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North Korean Nuclear Fears; Fiscal Cliff Negotiations Failing?; Fed Targets 6.5 Percent for Jobless Rate; Surprise Launch Sparks Alarm; Medicare Age: Could It Go Up?; Lugar's Parting Shot On National Security; To Collect Massachusetts Sales Tax; Pope Sends First Personal Tweet; Celebrating 12/12/12; "Merry Cliff-Mas"

Aired December 12, 2012 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: a dangerous breakthrough by an unpredictable regime. North Korea says it has orbited a satellite, raising fears it could some day could fire nuclear-tipped rockets at the United States.

Also, a new escalation in Syria's civil war. NATO says it has now detected the firing of unguided Scud-type missiles.

And we're also learning new details about why the latest phone call between President Obama and the House speaker, John Boehner, did not go well.

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

We begin with today's alarming news of North Korea's long-range rocket launch that's apparently managed to put a satellite in Earth's orbit. Here's why this is important to all of us. Even though North Korea is one of the world's poorest countries and many people are starving there, the Korean Peninsula is certainly among the most tense, the most dangerous places on Earth.

There are roughly a million North Korean troops on its side of the demilitarized zone separating it from South Korea. They face nearly 1,000 South Korean troops along the DMZ, as well as nearly 30,000 U.S. forces. Not only are they within striking distance of the launch site. But a successful launch of a long-range rocket shows North Korea is on its way to developing technology to fire a nuclear warhead potentially at Japan, possibly Hawaii and the United States West Coast.

And get this. A U.S. official tells CNN that the working assumption is that the North Koreans got outside help from others, including Iran. So today's launch is raising some huge concerns.

Let's go to our Pentagon correspondent, Barbara Starr. She's working the story for us.

I assume they are pretty surprised and alarmed by the successful launch over at the Pentagon?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Look, Wolf, because of everything you just mentioned, indeed, the U.S. military, the intelligence community have been watching North Korea for days now, 24/7, because they did expect to launch and North Korea had announced it. But North Korea also said it was having technical problems so a lot folks thought that launch may not come until next week. When it happened last week, there was a surprise.


STARR (voice-over): The North Korean anchor's excitement was clear.

UNIDENTIFIED FEMALE (through translator): The second version of satellite Unha-3 successfully lifted off.

STARR: Announcing the launch of a long-range rocket that put a North Korean satellite into orbit around the Earth. The North Koreans clearly achieved one goal, raising everyone's anxiety level.

JOSEPH CIRINCIONE, PRESIDENT, PLOUGHSHARES FUND: This is a step towards the ability to build a long-range missile that could strike parts of the United States.

DAVID WRIGHT, UNION OF CONCERNED SCIENTISTS: While I don't think this really was a great advance forward, I think in terms of the perception of North Korea, this probably has changed the way its neighbors think about it.

STARR: In an interview with CNN's Erin Burnett, Defense Secretary Leon Panetta wasn't about to say this three-stage rocket launch was a success for Kim Jong-un.

LEON PANETTA, U.S. DEFENSE SECRETARY: We still have to assess just exactly what happened here, most importantly, the final stage to determine really whether or not that did work effectively or whether it tumbled into space.

STARR: But North Korea did succeed in putting what U.S. officials describe as a rudimentary satellite into space. The U.S. is trying to determine if North Korea is now able to control the satellite. And while it's all the same technology that could some day result in a North Korea missile being able to hit the U.S., experts say, don't panic yet.

CIRINCIONE: It has to demonstrate that it cannot just get something up to space, but bring it back down. That requires a reentry vehicle.

STARR: The U.S. believes Iran may be one country that has helped North Korea fix its technical problems. Iran state media calls the accusation -- quote -- "baseless."


STARR: The U.S. maintains a small number of its own defensive missiles in both Alaska and California that would be capable theoretically of shooting down the North Korea missile if it came to that.

And as for the future, Wolf, as you said, the ultimate concern is that they could put -- the North Koreans could put a nuclear warhead on one of their missiles some day and in fact strike the West Coast of the United States. It could be years away, but nobody is saying don't worry about it.

BLITZER: I know the South Korean military is alarmed, the South Korean government is alarmed by what is going on right now. Even if the South Korean troops go on a higher state of alert, shall we say, on the Korean Peninsula right now, how does that impact the nearly 30,000 U.S. soldiers who are along the DMZ?

