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Challenges Facing Obama; Palin Answers Criticism; Races Still Too Close to Call; What Do Republicans Do Now?; Obama's Top Secret Intelligence Briefing

Aired November 5, 2008 - 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 happening now, Barack Obama's reality check -- a day after his extraordinary victory, the president- elect of the United States faces extraordinary challenges.
As he gets down to work, can he avoid dashing hopes that he raised so high?

Also, John McCain -- very gracious in defeat. Sarah Palin perhaps looking ahead. But after a monumental defeat, Republicans have started the finger pointing right now. How do they start picking up the pieces? And she was one of the first big stars to back Barack Obama. Did she help put him over the top? What was her role? We're going to be hearing this hour from Oprah Winfrey.

I'm Wolf Blitzer at the CNN Election Center. You're in THE SITUATION ROOM.

Just hours after celebrating a stunning victory with tens of thousands of supporters in Chicago, President-Elect Barack Obama is already getting -- already getting down to work. He's huddling with key advisers today to plan the transition to the next administration.

Our senior political correspondent, Candy Crowley, is joining us now live from Chicago. You're getting details of what he's doing. He's facing enormous challenges -- Candy.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely. And what's interesting here, Wolf, is that now it's down to business. And it comes right after that moment to remember last night.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): The history-making was awesome to behold and celebrated, as he likes to say, not in blue states or red states, but in the United States.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: It's been a long time coming. But tonight, because of what we did on this day, in this election, at this defining moment, change has come to America.

CROWLEY: Now it gets real. The man who daily brought out thousands of people to hear him talk was silent Wednesday. A brief wave, but all the rest behind closed doors.

In his first major move, Obama asked Illinois Congressman Rahm Emanuel, a former Clinton aide, to be his White House chief of staff -- one step in the tremendous task of transition.

Most of the nuts and bolts will take place in this nondescript building in Washington. Additionally, each department will have a transition office. Obama, for the most part, will remain in Chicago, where he's likely to reveal his cabinet decisions -- 76 days to put together a government and an inauguration.

Then it gets hard -- a war in Iraq he wants to end, a war in Afghanistan he wants to beef up, a health care system that leaves out tens of millions, under serves millions more, a record deficit and frayed international relationships. But the greatest burden may be great expectations -- all those voters told for 21 months that change is on the way.

OBAMA: The road ahead will be long. Our climb will be steep. We may not get there in one year or even in one term. But America, I have never been more hopeful than I am tonight that we will get there. I promise you, we as a people will get there.

CROWLEY: He is asking for time.

(END VIDEOTAPE)

CROWLEY: Even though he told the audience last night that this may take some time, may take, in fact, past his first term, the Obama campaign -- now the Obama presidency in waiting is very aware that they need to be quick out of the box and begin to push for part of the agenda that he has talked about for 21 months -- Wolf.

BLITZER: This transition to power very much underway already, Candy. Thanks very much.

The campaign grew nasty in its closing weeks, but Senator John McCain was very gracious and generous in defeat. He vowed to do everything in his power to help Barack Obama lead the nation through these difficult times. And Senator McCain said the failure of the campaign was his alone.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I don't know -- I don't know what more we could have done to try to win this election. I'll leave that to others to determine. Every candidate makes mistakes and I'm sure I made my share of them. But I won't spend a moment of the future regretting what might have been.

(END VIDEO CLIP)

BLITZER: Senator McCain's running mate, the Alaska governor, Sarah Palin, was a lightning rod for criticism, but mobilized Republican loyalists.

CNN's Dana Bash asked Governor Palin about the next presidential election. Listen to this.

(BEGIN VIDEO CLIP) GOV. SARAH PALIN (R), ALASKA: I don't know what the heck's going to happen in 2012. Again, just very anxious to get back to work there in Anchorage and in Juneau, making sure that the people of Alaska are well served.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: You're notably not ruling out 2012.

PALIN: You know, right now, I cannot even imagine running for national office in 2012. And I say that, though, of course, coming on the heels of an outcome that I certainly did not anticipate and had not hoped for. But this being a chapter now that is closed and realizing that it is a time to unite. And all Americans need to get together and help with this new administration being ushered in.

(END VIDEO CLIP)

BLITZER: And Dana is joining us now live from Phoenix -- Dana, in the final weeks of this campaign, as you know, there was lots of criticism of Sarah Palin.

BASH: That's right. She was controversial on a host of levels. But if you look at the exit polls, Wolf, it seems that she was most controversial with regard to the issue of whether she's qualified. And it seems that Independent voters, according to those polls, 65 percent said that they simply did not think she was qualified to be president. Suburban voters, almost the same percentage.

And, you know, those are the people that the McCain campaign were hoping would be lured toward their campaign because of Sarah Palin. And she actually hurt McCain with those voters. So I asked her about that.

