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Fiery Package at D.C. Postal Facility; Jobless Rate Falls to 9.4 Percent; President Names Clinton Vet to Key Post; Britain Boosts Terror Threat Level; Flood Crisis in Australia; Shocking Details of A.F. Base Arrest; Doctor in Court Over Jackson's Death

Aired January 7, 2011 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: And you're in THE SITUATION ROOM. Happening now, breaking news, a fiery package addressed to the Homeland Security Secretary forces the evacuation of a D.C. postal facility. It comes a day after similar devices caught fire at Maryland government offices not that far away.

The jobless rate falls, but the numbers paint a cloudy picture. The president says the trend is clear, the economy's on its the way back. But an ominous new prediction says it could take years - years to get back to normal.

And two Republican congressmen missed the mass swearing in ceremony. They held their own ceremony. Did they violate the U.S. constitution, even as their colleagues were reading the constitution aloud?

We want to welcome our viewers in the United States and around the world. Breaking news, political headlines, all straight ahead.

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

And let's begin with the breaking news. Police and federal agents rush to a postal facility right here in Washington, D.C. after a package ignited, forcing an evacuation of a key building. The incident comes a day after mail devices ignited two Maryland state offices not very far away. Authorities say the latest envelope was addressed to the Homeland Security Secretary, Janet Napolitano.

Let's go straight to CNN's Brian Todd. He's on the scene over this postal facility in the nation's capital. What's the latest, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the latest is a description that we just got from the D.C. police chief Cathy Lanier of the scene when this package was discovered. She spoke to us a short time ago. Here's what she had to say.


CHIEF CATHY LANIER, D.C. METROPOLITAN POLICE: At past 2:00 today, a metropolitan police officer was traveling in the 3300 block of East Street Northeast (ph). The police officer was flagged down by a - a postal employee that works in this block at a United States postal facility. The employee indicated that they had a package that they described as similar in nature to the packages that were recovered yesterday in Maryland.

The package was not opened by the employee. However, the package had been described as popping, smoking, and with a brief flash of fire, and then it - it went out and extinguished itself.


TODD: There were no injuries in this incident. The building was evacuated almost immediately. The police chief said that they are now conducting a joint investigation with the Joint Terrorism Taskforce, the Department of Homeland Security, the Postal Service. Everyone's involved in this, Wolf.

As you heard the police chief mention, officials are saying that this is very similar in nature to the two packages that ignited in Maryland yesterday, the - about the same size. One official just described it to me as about the size of a large VHS box. It was - it was - you know, had similar characteristics in almost every way to those packages that ignited in Maryland yesterday, but the investigation is ongoing now to determine if there is a link to those incidents, Wolf.

BLITZER: We'll stay in close touch with you, Brian. Thanks very much.

Other important news we're following, the latest job numbers show a dramatic drop in the unemployment rate to 9.4 percent. That's the lowest level in a year and a half.

But the economy added only 103,000 jobs in December. That's short of the forecast that were out there. The president says things are on the right path and that a beefed up economic team led by former Clinton administration veteran Gene Sperling will help bring more progress.

Let's go straight to our senior White House correspondent Ed Henry at the White House. He's relatively optimistic about these job numbers and the trends?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, that's right, Wolf. I mean, they see upward signs. I mean, the auto sales are up, you see manufacturing increasing. You also see, as you noted, jobs created for several months in a row now, and you had Austan Goolsbee on a short time ago, talking about over a million jobs created in the past year.

But they're also fully aware that you've got a robust Republican House, the Republicans also stronger this year in the Senate saying, look, there has been unemployment around 9.0 percent for nearly two years now, and that's why the president, when he went to a - a window manufacturing company here in the D.C. area earlier today to talk about these numbers, was very careful to temper expectations.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The economy added more than 100,000 jobs last month, and the unemployment rate fell sharply. Now, we know these numbers can bounce around from month to month, but the trend is clear. We saw 12 straight months of private sector job growth. That's the first time that's been true since 2006.

The economy added 1.3 million jobs last year, and each quarter was stronger than the previous quarter, which means that the pace of hiring is beginning to pick up.


HENRY: And the president is counting on that pace to keep going up, because of that tax deal he signed and brokered with Republicans late last year and signed into law, because he's saying, basically, that it's going to mean another $1,000 in the pocket of your average American family, number one. And, number two, there have been a lot of economic forecasters saying the economic growth is going to get a pretty good jump this year now that you've got this tax deal kicking in.

We'll see as the year wears on, but they're hopeful that things are finally getting better, Wolf.

BLITZER: And Gene Sperling, the latest Clinton administration official to get a major job in the White House, the director of the National Economic Council, succeeding Larry Summers.

Bill Daley yesterday was named the new Chief of Staff, the former Clinton Commerce Secretary. What are they saying over there at the White House about all these Clinton administration officials getting these big jobs now in the Obama administration?

