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THE SITUATION ROOM

Thousands Get Unneeded-Heart Device; Interview With Education Secretary Arne Duncan

Aired January 4, 2011 - 17:00   ET

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


SUNNY HOSTIN, CNN LEGAL ANALYST: Absolutely. And let's face it, I mean people do this often, not only just to celebrities. They do it, you know -- disgruntled employees, disgruntled exes, people who are sort of playing tricks...

BROOKE BALDWIN, CNN ANCHOR: Anyone.

HOSTIN: And now they've to be careful.

BALDWIN: Sonny Hostin, thank you, as always, on the case.

We'll see you back here tomorrow.

And now we go to Wolf Blitzer in Washington with THE SITUATION ROOM -- Wolf.

WOLF BLITZER, CNN ANCHOR: Brooke, thanks very much.

Happening now, as the sun sets on the Democratic-led Congress here in Washington, members are trading spaces and political jabs, with just hours to go before Republicans officially take control of the House. So we're going to tell you how both parties are repositioning themselves right now for the handover of power and perks. Perhaps no one is personally losing more than the outgoing House speaker, Nancy Pelosi.

And we're learning more about the last moments of a former Pentagon official who turned up dead in a landfill. Police are piecing together clues about how and why a veteran of three Republican administrations was killed.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

The Capitol may look the same on the outside, but inside, it's a hot bed of activity and change on this, the eve of the new Congress. This hour, the incoming speaker, John Boehner, is meeting behind closed doors with House Republicans. It's their first big get- together as a group before they take charge tomorrow.

The Democratic leader, Nancy Pelosi, is spending her final hours as speaker talking with fellow Democrats and with reporters. She's trying to get used to a new and less comfortable world where she's no longer the boss. We begin with our senior Congressional correspondent, Dana Bash.

History unfolding these days in Washington -- Dana.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. And for Nancy Pelosi in particular, it's effectively pivot day for her. It's the end of her historic time as House speaker and the beginning of her new role as House opposition leader. And she did it today, Wolf, without fireworks or waterworks.

(BEGIN VIDEOTAPE)

BASH (voice-over): The first female speaker of the House on her last day on the job.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: House Democrats will keep our focus on the creation of jobs, putting the American people to work.

BASH: Measured in tone and tenor -- a far cry from this moment four years ago.

(APPLAUSE)

BASH: Nancy Pelosi's name plate is already gone from the speaker's grand office suite. She's moved into the much smaller digs of the minority leader. Her message now -- growing jobs and shrinking the deficit -- a lesson from losing her gavel.

Does she regret not talking about that more when in charge?

PELOSI: No. We have no regrets.

BASH: And just as stoic when we asked for personal reflections.

(on camera): This is your last day as speaker. This, obviously, was an historic achievement -- on what that means to you and, looking back, about how it hit you personally?

PELOSI: Actually, I -- I don't really look back, I look forward. And we look forward to, as I said before, being a willing partner and solving the problems of the American people.

BASH (voice-over): Looking forward means defending health care legislation she worked so hard to make law and Republicans want to repeal.

PELOSI: To say we're going to repeal it is, just as has been said by my colleagues, is to do very serious violence to the national debt and deficit.

BASH: Around the Capitol, signs of change everywhere -- so many boxes and furniture in the hallways, they're hard to navigate. Freshmen GOP lawmakers like Ben Quayle of Arizona moving into offices, getting settled with new staff and vowing to keep campaign promises, like cutting spending. BEN QUAYLE, (R), ARIZONA CONGRESSMAN-ELECT: Some of the things are going to be tough to cut and people are not going to be happy about it. But the problems that we have, in the short and the long- term, are too big to deal with and too important.

BASH: Quayle is hardly one of the new GOP outsiders. He played in these halls when famous father, Dan, was in Congress.

QUAYLE: The biggest piece of advice that he gave me was just to like stick to your -- to your core principles and never apologize for them and never waiver from them.

(END VIDEOTAPE)

BASH: Now, sticking to principle is something we hear from a lot, if not all, of the incoming Republicans who are going to make up the new majority when they come in tomorrow. In fact, Wolf, they're meeting for the first time, all the House Republicans, right here in this room behind me. And we'll soon find out if they're really going to be able to stick to those promises -- promises of cutting spending and -- and cutting the growth of government.

Tomorrow is going to be a very interesting day, the beginning of many, many months.

And we're going to watch them very closely -- Wolf.

BLITZER: I've heard, Dana -- and you probably know this better than I do -- that, what, 2,000 Democratic staffers have lost their jobs now as a result of the Republican takeover of the House and the increased number of Republicans in the Senate?

Two thousand staffers have lost their jobs?

Is that right?

BASH: That number would not surprise me at all. I mean it is such a huge shift in power. And shift in power means shift in personnel. And there's absolutely no question about it, that so many House members, in particular, lost their jobs. And that means that all of their staff lost their jobs.

That also means that there's a hiring spree on the Republican side, as well.

