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THE SITUATION ROOM

Awaiting Leaks of More U.S. Secrets; President Urges Federal Pay "Sacrifices"; South Korea Warns North After Attack; Reports: Nuclear Scientist Targeted

Aired November 29, 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, thanks very much.

Happening now, a criminal investigation into the leak of U.S. diplomatic secrets. We're standing by for another document dump by the online whistleblowers at WikiLeaks. And we're digging into all the revelations, the potential damage to the U.S. national security and how this embarrassing leak was able to happen at all.

Plus, President Obama gives Republicans something to toast at their so-called Slurpee Summit tomorrow. But it will mean a sacrifice for millions of federal workers.

And mice may reveal the secret of reversing the aging process. There's a remarkable new study just out that could help -- eventual help people live longer, healthier lives.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Up first this hour, the leaks heard around the world and the scramble by U.S. officials to try to clean up the mess. We may be seeing the next round of WikiLeaks document dumping unfolding right now. We just got some new information posted online by "The New York Times" and "The Guardian" newspapers in London that have agreements with WikiLeaks. According to their reports, new documents suggest China is losing patience with its long time ally, North Korea, with senior figures in -- figures in Beijing describing the communist regime as acting like a spoiled child.

The White House says it would be an understatement to say that President Obama is not pleased about these leaks. The Justice Department says a criminal investigation is ongoing and the State Department is leading attempts at international damage control right now.

Our foreign affairs correspondent, Jill Dougherty, is over at the State Department working the story for us.

And there's enormous potential damage for the United States in these -- in these leaks, Jill.

I assume that's what officials there are telling you. JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: They are, Wolf. They're pretty overt about it. It could be very, very damaging. And, you know, Secretary of State Hillary Clinton was on the phone constantly this past weekend, reaching out to officials and leaders around the world, trying to tamp down some of the problems that are emerging from all of this. And we're told today that she's going to be back at it again, doing the same thing, making telephone calls, even as she travels abroad.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): Minutes before leaving on an international trip that could bring her face-to-face with leaders criticized in leak cables, Hillary Clinton issues an apology.

HILLARY RODHAM CLINTON, SECRETARY OF STATE: The United States deeply regrets the disclosure of any information that was intended to be confidential, including private discussions between counterparts or our diplomats' personal assessments and observation.

DOUGHERTY: The Secretary slammed the release of the cables, calling it an attack.

CLINTON: This is not just an attack on America's foreign policy interests. It is an attack on the international community.

DOUGHERTY: World leaders are beginning to weigh in. Iran's president, who, in one cable compared to Hitler by Abu Dhabi's crown prince, calls the leaks, "more like psychological warfare. It has no legal value," he says. "People are well-informed these days and these games will not affect relations."

The State Department now has a 24-7 crisis room in touch with U.S. embassies around the world, troubleshooting fallout from the leaks. To make sure there are no more leaks, the Obama administration is moving to further limit access to classified documents and ordering each department or agency that handles classified information to establish a security assessment team.

ERIC HOLDER, ATTORNEY GENERAL: Let me be very clear, this is not saber rattling.

DOUGHERTY: The U.S. attorney general is not ruling outgoing after the WikiLeaks' founder, Julian Assange, even though he is not an American citizen.

HOLDER: To the extent that we can find anybody who was involved in the breaking of American law and who has put at risk the assets and the people that I have described, they will be held responsible.

DOUGHERTY: Back at the State Department, Hillary Clinton finds some humor and solace in a diplomatic debacle.

CLINTON: At least one of my counterparts said to me, well, don't worry about it, you should see what we said about you.

(END VIDEO TAPE)

DOUGHERTY: Now, this may be no laughing matter, Wolf. But, you know, there's late breaking information that we have. You know, one of the reasons that the leaker was able to gain access to those State Department cables is that the State Department's database was connected to the Department of Defense's network. It's called Cybernet. And the whole idea of creating that Cybernet was to share information post-9/11. So now, a U.S. official tells us that they are temporarily disconnecting the State Department database from Cybernet. They want to figure out what are the next steps to make it more secure. You can still -- those with access can still gain access to the State Department cables, but it's going to be on a much more restricted basis -- Wolf.

BLITZER: Are they doing anything at all to make sure if some 23- year-old guy, allegedly, starts downloading hundreds of thousands of cables, hundreds of thousands of copies of sensitive information, that no one pays attention to that, no one in the security system of the United States government bothers to see someone is downloading all these millions -- literally millions of documents?

