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CIA Director Petraeus Resigns; Can the White House and Congress Avoid the Fiscal Cliff?

Aired November 9, 2012 - 15:00   ET



Just to let you know what we are learning here, this news just coming in from Washington. CIA director David Petraeus submitted his resignation to the president, citing personal reasons.

Suzanne Kelly has been doing this reporting basically saying that he has gone to the president, said he'd for 37 years, apparently stepped out on his wife and now has submitted his resignation.

Forgive me as I check my e-mail live on air because I am now seeing a letter here from David Petraeus. Not quite sure. I believe it's sent to the CIA. Let me just read the first graph.

Yesterday afternoon -- this was yesterday -- "Yesterday afternoon, I went to the White House and asked the president to be allowed, for personal reasons, to resign from my position as director of CIA. After being married for over 37 years, I showed extremely poor judgment by engaging in an extramarital affair. Such behavior is unacceptable, both as a husband and as the leader of an organization such as ours. This afternoon, the president graciously accepted my resignation."

Let's go to the Pentagon and get some reaction there.

Chris Lawrence, what more can you tell me about this?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Just that people are shocked and surprised, really couldn't believe it when they heard the news.

You know, David Petraeus has been married to his wife, Holly, almost since he graduated from West Point so many years ago. They have two years ago. Holly Petraeus has been an outspoken advocate for the troops. In fact, she has sort of waded into political waters at times on behalf of the troops.

President Obama invoked her name where -- Richard Cordray, when his nomination held up by some members of Congress, he invoked Holly Petraeus' name and cited her saying she's been working to make sure our armed forces personnel aren't taken advantage of.

In fact, when David Petraeus returned from Iraq just about four years ago, he said, he called Holly Petraeus -- quote -- "the greatest source of support, wise counsel and love that any soldier could have." It seemed to be a rock-solid marriage to everyone who saw it from afar -- Brooke.

BALDWIN: Apparently not. Chris Lawrence, do me a favor. Stand by. We have Suzanne Kelly standing by, who was the one who broke the news.

But, Wolf Blitzer, let me just bring you in.

I'm sure you have spoken to General Petraeus and perhaps you even know his wife, Holly. Chris Lawrence said people at DOD totally, totally surprised.

Why, if you are having an affair, granted it is wrong, but if you are having an affair, why does that then mean you lose your job?

WOLF BLITZER, CNN ANCHOR: When you are the head of the CIA, that potentially could compromise the director of the CIA.

And it's obviously a very, very -- if you are hiding something like that, and you not only have classified information. You are not only top secret, but you are at the top of the pinnacle in the intelligence community. That's an area potentially of vulnerability. And it sends a pretty serious message down the chain of command.

When you are talking to intelligence officers at the CIA or other agencies of the U.S. government, one of the things they are always warning you, don't get involved in extramarital affairs because you don't know who that man or woman might be and could they be agents for a hostile power or whatever, someone trying to entrap you.

They called it a honey trap in the old days in the espionage novels and all of that. But it is a very serious issue when you're in the intelligence community. It is a serious issue any place, but especially in the intelligence community.

And I assume, I don't know this for a fact, I assume it was probably going to come out at some point.


BLITZER: And he decided, you know what? I will resign and I will take the hit. It's time to move on. If somebody else was going to report it, some tabloid or whatever, that he decided to move on and get it over with and just move on.

It is obviously a very, very sad moment given his distinguished military career, his career more recently in the intelligence community, one of the most brilliant generals by all accounts we have had over the years, a Ph.D., graduate of Princeton University. Somebody who is not only a general, but a scholar who knows the stuff and by all accounts doing an excellent job over at the CIA. So it is a very sad moment not only for him and his family, but for everyone who knows him and indeed for the country right now.

It is just a bad situation all around. And it comes at an embarrassing moment for the administration to be sure as well.

BALDWIN: Yes, highly, highly decorated general. Just glancing back over here at this letter that he apparently wrote. And we now know the president accepted his resignation today. I just want to read another part of the letter from General Petraeus.

