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THE SITUATION ROOM

Stepped-Up Activity at North Korean Missile Site; Activists Say Children Killed by Cluster Bombs; 2016 Buzz Heats Up; Tortured, Stabbed, Beaten to Death; Interview with Mexican President-Elect

Aired November 27, 2012 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: And you're in THE SITUATION ROOM.

Happening now, satellite images sparking new concerns that North Korea may be getting ready to launch a long-range missile.

Horrifying details emerging of a shocking new death tied to Mexico's drug wars.

Can a new leader end the violence in Mexico?

I'll speak exclusively with Mexico's president-elect. He's here in Washington.

And they suffered without power for weeks after the super storm, Sandy, hit. But now some storm victims are getting hit again with huge power bills.

We want to welcome our viewers in the United States and around the world.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

We begin with one of the most dangerous spots on earth. U.S. intelligence now keeping a very close eye on a North Korean site where a flurry of activity suggests a long-range missile launch could be in the works. And that would be a blatant violation of U.N. resolutions.

Let's go live to our Pentagon correspondent, Barbara Starr -- Barbara, what are you learning?

BARBARA STARR, CNN CORRESPONDENT: Well, Wolf, North Korea says it is pursuing trying to launch a satellite into space.

But intelligence services around the world doubt that that is true.

(BEGIN VIDEOTAPE)

STARR (voice-over): This satellite image of a North Korean missile launch pad was just snapped in the last 24 hours. U.S. government officials and private experts say it shows the same types of preparations, including trucks and fuel tanks, not seen since April, when a long-range missile failed seconds after launch. North Korea claimed then it was just trying to launch a satellite.

The new DigitalGlobe image, and this one, taken just days before, don't yet show a missile. But with these kinds of preps, a launch could happen in about three weeks, if a missile is put on the launch pad, according to analysis by DigitalGlobe.

North Korea watchers say the new leader, Kim Jong Un, may be responding to internal political pressure from hard-liners.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: On the other hand, he may also want it himself. He may decide it's the right kind of provocation just before the South Korean presidential elections, just before President Obama is inaugurated for the second time.

STARR: The launch location is critical. From here, missiles are planned to launch south, avoiding flying over Japan and South Korea. Because it's close to the Chinese border, the U.S. can't routinely spy with manned aircraft or ships from a distance. North Korea knows the U.S. has to wait to send satellites overhead, so they do some work out of view.

The Pentagon says U.S. policy remains that North Korea must abide by restrictions imposed by the United Nations Security Council.

GEORGE LITTLE, PENTAGON PRESS SECRETARY: These resolutions, among other things, require the North Korean government to suspend all activities related to its ballistic missile program.

STARR: There's been other key activity here. The Web site 38north recently published a satellite image from September showing North Korea testing large rocket engines. There is burned vegetation, fuel tanks and trucks, which all point to critical activity.

(END VIDEO TAPE)

STARR: Now, Wolf, you remember, back in April, the North Koreans tried one of these long-range intercontinental ballistic missile launches. That test was pretty much a disaster. The missile failed after about 90 seconds off the launch pad.

So one of the questions analysts are asking themselves right now, is will North Korea rush it again and possibly fail?

Or are they going to take the time this time to solve whatever engineering problems they have and could the next test really work -- Wolf.

BLITZER: So what you're hearing, Barbara, the U.S. analysts, when they're looking at the various clues out there, does it look like a similar launch that took place earlier in the year, which was a disaster for North Korea?

Or does it have different markings? STARR: Well, the preparations do look the same, officials tell us -- the same kinds of fuel tanks, trucks, people, activity, instrumentation out there that U.S. satellites are picking up.

But the key question is, why are they not yet seeing a missile on the launch pad?

That, of course, would be the ultimate sign that North Korea's planning something -- Wolf.

BLITZER: We'll keep a close eye on it, together with you, Barbara.

Thank you.

STARR: Sure.

BLITZER: The civil war in Syrian seems to be reaching new depths of horror every single day.

CNN has been digging into a report by opposition activists that at least 10 children were killed when a Syrian aircraft dropped a cluster bomb -- that's a devastating fragmentation explosive -- on a playground.

Nick Paton Walsh is joining us now from Beirut -- Nick, it looks like it's going from bad to worse, the brutality in this war unfolding in Syria.

What's the latest?

NICK PATON WALSH, CNN CORRESPONDENT: Absolutely. What you're referring to, Wolf, is this cluster bomb incident to the east of Damascus, which now Human Rights Watch, having studied activist video, heard from witnesses on the ground, pretty certain that cluster bombs were used. They say it looks like Soviet-era munitions. A long relationship between Russia and Syria of military cooperation.

