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JOHN KING, USA

Gadhafi and Libya; Humanitarian Crisis; Arming the Rebels

Aired March 1, 2011 - 19:00   ET

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


JESSICA YELLIN, GUEST HOST: Thanks for joining us. I'm Jessica Yellin. John King is off tonight.

In a packed hour Newt Gingrich gets ready to make his presidential ambitions official, and possible Republican candidate Mike Huckabee gets confused about where the current president grew up. But first, the U.S. gets closer to the crisis in Libya. Tonight two U.S. warships are heading for the waters off Libya although Defense Secretary Gates says for now it's not to fight.

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: USS Kearsarge (INAUDIBLE) will be entering the Mediterranean shortly and will provide us a capability for both emergency evacuations and also for humanitarian relief.

(END VIDEO CLIP)

YELLIN: Moammar Gadhafi is trying as hard as he can to hold onto power. A source tells CNN pro-Gadhafi troops tried and failed to retake a town near Tripoli currently under rebel control. Also one of Gadhafi's sons tells CNN the government is trying to talk with the rebels, but the rebel leadership is in chaos.

There is a lot to cover tonight. Let's start with CNN senior international correspondent Ben Wedeman, who is in rebel-held city Benghazi. Ben, the former Libyan interior minister has said the noose is tightening around Gadhafi's neck. You've been traveling through different parts of the country today. Tell us where have you gone and what have you seen?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: We headed sort of in the direction of Tripoli and what we've seen is that the noose isn't necessarily tightening around Gadhafi's neck. It's clear that the opposition is in firm control of this part of the country, but if you look to the west, it's not at all clear the situation.

You have towns like Misurata and Zawiya, where it appears the rebels are in control of the center of the town, but they are surrounded by Gadhafi's forces. In this part of the country there's still a good deal of nervousness about the possibility that Gadhafi's forces could actually counter attack.

Yesterday of course we did see an air raid on ammunitions dump on the road to Tripoli to the shelter here. And today we were at a check point where there is a lot of nervousness because it is right next to a major oil facility where the workers tell us they're very worried about the possibility of an air raid or sabotaged attacks on that place where they not only produce gasoline for the country, there's a lot of oil exported from there. Also they produce natural gas that fuels the power plants that make this live set possible -- Jessica.

YELLIN: Ben, speaking to the oil refineries, clearly who controls these refineries is central to who controls the country. So from what you've seen at that refinery and elsewhere, who is in control of Libya's oil production?

WEDEMAN: Well, we understand than more than 50 percent of the oil production in Libya is currently in opposition hands. Certainly the facility we went to is also in opposition hands, but of course it's a question of not just the oil itself, but the revenues from the oil and we were told that that particular refinery that at the moment they're exporting very little because they don't know where the money for that oil will go. They're afraid of course it's going to end up in the treasury in Tripoli despite the fact that of course sanctions are going to be put in place against this country and against Moammar Gadhafi and his family -- Jessica.

YELLIN: There's a debate here in the U.S. Ben over whether the American government should supply opposition forces with arms in Libya. Some say one of the challenges in doing that is that there's no clear leader of the opposition. So I'm curious where you are, are there any signs of an emerging leadership structure among the rebels?

WEDEMAN: What they do have is a collective leadership. So there isn't one single person that anybody can go to, which is it appears the situation that Libyans want after living 41.5 years in a situation of one-man rule. They have sort of a collected leadership, but without any formal lines of hierarchy so to speak, so it's going to take some time for some sort of government, so to speak, to emerge and it just hasn't happened yet and it -- I would say that they're not in a great hurry to do so despite the fact that that -- if there were a clear leadership that would facilitate negotiations with foreign governments that would allow the arrival of some sort of aid, whether it's military or otherwise to this part of the country -- Jessica.

YELLIN: All right, Ben, thank you so much -- Ben Wedeman reporting for us from Benghazi. Turning now to Tripoli, CNN senior international correspondent Nic Robertson is there. Nic, I heard that you happen to bump into Saif Gadhafi, which is pretty amazing on its own in Tripoli. What are you hearing about any negotiations between the Gadhafi government and the rebels?

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Well I asked him how it was going because we hear a lot of talk about it. We don't hear any substance, i.e., what the government is actually offering and exactly whom they're offering it to, so I said to him how is it going. He said chaotic, so I asked well what does that mean and I was told it means that the opposition leadership is chaotic.

The government is finding the opposition leadership divided among themselves. You've got some former regime ministers in the opposition there who defected to the other side. You've got some lawyers, doctors, tribal leaders who are sort of forming another part of the leadership. There's a lack of trust between them. And this is why Saif al Gadhafi said it's a chaotic protest, which if you're trying to build stability in this country and trying to back this country away from civil war, which is where it seems to be heading at the moment, that's not a good thing, so it doesn't seem that the two sides are reaching any agreement right now -- Jessica.

