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Budget Battle; Hillary Clinton's Political Future; NYC Criminal System Clogged by Sandy?; Determining Which Sandy Victims Get Money; President Chavez Has "Severe" Lung Infection; Girl Shot By Taliban Leaves Hospital; Frank Asks to Fill In if Senator Kerry Leaves; Pelosi's Office "Photoshops" Official Photo

Aired January 4, 2013 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: a possible fix for the looming debt crisis without all the political mudslinging -- up next, why some are suggesting the answer could lie in a special $1 trillion platinum coin.

Also, a longtime friend of Hillary Clinton now speaking out about her health and some of the recent political attacks it's been generating. My interview with James Carville, that is just ahead.

And New York City's criminal system might be clogged for years to come because of massive flood damage from superstorm Sandy. We will explain.

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

Barely been 24 hours, and the air of bipartisanship that was ushered in with a brand-new Congress already seems to be shifting dramatically. Just weeks before the next major battle over the debt ceiling, Republican lawmakers are making it clear they are ready to fight the president.

Let's bring in our national political correspondent, Jim Acosta. He's over up on Capitol Hill, Statuary Hall, right in the middle of the Capitol, with the latest -- Jim.

JIM ACOSTA, CNN CORRESPONDENT: Wolf, it seems old habits die hard.

Remember all of those feelings of kumbaya yesterday as members of the 113th Congress were sworn in? Well, never mind.


ACOSTA (voice-over): After surviving a failed coup led by his own members, beleaguered House Speaker John Boehner wants to take that same fractured party into battle. In a closed-door meeting of House Republicans, a source in the room tells CNN Boehner said he will demand budget cuts that are larger than any increase in the nation's debt limit.

"With the fiscal cliff behind us," Boehner told his members, "the focus turns to spending." That puts Republicans in Congress back on a collision course with the White House after the president insisted earlier this week he will not negotiate over the debt ceiling.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I will not have another debate with this Congress over whether or not they should pay the bills that they have already racked up through the laws that they passed.

ACOSTA: If the president won't come to the bargaining table, one top Republican in the Senate, John Cornyn, says in an op-ed in "The Houston Chronicle," "It may be necessary to partially shut down the government in order to secure the long-term fiscal well-being of our country."

UNIDENTIFIED FEMALE: On this vote, the yeas are 354, the nays are 67.

ACOSTA: A preview of that brinksmanship came in the House where 67 Republicans, including House Budget Chair Paul Ryan, voted against $9.7 billion in aid for victims of superstorm Sandy, despite the tongue-lashing they got from New Jersey Governor Chris Christie.

GOV. CHRIS CHRISTIE (R), NEW JERSEY: Shame on you. Shame on Congress.

ACOSTA: The fact that the rest of the storm relief is now up in the air until a vote later this month was a letdown for New York and New Jersey lawmakers, even the freshmen.

REP. SEAN PATRICK MALONEY (D), NEW YORK: I'm new here. I don't know all the rules of Washington, but it seems like the rule here is to put off until tomorrow what should be done today.

ACOSTA: It was a return to the reality of broken government in Washington, after all that goodwill on display when Vice President Joe Biden was swearing in members of the 113th Congress and hamming it up with their loved ones.

One day later, we asked the vice president if things have changed. His response off-Cameron, "We're back to certifying the election."

Biden was heading into the House to confirm the results of the presidential election, a ritual mandated in the Constitution and a reminder of the few things that can get done without a fight.


ACOSTA: And asked whether the Congress is returning to that old pattern of brinkmanship, one top GOP aide told CNN -- quote -- "Absolutely," saying the next few months won't be fun.

Wolf, we should mention getting back to the vote on the aid for victims of superstorm Sandy, Chris Christie and the governor of New York, Andrew Cuomo, put out a joint statement earlier this afternoon saying that they are expecting that the rest of the money, the $51 billion that was approved by the Senate in the last Congress, will be approved later on this month.

But, Wolf, that is no guarantee. Both sides of Congress have to work that out over the next few weeks.

BLITZER: It is going to take a few weeks. The Senate has got to come back. It is not an easy process to appropriate all that money.

ACOSTA: That's right. The House is saying they are going to have a vote on the rest of that money potentially on January 15.

But there were members like Darrell Issa who was on the House floor earlier today saying we want a clean bill, we don't want all of that pork in the bill that was in there earlier in this process. At least in his view, there was pork in that bill. And so they are going to have to work on whether or not some of those items get pulled out of the final bill and is that going to be acceptable to members of the Senate when that legislation goes over to that side of the Capitol?

It's all really up in the air at this point.

