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Steve Forbes Interview; President Obama Calls For Economic Quality; Gingrich Weaknesses?; Where are Romney's Records?; Romney Takes Questions in Arizona

Aired December 6, 2011 - 16:00   ET


WOLF BLITZER, HOST, CNN'S THE SITUATION ROOM: Happening now: Republican front-runner Newt Gingrich gets grilled in an interview, exposing potential weaknesses with conservatives.

Also, President Obama channeling a predecessor from a century ago, echoes of Republican President Teddy Roosevelt, as Mr. Obama calls for greater economic equality.

Plus, electronic records from Mitt Romney's term as Massachusetts governor missing. Did he use taxpayer money to hide untold number of e-mails? We're seeing what Romney did. We're picking up new information and he's also getting a new endorsement.

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

He's not just the new Republican presidential front-runner. Newt Gingrich is leading the Republican pack by double digits in several brand-new polls. A Gallup national survey of registered Republicans shows Gingrich 15 points ahead of Mitt Romney, 37 percent to 22 percent less than a month away from the Iowa caucuses.

A new CBS/"New York Times" poll has Gingrich 14 points ahead of Romney in that state. But as former front-runners know, top status means extra scrutiny and Gingrich was grilled today about some of his past positions by conservatives. This is happening as we're meeting right now.

CNN's Jim Acosta is watching all of this for us.

What's the very latest? Because he's getting some tough questions.

JIM ACOSTA, CNN CORRESPONDENT: That's right. His poll numbers are good right now, but it has been said lately that Newt Gingrich's own worst enemy is Newt Gingrich. The two may have come face to face today.


ACOSTA (voice-over): On his radio show, Glenn Beck turns up the Tea Party heat on Newt Gingrich rubbing the former speaker's nose in his own past support for a health care individual mandate. The mandate that requires Americans to buy medical insurance is both a key component in the new health care law and poison for many conservatives.


NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: You either have health insurance or you post a bond or in some way you indicate you are going to be held accountable.

BECK: You seemed to be very interested in the government finding the solution.

GINGRICH: Well, let's go back to what I just said. Go back and listen to exactly what I was asked on that show, and what I said, I will stand by.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Support for an individual mandate? Folks, don't ask me to explain this.

GINGRICH: Conservative outrage our Gingrich's position on health care is now featured in a new TV ad from rival Ron Paul. It's a test for the new GOP front-runner who once posted a video on his YouTube page declaring his opposition to a mandate.

GINGRICH: I'm completely opposed to the Obamacare mandate for individuals. I fought it for two-and-a-half years at the Center for Health Transformation.

ACOSTA: But on the Web site for Gingrich's Center for Health Transformation, the group advocates a requirement that anyone who earns more than $50,000 a year must purchase health insurance or post a bond. Gingrich's past support for an individual mandate could be a bitter pill to swallow in the Tea Party. Right now he has 82 percent of Tea Party support, far ahead of Romney, whose own health care mandate in Massachusetts is a major turnoff for voters in Iowa.

A new "Washington Post" poll finds 45 percent of Republican caucus goers in Iowa say it's a reason to oppose Romney.

UNIDENTIFIED MALE: At the end of the day, they are going to find that he changes his positions much in the same way as Romney.

ACOSTA: Beck also pressed Gingrich on his now infamous ad with Nancy Pelosi on the need to combat climate change.

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: We don't always see eye to eye, do we, Newt?

GINGRICH: No, but we do agree our country must take action to address climate change.

BECK: Do you still believe in the inconvenient truth as outlined by global climate change advocates?

GINGRICH: Well, I never believed in Al Gore's fantasy.

ACOSTA: The problem for Gingrich, he did the ad for Al Gore's Alliance for Climate Protection. Gingrich now calls the spot one of his dumbest mistakes.


ACOSTA: Gingrich is riding high in the polls in Iowa with exactly four weeks to go until the caucuses in that state. The question though is whether some of these past positions on key conservative issues will catch up with him in time to slow him down -- Wolf.

BLITZER: Because I'm looking at these polls -- and we have briefly mentioned them -- the new CBS/"New York Times" poll in Iowa, Gingrich 31, Romney 17, Ron Paul 16, Rick Perry 11. The ABC/"Washington Post" poll in Iowa, Gingrich 33, Romney 18, Ron Paul 18, Rick Perry 11, very similar.

In South Carolina, which is maybe arguably even more important than Iowa or New Hampshire, Gingrich 38, Romney 22, Rick Perry 9 percent. So right now with four weeks to go, January 3, four weeks from today, Newt Gingrich is doing pretty nicely.

ACOSTA: That's right. And it's boiling down at this point to a choice between Mitt Romney and Newt Gingrich.

