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Republicans Make Fiscal Cliff Proposal; New Al Qaeda Plot Revealed; Plot Targeted U.S. Embassy in Jordan; Interview with Jordanian Foreign Minister Nasser Judeh; Hillary Clinton Warns Syria; Obama Speaks At Nuclear Conference; McCain Calls Kerry "Mr. Secretary"; Britain Buzzing Over Royal Pregnancy; White House Rejects New GOP Fiscal Cliff Offer

Aired December 3, 2012 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, we have new details just coming in of a brand-new offer from House Republicans to avoid the so- called fiscal cliff.

Also, President Obama's getting ready to speak this hour about an urgent national security issue, U.S.-led efforts to try to track down and eliminate loose nuclear weapons. That's coming up.

Also, frightening new revelations about an al Qaeda plot for a three- part terror attack on the United States Embassy in Amman, Jordan. I will ask the country's foreign minister, Nasser Judeh, for details. He's standing by live.

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

We begin this afternoon with brand-new Republican offers to try to save the $2.2 trillion and avoid the so-called fiscal cliff, the across-the-board spending cuts and sharp tax increases that hit in just 29 days.

Let's get straight to our senior congressional correspondent, Dana Bash. She's watching what's going on.

Dana, the tax rates, first of all, let's get to a major sticking point right now. There's been a counterproposal from House Republicans to the White House.

You have details.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. Let's start exactly where you just began on those tax rates because that has become the big divide between the two sides.

The answer is the House Republicans are not budging. They still want to continue the Bush era tax rates at all income levels. Let's get specific, though. First of all, the House Republican counterproposal, they say that they would get about $800 billion in savings from what they call tax reform, from deductions and closing loopholes, things like that.

But again the Bush era tax rates, all of them would remain, even for the wealthiest. To show you just so our viewers see the difference that compared to the White House offer that they got last week, $1.6 trillion in savings when it comes to tax revenue. But much of that came from raising tax rates for the wealthiest Americans, which, of course, is what President Obama campaigned on.

So those are the big differences right now. But this certainly is important, Wolf, because Republicans were saying that they're not even sure that this ball was in their court. Clearly, they realized it was. So the talks -- there is stalemate no more, let's put it that way.

BLITZER: On this key issue of tax rates, marginal tax rates for the wealthy, the Republican offer is keep the tax rates exactly as they are right now, 35 percent for that 2 percent, wealthiest families making more than $250,000. The Obama proposal is raise that rate to 39.6 percent, where it was during the Clinton administration. So there's an issue right there.

What else is in this new GOP proposal?

BASH: Let's show you some of the savings when it comes to government spending. First of all, they put about $600 billion in what the Republicans are calling health savings. We understand -- we don't have details. We understand much of that comes from Medicare, things that we have heard from Republicans over and over like raising the eligibility age, means testing, things like that.

So then we have about $600 billion in essentially spending cuts, half from mandatory spending, half from what they call discretionary spending. This is the other very interesting thing that's new, $200 billion from revising the Consumer Price Index. That sounds very technical. But it has very real world consequences because it very much could affect the money, the checks that Social Security recipients in particular get every single month because it changes, effectively changes inflation so it changes the formula from what they would get.

BLITZER: Significant differences between the White House proposal on this part of the equation as well as on the tax equation.

The politics behind this latest Republican counterproposal, are they just going through the motions of having their opening bargaining positions knowing that both sides are going to have to make concessions?

BASH: The answer to that is yes. Everybody knows that everybody is going to have to make concessions. But what Republicans -- in fact, the speaker himself, just to sort of give you a little bit of color of how this went down.

We were called into a meeting, reporters all over Capitol Hill, were called into a meeting with Republican aides to discuss this. And the speaker himself came into the meeting and he said that he believed this is a credible plan that deserves serious consideration by the White House. But he also made the point to underscore that the House Republicans could have just given back the Ryan budget, for example, something that was a complete non-starter.

They decided politically to go a different road and to put forward this proposal which they say was originally put forward by a Democrat, Erskine Bowles. This is not Simpson-Bowles. It's different. But Erskine Bowles gave testimony in November of 2011, last year, which effectively outlined what Republicans put forward.

