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Catholic Questions; Pistorius Defense Fights Back; New Tea Party Favorite Makes Waves; Millions Of Passengers, Little Regulation; GOP Blames Crisis On "Failed Leadership"; Nine Days Until Forced Spending Cuts; Inside The Rocket Factory

Aired February 20, 2013 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Fred, thanks very much.

Happening now: Prosecutors say the accused murderer Oscar Pistorius and his girlfriend argued for an hour before she was shot. We have the latest revelations in this sensational case.

The Catholic Church grappling with questions that haven't been asked in centuries: Where does an ex-pope live and can they speed up the process of choosing a new pope?

And the glory days of rocket men may be only starting. We have an exclusive look at how the rocket business is booming.

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

Imagine getting every Friday off for the next 22 weeks. But there's a catch. You won't get paid. You will be forced to give up 20 percent of your weekly paycheck. That's the prospect facing thousands of people whose jobs depend on the Defense Department and are now facing furloughs.

Our Pentagon correspondent Barbara Starr has one worker's stories.

She's joining us -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, we have heard about this fancy Washington word sequestration for months now. But what does that word really mean? It means for hundreds and thousands of federal workers trying to figure out how to live on less.


STARR (voice-over): Maintaining fighter jets and warships at the ready, providing care at military hospitals, crucial military functions done by some 800,000 civilian workers. Now the Pentagon has told Congress these workers will be forced to stay home one day a week without pay if mandatory spending cuts are not averted.

PETER RANDAZZO, NAVAL POSTGRADUATE SCHOOL: Everybody is waiting to hear. It's definitely become the new -- what I call the new F-word here is furlough. STARR: For federal workers, it will mean painful decisions. Union rep and Defense Department worker Peter Randazzo is already making plans.

RANDAZZO: I will pay those core bills. I will pay the mortgage and the utilities and then you live on what's left.

STARR: The head of the government workers union says his people have already suffered.

UNIDENTIFIED MALE: Already these employees have suffered a 27- month pay freeze, now a 20 percent pay cut.

STARR: The impact of a one-day-a-week furlough for 22 weeks will be widespread.

JESSICA WRIGHT, ACTING UNDERSECRETARY OF DEFENSE: On our civilians, it will be catastrophic. These critical members of our work force, they work in our depots. They maintain and repair our tanks, our aircraft, our ships. They teach our kids.

STARR: But how much do furloughs really save? Of the $46 billion in mandated military cuts, the Pentagon calculates it will account for 10 percent. The number two official at the Defense Department is vowing to stand with his workers.

ASH CARTER, U.S. DEPUTY DEFENSE SECRETARY: I can't be furloughed under the law because I'm a presidential appointee. But I'm going to give back a fifth of my salary in the last seven months of the year.


STARR: Now, there will be exemptions, we are told, workers who are essential for safety and security of military bases and other facilities, some health care workers, some military law enforcement personnel.

But this -- if it goes into effect, Wolf, will hit very hard beginning in the March/April time frame -- Wolf.

BLITZER: We know the Pentagon will be forced to cut a total of $46 billion for the remainder of this fiscal year. But here's the question. How much discretion do they have at the Pentagon, Barbara? Can they get rid of big-ticket gun, weapons programs, instead of furloughing these thousands of people, for example?

STARR: They say they cannot do that, Wolf, that, essentially, sequestration, that word again, means mandatory across-the-board budget cuts. Everybody takes a hit. So they say they can't do that.

BLITZER: The military will not though furlough foreigners who work on U.S. bases around the world and there are probably at least 100 of those bases around the world. Only American employees can be furloughed. Why is that?

STARR: Well, that is correct, Wolf. And what the Pentagon tells us in many cases these foreign non-U.S. workers are paid by the local countries, so there's no savings there. In other cases, they would have to renegotiate essentially employment agreements with that government. That opens up a can of worms. A lot of this is just set in stone, very little discretion about how to carry all of this out if it comes to that, Wolf.

BLITZER: Well, $46 billion in Defense Department cuts, according to this forced budget plan cut.

Just for some perspective, the U.S. is going to spend $88 billion this year, this year in Afghanistan. We're going to have much more on this part of the story coming up later, Barbara. Thanks very much.

Here in Washington, President Obama is doing an end-around the national press today. He's taking questions from local TV stations, blaming Congress for doing nothing to avoid these painful forced spending cuts scheduled to take effect in just nine days. So what kind of cuts is the president willing to take?

