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THE SITUATION ROOM

Acts of Desperation in Alaska; Pelosi: We Didn't Lose Because of Me; SCOTUS Allows Don't Ask, Don't Tell; Can Americans Afford Debt Plan?; President Denies Cave-In on Bush Tax Cuts; President Obama on the World Stage; Jindal Book Blasts President Obama; Alaska Senate Cliffhanger Drama

Aired November 12, 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: Thanks very much, Brooke.

Happening now, President Obama insists he's not caving in on tax cuts. This hour, he's pressing ahead with his Asian tour. But he's diving back into the debate over extending the Bush era tax breaks for wealthy Americans.

Stand by.

The Louisiana governor, Bobby Jindal, handles Mr. Obama's handling of the oil spill. Critics are accusing the Republican of now playing dirty in his new book to promote his White House prospects in 2012.

And a new call of duty to assassinate Fidel Castro. It's a controversial video game featuring the Cuban leader in his heyday.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

President Obama is sending an urgent message from Asia to Americans who fear he's ready to flip-flop on tax cuts. He's dismissing an online report that the White House is now open to extending the Bush administration tax breaks for the wealthy. our White House correspondent, Dan Lothian, pressed Mr. Obama about this issue during a news conference at the close of the G20 summit in South Korea.

Listen to this.

(BEGIN VIDEO CLIP)

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: After the mid-term elections, you said you were open to compromise on the Bush tax cuts.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Um-hmm.

LOTHIAN: I'm wondering if you're prepared today to say that you're willing to accept a temporary extension for the wealthiest Americans.

And in -- on an unrelated question, do you feel that the election has weakened you on the global stage? OBAMA: The answer to the second question is no. I think what we've seen over the last several days as we've traveled through Asia is that people are eager to work with America, eager to engage with America on economic issues, obscurity issues, on a whole range of mutual interests. And that's especially true in Asia, where we see such enormous potential. This is the fastest growing part of the world. And -- and we've got to be here. And we've got to work.

And I'm absolutely confident that my administration, over the next two years, is going to continue to make progress in ensuring that the United States has a presence here, not just for the next couple of years, but decades to come.

With respect to the Bush tax cuts, what I've said is that I'm going to meet with the -- both the Republican and Democratic leaders late next week. And we're going to sit down and discuss how we move forward.

My number one priority is making sure that we make the middle class tax cuts permanent, that we give certainty to the 98 percent of Americans who are affected by those tax breaks. I don't want to see their income taxes spike up, not only because they need relief after having gone through a horrendous recession, but because it would be bad for the economy.

I continue to believe that extending permanently the upper income tax cuts would be a mistake and that we can't afford it. And my hope is, is that somewhere in between there, we can find some sort of solution.

But I'm not going to negotiate here in Seoul. My job is to negotiate back in Washington with Republican and Democratic leaders.

(END VIDEO CLIP)

BLITZER: All right, you heard the president say he's ready to negotiate with lawmakers of both parties when they return for the lame duck Congressional session next week. Later, we'll talk about whether he may make concessions on the tax cut issue in the end. Stand by for that.

But let's get to the president's performance on the world stage right now. He left the G20 meeting in Seoul for Japan, where he's taking part in yet another economic summit.

Our senior White House correspondent, Ed Henry, is traveling with the president right now -- Ed, what, if anything, did the president accomplish at the G20 summit in South Korea?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Wolf, his senior advisers believe that he was able to push a lot of these leaders along who didn't want to have any sort of an agreement on some big economic imbalances -- trade imbalances, debt imbalances, trying to fix the debt load of some of these countries and make sure that there's not a Greek-style debt crisis spreading around the world; the thing there were many leaders who didn't want to agree on anything, but that the president helped bring it along. But when you look at what they ended up agreeing on, what they got on paper, the leaders of the 20 largest economies, it really wasn't much. It was a lot of talk on debt, trade, as well as economic growth. And then the big issue that was really the great divider, currency manipulation. It was not very tough on China, instead, kicking this issue down the road to 2011. And so the president was forced, at his news conference on the way out of Seoul, to say, look, you can't hit a home run on the world stage every time. Sometimes you just have to hit some singles. That can still pre--- be pretty good. You'll still score some runs. But obviously, there were some higher expectations here. And it -- it's difficult to meet sometimes -- Wolf.

