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THE SITUATION ROOM

President Barack Obama, the GOP at Odds Over Spending Cuts, Higher Taxes; Estate Realtors are Rushing to Sale Houses by Year's End; Interview with Mexican President Enrique Pena Nieto

Aired December 1, 2012 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: You're in the SITUATION ROOM.

As the U.S. edges steadily closer to the fiscal cliff, there are high level talks between the White House and Congress. Can they cut a deal in time?

As Mexico's bloody drug wars claim another high profile victim can a new leader end the violence. I will speak exclusively with Mexico's new president.

And it was hidden away for decades. We'll take the wraps of a long secret U.S. plan to explode a nuclear bomb on the moon.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer.

You are in the SITUATION ROOM.

We begin with huge confrontations shaping up between President Obama and Republicans involving the most important decisions the president needs to make as he begins his second term.

Let's turn to CNN's Joe Johns. He has got more. HE has got the latest - Joe.

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT: Wolf, we are now a month away from the so called fiscal cliff. A drastic combination of mandatory spending cuts and tax hikes that could plunge the United States back into a recession. And while there are plenty of hard words from both sides, some terms of a possible deal are making the rounds.

CNN congressional Kate Bolduan has been following the back and forth and she joins us now.

KATE BOLDUAN, CONGRESSIONAL CORRESPONDENT: Yes. Don't get too excited about that. There's only one way to avoid the fiscal cliff. Spending cuts and tax hikes. House Republicans and President Obama need to strike a deal on reducing the national debt. The Republicans have soundly rejected a White House offer that included $1.6 trillion in revenue, $400 billion in Medicare and other entitlement savings, as well as a permanent increase in the debt limit among other things. So far, the rhetoric has not softened. (BEGIN VIDEOTAPE)

BOLDUAN (voice-over): Treasury secretary Tim Geithner, the president's point man in the fiscal cliff negotiations, arriving on Capitol Hill for high level talks, most notably with house speaker John Boehner.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Good morning, everyone.

BOLDUAN: How did it go? Just listen.

BOEHNER: Despite the claims that the president supports a balanced approach, the Democrats have yet to get serious about real spending cuts.

BOLDUAN: A much gloomier assessment from the initial pre- thanksgiving huddle at the White House. Boehner described his meeting with Geithner as frank and direct, the same way he described his phone call with the president the night before. And he said for the past two weeks there has been no substantive progress.

UNIDENTIFIED FEMALE REPORTER: Most public statements have been optimistic, confident, hopeful. We're all sensing a very different tone from you right now. Are you walking away from talks? Have things completely broken down?

BOEHNER: No, no, no, no. Stop. I got to tell you, I'm disappointed in where we are, but going over the fiscal cliff is serious business. And I'm here seriously trying to resolve it. And I would hope the White House would get serious as well.

BOLDUAN: House democratic leader Nancy Pelosi quickly dismissed Boehner's remarks as a negotiating maneuver.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: I think they'll come around. It's a tactic. It's a tactic.

BOLDUAN: But, you hear a strikingly similar message from other top democratic leaders saying the ball is in the Republican's court.

SEN. CHUCK SCHUMER (D), NEW YORK: We are waiting for some specifics somewhere from our Republican colleagues to show that they're serious on negotiations.

BOLDUAN: As the country fast approaches the fiscal cliff, the two sides are talking past each other. Democrats say they've laid down their marker, hiking tax rates on wealthier Americans. And it's up to Republicans to propose specific spending cuts they want to entitlement programs.

However, Republicans say they've offered a concession, putting revenue on the table. And they say it's now up to the president and his fellow Democrats to feel some pain and proposed cuts in Medicare and Medicaid. Confusing? We asked senate majority leader Harry Reid.

Where is the disconnect?

SEN. HARRY REID (D-NY), MAJORITY LEADER: I don't understand his brain. So you should ask him, OK?

