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Another U.S. Credit Downgrade Looming?; President Obama Touts New Housing Plan; Iraqi Ambassador to U.S. Interviewed; Afghan President Says He Would Side with Pakistan in U.S.-Pakistan War; Reuters: Gadhafi Son Trying to Escape Libya; Perry Doubts Obama's Birth Certificate; Rove Tells Perry to Avoid "Birthers"; U.S. and North Korea Begin Talks; Wal-Mart Offers Holiday Price Match; Man Proposes Mid-Flight

Aired October 24, 2011 - 16:00   ET


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

Happening now: growing fear the U.S. could soon be facing yet another credit downgrade. All eyes and pressure now on the congressional super committee. Stand by, new information coming in.

Also, U.S. troops now just weeks away from leaving Iraq. Will Iran move to fill some sort of void? I will talk about that and more this hour with Iraq's ambassador to the United States. He has some strong views.

And Karl Rove warning Rick Perry he is making a big mistake by signing on to one controversial issue many people thought was settled.

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

President Obama is going around Congress for his latest plan. He is out West right now focusing in on the ongoing housing crisis that continues to drag down the U.S. economy. He wants to make it easier for homeowners who are underwater to refinance and he is unveiling his plan in one of hardest-hit housing markets in the country. We are talking about Las Vegas, Nevada.

Our chief White House correspondent, Jessica Yellin, is joining us now. She has got details.

Jessica, what is the president doing? What is this all about?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, he is rolling out a new plan that will help homeowners who are drowning in massive mortgage payments who can't take advantage of these historically low interest rates because the value of their home has plummeted.

That's the policy but there's politics here too.


YELLIN (voice-over): Nevada, a must-win for the president in 2012. Statewide, home values have fallen 53 percent since the height of the crisis, 59 percent in Las Vegas. So that's where the president is unveiling his latest housing plan, something he can do without Congress.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Anything that's within our authority to do as an administration, we start doing immediately. And we don't wait for Congress, because the American people can't afford to wait. They need help right now.

YELLIN: If you have good credit, good payment history, but your house is underwater, they will ease the rules so you can refinance with no new appraisal, no new credit check, no risk-based fees.

They will even consider you current if you have missed just one payment this year. It's the latest effort by the president to staunch the bleed in the housing market, an effort that began just after his inauguration.

OBAMA: Through this plan, we will help between seven and nine million families restructure or refinance their mortgages, so they can afford -- avoid foreclosure.

YELLIN: But that plan fell far short of expectations. By the government's measure fewer than 817,000 homeowners have permanently modified their mortgages. Just over 890,000 have refinanced.

The administration has since unveiled nine other housing plans with limited effect.

OBAMA: What I'm really concerned about is making sure that the housing market overall recovers enough that it is not such a huge drag on the economy, because if it isn't, then people will have more confidence, they will spend more, more people will get hired and overall, the economy will improve.


YELLIN: Now, Wolf, the administration says they cannot predict how many people this new program will impact because they still have to roll out the rules before they determine that. And here is a little news.

The administration is also going to, at some point, unveil some new plans that will address all those houses which are foreclosed on, and what to do with them. They are sitting there on the market and how will they be taken off the market? This could help address issues in the larger housing market and that will come down the line.

BLITZER: It looks like he is trying to go around Congress on some of these issues and do with an executive order what he can't do legislatively, given the stalemate between the Democrats and Republicans.

YELLIN: Yes. And you heard him say that in one of the sound bites in that piece. He's using his executive power, and the politics of this is clear. It is in keeping with his approach during this jobs bill tour. He is messaging on the economy every single day. He is not staying off of that. And he is trying to demonstrate to voters heading into this election year that he is doing what he can to improve the economic picture while Washington is locked in inaction.

This is what those close to the campaign would tell you. It is part of the strategy to run against a do-nothing Congress or an ineffective Washington. And you will see him continue to roll out executive branch efforts that will signal he is trying to make a difference in the economy while Washington is stuck in gridlock. That's the plan.

BLITZER: Worked for Harry Truman in 1948. Let's see if it can work for this president right now.


BLITZER: All right, Jessica, thank you.

On Capitol Hill, pressure is growing on the so-called super committee, charged with finding ways to reduce the U.S. debt. There's growing concern failure could mean another downgrade for the U.S. credit rating.

Lisa Sylvester is here. She is working this story for us.

Lisa, what is going on, on this front? Because a lot of nervous investors out there and a lot of nervous Americans.


You know the super committee they have a deadline of November 23 to come up with ways to reduce the deficit by $1.5 trillion. But there are some doubts emerging whether these lawmakers can actually reach a compromise and if they are not able to show significant progress, that could rattle global markets.