(BEGIN VIDEO CLIP)

PALIN: I don't think anybody should give Sarah Palin that much credit, that I would trump an economic woeful time in this nation that occurred about two months ago -- that my presence on the ticket would trump the economic crisis that America found itself in a couple of months ago and attribute John McCain's loss to me.

But now having said that, if I cost John McCain even one vote, you know, I'm sorry about that, because John McCain, I believe, is the American hero. I had believed that it was his time.

(END VIDEO CLIP)

BASH: Now, Steve Schmidt, who was one of John McCain's chief strategists, was asked whether or not he thought, at the end of the day, Palin hurt or helped McCain. And he notably refused to answer that question, Wolf. He simply said that they would wait and see -- you know, let the history books decide on that.

And I can tell that you that Palin is now on her way from Phoenix back to the State of Alaska. And she is going to go back to do her day job. But, as you just heard in that sound bite, there's no question that the idea of four years from now is not that far from her mind. And perhaps more importantly, some Republicans who are already, even behind the scenes, talking, working, thinking about a Sarah Palin 2012 run for president -- Wolf.

BLITZER: I don't know what she's going to do, but I'm certain she's not going to fade away.

BASH: No.

BLITZER: Dana, thanks very much for that report.

Let's check back with Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: There are others in the Republican Party who are sticking needles in their eyes at the prospect of Sarah Palin running for president.

(LAUGHTER)

BLITZER: She could do what we're doing. She could be on television.

CAFFERTY: Well, anybody can do that.

BLITZER: That's true.

CAFFERTY: We're proof.

With the election of Barack Obama, President Bush is now a certified official lame duck, who will mercifully quickly disappear in the rearview mirror. In 2000, we elected a guy we'd like to have a beer with. A big mistake. Bush soared, though, when the Twin Towers came down.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I can hear you, the rest of the world hears you and the people who --

(APPLAUSE)

BUSH: And the people who knocked these buildings down will hear all of us soon.

(END VIDEO CLIP)

CAFFERTY: And that was pretty much it -- arguably, his finest hour -- 90 percent approval ratings and the entire world ready in and help the United States any way they could.

But Bush blew it. The next seven years were pretty much a steady downward spiral -- the invasion of Iraq, torture, Abu Ghraib, Guantanamo, domestic spying, secrecy, lost White House e-mails, zero accountability and, finally, an economy in ruins.

President Bush be leave office as, arguably, one of the worst presidents this country ever had. His approval ratings are at an all- time low -- been there for a while. He is so unpopular, he dared not even show his face on the campaign trail.

The ultimate irony in this is without the utter disaster that was the Bush presidency, an African-American probably would not have been elected president. It's funny how things work out, isn't it?

George W. Bush, conservative Republican, did as much to get the liberal Democrat, Barack Obama, elected president as those primary voters in Iowa did back on that cold night in January earlier this year. Historians will render the final verdict, but you can have your say right now.

Here's the question: What will you miss most about President Bush?

Go to CNN.com/caffertyfile and you can post a comment on my blog -- Wolf.

BLITZER: Thank you very much, Jack.

CAFFERTY: Are you tired?

BLITZER: No. I feel strong.

(LAUGHTER)

CAFFERTY: Battery operated.

BLITZER: Yes.

CAFFERTY: Wolf Blitzer.

BLITZER: They not only lost the White House, but Republicans also lost seats in the House and the Senate. How will a shattered GOP pick up the pieces in the wake of the electoral defeat?

Also, as president-elect, Barack Obama will now be privy to the most top secret intelligence information on the threats facing the United States. We're going to have details of what he's learning.

Plus, grassroots support spilling into the streets -- spontaneous celebrations of the Obama victory. Does it translate, though, into grassroots government?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: It is our responsibility to try to find common ground when we can. And with our added numbers -- more numbers in the House, more in the Senate, a Democrat in the White House -- we have an opportunity. We have a responsibility. And the American people should and will hold us accountable.

(END VIDEO CLIP)

BLITZER: The House speaker, Nancy Pelosi, speaking on the Democrats' new and bigger majority in Congress. She also said she talked to President-Elect Obama this morning, congratulated him, as well as offering her best wishes and gratitude.

Right now, there are still about four Senate races that are simply too close to call.

Let's go back to our chief national correspondent, John King. He's tracking all of this with the magic map. What is the latest -- John?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, a sweeping victory for Barack Obama and modest gains for Speaker Pelosi and the Democratic leader in the Senate, Harry Reid.

Let's bring up our virtual Capitol and we'll break down the races as we know them right now. You see the Capitol coming up there. We'll begin with the Senate.

This is what we had going into the election. You see those numbers come up. You had 51 Democrats, 49 Republicans. And we'll flip over to what we know about the results. You now have at least 56 Democrats who will be in the new Senate in January, 40 Republicans.