HENRY: Well, on the negative side, they can hardly say that these are new faces, but what they're trying to say is, look, they're bringing real experience to the table, and as this president retools to deal with that new political climate I mentioned on Capitol Hill, you've got folks that the president now wants to really get in place, get this new team in place before his State of the Union, which is expected at the end of this month.

I'm told that Bill Daley is now definitely going to be here in place as new Chief of Staff before the State of the Union, maybe even as early as next week. And then Gene Sperling, after this event with the president, I am told, you know, he's been at the Treasury Department recently.

He came right over to the White House to the president afterwards and helped lead a meeting on the federal budget they're going to be unveiling in a couple of weeks here at the White House, and then immediately jumped on the phones. He was calling members of Congress in both parties to start reaching out to them. He also called business leaders. He'll be working with them, and finally called some organized labor leaders.

Why is that significant? Well, Gene Sperling, Bill Daley, these folks are seen as a little bit more pro-business. That's raising concerns on the left that maybe they're not going to be as friendly to labor and others, that clearly Gene Sperling calling on his first day, saying look, we're going to work together, Wolf.

BLITZER: And I suspect the American public will get to know them both a little bit better. They're not shy about appearing on television. I assume they'll both be making regular appearances here in THE SITUATION ROOM as well.

Ed, thanks very much.

While the president suggests there a clear trend of improving job growth, there are some somber warning out there that it could take years - yes, years - for the job market to get back to normal.

Joining us now is Mark Zandi. He's the chief economist for Moody's Analytics. And our senior political analyst Gloria Borger is here as well.

Mark, why this dip in the unemployment rate from 9.8 to 9.4 percent?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, Wolf, I wouldn't read anything into it. This is based on a very small survey, about 60,000 households and it jumps around a lot month to month. I think the president mentioned that in his comments. And I - I wouldn't read anything into it.

I think the unemployment rate is still pretty close to 10 percent. It's not 9.4, and we'll see that jump right back next month.

BLITZER: And the 103,000 jobs that were created, that's less than the 150,000 or even 200,000 some forecasters were predicting.

ZANDI: Yes. That's a bit of a disappointment. I had expected a number closer to 150, 160K. And, just to give you context, we need about 150,000 jobs created each and every month just to maintain a stable rate of unemployment, and we need 200K plus to get enough job growth to bring down unemployment in a significant way.

So we still - the economy is making progress, the job market's moving in the right direction, but we need to see a lot more progress before we're going to feel comfortable about it this.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: But, as you know, this is a real political problem for the president to keep this rate this high. Is there any scenario in which you see the unemployment rate getting to, say, eight percent or below within the next couple of years?

ZANDI: Yes, I - I think so, Gloria. I mean, I think all of our preconditions for better - much better job growth are in place. Most importantly, U.S. businesses are very, very profitable, their balance sheets are very strong. I don't think it's really a question of can businesses hire more aggressively, it's really a question of are they willing?


ZANDI: And if - and I think they will over time. BORGER: But they're sitting on an awful lot of money right now, so what do you do to get them to hire and stop - stop sitting on that pile of money they have got?

ZANDI: I think it's a lack of confidence, and two things are weighing on sentiment. One is just the fact that we've been through so much. The great recession was only a couple of years ago and I think it's going to take time for business leaders to overcome that.

And secondly, we need the policy uncertainty to - to - policy uncertainty to abate, and, you know, I think there's good news there. I think it is abating. Health care, financial regulatory reform are in the books. We've got a very nice tax cut deal.

I do think, as we make our way into the spring, summer, we will - we will see business sentiment improve, and we will see better job numbers.

BLITZER: You sound more hopeful, more upbeat than Ben Bernanke, the Chairman of the Federal Reserve, who told Congress today he doesn't think it will go below eight percent at least for another two years. And he says it - it probably will take four or five years for the U.S. economy to get to some sort of normal structure.

Is he too pessimistic?

ZANDI: Well, I think it's appropriate for him to be conservative in his views. I mean, he is - he needs to be very aggressive and ensure that the economy gains traction and unemployment moves south. I do think though he's right under even my sanguine view of the world, relatively sanguine of the world, it's going to take several years to regain the jobs lost during recession, and more than that to get back to an unemployment rate that we would consider to be full employment, where everyone is working who wants a job.

BORGER: What about the scenario under which Congress cannot agree on some way to raise this debt ceiling in March? I mean, how much of a problem would that pose?

ZANDI: Big problem. I - I just can't even imagine that. I mean, I think that would be very imprudent, irresponsible, counterproductive, and given that, I just can't see policymakers not coming together and -

BORGER: Well -

ZANDI: -- deciding to raise that lift (ph) on that.

BORGER: But this is Congress - this is Congress we're talking about. And you've got -


BORGER: -- and you've got a new class coming in that says, you know what -

ZANDI: Right.

BORGER: -- we are not going to raise - we're not going to vote to raise this debt ceiling unless we get $100 billion or more in cuts, so -


BORGER: -- there's a good chance that they - that they could dawdle over this. Then what?