CNN national political correspondent Jim Acosta confronted the White House press secretary today with that question. Jim is joining us now.

How did it go?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, here we go again. The White House and Congress move one day closer to the massive forced spending cuts that start going into effect at the end of next week. And even though both sides agree these cuts are a problem, they are too busy blaming each other to fix it.


ACOSTA (voice-over): The White House sounding the alarm. Poor children will be tossed out of classrooms, health services will be slashed, border security will be compromised, and the economy will take a hit if forced budgets cuts begin to happen on March 1, and the Obama administration says Republicans will be to blame.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The choice that the Republicans are making are throw these people out of work in order to protect these special tax breaks for corporate jet owners and oil and gas companies. It's just -- it makes no sense.

ACOSTA: But when pressed on whether the president has his own plan to stop the cuts, White House Press Secretary Jay Carney pointed to the grand bargain Mr. Obama failed to reach with House Speaker John Boehner two years ago.

CARNEY: When you ask, where's the president's plan, it's been there. It's on It's in the proposal that he submitted to the speaker of the House, that the speaker walked away from.

QUESTION: The budget plan for the long term, where is...


QUESTION: ... prevent sequestration from happening next week?


QUESTION: Shouldn't the president take the lead and present that...


CARNEY: The president -- well, first of all, Congress has to act.

ACOSTA: Less than two months since the fiscal cliff that resulted in tax increases on wealthy Americans, budget brinksmanship is back.

In an op-ed in "The Wall Street Journal" Boehner notes the idea for the automatic cuts originated in the White House, adding, "Mr. President, we agree that your sequester is bad policy. What spending are you willing to cut to replace it?"

The White House fires back, pointing out Boehner seems satisfied when it was all set in motion two years ago as part of the debt ceiling deal of 2011.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: When you look at this deal that we came to the White House, I got 98 percent of what I wanted. I'm pretty happy.

ACOSTA: The GOP responded by e-mailing out an interview featuring the chairman of the Senate Finance Committee, Max Baucus, saying the president shares some of...


ACOSTA: And, as you mentioned at the top of this piece, Wolf, the president is speaking with a number of local TV stations around the country. It's part of the White House plan to go over the heads of Congress and sort of sell the administration's position on these forced budget cuts to the American people.

And, Wolf, I had a chance to ask a top GOP aide up on Capitol Hill whether or not the administration is engaging in any new outreach with members of Congress, with leaders on the Republican side up on Capitol Hill and the word I got back from that aide was no new outreach, no old outreach, no anything.

And, Wolf, there are signs that the White House itself is not even sure as to the extent of these sequestered cuts and how far they will go. When asked whether there will be furloughs here at the White House, Press Secretary Jay Carney said he was not sure. He would have to get back to reporters.

He was also asked whether or not these forced budget cuts would affect the president's upcoming trip to the Middle East that is coming up next month. He said he had to get back to reporters on that one as well, Wolf.

BLITZER: I just want to point out we had a little technical glitch at the end of that report, that piece that you put together.

But as far as the $85 billion in forced cuts that are supposed to take place this year, everyone seems to think that the mandatory across-the-board cut is a bad idea. But is there a specific White House plan that has now been released for an alternative $85 billion in spending cuts?

ACOSTA: No, there is not a specific plan. That was what we tried to press Jay Carney on earlier this afternoon. They are pointing to the plan that Senate Democrats came up with last week that they say would essentially replace the sequestered cuts that are supposed to go in to place.

But at this point, as you know, Wolf, the Republicans are balking at that proposal. They are saying no dice on that because that proposal from the Senate Democrats includes tax increases on wealthier Americans, the so-called Buffett rule that they would like to implement, make it part of the tax policy.

And that's not going anywhere up on Capitol Hill. Unless both sides can somehow come to an agreement -- and we have said all of this before, we have heard these words before, Wolf -- unless there is some kind of deal that can be cut in the hours before this deadline comes up late next week, this thing is going to happen, Wolf.

BLITZER: Jim Acosta over at the White House, thanks very much.

This note to our viewers. Later this hour I will try to get some specific answers about what cuts the folks at the White House are willing to make right away to avoid these forced budget cuts. I will be speaking live with the president's senior adviser, Dan Pfeiffer. He will be joining us from the White House.