DOUGHERTY: And that is one of the keys, Wolf, especially, they're looking at anything that you can write -- you know, thumb drives or C.D.s, anything like that. They want to eliminate that from the system so you can't go in there and play -- pretend you're playing Lady Gaga and download all this stuff.

BLITZER: Do we know yet if they've that fix?

In other words, somebody right now who has top secret or secret security clerics can no longer download information onto a C.D. or a thumb drive?

Has that been fixed already?

DOUGHERTY: Wolf, I don't know specifically, technically. But I would presume that that has, because it was so obvious that that allegedly is how it happened. But that's precisely what they're trying to do. And beyond that, to try to figure out who should get access.

BLITZER: I...

DOUGHERTY: It was much too broad.

BLITZER: If you find out, let us know, because at this point, you know, it -- it's amazing to me that the U.S. government security system is so lax that someone could allegedly do this kind of damage just by simply pretending to be listening to a Lady Gaga C.D. and at the same time downloading all these kinds of documents.

Jill, stand by.

We're going to get back to you.

Jill Dougherty at the State Department. Just how secret were those exposed documents?

WikiLeaks says more than 100,000 of them are labeled confidential. That's the third lowest level of clearance. The federal government says the release of that information could damage national security.

More than 15,000 of the leaked documents are labeled "secret," with the potential to do serious damage to national security. Apparently, none of the documents is top secret, which would cause exceptionally grave damage if released.

As many as 2.4 million Americans hold some kind of security clearance. But fewer than one million, reportedly, have top secret clear.

Enormous damage. We're going to have a lot more on this story coming up.

But let's go over to the White House right now. President Obama is asking over two million government workers to help them make a dent -- a small dent, relatively speaking, in the federal deficit at their expense. Today he urged Congress to pass a two year pay freeze that would apply to all federal civilian employees, but not the U.S. military personnel.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In these challenging times, we want the best and brightest to join and make a difference. But these are also times where all of us are called on to make some sacrifices. So I'm asking civil servants to do what they've always done -- play their part. Going forward, we're going to have to make some additional very tough decisions that this town has put off for a very long time. And that's what this upcoming week is really about.

(END VIDEO CLIP)

BLITZER: Let's bring in our White House correspondent, Dan Lothian -- Dan, the timing behind this decision by the president today -- and he's alluding to some tough decisions. This is obviously going to affect a lot of federal government employees. But it's not going to make much of a dent in terms of the big picture as far as the annual trillion dollar budget deficit is concerned.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. You know, first of all, the tough decisions -- we heard the president talk a lot about that today, how he believes that this is something that Washington has been putting off for far too long. And so he says whether it's Republicans, Democrats or Independents, that they -- they all have to budge on the long held positions. And he says that they -- they can't -- they have to stop looking to the next election and instead look to the next generation. And so that's why tomorrow what's being called the Slurpee Summit is the beginning of what the White House is calling this new relationship with Congress. They're saying, though, as for the timing, it has nothing to do -- this freeze, the announcement of the freeze has nothing to do at all with that Slurpee Summit, it has nothing to do with the report coming out from the Deficit Commission -- the reduction commission on Wednesday, but, instead, had to do more with just end of the month calendar issues having to do with raises for federal employees.

Having said that, though, this meeting tomorrow with the president, Republicans and also Democrats here at the White House, gives the president a chance to show Republicans, hey, listen, this, is what I'm doing to eat into the federal deficit.

As you know, over the past few months, the Republicans have been very critical of this administration, that they've been focused too heavily on spending and not on cutting the deficit. And so this is a start in that direction -- Wolf.

BLITZER: The employees, they're going to get a little bit less in their paychecks over the last two years than they had anticipated.

How much is this going to save U.S. taxpayers?

LOTHIAN: That's right. What we're talking about here is $2 billion over the remainder of this fiscal year and then $28 billion over the next five years. As you pointed out earlier, though, it's just a drop in the bucket when you're looking at this booming federal deficit of over $1 trillion. But as the White House points out, it's just one piece of the overall puzzle, that the president, early on in his administration, froze the salaries of top officials here in the White House, that he's been cutting waste ever since he came into the -- into office. And they say this is just a start and you'll see other things happening in the coming months, as well.

BLITZER: You've got to start some place. I guess that's...

LOTHIAN: That's right.

BLITZER: -- the theory.

What about the president's lip?

How is that working out?

He got elbowed on the basketball court the other day and he got some stitches.

LOTHIAN: That's right. That happened last Friday. You know, everybody has been wondering, you know, how is the president doing?

And today, when he came out to make comments on the freezing of the federal salaries, the president, before he began his remarks, you know, talked about his lip.

Take a listen.