These four races still undetermined. In Alaska, Republican Ted Stevens in a very close race against his Democratic challenger. This Georgia race is going to a runoff. Republican Saxby Chambliss led last night, but he didn't get 50 percent plus one, so Georgia will go to a runoff election.

The Oregon race still too close to call up here. Gordon Smith is the Republican incumbent, a very tough challenge there. That one, still, we can't call. And another one we can't call is in Minnesota. This high profile, very nasty race -- Norm Coleman against the progressive talk show host and former comedian from "Saturday Night Live," Al Franken. That one, Wolf, still too close to call. So if you look at the numbers, the Democrats have 56 when it comes to the Senate.

Will they get to 60? They'd have to win all four of those outstanding races to do that. So, probably not. We'll see how they all play out in the weeks ahead. But the Democrats will at least have 56 and we'll see if they get closer to 60. Most people think they'll fall -- maybe split those and get 57 or 58.

BLITZER: Right. If they got all four of them, they'd get to 60.

KING: Right.

BLITZER: But that probably is not going to happen. We'll see what happens.

What about in the House of Representatives?

KING: Let's take this down on the Senate side and bring up the House of Representatives over there.

And there's where we are right now. And I'll go back just to show you the change. This is where we started the night, 236 to 199. Speaker Pelosi had a pretty good margin there. But if, say, 15 or so conservative Democrats went away, she had a little tougher job.

She will have an easier job in the next Congress -- 254, perhaps a couple more. We still have a few races out there yet to call.

But 254 the minimum the Democrats will have in the House of Representatives. That gives Pelosi a bigger majority, Wolf. It gives Barack Obama more Democrats to work with in both the House and the Senate. With that opportunity, of course, comes a challenge. He will face pressure from some of the liberals in his party to perhaps do more than he wants to do. But the Democrats will have full control of both -- they'll have both branches of government, the presidency and the Congress, in just 70 days.

BLITZER: And not just liberals. There's some blue dog Democrats, too, that are conservative.

KING: The tension within the Democrats will be interesting to watch.

BLITZER: That's right. So they're not just of one voice, let's say.

KING: Not at all.

BLITZER: Not at all.

KING: It will really be fun to watch what happens in Congress.

BLITZER: Thank you, John. We'll get back to you.

So how do the Republicans pick up the pieces after their enormous defeat? Brian Todd is working this story -- Brian, are things going to get ugly for the Republican Party right now?

BRIAN TODD, CNN CORRESPONDENT: Absolutely, Wolf. GOP insiders say this is where the finger pointing begins over what went wrong. One strategist says this is going to be a bloodbath, as it would be for the Democrats if they were in this spot. But it also gives the Republicans a chance now to wipe the slate clean and rejuvenate.

(BEGIN VIDEOTAPE)

MCCAIN: A moment in the future.

TODD (voice-over): The defeat is total -- a two year pummeling, starting with the 2006 mid-terms. Republican leaders just can't spin it any longer.

MIKE DUNCAN, REPUBLICAN NATIONAL COMMITTEE CHAIRMAN: It hurts too bad to laugh and I'm too big to cry.

TODD: John McCain is merely the lead domino to fall in a party that's now lost the presidency and has hemorrhaged more seats in Congress.

Just hours after hitting the canvas in this figurative knockout, the bloodletting has already started on Capitol Hill. Adam Putnam, the number three Republican in the House, steps down as GOP Conference chairman -- the post in charge of putting out the party's message.

He says in his letter to colleagues: "I have come to this decision reluctantly." One interpretation --

MARTIN KADY, THE POLITICO: I think Putnam probably realized that in an internal challenge with the Republican Party he was going to lose the number three slot.

TODD: Putnam's boss, House GOP leader John Boehner, is expected to keep his post. But Boehner's number two, Roy Blunt, is already facing a challenge from conservative Virginia Republican Eric Cantor. But observers say this also means a broader discussion about the party's real principles.

We asked Republican strategist Susan Molinari, once the highest ranking woman in Congress, does the party need to move farther right to regain power or more toward the center?

SUSAN MOLINARI, FORMER GOP CONGRESSWOMAN: I think that we can do both. I think that we can -- we can maintain and respect and deal with our base and we can continue to grow that base by showing fiscal responsibility, by maintaining our message on what tax cuts, you know, can do for the American economy.

TODD: But others say the party will struggle in the months ahead to figure out a winning set of ideas. Then there's the torchbearer question for 2012.

KADY: You know, there's a lot of people out there who love Sarah Palin. Mitt Romney maintained a pretty crisp reputation through -- after he stepped out of the presidential race. He's strong on economics. He's well liked by the base.

(END VIDEOTAPE)

TODD: But analysts say there is no clear leader in the wake of this. Questions surround Palin's lack of experience and depth, Romney's ability to appeal to a wider electorate. And on another possible candidate, Rudy Giuliani, is he too moderate to appeal to the base?

