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Elizabeth Edwards Dies; President Obama Defends Tax Deal

Aired December 7, 2010 - 18:00   ET


WOLF BLITZER, HOST: There is a lot happening right now in the world of space. A potential -- potential history-making commercial space flight could come later this week. A small company known as SpaceX expected to launch its Falcon 9 rocket.

Here is CNN's John Zarrella.


ANNOUNCER: The first sequence of the engine --

JOHN ZARRELLA, CNN CORRESPONDENT: When a Falcon 9 rocket lifted off from Cape Canaveral earlier this year -- the successful test flight was huge for the lean 1,200 employee upstart company called SpaceX.

In the control room, Elon Musk, billionaire, and former PayPal co-founder, and now the intense hands-on man at the top.

He sees SpaceX as his David versus Goliath, those big aerospace companies.

ELON MUSK, SPACEX CEO: They're just waiting for one misstep to say, "I told you so," and, you know, it's to be expected.

ZARRELLA: Expected because SpaceX and other new commercial companies are promising safer, more reliable space flight for less -- a lot less money. SpaceX says it could fly an astronaut to the International Space Station for $30 million less than the Russians. But is this new industry mature enough to deliver?

ALVIN DREW, SHUTTLE ASTRONAUT: I think that we'll get there. I just don't know how long it's going to take, what it's going to cost, and not just dollars, but possibly in lives and in aspirations.

ZARRELLA: NASA is banking on SpaceX and others to replace the retiring shuttle for flights to the space station.

(on camera): That would free up NASA to develop new technologies to get humans to Mars and the asteroids, but it's a risky plan.

(voice-over): An accident could send the fledgling commercial industry back for years.

ALAN LINDENMOYER, NASA COMMERCIAL CREW AND CARGO PROGRAM: It would be a bad day to have a -- you know, a major problem with any of the companies.

ZARRELLA: Because it's out in front, much of the pressure is on SpaceX. The company has signed a $1.6 billion contract to fly a dozen cargo flights to the station starting late next year. Musk is confident he'll be carrying astronauts soon after.

MUSK: We believe firmly we can astronauts to space station within three years of -

ZARRELLA: Whether you believe him or not, Musk says, while he wants his company to be profitable, he is not in this for the money.

MUSK: We want to make space accessible to everyone.

ZARRELLA: How soon that happens depends in no small part on companies like SpaceX living up to their promise.

John Zarrella, CNN, Cape Canaveral, Florida.


ANNOUNCER: This is CNN breaking news.

WOLF BLITZER, CNN ANCHOR: And we are following that news this hour, the death of Elizabeth Edwards. She lost her battle of with cancer today after a six-year struggle that began when her husband was running for vice president, continued as he ran for president in 2008 and afterward, as news of his affair went public and their marriage crumbled.

She went on alone to become a best-selling author and health care advocate with grace and with dignity, grace and dignity that earned her tremendous respect.

Our national political correspondent, Jessica Yellin, is here.

They released a statement just a while ago saying she had passed away earlier this morning.


She passed away at home. She was surrounded by her family, including John Edwards, who was with her in the home in her final days. And I spoke to a number of family friends since this news broke who say, first of all, this actually happened a little bit more quickly than they had expected.

The doctors had told them last week that she would have probably days as opposed to weeks. They did not really realize it would be this quickly that she would pass.

And one person said to me, Wolf, this is not a total surprise, but it is so shocking because she was the survivor among us. Think of so much, everything that she endured. She endured the loss of her son Wade when he was just a teenager. She had a bout with cancer back in 2004 that she vowed to fight and beat.

And it seemed for so long that she did. She went back, wrote that book that you mentioned and used it as a platform to campaign for health care reform for Americans and also to tell other people who had survived tragedy that they don't need to be victims, that you can go on and be a fighter in life.

And then again, of course, the second diagnosis and devastating news of her husband's affair and so much of her world looked different in retrospect after all that news broke, but, again, as you say, she remained graceful and strong in public. She was one of America's sort of public sort of survivors of tragedy and she showed Americans how to do it with grace.

BLITZER: Her estranged husband, John Edwards, you say was there at her side when she passed away?

YELLIN: The family is not saying who was actually in the room, but he was in the home and has been on her last days.

According to people who are close to her, it was her clear wish that he be there for her children, because, as one person said, she is a realist. She is a realist and she knows that he has to be the one who is strong for them.

Actually we have a piece of sound if we could play this, a reminder of how she was so determined to fight this. This was right after her diagnosis in 2004 when she said she is going to beat this cancer, Elizabeth Edwards.


ELIZABETH EDWARDS, WIFE OF JOHN EDWARDS: I also just have a belief that I'm going to beat this. And every indication is that -- all the news I have gotten really has been good news, so I feel pretty confident. I'm making those plans for those next 40 years.


YELLIN: And what is so remarkable about that is, she taught other people who were victims or -- sorry -- who survived diseases that you don't have to be a victim, that you could live for it, you could live for the future. And she fought to the very end.

