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THE SITUATION ROOM

Resolving Fiscal Crisis; Al Jazeera Makes Major Move on U.S.; Behind-the-Scenes at the White House; Asteroid to Make close Call with Earth

Aired January 3, 2013 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: And you're in the SITUATION ROOM. Happening now, more diversity and more partisanship. The new Congress has sworn in. Newcomers are ready to do battle, but can they avoid the gridlock of the last Congress? I'll talk to one of the architects of a bipartisan fiscal reform plan, exclusive conversation with Erskine Bowles. That's coming up.

The Arab news network, Al Jazeera, buys a struggling cable channel founded by Al Gore, the former vice president. Is the Middle East government trying to buy American public opinion?

And we'll take you inside the White House with some just released official photographs of the Obama presidency. We have glimpses of history you haven't seen before.

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

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BLITZER: We begin this hour with 113th Congress that was sworn in today right here in Washington. You'd think it wouldn't take much to outdo the record of the approval rating of the previous Congress, but the 113th will be more diverse, and perhaps, even more partisan than before. And with some incredibly tough and contentious issues to solve, the battle lines are already being drawn.

CNN national political correspondent, Jim Acosta, is walking into the SITUATION ROOM. He's got a closer look. You've been studying it this new Senate and House. What do you see?

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT: It was a busy day, Wolf. Some things did not change. John Boehner is still the speaker of the House, but there are plenty of new faces on Capitol Hill and some of them have come ready for a fight.

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ACOSTA (voice-over): The newly sworn in 113th Congress is so diverse it's redefining the term ladies of the House. There are more women than ever before, roughly 100. Add that to the approximately 43 African-Americans, 31 Latinos, 12 Asians, and seven gay and bisexual members of the House and Senate and even the politicians, themselves, have taken notice.

REP. TAMMY DUCKWORTH, (D) ILLINOIS: It means that we reflect America more. You know, the district where I come from is a very diverse district, and it's good to see Congress starting to look more like the rest of America.

ACOSTA: But some things will stay the same on Capitol Hill. John Boehner survived some GOP defections to remain House speaker, not surprisingly, the eyes of the famously emotional Ohio Republican welled up with tears.

REP. JOHN BOEHNER, (R) HOUSE SPEAKER: The American dream is in peril so long as its namesake is weighed down by this anchor of debt. Break its hold and we begin to set our economy free.

ACOSTA: That will be no easy task, not with so many moderates now gone from the Senate.

(CHEERING AND APPLAUSE)

ACOSTA: In some of their places, more partisans, like Democrat, Elizabeth Warren.

Do you think both sides can work together up here?

UNIDENTIFIED FEMALE: I hope so. I really hope so.

ACOSTA: The banking industry critic will now seat on the Senate Banking Committee as a hero to liberals.

DAVID AXELROD, FORMER OBAMA CAMPAIGN STRATEGIST: There are people who sat in that Senate who will do anything to stop her and to stop the kinds of consumer protections that she was fighting for, and now, she's a colleague and --

ACOSTA: Now, they have to deal with her.

AXELROD: Now, they're going to have to yield the floor.

ACOSTA: On the other side of the aisle, Tea Party backed Texas Republican, Ted Cruz, signaled to CNN he will be fighting for conservatism, not compromise.

Were you disappointed on how the fiscal cliff went down?

SEN. TED CRUZ, (R) TEXAS: I was. I think it was a lousy deal. I think it raised taxes by $620 billion, which is going to hurt the economy and kill jobs.

ACOSTA: His party is already feeling feisty on the next battle to come, whether to raise the nation's debt ceiling.

SEN. MITCH MCCONNELL, (R) MINORITY LEADER: We cannot agree to increase that borrowing limit without agreeing to reforms that lower the avalanche of spending that's creating this debt in the first place.

(END VIDEOTAPE)

ACOSTA (on-camera): The last Congress was not just unpopular, it was unproductive, passing the fewest number of laws in at least 40 years. That's why a lot of Americans are hoping the 113th is the do- something Congress -- Wolf.

BLITZER: You know, some conservatives, though, say that's good. The less Congress does, the better off the American people are.

ACOSTA: That's right. But this Congress that just departed, the 112th, could not have been more unpopular. The 113th does not have a tough act to follow.

BLITZER: Yes. We'll see what happens. Thanks very much. Jim Acosta is going to be a busy guy.

With a new Congress in place and a new cabinet may soon be following, President Obama's though, still on vacation in Hawaii. Is he clearly, though, mulling over some choices to fill some very important second term vacancies? Let's go to Honolulu right now. Our White House correspondent, Dan Lothian, is standing by. What are you hearing about some of those opened positions, Dan?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, first of all, Wolf, administration sources telling me that there are no plans for the president to make any cabinet announcements while here on vacation, but that it's possible, though, not definite that that will happen when he returns to Washington next week.

These are key positions that need to be filled and some of the nominations could face stiff opposition.

