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THE SITUATION ROOM

President Obama Defends His Tax Cut Deal With Republicans; Rand Paul Says He'll Introduce His Own Deficit Reduction Plan; What Should the President Have Done?; Interview with Vermont Senator Bernie Sanders; Alleged Plot to Bomb Military; Remembering Elizabeth Edwards

Aired December 11, 2010 - 18:00   ET

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


WOLF BLITZER, HOST: President Obama says he refuses to let middle-class Americans be collateral damage in a political war with Republicans. This hour, his feisty defense of a tax cut deal with GOP leaders, even in the face of a revolt from House Democrats. Did he lay the groundwork for long-term victory or for new defeats?

Also, an American Muslim arrested for allegedly plotting to bomb a military recruiting center right here in the United States. Is it part of a dangerous new trend? The imam behind that proposed mosque and community center near ground zero is weighing in.

And she was a pillar of strength both politically and personally. Elizabeth Edwards loses her six-year battle with breast cancer.

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

President Obama is defending himself against scathing criticism from fellow Democrats over the tax cut deal he reached with Republican leaders. They're angry at tax cut extensions for the wealthiest Americans and many feel the president didn't bargain hard enough. That left Mr. Obama, who's known for his cool demeanor, clearly frustrated. Listen to this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: 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? What is making us more competitive? And at any given juncture there are going to be times where my preferred option, what I'm absolutely positive is right, I can't get done.

And so then my question is, does it make sense for me to tack a little bit this way, or tack a little bit that way because I'm keeping my eye on the long term and the long fight? Not my day-to-day news cycle, but where am I going over the long term? 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've said that I would do that I have not either done, or tried to do. And I if haven't gotten it done yet, I'm still trying to do it.

(END VIDEO CLIP)

BLITZER: But Democratic opposition, especially in the House of Representatives, is growing and growing and the White House is making a full-court press to get reluctant lawmakers behind the deal, which is far from being a done deal.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now from the White House, Austan Goolsbee, he is 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, want to re-open this package. As far as you know the framework agreement the president announced this week, that was an all or nothing take it or leave it deal. Are you ready to see it re-open now for negotiation?

AUSTAN GOOLSBEE, CHAIRMAN, COUNCIL OF ECONOMIC ADVISORS: Well, look, 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 doesn't think they work, but for every dollar of that, there's more than $2.50 for Obama's priorities that no one expected was 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 invest in factories and equipment in this country, I think on net it's what we had to do for the middle class and to keep the economy going, not pull the rug out from under it. I think on just straight policy grounds we should just get this done before the January 1 deadline.

BLITZER: None of these tax deals are paid for.

GOOLSBEE: In the short run that's correct.

(CROSSTALK)

BLITZER: It will add $900 billion to the national debt.

GOOLSBEE: I don't know that $900 billion is the correct number, but it --

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, it comes up to $900 billion.

GOOLSBEE: It's a large number, whether it's $900 billion, 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 at least pay for some of these tax breaks? Come up with some sort of spending cuts, so our children and grandchildren wouldn't be stuck with this long-term debt?

GOOLSBEE: Well, look, the president absolutely believes we have to confront the longer-run fiscal issues facing the country, getting that done, and getting Republicans to agree with that before January 1st 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've reached 99 weeks they're done. Is that right?

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

BLITZER: 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? At DOD or Energy or any place else to pay for that?

GOOLSBEE: You're conflating, now, medium-run fiscal and short- run emergency. 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 tightening in the short run. When you have to be looking at confronting the fiscal consolidation needs of the country, they have to do it with the aging of the population and growth of health care cost, and that commission outlined is 2013, and later.

So, I really don't think with want to 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 is a 35 percent rate. That seems to go against what so many labor union leaders, others in the Democratic Party accepted-why didn't the president accept that?

GOOLSBEE: Look, as I say, I don't like that. 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 have the president get two and a half 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, how do you feel so many of your fellow Democrats in the House and 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 are encouraged that we were able to get some things done; identify and get funding for the priorities 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 in 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, and 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 to do so.

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

GOOLSBEE: Well, I've seen a number somewhat smaller than that, but it cost 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, the chairman of the Council of Economic Advisers at the White House.

Thanks very much. Good luck.

GOOLSBEE: Thank you, Wolf.