They say witnesses say there was no specific rebel target in the area around there, which they could have been aiming at, and, of course, applying pressure for the world to stop using cluster munitions, specifically here, of course, for the Syrian regime to stop hitting civilian targets -- Wolf.

BLITZER: And the brutality is really unbelievable. About 40,000 people so far have been killed in this war over the past year-and-a- half.

Who knows how many have been injured or made homeless, refugees streaming into Syria, Jordan, other countries in the region?

Is there any positive signs whatsoever that this may be coming to an end any time soon?

PATON WALSH: Well, of course, there's two different sides to that. The fear is, as you have just been talking about with these cluster bombs, that as the regime get put on their back foot, they may resort to some of the more devastating weapons in their arsenal, cluster bombs among them, but also chemical weapons. U.S. officials are very concerned about what will happen to them in the event the Syrian regime collapses.

But I say that, we are seeing, perhaps, for rebels, a glimmer of hope of some description. Over the past week, daily, we hear of air bases, military outposts being overrun and surrounded, in the east of the country, in the north, to the east of Damascus, the capital itself, two in the past week. And, in fact, today, rebels reporting that a military base was overrun. Seventy regime soldiers, they say, killed or captured. And they're also moving in on the west of that city, Aleppo, on another air base from which you saw this dramatic video of rebels downing a regime helicopter.

So the sense of progress, really, these constant bases being overrun, a -- a stream of positive news from rebel movement, which was accused of being locked in stalemate for a long time now. I think the genuine feeling from many observers, the momentum is on their side, and, certainly, they're able to prevent the regime from projecting its brute force, its air power and artillery, in much of the north and east of the country.

So I'm sure in Damascus, around President Bashar al-Assad, many questioning what their next step should be now -- Wolf.

BLITZER: Nick Paton Walsh will watch it for us unfold.

Nick, thanks very much.

And just ahead, the dust has barely settled from the presidential election, but are Rick Santorum, Jeb Bush, among others, already planning for 2016?

And scandal bankrupts a California city. Officials allegedly scam millions and millions of dollars from taxpayers. One former police chief now wants a lot more.

(COMMERCIAL BREAK)

BLITZER: The presidential election is barely over, but new reports of secret meetings, interviews already fueling the 2016 buzz.

Here's what former Republican presidential candidate, Rick Santorum, told our Piers Morgan last night.

(BEGIN VIDEO CLIP FROM "PIERS MORGAN TONIGHT")

RICK SANTORUM (R), FORMER PRESIDENTIAL CANDIDATE: They said would you consider running?

I said, I'm open to that possibility, but I -- we're a long way...

(END VIDEO TAPE)

BLITZER: A long way off, I guess.

And maybe not so much.

Let's talk about it with our CNN contributor, Ryan Lizza.

He's the Washington correspondent for the "New Yorker" magazine.

Santorum not ruling it out. Gingrich not ruling it out. There's talk that Jeb Bush had a quiet meeting with one of the top Republican pollsters.

What's -- what's going on here?

RYAN LIZZA, CNN CONTRIBUTOR, WASHINGTON CORRESPONDENT, "THE NEW YORKER": Well, there's nothing wrong with not ruling it out. There's no -- there's no -- there's no reason a guy like Santorum or Gingrich wouldn't. They get media attention. They keep their name in the news. And it's always better to be talked about than not be talked about.

Look, Rick Santorum has some right to be -- to be thinking about 2016. After all, he was the runner-up. He was the guy that -- the last man standing against Mitt Romney in 2012.

The guy that's the most interesting is Bush, though. I mean...

BLITZER: Jeb Bush, the former Florida governor.

LIZZA: The former Florida governor, who has been thinking about running for the president for years. In the -- in the wake of 2012 and the lessons that the Republican Party are learning right now, he's the guy with the message that could both keep the conservatives in his camp and cross over with some moderate appeal.

BLITZER: And he was pretty popular in Florida. He speaks Spanish.

LIZZA: Yes.

BLITZER: He could deal with a lot of sensitive issues, like immigration reform...

LIZZA: Yes.

BLITZER: -- in a -- in a relatively different way from other Republicans.

LIZZA: Yes. He -- he's the guy to watch. He has a book coming out about immigration reform in the spring. So, clearly, he's been writing this book for -- through 2012, knowing he was going to -- it -- it was going to come out in 2013, after the election. He's clearly setting himself up to make that decision to run.