He talks about Teddy Roosevelt. "Teddy Roosevelt once observed that life's greatest gift is the opportunity to work hard at work worth doing. I will always treasure my opportunity to have done that with you. And I will always regret the circumstances that brought that work with you to an end."

Wolf, stand by.

Suzanne Kelly, talk to me about the timing of this. Wolf sort of thought he was trying to get ahead and that this would ultimately come out and General Petraeus wanted to go ahead and go to the White House and submit his resignation. It was accepted. What more do you know about the timing?

KELLY: Wolf brought up the very important point, too, Brooke, is engaging in something like this gives people something over you and that may have been a factor in the decision.

But the timing is really important. There are a lot more questions to be answered on the timing of this, just days after the election. Obviously this affair didn't happen within the last two. I think it's safe for everyone to assume that. It probably had been going on before. Was he asked not to release this information until after the election?

Or did he not even tell the White House about this? I think there are a lot more questions that have to be answered over the timing of it.

BALDWIN: Wolf Blitzer, are you still with me?

BLITZER: Yes, I am.

BALDWIN: Now that we have this information, now we that know the president accepted the resignation, what happens next?

BLITZER: As far as the CIA is concerned, the president will have to nominate somebody. They be an acting -- and the deputy director of the CIA will be the acting director until someone is nominated and confirmed by the Senate Intelligence Committee and then by the full Senate. So that will take a while. I'm sure they are already starting to think about potential candidates to replace General Petraeus.

But the CIA will go on. The national intelligence community will go on. The country will go on. These kinds of things happen. It is obviously a major setback. It's a horrible situation, especially for General Petraeus and his family to end what has been such a remarkable career on such a horrible note, on a sad note for him and his family and indeed for the country.

You are right, Brooke, I have covered General Petraeus. I have known him many years going back a long, long time. Spent some quality time with him back in 2005 in Iraq when I was there in Baghdad and Fallujah and Mosul, other places. But he really did a brilliant job on the battlefield and he worked his way up.

He made a bad mistake, as he says. And if you read what he says in this letter, he says, I will just read that first paragraph once again for viewers, Brooke, who may just be tuning in, because he says it all right here.

He says, "Yesterday afternoon, I went to the White House and asked the president to be allowed, for personal reasons, to resign from my position as director of CIA. After being married for over 37 years, I showed extremely poor judgment by engaging in an extramarital affair. Such behavior is unacceptable, both as a husband and as the leader of an organization such as ours. This afternoon, the president graciously accepted my resignation."

And as I said earlier, other intelligence officers, if their bosses find out about inappropriate extramarital affairs or whatever going on, that could be a career ender in that kind of work. If you are a clandestine officer for the CIA and your superiors find out you have engaged in that kind of behavior, potentially endangering the national security of the United States, classified information, covert operations, what they call sources and methods in the intelligence community, that is a career ender right there.

I guess he realized that if he had been a lower-level CIA officer, he would have had to resign. And he's the director. So he made that decision and he decided to resign.

We don't know if this information was going to come out. There's a lot more that needs to be learned. I'm sure in the next few hours and days, we will learn a lot more.

But I want to just underscore how sad this is for the U.S. military, the Army, the CIA, indeed the country that someone of this stature must end a career under these circumstances.

BALDWIN: Absolutely. Wolf Blitzer, and I think you bring up a great point. People wondering why this would then happen, the fact that some of this information, as he is the top, top, top of the food chain in terms of classified information and because of this extramarital affair some of that could be compromised. Therefore, he is stepping down.

Wolf, thank you. Suzanne Kelly, thank you. Chris Lawrence, thank you.

Again, we are now learning the president of the United States has accepted the resignation of the chief of the CIA, General Petraeus. So they will have to then find someone else to fill his shoes.

CNN NEWSROOM back in a moment.


BALDWIN: We just want to keep this conversation going here as we are just learning here at CNN that the head of the CIA, a retired four- star general, General David Petraeus is now stepping down. The president has accepted his resignation because he has said he cheated on his wife, his wife, Holly, of 37 years. He said because of that he is stepping down.