YELLIN: And at the same time that Gadhafi's forces we understand are trying to take back control of cities he has lost like Zawiya and Misurata on either sides of Tripoli, which I understand that there are crucial cities, so is there so far any sign that Gadhafi's forces are on the verge of breaking the rebels there?

ROBERTSON: You know, we heard from rebels inside of Zawiya. That's the city that's just 40 minutes drive to the west of the capital here in (INAUDIBLE) city. The rebels said government forces tried to attack them last night. They beat them back, killed 11 of them.

When asked government officials that question, they said no, no, no, no, no. We could go in and crush the rebels there any time we wanted. Misurata it seems that the rebels have a stronger control there. We asked the government to take us there today and they wouldn't do that, which seems to us, the journalists here, to indicate that they don't have as strong control as they would wish to have.

But they are very important cities. The government says a standoff with the rebels can't go on. And they want to try and negotiate with them. If they can't negotiate with these two sort of rebel bases, if you will, which are relatively small compared to (INAUDIBLE) east of the country, then what success can they hope to have with across the whole country? So these are very important places, also because they're right, you know either side of the capital here, strategically psychologically very important if the rebels really do control them and build their strength there, then you get the capital, get the sense that it's surrounded and that's hugely important for the government -- Jessica.

YELLIN: You mentioned that you had to -- you were blocked by government forces from going, so how much freedom of movement do you have in Tripoli? Does the government minder come with you everywhere you go?

ROBERTSON: There's a government official with us. What's interesting about some of these people is they're western educated and they'll actually tell you they also want to see reform. They think that the government has made mistakes. And they'll stay out of our way so that when we try and talk to people on the streets, people don't feel hey, here's a government official listening to what being said.

Therefore, I'm going to be in trouble, so we get some latitude with them in that way. Whenever we go out we tape the man on the streets. Whenever you get a camera out on the street here, you "A" attract a crowd. And "B", if there are any police around they will come and check on you. So a government official has the piece of paper and the authority to tell the police, back off, let these guys alone.

But -- so we were able to go around the city where we wanted to yesterday until we got word of a demonstration. And when we wanted to go there we were told no, we had to go back to the hotel and only got clarification 12 hours later. We were told that there were gunmen in cars and it was too dangerous for us to go in, so there are real limits on what we can do. There are areas where we can do, do what we want and there are other it appears as we find out every day, other red lines we're not able to cross.

YELLIN: Thank you Nic Robertson -- thank you so much reporting for us from Tripoli.

And now we turn to the plight of those trying to flee Libya into neighboring Tunisia. The United Nations is already calling it a humanitarian crisis and warns that it can quickly turn to a catastrophe. CNN's Ivan Watson spent the day near the Libyan border in Tunisia and he joins us now.

Ivan, the U.S. says more than 140,000 refugees are fleeing Libya, and it has reached a crisis point. On the ground there do you see any signs of order or is it just chaos?

IVAN WATSON, CNN CORRESPONDENT: Well the situation is just getting worse on the border right now, Jessica. Yesterday there were record numbers of refugees coming across -- more than 14,000 people coming across. And the Tunisians up until really yesterday were dealing with this growing crisis, this flood of humanity on their own and it's really pushed the resources here to the limit.

The United Nations finally showed up yesterday. Today they were rapidly building a tent city to accommodate approximately 12,000 people. But there are estimates that more than 75,000 people have crossed this border since the crisis began. And they're only managing to get two or 3,000 people out moving back to their countries of origin every day on the step number of flights and a few ships that have come in, so you have tens of thousands of stranded people.

Most of them are Egyptian men who worked as migrant laborers in Libya. There are an estimated 1.5 million Egyptians that were there when this crisis started, so just expect these numbers to get worse. I've talked to U.N. officials. They're saying other countries really need to step up to help bring these people back to their countries of origin because Egypt clearly so far doesn't have the capacity to move these armies of stranded Egyptians back to their country -- Jessica.

YELLIN: There are reports that aide workers are being blocked from getting to the refugees and that even patients are being executed in hospitals on the route to the border. Are you aware of any of that? Are you hearing refugees coming across telling stories of this?

WATSON: The stories they tell me are of being held up by Libyan soldiers on the way to the Tunisian border. And a lot of these -- you know these are -- most of these men are Egyptian migrant workers who went to Libya to try to eke out a living, so they don't have much to begin with. And then a Libyan soldier will take them at gunpoint and take whatever earnings they've made, take their cell phones.

One man saying that his laptop was stolen and leaving these guys basically with a bundle of clothes to then wait for days at the border, struggling to get through to no man's land in between. They do say that some of the towns on the road from Tripoli are controlled by the opposition and this is really curious because you have Tripoli which of course Moammar Gadhafi still controls, along the way some towns where rebels are in control and then at the border there are government supporting soldiers that are still manning the last border gate across. So there are cantonments of different areas of control.

