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THE SITUATION ROOM

Obama Cabinet News; Private School for Malia & Sasha; Firings in Obama Phone Scandal; Attorney General Collapses; Democrats Chase Magic 60; Interview with Al Gore; Rating the Transition, How is Obama Doing So Far; Cheaper Oil's Downside; War of Intimidation, Taliban Letters Spread Fear

Aired November 21, 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 Al Gore is speaking exclusively to CNN about the historic election. He also talks about the outgoing Bush administration, calling some aspects of it -- and I'm quoting now -- "unhealthy for the country."
I'm Wolf Blitzer. You're in THE SITUATION ROOM.

We're following breaking news involving Barack Obama's pick for three critical cabinet positions -- the departments of Treasury, Commerce and State.

Let's go straight to our senior political analyst, Gloria Borger, who's working all of these stories for us. Let's start with the secretary of State.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, what we know is that -- sources close to the transition tell us that Hillary Clinton is "on track" -- is the phrase they're using -- to becoming the next secretary of State, Wolf. It's a story we've been reporting since we first reported that she had met with Obama last Friday.

BLITZER: So that's working -- it looks like it's working out.

BORGER: It goes look like it, yes.

BLITZER: Treasury Department, a major development today.

BORGER: A major development. Again, this is a mosaic. One piece goes in place, another piece comes in place. Tim Geithner seems to be -- again, that phrase "on track" from the Obama transition team -- is on track to become the next Treasury secretary.

BLITZER: He's the president of the Federal Reserve in New York...

BORGER: He is the president of the New York Fed.

BLITZER: Highly respected, 47 years old, served in the Treasury Department during the Clinton administration.

BORGER: And a career -- really, a career public servant.

BLITZER: And Bill Richardson, the governor of New Mexico. BORGER: Right. The governor of New Mexico, who, at some personal jeopardy, endorsed Barack Obama in this campaign, is now looking like if he wants to become the next Commerce secretary, that job could be his.

BLITZER: Stand by, Gloria. We've got more to talk about.

All right. There's a developing story just coming into THE SITUATION ROOM right now. The Obamas have made a decision on where their two little daughters, Malia and Sasha, will be going to school here in the nation's capital.

Let's go back to Chicago. Ed Henry is our correspondent covering the transition. What do we know -- Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, CNN has learned that, in fact, the two Obama daughters, Malia and Sasha, will be attending Sidwell Friends. It's an elite private school, as you know, in Washington, D.C. . It's one of many high-powered schools where a lot of Washington insiders send their children that were visited recently by Michelle Obama to get an idea of where she wanted to send her daughters. Stephanie Cutter, a spokeswoman for the Obama transition, confirming to CNN they have now selected Sidwell Friends.

We have a statement, as well, from Mrs. Obama's spokeswoman, Katie McCormick Lelyveld, saying: "A number of great schools were considered. In the end, the Obamas selected the school that was the best fit for what their daughters need right now."

Obvious, it will be an interesting transition for these two young daughters, going to Washington, D.C. , going to a new school. As you'll remember, Chelsea Clinton, of course, attended Sidwell Friends, as well -- Wolf.

BLITZER: And I'm sure security was a major, major consideration, not only for Chelsea back then -- I covered the White House in those years -- but for these two little girls, as well. And Sidwell Friends has some history in dealing with security for daughters of presidents of the United States. All right, Ed. Thanks very much.

Cell phone company employees taking unauthorized peeks at Barack Obama's records. And now we have breaking news on this story.

Brian Todd has the latest. What are you picking up -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, we found out a short time ago that Verizon has taken action against employees involved in this breach.

(BEGIN VIDEOTAPE)

TODD (voice-over): CNN is told by a source at Verizon Wireless, employees there have been terminated as a result of some getting unauthorized access to records from a cell phone used by Barack Obama.

The source did not say how many were fired, but said the company now considers this matter closed. The Verizon source tells us: "These were people employed to take care of customers and were only authorized to get into accounts if customers asked them to.

CNN and independent privacy expert Ari Schwartz asked other questions that Verizon says it can't answer now.

ARI SCHWARTZ, CENTER FOR DEMOCRACY & TECHNOLOGY: I was like (INAUDIBLE) how they're going to stop it from happening in the future and so -- because it sounds as though they need to take an extra step.