And really this might become an issue of hearts and minds. Mitt Romney may seem like the smart choice for a lot of Republican voters, but he doesn't hit them in the heart. Newt Gingrich -- and I saw this up close and personal when I was out in Iowa, not only checking off those boxes for conservative voters. He's also appealing to their heart with some tough language on President Obama and that is working for him right now.

BLITZER: Jim Acosta will be busy over the next month and beyond, I'm sure. Jim, thanks very much.

This important programming note for our viewers. Both -- both Newt Gingrich and Rick Perry, they will join me here in THE SITUATION ROOM tomorrow. We will talk about Newt Gingrich's surging campaign, his Republican rivals, a lot more. Lots of questions tomorrow for Rick Perry and Newt Gingrich. If you want to weigh in or have a suggested question, send me a tweet @WolfBlitzerCNN. Maybe I will read one of your questions to these two Republican presidential candidates.

The interviews will air tomorrow beginning 4:00 p.m. Eastern right here in THE SITUATION ROOM.

President Obama previewed his campaign themes in a major speech today in Kansas. He traveled to the same town where Teddy Roosevelt delivered a landmark speech of his presidency a century ago, calling for greater economic equality. The president echoed those themes today, calling on Americans to unite to restore opportunity for everyone.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is the defining issue of our time. This is a make-or-break moment for the middle class and for all those who are fighting to get into the middle class, because what's at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, secure their retirement.

Now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia. After all that's happened, after the worst economic crisis, the worst financial crisis since the Great Depression, they want to return to the same practices that got us into this mess.

In fact, they want to go back to the same policies that stacked the deck against middle-class Americans for way too many years. And their philosophy is simple: We are better off when everybody is left to fend for themselves and play by their own rules.


BLITZER: Let's talk about the president's speech with our chief political analyst, Gloria Borger.

Gloria, what was the president trying to do today, fly all the way to Kansas and deliver this lengthy speech?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, it was a political speech, Wolf, and I think he was trying to define what this campaign is going to be about.

He was using the notion of income inequality to sell the extension of the payroll tax cut. You heard in that little clip that we ran that he believes there's a large wealth gap in this country. That's indisputable, the rich have gotten richer and the poor have gotten poorer. And what he called it a defining issue of our time.

And what he is saying is, we need to level the playing field and what the Republicans want to do is let everyone fend for themselves. In the larger scheme of things, though, Wolf, this president does not want the election to be about high unemployment or his economic record. A large majority of people in this country don't like what he's done on the economy.

What he wants to do is define this election about this wealth gap and say, you know what, Republicans are fine with it and I'm not. I'm going to fight for the middle class, which continues to be in a squeeze. He raised Bill Clinton's name, reminding people that when Bill Clinton was president, he created over 20 million jobs and, yes, your taxes were a little bit higher, but times were good.

BLITZER: Does he have the American public with him on all of these gut issues?

BORGER: Well, he has the political upper hand on the extension of the payroll tax cut. Let me just show you a poll that "The National Journal" did.

When they asked people whether they support extending the payroll tax cut, look at how broad this support is, not only among Democrats, six out of 10 Republicans, half of Republicans, and independents, 57 percent. But I think there is an issue here that's larger for President Obama as you head into the general election. He's talking about government fixing problems, regulation, for example, government regulation. When you talk to the American public about whether they want the government to get more involved in their lives, the answer to that is no.

And so that's going to be the focus of the debate. Is it the government that should level the playing field or will the market level the playing field on its own.

BLITZER: Sixty-eight percent of the Democrats.

BORGER: I'm sorry. Did I say 58?


BLITZER: No, no, you said six out of 10. It's almost seven out of 10 Democrats support extending the payroll tax cut.

So how are the Republicans -- they have had a few hours now to react to this latest speech from the president.

BORGER: Well, I spoke with a couple of Republicans after the speech. They are not surprised by it, obviously. Neither am I. They said it's the same old, same old.

As one Republican said to me, it's taking the money from one group of people and giving it to another, because of course the extension of the payroll tax cut, the president wants to pay for that with a surtax on the wealthiest among us. They say where's the president's plan for structural tax reform that would actually bring money into government coffers and help get this deficit down? They say they haven't seen the real solutions yet from the president.

BLITZER: Gloria, thanks very much.


BLITZER: And we will get a lot more on the president's speech in our next hour.

His senior adviser Valerie Jarrett, arguably his closest adviser -- she's been working hi him for a long time -- she will join us live right here in THE SITUATION ROOM, and that's in our next hour.

Let's check in with Jack Cafferty right now. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Donald Trump fancies his endorsement a hot commodity in the Republican race, and several of the candidates apparently agree.