BLITZER: Did you get the sense, Ed -- and you've traveled with the president around the world over the past two years -- that is, his standing now, internationally, has been reduced as a result of the political setbacks he and the Democrats suffered on November 2nd during the election?

HENRY: Well, it's certainly hard to measure. But I remember the first G20 summit that President Bush attended -- President Obama attended in London in early 2009. He was greeted almost like a conquering hero, a rock star. He was the new big star on the world stage.

This time, you didn't see that kind of reception. So that was different, for sure.

But I think some of that is natural over the course of two years. It may not be related to the mid-term election. I think a bigger measure be -- may be what kind of policy changes can he actually enact. And one where he -- he took a blow on the world stage, frankly, was in Seoul, on the sidelines of the G20. He really wanted to get a bilateral trade agreement with South Korea done. He had set that deadline. They didn't get it done. He's still hopeful to get it finished in the next few weeks. But that's far from a certainly. That was something he desperately wanted to come home with. He said it would help bring U.S. jobs home. So far, he -- he's come up empty -- Wolf.

BLITZER: He'll keep on trying, I'm sure.

All right, Ed.

Thanks very much.

The president is also under attack for his handling of the Gulf oil spill by a possible -- possible Republican rival in 2012. We're talking about the Louisiana Governor Bobby Jindal. He's now out with a brand new book that's fueling fresh speculation about his White House hopes.

Let's bring in CNN's Martin Savidge.

He's looking into this for us -- Marty, what's going on here?

MARTIN SAVIDGE, CNN CORRESPONDENT: Well, Wolf, this is the book here, "Leadership in Crisis," by the Governor Bobby Jindal of Louisiana. And pretty much from page one, he slams the Obama administration for its handling of the Gulf oil crisis, saying that they were more concerned with their political image than they were with the actual environmental damage that was being done as a result of the Gulf spill.

Specifically, he opens the book up going back to the very first visit that President Obama gave to Louisiana immediately after the oil began gushing into the Gulf. CNN was there that day. We decided to take you back to it.

(BEGIN VIDEOTAPE)

SAVIDGE (voice-over): Sunday May 2nd, 12 days after the Deepwater Horizon oil rig blew up, Air Force One touches down in New Orleans with President Obama on board. Louisiana Governor Bobby Jindal writes: "I was expecting words of concern about the oil spill, worry about the pending ecological disaster and words of confidence about how the federal government was here to help. But, no, the president was upset about something else."

Jindal goes on to describe what he says was "a clearly agitated president," dressing down the governor over Jindal's request in a letter that food stamps be given to those who lost their jobs due to the spill. In the book, Jindal says of the president: "He was concerned about looking bad because of the letter. 'Careful,'" Jindal quotes the president as telling him, 'his is going to get bad for everyone.'"

The governor asserts that this meeting and another like it gave him the impression that Barack Obama was disconnected from the Gulf oil spill, more concerned with political image than ecologic damage: "The White House seemed to focus on the wrong things. I felt like we needed to be on a war time footing against the oil and the president was wondering, why is everybody criticizing me?," Jindal writes in his new book.

In response today, the administration said the president wasn't angry with the governor's food stamp request, but instead, was angry the governor publicly criticized the White House for foot dragging when the governor had only made the request the day before. The White House went on to say: "From day one, President Obama has directed his administration to work with state and local governments to respond to and help Gulf communities recover from the BP oil spill."

(END VIDEO TAPE)

SAVIDGE: And from my conversations that I had today with the White House, one Obama administration insider described Governor Jindal as ambitious. And it was a clear insinuation that by using this book, the rising Republican governor was politically motivated to make himself look very good and, of course, the Obama administration look very bad -- Wolf.

BLITZER: Is this book, Marty, only about the oil spill? SAVIDGE: No, it's not. It might give you that impression, but, in fact, actually, there is a lot -- it's an autobiography. So Bobby Jindal talks about his upbringing. He talks about how he gets into politics. Then he diverts to other topics. He's very critical of members of Congress, including other conservatives. And then he talks about ways he thinks that America can be fixed, both politically and economically.

