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THE SITUATION ROOM

Obama Bemoans the "New Normal"; Crackdown on Air Freight Bribery; Will India Become A Permanent Member of the U.N. Security Council?

Aired November 8, 2010 - 17:00   ET

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


WOLF BLITZER, HOST: Brooke, thank you.

Happening now, a surprising new target in the crackdown on air cargo security. This hour, the threat that illegal bribes could open the door for bombs to get on planes. Stand by.

Also, President Obama celebrates a relationship with India, dogged by job losses and election losses back home. He's talking about the struggle that could cost him -- potentially, at least -- a second term.

And who says you can't go home again?

We're going to revisit the place in Indonesia where Mr. Obama lived as a young boy only hours before he gets there.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

President Obama is going to go to new lengths to strengthen ties with India to try to convince Americans that the growing economic powerhouse is not stealing American jobs. The president wrapping up his trip to India with a state dinner, a speech to parliament and a joint news conference with the prime minister. Through it all, he tried to address worries back here at home about outsourcing, citing new trade deals with India that he says will create thousands of well- paying jobs for U.S. workers.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When I go back home to the United States, part of the reason that I advertise these 50,000 jobs is I want to be able to say to the American people, when they ask me, well, why are you spending time with India, aren't they taking our jobs, I want to be able to say, actually, you know what, they just created 50,000 jobs. And that's why we shouldn't be resorting to protectionist measures. We shouldn't be thinking that it's just a one way street.

(END VIDEO CLIP)

BLITZER: We're going to go to India shortly and speak with our own Sara Sidner. She's on the scene for us. Stand by for that. But this is what awaits the president at his next stop, Indonesia. A deadly volcano has been erupting for almost two weeks, but the president's travel plans have not been affected -- at least not yet. Back in June, the oil spill in the Gulf of Mexico forced the president to scrap a visit to Indonesia. It was the second time he had to cancel a trip to the country where he grew up. He spent a few years of his childhood living in Indonesia. The first time, by the way, he had to cancel that trip was in March. Mr. Obama stayed in Washington at that time to promote and later sign health care reform legislation into law.

Meanwhile, new air security measures are taking effect today, prompted by that package bomb plot uncovered late last month. Toner and ink cartridges over 16 ounces now are banned on passenger flights in both carry-on and checked baggage. The Department of Homeland Security also extending its ban on air cargo from Yemen to include Somalia, as well.

All of this is happening right now as -- as we're getting new information about what's going on -- as officials are cracking down on cargo security, they're paying new attention to a lot of other problems here in the United States.

CNN's Allan Chernoff is standing by in New York.

He's got more details on this -- Allan?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Indeed, Wolf, this is a growing problem. A lot of people very concerned about the possibility of corruption within the air cargo security business.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Wolf, bribing officials overseas, Panalpina, a global freight forwarder, admits it did that for at least five years, paying thousands of bribes, worth at least $27 million to government officials in seven countries, including Angola, Russia and Nigeria. Not only is it a violation of the Foreign Corrupt Practices Act, but in today's world, experts say it raises troubling questions about air freight security.

(voice-over): A payoff, warns the former commissioner of U.S. Customs and Border Protection, could be the security hole that permits a dangerous package onto a plane.

JAY AHERN, CHERTOFF GROUP: Corruption is a problem to any security strategy. It can certainly undermine the various elements of a comprehensive strategy.

CHERNOFF: Panalpina paid bribes from 2002 to 2007 to avoid inspection, documentation requirements and customs duties. The settlement with the government will cost almost $82 million. The company says it has reformed so that "our guiding principle is to act in an ethical manner and to comply with all laws and regulations."

The bribe factor, Ahern says, magnifies the urgency of strengthening intelligence-based security, as opposed to technology, which can be bypassed through illegal payoffs.

PANALPINA

AHERN: And 100 percent scanning does not equal 100 percent security.

CHERNOFF: That is especially the case with large retail shippers like FedEx and UPS, that accept packages from almost anyone.

(on camera): Some small shippers, though, know exactly whom they're dealing with and what they're packaging. Racine Berkow, for example, works for museums around the globe. She knows exactly what goes into these crates.

Racine, do you think that screening absolutely all packages is going to really help air security?

RACINE BERKOW, FINE ART SHIPPER: Well, I don't think so, particularly for the kind of commodity that we ship. It's redundant. It can also create unnecessary handling of the objects, you know, as well as additional expense.

(END VIDEO TAPE)

BLITZER: Allan is back with us -- Allan, how much of a problem is this, specifically for small shippers?