So by the time these guys get to the border, they're exhausted. They're scared. And they have to wait, potentially for days out in the elements. It's freezing here right now. It's been raining. There have been dust storms, waiting for a chance to get across and the Tunisian soldiers and police, they are trying to help. I mean they're really reaching out to try to help their fellow Arabs here in this time of need, but they're simply, simply overwhelmed and having a very difficult time controlling these throngs of people. It's a potentially explosive situation at the border right now -- Jessica.

YELLIN: It's a fascinating problem you raise because in addition to the challenges of Libya now there's these desperate people being flooding into Tunisia, which is itself so fragile. Three top government officials quit Monday and today the prime minister resigned Sunday, so is this chaos on top of an already uncertain situation creating a new challenge to Tunisia's stability itself?

WATSON: Absolutely. I mean, you've had deadly clashes taking place in the Tunisian capital to the northwest of here just a couple of days ago. Tunisia just experienced its own revolution, just overthrew its own dictator and perhaps that's helped motivate some Tunisians to flock to the border of bringing aid and bringing food and showing support for not only the Egyptians and the refugees that are streaming across the border, but also for the Libyans who are involved in these deadly clashes against this rump regime that Gadhafi still controls in Libya.

On top of that, you've got the challenges that Egypt is facing, so Egypt has 1.5 million Egyptians in Libya, many of them trying to get out. But it is struggling to set up its own government right now. It's dealing with labor unrest and a number of other problems inside Egypt and now having to deal with trying to move tens of thousands, if not hundreds of thousands of Egyptians back home. Another factor to consider, what about armies of hundreds of thousands of people who have relied on Libya as a place to make money and now coming back to their countries that already have huge unemployment problems, they're coming back home. Where are they going to earn a living now? How are they going to support their families now? There are potential major ripple effects that could further destabilize an already turbulent North Africa -- Jessica.

YELLIN: So much uncertainty -- Ivan Watson thank you so much -- reporting from the border from Tunisia to Libya. And we have plenty more on Libya coming up including the argument over whether the United States should supply weapons to the rebels who are fighting Gadhafi.

(COMMERCIAL BREAK)

YELLIN: So far, the U.S. have imposed sanctions on Libya, frozen a record $30 billion of its assets and is moving Navy warships into the region. So what more could be done to get rid of Gadhafi? One option being floated is arming the rebels. Both British Prime Minister David Cameron and U.S. Senator Joe Lieberman are talking about that option, but is it a good idea?

Joining us to discuss, Democratic Congressman Keith Ellison of Minnesota and here in the studio with me, CNN's Wolf Blitzer, who as you know anchors "THE SITUATION ROOM", but has also covered this region for more than three decades and CNN national security contributor Fran Townsend. In 2010, she visited high ranking Libyan officials at the invitation of the Libyan government and is also a member of the CIA External Advisory Committee. Big interest to all of you -- Congressman Ellison, to you first, arming the rebels, good idea or bad idea?

REP. KEITH ELLISON (D), MINNESOTA: Bad idea, what we should do is we should deprive the Gadhafi government of the means to hurt and inflict violence on the -- on the Libyan people. We've already taken steps -- we should work through the United Nations. And this is not a good time for the United States to operate unilaterally.

We should work through the United Nations and we should seek a Chapter Seven resolution so that measures like no-fly zone, no-float zone and other measures can be taken. But a unilateral U.S. effort to arm the rebels would be a bad idea. Who would you be arming? The rebels are not a unified group. There are different factions. And after -- if they vanquish Gadhafi do you -- how do you -- will you control that they won't turn those same weapons on the Libyan people all over again?

YELLIN: OK, Fran, your take on this -- let's say not even unilateral, say the U.S. wants to do what David Cameron, the British prime minister.

FRANCES FRAGOS TOWNSEND, FORMER BUSH HOMELAND SEC. ADVISER: I do think there are a number of steps. We need to get a no-fly, no-float zone. You need a U.N. Security Council resolution. I'm not saying you're never going to arm the rebels, but the problem right now is remember we armed rebels in Afghanistan against the Soviets and wound up having those weapons turned on us. And so we ought to -- if we're going to move in that direction, we have to do so deliberately and smartly, along with our allies.

YELLIN: Well you talk to the Libyan ambassador daily. He's somebody who has sided with the protesters against Gadhafi. Would activists like him want the U.S.'s fingerprints on an effort to topple Gadhafi? WOLF BLITZER, HOST, "THE SITUATION ROOM": I think they would want any help they can get. They just want to get rid of Gadhafi any way they can. They see Gadhafi as a real threat to the Libyan people. Not only Gadhafi, but his sons, troops loyal to Gadhafi, the mercenaries who have been brought in -- they just want to save people's lives, so if it means the U.S., the Europeans through the United Nations, a multinational force, a no-fly zone, whatever it takes. They just want to stop the killing right now.