By the way, the name of the book -- actually, it was going to be "Real Hope, Real Change." But after the Gulf oil crisis, they changed the name.

If you're interested, it goes on sale on Monday.

BLITZER: His family -- originally, his parents were from India. So he's the first Indian-American elected governor -- a governor in the state of Louisiana.

Nikki Haley is the new incoming governor in South Carolina. She's also of Indian ancestry. So there will be a second Indian-American governor of a major state.

All right, thanks very much, Marty, for that.

The outgoing House speaker, Nancy Pelosi, is fighting back against Democrats who say she cost them control of the House of Representatives. You'll hear what she's saying.

And Republican and Tea Party favorite, Joe Miller, has some new weapons, as the vote counting drags on and on in the Alaska Senate race.

And San Francisco's mayor wants to have the last word on whether local kids will, after all, be able to eat McDonald's Happy Meals.

(COMMERCIAL BREAK)

BLITZER: Dramatic new twists today in Alaska -- a big cliffhanger of the 2010 election. As officials in Alaska count write-in ballots in the Senate contest, a new lawsuit is being filed and a conservative activist known for some notorious attack ads is getting involved in the race.

Our political producer, Shannon Travis, is joining us from Alaska.

He's got all the latest details -- update our viewers, Shannon, on what's going on.

SHANNON TRAVIS, CNN POLITICAL PRODUCER: That's right, Wolf. Well, let's go through the latest numbers that are coming out right now. They're not much changed on day three of this write-in ballot count. They're still showing that 90 percent of the ballots that are being counted here, these write-in ballots, are being sorted for Senator Murkowski. Again, not added to her official tally, but sorted for her. In terms of the lawsuit that you just mentioned, that's right, the Miller campaign, right now, supposedly, is filing this lawsuit in state court here in Juneau, basically saying we want voter rolls. We want to look at districts and see if, say, 1,000 voters in that district were registered, that there weren't 2,000 votes. They're concerned about the possibility -- they say they've been hearing stories about voter fraud -- and are concerned about the possibility of that. So they have a lawsuit in court today.

BLITZER: If those votes go along the lines of these write-in ballots, for Murkowski, is she going to be well ahead of Miller, assuming that they -- that they remain on the books?

TRAVIS: Yes. It's looking really good for her. Let's look at this scenario. If the vote -- the write-in ballots continue to break her way with, again, this 90 percent tally, and if -- even if a lot of the challenged ballots aren't counted, she could still possibly win this thing.

But the Miller campaign says, hey, wait a minute, there's still a lot of absentee ballots out there that need to be counted. And they think that those will break their way.

BLITZER: Some heavy hitters are getting involved in this whole ballot battle in Alaska.

TRAVIS: That's right. I'll throw out a name that you know a lot and our viewers may not, but they've certainly his work his name is Floyd Brown.

Floyd Brown is a veteran conservative activist, probably his biggest claim to fame was authoring that 1988 Willie Horton ad, that a lot of people think it sunk Michael Dukakis who's been a Democratic presidential nominee.

A lot of people think it sank his campaign, Brown -- Floyd Brown was also involved in campaigns of the Jennifer Flowers-Bill Clinton affair and right now he has a web site to impeach President Obama.

BLITZER: All right. Thanks very much, Shannon, for that. They're getting involved up there in Alaska. Meanwhile, the incumbent Senator Lisa Murkowski is accusing her opponent, Joe Miller of taking desperate measures to try prevent her from winning.

The write-in candidate spoke to our own John King about the vote counting process and Miller's latest legal challenge.

(BEGIN VIDEO CLIP)

SENATOR LISA MURKOWSKI (R) ALASKA: What people have done is they have filled in the oval and they have written a name and they spelled the name right.

And Miller doesn't know what to do with the fact that people actually did what they were supposed to do. And so what we're seeing now, I believe quite honestly are acts of desperation. We're seeing lawsuits that are being filed. We are seeing ballots that are perfectly clear. Perfectly clear ballots being challenged.

(END VIDEO CLIP)

BLITZER: You can see the Murkowski interview with John, on "JOHN KING USA" that airs right after THE SITUATION ROOM 7:00 p.m. Eastern only here on CNN.

