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Obama Cabinet Appointments: Clinton Possible Secretary of State?; Obamas Talk to Schools in D.C.; First Lady Laura Bush Speaks out Against Afghanistan Attack

Aired November 14, 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: I'm Wolf Blitzer. You're in THE SITUATION ROOM.
A secret meeting between Barack Obama and Hillary Clinton now revealed. Sources telling CNN they met yesterday in Chicago, at Obama's request, to discuss a possible role in his administration for the New York senator and former rival -- possibly the Secretary of State.

Let's go to Ed Henry. He's working the story for us.

Ed, update our viewers on what we know right now.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, what's interesting is we've already seen a very strong Clinton influence on the Obama transition. In fact, some sources are now indicating that the Obama White House may include someone who defended Bill Clinton against impeachment charges.

(BEGIN VIDEOTAPE)

HENRY (voice-over): Whether or not he nominates Hillary Clinton for Secretary of State, President-Elect Barack Obama is stocking his team with lots of Clinton veterans, starting with incoming chief of staff, Rahm Emanuel, who cut his teeth with Bill Clinton and is now in Washington eying other former Clinton insiders for key posts.

Three officials close to the transition say Greg Craig is getting strong consideration to be White House counsel -- the powerful post of the president's chief lawyer. Craig represented Bill Clinton in his Senate impeachment trial, but picked Obama over Hillary Clinton in the Democratic primaries and played a key role in the vice presidential vetting process.

GREG CRAIG, PARTNER, WILLIAMS & CONNOLLY LLP: This is the first major decision that Barack Obama has to make in front of the whole nation. And he has done it systematically. He's done it carefully. He's included a lot of people in the process, in terms of candidates.

HENRY: Meanwhile, two people familiar are transition deliberations say retired General Jim Jones is getting a close look for energy secretary or national security adviser.

Candidate Obama touted Jones during the third presidential debate. (BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENT-ELECT: This committee or General Jim Jones, the former supreme allied commander of NATO. Those are the people, Democrats and Republicans, who have shaped my ideas and who will be surrounding me in the White House.

HENRY: Jones is a bipartisan figure who also advised John McCain, who is coming to Chicago Monday for his first post-election meeting with the president-elect.

(END VIDEO CLIP)

HENRY: Now, Obama aides say that McCain and Obama are likely to talk about issues like lobbying reform, ethics reform and global warming -- some issues where they think there may be some common ground that they can forge together in January, when the new Congress comes in and when Barack Obama is sworn into office -- Wolf.

BLITZER: Ed Henry working the story.

We'll be checking back with you. Don't go away, Ed. Thank you.

Let's get some more now on the possibility -- a real possibility of Barack Obama's naming Hillary Clinton his Secretary of State.

Our State Department correspondent, Zain Verjee, is looking at that.

So what are you hearing, what are you thinking?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, Wolf, Senator Hillary Clinton didn't do anything to squelch the buzz. She revealed nothing about her secret meeting with the president-elect. So the guessing game is on.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): Secretary of State? Stay tuned.

SEN. HILLARY CLINTON (D), NEW YORK: I'm not going to speculate or address anything about the president-elect's incoming administration.

VERJEE: She fought to the bitter end against Barack Obama. And when the campaign was over, she told Wolf Blitzer...

CLINTON: Well, I really want to stay a senator. I am committed to being in the Senate, working with President Obama.

VERJEE: Their primary campaign was a contact sport. Clinton accused Obama of being naive, offering to meet leaders of America's adversaries without conditions in his first year, like Iran's Mahmoud Ahmadinejad.

CLINTON: I think it is not that you promise a meeting at that high a level before you know what the intentions are.

VERJEE: A mini-drama over whether he was crisis ready.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: But there's a phone in the White House and it's ringing. Something's happening in the world.

(END VIDEO CLIP)

VERJEE: Months ago, "The New Yorker" spoofed them both grabbing the White House red phone. Senator, before that, first lady, overseas, Hillary Clinton has star power, knows world leaders. She said she wants to restore America's standing in the world and cooperate with other countries.

But her husband's globe trotting and Clinton Foundation fundraising may raise red flags.

DANA MILBANK, "WASHINGTON POST": A lot of money from places around the world that aren't necessarily in line with how U.S. policies are being executed. That is, perhaps, the main obstacle to her being named Secretary of State. They'd have to figure out a way to kind of keep his foreign travels and entanglements under wraps.

(END VIDEOTAPE)

VERJEE: As recently as Monday, Senator Clinton was asked whether she would want a cabinet position. And she responded saying she wants to be "a good partner" and "I want to do everything I can to make sure his agenda is going to be successful."

BLITZER: It sounds pretty diplomatic to me.

VERJEE: I know.

BLITZER: So for a top diplomat, that's pretty good.

What are you hearing? What's going on at the State Department, your beat, Zain, right now...

VERJEE: Right. Right.