BLITZER: Yes. So maybe 2,000 Republican staffers are coming in as 2,000 Democrats leave.

Dana, stand by.

One interesting footnote -- John Boehner is inviting all his Facebook friends to watch him become speaker live online. In a first for Congress, real time coverage of the House floor will be available on the Republicans' Pledge to America Facebook page. It all starts at noon Eastern. By the way, I'll be anchoring CNN's special live coverage of this historic event, along with the best political team on television. Our coverage will begin at noon Eastern tomorrow right here on CNN. You'll want to watch us to see what's going on.

President Obama is back here in Washington for the kickoff of the new Congress. He and his family returned from their Hawaiian vacation earlier today. On the flight home, the president told reporters he hopes the Republican leaders of the House and the Senate realized that there will be plenty of time to campaign for 2012 in 2012.

Of course, it's hard to take politics out of anything that goes on here in Washington. And the president is wasting no time trying to play up one of his legislative accomplishments. He's expected to sign the $1.4 billion food safety bill into law today.

Other news we're following, a dead man's journey from the halls of power to a landfill in Delaware -- we're learning more about the life and the violent death of a former Pentagon official who worked under three Republican administrations.

CNN's Deborah Feyerick is following this murder mystery for us -- Deb, such a sad story.

What's the latest?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, you know, it really is, Wolf. And friends say John Wheeler was a highly accomplished man who moved easily between the military and private sector, and has worked with various charities. He once joked he couldn't hold a job, but that's because he was in such high demand.

The question now, who would want to kill him?

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): Police returned to the Delaware landfill hoping to find answers in the trash as to how John Wheeler died and why. Wheeler, a former Pentagon official with top security clearance, was an expert in chemical and biological warfare, who served under three presidents. He was best known for pushing through the Vietnam Veterans Memorial. His friend and lawyer describing Wheeler as...

BAYARD MARIN, JOHN WHEELER'S ATTORNEY: Brilliant, forceful, determined, wanted to get done, wanted to get things done.

FEYERICK: Police believe Wheeler was murdered sometime between December 30th and 31st, then stuffed in a dumpster in a busy shopping area about 20 minutes from Wilmington, Delaware, where he was last seen -- not far from the famed Hotel du Pont. Police questioned businesses on the trash collector's New Year's Eve route. Two of those businesses tell CNN police asked for surveillance video. Wheeler's lawyer says the 66-year-old Vietnam veteran knew many people in Washington, DC, but had no known enemies.

MARIN: I think there's every possibility of that -- of it just being a random crime. It's come to everyone's attention because of the background of the person involved and the fact that litigation was involved. But it may be random.

FEYERICK: Wheeler was involved in litigation with a neighbor over the building of a home. His lawyer says it was contentious, but there were never any threats. Wheeler had a Washington, D.C. ticket on Amtrak. His car was found in a parking garage not far from the station.

(END VIDEOTAPE)

FEYERICK: That's right. And that's one of the clues that police are looking into. He did have a Washington ticket on Amtrak and his car was found. It's not clear whether it was abandoned or whether he had even made the journey.

Now, Newark police confirmed that they have asked the FBI to step in and help. The FBI has evidence response teams that -- that help in murders like these. And a source says that only if this murder is found to be connected somehow with Wheeler's work with the government would they step in and take over the case -- Wolf.

BLITZER: All right. If you get some more, let us know. A mystery unfolding in the state of Delaware.

Thanks very much, Deb Feyerick.

Homeland Security officials believe they have a lot to learn from some of the most notorious terror suspects.

Could the shoe bomber, for example, help authorities find and stop would-be attackers?

Plus, they're Palestinian militants different than most of the people you see in the Middle East. That's because they are women. And CNN was given rare access to watch them in action. Stand by.

And a man sees freedom after three decades in prison for a crime he could not have committed.

(COMMERCIAL BREAK)

BLITZER: A new year, a new controversy over immigrants and citizenship.

Jack Cafferty is here.

He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Fourteen states are considering passing laws that would deny citizenship to children born of illegal immigrants here in the United States.

Arizona, ever at the front of the immigration debate, could take the first step when it comes to the issue of birthright citizenship. Arizona lawmakers plan to introduce model legislation in Washington tomorrow that would force the Supreme Court to weigh in on this issue. Lawmakers from more than a dozen other states plan to be there tomorrow, as well. That includes everywhere from other border states like Texas to Utah, Oklahoma, Michigan, Delaware and Pennsylvania.

This all goes back to the 14th Amendment of the Constitution, which states that: "All persons born or naturalized in the United States are citizens of the U.S."

The law initially was meant to give citizenship to freed slaves. Those behind the new push say it wasn't meant to apply to children of foreigners. They say illegal immigrants and their children are draining taxpayer services and that they're attracting more illegal aliens into this country.

And they've got a point. A lot of our states are drowning in debt and deficits. See California.

The total is estimated at $140 billion for all of the states for the next fiscal year. And they're making drastic cuts as a result in all kinds of things -- education, health care, police forces, state workers. You name it, the cuts are every place.