It was politically a very interesting decision for them to do this. It was in the words of one Republican staffer something that all sides -- quote, unquote -- "detest." So clearly they are saying that they believe everybody's going to have to give concessions. But just going back to where we started, that fundamental divide over those tax rates, that is still very, very wide.

BLITZER: And very quickly, Dana, on two sensitive issues in the original White House proposal, they wanted to raise the debt ceiling right now. What does this GOP proposal say about that?

BASH: Not a chance. That was one of those conditions that Republicans said definitely didn't pass the laugh test. So they're completely silent on that. The Republicans absolutely want that to remain in Congress' court. They don't want the president to have that kind of authority.

BLITZER: What about the $50 billion the White House wants in additional stimulus spending right now?

BASH: No new spending in this proposal. I know that's probably not a surprise since this is a Republican proposal.

BLITZER: All right, so the sides obviously very, very far apart right now. Dana, thanks very much.

During an unusual question-and-answer session on Twitter this afternoon, the president was asked why he opposes keeping tax rates the same for everyone, but taking away some of the tax deductions used by the top 2 percent of wage earners. The president answered: "Not enough revenue unless you end charitable deductions, et cetera. Less revenue equals more cuts in education, et cetera."

I'm joined now by our chief political analyst, Gloria Borger.


BLITZER: Yes, you like the et cetera, instead of "etc.," they spelled it out.

All right, they got two very different proposals on the table right now.

BORGER: Right.

BLITZER: They're speaking -- I don't think they're speaker necessarily to each other, but against each other, if you will.

BORGER: Yes. They're speaking past each other. They seem to be really living in different universes or one on Mars, one on Venus, whatever you want to call it.

Look, it's very clear. One, the Republicans want more entitlement cuts up front. And the Democrats want these tax increases on the wealthy up front. The irony here to me watching this is in the long term, the second part of this, everybody seems to know what needs to be done. They know you have got to fix entitlement spending. They know you have got to reform the tax code to make it simpler and to make it fairer.

The big problem they have got is how you get from here to there. And right now, in order to get over this hump, they sort of right are in the position of Alphonse/Gaston, putting everything out there on the table and so we now know what the base of each party wants and would applaud. And now they have got to go behind closed doors and figure how they get past January and how they avoid this fiscal cliff, not only the spending cuts and tax increases, but spending cuts particularly in defense they don't want.

BLITZER: Explain why -- what they agree on, namely that the middle class, 98 percent of all taxpayers, that their taxes will stay the same, they will not go up. If everyone agrees at least on that, and the president says, go ahead and pass that. Why not just eliminate the 98 percent who won't have any changes, those making under $250,000 a year? Why not just pass that, allow that to go forward? Why are the Republicans resisting on that?

BORGER: Well, it could wind up there, Wolf. But if the Republicans lose that, they believe they kind of lose the leverage that they have. If they sort of give on that, then where's their leverage with the White House?

So I think that, in the end, Wolf, if I had to bet -- and I don't like to bet on these things because they always disappoint -- but I would have to say that the one thing they are all likely to do at some point is to make sure the taxes do not go up on the middle class. But in order to do that, Republicans want to get some concessions for that. It seems very easy to do that.

Democrats have done it in the past. And Nancy Pelosi, the House speaker, wants to do it again. But Republicans want to wait and see what they can get.

BLITZER: They do have an obligation, I think, lawmakers, Democrats, Republicans, the president, to resolve this before December 31, not kick it down the road once again.

BORGER: The big problem is going to get kicked down the road. You can't reform the tax code and reform all entitlements in three weeks. They're not going to do that.

But they do have an obligation, and I think even they understand that. Their approval rating is, what, low double digits right now? That this is a leadership issue for the president of the United States. It's also a leadership issue particularly for the speaker of the House and House Republicans and that the public in our polls overwhelmingly believes they're not going to behave like responsible adults and they actually have something they need to show to the American public.

And this is not the way the American public wants to see its government operate. They have seen it work like this too much in the past. We just went through the debt ceiling in 2011. They don't like seeing Congress and the president be crisis-activated institutions.


BLITZER: No, this should not have been a crisis. They agreed on this deadline a year-and-a-half ago. They had well more than a year to resolve this.