STARR: Well, at this point, there are U.S. troops pretty much throughout the northern area of South Korea and even further back into South Korea.

They are always, we are told, are at a very high state of alert. The surveillance, the intelligence assets remain on station 24/7 because of the concern that really North Korea could order its ground troops across the DMZ or start firing some day with its long-range artillery. They could keep it in North Korea and they could fire well into South Korea. So all of this is the constant concern. This missile test only raises the worries -- Wolf.

BLITZER: Barbara Starr at the Pentagon, thank you very much.

As if North Korea's rockets aren't enough to worry about, NATO today confirmed the dangerous escalation, another one, in Syria's civil war. It started detecting the launch of what are being described as Scud- type missiles inside Syria this week, missiles aimed at civilian populations controlled by the rebels.

Let's go to our foreign affairs correspondent, Jill Dougherty. She's got more.

What are you learning, Jill?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, U.S. military satellites are tracking those missiles and a U.S. official tells CNN that literally within the last few days four missiles were fired from Damascus north towards Turkey.

They didn't go over the border but this official says they got close.


DOUGHERTY (voice-over): The fighting in Syria grows more vicious. Troops loyal to Syrian President Bashar al-Assad reach into their arsenal for more deadly weapons, even the fearsome Scud missile. Experts say al-Assad has between 300 and 400 of those short- and medium-range missiles in his stockpiles.

Just Monday, opposition charged the regime forces launched a Scud from the suburbs of Damascus.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: If this proves to be true, it's just another indication of the depravity of Assad and his cronies. DOUGHERTY: What's more, the State Department says Assad's forces last week started using what's called barrel bombs.

VICTORIA NULAND, STATE DEPARTMENT SPOKESWOMAN: Which is an incendiary bomb that contains flammable materials. It's sort of a napalm-like thing and it's completely indiscriminate in terms of civilians, so very, very concerning and indicative of the regime's desperation and the regime's brutality.

DOUGHERTY: Human rights groups say such weapons produce extremely painful burns, often down to the bone, burns that are very hard to treat. The deadly turn comes just after worrisome signs that an increasingly desperate al-Assad is moving closer to possibly using chemical weapons. Chemical weapons plus Scud missiles would be a lethal combination.

BRIG. GEN. JAMES "SPIDER" MARKS (RET.), CNN MILITARY ANALYST: If you were to marry up a chemical capability, a chemical warhead onto the Scud, you now have an area denial weapon system, which is very nasty. It affects everybody. It doesn't discriminate from friend or foe.

DOUGHERTY: One means of stopping Scuds, Patriot air defense systems. And just a week ago in Brussels, NATO approved Turkey's request to deploy the weapons in that country to protect against any possible attack from Syria.

ANDERS FOGH RASMUSSEN, NATO SECRETARY-GENERAL: The mere fact that the missiles, the Patriot missiles have been deployed make it necessary for any potential aggressor to think twice before they even consider attacking Turkey.

DOUGHERTY: A Pentagon spokesman tells CNN Washington will be giving orders for the deployment of U.S. Patriot batteries and personnel within days.


DOUGHERTY: And all of means an increasingly desperate situation on the ground for those civilians. In fact, the U.S. administration today is announcing they are getting another $14 million for humanitarian aid. That brings the total up to $210 million and the focus this time, Wolf, is on children, especially nutritional supplements for them and also medical supplies.

BLITZER: Jill Dougherty from the State Department, thanks very much.

We will much more on Syria and North Korea later.

As for talks to avoid across-the-board tax hikes and cuts in government programs like defense, health care, among others, Tuesday's optimism over news of a new offer, a counteroffer between the White House and congressional Republicans turned to gloom today.

Our senior congressional correspondent, Dana Bash, is joining us with more details now on what's apparently going wrong.

Dana, what's the latest?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It was a very interesting moment today here when the former Democratic House Speaker Nancy Pelosi had some blunt advice for the current Republican House speaker in terms of learning how to get his caucus together to find a deal that can actually pass Congress and that the president will sign and those blunt words were -- quote -- "Figure it out."


BASH (voice-over): Sources in both parties say a Tuesday evening phone call between the president and Speaker Boehner did not go well.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Well, the president and I had a deliberate call yesterday and we spoke honestly and openly about the differences that we face.