Lots of things to work out for this defeated party. Remember, this is the same group that came storming back after political bloodbaths in 1964, then after Watergate and after Bill Clinton's election in 1992 -- Wolf, they can do it again.

BLITZER: Good point, Brian. Thanks very much. Brian Todd in Washington.

It's the top secret information given to the president of the United States every single day. And for the first time, Barack Obama is now getting the deepest intel on threats to the United States. We're taking a closer look.

And millions of people saw CNN's latest technology -- the hologram. We beamed in guests and correspondents. We're going to take you behind-the-scenes and explain to you how we did it. I think you'll be interested. David Bohrman will be here to explain.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Deborah Feyerick is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Deb, what's going on?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, the question is how sick is he?

Intelligence analysts are poring over newly released photos from North Korea, apparently designed to show that the country's leader, Kim Jong Il, is not sick and still in charge of the communist state. South Korean and U.S. officials suspect that Kim suffered a serious health setback in August. North Korea denies that speculation. And the most recent photos and news reports portray him as active and healthy.

Mexico's interior minister who oversees gangs and drugs is among 13 people reported dead in a plane crash in Mexico City. The small plane went down right in the center of the city last night. At least 40 people on the ground were injured. Authorities are investigating the cause of that crash.

And Iran says U.S. helicopters are carrying out operations in Iraq -- maybe crossing the border into Iranian air space. According to Iranian state media, Iran's military is warning that it will respond if U.S. aircraft do not keep their distance. No word yet on the U.S. response to those charges -- Wolf.

BLITZER: All right, Deb. Thank you.

The Dow Jones Industrials take a massive dive today, underscoring the economic mess that Senator Barack Obama, now the president-elect, is inheriting. We're going to take a closer look at what he plans to do and how it impacts all of us.

Also, the technology behind this -- you're going to find out how we beamed up guests and correspondents in the form of holograms.

And she wept at Barack Obama's victory. Now, Oprah Winfrey tells CNN what it really means to her.

(BEGIN VIDEO CLIP) OPRAH WINFREY, ENTREPRENEUR AND ENTERTAINER: It feels like something really big and bold has happened here -- like nothing ever in our lifetime did we expect this to happen. Something big just happened. It feels like -- it feels like anything is now possible.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Happening now, President-Elect Barack Obama about to lay eyes on the government's Middle East top secret information about Al Qaeda, Iran, North Korea and a lot more. Details of his new intelligence briefings -- that's coming up.

Also, the world watches Obama's victory, but some countries are reacting very differently than others. Paul Begala and Alex Castellanos -- they're going to help us gauge the international response.

And he rode grassroots power to victory -- but does that translate to grassroots government? We're taking a closer look at the Obama administration.

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

With America facing two wars and an ever present terror threat, Barack Obama is already scheduled to receive top secret information.

Our CNN justice correspondent, Kelli Arena, is joining us from Washington -- Kelli, these briefings, when do they actually begin? I'm talking about the really, really good stuff -- the best stuff that only a president sees.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Wolf, the president-elect is expected to be briefed tomorrow by the director of national intelligence. He'd better celebrate today, Wolf, because tomorrow he's due for a very harsh reality check.

(BEGIN VIDEOTAPE)

ARENA (voice-over): It's called the presidential daily brief or PDB. It contains the most classified information about covert activity, U.S. military operations and threats facing the United States.

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: He will begin to see not only the threat, but also the response. And he will have to make decisions about what will his policy be.

ARENA: It will be a sobering experience for the president-elect. He'll be able to see top secret satellite photos, hear what the nation's spies are reporting and he'll get the latest intelligence from the world's hot spots -- what's happening with the insurgency in Iraq, how sick is North Korea's leader Kim Jung Il and what's the status of the hunt for terrorists in Pakistan.

The sooner he hears it, the better.

(BEGIN VIDEO CLIP)

MIKE MCCONNELL, DIRECTOR OF NATIONAL INTELLIGENCE: Those who wish us harm realize this is a period for us when we are still adjusting to making decisions and understanding and so on.

(END VIDEO CLIP)

ARENA: McConnell points out the first and second attacks on the World Trade Center happened during the first years of the Clinton and Bush administrations -- a fact that has not escaped the president- elect or his number two.

SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENT-ELECT: Mark my words, it will not be six months before the world tests Barack Obama like they did John Kennedy.

ARENA: Officials stress there's no intelligence to suggest that any attack is imminent, but they remain on guard.

MICHAEL CHERTOFF, U.S. HOMELAND SECURITY SECRETARY: We have put into effect some additional measures to just make sure we're really scrubbing all the intelligence. We're looking very carefully at anything that might be a vulnerability.

ARENA: A smooth transition also calls for the fast placement of a new national security team.

(END VIDEOTAPE)

ARENA: Experts say the president-elect needs to get that team, which will include a new homeland security secretary and attorney general, in place as soon as possible so he's prepared for the many challenges that he'll face on day one -- Wolf.