The outgoing Speaker Nancy Pelosi is refusing to take blame for the Democrat's huge election losses that cost the party control of the House of Representatives.

Pelosi is defending herself as she runs to become the House minority leader despite calls by some Democrats for her to step aside. She told National Public Radio that most members of her party understand what happened, and are on her side.

REPRESENTATIVE NANCY PELOSI (D) HOUSE SPEAKER: We didn't lose the election because of me. In any circumstance, we had 9.5 percent unemployment. Any party that cannot turn that into political gain should hang up the gloves. I said that before the election.

The reason they had to try to take me down is because I've been effective in fighting the special interests in Washington, D.C. I'm also the most significant attracter of support for the Democrats.

So I'm not looking back on this. They asked me to run. I'm running and, again, our members understand they made me a target because I'm effective.

BLITZER: The outgoing Speaker Nancy Pelosi in that interview with NPR.

Rumors swirling right now that the Nobel Laureate, the Democracy activist Aung San Suu Kyi could be released from house arrest very soon. We'll give you the latest on one of the world's best known political prisoners.

The latest on the investigation into the fire that disabled that cruise ship and left passengers without electricity and hot food for four days. Stick around. You're on THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The Supreme Court weighing in on gays serving openly in the United States military. Fredricka Whitfield is monitoring that and some other top stories in THE SITUATION ROOM. Right now, what's going on, Fred?

FREDRICKA WHITFIELD, CNN NEWS ANCHOR: Hello to you, Wolf. Hello, everyone. Well, "Don't Ask, Don't Tell" isn't going anywhere, at least for now. The Supreme Court rejected a gay rights' group request to temporarily suspend the military's controversial policy.

The justices say it should remain in effect temporarily until the full appeals process is done. A lower court had found the law court unconstitutional, but that ruling was appealed.

And to San Francisco, for the latest in the battle against the happy meal. Mayor Gavin Newsom is set to veto the city's ban on most McDonald's happy meals with toys. The ban would require fast food meals with toys to meet certain nutritional standards, but the mayor's veto doesn't mean much since the board have enough votes to override him. McDonald's has said it is extremely disappointed with that ban.

And now that the thousands of passengers from that Carnival cruiseline ship are back on land, it's time to find out exactly what caused that fire. Panama officials will lead the investigation and the U.S. coast guard will also participate. The National Transportation and Safety Board says Panama will take the lead since that's the country where the ship is flagged.

Even though President Obama lifted the moratorium on deep water drilling a month ago, the government still has not issued any new permits for the Gulf of Mexico and most experts think, new permits will be slow to come through 2011.

There are some concerns that future oil production could fall if new wells are not drilled. The president imposed the ban after April's BP oil spill, the worst in U.S. history. Wolf --

BLITZER: All right. Fred, thanks very much. It's a shocking scam, millions of dollars in compensation for holocaust victims allegedly stolen. Stand by, information coming in.

And jobless Americans angrily tell members of Congress to do their job and extend unemployment insurance benefits.

Marilyn Monroe makes a cameo appearance of sorts at an auction of baseball memorabilia.

(COMMERCIAL BREAK)

BLITZER: Many of the new recommendations of the president's Bipartisan Debt Commission are being met with skepticism from both ends of the political spectrum.

The plan aims to reduce the nation's debt by $4 trillion over the next 10 years and would cut Medicare and Social Security benefits while eliminating some popular tax breaks. So does it have any chance of being implemented at all?

Joining us now is the chairman of the Senate Budget Committee, Democratic Senator Kent Conrad of North Dakota. He is also a member of this Bipartisan Debt Commission.

Senator, thank you very much for coming in.

SENATOR KENT CONRAD (D) NORTH DAKOTA: Good to be here.

BLITZER: Are you on board with these recommendations that the two chairman of the commission, Alan Simpson and Erskine Bowles put up? CONRAD: No, not every detail, but I'm strongly on board with the magnitude of the plan because that's what it's going to take to get us back on track.

BLITZER: Are you ready to deal with Social Security the way they're recommending? Because Jan Schakowsky was on this program earlier this week, the Democratic congresswoman from Illinois, also a member of your panel, she was furious. She says it's not good and Nancy Pelosi says it's a non-starter.