CHERNOFF: Wolf, the small shippers like Berkow are saying when you add those extra layers of security, the expense of it, that could actually put them out of business. So when you combine that concern, along with the risk of bribes, experts are saying that intelligence -- improving intelligence is really the way to get better air cargo security, as opposed to focusing on technology -- Wolf.

BLITZER: A serious problem, indeed. And it's not going away.

All right, Allan, thank you.

A revolt in Democratic Party ranks.

Jack Cafferty is here with the Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Some people insist on not knowing when to call it quits on overstaying their welcome, as it were. And House Speaker Nancy Pelosi is looking like one of them.

Despite her party being crushed in last week's mid-term elections, despite her party losing control of the House of Representatives, Nancy Pelosi wants to stay on as the Democrat's minority leader in the House.

But a growing number of Democrats, her own party, are having none of it. Fox News is reporting a group of defeated Democrats has written a draft of a letter urging Nancy Pelosi to step aside. The draft letter suggest that with Pelosi in charge, quote, "The hangover of 2010 stands no chance of subsiding," unquote.

Other Democratic House members have said they will vote against Nancy Pelosi if she insists on running for minority leader.

The Republicans, of course, couldn't be happier about this. They are positively giddy at the prospect of the Democrats keeping Nancy Pelosi as their leader in the House. It is generally agreed that Pelosi and Senate Majority Leader Harry Reid drove the Democrats off of the cliff. An analysis of TV ads shows more money was spent and more commercials were run against Nancy Pelosi in the mid-terms than against any other Congressional leader since Newt Gingrich -- $65 million spent on 161,000 ads targeting Pelosi.

Is she oblivious to all this?

A poll taken right before the mid-terms showed Nancy Pelosi with an anemic 26 percent approval rating; a 53 percent unfavorable rating.

Here's the question -- isn't it time for Nancy Pelosi to just go away?

Go to CNN.com/caffertyfile and share your thoughts.

BLITZER: And they will, Jack.

Thank you.

Jack Cafferty with The Cafferty File.

President Obama is talking about America's bleak jobs market and his fears that it's becoming the, quote, "new normal." We're going to talk about the threat to the economy and to his chances for reelection.

And stand by for the Republican Congressman who will have a lot of power to make the next two years of the Obama administration -- potentially, at least -- an investigative nightmare. Darrell Issa is standing by to join us live.

(COMMERCIAL BREAK)

BLITZER: The president spoke before the Indian parliament today and he made it clear the Obama administration would like to see India become a permanent member of the United Nations Security Council.

Listen to this.

(BEGIN VIDEO CLIP)

OBAMA: The just and sustainable international order that America seeks includes a United Nations that is efficient, effective, credible and legitimate. And that is why I can say today, in the years ahead, I look forward to a reformed United Nations Security Council that includes India as a permanent member.

(END VIDEO CLIP)

BLITZER: Let's bring in CNN's Sara Sidner.

She's in New Delhi covering this visit for us.

This was well received by the Indians, not so well-received by their rivals, the neighbors, the Pakistanis.

What are the -- what is the thinking there in India, Sarah?

Do they think this will get off of the ground, that -- that India will eventually become a permanent member of the Security Council?

SARA SIDNER, CNN CORRESPONDENT: They absolutely do. They think it's about time. They've been pushing for this in the background for a very long time now. And as you heard there, great applause after Mr. Obama said, yes, the U.S. will back India in its bid for a permanent seat on the U.N. Security Council.

What does America have to gain?

You know, a very strategic ally. That is what the president kept talking about over and over and over again. India is located in a region and it's the most stable country, really, in the region, both economically and politically. You know, it's bordered by, you know, war torn Afghanistan. You also have Pakistan, a little less stable there, but also a nuclear power. And it also counterbalances -- if India was to get this seat -- counterbalances the new powerful influence of China.

So for America, it is a great strategic ally, which is something that the president again and again made very clear to the world and to India itself while they -- while he was here -- Wolf.

BLITZER: The press in India, which is vocal and lively, as you well know, Sara, they weren't necessarily all that happy with some of his earlier comments about Pakistan. A lot of them think that Pakistan is a state sponsor of terror. They remember what happened in Mumbai just a couple of years ago.

How is the president being received, though, now that he's wrapping up his visit to India?

SIDNER: I can tell you this, like you said, at the very beginning -- and this stems from his very first speech outside of The Taj Hotel. You remember that hotel, the last battleground of the Mumbai attacks, where more than 160 people were killed. He did not mention who the culprits were in that, which were Pakistani citizens. And so India reacted a bit, the citizens and the media, as to why he did not mention that.