We have a couple of people to talk to here, Bob Baer, former CIA operative, CNN contributor, also Suzanne Kelly. She is also still with us from Washington, intelligence correspondent. And we have Barbara Starr at the Pentagon.

A lot of angles to get to.

Bob Baer, I know you're on the phone with me from California. We appreciate it here. Let me begin with you.

First of all, are you surprised that this man is sending his resignation to the president because of cheating on his wife? What do you make of that?

BOB BAER, CNN CONTRIBUTOR: Well, I'm surprised of two things.

I have been hearing rumors that he was going to leave over Benghazi,that the CIA was going to take the fall for that fight down there and he was supposed to go to Princeton, as I understood, as president.

Secondly I'm surprised is CIA directors rarely leave under a marital scandal like this. It just doesn't happen. Scandals like this do happen at the CIA, but they are kept quiet. People leave for family reasons or whatever to move on. So, I'm completely surprised this is -- the whole thing is -- there's a big story behind it.

BALDWIN: OK. You sound perplexed. You sound like there could be more there, but we just don't yet, as these few details are just eking out.

Let me though pose this to you. If you are surprised he would be stepping down because of simply an extramarital affair, talking to Wolf Blitzer, he brings up a point. Whoever it is he has been having this extramarital affair with, the top, top secret information could be compromised. Do you buy that possibly as an explanation?

BAER: I think it is going to -- I think we are going to see it will appear as probably an affair with a subordinate. That's just pure speculation, which at the CIA or any federal agency, it just can't be done. You have to leave, but especially when it is about to become public that he was caught red-handed if you like on this whole thing.

I think my speculation is that is what we will see.

BALDWIN: OK. Again, speculation. We don't know. Let me ask you this, though. General Petraeus, he has not been at the helm of the CIA for very long, just about a year.

You are former CIA and you talk to people I'm sure currently. What kind of mark will he be leaving on this group? BAER: He still hadn't found his way at the CIA.

Of course, as a four-star, he wasn't used to a civilian organization. He brought a lot of aides with him. He was a bit isolated. He was just learning his way. You know, he didn't have a time to really change anything at all. And that's what makes it even more surprising that he is leaving so soon.

BALDWIN: What about just the CIA in general? Here, their chief is leaving. How do they progress? Is this a big hit for them?

BAER: Yes, it is a huge hit. The CIA needs a director who should be in there for four or five years, understands the way things work, put his people in the key positions, figures out what intelligence is about.

It needs continuity. It cannot be, you know, switching directors in and out all the time, especially highly politicized directors or even four-star generals. It is a professional organization and needs to do things in the quiet. And so Petraeus' leaving a this point is not helpful at all.

BALDWIN: Bob Baer, former CIA operative, CNN contributor, thank you for picking up the phone. You say there is more to the story and perhaps that will eke out in the coming days. Bob Baer, thank you.

We do also have Barbara Starr at the Pentagon, Suzanne Kelly in Washington, a bunch of questions we have for them.

Let's take a quick break and we will talk on the other side of the break.


BALDWIN: Breaking news, the head of the CIA no longer the head other CIA.

Retired four-star General David Petraeus stepping down. The president accepting his resignation. General Petraeus citing an extramarital affair. He's been married for 37 years and says he needs to step down from this post because of this affair, again, this news just coming out. Details will be eking out of course the next couple of days.

Let me read just you the first graph of this letter from General Petraeus -- -- quote -- "Yesterday afternoon, I went to the White House and asked the president to be allowed, for personal reasons, to resign from my position as director of CIA. After being married for over 37 years, I showed extremely poor judgment by engaging in an extramarital affair. Such behavior is unacceptable, both as a husband and as the leader of an organization such as ours. This afternoon, the president graciously accepted my resignation."

BALDWIN: I have Barbara Starr at the Pentagon and I have Suzanne Kelly standing by in Washington.

Suzanne, to you, I understand you have something from the White House? KELLY: Yes.

Brooke, we now have the statement from President Obama on the resignation of David Petraeus. Let me read it to you because we literally just got it.