CONRAD: Well, you know, they have a right to their views. Look, I believe it is, without question, necessary to deal with the entitlements, to deal with revenue, to deal with discretionary spending and to deal with defense.

We are borrowing 40 cents of every dollar we spend. We're headed for a debt that will be 400 percent of the gross domestic product of the country.

BLITZER: Are you ready to increase taxes?

CONRAD: Absolutely. I am ready to cut spending. I am ready to raise revenue. I am ready to deal with every part of the federal budget, because there is no option if America is going to remain economically strong.

BLITZER: So what I hear you saying is you're Alan Simpson and Erskine Bowles basically when it comes to these recommendations. You can tinker on the margins, but basically you're with them on that?

CONRAD: Let's talk about Social Security. They have said we're going to alter somewhat the inflation adjuster, make less of an inflationary adjustment.

BLITZER: People won't be getting the increases they have been until now.

CONRAD: Yes, a more accurate adjuster according to most economists. That seems to be a non-starter given the fact that Social Security is going to go cash negative in 2015.

It's going to go insolvent. It's going to go broke by 2037. So those who say don't touch it aren't dealing with reality any more than those on the right are dealing with reality who say you can't touch revenue.

Look, you have to deal with both sides of the equation.

BLITZER: When you say revenue, you mean taxes?

CONRAD: Exactly. Revenue as a share of our national income is the lowest it's been in 60 years. Spending is the highest it's been in 60 years as a share of national income. So you've got to deal with both sides of this equation if we're going to get our debt under control.

BLITZER: What you're saying is you've got to cut spending and increase taxes? CONRAD: It's undeniable. I think any serious person who has looked at it has concluded that that's the case. By the way, on Social Security, I don't think many people have mentioned that in the Simpson-Bowles plan they're increasing for the bottom 20 percent. They will get an increase --

BLITZER: For the poorest Americans.

CONRAD: Yes. For those who reach the age of 80, they will get a 1 percent adjustment upward each year for five years in a row.

BLITZER: Let's be practical. You need 14 of the 18 members to approve these recommendations. Otherwise, they're just recommendations. If you get 14 on board, then it can go to the Congress as legislation. Do you believe there will be 14 of your colleagues, you and 13 others, who will agree?

CONRAD: I don't know. I hope so. I hope for the sake of this country that we have the will to do what's necessary. I can tell you the Chinese have concluded we have lost the will to deal with our debt. And they have concluded as a result the United States is going to become a second tier economic power. I hope we're able to prove the Chinese wrong. I hope we're able to tell all the interest groups in this town to oppose it because their little slice of the pie is getting nicked. It's going to take nicking a lot of the pie to get this job done.

BLITZER: You're up for re-election in 2012. Are you going to run?

CONRAD: I've not reached conclusion on that. I don't usually make that decision two years in advance but I'm certainly preparing to run.

BLITZER: North Dakota is not necessarily all that receptive, at least in the most recent election, to Democrats.

CONRAD: I can tell you my ratings have remained very positive.

BLITZER: Even though you voted for health care reform?

CONRAD: Absolutely. Look, as I explained to the people of North Dakota, we're on an unsustainable track on health care. We're spending 1 in every 6 dollars in this economy on health care. On the trend we're on, we're going to go to spending 1 in every $3 in this economy to health care.

BLITZER: So you're not going to break away from that.

CONRAD: Absolutely not.

BLITZER: And you know the Republicans if you run for reelection will hammer away on that.

CONRAD: I'm completely prepared to defend what has been done to prevent a financial collapse. I was in the room when the secretary of the treasury under the previous administration and the chairman of the Federal Reserve told us if you don't act, we are going to have a financial collapse.

BLITZER: Henry Paulson and Ben Bernanke, they were that blunt?

CONRAD: They were absolutely as clear as they could be and told us we would face a collapse within days.

BLITZER: Did they say it would be a depression?

CONRAD: They didn't use those words. They used the words financial collapse. On the night that we achieved agreement on the T.A.R.P. plan, we were told if we did not reach agreement by 5:00 on Sunday evening, the Asian markets would collapse, our own markets would open the next morning, and they would collapse.