BLITZER: Yes. They start from scratch. With a new Congress, whatever was passed the last Congress is irrelevant right now. Jim Acosta, thanks very much.

Imagine if all the political mudslinging over the debt crisis could be avoided entirely and there was a much easier fix to the problem. Some are suggesting just that and it would come in the form of a $1 trillion platinum coin.

Brian Todd is walking into THE SITUATION ROOM with this unusual story.

We are laughing, but some people are taking it seriously.

BRIAN TODD, CNN CORRESPONDENT: They are, Wolf. It sounds crazy, but some economists, some legal scholars say it is legal and could be done.

With the president and Congress hurtling toward another showdown that could slam the economy, something like what I'm holding in my hands could be the key.


TODD (voice-over): The president says he won't negotiate with Congress over lifting the debt ceiling.

OBAMA: I will not play that game.

TODD: Republicans say:

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: The president may not want to have this debate, but it's the one he is going to have it, because the country needs it.

TODD: So while they debate over a debate and race headlong into the debt ceiling, is there a magic bullet to solve the crisis? Try a magic coin. Some economists, legal scholars and now even a congressman are suggesting a $1 trillion platinum coin could be minted and the government could use that to pay the debt, avoid default and preempt the debt ceiling crisis.

Democratic Congressman Jerrold Nadler of New York says: "I'm being absolutely serious. It sounds silly, but it's absolutely legal."

I spoke to economist Joe Gagnon.

(on camera): Why do you think it is a good idea right now?

JOE GAGNON, ECONOMIST: Well, I think it is better than a government shutdown. It is better than defaulting on the debt. It is better than the bad alternatives.

TODD (voice-over): And, technically, it does appear to be legal. Here's how.

(on camera): The U.S. government can print new money, but under law there is a limit to how much paper money can be in circulation at any one time. There are also rules that at least limit the denominations that gold, silver and copper coins can be, but there is no limit on platinum coins.

The president can issue a platinum coin in any denomination. Treasury can mint it and then just print on it $1 trillion. The president can order that coin to be deposited at the Federal Reserve.

Then, says Gagnon:

GAGNON: And the Fed would credit the Treasury's account. So when the Treasury writes checks to pay people, the Fed will cash them.

TODD: And that money would never be in public circulation, so some believe it wouldn't cause inflation. But Gagnon says it will only temporarily pay America's bills, won't bring down its massive debt long term. That's also some conservatives' argument against it.

STEPHEN MOORE, SENIOR ECONOMIC WRITER, "THE WALL STREET JOURNAL": I think this is waving pixie dust over the debt and pretending the debt is going to go away by this, what I view as just another one of these Washington gimmicks. Minting new coins is not going to do anything about dealing with that fundamental problem.

TODD: And what if the coin got stolen?

Remember this from Dr. Evil?

MIKE MYERS, ACTOR: If you want it back, you are going to have to pay me $1 million.



TODD: Well, apparently, then the government could just mint another one of those coins. By the way, none of this requires congressional consent, so that is what makes it attractive to so many observers here. We have tried to see if this is something the president would actually consider. The White House hasn't gotten back to us on this yet.

BLITZER: I thought these coins are supposed to be commemorative.

TODD: Well, the section of the law that authorizes all of this was meant to allow for commemorative coins and pieces like that to be printed by that decree. But under that same law, the treasury secretary does have the authority to mint the coins in any denomination he or she sees fit.

If they wanted to mind this one for $1 trillion, $2 trillion, they could have done it.

BLITZER: It wouldn't be a $1 million coin. It would be a...

TODD: One trillion dollar coin. Got to get the pinkie right.


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

Wall Street has just ended a strong abbreviated week. Investors are digesting the latest jobs report showing unemployment unchanged at 7.8 percent at the month of December, 155, 000 jobs added.

Joining us now to break down these numbers politically, our chief political analyst, Gloria Borger.

How do these latest numbers play into the whole political debate that is coming up over the next chapter of our fiscal cliff?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: At this point, if it is kind of steady as you go, it is not exactly transformative, because each side can make an argument.

And the White House can say, OK, we are heading in the right direction. We are steady. If you mess around with things and you don't approve the debt ceiling, you are going to throw a bunch of uncertainty into the economy and it is going to start tanking and heading south.

And Republicans can make the argument that they are making, which is unless you seriously reform entitlements, America is going to turn into Greece. At this point, each side can use the economy so long as it remains kind of flat, hopefully headed in the right direction, to their advantage.

BLITZER: The president has got some major decisions he's got to make. He is in Hawaii. He is going to be coming back to Washington over the weekend. We expect maybe as early as Monday or Tuesday, he will start making some more Cabinet announcements and nominating new positions.