BLITZER: ...in terms of this transition?

VERJEE: Well, there was a little bit of activity today -- the first high level contact from the State Department transition team. They were there. They were looking at office space. They have a few more meetings this afternoon. Secretary of State Rice has insisted and directed that the transition be really smooth, so the U.S.

Doesn't miss a beat in dealing with all the challenges around the world.

BLITZER: Yes. Well, the transition seems to be going smoothly in a lot of the places, not just the State Department -- Pentagon, Treasury and elsewhere.

VERJEE: Right.

BLITZER: We'll see how smooth it remains, though. It's smooth right now.

VERJEE: Yes. Right.

BLITZER: Zain, thank you.

Zain is going to be busy.

Let's go to Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: I'm busy, too.

BLITZER: Always.

(LAUGHTER)

VERJEE: How busy are you, Jack?

CAFFERTY: I hear her laughing.

(LAUGHTER)

CAFFERTY: As GM goes, so goes the nation. That's the old motto anyway. Financially, though, neither one -- neither GM nor the nation are looking too good these days.

General Motors, along with Ford and Chrysler, looking for some help from our already cash-strapped government in order to get back on track. The estimates are if the big three in Detroit go belly up, unemployment could hit 10 percent.

Doubts about a bailout for the industry grew yesterday in Washington, as Democratic leaders conceded they don't have the votes to get a measure through -- at least not now, during next week's lame duck session.

If General Motors fails -- and it would likely to be the first of the big three to fall, because Ford is in better shape financially and Chrysler is a much smaller company. But if GM goes down, the impact would be huge -- not just the hundreds of thousands of jobs directly related to General Motors that would be lost, but literally thousands of smaller companies all over the country that sell their products to GM. It's highly likely many of them would fail, as well.

As "TIME" magazine's Bill Saporito put it: "The decision Washington has to make is whether we pay for G.M.'s survival or for its funeral, because whether GM gets help from the government or not, as taxpayers, we're on the hook. We'll have to cover everything from the lost tax revenues and higher unemployment costs to GM's hefty pension obligations."

So here's the question: Is General Motors worth saving? Go to CNN.com/caffertyfile and you can post a comment on my blog -- Wolf.

BLITZER: A good question, Jack. And we'll see what our viewers think.

Thanks very much.

The world right now watching Barack Obama's transition to power, including the Taliban.

(BEGIN VIDEO CLIP)

MUSLIM KHAN, TALIBAN SPOKESMAN (through translator): For America's black people, it could be that there will be a change. That era is coming.

(END VIDEO CLIP)

BLITZER: A notorious Taliban leader speaks to CNN about the Obama victory and delivers a warning to the president-elect. We have the exclusive report.

Also, he not only needs to find schools for two daughters, he needs to find some way to help a failing system nationwide. We go inside Barack Obama's education challenge -- and it's a huge one.

Plus, she's believed to be on the Obama short list for attorney general -- the top cop. Why there's so much buzz right now about the Arizona governor, Janet Napolitano.

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

(COMMERCIAL BREAK)

BLITZER: Education is certainly very high on the president- elect's to-do list -- on a personal level, finding schools for his two daughters, and on a much broader level, tackling the nation's troubled education systems, including D.C. public schools, which are almost within view of the Oval Office.

CNN's Jim Acosta has details -- Jim.

JIM ACOSTA, CNN NATIONAL CORRESPONDENT: Wolf, D.C. public school officials have confirmed to CNN they have discussed education options with the Obama family. But the issue of education is much bigger than public or private.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): If Barack Obama puts his two daughters in private schools in Washington, it will be for good reason. The public school system in D.C. is one of the worst in the nation. The elementary school zoned for the White House was just closed over the summer and merged with the closest middle school. That means Pre-K students are on the same campus with eighth graders. This parent says things are improving, but not fast enough.

MICHELLE NEWBY, PARENT: I didn't like when the children didn't have books to bring home. I did not like that. I didn't like that they had leave their books at school.

ACOSTA: During the campaign, Obama cited education reform as one of his top five priorities.

OBAMA: I don't want to just hold our teachers accountable, I want you to hold our government accountable. I want you to hold me accountable.

ACOSTA: He pledged to spend $10 billion a year on early childhood education, put money in the under funded No Child Left Behind program and double the funding for charter schools. It sounds promising to the man who runs the public schools in Obama's hometown of Chicago, Arnie Duncan, a reformer who is being mentioned as the possible next Secretary of Education.

ARNIE DUNCAN, CEO, CHICAGO PUBLIC SCHOOLS: I think that he could be the best education president we've had in decades.

ACOSTA: Duncan dismays any notion that the economy will push education to the back burner.

DUNCAN: There's a tremendous sense of urgency around public education. We have to do better. Our children deserve better. We have to do it now. We can't wait, you know, three years, four years, five years. We'll lose another generation of children.