SYLVESTER (voice-over): The 12 members of the super committee share one thing in common, strong ties to their party caucus and political base. That kind of division makes it challenging to find common ground and Wall Street seems to know that.

A new Bank of America/Merrill Lynch report says the deficit commission is -- quote -- "very unlikely to come up with a credible deficit reduction plan. The committee is more divided than the overall Congress." The Merrill Lynch reports an additional downgrade from another major ratings agency by the end of the year if the super committee fails to act.

University of Maryland professor Peter Morici says that's a scenario he also sees playing out.

PETER MORICI, ECONOMIST, UNIVERSITY OF MARYLAND: We are getting to budget dysfunction. We need a whole restructuring of how the federal government spends money and its relationship with the states regarding health care, Medicaid. That's not happening. So the credit rating agencies are quite correct to say the United States is not AAA and even less.

SYLVESTER: Standard & Poor's in August lowered the U.S. rating a notch from AAA to AA. S&P left the door open to further rating cuts if there's less reduction in spending than agreed to.

Moody's and Fitch Ratings still score the U.S. government bonds AAA but Moody's has a negative outlook and has also warned a risk of a downgrade if further fiscal consolidation measures are not adopted in 2013. But the way the committee was set up by Congress, there is something called sequestration, a trigger if the super committee deadlocks or the president vetoes their proposal.

JAMES HORNEY, CENTER FOR BUDGET AND POLICY PRIORITIES: What happens then is in the first year, that year, you get about a 9 percent cut in defense spending and in non-exempt domestic spending. On the domestic side, things like Social Security, Medicaid are exempt. A lot of others things aren't.

SYLVESTER: Things like Medicare, homeland security spending in addition to defense cuts that would take effect in 2013. The Merrill report predicts a lot of uncertainty for investors in the markets head. On the day the S&P downgraded the U.S. credit rating, the stock market dropped 7 percent.


SYLVESTER: Now, most of the work of the super committee has been done behind closed doors. There a public hearing scheduled for this Wednesday but they only have about five more weeks to go and then Congress has until December 23 to vote on whatever proposals they come up with.

So, Wolf, it is a very tall order and you know how Washington moves very slowly, so they have a lot of time ahead of them.

BLITZER: It's not much time at all. Lisa, thanks very much. The stakes really are enormous.

In just the last couple hours, an explosion at a bus station in Nairobi, Kenya killed one person just hours after the separate blast at a nightclub in the city. This explosion injured at least a dozen people. The explosions came one day after the U.S. Embassy in Kenya warned it had credible information of an imminent terror attack and urged all Americans to consider deferring travel to Kenya. Kenya has been on edge since it sent troops across the border into Somalia to pursue Islamic militants.

The end of the year will see the abrupt end of the entire U.S. military presence in Iraq after almost nine years and there is fear the U.S. absence will give an opening potentially to Iran to increase its influence in Iraq.

CNN's Brian Todd is getting more information on this fear that clearly is evident out there. What are you picking up, Brian? BRIAN TODD, CNN CORRESPONDENT: Wolf, you're talking about a matter of weeks until the United States will have virtually all of its forces out of Iraq.

There are now ominous signs about what might happen in Iraq after that. And the U.S. defense secretary is warning Iraq -- excuse me, warning neighboring Iran that if you have designs on Iraq after the U.S. leaves you might want to rethink that.


TODD (voice-over): With mere weeks remaining until virtually all U.S. troops leave Iraq, the concern that neighboring Iran will try to fill that void has U.S. officials warning to back off.

LEON PANETTA, U.S. SECRETARY OF DEFENSE: Let me make clear to them and to anybody else that America will maintain a presence in that part of the world.

TODD: U.S. commanders say Iran's already been arming militants in Iraq for years, training them in deploying lethal IEDs, improvised explosive devices that have killed hundreds of U.S. troops.

A U.S. official tells CNN the Iranians have been trying to gain influence for some time and will continue to do so. Senator John McCain says this about Iran.

SEN. JOHN MCCAIN (R), ARIZONA: We are now leaving Iraq completely, which is the number one priority of the Iranians.

TODD: McCain says the U.S. withdrawal is being viewed in the region as a victory for Iran. And he says powerful Iraqi politician and militant leader Muqtada al-Sadr, who is backed strongly by Iran, has warned U.S. Embassy in Iraq will be targets when American troops leave.

If there is a security emergency, could U.S. troops go back in quickly? I asked retired General James Spider Marks, once an intelligence officer in Iraq.

(on camera): After the withdrawal from Iraq, there will be at least 30,000 U.S. forces in that region. How quickly can they get into Iraq in an emergency from places like Kuwait and Turkey?