Speculation Chuck Hagel could succeed Leon Panetta as the secretary of defense. What do you hear? BORGER: Since mid-December, we have been reporting that Chuck Hagel was at the top of the list, the front-runner to be next secretary of defense. The longer his name stayed out there, there was some sense that perhaps the president was wavering on that.

The latest reporting we have is that in fact he is still the front- runner to be the next secretary of defense and that could come, that announcement could come early next week, along with a bunch of other announcements, for key Cabinet positions.

I have been told, Wolf, that at this point, the president has not yet checked that final box, although that could happen in an hour or an hour ago, but that is my latest. But the sense around Washington with people who are knowledgeable about the president's thinking is that the bet is that it will be Chuck Hagel.

BLITZER: I just got an e-mail from a source of mine who says POTUS hasn't offered the job to anybody, at least not yet, technically. Maybe they are getting closer and closer and closer.

BORGER: Well, he is in Hawaii.

BLITZER: Yes, he is in Hawaii. Maybe he is not going to offer it until he gets back.

BORGER: Right. The thinking is that Chuck Hagel will be offered that job. And he has already had his friends lobbying for him for it, although I might add it is controversial, Wolf. This is somebody who in the past has been against sanctions, who has been for talking to Hamas.

And there are Democrats, as well as some Republicans, who are a bit skeptical about this. As you know, Chuck Hagel is a Republican, serves on the president's intelligence advisory board, is a personal friend of the president. But there could be some rocky going on this nomination. The question is whether anybody in the Senate would actually put a hold on the nomination.

BLITZER: I know he has been thoroughly vetted and as far as that is concerned, he is fine for the position. We will see what happens. But he is on the president's foreign intelligence advisory board.

BORGER: That's right.

BLITZER: He had to be vetted for that to begin with.

BORGER: Exactly.

BLITZER: Thank you.

It has been a rough couple of months for Hillary Clinton. I will talk to a close friend of the Clintons, James Carville. He is here. We are going to talk about how all of this could affect a possible Hillary Clinton presidential run in 2016.

Plus, warehouses storing police evidence are still damaged from superstorm Sandy. Could it lead to criminals going free?

And can you tell this picture has been Photoshopped? We are going to tell you how and why Nancy Pelosi has doctored an official photo of the new Congress. We're going to tell you why.


BLITZER: Days after the last House of Representatives ignited a huge political firestorm, refusing to vote on a $60 billion aid package for the thousand of superstorm Sandy victims, both chambers of the new Congress have approved a smaller $9.7 billion measure. The remaining $51 billion will be considered later this month.

Money is only one of the many challenges facing New York and New Jersey in the wake of the storm. Another major problem, two facilities housing thousands and thousands of barrels of evidence in criminal cases are damaged and it could take a huge toll on the courts.

Mary Snow is joining us with details on what's going on.

What is going on, Mary?

MARY SNOW, CNN CORRESPONDENT: Wolf, there are some cases right now making their way through New York City courts where evidence can't be produced. And it's unclear at this point how extensive a problem this is going to be in criminal trials.


SNOW (voice-over): This flood damaged warehouse right on New York harbor could actually clog the city's overflowing criminal system for years to come. It sits in an area of Brooklyn devastated by superstorm Sandy. Inside it, there are thousands of pieces of police evidence ranging from DNA to narcotics to guns that right now can't be touched.

RAYMOND KELLY, POLICE COMMISSIONER, NYPD: Significant flooding has taken place. No question about it. We are still trying to sort through this and, you know, assess the total damage. It's a -- it's a big job.

SNOW: That was back in November. The police department says it still hasn't been able to get into this facility and a second one because sewage contamination has made them unsafe. But trials can't wait.

CNN legal contributor Paul Callan is a former prosecutor.

PAUL CALLAN, CNN LEGAL CONTRIBUTOR: It could be a major problem if evidence that has been damaged is critical to proving a case.

SNOW (on camera): The NYPD says so far, there have been six criminal cases where police have said there is evidence but it's not accessible.

(voice-over): Those cases have not been dismissed. In cases involving DNA and narcotics, prosecutors rely on results of tests done that are on smaller samples of the evidence. Police say the results are kept at a different facility that was not surprised by the storm.

(on camera): What about cases where there is, let's say blood evidence, where the physical evidence is in that warehouse but test results are in a different location?

CALLAN: You would have the issue of if there is enough for the defense to fairly test the sample to determine whether it's the defendant's blood or not. So, I -- it wouldn't necessarily be fatal to a case but, you know, in criminal cases, beyond a reasonable doubt is a very, very high standard of proof. And if you eliminate the physical evidence, you can put a serious dent in the prosecutor's case.