(BEGIN VIDEO CLIP) OBAMA: For those of you who are worried about my lip, I should be OK.

Doctors give me a clean bill of health. And I will continue to be playing basketball whenever I get a chance. In fact, I played yesterday with Sasha and Malia and they took it easy on me because they were feeling pity.

(END VIDEO CLIP)

LOTHIAN: So he brought that lip out in public. You know, you thought he would have stayed away from the cameras, but we got a chance to see it up close. Twelve stitches -- the injury provided by the director over at the Congressional Hispanic Caucus. But all is well there. It's just some fun they were having last Friday, five on five basketball. And as you heard from the president, it hasn't stopped him from playing the game.

BLITZER: No. He could have said read my lips, no more basketball, at least...

LOTHIAN: Right.

BLITZER: -- at least for now.

LOTHIAN: I thought of some puns...

BLITZER: Yes.

LOTHIAN: I thought of some puns -- lip service, some other things like that. But I -- I left that to you.

BLITZER: All right, Dan. Thanks very much.

Wish the president our best for a speedy lip recovery.

It's a drip, drip, drip of classified sensitive information and it's like water torture for the Obama administration.

We're going to talk about the WikiLeaks' bombshells and whether world leaders can still trust the United States to keep their secrets.

And the victim of a bomb attack in Iran apparently was just not -- not just a professor. There's new information coming into THE SITUATION ROOM right now on why he was targeted.

(COMMERCIAL BREAK)

BLITZER: The rush of holiday shopping is on Jack Cafferty's mind.

Jack is here with The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: The holiday season is officially upon us. And by the looks of things, we ought to be ashamed of ourselves. Some of the behavior that was on display as Americans hit the stores for Black Friday was downright disgusting. This includes stampedes, arrests, fistfights, assaults with weapons, all in the name of buying holiday gifts for our loved ones.

Here are few of the reports from what happened in source around the country. In Georgia, a U.S. marine reservist was stabbed when he tried to help stop a suspected shoplifter. The marine was one or four servicemen stationed outside at Best Buy Store collecting toys for tots.

In Los Angeles, the sheriff's department had to temporarily put part of one shopping mall on lockdown after a fight broke out in the food court. An Indiana woman arrested after fighting with other shoppers on a Wal-Mart checkout. Police say the customers were fighting about a person accused of cutting in line in the checkout counter.

Another woman arrested in Wisconsin. Police say she threatened other shoppers while waiting in line of a Toys "R" Us store that said she tried to cut several hundred shoppers waiting on line. And when she was confronted, she threatened to get a gun and shoot people.

And finally, another Wisconsin Toys "R" Us, thousands of people waiting in line rushed the doors when the store open. The store had to lock its doors again and call in police for backup. Customers waiting for hours reportedly chanting "end to the line" to those who were just showing up to do their Christmas shopping.

Merry Christmas, everybody. Here's the question, in light of the stampedes, arrests, and fights on Black Friday, what the hell has happened to us? Go to CNN.com/caffertyfile. Post a comment on my blog.

WOLF BLITZER, CNN ANCHOR: Great question, Jack. Thank you.

Right now, many world leaders are wondering what else U.S. diplomats may be saying behind their backs after the embarrassing leak of thousands of diplomatic cables including the documents released by with WikiLeaks. The Saudi King Abdullah, for example, urged the U.S. to attack Iran to halt its nuclear program. United States keeps (ph) bombers are ready to strike al Qaeda targets in Yemen.

The state department directed U.S. diplomats to engage in intelligence gathering at the U.N. and elsewhere. A claim that the Saudi king also proposed implanting electronic tracking chip in Guantanamo detainees, and an account about the Libyan leader, Muammar Gaddafi, relies on what was described as a voluptuous blond nurse.

Some news reports are also suggesting that the French president, Nicholas Sarkozy is called in some of these documents an emperor with no clothes and that the German chancellor, Angela Merkel, is described as risk averse and rarely creative.

Let's bring in our senior political analyst, David Gergen. David, just a little bit of what's in some of these documents. You've worked in the government. You've worked for four presidents. When a foreign leader meets with the Secretary of State or U.S. Ambassador now, why should that leader not be worried that whatever he or she says is going to wind up on the front pages of "The New York Times" or "The Guardian" and their speaker (ph)?

DAVID GERGEN, SENIOR POLITICAL ANALYST: He won't be worried, and he won't tell us as much. You know, as a journalist, Wolf, if you got an anonymous source who's fin (ph) your reach information, and then you burn that source, you expose who that person is, you'll never hear from him again. He'll never tell you anything again. Well, that's the situation that American diplomats are now calling you because some outrageous person has leaked all this stuff out there.