But then, after he made his speech in parliament -- only a second U.S. president to do that in front of a full parliament -- after that, he did mention Pakistan. He said, look, Pakistan has to take care of the terror within its borders and try to control the extremist groups there. A big round of applause. And it looks like, after that, he really charmed India and India sees him as someone who really can be and help bridge the gap between the India, America and Pakistan situation and the ties there.

BLITZER: A lot going on for the president this week, as he guess ready to leave India for Indonesia, his next stop.

Sarah Sidner, thanks very much.

She's been dubbed a kingmaker in the wake of the mid-term elections. We're talking about Sarah Palin. She now has her sights set on a new target.

Does she have the ability, though, to set policy change in motion?

And a new report card on fast food fare. And the score is generally a big fat F.

Who has the worst and the best meals for kids?

(COMMERCIAL BREAK)

WOLF BLITZER, CNN ANCHOR: The Democrats trouncing of Election Day, forcing President Obama to very publicly reflect on where he and his party have gone wrong.

Let's bring in our senior political analyst, Gloria Borger. He was doing a lot of reflecting. He had a 70-minute interview on "60 Minutes" yesterday, the only televised part of the interview. It's all on their Web site.

But listen to this little bit that he said what keeps him up late at night.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What is a danger is that we stay stuck in a new normal where unemployment rates stay high, people who have jobs see their incomes go up, businesses make big profits, but they've learned to do more with less, and so, they don't hire.

(END VIDEO CLIP)

BLITZER: Well, that's a major nightmare, not only for all for those people out there.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes.

BLIZTER: But as far as he's concerned, if the unemployment rate is still very high in two years, his chances of getting reelection, obviously, go down.

BORGER: Sure. I mean, if that's the new normal, then you could really have a new president, Wolf. I mean, you know, if unemployment remains at 9.6 percent, the public is going to be very unforgiving.

I think the problem the president has is that he doesn't have a whole lot of tools in the tool box, which is why you see the Fed now buying treasuries and trying to help out in that manner. But, look, this is -- this is the Democrat's nightmare. And what you see from this president now is really trying to reach across the aisle because in some way, shape, or form, I think he hopes or believes that the Republicans may overreach on the budget cutting side of the equation and at least that could prop him up to a certain degree if he's seen as somebody who's reaching across the aisle in a post-partisan way, because that's what people thought they got when they elected him.

BLITZER: But by all accounts, these Republicans now are going to be even more conservative than the previous Congress. And a lot of the members of the Senate, for example, Republicans who are up for reelection in 2012, they're already worried about the Tea Party-backed challenger in their primaries.

BORGER: Sure.

BLITZER: Whether an Orrin Hatch who's worked with Democrats over the years or even Olympia Snowe in Maine -- they have to worry about a Tea Party challenge. So, they're probably going to be even more reluctant to cooperate, to compromise with the Democrats.

BORGER: Sure. They will. And the whole question, Wolf, is whether they overreach and where they could potentially do that.

And in talking to the Democratic sources, I think they're figuring that when the Republicans have to put up and say these are the budget cuts we need to get to -- to start reducing the deficit, that the American public might start saying, whoa, we want to reduce the deficit, but we don't want to cut Medicare, we don't want to cut Social Security or raise the retirement age. We don't want to cut this program or that program or education. And that there -- you know, they're feeling that that's going to set up the argument that, in fact, the president and the Democrats can have.

But, you know, we just don't know at this point how either side is going to behave.

BLITZER: In that "60 Minutes" the interview, Steve Kroft asked the president about all of the appearances he's been making lately not only on "60 Minutes," but on "The View" or "The Daily Show with Jon Stewart," whether this diminishes the office of the presidency.

Listen to what the president said.

(BEGIN VIDEO CLIP)

OBAMA: I've got to adapt the presidency to reach as many people as possible in as many settings as possible so that they can hear directly from me. You know -- but this is an example of where, you know, on the one hand, folks say, well, you know, he's a little too remote. Then if I'm on "The View," well, you know, he shouldn't be, you know, on some daytime TV show.

My attitude is: if I'm reaching people, if I'm talking to them, I'm willing to take the risks of overexposure on that front.

(END VIDEO CLIP)

BLITZER: I'm sure he reached millions and millions of people last night on "60 Minutes" following football. I'm sure he had a big audience. So, is there anything wrong with the president going on these shows?

BORGER: You know, it's not how many times you see him, Wolf, because he does have a point there. But if what you see and what he says and -- you know, we saw Bill Clinton once on MTV talking boxers and briefs and that was the end of it.