Look, in Florida, he did better with Hispanics than Marco Rubio, the Cuban-American senator from Florida. He -- he won more per -- more Hispanics when he was governor... BLITZER: He's fluent in Spanish, too.

LIZZA: He's fluent in Spanish. His wife is from Mexico. And, obviously, the big story on the Republican side these days is the -- how bad -- poorly they have done with Hispanics in the last couple of elections.

BLITZER: Yes.

LIZZA: So he's someone to watch.

But the other thing I think that's going to shape 2016 -- I mean, obviously, it's very early. The 2014 midterms will shape the field. The presidential election is always shaped by the previous election before it, so, you know...

BLITZER: I don't know about you, but I could see a Clinton-Bush contest in 2016.

LIZZA: It could happen. Just by name I.D. alone, if you probably polled Democrats and Republicans, I would imagine that Hillary and Jeb would be the favorites, just because of the power of their last names.

BLITZER: Yes. I could see that happening.

LIZZA: Yes.

BLITZER: James Carville, our friend, our CNN contributor, he told "Rolling Stone" magazine -- and I'll put it up on the screen. "There's a reason that Jeb Bush or Chris Christie or Mitch Daniels didn't run. They just couldn't do it. They knew what they had to do and deep down inside, they didn't have it in them."

In other words, he says they're skeptical about all those anti- global warming types out there...

LIZZA: Yes.

BLITZER: -- immigration reform. They're in favor of immigration reform.

Do you think James has got a good point there?

LIZZA: I think he's got a good point, that what shaped the 2012 field was the 2010 election, when the Tea Party started to really be the driving force in Republican politics and some moderates, or -- or Republicans who consider themselves conservatives but had taken positions previously that were no longer considered conservative, decided just not to run.

I mean the guys that did, the moderates that did, like Jon Huntsman, never stood a chance.

So I think there's something to that. And I think the other thing that happened in 2012 is 2006 and 2008 were big Democratic years. And a lot of the top Republican talent was washed away in 2006 and 2008. And you just didn't have the strong candidates for 2012.

That will be different in 2016. We'll have a big, robust field with a lot of -- with a lot of talent.

BLITZER: In this fight over the fiscal cliff right now...

LIZZA: Yes?

BLITZER: -- do you think more Republicans are going to bolt from the Grover Norquist pledge, no new taxes?

LIZZA: It looks like that's where things are going. Look, one of the central debates in the election between Romney and Obama was how to adjust tax rates. The Republican Party lost that debate. And in our system, politicians usually respond to elections. So, you're seeing that a little bit. But it's tough in the House.

Most of the guys, they're elected in the House, they won by 60, 70 percent, most of the Republicans. And so, their incentives are a little bit different. They look at the presidential results and say, well, I don't have to worry about that in my district. It's still very popular to be anti-tax. But, that's definitely the way things are moving.

BLITZER: It's not enough to have a few moderate Republicans and Senate to do it. You need a whole bunch of Republicans in the House and that's a lot more --

LIZZA: Yes. And the question is how many -- look, you don't -- Boehner doesn't need his whole Republican caucus. He probably needs about 100 Republicans. And you know, that's doable, about half his caucus.

BLITZER: He can get 100, that would be pretty good from that perspective. Thanks very much, Ryan Lizza.

A popular comedy website names the North Korean leader, Kim Jong- Un, the sexiest man alive for 2012. And you won't believe what country fell for the spoof. Stay with us. You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Ireland will clarify its abortion laws in the coming weeks. Lisa Sylvester's back. She's monitoring that story and some of the other top stories in the SITUATION ROOM right now. What's the latest?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, the Irish government says it will decide by the end of December whether to allow abortions and in what cases. Abortions have been banned in the mostly catholic country since the 1980s. Although, the Supreme Court says they are allowed when a woman's life is at risk, the debate, though, has picked up against since a 31-year-old woman died in Ireland last month after being refused an abortion.

Heavy flooding across England is causing major damage with hundreds of flood warnings across the country and more than 1,000 homes already flooded. The rising waters have also shut down train lines and roads. In one town (ph), a burst river forced more than 500 people to evacuate. Heavy rains have swept across England and Wales for days now.

And the Florida socialite at the center of the Petraeus scandal is losing her honorary consul title. South Korea is stripping Jill Kelley of the designation after a New York businessman accused her of using it to solicit business. The title carried no official responsibility.

Kelley complained to the FBI after she said she received harassing e-mails from General Petraeus' mistress, Paula Broadwell. Kelley hasn't returned any of CNN's calls.