(END VIDEOTAPE)

BOLDUAN: From Capitol Hill to the White House, Democrats are standing firm, saying the major hurdle remains whether Republicans will agree to not just revenue, but to raising tax rates. Republicans have made so far that it is a no go. So, what's next? Where do things go? The top Republican aide tells me they look forward to talking to the White House. A top Democratic aide saying, our door is open. Read that John, stand still.

JOHNS: Time is still running out, too.

BOLDUAN: And quickly.

JOHNS: Thanks, Kate.

With us now are CNN contributor Ryan Lizza who is the New Yorker magazine's Washington correspondent and CNN's senior political analyst Ron Brownstein. He is editorial director of "National Journal."

Thank you both for coming in.

Ron, you wrote an interesting column. I just read it in "the National Journal" about Democrats having a more unified coalition after the election in November. What sort of negotiating advantage is that supposed to give them in the fiscal cliff situation.

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: You know, I think the situation, Joe, is almost the inverse of what we saw after the election in 2010, right after big democratic losses in that election. The caucus was very divided in both the house and Senate on whether to extend the Bush tax cuts for everyone. Republicans were unified, they insisted it be extended for everyone. Democrats are divided. President Obama ultimately made a deal to extend them as you know, for two years for all taxpayers, which is how we are where we are now. And now, we are on the reversed situation. Democrats, I think, are virtually in lock step on insisting that the tax cuts for those at the top and Republicans are showing cracks believing the "Wall Street Journal" editorial page and Tom Cole, leading House Republican, saying that maybe we do need to extend for those in the middle.

It's a very different circumstance. And I do I think the leverage on the tax side, at least is clearly with the Democrats, because stalemates mean all the tax cuts are passed to President Bush expired and Democrats are more willing to live with that than Republicans are.

JOHNS: Ryan, when you sort of read between the lines here, it looks like senate Democrats are saying they are more willing to go over the fiscal cliff. Do you think that's real or are they just posturing for the sake of the negotiation? RYAN LIZZA, CNN CONTRIBUTOR: I think that's very real. The White House has been signaling since, frankly, the summer of this year, that they are -- if the Republicans don't budge on the tax side, on the revenue side, they are willing to let those -- to let the deadline expire, let the Bush tax cuts all go back to the 2001 levels and start from scratch next year in redoing the tax code.

So this is why the White House, you know, they hold the trump card here. If nothing happens, then the policy moves in the direction that the Democrats, the Democrats favor direction, not exactly what the Democrats want, but it moves in the direction that the White House wants. And that frankly is why many Republicans, not exactly a stampede, but quite a few are saying, look, the White House has won the argument here over the top rates, let's take 98 percent of the Bush tax cuts and get a good deal on entitlements. I think, you know, frankly, everyone realizes that's where this is headed.

BROWNSTEIN: Yes.

JOHNS: But Ryan, do you remember back during the TARP negotiations, it seems like ages ago, when the House initially failed to passed the bill, the market dropped by something like almost 800 points. Should we be worried about what's happening with the markets right now?

LIZZA: Well, look. There's a growing argument on the left that the White House is using too many scare tactics about the fiscal cliff and it's actually not a fiscal cliff, you hear a lot of liberals saying it's a slope. And the world is not going actually to end if we go over it.

Now, you won't finds too many people in the administration who agree with that. They worry about the psychology. They worry about the markets. And frankly, just the drama associated with hitting that deadline and Washington's inability to deal with this deadline. They worry about that. But the growing argument on the left that the White House shouldn't be so concerned, that they should just call the Republicans bluff.

JOHNS: Ron, the Democrats like to say that they got a mandate out of the last election. But do you think that's true? Certainly, it's stronger in the Senate for them, but Republicans still control the house.