BLITZER: She struggled with grace. And we wish her family our deepest, deepest condolences, a sad moment indeed.

Thanks very much, Jessica.

President Obama says his deal with Republicans to extend Bush era tax cuts is about compromise and getting things done, rather than victory and politics. But the agreement to keep cuts for the wealthiest Americans in place for now faces significant opposition from some fellow Democrats. And the president, known for his cool demeanor, is clearly frustrated.

Our White House correspondent, Dan Lothian, is joining us now with more.

The president had a news conference over at the White House today. Give us some of the highlights, Dan.


Well, Wolf, the bottom line is, is that the president was telling his critics and Americans that he had no choice but to compromise. He said, had this been just about politics, he would have stuck to his guns, but he said this was bigger than politics and had he not made this deal, there would have been collateral damage.


LOTHIAN (voice-over): Selling the tax cut deal to the nation and his fellow Democrats, President Obama admitted Republicans had him in a corner and it was not the time to punch his way out.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A long political fight that carried over into next year might have been good politics, but it would be a bad deal for the economy and it would be a bad deal for the American people.

LOTHIAN: The president said he could not persuade Republicans to bend on extending tax cuts for the wealthy, so he struck a less-than- perfect compromise.

But this bipartisan gesture is hardly a friendly one. The Republicans who praised the president on Monday were today compared to hostage-takers.

OBAMA: I think it's tempting not to negotiate with hostage takers, unless the hostage gets harmed. Then, people will question the wisdom of that strategy. In this case, the hostage was the American people. And I was not willing to see them get harmed.

LOTHIAN: House Republican Whip Eric Cantor criticized the president's analogy, saying -- quote -- "I don't think those comments were helpful."

But it is the president's own party, the Democrats, who are throwing the biggest punches.

Unhappy with the deal, Senator Frank Lautenberg accused Mr. Obama as capitulating under pressure. "What do I think of it?" asked Senator Patrick Leahy of the deal. "Not much."

More criticism from Senator Barbara Mikulski, who said, "I don't believe it will promote growth."

And Senator Jeanne Shaheen was "disappointed."

Vice President Biden went up to Capitol Hill to smooth things over with Democrats and get them to embrace the deal. The message to them from the White House, look at the big picture.

OBAMA: To my Democratic friends, what I would suggest is let's make sure that we understand this is a long game.

LOTHIAN: President Obama denied that he is going to cave to every Republican demand over the next two years. Instead, he repeated that with tax cuts about to expire, this was a unique situation.

OBAMA: My job is to make sure that we have a North Star out there: What is helping the American people live out their lives? You know, what is giving them more opportunity? What is growing the economy?


LOTHIAN: Now, Wolf, I know you will be speaking with Senator Bernie Sanders of Vermont, who is an independent, but he caucuses with the Democrats, he votes with the Democrats, and he says that he plans to filibuster this deal and block it essentially, because he thinks it is a bad agreement.

And kind of giving a sense of what the temperature is like up on Capitol Hill, House Speaker Nancy Pelosi after coming out of a meeting with Democratic leaders said that so far the response has -- quote -- "not been too good."

So based on that evidence it doe show that the White House has some selling ahead before this deal is truly done.

BLITZER: They have got some hard work to do. We will hear from Senator Bernie Sanders. He's here in THE SITUATION ROOM. Also, Austan Goolsbee, the chairman of the Council of Economic Advisers over at the White House, we will speak with him as well.

Dan, thanks very much.

A big disappointment for those who serve their country.

Jack Cafferty is here with "The Cafferty File" -- Jack.


As our government plans to extend tax cuts to the wealthiest Americans, they're also proposing the lowest pay increase for the U.S. military in almost 50 years.

That's correct. As our service men and women return to the battlefield for their third or fourth tours of duty, the people who represent us think this is a good time to cut corners here, with the military. Extend tax breaks for millionaires and extend the middle finger to the armed forces.

The Obama administration has proposed a 1.4 percent pay raise for the military in 2011, the lowest since 1962, when they got no raise.

The administration says a 1.4 percent raise would match the average for the private sector. You take a lot of bullets on your job? And they say it's on top of other increases for the military for housing and food subsidy. But a lot of people in the military aren't buying it. What a surprise. Easy to see where they're coming from, too, when rich Americans will be saving billions on tax breaks.

One Marine Corps sergeant who just got back from his fourth deployment in Afghanistan calls it "absolute garbage."

He asks "USA Today," who published the story, how the government can bail out the auto industry and other major corporations, and yet not give a larger pay raise to those who put their lives on the line for the United States.

Some senators want to give bonuses to troops who do the most fighting. And an organization that represents 32 military groups is pushing for a 1.9 percent pay raise.

Now, it's estimated that to an increase from 1.4 to 1.9 percent would cost taxpayers about $350 million next year. Compare that to the tax deal that is on table. That will cost about $800 billion.