And WikiLeaks has engaged in this contemptible behavior, and it will put a chill on conversations with U.S. diplomats especially in the gulf region where this is so sensitive. You know, they have the Saudi king quoted, you know, cut off the head of that snake telling the United States to go after Iran. To have the Yemenis quoted in this way, to have others, Abu Dhabi quoted in this way is going to make them very, very reluctant to have straight conversations with any sort of ambassador.

They're going to want to go just to the top and make it -- it's going be much, much harder for our diplomats to do their wok.

BLITZER: It makes some of these Arab countries seem to be even more concerned, if you will, that the Israelis about Iran's nuclear program which will be very embarrassing to some of these Arab countries. But here's another question that sort of jumped out at me.

The Security of U.S. Documents, doesn't this make the United States government look ridiculous when these hundreds of thousands of documents can simply be pilfered or stolen or copied into some sort of small CD or thumb driver by a young private first class? That's the allegation.

GERGEN: Yes, that's the most embarrassing part of this. A great power, the world's greatest power has somehow erected a system that a young private first class, setting 40 miles outside Baghdad, can crack into it and get all this stuff and dump it out in the world and cause this enormous problem. How can we possibly let this happen? It is a question of there has been a big effort on the part of the state department and the defense department to have their computer systems much more sophisticated and talk to each other, share much more information.

But it allows as allowed this individuals as this very anti- patriotic person to get in and do this. I have to say, one of the things, Wolf, on the positive side, having looked at all these documents, you know what's really striking also, though, is there's no scandal here. There's nothing here in which we find that the U.S. government has been lying to us as a people. They've been telling one thing publicly but saying having a very different conversation privately.

You look at the private stuff. It's pretty consistent to what they've been saying publicly. And I thin that part of it is reassuring as well as the fact that our diplomats look like they're pretty darn smart, and they've been doing some good things especially in the Iranian front. You have to give the state department more credit. From what's revealed in this, they've done a pretty good job.

BLITZER: Well, their mission is about to become a whole lot more difficult now as a result of this leak. A lot of foreign government is simply not going to share that kind of information if they're afraid it's going to be made public.

All right. David, thanks very much. You make excellent points, as usual.

GERGEN: Thank you.

BLITZER: We're following some other important top stories here in the SITUATION ROOM, including the deaths of six NATO troops in Afghanistan allegedly killed by a suspected -- a suspect disguised as an Afghan policeman. This is a very worrisome story. We'll have the latest.

Plus, South Korea warning North Korea could pay a dear price in the face of a deadly attack. The details coming up.

(COMMERCIAL BREAK)

BLITZER: Kate Bolduan is monitoring some of the other top stories in the SITUATION ROOM right now, including a stern new warning from South Korea to North Korea about last week's deadly attack. What's the latest thing?

KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Wolf. Well, South Korea's president warns that North Korea will pay a dear price if it launches another military attack across its southern border. The officials say the country has reportedly deployed additional long range artillery and rocket launchers to the Island hit by North Korean fire Tuesday. The incident killed four people. South Korea and the U.S. began previously scheduled joint military exercises yesterday.

And a professor wounded during bombings in Iran was a scientist involved in nuclear or ballistic missile activities. That's according to a local news agency. The man who taught at a university in Tehran had been sided in a U.N. resolution, and last month had his assets frozen by the European Union. A second professor from the university was killed in the blast.

And six NATO troops in Afghanistan are dead after a man dressed as an Afghan policeman opened fire on them. The International Security Assistance Force says the incident happened during a training mission in the eastern part of the country. The suspect was also killed. A joined Afghan and ISAF team are now investigating -- Wolf.

BLITZER: All right. Thanks very much, Kate. We're going to get back to you.

Hundreds of thousands of jobless Americans are only hours away from a huge financial loss unless Congress takes action. We're going to hear from a woman who knows what it's like to be out of work and cut off from benefits.

And questions about a new terror indictment whether the fed went too far to build a case against them. Stand by.

(COMMERCIAL BREAK)

BLITZER: Members of Congress are back at work this week with a lot to do on their lame duck session. On the agenda, a vote to continue funding the federal government and avoid a shutdown, a divisive debate over extending Bush era tax cuts that expire at the end of the year, hearings on the repeal of "Don't ask Don't tell," and a push by President Obama for approval of the nuclear arms reduction treaty with Russia known as Stark.