Out-of-control spending isn't just a federal problem. Detroit is in such dire financial right now, it may have to actually declare bankruptcy. A blue-ribbon panel predicts a $100 million shortfall by the middle of the year. Michigan's governor has 30 days to decide whether to put an emergency manager in charge of the city.

Detroit was once the nation's fifth largest city and it now ranks 18th having lost a quarter of its population since 2000. Tomorrow, the Detroit mayor, Dave Bing, will be joining me here in THE SITUATION ROOM. I will ask him what, if anything, can be done to save his city from bankruptcy.

And now we turn to the latest revelations in the sensational murder case involving one-time Olympic athlete Oscar Pistorius. He says he shot and killed his girlfriend, the model Reeva Steenkamp, by accident.

Prosecutors say the killing was intentional and premeditated.

CNN's Robyn Curnow is joining us from Johannesburg, South Africa.

Robyn, the prosecution laid out its case today. How did they do?

ROBYN CURNOW, CNN CORRESPONDENT: It was bit of a roller coaster day, so much so I felt like I was watching a television drama. Initially when the prosecutor laid out its case, they gave some quite damning evidence and also they added into the mix that they had found allegedly two boxes of testosterone and syringes in his house.

By the time the defense came in after lunch, they bit by bit ripped apart the state's evidence and unraveled quite spectacularly at one stage because there was quite an interesting exchange between Oscar Pistorius' lawyers and an investigating officer and he said, well, how do you know this is testosterone? Have you tested it yet? And he said, well, no, I just read the label on the box.

And he said, well, if you had gone to any pharmacy or any chemist, you would know that this is a herbal medicine. That's the kind of interchange that was taking place. Also, the investigating officer really looking quite red-faced by the end of his stint on the dock. He admitted that he didn't wear protective foot covers or shoe covers when he walked into the house so he contaminated the crime scene.

And we also know that the defense said that they had this key witness that had heard shouting, arguing in the hour before the shooting, but when pressed further, it emerged, much to the shock -- the court gasped -- it emerged that this witness actually lived 300 or more meters, that's more than 1,000 feet away from Oscar Pistorius' house.

So, really, various aspects of the state's case started unraveling and I think for anybody who supports Oscar they would have been pleased with that outcome. His family even issuing a statement saying that they found they were satisfied with the bail hearing, particularly, I must say and this is the clincher, Wolf, the investigating officer said that he actually couldn't find any inconsistencies with Oscar Pistorius' version of events.

BLITZER: Yes, that's obviously good news for Oscar over there. Did you see a difference in his demeanor today? Yesterday, he was sobbing, he was breaking down. What about today?

CURNOW: Yes, absolutely. We talked about it.

He was physically sort of bent over yesterday and physically he seemed to sit straighter today and for me that told a lot, that he seemed to be dealing with the information that was coming out of the court a little bit better, obviously because his defense team were really hammering holes into the state's case.

Just let me give you a sense of what his family is saying. His uncle has been talking to the press. Take a listen to this.

(BEGIN VIDEO CLIP) ARNOLD PISTORIUS, UNCLE: He's in extreme shock and so he's grieving and he's -- I don't expect him to get over it even soon and so he's still emotionally tough time.


CURNOW: OK. And, of course, all of the focus on the drama in the courtroom today, but many South Africans say as Oscar Pistorius spent his seventh night in jail, just remember Reeva Steenkamp's family, their seventh night of realizing, trying to come to deal with the fact that she's not around anymore, that she won't be here. So it's still a very emotional day, but very much a focus on the court proceedings.

BLITZER: And just very quickly, they resume the hearing tomorrow. Is that the last day? Will we know whether he will be eligible for bail or will he have to stay in prison?

CURNOW: You know what, Wolf, I'm just a humble journalist. I'm not a legal expert, but from what I understand that there will be some sort of ruling by the magistrate tomorrow after the final arguments are made by each legal team. It's understood the magistrate will rule whether he will get bail or not.

It's unclear how he's going to think and which way he's going to go. I'm not a betting person, but just by the tone of what happened in court today, many people here, legal experts, journalists listening observe that family firmly believe Oscar that will get bail. But, of course, like I said, I'm not a legal expert. So we'll have to see.

BLITZER: We certainly will. We'll check back with you, Robyn -- doing an excellent job for us covering the sensational story. Thank you.

We're about to meet a man who's new to Washington but already making some serious waves. Whether you recognize him or not, stick around. We're going to tell you who he is and why you need to pay attention to what he's doing.