Critics of an effort to end birth right citizenship say these attempts to take on the 14th Amendment could cost big bucks in legal challenges. And they also say that the issue is a federal one.

And, of course, we all know how seriously and how well the federal government has dealt with the problem of illegal immigration, don't we?

Here's the question: Should states deny citizenship to children born of illegal immigrants?

Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: All right, Jack. Thank you.

They are armed, dangerous and have one overriding goal -- resist and destroy Israel by any means. But these Palestinian militants are not men, they're women.

And as CNN's Paula Hancocks reports from inside Gaza, they're giving us a rare look inside their lives as they train for death missions.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): Militants training among the sand dunes of Gaza -- masked, armed, ready to fight and female. Training alongside men, they're calling for more Palestinian women to join Gaza's militant groups in the fight against their sworn enemy, the state of Israel.

We are given rare access to some of these women. These four belong to the Saladin Brigades (ph), one of the many militant groups in Gaza. Sitting beside a table of guns, rocket-propelled grenades and mines, this scene is carefully choreographed and the message is clear.

This woman says the Saladin Brigades trained me how to use weapons, how to shoot and deactivate mines. She says: "I am trained and ready to be a suicide bomber against Israeli soldiers."

Jewelry, on one hand; a hand grenade in the other -- these women say they are ready to fight Israel in any future war -- a prospect considered possible by both sides, as cross border violence has increased in recent weeks.

Many in Gaza see them as freedom fighters. But they are reviled as terrorists by Israel and many Western countries. A second woman tells me she wants to fight Israel and is ready to die for her cause. She says, our children are living in destruction and fear. They're wetting themselves at night because they're afraid of Israeli airstrikes.

It is hard to reconcile the sight of children's rucksacks hanging on a tree next to these heavily armed women.

(on camera): I'm told that there are tens of female fighters here in Gaza, just like the ones standing behind me, some as young as 20, some as old as 50, all of them willing to do whatever it takes to fight.

(voice-over): They tell me that Israeli women fight in their military, so why shouldn't they fight alongside me.

The first female Palestinian suicide bomber struck at the heart of intifada, or uprising, in January of 2002 in Jerusalem. Wafa Idrees, from a refugee camp in the West Bank, killed one Israeli and wounded dozens of others. And a young mother from Gaza carried out a suicide bombing in 2004 at the crossing into Israel.

Even though it is now difficult to get from Gaza to Israel, at least one of these women says she is willing to follow in their footsteps.

Paula Hancocks, CNN, Gaza.

(END VIDEOTAPE)

BLITZER: Imagine up spending 30 years behind bars for a crime you didn't commit? That happened to a Texas man. Now he's finally freed and cleared of wrongdoing. We're going to tell you what proved his innocence once and for all.

And are you already procrastinating filing your income taxes? This might be your lucky day. You're going to find out why the IRS is saying you can -- yes, you can wait even longer.

(COMMERCIAL BREAK)

BLITZER: Guess what. We're all going to have three extra days to file our income taxes this year. Lisa Sylvester is monitoring that, some of the other top stories in THE SITUATION ROOM right now.

What's going on here, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Well, Wolf, you don't strike me as being a procrastinator, but for those of us that are, well, the tax filing deadline is now Monday, April 18. And that's not because of previously announced processing delays, but because Washington, D.C. will be observing the Emancipation Day holiday on the original tax deadline, Friday, April 15. That holiday celebrates the freeing of slaves in the District. Now the IRS is warning, though, don't count on getting any more time to file because of processing delays caused by new tax policies taking effect.

A Texas man is enjoying freedom after spending 30 years behind bars for a crime he did not commit. Cornelius Dupree Jr. hugged Barry Scheck of the Innocence Project after DNA evidence exonerated him. A Dallas County judge overturned the now 51-year-old Dupree's conviction of rape and murder. He tells CNN there is anger about being incarcerated for so long, but that anger is overwhelmed by joy.

A two-week hearing to determine whether Michael Jackson's former doctor should stand trial on involuntary manslaughter is underway in los Angeles. Jackson's family gathered at the court building today. Prosecutors told the judge that Dr. Conrad Murray found Jackson unresponsive but that he waited at least 21 minutes before calling an ambulance. The coroner later found the pop star died of intoxication of the powerful anesthetic Propofol and a sedative.

And there's a casting change for Broadway's troubled musical "Spider-Man: Turn Off the Dark" and this takes affect officially tonight. Actress T.V. Carpio officially assumes the role of the musical's villainess and she is replacing Natalie Mendoza. You may recall, she dropped out after suffering a concussion last month. This amateur video captured a stuntman falling 20 feet during a performance last month. He had to be hospitalized, but he insists that he's looking forward to returning to the show.

So the show must go on, Wolf.

BLITZER: As they say on Broadway. I'm sure -- they're getting a lot of publicity, folks are going to want to see "Spider-Man" on Broadway.