BLITZER: Looking back, were they exaggerating or do you still believe that?

CONRAD: I think it is as clear as it can be, that's what it would have been. You saw former President Bush at the University of Texas say it wasn't a hard choice. It was a choice between depression or no depression. I chose no depression. And former President Bush is exactly right.

BLITZER: Sounds like someone may be running again from North Dakota in 2012.

CONRAD: Look, I am absolutely going to defend what was done, because it was absolutely essential to avert a financial collapse.

BLITZER: Senator, thank you very much for coming in.

CONRAD: You bet.

BLITZER: A former Republican insider is pushing the GOP leadership to embrace tea party members and their agenda. And a tea party retreat and a call for unity. That's coming up in our strategy session.

A memento of Marilyn Monroe's love life on the auction block right now.

(COMMERCIAL BREAK)

BLITZER: Jobless Americans on the brink of losing unemployment benefits are turning up the heat on Congress. Listen to this.

UNIDENTIFIED MALE: We need a j.o.b. so we can e.a.t.

BLITZER: A lot of anger at this rally in New York. Protestors urging lawmakers to pass an extension of jobless benefits when they return for their lame duck session next week. Those benefits are due to expire at the end of the month. It's a snapshot of difficult times even when some people who managed to find work are struggling. Here's CNN's Deborah Feyerick.

DEBORAH FEYERICK, CNN CORRESPONDENT: For many people in the middle class who finally found work after being laid off, there's still tremendous uncertainly. We went back to Bedford Street Diner in Stanford, Connecticut to check in and see how people there are doing.

(BEGIN VIDEOTAPE)

FEYERICK: When we first met these white collar workers nearly two years ago, all were unemployed. It's been a tough time, but here's how some of them are doing now.

ADAM BRILL, BACK AT WORK: It's the kind of event that your grandparents talked about when the great depression hit 80 years ago. And it's changed our lives.

FEYERICK: After many long months, all but one finally have jobs. But there's a catch. For some, there are no benefits and the work will last for a limited time only. Darcy MacDonald was hired as an IT specialist on a year-long contract.

DARCY MACDONALD, FOUND TEMPORARY WORK: You just have to really stay active and engaged and be looking ahead at another contract or extending the one you're on. So it's definitely not a permanent secure feeling.

FEYERICK: Kenneth Lee spent two years juggling odd jobs like bartending and working at Trader Joe's. He's now hoping to extend the year-long contract job he found in information security.

KENNETH LEE, FOUND TEMPORARY WORK: With all the retrenching that companies have done, they've collapsed a lot of positions into a single position while they're working for it all in one person.

FEYERICK: Nicole Campbell is still searching for her ideal job. To stay relevant, she has reinvented herself teaching French and volunteering at a business association.

NICOLE CAMPBELL, STILL LOOKING FOR FULL-TIME POSITION: It's very easy to get very depressed and lie in bed and stay in your pajamas and watch TV all day. But by volunteering and working part time, it made me be engaged.

FEYERICK: Adam Brill landed a better job than the one he lost working now as a political communications director. Even so, he's not breathing easy. His wife is about to be laid off. Her company moving away to cut costs.

BRILL: There's so much pain and I think it's going to change how we spend and save money, and where we go from here.

FEYERICK: Working harder and harder they all say to remain in an increasingly shifting middle class.

(END VIDEOTAPE)

FEYERICK: And when I asked these folks whether they feel they're still solidly in the middle class, all of them said no. Wolf?

BLITZER: Deborah Feyerick, thank you. Can the different elements of the tea party movement come together to drive the Republican agenda in Congress? We'll talk about the high stakes efforts to build unity.

And if you had a chance to kill one of America's long-time foes, would you pull the trigger? A new video game gives you the chance to assassinate Castro, virtually. And it's generating a lot of controversy, especially in Cuba.

(COMMERCIAL BREAK)

BLITZER: Let's talk about the tea party and more with our strategy session. Joining us, the Democratic strategist, Hilary Rosen, and the CNN political contributor, the national radio talk show host Bill Bennett. Thank you very much for coming in. You both know Dick Armey, the former House majority leader. He's saying this, because he's been involved, as you know, raising a lot of money, helping the tea party movement. Listen to.