And the comedy website, The Onion, apparently (INAUDIBLE) of the satirical site named North Korean leader Kim Jong-Un, yes, the sexiest man alive for 2012. And a Chinese news site, they thought it was real. China's People's Daily reprinted the Onion's description of Kim's, quote, "heir of power that masks an unmistakable cute cuddly side and his impeccable fashion sense, chic short hair style, and that famous smile."

The Chinese news side (ph) also included his own 55-page photo gallery with the story. You know, they could almost have been describing you, Wolf, you know? The heir of power that masks an unmistakable cute and cuddly side. That's my favorite part, too. And of course, that wonderful smile as well. They could have been talking about the sexiest man, right?

BLITZER: Not necessarily.

SYLVESTER: Channing Tatum, nothing on you, right?

BLITZER: We're moving on.

(LAUGHTER)

BLITZER: Kim Jong-Un, let's see what he does.

(LAUGHTER)

BLITZER: If you've ever dreamed of being a billionaire or a millionaire or whatever, guess what, you can get there by picking the right numbers for tomorrow's Powerball lottery. The $500 million jackpot is the largest Powerball in history. But before you and your co-workers pool your money to buy a block of tickets, CNN's Alison Kosik has some advice for all of you to consider.

(BEGIN VIDEOTAPE) ALISON KOSIK, CNN CORRESPONDENT: It always seems like a good idea to go into an office lottery pool. It builds camaraderie, gives everyone a chance to share in the wealth. But, what happens when your cube mate takes all the money and leaves you in the dust? Here's some advice to make sure you get your fair share. First, it may be obvious but write everything down. Create a document with who contributed money and how much and have everyone write down their own name or signature.

And be sure to clarify if certain people are meant to get a bigger cut if they invested more. Legal experts say a simple document like that will hold up in court. Also, before the drawing, make sure each person in the group has a photocopy of all the tickets the group is sharing. That way, any personal ticket purchases are kept separate from the pool.

There have been many lawsuits filed by people involved in office pools who've claimed the eventual winning ticket was actually one they'd bought on their own. And of course, use common sense. It's always better to go into a pool with people you know and trust. Then, all you have to decide is what do you do with the money if you win. What would be your first big splurge?

I'm Alison Kosik in New York.

(END VIDEOTAPE)

BLITZER: Good advice, Alison. Thank you.

The biggest problem between the United States and Mexico right now and how to solve it. I'm going to be speaking with Mexico's president-elect, Enrique Pena Nieto. My exclusive interview with the newly elected president of Mexico, that's just ahead.

(COMMERCIAL BREAK)

BLITZER: The newly elected president of Mexico, there he is, Enrique Pena Nieto. He's meeting over at the White House today with President Obama. Their first meeting, the 46-year-old recently elected, the new president of Mexico. He'll head back to Mexico City. He'll be inaugurated on Saturday.

My interview with him before he went over to the White House, I sat down with the newly elected president of Mexico. You're going to see the interview here in the SITUATION ROOM momentarily.

All this comes as tens of thousands of people have died in Mexico's drug war. And now, shocking details emerging of a new killing that seems to represent the horrifying nature of the conflict. Brian Todd is looking into this for us. What are you seeing, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, this was a very grizzly case. A clear message from cartel leaders to other local mayors who try to stand up to them and a symbol of how this drug war even with some positive signs recently is far from won.

(BEGIN VIDEOTAPE)

TODD (voice-over): She's survived two assassination attempts and the killing of her husband, but this time, as her daughter watched, Maria Delos Santos Gorrostieta (ph) could not escape, dragged away, tortured, stabbed, beaten to death. The mayor of a small town in the Mexican State of Michoacan became the latest high profile casualty in the drug war.

Gorrostieta's body was found in a ravine over the weekend. For denouncing traffickers, she became one of more than one of two dozen mayors in Mexico assassinated in drug-related violence since 2007. One analyst says she also became a symbol of this struggle.

ERIC OLSON, WOODROW WILSON CENTER: This conflict, this violence, it's very gruesome and it's also mostly felt at the local level, oftentimes, in off the beaten path places and municipalities and small towns.

TODD (on-camera): It's against that backdrop that Mexico's newly elected president, Enrique Pena Nieto, is in Washington to meet with President Obama. Analysts say Pena Nieto is likely to veer at least slightly away from the confrontational and controversial tactics in the drug war favored by his predecessor, Felipe Calderon.

(voice-over) Deploying the Mexican army and marines as never before, Calderon fought the cartels head-on, took out several kingpins. But during his six-year term, the streets of Flores, Tijuana, Sinaloa, flowed with flood. At least 50,000 Mexicans were killed, many of them innocent civilians. That's far more than the American death tolls in Iraq and Afghanistan combined.