ACOSTA: But President-Elect Obama has another looming education problem -- budget cuts. A new study on the impact of the economic downturn on public education says 62 percent of school superintendents are lowering their thermostats -- yes, thermostats -- to save money; 48 percent are reducing hiring; 30 percent considering layoffs -- many of the cutbacks at under funded schools.

WENDY KOPP, FOUNDER, TEACH FOR AMERICA: We're absolutely starting to hear from school systems that they're projecting significant budget cuts. Faced with huge budget cuts, they will have to lay off teachers. They will lay off the most recently hired teachers.

(END VIDEOTAPE)

ACOSTA: Which is why a lot of professional educators are tying their issues straight to the economy. As the leader of an association of school superintendents put it, "A strong public school system produces a strong workforce."

And we should point out, D.C. public schools do offer parents school choice, so the Obama family wouldn't necessarily have to send their kids to the school they're zoned for -- Wolf.

BLITZER: Thanks very much. Jim Acosta reporting.

As you know, lots of buzz right now that Hillary Clinton could be the next Secretary of State. But is another former Clinton official headed to Obama's cabinet? There's a lot of buzz, also, that the Arizona governor is on the president-elect's short list to become the next U.S. attorney general.

CNN's Dan Simon is following these developments -- Dan.

DAN SIMON, CNN CORRESPONDENT: Wolf, Janet Napolitano served as a state attorney general and was also a U.S. attorney under President Clinton. Now a popular governor, her allies say her resume is tailor- made for a cabinet position.

(BEGIN VIDEOTAPE)

GOV. JANET NAPOLITANO (D), ARIZONA: This is a crucial moment and it's a critical time and a critical race.

SIMON (voice-over): She endorsed Obama early, then hit the campaign trail. Now Arizona's governor, Janet Napolitano, is part of Obama's transition team. That's helped fuel speculation in blogs, articles and on talk radio...

J.D. HAYWORTH, RADIO TALK SHOW HOST: Governor Napolitano could be in contention.

SIMON: ...that she could be tapped for a high level cabinet position, including attorney general.

Here's what the governor is saying now.

NAPOLITANO: First of all, I don't speculate. And I have no offers before me. I enjoy being the governor of Arizona. And it's up to President-Elect Obama who he selects for his cabinet.

SIMON: Even some of her political opponents, like Arizona's Republican speaker of the House, concede she has strong credentials and would be a great cabinet choice.

REP. JIM WEIERS, ARIZONA HOUSE SPEAKER: And you've got a woman who is very intense and very prepared, very hard working. I don't think the woman sleeps much.

SIMON: Napolitano started her career as a litigator in a Phoenix law firm. At one point, she helped represent Anita Hill during the infamous Clarence Thomas Supreme Court confirmation hearings.

In 1993, President Clinton appointed her U.S. attorney for Arizona.

Five years later, came her first elected office -- as the state's first woman attorney general.

JOSE CARDENAS, NAPOLITANO FRIEND: I think Governor Napolitano is very much in the Obama mold, in terms of reaching across the aisle, trying to create a consensus.

SIMON: Jose Cardenas has been friends with Napolitano for years. Aside from politics, her two passions -- opera and baseball.

CARDENAS: She jokes about the fact that her security detail kind of moans and groans when she takes them to the opera with her, but they're very happy when she goes to the Diamondback games.

SIMON: But Napolitano has her critics. Some Republicans, like former Congressman J.D. Hayworth, now a conservative radio talk show host, fault her for Arizona's soaring billion dollar deficit. Given the state's poor fiscal health in the wake of foreclosures and shrinking tax revenue, Hayworth says a cabinet post would be a perfect exit strategy for the governor.

HAYWORTH: She is so frantic and desperate to get out of town and get out of this state, she would take any role with the administration that provided a cabinet level appointment.

SIMON: Despite Arizona's budget problems, Napolitano has maintained solid approval ratings. In fact, her allies think she could give John McCain a run for his money if she stayed in Arizona and challenged him for the Senate in 2010.

(END VIDEOTAPE)

SIMON: However, if Washington comes calling sooner, her name has also been floated as a possibility Secretary of Homeland Security and Secretary of Education -- Wolf.

BLITZER: Dan Simon looking at that story for us. Thank you.

So Hillary Clinton -- could she really become the next Secretary of State?

We're learning more about her secret meeting with Barack Obama in Chicago. And we're also assessing the growing buzz with Hilary Rosen and Alex Castellanos. They're standing by live.

Plus, young Afghan girls attacked with acid -- the first lady of the United States, Laura Bush, speaking out, giving an exclusive interview to our Elaine Quijano. You're going to hear what she's saying on this important issue.

That and a lot more coming up.

(COMMERCIAL BREAK)

BLITZER: Zain Verjee is monitoring some other important stories incoming into THE SITUATION ROOM right now.

Zain, what's the latest?

VERJEE: Wolf, U.S. retailers say Americans just aren't buying it. The group's experienced its worst monthly sales drop ever, down nearly 3 percent in October, as consumers spend less of their discretionary income.