So, here's the question: In light of the economy, do members of the military deserve the lowest pay raise in nearly 50 years?

Go to Post a comment on my blog.

BLITZER: Jack, thanks very, very much.

Some Democrats clearly are outraged right now at President Obama's tax cut deal with the GOP. We are going to hear from one of them, as well as the president's chief economist -- two very different perspectives coming up.

And the founder of WikiLeaks is under arrest in Britain. He's wanted in Sweden, not for leaking hundreds of thousands of U.S. secrets. Instead, he is accused of rape.


BLITZER: President Obama clearly under fire from some members of his own party over the deal he cut with the Republican leadership to extend Bush era tax cuts, not only for the middle class, but for the wealthiest Americans.

We are joined now by Senator Bernie Sanders of Vermont. He is an independent. He caucuses with the Democrats.

Senator, thanks very much for coming in.

SEN. BERNIE SANDERS (I), VERMONT: Good to be with you, Wolf.

BLITZER: You heard the president say he hates extending the Bush tax cuts for the wealthiest Americans, those earning more than $250,000 a year, but he points out you don't have the votes in the Senate to block that. So it was either everyone losing their tax cuts or swallowing this deal and letting it go forward.

Why are you shaking your head?

SANDERS: Because I don't agree with that judgment.

I think the American people are outraged, frankly. I got 800 calls in my office today alone. I'm the senator from a small state -- 99 percent of them are against this agreement. And the American people are outraged that, at a time when we have a $13 trillion national debt and a collapsing middle class, that the Republicans would hold hostage middle-class tax breaks and extending unemployment benefits in order to give tax breaks to millionaires and billionaires.

In my view, Wolf, we can win this fight. We can get a handful of Republicans to join us.


BLITZER: Yes, but you have six Democrats in the Senate who are voting with the Republicans, saying, in a time of economic recession, distress, you don't raise taxes on anyone.

SANDERS: Yes, well, that is what the millionaires and billionaires always say.

As Warren Buffett pointed out recently, when times are good, when times are bad, we always -- they always want tax breaks for the very rich. The reality is, according to the CBO, if we're serious about creating jobs in this country, the worst option, the least effective option is giving tax breaks to billionaires. The best option is to rebuild our roads and our bridges and our infrastructure.

BLITZER: All right. I understand what you're saying, Senator, but if you don't have any of the Republicans and six Democrats are with the Republicans, the president says you have got to be practical.


SANDERS: Wolf, that is today.

The point is our job and the president's job is to rally the American people. Poll after poll suggests, tells us strongly that the American people do not want to drive up the national debt by giving tax breaks to millionaires and billionaires.

Our job is to have the American people say to the Republicans, you have talked about your concern, your deep concern about the deficit and the national debt. Why are you voting for a proposal that raises the national debt to give tax breaks to the rich?


BLITZER: I want to bring in our senior political analysts into this conversation with you, Senator. Gloria Borger is here. David Gergen is here.

David, go ahead and ask the senator a question. DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Yes, Senator, I'm curious. There is a brewing rebellion among Democrats on Capitol Hill, especially from the progressive end of the Democratic Party. Are the prospects growing that President Obama may actually have a challenge in 2012 with a candidate from the left?

SANDERS: David, that's -- I'm not into discussing and speculating about that.

What I am here to tell you is, I think the vast majority of the American people think we can get a deal that represents the unemployed and the middle class and not the very rich. I don't want to speculate.

GERGEN: And why did the president -- why do you think the president has failed to rally? What has been his biggest mistake getting to this point?

SANDERS: His biggest mistake, I think, is not making it clear to the American people that we can in fact win this fight. If you concede at the very beginning, you are not going to end up with a strong agreement.

What our challenge is, is to ask why we can't get a handful of Republicans, tiny handful, who tell us every day how concerned they are about the deficit. Why aren't they supporting us?



And I spoke with a senior adviser at the White House today who says that they can't get those Republicans, they can't get moderate Republicans that you're probably talking about, like Olympia Snowe, that they had to do this in order to get the tax cuts for the middle class. And they say, with all due respect, it is a fight we could not win on this one.

SANDERS: Well, Gloria, if you concede defeat and surrender before you really engage, yes, you are going to lose. We have got three weeks. Why aren't we putting pressure on the Republicans?


BORGER: What pressure can you put...


BORGER: ... because they have more power when they come in, in January?


SANDERS: No, they don't have -- Gloria, they don't have more power. We have a Democratic president, Democratic House, Democratic Senate today.

I got 800 calls in my office alone.


BORGER: But you are from Vermont, OK? It is not...


BORGER: It is not Texas. It is not...


SANDERS: Let me tell you something. The issue for the president right now is to tell conservatives who tell us how much they're concerned about the national debt that our kids and grandchildren are going to have to pay.

Those people should be calling up Republican senators. I think we can win some of them.

BLITZER: All right, Senator, listen to what the president said today and we will discuss on the other side. Listen to this.