BORGER: And, by the way, this is a crisis they created.


BORGER: For themselves.

BLITZER: They knew this cliff was coming. They had a year-and-a-half to deal with it, not three weeks. They had a year-and-a-half and they wasted a year-and-a-half basically just to get to this crazy moment.

BORGER: Exactly. They effectively said, we're going to put ourselves up against a wall because we know when we're up against the wall, it's the only time we can get something done.

BLITZER: Yes, it's a sick way of running a government, no doubt about that.

BORGER: Not good.

BLITZER: Thank you.

We're awaiting the start of an important speech by the president of the United States. He will be talking about the U.S.-led effort to locate secure nuclear chemical weapons. You're looking at live pictures from the National Defense University right here in Washington, D.C. We will go there live.


BLITZER: Toxic levels of carbon monoxide sicken dozens of people in an Atlanta, Georgia, elementary school.

Kate Bolduan is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

Kate, what's going on?

KATE BOLDUAN, CNN ANCHOR: Yes, quite a scare for many families.

Atlanta fire officials found what they say are record and potentially lethal levels of leaking carbon monoxide this morning after responding to a 911 call. They evacuated the elementary school and took nearly 50 people to the hospital, all complaining of headache, dizziness and severe nausea. But no one was seriously injured, they say. Carbon monoxide detectors are not required in Atlanta schools.

Also, North Korea says it will launch another rocket within days. This announcement to send what government officials call a working satellite into orbit follows a failed attempt last April that drew international condemnation. The U.S. State Department says another launch -- quote -- "would be a highly provocative act that threatens peace and security in the region."

And I guess the question on some people's minds today: did Kim Kardashian's weekend visit to Bahrain prompt protests? The agent who brought the Hollywood star there to promote a milkshake franchise is deny unconfirmed reports that police used tear gas to clear out 100 Shiite protesters at a shopping center before her arrival. Shiite groups have rallied in Bahrain to demand greater economic opportunities and political rights. Quite a scene there.

And in New Orleans, when Quicky's convenience stores says parking for customers only -- apparently, they really mean it. If you're there to save someone's life. Paramedics rushed in to get a patient complaining of chest pain. As the ambulance headed off, they said they heard a loud noise.

There you see what happened right there -- they had a boot. When that came off, a flat tire. Another ambulance was called.

As far as we know, the patient made it to the hospital. This goes into the category of, come on!



BLITZER: Kim Kardashian, Bahrain, milkshakes -- I mean, those are words I never thought we've had in one story?

BOLDUAN: You know, I bring you the best.

BLITZER: Yes, thank you. Wow, what a story that is. Thank you.

An old adversary for the United States may have been played a role in a terror plot in Jordan and the target of Amman that's becoming a familiar scene in some of these terror schemes.

Stand by. The foreign minister of Jordan here in THE SITUATION ROOM live. We're going to discuss that and a lot more when we come back.


BLITZER: Leon Panetta is introducing the president of the United States at the National Defense University. He's speaking now.

Once the president speaks, we'll monitor what he's saying, dip in, hear what the president has to talk about. He's talking about loose nukes out there, the threat from nuclear weapons, chemical weapons, weapons of mass destruction. The president will be speaking at NDU, National Defense University. Stand by for that.

Meanwhile, a foiled plot aimed to bring Jordan's capital to its knees and the prize for the terrorist scheme was the United States embassy in Amman. We're now learning that al Qaeda in Iraq played a key role in the planning.

CNN's Brian Todd has been investigating this story for us.

Brian, what are you learning?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, we're getting some disturbing new detail emerging now on a plot that was foiled by Jordanian authorities. That was several weeks ago. The group the plotters worked with, as Wolf mentioned, that will be familiar to many Americans. And the coordinated nature of the attack brings to mind one of the most ruthless terrorist operations in recent memory.


TODD (voice-over): It was supposed to be on the scale of the devastating 2008 attacks in Mumbai, India, when terrorists killed more than 160 people and menaced a huge city for days. This one planned to target the American embassy in the capital of one of the top U.S. allies in the Middle East. Now, new details are emerging on an ambitious plot to attack Amman, Jordan.