Many of the GOP hopefuls have been making the pilgrimage to Trump Tower here in New York City the last few months to meet with the real estate magnate and the reality TV star. Yesterday, front-runner Newt Gingrich was here to visit with Trump. In his book, Donald Trump writes that the candidates come to see him "because millions of people listen to what I say and know I get it." He adds that it wouldn't surprise him if he, Trump, is the "single most important endorsement a presidential candidate" can get. And just to be clear, Trump says he's not bragging, but rather, "I just tell it like it is."

Trump says he'll most likely endorse someone. He hasn't said when. Trump flirted with his own Republican run earlier this year, still isn't ruling out an independent run.

But not everyone in the Republican race is after Donald Trump's endorsement.

Jon Huntsman probably had the best line of the week, saying he refuses to kiss Trump's ring or any other part of his anatomy. Huntsman says that this is what's wrong with politics. "It's show business over substance." He adds that if Trump had any courage, he'd still be running for president, instead of manipulating the process from the outside. Huntsman recently said he would not attend the GOP debate that Trump is going to moderate.

Ron Paul has turned down that debate as well, saying it would have a "circus-like" atmosphere.

Paul also took a swipe at the front-runner, Newt Gingrich, after yesterday's meeting with Trump. Paul says Gingrich and Trump would have a "wonderful time" shopping together in New York, picking out Christmas gifts for their wives. He suggests Tiffany's.

I love Ron Paul.

Here's the question: How important is Donald Trump's endorsement?

Go to Post a comment on my blog. Or go to our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: He will be here in THE SITUATION ROOM with me on Thursday, Donald Trump, so we will ask him some good questions. We will talk a little bit about his upcoming debate.

Jack, thanks very much.

We're going to take you live to Arizona, where Mitt Romney is picking up a new endorsement from a former vice president of the United States. You're looking at pictures over there. We have also got details over countless missing e-mails from his term as Massachusetts governor.

And Steve Forbes has endorsed Rick Perry for president. Does he regret it now? I will ask Steve Forbes. He's standing by. He's here in the THE SITUATION ROOM. We will discuss this hour.


BLITZER: Mitt Romney has just said he will not -- repeat -- not participate in Donald Trump's upcoming debate in Iowa at the end of this month. Mitt Romney will not appear in that debate.

Newt Gingrich will appear. Rick Perry will appear. Rick Santorum will appear. Those three Republican presidential candidates will join Donald Trump at that debate.

Three other candidates have said no. Romney, and Ron Paul and Jon Huntsman. Those are the three who say, Romney, Paul and Huntsman.

Michele Bachmann still has not made up her mind whether or not she will show up at that scheduled debate that Donald Trump will host in Iowa at the end of the month. But the headline right now, Mitt Romney says no to Donald Trump.

Meanwhile, some tough new questions facing the Republican presidential candidate, Mitt Romney. They center on allegations he spent thousands of taxpayer dollars to hide electronic records from his term as the governor of Massachusetts.

CNN's Brian Todd has been looking into the story for us.

Brian, what are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, we've got the records on the money that Romney's team spent to replace computers at the end of his term as governor and other records indicating that they might have hid some information. But Romney's team is adamant. This is what other governors have done before him and it's legal. It's still throwing Romney some added scrutiny at the crucial time.


TODD (voice-over): Aside from Newt Gingrich, new hurdles for Mitt Romney to clear in the Republican race. Questions about records from his term as Massachusetts governor that disappeared; questions about whether he'd be transparent as president.

Democratic Massachusetts Governor Deval Patrick's office says they "found no e-mails from 2002 to 2006 in our possession," which covers Romney's term as governor. Patrick's office says the computers used during Romney's term were replaced right before Patrick took office.

Governor Patrick's team gave us copies of leases for the computers, indicating it cost Romney's administration Massachusetts taxpayers nearly $100,000 to replace those computers near the end of the term. Patrick's team says all of the computer files were removed and the server used during Romney's administration was taken out of service.

An advocate for government transparency says those records should have been preserved.

PATRICE MCDERMOTT, OPEN THE GOVERNMENT: Clearly in Massachusetts it's not illegal to do that. I mean, that has been made clear in the press reports, anyway. But because something is not illegal doesn't mean that it's right or ethical or acceptable to the public to do so.

And we believe that the records of political officials, elected political officials belong to the public.

TODD: Governor Patrick's office also showed us records of canceled checks, indicating Romney's aides paid the state to buy the hard drives they used in their government jobs.

Theresa Dolan, director of administration in Massachusetts under Romney and several previous governors, told "Reuters" that in all of those years, "no one had ever inquired about, or expressed the desire to buy their hard drives."