BLITZER: All right. Kelli, thanks very much. So certainly the eyes of the world are on this unprecedented transition of power.

Let's gauge some reaction with our Republican consultant, Alex Castellanos, and Democratic strategist, Paul Begala. Guys, thanks very much, both CNN political contributors.

Nicolas Sarkozy said this -- the president of France. Let me read it to you: "At a time when we must face enormous challenges together, your election raises immense hope in France, Europe and beyond -- the hope of an open America characterized by solidarity and strength that will once again lead the way with its partners, through the power of its example and the adherence to its principles."

Alex, those are pretty powerful words from the leader of France.

ALEX CASTELLANOS, REPUBLICAN CONSULTANT, CNN POLITICAL CONTRIBUTOR: Who has been close to this administration. And it looks like he wants to be close to the next. You know, right now, America's place in the world is -- has been a bit uncertain. We -- Fareed Zakaria has written a book called the "Post American World" your CNN contributor in which he talks not about the decline of America but the economic rise of Europe and Asian nations. And with that comes, of course, global political power. Ordinarily, you'd expect the president who is seeing other nations in the world gain economic power, an American president, you would think America would be in a position of weakness.

But Barack Obama is as popular in France as Sarkozy. Frankly having Barack Obama over there may not put America in a position of weakness. As a matter of fact, maybe just the opposite. It may be an opportunity to build bridges.

BLITZER: What do you think, Paul?

PAUL BEGALA, DEMOCRATIC STRATEGIST: I was thinking exactly that. Alex is a brilliant guy. He understands that Tip O'Neill used to say all politics is local. I was thinking that too. Sarkozy is looking at his countrymen and women who probably like Barack Obama as much or more than Sarkozy. Ronald Reagan understood this and Bill Clinton understood it. It's one of the reasons they were successful and effective overseas is that they were able to be build trust, confidence, admiration, even affection and love overseas which helped leverage America's power.

It's up to General Powell would say is a force multiplier. American prestige is a force multiplier, Secretary Powell has said. I think that's right. As two practical politicians I think Alex and I both saw that right away. Just the man's remarkable popularity overseas makes him a more powerful president when dealing with the overseas government.

BLITZER: They used to say Alex I don't know if it still holds that during the transition, there's certainly a honeymoon and then the first 100 days of the new presidency, there's a honeymoon. Does that still hold in a time of crisis like this right now?

CASTELLANOS: I think so. I think you're going to see a honeymoon. But you know I was surprised by the tone last night and how quickly the election ended, how quickly the partisanship fell away. The challenges that this president faces and the success I think that all Americans wish him, you know, dawned on us I think real seriously last night.

So I think this is a little more than a honeymoon. He's going to get I think the mistake the Obama administration could make is to underestimate it the patience of the American people. American people have been very patient with George Bush for quite a long time in 9/11. It took a lot. It took Katrina. It took quite a few years to I think exhaust the American people's patience. It's more important for Obama to get it done right than to get it done quickly.

BLITZER: As you remember, Paul, Bill Clinton in transition and shortly after take the white house I don't remember if there was much of a honeymoon at all, was there? BEGALA: No, and it's in part because I think the personates (ph) were a little sharper back then I think probably. During his transition, I remember Bob Dole then the leader of the Senate Republican said, well, if Clinton's going to have a honeymoon, I'm going to be a chaperone. Off we went.

And I think that this is a different time. I think Alex is right. I think the Republicans first off, the Republicans got drubbed in a way they did not in the house and senate races in 1992.

Second, they understand the stakes here. There are greater threats from abroad than there were in 1992 and '93. And the economic crisis is greater still. Neither party wants to be seen as uncooperative or unhelpful to this new president. I was struck that the tone last night was somber, sober, not celebratory. It took tremendous discipline for Senator Obama, president-elect Obama to stand up last night and see all those people waiting to just explode the way we saw Oprah Winfrey with just the absolute unfiltered joy in her face and instead of revving them into a frenzy, calming them down and trying to remind them as Dr. King did in his last sermon, as President Kennedy did in his inaugural, this will take a long time. That should be an important message of this transition.

BLITZER: And we're going to be hearing from Oprah Winfrey. She was really, really excited. She spoke with our Alina Cho. All right. Stand by for that. Guys, thanks very much.

Last night, Barack Obama told the nation that his victory belonged to the American people and hundreds of people celebrated in the streets of cities across the country. Our special correspondent Frank Sesno is here. You sense that these folks, and there were millions of them out there who were just thrilled, they have a sense of ownership in this presidency?

FRANK SESNO, CNN SPECIAL CORRESPONDENT: They do. You know Wolf, last night in the middle of all this I got an e-mail from some of my students at George Washington University and they were heading out of their dorms and heading out of their buildings and going down to Pennsylvania Avenue to be spontaneously in the streets in front of the White House.