BRIGADIER GENERAL JAMES "SPIDER" MARKS (RET.), CNN MILITARY ANALYST: Brian, very quickly. From Kuwait it would be hours, simply hours, before the U.S. could respond. This is a heavy mechanized armored tank and Bradley Fighting Vehicle. It could respond very, very quickly.

Plus, there is a very large logistics base here where supplies continually flow in. And from Turkey, again, there is an aircraft capability. So we could have fighters into Iraq in almost no time.

(END VIDEOTAPE) TODD: General Marks says his main concern is with Iran continuing to train and arm militant groups inside Iraq as they have been doing and he believes most of that will be covert.

But a U.S. official tells us Iran's influence in Iraq does have its limits, that Iraq won't completely roll over to a country who it fought an eight-year war against, Wolf. We will see how that plays out.

BLITZER: But the Iranians clearly want to exert as much political influence inside Iraq as they can.

TODD: That's right. And analysts say they have already been doing some of that. They have wielded a lot of influence in the Iraqi Parliament, trying to help Shia politicians gain power there. There's some real concern that the Iranians will really throw their weight around politically inside Iraq as well as militarily once the U.S. leaves.

BLITZER: I think there's no doubt that's the major reason the Iraq government of Prime Minister Nouri al-Maliki refused to give the immunity that U.S. troops needed if they were going to remain a residual force inside Iraq. Brian, thanks very much.

An abrupt end to the U.S. mission after the U.S. and Iraq failed to reach a deal to let some troops stay past the end of the year. Who is to blame for the stalemate? I will talk about that and much more with Iraq's ambassador to the United States. He is getting ready to leave. We will stand by. We will speak with him live.

And he is already under fire for health care reform. Now Mitt Romney is taking heat over illegal immigration.

Stay with us. You're in THE SITUATION ROOM.


BLITZER: Two of the issues that outrage conservative voters the most, are coming together to haunt Mitt Romney's Republican presidential campaign at least for now. We are talking about illegal immigration and healthcare reform. CNN's Jim Acosta is joining us now. He's got details. What is going on with Mitt Romney and these issues right now, Jim.

JIM ACOSTA, CNN CORRESPONDENT: Well Wolf, it is the healthcare headache that just won't go away for Mitt Romney. The healthcare law he passed in Massachusetts is back in the headlines. Today it is in the L.A. Times and not in a good way.


ACOSTA (voice over): Just moments after Mitt Romney filed his official paperwork to run in the New Hampshire primary, a political ghost came back to haunt the GOP front-runner from across the border in Massachusetts. As it turns out, the state healthcare law signed by Romney In 2006 when he was governor of Massachusetts can contained a program for uninsured residents that allows illegal immigrants to receive medical services. That program, health safety net was well known inside Romney's administration, according to experts who helped draft the legislation.

UNIDENTIFIED MALE: He definitely signed the line. Absolutely his people had to know both before and after the law about how the state dealt with this need. This was a costly issue. It was part of the process and the conversation leading to passage of the law.

MITT ROMNEY, PRESIDENTIAL CANDIDATE: I'm speaking. I'm speaking. I'm speaking. I'm speaking.

ACOSTA: For weeks Romney and Rick Perry have traded blows over illegal immigration. Romney accused Perry of providing a magnet to the undocumented by offering in state college tuition to illegal immigrants. Last week, Perry struck back.

RICK PERRY, PRESIDENTIAL CANDIDATE: Mitt, you lose all of your standing from my perspective, because you hired illegals in your home and you knew for about it for a year.

ACOSTA: The Perry campaign couldn't resist hitting Romney once again, saying Governor Romney's government mandated healthcare plan provided free care for illegal immigrants in Massachusetts. Establishing just the kind of illegal immigration magnet, Governor Romney claims to oppose. The Romney campaign claims all of the regulatory activities involving the health safety net fund, including who could get care, were made long after Mitt Romney left office.

ROMNEY: It's now my pleasure to introduce my collaborator and friend, Senator Edward Kennedy.

ACOSTA: But for Romney it's also another reminder to Republicans, that their potential nominee helped draft a healthcare plan with liberal icon Ted Kennedy that eventually became a model for the president's healthcare law. So when Romney slams Obamacare.

ROMNEY: When government tries to tell us what kind of healthcare we can have, when government tells us that we have to join a union, whether we want to or not, then government has become too intrusive.

ACOSTA: Liberal defenders of the law are all too eager to fire back.

UNIDENTIFIED MALE: On any given day, you just never know which Mitt Romney you're going to get.