TODD: Verizon says the account has been inactive for several months. This was just a simple flip phone and Verizon says the employees could not have accessed voice-mail content or any text messages if Obama sent or received them.

SCHWARTZ: This is probably the type of information that they had access to.

TODD: Schwartz says those Verizon employees could likely see when Obama spoke on the phone, for how long and the numbers -- so they could have looked up who he had spoken to. The Verizon source did not say how this breach occurred.

Schwartz's biggest privacy concern now?

SCHWARTZ: What happens to -- not just to celebrities' information, but to the person who -- the employee that's accessing about their neighbor or their spouse and -- on a regular day. And how do we stop that from happening?

(END VIDEOTAPE)

TODD: And Schwartz has a broader privacy concern way beyond Verizon. He says this is a case that Verizon caught.

What happens with all these other companies, where he says things like this happen every day that we don't even know about, not just telecom firms, but credit card companies and other companies that store a lot of personal data -- Wolf.

BLITZER: Does Verizon, Brian, have some sort of filter where high profile people, celebrities, their accounts can't be accessed by employees?

TODD: Well they do have -- well, Verizon won't comment on that, first of all. But experts tell us that some of these companies have those so-called tags. That's how the State Department actually learned that Obama's passport file had been looked at by contract workers earlier this year. They have these tags in place where, if there's a lot of internal activity, the company will find out about it.

BLITZER: Brian, thank you. Brian Todd working the story.

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

JACK CAFFERTY, CNN ANCHOR: There are high hopes for big change when Barack Obama becomes president of the United States in about two months. The expectations for this man are approaching euphoria. And that could set the stage for a big disappointment.

We've got huge problems in this country and no one is going to wave a magic wand and fix them in a matter of weeks or months. It's likely going to take several years, if, in fact, they're fixable.

Some of the president-elect's advisers want to make sure that Americans realize this and they're speaking out. One of Obama's top economic advisers, Robert Reich, who was the Labor secretary under Bill Clinton, says Barack Obama is not going to solve the country's problems in his first hundred days in office. He told Chicago's CBS-2 in an interview: "This might be a long haul. 2009 is going to be a very hard year."

And Obama's chief campaign strategist, David Axelrod, also cautioning the overly optimistic. He says: "We're inheriting an array of problems unlike any a president has faced, maybe since Franklin Roosevelt in 1932. It's not going to be easy, it's not going to be quick." In other words, great hopes and expectations for Barack Obama are going to have to be accompanied by some patience.

Here's the question: Are expectations too high for Barack Obama's presidency? Go to CNN.com/caffertyfile and you can post a comment on my blog -- Wolf.

BLITZER: As you say, huge, huge expectations for this incoming president. Jack, thank you very much.

The attorney general of the United States collapses while giving a speech. We have the latest on Michael Mukasey's condition. We'll also talk about it with our chief medical correspondent, Dr. Sanjay Gupta. He's a neurosurgeon.

Also, we have an exclusive interview with Al Gore here at CNN -- his reaction to Barack Obama's historic election. Al Gore speaking to Fareed Zakaria.

Plus, Hillary Clinton now apparently on track to become secretary of State. We're following the breaking news. The Obama administration being formed right now.

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

(COMMERCIAL BREAK)

BLITZER: The attorney general of the United States, Michael Mukasey, is out of the hospital. He's now back at work. He collapsed last night during a speech at a dinner here in Washington. Cameras were rolling when it happened.

CNN's Jeanne Meserve reports that Mukasey was released after undergoing a series of tests -- Jeanne?

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Wolf, it was a frightening moment. (BEGIN VIDEOTAPE)

MICHAEL MUKASEY, ATTORNEY GENERAL: I'd like to focus on the successes of this administration.

MESERVE (voice-over): Attorney General Michael Mukasey was delivering a speech at a Washington hotel when it became clear something was terribly wrong.

MUKASEY: And the country is...

(SLURRING SPEECH)

UNIDENTIFIED FEMALE: No.

UNIDENTIFIED MALE: Oh.

UNIDENTIFIED FEMALE: Oh, no. Oh, no.

UNIDENTIFIED FEMALE: Oh, my gosh.

UNIDENTIFIED FEMALE: Oh my god.

UNIDENTIFIED MALE: Wake up.

UNIDENTIFIED MALE: I happened to be at a table right near the front. I began rushing toward him. But before we could reach him, the security people already had him. And then the EMTs came and began to work on him.