What Democrats were complaining about was that you saw them in all of these places during the election, but hey believe -- particularly the ones who lost -- they believe that he didn't effectively carry the message that they needed to carry about all of the things they have done to try to help the economy. And they believe that he wasn't a good spokesman for them. They think it might be good for Barack Obama to be seen. But it wasn't -- it didn't trickle down to them. And they believe, as leader of the Democratic Party, that he should have done more.

Now, he is kind of overexposed. And I wouldn't be surprised if they pulled back just a touch more now that they've done their big "60 Minutes" interview because he's got to get down to work. And you'll see him probably meeting with Republican leaders, I would think, because that's the new message they want to get across, which is that he's trying and they're waiting -- the Democrats are waiting to see if it's returned. And they believe the public will be on their side if Republicans behave in a partisan way.

BLITZER: All right, Gloria. Thanks very much. Gloria will be back later.

Sarah Palin now has her eye on a new post-election target. Kate Bolduan is here. She's monitoring some of the other top stories in THE SITUATION ROOM. She's walking into THE SITUATION ROOM right now.

KATE BOLDUAN, CNN CORRESPONDENT: Exactly (ph).

BLIZTER: Tell us what Sarah Palin is up to right now.

BOLDUAN: Taking on an unusual political foe it seems. This time, Sarah Palin is taking aim at the Federal Reserve and its chairman, Ben Bernanke. In a speech prepared for her appearance in Phoenix, the former Alaska governor takes issue with the Fed's newly announced plan to buy up hundreds of billions of dollars in long-term Treasury bonds to jump-start the economy. The speech is viewed as a shift for Palin who generally steered clear of major policy statements so far.

Now, this one is actually really interesting, you want to look at this. Today marks the 50th anniversary of John F. Kennedy's election as the 35th president of the United States. During his campaign, "Life" magazine, then a popular weekly, assigned its best photographers to follow JFK. You're seeing him as he's raised there, they took thousands of photographs.

Today, Life.com released some of its previously unpublished Kennedy photos from that era. Pretty amazing stuff.

Parents, listen up -- another study to tell you about. A new one says fast food marketing to children is up. And meals advertised at popular restaurant chains are -- probably no surprise -- very unhealthy. The report from Yale's Rudd Center of Food Policy and Obesity says the worst meal was -- Dairy Queen's cheese burger, fries, soft drink, and Dilly Bar, totaling 973 calories. Ouch!

Researchers found only 12 out of the 3,000 meal combos met nutritional combos. The healthiest was Subway's veggie delight paired with apple slices and 100 percent juice.

Now, this one is going to sound obvious to you but I'm still going to give it to you. When you're on the road, stay awake. Easy? Maybe not so much. The AAA Foundation for Traffic Safety says a lot of us don't. Forty percent of drivers surveyed said they have dozed off behind the wheel at some point.

Researchers blame drowsy driving for one in six fatal crashes. The best advice for a long road trip: get a good night's sleep. And start out the road trip in the morning.

I will admit, I'm one of the 40 percent.

BLITZER: I don't want you to have any Dilly Bars either. I don't know what a Dilly Bar is.

BOLDUAN: Wolf?

BLITZER: What is a Dilly Bar?

BOLDUAN: You have not live.

BLITZER: I know.

BOLDUAN: It's ice cream with a nice chocolate shell.

BLITZER: Oh.

BOLDUAN: Exactly.

BLITZER: I've had that. I didn't know those were called the Dilly Bar.

BOLDUAN: It's a called a Dilly Bar.

BLITZER: Those are delicious.

BOLDUAN: They're delicious but --

BLITZER: Oh, they're right there. The worst right behind you, the Dilly Bar.

BOLDUAN: Only in moderation, a little dessert.

BLITZER: Yes. One Dilly Bar a day, is that right?

BOLDUAN: I'm sorry.

BLITZER: No?

BOLDUAN: That's the apple. What are we going to do with you?

BLITZER: Thank you. Darrell Issa, come on in, Congressman. He's going to be joining us right after this. I don't know if you've been eating Dilly Bars, Congressman. But we're not going to investigate.

REP. DARRELL ISSA (R), CALIFORNIA: Not since I have to wear suits.

BLITZER: OK. The Darrell Issa, the congressman. He's coming back right after this.

(COMMERCIAL BREAK)

BLITZER: The incoming Republican majority in the House of Representatives could -- potentially at least could make the life of the Obama administration rather miserable if they want to. Let's talk about it with one congressman who's poised to take over a key investigative committee. He's going to be the new chairman of the House Oversight and Government Reform Committee, Darrell Issa of California. That would be your state.