Meanwhile, investors absorbed another wave of downbeat economic news today and had little reaction to hints of interest rate cuts. The Dow Jones Industrials fell more than 330 points. That's nearly a 4 percent drop.

For the first time in the history of the U.S. military, a woman has been promoted to four star general. Lieutenant General Ann Dunwoody was sworn in today, after serving in the Army for 33 years. She's now going to lead a command responsible for equipping and arming 130,000 soldiers fighting in both wars and around the world.

India makes one giant step, as the country plants an Indian flag into the moon. A probe from the unmanned lunar orbiter made a hard landing on the moon's surface today. Its other objectives are to search for evidence of water or ice and attempt to identify the chemical composition of certain lunar rocks.

Turtles, Wolf, as you know, usually don't fly. But two endangered baby turtles had to take a plane trip after they ended up thousands of miles off course. The loggerheads were rescued in the cold waters off Sydney. They were supposed to be in much warmer waters. So what happened was rescuers flew them to South America. They then had to go through the x-ray machine at the airport.

So you see, Wolf, even turtles can't escape security these days.

BLITZER: All right, Zain. Thank you.

Zain Verjee, we're going to be getting back to you soon.

Even in a place plagued by enormous amounts of violence, this attack stands out -- a brutal attack -- schoolgirls squirted with acid. The gruesome attack is drawing the attention of the first lady of the United States, Laura Bush.

She spoke exclusively with our White House correspondent, Elaine Quijano -- Elaine, we had some of the interview in the last hour. But this is such a powerfully important story, she wanted to get on the record and speak out.

Tell us what she's saying.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, that's exactly right, Wolf.

We can't, in fact, even show you some of the video because it is so disturbing. I believe we have a still photograph to show you of the aftermath.

This is a story that happened on Wednesday in the southern part of Afghanistan, in the City of Kandahar.

Militants -- men on motor bikes, actually, targeting girls who are simply walking to school in Kandahar. They used water pistols that were filled with battery acid and aimed them right at these girls. We are told at least two girls were blinded by this. And the next day, Thursday, we understand, the girls were so afraid, that no one showed up for class.

So today in that interview, I asked Mrs. Bush what her message would be to girls who certainly are frightened now.

Here's what she had to say.

(BEGIN VIDEO CLIP)

LAURA BUSH, FIRST LADY OF THE UNITED STATES: Well, I'd want them to know, first, that people around the world are watching and that people around the world send them our love and our sympathy -- the girls who have been attacked and who are disfigured or blind now. We know how afraid they are.

I met earlier this year with women parliamentarians and business leaders from Afghanistan who came here. And they are afraid, too. They said, you know, this is our only chance. If we can't -- if our country can't really get it together now, if women don't have the chance to serve and to be part of our community and to be contributors to our country now, then when will it ever happen?

Right after September 11th, actually in October of 2001, I gave the presidential radio address to talk about the women in Afghanistan.

It's very hard for women here in the United States to imagine a country where women are forbidden to be educated, where girls are forbidden to go to school.

What I've seen in my visits to Afghanistan and in all my study of Afghanistan since is how totally decimated the country was because of the Taliban and because of the years of war before that and how the people of Afghanistan are trying to build their country from nothing -- I mean from a country that once thrived, that once had a lot of agriculture. And now, starting after the United States liberated Afghanistan from the Taliban, started trying to rebuild.

And we've seen an election there. We know that there is a woman governor. There are women members of parliament. Schools are being rebuilt around the country. Girls are in school. Boys are back in school, obviously, as well.

But we also see how one happening like this makes the country take these few steps back and makes people afraid to go to school or step out of their house.

So I want to urge the international community, as well as the people of Afghanistan, to stand up against this sort of brutality.

(END VIDEOTAPE)

QUIJANO: And First Lady Laura Bush there.

She condemned, in a written statement, this attack yesterday, calling it "cowardly and shameful." And she said this certainly was an indication of the brutality of the Taliban and how necessary it is, Wolf, she said, for the world to remain supportive of the people of Afghanistan -- Wolf.

BLITZER: Good for her. I'm glad she's speaking out on this issue.

Thanks very much, Elaine.

Elaine Quijano reporting from the White House.

She wanted the Oval Office, but could wind up in the State Department instead. That would be Hillary Clinton and a possible role in the Obama cabinet as Secretary of State.

CNN's senior political analyst, Gloria Borger, she's been doing some serious reporting. She's about to share what she knows with us. Stand by.

Also, a Taliban warning to Barack Obama -- a notorious leader sits down with CNN to talk about the change he sees coming.

Plus, Barack Obama brought in huge numbers of young voters.

Are they loyal just to him or are they loyal to the next generation of Democrats?