ACOSTA: The Romney campaign accurately points out that emergency rooms have been required by federal law to provide healthcare to illegal immigrants for decades, which means, Wolf, they get healthcare in Texas as well as just about every other state in the country.

BLIZTER: So was there anything special in Massachusetts that illegal immigrants got if they needed healthcare, that they wouldn't have gotten let's say In New York or Texas or California? ACOSTA: No, basically this was a way for the federal government to pay for those services in Massachusetts. Massachusetts was actually trying to think ahead and somehow get funding for those services for undocumented workers when they went into those emergency rooms. They were trying to steer those folks from emergency rooms into community healthcare centers and that's what that law did. But it was one of the issues that really didn't cause Mitt Romney that many political problems at the time because it just wasn't an issue nationally, politically for Republicans. Now of course things have changed.

BLITZER: Certainly have. All right thanks very much. One thing to be running for Governor of Massachusetts, another thing to be running for the Republican presidential nomination.

Immigration reform is taking center stage of the Republican race for the nomination. Now Democrats are trying to take advantage of the Republicans' push for stronger border enforcement. Stand by.

And as Iraqis prepare for the withdraw of thousands of U.S. troops, almost all of the U.S. troops coming out by the end of the year, is Iran coming out the Winner? Iraq's ambassador to the United States, Samir Sumaidaie, he's standing by live. We will talk with him right here "The Situation Room".


BLIZTER: Illegal immigration continues to be a huge issue in the race to become the Republican presidential nominee. Now Democrats may be trying to take some advantage and play to a key part of the president's voting base back in 2008. We're talking about Latino voters. Our chief political analyst Gloria Borger is here, she's watching this story for us. What are your sources telling you, Gloria, about illegal immigration, what the Democrats may have in mind?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well Democratic sources are telling me that there is an awful lot of interest on Capitol Hill as well as at the White House in reintroducing some form of immigration legislation. Wolf, we're not sure when, could be as early as December or sometime into the new year. We're not sure what form it would take. It could--the discussions are about everything. It could go from reintroducing comprehensive immigration reform, to re- introducing some form of the "Dream Act" which allows children of illegal immigrants who have gone to college to become citizens. You could combine that with tough border security which has been proposed by John McCain. But what's behind all of this, Wolf, is that they believe that Republican party is moving so much to the right on illegal immigration that while Hispanic Voters were disappointed in this White House, because it didn't get immigration reform, they believe that there is a large opportunity for them, which they need, to get back these Hispanic voters.

BLIZTER: Because President Bush, he tried comprehensive immigration reform, including a pathway to citizenship for illegal immigrants and worked with Senator Kennedy and others. Didn't exactly work out, are the Republican nominee-presidential candidates who want to be the nominee, they are all basically abandoning that.

BORGER: They are. We're not hearing about amnesty or pathway to citizenship. What we are hearing an awful lot about is border security. Remember Herman Cain talking about building the fence and electrifying it. He said it was a joke but ill advised, whatever it is. So Democrats now feel, look, there is an opening here for us. Take a look the at this exit poll from the 2008 presidential election. And the Latino vote, you see Barack Obama 67 percent, McCain only 31 percent. Democrats need these voters to show up again in this election, particularly in those key battle ground states. Florida, Nevada, New Mexico, and Colorado. So again, they don't want them to sit at home. They want them to come out for Barack Obama and Democrats.

BLIZTER: Now we just had Jim Acosta reporting about Mitt Romney when he signed that healthcare reform legislation in Massachusetts. It did allow some provisions for illegal immigrants to get healthcare in Massachusetts. Now all of a sudden it is coming out. You saw Perry jumping all over Romney today. How much of a problem is this going to be?

BORGER: Well it is not the conversation Mitt Romney wants to be having. He wants it move to the right of Rick Perry in any way that he possibly can and he thinks he moved to the right on immigration. But Perry keeps jabbing him back at whether he hired illegal yard workers. Now on this healthcare issue. So this isn't a good conversation for Mitt Romney. He wants to be to the right of Rick Perry because that is where the Republican party is, Wolf.

BLIZTER: At least in these primaries, in these caucuses. Maybe not necessarily in a general election.

BORGER: And let me say one other thing about, if the Democrats raise this immigration legislation on Capitol Hill, it doesn't have a chance of passage. They will be doing it largely as a contrast issue with Republicans.

BLIZTER: Gloria, thanks very much.

The Iraqi ambassador to the United States is standing by live to join us. I'll ask him what his biggest fears are for his country right now after U.S. troops will be leaving by the end of this year.

Also, details of a slap in the face of the U.S. by the Afghan president, Hamid Karzai. We're going to Islamabad.

Plus, Rick Perry flirting with the so-called birther movement. Karl Rove has a strong warning for the Texas governor.