ZANDI: Well, my sense is the president - he's got the State of the Union Address. He's going to come forward in that address outlining some spending restraint and what he's going to do to address the long- term fiscal problems and that will be the fodder for some real discussions, negotiations with the Republican Congress.

And, again, I would be very, very surprised if they can't come to terms on this debt ceiling limit. It would be very counterproductive.

BLITZER: Mark Zandi, thanks very, very much for joining us. Always good to have you here in THE SITUATION ROOM.

Gloria - Gloria's remaining with us. Jessica Yellin is coming in as well.

Jessica, what do you think about all of these Clinton folks - Gene Sperling coming in right now?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Well, you know, one of the big knocks on this White House, Wolf, is that the president kept too many of his old campaign hands around him. So now those same people are also criticizing him for bringing in some folks who weren't with him during the campaign. But these are people who, a, have done jobs like this before in some measure and who know what it is to be a Democrat in the White House working against a strong Republican Congress. And so they do have qualities that will, you know, freshen up the mix, at least.

BLITZER: You need people with experience -


BLITZER: -- and these people like Bill Daley, like Gene Sperling, they have a lot of experience.

BORGER: You know, I was talking to somebody today who actually worked with Gene Sperling and the Clinton White House. One thing he said that you've got to give Sperling a real credit for is that he - he's very good at finding the sweet spot where politics and policy overlap. I think we saw that in the tax cut deal. Lots of liberals will say he sold them out, but he did find that sweet spot along with others. And so, this person felt that he'd be a really good addition to the White House.

YELLIN: And I heard the exact thing and that he's so good and many of his supporters' view at communicating the economic message. And, you know, that's what this White House has really been dinged (ph) for. So he could potentially be a very effective spokesperson for the economy.

BLITZER: Yes, because he's not - just as I said, he's not shy about going on television and making the case. That was one of the problems they've had in the first two years of this administration. They didn't have a whole lot of people who were ready and willing and able to make a good case -

YELLIN: Yes. Ready, willing and able.

BLITZER: -- for themselves.

BORGER: Ready, willing and able. Although, you know, he just get mixed reviews about his television appearances.

BLITZER: Who, Gene?

BORGER: Yes, he does. He tends to go on a little bit. And I was told today, he's a little bit more succinct in his policy papers than he is - than he is on television, but you get better at it.

BLITZER: If unemployment in 2012 is still at eight percent, that's better than nine and a half or 9.8, but if it's still at eight percent, how much trouble will the president be in?

YELLIN: It's devastating. I mean, really, this election is about the economy and how he has turned it around. And if he can't deliver on jobs, he's in a lot of trouble. But then again, now, that the Republicans will share some of that responsibility, they can spread it around. That's why they're bringing Bill Daley in, though, to really drive their message and their focus in a strategic way during the campaign.

BLITZER: All right. Thanks very, very much. And we'll - we look forward to having Gene Sperling and Bill Daley and all of the others -

BORGER: We'll see how succinct they can be.

BLITZER: Yes, we'll see. Well, you can make a good point about that. We'll tell him to keep it tight. Thanks very much.

The terror threat level is notching up in London right now. Airports, rail stations and more - they're all on the highest state of alert. We're going to go there. We'll tell you what's going on.

And scathing criticism of the Arizona Governor, some are blasting her as a one-person death panel for cutting funding for life-saving surgeries.

And new details emerging right now of the swearing in snafu - how two U.S. congressmen missed their oath, creating an embarrassing situation for the Republican Party.

(COMMERCIAL BREAK) BLITZER: A report that terrorists may be planning a Mumbai-style assault in Europe. The threat level has been boosted to the highest levels in airports and train stations across London. While there's evidence of tighter security, British authorities are playing it very close to the vest. They're not providing a whole lot of details.

Our senior international correspondent Matthew Chance has more from London.


MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (on camera): Well, I'm here at Kings Cross train station in London, one of the major transport hubs that British authority officials have placed on a higher state of alert. The terrorist threat level in here and in other key train stations and airports across the country have been raised from substantial to severe. Officials say it is a precaution, and that there's no intelligence of an imminent attack. But there is an increased police presence as you can see here, and the thousands of commuters that pass through every hour are being warned to be (INAUDIBLE).

UNIDENTIFIED FEMALE: I think we live in London and this is just something that we live with. I don't particularly - that I am not more panicky than I have been in other days.

UNIDENTIFIED MALE: Sometimes you think about all the time also what happened a few years ago, so, yes, I suppose I'm a bit more concerned.

CHANCE: Well, Kings Cross has been targeted by bombers in the past most recently in July, 2005. In fact, the whole of Britain has remained on a general severe threat level for the past year amid fears of a Mumbai-style gun attack in Europe possibly here in the British capital.

Matthew Chance, CNN, London.