BROWNSTEIN: Well, look. On this question of letting tax rates for those at the top, that is the lower tax rates expire for those at the top, there is unquestionably a mandate. Polling has been consistent for years, and we saw in the exit poll, 60 percent of voters overall, and more importantly, 80 percent of Obama voters, 80 percent, is more unified Democratic coalition. We are talking about support letting the tax rates expire. And that's why I think you see Democrats -- that's why you see Democrats being much more adamant on that, certainly than they were in 2010.

Look, I think the country wants a deal, and like Ryan, I think we're going to get a deal. I think at some point in the next six months, we're going to end up with a tax rate for those at the top that is higher than it is now, but lower than it was under Bill Clinton with the difference spot off by limiting deductions for people at the top. It's going to be messy getting there, but a higher rate for those at the top seems to be an inevitable outcome of this after President Obama (INAUDIBLE).

JOHNS: Speaking of messy, the progressives love to sort of get on the bandwagon on that one issue. But, what are they going to do when this president starts moving against entitlements?

BROWNSTEIN: Well, you know, what's interesting on that, Joe, is the Republicans gambled and lost, I think, you know, in the summer of 2011, President Obama showed willingness to go much further on entitlements than he is today. He will probably end, if there is a deal going further on a deal than he is now, but not as far as he would have then.

And yes, he will have to confront his party. That's part of the definition of being president, saying no to your own side. There's a case to be made to liberals, that if you do not constrain entitlements in the long run, ultimately, what you're doing is squeezing all the discretionary investments in the next generation and education and programs like that. So, there is a case for controlling the entitlement spending. But I think the Republicans gambled and lost by nit making the deal that he is willing to take during the debt ceiling talks in the summer of 2011.

LIZZA: Yes.

JOHNS: Ron Brownstein. Ryan Lizza. Thank you so much. Let's leave it there. And good to talk to you.

LIZZA: Thanks.

BROWNSTEIN: Thank you.

JOHNS: Critical advances by Syrian rebels shooting down regime warplanes. Our Arwa Damon reports from inside Syria. We will take you there next.

(COMMERCIAL BREAK)

BLITZER: We have a rare and important look at how Syria's rebels appear to be gaining momentum in their fight against the regime of President Bashar al-Assad.

CNN's senior international correspondent Arwa Damon is in northern Syria. She was able to visit an area where rebels say they shot down a government jet.

(BEGIN VIDEOTAPE)

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Children on the back of a tractor make a sizable tangled lump of metal. Now a trophy of war, proudly shown off by (INAUDIBLE). We want to take these pieces to show them to other villages, he says. Let them see what happened to these planes. Everyone we speak to hear describes the fear they felt any time they heard a jet overhead. For them, this is the greatest victory.

The wreckage is being picked through pretty quickly by young and old alike. And resident are telling us, as soon as the strike took place, they began rushing to the scene. One man who we spoke to said he was picking olives, he saw the plane being hit and the two pilots ejecting. He says at that point everyone fanned out, looking for them. He and others are telling us that one pilot was found unconscious with a head injury.

Video posted to you tube shows a man in military uniform, seemingly unconscious, being carried away. As a man off camera states, here is the pilot who is shelling the houses of civilians.

Another clip is of him in a makeshift field clinic, head bandaged a voice says this is the fate of your pilots (INAUDIBLE). And this is not an isolated incident.

In the same vicinity, close to the city of (INAUDIBLE), in the span of 24 hours, rebels claim they not only brought down this fighter jet, but also two helicopters. Video posted to you tube shows a trail of smoke and a helicopter bursting into flames. But, there's no way for us to confirm when and where this happened.

These dramatic developments are the result of a pitched battle fought here at the 46 regiment base just over a week ago. For nearly two months, they lay siege to the base after clearing the villages around it of Assad's forces and positioning rebel snipers in the area. They waited for their enemy to weaken.

The government would try to airdrop supplies from helicopters, they didn't dare land he says. And most times they would miss. And we would take the foot. It was inedible. Dozens defected and even more we are told were killed.