Very urgent, though. Right now, long term unemployment benefits running out for hundreds of thousands of people tomorrow unless the Congress takes action immediately. Mary Snow has been talking to some of those jobless people to know what it's like to lose their financial lifeline. I assume they're very worried that it's about to end the unemployment benefit.

MARY SNOW, CNN CORRESPONDENT: They do, and they don't want to see the ranks of the unemployment not getting benefits swell. The people that have already lost their benefits call themselves the 99ers, which means they've run out of unemployment benefits after 99 weeks. That's the longest the government has ever extended them. But ask Rhonda Taylor and she says it's still not enough.

(BEGIN VIDEOTAPE)

RHONDA TAYLOR, UNEMPLOYED SINCE 2008: Watch out for the heater. That's my heating source.

SNOW: 42-year-old Rhonda Taylor shows us what she calls a tough downgrade, her family's third rental home in two years, a spiral from the working class neighborhood they once called home. At that time, Rhonda estimates she was earning $60,000 a year. Her partner, Kevin Wallace, was a stay at home dad, taking care of their son, now 9 who has mental disabilities. And daughters ages 3 and 4. Everything changed when Rhonda lost her job in April of 2008.

How long did you think you would be out of work?

TAYLOR: Two weeks.

SNOW: Rhonda worked in information technology. Before that, she was a teacher. Her search for work is made tougher in Rhode Island which as an 11.4% unemployment rate, the fifth highest in the nation.

TAYLOR: I will look anywhere.

SNOW: Recently she found holiday work for Kevin on a delivery truck. Still, they face possible eviction.

TAYLOR: Savings is gone, our 401(k) is gone. I've sold every possession that is valuable.

SNOW: In March, Rhonda exhausted the 99-week limit on unemployment benefits.

TAYLOR: Hi. I'm Rhonda, I'm unemployed too. I'm a 99 weeker. I lost my benefits.

SNOW: Rhonda is now organizing with others who call themselves 99ers. They're trying to pressure Congress to extend the benefits by 20 weeks. Opponents say the cost of extending benefits will have to be offset by spending cuts and there are critics who say widening the safety net will deter people from getting work. That's something Rhonda is trying to fight.

TAYLOR: Collecting didn't deter me. The problem was there was no jobs. Nothing motivates you more, nothing -- than losing everything you own. You won't be picky. You will get a job. You will take what's out there. There's nothing out there.

SNOW: So those critics who say, look go work at McDonald's. What do you say to them?

TAYLOR: I've tried.

UNIDENTIFIED FEMALE: Are you looking for something in particular?

TAYLOR: I have little kids.

SNOW: With no money left, Rhonda now finds herself going to a ministry for clothes with no cost. The next step she fears is homelessness.

TAYLOR: We will be on the street among millions of people out there. In Rhode Island, the shelters are full. I can't take my kids to the street.

SNOW: What are you going to do?

TAYLOR: I have to take them to foster care and say here you go. I can't be that selfish. It hurts to say that. I can't.

(END VIDEOTAPE)

SNOW: Right now the family is surviving on a social security check they get for their son who's disabled and they're currently four months behind in their rent. Wolf?

BLITZER: What a story. All right. Thanks very much Mary for that.

Let's bring in our senior Congressional correspondent Dana Bash and our senior political analyst Gloria Borger. Dana, a lot of Republicans are saying 99 weeks is enough. How would they respond to this woman who's obviously in a very painful situation? DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: For the most part, there are some Republicans who say 99 weeks is enough. But for the most part, Republicans say, okay, we understand, if there are very hard times out there, we should extend unemployment benefits but they're saying we need to pay for it. There's a measure that was before the house. It didn't go through, that would extend for three months up to the end of February. And it would cost $12.5 billion. And most Republicans say, let's do it but find a way to pay for that. And Democrats philosophically think this is emergency spending and we shouldn't have to pay for it.

BLITZER: And what are you hearing?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well I spoke with some senior Republican aides today in the house who said look the Democrats can always pass this on their own, if they want to. They won't get our votes for it. That may be true in the house. It may be a little bit more difficult to do in the Senate. But it's clear if the Democrats want to pass this right now without paying for it, they have to do it with the Republicans in the house.

BASH: In the house but you're right. The Senate will be harder.

BLITZER: Let's set the stage for the big meeting tomorrow. The Republican leadership. The Democratic leadership as well. They're going over to the white house. It was supposed to be a couple of weeks ago. They're finally going to meet tomorrow in the white house. There's huge expectations that they'll work out a deal, for example, on extending the Bush era tax cuts.