OBAMA: And I don't think there's a single Democrat out there who, if they looked at where we started when I came into office and look at where we are now, would say that somehow we have not moved in the direction that I promised.

Take a tally. Look at what I promised during the campaign. There's not a single thing that I have said that I would do that I have not either done or tried to do.


BLITZER: All right, go ahead, Senator, and respond to the president.

SANDERS: Well, look, don't get me into being overly critical of the president. I like him. I respect him. He's a friend of mine. He happens to be wrong on this issue.

One of the things he did say during the campaign is that we were not going to continue Bush's tax breaks for the richest people in this country. We were not going to lower the estate tax rates that apply only to the top three-tenths of 1 percent. That is what this agreement does.


BLITZER: Hold on one second. Hold on.

David, did the president have a choice, as Senator Sanders is suggesting? Could he have gone further over the next three weeks, until the end of this month, and eyeball to eyeball with the Republicans and see who blinks first? Or did he do what he had to do, he had no choice?


GERGEN: Yes. I wanted to follow up.



BLITZER: I am asking you, David.

GERGEN: Well, I think it -- did he go eyeball to eyeball and blink?

BLITZER: Did he have a choice, as Senator Sanders is suggesting, or did he have no choice?

GERGEN: Oh, I think he had a choice earlier on to really build a campaign and build up momentum. And I think he could have waited perhaps a week or two.

And I think the Senator makes a good point that in effect the White House began signaling some weeks ago that it was going to concede on this before it really got into a fight. And that, I think, they -- I happen to think the president ultimately was going to have to do this, but I am surprised it happened without a fight.

And I think he has done something which has put him in a perilous situation, both with Democrats and perhaps with the country.


BLITZER: Senator, go ahead.

SANDERS: And let me just add this.

If anybody thinks that this agreement, this compromise is the end of what the Republicans want, you are kidding yourselves. They will be back in three or four weeks demanding the privatization of Social Security, cuts in Medicare, cuts in education.

They will be hypocritical enough, mark my words, to say, oh, my word, the deficit and national debt are going up because of the tax breaks for the rich. Now we have got to cut programs for the middle class and working families.

That's what they will do. But we have got to take them on at some point. This is as good an issue as any.

BORGER: Senator, do you think this is a sign of things to come with President Obama?

SANDERS: Again, I don't want to speculate into the future. All I can tell you is, you have a very radical right wing running the Republican Party. They want to take us back into the 1920s. They want to dismember all of the programs that we have passed for 70 years to benefit working families.


BLITZER: All right, the bottom line, though, Senator, does the president have the votes in the United States Senate during this lame- duck session to get this compromise passed?

SANDERS: If we do what we have to do and rally the American people, who are against this agreement, yes, we can get the votes.

BLITZER: You can get the votes?

SANDERS: I am tired of being on the defensive. It is time to put the Republicans on the defensive. They are dead wrong on this issue. The American people don't support them. Let them start conceding for a change.

GERGEN: Senator, as a practical matter, where do you go from here to get this stopped?

SANDERS: Well, we're going to all do everything that we can with grassroots organizations all over this country. We're going to put pressure on the Republicans, who tell us how concerned they are about the deficit, when they are signing on to an agreement will substantially increase the national debt.

BLITZER: Senator Sanders, thanks very much for coming in.

Gloria, David, thanks to both of you as well.

We're going to get a very different perspective coming up.

America's wealthiest are getting a tax break. It is the tax cut President Obama had said he would not give them. Is this a huge political defeat, or is it simply good politics? We are going to hear from the president's chief economist.

And Julian Assange, the man at the center of a global diplomatic leak scandal, is in London. He's in a jail tonight, but that is not stopping the WikiLeaks founder from speaking out or fighting extradition.

Plus, details of the hundred-billion-dollar mistake that could render a mountain of money worthless.


BLITZER: The federal government here in Washington combing through huge stacks of the new $100 bill because all of that money just might be worthless.

Let's go to Brian Todd. He is tracking this story for us. He's joining us.

What is going on here, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, a Treasury official tells us the problem is the paper they are printing on is sometimes creased.

I'm going to show now with a copy of a $1 bill, because it is easier to illustrate this with a copy of a bill.

Let's say this paper was folded when it went through the printer and had a crease in it. The creased part wouldn't get printed on. Then, when you pull the bill out in full, it would look like this, with blank space between the folds, just like that.

Now, stacks and stacks of crisp new $100 bills are sitting in quarantine -- yes, quarantine -- until they can set up a scanner to run them through and weed out the bad ones. The bad bills will be put through a shredder, Wolf.

BLITZER: How much cash are we talking about, Brian?

TODD: Well, one report says they printed about a billion bills. And that is $100 billion worth of cold hard cash that may be flawed. Now, an official at Treasury would not confirm that report. It costs 12 cents to print each one, so that is $120 million spent on printing this batch.