SNOW (voice-over): The NYPD has consulted with its counterparts in New Orleans where evidence and records were destroyed following hurricane Katrina. The New Orleans Police Department says, one key difference is that flood waters remained at the courthouse for weeks where evidence was destroyed and they had the job of cataloging evidence that could be salvage.

DEPUTY CHIEF KIRK BOUYELAS, NEW ORLEANS POLICE: It took years. It is not something that can be easily done. And in New York you are looking at facilities that are much more vast than what we had here in New Orleans. So that compounds it even more.


SNOW: Now, as far as the damage here in New York, NYPD says it expects to get into those facilities to assess the damage in coming weeks. It doesn't believe that all of the evidence was damaged in those facilities. But right now, it's unclear. Meantime, the chief attorney for New York's legal aid society says that he definitely expects more cases to emerge where there is going to be a problem. He cites 213,000 criminal cases each year throughout New York City -- Wolf.

BLITZER: Couldn't more be done to foresee what potentially could happen, leaving all these evidence in a relatively vulnerable area, facility on the water?

SNOW: Yes, when you see the pictures of where the facility is, it was surrounded by water, they are certainly vulnerable. The police department says that it did take precautions. Obviously, that didn't help with the flood water and the storm.

It also says, though, in August, it had been looking at different facilities, that it had planned to move out of that location. Obviously, that's going to be something that's done in the future to make sure that this won't happen again.

BLITZER: Yes, that would be smart.

All right. Thanks, Mary. Thanks very much.

SNOW: Yes.

BLITZER: Let's talk more about the relief aid for the victims of superstorm Sandy. Joining us now is Ken Feinberg. He's the founder and managing partner of the law firm Feinberg, Rozen, LLP. Also, someone who's work on these kinds of issues over the years.

You have given away, what, $25 billion to victims of 9/11, Katrina and several others, BP --


BLITZER: -- and Virginia Tech and some of these others.

So, what is your role now as far as superstorm Sandy is concerned?

FEINBERG: Liberty Mutual, private insurance company with claims all over the mid Atlantic region, has decided to set up a program to accelerate the process of insurance claims arising out of Sandy. Anybody who's an insured with Liberty first tries to resolve the claim in a normal course with Liberty Mutual.

If that doesn't work, Liberty has asked me to set up an independent mediation program designed to place the insured and the insurer together with a neutral third party to try to resolve the claim quickly within a matter of four to six weeks without result to litigation.

BLITZER: So, you'll be mediating between Liberty Mutual, if you will, and individuals who aren't satisfied with the money they are going to get from Liberty Mutual if they paid all the premiums over the years.

FEINBERG: That's right. Homeowners, commercial establishments, business interruption claims, or other claims arising out of Sandy, automobile insurance claims, all of those claims first go to Liberty. Now, in Katrina, Liberty resolved like 95 percent of those claims. But you're not getting satisfaction, then this program will accelerate the processing and effort to get it resolved.

BLITZER: But you are retained by Liberty Mutual, right?

FEINBERG: Liberty Mutual is paying the entire cost of the mediation program. I'm going out and reach out to about 40 mediators. So, we will have enough mediators available, Wolf, to handle the claims if as I suspect there are a relatively modest number that get passed to this state.

BLITZER: This is private money going to individuals. You have nothing to do with the government. You're not giving government money away that Congress will appropriate.

FEINBERG: That's right. This is a purely private effort by an insurance company to do the right thing but its insurance and accelerate the processing of these claims in an effort to get them resolved quickly without going to the court.

BLITZER: All right. At some point, let's say they get the $60 billion through Congress and they're going to start distributing money to individuals. You're not going to have any role in that, but you have given away a lot of money.

Give us some advice how do they do that, how they should make sure that the people who really need it, get it, they are not phony operations that people just try to suck away a little money?

FEINBERG: Most important, two rules I've learned, two conditions I've have learned over the years. One, get the money out fast, don't delay the processes.

BLITZER: Whether you say get the money out fast, how do you know the money is going to the people who need it the most.

FEINBERG: The second thing you have to do is have a fully transparent process with the right oversight, the right people reviewing these claims or these requests for compensation so that you have a certain comfort level even with BP, we had over a million claims. There were about 12,000 that were fraudulent because we had a pretty effective antifraud mechanism in place.

BLITZER: Because right now, we are hearing a lot of stories of people who aren't getting the money they thought they should be getting from insurance companies. Forget about the government right now, but from insurance companies.