BASH: There have been huge expectations leading to this after it was delayed and after it was set back up. It's going to be an hour long. That's what it's slated for tomorrow morning at 10:30 eastern. I have to tell you, I talked to Democrats on both sides of Pennsylvania Avenue, Republicans on both sides of the capital. They're trying to lower expectations right now, big-time. Substantially will come out on the issue of tax cuts. They're saying this is just the beginning of the conversation leading into the next Congress. On tax cuts, you have Republicans in the Senate who are saying, we would be open to extending all of the tax brackets for two or three years, but they're saying you know what? Democrats don't think they can get the votes and then you have Democrats who have various ideas of their own. The question is going to be whether or not the president of the United States is going to sit down and say, here is something whether you call it an olive branch or calling it their bluff. So far, we don't have an indication that that's going to happen.

BORGER: The bottom line is that you know the question is about the middle class tax cuts. And the Republicans want everything permanent. And they don't want to go back and have votes and votes and votes again. That's going to be -- I think that's going to be the real problem is whether you can extend middle class tax cuts and the tax cuts for the wealthy on a temporary basis perhaps, do that all and see if they can compromise on something, which is what the public wants them to do. BASH: It is if you look at all of the polls, overwhelmingly, they want the Congress to compromise. But listening to Republicans particularly Republicans in the house who have a lot of leverage and have a lot of power going into the next Congress, more and more, I continue to hear from them saying if we can't work this out now, these tax cuts may expire. We'll deal with it as soon as we get the next Congress.

BORGER: And they'll make it permanent.

BLITZER: All right guys. Thanks very much. We'll be covering obviously that big meeting at the white house tomorrow despite their efforts to lower expectations.

He's been dubbed the alleged tree bomber. Did the feds go too far in trying to catch a suspect now under indictment in Oregon? Stand by.

Fox News appears to be cornering the market on would-be Republican presidential contenders. Will it stable of contributors help or hurt the candidates in the end?

(COMMERCIAL BREAK)

BLITZER: A federal grand jury has just indicted the Somali born American accused of plotting to bomb Friday's Christmas tree lighting ceremony in Oregon. Our homeland security correspondent Jeanne Meserve has got some details for us. What are you learning Jeanne?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, the Portland terror case is reviving the question of when an undercover investigation builds a case and when it creates one.

(BEGIN VIDEOTAPE)

MESERVE: Mohamed Osman Mohamud was arrested as he called a cell phone allegedly to detonate a car bomb at Portland's Christmas tree lighting. But the bomb was a fake provided by the FBI.

ERIC HOLDER, ATTORNEY GENERAL: But for the interaction that he had with the FBI, he might have come in contact with somebody who would in fact made his plans tragically real.

MESERVE: Undercover operatives have been used in a number of terror investigations including the scheme this fall to blow up metro stations near the pentagon. But increasingly, law enforcement has let it evolve the final act to better improve the suspect's intent. In September, a terror suspect placed a fake bomb supplied by the FBI a block from Chicago's Wrigley Field. And a year earlier, the FBI provided phony explosives to a man plotting to blow up a Dallas skyscraper and another for targeting an Illinois federal building. Some experts fear sometimes the government treads dangerously close to entrapment.

DAVID COLE, GEORGETOWN UNIVERSITY LAW SCHOOL: The government in its eagerness to prevent crime may be creating crimes that never would have happened were it not for the encouragement, congealing, involvement, assistance, planning of the FBI agent or informant himself.

MESERVE: Cole points to the case of the liberty seven, a Miami group caught in an undercover sting plotting to blow up the Sears Tower. Even the FBI called them more aspirational than operational. But the FBI ran the Portland case differently letting it play out and according to court documents, giving the suspect repeated opportunities to back out. The attorney general insists that the FBI acted appropriately.

HOLDER: I'm confident that there is no entrapment here, no entrapment claim will be found to be successful.

(END VIDEOTAPE)

MESERVE: Whether they use it as an important law enforcement tool or entrapment, some experts worry if they are overused, they could corrode law enforcement's relationship with Muslims and other communities and could make terrorists increasingly wary, developments which could make it more difficult to thwart future threats. The suspect was just in court. We have a new court sketch of him. By the way, I should that say in the complaint it alleges that he turned to the undercover FBI operative and said to him, are you a spy? So he was aware of the possibility.

BLITZER: He was getting nervous himself. All right. Jeanne, thanks very much. I know you'll stay on top of the story for us.

Could Iran strike with a nuclear bomb? It's a common fear among many Middle Eastern powers and it's revealed in the latest Wikileak document dump. We'll explain why.

The details of a major brawl that erupted on the football field.

UNIDENTIFIED MALE: Andre Johnson going after it.