The final battle to take this massive base lasted 24 hours. Rebel fighters used artillery they captured from another unit on the base, firing it into the building and ending the battle. For this rebel unit there was a treasure trove of weaponry. And most important of all, anti-aircraft missiles. Hundreds of them. Though not all functioning, the fighters tell us.

Video posted to you tube right after the assault took place, shows stacks of metal boxes packed with soviet era anti-aircraft missiles. Another video posted is explaining how to arm and launch the missiles and ensure that they're locked in on their target. The regime still has the military advantage, thanks to the sheer size of its arsenal. But, the balance it seems may have ever so slightly shifted.

(END VIDEOTAPE)

BLITZER: And Arwa is joining us from northern Syria right now on the phone.

Arwa, is it the sense these rebels have, that they see some light at the end of the tunnel?

DAMON (via phone): There are all of the rebel fighters at some point in time, and though a very near estimation of one day are going to win this battle quite simply because they say they have come so far on their own. They feel as if the international community has completely abandoned them. They fail to understand why the U.S. and other nation will march soon behind them. And they say though, that despite that, they have managed to make all of these significant gains. They have not yet lost the fight. In fact, they are gaining territory by the day, by the week. There are areas of northern Syria, where two months ago, they were under the grass of outside forces. And right now, in spite the fact that were battle fought in some of these small villages, there are signs of life returning. Civilians are there. There are no signs (INAUDIBLE).

BLITZER: You've told me over these past few days, Arwa, that the longer this drags on and on and on and this bloody civil war continues, the more you're seeing some evidence that extremist elements, if you will, jihadists, those sympathizing with al-Qaeda may exploit the civil war and take advantage of it. What's going on in that front.

DAMON: Well, the situation has existed in Syria (INAUDIBLE) for quite some time now. (INAUDIBLE) these kinds of extremist groups move in. That is what we're seeing taking place. Bear in mind that right now, they are still the minority, they are still very much a fringe element. But as one rebel commander put it, the longer Assad stays in power, the more powerful these groups are going to grow. And that's going to become a problem that neither the Syrian opposition nor the United States is -- or any other western or other nation is going to want to see materialize. Given just how volatile the region already is. But, the reality is that as long as the battle takes place. As long as the extreme fighters are the ones willing to take up arms in some cases bringing in significant amounts of money with them. That is all the opposition has to turn to. They are trying to control these groups. But they will admit they're very frustrated and disgruntled by this. These various students do not follow the rebel chain of command. They're not necessarily following orders by the Syrian army. So, they may be trying to reign them in, they're growing more powerful by the day.

BLITZER: Arwa Damon in northern Syria for us. Stay safe Arwa, thank you very, very much. She's doing an amazing job for all of us.

The looming fiscal cliff could force politicians to make some tough decisions. One of the hardest could involve a popular tax break enjoyed by millions of Americans, we have details just ahead.

Stay with us here in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The fiscal cliff means a lot of things are on the cutting block right now. Things that used to be sacred cause for a lot of politicians, one involves what ones the most dependable of investments for many Americans' property.

Let's bring in our own Lisa Sylvester. She has got some details of what is going on. What is going on?

LISA SYLVESTER, CNN CORRESPONDENT: You know, Wolf, what lawmakers on Capitol Hill are debating right now could have a direct impact on homeowners across the board. And it doesn't matter if live just off of Wall Street or stock down on Main Street.

(BEGIN VIDEOTAPE)

JORGE URIBE, FLORIDA REALTOR: You basically have 270 degrees of pure ocean.

SYLVESTER (voice-over): Amazing views, luxury bathrooms and a gourmet kitchen. The owner of this $8 million penthouse in Coconut Grove, Florida is eager to sell it before the end of the year because of the pending fiscal cliff. Unless Congress ask by year end, capital gains taxes will go up for homeowners with a lot of equity in their homes selling now could make a big difference.