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

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

BLITZER: Hillary Clinton potentially -- potentially the next Secretary of State. We've been doing a lot of the reporting on what we know. But Gloria Borger, our senior political analyst, is here -- Gloria, what are you discovering right now?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I'm discovering, Wolf, from talking to multiple Democratic sources today, that President-Elect Obama and Hillary Clinton had what they all say was a serious discussion to gauge Senator Clinton's interest in becoming Secretary of State, if she were to be offered the job.

Senator Clinton's response to this whole conversation is unknown, although many sources agree -- and I'll tell you, there are multiple sources who agree that when she left that meeting, she believed that the job of Secretary of State would be hers if she wanted it.

BLITZER: And so we didn't hear -- at least you're not hearing from your sources that she immediately accepted the offer, if there was an offer, on the spot?

BORGER: No. I was told that there was a serious discussion. And that in these circumstances generally, Wolf -- and you know this as well as I do -- a president-elect who is serious about offering someone a position will bring them in and gauge their interest. And there was a sense that they needed to have this face-to-face conversation.

I believe that Hillary Clinton did not give him answer at that point. I believe she is seriously considering this. And I was told by one source very close to the transition that this -- offering Hillary Clinton this job has been something that has been what he calls of great interest to Barack Obama for some time now.

BLITZER: Because I've been hearing from some of her colleagues and friends that you know, this would be a very attractive offer to her. She goes back to the Senate.

BORGER: Right.

BLITZER: She's going to be the junior senator from New York, she'll be influential. It's unlikely, at least in the short term, she's going to be the leader of the Democrats in the Senate. And being Secretary of State, that's a pretty powerful and shall we say glamorous influential position.

BORGER: It is a powerful job. As you say, she is the junior senator. On issues that she cares about like health care, she's essentially blocked. She's not the senior person in that position.

From the Obama point of view, this is, this is a wow appointment. It gets a lot of notice internationally. You might say, to use an old phrase, you get two for the price of one, Wolf. You get both Bill Clinton and Hillary Clinton.

And also, as Obama has said, he loves the Lincolnesque theory of team of rivals. So people who might have been your rivals, why not bring them close to you and benefit from their advice.

So, again, Wolf, the lead of this is a serious conversation between the two of them. He was gauging her interest in Secretary of State. She believes the job is hers if she wants it.

BLITZER: And, you know, it's very interesting because when she spoke about it earlier today, and I think we have that sound bite, maybe we'll play it for our viewers, she didn't leave the impression that this was out of the realm of possibility and all the sources I've been speaking to are, you know -- there are some of them very, very close to Hillary Clinton. They're not saying that this is out of the question by any means.

In fact, that suggests to me, because if it were out of the question, they'd be shooting it down, they'd be shooting it down very quickly. In fact, we have that sound bite. I'm going to play that...

BORGER: OK.

BLITZER: ... for our viewers right now. And I want everyone to listen very carefully when she addressed head-on this issue of whether or not she might be the next Secretary of State.

(BEGIN VIDEO CLIP) SEN. HILLARY CLINTON (D), NEW YORK: Senator McCain will bring a lifetime of experience to the campaign. I will bring a lifetime of experience and Senator Obama will bring...

(END VIDEO CLIP)

BLITZER: All right. That's wrong -- that's the wrong sound bite. I'm sorry about that. That's what she said during the campaign. She said something very different today -- during the campaign, she was criticizing.

BORGER: Well, and that does bring up an interesting point, though, because he does want people who disagree with him around the table. And she does have an awful lot of foreign policy experience and shows from the Obama point of view that he's a leader who does not feel threatened by Hillary Clinton.

BLITZER: Yes, because he would -- and as you say, this is something that Abraham Lincoln did.

BORGER: Right.

BLITZER: And he's read a great deal about Abraham Lincoln.

BORGER: He has.

BLITZER: Abraham Lincoln, when he was elected president, he had a lot of rivals, a lot of political enemies. You know what he did? He brought them all in...

BORGER: He brought them in.

BLITZER: ... to work together. I think we have the right sound bite queued up right now. Let's try this one more time.

(BEGIN VIDEO CLIP)

CLINTON: I'm not going to speculate or address anything about the president-elect's incoming administration. And I'm going to respect his process, and any inquiries should be directed to his transition team.

(END VIDEO CLIP)

BLITZER: All right. Gloria, that's very diplomatic words. She could have said I love being the senator from New York. I have a responsibility to the people of New York state. She could have said all that which she said before but didn't.

BORGER: Right. No, she didn't. And that's a clear sign she is mulling over this job. And you know, again, let me say that presidents-elect don't offer people a job unless they're sure they're going to take it.

So what we saw yesterday, according to our sources, is a conversation to gauge her interest because he is clearly interested in offering her that job if she decides she wants it.

BLITZER: Let's bring in two CNN political contributors to join in this conversation. Hilary Rosen, a Democratic strategist, and Alex Castellanos, the Republican strategist.