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LOTHIAN (voice-over): CNN has learned Chuck Hagel, top contender for the Defense Department post whose prospects had appeared to be dimming amid criticism from pro-Israel groups and gay organizations over past comments, is still in the game. Close friend, former senator Max Cleland tells CNN, quote, "I understand his nomination is back on the table and I believe very strongly he should be defense secretary."

A strong endorsement that the president is not yet ready to make, but recently on NBC's "Meet the Press" did not count him out.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My number one criteria will be who's going to do the best job in helping to secure America.

UNIDENTIFIED MALE: Anything of disqualifying him?

OBAMA: Not that I see.

LOTHIAN: But Hagel supporters are concerned about the process of names being floated, exposed to harsh scrutiny before they are formally named.

ZBIGNIEW BRZEZINSKI, FORMER NATIONAL SECURITY ADVISER: Anyone with any record of involvement in controversial issues will always mobilize against the would-be appointee a whole phalanx (ph) of accusations and sometimes distortions.

LOTHIAN: If not Hagel, Michele Flournoy, under secretary of defense for policy, remains in the mix. At the treasury department where Sec. Timothy Geithner plans to leave sometime around inauguration, one name floated American Express CEO, Kenneth Chenault, has no plans to leave that company, a spokesman confirmed to CNN.

White House chief of staff, Jack Lew, is considered to be another choice for the job. And at the CIA, counterterrorism and homeland security adviser, John Brennan, and acting CIA director, Michael Morell, remain on the short list according to a source. History shows most presidents get the nominees they want, but in this political environment, there's no guarantee.

REID WILSON, EDITOR IN CHIEF, NATIONAL JOURNAL HOTLINES: It used to just be Supreme Court justices who inspire these sort of partisan free for alls. Now, it's bleeding down into a president's cabinet picks as well.

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LOTHIAN (on-camera): Now, the president has already made one choice for secretary of state, Senator John Kerry, for that position. He's expected to have a smooth confirmation. Now, I did talk to a senior administration official, asked him if the president had already settled on names for all of those positions but just not made them public. This official telling me, quote, "no decision is final" -- Wolf.

BLITZER: Dan Lothian in Hawaii for us. Dan, thanks very much.

Let's dig a little bit deeper right now. The politics behind filling the president's cabinet. Our sister publication "Time" magazine takes a closer look at that in this week's brand-new issue. "Time" senior correspondent, Michael Crowley, is joining us here in the SITUATION ROOM. Michael, thanks for coming in.

MICHAEL CROWLEY, SENIOR CORRESPONDENT, TIME: Thanks, Wolf.

BLITZER: It's never really completely easy getting confirmation. You nominate someone, getting them confirmed, but it looks like it's going to be a little bit tougher for this second term President Obama in certain key positions.

CROWLEY: Yes, it is. And I think you have to look no further than the recent example of what happened to Susan Rice who was Obama's putative choice to be secretary of state before he nominated John Kerry. Her nomination never was submitted. She never made to the Senate. She was shot down before Obama was able to officially tap her. It's a combination of the extreme partisan climate we're in. People are angry to each other over other issues. We've just come out of a heated presidential election. We have these fights over the budget. And on the other hand, the Republicans in the Senate are exercising their ability to filibuster and block up nominations to unprecedented degrees, according to a lot of experts who have followed Washington and the Congress for decades.

BLITZER: Your colleague, Michael Greenwald (ph), has a strong piece in the new issue of "Time" in which he says, among other things, "Obama's second term is shaping up to be full of non-stop, overt partisan warfare. Congressional scholars say the modern GOP has taken the confirmation process to new extremes." Go ahead and elaborate."

CROWLEY: Well, you know, Wolf, to some degree, these are powers that have always been there but the norms in Washington are changing. People are more aggressive about exercising powers they have. You know, there's just a little bit less of politeness, there's a little bit less of -- this is the decorum. This is how we've always done it.

People are saying, where is our leverage? How can we use it? How can we maximize it? And people are finding new ways to do it. They're being more aggressive. And again, it's just a very tense partisan atmosphere right now. We just came out of this election. There's a lot of bitterness over that. They're fighting over the budget.

And also, I think that there's evidence that shows that Republicans in Congress are more conservative than they were, thanks to a lot of backers, including the way primaries are working out on the Republican side. More conservatives who really have a stomach for a fight.

They're not interested in compromising, but they're not interesting in Washington traditions like deferring to the president to let him choose his team of advisers, which is kind of a long- standing Washington point of etiquette which has kind of gone out the window now.

BLITZER: What area where there could be some bipartisan cooperation is a sensitive issue that wasn't tackled during the first term, comprehensive immigration reform. The president clearly wants to do something this year. There are some Republicans, Marco Rubio, for example, he looks to be ready to cooperate, Lindsey Graham of South Carolina.

You think that they're going to get something done? I remember the Bush administration, President Bush, trying to work with Senator Kennedy, Senator McCain, couldn't do it then.

CROWLEY: I'm a skeptic, Wolf. I may be too cynical. And my prediction is not worth much more than anyone else's, but I would just say that the reason I'm skeptical is the passion about immigration within the republican base that I've seen personally and you probably have as well, but, you know, in my travels on the campaign trail, particularly, the Republican primaries, it was no issue that infuriated Republican primary voters like the immigration.