But a spokeswoman says they are confident that the overwhelming majority of those new bills are fine. In the meantime, they're going to start printing the old model of $100 bills again at two-thirds the costs. That's eight cents per bill. Still pretty hefty, though, Wolf.

BLITZER: This is the new Benjamin you've got in the wall behind you, the new $100 bill that has lots of features supposedly designed to prevent counterfeiting.

TODD: That's right, pretty cool features. And you can see this on the government's Web site here, on We're going to show you this.

Now, this is interesting. When you move it around in the light here -- I have got to do this with my hand here with the -- let me do it with my left hand here. You can move it around with the icon here on the Web site. And the $100 here changes from gold to green. Let me just try that again.

There. See? You can see it goes from gold to green and then back if you move it around there. And then with the real $100 bill, if it shifts around in the light, it goes from gold to green and back. That's where you can tell that it is not a counterfeit.

Then you have got the backlight feature I'm going to kind of click on here. And you can see it here. If we go in tight, you can see the watermark, the 100 here with the watermark inside, and then the quill right there, and then the other picture -- sorry about that -- and the other picture of Benjamin Franklin there.

And then there is the ultraviolet mark when you hit this icon on the Web site here and then you can see the added band here, the pink band. These are all features, Wolf, to prevent counterfeiting.

BLITZER: Let's see if it actually works.

Brian, thank you.

America's wealthiest, they're going to continue to get the Bush era tax cuts. It is something the president had said would not happen. Is it a political defeat? Is it a good idea? We're going to hear from the president's chief economist. That's coming up next.


BLITZER: Some congressional Democrats are blasting the deal President Obama reached with the Republicans to extend Bush era tax cuts for all Americans, not just the middle class. And some say the White House deal is not necessarily a done deal.


BLITZER: And joining us now from the White House, Austan Goolsbee. He's the chairman of the Council of Economic Advisers at the White House.

Austan, it looks now like the Democrats, including Harry Reid in the Senate, they want to reopen this package. As far as you know, the framework agreement that the president announced this week, that was an all-or-nothing, kind of take-it-or-leave-it deal. Are you ready to see it reopened now for negotiation?

AUSTAN GOOLSBEE, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Well, look, I'm not a -- I'm not a legislative negotiator. I'm a policy guy. I think if you look at the policy of this, certainly the president doesn't like extending the high-income tax cuts. He said he does not think they work, but for -- for every dollar of that, there's more than $2.50 for Obama's priorities that no one expected were going to be in the deal.

I think on straight policy grounds, the extending not just the Bush middle-class tax cuts, but the Obama tax cuts and the unemployment benefits and getting the money to encourage tax incentives for businesses to -- to invest in factories and equipment in this country, I think, on net, it's -- it's what we had to do for the middle-class, and to keep the economy growing, not pull the rug out from under it. I think on just straight policy grounds, we should just get this thing done before the January 1 deadline.

BLITZER: None of these tax deals are paid for in this new deal...

GOOLSBEE: In the short run. That's correct.


BLITZER: So -- so it will add -- it will add $900 billion to the national debt?

GOOLSBEE: I don't know that 900 is the correct number, but it is some large number...

BLITZER: If you add all the middle-class tax cuts, all the tax cuts for the rich, the estate tax, all the other arrangements, all the other tax breaks, it comes up -- we've done the math, and it comes up to $900 billion.

GOOLSBEE: It's a large number, whether it's 900 or some other number. It's -- the short-run emergency spending of this form is totally different from the longer-run fiscal commission-style things which are geared around 2013. That's what I'm trying to emphasize. Conflating medium-run fiscal consolidation needs with the large deficit, which is induced by us coming out of the deepest recession since 1929. It's dangerous to conflate those two, and we really should not do that.

BLITZER: Why couldn't you find any way to pay at least for some of these tax breaks, come up with some sort of spending cuts, so that our children and grandchildren wouldn't be stuck with this long-term debt?

GOOLSBEE: Well, look, the president absolutely believes that we've got to confront the longer-run fiscal issues facing the country. Getting that done and getting the Republicans to agree with that before January 1 would have been extremely difficult, and would have led ordinary Americans, who are reeling from the deepest recession since the Depression, and they would have been piled on $3,000 and $4,000 a year of additional taxes, which made no sense, and that is why the president did not want to play games and risk that.

BLITZER: On the unemployment benefits, the extension of unemployment benefits, it allows people to be getting the benefits for up to 99 weeks, but once they have reached 99 weeks, they're done. Is that right?

GOOLSBEE: That's what it has been, yes.

BLITZER: And it -- but that's going to cost an extra $30 billion for 13 months to continue this federal program. Is that right?

GOOLSBEE: Well, let me just specify -- the 99 weeks is only if you're in a state that has a very high unemployment rate. As conditions improve in your state, the length of the weeks automatically goes down.

BLITZER: I guess the question is, because the Republicans fought hard. They failed to get you to agree to pay for those $30 billion to extend the unemployment benefits. You couldn't find $30 billion in cuts elsewhere in the federal government or the DOD or energy or any place else to pay for that?