BLITZER: Controversial cuts that may literally be costing lives. They have critics slamming Arizona's governor as a one-person death panel. Now, she is responding.

And new developments in the case of two U.S. lawmakers who missed - missed the oath of office this week. We're just learning details of their formal apology to the new House Speaker.


BLITZER: There has been a deadly attack in a public bath in Afghanistan. Lisa Sylvester is here. She's monitoring that and some of the other top stories in THE SITUATION ROOM for us. What's going on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf. Well, at least 17 people are dead in a suicide bombing at a public bath in Afghanistan's Kandahar Province aboard a police commander who may have been the target is among the victims. Twenty-three people were wounded including two other police officers. This happened in the town of Spin Boldak, near the Pakistan border which is a hot bed for Taliban militants.

And now a bizarre case in Toronto where an aspiring actress is accused of setting up a fake casting call for babies and then snatching a 1- month-old girl. Police say 24-year-old Michelle Gopaul fled with the infant by taxi. The child was found unharmed several hours later. Gopaul is due in court next week.

And thousands of policy holders with Blue Shield of California are facing premium highs of up to - and brace yourself for this - 59 percent. The company blames rising medical costs and says the increase has almost nothing to do with the health care reform. Health Secretary Kathleen Sebelius says she's reached out to California's insurance commissioner in an effort to help. But under federal and state law, neither has any control over that rate increase.

And it is hard to believe but Elvis Presley, he would have turned 76 years old tomorrow. And look who's on hand to Graceland to help celebrate the birthday? Edison Pena. He's the Chilean miner who led Elvis sing-a-longs during that infamous 69-day underground ordeal. Pena was invited as a special guest and says of his visit, well, he just can't describe it. So very nice for him. He now gets to go to Graceland.

BLITZER: Good for him. All right. Thanks very much for that.

River levels are receding in Eastern Australia after monsoon rains caused flood waters to cover an area the size of France and Germany combined. Ten people have died and thousands of people have been forced from their homes. Authorities say it could take years to cleanup and repair damages.

Here is CNN's Phil Black from one of the hardest hit areas.


PHIL BLACK, CNN CORRESPONDENT (on camera): Rockhampton is now in the endurance phase of its flood crisis. The Fitzroy River has peaked and is dropping about only slowly, so it means that all of the flood affected areas are still pretty much at least waist high in water like this. And the water is dropping very, very slowly. So for the next week or so, those who have chosen to stay in their homes will be living amongst all of this, and that's before the cleanup operation can begin.

But in this environment, a stubborn war of wills has broken out between some of the residents who have against all official advice refused to evacuate from their homes and the local authorities. The locals who've stayed say they need help. They need food. They need supplies. The authorities are saying, well, we told you to get out and we can look after you in the evacuation centers, not your homes. We're not a home delivery service.

But those locals aren't moving. They're determined to stay and wait for the floodwaters to come down. In this part of Queensland, you don't tell a man easily to leave his home.

Phil Black, CNN, Rockhampton, Australia.


BLITZER: Budget cuts here in the United States, they're cutting off state funds for critically ill transplant patients. Why one political opponent is now calling Arizona's Conservative governor a one-person death panel.

And stunning allegations against a man accused of improperly living on a U.S. Air Force Base and you wouldn't believe what turned up in the search of his home.

And an update on the man with the golden voice. He's gone from homelessness to being flooded now with job offers, and now an emotional reunion with his mother.


BLITZER: We turn now to the stunning allegations against a man accused of living without permission on a U.S. Military Base and the extraordinary cache of weapons found in his home.

Our Pentagon correspondent Barbara Starr has the latest information for us. What's going on here, Barbara?


This man is a lieutenant in the Army reserve working as a civilian contractor at MacDill Air Force Base in Tampa, Florida. His name - let's focus on his picture, is Scott Allan Bennett. He is now facing possible federal charges for inappropriately and improperly getting housing on the Air Force Base as well as a cache of weapons they found in his house.

Now, this incident happened back in April, but they just unsealed the charges against him. Apparently, in the early morning hours of April 23rd, he shows up at the gate, there's suspicious activity. He's not - he appears dazed and confused encounters with law enforcement, the possibility of driving under the influence. Anyhow, they wind up at his house. They find out he's got something like seven guns and nearly 10,000 rounds of ammunition.

The bottom line, Wolf, though, is this is now the third security incident at MacDill Air Force Base that's come to light in recent months. It calls into question base security. This is a base that is very sensitive, of course. It is the home of the U.S. Central Command and Special Operations Command, a number of very sensitive offices on that base, and very significant generals, admirals and intelligence specialists that work and live on MacDill - Wolf. BLITZER: Barbara, thanks very much.

Other news, a hearing to determine whether or not Michael Jackson's personal doctor should stand trial on manslaughter charges for the singer's death.

Beth Karas is a correspondent for TruTV's "In Session". She just came out of court. Beth, I understand that someone from the coroner's office was on the witness stand. What is - what's the latest information we're getting about the cause of death?