Thanks very much for that. Let's just hope they're careful and have no more accidents.

Researchers are warning that doctors are implanting high-tech heart devices in literally thousands and thousands of people around the United States who don't need them. A new medical study suggests some patients' health may be actually be at risk because of those devices that are supposed to help them.

Our senior medical correspondent Elizabeth Cohen is joining us now from the CNN Center.

Elizabeth, what did this study actually find out? ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: You know, this is really a major study. They looked at a hundred thousand people who had defibrillators, that's like the one that former Vice President Cheney got years ago, and what they found is that 23 percent did not need them according to evidence-based guidelines. These are guidelines that are in writing that sort of say who needs them and who doesn't.

Now, is it possible that this report is not completely correct and maybe some of the 23 percent did need them? It's possible, but as the researcher told us, still, it's a lot of people who are getting defibrillators who may not need them -- Wolf.

BLITZER: Raises the question, are we simply overdoing it with the expensive procedures that may not only be not necessarily but could actually be harmful?

COHEN: Right, Wolf, you'll remember, we talked a lot about this during health care reform, this was a big piece of that debate. And there are a lot of voices out there saying that Americans get too many procedures, and that when you look at strict guidelines, many of the patients don't meet them.

Other doctors say, look, we shouldn't be going by guidelines, we should be going by a doctor's judgment, that medicine is an art, not a science. So it's a debate that I'm sure swill continue, but this is yet another study that suggests that indeed we are getting procedures that we don't necessarily need.

BLITZER: And as Elizabeth and a lot of other experts will tell us, get a second, third, even fourth opinion if you have any doubts at all.

Elizabeth, thanks very, very much.

The new Republican-led House could try to cut funding to American schools. I'll ask the education secretary, Arne Duncan, about the threat to his budget. Why all of the money spent now isn't necessarily, as some folks are alleging, helping our kids. Stand by, Arne Duncan is here live in THE SITUATION ROOM.

Plus, the failed bomb attack in Times Square could help tip off homeland security officials trying to track down future terrorists.

And a Navy captain pays a huge price for making and playing a raunchy, offensive video onboard his ship.

(COMMERCIAL BREAK)

BLITZER: You're in THE SITUATION ROOM.

Happening now, we're following lots of developments here in THE SITUATION ROOM, including $2,500 tickets, a $50,000 VIP suite and celebrity entertainment -- it's all part of tonight's glitzy fundraising bash for the incoming GOP freshman right here in the nation's capital. What happened to the Republicans promise to clamp down on spending and K Street lobbying? Stand by.

And relived of his command -- lewd anti-gay videos are costing the U.S. Navy captain of the USS Enterprise his job and the investigation is now widening. We have new details are coming in.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

All that coming up, but take a good look at how year after year of red ink in the federal budget is now adding up. The national debt now is over $14 trillion, that's the total amount owed by Americans and our children and our grandchildren, generations to come. It's one of the big reasons the incoming Republican leaders of the House are vowing to cut $100 billion of domestic spending this year.

One potential target of the budget acts, education. Joining us now, the education secretary Arne Duncan.

Mr. Secretary, thanks very much for coming in.

ARNE DUNCAN, EDUCATION SECRETARY: Happy new year.

BLITZER: I don't know if -- happy new year to you, too, as well.

"The New York Times," on the front page today, say the Republican leaders of the House, they want to cut $100 billion in domestic spending and they suggested that means about a 20 percent cut in the Transportation Department, another 20 percent cut in your Education Department.

Are you ready for that?

DUNCAN: What that would mean would be 8 million students currently receiving Pell grants wouldn't get that. So as we're desperately trying to educate our way to a better economy, send more young people to college, less young people would have those kinds of opportunities. It means less special education students, millions less special education students will be served, poor students would get less services, that's not as country what we (INAUDIBLE) --

(CROSSTALK)

BLITZER: So what can you really -- assuming everyone has to cut in discretionary spending -- hold on one second, cause I think -- we don't have a mike. Here we go. Here we got a mike. We're going to -- talk into that mike and see if that works.

Is that working now? All right, hold on for a second, Mr. Secretary. I'm going to coming back to you in a moment.

Let me bring in Lisa Sylvester, she's got some other news. We'll get right back to the secretary in just a moment -- Lisa.

SYLVESTER: Wolf, we want to tell you about former White House -- actually, we're going to a different story. A Cook County judge has ruled that President Obama's former right-hand man meets Chicago's residency requirement and can run for mayor of the city. The judge upheld an earlier ruling by the Chicago Board of Election Commissioners in Emmanuel's favor. His opponents, if you recall, they had argued that his two-year stint in Washington disqualified him. That election is February 22cd.

And there are new fears today that U.S. ally Pakistan could descend into further unrest and violence. The influential and moderate governor of Pakistan's Punjab Province was gunned down by his own security guard. The suspect is in custody today. He allegedly assassinated his boss because the governor spoke out against Pakistan's controversial blasphemy law. Pakistan's president has declared three days of national mourning.