BASH: CNN has learned at least part of the reason why. Tuesday's GOP counteroffer included a renewed explicit call for a -- quote -- "permanent extension" of Bush era tax cuts for the top 2 percent of Americans, according to a Democratic source familiar with the language. The Democratic source argued that proposing to permanently extend tax cuts for the wealthy that the president calls a nonstarter showed that Republicans are either -- quote -- "unwilling or unable" to make an offer that can pass and the president will sign.

CARNEY: Those magic beans are just beans and that fairy dust is just dust. It is not serious. And the president will not sign an extension of the Bush tax cuts for the wealthiest.

BASH: A Republican source responded to CNN that the White House is misinterpreting Boehner's office, that it also included a proposal to revamp the tax code down the road, which would make current tax rates moot. Regardless, it appears both sides are still talking past each other, even in private.

BOEHNER: Listen, there were some offers that were exchanged back and forth yesterday, and the president and I had a pretty frank conversation about just how far apart we are.

BASH: From the GOP perspective, the talks are back at a standstill because the president is offering too few spending cuts and too much in tax increases.

BOEHNER: The president has called for $1.4 trillion worth of revenue. That cannot pass the House or the Senate.

BASH: CNN is told that in a meeting of House Republicans behind these closed doors, Boehner expressed frustration with the president's negotiating stance. So far, he thinks rank and file angry at the president appears to be helping keep Boehner keep his troops behind him.

REP. TRENT FRANKS (R), ARIZONA: Because I think the speaker is at a profound disadvantage in the negotiations at it is.

BASH (on camera): Why?

FRANKS: Simply because he's got a recalcitrant Senate and a president that simply is out of touch with reality.

BASH (voice-over): Despite the renewed flash point over taxes, privately, more and more Republican lawmakers tell CNN they do anticipate giving in on raising tax rates for the wealthy. That's why publicly most GOP lawmakers are careful not to box Boehner in.

(on camera): If the speaker agrees to a raw deal that includes rate increases for the top 2 percent, would you go for that if it also included significant spending cuts?

REP. SHELLEY MOORE CAPITO (R), WEST VIRGINIA: Well, I think we would have to look at the whole package and I have said let's leave everything out there.


BASH: Now, Boehner said publicly he is still optimistic about getting a deal done, but privately in that meeting with House Republicans today, several lawmakers came out and told us that the speaker told them not to make any plans for Christmas -- Wolf.

BLITZER: Does that mean all 435 members of the House, 100 senators are going to be told to stay here during that Christmas week leading up to New Year's?

BASH: It is entirely possible. What leaders have done in the past, even as recently as last week, is sent home rank and file members while the leaders stayed and negotiated. But as we get closer to the holidays, it's entirely possible, even maybe probable that they will keep everybody here in case they actually do get a deal and they will be able to pass it fast.

We know that when things move, they actually move very quickly and when there's a will to get out of here, particularly as we're bumping up against Christmas Eve or even New Year's Eve, things can happen very fast. Wouldn't be surprised.

BLITZER: Yes. That's usually pretty good pressure on these lawmakers, Christmas coming up. They want to get out of here. Maybe they will make a deal, let's hope.

Thanks very much for that, Dana.

A major announcement this afternoon is supposed to encourage businesses to create new jobs and hire more workers. Will it work? We will have details in just a moment.

Also, the scary reason why Honda is recalling nearly a million minivans and SUVs.


BLITZER: The people in charge of the U.S. money supply now believe U.S. economic growth will be slower than they forecast. So, the Federal Reserve intends to keep stimulating the economy until the unemployment rate, which is now 7.7 percent, falls to 6.5 percent. That could take some time, though, even though the Obama administration is hoping the recovery will speed up.

Let's bring in our chief White House correspondent Jessica Yellin. She's working this story for us.

Jessica, what is the White House saying about today's dramatic, very important decision by the Federal Reserve?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, as usual, they are saying nothing. They don't want to comment on federal -- Fed policy from the White House podium because they never want to say anything that might rock the markets.

But I can tell you that Democrats generally view these moves as a positive sign something that will create predictability for business so that's something that pleases them. Also, behind closed doors here at the White House, Wolf, they have been meeting with business leaders today. The president's top advisers and chiefly his economic team has been meeting with CEOs and Wall Street honchos, trying to continue their charm offensive to help some of the nation's top business executives sell their deal on the fiscal cliff.