BETH KARAS, CORRESPONDENT, TRUTV'S "IN SESSION": Well, she is still on the stand, Wolf. She's under cross-examination when I came out to talk to you.

On direct examination, this coroner's investigator didn't get to the cause of death. She talked about evidence she collected. She was at the hospital and at Michael Jackson's home hours after he died. She went back four days later, too. And she talked about a host of medicine bottles and medical paraphernalia that she collected. But 12 bottles of...

KARAS: She was at the hospital and at Michael Jackson's home hours after he died. She went back four days later, too. And she talked about a host of medicine bottles and medical paraphernalia that she collected about 12 bottles of Propofol, some opened, some unopened. Propofol is that anesthetic that is used in surgery.

Most of them were in a bag in a closet. There was one empty bottle, though, underneath a table in Michael Jackson's bedroom. It appears that these bags she found in a closet four days later containing all the drugs and other paraphernalia are the bags that Dr. Murray was using to collect things with one of the bodyguards before 911 was called. The description of those bags matches what we heard in testimony earlier this week.

BLITZER: Sounds like a pharmacy was going on over there. They also called, the prosecutors this morning, Nicole Alvarez, Dr. Murray's -- Conrad Murray's girlfriend. What is -- how is she related to this?

KARAS: Well, you know, Conrad Murray is married, but he does have this woman, Nicole Alvarez, in his life. She gave birth to their son, his seventh child in March of 2009, and he, in fact, is staying with her right now.

Nicole Alvarez talked about her relationship with Dr. Murray and his schedule in the spring, in June of 2009 when he was caring for Michael Jackson, but primarily, the most important part of her testimony was that she said Dr. Murray told her she would be getting packages delivered to her apartment -- she was to sign for them -- by Federal Express. And there were six different dates when she signed for packages from a place in Las Vegas called Applied Pharmacy.

We know from the investigation and the search warrant applications that the police have connected the Propofol to Conrad Murray and his buying them at Applied Pharmacy and having them sent to an address, and this is the address.

BLITZER: We're also getting a lot of personal information about Dr. Murray in the course of this hearing. Why is that relevant right now?

KARAS: Well, it's not necessarily relevant, but the prosecution is putting on a more comprehensive preliminary hearing than the law requires them to. In part, I think they want the people to know the evidence they have.

If they put on a bare-bones presentation here, which is all they need to show a probable cause, there might be a lot of speculating by us in the months to come before trial about their case being weak. I think they wanted us to see that they have a strong case, at least in their opinion. We'll see at trial time when some of these witnesses are more challenged.

But they are probably more than -- at least halfway through the presentation and will be wrapping up shortly this afternoon for the week.

BLITZER: Yes. We'll check back with you Monday, Beth. Thanks very much.

Beth Karas, reporting for us.

Charges of a one-person death panel after the Arizona governor cuts funding for life-saving operations. Now she's responding.

And new developments in a swearing-in snafu. Details of an apology by lawmakers who missed their oaths.


BLITZER: President Obama is seizing on a new unemployment report, touting it as proof that America is digging itself out of its big economic hole. The jobless rate fell from 9.8 to 9.4 percent last month. The president was upbeat about that and about the number of jobs created in December, even though it was less than expected.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The economy added more than 100,000 jobs last month, and the unemployment rate fell sharply. And we know these numbers can bounce around from month to month.

But the trend is clear. We saw 12 straight months of private-sector job growth. That's the first time that's been true since 2006.


BLITZER: Let's get to the people, though, behind the jobless numbers, and there are millions and millions of Americans who don't have a job. Who -- these people are out there. They're searching for work. They're desperate to try to find a paycheck once again.

CNN's Mary Snow has been with some job hunters on the front lines. She's joining us now with more -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, here in New York City, thousands of people turned out to apply for jobs at a new hotel getting ready to open. And that meant waiting for hours in freezing temperatures without no guarantees that any of it will make a difference.


SNOW (voice-over): It's hard to find signs that the economy is improving by looking at the line that goes on and on and on. Some 2,000 people waited in the cold to apply for 250 jobs at a new hotel opening in New York.

EARL NEWKIRK, JOB SEEKER: It made me think of what it must have been like during the Depression: people standing out there waiting for soup.

SNOW: Thirty-eight-year-old Earl Newkirk waited 4 1/2 hours to get inside with more than 600 people ahead of him. Once inside...

UNIDENTIFIED FEMALE: If anyone has an application filled out, you can step on over here.

SNOW: More lines. The Morgan's Hotel Group held this job fair for its new hotel, the Mondrian Soho, that's opening in March.

Newkirk is hoping to land an event planning position, similar to his part-time job in catering but much different from the full-time job he lost last April working for New York City's Social Services Department.

UNIDENTIFIED MALE: We're going to call you in a moment.

SNOW: After hours of waiting, Newkirk's moment of truth.