Jordanian officials tell CNN the plot called for three waves of attack, first, coordinated bombings at large shopping malls in Amman. Almost simultaneously, machine gun and bomb attacks on cafes and luxury hotels frequented by diplomats and tourists.

(on camera): Then, with the city's police responding to those attacks, Jordanian officials say the terrorists plan to launch the main assault on the U.S. embassy in Amman. Bombs, machine gunfire and mortar shells would rain down on that compound, one of America's biggest embassies in the world.

Terrorism analyst Tom Sanderson says the motivation for the attack was to show capability.

TOM SANDERSON, CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: To inflict damage on the United States, to inflict damage, physical and reputational, on the Jordanian government in an environment in which all other governments are certainly dealing with their own difficulties right now.

TODD: All 11 suspects were rounded up by Jordanian security forces in mid-October. Jordanian officials say they'd planned to strike on November 9th, the seventh anniversary of the last al Qaeda attack in Jordan, when suicide bombers struck three hotels in Amman, killing about 60 people.

The man who claimed responsible for that 2005 attack, Abu Musab al- Zarqawi, a Jordanian who led the group al Qaeda in Iraq. Zarqawi was killed by U.S. forces in 2006. But analysts say the recent resurgence of al Qaeda in Iraq now shows an unsettling pattern. SANDERSON: We thought we had them, you know, essentially pushed to the wall and snuffed out to a large degree. Some individuals were released from prison in Iraq and rejoined this group.

And certainly when you have a country that is unstable like Iraq and you have tremendous sectarian tension there and violence, the more from the Sunni side on to the Shiite side, you can't be surprised that a group like al Qaeda in Iraq or the Islamic state of Iraq would replenish itself.


TODD: Raising questions, of course, of whether America's efforts in Iraq paid off, at least as far as combating terrorist cells is concerned, and whether the U.S. may need to get back into Iraq militarily with small Special Ops forces to attack those cells again.

Other ominous detail on the plot, in Jordan, all the suspects, according to Jordanian officials, have moved in and out of Syria where weapons and jihadist fighters are plentiful. That's another sign that the Syrian civil war is spilling over into Jordan, where the U.S. has a large stake in the survival of that government -- Wolf.

BLITZER: To put it mildly, Jordan is one of America's closest allies in that part of the world. If anything were to happen to that government, to that regime, to the kingdom there, that would be a huge loss for the U.S.

TODD: Absolutely it would, Wolf. Analysts say the Jordanian intelligence service is one of the best in the entire region. It works very closely with U.S. intelligence to share information on terrorist cells there. If that government falls, a lot of that is compromised or lost -- a huge loss for America's assets in that region.

BLITZER: All right. Brian Todd, thanks very much.

Let's get some perspective now from the Jordanian foreign minister, Nasser Judeh. Thanks very much, Minister, for coming in.

NASSER JUDEH, JORDANIAN FOREIGN MINISTER: Thank you very much, Wolf. Lovely to be here.

BLITZER: How close was al Qaeda to blowing up -- destroying the US embassy in Amman?

JUDEH: They had just moved into the operational phase when we thwarted that attempt. Of course, we had been monitoring them through our intelligence services for a while, and we managed to penetrate them and infiltrate their groups, and we thwarted that plot.

I just want to say a couple of things. In the reports that we are seeing about that thwarted plot, we're saying that the attempt was to bring Amman down to its knees. Nobody will bring Amman down to its knees. Nobody will bring Jordan down to its knees. Terrorists have tried in the past, and they'll continue trying, and we'll always thwart them, and we will always overcome them and prevail.

The second thing I want to say is the spillover that was mentioned in the report, I think the -- Brian was saying the spillover of the civil war in Syria might threaten the stability of Jordan, and you referred to it as bringing down the government.

Again, not in their dreams. This will not happen. There's a humanitarian spillover from what's happening in Syria, and of course there are cells trying to infiltrate Jordan across from the Syrian side of the border, and we are being very, very vigilant. But this has nothing to do with the political stability of Jordan or of our government or of our way of thinking, way of life.

BLITZER: How big of a deal is this revival of al Qaeda in Iraq and the potential of these al Qaeda forces? We thought al Qaeda in Iraq was dead, but now they seem to be gaining strength and representing some terror threats to Jordan.