And this week, the White House had a major victory on that front. The Business Roundtable, the group that represents some of the top business CEOs, changed its position and came out in support of raising the tax rate on the top 2 percent as part of a larger fiscal cliff deal. In a conference call today, their chairman at the Business Roundtable said -- this is part of a quote -- that some executives are "unhappy that we want to even mention revenues or taxes," but he said "everybody's got to feel a little bit like they are getting nailed. And then we'll know that we've got a deal."

Now, Wolf, this is meaningful because Republicans met with the Business Roundtable, but White House officials also met with this group and helped them get to this place. And, you know, these guys said, bottom line, they knew, at the Business Roundtable, that they thought their prospects of a deal were grim and they realize this was a step they had to take to help both sides come to a deal, Wolf.

BLITZER: Maybe it will work, maybe it will help, because a lot of these guys are very, very influential.

Speaking of the fiscal cliff, Jessica, what did the Federal Reserve chairman, Ben Bernanke, say about these current negotiations?

YELLIN: Well, Bernanke is the man credited with coining the term "fiscal cliff". He did it back in February as part of testimony before Congress. Bernanke was speaking at a press conference today and he was asked two things.

One, does he see impacts from the fiscal cliff, the lack of a deal? Is it already rippling through the economy in? He said, yes. That's why you're seeing a fall in consumer confidence. You're also seeing less business activity because of that. And he said that it's imperative that Congress come to a deal with the White House, and that the White House act quickly to get there.

He also was asked, do you think that term is correct, fiscal cliff? Is it more of a slope, maybe? You know -- and he said, no. He thinks fiscal cliff is the right term because the economy will hit a brick wall if there is not a deal in January. He said it's not hype, Wolf.

BLITZER: So, he's basically saying, if we go over the fiscal cliff, if these lawmakers and the president don't reach a deal, potentially, we could get in to another recession? Is that what he's suggesting?

YELLIN: That is right. He said we could hit another -- that's right, we could hit another recession if we go over the fiscal cliff.

BLITZER: Let's hope we don't go over.

All right. Thanks very much, Jessica.

Shoppers that dive for cover as a gunman opens fire in a deadly shooting spree in an Oregon mall. We're going to give you the latest details, including the newly released identity of the gunman.


BLITZER: Internet pioneer John McAfee is on his way back to the United States.

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

What's the latest?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Hey, we have some new updates on Mr. McAfee.

Guatemalan officials escorted McAfee to the Guatemalan city airport this afternoon. "Reuters" reports he just boarded the plane to Miami after a deportation order from Guatemala. The 67-year-old American is wanted for questioning in Belize over the death of a neighbor. We've been following his story pretty closely.

McAfee was held in Guatemala for a week. McAfee made his fortune from the anti-virus software that bears his very name.

Also, investigators have identified 22-year-old Jacob Tyler Roberts as the lone gunman in the shooting at a suburban Portland mall. Roberts' motive remains unknown. There is no apparent connection between him and the victims. Officials described the rampage as, quote, "heinous, horrible, tragic crime". They say Roberts was armed with a semiautomatic rifle.

Take a listen.

(BEGIN VIDEO CLIP) SHERIFF CRAIG ROBERTS, CLACKAMAS COUNTY, OREGON: It appears that the suspect's rifle did jam while he was attacking individuals in the food court. However, he was able to get the gun working again. Clackamas Town Center had a lockdown procedure for this type of incident, and they did a great job implementing that program.


BOLDUAN: Roberts shot three, two of them fatally, before killing himself. Wolf will talk to an eyewitness of this tragedy coming up in our next hour.

Also, Honda is recalling 800,000 minivans and SUVs. Listen up. This is because the key can be removed when the car is not in park. If this happens, the vehicle might roll away. The recall affects Honda Odyssey minivans and Pilot SUVs from 2003 and 2004, as well as 230,000 Acura MDX SUVs from 2003 to 2006.

Honda says owners will be able to have the problem fixed at no charge. So pay attention there, parents.

And Facebook is also announcing a major overhaul to its privacy settings. The changes include a new tool that let's users asks for photos of themselves to be removed from the site. There's also an upgraded tool that let's users see what other people can and can't see on their Facebook pages. Critics have questioned how Facebook handles user data in the past.

It's really, Wolf, you know, privacy concerns have plagued Facebook. They describe it as a way kind of simplifying the way users already tweak their accounts.

BLITZER: A lot of people don't want pictures on their Facebook account that can be seen by a lot of other people.

BOLDUAN: Absolutely.