John O'Keefe, a former Romney aide who was in charge of archiving all records when Romney transitioned out of office, says he was allowed to go anywhere, to gather any records he needed for the archives, but with Romney's third floor office --

JOHN O'KEEFE, FORMER ROMNEY AIDE: The so-called third floor was actually really office specific. You had the chief of staff and communications director and deputy chiefs of staff. They archive their own offices. So, it was handled differently than the rest of the governor's office.

TODD: O'Keefe does not believe it was a directive from Romney. It was just, he says, how it worked out. The story was first reported by "The Boston Globe."

Romney's campaign tells CNN, the decision to erase most electronic files is not illegal or unusual, that several other governors have also done that.

Romney said this.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We actually put in 700 boxes of information to the archives that weren't even required. So, we followed the law exactly as intended and as written.


TODD: Romney's team says the decision by Governor Patrick to put out this information is politically motivated. Deval Patrick is a close ally of President Obama's. An aide to Patrick denied that, telling us they were only responding to media requests for public documents -- Wolf.

BLITZER: What does Massachusetts state law -- and now that you've taken a close look at this -- actually say about destroying records?

TODD: Well, it says that officials have to preserve records for a set amount of time, including electronic records. But because of a state Supreme Court ruling that was issued 14 years ago, the governor's office is exempt from that law. So, Romney's team could claim they were doing what was legal and have a window of interpretation for that to say that this was legal. And again, they make the claim that every other governor did it before them and why should they just leave this information for what they term is their opposition to see when no one else has done this before that.

BLITZER: Brian, thanks very much for that report.

Romney, by the way, is picking up an endorsement today from the former Vice President Dan Quayle. He calls Romney a proven leader capable of making tough decisions. He also cites Romney's economic understanding and his integrity.

We're standing by, we should be hearing from Mitt Romney fairly soon. Look at the cameras you're seeing in Arizona. That's where he got that endorsement from Dan Quayle. He's going to take questions from reporters. You see the microphone there.

We'll listen in and see what Mitt Romney has to say, that's coming up right here in THE SITUATION ROOM.

It's getting close to judgment day for former Illinois Governor Rod Blagojevich. We'll check in on his sentencing hearing.

Also, look at this -- Lady Gaga takes her campaign against bullying to the White House. She's there at the White House. This is not when she was at the White House, but other video. We have pictures of her at the White House today.

And later, my interview with influential Republican media mogul Steve Forbes. He once ran for president, promoter of the flat tax. You remember that. You're going to hear what he has to say about Donald Trump hosting a Republican presidential debate and a lot more.

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


BLITZER: Mitt Romney is in Paradise Valley, Arizona. He's answering some reporters' questions. I want to listen in.


ROMNEY: You know, I know the beginning is going to be, what, January 3rd. But this will probably take longer than a week or two to sort out. My expectation is this is going to be a campaign that's going to go on for a while and I expect to win it.

I need to get something over 1,000 delegates and we're just getting started. And I'm pleased with where we are right now and anticipate getting the nomination if I do my job right.

REPORTER: What do you need to do to win them over?

ROMNEY: The only thing I can do to win people over is tell what I believe, have them understand my background and experience. And if they support me, that's great. And if they don't, well, I support who they choose.


ROMNEY: With regards to media, you're going to see me on a lot more shows than I've been on in the last several months. And part of that is just, we're getting, as Phil indicated, to the end of the process, and now, it's time to make our case to the American people, and to the people in Iowa and New Hampshire and South Carolina and Florida. And so, I'll be seeing you more often.

With regards to the debates, we've had requests for quite a few debates. We decided on two in December. We're doing the debate on the 10th and again on the 15th, and we're just not adding any others in December. We'll look at January's request. I think we have 10 requests for January debates. We'll probably do, I don't know, two or maybe three in January.

So, we've already set our calendar in December and I communicated to Mr. Trump that that schedule is completed.

REPORTER: (INAUDIBLE) last 17 years, you've been running for office, as a career candidate. How do you respond to that?

ROMNEY: Actually, he's got the numbers wrong, of course, because I have -- I ran for office but I didn't win. And so, that doesn't mean I spent my time in Washington because I didn't win. Had I won, why we wouldn't be having this argument, I'd be president of the United States.

But instead when I lost elections, I got to go back and be a businessman again, and allowed me to be involved in the economy and to understand that the grassroots level what American people are suffering and what I can do to get jobs again. So, I spent my career, 25, 30 years, in business in the Olympics and running a state.

And the experience of leadership, of leading an enterprise, leading two enterprises, leading an Olympics, leading a state, that experience I think is essential to leading the biggest enterprise in the world, the United States of America's government.


ROMNEY: Yes, I think the payroll tax extension is a nice thing to do for people who are really struggling right now in the middle class that have really been hurt by the Obama economy. It is just a temporary thing. It's not going to fix our economy.