GOOLSBEE: You're -- you're conflating now medium-run fiscal and short-run emergency. So you don't put in and take out at the same moment. That doesn't make sense.

When we're struggling to get the growth rate up, you don't want to be yanking the belt tight in the short run. When you have to be looking at confronting the fiscal consolidation needs of the country, they have to do with the aging of the population and the growth of health-care costs, and that, as the fiscal commission outlined, is 2013 and later.

So, I really do not think we want to be conflating those two, because they are two totally different problems.

BLITZER: The other thing that really irritates a lot of the Democrats, the liberal Democrats, your base, some of the president's major supporters was this estate tax arrangement you worked out. The first $5 million, tax-free, and over that, it's a 35 percent rate. That seems to go against what so many labor unions leaders, others in the Democratic Party, accepted. Why did the president accept that?

GOOLSBEE: Look, as I say, I don't like it. I'm sure the president doesn't like it. The issue is, we could have fought for a month or two, and then the Republicans come into Congress and do their high-income tax-cut extensions anyway, or we could do this deal and let the president get 2.5 times as much in terms of his priorities than the cost of those for high-income tax cuts. I mean, I think that was the situation.

BLITZER: I guess the bottom line, Austan, is how do you feel that so many of your fellow Democrats in the House and the Senate are so angry right now with what the president has accepted?

GOOLSBEE: Well, look, I know there are some people upset. I know also that there are some people who -- who are encouraged that we were able to get some things done, identify and get funding for the priorities that -- for middle-class workers and for businesses to invest and for us to grow.

And I just hope that everybody on both sides will go sit down and look at the deal and recognize that we got a lot of what was important and what the economy needs in the short run, and that, on the point of the high-income tax cuts, that the president completely agrees that they aren't effective. They weren't made permanent. And we live to fight another day on that in two years when we aren't coming out of the worst recession since 1929. The president will continue to fight that we not extend those and make them permanent, because we can't afford it.

BLITZER: But for the two years, you agree, it will cost the American taxpayers $120 billion?

GOOLSBEE: Well, I've seen numbers somewhat smaller than that, but it costs some money. And we got two and a half times as much as that for middle-class families, for the Obama tax credits, for encouraging investment, and for extending unemployment benefits. And so on that, I think it's a big plus.

BLITZER: Austan Goolsbee is the chairman of the Council of Economic Advisers at the White House. Thanks very much. Good luck.

GOOLSBEE: Thank you, Wolf. BLITZER: And also at the White House, this just coming in, a statement from the president of the United States on the passing of Elizabeth Edwards. She died today at the age of 61.

The president's statement, let me read it: "Michelle and I were deeply saddened to learn of the passing of Elizabeth Edwards. This afternoon I spoke to Cate Edwards and John Edwards and offered our family's condolences. I came to know and admire Elizabeth over the course of the presidential campaign. She was a tenacious advocate for fixing our health-care system and fighting poverty, and our country has benefited from the voice she gave to the cause of building a society that lifts up all those left behind.

"In her life, Elizabeth Edwards knew tragedy and pain. Many others would have turned inward. Many others in the face of such adversity would have given up. But through all of that, she endured. Elizabeth revealed a kind of fortitude and grace that will long remain a source of inspiration. Our thoughts and prayers are with her family and friends."

That statement from the president of the United States. Elizabeth Edwards, sadly, has died today. We pass along our deepest condolences to her kids and to her family.

Will American troops really start leaving Afghanistan within seven months? The defense secretary, Robert Gate, visiting the war zone. What he's saying, that's coming up.


BLITZER: Just days after a surprise visit to Afghanistan by President Obama, another unannounced high-level trip to the war zone. This time the defense secretary, Robert Gates, is talking with troops, meeting with officials to have a critical upcoming review of the entire strategy toward Afghanistan.

Our Pentagon correspondent, Barbara Starr, is joining us now with details.

Barbara, what do we know?

BARBARA STARR, CNN CORRESPONDENT: Well, that strategy report on the progress on the war may be out as soon as next week, but that report, there's one word you're not going to hear in it, and that word is "victory."


STARR (voice-over): As the White House prepares its Afghanistan war review, General David Petraeus revealed he's already told President Obama that progress is being made against the Taliban, although the insurgency still has plenty of punch.

GEN. DAVID PETRAEUS, COMMANDER, U.S. CENTRAL COMMAND: I provided an assessment of the situation through the chain of command to the president and the NSC. I also, of course, talked to the president, along with Ambassador Eikenberry during his recent visit to Bagram air base this past weekend.

STARR: Petraeus's views are key. He recently told CNN he's preparing to meet the president's plan to begin a troop drawdown in July 2011.

PETRAEUS: I think by that time, that very likely we'll also be able to send some forces home.

STARR: The top Marine in southern Afghanistan's Helmand province insisted there is improved security.