URIBE: If you're looking for someone who are selling their property, let's say at a $10 million sale price and they have $5 million in the property, there is a potential $5 million profit, capital gains being 15 percent right now and they are estimated to go up to 25 percent next year. So, in theory, there's a half a million dollar savings for seller and buyer to get the deal done.

SYLVESTER: Even if you have an average price home, some possible outcomes of the fiscal cliff negotiations could have a major impact on you. Congress could limit the amount of home mortgage interest homeowners could write off on their taxes. One proposal from the Simpson-Bowles commission would cap the deduction at $500,000, half of what it now is.

Lawmakers also may limit tax breaks for second homes. Distressed homeowners also could see major changes ahead. The mortgage debt relief act which waves tax obligation on the portions of the mortgage being forgiven is set to expire at the end of the year.

And new estate tax rules will likely kick in. The exemption level drops back down to $1 million from the current $5 million. That's causing a mad scramble to pass real estate and other assets down to children and grandchildren says Maryland estate lawyer, Gary Altman.

GARY ALTMAN, ESTATE LAWYER: It's like a feeding frenzy, everyone's worried that at the end of this year, there's only going to be a small amount, which is a million dollars that will pass free of estate tax and gift tax. So, they want to lock in the exemption this year, before it goes away.

(END VIDEOTAPE) SYLVESTER: Possibly though, the worst thing for the housing market is if there's no compromise and we end up going off that fiscal cliff, and then there's a sharp cut in government spending. That could push the economy into a recession, raising the unemployment rate and that could push home values back down, Wolf.

BLITZER: A serious problem for a lot of people. Let's hope we don't go over that fiscal cliff.

SYLVESTER: Yes. Fingers crossed that they will reach a compromise because I think honestly, Wolf, I don't think that there's anyone out there that wants to see us actually go over that fiscal cliff.

BLITZER: Yes. That would be bad. But the clock is ticking. Only a few weeks left.

Well Lisa, thank you.

The biggest problem between the United States and Mexico and how to solve it. I'll speak with Mexico's new president, Enrique Pena Nieto. My exclusive interview is just ahead.

(COMMERCIAL BREAK)

BLITZER: At least 50,000 people have been killed in Mexico in the drug wars in recent years. Finding new strategies to tackle Mexico's drug violence is certainly one of the top agenda items of the new president of Mexico, Enrique Pena Nieto. But, that will certainly require continued close cooperation with the United States. Mexico's new leader paid a visit to the White House this week. Before that, he sat down with me for an exclusive interview.

(BEGIN VIDEOTAPE)

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

ENRIQUE PENA NIETO, MEXICAN PRESIDENT (through translator): To feel greater trust in our relationship. I think the first encounter meeting 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 with the countries has to go through the people who have set governments, they will have a good understanding on m purpose then is to create a relationship, to build a relation based on trust, a relationship that would be positive, constructive, that would allow us to understand the world affairs and the world -- basic disagreement will reach a relationship of brotherhood.

BLITZER: There have been record deportations in the Obama administration from the United States of undocumented workers back into Mexico.

NIETO (through translator): I think we have to work at this issue especially to get proper treatment for the people in the end and deported for because they have the proper papers. But also, I see with great understanding the proposal that President Obama has offered to reach immigration reform. It's another issue and there's American politics by which my government sees with great favor.

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

NIETO (through translator): Because we have lack of opportunity in Mexico. Right now, Mexico has a great opportunity in my opinion, to reach economic growth. I'm sure that there are two main issues of my agenda of my proposal. I want to be focusing in for the next few years on economic growth to reach greater social benefits. That I think is going to be the best prevention of my government kind a establish organized crime, so as to avoid the millions of compatriots from my country 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 the U.S. border guard. Will you take steps to make sure that can never happen again?