BLITZER: North Korea's surprise rocket launch. Could the West Coast of the United States be within the range of a North Korea warhead? I'll talk to one of Washington's leading global security experts.


BLITZER: Returning now to our top story, North Korea launching a long-range rocket and putting a satellite into orbit. The U.S. ambassador to the United Nations Susan Rice spoke out after a meeting behind closed doors of the United Nations Security Council to lays out the U.S.' position.


SUSAN RICE, U.S. AMBASSADOR TO THE UNITED NATIONS: We are very much ready to engage with our colleagues on the council and we will be searching for a clear and credible response.

(END VIDEO CLIP) BLITZER: Let's discuss what the next steps should be. Joseph Cirincione is the president of the Global Security Foundation Ploughshares Fund, also a member of Secretary of State Hillary Clinton's International Security Advisory Board.

All right, Joe, you heard Ambassador Rice say that there has to be a clear and credible response. What should that be?

JOSEPH CIRINCIONE, PLOUGHSHARES FUND: Well, we have a very strong resolution before the U.N. Security Council. It's likely that China will try to water down some of those provisions, but it's almost certain that the resolution will pass.

BLITZER: Do you don't think China will veto it?

CIRINCIONE: I don't think China will veto it. They had a strong statement calling this launch intolerable today. They don't want North Korea doing this.

BLITZER: China is the only ally that they really have the North Koreans. I wonder, do you think it's possible they didn't inform China in advance of the timing of this launch?

CIRINCIONE: It's possible they did not. People now suspect that the information that we had that North Korea was moving its rocket, something was wrong with it, was an intentional deceptive move? They thought there would be attempts to shoot it down. They wanted to fool Japan. They succeeded.

BLITZER: And it certainly does strengthen the new young leader Kim Jong-Un domestically, regionally, gives him some credibility.

CIRINCIONE: Absolutely. He just did what his father tried to do and could not. They have been trying since 1998 to launch a long-range space launch vehicle/missile, same technology, just a different payload. They failed in the previous four attempts. They succeeded in this.

It's not a rocket that can deliver a nuclear warhead. There are still major technological hurdles to go, but he's achieved the first one. It's definitely going to boost his standing domestically.

BLITZER: They have done in North Korea where a lot of people are starving and they don't have a whole lot of money what South Korea so far has been unable to do.

CIRINCIONE: Well, by choice, actually.

BLITZER: They haven't launched a satellite into orbit.

CIRINCIONE: South Korea has not. There's talk about it. This will undoubtedly spur some competition with South Korea. You'll see that. You'll probably see South Korea react with deployments of more anti- missile batteries. Japan will probably want to do that.

You have already heard call in Congress and defense talks that we have to spend more. We spend about $10 million a year already on missile systems. So although there's not much of a military capability that North Korea demonstrated. It has international ramifications that are going to destabilize. This is why the Security Council is condemning the move.

BLITZER: So how much of a real threat to the United States, whether Hawaii or the west coast, is this?

CIRINCIONE: We are not threatened any more today than we were yesterday. Let me give you one example. Iran put a satellite in orbit in 2009. They are still years away from turning that into any kind of ICBM capability. North Korea would have to do three things.

One, prove this system is reliable. It didn't work last time. It did work this time. Will it work next time, many more tests? They have to miniaturize their nuclear devices. They've had two nuclear tests, but they were nowhere near small enough to put on top of a missile. They have to test more of those.

And finally they will have to have a re-entry vehicle. You put it up, that's half the battle. You have to bring it back down and have it land where you want. They are still years away from that kind of capability.

BLITZER: How much cooperation has there been between North Korea and Iran?

CIRINCIONE: A lot. North Korea is the source of both Iran and Pakistan's medium-range missiles. So the Shahab that you see in Iran, the Gawi missile that you see in Pakistan, these are basically Korean missiles with a different paint job.

BLITZER: Joseph Cirincione, thanks very much for coming in. I suspect this subject is not going to leave us.

CIRINCIONE: That's right. Thanks for having me, Wolf.

BLITZER: Thanks very much. Exactly two years ago, I was in North Korea during a very tense time. Here's another look at the country's capital city, Pyongyang, which is very seldom seen by westerners. Watch this short report.


BLITZER (voice-over): The North Korean capital is a lot different than I thought. Take, for example, the subway system. It takes forever to get to the underground station. I never saw such long escalators, even longer than the ones at the Washington, D.C., metro. So deep that it could and does double as an underground bunker.