What we need to see from the president is a plan like mine, a plan that lays out what we need to do to have a long term stronger economy that makes us globally competitive.

And the amazing thing to me is you have a president of the United States who's been in office for three years and who has no plan for our economic vitality. No plan to make our economy once again the most powerful on the earth. I just -- I just can't understand how we have a president that continues talking about a little of this and little of that and let's extend this a year and let's have the tax cuts go on two years.

Fine. We don't want to raise taxes on people. But let's also fundamentally and permanently make America globally competitive again. And he has not been willing to do that. I laid out a plan as to how I would do it and that's what it's going to take to get America growing again.


ROMNEY: You know, I think I appeal to voters all over based upon describing my vision for the country, the values I hold dear, the policies and ideas that I brought forward. And if they are drawn to those things, they'll vote for me. And if not, well, there are plenty of other people to choose. I don't try and craft a particular argument for a particular faith group.

But instead talk about the things I believe. You'll hear me saying the same things I've been saying for the last year, which is, this is a time of decision for America. Do we want an entitlement society or do we want a merit-based opportunity society?

And I'm going to be taking that message and my view is that whether you're Evangelical or Catholic or Jewish or Muslim or Mormon that that message will connect because people recognize that what America is, is unique and exceptional and that this president does not understand America and its uniqueness.

REPORTER: Four years ago you ran here in Arizona and won 34 percent of the vote in the primary. Now these other candidates are running to your right. How are you managing that transformation from being the conservative candidate while the others run for your --

ROMNEY: You know, I'm not a political pundit and strategists will look on who's on right and left and so forth. I think my positions on issues are the conservative views that I communicated effectively four years ago, not well enough to beat Senator McCain, but pretty effectively.

I have those same views today and I think people recognize that my views are conservative, whether you're looking at taxes. By the way, I not only have views, but I have a record. I was a governor. So I not only talk about being pro-life. I have a record of being pro-life.

And not only talk about being serious about immigration reform and enforcing the law, I did that in Massachusetts. I can -- we can look about our tax record, for instance, cutting taxes 19 times and balancing the budget for all four years I was in office, eliminating a budget gap of almost $3 billion, leaving a rainy day fund of over $2 billion.

I have a conservative record as well as conservative rhetoric and that's something, which I think will hold me a good stead.

I'm not familiar with the figure, but I know we provided all of the information that's required under the law and as well as something that was not required under the law, which I think was 70 boxes of documents of our administration. Thanks, guys, OK.


WOLF BLITZER, CNN ANCHOR: All right, Mitt Romney, there you saw him answering a few reporters' questions in Paradise Valley, I guess that's what it's called, Paradise Valley, Arizona, outside of Phoenix, shaking hands with a few supporters there.

But the headline out of this is what we've been reporting now, he has said no, no to Donald Trump. He will not, repeat, not appear at the Donald Trump organized debate at the end of December. He now joins Ron Paul and Jon Huntsman in saying no to Donald Trump.

Newt Gingrich, Rick Santorum, Rick Perry have said yes to the Trump debate. Michele Bachmann still on the fence, we'll see what she has to say.

Let's discuss what's going on. Alex Castellanos, our Republican contributor is here. Donna Brazile, our Democratic contributor is here.

Alex, I think it took guts, whether it's a right decision or a wrong decision for him to say no to a power broker in a Republican establishment, Donald Trump?

ALEX CASTELLANOS, REPUBLICAN CONSULTANT: Couldn't agree more, Wolf, I think Mitt Romney just fired Donald Trump and that is a sign of strength. Look, this election is about strength and certainty because Americans feel the economy in the country is coming apart at the seams.

One thing Romney has not demonstrated enough in this campaign yet is strength. He's had a lot of ideas, 59-point plans, but people want to know does he have the strength to be president and tackle the tough problems the country faces.

He did that in the Las Vegas debate when he stood up to Newt Gingrich. When he said, No, Mr. Gingrich, you weren't in support of those mandates. He did that today again with Donald Trump. A good moment for him.

BLITZER: I was speaking to several of Mitt Romney's establishment supporters here in Washington over the past couple of days since word of this Donald Trump issue emerge and almost all of them said, if he has guts, he will not show up.

This is not worthy of a Republican presidential candidate, but almost all of them also said the pressure might be too enormous on him and in the end, he might have to do it.

In the end, he decided, you know what? Newt Gingrich can do it. Rick Perry can do it, but I'm not doing it.

DONNA BRAZILE, CNN CONTRIBUTOR: I think he made the right decision. He made the right decision for his campaign, especially if he is to become the nominee. Donald Trump has a lot of negatives. He's not seen as someone that the public would like to see endorse candidates, I think he made the right decision and showed that Mitt Romney has a little steel in his spine.