BLITZER: The remaining 40,000 or so U.S. troops are all packing up right now, getting ready to leave Iraq by the end of this year after the Obama administration was unable to reach a deal with the Iraqi government at Baghdad on immunity for any troops that stay beyond the deadline. Let's talk about what's going on with Samir Sumaidaie. He's Iraq's ambassador of the United States wrapping up four or five years since you were --


BLITZER: Five and a half years as ambassador here in Washington. How do you feel about this inability to work out residual U.S. military presence in Iraq? Is that good for Iraq or bad for Iraq?

SUMAIDAIE: Let's hope it'll be good.

BLITZER: Beyond hope, what do you think?

SUMAIDAIE: I think there are mixed feelings about that. There are people in Iraq who think -- who are fearful of action, to be left behind or by the American military. And there are those who think that this is a good closure. This is an end of an era, not the end of a relationship.

BLITZER: What do you think? Is this good for the Iraqi people that there won't be U.S. military troops left, or would it have been better if 5,000 or 10,000 or 15,000 U.S. troops maintain the presence there?

SUMAIDAIE: You know, Wolf, there is no use speculating about that. The reality is we have a democratic system. There was consultation. There this is what the leaders of the main blocks of parliament decided.

BLITZER: They didn't want to give immunity to U.S. troops remaining.

SUMAIDAIE: No, they didn't. Iraqis are very touchy about, given their recent history, very touchy about independence and sovereignty. This is what they came up with. We have to make it work. And I think, as I said, this is the end of an era, the beginning of another.

BLITZER: Did the Obama administration, and you are familiar with all of the back and forth negotiations that were going on, seriously want to maintain a modest U.S. military presence in Iraq? Because some of the critics say they never even wanted that. Did the Obama administration want to maintain presence there?

SUMAIDAIE: To judge by the serious negotiations, conducted by the American ambassador and by the commander of the American forces, yes, they were very serious and very positive.

BLITZER: What was the number? How many troops did the U.S. want?

SUMAIDAIE: There are many numbers bandied about. And again, I'm not going to go into speculating. But what I want to say here is that this is -- this could be the beginning of a very positive chapter. This is not the end of the world. It could be the beginning. Instead of boots on the ground, we will have more suits on the ground. We need economy, economic support. We need business, American businessmen to come in. It is not necessary to have always the emphasis on the security side. BLITZER: Because there is concern, as you well know, John McCain expressed concern, Lindsay Graham, others, that Iran will fill a void. Its allies Muqtada al Sadr and Shiite extremists will fill the void of the U.S. departure.

SUMAIDAIE: That is a danger always in any vacuum that somebody or other will try to fill it. But Iraqis are very are very touchy about their independence and sovereignty, as I said. And they don't take kindly to intervention and any attempt to impose an external will on them, as their American friends have already discovered.

BLITZER: How much influence does Iran have in Iraq right now with some of these various Islamist groups?

SUMAIDAIE: Well, they might have some influence with some people. With the Iraqi people, as a whole, as I said, Iraqis are very independent-minded. People will try to exercise influence. Not only Iranians -- the Turks, Saudis, even our friends, the Americans. We will accept only the influence can which is beneficial to the country.

BLITZER: Why has the government of Prime Minister Nouri al Malaki aligned itself with Iran with what is going on in Syria and basically come to the defense of Bashar al Assad, the president of Syria?

SUMAIDAIE: You characterize it in this stark manner. I don't see it exactly the same way.

BLITZER: How do you see it? Because all the political behind-the- scenes activity shows Bagdad, Nouri al Maliki's government supporting the Syrian regime in the face of this brutal crackdown.

SUMAIDAIE: I see it more of a nuanced posture, not revealing our hands. Again, we are very sensitive about interfering in other people's affairs. We don't want that charge to be leveled against us. And it is more of a wait-and-see policy.

BLITZER: Because the public statements have been very supportive of Bashar al Assad.

SUMAIDAIE: Yes. And there were people who were critical. And not all of the public statements are on the same level of support. There were some fluctuations in that. And again, opinion in Iraq is divided. And the same as you see the situation here in America. There are always different opinions about the same issue. You have that here. And this is the problem with democracy. There is no unity of opinion.

BLITZER: I know what your hope is in Iraq, a peaceful, democratic, stable Iraq, at peace with its neighbors and everyone else. What is your nightmare fear? What is your fear? Because you are a realist. You and I have known each other a long time. When you tell me your worst case fear, it is important that I understand that and our viewers understand that, so that maybe people can deal with it.

SUMAIDAIE: My worst nightmare is that we take too long to dissolve our outstanding political issues, our political differences, and we do not consolidate our democratic institutions fast enough. This will give an opportunity for violence to come back into the scene, and with that, we can lose many of the gains we have made.