Homicide rates in those areas have recently plateaued. And a Mexican official tells us civilians there are telling them they do feel safer now. Tourism is bouncing back. Analysts say president- elect Pena Nieto will continue to confront the cartels but in a more nuance way.

OLSON: With the United States, he's going to ask for more intelligence sharing from the United States. There's been intelligence sharing. It's been in a little more limited way. They would like to see that expanded so that Mexican authorities, police, army, marines, have more information and can go after the bad guys with that intelligence.

TODD: Experts say he's also likely to focus on Mexico's own addiction problem, which is growing. Police efficiency, lack of prosecutions, overcrowding of jails have to be addressed. And while Pena Nieto says that the U.S. has to take responsibility for the American demand for illegal drugs, it's just one of the problems north of the border.

RUEBEN NAVARRETTE, CNN.COM CONTRIBUTOR: The people run drugs in dozens of U.S. cities. And you have a presence of drug cartels in dozens of U.S. cities. So, they're very much integrated in our society.

(END VIDEOTAPE)

TODD (on-camera): Rueben Navarrette says Americans and Mexicans have to start thinking of the drug war in the same terms that they do the war on terror. It will be fought for a long time, maybe even without end. And when you take out some top leaders, others will certainly replace them, Wolf.

BLITZER: In your conversations, Brian, with Mexican officials, you're getting other information about how the newly elected Mexican president will deal with this drug war?

TODD: That's right. One Mexican official told me that president-elect Pena Nieto is likely going to dissolve the ministry of public security or the secretary of public security, its called, which President Calderon created just a few years ago. He's going to fold that into the Interior Ministry. The idea is to maybe better coordinate operations against the cartel leaders and he's going to place the federal police inside the Interior Ministry. They hope that will lead to better coordination, streamline operations and maybe some more success.

BLITZER: It's a huge, huge process.

TODD: Absolutely.

BLITZER: Brian, thank you.

Finding new strategies to tackle Mexico's drug violence certainly one of the top items on the agenda of the President-elect Enrique Pena Nieto. But that will require continued close cooperation with the United States. Mexico's incoming leader paid a visit to the White House today. He's been over there meeting with President Obama. But before that he sat down with me here in Washington for an exclusive interview.

(BEGIN VIDEOTAPE)

BLITZER: What's the biggest problem in U.S.-Mexican relations right now?

ENRIQUE PENA NIETO, MEXICAN PRESIDENT-ELECT (Through Translator): To build a greater trust in our relationship, I think, this first encounter with Mr. Obama, this first meeting. The main purpose will be to get to know each other because I'm convinced that a good relationship between the countries has to go through the people who heads governments. They will have a good understanding.

And my purpose then is to create a relationship, to build that relationship based on trust and relationship that would be positive, constructive, that would allow us to understand the world affairs and the world matters that both peoples have to face. And based on this agreement will reach relationship of brotherhood.

BLITZER: There have been record deportations in the Obama administration from the United States of undocumented workers back into Mexico. PENA NIETO (Through Translator): I think we have to work on this issue. Especially to get to proper treatment for the people who are in the end up deported because they don't have the proper papers. But also I see with great understanding the proposal that President Obama has offered to reach an immigration reform. It's a matter -- an issue in North American politics but which my government sees with great favor.

BLITZER: Why are fewer Mexicans seeking to cross over into the United States now?

PENA NIETO (Through Translator): Because we have lack of opportunity in Mexico. Right now Mexico has a great window of opportunity in my opinion to reach a grower economic growth and social development. There are two main issues of my agenda, of my proposal in the government, and want to be focusing in for the next few years, economic growth, to reach greater social benefits.

That I think is going to be the best prevention that my government can establish, this organized crime and so as to avoid that millions of compatriots from my country will have no other option.

BLITZER: The Mexican ambassador here in Washington, he said that the Mexican government was left, in his words, in the dark by that so- called "Fast and Furious" operation that resulted in the killing of a U.S. Border guard. Have you -- will you take steps to make sure that can never happen again?

PENA NIETO (Through Translator): To be frank, I told President Obama -- I'm going to tell President Obama to try to avoid policies which are outside the knowledge of the other government. I think a good relationship that Mexico could maintain with the United States and vice versa should be based on trust, on opening -- openness and constant dialogue that would allow us essentially to define, share objectives and to work towards those so as to avoid activities which are not known to the other government.

BLITZER: We just learned today a well-known Mexican mayor, Maria Santos Gorrostieta, was killed, was murdered. Can you give us your reaction to what's going on?