The rhetoric they used. I was at a town hall forum where I heard a guy talking about threatened to shoot people coming across the boarder. There is so much anger. Now, I haven't heard conservatives say that do you think the party is waking up, that some of the key Republican media outlets might be changing their tone, making a little bit easier coming some of the anger and making it easier for Republicans to make (ph) a deal, but I remain skeptical.

BLITZER: Don't you think the Republicans, though, want to reach out to Hispanic community and demonstrate that they are not simply walking away completely from them?

CROWLEY: That's right. And so, that's the bind they face, but I just think that the base is not there yet. The Republicans who vote in primaries, who will be voting in the midterm primaries as we go into the midterm Congressional elections and who will shape the next presidential primary, they're not there yet.

In my personal and anecdotal experience, I think according to a lot of the polling. And so, the party has got to find a way to bring them around and I just haven't seen that yet.

BLITZER: Michael Crowley of "Time" magazine, thanks for coming in.

CROWLEY: Thank you, Wolf.

BLITZER: A key architect to fiscal reform says Congress and the White House fell well short of what they had to do.

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ERSKINE BOWLES, CO-FOUNDER, FIX THE DEBT: We had a chance for our generation to do something big, to put our fiscal House in order, and we absolutely blew it.

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BLITZER: My exclusive interview with Erskine Bowles, the former co-chairman of the Simpson-Bowles commission on the dangerous cliffs, yes, cliffs that lie ahead.

And up next, sudden death from a sky. A top Taliban commander killed in a U.S. drone strike. Why the Pakistanis right now are furious?

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BLITZER: For a top Taliban commander linked to attacks on U.S. troops, death came from the sky suddenly without warning. The drone strike which killed several militants in Pakistan's rugged tribal area is causing some new controversy. Our foreign affairs correspondent, Jill Dougherty, has got the details for us. Jill, what's going on?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, U.S. official now is confirming the death of that key warlord. He does not saying how he died, but he does say that Mullah Nazir (ph) and his men were directly responsible for planning and carrying out cross border attacks on coalition forces in Afghanistan as well as providing protection for al Qaeda forces in Pakistan.

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DOUGHERTY (voice-over): Pakistani intelligence officials tell CNN what they believe was a U.S. drone has killed a key Pakistani- Taliban commander in South Waziristan. Mullah Nazir, also known as Maulvi Nazir Wazir, Pakistani warlord who sent his men to Afghanistan to fight U.S. and NATO troops. The Pentagon is not confirming Mullah Nazir's death, but senior officials are calling reports that he died a major development.

Nazir, they say, had a lot of blood on his hands. Pentagon spokesman, George Little, saying, any time a bad guy has a bad day, it's a good day for us. But in Pakistan, fury over Nazir's killing. A man who played both sides against the middle.

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Mullah Nazir was one of the top commanders of the Taliban. He had done a peace deal with the Pakistani government. So, unlike some of the Pakistani- Taliban, he wasn't regarded as an enemy of the Pakistani state, but he was certainly sending Taliban soldiers into Afghanistan to attack U.S. and NATO targets.

DOUGHERTY: At the state department, questions about the drone strikes brought the usual terse (ph) response.

VITORIA NULAND, STATE DEPARTMENT SPOKESWOMAN: Again, I'm not going to talk about intelligence issues at all from this podium.

DOUGHERTY: But the state department has had to deal with the fallout from previous strikes that have angered Pakistan. Nevertheless, relations between the two countries recently have been on the mend. The killing of the militants came even as Pakistan's ambassador to the U.S. Sherry Rehamn discussed new economic initiatives between the two countries with a top state department official.

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DOUGHERTY (on-camera): And a U.S. official says while it's still too soon to tell, the death of Nazir along with some of his deputies could push his network into disarray, and as a result, degrade al Qaeda's access to South Waziristan -- Wolf.

BLITZER: We'll watch the fallout together with you, Jill. Thank you.

Meanwhile, some stunning travel plans in the works. Sources telling me that the Google chairman, Eric Schmidt, will be traveling to North Korea on what's being described as a private humanitarian visit. But could Google be trying to expand its online empire into -- inside that tightly controlled communist nation? Now, the state department isn't to please. The spokeswoman, Victoria Nuland, had this exchange with a reporter.

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NULAND: Frankly, we don't think the timing of this is particularly helpful, but they are private citizens and they are making their own decisions.

UNIDENTIFIED MALE: Why don't you think the timing is particularly helpful?

NULAND: Well, in light of recent actions by the DRPK --

UNIDENTIFIED MALE: By that, you mean the missile?

NULAND: Correct.

UNIDENTIFIED MALE: And, did you express your view to them, I mean, that the timing was not right?

NULAND: They are well aware of our views.

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BLITZER: The Google chairman, Eric Schmidt, will travel with the former New Mexico governor, the former U.S. ambassador to the U.N., Bill Richardson, who's made a number of humanitarian trips to North Korea. Sources also tell me they believe Richardson will try to get the release of an American prisoner captured last month in North Korea.