Later, the Catholic Church scrambling to come up with a retirement plan for the soon-to-be ex-pope.



SEN. TED CRUZ (R), TEXAS: If we lose our liberty here, where do we go?

It ain't rocket science. What do we need to do? Stop spending money.

And to explicitly agree with the characterization of the United States as the world's bully, I would suggest is not the conduct one would expect of a secretary of defense.


BLITZER: That's one of Washington's newest arrivals who is already making some big waves.

Our chief congressional correspondent Dana Bash caught up with the new senator from Texas, Ted Cruz.

You just came back from Texas.


BLITZER: Dana, how did it go?

BASH: Very interesting. Look, you know, 2012 was a bad election year for Republicans. And Ted Cruz is one of the few new GOP faces in the Senate and he's already making sure he's a powerful voice of the GOP.


BASH (voice-over): It had the look and feel of a campaign event. Except freshman GOP Senator Ted Cruz isn't up for re-election for six years.

These Texans are applauding their senator's head-turning performance after only one month in office.


BASH: Joining only two others to vote against John Kerry for secretary of state, aggressively defending gun rights and trying to take down defense secretary nominee Chuck Hagel.

(on camera): I've covered the Senate for a long time. It's unusual for a freshman to be this outspoken on a high profile issue.

CRUZ: At the end of the day, I was elected to represent 26 million Texans and to speak the truth. You know, I think a lot of Americans are tired of politicians in Washington and both parties who play games.

BASH (voice-over): The 42-year-old Cuban-American, the first Hispanic senator from Texas studied free market principles and memorized the Constitution as a teenager, thanks to his father, a Cuban refugee. After Princeton and Harvard law, Cruz became solicitor general of Texas, arguing for state's rights and religious freedom before the U.S. Supreme Court.


BASH: Tea Party activist bucked the GOP establishment to help elect Cruz and now see their hard work paying off.

STEINHAUSER: He's the total package. He's brilliant. He's a great messenger for ideas. He's a true believer. And he's a guy that you never have to wonder how he's going to vote.

BASH (on camera): Conservatives here in Texas who fueled Cruz's come-from-behind Tea Party Senate win maybe ecstatic that he's been so aggressive so fast, but for some senior Republican senators, not so much.

One of the guiding principles of the Senate for a freshman senator is come in and be a workhorse, not a show horse. You don't seem to be following that.

CRUZ: The attention that has focused on me, in my opinion, is actually primarily being driven by an effort to distract from merits of the Hagel nomination.

BASH (voice-over): Cruz angered senators in both parties demanding to know without evidence if Hagel accepted money for speeches from foreign countries that opposed U.S. interest.

CRUZ: If that $200,000 that he deposited in his bank account came directly from Saudi Arabia, came directly from North Korea --

BASH: That got him a smackdown from Republican John McCain.

SEN. JOHN MCCAIN (R), ARIZONA: No one on this committee at any time should impugn his character or his integrity.

BASH: From Democrats, suggestions of McCarthyism.

SEN. BARBARA BOXER (D), CALIFORNIA: It was reminiscent of some bad times.

CRUZ: I do find it ironic that in the course of attacking me and using a label like McCarthyite, they also chide me for not respecting comity.

BASH: It's clear Cruz did not run for Senate to make friends.

CRUZ: I find it amusing that those in Washington are puzzled when someone actually does what they said they would do.



BASH: Now, one GOP senator I spoke to about Cruz said that even in the place of healthy egos -- which is what the Senate is -- Cruz stands out for his ego. And a Tea Party activist supporter I talk to said that, Wolf, he could do well with a small dose of humor. But still, it's very clear, talking to Cruz, watching him, he relishes the kind of criticism he's getting from the so-called establishment.

BLITZER: A lot of Republicans will reject the nomination of Chuck Hagel to be defense secretary but only three -- he was one of them -- rejected John Kerry. Why did he reject John Kerry?

BASH: The reason he gave was because John Kerry has agreed to and supported too many international treaties that give up the sovereignty of the U.S. That is something again that is, when you look at the sort of the core of the conservative credo that he espouses, that's it. Don't give up too much U.S. sovereignty.

BLITZER: Obviously he's a smart guy if he memorized the whole -- the whole Constitution?

BASH: He is a very smart guy.

BLITZER: Did you say he went to Harvard Law School, too?