(CROSSTALK)

BLITZER: If you listen to the ambassador, that's his argument.

YELLIN: But they don't want it to be organic the way it was in Tunisia and Egypt --

BLITZER: They would love it to be organic if they could do it. The difference is here you have in Tunisia you had a military that refused to kill fellow Tunisians. In Egypt you had a military that refused to kill fellow Egyptians. In Libya right now you have a mercenary regime. You have a military that's ready to kill fellow Libyans and that's a huge difference. I wonder how the congressman feels about that.

(CROSSTALK)

YELLIN: I'll put it to you because we have already imposed sanctions. We've frozen assets. You've now ruled out arming rebels, so you said -- well what else should the U.S. do? You suggested a no- fly zone.

ELLISON: Well, let me tell you, I think there's a lot we can do. We should -- we should immediately get that Chapter Seven resolution passed. That will send a very clear signal to the Gadhafi regime that the international community is united and is willing to take action. And I think we should also make sure we're supplying the humanitarian needs of the Libyan people. There are catastrophes going on all the time as Wolf points out. People are in a very desperate situation.

But the fact is that look, we have to ask the Libyan people what it is they want. And the Libyans I'm talking to and listening to say that look it's not a good idea for the United States to try to intervene militarily in Libya. It's a good idea for the international community to begin to take his money away so he can't hire mercenaries, take his ability to fly away and his ability to get boats up there.

We need to stand with the Libyan people, but we should not exacerbate and raise the level of violence in that country that could even make more catastrophic losses possible. So I think this is a time for cool heads. I'm quite sure the people on the ground in Libya are desperate and I tell them, Wolf, we want any kind of help we can get -- right now. But this is still something we need to do in a deliberate, careful and planned way in collection with the United Nations. YELLIN: Let me ask Fran if this changes the equation at all. "The New York Times" has just posted a piece saying that Libya's Revolutionary Council, which is made up of lawyers, academics and judges is debating whether they should ask the U.S. or the west in general for air strikes against key installations, some key Gadhafi installations to help them overthrow him. Is that something the U.S. should do if they ask for it?

TOWNSEND: Well I think it makes it a lot easier to get there if they're -- if this representative council is asking the international community. I still think, and my understanding from sources in the administration is that they're looking for their western allies through NATO to support such a request. If we're going to do air strikes and we're going to have a no-fly zone, you would like it to not be a merely U.S. effort, but you'd like it to be as the congressman suggests, an international effort using NATO forces, not just Americans.

YELLIN: Wolf, is there a political will for the U.S. to start getting involved in a military way?

BLITZER: Well if you listened to the news conference that the Defense Secretary Robert Gates had, chairman of the Joint Chiefs, Admiral Mullen had, the head of the U.S. Military Central Command, I didn't see any great appetite for the U.S. military -- U.S. military wants to get involved. I suspect they don't want to get involved.

The head of the Central Command saying you know what, imposing a no-fly zone over Libya is not easy. You first have to go and knock out their anti-aircraft missile batteries. That's not necessarily all that easy. And then you've got to maintain that kind of no-fly zone. It could be dangerous to American pilots whether they're coming from an aircraft carrier or a NATO base in Italy, wherever they're coming from, so I don't see a great desire on the part of the U.S. military to get involved in Libya right now. The U.S. military has its hands full in Afghanistan and Iraq to be sure.

YELLIN: That absolutely was the tone you got and there was also though this sound -- this moment when Secretary Gates said the following thing. Congressman, I want to take -- ask you to take a listen to this when a reporter asked if force would be necessary to push Gadhafi out, Secretary Gates gave the following response.

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: All I can say is that sometimes you actually have to listen to what people say and he's saying he's not leaving.

(END VIDEO CLIP)

YELLIN: So it's kind of cryptic, but does it sound like he's acknowledging that at some point the U.S. will be forced to take action.

ELLISON: No, that's not the conclusion I would draw from what Secretary Gates said. The conclusion I would draw is that Gadhafi really is -- he has said he would rather die a martyr and I think that may be true, but I don't think that needs necessarily to U.S. military intervention. In fact that's something I would very much be opposed to. But I think working through the international community, getting that Chapter Seven resolution and then listening to the Libyan people and doing the thing that is going to help them most, I think that's what we should do.

And I -- but I will also say this. You know we really don't want to see -- I think the international community has a duty, an obligation to protect vulnerable populations. But that needs to be clear. We need to know exactly what we're doing. It needs to be with the consent and the consensus of representative Libyan leaders. And there's a lot to do, but I don't necessarily think that that cryptic statement from Gadhafi means that somebody -- that the U.S. needs to go in there and take him on militarily.

YELLIN: From Secretary Gates, yes.

TOWNSEND: Jessica, the real problem with that is what happens if the international community fails to lead and act as the congressman suggests and Gadhafi continues to slaughter his own people. When does the United States then have the moral obligation to act unilaterally?