"David Petraeus has provided extraordinary service to the United States for decades. By any measure, he was one of the outstanding general officers of his generation, helping our military adapt to new challenges, and leading our men and women in uniform through a remarkable period of service in Iraq and Afghanistan, where he helped our nation put those wars on a path to a responsible end. As director of the Central Intelligence Agency, he has continued to serve with characteristic intellectual rigor, dedication, and patriotism. By any measure, through his lifetime of service David Petraeus has made our country safer and stronger."

It's only a two-paragraph statement. Here's the last paragraph.

"Today, I accepted his resignation as director of the Central Intelligence Agency. I am completely confident that the CIA will continue to thrive and carry out its essential mission, and I have the utmost confidence in Acting Director Michael Morell and the men and women of the CIA who work every day to keep our nation safe. Going forward, my thoughts and prayers are with Dave and Holly Petraeus, who has done so much to help military families through her own work. I wish them the very best at this difficult time."

Brooke, so there will be some consistency obviously at the CIA through this. There have been some five different directors in eight years now who have headed the agency and the president himself had pointed out Deputy Director Michael Morell, who is a career intelligence professional with some 32 years at the agency.

BALDWIN: Suzanne, I have also to ask you about the timing, because we now learned today that -- I'm glancing over here at my notes because I think it is next week that senior intelligence, State Department officials are to be grilled next week specifically on what happened in Benghazi on September 11 and in front of the Senate Intelligence Committee. It was supposed to be CIA chief, now I should say former Chief David Petraeus. Now what?

KELLY: Right. Right.

Well, now Michael Morell will get that fun job, which is tough right now. And Benghazi, you know, Brooke, how political that has been. There was the investigation side and there was the political side leading up to the election. That is not really expected to go away. I think the Republicans are still extremely angry. They feel like the administration knew more than it did in the days the attack and it didn't come forth with transparency in what it knew.

And the administration has fought back really hard against that accusation. There were some grumblings about -- Petraeus went up to the Hill and testified in closed hearing shortly after the attack and briefed members on the Oversight Committees about what the intelligence community knew. There were some grumblings that me and my colleagues at CNN were hearing from people who were in those briefings that they were a little bit disappointed maybe in the information that Petraeus had given them.

But I don't really think they needed so much of a fall guy in the Benghazi effort, having won the election.

BALDWIN: OK. Suzanne Kelly, you are getting more information. I will just ask you to stand by and as soon as you get more, we will come back to you.

But, Barbara Starr, let me go to you at the Pentagon here. I was just talking to Bob Baer, former CIA operative, and I was asking him how much of a hit this would be on the CIA his sort of sudden, swift departure, and he said it would be a huge hit and he said that General Petraeus didn't really leave a real mark. He was still finding his footing, I believe was his phrase at the civilian group.

But in terms of the military, I mean, this is a retired four-star general. You have I presume been in Afghanistan with him, spoken to him. It's a huge, huge issue with the military.


BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, it really is, Brooke.

I have interviewed him many times in both Iraq and Afghanistan and traveled with him in those areas. The thing about Dave Petraeus you have to remember is he was and is always what you just said, the four- star general. Four-star generals live potentially -- and it's very risky for them -- they lead isolated lives, don't they? They have aides. They have people around them, a small group of confidants.

They have access to the highest level of intelligence. They are in the ultimate inner circle. And we have seen it time and again. Just think back to General McChrystal making some judgment calls that didn't work out for him, him having to leave, oddly enough, Petraeus taking over from him.

This has happened time and again to four-star generals for a variety of reasons. You know, there had been a lot of rumor around town in recent weeks that reporters were working on profiles of Petraeus that were not going to be complimentary.

So perhaps, we don't know, perhaps word of this was beginning to circulate around town.

But I want to shift for a minute to Mrs. Holly Petraeus.

BALDWIN: I wanted to ask you. Yes, I'm sure you have met her.

STARR: Very -- I know her. I have spoken to her many times. I think it is really important at this moment to remember there is a family involved here. First of all, they have a son who has served in the Army in Southern Afghanistan in some of the roughest neighborhoods of that war zone. Mrs. Petraeus, Holly Petraeus, she's really come in to her own in recent years. She's an expert in consumer finance protection issues for military families.