BASH: Princeton undergrad, debate champion, Harvard Law School.

BLITZER: Yes. So, he must be a smart guy.

All right. Thanks very much for that, Dana --

BASH: Thank you.

BLITZER: -- reporting.

Coming up, the Carnival cruise lines facing more trouble right now after the disaster of its Triumph cruise liner. This time from passengers who aren't taking the offered compensation and are saying, we'll see you in court.


BLITZER: Kansas City is still reeling from a blast that leveled a restaurant last night. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What's going on?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, officials say that we actually have new video right now of the moment that blast hit, that Kansas City restaurant that we want to start with first. But officials say it is too soon to say if more than one person was killed in last night's natural gas explosion. At least 15 people were injured.

Witnesses say the blast was so powerful it blew the roof off the building. About an hour before the blast, a utility crew responded to a report of a gas leak and suggested that the restaurant close, which it did, but witnesses say the crew gave no sense of urgency.

And Carnival is facing a class action lawsuit over the disaster aboard the Triumph. The lawsuit alleges that the company knew or that it should have known that the boat could experience mechanical and/or engine issues since it had in the past. It also says conditions on the ship created a risk of injury or illness.

Now, Carnival has offered passengers compensation for suffering in that ordeal.

Senator Patrick Leahy says it will take more time to win the release of American contractor Alan Gross from Cuba. Leahy and a congressional delegation met with President Raul Castro to ask for his relief but Leahy sounded resign when he spoke with CNN after the two- day visit.


SEN. PATRICK LEAHY (D), VERMONT: I wish he could be released. I think the point's been made. Obviously, it's going to take more negotiations but the man is not a spy. He should go home.


SYLVESTER: Gross is serving a 15-year prison sentence for bringing banned communications equipment into Cuba.

And China's military says it isn't involved in any kind of cyber attack. A recent report accused groups linked to the military of stealing data from at least 141 organizations across 20 industries worldwide.

A crew from CNN tried to film a building at the center of the allegations in Shanghai. You can see the chase there. Security officers when they realized where they were, they immediately gave chase. Well, after being chased down, a reporter had, in his words, cordial words with the officer when they asked for that video that they had taken.

So, you could see those officers, they were really booking, trying to catch up.

BLITZER: We're going to have a full report on what happened outside that building. That's coming up later here in THE SITUATION ROOM. Thanks very much.

No one has died on a Boeing Dreamliner but we've heard plenty about its safety issues in recent weeks. So, why aren't more people talking about the safety of buses, especially bus companies with some spotty safety records? Ahead, we're going to do just that.


BLITZER: When safety issues slipped through the cracks is troubling certainly for all of us. We've seen the stories about the cruise ships, the airliners, but commercial buses don't get a lot of attention. Rene Marsh is here. She's been investigating this part of the story for us. Rene, what are you finding out?

RENE MARSH, CNN CORRESPONDENT: That's right. Well, Wolf, we're finding out that when it comes to these safety regulations, pilots and planes compared to buses and drivers, everything isn't quite equal and some advocates say that's a big problem.


MARSH (voice-over): December 30th, Pendleton, Oregon, a tour bus operated by a company with a history of safety violations slides off a mountain highway killing nine, injuring 39. February 3rd, San Bernardino, California --

UNIDENTIFIED DISPATCHER 1: CHP with a transfer on 38 just north of Bryant on a tour bus that overturned.




MARSH: A tour bus operated by another company also with a history of safety violations careens down a mountain road and strikes a car, eight dead, 32 injured.

UNIDENTIFIED DISPATCHER: She says the tour bus is overturned. There were multiple injuries. Apparently it may have lost its brakes.

MARSH: In both cases, Federal Motor Carrier Safety Administration records show numerous violations before the wrecks. But the feds found justification to shut down the companies only after the fatal crashes. Some question whether enforcement is strict enough.

DEBORAH HERSMAN, NTSB CHAIRMAN: We've got to have regulations with teeth and the penalties have to be a deterrent.

MARSH: Larger buses can carry as many people as a regional jet. In recent years, there's only been one major plane crash in the United States. It went down near Buffalo, New York, killing 50 people. Meantime, roughly 300 people die on board buses every year, according to the Department of Transportation.

HERSMAN: We would never see hours of service violations in aviation. Pilots will not bust their hours, but we see it routinely on the highways.

MARSH: The DOT says it's launching a crackdown targeting high- risk motor coach companies like those involved in the crashes. Even representatives of the bus industry say it's about time.