I can't remember a time, can you, in a presidential election when young people and others have just poured out into the streets and to a President-Elect now who's been able to draw 20, 30, 40, 50, 100,000 people, people power is going to mean something different when it becomes real power.

(BEGIN VIDEOTAPE)

SESNO (voice-over): Emotion, colliding with jubilation. They poured into the streets in front of the White House. They filled the church where Martin Luther King once preached. They came out to hear the President-Elect acknowledge history and who made it happen.

OBAMA: I will never forget who this victory truly belongs to. It belongs to you. It belongs to you. SESNO: Obama recruited his army, ran his campaign, raised his millions with the unprecedented use of technology, viral videos.

OBAMA: Yes we can.

SESNO: And personalized e-mails that could be sent in a nanosecond like the one to supporters just before he headed to Chicago's Grant Park. "I want to thank all of you who gave your time, talent and passion," he wrote. "I'll be in touch soon about what comes next." Obama hopes to keep the connection. And use it to change the way government works.

OBAMA: Above all, I will ask you to join in the work of remaking this nation.

ROBERT ZIMMERMAN, DEMOCRATIC NATIONAL COMMITTEE: It not only changed the way governance is done, it makes it more responsive to the people.

SESNO: By using list serves and targeting constituents, issues and congressional districts, Obama would create a new dynamic and a new power center.

ZIMMERMAN: A President Obama could in fact develop an e-mail video message that could be sent to thousands of his contributors in a particular state or in a particular congressional district to encourage that member of Congress to support an important piece of Obama legislation.

SESNO: If he can harness even a shred of the energy that was on display in the streets or the more than 3 million donors who gave well over half a billion dollars to his campaign, he really might change the game.

(END VIDEOTAPE)

SESNO: And the rules of this game would be largely set out in the campaign where the organizing and the training really of so many people, millions of people has been established. Wolf, what they're talking about for example is, getting people to pitch in, maybe even crafting legislation or enacting policy changes where people break down and help to set policy at state, local, maybe federal level. If he does this, big if, but if he does this it's almost a new branch of government. We have to think of things a little bit differently now.

BLITZER: It really is amazing when you think about it. Historians will be studying this for a long time.

Among other things, Frank, you're a professor of media studies and public fairs at George Washington University in the nation's capital. And we saw something amazing last night, very proud of this. We just got the ratings in, the television viewer ship, from around the United States courtesy of the Nielsen ratings.

And CNN, our network, was number one, not only among the cable networks but also beating all the broadcast networks, ABC, CBS, NBC from 8:00 p.m. until 12:30 a.m. Those are the critical hours when this election was told, the story was told and we had averaged 13.5 or so million viewers out there, 13.3 to be exact.

It's pretty remarkable when you think of basic cable station like us can beat all the broadcast networks, obviously beat our cable competition. It's amazing. It doesn't even include obviously our reach around the world. This is only in the United States.

SESNO: Well, first of all, congratulations. That's in order. Second of all, it's a news story because it demonstrates that people are getting their information in all together different ways. Third, it shows the progress of CNN itself. But what we're really seeing is that people are going to where they can get information that they want when they want. I would be willing to wager and it would be interesting to know what percentage of those people were also online and at CNN.com at the same time.

We're seeing a whole new way people are going about getting their information. And sad to say the old traditional newspapers, we know what's happening there. Many of them are changing the way they do business. The Christian Science Monitor isn't even publishing in hard copy anymore and the broadcast networks are increasingly becoming things of the past. Congratulations to CNN. Good job to you and everybody else. Provide a good product and everybody will come.

BLITZER: We're very, very proud of this accomplishment, very nice indeed.

SESNO: Now you've got to keep it up.

BLITZER: We'll definite keep it up. Being number one is good on a historic night like this. By the way, this was the largest audience in the United States that CNN has ever had. What we had last night.

SESNO: It's very significant. Both you and I go back to the '80s at this company when cable was a new and fledgling industry. What this really does show is that we have entered into a new era of media and information distribution.

BLITZER: We're grateful to viewers when he they wanted to see a big story like this last night, they came to CNN. OK, we owe them and we appreciate that.

SESNO: Appreciate it.

BLITZER: Frank Sesno, thanks very much.

Voters made it very clear they viewed America's financial woes as issue number one. We're going to be hearing what Barack Obama plans to do about the economy.

And she has a degree from Harvard Law School, a career in public service. She's the mother of two young girls. What kind of First Lady will Michelle Obama be?

Stay with us. You're in THE SITUATION ROOM. (COMMERCIAL BREAK)

OBAMA: Mothers and fathers who will lie awake after their children fall asleep and wonder how they'll make the mortgage or pay their doctor's bills or save enough for their child's college education. There's new energy to harness., new jobs to be created, new schools to build, and threats to meet, alliances to repair. The road ahead will be long. Our climb will be steep.