DICK ARMEY, FREEDOMWORKS CHAIRMAN: There's no difference of objective or point of view. There is a complimentary effort for us all to come together to make this new Republican majority the most responsive majority to the will and the needs of the American people than that which we will have seen in our lifetime. I think I dare say Speaker Boehner understands this, as well as we do.

BLITZER: Bill, you're well plugged in, in the Republican circles, conservative circles. Is there a split between the tea party movement and the Republican leadership, the Republican establishment?

BILL BENNETT, NATIONAL RADIO TALK SHOW HOST: I don't think anything major.

BLITZER: Earmarks, major differences on earmarks.

BENNETT: We've had fights about earmarks before. Remember John McCain and the Bush administration? I think we'll get resolution to this. There's a new group of people who have not been in Washington. In fact, people who haven't been elected to office at all, many of them, and they have a different point of view than a lot of the people who are here. But you will see Washington work in a new way, but it will also work with people understanding they have to give in order to get.

BLITZER: I want to bring Hilary in but on the issue of free trade, I sense there is a split between the traditional Republicans, who support free trade, and the tea party movement that's not necessarily willing to go that far.

BENNETT: I will have an opportunity to talk to the freshman soon in the next couple of days and I will talk about free trade and the importance of free trade. Yeah, again, there are differences. I don't think free trade is a big issue in the tea party rallies. But it needs to be an important issue.

BLITZER: There's no doubt that the tea party movement really energized voters for the Republicans this time around.

HILARY ROSEN, DEMOCRATIC STRATEGIST: And many of us firmly believe that it what's helped the Republican Party get over the disastrous George Bush years in terms of messaging. I would point to two things for people to look at over the next month or two. The first one you mentioned. There's going to be a vote likely in the Senate that Senator DeMint is going to force to ban all earmarks. Which has been a top priority with the tea party. We heard Senator Mitch McConnell say no, no, we're not going to vote for that. The second piece is, you had Dick Armey on TV just being "kumbaya," but in the last week we wrote a memo saying unless health care is repealed, these new -- the Republican majority are going to pay with their seats, not unless there's an attempt to repeal, but a threat already at his colleagues in the Republican Party. So the divisions they're making are kind of their own. It's nice for us to foment them, but they're nicely doing it themselves.

BLITZER: The president has the veto pen, and the opponents of the healthcare law don't have the ability to have 2/3 override. They are not going to be able to repeal the health care law.

BENNETT: There are three branches of government. Republicans control one half of one branch of three branches of power. But look, I expect you will see more cohesiveness in the Republican Party by the end of the year than in the Democratic Party. We were unanimous on health care. The Democrats weren't. Big splits coming up. I don't deny the differences. My guess is DeMint may well --

BLITZER: How worried are you as a Democrat that some of these Democrats up for re-election in 2012, from states whether Pennsylvania, Ohio, Virginia, states that went Republican in recent elections, are looking over their shoulders and not necessarily --

ROSEN: When it comes to reducing spending, I think Republican majority in the house will get a lot of Democratic votes. When it comes to thoughtful tweaks that the president supports on health care, they may get a lot of Democratic votes. But I think that we will very likely see what we saw in the Democratic Party over the last few years, which is a protracted process fight over a lot of these issues. And I don't think that's going to serve the Republicans well.

BLITZER: Let's talk about the Republican Party leadership. Michael Steele is the chairman of the Republican Party. He's going to make a decision whether he seeks a second term. He's already being challenged by the former chairman to the Michigan Republican Party who just wrote a letter. "Chairman Steele's record speaks for itself. He has his way of doing things. I have mine. I will not strive to be the voice or the face of our party. Of course I will be happy to discuss politics and elections with the media but I won't be competing with valuable airtime from the men and women on our ticket." Is Michael Steele going to stay on as chairman of the Republican Party?

BENNETT: I think there will be a good debate about this and I think there will be a challenge to all of this. Two years is the usual term. I served two weeks, you may remember. That's not a usual term. But if you look at the consequences of Michael's being chairman, you have to say look what the Republicans did.

BLITZER: Win after win after win.

