggers are already carrying the batter really of corporate America. We talked about it on our show Friday. Somehow their agenda as a populist organization is the exact same agenda as billionaires like Steve Forbes.

BLITZER: Some on the left think the president went too far towards Wall Street, didn't go far enough towards the -- what we call these progressive ideas, ideas that you like. Are you among them that think the president wasn't progressive enough?

MAHER: Absolutely and by the way, when we define progressive, please remember that we're defining that by the parameters of 2010. When actually what is centrist today, really if you look at like 1994 when Bob Dole presented his health care plan, OK, that I assume was considered a centrist plan or maybe even a little to the right since it was Bob Dole, the leader of the Republican Party. That's essentially the health care plan that we got in 2010 from the Obama administration, but somehow that became socialism.

(END VIDEOTAPE)

BLITZER: Bill Maher speaking with me earlier in the week.

Indonesia right now is dealing with a series of natural disasters including multiple eruptions of a major volcano. We're going to show you the fallout. That and more in today's Hotshots. (COMMERCIAL BREAK)

BLITZER: Here's a look at Hotshots of Indonesia. A woman carries her daughter to an evacuation center because of a nearby volcano eruption.

In Iran, militia schoolboys take part in a rally outside the U.S. Embassy. In India, a mother and her son light candles in front of a temple. In Australia, a baby elephant explores the zoo with her mother. Hotshots, pictures worth a thousand words.

President Obama is known for his quick and easy smile, and there were few signs of it, though, in the wake of the midterm election.

CNN's Jeanne Moos takes a most unusual look.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): Ouch. Humbled. Barack against the wall. President Obama look so glum after the midterm losses that even Regis called him --

UNIDENTIFIED MALE: Poor Barack Obama.

MOOS: As he displayed that sad face.

UNIDENTIFIED MALE: Yes, you're probably right.

MOOS: Ironically one of the few smiles the president flashed came when asked --

UNIDENTIFIED MALE: What does it feel like?

PRESIDENT OBAMA: It feels bad.

MOOS: The "New York Daily News" dubbed him Woebama. He was sad in every language from colpamia to meaculpa to Hebrew for the defeat. What happened to the president praised by facial experts for his disarming grin?

UNIDENTIFIED MALE: You can see Obama's smile is true smile is about twice as large as McCain's.

MOOS: From that to this? But wait a minute, it turns out that now famously sad face was snapped either at the end or beginning of an answer.

UNIDENTIFIED MALE: Are you willing to make any changes in your leadership style.

MOOS: As the president gathered his thoughts. You make look glum, too. While saying um. You know how when someone takes a picture, they always seem to catch you at the exactly moment when you're making some weird unattractive expression. Well, this is a little like that.

Photographers naturally snap their shots when they see a funny face. You can hear the cameras whirring. At least the president didn't cry. UNIDENTIFIED MALE: I poured my heart and soul into running a small business.

MOOS: As the likely next speaker of the House did celebrating the Republican victory. Next thing you know "Politico" was listing the tracks of John Boehner's tears. Previous teary moments.

UNIDENTIFIED MALE: -- provided for safety and security of the American people. What's in the best interest of our country? Vote yet.

UNIDENTIFIED FEMALE: He's been called the weeper of the House.

MOOS: Another time he was speaking of his 11 siblings.

UNIDENTIFIED MALE: I'm sure glad they're all here.

MOOS: Watch Congressman Boehner's expression when a reporter brought up his latest emotional moment.

UNIDENTIFIED FEMALE: What made you cry last night?

UNIDENTIFIED MALE: It's difficult to talk about my background or talk about my family.

MOOS: Hey, we like men who show their feelings. President Obama sure knows how to put the um in bummed.

PRESIDENT OBAMA: It's hard.

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: Thanks, Jeanne. I'm Wolf Blitzer. Join us weekdays in THE SITUATION ROOM from 5 to 7 p.m. Eastern and every Saturday at 6 p.m. Eastern right here on CNN and this time every weekend on CNN International. The news continues next on CNN.