I have talked to her about that. She knows her stuff. I can tell you one time I was at an event where both he and she were there and he basically said, talk to my wife. She knows her business.

He really was so proud -- is -- is so proud of what she has accomplished. They met each other, you know, back at West Point. Her father was superintendent of the academy when he was a cadet at West Point. So, essentially, you could think of it as he married the boss's daughter, and this woman spent 37 years as a military wife essentially, many, many years in which her husband and father of her children was not home, was in Iraq, Afghanistan, other war zones.

She more than anybody knows what young military wives are going through these days with long separations, trying to raise the kids, trying to keep the families together while their husbands are off doing other things.

So this will be looked at through many prisms, but it will be looked at through that military prism, because I think that still so many people will view him always as the four-star general.

BALDWIN: I'm so glad you mentioned the wife and the son because clearly this not only has ripple effects within the military, then really the CIA, but also within a family as well.

Barbara Starr, thank you at the Pentagon.

Again, director of the CIA, General Petraeus, is out.

We will be right back.


BALDWIN: Bottom of the hour, breaking news here on CNN. I'm Brooke Baldwin. Let me just get you up to speed in case you are just tuning in.

We have now learned that the CIA director, General Petraeus, retired four-star general, is now stepping down. President Obama today accepting his resignation, the general citing an extramarital affair.

He has been married to his wife, Holly, for some 37 years, but he says because he has stepped out, he is stepping down.

A little bit of color we've just gotten from Barbara Starr there at the Pentagon. Not only does the affect and have a huge hit on the CIA as they move forward, this is certainly rippling within his family as well, not only Holly, the wife, but his son who has served our country and in some of the toughest neighborhoods in Afghanistan. to quote our correspondent there at the Pentagon. And, you know, this couple, they go all the way back to when General Petraeus was Cadet Petraeus back at West Point and he met Holly because her dad was the superintendent of that school. So, it goes a long way back.

Now, we want to bring you up to speed with Suzanne Kelly and, also, Jessica Yellin, our chief White House correspondent.

Jessica, let's go straight to you. The president is reacting, citing General Petraeus' extraordinary, extraordinary service.


He's said that not only has he served extraordinarily -- performed extraordinary service to the U.S., Jay Carney said that he has done remarkable work in his role at the CIA.

The president making clear that the next acting deputy director will be Mike Morrell.

I would point out that General Petraeus and the president had, at times, a tricky relationship, but they have become closer partners in recent months and this comes at something of an awkward time, the president and General Petraeus now dealing with the fallout from the death in Benghazi of Ambassador Chris Stevens and other Americans.

The CIA under an intense spotlight during the aftermath of all of this and the White House and the CIA now both trading, you know, responsibility over who made the call for the explanation in the days after as to why exactly it was described the way it was described.

And the CIA finally coming out, it would seem, and taking some of the responsibility, it would seem, in the most recent days.

But now, with this development, General Petraeus' departure, there will be questions about how this, no doubt, impacts the investigation. The White House insisting they are going ahead with this investigation as they have been all along.

And, obviously, this has nothing to do with that Libya incident, with the deaths in Libya, but there will be some political sensitivities around it, no doubt, Brooke.

BALDWIN: Jessica, let me also just ask you, you've interviewed Holly Petraeus because, as Barbara pointed out, she led the Consumer Financial Protection Bureau's office, specifically for service members' affairs.

Tell me about her role there, who she is.

YELLIN: She was -- I spoke to her when she served with Elizabeth Warren, who's now Senator-elect Elizabeth Warren from Massachusetts, but at the time, she was setting up what is now the Consumer Financial Protection Bureau and she brought in Holly Petraeus to represent the interests of service members. So -- and she is still there, working to represent, so, if you are in the armed services and you're overseas and suddenly the bank is foreclosing on your house and a mortgage gone awry and you are somewhere deployed overseas and have no way to sort of respond and deal with it, you contact Holly Petraeus' office and they help you find remedies, so that you don't come home and find you have no house.