(COMMERCIAL BREAK)

BLITZER: Kate Bolduan is monitoring some of the other top stories in THE SITUATION ROOM right now, including a desperate search for three boys in Michigan who have been missing, Kate, for several days. What's the latest?

KATE BOLDUAN, CNN CORRESPONDENT: A couple tough stories here Wolf. The father tells police he left the 5, 7, and 9-year-olds with a woman he met on the internet. He said he was going to commit suicide and did not want them to witness the act. He survived the attempt and is now in a mental health facility but authorities aren't sure they believe his story. An amber alert has been issued.

Another hard one to tell you, disturbing new details now about five children in south central Pennsylvania allegedly hidden from society. The children range in age from 2 to 13 were discovered by police recently in a condemned home with no heat or running water. The parents face five felony counts of child endangerment and are expected in court Friday. The mother maintains she's innocent.

Take a look at this -- Houston Texans receiver Andre Johnson and Tennessee Titans cornerback Courtland Finnegan. They got in to it a little bit in the fourth quarter of yesterday's game. Just look at this. Tensions had been flaring between the two before this brawl. Johnson later apologized and a Houston station is reporting that he will be fined for his actions but not suspended. No comment yet, Wolf, from Mr. Finnegan, however. I can only imagine what got that little brawl started.

BLITZER: It's sort of like hockey, you know? NHL hockey, these guys. The wrong sport. If they're hockey guys, they --

BOLDUAN: They didn't have -- they didn't have the control.

BLITZER: In the NFL, they're not supposed to do that. They have other activities.

BOLDUAN: No. They must have missed the memo on that one.

BLITZER: All right. Thanks very much.

President Obama is trying to talk about problems here at home on this day but the world keeps getting in the way. Paul Begala and Bill Bennett are standing by to talk about that and more.

And about the five, yes, five Republicans not working for Fox News who may run for the white house in 2012.

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BLITZER: All right, let's get right to our strategy session. Joining us, our CNN political contributors, the Democratic strategist Paul Begala and the national radio talk show host, Bill Bennett. Guys, thanks very much. Bill, let me start with you. The president clearly is trying to shift his attention this week to domestic issues. Came out and spoke about a freeze on federal employees. No more pay raises, excluding the U.S. military. He's got Wikileaks, national security issues. He's got a huge crisis right now with North Korea. What advice do you give the president if he wants to focus in on domestic issues at a time like this?

BILL BENNETT, NATIONAL RADIO TALK SHOW HOST: Well, of course, the job responsibility primarily is the defense of the country. That's what the constitution says. That's what the federalist papers say. This issue has bedeviled lots of presidents who have wanted to focus on domestic problems. They don't plan for it and it intrudes on them, sometimes violently, as it did with George W. Bush and the 9/11 attacks. But also Lyndon Johnson had to deal with it. Bill Clinton, Paul Begala served with Bill Clinton. He to deal with Russia, he had to deal with the problem in the Balkans. And when these problems erupt, they have to take precedence because of this constitutional responsibility the president has. He has to be able to do many things at once. Lord knows many things are happening right now. You mentioned the Wikileaks, incredible intrusion on everyone's agenda. You've got the situation in North Korea. You have Iran, you have the Middle East. There's a lot to worry about.

BLITZER: How does the president balance all this at a sensitive moment like this, Paul?

PAUL BEGALA, DEMOCRATIC STRATEGIST: Well, Bill is right. It's in the job description. It's his requirement. Presidents, because they have more constitutional responsibility on national security, they have a lot more flexibility as well. This president particularly, for a guy who has been accused of being inexperienced, I think he has as good a national security team and as cohesive a team as I've ever seen. Bob Gates at the pentagon, Hillary Clinton at the state department, Susan Rice at the United Nations, Leon Panetta at the CIA, these are tough and smart people. I think perhaps the greater challenge is at home where, frankly, his economic team has not been able to generate the ideas that he needs to generate jobs and find bipartisan movement towards creating jobs.

BLITZER: Are you not happy with Timothy Geithner or with Larry Summers who used to work there? Is that what you're saying?

BEGALA: Well, they're clearly not moving the needle on jobs the way they need to. The truth is there are metrics in national security. Some of them are not going great, but most of them are better today than yesterday. I don't think you can say that about the economy. Most Democrats and most Republicans will say we have to do more to generate jobs. The president needs to come to this new Republican house and the Democratic Senate with new ideas to generate jobs.