FEINBERG: This program --

BLITZER: The program that you're involved in.

FEINBERG: That I'm involved in is designed to deal with the concern about delay and about amount. And I am confident based on the Katrina experience that this mediation program will be reserved for the relatively modest number of claims with the insured does not get satisfaction.

BLITZER: Because you had a major decision after 9/11 or Katrina or BP, you know, how much is a life worth -- for example, if someone died in 9/11 at the World Trade Center. You had to determine how much the survivors would get. Those are impossibly difficult decisions to make.

FEINBERG: They are all difficult. Now, with the insurance Sandy claims, you will probably see disputes over is it wind and rain covered, flood not covered.

BLITZER: Unless you have flood insurance.

FEINBERG: Unless you have flood insurance, that's not Liberty Mutual. Is it -- what was the business interruption? Because my commercial establishment was closed, I lost a certain amount of profit or income, revenue, is that covered? Auto, what's the value of the automobile that was destroyed? That's a relatively straightforward calculation.

BLITZER: Does it a difference if you're just -- it's your house, your primary residence, which was destroyed along, let's say, the southern shore of Long Island, or if you are a millionaire and you have a second home on the Jersey Shore, the Long Island shore, do those issues even come into effect?

FEINBERG: In the private insurance business, what is the contract? What's covered? What's insured? Your first home? Second home? Your third home?

You have to look at the policy. Liberty's made it very clear it wants to resolve --

BLITZER: What about the government money allocated?

FEINBERG: Now, most of that government money I suspect I haven't looked at the appropriation, I bet you the great bulk of that money is for community purposes, bridges, roads, sewers, water. I doubt that much of that government money is going to be reserved for individual payments to individuals residing in this area, FEMA, and most of that money I suspect as in Katrina is going to go for community wide improvements.

BLITZER: One final question, Ken, what was the most difficult kind of decision you had to make in giving away money, government money to the victims of 9/11 or BP or Katrina, the Virginia Tech shooting, these areas where you were asked to distribute funds?

FEINBERG: In all of these cases, whether BP or 9/11 or Virginia Tech, any of them, the emotion that you confront with people who justifiably have been wronged through no fault of their own, they are innocent victims, they are frustrated by life's misfortune, and you have to try and empathize with people, understand what they confront -- and that's the most difficult is being sort of a psychiatrist in trying to gauge that emotion and try and deal with them as best you can.

BLITZER: Ken Feinberg, good luck.

FEINBERG: Thank you.

BLITZER: Thanks for coming in. Ken Feinberg's got a tough job ahead of him.

So, can you tell this picture has been PhotoShopped? Take a look at it. We'll tell you why and why Nancy Pelosi office doctored the photo of the new Congress.


BLITZER: This just coming in to THE SITUATION ROOM. A plane has crashed into a home in Florida.

Kate Bolduan is here. She's got more on what's going on.

What happened?

KATE BOLDUAN, CNN CORRESPONDENT: Yes, this and some other stories we're watching. It's just coming in to us, Wolf. The sheriff's department of Flagler County, Florida, which is about a half way between Orlando and Jacksonville, confirms that a small plane with five passengers crashed into a home in Palm Coast. You're seeing some video from the scene today. Initial reports indicate the pilot declared an emergency about 10 minutes before the crash, after reporting the plane was severely shaking.

The plane struck a house on a street called Utica Path. Still don't have any word on injuries. But of course, we'll bring you more information as we get it on this story.

Other stories we're watching, Hugo Chavez is battling what is being called a severe lung infection that's causing respiratory failure this according to a top Venezuelan official. The infection could be very serious because Chavez's immune system has already weakened from cancer.

The Venezuelan president has been hospitalized in Cuba since undergoing cancer surgery more than three weeks ago though it's unknown what kind of cancer Chavez is battling.

And an amazing story of recovery coming out of London three months after being attacked by Taliban gunmen, Malala Yousefzai has been discharged from a British hospital. If you can even believe it, she was shot in the head for speaking out advocating education for Pakistani girls.

They are still to work to be done though for the 15-year-old now an international symbol of courage. She will likely undergo cranial reconstructive surgery very soon, but an amazing story of recovery there.

His term in the House is over, but Barney Frank could be back on Capitol Hill in no time it seems. The former Massachusetts lawmaker told MSNBC he asked Governor Deval Patrick to appoint him as a temporary senator if John Kerry becomes secretary of state.

Frank says he wants to be a part of the looming battle over the debt ceiling and it will be a rough battle, but says he has no interest in running for the position permanently.