DAN RONAN, AMERICAN BUS ASSOCIATION: The 53 or 55 people who get on a motor coach, their safety, their well-being is just as important as the 53 or 58 people who are on an airplane flying from Charlotte to Washington, D.C. on a regional jet.


MARSH: Now the Department of Transportation encourages travelers to look at its safer bus application to check company safety records, but that wouldn't have helped people in this Oregon crash because when you went on that site, there were very little details as far as prior safety issues. Back to you.

BLITZER: I'm glad you brought this up and looked into it. Thanks very much. Ahead in THE SITUATION ROOM, a pope hasn't quit in six centuries, so the Vatican can be forgiving for scrambling to come up with some rules for its first ex-pope in hundreds of years.


BLITZER: A last minute deal between the White House and Congress, force spending cuts will hit federal workers in only nine days. I'm joined now by President Obama's senior adviser Dan Pfeiffer joining us from the White House. Dan, thanks very much for coming in.


BLITZER: You saw the article the House speaker wrote in "Wall Street Journal," on the op-ed page today blaming this budget crisis on what he called the president's failed leadership. And he posed this question, I'll put it up on the screen, he said, "Mr. President, we agree that your sequester is bad policy. What spending are you willing to cut to replace it?"

So what -- you need $85 billion in spending cuts to avoid what's called these forced budget cuts or sequestration. Do you have $85 billion in mind?

PFEIFFER: We do. We also have a trillion dollars in mind to go along with tax revenue that would raise money for deficit reduction by closing loopholes for the wealthy. We can solve this problem over the short term.

The House and Senate Democrats have a proposal combined with asking the wealthy to pay a little more by closing loopholes. So we can do all of this. The question isn't whether we have a plan. We have a plan. The question is whether the Republicans are willing to compromise so we can actually solve the problem.

BLITZER: All right, the $85 billion, the plan that you have in mind to avoid the forced budget cuts, give me examples of where you would cut.

PFEIFFER: Well, we have -- of the 85 billion, we have specific cuts and savings on the foreign program. There are cuts in defense spending that we would do. The overall deficit reduction, we have very specific cuts, reforms to Medicare, including asking higher income seniors to pay --

BLITZER: Is that part of the 85 billion?

PFEIFFER: That's part of our -- the president's overall deficit reduction plan that would --

BLITZER: What I'm trying to do is find out on the $85 billion, to avoid what's called sequestration, the specifics. So how much would the farm -- the money that you want to eliminate for farm subsidies, how much would that bring in?

PFEIFFER: That's about 30 billion, Wolf. The House and Senate Democrats --

BLITZER: It's 30 billion this year or over ten years?

PFEIFFER: Over in 10 years.

BLITZER: Well, I'm talking about this year. How much --

PFEIFFER: The plan is -- it's $3 billion this year. The whole idea of "The Sequester" is spending over the next decade. The formula that the House and Senate Democrats are using are nearly 95 senators voted for, including 40-some Republicans just two months ago to avoid this sequestration. We're following their proposal.

BLITZER: So let's go through some of these specifics because I think it's interesting, $3 billion in farm subsidies this year. You still have $82 billion left to go.

PFEIFFER: Wolf, what you have to look at is the House and Senate Democrats plan. It includes -- it's about $110 billion, half from tax revenue, half have spending cuts. It's our belief, the president's belief that we should deal with "The Sequester" and overall deficit reduction in a balanced way.

The Republican plan is that all of the deficit reduction should be paid for by seniors and the middle class and the wealthy should pay nothing more. So that's why the House and Senate Democrats have in their plan a plan that the president has endorsed.

The Buffett rule, which would raise tens and billions of dollars in order to by ensuring that when we do tax reform, seniors are -- billionaires will not pay a lower effective tax rate than their secretaries.

BLITZER: You saw what John Boehner, the speaker, wrote in "The Wall Street Journal." The president has repeatedly called for more tax revenue, but the American people don't support trading spending cuts for higher taxes. They understand that the tax debate is now closed. He says, forget about additional tax increases between now and next Friday. That's close.

PFEIFFER: Well, I think two things. One thing, if the speaker is -- believes that the American people don't think that the wealthy should pay more by closing loopholes. He must be reading the same polls that have Mitt Romney winning Ohio.