JUDEH: Well, again, maybe what the report failed to mention is that this operation was called "9/11 2." And that's --

BLITZER: That's what the al Qaeda called it?

JUDEH: Yes, in reference to our 9/11, the 9th of November, 2005, when they bombed, as the report shows, three hotels, and that resulted in a loss of lots of civilian life.

Now, the thing is that they were affiliated with groups affiliated with al Qaeda in Iraq. They were getting the technology and the weapons and a new type of explosive that wreaks havoc and results in the maximum damage in terms of loss of life and in terms of destruction.

By the way, I just want to say the three-wave was a very accurate description: attack the shopping malls, distract the police forces, and then try to target hotels and cafes where Jordanians and others are enjoying their daily lives.

But also to attack the neighborhood of the US embassy, not just the US embassy -- lots of Jordanians live in the vicinity of the embassy -- with mortar shells and sophisticated weaponry.

BLITZER: Because there a lot of --

JUDEH: Again --

BLITZER: -- a lot of Americans, obviously, in Amman at anytime, but especially at the US embassy in Amman, which is a major US embassy.

JUDEH: That's right.

BLITZER: It's a big embassy. You're very --

JUDEH: And lots of Jordanians as well.

BLITZER: Now, have you had serious conversations with your Iraqi counterparts about dealing with this al Qaeda growth in their country?

JUDEH: Of course. Our intelligence services --


BLITZER: Do you have confidence in Nouri al-Maliki, the prime minster of Iraq, that he's doing what has to be done?

JUDEH: Well, it's not my place to talk about what Nouri al-Maliki does in Iraq, but our intelligence services and our relative -- relevant agencies are talking to their counterparts, not just in Iraq, but everywhere. This is a whole network, and as you mentioned, we are very vigilant in coordination with many intelligence services around the world to fight this disease called terrorism.

We've been a target in the past. People will continue to target civilized countries, and civilized countries have to work together to prevent this.

BLITZER: Former CIA analyst, Bruce Riedel, a man I assume you know, he's an expert, he wrote this in the "Daily Beast." He said, "The longer the civil war in Syria goes on, the more al Qaeda will benefit from the chaos and the sectarian polarization. It will also benefit from the spillover of violence from Syria into Lebanon, Turkey, Iraq, and Jordan, that is now inevitable." Is that spillover from what's happening in Syria inevitable?

JUDEH: Al Qaeda and any terrorist organization looks for fertile ground in any country or any environment where there's instability, where there's violence, where there's a civil war, and this is the case, certainly, in Syria now.

You have a civil war that is of a political nation and dimension at this stage. Our biggest fear, of course, and concern for the entire region is for this to slide into a sectarian and ethnic civil war, or violence that is uncontrolled. Similar to what we saw in Iraq post- 2003.

This is the ripe environment for any terrorist organization to thrive and to try to perpetrate its heinous ideology and heinous acts --

BLITZER: So, al Qaeda's gaining some strength in Syria right now --


JUDEH: This is what we know at the time.

BLITZER: -- as part of this war. Hillary Clinton, the secretary of state, she said the US is prepared, in her words, "to take action if the Syrian regime, the Syrian government of President Bashar al-Assad, were to use chemical weapons," or even move around chemical weapons, stockpiles, many of which, I take it, are near the Jordanian border.

JUDEH: A lot of which is near the Jordanian border. This is something that we have been aware of for a while. We're working very, very diligently to monitor that and the potential, God forbid, of using it.

As His Majesty the King said on more than one occasion, this is a game changer. The international community --

BLITZER: As far as Jordan is concerned, this is --

JUDEH: As far as the world is concerned, not just as far as Jordan is concerned.

BLITZER: Now, you saw that story in "The Atlantic" -- magazine, they posted it on their website, that Israel has asked Jordan for permission to go in there and attack those chemical weapon sites in Syria.

JUDEH: I saw the report. I'm not aware of this context, but all I can tell you is that this is something that affects all the countries of the region. In fact, it will be a game changer in the sense that the world will not stand still and watch these chemical and biological weapons either being used or the threat of using them. So, it is going to be a game changer.