YELLIN: OK. I'm afraid we have to leave it there. Thank you, Fran. Thank you, Wolf. And Congressman, thanks for joining us.

ELLISON: Absolutely. Thank you.

YELLIN: Up next, what are President Obama's options in Libya and is he sending the right message? We'll get perspective from a key Democrat on the Senate Foreign Relations Committee.

(COMMERCIAL BREAK)

YELLIN: The Libyan crisis has become a major diplomatic challenge for the U.S. Today Defense Secretary Robert Gates announced two Navy warships are moving to the region near Libya, although he says they'll focus on humanitarian assistance and evacuations. But the Obama administration has made it clear that all options are on the table, so what is the next step?

Joining us now Democratic U.S. Senator Robert Casey of Pennsylvania who is on the Senate Foreign Relations Committee. Senator, thanks for being with us. In the eastern part of the country it is right now in the control of rebels, the west is held by Gadhafi. Is the status quo acceptable to you?

SEN. ROBERT CASEY (D), PENNSYLVANIA: Well, no. I think, we're still in a very fluid situation in Libya. But we're encouraged by the fact that this reform movement, the opposition has -- it has been very strong. And I think it's very clear to most people in the international community that the steps that have been taken so far by the United States and by the international community have been constructive.

YELLIN: Is there a point in which you would back military intervention to stop any massacres that might be taking place there?

CASEY: Well, there are a couple of aspects to that. One is a call by many for a no-fly zone. That makes sense especially and I think it's important that it'd become a -- if a no-fly zone is imposed and implemented, it should be international in nature. The United Nations can -

YELLIN: May interrupt you just briefly? Because Secretary Gates today said that there is no evidence that Gadhafi is shooting at his people from the air. So, given that, you still back a multilateral no-fly zone?

CASEY: Oh, I think -- I think it makes sense. But as long as -- any kind of -- any kind of assistance that points in the direction of being military in nature should not -- should not be an American-led effort. We've got to make sure that the United Nations -- I know our allies in Europe play an important role both on humanitarian questions as well as matters of the military. But I think it makes sense. There's a good chance that we'll get a resolution through the Senate that will, among other things, call on the United Nations to have a no-fly zone.

YELLIN: Would you -- if Gadhafi remains in power in Tripoli, would you support arming the rebels there?

CASEY: I think we got to know a lot more about what's happening on the ground to take that step. And I wouldn't favor that right now until we know an awful lot more about it. And again this has to --

YELLIN: Can I ask you why? What's your fear?

CASEY: Well, let me just finish.

YELLIN: Yes.

CASEY: This has to be an international effort. This cannot be an American-led effort.

YELLIN: Let me ask -- if we don't send any military intervention in, and given that we've already tried sanctions and freezing their assets, if we don't take action, how does this end? How will we end this without finally adding our force to tipping Gadhafi out if the stalemate continues?

CASEY: Jessica, nobody knows the answer to that question. There's no way you can predict. This is still very fluid. All of these situations in every country that we've been watching on CNN and throughout the last few weeks, every situation is going to be different. I don't think anyone knows where it's going to end.

YELLIN: For days now, we have heard both the U.N. ambassador and Secretary of State Clinton call for Gadhafi to go. But nothing from President Obama himself publicly since last week. In your view, should the president himself be speaking out on this every day? Putting the prestige of the U.S. presidency behind this demand for Gadhafi to go? CASEY: No, because we know there are limits to what the United States can do. We can't be -- we can't be dictating, just as we couldn't do that in Egypt.

But I think the administration, the president, Secretary Clinton, have done a good job so far trying to be constructive and not trying to impose something, which would -- which would not work and would no be in concert with the United Nations. So, so far so good. But we have a long way to go and when you have the numbers of deaths that you have in Libya, in humanitarian dimensions of this, we've got to pay very close attention and work with allies, work with the United Nations, and do everything possible to be constructive.

YELLIN: As part of this unrest in the Middle East, we've seen gas go up to $4 a gallon in some parts of the U.S., is this just something you think Americans better get used to now?

CASEY: Well, no. I don't -- I don't think that's the way we should approach it. Obviously, there is -- there has been and will continue to be an impact on gas prices. But, again, we don't know the extent of that. We're just going to have to do everything we can to try domestically to be responsive to that and to do everything we can to not allow what is happening in the Middle East to adversely or disproportionately adversely impact our economy.

But we don't know the answer just like we don't know the answer to what's happening on the ground. It will be a while before there's any resolution of this. We just have to take this literally day by day, and in some days, almost hour by hour.

YELLIN: OK. And finally, Senator, you mentioned the humanitarian crisis. There are a number of times we have moved military assets into the region. But, concretely, what can the U.S. do to help the refugees in particular who are at a crisis point, the U.N. says, at the border?