Let's see if you can spot the difference between these two photos we're showing you of the Democratic women in the new Congress. One of the photos released by Nancy Pelosi's office and the other shows who is standing on the Capitol Hill.

It is pretty obvious that four congresswomen have been photo shopped into the picture. Pelosi was asked if she considered it an accurate historical record today. Here is what she said.


REPRESENTATIVE NANCY PELOSI (D), MINORITY LEADER: It is an accurate historic record of who the Democratic women of Congress are. It was an accurate record that it was freezing cold and our members had been waiting a long time for everyone to arrive and had to get back into the building to greet constituents and family members. It wasn't like we had the rest of the day to stand there.


BOLDUAN: It definitely was cold that's for sure. But this might be a non-story really if Pelosi's office said it was doctored to include all of the Democratic congresswomen. There are a lot of them to get them there. Reporters noticed the difference in the photos and spoke up -- Wolf.


BOLDUAN: It is pretty obvious when you see the original. In this day and age, you can doctor pretty much anything.

BLITZER: That photo shop this is working out pretty good.

BOLDUAN: I don't know how to use it, but some people do obviously.

BLITZER: Pretty good, thank you. One fight down and another one just around the corner, will the looming battle over the debt ceiling lead to a government shut down?

And how do you deal with an unruly passenger on a flight? Look at this, one airline decided to duct tape him to his seat. You will want to see this. Stay with us.


BLITZER: Let's get right to our "Strategy Session." Joining us now, our CNN contributor, the Democratic strategist, Paul Begala and the Republican strategist, Terry Holt. Guys, thanks very much for coming in.

All right, Terry, Senator Cornin of Texas, you know him, he ran an op- ed in the "Houston Chronicle" in which he said this about the upcoming debt ceiling fight. It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country. Now, you remember the last time Republicans shut down the government?

TERRY HOLT, REPUBLICAN STRATEGIST: It was Bill Clinton and Newt Gingrich and it was the standoff. I think it might have started because Newt got thrown of the back of Air Force One or something.

BLITZER: I was on that plane, by the way, it was coming back from a funeral in Israel.

HOLT: It was a very personal fight between the president and the speaker at that time. There a lot of differences. This time the country is $16 trillion in debt. This president has made no effort to be willing to cut spending or address the debt in a serious way. So with the American people, more behind the idea that the debt is a problem now than then, I think Republicans have legitimate --

BLITZER: The last time the government was shutdown, it didn't work out well for the Republicans. HOLT: No and it was a political fight that the Republicans lost, but at this point I would say first of all maybe they don't have as much to lose as they did last time. I mean, they've had a rough coup of months. Barack Obama won the election. The majority of the American people say that the debt is a serious problem and saying that the American way of life is in decline. I think we are in a different moment in history.

BLITZER: You remember those days. I believe you were working in the White House in those days.

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: It was actually just before I joined the White House stepping in as political adviser to the president. It did not work out well for the Republicans for the same reason this won't. Senator Cornin, he's a smart guy. He is a good guy.

He's a fellow Texan and a great guy. Not getting pretty good advice to his party or very good leadership for our country. The notion that these Republicans want to damage the economy, damage the country in order to further their own ideological ends is really shameful.

It's like the old quote from the officer in the Vietnam War who said we had to destroy the village in order to save it. This is -- apparently with the Republicans feel about the American economy. They have to destroy it in order to save it.

HOLT: The president said that he wasn't going to negotiate with the Congress. That he was done --

BEGALA: Just on paying our bills. Senator Cornin voted for that --

HOLT: Fundamental element of this.

BEGALA: No, the debt ceiling --

HOLT: The president wants a blank check cut to him. In fact, he would make it so that he could say whatever he wanted about spending. That there were no limits on the debt and he set this matter up for the American people.

BEGALA: Under our constitution, only the Congress can spend money. Senator Cornin and his colleagues voted for that debt and now we must pay it. The president is exactly right. It should be non-negotiable for the United States of America to pay its debts. That should be nonnegotiable.

BLITZER: But for 100 years Congress, the House and the Senate have been raising the debt ceiling according to the law to keep it going. They've done it dozens and dozens of times.

BEGALA: Before that, we had no debt ceiling.

BLITZER: Congress every few years, every two or years was forced to raise the debt. Usually it was done without a big deal, the last time it was a big deal. HOLT: It has been for a while now. Even President Obama at one point voted against raising the debt ceiling.

BEGALA: That was shameful. He now said he regrets that. I'm with you. He should have never cast that vote. America must pay its bills and Congress votes those debts. Those are not Obama's debts.

BLITZER: But if the president holds firm to what he is saying, I am not negotiating over the raising of the debt ceiling. The Republicans say we are not going to raise it unless we come up with spending cuts equal to what you want to raise the debt ceiling. What happens?