We have to -- we have to stay the course on building our democratic institutions, consolidating rights for individuals, but solve the political issues. Otherwise, Iraq could be in danger. Stay away from violence --

BLITZER: Ambassador, I know you wrap up your tenure within two weeks. Good luck with the next chapter of your career.

SUMAIDAIE: Thank you very much, indeed, Wolf. It has been a pleasure to work with you.

BLITZER: Thank you so much. And good luck to all of the people of Iraq as well.

SUMAIDAIE: Thank you.

BLITZER: We're hoping for the best. As you know, the United States invested a lot of blood and treasure to deal with your country.

SUMAIDAIE: And I know this is the beginning after new positive relationship with the United States.

BLITZER: Let's hope.

SUMAIDAIE: Thank you.

BLITZER: And 1,700 lives and billions of dollars, the U.S. war in Afghanistan has proved very costly for Americans as well. Now fresh questions about the mission after a controversial new statement from the Afghan president, Hamid Karzai.


BLITZER: I'm Wolf Blitzer. Here are some of the stories we are working on for our next hour. The U.S. pulls its ambassador out of Syria. Now Syria is responding. What is next in this diplomatic scuffle?

And we'll go live to Turkey where rescuers are digging through the rubble, hoping to find survivors after a monster earthquake kills more than 270 people.

And hundreds have lined up for hours in Libya just to see Moammar Gadhafi's body. We'll explain why their chance is about to be over.

Stand by, you're in "THE SITUATION ROOM."

A slap in the face for Washington by the Afghan president Hamid Karzai. Just days after meeting with Hillary Clinton in Kabul, Karzai now says on Pakistani television that if fighting were to start between Pakistan and the United States, I'm quoting him now, "We are beside Pakistan." And joining us now from Islamabad, Pakistan, our own Reza Sayah. Reza, there is a lot of concern in Washington about the latest comments from Hamid Karzai, the Afghan president, said if there were ever a war between the U.S. and Pakistan, that is very unlikely, Afghanistan would side with Pakistan against the U.S. Give us some context what Hamid Karzai is talking about, because people are upset about that.

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Yes. First and foremost, Wolf, we should point out that it is very unlikely that U.S. and Pakistan are going to go to war. These are two countries that obviously don't see eye to eye on a lot OF issues. They had a very rocky relationship. But there is absolutely in sign they will go to war. In fact, some argue that relationship is improving after a high- powered U.S. delegation visited Islamabad last week led by U.S. Secretary of State Hillary Clinton.

That said, Afghan President Hamid Karzai did come out and made a statement that surprised some people, especially in Washington, that Afghanistan would support Pakistan if the U.S. and Pakistan were to go to war. That surprised some people for two reasons. Obviously the U.S. is a critical ally of Afghanistan. And the second reason is, that on numerous occasions Afghan President Hamid Karzai himself has been a tough critic of Pakistan's military and intelligence establishment.

It is Hamid Karzai's view that Pakistan is playing a double-game, on one hand saying they are in fight against militancy, but on the other hand supporting militant in an effort perhaps to gain influence once U.S. and international troops pull out.

So because of that, a lot of people are surprised he made that statement. I think the only explanation is where he made that statement. It was on Pakistani TV. He had a Pakistani audience, an audience that is very anti-American. And I think he was playing to the Pakistani audience. Hamid Karzai still views the Pakistani public opinion as critical and the partnership between Afghanistan and Pakistan as critical.

BLITZER: But what's really angered a lot of folks here, as you well know, Reza, the United States for 10 years has been involved in trying to free Afghanistan from the Taliban and Al Qaeda, lost a lot of troops, spent a lot of money, hundreds of billions of dollars, still spends $2 billion a week maintaining 100,000 troops in Afghanistan.

And to get this statement from Hamid Karzai raises all sorts of questions. What does this guy want? Is he really a friend of the United States? Is it time for the U.S. to do in Afghanistan what it is about to do in Iraq, simply start pulling out?

SAYAH: Yes. Well, if you take a step back, Wolf, I think these types of tangled confusing messages underline partnership between three countries, Pakistan, Afghanistan, and the U.S., where there's three very different visions for each country has very different strategies in that vision, and that creates a lot of problems. And frankly, these are three countries, despite what their politicians say, that don't always like one another. So because of that, depending on where these political leaders, these senior officials are talking, you get a very different message. You saw Hamid Karzai's message to the Pakistani public. He would never say that if he is talking in Washington.