UNIDENTIFIED MALE: What steps do you take to ensure that the work that you have done was done correctly?

NEWKIRK: I'm very detail oriented...

SNOW: Newkirk says this group interview was some the most contact he's had with employers since starting his job search.

(on camera) How many resumes would you say you've sent out?

NEWKIRK: A thousand.

SNOW: A thousand resumes?

NEWKIRK: Oh, easy.

SNOW (voice-over): Because Newkirk works part-time, he doesn't collect unemployment, and economists point out that counting part-time workers changes the jobless picture.

WILLIAM RODGERS, FORMER CHIEF ECONOMIST, LABOR DEPARTMENT: People are focused on the 15 million Americans who are unemployed, actively searching. We have another 9 million Americans who are working part- time but want to work full-time.

SNOW: And that hope for full-time work is keeping Newkirk trying what he can to land a job. He says emotions are a luxury, that he must focus on getting a job. But he couldn't hold back tears talking about the impact this has had on his younger sisters.

NEWKIRK: They both felt so bad, so for Christmas they gave me money. This -- I mean, it's -- I'm not going to cry on camera, really, but, yes, not good. Not good. But anyway.

SNOW (on camera): Have you gone through savings?

NEWKIRK: Ah, pretty much.


SNOW: Now, Earl Newkirk says that's the first time he's gotten emotional since he was laid off last April, saying he's just now trying to stay focused.

There is a sign of hope, though, in December's jobless report. It shows that the hospitality industry actually gained jobs last month -- Wolf.

BLITZER: We'll follow up and see if he lands a job. That would be interesting to see. All right, Mary. Thanks for that good report.

A pair of Republican congressmen missed the swearing-in ceremony of the 112th Congress. Did they actually, though, violate the U.S. Constitution even as their colleagues were reading the Constitution aloud?

And until now, you could only get iPhone service with one company here in the United States. Is that about to change very soon? We've received some brand-new information just now. Stand by. We'll share it with you right here in THE SITUATION ROOM.


BLITZER: Controversial budget cuts in Arizona may be a death sentence for some seriously ill patients who can no longer quality for state payments. Patients and political rivals are turning up the heat on Arizona's conservative Republican governor. Brian Todd has been digging deeper into this story.


BRIAN TODD, CNN CORRESPONDENT (voice-over): David Hernandez is a 48- year-old father of five from Arizona. He's got a terminal disease, needs a lung transplant, and says he can't get it because his governor has cut funding for it.

DAVID HERNANDEZ, NEEDS LUNG TRANSPLANT: I just can't believe that she is in a situation that she can turn lives like that away. And she can tell you whether you're going to live or die right there.

TODD: Hernandez is talking about Republican Governor Jan Brewer, whose administration cut its share of Medicaid funding, about $1.2 million, for certain transplants. At least one person in Arizona who was with on a list for a liver transplant has died as a result of being taken off the list when the cuts took effect in October.

UNIDENTIFIED MALE: In order for me to live a longer life, I need a bone marrow transplant.

TODD: Mark Price (ph), another patient who was taken off the list, died even though an anonymous donor had offered to pay for surgery. David Hernandez is one of nearly 100 people in the state who now need potentially life-saving transplants and who can't get them through Medicaid under the new rules.

DAVID SCHAPIRA (D), ARIZONA SENATE MINORITY LEADER-ELECT: We have a real death panel, and to this point, it's been a one-person death panel, and that is the governor.

TODD: Democrat David Schapira, Arizona's incoming Senate minority leader, he's pushing an emergency restoration of the state's Medicaid funding for those transplants.

Brewer and her allies say the state faces a $1 billion budget deficit, and tough choices have to be made.

GOV. JAN BREWER (R), ARIZONA: The bottom line is that the state only has so many money, and we can only provide so many optional kinds of care, and those were one of the options that we had taken liberty to discard.

TODD: Brewer and her allies say their research showed transplant procedures are too risky to justify taking money from other programs.

FRANK ANTENORI (R), ARIZONA STATE SENATE: The funding reduction occurred because data showed that the outcome from providing funding for these patients was negligible.

TODD: I asked one of America's leading transplant surgeons, Dr. Robert Montgomery, about that.

(on camera) Does the survival rate have too low a percentage to justify spending this kind of money?

DR. ROBERT MONTGOMERY, TRANSPLANT SURGEON: For -- let's say for liver transplantation, if your liver fails, and you don't receive a transplant, you virtually have no chance of survival.

If you receive a transplant, and you have hepatitis C, for instance, your survival rate after five years may not be 90 percent. Maybe it's 80 percent, but it's not zero percent.

TODD (voice-over): Dr. Montgomery says he believes this is the beginning of health-care rationing in the United States. He says he and many of his colleagues have already been told that, in some cases, in order to get federal funding for transplants, they have to make a strong case that the procedure will be successful. The result, he says: transplants will be given to less sick Medicaid patients, but the people who rely on Medicaid, and need them the most, may very well not get them.