BLITZER: So with the election now out of the way, investors went back to worrying about the very weak U.S. economy. Today the Dow Jones Industrials dropped 486 points or just over 5 percent. The S&P 500 and the NASDAQ also fell more than five percent on this day.

So how will Barack Obama tackle the nation's economic problems? Our senior correspondent Alan Chernoff has been following issue number one for a long time. He's got a huge challenge, Alan, ahead of him.

ALAN CHERNOFF, CNN SENIOR CORRESPONDENT: Indeed. No question about it, Wolf. Barack Obama certainly is hoping to revive the economy and especially to help the millions of Americans having trouble paying their mortgages.

(BEGIN VIDEOTAPE)

CHERNOFF: Aoah Middleton is fighting foreclosure on their home after cancer treatment for their 8-year-old daughter forced them to miss mortgage payments. They voted for Barack Obama, now they're hoping to get help from the President-Elect.

AOAH MIDDLETON, HOMEOWNER: I would like for Barack Obama to find some way to, you know, bail the homeowners out of this situation. My husband and I work, you know. We feel that if you're able to work, you should have a home and have a backyard.

CHERNOFF: Obama may help the Middletons. He wants banks to give a 90-day moratorium on foreclosures. He wants to create a foreclosure prevention fund and allow bankruptcy judges to make mortgages easier to pay off.

OBAMA: Make no mistake, we must do more to help innocent home buyers.

CHERNOFF: Beyond addressing the mortgage crisis, President-Elect Obama says he'll take quick action to help Americans who are suffering from the economic slump. The Obama plan calls for extending unemployment benefits, temporarily exempting those benefits from taxes, emergency loans for small businesses, and a tax credit for every new job a company creates. Barack Obama says he'll keep a close watch on the bailout program to help banks that invested in risky mortgages.

OBAMA: I support the treasury's effort to buy up troubled mortgages but we need to do it in a responsible way.

CHERNOFF: Aoah Middleton does not expect immediate results from Obama.

MIDDLETON: It's probably going to take a couple of years, maybe two or three years to get things turned back around because it took us a couple years to get into this mess. So it's not going to be overnight. So you know, I'm willing to wait to see what he's going to do.

CHERNOFF: But for your home?

MIDDLETON: Well.

CHERNOFF: Do you have a couple of years?

MIDDLETON: I don't have the answer to that question. I can just only hope and pray that whatever solution Obama comes up with that my family will be taken care of.

(END VIDEOTAPE)

CHERNOFF: Families like the Middleton's might actually be able to get quick help. But for the economy at large, the fact is, there is no quick fix. Wolf?

BLITZER: It's very, very worrying how deep this recession might be. All right. We'll watch that together with you. Alan, thanks very much.

She was an early and important backer of Barack Obama.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You've got this little thing called the Oprah Show. Would you consider an ambassadorship?

OPRAH WINFREY, TALK SHOW HOST: Would I consider an ambassadorship?

(END VIDEO CLIP)

BLITZER: We'll hear how Oprah answers that question. Stay with us. You're going to hear from her. She's very excited.

And we turned reporters and guests into high tech holograms. Find out how we beamed them up into the CNN Election Center. David Bohrman is standing by to explain how we did it.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Millions of people around the world saw CNN's latest technology, holographic interviews. It was pretty must say one day after the debut and one of the most talked about issues online. Let's go back to internet reporter Abbi Tatton. Abbi, what are the folks around the world saying? ABBI TATTON, CNN INTERNET REPORTER: Well, I want to show you Google's hot videos right. After the election, obviously there's Barack Obama's acceptance speech, but then look here, the next one CNN hologram first, CNN reporter Jessica Yellin was beamed into the CNN studios just a few feet away from me last night.

Hundreds of thousands of views for that video. And another one that is popular is here is the artist when will.i.am came in for similar treatment later in the night. Some of the headlines on the blogs and the news sites this is generating freaky and amazing. The A-Plus geekiness award went to CNN. And then my favorite, CNN studio haunted by ghost of will.i.am -- Wolf?

BLITZER: All right. Thanks Abbi very much.

And David Bohrman is the man behind all of this. He is our Washington bureau chief, the man in charge of all of our election coverage. He was amazing and here with us right now.

David, congratulations first of all. Excellent ratings and you did an amazing, amazing job.

DAVID BOHRMAN, CNN WASHINGTON BUREAU CHIEF: As did you.

BLITZER: Let's talk a little bit about how you did this. You came up with this idea, and I know you have been thinking about it for a while.

BOHRMAN: Well, about a dozen years I have been trying to do it. Basically I have been a crazy mad scientist trying to get it done. This year, we pressed really hard and three months ago we launched into developing it, and it ended up working. It was quite surprising.

BLITZER: I know you at one point made a quick trip for a day or so to Israel, because there was some technology there that you needed?