And that's what she is there trying to help fight on behalf of the families of deployed men and women. And she's apparently been doing wonderful work. And she was lovely, very soft-spoken woman, sort of did not like the spotlight, did not want to be interviewed on television, a very warm, friendly woman.

BALDWIN: Jessica Yellin at the White House, Jessica, thank you.

And as we are playing this video, this is Holly Petraeus in that light-pink blazer sort of standing behind her husband. You her along with Vice President Joe Biden just a moment ago, just to put a face on who this woman is who's been married to this retired four-star general for 37 years.

Go for it, Jessica. Are you still with me?

YELLIN: I am. Yes. Sorry.

BALDWIN: I hear you.

YELLIN: The president actually met with General Petraeus yesterday and the general offered his resignation and explained the reasons behind it and the president then accepted his resignation in a phone call this afternoon.

BALDWIN: OK. In a phone call this afternoon. So, yes, that jives with this letter we have been reading from General Petraeus this afternoon. He says the president graciously accepted my resignation.

Jessica Yellin, thank you. We've got a lot more here on this story. We're going to talk to Suzanne Kelly for a couple more questions. Again, CIA Director David Petraeus, General Petraeus. stepping down as the chief of the CIA.


BALDWIN: Just want to let you know before we talk economy, again, we are working a breaking news story that the head of the CIA, General Petraeus, has now resigned. The president, just this afternoon over a phone call, accepted his resignation.

So, we folks making some phone calls. We're going to push that story forward for you in just a moment, but first, the other big story of the day.

Our nation's speeding toward what is known as a fiscal cliff, this nasty combination of steep tax hikes and budget cuts that could affect almost all of us in a matter of weeks. So, now that the election is over, it's time for Washington to get in gear and do something about it. And you can bet there's plenty going on behind the scenes.

President Obama is inviting the top leaders of both houses of Congress and both political parties to meet with him at the White House next Friday.

Senators Harry Reid, Mitch McConnell, and Speaker Boehner and Congresswoman Nancy Pelosi will be there.

This afternoon, we heard the president say, just about two hours ago, that he is open to compromise. He's open to new ideas -- received by a standing ovation walking into that room there.

There is one point the president is sticking to, higher taxes for people making higher incomes.


PRESIDENT BARACK OBAMA: I refuse to accept any approach that isn't balanced. I'm not going to ask students and seniors and middle-class families to pay down the entire deficit while people like me making over $250,000 aren't asked to pay a dime more in taxes.


BALDWIN: Just about two hours before we saw the president, we saw this man, Republican House Speaker John Boehner.

He said, quote, "Everything on the revenue side and on the spending side has to be looked at," end quote.

But when it comes to specifics, Speaker Boehner put the ball firmly in the president's court.


REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: I don't want to box myself in. I don't want to box anybody else in. I think it is important for us to come to an agreement with the president, but this is his opportunity to lead.


BALDWIN: Exactly what does all of this mean for you and for me if Washington does not get anything done in the next 52 days? What if we do over this proverbial fiscal cliff?

According to the Tax Policy Center, taxes would go up an average of $2,000 for middle-income American households.

And Jill Schlesinger is editor-at-large for CBS Jill, welcome back. How many of us will see our taxes go up, if there is no deal? JILL SCHLESINGER, EDITOR-AT-LARGE, CBS MONEYWATCH.COM: This is unbelievable. Actually, about 80 to 90 percent of us will see some tax increase, whether that comes from the payroll tax, it could be the expiration of the tax credit that Obama had enacted. This is widespread.

And, as a result, you would like to think that all parties would like to get together and make something happen, but today's talk was really about, you first, you go first. I will wait until you say something, right?

BALDWIN: At least we know they're all meeting next Friday, so hopefully, they start here and they sort of inch towards this compromise.

It's a word we have heard today. You know, the president says he is open to new ideas, isn't entirely wedded -- this was his word, wedded -- to his plan.

But, you know, one idea that seems to be bubbling to the surface is raising revenue by changing the tax code, closing the loopholes and the deductions rather than raising rates on the wealthy.

So, could I still end up paying more if they do that.

SCHLESINGER: Yes, you could.