(on camera): We're here at the Prosperity subway station. It's deep underground. You saw how long it takes to get through those escalators. We are really, really deep underground and patriotic pictures all over the place.

As we are speaking right now, also very patriotic music going on. It's the nature of Pyongyang and North Korea. A lot of patriotism, a lot of propaganda music and a lot of propaganda pictures all the time.

(voice-over): New Mexico Governor Bill Richardson senior adviser Tony Namkun, he has been to North Korea 40 times going back to 1990.

(on camera): We're here on a subway train. We're about to take off. We'll see where it goes. I have no idea where it goes so far, so good. Tony, what do you think of this?

TONY NAMKUN, SENIOR ADVISER TO BILL RICHARDSON: It reminds me of an underground bomb shelter. It's a very colorful station with all of the paintings and color. It's very crowded, midday. A lot of people moving forward, moving backwards.

BLITZER: Do people pay for these --

NAMKUN: Yes, they do.

BLITZER: How much do they --

NAMKUN: Five Yuans per ride.

BLITZER: How much is that in New York?

NAMKUN: It's very little, 100 Yuans to the dollar.

BLITZER: So five cents.

NAMKUN: Most people use six-month passes for about 100 Yuan.

BLITZER: So a dollar?

NAKUM: Yes. Very cheap.

BLITZER: That's a pretty good deal. We're moving now. It's pretty smooth.

(voice-over): But sometimes it goes dark. Electricity shortages are always a problem in North Korea. We went to this high school where the students were in cold classrooms with overcoats. So cold you could see their breath. The rooms were not well-lit.

(on camera): All right, here we are, this is the square, as you can see, it's huge. It's magnificent and they often have events here, which is totally understandable. These are all government buildings over here.

You can see the Foreign Ministry and then see this marvelous structure over here. This is a brisk, cold day on this Friday here in Pyongyang, but it's nice. There's not a whole lot of traffic here.

It's icy. The streets are snowy. I see a lot of people shovelling and there you see the communist government. You see Lennon, you see Marx. It's brisk, it's lovely, it's a nice day here in Pyongyang.

(voice-over): We drove all over the North Korea capital, saw lots and lots of buildings. Some looked impressive from afar, but I couldn't help but wonder if they were just for show. Were there really people living inside?

I couldn't get access to find out. We also went to the national library where they have a lot of less than state-of-the-art computers. Folks can listen to their favorites. I was surprised by some of them.

(on camera): We're here at a library in Pyongyang and it's Kenny Rogers playing. How are you?

(voice-over): I had some fun when I saw the North Korean Girls National Ice Hockey team jogging outside the national ice rink.

(on camera): All right, we're running. We're running. Everybody is looking good.

(voice-over): I couldn't help but join them with my handheld camera shooting away. Wolf Blitzer, CNN, Pyongyang, North Korea.


BLITZER: That was exactly two years ago. I suspect a whole lot has not changed. We do know there is a new young leader getting ready to celebrate his first anniversary, Kim Jong-Un.

As you say, I was in North Korea along with the New Mexico governor, the former United States ambassador to the United Nations, Bill Richardson. He is going to join me later here during our 6 p.m. Eastern hour to talk about the new threat raised by North Korea's long range rocket launch. So that interview coming up later.

As fiscal cliff talks here in Washington right now showing little movement towards a deal, there's now a new report that President Obama may be willing to put raising the eligibility age for Medicare on the table. Is that true? We will discuss that and more in our "Strategy Session". Stand by.


BLITZER: Let's get right to our "Strategy Session." Joining us, the Democratic strategist and CNN contributor, Donna Brazile and the former White House press secretary under President George W. Bush, Ari Fleischer, he's also a CNN contributor. Guys, thanks very much for coming in.

It was intriguing what the president told ABC News yesterday, the possibility, very sensitive subject, of raising the Medicare eligibility age from 65 currently to 67.

It's something that's been floated, when you look at the evidence, it's not clear that it actually saves a lot of money. But what I've said is, let's look at every avenue. He didn't completely rule it out, by any means.

To which Nancy Pelosi was on CBS this morning saying this --

(BEGIN VIDEO CLIP) REPRESENTATIVE NANCY PELOSI (D), MINORITY LEADER: -- raising the retirement age, it does not get you that much money. So you're doing a bad thing when it comes to seniors and you're not achieving your goal so we're saying, does it work? Is it fair or is it just a trophy that the Republicans want to take home whether or not it achieves -- contributing to reducing the deficit and creating jobs.