BLITZER: It's not just some Democrats opposing the tax cut compromise. There are Republicans speaking out against it as well. Including the Tea Party favorite, Senator-elect Rand Paul of Kentucky. He's here to explain why.

And details of the historic launch and splashdown that could change America's space missions forever.

(COMMERCIAL BREAK)

BLITZER: The tax cut compromise between President Obama and the GOP leadership isn't under fire just from the left. Some Republicans are also opposed and they are appalled at the cost. And joining us now from Bowling Green, Kentucky, the Senator-elect from Kentucky Rand Paul.

Senator-elect, thanks very much for coming in.

RAND PAUL, (R) SENATOR-ELECT, KENTUCKY: Good to be with you.

BLITZER: I know you can't vote during this lame-duck session. You won't be a United States senator yet. What do you think? Do you support this compromise that President Obama has worked out with the Republican leadership on extending the Bush-era tax cuts?

PAUL: Well, I think the most important thing government can do right now for the economy is to extend the Bush tax cuts. I would be for extending them permanently, so that's my first problem with this. The other thing is, is one of my biggest concerns is the deficit.

So, I think if you're going to extend and add new tax cuts, you should couple them with cuts spending. Instead we're coupling them with increases in spending and I think that's the wrong thing to do.

BLITZER: This whole package is going to wind up cost $800 billion or $900 billion. There's nothing paid for in all of these aspects of this deal. The bottom-line question is, if you could vote would you vote aye or nay?

PAUL: I'm leaning toward, you know, what Senator DeMint has said. He's concerned that they're bringing back the estate tax. Right now the estate tax is zero, and I kind of like that. The new estate tax under this legislation will be 35 percent. I don't like that.

And I also don't like that we're coupling it with increases many spending. My inclination would be with the current package, I haven't seen all the details of it, my inclination would be that you shouldn't cut taxes and increase spending. If you want to cut taxes, you should cut spending also. I would be leaning toward against voting it.

BLITZER: And I assume you don't like the extension of the unemployment benefits, none of that's paid for either?

PAUL: I think what we have to decide as a country is we have an unemployment insurance program, and it sort of works, and it is sort of paid for through about 26 weeks. If the society and if everyone wants to have it at 99 weeks, which is extraordinarily long and extraordinarily expensive, they should say, well, we're going to have to increase taxes to pay for it. The problem is if you increase taxes to pay for 99 weeks of unemployment benefits you're going to stifle employment and make unemployment worse. So really, we're in a Catch 22 here. But I don't think it is a good idea to add to the debt.

You know, we started this program, pay as you go, and this is what Senator Bunning stood up on, was if you're going to add spending you have to cut spending somewhere. Let's make difficult decisions but let's just not pile on new spending without paying for it. BLITZER: This compromise the president worked out with the Republicans, he's deeply angered many of his liberal Democrats, the base of his party. What does this compromise to you say about President Obama?

PAUL: Well, I actually think that President Obama is going to turn out to be fairly pragmatic with a new Republican Congress. I think they want to get it through now because they think the compromise they'll get with more Democrats in the House and more Democrats in the Senate will be better for them. I think --

BLITZER: More Republicans you mean? You mean more Republicans?

PAUL: Yes. Right. There will be more Republicans in January but right now there are more Democrats and I think the president sees this as a time to have a compromise. I think the president will turn out to be someone who may, you know, take Bill Clinton as his model and after '94 Bill Clinton did work with Republicans. We got welfare reform. We actually got more fiscally responsible government.

And I really have always said, and people have given me a hard time for this, but I think divided government sometimes works better because there's more debate, there's more discussion. And maybe we'll have more of the difficult decisions on cutting spending.

When I get there I'm going to propose a bill that will have $500 billion worth of spending cuts because you have to start doing it. Nobody has been willing to do it. No one is brave enough to put the spending cuts on the line. We're going to lay out $500 billion worth of spending cuts in January and see if anyone is brave enough to say, yes, let's go ahead and do it.

BLITZER: You're going to have to have a major vote at some point next year to raise the debt ceiling otherwise the country will go formally into bankruptcy. I want you to listen to what the president said this week when he was asked about a commitment from Republicans to raise the debt ceiling.

(BEGIN VIDEO CLIP)

OBAMA: I'll take John Boehner at his word that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government, collapse.