MAJ. GEN. RICHARD MILLS, U.S. MARINE CORPS: We've seen steady and unwavering progress in improving the security situation in the area.

STARR: But Defense Secretary Robert Gates, traveling in eastern Afghanistan, heard it's been tough going.

ROBERT GATES, DEFENSE SECRETARY: I think these guys being close to the border do face some special challenges. And -- and have taken some serious losses.

STARR: We recently traveled with Major General John Campbell, the top commander in the east. His troops have been battered by a number of large-scale Taliban attacks that show no sign of stopping.

UNIDENTIFIED MALE: They have no issues with recruiting. They go into the madrassas inside of Pakistan, and they can come in very large numbers. They've got enough money; they have enough supplies.

STARR: At this one base, weapons captured after a fight underscore the problem. Progress is not yet success in this nine- year-old war.


STARR: Nine years of war, Wolf, and this report is still going to say, "on the one hand, but on the other hand." Progress, but still a very long way to go, and no clear view yet on how many U.S. troops may be able to come home after that July 2011 date on the calendar -- Wolf.

BLITZER: Well, we might get a better indication next week. All right. Thanks very much, Barbara, for that.

Julian Assange, he's behind bars right now, but before he landed in a London jail, the WikiLeaks founder, he sat down with CNN's Atika Shubert to see what made him walk out of that interview. Stand by for that.

A very close call on the runway; tragedy barely averted. We'll tell you what happened. Stay with us. You're in THE SITUATION ROOM.


BLITZER: The founder of the whistle-blowing Web site WikiLeaks is now under arrest in Britain. He's in jail. It has nothing, apparently, to do, though, with the massive leak of hundreds of thousands of classified U.S. documents. Instead, Julian Assange is wanted in Sweden, where he's accused of rape.

Not that long ago, at the end of October, CNN's Atika Shubert had a chance to sit down with -- with -- with Assange -- Assange.

Let's go to Atika right now.


ATIKA SHUBERT, CNN CORRESPONDENT: Well, Wolf, while the media was swarming outside of the courthouse...

UNIDENTIFIED MALE: Move out of the way! Move out of the way!

SHUBERT: ... inside of the courtroom Julian Assange kept very calm and collected, showing very little emotion. He told the court he did not give his consent to be extradited to Sweden.

He did have a brief moment of defiance at the very beginning of the hearing, when the court asked for his address. Initially, he refused to give a permanent -- permanent address. Eventually, he did give an address in Australia, but this is a man who prides himself on having no permanent home, and of course, WikiLeaks says that the organization only exists online.

But his answer of not giving a permanent address perhaps did not go over well with the judge. The judge denied him bail, in part, he said, because of the, quote, "nomadic lifestyle" that Assange lives, but also, he said, because of possible threats to Assange's personal safety.

Now, there are quite a few high-profile celebrities that also came to the court today to show their support for Julian Assange. Jemima Khan, who is perhaps better known for appearing on the social pages of Britain's fashion magazines, was there, as well as Ken Loach, the British film director. He said he was there to support human rights.

And John Pilger, a journalist, and also a personal friend of Julian Assange's, he said that the allegations against his friend were absurd.

Now, Julian Assange and his legal team insist that he is innocent, that he denies the allegations and has done nothing wrong. They say the charges are trumped up, and that the prosecution is, in their words, more of a political persecution -- Wolf.

BLITZER: Atika, thanks very much.

Julian Assange, by the way, sat down with Atika Shubert on October 2. When she asked the WikiLeaks' founder about the sex crime allegations in Sweden, she got this response. Take a look.

(BEGIN VIDEO CLIP) SHUBERT: Well no, I'm not, but what I want to ask is at one point you said it was a dirty tricks campaign.

JULIAN ASSANGE, WIKILEAKS FOUNDER: I'm going to walk if you're going to.

SHUBERT: So, you don't want to address whether or not you feel this is an attack on WikiLeaks?

ASSANGE: This is completely disgusting, Atika.

SHUBERT: I'm asking whether or not you...

ASSANGE: I'm going to walk if you're going to contaminate us revealing the deaths of 104,000 people with attacks against my person.

SHUBERT: I'm not. What I'm asking is if you feel that it is an attack on WikiLeaks? Julian, I'm happy to go on to -- (inaudible)? I have to ask that question, Julian.

ASSANGE: (inaudible).


BLITZER: That was back at the end of October when he simply walked off the set when she asked him to respond to the allegations that he was involved in a rape in Sweden. You saw him simply take the microphone off and walk off. He's now in jail in Britain, awaiting, potentially, extradition to Sweden. We'll stay on top of the story for you.

Other news we're following. Two armed men burst into a kindergarten in Mexico's border city of Juarez and set it on fire. Deborah Feyerick is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

Deb, what's going on?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, police say the reason for that attack is that teachers had refused to hand over their Christmas bonuses in return for protection for the school's students. Luckily, the fire did happen late at night, so none of the children were in the building, and no one was hurt. But classes are now suspended, and many parents say they will not send their sons and daughters back until safety improves.