CASTELLANOS: You know, Wolf, there's a danger sometimes. This Republican contest has been all over the map. You know, sometimes it's seems trivial and frivolous.

And we're talking about big problems and we're looking for a serious leader to deal with them. I think sometimes you have to pull your campaign above the reality show level and I thought there was a good moment for Mitt Romney.

BLITZER: Yes, I'm going to speak with Donald Trump Thursday here in THE SITUATION ROOM. We'll discuss obviously Mitt Romney's decision to not attend that debate. Guys, stand by, we have a lot more to discuss, more of the "Strategy Session," including more politics right after this.



UNIDENTIFIED MALE: I don't think there's any single person in this country who did more to create the kind of discord in Washington that we see today than Newt Gingrich.

He's really the godfather of gridlock. He was the one who really created an environment in which people started treating each other as enemies and not as opponents here in Washington.


BLITZER: David Axelrod really going after Newt Gingrich. Until now almost all of the Obama supporters were going after Mitt Romney, but that is clearly changed.

Let's continue with Donna and Alex. What do you make of this? Pretty strong words, the godfather of gridlock.

CASTELLANOS: Smart politics for Mr. Axelrod. They were going after Mitt Romney to try to bring Mitt Romney down last week. Now they are going after Newt Gingrich to try to build Gingrich up.

If you're the president and you're heavyweight champ, if you attack Gingrich, you bring into the ring with you as number one contender. They're trying to elevate Gingrich so they extend the Republican process and make it more divisive --

BLITZER: They would rather face Newt Gingrich than Mitt Romney, is that what you're saying?

CASTELLANOS: And they'd rather keep Gingrich around as long as possible, which is no sure bet with Gingrich's record.

BLITZER: What do you think?

BRAZILE: Of course, we would like to keep Newt Gingrich in the arena. He's quite sound bite. He gives the Democrats something to fight against and also to fight for.

So he's brilliant, but as Senator Coburn said yesterday, he's also very divisive and he represents the kind of partisanship that the American people have been turned off. BLITZER: So who is a bigger threat potentially as the Republican nominee to a second term for President Obama?

BRAZILE: Well, right now, Wolf, if you look at the polls, 50 percent of the Republican voters are still in this dating phase. So I would say that both Romney and Gingrich should be targeted by the Obama --

BLITZER: A lot of Republicans love the idea of Newt Gingrich debating Barack Obama.

CASTELLANOS: And you know, it's almost like, do you want to buy a ticket for that debate? Republicans would vote for that. They need to remember when he was speaker and when he led Republicans, Republicans didn't fare so well.

BLITZER: When you say they didn't --

CASTELLANOS: When he was speaker of the House, they ended up --

BLITZER: But he did lead the Republican revolution, a contract with America. For the first time in 40 years, he led the Republicans to the majority in the House of Representatives.

BRAZILE: He was the man of the year.

CASTELLANOS: And actually right after that, we got very little done. On top of that, he nearly destroyed the Republican brand.

BLITZER: I covered that period. He pushed that Clinton White House, the balance budget. He was forceful on that, on welfare reform and some other issues.

CASTELLANOS: And he shut down the government and we ended up with Bill Clinton as president.

BRAZILE: And he also as you well know, I believe that he did some good on welfare reform and good on the budget reform and did good on making sure that Congress live under the same rules as the rest of the American people.

And did good in the District of Columbia when we had fiscal problems that he was then the speaker of the House. But all of that good is washed away by the bad, his own ethics charges, and of course, the divisive brand that he brings to the American political system.

CASTELLANOS: I think the Brazile endorsement will not help him more than the Pelosi endorsement.

BLITZER: And Mitt Romney, how tough does he need to get right now because you heard him say, we took it live. He just said, you know what, you're going to be seeing me I'm going to be doing more media interviews. He's obviously welcome to come in THE SITUATION ROOM whenever he wants, but he's going to become much more visible between now in Iowa and New Hampshire.

CASTELLANOS: Wolf, I think you just hit it on the head. Mitt Romney has a 59-point economic plan. He doesn't need 60 points. He needs to demonstrate he's got the strength to get the job done.

To be a president in tough times and turn this country around, people doubt that. They haven't seen it in the campaign. They haven't seen him fight. He's going to have to fight Newt Gingrich now.

BRAZILE: He said it yesterday and he said it today, but he could change his tomorrow. The 48 percent of voters in Iowa believe that Mitt Romney will say or do anything to get elected.