So far, a lack of unanimity on how to deal with the political side of the situation in Syria will certainly change if the Syrian regime were to use chemical and biological weapons.

BLITZER: And we know that Turkey's very concerned about a spillover. They're taking steps to protect themselves. They want Patriot air defense missiles. How worried are you that some of the refugee sites in Jordan, spillover from Syria, could affect Jordan's security?

JUDEH: It has not so far. Like I said, we're seeing a very --


BLTIZER: There's no evidence yet that Syria -- the regime of President Bashar al-Assad, has targeted any sites in Jordan?

JUDEH: No reference -- no concrete reference. Still, we have a few troublemakers who are sent back and not allowed to enter. We keep a very, very tight control of our -- particularly after what we saw in 2005 and the continuous attempts to try and penetrate Jordanian -- the Jordanian security and try to affect it. So, we keep a very vigilant watch.

BLITZER: The foreign minister of Jordan, Nasser Judeh, thanks very much for coming in. Good luck.

JUDEH: Thank you very much.

BLITZER: President Obama is speaking about the U.S.-led effort to locate and secure nuclear and chemical weapons. We're going there live in just a few moments.


BLITZER: The president of the United States at the National Defense University here in Washington. He's speaking about nuclear chemical weapons stockpiles. Just spoke about what's going on in Syria. Let's listen in.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: -- that's why I continue to believe that nuclear terrorism remains one of the greatest events to security. That's why it remains one of my top priorities in national security priorities as long as I have the privilege of being president of the United States.

So I came here in part to say we cannot let our guard down. This needs to be a sustained effort across all your organizations, across our government. We have to keep investing in our people and in new technologies. We have to sustain the partnerships we have, and that includes Russia.

We're joined by some of our Russian friends here today. Russia's said our current agreement hasn't kept pace with the changing relationship between our countries to which we say, let's update it. Let's work with Russia as an equal partner.

Let's continue the work that's so important to the security of both our countries. I'm optimistic that we can. We have to keep creating new partnerships. We have to make sure to paraphrase Einstein that our wisdom stays ahead of our technology. And I know you're committed to this.

And I want you to know that I am, too. So let me leave you with a story of that first trip Dick and I took together. You may remember this, Dick. I was in Ukraine. We went to a facility, an old factory. We walked down these long, dark corridors, ducking our heads, stepping over puddles of something.

We're not sure what it was. Finally, we came across some women sitting at a worktable. On it were piles of old artillery shells. And the women were sitting there taking them apart by hand, slowly, carefully, one by one. It took decades and extraordinary sums of money to build those arsenals.

It's going to take decades and continued investments to dismantle them. The two of you know this better than anybody. It's painstaking work, rarely makes headlines. But I want each of you to know and everybody who's participating in this important effort to know that the work you do is absolutely vital to our national security and to our global security.

Missile by missile, warhead by warhead, shell by shell, we're putting a bygone era behind us, inspired by Sam and Dick, we're moving closer to the future that we seek, a future where these weapons never threaten our children again, a future where we know the security and peace of a world without nuclear weapons.

I could not be prouder of these gentlemen. I'm proud to call them friends and I'm looking forward to continuing to work with them and all of you in the years to come. Thank you very much.

BLITZER: The president of the United States making it clear that he wants to do whatever is necessary to continue fighting those so-called loose nukes out there. He also made a pointed reference to the Syrian President Bashar Al Assad saying he's been warned about what's going on.

Any movement of those chemical weapons stockpiles in Syria, that is a red line, as far as the United States is concerned. The president over at the National Defense University was celebrating today. He was celebrating what was created, program to eliminate nuclear weapons that were a leftover after the collapse of the Soviet Union at the end of 1991.

The U.S. provides lots of money and experts to help with the job, which is still continuing. According to the American Security Project, the program is responsible for deactivating more than 7,000 nuclear warheads over the past two decades, in addition, some 900 intercontinental ballistic missiles and 6.5 million pounds of chemical weapons material have been destroyed thanks to the program.

Hillary Clinton has served President Obama for four years as secretary of state. Four years from now, could she be moving into her boss' office over at the White House?