Those are some pictures we showed you. I traveled with Governor Richardson to north Korea two years ago back in December 2010.

One of the major battles here in Washington will be over the debt ceiling. I'll talk about that and more with Erskine Bowles. He worked at a plan to try to fix this crisis. He's firm on where Democrats and Republicans should not be looking for a fight.

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BOWLES: We shouldn't negotiate on the full faith and credit of the U.S. government. That is crazy.

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(COMMERCIAL BREAK)

BLITZER: A deadly car bombing in Iraq once again stirring fresh fears of violence between various religious groups. Kate Bolduan is monitoring that and some of the other top stories in the SITUATION ROOM right now. So, what's the latest?

KATE BOLDUAN, CNN CORRESPONDENT: Yes. At least 15 people were killed and dozens more injured when the bomb went off at a bus station filled with religious pilgrims. It happened less than 50 miles south of Baghdad. The bombing comes after protests by tens of thousands of Sunni Muslim against the Shiite-led government. No group, though, has claimed responsibility for this attack.

A very different story. Actor, Gerard Depardieu, joked a few weeks ago that Russian president, Vladimir Putin, had sent him a passport, but now, it might actually happen. Depardieu plead his native friends in a high profile protest of government plans to raise taxes on wealth citizen. He says he already paid 85 percent of his income in taxes last year.

Now, Mr. Putin is offering the actor's citizenship if he wants it along with a 13 percent flat income tax rate that comes with it. Sure will be more about that.

And by the time the bill to avert the fiscal cliff was delivered to the White House, President Obama was some 5,000 miles away in Hawaii, enter the auto pen. The president reviewed a digital copy of the bill and then aides used the auto pen to put his signature on it, you see working right there, rather than have the commissioning special flight to send a hard copy of it to Hawaii.

Inauguration day for President Obama is less than three weeks away and if you want something special to celebrate with the 57th presidential inauguration store is opened just for you. Looking at some of the online stores, quote, "essentials." You can find a wide selection of buttons for some $5. Obama tube socks will keep you (INAUDIBLE) on up to a medallion set for a good $7,500. I know you will be getting a --

BLITZER: What about an auto pen? An inaugural auto pen?

BOLDUAN: I think those are pretty limited supply.

BLITZER: Yes. Limited auto pen.

(CROSSTALK)

BOLDUAN: I mean, I'm not often in Hawaii, so you don't have to auto-pen me.

BLITZER: Auto-pen. OK. Thank you.

After the fiscal cliff, a bigger cliff, the debt ceiling fight.

(BEGIN VIDEO CLIP)

BOWLES: For God's sake, I wouldn't wait until the last minute. We've had enough of this brinkmanship, moving from crisis to crisis.

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BLITZER: I'll speak exclusively with Erskine Bowles, the co- chair of that bipartisan panel which tried to head off this entire crisis.

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BLITZER: Congress went to the 111th hour and then way beyond before agreeing to a deal that keep the country from going over the fiscal cliff. That tax agreement was signed into law today but more cliffs lie ahead, including the very dangerous problem of raising the U.S. debt ceiling.

(BEGIN VIDEOTAPE)

BLITZER: And Erskine Bowles is joining us right now. He's the co-founder of the organization called Fix the Debt, which is obviously something important, former White House chief of staff under president Bill Clinton, and the co-sponsor of the Simpson-Bowles commission designed to deal with debt relief and deficit reduction. Erskine Bowles, thanks very much for joining us.

BOWLES: Thank you, Wolf. I'm glad to be with you.

BLITZER: All right. A lot of important issues on the table, but first of all, had you been a member of the House or the senate, how would you have voted for that fiscal relief legislation?

BOWLES: Look, I would have voted for it. You know, I think going over the cliff would have been an economic disaster for the country. It was too much, too quick, too abruptly, and if you look at cuts that were, you know, in the sequester, they're all in the discretionary items. None of them deal with the things you really need to slow the rate of growth and that's the entitlement programs.

And it did generate a little bit of revenue for the country, about $600 billion worth. So, I would have voted for it. It was a step in the right direction but for sure, Wolf, it was a missed opportunity. I've called this the magic moment, you know, where we had a chance for our generation to do something big, to put our fiscal House in order, and we absolutely blew it.

BLITZER: In the next few weeks, as you well know, there will be at least three crises points coming up raising the nation's debt ceiling dealing with what's called that sequestration, those automatic spending cuts and domestic spending and national security spending. Also, continuing resolution to keep the government operating. How would you deal with those crisis points in order to deal with what you want, which is the big picture and really getting to the bottom of this whole issue?

BOWLES: For God's sake, I wouldn't wait until the last minute. We've had enough of this brinksmanship, this moving from crisis to crisis. That is a foolish way for any organization, small or large, much less the U.S. government, the largest economy in the world, to run its organization. Here's what we've got to do. We have got to do -- we make the tough decisions.