Second, I also heard what the speaker said two months ago when he came to the president and said, we he could raise a trillion dollars by closing loopholes that benefit the wealthy. So we agreed with him then.

We think it's the right proposal to do. So I'm not sure exactly what's changed but the speaker was right when he said there are hundreds of billions of dollars in the tax code, loopholes that benefit corporate jet owners, oil and gas companies, hedge fund managers. We can close those loopholes because we can make those tax reforms fair. BLITZER: He makes the point. He's open to comprehensive tax reform as part of a deal including comprehensive entitlement reform, Social Security, Medicare, and Medicaid. But that's a big ticket item that you're not going to resolve between now and next Friday.

You have an immediate issue that you have to deal with. Otherwise, there are going to be all of these furloughs and all this pain that is going to come right away. Is the president ready to invite the speaker to come to the White House over the next few days and work out a deal?

PFEIFFER: Well, the president is going to talk to the leaders in both parties and both houses to try to get this done. That can only happen if the Republicans are willing to compromise. Only Congress can turn off "The Sequester." The president thinks we should turn it off, House Democrats, Senate Democrats think that.

We can't do anything without the House Republicans doing something and their view is, these cuts should happen. They have made a political decision that these automatic cuts should go into effect, which means that there are Americans working today who will lose their jobs. That's a choice they are making.

BLITZER: Because nobody wants these automatic spending cuts.

PFEIFFER: That's actually -- wolf, that's actually not true. Speaker Boehner has said that these are leverage. This is leverage for him to try to extract an ideological agenda that includes slashing Medicare, slashing education. They have no realistic plan to avoid these cuts.

They have said they wanted them to go into effect. That's bad for the country but let's be very clear what that choice means they are making. That means some Americans will lose their jobs, kids will get kicked out of head start.

The president thinks that's the wrong choice for the country and with commonsense compromise we can avoid it. It takes two to tango and the Republicans are refusing to compromise.

BLITZER: Why did the president come up with this idea to begin with?

PFEIFFER: Well, Wolf, this is all part of the debt ceiling negotiations in 2011, where the Republicans said that we are going to force the country to default if we don't get what we want. And so the president working with Congress came up with a proposal that tried to force congress to do balance deficit reduction.

Congress is choosing not to do that because Republicans are refusing for a very long time and consider tax revenue a part of that. Let's forget, the speaker says now this was the president's idea. After this was passed and the speaker voted for it and all of his lieutenants voted for it, he went to the floor of the House and crowed about how this was a deal where he got 98 percent of what he wanted. Maybe the trillion dollar sequester was the 2 percent he didn't want, but I find a lot of that hard to believe. There's a lot of revision that's history from the Republicans. They he should stop trying to cast blame here.

And actually try to help the American people by working with this president to come up with a balanced solution to deal with the "Sequester" right now, but also to reduce our deficit over the long term.

We can reform our tax code, reform our entitlements and focus on job growth and economic growth in this country.

BLITZER: You know, you could come up with $85 billion very quickly if you decide to get out of Afghanistan this year as opposed to next year. Is that at all on the table?

PFEIFFER: No, the president talked in the "State of the Union" about his plan to remove about 30,000 troops from Afghanistan over the next year. He's working with the military on a way to end this war by next year. So he is going to do in what's in the best interest of the country.

BLITZER: Because the U.S. is spending $85 billion this year in Afghanistan alone, which is what you're talking about as these furloughs and all of these other dire situations would go into effect.

PFEIFFER: Wolf, just by closing a few tax loopholes and doing some smart spending cuts. We can find $85 billion. The Democrats have a proposal and we're willing to talk with Republicans if they are willing to compromise. Right now, their approach is my way or the highway and they are essentially guaranteeing that these cuts will go into effect.

BLITZER: Just to get back to the first question, the farm subsidies, that's one area that you're willing to start cutting right away. Is there another example besides farm subsidies?

PFEIFFER: We can do cuts in defense spending.

BLITZER: How much in defense spending this year do you want to cut as part of the $85 billion?

PFEIFFER: Wolf, the president has -- it represents about half of the spending side of the House and Senate Democrats proposal.

BLITZER: That's what the sequestration plan has. You would do the same if you had your way?

PFEIFFER: No. I think there are two things to recognize here. One, the problem with "The Sequester" is it's a meat cleaver, is that these cuts go in and doesn't offer the Pentagon and military the chance to make smart cuts in the best interests of this country.