(END VIDEO CLIP)

BLITZER: They're going to have to raise the debt ceiling above the $13 trillion or $14 trillion where it's hovering right now. Are you with John Boehner when he said to the president, no one is willing to see the full faith and credit of the United States government collapse?

PAUL: I think they've always presented this as a false choice. A Hobson's Choice, if you will, where they say either you raise the debt ceiling, or we shut down government. My question is they're not an in between solution where you say let's not raise the debt ceiling but let's only spend what you have.

So I'm going to introduce an amendment, when the time comes, or even before that says spend only what you have. So basically we bring in $20 billion a month or more. It is about $700 billion a day. It's not like the government would have to shut down if we spent only what we took in. Let's have an austerity program and starting when the debt ceiling has to go up, let's say, we're not going to raise it, but we're only going to spend what comes in so we don't have to raise it.

(CROSSTALK)

BLITZER: That may be a long-term solution. In the short term, April, May, June of next year, when the debt ceiling ends, you're not going to have time to start cutting hundreds of billions of dollars by then.

PAUL: We're going to introduce it in January, $500 billion worth of cuts. And if people are serious about not wanting to raise the debt ceiling, which I am, then you have to have cuts. And so we're going to introduce $500 billion -

(CROSSTALK)

BLITZER: But what if that legislation you're introducing fails and it doesn't get the votes?

PAUL: Right. I think we'll have to cross that bridge as we go forward, but I guess what's great about never having held office before is that I'm new enough to think that we can change the world. And I'm not going to accept them just simply saying, oh, it's never been done that way and it can't be done. The way they've been doing things in Washington hasn't been getting us very far. They've been running up the deficit to the tune of $2 trillion in a year.

I think the American people are ready for some difficult choices, and some people will get money that they've always wanted to get and they consider to be free that it comes from the federal government. They will have to do without it because it's not there. They're borrowing it from China. These are both bad problems for us as a country.

BLITZER: We're out of time. But what I hear you saying you will vote against raising the debt ceiling, whatever?

PAUL: Well, what I'm going to do is propose another alternative. I don't want to shut the government down and ruin the full faith and credit of the country. I think there's another choice and it shouldn't be an either/or. I think that's a false presentation of choices. I'm going to see if there's a third way that says we spend only what we have.

BLITZER: Senator-elect Rand Paul of Kentucky. Thanks very much. Good luck.

PAUL: Thank you.

BLITZER: Anger on the right and on the left over the tax cut compromise. Senator Bernie Sanders is outraged. He's here to explain why.

And the mission heralding a new era in the U.S. space program. Why this launch is making history.

(COMMERCIAL BREAK)

BLITZER: Another giant step forward for the future of space travel. For the first time, this week, a commercial spacecraft slashed down safely in the Pacific Ocean after flying a low orbit around the Earth. CNN's John Zarrella has been following this Space-X program and the pressure for it to succeed.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT (voice over): 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, former PayPal co-funder and now the intense, hands-on man at the top. He sees his SpaceX as his David versus Goliath, those big aerospace companies.

ELON MUSK, CEO, SPACEX: 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. Is this new industry mature enough yet to deliver?

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

ZARRELLA: NASA is banking on SpaceX and other companies 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. An accident could set the fledgling commercial industry back for years.

ALAN LINDENMOYER, NASA COMMERCIAL CREW & CARGO PROGRAM: It would be a bad day to a major problem with any of these companies. ZARRELLA (voice over): Because it's out in front, much of the pressure is on SpaceX. The company 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 send astronauts to the space station within three years of receiving a NASA contract.

ZARRELLA: Whether you believe them or not, Musk says while he wants his company to be profitable, he's 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.

(END VIDEOTAPE)

BLITZER: President Obama's getting a lot of heat from his own party for agreeing to a tax cut deal with the Republicans. Just ahead, a key senator explains why he's so angry.

Plus, Elizabeth Edwards loses her long battle with breast cancer. You'll hear how she described her illness to me, just a few years ago.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: There's an important debate, I think most of you are aware of, on Capitol Hill that will determine in part whether our economy moves forward or backward. The bipartisan framework that we've forged on taxes will not only protect working Americans from seeing a major tax increase on January 1st, it will provide businesses incentives to invest, grow, and hire.