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

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

NIETO (through translator): What the Mexican city cannot do and my country cannot do is to allow us to be intimidated, to allow the authorities to be intimidated by organized crime. I think the Mexican state must and this is one of my task, one of the changes that I have to strategy in the security issues that my government must reach. We have a greater coordination of efforts. And every level of government is a task for the state as a hole. It involves all three powers of the state. It involves all the authorities, so that 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, Washington State, is that going to help or hurt?

NIETO (through translator): Personally, I don't agree with the regulation of drugs under reason that it is not just about legalizing marijuana. I think that it's a door that would eventually would cause for sectors of the population to consume drugs which are much more harmful. But, what is clear right now is the same which is happening to states of the American Union, United States, could possibly in the future, in your future, do a refocusing of the strategy we use. I'm convinced and open to the debate about the issue and to define new strategies in order to combat drug trafficking and drug consumption. And that has to be reached jointly.

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

NIETO (through translator): Mexico is a safe country. Unfortunately some areas of our country are leaving through events of greater criminality. And it is a challenge to the government -- Mexico wants to predict the splendor and beauty 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 have been very different from that which is pointed around the world. We're air 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.

NIETO (through translator): I will let history make its own judgment. I let the Mexicans make their own judgment based on the resources, whatever I manage to achieve in my administration. Really, it is honorable for me to hear such praiseful expressions. But, most important for my government for myself will be to offer tangible results to Mexican for far created a better Mexico --

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

NIETO (through translator): Wolf, thank you.

(END VIDEOTAPE)

BLITZER: A prominent journalist nearly assassinate d for his coverage of this teenage girl shot by the Taliban. He shares his chilling story with us, that's next.

(COMMERCIAL BREAK)

BLITZER: Her story has been reported around the world, Malala Yousafzai, the teenager shot by the Taliban for advocating education for girls. But, for one Pakistani journalist, the story almost cost him his life. The Taliban tried to assassinate him with a caravan.

Joining us now from Islamabad, Hamid Mir. He is one of Pakistan's most prominent journalists, he's the executive editor of GOTV.

Hamid, thanks very for coming in. I'm really glad to see you. I'm glad you survived this assassination attempt. How did you discover this bomb that was under your car?

HAMID MIR, PROMINENT PAKISTANI JOURNALIST: That was only a good luck because the driver of my neighbors, he saw this bomb which was installed under my car with a magnet. And he warned my driver that there is something under your car please check it. And my driver checked it and he was suspicious because it was a bag. Then he informed me, I was preparing myself to go to the office. And I was already informed by the home department and some security -- also from the police that I'm under threat and I should be careful. So that's why I informed the bomb disposal squad of the 30, 35 minutes to diffuse the bomb.

BLITZER: And thank God for that.

The Taliban as you know, has claimed responsibility for wanting to kill you because of your coverage of that young Pakistani school girl, Malala, who was burned badly, flown to Britain for treatment. In a statement of Taliban's spokesman said on the BBC (INAUDIBLE), he said we have advise d journalists to be moderate. If they don't understand our advice, we send explosives or suicide bombers. So, what's your response to that statement from that Taliban spokesman?

MIR: Wolf, look, that Taliban spokesperson, (INAUDIBLE), he sent me a six page letter a few weeks back and warned me I should not support Malala. And after receiving his letter, I wrote a column and spoke in my TV show that I will not accept your dictation and I will continue my support for Malala Yousafzai. And then, he sent me a message through one of my colleagues in (INAUDIBLE) that we will send some suicide bombers.

Today, the same colleague of mine, he was contacted again by the Taliban spokesperson. And he told me the same message that this time you survived. But next time you will not survive. And they want me to -- they warn me that I should not support Malala Yousafzai, I should not say that attacking Malala was a bad thing.

So, I cannot surrender to the Taliban. They warn that I should not speak against them. If I stop, it means that it's a surrender to Taliban. So, I cannot surrender to Taliban. I will keep supporting Malala Yousafzai. The little girl called me from the hospital last night and spoke to me for more than 10 minutes and she was giving me a lot of strength.