And you know, we're only about halfway there of the things we have to do. We've got to make sure that we, you know, reform our tax code. We've got to broaden the base, simplify the code, get rid of some of this backdoor spending in the tax code. We've got to slow the rate of growth of the entitlement programs, particularly, health care.

If we don't slow the rate of growth of health care, it will absolutely bankrupt the country. And finally, we've got to make Social Security sustainably solvent. These are the big items we have to deal with if we're going to stabilize the debt and get it on a downward path this person (ph) to GDP. These guys have got to negotiate. They've got to start working together. They've got to put some of his ultra partisan politics aside and deal with these really big issues.

BLITZER: But you know Washington right now, it's very dysfunctional, despite the last-minute deal on the fiscal cliff, and there was some bipartisanship at the very, very end, but it looks like they only want to deal with what we call small ball. They're not ready to deal with that big picture unless you see something there that I'm not seeing.

BOWLES: Look, I can tell you, what I see are the things that you said. You know, there is great uncertainty out here in the country. The markets are going to react at some point in time and we've got severely to the lack of knowledge of what's going to go on, the uncertainty.

You know, and we do have the debt ceiling coming up. We do have the budget coming up. You know, we do have this sequester coming up. All of that creates great uncertainty. And what these guys have got to do is start acting like grownups and they've got to start negotiating, just like, I might add, we did in the 1990s when President Clinton actually sat down and negotiated with Newt Gingrich and Trent Lott.

Even when there was ultrapartisanship people say that partisanship is so much worse today than it was then. Hell, back then, they were trying to impeach the president. I mean, gosh, we've had partisanship but you've got to put that partisanship aside and work together.

BLITZER: Hearing what the president says repeatedly now when it comes to raising that so-called debt ceiling, it's going to have to be raised by the end of February, early March, at the latest. Now I want to play a little clip. Listen to the president.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If Congress in anyway suggests that they're going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation, which, by the way, we have never done in our history until we did this last year, I will not play that game.

(END VIDEO CLIP)

BLITZER: He says he won't play that game and Republicans are saying they're only going to raise the debt ceiling if there's an equal amount of spending cuts accompanying the raising of the debt ceiling. He says he's not going to play that game. Will he have any choice?

BOWLES: Look, that's the kind of brinkmanship I'm talking about. We shouldn't negotiate on the full faith and credit of the U.S. government. That is crazy. Why would we want to put our economy through that? But there are lots of things we can negotiate on. We do have the sequester. We do have the end of a continuing resolution. We have lots of things coming up that will force us to make some of these tough decisions.

BLITZER: Here's what Mitch McConnell wrote in an op-ed on Yahoo! News. And I'm going to read it to you because he's going after the president. He's the Republican leader in the Senate.

"Predictably the president is already claiming that his tax hike on the rich isn't enough. I have news for him. The moment that he and virtually every elected Democrat in Washington signed off on the terms of the current arrangement, it was the last word on taxes. That debate is over."

What he's saying is, it's now all about spending cuts, no more discussion of taxes for all practical purposes. No more increases in taxes. It's all spending cuts.

Do you agree with Mitch McConnell on that?

BOWLES: I actually don't. I think the primary focus has to be on spending cuts. You know, we have got to slow the rate of growth of health care in particular. We've got to make Social Security sustainably solvent. And we're going to have to do more in the discretionary front. So there's lots of work left to be done on the spending side, and we haven't had enough discussions of that to date.

BLITZER: Would you like to be the Treasury secretary?

BOWLES: No.

BLITZER: OK. That's a pretty blunt answer. Because your name -- you've seen your name floated out there as a possible successor to Timothy Geithner.

BOWLES: And the reason I say that is, look, I'm 67 years old. I've been gone from home for over a dozen years doing various public service things and I've come home, I've got nine grandchildren under 7, and I really want to stay home. So I don't want a full time job either in the public or the private sector.

BLITZER: One final question. How disappointed were you that the president rejected the Simpson/Bowles recommendations?

BOWLES: Well, look, I was disappointed at the time but I came to understand that what he was doing was -- his goal was to use it as a framework for his discussions that he had with Speaker Boehner back in the -- gosh, almost two years ago now. And his first effort to get a grand bargain. He felt that was the way to be successful. If it'd been right, he would have been proven to be a political genius. Unfortunately, he wasn't. They didn't get a deal done. And so I was very disappointed.

BLITZER: Yes, I think that was an historic moment to try to do that grand bargain. I know you and Alan Simpson worked hard on it together with the other members of your commission. It was clearly a missed opportunity, certainly with hindsight, at least that's what I think and I know you agree.

BOWLES: And we're going to keep working on it. This is -- you know, our generation, Wolf, yours and mine, we're the ones that created this fiscal mess. I don't care whether you're a Republican or a Democrat. Together we created this mess. And it's our responsibility to clean it up. We can't leave this until the next generation.

BLITZER: Erskine Bowles, thanks for all that you have done. Thank Senator Simpson for us as well, and we'll stay in touch --

BOWLES: I sure will. Thank you, sir. Good to talk to you.