Congressman, thanks very much for coming in.

ISSA: Thanks very much, Wolf.

BLITZER: Are you going to make their life miserable? Are they going all have to start hiring lawyers?

ISSA: No, no. We're going to try and get to the bottom of where money went and whether it was well-spent. We're going to try to roll back the direction of government. Many people talked about reducing the 100 million of discretionary spending. We're rolling back $350 million a year which was the stimulus over two years each year. That's a lot of money that we have to figure out where it was spent and how we're going to live without it.

BLITZER: That's going to be a primary focus of your investigation.

ISSA: It's going to be a big part of where we start. I said I have two priorities. One is public safety. Things like the FDA, and obviously MMS, the oil spill, and places where it affects people's lives. The money spending that has not let to jobs. Those are real priorities for the American people.

BLITZER: Because some Republicans and some conservatives would love you to go after the ACORN investigation or the new Black Panthers and some of the highly publicized activities.

ISSA: There's always going to be things that you watch where you have to follow up and ultimately refer it to the attorney general and so on. That's not what the committee is about. Our committee is supposed to be about finding waste, creating reform, making government do its job and do it within a smaller budge, not a larger budget.

BLITZER: Here's what you said on the Rush Limbaugh show back on October 19. "There will be a certain degree of gridlock as the president adjusts to the fact that he has been one of the most corrupt presidents in modern times. He has ignored the laws that said were so vital when he was a senator." Wow, those are strong words.

ISSA: They were tough.

BLITZER: Got to back it up. He's one of the most corrupt presidents in modern times.

ISSA: It was a campaign. I make no bones about it. If I had to do it all over again, I would have pursed my words a little more carefully. When you hand a president nearly a trillion dollars in walking around money, he uses it for political paybacks, that's corrupt. When you have things like ACORN where the president once received money to work for them and there seems to be no follow-up, even while states have recognized there's a corrupt organization, there's a problem. The new black panthers that you mentioned is really not in my lane, it's another Congressman's lane, Lamar Smith.

BLITZER: He'll be the chairman of the judiciary committee?

ISSA: He'll be the chairman there and I expect he'll follow up because this is voter intimidation. Voter fraud, voter intimidation, wasting money, these are important. But let's understand, corrupt is often taken by people to be breaking the law. It's not necessarily breaking the law. Getting all that money and using it in a way that was not its intended purpose, it did not create jobs, that's a problem. I need to be fair to the president and say, I come here to work with you. I come to make your administration more successful because you comply with the will of the people in light of the election. I'm going have to have a working relationship if we're going to bring hundreds of millions or dollars of spending out of it. My goal is to say never again will we hand you Congressional ear marks, never again will we give you walking around money that becomes discretionary ear marks by the president.

BLITZER: So if you had to take it back, you would take back the words one of the most corrupt presidents in modern times? That's political campaign rhetoric?

ISSA: I would say the administration's, if you will, ability to be corrupt because nearly a trillion dollars that Congress gave them and let them do whatever they wanted with it should have been approached in the sense that the house. the Senate, and the president wasted a considerable amount of money and they did so in a way that was political. That's a big difference in s saying one of the most corrupt. Do I think the president has a long way to go to make the kind of changes he promised to make? Absolutely. The Sestak issue is an issue not about a new crime or a new wrongdoing, but saying we're not going to change it.

BLITZER: Joe Sestak, when he was running against Arlen Specter for the Democratic nomination. He was approached and said he'll get a job and some sort of title in the Obama administration if you drop out. You're saying what? ISSA: That I can only take on an issue like that that occurred in the Bush administration if I take on the whole problem. I can't say this president's wrong when I find out that President Bush --

BLITZER: So you're not going to investigate it.

ISSA: I'm going to look for changes so it doesn't happen in the future. But I've got to recognize just as the problem from the gulf in MMS began on President Bush or President Clinton's watch, that I have to be fair and bipartisan, we need reforms for all presidents. Not just this one.

BLITZER: Just to be precise and clean this up, you don't or you do think the president is corrupt?

ISSA: I think this administration is going to have to make a change. The word corrupt is not an unreasonable -- Black's law would say getting $800 billion and spending it in political paybacks to a great extent through public employee unions and governments was, in fact, a misuse that I would call corrupt. Do I think that the president is personally corrupt? No, I should never have implied that or said that on a quick statement on a radio call-in.

BLITZER: You were supposed to meet today with the Vice President Joe Biden to start a new dialogue. He called you to invite you in. What happened?