So, if she can stand against the Taliban, and she's a little girl, 14, 15-year-old girl, so, I should also stand against Taliban. The people of Pakistan gave me so much respect and popularity. SO, this is of testing time for me. And I should stand with the people of Pakistan who face terrorist attacks every day. Most of my colleagues in (INAUDIBLE) and travel areas, they're more vulnerable than me, they are facing more threats than me from Taliban and also from the security offensive. I am sitting in the capital. Yes, I am also vulnerable, but I should not surrender the Taliban, and I will not.

And today just a few hours back, I spoke in my show. And I responded back to the Taliban spokesperson that you think that you can terrorize me, I will not stop. And I will keep opposing you.

BLITZER: Are you suggesting Hamid that Pakistani security services in addition to the Taliban may also have played a role in this assassination attempt against you? MIR: Wolf, it's a very complicated situation. Nine months ago, the committee to protect journalists in New York and some other media outfits. They issued a statement, and I also endorsed the statement, and I was facing threats from some security officials. And at that time, the government established a special committee to investigate those threats, but no report was released. They never came out with concrete result. There was no result of their investigation.

I cannot make a judgment right now, and I will leave it to the investigation authorities. Yes, Taliban authorities have threatened me in the recent past and the intelligence also threaten a few months back. I am scared of both of them. But I will not leave Pakistan, I will not stop speaking the truth.

BLITZER: Well Hamid, good luck to you. Be careful over there. We know the important work that you're doing, and we wish you only the best. We, of course, wish only the best for all Pakistanis in the process. Thank you so much for what you're doing.

MIR: Thank you very much.

BLITZER: A long secret U.S. plan to explode an atomic bomb on the moon. The shocking details just ahead.

(COMMERCIAL BREAK)

BLITZER: Sounds preposterous, but the U.S. hatched a plan during the cold war to possibly nuke the moon.

CNN's Brian Todd's got the latest on this very bizarre story. Bizarre, but true. What happened?

BRIAN TODD, CNN CORRESPONDENT: Well Wolf, you know, in the 1950s there were all sorts of wild ideas floating around inside the halls of government back in the height of the cold war in the 1950s. There were security scares all around. American leaders felt they need to give a jolt to the Soviet Union so at the time, this didn't seem so outlandish.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Fire.

TODD (voice-over): Just think of what a nuclear explosion would look like up there. The U.S. government once considered it. CNN has documents and interviewed the leader of a once secret air force project titled a study of lunar research flights, with a just as low brow nickname, project a-119. What was it really?

LEONARD REIFFEL, LEADER OF MOON NUCLEAR BLAST PROJECT: To evaluate the value of putting a small, emphasize small in this world anyhow, nuclear explosion on the moon.

TODD: Physicist Leonard Reiffel, now 85-years-old, led the project in 1958. It was the height of the cold war. America and the Soviet Union were in a nuclear arms race. The soviets have just launched the world's first satellite, sputnik, and were ahead in the space race. U.S. officials need a big splash.

REIFFEL: In comparison, the United States feared -- was feared to be looking puny, so this was a concept to sort of reassure people that the United States could maintain a mutually assured deterrence and therefore avoid any huge conflagration on earth.

TODD: According to Reiffel's now de-classified report on the project, team leaders also thought they could get information concerning the capability of nuclear weapons for space warfare. Rifle says the plan called for an intercontinental ballistic missile to be launched from an undisclosed location, travel 240,000 miles to the moon, and detonate on impact. Various news reports say they considered using a bomb the same size as the one dropped on Hiroshima, but Reiffel now says he wasn't in on those discussions.

Could the blast as some news reports suggest have actually blown up the moon?

REIFFEL: Absolutely not. It would have been microscopic, so to speak, would have left a crater that would have been, I think, essentially invisible from earth, even with a good telescope.