BENNETT: But he's also had some rocky times. Let me just say back to the tea party, whatever the problems, whatever the disagreements, it gave tremendous energy and push to this Republican victory and it's really been a four-barrel carburetor for this engine.

BLITZER: Republicans lost some races but it did help them overall.

ROSEN: It did help them overall, and Michael Steele may be the beneficiary for that. You look for three things with a party chairman. You look for money, you look for leadership and you look for message. I think there's a pretty good argument to say Michael Steele hasn't delivered on those three things but I'm not sure they have somebody to beat him with.

BLITZER: He has delivered in terms of winning a lot of elections, though.

BENNETT: That's the bottom line. I like him.

BLITZER: All right guys. Thank you very much.

Republicans have virtually no chance of getting a repeal of health care reform through the Senate or certainly not signed by the president. But they're still pursuing another strategy to block what they call Obama care. We'll tell you what's going on.

And it's one of the great questions of our age. What to do with nuclear waste that can remain toxic for 100,000 years. Finland says it has the answer. Stand by; you'll learn what it is.

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BLITZER: Rumors swirled all day in Miramar that the democracy activist Suu Kyi would be released from house arrest. Suu Kyi, a Nobel peace laureate who spent 15 of the last 21 years under house arrest. The military has said it plans to release her, but hasn't said when. There have been calls from around the world for her release for a long time.

An urgent effort is underway right now to save Iraq's power sharing deal which threatened to unravel hours after it was announced. One Kurdish lawmaker tells CNN that if the Sunni leaders lawmakers who walked out don't come back, he worries the deal may fall through. This agreement came after an eight-month stalemate between the Sunnis and the Shiites and the Kurds and there is worries that sectarian violence will spike if it collapses.

Next week a U.S. army sergeant will become the first living American soldier to receive the Medal of Honor. The story of how he won the distinction began almost three years ago to the day. Our Pentagon correspondent Barbara Starr brings us the story.

(BEGIN VIDEOTAPE) STAFF SGT. SAL GIUNTA, MEDAL OF HONOR RECIPIENT: The whole time frame maybe lasted anywhere between like two minutes or three minutes and five or six lifetimes, I don't know.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: But in the two three- minutes, Army Staff Sergeant Sal Giunta went from a self-described mediocre soldier to a hero. That October night, Giunta was walking along a ridgeline with other members of the unit, assigned to protect other soldiers as they were walking back to their base.

SGT. FRANKLIN ECKRODE, AUSTIN, TEXAS: And single shot rang out. And everybody started to get down behind cover.

GIUNTA: There is not one of them or two of them or ten of them, but more than ten and they are not that far away.

UNIDENTIFIED MALE: You could watch the guy pull the trigger that was aiming at you.

GIUNTA: It seems like the world is exploding in bullets and RPGs and everything. We looked and it was along the whole side, and along, you know the flank.

STARR: Hit eight times was the man in front, walking point as the military says, Sergeant Josh Brennan of McFarland, Wisconsin. He talked to his dad, Mike, only a few days before.

UNIDENTIFIED MALE: Actually he had volunteered for that mission that day.

STARR: On that ridgeline Josh Brennan was downed severely wounded. Sal Giunta raced ahead into the face of Taliban fire.

ECKRODE: He got to the front, and he killed one of the guys that was dragging my team leader away, Sergeant Brennan. And wounded another one, recovered Sergeant Brennan and brought him back to an area where we could secure him and continue the fight, and started the aid on him. For all intents and purposes the amount of fire that was still going on in the conflict at the time, he should not be alive right now.

STARR: Sal Giunta says he does not deserve the nation's highest award for military heroism.

GIUNTA: When I first heard that they were putting me in for the Medal of Honor, I felt lost. I felt kind of angry, because it came at such a price. It is very bittersweet. It is such a huge honor. It is a great thing, but it is a great thing that has come at a personal loss to myself and other families.

STARR: That is what you want people to know?

GIUNTA: Absolutely.

STARR: Barbara Starr, CNN, Afghanistan.

(END VIDEOTAPE)

BLITZER: There is a new video game virtual reality and has it simply gone too far? Players take aim at Cuba's Fidel Castro. We're going to show it to you. That is coming up.

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