ISSA: We had a good conversation. Fairly lengthy in which we talked a little bit about what we needed to start doing together. I think when the vice president had scheduled it, perhaps, the fact that the president would be out of the country, it hasn't hit him how busy the schedule was going to be. They said they want to reschedule next week. We have a number of issues we need to work on together. We certainly have to deal with the fact that the special IG on the -- on the stimulus and the TARP, they don't have subpoena authority, they need to have it. We have a bill in the Senate, it was passed in the house, trapped there, that would give them the ability to do that. Additionally, one of the things that I want to lobby the vice president is, we do not have mandatory reporting. We have voluntary reporting on all of the stimulus money. That's not going to work. Because what we're getting is we're getting the reporting of the right spending and not the reporting of the wrong spending.

BLITZER: Should officials in the white house right now start thinking about lawyering up?

ISSA: No. if anything what they should think about is one of my number one priorities to give all 74 IGs, inspector generals, subpoena authority. I believe they are the ones that need to be able to use subpoena, be able to do investigations and be free of fear of being fired for doing it. A lot of what I want to do is make the administration be able to do their job better. There aren't enough of us in a little committee to be able to really go after government. We can go after the white house. But the mistake is, the white house is not the probable. The bureaucracy to a great extent is the problem. BLITZER: So you, I assume, have studied what happened after President Clinton lost the majority in '94 and '95. The Republicans took over. And the white water investigations, the Paula Jones investigations, there were subpoenas after subpoenas after subpoenas. What I hear you saying is you're not going to do that.

ISSA: I have no intention on doing that. The fact is, we were out of power for over 40 years. I don't think we knew how to lead. We've only been out of the majority for four years. We've learned lessons by being voted out. But we have also a pretty good amount of knowledge on how do you lead? How did Tom Davis bring about real reforms when he was chairman? How do they do the things that the Americans want us to do. We've got to do those first.

BLITZER: What is the first thing you're going to investigate?

ISSA: That's a long list.

BLITZER: Number one?

ISSA: Well, look, I'm very concerned about the FDA and their ability to make sure our food and our medicine is safe. Under Chairman Towns, we had bipartisan hearings to show us that we're not good at either one. And there are real problems to make sure we can do that basic task of government. And I said in the beginning, safety -- the American people's safety, whether it's oil in the gulf or the food and drugs that they -- that they take feeling that they've been checked by the government. That has to come first. There's no question we're going to work on that. That's where government money is important.

BLITZER: That sounds like something everybody can agree on. Food, safety, for our kids and all that. No one is going to quarrel with you on that.

ISSA: When Ed and I switched position.

BLITZER: The outgoing.

ISSA: Chairman Towns. When we switched positions, my hope is everything that's bipartisan before is bipartisan again. I think it will be.

BLITZER: You're going to start off on a positive note.

ISSA: We're going to work first on the things that we agree need to be fixed. Mineral Management Service, now the Ocean Management --

BLITZER: The result of the BP disaster the gulf.

ISSA: But they were a corrupted organization under the -- under President Bush's watch. This is a group that had --

BLITZER: MMS --

ISSA: MMS in those days. We had hearing after hearing in which we saw the too-cozy relationship and we failed and the Bush administration failed to fix it to have prevented this. So I look at it and I say, when I start in '05, when I was a subcommittee chairman, I have to finish to make sure I work with the administration to ensure this organization becomes functional on the revenue we deserve and the safety we deserve in the work that they do. Those are things that are clearly in my lane. They could be controversial from time to time. I don't think they should be. You said which one is first? I can't fail to tell you there is one investigation I'm going to continue -- the friends of Angelo, finding out how hundreds of thousands of dollars per recipient, mostly people in government, not elected people, influenced Freddie and Fannie's decisions to take bad loans.

BLITZER: Special mortgages, like Chris Dodd. Was he one of those?

ISSA: He was one of those people. But I'm not looking at the senators and the Congressman as much as I look at the staffers and the people over at Freddie and Fannie that, in fact, may very well have been more important to the bad decision. I think that when it comes to member of the house and the Senate, that's an ethics job. That's not my committee. But it is important that we get the facts. If I find something on a member of the house or the Senate as we've done in the past, we refer to ethics and leave it alone. When I look at over 100 people on staff in the house and Senate and at Freddie and Fannie who received these special loans in key positions, I have to ask, was Angelo doing it because he was a nice guy, or because he got a real bang for his dollar and I think the latter the true.

BLITZER: Investigating the mineral and management mines. With have a lot on your plate.