Hillary, Hilary, you supported Hillary Clinton during the primaries. You know her quite well. You know a lot of folks close to her. What are you hearing?

HILARY ROSEN, DEMOCRATIC STRATEGIST: Well, you know, I think that Gloria is a good reporter. I understand that Gloria's right on target. So, I think -- you know, let's look at this from the country's standpoint.

Both Hillary Clinton and Barack Obama during the entire presidential campaign talked very much along the same lines that they cared about restoring America's standing around the world. And that the problems that we were facing in multiple hot spots around the world were a serious concern.

They're both a drain on America's economy and a threat to America's security. And our alliances haven't been strong enough. And so, you know, I think if this all worked out the way people are talking, she would be just a huge asset right out of the box for President Obama.

BLITZER: I want to welcome our viewers on CNN International from around the world. They're joining us now. We're covering this breaking news story involving potentially Hillary Clinton becoming Barack Obama's Secretary of State.

Alex Castellanos, as a Republican strategist, what do you think about this possibility?

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: Well, I think it -- it accomplishes a lot of things. One is, short-term domestically, if he makes her Secretary of State, that takes Hillary Clinton out of the health care debate.

If he wants to -- that's one of the things he wants to get done. He can send a health care plan to the Senate and it won't become the Hillary care plan, it won't become a partisan plan. He'll have a shot at bringing people together without having a polarizing force there.

And two, Barack Obama is trying to make it the Clinton party the Obama party. He's trying to take over the new Democrat wing of the Democratic Party. Putting Hillary Clinton in a foreign policy role would make her sublimate her long-term political interests getting elected president, second to the success of his administration.

So I think he would achieve quite a lot with something like this.

ROSEN: You know, Wolf, I thought that Alex was going to go somewhere positive with that statement when he started which was it accomplishes something significant on the domestic front, which is it's putting a real pro on the foreign policy front. And it allows a President Obama to really focus on the domestic issues, the economy and his top priorities, knowing that foreign policy issues are being handled by somebody who will have credibility around the world.

The -- there's a third leg in this stool, I think and people aren't talking about it much. And that's Vice president-elect Joe Biden, who is currently the chairman of the Foreign Relations Committee, quite a good friend of Senator Clinton's, and I think his support here is crucial in the fact that somebody with as much standing and as much credibility and interest in these issues wants Senator Clinton.

That says a lot about the interests that the Obama administration would have in making this be a successful run.

(CROSSTALK)

BLITZER: Go ahead.

CASTELLANOS: One of the dangerous things here, though, is you don't just get one Secretary of State. You get a Secretary of State and a half. You get Bill Clinton who has credibility around the world, who will -- who can generate news media coverage around the world and talk about the maverick in that situation, it would be Bill Clinton.

You really don't know -- you know he can be the loose wheel here, the loose cannon on the deck.

BLITZER: But Alex...

CASTELLANOS: So I think that's one of the things they'd have to weigh.

ROSEN: Can't you say anything nice yet?

BLITZER: I was going to say, I was going to say -- hold on, Hilary.

Alex, if, in fact, Barack Obama were to name Hillary Clinton to be his Secretary of State, and our reporting, Gloria's reporting, our other sources are reporting that -- and one source close to the Obama transition told Gloria there was a serious discussion to determine whether if offered Secretary of State she would accept it.

If she were to accept it, if in fact this goes forward, what does that say, Alex, about Barack Obama as the president-elect? It says to me that this is a man who's very, very confident that he can deal with some pretty sophisticated, some powerful figures working for him.

CASTELLANOS: I think it says -- it speaks of confidence and it speaks of someone thinking long-term, not short-term. Barack Obama doesn't want to just be a successful president in the short-term. He doesn't just want to win the next election. He is trying to build a Democratic Party like Reagan built the Republican Party that lasts for 20 years.

He's trying to unify the Democratic Party, not have a Clinton wing and not have an Obama wing but just an Obama wing. Well, that's what he should do. He's president of the United States, is the leader of his party. And so it does speak of confidence.

And, you know, Hillary Clinton's political interests have not been the same as his. To her credit, she was a stalwart in the campaign for him. She did put her political interests second. And I think he has confidence that she'll do that again.

I can't believe they would have floated this story unless they were going to offer it to her.

BLITZER: Yes, and...

ROSEN: You know...

BLITZER: And Hillary Clinton wouldn't be going to Chicago, as they say, Hilary, just to visit Hyde Park or the lake -- the beautiful Lakeshore Drive area.

ROSEN: Well, of course, she grew up in a suburb of Chicago. So the -- you know, the other thing about Senator Clinton which I think speaks to the potential success here is despite what Alex is talking about in terms of her own political ambition, she is a team player.

You know she had political ambition and ran for president, but when she lost in the primary, she got right on board and did historically more than many others have done before her. And when she was in the Senate, I think her colleagues, her former colleagues, current colleagues would say, you know, she's constantly working with other senators, both across the aisle and with her own colleagues to share credit.