CASEY: Well, that's why it's so important, to work when it comes to refugees in helping as best we can. That's why it's so important to make sure that that's an international effort, even as we're providing as much direct support as we can.

The United Nations has a long history in providing help to refugees. There are other --obviously, other institutions as well. But I think we've got to work in concert with allies and other international partners on this.

YELLIN: OK. Senator Casey, thank you so much for your time. We appreciate it.

CASEY: Thanks, Jessica.

YELLIN: Still to come, the Wisconsin protests are in this third week. Is there any end in sight? And how could what happened there impact children everywhere?

(COMMERCIAL BREAK) YELLIN: Welcome back.

If you're just joining us, here's the latest news you need to know right now:

The U.S. is moving two Navy warships into the water off Libya to help with evacuations and humanitarian aid.

Here in Washington this afternoon, the House of Representatives passed a spending bill that puts off the threat of a government shutdown until March 18th. The Senate is expected to pass the same bill tomorrow morning.

Federal Reserve Chairman Ben Bernanke says Republican budget cuts will not stop the economic recovery or drastically slow job growth. Contradicting more gloomy private forecast which have been seized on by Democrats.

The former senator from Connecticut is going Hollywood. Chris Dodd will be the new head of the Motion Picture Association of America, which is the movie industry's top lobbying group.

And, finally, on a personal note, the reason John King is not here tonight is so he can be with his wife, CNN's senior congressional correspondent, Dana Bash. Right now, she's accepting the National Press Foundation's 2010 Dirksen Award for distinguished reporting in Congress. It is the second time she has won that award.

We honor her and recognize her amazing accomplishments up on Capitol Hill. Look at some of her many reporting assignments there.

Dana, congratulations.

Coming up next: a major Republican moves closer to a presidential bid. Does he have to give up his day job to do it? And how does it affect the rest of the Republican contenders?

Stay with us.

(COMMERCIAL BREAK)

YELLIN: 2012, here we come.

Newt Gingrich will make it official this Thursday. A source familiar with his plans tells CNN the one-time speaker of the House will announce he's forming a presidential exploratory committee.

Now, by the way, CNN has learned Gingrich will have some company on Thursday in Atlanta. Mitt Romney will be in the city, too, while he's there for what we're told are private meetings. No big announcement expected.

With us now to discuss this and other stories, Democratic strategist, CNN political contributor Paul Begala; Republican strategist Rich Galen; and in Gingrich's home state of Georgia, Erick Erickson, editor in chief of the conservative blog, RedState.com. Rich, of course, we're going to you first because you worked for Gingrich for years. He has, obviously, had aspirations of this nature for a long time. Why does he think this is the right moment for him?

RICH GALEN, REPUBLICAN STRATEGIST: I'm not sure that the premise is correct. You know, one may -- one of those late night meetings when he was minority whip and I was his press secretary, we were talking about what he might do and do he ever wanted to be governor. He said, no, all I ever want to be is speaker of the House. And he got there.

So, I don't think this has been a long time thing. I think he just feels that if he's going to do it, this is the chance, this is the year.

YELLIN: OK. So, then, why now?

GALEN: Well, I think, well, he's 67. So, this is his last turn around the track, I think, for that. I think he perceives that the field on the Republican side may not be as strong as it maybe as in years past or what might be the nearest future. And I think he's got his life in order to that point that this is really be the best time for him to run.

You know, will he win? Who knows? But there are talented guys that are likely to get in, I think, on the Republican side. All guys, but I think these are talented people.

YELLIN: There are some mostly personal reasons. His life is in order. Erick, I'm curious. Do you think the environment is right for Gingrich to become the Republican nominee? Does he have that kind of support, especially among Tea Party activists?

ERICK ERICKSON, CNN CONTRIBUTOR: Well, you got guys like me having a second look at Donald Trump to see if he's really serious. Yes, the field is weak. Gingrich could seize the day.

You know, I'm not a huge Newt Gingrich fan. For policy, yes. But I'm not sure that he'd be a great strategist or a great president with the right temperament.

But he's a great ideas guy. And he's articulate and better than any other Republican running right now, opposition to the president's handling of the Middle East and energy policy. He's very articulate of those things.

So, yes, he could fill the vacuum with policy ideas.

YELLIN: He's definitely, Paul, an ideas factory. I mean, you sparred with him in the Clinton White House. Would he be a formidable opponent? Or the fact that he's a little disciplined makes him a good opponent, from your perspective.

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Well, a little both. Look, he's brilliant. He is brilliant. And the Republicans could use brains. I don't mean to be mean, but, you know, you got George W. Bush and Sarah Palin, people are going to start thinking that there's something wrong with the party.

Newt, no one will ever accuse Newt of being dumb. He's a brilliant man. I don't agree with him on issues. No, no, but seriously.

Here's what he can do, and that makes the point. He could raise money, which as a professional strategist, he'd always look at. Second, he can articulate big ideas. He's not a small ideas guy. Third, he can give a heck of a speech and he's a great debater. He's got a lot of the skill set.