And authorities are ramping up security at Christian Coptic churches across Europe in the wake of the deadly New Year's Day attack on the church in Egypt. That church had been listed on an Islamist Web site. At least 16 other Coptic Churches, including four in France and six in England and Germany, are also mentioned on that Web site and some are fearing that they could be targeted as Friday's Coptic Christmas celebration approaches.

And la dolce vita, well, it just got a little bit more expensive. Tourists visiting Rome are being hit with a brand new hotel tax.

It will cost you $4 more now a night to stay at a four-and-five- star hotel in the Eternal City. The new law applies to anyone who is not a resident of Rome. The money is to help to pay for repairs and maintenance for the ancient city, but the hotels are fearing that it could scare away the tourists -- Wolf.

BLITZER: All right, Lisa. Thanks very much.

Let's get back to our interview with Arne Duncan, the Education secretary.

Mr. Secretary, "The New York Times" suggesting Republican leaders in the House want to cut perhaps 20 percent of your budget as part of their effort to cut down $100 billion in domestic spending this year.

Are you ready for that kind of action?

ARNE DUNCAN, EDUCATION SECRETARY: That would be bad for the country, bad for our long-term economy, bad for education. Eight million young people currently going to college would receive less financial aid, less Pell Grants. We need many more graduates, we don't need people dropping out of college due to financial stress.

Millions of students with special needs wouldn't get the services they need. Poor children wouldn't get the services they need.

Wolf, we have to educate our way to a better economy. We have to invest. We have to invest wisely, we have to invest in a reform agenda. We can't afford to take a step backwards.

BLITZER: What can you afford? How much of a budget cut can the Department of Education afford, assuming what they call domestic discretionary spending has to be cut? DUNCAN: Well, this is where we need to continue to invest. We're looking to consolidate. We're looking to consolidate 38 programs into 11.

We want to be much smarter, much more targeted. But we cannot afford to deny young people opportunities to go to great elementary schools, great middle schools, great high schools, and ultimately go on to college.

BLITZER: All right. Let's talk about this article you wrote in "The Washington Post," because you suggested that there was an opportunity to improve education by dealing with poverty, which is the huge source (ph).

There was criticism of your article coming in from Professor Stephen Krashen of the University of Southern California, saying, "Duncan gives the impression that overcoming poverty happens all the time under his administration. There is no real evidence that it happens at all."

Is there any evidence that you are overcoming this?

DUNCAN: Wolf, that's one of the biggest challenge our country is still -- folks to believe, that somehow poverty is destiny. I spent my whole life working in the inner city in a desperately poor community. I know those challenges as well or better than anyone.

Bright stars and young people from very poor communities, very tough family situations, lots of violence in the neighborhood. Despite those very real obstacles, with long-term support and guidance and real education opportunity, people go on to do extraordinarily well.

BLITZER: Is there any, like, real scientific evidence of that other than anecdotal evidence?

DUNCAN: There's evidence all over the country. You look at what Geoffrey Canada is doing to the Harlem Children's Zone, where they're basically closing the achievement gap. We've never had more high- performing, high-poverty schools around the country. That's why I'm so hopeful.

The challenge, Wolf, is those kinds of opportunities aren't at scale yet. We have to invest in those best practices, we have to create more of those opportunities. Great principals, great teachers make a huge difference in students' lives.

BLITZER: The other criticism, he says, more of this testing is a disaster. He says, "We are about to make a mistake that will cost billions and make school life even more miserable for millions of teachers and students. The only ones who will profit are the testing companies. We should be talking about reducing testing, not increasing it."

DUNCAN: We need better evaluations. And right now, in part thanks to Race to the Top, we have 44 states working together and two consortia coming up with the next generation assessments.

Teachers, parents, students want real information. They need to know, are students learning? Where are they improving? Where are they not? Where do they need more help?

Those next generation of assessments are going to help us to get there. That leadership is being provided at the local level, not by us in Washington.

Here's what's so shocking. December, "USA Today," the newspaper, had these statistics from the Organization for Economic Cooperation and Development. I'll read it exactly.

"Out of 34 countries, the United States ranked 14th in reading, 17th in science, and 25th in math." That's horrendous.

DUNCAN: Wolf, that's reality. And that's why we're pushing so hard for real change, for real reform.

We cannot as a country celebrate and say we're 25th in science. In a knowledge-based, globally-competitive economy, we have to do so much better educationally, so anyone who's defending the status quo, anyone who is saying we don't need change is part of the problem.

BLITZER: And the other problem is the amount of money we spend and the results we get. Let me read to you from "USA Today."

"The United States spends more per student on average than the other countries. In the 2009 PISA study, only Luxembourg spent more per student. The report notes that countries like Estonia and Poland perform at about the same level as the United States, while spending less than half the amount per student."

DUNCAN: If you looked at what the high-performing countries are doing, there's so much we can learn -- the Singapores, the Finlands, the South Koreas.