Brian Todd, CNN, Washington.


BLITZER: There's growing buzz about a major iPhone announcement coming next week. And now reports that a long-awaited launch is about to happen. Stand by for details.

An emotional end to an incredible week for this formerly homeless man with a golden voice. After a decade or two, he's now reunited with his mother.





BLITZER: While the members of the House of Representatives were being sworn in, a pair of Republican congressmen were simply missing. And as their colleagues proceeded to read the U.S. Constitution aloud, were the unsworn lawmakers somehow violating that very Constitution?

Here's CNN's congressional correspondent Brianna Keilar.


BRIANNA KEILAR, CNN CORRESPONDENT: Wolf, this has become a bit of a political embarrassment for Republicans, and because of that, Congressman Sessions and Fitzpatrick sent a letter of apology to Speaker Boehner. Fitzpatrick told me he intended to be on the House floor to be sworn in, but he got caught up talking to his constituents at a reception.

(voice-over): The most important moment of the week for House Republicans: the swearing in of the new House of Representatives.




KEILAR: And two of them missed it. They were here at a reception in the new Capitol visitor's center. That's Texas Congressman Pete Sessions on the left, the head of the House Republicans' campaign operation. And Mike Fitzpatrick, a freshman from Pennsylvania, who previously served a term in Congress.

REP. MIKE FITZPATRICK (R), PENNSYLVANIA: Then I was with a very large group of my constituents, who traveled to the Capitol from Bucks County, Pennsylvania, in the Philadelphia area to see me sworn in. And so we got caught up with them, and things were pretty fluid that day, and the oath was administered while I was with my constituents.

KEILAR: Sessions and Fitzpatrick took the oath at the reception, as seen in this photo, while watching the swearing in on the television, but according to House rules, they were supposed to be in proximity to the speaker.

Democrats pounced on the embarrassing mishap.

UNIDENTIFIED MALE: Which has what's known...

UNIDENTIFIED FEMALE: ... what proximity is, but I would expect it would mean on the floor.

UNIDENTIFIED MALE: Yes. Exactly right.

KEILAR: A day later, Speaker John Boehner swore the men in. This time they were on the House floor.

BOEHNER: Congratulations. You are now officially members.

KEILAR: But Sessions and Fitzpatrick had already voted multiple times. Democrats accused Republicans of flouting the constitutional requirement that members of Congress be sworn in...

BOEHNER: We, the people...

KEILAR: ... even as the GOP kicked off the new Congress by reading the Constitution aloud.

New York Democrat Anthony Wiener taking this jab even after the two Republicans had taken the oath.

REP. ANTHONY WIENER (D), NEW YORK: Can the speaker certify that all 435 members have been correctly and duly sworn and taken the oath of office, as required under the Constitution?

UNIDENTIFIED FEMALE: The chair is under the information and the belief that all 435 members have been sworn.

WIENER: Thank you. KEILAR: And now Democrats and the Sunlight Foundation, a nonpartisan nonprofit group that supports transparency in government, are raising questions about the event Sessions and Fitzpatrick attended, calling it a fund-raiser, since it solicited a payment of $30 per person.

(on camera) The Sunlight Foundation is calling this a fund-raiser, this reception that you were at. Was it a fundraiser?

FITZPATRICK: Absolutely not. It was open to the public. People came. They enjoyed themselves. It was absolutely not a fund-raiser.

It's individuals that wanted to come down in busses, paid for a bus trip to get to the Capitol. But there was no charge at all to attend the event. There never was.

KEILAR (voice-over): Nothing fishy, Fitzpatrick insists, but he will say it is a little humiliating.

(on camera) Are you in the doghouse at all?

FITZPATRICK: In the gym this morning, we had a little bit of ribbing that went on, but I'm sure that's -- that's all in good fun.

KEILAR: Those votes these two members of Congress took before clearing up this mess will not count. They've been nullified, since technically, Fitzpatrick and Sessions were not members of Congress, Wolf.

BLITZER: All right, Brianna. Thanks very much.

An update now in the case of the murdered former Pentagon official in Delaware. Lisa Sylvester is monitoring that and the other top stories in THE SITUATION ROOM.

What's the latest, Lisa?


Well, it is a sad story. Funeral preparations are underway for John Wheeler. He's the murdered former Pentagon official whose body was found in a Delaware landfill. Wheeler's family is asking for privacy as authorities investigate his mysterious death.

Wheeler was seen on surveillance video looking disheveled and acting strangely in the days before his death, which has been ruled a homicide.

"The Wall Street Journal" is reporting that Verizon will unveil it's long-rumored and long-awaited iPhone next week. The company has sent out invitations to a news media event Tuesday, sparking speculation about the company's iPhone debut. Although Verizon reported Verizon has actually never confirmed that they would be producing it. So far it has been unveiled exclusively through AT&T's service, at least until now. We'll have to see if Verizon becomes the provider, as well. And what a week it has been for Ted Williams, now being called the man with the golden voice. This was a great story. This guy, he went from being homeless in Ohio to an overnight sensation when news of his plight and vocal talent spread thanks to this video. It was shot by "The Columbus Dispatch" and went viral on YouTube.