BOHRMAN: Yes, I was in between two debates and I produced the vice presidential debate and went to Israel with a fellow we were working with on the project, and we were on the ground as long as we were in the air. We had to see a proof of concept to be able to recreate an image moving with six cameras. These are some of the cameras that we used. There are 40 of them. And they were surrounding --

BLITZER: Well, show us how you do it.

BOHRMAN: Well, there is a green room and we have pictures of it.

BLITZER: Yes, right there.

BOHRMAN: And there were 40 of these cameras in semicircle in the rig that we began to call it the transporter, and the cameras are fixed, and they don't move.

BLITZER: There is will.i.am right there. BOHRMAN: And the cameras in our studio here where you and I are right now were basically broadcasting telemetry of information of where they were in the studio and the cameras had to project out the right prospective of will.i.am or Jessica Yellin. It was complicated technologically and the sound was complicated. I didn't know if it would work or not.

BLITZER: Well, moments before we did it with Jessica Yellin and me and we were wondering, is this really going to work?

BOHRMAN: To work or not.

BLITZER: It worked. So we have a future in this hologram business?

BOHRMAN: Well, it was an ornament on the tree. The coverage was covering the races and calling the races and how we do things evolves and maybe at some point five or ten or 20 years down the road, there is a way that television does interviews like this, because it allows for more intimate possibility for an interview.

BLITZER: David Bohrman is our genius.

BOHRMAN: For now.

BLITZER: Thanks good. Good work. David Bohrman, our Washington bureau chief and senior vice president of CNN.

She is about to assume one of the most high profile positions in the country. So what kind of first lady will Michelle Obama be? Who are the role models going to be? Will she break the mold?

And the e-mails on this question, what will you miss most about President Bush? Jack Cafferty and your e-mail standing by.

(COMMERCIAL BREAK)

BLITZER: We have two powerful interviews coming up in the next hour right here in THE SITUATION ROOM. Colin Powell and Oprah Winfrey they react emotionally in what happened here in the United States here yesterday. Standby, because you will want to see this.

In the meantime, check back with Jack Cafferty who has "The Cafferty File." Very strong words from both of them.

CAFFERTY: I saw the Oprah interview on "AMERICAN MORNING" this morning. Alina Cho got it, an exclusive. It was terrific.

The question this hour: What will you miss most about President Bush? Here are some of the ones we can put on television.

Nixon in Brooklyn, New York: "It is going to be tough but he's leaving us with so many memories. With tears in my eyes, I'll be reminded of our gazillion deficit when I pay my adjustable rate mortgage. In spirit, I'll hear his voice on the phone and wonder what is the fuss about the wiretappings. It will become so unbearable when he is gone and I will reread the patriot act and remind myself how much he has done and cry for joy some more."

Slatts writes: "Two things we won't miss, the humiliation Americans suffered watching George Bush fumble his way around the stage among foreign leaders who spoke English better than he did, and the insult to our democracy and government we suffered at the hands of Bush's puppet master Dick Cheney."

Mark says: "I'll miss seeing an every man type as leader of the free world. Though his mistakes were numerous and his missteps well- documented, he was more of a victim of those around him and the fact that he trusted them so much."

Albert says: "I truly believe that President Bush is a good Christian man and the challenges he faced during his administration no one ever faced before. Our country was attacked by Islamic terrorists, his foreign policy failed. History will tell the American people about his presidency."

Syrus in Kirkland, Washington: "I just now realized the inadequacy of the word nothing. Despite the fact that President Bush has shown me that for eight years, nothing."

Heather in Flagstaff, Arizona: "Ask again in a year after we have had time to gather perspective. Right now it is too fresh like sort of like walking away from a bad eight-year marriage."

And Kevin in Pennsylvania wrote: "That Dick Cheney didn't take him hunting."

If you didn't see your email here, you can go to my blog, CNN.com/Caffertyfile and look for yours there among hundreds of others -- Wolf?

BLITZER: Thank you Jack Cafferty.

To the viewers, you are in THE SITUATION ROOM.

Happening now, the president-elect faces the hard work ahead. Barack Obama can't afford to savor his historic victory for very long. He has some tough decisions to make right now. Obama heads to the White House with an agenda, can he get what he wants out of congress or will the Republicans have the will and the way to stop him? The best political team on television is standing by.

And Colin Powell simply cannot contain the emotion, the former secretary of state breaking down. He speaks at length to CNN about Obama's win and what it means for African-Americans and what it means for the United States of America.

We want to welcome the viewers in the United States and around the world. I am Wolf Blitzer at the CNN Election Center, and you are in THE SITUATION ROOM.

Barack Obama's name and face are splashed across newspapers and magazines and of course TV screens around the world, but the president-elect is staying out of sight at least for now, trying to catch his breath a little bit after the history-making election. After his long hard-fought victory, President-Elect Obama has a tougher job ahead, living up to the supporters' high hopes and making good on the promise of change.

CNN's Jessica Yellin is with the Obama team in Chicago right now.