TODD: Reiffel had some brilliant minds on his team. One of them, an up and coming graduate student named Carl Sagan, who went on to become one of the world's most renowned astronomers. Later on, Reiffel said, Sagan violated security when he mentioned the still classified project on a job application. Sagan's widow told us she's not sure if he ever did that, but if he did, it wasn't intentional. By 1959, project a-119 was drawing more concern than excitement and was abandoned.

REIFFEL: We didn't want to clutter up the natural radio activities of the moon with additional bits of radioactivity from the earth.

(END VIDEOTAPE)

TODD: Reiffel says other factors in killing the project were that they were not sure of the reliability of the weapons, the possible nuclear deterrent against the Soviet Union wouldn't have been worth the gamble and there would have been a lot of public backlash in the U.S. Contacted by CNN, the air force would not comment on project a-119, even 54 years later, Wolf.

BLITZER: Yes, pretty amazing. You also got some new details on considered efforts, at least considered efforts that actually deploy nuclear weapons in space.

TODD: That's right. Dr. Reiffel says in military circle at that time generally, they discussed the idea of making the moon what they called a military high ground. Sounds crazy, but that involved possibly having nuclear launch sites on the moon. The thinking was that if the soviets hit the United States with nuclear weapons, and wiped out America's ability to hit back, then America could launch warheads from the moon. He says this is a horrendous scenario and he's glad this is in the realm of science fiction right now. We hopes it stays there.

BLITZER: Fascinating stuff historically speaking. Thanks you very much, Brian. Tells us a lot about that era.

TODD: Right.

BLITZER: Up next, a different story, Christmas carols with a touch tone twist. Jeanne Moos on the new way to sing holiday favorites.

(COMMERCIAL BREAK)

BLITZER: Christmas is still a few weeks away, but your favorite radio station may have already switched over to holiday music. Everybody has a favorite, some new, some old. But Jeanne Moos found a new take on a classic that is poised to go viral.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): It is one of those omnipresent Christmas songs you hear played on cellos, performed by vocalists. But now, the ding dong is coming out of the office phone.

UNIDENTIFIED FEMALE: The day of there was over 250 takes.

MOOS: Wasn't like you dubbed over sounds.

UNIDENTIFIED FEMALE REPORTER: No. No, all the sounds are real.

MOOS: Produced at the warehouse where alphabet photography assembled their products in Niagara Falls, Canada. Owner Jennifer Blakely used a mix of her employees and local musicians to create a do it yourself version of the carol of the bells.

UNIDENTIFIED FEMALE REPORTER: The janitor was also -- he's actually a local rapper.

MOOS: The guy manning the phone like some demonic elf --

UNIDENTIFIED MALE: Demonic?

MOOS: -- is a singer/songwriter named Joel Van Vliet.

UNIDENTIFIED MALE: I got excited.

MOOS: Alphabet photography is a small company and unlike Wal- Mart, unlike the NBA, Jennifer can't afford a big ad budget. So this is a sort of viral Christmas commercial. Two years ago she organized a Christmas flash mob in a mall food court.

That video now has 39 million views. The new video starts with dial tone. Imagine all those folks at home who are going to be dialing 9591. Take it from the demonic dialer --

JOEL VAN VLIET, MUSICIAN, ACTOR: People are trying to play it, just know that not all telephones are in the same key. MOOS: My producer found a better combo.

UNIDENTIFIED MALE: Pound 8 pound 4. All right. Listen to this. Pound 8 pound 4, pound 8 pound 4.

MOOS: It will either sweep you off your feet or leave you wishing for dial tone.

Jeanne Moos, CNN - what is the Beethoven one?

UNIDENTIFIED MALE: Oh. 5557.

MOOS: -- New York.

(END VIDEOTAPE)

BLITZER: Very funny. Good stuff.

Remember, you can always follow what's going on here in "the SITUATION ROOM" on twitter. Tweet me @WolfBlitzer.

I'm Wolf Blitzer in "the SITUATION ROOM." The news continues next on CNN.