(END VIDEO CLIP)

BLITZER: President Obama making the case for the tax cut compromise he reached with the Republican leadership. He's under fire from some members of his own party over the deal, which extends Bush- era tax cuts for the wealthiest Americans.

So we're joined now by Senator Bernie Sanders of Vermont. He's 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-era 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. It was either letting 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.

The American people are outraged that at a time when we have a $13 trillion national debt at 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's what the millionaires and billionaires always say, as Warren Buffett pointed out recently, when times are good, when times are bad, 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: 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 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've talked about your concern, your deep concern about the deficit and the national debt, why are you voting for proposal that raises the national debt to give tax breaks to the rich?

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

David, go ahead and ask the senator a question.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: 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, 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: 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're 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 who tell us every day how concerned they are about the deficit. Why aren't they supporting us?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Senator, it's Gloria Borger here. 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 -- they had to do this in order to get the tax cuts for the middle class. And they say, you know, with all due respect, it's a fight we couldn't win on this one.

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

BORGER: What pressure can you put? 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.

BORGER: But in - but you're from Vermont, OK? I mean, it's not -- you know, it's not Texas. It's not -- you know --

SANDERS: Let me tell you something. The issue for the president right now is to help conservatives who tell us how much they're concerned about the national debt and 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 that.

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

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I don't think there's a single Democrat out there who 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 said that I would do that I have not either done or tried to do.

(END VIDEO CLIP)

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

SANDERS: Well, look, don't get me into -- you know, 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 3/10 of 1 percent. That's what this agreement does.

BLITZER: 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? David?

GERGEN: Yes. I wanted to follow-up, Senator.

BLITZER: I'm asking you, David.

GERGEN: 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: I think he had a choice earlier on to really build a campaign, build up momentum and I think he could have waited, perhaps, a week or two. I think the senator makes a good point.

That in effect the White House began signaling some weeks ago it was going to concede on this before it really got into a fight. That I think is a -- I happen to think the president ultimately was going to have to do this, but I'm surprised it happened without a fight and I think he's -- I think he's done something, which put him in a perilous situation with Democrats and perhaps with the country.

BLITZER: Senator, go ahead.

SANDERS: And let me just add this. If anybody thinks this agreement, this compromise is the end of what the Republicans want, you're 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, my word, the deficit and national debt are going up because of the tax breaks for the rich. Now we have to cut programs for the middle class and working families. That's what they'll do. We have 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.

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?

BLITZER: 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. I am tired of being on the defensive. It's 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 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're signing on to an agreement that will substantially increase the national debt.

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

He's the imam behind the proposed mosque and Islamic Cultural Center near ground zero. Just ahead, why he now says he's deeply concerned about the number of American Muslims being recruited for Jihad against the United States.

And remembering Elizabeth Edwards, you'll hear what she told me about battling breast cancer.

(COMMERCIAL BREAK)

BLITZER: An American Muslim is in custody right now, charged with plotting to bomb a military recruiting station in Maryland. The incident is prompting new concerns about what seems to be a growing number of such cases here in the United States.

I spoke about that and more with Imam Feisal Rauf, he's the founder of the Cordoba Movement and the spiritual leader of that proposed new cultural center and mosque near ground zero.

I asked him specifically whether he thinks there's a bigger problem right now with American Muslims being recruited for Jihad. (BEGIN VIDEOTAPE)

IMAM FEISAL ABDUL RAUF, FOUNDER, THE CORDOBA MOVEMENT: No doubt there is a problem. This is why it's important for us to end this spiral, this downward spiral of discourse, of hatred, of animosity between America and the Islamic world and Muslim world and Americans.

This is why I'm launching the Cordoba Movement, which is a multi- faith, multinational movement focusing on reversing this cycle of hatred and creating an opposite cycle of tolerance and hopefully even harmony and love. This is what we need to work on.

BLITZER: It's in contradiction to Anwar al-Awlaki, the American born cleric in Yemen right now who has web sites together with others that are aggressively seeking to recruit American Muslims to fight against the United States. What's the best way to stop these kinds of guys?

RAUF: We have to end this downward spiral by creating the opposite. One of the things that happened very positively from our experience this summer was the optics in the Muslim world of the mayor of New York City, the politicians of New York City, the interfaith community supporting our attempts to establish a center.