Secretary Panetta talked about a carrier group that would not go to the gulf because of these cuts. So what we want to do is we can cut defense spending. There are places that we can save money, but we should do it in a smart way.

The path that it would put us on is making choices that protect this country and secure the homeland in the best way. We don't want to do that. They do.

BLITZER: One final question because we're out of time. So Boehner coming over to the White House over the next nine days, is that in the cards?

PFEIFFER: Look, if they are willing to compromise, the president's door is always open. What doesn't make any sense for us is if they are going to take this my way or the highway approach, we are wasting time. If they actually try to find a solution to this, the president is here in the White House waiting for them to return from recess.

BLITZER: But the president has to offer the invitation, right?

PFEIFFER: The door is open and we will be talking to the speaker and everyone else in the coming days. Our hope is that they are willing to do the right thing for the American people.

BLITZER: All right, nine days to go. Dan Pfeiffer at the White House. You are going to be busy not just these nine days, but the next four years as well. Thanks very much for joining us.

PFEIFFER: Thank you, Wolf.

BLITZER: The space shuttles maybe museum pieces, but believe it or not, the U.S. rocket industry is booming. An exclusive look inside the place where they make the latest generation of rockets.


BLITZER: The days of U.S. space shuttle launches are gone forever and NASA along with the rest of the federal government faces mandatory spending cuts. You may be surprised to find out that the rocket business is booming right here in the United States. You just have to know where to look. Here is CNN's John Zarrella.


JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): Here it's all about metal in all shapes and sizes, in seemingly unending stages of developments. It's pounded. It's dipped. It's mill and when this high-tech tinker toy is put together, you get a rocket launch.

While the nation's space shuttle program is over, the rocket business is, well, taking off. The number of companies working on rockets and spacecraft seems to grow daily. There is a bit of a feeding frenzy to reach the new frontier.

JOHN MATSON, SCIENTIFIC AMERICAN: I think we'll see some of these smaller players start to peter out as either their objectives don't line up with NASA or funding streams dry up or simply technical. ZARRELLA: United Launch Alliance is the big boy on the block, top of the rocket food chain. On the floor of their plant in Decatur, Alabama at any one time, there are 20 different Delta or Atlas rockets in the pipeline that will eventually carry satellites and spacecraft.

They start taking shape from a nondescript 10,000 pound sheet of metal, down to 1,100 pounds when the milling process is done.

(on camera): What you're looking at are segments of the second stage of an Atlas 5 rocket, stainless steel segments. How thick are they? They are less than the thickness of in dime. This is not new high-tech rocketry. It's been around a while, a long while.

DAN COLLINS, COO, UNITED LAUNCH ALLIANCES: And this thin wall stainless steel technology --

ZARRELLA: That's this right here?

COLLINS: This thin little stuff, this is the technology that put John Glenn into orbit.

ZARRELLA (voice-over): What's changed, manufacturing processes have dramatically improved. Engineer Amy Pace oversees processing a dream job.

AMY PACE, ENGINEER: You know, not everybody can wake up and their job is to build, test, and launch rockets.

ZARRELLA: But more people are lately, a sign of a healthy industry. ULA has added 200 employees in two years, most good paying high tech jobs that have boosted the economies of both Decatur and nearby Huntsville.

MAYOR TOMMY BATTLE, HUNTSVILLE, ALABAMA: Just the wages bringing economic stimulus to the area, but then you talk about the suppliers that they bring in and the number of jobs, it's in the millions and millions of dollars.

ZARRELLA: Spinoffs are part of the story, too. Metal is coated with an anti corrosive material. Years back they needed something to recoat areas where joint welding removed the coating. One formula after another was tried until on what was called the 40th water displacement test, they found something that worked. And thus was born --

(on camera): To this day you use WD-40?


ZARRELLA: That's WD-40? Look at that.

(voice-over): You may never look at the business of rockets quite the same again.

(END VIDEOTAPE) ZARRELLA: Now, NASA is going to use Delta rocket for its first test flight sometime next year of that new Urion spacecraft and that Delta rocket, Wolf, is being built right now, right there in Decatur and who would have ever thought that it would turn out to be WD-40 -- Wolf.

BLITZER: John Zarrella is our rocket man. Always has been, always will be. John, thanks very, very much.

Jesse Jackson Jr.'s fall from grace, tens of thousands of dollars in jewelry, memorabilia, furniture, we have the details of how he spent his campaign cash.