Now, he's downside is he tends to be a little bombastic and sometimes he'll shoot himself in the foot. But, you know, with the current atmosphere in his party, I would not, to quote George W. Bush, I would not mis-underestimate Newt. He is an extraordinary formidable guy.

YELLIN: Would you put your money on him becoming the nominee?

GALEN: Yes, I think I would. But there are some other people that I think I would take a really close look at. If Mitch Daniels decides to get in, I think he's got exactly the right combination of history -- political history and talent and brains to be able to pull this thing off. Haley would be formidable only because he could generate so much excitement.

YELLIN: Bigger question here, Newt Gingrich has been a contributor to FOX News since 1999. And we were wondering today if he has to leave his FOX News job and his contract because he is getting into the race and it looks like he might. Now, when we asked, no one at FOX would answer that question.

So, Rich, do you think that his role on FOX poses a conflict?

GALEN: Well, I mean, that's up to FOX. He doesn't have to do it legally. The Fairness Doctrine doesn't apply to cable stations, only over the air stations because the government owns the airwaves -- the spectrum. But that's not the case in cable. He doesn't have to legally. It's up to FOX.

YELLIN: It's up to FOX. OK.

Should he? Let me just push you a little bit? Should he?

GALEN: Oh, I think he has to.

YELLIN: Yes.

GALEN: Because he can't -- I mean, Paul knows this better than I do. But -- I mean, he can't stop and come off the campaign and go do a FOX News because they call --

(CROSSTALK)

YELLIN: He could. OK. Erick, in other news, another potential 2012 hopeful was in the news today in an appearance on a New York talk radio show. Mike Huckabee told host Steve Malzberg that he still wanted to know more about President Obama's upbringing. Listen to this.

(BEGIN AUDIO CLIP)

MIKE HUCKABEE (R), FORMER ARKANSAS GOVERNOR: I would love to more. What I know is troubling enough. And one thing that I do know is his having grown up in Kenya, his view of the Brits, for example, very different than the average American. When he gave the bust back to the Brits --

STEVE MALZBERG, RADIO HOST: Of Winston Churchill, yes.

HUCKABEE: -- the bust of Winston Churchill, a great insult to the British. But if you think about it, his perspective growing up in Kenya with a Kenyan father and grandfather, their view of the Mau Mau Revolution in Kenya is very different than ours because he probably grew up hearing that the British were a bunch of imperialists who persecuted his grandfather.

(END AUDIO CLIP)

YELLIN: OK, a lot not true there. Especially President Obama did not grow up in Kenya. So, a spokesperson, Erick, for Governor Huckabee told CNN he misspoke. But should he go back on that radio station and set the record straight?

ERICKSON: Yes, he might want to go back and use the word Indonesia. Listening to that is like listening to Jan Brewer at the debate. It's painful. Yes, he misspoke.

But, wow, will people remember in a year, though? No. Mike Huckabee is still in the leads, surprisingly. So, for many people, in the lead as far as presidential candidates for the Republicans.

And, you know, I think he can overcome this. Mike Huckabee has a quick wit and has able to get over things pretty quick.

YELLIN: OK. We're going to have to leave it right there. We're going to come back on the other side of the break and continue our discussion with these fine fellows.

Up next, a politician crosses state lines to meet the opposition. Does that sound dramatic? We have the latest on the state budget impasse.

And the fight over the capitol building, a live report from Wisconsin.

(COMMERCIAL BREAK)

YELLIN: Wisconsin's governor made a big announcement this afternoon. But Democratic state senators weren't there to hear it. Less than two hours ago, Republican Governor Scott Walker revealed his budget would cut the state's deficit by 90 -- 9-0 percent. He also warned the absent Democrats there will be more teacher layoffs and less money for their districts if they don't come back home allow a vote taking away collectively bargaining rights for most public employees.

CNN's Casey Wian is at the state capitol in Madison.

Casey, so far, what's the response to Governor Walker's speech been outside the capitol?

CASEY WIAN, CNN CORRESPONDENT: Well, outside the capitol where protesters continue to gather, they're very upset about the governor's speech because as you mentioned, it proposes significant cuts in education. It proposes significant cuts, billions of dollars in cuts to local governments, and that could mean cuts in police and fire services at the local level.

But there are still -- they're still most upset about the proposal to strip the collective bargaining rights of public employee unions. Inside the capitol, though, where the legislature is dominated by Republicans, the governor actually received applause as he delivered that speech, Jessica.

YELLIN: Today, Casey, there's also a conflict about whether more protesters would be let into the capitol building. Was there any resolution today?

WIAN: No resolution yet. There was a victory by the protesters who received a temporary restraining order from the judge saying that the capitol had to be open to public business. The governor's people said we're complying with that. It is open to people with legitimate business here.