BLITZER: Alex and Donna, guys, thanks very much. He's a former presidential candidate himself. So what does Steve Forbes make of this year's Republican contenders? Why did he endorse Rick Perry? Does he regret that right now? Steve Forbes is here in THE SITUATION ROOM when we come back.


BLITZER: Returning now to the race for the Republican presidential nomination. Four weeks from today, the Iowa caucuses, the influential Republican Steve Forbes of Forbes Media has a unique perspective on the race having twice run for president himself.


BLITZER: And joining us now from New York, Steve Forbes, he's the chairman and editor-in-chief of Forbes Media. Steve, good to have you back in THE SITUATION ROOM.


BLITZER: Your man from president, Rick Perry, the Texas governor, look at the latest polls and I want to pick your brain. The ABC News/"Washington Post" poll right now has Gingrich 33, Romney 18, Paul 18, Rick Perry 11.

In South Carolina, the new Winthrop poll has Gingrich 38, Romney 23 and your man, Rick Perry 9 percent. Did you pick the wrong guy?

FORBES: No, I think this race has proved it is a very fluid situation and already Newt Gingrich is starting to get some of the flak that every temporary frontrunner seems to get.

So I think this is going to be a long contest and I think Rick Perry has an excellent chance to move up to the middle between Romney and what's happening with Newt Gingrich.

So I don't think this thing is over at all. It is very volatile. I think the real sparks are still yet to come in January and February.

BLITZER: Did the Rick Perry gaffes -- that so-called brain freeze and some of the other issues that he had troubled dealing with, did that give you pause?

FORBES: No, I've known Rick Perry since over 10 years ago when he first became governor and put in some excellent reforms to their legal system in Texas, especially against tort lawyers, and so he's much better -- came across much better in person than he did in those early debates.

So I think with practice he is getting better. I think as positive policies especially on the flat tax and energy and other areas, I think will hold him in good stead as people finally make up their minds in January and February. Again, this is a very highly fluid situation.

BLITZER: You're a candidate guy. What do you have against Newt Gingrich?

FORBES: I have nothing against Newt. I just think that Rick Perry is going to be a far better candidate and has demonstrated real executive ability in Texas and his ideas are as good or better than those of Newt. It's not anti-Newt as much as it is pro-Rick.

BLITZER: Would why he be better than Newt Gingrich? Give me a specific area where you think he's more qualified to be commander in chief.

FORBES: Well, I think in terms of his ability to run the larger -- second largest state in the union, Newt as you know had a lot of problems when he was speaker of the House. He's obviously learned a lot from that.

But Rick Perry has demonstrated an ability to work with legislature, get teamwork going in terms of getting things done, getting major things through where he is the chief executive. Newt was speaker of the House, not president of the United States.

He has a great ability to negotiate. So I just think it's not again anti-Newt so much as I think Rick Perry in an executive position has demonstrated that he can get real things done in the second largest state of the union, which in terms of economics is the most dynamic state in the union except perhaps North Dakota.

BLITZER: What's the biggest issue you have with Mitt Romney?

FORBES: I think there are two big ones, one is taxes, Mitt Romney is against the flat tax. When I ran in 1996, he actually ran ads paid -- for them himself -- attacking the flat tax and shown very little growth since then on that issue.

And on Romneycare, he still hasn't repudiated Romney care, which was the embryonic Obama care. So on health care and taxes, I think he has a long ways to go to get to the mainstream of the Republican party indeed of the country.

BLITZER: Donald Trump, you know him well, you live in New York, should he be moderating a Republican presidential debate?

FORBES: Why not? We're going to have I think before this is over, over 30 debates. You've done debates and I think that certainly it's going to get attraction for it.

We'll see he's demonstrated his ability to handle television with his shows over the years. So let's see what happens, but it's not as if it's the only debate. We've got about two score in ten, maybe more before this is over. So let's see what comes of it.

BLITZER: You in "Forbes" magazine, you put Donald Trump's net worth as $2.9 billion. He says in his new book that just came out, that you're way wrong. He puts his net worth at more than $7 billion. Who's right and who's wrong?

FORBES: Well, these things are estimates and we like to take especially when it involves real estate a conservative estimate. He makes a good case that it should be higher.

But our estimate of $2.93 billion is higher than what others estimated a few short years ago. So we're right in the middle and we're comfortable with it.

So again, that's a conservative estimate. He's in good shape whether it's $3 billion or $7 billion. I think most people would take either one.

BLITZER: You want to cut taxes, but are you with President Obama when it comes to extending the payroll tax cut at least for another year or so that tens of millions of American families will have at least another $1,000 or $1,500 a year in their pockets?

FORBES: Well, I think there are better things to be done with the tax code like the flat tax, but we're not going to get it until after the elections next year.