You know, she is a team player. And I think in an administration that has a big agenda, you know, that can really help.

BLITZER: All right. Hilary Rosen...

CASTELLANOS: It wasn't...

BLITZER: ... Alex Castellanos, we've got to leave it right there. Gloria Borger still here. And I'm going to take a break, Gloria, but just to recap very briefly the breaking news, be precise, tell our viewers not only in the United States but around the world what we know.

BORGER: Well, multiple Democratic sources have told us, Wolf, that President-elect Obama met with Senator Clinton in Chicago on Thursday and had a serious discussion with her to gauge her interest in becoming Secretary of State if he were to offer her the job.

When Senator Clinton left that meeting, we don't know what her response was. When she left that meeting, we're told by multiple sources that she was left with the impression that if she wanted to become Secretary of State, the job is hers.

BLITZER: All right. Stand by. We're going to stay on top of the breaking news.

How does this impact Joe Biden, the vice-president elect? And what about the world reaction? Zain Verjee is standing by for that. Much more on the breaking news.

Will Hillary Clinton be the next Secretary of State of the United States?

Stand by. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN Breaking News.

BLITZER: We're continuing the story we've been reporting now. Multiple sources telling CNN that Senator Hillary Clinton had a very serious discussion with President-elect Barack Obama about the possibility of becoming the next Secretary of State.

We don't know her response, but multiple sources telling CNN that Hillary Clinton was left with the impression that if she were interested in the post, it would be hers.

Let's bring in our senior political analyst Bill Schneider and our State Department correspondent Zain Verjee. They've been working this story, as well.

Bill, it's got enormous ramifications. It says a lot potentially about Barack Obama, says a lot about Hillary Clinton. What do you -- and potentially the vice president to be of the United States, Joe Biden, as well.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: That's right. Joe Biden was put on the ticket, in part, because of his experience, his knowledge, his expertise in the area of world affairs.

As vice president, he was expected to really be a kind of super Secretary of State. Obviously, there would be a different Secretary of State, but he would have real responsibility in the area of world affairs, an area where Barack Obama doesn't have a great deal of experience and Joe Biden really does.

So I'm not sure that Joe Biden would be -- you know, you'd have to ask him. But I wonder how enthusiastic he is about the prospect of having a person of the stature of Hillary Clinton in the Cabinet to really be the primary voice on international affairs in the Obama administration.

BLITZER: Well, he and Hillary Clinton have always had a very good relationship based on everything I know about them. I think they admire each other and I think they're, they're pretty good friends at the same time. At least that's what I've heard over the years, Bill. SCHNEIDER: Well, they are very good friends. And I don't think there's any ideological or issue differences between them, but they are set up as political rivals, possibly for the future.

You know, the Democratic nomination is all but shut down. Barack Obama has talked about a second term. If he does run for a second term, he will almost certainly be nominated in 2012, which means we're not talking about a Democratic nomination opening up until 2016. My god!

And the two obvious inheritors would be either the Vice President Joe Biden or Senator Clinton, of course, who ran this year. Well in, 2016, Joe Biden will be 74, Hillary Clinton will be 69. That's way off in the future but they are the two voices in the Democratic Party which have stature second only to Barack Obama.

BLITZER: Zain Verjee is our State Department correspondent.

Zain, what would be the reaction based on everything you know around the world?

VERJEE: Well, Hillary Clinton is viewed around the world really as a celebrity. Her international stature is huge. The Clintons are extremely popular. The rest of the world really has a perception of President Clinton and the years he was president, the world being a safer one, a much happier one under him.

And there is also a huge amount of good will, Wolf, around the world because of the work of the Clinton Foundation. So that's something that Hillary Clinton could bask in and take advantage of. But certainly there are a lot of expectations around the world, and a huge amount of challenges she would face were she to take the Secretary of State position.

BLITZER: All right. We've got to leave it right there. But we're going to continue the breaking news coverage.

Bill Schneider, Zain Verjee, thanks very much.

Also, we're watching this story. A leader of the Taliban in Pakistan talks to CNN about Barack Obama. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): If Barack Obama pursues the same policies as Bush and behaves like Bush and if he keeps making policies like Bush, then he cannot be Hussein. He can only be Obama.

(END VIDEO CLIP)

BLITZER: CNN got some pretty rare access to this Taliban leader. You're going to want to hear everything he had to say about America's next president.

And the election is over, but in the middle of the transition of power, there's a new race in Washington --the race for the best office space on Capitol Hill.

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

(COMMERCIAL BREAK)

BLITZER: Leaders of America's allies around the world have spoken out about their hopes of Barack Obama's presidency. And now America's enemies are weighing in as well.

Our Reza Sayah got extraordinary access to a Taliban leader -- Reza.

REZA SAYAH, CNN CORRESPONDENT: Wolf, the Taliban are well aware, in about two months, there's going to be a change in the White House. In a rare television interview, a Taliban leader weighed in on what that change will mean for them.