ISSA: America is a great country with a lot of problem on the government. If we don't make a change in the two years, we don't deserve to have an opportunity to lead. I've gotten this opportunity. I want to make the most of it. It won't be by investigating the president first, it will be fixing the problems first.

BLITZER: The whole country will be watching.

ISSA: Thanks, Wolf.

BLITZER: Thanks for coming in.

ISSA: My pleasure.

BLITZER: Good luck.

ISSA: Thank you.

BLITZER: The CIA chief is giving a stern warning to his employees about the incredible damage they could do. Stand by. New information coming in.

And the kidnapped victim, Elizabeth Smart, relives her abduction in court.

(COMMERCIAL BREAK) BLITZER: More than eight years after she was kidnapped from her home, Elizabeth Smart is now testifying. Kate Bolduan is monitoring that and some other top stories in THE SITUATION ROOM right now. Must be painful for her to be doing this.

KATE BOLDUAN, CNN CORRESPONDENT: Absolutely. How can we forget this story? Remember it was just unfolding. It's still on going, the trial now. Child abduction victim Elizabeth Smart she described her kidnap and rape eight years ago in her words quote was indescribable fear. Smart, now 23 years old began her testimony in the federal kidnapping trial of Brian David Mitchell. Mitchell is charged of snatching then 14-year-old Smart from her bedroom in June of 2002. Smart says she was taken by knife point and was later raped. The defense claims Mitchell is insane.

Another case we want to tell you about, a Connecticut jury is recommending Steven Hayes be put to death for the murders of a mother and her 11 and 17-year-old daughters during a 2007 home invasion. The girl's father Dr. William Petit wept when the verdict was read. He later told reporters the verdict was just and he was crying over the tremendous loss. That seems like an understatement. Another trial is pending for the second defendant in that case.

And a message from Leon Panetta today. A stern warning to employees of the Central Intelligence Agency. The CIA chief dispatched a memo warning that the government is cracking down on any leaks to the media. He said unauthorized disclosure of information has done, in his words, incredible damage and could put lives in danger. He referenced only one leak specifically -- the Wikileaks.

BLITZER: That's a huge, huge leak with a lot of information. Thanks very much.

Michael Bloomberg, the mayor of New York, is not impressed with the new members coming to Washington. The mayor of New York says some of the new members need to get smart about China and other issues.

And the white house press Secretary Robert Gibbs, he does the right thing. He gets in to the shouting match with an Indian official. Thank you, Robert. We'll tell you why.

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BLITZER: Let's get right to the strategy session. Joining us now, the Democratic strategist and CNN political contributor, Paul Begala and Republican strategist Rich Galen. Guys, thanks very much for coming in. The mayor of New York, Mayor Bloomberg, he's outspoken assessing some of these new members who are coming to Washington. "If you look at the U.S., you look at who we're electing to Congress, to the Senate, they can't read. I'll bet you a bunch of these people don't have passports. We're about to start a trade war with China if we're not careful here because nobody knows where China is. Nobody knows what China is." Mayor Michael Bloomberg quoted in "The Wall Street Journal." He sounded happy with a lot of the new members. I assume he's referring to the Republicans because they're the new ones coming to town. PAUL BEGALA, DEMOCRATIC STRATEGIST: I will point out for the benefit of our viewers, Michael Bloomberg was elected as Republican, mayor of New York.

RICH GALEN, REPUBLICAN STRATEGIST: Independent.

BEGALA: Now an independent, but comes out of the Republican Party in the politics. This is the intellectual arrogance that's disappointing. I don't like the outcome of the election. I disagree with most of the Republican Congressman coming in. Lord all mighty, they haven't done anything yet. Let's wait and see how they do. I'm just -- I hate that kind of intellectual arrogance.

GALEN: It's that elitism that -- that -- the upper east side of New York. I mean, that's why everybody else hates New York City people. My father who grew up and was raised and born in Brooklyn would have called Brooklyn a New York smart. He's better than anybody else. But, you know, if he wants to run for president, we may not be able to read, but he can't count. There are a number of electoral votes in the west coast and the east coast to get there.

BLITZER: Do you think he'll run as a third party candidate?

GALEN: He will. I think he will. Yeah.

BLITZER: Do you think he will?

BEGALA: I think if the Republicans nominate an extreme conservative, Sarah Palin, Glenn Beck, the people who run their party. He might see some opening. I'm not kidding. But Ms. Palin is the queen and king maker of the Republican Party now. It's inconceivable. You can't say things like that. It's not true. Lots of smart people are conservative. I'm standing next to one. Okay? And by the way, lots of perfectly moral people are liberal. The notion that all liberals are smart is wrong, all conservatives are pure is wrong.