After this weekend, a lot more people are beginning to speculate about what Hillary Clinton is planning to do. Our "Strategy Session," James Carville and Mary Matalin, are both standing by live.


BLITZER: Let's get right to our "Strategy Session." Joining us from New Orleans, our CNN political contributors, the Democratic strategist, James Carville and his wife, the Republican strategist, Mary Matalin. Guys, thanks very much for coming in.

You know, I want to do this. I'll play a little clip from -- a little tribute that was paid to Hillary Clinton, the secretary of state, the outgoing secretary of state. This was at the Brookings Institution forum this past weekend. Watch the little video tribute, what was said.


UNIDENTIFIED FEMALE: More countries may have the same extraordinary good fortune that we've had.

UNIDENTIFIED MALE: Someone who knows a thing or two about political combat, I don't think we've heard the last of Hillary Clinton.

UNIDENTIFIED MALE: I just have an instinct that the best is yet to come.


BLITZER: That was a little tribute to Hillary Clinton. She came out of that video at the forum and she said this. Listen --

(BEGIN VIDEO CLIP) HILLARY CLINTON, SECRETARY OF STATE: I prepared some remarks for tonight, but then I thought maybe we could just watch that video a few more times. And then the next time, I could count the hairstyles. That's one of my favorite pastimes.


BLITZER: The editor of "The New Yorker" magazine, David Remnick, he was there. First words in the column that he wrote, he says, "Hillary Clinton is running for president." All right, James, is she?

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: Is she? Well, four years. A day is a month, as it's said. Look, David is one of the smartest people I've ever met in my life. If that's an observation he had, I hope that she does.

I don't have any idea that she will, but the hope -- my hope and the hope of a lot of Democrats. That she would run for president in four years, but she's had a pretty hard job for the last four years.

I suspect that she wants to catch her breath a little bit and spend some time with Chelsea and her husband and do some other things. But I'm sure it's on her mind. It has to be because a lot of Democrats really want her to run around the country.

BLITZER: Yes, I've been saying for a while that, Mary, I think she is going to run. I think she still has the fire in her belly to become the first woman president of the United States. But what do you think, Mary?

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: Well, you guys are men, so you think like men. I'm a woman, I think like a woman. If I had accomplished as much as she had and had a young daughter who was beginning the seriousness of her career and possibly having children, I might not want to do it.

There's lots of ways to have an impact. But there's so much pressure on her from the whole Hillary vast conspiracy, if you will, the Hillary machine is not just all together. It's very loyal. It's remained loyal through all these Obama years.

And there's lots of pressure on her -- I think some of James and his colleagues might believe that she would somehow lessen the primary opportunities. But woman or man, whatever, what I've noticed in politics is that people are competitive. And I don't think she clears out the primary if she gets in.

BLITZER: All right, let's move on to this whole debate that's going on involving who the president should nominate to be the next secretary of state replacing Hillary Clinton, a little exchange between John McCain and John Kerry earlier today. Watch this.



SENATOR JOHN MCCAIN (R), ARIZONA: Thank you very much, Mr. Secretary.

KERRY: I think thank you very much, Mr. President. This is what happens when you get two losers up here. We're just having fun.


BLITZER: All right, so here's the serious question, though, I'll start, James, with you, once again. Who do you think would be a better secretary of state? Would it be John Kerry, the chairman of the Senate Foreign Relations Committee, or Susan Rice, the U.S. ambassador to the United Nations?

CARVILLE: I honestly have no idea. I would say John Kerry because I know Senator Kerry. I don't know if I've met Ambassador Rice before. But to be honest with you, both of them are imminently qualified people. I can't imagine either one of them would do anything other than a spectacular job. But I'm a political guy, not a foreign policy guy. I'm just unable to really render a very knowledgeable --

BLITZER: Let me rephrase the question, James. Politically speaking, who would the president be better off nominating?

CARVILLE: Politically speaking? Probably Ambassador Rice because she would represent sort of new and different administration, but I don't think people when they look at the secretary of state, I don't think that there's much of a political gain there.

I say that, but I say it without a lot of conviction or a lot of authority. I think the one that you want is the one that does the best job because if they get in there and do something wrong, the politics of it are horrendous for you. I'm just not that -- that's not my area of expertise.