BEGALA: Well, the Republicans may in fact cause the country to default. They have the power and do control half of the Congress and they have enough votes in the Senate to block anything.

So I think with Senator Cornin's very, very seriously I think it's disgraceful though. I think the president is doing all he can to try to run the only super power on God's earth in the right direction. Our economy is rebuilding, somewhat optimistic. They seem to want to destroy this economy because they lost an election.

HOLT: But Paul, you don't get elected president and completely ignore the will of the people, the American people believe that this government is too big and it spends too much and taxes too much. It's now $16 trillion in debt.

If the president ignores that problem, he does so in his own peril. At some point, he can't be just intimidator in chief. He has to be a leader. He has to be commander in chief. This is his moment to step up and try.

BEGALA: He in fact inherited the debt that your party --

HOLT: He added $6 trillion.

BEGALA: They handed it off to Republicans and the Republicans created the debt by cutting taxes mostly for the rich, by waging two wars on the national credit card and by passing a prescription drug plan for seniors that had no pay for and then by deregulating Wall Street and plunging us into recession.

Those were the pieces, all of the Republican policies. The president has been trying and succeeding in ameliorating those policies, but you can't blame him for this debt.

HOLT: In four years, he has taken the debt from $10 trillion to $16 trillion. That's quite an accomplishment.

BLITZER: Paul is blaming Bush for raising it from $10 trillion.

BEGALA: From 0 to 10.

HOLT: Let's give Barack Obama credit for the 6 trillion that he's had just these four years. BEGALA: We are still paying for Mr. Bush's wars. We are still paying until yesterday for Mr. Bush' tax cuts for the rich. We are still paying for --

HOLT: We support it.

BEGALA: Not for the rich -- for 98 percent of Americans.

BLITZER: He's made permanent now up to $450,000.

BEGALA: Absolutely and yet the Republicans voted against it. That's -- 64 percent of House Republicans voted against this.

BLITZER: You guys are going to disagree on this issue. We will see what happens and who blinks on this one. Guys, thanks very much.

We are coming in with an early spike of case of the flu across the country and the worst may yet be on the way. Up next, we are going to tell you what you need to know to protect yourself right now.

How do you deal with a disruptive passenger? Look at this, for one airline, all it took was some heavy duct tape and plastic ties. We have the stunning details coming up.


BLITZER: The flu season is having an early spike across the country. Look at the red of this map. More than half of the states already have widespread flu activity. We are watching all of this unfold.

There is important information that all of our viewers that they need to know as far as the flu is concerned. It looks like it's going to be worse than a lot of folks thought.

Our senior medical correspondent Elizabeth Cohen is joining us now. Elizabeth, how bad has this flu season first of all been so far?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Right. The key is the so far part, Wolf. So far it's been a pretty bad flu season. They are having a heavy activity very early. So what's happening is that flu activity is very heavy at various times of the flu season.

This year it's early. It actually started in mid-November and the numbers keep going up. Let's take a look at the latest numbers from the CDC that just came out this morning.

What they found was that last week there were 29 states that had heavy flu activity and the week before only 16. That's a big jump in one week -- Wolf.

BLITZER: So how bad could the flu season get?

COHEN: You know, we asked the CDC folks that and they said to us, look, it's shaping up to be a moderate to severe flu season, moderate to severe. So it's not shaping up to be the worst one ever. And in fact, even if you look at the flu season at this point in time, there are two or maybe three other flu seasons that have been this bad this early. It's certainly not unheard of.

BLITZER: There is a question a lot of folks who are watching right now are asking if they haven't gotten the flu shot, is it too late?

COHEN: It is not too late. We probably haven't seen the worst of this flu season yet. It's not too late. The flu shot works in most, but not all cases and contrary to what some people think it doesn't make you sick.

BLITZER: I got a shot and I assume you did. Should everyone or are there certain people who shouldn't be getting flu shots?

COHEN: Well, certainly, if you are allergic to components of the shot, you shouldn't get a flu shot. But the CDC used to say if you are elderly or have immune problems. Now they say everyone should get a flu shot. Not just to protect yourself, but to protect people around you.

BLITZER: Good advice from Elizabeth Cohen. As usual, thank you, elizabeth.

COHEN: Thanks.

BLITZER: A long time friend of Hillary Clinton is speaking out about her health and some of the recent political attacks it has been generating. James Carville, he is here in THE SITUATION ROOM, that's next.