Hillary Clinton herself last week when she was in Afghanistan, she made some very tough statements against Pakistan, explicitly saying they are an obstacle to the peace process. But when she came to Pakistan, they toned down the message, saying Pakistan is part of the solution is, that we need Pakistan to help with the political negotiation.

But all these tangled and confusing messages, again, underline three partners that don't see eye to eye, have very different visions of what this region should look like, if there is to be an end to the conflict in Afghanistan.

BLITZER: And let's not forget the U.S. is supposed to keep those troops in Afghanistan for at least another three years until the end of 2014. Reza Sayah on the scene for us in Islamabad. Reza, thanks very much.

Getting new information from the Reuters news agency, according to a National Transitional council official, an NTC official, the official tells Reuters that the son of Moammar Gadhafi is still on the run right now.

He is believed to be in the desert area near the Libyan borders with both Niger and Algeria seeking to escape. This official also suggesting that Saif Al-Islam is carrying a forge Libyan passport. They are obviously looking for Saif Al-Islam, the son of Moammar Gadhafi who's still on the run.

This official also is giving some new information about the burial plans for Moammar Gadhafi. They say that Moammar Gadhafi and his other son will be buried tomorrow at an undisclosed location, a secret location, in their words, in the Libyan desert.

He will be buried tomorrow in a simple burial, with Sheikhs attending the burial. This official says it will be an unknown location in the open desert. They say that they have to bury him because the body, the decomposition of the body has reached the point where the corpse cannot last much longer.

We are getting this information. We will check in and get some more information, but that's the latest coming in from Reuters.

Meanwhile, we got other news we are following, including political news. Rick Perry questions legitimacy of President Obama's birth certificate. Is that the way he should be trying to get one key endorsement or is it a desperate move? Our strategy session is coming up next.

(COMMERCIAL BREAK) BLITZER: Get to our "Strategy Session." Joining us right now, our CNN political contributor, the Democratic strategist, Paul Begala and the Republican strategist, Terry Holt. Guys, thanks very much.

In the next hour, the president is going to be speaking on the housing crisis in Las Vegas, which is suffering, as both of you know, big time. Let me read a little bit of advance text that the White House made available.

We can't wait for an increasingly dysfunctional Congress to do its jobs. I've told my administration to keep looking every day for actions we can take without waiting for Congress, steps to save consumers money.

Make government more efficient and responsive and help heal the economy. We will be announcing these executive actions on the regular basis. Smart for the president to go around Congress and just do by executive order what he can't do legislatively?

TERRY HOLT, REPUBLICAN STRATEGIST: Well, when you don't have the votes, you get your executive orders out and you try to advance your agenda that way. My sense is that he is trying to appeal to his base.

He's trying to show that he is a strong and determined leader to people that he needs to win back his side. This is just one way to do that, but I don't think it fundamentally improves the standing with the American people or with independents who are walking away from this president in droves.

BLITZER: What do you think?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: I love it. I mean, I think thinks there are two attributes that I keep looking for in polling, strong leader, cares about people like me. OK, this is both.

He is showing strength. You know, when you were covering this, I was working for President Clinton. He was great with executive orders using authority Congress had given him and doing it to help middle class people.

That's what the president is doing today. A lot of Nevadans homes are under water through no fault of their own. The Republican Congress won't act to help them, here comes the president. I'm going to help the middle class. I love it.

BLITZER: His key words, we can't wait. He can't wait another 13, 14 months for the election. He says the country needs action right now. The Republicans won't let him do what he wants to do, so he's going to do it alone.

HOLT: As a campaign guy, I look at this and say, OK, descent tactic. But what is the overarching strategy, what is he trying to do? I agree with Paul that you want to have a demonstration that you are a strong determined leader. That's how Republicans have won elections.

BLITZER: Worked for Bill Clinton. HOLT: It worked for Bill Clinton, but in this case, it is a press release. It's after thought. It's a speech out in Las Vegas. It is not fundamentally changing the narrative and he desperately needs to do that right now.

BLITZER: Because if he doesn't change the narrative in terms of the substance, if unemployment is still 9.1 percent a year from now, he can do all of the executive orders he wants, but it might not necessarily get him re-elected.

BEGALA: That's exactly right. So he's got to make the case that the Republicans are blocking things that would help the economy. Even ideas Republicans used to support. Why, because they would rather hurt the economy and help themselves politically.

And that's the case, I hope he toughens up this language that he makes that point. I mean, when the speaker of the House has told his plan would cause layoffs, he said so be it.

When Mitch McConnell, leader in the Senate, as his top political priority, he said defeating the president, not creating jobs, defeating the president. So the Republicans, I think wants the country to fail.

BLITZER: Let's talk about Rick Perry for a second. You saw that little exchange he had in "Parade" magazine, a popular magazine on its web site.