BLITZER: How do they do it and we don't?

DUNCAN: In South Korea, Wolf, teachers are known as nation builders. We need to make teaching a revered profession. We need to do a much better job of respecting and valuing teachers. We need to bring that next generation of talent in.

In those countries, teachers are looked upon as doctors and lawyers. Somehow in our country, teachers have been disrespected, they've been devalued. We have to get away from that. With the baby boomer generation retiring, a million new teachers are needed around the country. We have an amazing opportunity to transform the workforce.

BLITZER: Because as you say, in the global marketplace, if we don't improve our education levels, we're going to go down and down and down.

DUNCAN: Jobs just continue to go overseas. We're fighting for our country. We're trying to make our country great again.

This is about nation building. The only way we get there, Wolf, is through smart investment, targeted investment, and education reform.

BLITZER: The former governor of Florida, Jeb Bush, he wrote in "The Wall Street Journal" this week. He said this: "If a public school doesn't measure up, families have an unprecedented array of other options: public school choice, charter schools, vouchers for pre-K students, virtual schools, tax credit scholarships, and vouchers for students with disabilities."

Are you with Jeb Bush on all these things?

DUNCAN: What we need are great public schools. What I want is to give every single child in this country, regardless of where they live, urban, rural, suburban, a chance to go to a great public school. The overwhelming majority of our children always will go to a public school. We need to make every single one of those options a great one.

BLITZER: What if there's no great public school, and the kids -- but there's a good private school or a Catholic school in the neighborhood, but they need a voucher to go?

DUNCAN: So what we're doing, Wolf, first time around the country, as a country we're turning around 700 chronically underperforming schools. For so long, we just watched 40 percent, 50 percent, 60 percent of children drop out. Seven hundred schools are being turned around as we speak, schools that, historically, were dropout factories.

You're going to see very, very different results. We can't just save one or two children, Wolf. We have to save that whole school, and ultimately that entire community.

In far too many areas, those dropout factories have been there for decades -- 10, 20, 30 years. The country now is finally having the courage, and we're providing the resources to challenge that status quo.

BLITZER: Let me wrap up with a new reality here in Washington, a Republican majority in the House. They want to slash domestic spending, including in the Department of Education, your department.

Where do you go from here?

DUNCAN: We all work together. I think there's great leadership, Republicans, Democrats, in the House, great leadership in the Senate. No one is satisfied with the status quo. We have to educate our way to a better economy. We all have to come together for --

(CROSSTALK)

BLITZER: Can you work with John Boehner? DUNCAN: I have great respect for John Boehner, great respect for John Kline, Senator Enzi, Senator Alexander. There's great relationships in the House and the Senate on the Republican side. We've had great relationships. We need to continue to do the right thing for our children and the right thing for our country.

BLITZER: Good luck.

DUNCAN: Thank you so much.

BLITZER: Arne Duncan is the secretary of Education.

Appreciate it very much.

DUNCAN: Thank you.

BLITZER: House Republicans are talking about reining in the federal budget, yet some of them are heading to a posh welcoming party here in Washington at a class hotel at a cost of about $2,500 a ticket or more. Some of those tickets, much more.

We're taking a closer look at the event, the controversy. Our own Brian Todd is live at the W Hotel here in Washington.

(COMMERCIAL BREAK)

BLITZER: Let's get right to our "Strategy Session."

Joining us now, our CNN political contributors, the Democratic strategist, Donna Brazile, and the Republican strategist, Ed Rollins.

Look at this new Gallup Poll. President Obama's approval rating now, Ed, back at 50 percent. Disapproval, 43 percent.

Is he coming back? December looks like it was a pretty good month for him.

ED ROLLINS, CNN POLITICAL CONTRIBUTOR: Well, it was a pretty good month for him, according to the polls. Obviously, the post- election session, he had some successes. He looked above the partisanship, and I think that benefits any president, that he can work with both sides.

We'll see now as we start moving forward in the rough and gritty patches of Congress, but he certainly has come back.

BLITZER: He certainly has come back with a lot of middle-of-the- roaders, Donna. It looks like they actually like what so many of the liberals or progressives didn't like, extending the Bush tax cuts for the wealthy.

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: Well, Wolf, I think they enjoyed seeing the president exert his leadership on the national stage and getting the two parties to come together with their compromise. And also, some of the other initiatives that the Democrats were able to get through Congress at the 11th hour. This president has an enormous amount of political capital. At this same point in President Reagan's term, I believe he was at 40 percent. And President Clinton, 37 percent. And we knew that they went on to win their re-election.

I think it's important that the president continues to reach out to both political parties, find the good ideas that will work, and continue to exert leadership.

BLITZER: But if unemployment is still at 9 percent or 9.5 percent, Ed, he's going to -- no matter how personally popular he might be, he'll be in trouble.

ROLLINS: Well, there's no question, the unemployment, the slow economy is going to affect all politicians, particularly the president. And I think whatever they do in the next year, they've got to get people back to work. They've got to get businesses to reinvest. They've got to get banks to loan money. And they've got to get workers back in the workplace.