BLITZER: Al Jazeera making a major move for more viewers right here in the United States. Up next, we have details behind the network's multi-million dollar purchase.

And the story behind this rare moment captured by a White House photographer. We're going behind the scenes in the Oval Office.

(COMMERCIAL BREAK)

BLITZER: The TV network Al Jazeera has bought a major foothold right here in the United States. It announced it purchase Al Gore's Current TV which is on the Channel Guide of 40 million homes right here in the United States. Gore and co-founder Joel Hyatt put out a statement saying, among other things, "Al Jazeera has the same goals and, like Current, believes that facts and truth lead to a better understanding of the world around us."

Let's discuss this with Brian Stelter, the "New York Times" media and TV correspondent, also joining us, Howard Kurtz, of CNN's "RELIABLE SOURCES", who's the Washington bureau chief of "Newsweek" and "The Daily Beast."

Brian, you broke this story in the "New York Times." So tell us, why does Al Jazeera want Current TV?

BRIAN STELTER, TV AND MEDIA CORRESPONDENT, NEW YORK TIMES: Al Jazeera has been trying and frankly failing for years to get on television here in the United States. It's been so much of uphill battle it's more like a cliff they're trying to climb up. And I think they eventually decided they had to buy their way in by buying Current TV.

BLITZER: Tell us about the timing of this deal, because you have an important and interesting nugget in your report.

(LAUGHTER)

STELTER: You know, for the days leading up to New Year's Eve, Al Gore and his partners were trying to get the deal done by midnight because of course higher tax rates were going to into effect. As it turned out the deal wasn't done until yesterday on January 2nd but they were trying to avoid those higher tax rates.

BLITZER: What do you make of this, Howie? You study the media. You've been watching what's going on. Why does Al Jazeera, which is based in Doha, Qatar, really want to have a foothold on the American media market? They already have Al Jazeera in English as well as Al Jazeera in Arabic which is very popular around the Arab world?

HOWARD KURTZ, CNN'S RELIABLE SOURCES: First, Wolf, can I note the unusual nature -- all right, the essential weirdness of a former vice president of the United States selling his network to an Arab- based network that is owned by a foreign government?

But leaving that aside, as Brian says, Al Jazeera English, which has actually won some praise in recent years for its international reporting, including among others from Hillary Clinton, has -- you know, wants to reach the big and lucrative American market. So it faces an uphill climb at this point for two reasons. One is, can it put the numbers on the board? Can it draw enough ratings that cable systems have been wanting to keep it one. Time-Warner Cable, the -- affiliated with the parent company of this network has already said no.

And secondly, can it deal with the image problem when it was battling the Bush administration during the war on terror that was left behind where some people thought the network -- the parent network had an anti-American tone.

BLITZER: You quote the author, Brian, of a book entitled "The Al Jazeera Effect." You have this in one of your reports. You say there are still people who will not watch it. We're talking about Al Jazeera. Who will say that it's a terrorist network.

How much of a problem will this be for the new owners of Current TV, whatever format they eventually decide to go with?

STELTER: You know, a lot of people don't even know this but the only journalist ever detained at Guantanamo Bay was an Al Jazeera cameraman. You know, this sort of disdain goes back along time. And it's deeply rooted. But I do think it is subsiding. Al Jazeera will definitely still have an uphill battle trying to get people to tune in. I hear today that some of the distributors that are going to carry the channel are getting some hate mail from some viewers who still don't want to see it on their cable lineups.

But money can change a lot of these kind of problems and Al Jazeera has a lot of money. They can put a lot into marketing and promoting the channel and trying to change the image of it.

BLITZER: I know that Al Gore and Joel Hyatt, Howie, they tried to get Current TV, make it a major player. They had Keith Olbermann working there for a while. It hasn't exactly worked out the way they wanted. Why?

KURTZ: It's been an extraordinarily low-rated channel, Wolf. Because it didn't have a clear identity. It -- even though it was co- founded by Gore, it didn't do a lot of politics. Then it decided to do more politics, the $10 million deal with Keith Olbermann blew up in a contract dispute. Other hosts, Eliot Spitzer went there. You know, haven't gotten much traction.

And so, you know, although it looks like Al Gore will make a substantial amount of money on this sale, from a critical point of view and from point of view kind of influencing the national conversation, Current TV just never got it done.

BLITZER: Do you think those shows are going to stay under the Al Jazeera ownership, Brian? You know, the Eliot Spitzer show, the Jennifer Granholm show, the former governor of Michigan, a whole bunch of other shows?

STELTER: No, I think Howie picked the best word for it. Extraordinarily low ratings. It's kind of amazing to look at 40,000 viewers watching. There are local stations in Memphis and Houston and Toledo that get higher ratings than that.

I don't think the shows will stick around. I think some of the hosts might possibly but it's unlikely. I think for the most part, Al Jazeera is buying this for the real estate, because it's beach front real estate, but not for the house, not for anything around it.

BLITZER: Yes, but you know --

KURTZ: A lot will --

BLITZER: Howie, go ahead. Make your point.