Once again, saying, well, maybe this whole birther issue, there is something to it coming out of the meeting with Donald Trump. He is not necessarily sure, at least if you read the exchange he had with "Parade" magazine, you know, maybe willing to give the president the benefit of the doubt.

But he doesn't buying this notion a 100 percent necessarily that the president of the United States birth certificate that he was born in Hawaii is authentic.

HOLT: Just like you can't convince some people that we didn't land on the moon. You will never convince a certain number of people in America that Barack Obama was born in Hawaii.

I don't think this is fundamentally an important issue for most Americans. They want people to have real change with leaders to talk about issues that matter to them. I think Rick Perry was answering a question that's kind of an old question, frankly and handling it in the context of trying to get Donald Trump's endorsement.

BLITZER: Karl Rove --

BEGALA: I'm not sure --

BLITZER: Said this on Fox. You know Karl Rove.

BEGALA: I do, sure.

BLITZER: You met him.


BLITZER: Smart guy. He is trying to cultivate Donald Trump. In order to get his endorsement, but this is not the way to go about doing it. He said, don't associate yourself with this nutty fringe group.

BEGALA: Carl is a very smart guy. He has this backwards and I think he knows he does. This isn't about Rick Perry sucking up to get Donald Trump's endorsement. That might be what Perry is thinking in his tiny reptilian brain. Donald Trump, huge brain. OK, so like watching Donald Trump square off against Rick Perry, you know --

HOLT: These Texas guys, there is something going on here.

BLITZER: What is going on here with Karl Rove?

BEGALA: Save this tape. Donald trump is going to set himself up to run as third party candidate. He's sending Mitt Romney out there to revive the birther thing, which he got some traction on before and I think that's is what is happening.

I think if the Republicans nominate Mitt Romney, I think Trumps going to be able to say, look, I talked to Perry and other conservatives about this. The birth certificate, grades, you remember all the stuff Trump was running on for that five minutes he ran.

I think he may come back. You watch he could be a third party candidate.

HOLT: I don't think he will run.

BLITZER: You think Donald Trump could run as third party --

HOLT: I typically like self funding candidates because they don't have to waste time raising money. But in this case, I've never seen any evidence that that man is willing to put a single dime into getting himself elected president and if I were him, I would stick with real estate.

BLITZER: I wrote on my blog today that there's -- I would think that, not out of the realm of possibility that Ron Paul, if he doesn't get the nomination, let's say Mitt Romney gets it, I don't know if you saw him on "Meet the Press" yesterday.

He is basically saying there's no great difference between Mitt Romney and Barack Obama, which says to me, even though he says he is not thinking about it, Ron Paul could run as third party can date.

BEGALA: And if Ron Paul had a billion dollars, he could be Donald Trump. Trump could run as libertarian as well.

BLITZER: I don't think Donald Trump is going to spend a billion of his own dollars as third party candidate.

BEGALA: Well, a guy can hope.

BLITZER: Michael Bloomberg could do that and not worry about a billion dollars. I don't think Donald Trump doesn't have --

HOLT: I think trump has an agenda we haven't fully seen. He is a smart guy.

BLITZER: We'll continue this conversation. Guys, thanks very much.

President Obama going around Congress to address the housing crisis. We're going to hear him live from Vegas. That's coming up in our next hour. Straight ahead, a proposal at 30,000 feet.


BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now. What else is going on, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, there, Wolf. Well, U.S. officials are meeting with the delegation from North Korea in an effort to restart talks over the reclusive nation's nuclear ambitions.

Today is the first day of two days of scheduled talks. A U.S. official calls the initial presentations useful. These talks could help pave the way to resuming the six-party talks, which haven't taken place since 2008.

Wal-Mart wants your holiday shopping dollars and is hoping a new price match guarantee will get you to the store. If you buy an item and find the same product advertised for a lower price at another local store, and it's available, Wal-Mart will refund the difference.

The offer follows a National Retail Federation report in which almost two thirds of Americans said the economy will impact their holiday spending plans.

And a routine flight from Chicago to New York got a little less routine for passengers, when a man proposed to his girlfriend, mid flight. The crew allowed him to pop the question over the plane's intercom. Take a listen.


UNIDENTIFIED MALE: So would you marry me?



SYLVESTER: Isn't that sweet. Actually they met on a flight following the same route last year, and he says he knew that he wanted to spend the rest of his life with her then. And Delta treated the passengers to champagne, and, CNN affiliate WGB reports, the airline also surprised the couple with a free trip for their honeymoon. Not bad at all. What a treat for the other passengers on the plane, Wolf.

BLITZER: Congratulations to both of them.