PENA NIETO (Through Translator): What Mexico City cannot do and my country cannot do is to allow us to be intimidated, the authorities to be intimidated by organized crime. I think the Mexican state must and is one of my tasks, one of the changes that I have the strategy and the security issues that my government must reach, we have greater coordination of efforts at every level of government is tasked for the state as a whole.

It involves all three powers of the state, involves all the authorities so that, you know, events like the one you just mentioned will not happen again in our country.

BLITZER: What do you think of the legalization effort of marijuana in states like Colorado and Washington state? Is that going to help or hurt? PENA NIETO (Through Translator): Personally, I don't agree legalization of drugs and the reason is, it's not just about legalizing marijuana. I think that is a door that will eventually, you know, who would cause for sectors of the population, the (INAUDIBLE) which are more harmful. But what's clear now is seeing which is happening to the states of the American union, the United States, could possibly in the future, in the near future to refocusing of the strategy were used.

I'm convinced and I'm open to the debate about issue and to define new strategies in order to combat drug trafficking and drug consumption to combat it. And that has to be reached jointfully.

BLITZER: As you know the State Department has issued a travel advisory to go to Mexico and a whole bunch of areas of Mexico saying it's unsafe for Americans to be there. How safe is it for American tourists to come to Mexico?

PENA NIETO (Through Translator): Mexico is a safe country. Unfortunately, some areas of our country are living through events of greater criminality. And that is the challenge to the government that it will head. But Mexico wants to project towards the world the splendor and beauty that we have in our country.

For those who have not visited, for those who have the chance to be in Mexico, I think their experience has been very different from that which is pointed at unpredicted towards the world. We're a country with hospitable people, with great natural beauty all over the country. I will work precisely to reach efficiency and to recover spaces which have been lost.

BLITZER: Some in Mexico have called you the Mexican Kennedy. How do you feel about that?

PENA NIETO (Through Translator): I will let history make its own judgment. I'll let the Mexicans make their own judgment based on the results of whatever I manage to achieve in my administration. Really is very honorable for me to hear such praiseful expressions. But most important for my government, for myself, will be to offer tangible results to Mexicans to far create a better Mexico.

BLITZER: Good luck to you. Good luck to all the people of Mexico.

PENA NIETO: Wolf, muchas gracias.

(END VIDEOTAPE)

BLITZER: The FDA shuts down a peanut plant tied to a nationwide salmonella outbreak. Just ahead we're going to tell you what this bold first-time move could mean for your next trip to the grocery store.

(COMMERCIAL BREAK)

BLITZER: The FDA is taking bold new action against the peanut plant tied to a nationwide salmonella outbreak.

CNN's Tory Dunnan is working the story for us. She's here in THE SITUATION ROOM with details.

What have you learned, Tory?

TORY DUNNAN, CNN CORRESPONDENT: Well, Wolf, this plant was actually set to reopen at some time this week, but the FDA stepped in and did something it hasn't done before.

(BEGIN VIDEOTAPE)

DUNNAN (voice-over): Dozens of people sick in 20 states. Peanut butter manufactured at this plant in New Mexico and sold at grocery stores nationwide was linked by health officials to an outbreak of salmonella in September. Now the FDA is shutting down Sunland Incorporated.

The government's new power to halt food production was granted in 2011 as part of the Food Safety Modernization Act. But this marks the first time it's been put into action.

(On camera): So what does this mean for you the consumer who comes to a grocery store looking for a particular item? Does the FDA action mean the food you choose will be safer?

SARAH KLEIN, CENTER FOR SCIENCE IN THE PUBLIC INTEREST: Producers and consumers should see this action as a signal that FDA is really prioritizing food safety.

DUNNAN: Sarah Klein, an attorney and food safety advocate, says the government is taking a more assertive stance.

KLEIN: The new food law allows FDA to be more preventive rather than reactive. So they're allowed to shut down plants that they believe are producing unsafe food even before there's an outbreak.

DUNNAN: Sunland had voluntarily stopped selling the peanut butter and issued a recall. Saying at no time did the company distribute products that it knew to be potentially contaminated with harmful microorganisms.

KATALIN COBURN, VICE PRESIDENT, SUNLAND INC.: We have taken all of the proposed necessary and recommended steps to make certain that we are in complete control of our environment and anything that is coming in and out of the plant.

DUNNAN: The company says it's disappointed by the FDA's decision to stop production. It had plans to reopen this week and start selling again by the end of the year.