KURTZ: Just briefly going to say a lot will depend, Wolf, on how much appetite there is in the American market for international news. A lot of these organizations have cut back on that. They think Americans are mainly interested in what's going on here at home. And that of course is Al Jazeera (INAUDIBLE) with correspondents around the world.

BLITZER: Al Gore and Joel Hyatt, Brian, they may have had money but it's nothing compared to what the Amir of Qatar has. I've been to Doha, Qatar, I've been to Al Jazeera headquarters. They're getting ready to host the World Cup soccer games in Qatar. They've got a ton of money over there. If they want to start spending a lot of money, they could probably build Current into a major player.

STELTER: I think that's right. I think in some ways we're entering a new golden age of international news coverage. Now we don't know if anybody wants to watch that but look at the players, the BBC in Britain, Russia has its news channel, China is making inroads into the U.S. with a news channel. And here comes Qatar. Now the front of the pack because it has more homes than anybody else.

They would all like to compete with each other and frankly with CNN and other U.S. cable news channels. But it's really unclear if anybody wants to watch those channels.

BLITZER: Well, we'll see what happens. You know what, you have a lot of money, you could buy a lot of personalities, you could do some stuff. And I know for a fact that the Amir, the leadership in Qatar, they want to be players not only in the Persian Gulf, where they are, not only in the Arab world, not -- but internationally including right here in the United States. These are very ambitious folks. We'll see what they have to do.

I'm just guessing, Howie, you're going to have much more on this story coming up Sunday on "RELIABLE STORIES," is that right?

KURTZ: Your guess is correct, Wolf. Sunday morning, 11:00 Eastern.

BLITZER: Yes, 11:00 a.m. Eastern.

Brian, Howard, thanks very much.

Some glimpses of history you haven't seen before. We're taking you inside the White House with just-released official photographs of the Obama presidency. You're going to want to see these. Stay with us here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's go behind the scenes right now over at the White House. Through official photographs of the Obama presidency that have just been released today, some show glimpses of history we haven't seen before.

Joining us now is the former White House aide Jen Psaki. Most recently a spokeswoman for the Obama re-election campaign.

Jen, thanks very much --

JEN PSAKI, FORMER WHITE HOUSE AIDE: Thank you.

BLITZER: -- for coming. I love these pictures.

PSAKI: They're great.

BLITZER: That Chuck Kennedy took. This is one in the White House, December 28th, 2012, returning early from Christmas vacation, the president met with his top leadership to discuss the fiscal cliff.

PSAKI: Well, the body language tells you everything you need to know about this photo. You can -- you can imagine the president saying something like, on one hand, we could do this, or on the other hand, we could do that. If only there were thought bubbles, we would know where they would prefer to be than in this room.

BLITZER: You see the Republican leadership over there on the couch.

PSAKI: That's right.

BLITZER: The Democratic leadership on the --

PSAKI: On the right, the Democratic. BLITZER: On the other side. The vice president --

PSAKI: And the apples in the middle, always in the Oval Office.

BLITZER: Yes.

PSAKI: the symbol of apples.

BLITZER: I love the Oval Office.

All right. Take a look at the next picture. We'll put it up, show it to our viewers. The president reacts as John Brennan, his counterterrorism adviser, briefs him on details of the shooting at the Sandy Hook Elementary School in Newtown, Connecticut. The president later said when he went there, that was the worst day of his presidency.

PSAKI: Right. He did say that, and it clearly impacted him so terribly. I remember one of the days on the campaign, where he was the most down trodden was the day of the Aurora shooting. What I love about this photo is that the rug he's standing on has famous quotes that he loves. And one of them he uses often, which is the Martin Luther King quote, "The arc of moral justice is long, but it bends towards justice," and that's certainly applicable in this case.

BLITZER: And he went up to Newtown. I was there myself. A couple of days later. He delivered a powerful speech. He also met with some kids there. Let's put it up and show it to our viewers. There, he's pretty happy there, it's a great picture that Pete Sousa took.

PSAKI: It is. You know, the traveling staff used to say he was a baby whisperer because he was drawn to babies in rope lines and backstage, behind the scenes. And this was clearly such a great moment in an otherwise sorrow-filled day. And I know some of the siblings of one of the young girls who lost her life are in this photo as well.

BLITZER: Yes Such a nice picture.

Let's go to the next picture, a very different picture, October 2nd, 2012. The president rehearsing debate preparation. You see Ron Klain behind the desk. He was helping the president -- former chief of staff for the vice president. The president sitting there.

You were involved in the campaign.

PSAKI: Yes.

BLITZER: John Kerry played Mitt Romney.

PSAKI: He did, almost too well, to the point where he got under the president's skin, because he played him so well.

BLITZER: Did you ever watch any of those rehearsals? PSAKI: I didn't, I tried to stay out of the fray of that, but this was the day before the infamous first debate, if we can call it that. You have Ron Klain, who won the -- who ran debate prep there. Senator Kerry, clearly, they just ended a mock debate session here, and they're kind of going through what happened, what to work on, some fine points before the debate.