MESERVE: And the attorney general was rushed to George Washington University Hospital and kept overnight for tests and observation.

UNIDENTIFIED FEMALE: All of the tests have been reassuring. There's no indication that he suffered a stroke.

MESERVE: Mukasey sent an e-mail Friday morning to Justice Department employees telling them, "I feel fine."

When a C.T. scan, MRI, stress test and echocardiogram turned up nothing irregular, Mukasey was released from the hospital shortly after noon.

UNIDENTIFIED FEMALE: How do you feel?

MUKASEY: Great. Terrific.

MESERVE: With that, he headed back to the Justice Department and went back to work.

(END VIDEOTAPE)

MESERVE: Justice Department officials say it appears Mukasey simply had a fainting spell brought on by long hours and the hot lights on the podium. But it was so scary that it made some members of the audience unwell. And at least one of them had to be taken to the hospital, too -- Wolf.

BLITZER: Jeanne Meserve, thanks for that.

Let's get a closer look now at what may have happened to Michael Mukasey last night. Our chief medical correspondent, Dr. Sanjay Gupta, himself a neurosurgeon, is standing by to give us some more insight -- Sanjay, you've studied the images, the videotape. What does it look like to you?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, you know, it's interesting, even as a neurosurgeon and a doctor, we rarely get an opportunity to see something like this happen. I mean the cameras were rolling, as you mentioned. So it was interesting to observe.

The bottom line, we saw him walking out of the hospital more recently. He looked good then. But last night -- if we can take a look at that and listen to it again, specifically, there are a few things there I think are worth pointing out, a few clues, if you will. If we could take a look at that.

(BEGIN VIDEO CLIP)

MUKASEY: Good faith.

(SLURRED SPEECH)

(END VIDEO CLIP)

GUPTA: The concerning thing there, Wolf, is that there was some word finding difficulties. He was having difficulty finding words. Then he started repeating himself. He started repeating himself after that. And then he -- he sort of fell to his right side and then slumped over. So the word problems, the slumping over and then completely passing out. There was concern that -- was there a lack of adequate flood blood flow to the brain causing some of those problems, specifically the left side of the brain.

Take that brain and go ahead and bring it in a little bit. There are several different blood vessels that could potentially be involved. You get little clots in these tiny blood vessels over here. Sometimes bleeding can occur, causing those same sorts of symptoms. There are blood vessels over here that are in the neck that supply blood to the brain. And sometimes those can become a little blocked, as well.

All those tests that Jeanne was just talking about, those were obviously what needed to be done -- a C.T. scan to make sure there wasn't bleeding; looking at the blood vessels in the neck, as well; and making sure the heart was functioning well; but also simple things, Wolf, like checking his blood glucose, making sure his sugar wasn't too low; checking his blood pressure.

All those things were done and it looked like he got a clean -- a clean bill of health -- Wolf. BLITZER: Some people faint and that's not considered to be all that serious. On the other hand, what he was going through looked a little bit more serious -- at least to me -- than someone just fainting, especially when you hear the slurring of the words.

GUPTA: Yes. Exactly, Wolf. I thought the same thing. And fainting is one of these sort of throwaway wastebasket terms. There can be non- dangerous forms of fainting and non -- and much more dangerous causes of fainting.

You keyed in on the important thing. When someone starts having word finding difficulties, starts slurring their words and there's sort of a gradual progression of symptoms, as we saw there with the attorney general, to me, as a neurosurgeon, that's a little bit more concerning and certainly warrants a much more thorough investigation, as he had. He did the right thing. He went to the hospital and got checked out.

Fainting typically people associate with suddenly -- you know, being there and then suddenly going to ground. It could because you had the flu and you become too dehydrated. Sometimes certain medications can cause this. That was a little bit different. That videotape -- which is hard to watch, frankly -- is just a little bit different than a typical fainting spell.

BLITZER: So if he were your patient right now, I assume he would -- you'd recommend a whole battery of very sophisticated tests to make sure that he's OK. I think they started the process at George Washington University Hospital this morning. But I suspect it's only just the beginning.

GUPTA: A 67-year-old man has an episode like that, I want to make sure there's nothing impeding the amount of blood flow that can get to his brain. I would want to look at the carotid arteries, which are the arteries here in the neck. Usually you look at those with an ultrasound to make sure they're widely open and they're not narrowed in any way.