WAYNE BAKER, NEW MEXICO PEANUT GROWERS ASSOCIATION: Everybody has been so concerned and hoping, you know, we can get the problem solved and get back to going. It's so important to the area. It's a major industry for eastern New Mexico.

(END VIDEOTAPE)

DUNNAN: The FDA issued a statement about the suspension of Sunland. It says, quote, "Consumers can be assured that products from this facility will stay off the market until FDA determines that the company has implemented procedures necessary to produce safe products."

And, Wolf, we of course mentioned that this is the first time the FDA has completely shut down operations and that law makes all of this possible.

BLITZER: First time ever. Thanks very much, Tory. Good report.

DUNNAN: Thanks.

BLITZER: Tory Dunnan reporting for us.

And next, a police chief caught up in a massive scandal allegedly involving millions in taxpayers dollars. Up next, why he's now suing for a pension worth half a million more.

(COMMERCIAL BREAK)

BLITZER: Shock and outrage in a California town bankrupted by scandal. A number of city officials allegedly raking in millions at taxpayer expense. At the center of the controversy an ex-police chief who claims he's entitled to hundreds of thousands of dollars more.

Here's CNN's Kyung Lah.

(BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT (voice-over): A 22-year veteran of the Bell Police Force Sergeant James Corcoran is reminded of the corruption that crushed his town at every turn he takes. Boarded up buildings, vacant homes and lots, and store front after store front for lease. But nowhere is a reminder more stark than his own police station where he says his former police chief was there for only one reason -- greed.

SGT. JAMES CORCORAN, BELL, CALIFORNIA POLICE: He was here for his personal gain. He was not here to better the community. Certainly not here to better us.

LAH: He's talking about former police chief, Randy Adams, who was pulling in a whopping $457,000 a year. For a police force with only 30 officers, way more than top cops in neighboring Los Angeles, Chicago or even New York. Cash put in his pocket by a city manager and others who were paying themselves inflated salaries. The city manager taking home more than $1 million.

This was the reaction when the public found out. Outrage. Anger boiled over. Prosecutors nabbed eight city leaders saying they used public funds like a personal piggy bank, looting the working class city of millions of dollars. They face criminal corruption charges. Chief Randy Adams wasn't charged because Adams didn't directly control the city's money. But even a judge wondered in court, "I don't know why he's not a defendant in this case."

So where is Adams today? He lives in Simi Valley, an upper class L.A. suburb 50 miles northwest of Bell, just off of Country Club Drive in a gated community. His five-bedroom, five-bath, $800,000 home overlooks a picturesque golf course.

DENISE RODARTE, BELL, CALIFORNIA ACTIVIST: Disgusting. And the fact that he is living this lavish lifestyle on the backs of us.

LAH: Bell resident Denise Rodarte calls Adams the one who got away.

RODARTE: Arrogant, cocky, criminal. If I can find the dictionary where it says corrupt police chief, whatever, his picture would be on it. He's the epitome of what is wrong in this country.

LAH: She says that because of these e-mails from 2009 exchanged between Adams and Angela Spaccia, Bell's former assistant city administrator. Adams, negotiating the terms of his new job as Bell police chief, wrote, "I am looking forward to seeing you and taking all of Bell's money. OK. Just a share of it." Spaccia replies, "LOL, well, you can take your share of the pie just like us. We will all get fat together."

The salary quietly approved by the former city manager.

My jaw dropped when you see it.

LAH: Doug Wellmore, Bell's new city manager, says he still can't believe what happened and what's still happening.

Talking to me in the rundown city council chambers, Wilmore says walking away with that half million-dollar paycheck wasn't enough. The former police chief is now suing the city of Bell for what city sources calculate would amount to $600,000 in severance and unused sick days.

DOUG WELLMORE, BELL CITY, CALIFORNIA, MANAGER: From this small community, from this poor community, to them, have it revealed, get fired and actually comes back for severance, it's incredible. It's outrageous.

LAH: But seeking severance isn't apparently enough. Randy Adams wants more money from the state of California for his pension. Adams is also suing the state to double his pension to half a million dollars a year for the rest of his life. How? His oversized salary in Bell. That was his last job. His highest paying job. And even though he only held the position for a year, he said his pension should be based on that pay.

(On camera): Hi, Chief Randy Adams. I'm Kyung Lah from CNN.

(Voice-over): We caught up with Randy Adams in Simi Valley. (On camera): The people of the city of Bell say you milked them for a salary that was extraordinarily high and now you're trying to do the same thing with the state.