In the Sunday edition of the (inaudible) magazine, it quoted a Bahrainian newspaper who said this support of the American community for our community center was the best propaganda, the best PR that could possibly happen for America.

So what we have learned, Wolf, is that we can actually end the spiral and we have to engage with it and push back against it. We cannot let it dominate the discourse. Just last night, I met with a number of - the 9/11 families and communities, survivors, family members and entities whom we have committed ourselves to engaging with and changing this discourse not only about (inaudible), but the larger issue of faith and beliefs, what American stands for, what Muslims stand more and how we can reclaim the discourse from these extremists.

We have extremists in the Muslim world, extremists in all faith traditions and when this happens, you have threatening to burn the Koran, and the extremists feed on each other. We need to change it because the battle front is not between Islam and the west, but the moderates of all faiths traditions, including atheists agnostics and the extremist of all faith traditions including the extremists --

BLITZER: Are American Muslims doing enough to join you in this fight. Are you satisfied with what your fellow American Muslims are doing?

RAUF: We need to do more. We are stretched, but we need to do more and we cannot do this alone. We need to organize better. We need to partner better and this has to be a joint effort between Muslims and members of other faith traditions.

BLITZER: Let's talk --

RAUF: This is the only way we can do it.

BLITZER: Let's talk about the cultural center and mosque near ground zero. How much money have you actually raised for it so far?

RAUF: We have yet to begin a capital campaign. All that has happened is that the developer put together a group of investors who acquired the property, who have yet to begin a capital campaign to raise the money for that.

That is the work and focus of the developer. His focus is the real estate and development of the raising for the money for that development. What happened is my focus has been, was before and will continue to be on how we can actually win the peace and how do we wage the peace against the extremists who have hijacked the discourse and that what we aim to do.

That is why we founded this movement, cordobamovement.org and encourage listeners to visit our web site, learn more about our projects, our programs, our approaches on how to win the peace and register the voice.

BLITZER: There was a story on the "Daily Beast" by our CNN contributor John Avalon saying that your group has actually applied for federal funding for the cultural center. Is that true?

RAUF: The developer, I understand, has developed for the lower Manhattan development funding, which was funding established for the redevelopment of lower Manhattan. This is what I do understand. Yes.

BLITZER: Because there's been some criticism, Irshad Manji, I know you know she is the author of "The Trouble with Islam." She was quoted in that "Daily Beast" article as saying the New Yorkers have speak with have questions about Park 51, which is the name of the cultural center, requesting money from public coffers without engaging the public shows a staggering lack of empathy especially from a man who says he's all about dialogue. Do you want to respond to Irshad Manji?

RAUF: Absolutely, I mean, I have focused myself on dialogue. My track record speaks for itself and as I told you, we were engaged with the 9/11 survivors and families yesterday and they recognize that this is going to be an important discourse.

One of the ladies present yesterday said, look, I don't want my daughter to grow up hating anybody. Another gentleman who was a 9/11 survivor said, you know, I was in a stairwell and surrounded by Muslims and we were all looking to survive together.

There are many important stories and their major concern is how the discourse has been become so vitriolic and one of hatred and accusatory voices. We are working together with them to create programming in the immediate future on how we can actually reclaim the dialogue.

BLITZER: Are you at all considering moving the proposed cultural center and mosque from that location near ground zero to a less controversial location?

RAUF: At the moment the dream is alive to establish the center because the issue is not really about the real estate. The issue is about the broader -- the broader problems between -- and the perception between Muslims and members of other faith communities.

Let me remind you. The issue that happened, the controversial this last summer is not just about our proposed center. There were many, many -- which is intended to be a community center open to all. There were three, four, five, six others proposed mosques around the country, the Midwest, in Tennessee, in San Diego that also received criticism. What really appeared was really an anti-Islam sentiment, which was whipped up and fanned and this is very, very dangerous.

BLITZER: I want to be precise. As of now, you still want to build it at that location?

RAUF: This is our dream, yes.

BLITZER: Imam Feisal Rauf, thank you very much for coming in.

RAUF: Thank you so much for having me, Wolf.