BLITZER: Let me ask you about this other issue that I wanted to raise. Fox News, there are five Fox News contributors now who are thinking of running for the Republican presidential nomination. Let me name them. Sarah Palin, Mike Huckabee, Newt Gingrich, Rick Santorum and John Bolton. They're only allowed to appear on Fox News Networks and no other networks. They can occasionally go on some of the broadcast networks. We don't have access to any of them. Is this a serious problem for them, for the Republican Party, that they only are paid contributors to Fox News?

BENNETT: And only one Republican candidate is a regular contributor to CNN, and that's me, but I'll accept the burden. Whatever it is. That's a joke. That's a joke.

BLITZER: You're not throwing your hat in the ring?

BENNETT: It's -- absolutely not running. But I -- it's not a problem. It's a problem if they stay sequestered at Fox, but they won't. If they're serious about running, they'll leave their jobs at Fox. Now, Sarah Palin, obviously, doesn't have a problem getting on the news anywhere and everywhere. She's also on the Learning Channel, I understand. But they don't want to just talk to their base. They don't just want to talk to a conservative base. The country is a lot bigger than that. There's no problem with it. But they can't define themselves by being Fox contributors.

BLITZER: If you want to get the Republican nomination, Paul, you would agree it's smart for them to appear on Fox.

BEGALA: It is. Fox News viewers are more reliable Republican voters than self-described Republicans, okay? They're the core of the Republican base. But that's all it is the base. They need to grow out from there. I had to chuckle to hear Bill remind us that Sarah Palin is also associated with a network that has in its name the word learning. Isn't it terrible that Bill is not running, a guy who actually writes the books that he authors as opposed to Mrs. Palin who I doubt has even read. When Sarah Palin is quoting Plato, you know she didn't write it herself, until it's the toy, play dough, that my kids play with.

BENNETT: Stop it, stop it, stop it, stop it, stop it, stop it. Anyway, they should not be limited or defined by Fox. Thanks for the compliment. You almost threw me off, but stop it. Rick Santorum is the substitute host for my radio host, so that's one other outlet. But it is a powerful part of the base for Fox. At Fox for these candidates. These people vote, these people care, these people are very passionate and good for them.

BLITZER: Fox says that if any of them formally announces they're running for the Republican nomination, their ties with Fox News will be severed and presumably at that point they may be willing to join us here at CNN as well. We'll see.

BEGALA: There's one thing -- somebody there should take a shot at Glenn Beck. They can't do it because he works at Fox. But the way you become the boss of a party is to take on the old boss. Barack Obama punched Bill Clinton in the nose. Bill Clinton punched Jesse Jackson in the nose. This is what you do within a political party. It's like a prison movie. Nobody at Fox can attack Mr. Beck even if they want to run for president, even if they want to disagree with him because he generates all the revenue there.

BLITZER: All right. We've got to leave it right there guys. We'll continue this conversation, no doubt, about that. Jack Cafferty is coming up next. Stand by.

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

JACK CAFFERTY, CNN CORRESPONDENT: The question this hour is in light of the stampedes, arrests and all-out brawls on black Friday at some of the stores around the country, what has happened to us?

Ken in California, "The great experiment called the United States seems to be failing. We're not the American family capable of tolerating our neighbor's race, religion, language and culture. The fact is, Jack, we don't like each other, starting in the halls of Congress whose members are from blue states and red states. There's a foreboding of disaster, a sinking feeling about our nation as those who represent us drive wedges between us. If we can't fix our government, let the chaos begin. It's already showing up in the stores." Will in Mississippi, "Department stores are jam-packed with people willing to wait hours just to buy that very special gift for a family member or a loved one. But if another shopper intrudes in any way, time to get out the boxing gloves and exhibit the Christmas spirit."

Ken in New Jersey writes, "Welcome to America. We're rude, obnoxious and violent. Ask the countries that we bully and attack every day. Shoppers are no different than our elected officials. Wikileaks proves that."

Ron in Minnesota, "What's happened is that our country has gone from the greatest generation to the worst generation in my lifetime. I have a feeling if my grandparents' generation had any idea what has become of the country that they sacrificed so hard for, they might not have made those sacrifices in the first place. And our world would have been much the worse for it."

Jerry in Maryland writes, "Whatever it is, it applies to only a small segment of the U.S. population. Contrary to what the media claim, the majority of Americans avoided the stores last Friday."

Al in New Jersey writes: "We did better than last year. Nobody got killed. That's movement in the right direction. Last year, someone did get trampled to death."

And Ralph in Corpus Christi, Texas, writes, "It sounds more like black-and-blue Friday."

If you want to read more of this, you will find it on my blog, CNN.com/caffertyfile.

BLITZER: Jack, thanks very much.