BLITZER: You wrote an op-ed saying, Donna, no raise increase in the retirement age for Medicare from 65 to 67. Is this an issue that could potentially derail all of the negotiations, would the president have enough Democrats to support him if he goes ahead and bites the bullet and does this?

DONNA BRAZILE, CNN CONTRIBUTOR: I don't think so, Wolf. I've talked to a number of Democrats who are opposed to raising the eligibility age, but two simple reasons. One is that leader Pelosi talked about this morning, there's not a lot of savings in it short term.

The second reason, of course, is that millions of Americans will be forced out of insurance. They will not be eligible for Medicaid or their spouse or their own employer-based health insurance. And so they may not be able to --

BLITZER: I thought Obamacare was supposed to take care of that?

BRAZILE: Well, it will take care a small percentage of them, but not enough of them that might just fall through the cracks --

BLITZER: Why wouldn't Obamacare take care of that?

BRAZILE: Well, you know, it would be fully implemented in 2014 so I don't know what the parameters on in terms of raising age, but I don't think -- the millions of Americans who will fall between 65 and 67 when Medicare kicks in, I don't know that they'll be able to get coverage. That should be the focus, making sure that no American is without coverage during that critical period of their lives.

BLITZER: How important is this for Republicans to raise the eligibility age?

ARI FLEISCHER, CNN CONTRIBUTOR: Well, let me give you a couple numbers, Wolf and the Census Bureau just come out with it today. Right now, there are 43 million Americans over 65. By 2016, there will be 93 million Americans over 65 and of course, it's a blessing. We're living longer.

When Medicare was started for men who turned 65, they lived to 78. Now they live to 83. For women when Medicare was started, they lived back then to 81. Now they live to 85. So we are becoming older society and fortunately, we're healthy. We're living longer.

But part of that means is we're straining everything especially the young people. It raises $124 billion over 10 years, which interestingly is five times as much as the Democrats would like to raise by cutting loopholes to oil and gas companies, for example.

So that's a sum of money they think is worth getting. This is five times bigger and it's one of those modest changes that actually make it conform to Social Security so seniors are getting ready for this. The trick is you do it down the road enough so it's not a sudden or a surprise. But as a society we have to make some changes.

BRAZILE: If we close the Bush tax cuts for the wealthiest Americans, that will give us a substantial amount of revenue and I don't believe it's fair to put seniors on the chopping block before we put some of the other revenue --

BLITZER: That would raise about $400 billion over 10 years if those top 2 percent go back to the tax rates that existed during the Clinton administration from 35 percent to 39 percent --

FLEISCHER: Even after you do that, the debt still goes up $10 trillion --

BLITZER: Well, there are a lot of other cuts you got to do, spending cuts, additional tax revenues. Look, we have more than a trillion dollars a year in deficit spending. There's going to be pain. Listen to the outgoing senator, the Republican from Indiana, Richard Lugar delivering his finale speech today. Listen to what he said.


SENATOR RICHARD LUGAR (R), INDIANA: Currently the national security dialogue between the president and Congress, in my judgment, is one of the least constructive I have ever witnessed.

There is little foundation for resolving national security disputes or even the expectation that that is going to occur. All parties should recognize the need for unity in the coming year when events in Iran, Syria, Afghanistan, North Korea, and other locations may test American national security in extreme ways.


BLITZER: Will his colleagues, the new Congress, the House and the Senate heed that advice?

FLEISCHER: No. And I wish people had heeded that advice when George Bush was president. We really pulled apart on foreign policy. We didn't used to do that. I remember before when North Korea lied to the United States under President Obama about what they were doing.

And I said, the problem is not the United States. The problem is North Korea. I do wish people would communicate like that, but I'm afraid, Wolf, we crossed that partisan bridge a decade ago.

BLITZER: Should the president reach out to a Republican, for example, and ask the Republican to be, for example, secretary of state or secretary of defense or CIA? He's going to have a lot of openings in his national security area. Would that be wise? BRAZILE: Well, look, there are rumors that he's talked to Chuck Hagel. There are rumors that he is talking to a whole variety of people. But, you know, I want to go back to the Bush years.

Look, this started years ago and it wasn't helpful that, you know, in the Bush administration that Democrats were targeted who didn't get along with the Bush administration on a host of initiatives following 9/11.