SCHLESINGER: And so let's just talk about this for a second. Because the tax rate is this very easy, identifiable moment. For every dollar over $380,000, instead of paying 35 percent taxes you will pay 39.6 percent. That kind of is very clear.

What if I bring new money into the government by doing this. Hey, you know that mortgage interest deduction that you rich people claim? You know those charitable deductions? I'm going to limit how much of that you can take.

Effectively, it has the same impact. You are going to pay more in taxes. I haven't actually raised your rate. I have just limited some of the deductions you are taking.

So, when you hear the word "loophole," it is not illegal. We are talking about the perfectly legal things in the tax code which both sides are now saying, well, if we close the loophole, the government will bring in more money but you know what? We can tell everybody in our district we did not raise taxes. It's semantics. It's silly, but it has the right effect if we can get the deal done.

BALDWIN: OK, and just another way for the government to get money.

But let me throw this wacky idea at you. I was talking to Ali Velshi last year and he said this is crazy, but I'm going to read it anyway.

I was reading my "New York Times" op-ed section this morning Paul Krugman wrote that, basically, you know, if we go over the fiscal cliff, hey no big deal. The president shouldn't be held hostage by the Republicans.

Let me quote him. Quote, "It's worth pointing out that the fiscal cliff isn't really a cliff. It is not like the debt ceiling confrontation where terrible things might have happened if the deadline had been missed."

He goes on. "This time, nothing very bad will happen to the economy if an agreement isn't reached until a few weeks or even a few months into 2013, so there is time to bargain.

What do you think of that?

SCHLESINGER: I don't have a PhD in economics and I've never won any sort of prizes, but that makes me a little bit anxious. I saw Ali go apoplectic earlier. And I think that there's a problem here because there is one issue which Krugman is exactly right about.

Going off the fiscal cliff does what a lot of people think needs to happen. It spreads pain across a variety of Americans. We may dip into a recession, but heck, we sure do solve the debt crisis, don't we?

That said, you know, it's pretty easy to be cavalier and say it's no big deal. How do you feel if the Dow goes down 2,000 points in the interim? How do you feel if you're one of the people that loses a job because your company is freaking out over this debate going on and on and on.

So, I don't think it is fair to say it is no big deal. It is a big deal. Is it the end of the world? No. Nothing is the end of the world on this stuff. It is money. It is painful. It will probably be banged out behind closed doors.

No one's going to look really good in this. I'm going to promise you that. Everyone will look obstructionist. At the end of the day what we want is a way forward to get through this period so that the economy keeps improving slowly and we have a plan to deal with the debt.

Everyone just wants a plan. We don't have to do it all at once.

BALDWIN: OK, 52 days and counting. Jill Schlesinger, we might have to have you back to reassess. We appreciate it, editor-at-large for CBS Thank you.

And, as promised, we are staying on top of this breaking news story, the now former chief of the CIA, General David Petraeus, has now stepped down as the president just this afternoon has accepted his resignation, the general citing the reason, the fact that he has had an extramarital affair.

We are now getting more from this letter that the retired four-star general has sent to his former colleagues at the CIA. Suzanne Kelly is on that, next. (COMMERCIAL BREAK)

BALDWIN: I want to go straight to Washington to Suzanne Kelly, our national intelligence correspondent who can shed a little light on the breaking story here this afternoon, the fact that we are now learning the president has accepted the resignation of retired four-star general, former now -- I should say -- former chief of the CIA.

We are hearing from the general , his own words in a letter to his colleagues.

SUZANNE KELLY, CNN NATIONAL INTELLIGENCE CORRESPONDENT: Yeah, and this is really -- you know, if you can't talk to the man himself and ask all these questions that everybody has for today, you can glean a lot of what he is thinking and feeling right now from the letter that was issued to the employees of the CIA just probably about an hour ago, Brooke.

And here's what it says. "After being married over 37 years, I showed extremely poor judgment by engaging in an extramarital affair. Such behavior is unacceptable both as a husband and as a leader of an organization such as ours."

There's another little nugget later down in that letter, Brooke, where he quotes Teddy Roosevelt as once saying, "Life's greatest gift is the opportunity to work hard at work that's worth doing."