I'd want to get a good test of his heart to make sure he doesn't have any blood clots in his heart that can sometimes break off and travel to the brain. If any of those things were true, he might need to be on a blood thinner. The blood thinner could be as simple as aspirin, but sometimes more powerful blood thinners are warranted. So, yes, I would be concerned about that. I'd want to have him checked out. I'd probably bring him back to the office to make sure he's having any more of these episodes.

If this was a TIA -- right now, the attorney general's spokesperson said it wasn't a TIA. But one thing for the viewers at home, if you have a TIA like that, there's about a third of those people who go on to having a stroke at some point in the future. So you've got to get this checked out.

BLITZER: Absolutely. Good advice. Dr. Sanjay Gupta. Thanks very much.

GUPTA: Thank you.

BLITZER: An effigy of President Bush toppled in Baghdad -- details of the U.S. plan sparking angry demonstrations in the Iraqi capital.

And Al Gore speaking candidly about President Bush, Vice President Cheney -- why Gore says he may be losing his objectivity. CNN's Fareed Zakaria has an exclusive interview with Al Gore and you'll see some of it right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In the United States Senate, the magic number is 60. Seven seats either open or held by Republicans were taken by these Democrats during this month's election. That puts the Senate split right now at 58 Democrats, including two Democrat leading Independents, and 40 Republicans. But two Senate races still hang in the balance.

Let's go to CNN's Mary Snow. She's looking at all of this -- Mary, is Barack Obama, the president-elect, getting involved in these two races?

MARY SNOW, CNN CORRESPONDENT: He has, Wolf. He's joined the Democrats' efforts to try and win back a Republican-held seat -- Senate seat -- in Georgia. And his involvement and that of other political heavy-hitters just underscores the intensity of the fight.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Jim Martin is a man of his word and I know he'll do everything he can in the Senate to help me change Washington.

(END VIDEO CLIP)

SNOW (voice-over): President-Elect Barack Obama speaking out in a new radio ad for Jim Martin, the Democratic challenger to freshman Republican senator, Saxby Chambliss.

Obama is urging voters to...

(BEGIN VIDEO CLIP)

OBAMA: Head to the polls just one more time this year.

(END VIDEO CLIP)

SNOW: Since neither candidate won 50 percent of the vote in a three-way race on election day, as Georgia law requires, the two men face-off in a runoff election on December 2nd.

MITT ROMNEY (R), FORMER MASSACHUSETTS GOVERNOR: Saxby Chambliss fundamentally believes in keeping America strong and safe and free. SNOW: Mitt Romney is the latest former Republican presidential candidate to campaign for Chambliss. Mike Huckabee and GOP presidential nominee John McCain have also stumped for him.

On the Democratic side, former Vice President Al Gore campaigned with Martin this weekend. That followed Wednesday's visit to Georgia by former President Bill Clinton.

UNIDENTIFIED FEMALE: Make sure you hold it out there long enough for everybody to see.

UNIDENTIFIED FEMALE: OK.

SNOW: And Democrats are keeping a close eye on the results trickling in from Minnesota. Nearly three million ballots are being recounted by hand in the too close to call Senate race between Republican incumbent Senator Norm Coleman and Democrat Al Franken. In the first two days of the recount, hundreds of ballots have been contested and Coleman's 215 point lead has been shaved to 129 votes. A majority of precincts still need to be tallied. And University of Minnesota political science professor Larry Jacobs says the recount could produce a significant shift.

LARRY JACOBS, UNIVERSITY OF MINNESOTA: We could well see thousands of votes change during this process -- 3,000, maybe even 4,000 votes change as this process moves forward.

SNOW: Why the big difference?

Jacobs says it could be ballots that were not read by optical scanners properly, ballots that were miscounted and absentee ballots.

(END VIDEOTAPE)

SNOW: And the Franken team is fighting to get absentee ballots counted that it says were wrongly rejected. The state canvassing board in Minnesota is meeting to discuss that on Wednesday -- Wolf.

BLITZER: Two Senate races still up in the air. Thank you, Mary.

Zain Verjee is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Zain, what's the latest?

ZAIN VERJEE, CNN CORRESPONDENT: Wolf, Wall Street ends the week with an unexpected jolt of confidence. Stocks surged on reports Barack Obama is picking New York Federal Reserve head Timothy Geithner to be his Treasury secretary. The Dow gained nearly 500 points in a late day rally, ending above the 8000 level.