T. WILLIAMS: When you're listening to nothing but the best of oldies, you're listening to Majic 98.9.

Thank you so much. God bless you. Thank you. And we'll be back with more right after these words.


SYLVESTER: OK. So this week Williams has appeared on morning and late-night TV, fielded a job offer from the Cleveland Cavaliers, and accepted a voice over job with Kraft. And today, much more: a reunion with his 90-year-old mother, whom he hadn't seen in a decade. "The Columbus Dispatch," which by the way, started this all, captured the emotional moment.


T. WILLIAMS: Hi, Mommy. Hi Mommy. Hi, Mommy. Hi, Mommy. I know I feel the same way, Mommy. I love you, Mommy. I've been wanting to see you for the past hours. It seemed like everybody...


T. WILLIAMS: Hi, Mommy, I'm home. I told you I was coming this year. I don't look the best. I'm home. I'm OK. I love you, Mommy.

J. WILLIAMS: I love you too, son. Please don't disappoint me.

T. WILLIAMS: I'm not, Mama. I'm not. I'm through with it all. Thank God this happened for me. You always told me to pray. And I've been praying, Mommy. Hi, what's going on?

J. WILLIAMS: I love you, sweetheart.

T. WILLIAMS: I love you, Mommy.

J. WILLIAMS: The prodigal son has returned.

T. WILLIAMS: Yes, ma'am. Oh, God, Mommy. You're looking good.

J. WILLIAMS: Look at your hair.

T. WILLIAMS: It's all gray, Mommy. I'm 53.

J. WILLIAMS: Fifty-three?

T. WILLIAMS: Yes. Yes. Mother, I love you so much. This has been -- this has been a dream. A dream and a prayer. So finally, a sign has some kind of validity to it. That's all.

J. WILLIAMS: I have been waiting for you to get off of that plane.

T. WILLIAMS: I know, I know. And then I've been calling you. And then -- and I was calling you.


SYLVESTER: So this is a guy, you know, he got involved with drugs and alcohol. And he said in an interview that he dreamed about this day, being reunited with his 90-year-old mom, to see that, you know, he cleaned up his act. And today it happened.

BLITZER: I'm glad she's lived this long to see that. She's 90 years old. Wow. Let's just say, as I said yesterday, let's hope he stays clean and he can enjoy the thrill of what's happening in his life right now.

Thanks very much.

The Senate Republican leader, Mitch McConnell, by the way, he'll be joining John King right at the top of the hour on "JOHN KING USA." Stand by for that. But up next, late-night laughs with a political bent.


BLITZER: A busy week here in Washington gave late night and other comedians plenty of material. Listen to this.


JAY LENO, HOST, NBC'S "THE TONIGHT SHOW WITH JAY LENO": This just in: President Obama has chosen former Clinton Commerce Secretary William Daley as his chief of staff. He's the new chief of staff. Before this, Daley ran Al Gore's 2000 campaign and was in charge of a Florida recount for the Democrats. So he's -- he's got a history of accomplishment.

DAVE LETTERMAN, HOST, CBS'S "THE LATE SHOW WITH DAVID LETTERMAN": You know what the Republicans are doing now they're in office? They're going to undo everything that the Obama administration has done. That's -- this is the plan. Earlier today they told Michelle Obama, they told the president's wife, that the vegetable garden, got to go. Take your vegetables and plant them somewhere else.

JIMMY KIMMEL, HOST, ABC'S "JIMMY KIMMEL LIVE": The last speaker, Nancy Pelosi, has a frozen face. John Boehner has an orange face. You put them together, you've got the Creamcicle of the House.

STEPHEN COLBERT, HOST, COMEDY CENTRAL'S "THE COLBERT REPORT": And you know, folks, right away, Speaker John Boehner signaled that things would be different, beginning with the choice of his gavel.

REP. NANCY PELOSI (D-CA), FORMER SPEAKER OF THE HOUSE: I now pass this gavel, which is larger than most gavels here, but the gavel of choice of Mr. Speaker Boehner.

COLBERT: That is one big (EXPLETIVE DELETED) gavel. I think someone's compensating for his small government.

LENO: You could sense there was tension between -- you know, between Boehner and Pelosi. I mean, it's subtle. See if you can see. Take a look.

PELOSI: God bless you, Speaker Boehner. But -- (SCREAMS)

BOEHNER: Did you see that? Did you see it?


BLITZER: That's very funny.

Remember, you can always follow what's going on in THE SITUATION ROOM. I'm on Twitter. You can get my tweets at, @WolfBlitzerCNN, all one word.

That's all the time for me. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM. "JOHN KING USA" starts right now.