GALEN: It does remind me of what then candidate Obama said in California when he said about Pennsylvanians, that they're bitter and they rely on their guns and their religion. I think Bloomberg was in on --

BLITZER: I want both of you to stand by. I want to talk about the tea party and what Republicans are fearing incumbent Republicans as they're looking ahead to 2012, their own reelections. They're not worried about Democrats, but they're worried about other Republicans. Stand by for that. Also, Jack Cafferty coming up later. We'll be right back.

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BLITZER: Let's get back to the strategy session. Paul Begala and Rich Galen are here. Rich, a tea party spokesman said this. He's referring to Republicans who would be up for election in 2012, reelection many of then in the Senate. "Hopefully the 2010 election results will cause more senators to see the light about excessive growth of government and deficit spending. So we will give them a chance to improve before we make them feel the heat in their reelection campaigns. After the results this week, my guess is many senators will suddenly be more willing to adhere to conservative ideals." Mostly Republicans. So if you're Orrin Hatch in Utah, who has worked with Democrats over the years, or Olympia Snowe for that matter in Maine, how worried should you be about a tea party backed candidate going after you in a Republican primary?

GALEN: I think anybody running for any office needs to be aware of what around them. Mike Castle not knowing that these people are coming after him, after he saw what happened.

BLITZER: Robert Bennett in Utah.

GALEN: Castle got to see what happened to Murkowski a week before and he still didn't do anything about it. I think everybody needs to take all of this stuff as seriously as you would in any campaign. I don't think there's anything wrong with long-term incumbents having to work to -- shall he be retained to use context.

BLITZER: Sometimes people want a new face.

BEGALA: But this smells like a purity test. This smells like rigid extremism. Frankly, it helped the Democrats. If you start knocking out -- the -- the tea party --

BLITZER: It didn't help in Kentucky.

BEGALA: No, it didn't. They won in several places. They lost in Delaware because of the tea party, I believe. Mike Castle the popular former governor and congressman would have won that race.

BLITZER: Didn't help in Florida.

BEGALA: They won in some places, but they lost in places they should have won. They should have won Nevada even though Harry Reid is the toughest politician I've ever seen. They certainly should have won in Delaware. They probably should have won in Colorado. They limited their gains in what should have been a Republican wave. But also, it ought not be a crime, a sin. If they worship the founding fathers, the founding fathers were all about compromise.

BLITZER: We're going to have two years to discuss this so stand by. We'll continue this conversation, guys. Thanks very much.

An American-born Islamic cleric sends out the call to kill Americans. He's wanted dead or alive in two countries. New information coming in.

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

JACK CAFFERTY, CNN CORRESPONDENT: The question this hour, isn't it time for Nancy Pelosi to just go away? Now she says she wants to be minority leader of the house. Cameron writes from San Francisco, which is where her district is, "We'd love to -- for her to do that, but she's a narcissist who can't see past her own reflection. The only person's interest Pelosi has been advocating is her own. Stepping down would be admitting failure and that would make her not perfect."

Rose in Arizona, "Yes, it's time for Pelosi to go away. I can't help but feel sorry for her family. They have to listen to the bad publicity against her. It must be hard for her grandchildren and her own children to defend her. I think she's being selfish and is not considering other people's feelings. She just doesn't seem to care. It's all about her."

Vincent writes, "Actually, Jack, Nancy Pelosi has done a great job passing historical legislation over the last two years. However, it might be time for you to go."

Mike in New Hampshire, "No, Jack, as a Republican I want her to remain the face of house Democrats for two more years. It will be good for 5 million votes in 2012."

Keith in California, "Pelosi doesn't have a positive public presence, but she can get things done in the house. Gingrich by contrast couldn't get things done in the house but did have a great public media presence. This question about Pelosi will be answered by the house Democrats, not here."

Mark in Minnesota, "Jack, Miss Pelosi should go away, but she won't. Like Sarah Palin, she has an ego the size of Texas and will never willingly give up the limelight. She just enjoys being the center of attention too much. In a sense, Miss Pelosi represents all that's wrong in American politics."

Pat in Michigan writes, "Yes, you would think she would realize this is just step aside, but no. The queen thinks she has shiny new clothes. Well, you know the rest of that story and the visuals ought to keep you up all night. You know what I mean?" Yes, I do.

If you want to read more on this, you'll find it on my blog, cnn.com/caffertyfile.

BLITZER: Thanks, Jack.