This is what he said to his employees today. "I will always treasure my opportunity to have done that with you and I will always regret the circumstances that brought that work with you to an end."

And, Brooke, you know, obviously, there are a lot of unanswered questions and a lot of things that reporters will be digging into in the day ahead.

Why now? Why is this something that came out right now after the election, within days after the election? Did somebody have this information on him they were waiting to release? Why would you publicly humiliate your family in a way? Is it a way of being honest?

I mean, there are lots of questions that are going to l need to be answered in the next few days.

BALDWIN: I'm sure the details will being to eke out.

Suzanne, as soon as you get more, I will pop you back on TV. We appreciate you in Washington.

Back in just a moment.


BALDWIN: Now, to those tempers flaring in New York today after another freezing cold night without night.

(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: Restore the power to our community now! Now! We're done!


BALDWIN: The anger is bubbling. This is Oceanside, New York, just a couple hours ago. Look at the crowds, people there furious with their utility company. They're known as LIPA.

As of today, more than 200,000 are still without power in just this one community. Folks, this is 12 days since the superstorm, Sandy, swept through here, 12 days without heat with temperatures last night dipping into the 30s.

A lack of power not confined to Long Island. Want you to listen here as New York Governor Andrew Cuomo blasts utility companies across the region.


GOVERNOR ANDREW CUOMO (D), NEW YORK: You pay a person for service. They were specialized in doing this and we paid them and gave them a franchise because they represented themselves as experts at doing this and they failed. And they should be held accountable for their failure.


BALDWIN: And consider this. Today, New Jersey's attorney announced lawsuits against eight businesses accused of post-Sandy gouging. That may be just the beginning of this storyline.

Angry New Jersey consumers have already filed more than 1,200 complaints against gas stations, hardware stores and hotels.

The closing bell moments away, we've got a market check, next.


BALDWIN: Days after the election, days before the hearings on Capitol Hill in which many senior intelligence leaders were to be grilled by Congress on what happened in Benghazi, we are now learning this retired four-star general, General David Petraeus, has now stepped down from his post as the director of the CIA. The president accepting his resignation just this afternoon.

I'm sure "The Situation Room" will have much more on that, so stay right here.

But I want to talk about the markets, closing bell just about two minutes away here.

Let's go to Alison Kosik. As we're looking at this, down just barely here, but today a huge, huge day on the economy. We're hearing from Speaker Boehner. We're hearing from the president. Tell me a little bit more about how the markets have reacting. ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, first of all, you look at how the markets are doing. They're pretty darned flat.

But I'll tell you. It's a big improvement from what we've seen over the past couple of days, that triple-digit plunge the blue chips have made.

You know, any real gains, though, that we saw in the market today. they fizzled out, Brooke, right after President Obama's speech. The Dow was up more than 70 points before we spoke to the nation about the looming fiscal cliff and then as he spoke you saw the gains slowly but surely disappear.

A big part of the reason for that is that he didn't deliver anything new. That's at least how the market sees it. It was more, you know, of a call to action.

Investors are nervous about the fiscal cliff and they're showing it. Look how the Dow did the past couple of days. You know, in two days, between Wednesday and Thursday, it fell 430 points, more than 430 points, and as you see, it's kind of wavering all day today.

You know, investors, they've been moving money into bonds. That's a safer investment. They don't feel like they want to leave their money and stocks. You know, it's a clear sign that Wall Street wants to hear more and wants more clarity on the fiscal cliff.

But, Brooke, you know, with no end in sight, it really is fear that's crippling Wall Street, so you're seeing sort of that frozen feeling play out on the markets as we see a mixed bag right before the closing bell here.

BALDWIN: At least we now know the president -- and there's the closing bell. The president and heads of both the Senate and the House will be meeting at the White House next Friday to talk about this fiscal cliff and, hopefully, compromise.

Alison Kosik, thank you.

I'm Brooke Baldwin in Atlanta. I'm going to send things up to my colleague, Wolf Blitzer. "THE SITUATION ROOM" begins right now.