BLITZER: Hillary Clinton is wrapping up what has been a pretty rough week. It started in the hospital with a blood clot in her head. The State Department says she is eager to get back to work and they've indicated she might actually return to work as early as next week.

Joining us now to talk about all of this and how it is playing out and what it could be politically. A long time friend of both Hillary and Bill Clinton, our CNN contributor, the Democratic strategist, James Carville.

James, thanks very much for coming in. Before the hospitalization because of the blood clot, there were some conservative commentators who were really going after the secretary of state. Let me play a few clips.


COL. ALLEN WEST (R), FLORIDA CONGRESSMAN: I'm not a doctor, but seems as though the secretary of state has come down with the case of Benghazi flu.

UNIDENTIFIED MALE: Apparently, she is suffering from acute the Benghazi allergy that causes lightheadedness when she hears the word Benghazi.

LAURA INGRAHAM, FOX NEWS CONTRIBUTOR: If a tree falls in the forest, does it really fall if no one heard. Did she have a concussion? Maybe, who knows?


BLITZER: They were accusing her basically of faking sickness in order to avoid having to testify before Congress on the Benghazi killings of the U.S ambassador and three other Americans. When you heard all of those commentaries, what went through your mind?

JAMES CARVILLE, CNN CONTRIBUTOR: What kind of human being is going to think like that with everything going on with concussions, head injuries and dehydrated the fact that she was overseas so much. I just don't know. Some of these people I know and I get along with them.

I have no idea what that's drives them to this kind of inhumane idiotic behavior and statements. Something I will never understand and none of it made any sense at all. People in Clinton land were very, very concerned about the secretary of state when she fell and hit her head and particularly when they had the blood clot.

Now I can assure you that all of this was heard and duly noted. This is really an inhumane kind of discussion that these people were having. I have no idea what would lead them to do something like that. It's beyond me.

As if she wouldn't testify on Benghazi. She said she took responsibility for it and ordered an investigation into it and God know what is else. It doesn't make sense. Just a cheap sound bite if you ask me.

BLITZER: I first got to know her way back in 1992 when her husband was elected president of the United States. If anything I know about her and I covered her as a first lady and senator and now as secretary of state. I don't think she was reluctant at all to go testify before Congress on Benghazi. I think she wanted to defend or explain or do whatever she could to let the American public know what was going on.

CARVILLE: I don't have any doubt about that. All of Benghazi that turned out and mistakes were made and responsibility was taken. Investigation was put in. I don't think anything is investigated with as much cooperation as this was. I can't imagine what it is that these people want.

Other than the fact that they have some intense hatred for the secretary of state that can't be explained and they should just go out and say it. One was this clown. It's hard for me to know how somebody can say what he said.

Again Hillary hating is old and deep and I guess it was still alive. I was hoping after the tremendous service to the country that it would have dissipated somewhat but apparently not. BLITZER: John Bolton, the former U.S. ambassador to the United Nations during the Bush administration. All right, let's look ahead, 2016 as I love doing and you love doing as well. I suspect and this is just me. That she still would like to be the first woman president of the United States. Do you agree?

CARVILLE: Let me put it this way. I hope so. I suspect that after having an injury like this, she is probably exhausted. I would make no secret about my admiration for her and I hope she runs for president, but I don't think she has made up her mind.

Traveling around the country, every Democrat that I see really wants her to run. The nomination is hers for the taking if she did run, but I have no idea what she's going to do. Unlike anybody else, I hope and pray she does.

BLITZER: I asked Ari Fleischer about this yesterday here in THE SITUATION ROOM. Just listen quickly to what he said.


ARI FLEISCHER, CNN CONTRIBUTOR: She might want to do it and take on the Republicans and to go through the primaries and the pancake eating in Iowa and everything you have to go through, that's a lot to impose on somebody.


BLITZER: He was skeptical. I think assuming she is healthy and we all hope she is healthy. She rests up for the next six months or a year, whatever it takes. She has good name recognition right now. I assume when she rests up, maybe write a book and does some up, she decides to run, but that's just me.

CARVILLE: Well, you know, I'm hoping that she does and I suspect she doesn't mind eating a pancake or two along the way. It's hard to find a Democrat or voter or donor or activist or politician that doesn't want her to run.

It's very unusual that the Democratic Party has this unity. I have been a member my whole life and I never have seen anything like this. Who knows what's going to happen in 2016. It's a lot of enthusiasm out there right now.

BLITZER: James Carville joining us. As usual, thank you very much, James.

CARVILLE: Thank you. Have a happy new year.

BLITZER: You too. Talk about a man what must have been behaving extremely badly. We have a picture to show you what happened. He had to be duct taped to a seat on the flight. The details coming up.