BLITZER: Here's November 6th, 2012, happens to be Election Day. The president is waiting for a concession call from the Governor Mitt Romney.

PSAKI: So this is a moment --

BLITZER: By the way, take a look and see what channel they're watching over there.

PSAKI: Well, clearly, we would like to fix it sometimes for you.

BLITZER: They're watching CNN. Because that's very important. Go ahead.

PSAKI: So, clearly in this photo, they're fine tuning. We all -- we all thought, including CNN, I think, that the race was going to be called much later, so they had a much shorter timeline to --

BLITZER: This is his speechwriter in the middle there?

PSAKI: That's Jon Favreau, his director of speechwriting for many years back in the Senate, David Axelrod, his senior adviser. You see the remnants on Jon Favreau there of the beard that many of the -- campaign staff grew. Now in the neighboring room is all of his friends and family and close campaign aides, celebrating. So they're really trying hard to concentrate and make sure they really capture the moment in the remarks.

BLITZER: Here's the next one. You see the president, he's obviously happy on Election Day with his wife.

PSAKI: Yes, he is. You know, so happy. There was just elation in that room. There was crying, there was hugging, there was screaming. You see Valerie Jarrett there, I think that might be Craig Robinson, the first lady's brother, in the back. This was really a warm room. People they felt very comfortable with who had been a part of the journey from the beginning.

BLITZER: All right. Let's take another picture. Very different picture over here. June 28th, 2012. Look at this, the president is over at the Walter Reed National Military Medical Center in Bethesda, Maryland, and he's actually praying with a wounded warrior.

PSAKI: Yes, these were -- these are moments that the president rarely speaks about. You know, he enjoys going to Walter Reed, he enjoys talking to the soldiers' families. There aren't media allowed in, so this was a White House photo that was released, I'm sure with the agreement of this family, and he's very much touched by these moments. They're really -- he keeps them with him when he's making decisions about global policy.

BLITZER: It's a nice picture. Very good pictures. I want to thank the White House photographers for those excellent pictures.

PSAKI: Yes. They're great.

BLITZER: Jen Psaki, thanks for coming in.

PSAKI: Thank you, Wolf.

BLITZER: And sharing with us your thoughts.

PSAKI: My pleasure.

BLITZER: Earth is poised for a close encounter, get this, with an asteroid. Up next, will there be any threat to the United States when we're closer to the asteroid than we are to the moon.

And at the top of the hour, it's the first day of a new session of Congress. The House speaker, John Boehner, already facing some push back from his own party.

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BLITZER: An asteroid is on track to make a relatively close call with earth. Key words, relatively close. In fact, so close that it will come between us and the moon and even closer than major communication satellites.

CNN meteorologist Chad Myers is tracking this asteroid for us.

Chad, we're talking pretty short distance, relatively speaking, when it comes to space.

CHAD MYERS, AMS METEOROLOGIST: Yes, only 14,000 miles. And that's just a little more than the old cars had for a warranty, a 12- month, 12,000-mile warranty. So yes, it's going to be very close. It's not going to hit the earth. We already know that. But what it's going to do, Wolf, it's actually going to come between where our satellites are, even the ones that take pictures for the weather and the geo -- GPS satellites, fly right by the earth, and right out the other side.

So it could impact satellites two different times, but that's unlikely. The satellites are very small and this thing is not very big at all. I mean, comparatively, we don't want to get hit by it. It's bigger than two, let's say, train cars put together, about 150 or 160 or so feet long, it weighs an awful lot, it would do a lot of damage if it did hit, but so far right now, it is not going to hit here.

February 15th, this is the closest approach. Now you would think, wow, can I look at it? Probably not without a telescope or a really good pair of binoculars. So it won't be quite that bright for that to happen. But the moon is 239,000 miles away. This thing is only going to be between about 14,000 and about 16,000 miles from the surface of the earth -- Wolf.

BLITZER: So the bottom line, Chad, give us a little perspective. Bottom line, folks are watching, should we be nervous, not so nervous? Excited? Give us a little analysis.

MYERS: Maybe excited, but you should not be nervous. This is the diameter of the earth, almost maybe 8,000 miles, when it's rounded up. There's another 8,000 and there's another 4,000. So compared to the diameter of the earth, it's going to be way out here, flying on by. Now considering that the moon is still another 225,000 miles away, this is a very close brush.

And this does come within a few hundred thousand or million miles of the earth twice a year. What we don't know quite yet is what the earth will do to this trajectory, to the orbit. Will it bend the trajectory just a little bit, so that the next time it comes by, could it be a little bit closer or a little bit farther away? All those things in 3-D space, kind of all get your head in a spin, so to speak.

BLITZER: It's spinning right now. Chad, thanks very much for that.

(LAUGHTER)

MYERS: You're welcome, Wolf.

BLITZER: And happening now, the opening of a new Congress. Will it see the kind of drama and dysfunction that marked the last one? Two new members are here this hour.

Out of the hospital and on her way out of a job. A closer look at Hillary Clinton's final days as secretary of state as she prepares to step down.