A federal judge has tossed out a lawsuit that was trying to stop the U.S. from targeting suspected terror leader Anwar al-Awlaki for assassination. The U.S. citizen is believed to be on the run in Yemen. The judge said Awlaki's father lacked legal standing to bring the lawsuit. It is believe that Awlaki was behind the fatal shootings at Ft. Hood, Texas and the foiled Christmas day airline plot.

And you know, sometimes you just have to be a little bit patient. Taxpayers stand to make a $12 billion profit from the Citigroup bailout. The Treasury Department says it's now sold the last Citigroup shares to private investors. Citi and Bank of America were the two biggest recipients of the bailout, with each receiving $45 billion. So good news, certainly, on that score -- Wolf.

BLITZER: Taxpayers could certainly use a little good news. Thanks very much for that, Deb.

A tragedy averted. We're learning details of a near collision between two passenger planes. Stand by.


BLITZER: See that beautiful Christmas tree on Capitol Hill. Always a lovely, lovely sight.

All right, Jack. Let's go back to Cafferty for "The Cafferty File." That would be you, Jack.


The question this hour: "In light of the economy, do members of the military deserve the lowest pay raise in nearly 50 years?" A lot of e-mail on this.

Larry writes, "Our Congress ought to visit Walter Reed or Brooke Army Medical Center to see our wounded warriors try to reclaim their lives. Many other soldiers suffer less visible wounds with tortured memories of their ordeals. The tax money the Republicans chose to direct toward the wealthy would have nicely assisted those heroes and their families. I suppose the GOP considers it more important to help the rich upgrade their Lexus than to help a soldier buy a minivan."

Ed in Texas writes, "A soldier in Iraq carries 45 pounds of gear minimum in 119-degree heat. He has seconds to decide if the car speeding toward him carries an expectant mother on the way to the hospital or a suicide bomber. For that, he gets a 1.4 percent pay raise? A Wall Street banker's bad bets are covered by the U.S. taxpayer, and he gets a million-dollar bonus besides. The concept of risk and reward has been turned upside-down."

K.J. writes, "Active duty here. I'm willing to forgo a pay raise to help the country. Yes, I know we're fighting two wars, but for those of us who deploy, we do get additional pay for this effort, sometimes up to 50 percent of our regular play."

Alex writes, "As a veteran I hate to say it, but pay raises for the military are tied to inflation, and with the poor economy, inflation is only a bit over one percent, so a 1.4 percent raise is correct. The only reason the millionaire tax cuts look like they will be extended is because the Republicans ended the extensions of unemployment insurance this month just in time for Christmas and refused to move on anything until they got their way."

Joe writes, "No, sir. It's a big joke and a slap in the face. I don't know anyone personally in the military. I am American Muslim, and I think this is ridiculous. Our country is prioritizing all the wrong things, and it's continuing to get worse." And Carol says, "This is unbelievable. My son is currently on his sixth deployment. He was in the initial Iraqi invasion, two more trips to Iraq, now his third to Afghanistan. He got out of the Marines after his first hitch, but he couldn't find a job, so he reenlisted for four more years. Talk about tough choices. Jobless or target. And now a 1.4 percent raise. What an insult."

You want to read more about this subject, go to my blog:

BLITZER: All right, Jack, thanks very much. We'll be right back.


BLITZER: A disaster averted. Here's CNN's Jeanne Meserve.

JEANNE MESERVE, CNN CORRESPONDENT: Wolf, this happened at Boston's Logan Airport on the day before Thanksgiving.


MESERVE (voice-over): JetBlue Flight 1264 had just arrived from Austin, Texas, and was holding on a taxi way. The ground controller tells the pilot to taxi to the terminal via runway 22 right and taxiway C. But instead of taking a left onto 22 right, the pilot took a right and headed for runway 33 left. But barreling down 33 left, JetBlue flight 417 taking off for Palm Beach. The ground controller realizes what's about to happen.

UNIDENTIFIED MALE: JetBlue hold, JetBlue 1264, hold right there. JetBlue 1264, hold! Hold!

MESERVE: Flight 1246 hears him, stops, crisis averted.


MESERVE: JetBlue calls the incident a nonissue because Flight 1264 never entered an active runway. The airline says the processes put in place by the airline, the pilots, and ATC -- that is air traffic control -- are designed to mitigate inadvertent errors. The system worked.

The controller at the time was a veteran with 32 years of experience, nearing retirement. His name, Mark Libby (ph). The union which represents him says he did a great job, but also gives credit to the pilot, who heard his call sign in the midst of busy radio traffic and stopped the plane. And thank goodness he did. There were 91 people onboard Flight 1264. JetBlue has not told us how many were on the other aircraft, but it was one of the busiest travel days of the year. Wolf, back to you.

BLITZER: All right, Jeanne, thank you. I'm Wolf Blitzer in the SITUATION ROOM. "JOHN KING USA" starts right now.