BLITZER: Very quickly, Mary, what's your thought?

MATALIN: He cannot nominate Susan Rice and not because of the Benghazi scandal, but because of her previous tenure at state where she doesn't have a good record and her U.N. record is not good. We don't have time to go through the particulars, but I think Senator Kerry would not only be the policy and political wiser choice.

CARVILLE: Everything I've read about Ambassador Rice, she's imminently qualified for the job.

BLITZER: All right, you guys can continue this conversation at home right now. Thanks to both of you for joining us.

The royal line of succession could soon be adding a new name. Britain is buzz right now over the news the royal family is about to add another member.


BLITZER: Katherine, Duchess of Cambridge, is pregnant. CNN's royal correspondent Max Foster is over at the epicenter of the madness that's going on right now, the hospital where the duchess has been admitted with acute morning sickness. Max, give us the latest.

MAX FOSTER, CNN ROYAL CORRESPONDENT: Well, I think we're going to be here for months now, Wolf, but certainly the Duchess of Cambridge in the hospital on her own. Prince William came up with her, but there's some degree of concern as they came up to London.

Not in ambulances but in cars. He's just left the hospital and royal sources saying they're not overly concerned about the condition of the duchess. But they're concerned enough to come to the hospital. Also concerned now have to announce this early because she is still not 12 weeks pregnant.

They weren't planning to announce this at this point, but they were forced into it because of the hospitalization. And the queen and the Prince of Wales, William's father, were informed today that she was pregnant. So this was meant to be under wraps. It isn't any longer.

The duchess being treated in the hospital for -- being given nutrients being given hydration treatments and being given rest crucially, that's a crucial thing they must have at this point -- Wolf.

BLITZER: Give us a little sense of the excitement, the reaction in Britain right now to this news.

FOSTER: Well, we've been waiting for it for over a year now, Wolf, since the wedding. There have been all sorts of speculation, certainly the U.S. magazines have been full of speculation over the past year and a half. The princess of Wales, Princess Diana, got pregnant in her first year of marriage, as did the queen.

So people were expecting it. It's been a year and a half since though and certainly a huge sense of excitement. They weren't expecting it at this point. The media's been full of it. Magazines full of it. It's a truly global story.

Huge amounts of press here outside the hospital and in various locations around London, more coming in, certainly a very, very big story. We're expecting to hear more updates tomorrow. But no more updates tonight.

They don't want to give a running commentary on this, but we will be getting some sorts of updates over the next coming day. She'll be in the hospital, Wolf, for a few days.

BLITZER: We, of course, wish Katherine, the Duchess of Cambridge, only the best, hope she starts feeling a little bit better very soon. Max, thank you very much.

Other important news coming up, including the Syrian president, Bashar Al Assad, accused of many things, as you know. But the latest accusation could brand him a war criminal.


BLITZER: The White House has just responded to the new fiscal cliff offer from House Republicans. Let's bring in our chief White House correspondent Jessica Yellin. Jessica, how's the response?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi, Wolf. Well, it should not be a surprise that the White House is dismissing the House Republicans' offer as an unserious offer because it does not address a raise in tax rates. Here's a statement from Dan Pfeiffer, the communications director here at the White House.

He says in a statement in part, quote, "The Republican letter released today does not meet the test of balance. In fact, it actually promises to lower tax rates for the wealthy and sticks the middle class with the bill. The Republicans' plan includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close or which Medicare savings they would achieve."

He goes on to say, "Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won't be able to achieve a significant, balanced approach to reduce our deficit our nation needs."

So, Wolf, here at the White House, they received this letter earlier in the day. They've had time to process it and clearly the White House not seeing this as something that they want to even bargain with. They've been saying that the next move is up to Speaker Boehner.

And they wanted to see specific details so that they could actually begin the negotiations. What we see in this statement is that they feel he did not provide those details.

Now, the speaker and the president will see each other tonight we think at a holiday reception here at the White House. We'll see if they will actually discuss this -- Wolf.

BLITZER: All right, the Republicans hated the Democratic initial proposal. The White House hates the Republican counterproposal. We'll have much more in our next hour, Jessica, thank you.