BLITZER: Donna, what about this palace intrigue going on at the White House right now? The vice president's chief of staff, Ron Klain, he's leaving. There's a lot of speculation that Bill Daley, the former Commerce secretary during the Clinton administration, is coming in as the new chief of staff.

What's going on over there?

BRAZILE: Well, we've known for months when Rahm Emanuel announced his departure to return to Chicago to run for mayor that the White House would be making some significant changes. I don't know the extent of the personnel that will be coming in. I don't know if there's fresh blood, new blood, or some old blood from Chicago. But the bottom line is this president needs to recharge his political team, his entire White House operation.

As you know, there's a new reality here in Washington, D.C. And he's going to need some reinforcement. So I'm looking forward to seeing some of the new people come on board. And hopefully, he'll bring in some new faces from the outside.

BLITZER: Is Bill Daley the kind of guy that can be a chief of staff, successful, Ed?

ROLLINS: He's an extremely able guy. He obviously comes from a family, a dynasty of great politicians.

He was very effective as a Commerce secretary. He's well regarded by Democrats and Republicans alike. He's a great campaign strategist.

I think he would be a superb chief of staff as long as you remember that you're the chief of the staff. And so, you know, I think to a certain extent, he doesn't have quite Rahm's elbows and personality, but I think to a certain extent, he would be a great addition if he's coming. BLITZER: Here's what I don't understand at the White House right now, Donna. Maybe you can help me.

They've got two -- the president is signing two important pieces of legislation into law -- the health care bill helping the 9/11 responders, the first responders. These are heroes who are sick. He does that behind closed doors.

And today, the food safety legislation which is going to help prevent disease for kids and for a lot of people, strengthening up food safety across the board. He signs that behind closed doors.

Why does he do that quietly, without a big signing ceremony, and try to get some publicity for these initiatives which are both pretty popular?

BRAZILE: Very popular, and two initiatives that the president strongly supports. But it's a matter of expiration.

These bills have to be signed at a certain point. And I think the president was trying to get the job done and not look at holding another news conference.

I'm glad that he signed them, especially the 9/11 bill. And hopefully, we'll see the president sign more bills in the coming weeks. But not repealing the health care law --

BLITZER: He doesn't have to have a news conference. He can just sign it in public, let the TV cameras watch, get some friends over there. They can celebrate.

Ed, if you were still in the White House, you wouldn't have done this behind closed doors. Is that right?

ROLLINS: We definitely would not have done it behind closed doors. You know, it's easy to second-guess from the outside.

But, you know, I think the theatrics are very important, and whatever the reasons only they know. But I think the bottom line is we're going to have to start a whole new day tomorrow in which Republicans are clearly going to be a part of the process. And hopefully everyone is going to talk to each other and not talk at each other.

BLITZER: All right, guys. Stand by. I want to continue this conversation.

We have more of our "Strategy Session" coming up.

Also, starting tomorrow, Republicans take over the House of Representatives, and they're promising to turn the clock on health care reform. Is this the right move?

Donna and Ed, they're back in two minutes.

(COMMERCIAL BREAK) BLITZER: Let's get right back to Donna Brazile and Ed Rollins.

Ed, the first issue out of the gate for the Republican leadership in the House is repealing health care reform.

Is that issue number one?

ROLLINS: It's been issue number one. They promised it when most of the candidates that ran and got elected promised to do this.

You know, it's not going to be repealed. It certainly could pass the House. I think it will. And there will be some Democrat votes.

I think the key thing here is to examine what's good and what's bad in this bill, and modify some of it as you move forward. And I think to a certain extent, this is the beginning of a process. But it's living up to a commitment which is very important to the constituencies that sent these guys there.

BLITZER: Nothing wrong with that, living up to a pledge. They promised to try to repeal it.

That's what they're going to try to do, Donna.

BRAZILE: Well, Wolf, one of my friends called it cruel and unnecessary. Cruel in the fact that millions of Americans are already enjoying some of the benefits of this plan, including children with pre-existing conditions.

Seniors have received a $250 check for Medicare. Are they going to tell the seniors to return that money when seniors reach 50 percent of the money in their doughnut hole? They won't be able to get additional resources to buy their prescription medicine.

This is unnecessary. This will add $143 billion over the next 10 years to the national deficit. And billions more in the waste and fraud. And once again, we've giving the insurance company the right to raise premiums.

Ed, this is going to be a fight, and it's going to be a fight because Democrats and Republicans had -- they held 79 hearings in markups. We know what's in the bill. But they're going to start denying people with pre-existing conditions health care.

(CROSSTALK)

BLITZER: Go ahead, very quickly, Ed.

ROLLINS: Well, let Republicans in the room this time. And obviously --

BRAZILE: They were in the room before, Ed.

ROLLINS: Thank you, Donna.

BRAZILE: They were in the room before. ROLLINS: Happy New Year.