(END VIDEOTAPE)

BLITZER: Elizabeth Edwards lost her long battle with breast cancer this week. She leaves behind some very personal letters to her children. Letters she told me about in an emotional interview a few years ago. Stand by for that.

(COMMERCIAL BREAK)

BLITZER: Elizabeth Edwards' family and friends are remembering her today as a lawyer, an activist, a political figure, but above all, a loving mother. The estranged wife of former presidential candidate John Edwards lost her long fight against cancer this week. She was 61 years old.

In an interview with Elizabeth Edwards just a few years ago, I asked her about her illness and the letters she was writing to her children.

(BEGIN VIDEOTAPE)

BLITZER: This is a really emotional article that is in the "People" magazine, and in it one of the most emotional parts which I read deals with the letter you're writing to your kids. Tell us a little bit about this.

ELIZABETH EDWARDS, LAWYER & ACTIVIST: This is actually something I've been writing probably nearly 20 years now. I started writing it after the movie "Terms of Endearment" where the mother knew she was dying and wrote a letter to her children. I thought, that's a really great idea.

You don't know when your time is going to come and whether you'll have warning and it would be a great idea to pass on things you thought were important to them. So I started writing it then long before I knew, of course, of any cancer.

And it just tells them the things I hope that they'll know about growing up. I know they'd have their father as a great moral guide, but of course, there's no mother who doesn't want to get her two cents in.

BLITZER: And you're giving them advice about people they should marry, what kind of church they should go to, simple things and really serious things. Your little kids are 9 and 7. You have an older daughter who's 25.

EDWARDS: Right and these were actually written for our older children. They were a little bit older than this, I think, maybe, but when I started writing it or maybe not. But they -- I wrote it for children, you know, Kate now 25. So it may come in handy for the younger ones and maybe she'll read it, too.

BLITZER: I was really happy to read in this "People" magazine article that the new treatment you're going through is not as apparently debilitating as the other treatment when you were first diagnosed with breast cancer.

EDWARDS: No, I still have my hair. That's a good sign. I'm not -- it doesn't exhaust me in any way. That's also great. It means I can campaign.

BLITZER: The pills are really, really little.

EDWARDS: They're very, very tiny and they're yellow actually. I was kind of thinking I needed a serious color of pill if I was going to have a serious disease. I have little tiny yellow pills to take.

BLITZER: Because people think that chemotherapy, they think of IVs and sitting in a chair for a long period of time and going through this really painful, arduous process, but it's a lot different.

EDWARDS: My doctors have said, you know, that you don't have to have terrible side effects to have good effects, we always think no pain, no gain. That doesn't actually apply in this case.

BLITZER: But you're doing well and you can combine your family life, obviously, also campaigning.

EDWARDS: Absolutely. I spent the previous two days at a wedding with the children. Here for a couple of days, back home for the last days of their school and then when they're through with school, they'll be on the road with John and with me.

BLITZER: The little ones, Emma Claire 9 and Jack 7, you're going to home school them during this coming year. Tell us a little about that.

EDWARDS: Well, I actually thought about home schooling my children in some subjects before, my older set of children. But this time we have an opportunity to let them travel, to see the country, to go to historical sites as we travel and to be with us a and just to home school them for a short period of time.

We're going to get someone to travel with us, too, because honestly I'm not capable of teaching science and math. I know how to do fourth grade science and math. I just don't know how to teach it in an effective way. We're going to get someone to help us with those things.

(END VIDEOTAPE)

BLITZER: Elizabeth Edwards passed away this week at the age of 61 years old. Our deepest, deepest condolences to her close family and her friends.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some "Hotshots" coming into THE SITUATION ROOM.

In Tibet, Buddhists monks celebrate the 500th anniversary of the birth of an early Buddhist teacher.

In Mexico, look at this, a model of the Statue of Liberty submerged by Green Peace activists to make a point about climate change.

In a public square in Lisbon, Portugal, people gather around an old carousel.

In Greece, a dog named Sausage who has appeared at all major demonstrations in Athens stands with riot police. "Hotshots," pictures worth a thousand words.

That's all the time we have today. I'm Wolf Blitzer, join us weekdays in THE SITUATION ROOM from 5:00 p.m. to 7:00 p.m. Eastern and every Saturday at 6:00 p.m. Eastern right here on CNN and at this time every weekend on CNN International.

The news continues next on CNN.