So I think we just need to stop it. I agree with Senator Lugar. We need to find common ground especially on foreign policy. Ari and I were talking about Iran in the green room about the threat that they posed.

And the missile crisis now in North Korea, the Syrian conflict, I mean, there are so many issues right now that we need to come together and talk about as Americans not just as partisans.

BLITZER: Unfortunately, we need to leave it there on a positive note. Let's hope there is some bipartisanship on these national security issues. Good to have you here.

FLEISCHER: I try to keep myself out of here.

BRAZILE: I'm going to give him some advice for the Republicans too free of charge.

FLEISCHER: My kids grew up Redskins fans. I can't stay here too long.

BLITZER: The wait is over for Pope Benedict XVI. His many Twitter followers approaching a million right now, you're going to hear what the pope wrote in his first tweet ever.


BLITZER: A new tax for some users of Kate is back. She is monitoring that and some of the other top stories in THE SITUATION ROOM right now. What's going on here?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: At least this does not affect your holiday shopping this year. will start collecting sales tax in Massachusetts, the world's largest online retailer struck a deal with the state that goes into effect next fall.

Online retailers are not required to collect taxes unless they have a physical presence in the state. It's estimated Massachusetts has lost some $600 million in e-commerce sales tax revenue since 2007.

And after much discussion and attention, the pope has sent his first tweet ever. Pope Benedict XVI tweeted this. Quote, "Dear Friend, I am pleased to get in touch with you through Twitter. Thank you for your generous response. I bless all of you from my heart."

The pope is tweeting from the handle @pontifex, which means bridge builder in Latin. The pope already has 900,000 followers on his English language account. Just after his first tweet.

And people around the world are celebrating today's date of 12/12/12. It's the last of such triple digit date that most of us will ever see. It won't happen again until January 1st, 2101.

For some superstitious couples that means a rush down the aisle. One Vegas chapel say it will perform more than 100 weddings just today and you know there are some men out there going at least I can remember the date of my anniversary.

BLITZER: They should get married on 12/12/12 but at 12:00 noon, 12 minutes afternoon, 12 seconds after 12 minutes.

BOLDUAN: I don't if you're in the newsroom, but we were taking pictures of the clock when it hit that today.

BLITZER: That's pretty cool. Thank you.

During the next hour of THE SITUATION ROOM, by the way, CNN's Arwa Damon will report on the search for Syria's chemical weapons.

Also, big changes coming over at the Pentagon, we have the latest on who -- who possibly could be the next secretary of defense.


BLITZER: So how do you make the fiscal cliff negotiations funny? Let's check in to see what some of the late-night comics are saying.


UNIDENTIFIED MALE: You know, it's a special time of the year. We've been looking forward to it for months now. Everywhere you go you can see the twinkle in little children's eyes because they know in a few short weeks the fiscal cliff is coming to town. Merry cliff-mas -- Jim.

UNIDENTIFIED MALE: The president is asking for $1.6 trillion in revenue.

UNIDENTIFIED MALE: It's $600 billion in tax hikes.

UNIDENTIFIED FEMALE: Entitlement reform.

UNIDENTIFIED FEMALE: Discretionary spending.

UNIDENTIFIED MALE: I'm back. What happened? Is it over?

UNIDENTIFIED MALE: President Obama and John Boehner are still trying to reach a resolution in their fiscal cliff talks and it seems like neither side wants to bodge on the issue. It's getting a little heated between President Obama and Speaker Boehner. Take a look at what they've been saying to each other.

Yesterday Obama said, quote, "if we can get some leadership on the Republican side, we can probably solve this in about a week. It's not that tough."

Boehner then responded saying, quote, "I've sent the president our proposal. If he doesn't like our plan, he should come back with a plan of his own."

Obama responded to that saying, maybe I will. To which Boehner replied, maybe I will.


FALLON: And Mr. Obama replied, "Stop copying me."


FALLON: To which Boehner replied, "Stop copying me."

To which Obama replied, "Whatever."

To which Boehner replied, "Whatever times infinity."

To which Obama replied, "Damn, infinity. You win for now, Boehner."




CONAN O'BRIEN, HOST: According to a new poll that just came out, most Americans think that Santa Claus is a Democrat...


OBRIEN: Yes. Which is odd, because when you think fat old white man who hires unskilled labor, I think Republican, you know?


OBRIEN: Yes, I do.