(BEGIN VIDEOTAPE)

SAYAH: His name is Muslim Khan, and in a rare television Q&A with CNN, the Pakistani Taliban leader called the election of Barack Obama a victory for African-Americans.

UNIDENTIFIED MALE (through translator): For America's black Americans, it could be that there will be a change. That era is coming.

SAYAH: But Muslim Khan says the Taliban expect nothing to change with the U.S. policy in Pakistan and Afghanistan.

UNIDENTIFIED MALE (through translator): For us, the change of America's president, we don't have any faith in him. If he does anything good, it will be for himself.

SAYAH: And he had a message for President-elect Obama and U.S. troops in Afghanistan.

UNIDENTIFIED MALE (through translator): America should take its army out of the country. They are considered terrorists.

SAYAH: The grizzled and graying mouthpiece of the Taliban is among Pakistan's most wanted men. He agreed to meet with a CNN representative in the remote swat valley, a mountainous region in Pakistan's northwest frontier province where the Pakistan army and the Taliban have been engaged in fierce fighting.

With an assault rifle across his lap, Muslim Khan answered a list of 10 written questions. There was no opportunity to ask follow-up questions. In answers that sometimes rambled, he talked about subjects ranging from slavery to Barack Obama's middle name, Hussein.

UNIDENTIFIED MALE (through translator): If he behaves in the way of a real Hussein, then he has become our brother. If Barack Obama pursues the same policies as Bush and behaves like Bush and if he keeps making policies like Bush, then he cannot be Hussein, he can only be Obama. It could be that Barack Obama could bring a change to the lives of black people of America. The black people know how much they were discriminated against in America and Europe and other countries.

SAYAH: Khan says today it's innocent Muslims being discriminated against and killed by U.S. and NATO forces in Afghanistan and missile strikes in Pakistan's tribal region. President-elect Obama must change Washington's policies, Khan warns, or the Taliban will continue to wage their holy war.

UNIDENTIFIED MALE (through translator): And where jihad is needed we will go there.

(END VIDEOTAPE)

SAYAH: Despite those aggressive words by the Taliban spokesman, military and intelligence experts in Pakistan say that a Barack Obama presidency could create ideological complications for Islamist extremists. After all, he's an African-American who shares a name with a Muslim prophet.

For al Qaeda and the Taliban, they could make him a much tougher U.S. American president to hate -- Wolf?

BLITZER: Reza, Reza Sayah reporting from Islamabad, Pakistan. What a story.

New details about that secret meeting between Barack Obama and Hillary Clinton. They are coming in to THE SITUATION ROOM. Some sources now telling us hat she believes the job of Secretary of State is hers if she wants it. We're following the breaking news right now.

And the former radical linked to Barack Obama speaking out publicly. We are going to be hearing from William Ayers.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

CAFFERTY: The question is: Is General Motors worth saving?

Ann in New Jersey says: "Yes. Besides hundreds of thousands of Americans losing their jobs, we'll keep other companies in business buying their car. The American dream is slowly dying."

John in California: "No, we're not buying their cars now for a reason. How would temporarily bailing them out help? We won't be buying them next fiscal quarter either for the same reasons. They need to learn to win in the market place as the foreign cars are doing and sell cars that people want."

Jackie in Dallas, Texas: "Normally I'd say no, let them die, however, with the hundreds of thousand if not millions of jobs that are tied to them, I can't see that we can afford to let them go under. Instead, put strings on the money, accountability, no money going into the executives in bonuses or perks, immediate retooling to hybrids or alternate fuel vehicles, a significant percentage going into the development of alternate fuels, and a (INAUDIBLE) agreement."

Kerry says: "If we can retool our automobile industry to compete with the rest of the world and save hundreds of thousands of U.S. jobs in the process, it would be a huge mistake not to save it."

Johanna in Minnesota: "Absolutely not. It's throwing money down in a rat hole. They need to restructure via Chapter 11 and the top executives should be fired."

Jim in El Paso, Texas: "Absolutely not. The government wants to bail out all of these companies to keep things going with no real plan. Who's going to bail us taxpayers out? I'm not far from going under to myself, and no one's coming to my aid."

And Willy in Michigan offers this: "Did the world come to an end when American motors folded?"

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. Look for yours there among hundreds of others -- Wolf.

BLITZER: Jack, thank you.

Happening now, breaking news. We're following Barack Obama ask Hillary Clinton if she's interested in being Secretary of State? This following a close door meeting with his former rival.

Stand by for more on the breaking news.

When Sarah Palin accused Barack Obama of palling around with terrorists, she meant the former '60s radical William Ayers. Now Ayers is speaking out.

And the First Lady Laura Bush, she's speaking to CNN exclusively about the history-making election and her visit with the next residents of the White House.

All that plus the best political team on television.

We want to welcome our viewers in the United States and around the world.

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