So in the meantime, I think politically we have to extend this thing. It doesn't give as much punch to the economy as other tax provisions would.

But in the meantime, take what you can and we're going to have to do the real repair work after November of 2012.

BLITZER: Would you insist on paying or finding offsets to pay for continuation of this payroll tax cut?

FORBES: Well, they didn't last year and so they are not going to do it this year or going into 2012. Again, I think there are a lot of positive things that could be done on taxes, including if the president taking the recommendations of his own Simpson-Bowles Commission, which he appointed to make recommendations over a year ago.

He's ignored them. They had some good ideas, good starter ideas on making tax code fair and simpler and more conducive to growth. In the meantime, you take what you can and do the real repair work after November.

BLITZER: Do you think the unemployment benefits should be extended for another year as well as the president is pushing?

FORBES: Again, I think there are a lot of reforms that can be done on unemployment benefits, but we're going to have to wait until a more benign environment to do it.

So in the meantime, yes, you can debate whether they should be paired down or something like that. But extend them and we'll get the real work done a year from now.

BLITZER: How worried are you, Steve, about Europe, the Euro zone basically potentially could really collapse?

FORBES: It would be a horror and it would put us right back to where we were in 2008. I'm a little surprised that Germans have been so reluctant to take the massive measures necessary. You are going to have to pump billions of euros into the banking system to keep it from collapsing.

And at the same time you're going to have to put pressure and you have new governments in Italy and Spain to do the necessary work. Wolf, it can't be austerity in those countries. You also have to put in new labor provisions, new tax provisions and tax reduced, simplify the tax code to enable those economies to get back on their feet.

Otherwise it's going to be a vicious spiral, economy declining, which means bigger deficits, which means higher taxes and more spiraling downward economy. We should do what Reagan did in the early '80s and that is he had tight money, which killed the inflation of the 1970s.

But he also put in massive cuts in income tax rates and also deregulation, so you have to do both, austerity, but also create an environment for a new growing economy to emerge.

BLITZER: Very quickly, should the U.S. do anything financially to intervene?

FORBES: The U.S. has already made it clear it's going to do what it can in terms of making dollar loans. But this has to be undertaken by the Germans and French with the European central bank. We can urge them to do it, but they have to do the heavy lifting on this and the sooner they do it the better for all of us.

BLITZER: Steve Forbes, as usual thanks for coming in.

FORBES: Thank you, Wolf.


BLITZER: Newt Gingrich calls President Obama and I'm quoting him now, "the food stamp president." Today, the president seems to be taking his own swipe at the latest Republican frontrunner.

I'm going to talk about that and a lot more. The president's senior White House adviser, Valerie Jarrett, she will join us live right in THE SITUATION ROOM in our next hour.


BLITZER: Our very experienced CNN photo journalist, Mark Wallace, was more like a member of paparazzi over the White House today. He caught Lady Gaga. Yes, Lady Gaga outside the White House. That's here in Washington as you obviously know.

Lady Gaga is a well known advocate for gay rights as she came to Washington to discuss her anti-bullying campaign with administration officials earlier this year.

She tweeted about the tragic suicide of a teenage fan who was a victim of bullying. Days later, he voiced her concerns about the issue directly to President Obama. Lady Gaga at the White House today.

Let's go back to Jack for the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Question this hour is, how important is Donald Trump's endorsement? Donald Trump thinks it's very important by the way.

Paul writes, "In a just world the endorsement of a much marred money grabbing ego maniac should be worth nothing. However, in a country where money not only talks but frequently swears, it may help win the stupid vote."

Doug in Massachusetts, "I think Trump's endorsement might be good for a New York councilman in one of the more expensive New York neighborhood precincts, but nothing above that. I like his orange hairpiece and his prettier than Madonna.

Sy in Virginia, "If you're running for mayor of the "Jersey Shore," it could be huge. If you're running for president of the hair club for men, it could be huge. If you're running for president of the United States, forget about it."

Fred writes, "For those who pander to the American public, having the endorsement of the greatest modern day panderer of all may be important. For any thoughtful American, it's a source of both amusement and despair."

James in Las Vegas, "Jon Huntsman and Ron Paul have answered this question very well. Trump is a self-promoting BS artist that has made his money at the expense of his investors in many cases. His endorsement of Republican candidates should be considered a negative, unless, of course, you like the gong show."

Allen on Facebook, "On a scale of one to ten, with 10 being the highest, I would say minus 5." Carol writes, "Trumps endorsement is more Zale's than Tiffany."

Mike in Florida, "To the top Republican contender a lot. To the rest of America it's a big joke." And Es in Florida, "Very important if you need a room camp at one of his casinos. In the election, not so much."

If you want to read more on this, go to my blog, or post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Jack, thanks very much.