RANDY ADAMS, FORMER BELL, CALIFORNIA POLICE CHIEF: Well, I disagree, of course, with those types of characterizations, and when one day I'm able to tell my complete side of the story, I think you'll see that there is a completely different side to that story. Unfortunately I can't really talk at length about it, but that's the situation.

LAH: Did you think you deserve to make double what the LAPD chief make?

ADAMS: I have made all the comments -- I've made all the comments I can make at this time.

LAH: While Adams would not elaborate on camera, I did manage to speak to his attorney by telephone who says that Adams is a good cop, a life-long public servant who does deserve to double his pension to $500,000 a year for that one-year service in Bell, but the people who run California's pension system say absolutely not.

What is he asking for?

ROBERT GLAZIER, CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM: Basically, he's trying to double his pension from $19,000 a month, which is far surpassing almost anyone else in our system as a retiree, to about $38,000 a month.

LAH: Does he deserve $38,000 a month from the taxpayers?

GLAZIER: The taxpayers are outraged whenever anyone does something like trying to use fraud and deceit and hide the way that which they got paid. And you don't deserve it and it's not allowed.

LAH (voice-over): A proposed decision by a state board agrees, rejecting Adams' appeal to increase his pension, but Adams is appealing. Inside his gated community, he awaits a final decision.

Kyung Lah, CNN, Simi Valley, California.

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BLITZER: The California State Pension Board expects a final decision on Randy Adams' request to double his pension by the end of the year. As far as the eight Bell city officials, they're still awaiting trial.

Storm victims on New York's devastating Long Island getting power bills even though they didn't have any power. We have details. That's ahead.

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BLITZER: Thousands of Sandy victims on New York's devastated Long Island are getting hit with power bills even though they were in the dark for weeks.

Let's bring in Mary Snow. She's got details.

What are you seeing, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, you know, Wolf, there was already a lot of anger toward the utility that provides power to New York's Long Island because of its response after the storm. Well, that anger is only escalating when customers started getting their regular monthly bills.

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JONATHAN SAPORTA, LIPA CUSTOMER: Basically, this entire thing was full of water up to about here.

SNOW (voice-over): Jonathan Saporta experienced the wrath of Sandy firsthand when the superstorm destroyed his Long Beach restaurant, but it's now his wrath that's all consuming, targeted at the Long Island Power Authority. The utility is coming under intense criticism for its response following the storm.

The latest criticism, LIPA is sending out full monthly bills even though thousands of people had no power for weeks after Sandy.

SAPORTA: At first it was exasperation, then frustration, and now it's just a pure hatred.

SNOW: In Saporta's his case, he received a bill for a home he says he vacated on October 1st, then came a bill for his new home, even though he had no power for 14 days. On top of that, he expects the electric bill for his restaurant to be around $1700.

A LIPA spokesman says a company representative was not available for an interview on camera, but in a statement they told us, "LIPA was told by its contractor, National Grid, that their computer system cannot reduce the estimated bill to a period of time shorter than a whole billing period."

LIPA says it's giving its customers options. Among them, it says, they can wait until the meter is read to pay. Make a partial payment with no penalty or, it says, customers can read the meter themselves and get a corrected bill. The utility also said it's aiming to withhold bills to some hard hit areas like the Rockaways.

Saporta is unmoved.

SAPORTA: I think it's a very poor way of making nice for a colossal mistake. Money is not as readily available to people as it was prior to the storm. And to think that, you know, it's OK that it's going to take one billing cycle, two billing cycles to balance itself out, it's insane.

SNOW: Even with so much anger directed at LIPA, the head of a crisis management firm says utilities with no competition have little incentive to change. ERIC DEZENHALL, CEO, DEZENHALL RESOURCES: What usually happens in situations like this is in order to show that something has been done, heads roll, people are fired, but the company remains intact, largely because there's not a lot of other options for consumers or local governments.

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SNOW: Now, on Monday, the utility announced two resignations. One of them is the vice president of customer service. LIPA's COO has also said he's stepping down at the end of the year. And in the wake of the storm, New York's governor ordered a special commission to investigate the response of New York's utilities -- Wolf.

BLITZER: Mary Snow, thank you.

And you're in THE SITUATION ROOM. Happening now, an effort to placate critics throws fuel on the fire. Ambassador Susan Rice goes face-to-face with Republican lawmakers.

Yasser Arafat's body is exhumed. Was Israel involved in his death? I'll ask the Israeli government spokesman Mark Regev.

Plus, the woman at the center of the General David Petraeus sex scandal. We're learning how Paula Broadwell reacted when the former CIA director revealed their affair to their entire world.

I'm Wolf Blitzer, you're in the SITUATION ROOM.