BRAZILE: Happy New Year.

BLITZER: Guys, we'll continue this conversation. Stand by. Thanks very much.

ROLLINS: Thanks.

BLITZER: Jack Cafferty will be back in a moment.

Also, famous bombing suspects under the microscope. The Homeland Security Department --officials there are learning -- or trying to learn, at least -- what makes homegrown terrorists tick.

And a raging debate returning to Capitol Hill over the health care reform issue. But before lawmakers battle it out, two representatives are here in THE SITUATION ROOM with both sides of this debate.

Stand by.

(COMMERCIAL BREAK)

BLITZER: Let's get right back to Jack with "The Cafferty File" -- Jack.

CAFFERTY: The question this hour is: Should states deny citizenship to children who are born of illegal immigrant parents?

H. writes: "Arizona's proposal not to issue state birth certificates to children born of illegal aliens will do more to reduce the number of illegal aliens in that state than any previous law. Without a state-issued birth certificate, the child won't be able to collect benefits in any state. Illegal aliens will no longer want to have their children born in Arizona, and thus will not settle there."

Nate writes: "When we start bending or breaking our constitutionally-guaranteed rights because of fear, what do we have left? Shouldn't we be concentrating on improving the economic situation in Mexico and keeping folks from being able to enter the country, rather than changing our country's laws to address the problem?"

Sylvia writes from California: "Jack, it's no secret that many pregnant women cross the border illegally to have their anchor babies born in the United States. I applaud those states that are tired of paying for them and are saying enough already. It sickens me when Democratic liberals try to paint this as a racial issue. I'm a Latina, and I find nothing racist about a country trying to get a hold of its borders."

Jenny writes from New York: "No, it's not the fault of the children that they were born here. America is their country. Employers ought to be punished for hiring people they know are here illegally. Until then, people will continue coming here looking for work, and babies will continue to be born here. Don't blame the innocent children."

Nathan writes, "I'm a legal immigrant. I stood in line, attended interviews, paid taxes, and became part of society. I have never run a red light, never broken any law. I come here legally, I live here legally."

"It took me 15 years to go through that process, and I'm all for that. I say this to point out the unfairness of all of this. This is spitting in the face of all those who try to get the process done the right way. And 100 percent of the illegals have incentive to come here because they can have anchor babies."

Finally, Paul writes from Hawaii, "So, Jack, if my pregnant wife and I were visiting your home, and she just happened to deliver the baby in your house, would you be forced then to support my kid, providing him with food, clothing, shelter and health coverage until the age of 26?"

If you want to read more on this, go to the blog, CNN.com/caffertyfile -- Wolf.

BLITZER: All right, Jack. Thank you.

A Navy captain exposes his crew to raunchy videos. We're taking a closer look at the history of sailors and commanders behaving badly.

And connecting the dots between homegrown terrorists.

Stand by.

(COMMERCIAL BREAK)

BLITZER: A new year, and new efforts under way to learn what makes homegrown terrorists tick.

Our Homeland Security Correspondent Jeanne Meserve is here. She's watching the story.

Jeanne, what are we learning?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well, Wolf, over the past 24 months, nearly 50 U.S. citizens have been charged with serious terror violations. Authorities are trying to get a better picture of who they are, hoping to find and stop other homegrown terrorists before they act.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): The list of terrorists accused of plotting or carrying out attacks against the U.S. is long and getting longer. A new study examines cases from shoe bomber Richard Reid to Times Square bomber Faisal Shahzad, and looks at 25 variables to try to identify common characteristics.

The head of counterterrorism for the Los Angeles Police Department says that kind of information can help local law enforcement piece together a terrorism investigation.

DEP. CHIEF MICHAEL DOWNING, LOS ANGELES POLICE: It's hard to put it together, but the more data points that we have, that we can connect up, we can get a sense of what this picture looks like.

MESERVE: A draft copy of the report by the New York State Intelligence Center was obtained by "The Wall Street Journal." It found most of the terrorists were U.S. citizens, men between the ages of 18 to 33. Many had prior arrests, often for drugs. Of the 61 percent who had attended college, the majority were engineering majors.

With the proliferation of homegrown plots like those to blow up D.C.'s Metro and a Maryland military recruiting center, a flurry of studies has tried to create a picture of who these domestic terrorists are. But some experts say it is also critical for law enforcement to know more about the process of radicalization.

FRANK CILLUFFO, GEORGE WASHINGTON UNIVERSITY: We need to be able to break down the case step by step by step by step, all the way to the very beginning of an idea as much as we can to see how it manifests itself. And that will be more valuable from an operational counterterrorism preventative perspective.

(END VIDEOTAPE)

MESERVE: Some law enforcement officials say the statistics in the new report are so generic, that they aren't useful investigatively. And some experts caution that drawing a picture of a terrorist can give you tunnel vision and make you miss dangerous people who do not fit preconceived notions. Wolf, back to you.

BLITZER: OK, Jeanne. Thank you.