A few number of protesters, perhaps 40 or so, remain inside the capitol. There was a hearing this afternoon. It seems that issue is still yet to be decided, Jessica.

YELLIN: All right. Thank you very much, Casey, from Wisconsin.

And joining us again here, Paul Begala, Rich Galen, and Erick Erickson, to discuss all this.

First, let's go to a poll and, Erick, take a look at this. A CBS News/"New York Times" Poll out shows independent voters disagree with what Walker, Governor Walker, is trying to do in Wisconsin. When asked if they favor taking away some collective bargaining rights of public employees, only 33 percent of independent voters favor the move; 61 percent oppose it.

So, are Republican governors like Walker overstepping their mandates?

ERICKSON: Well, you're talking about the CBS/"New York Times" Poll of all adults, which I never buy into, and one that had a massively skewed sample of Democrats as opposed to Republicans and independents, and also oversampled people in union households. I don't buy the poll.

YELLIN: OK. Paul, you think that Republicans are getting themselves in trouble here, or -

BEGALA: Yes, Jessica. First -- but, first, you should know and our viewers should know that in my business life when I'm not on TV, I advise the Service Employees International Union, one of the unions here. So, I'm not an objector, I'm a pro-union guy. And our audience needs to know that.

GALEN: Exactly, I'm not. So, we're even.

(LAUGHTER)

BEGALA: That's good. It's important to disclose that. I don't want to try to fool anybody.

I do think Walker's losing, though. Now, the Pew Poll, by the way, is a different organization, within one point of where "The New York Times" -- I think it's a valid poll.

YELLIN: Yes, that's one point.

BEGALA: But Walker's losing this thing. And I don't understand why he's pressing -- he could have won on the pay issue which really would have affected the budget deficit. He seems to want to take away rights that union members have that citizens of Wisconsin want them to have.

YELLIN: But, Rich, do you think unions are losing credibility, or at least popularity?

GALEN: Well, the only union that's -- serious union that's left in the world is the SEIU in the country. And here's the problem I think that -- the strategic problem that they have. The -- a private union, a union that's negotiating with the company, there's a natural ceiling on what they can demand because they can't put the company out of business or everybody loses their job. Public unions don't have that ceiling. So, they could ask for more and more and more.

And I think what Walker's trying to do is saying, we're not doing that anymore. We will -- we'll be fair. We'll make sure that you have jobs. We'll make sure the kids get educated. But you can't -- you can't hold us over the barrel like you did before.

YELLIN: Paul, if this remains an issue going into 2012, will the fight between Republican governors and state employee unions be a winning one for Democrats?

BEGALA: Yes. I think this could cost Scott Walker his job. There's already talk of recalling him. He's only been in the job in two months. In his state, it takes a year before you can challenge a governor on recall. But it's an enormous mistake. People understand there has to be shared sacrifice. But when Governor Walker makes the deficit worse by giving tax cuts to corporate interests that supported him in the campaign and then turns and says we're going to cut education and, oh, by the way, we're going to destroy your union rights, that's taking -- he won, and he should be congratulated for that. He's taking his victory way too far, and it could be his demise.

YELLIN: Eric, do you think -- yes, go ahead.

ERICKSON: Yes, you know, I think no. Yes, there's always a chance that anyone can lose an election. But I mean, we're talking about a year ago the Democrats were saying that they were going sweep through Washington by passing health care reform and it didn't happen. What we say today isn't going to matter in 2012.

I think Scott Walker -- or I guess 2014 when he's on the ballot, no, I think people are going to say this is guy who came in and say he was going to do this. By the way, he had a record in Milwaukee doing the same thing and it hadn't hurt him for re-election. So, no, I don't think it's going to hurt him.

(CROSSTALK)

GALEN: Remember, he was county executive in Milwaukee.

YELLIN: Yes.

GALEN: So, It's not like he came up out of -- you know, out of a dairy farm in central --

YELLIN: But there's one thing when it goes statewide between proposing something and it's another thing when people begin to feel the cuts in their lives. And that could become a problem for him politically down the road for Republicans, generally. No?

(CROSSTALK)

ERICKSON: Most people aren't going to feel if in their lives. It's the public sector unions who are going to feel it in their lives, and most people aren't members of public sector unions.

GALEN: And besides, there's -- you get some -- I think you get points for having the guts to stand up for what you believe is the right thing to do. That's what -- that's what governors get paid for. It would be nice, by the way, if most members of Congress would actually do their jobs and quit, you know, trying to duck the hard decisions.

YELLIN: I think that's a discussion we're going to be having for the next few weeks as we discuss budget cuts and the Congress.

Gentlemen, thank you so much for being with us, Rich Galen, Paul Begala, Erick Erickson. And again, our congratulations to our own Dana Bash for winning, again, the Dirksen Award tonight. We wish we could be there with you. And that is all from us tonight. John King will be back tomorrow.

Next show "IN THE ARENA" starts right now.