There's growing anger in Iraq over a proposed pact allowing U.S. troops to stay for three more years. An effigy of President Bush was thrown to the ground in the same Baghdad square where Saddam Hussein's statue was toppled five years ago. The thousands of protesters were mostly backers of the anti-U.S. Shia cleric Muqtada al-Sadr. Iraq's government has approved the new security pact. The parliament votes on it next week. Defense Secretary Robert Gates wants to add a significant number of U.S. troops to the war in Afghanistan. Gates says that the extra forces are needed to provide more security for elections later next year, but he insists while violence is on the upswing, the Taliban are not winning. He says Taliban fighters lose every real engagement with NATO or U.S. forces.

And the crew of the shuttle Endeavour ran into some problems today, Wolf, setting up a system to supply the International Space Station with its own drinking water. The systems broke down even before the astronauts could run a test -- Wolf.

BLITZER: Do you have any desire, Zain, to go up in that space shuttle?

VERJEE: Oh, yes. It would be incredible, Wolf.

BLITZER: You would do that, Zain?

VERJEE: Yes.

BLITZER: Seriously?

VERJEE: It would be amazing. Yes. Yes.

BLITZER: I thought Miles O'Brien was the guy, but Zain, too.

VERJEE: Miles will kill me if I get there before him.

(LAUGHTER)

VERJEE: He's been waiting years.

BLITZER: Stand by.

Zain could be going...

VERJEE: Looking for aliens.

BLITZER: ...could be going up into space, who knows?

(LAUGHTER)

BLITZER: Coming up, an exclusive interview with Al Gore, the man who lost the White House in a cliffhanger eight years ago. He's speaking with CNN's Fareed Zakaria about Barack Obama's historic victory. Stand by for that.

Plus, living and working next to the president-elect is making life very difficult for some people in Chicago. Now they're speaking about out about what's going on.

And a report card on the transition to power -- how is Barack Obama doing so far?

Donna Brazile and Alex Castellanos, they're giving their grades, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, what does the former vice president, Al Gore, think of Barack Obama's historic victory?

He talks about the election outcome in an exclusive interview with CNN. Plus, something he thinks is unhealthy for America -- stand by.

With gas prices getting lower, you might actually look forward to filling up your car these days. But there may be a down side to cheaper oil. We'll talk about that and more. Frank Sesno is standing by.

And Chicago feels the strain of protecting the president-elect. Some find being next door to Barack Obama's heavily fortified transition headquarters is not necessarily good for business.

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

Eight years after his cliffhanger loss, Al Gore is speaking out now about Barack Obama's historic election victory. Listen to what the former vice president and presidential candidate tells CNN's Fareed Zakaria in an exclusive interview.

(BEGIN VIDEOTAPE)

AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: I can barely contain my excitement about his election. I just think that it's a fabulous new development. This was a watershed election that really just gave every American a feeling of great pride in our nation's ability to transcend our past and redeem the -- the revolutionary promise of our Declaration of Independence that every human being is created equal. It's electrifying to redeem that Declaration.

(END VIDEO CLIP)

BLITZER: Al Gore also talked about the unprecedented power of the current vice president, Dick Cheney, which he characterizes as "unhealthy for the country."

(BEGIN VIDEO CLIP)

FAREED ZAKARIA, CNN CORRESPONDENT: Do you think that Biden should maintain the vice presidential structure that Dick Cheney has put in place? You know, a lot of people feel Cheney has effectively changed the nature of the vice presidency forever, that these institutional aggrandizations of power never -- never shrink. How should Joe Biden think about the vice presidency?

GORE: I hesitate to comment on Bush and Cheney because I've recently begun to fear that I'm losing my objectivity on them. And I think Dick -- I think it's good to have an active, powerful vice president who can help the president carry a lot of the burden.

ZAKARIA: You just don't think that person should be Dick Cheney?

GORE: Well, not only that. I think that the nature of the delegations in this present administration were unhealthy for the country.

(END VIDEO CLIP)

BLITZER: You can see the entire exclusive interview with Al Gore this Sunday on "FAREED ZAKARIA GPS, " 1:00 p.m. Eastern, only here on CNN -- 1:00 p.m. right after "LATE EDITION".

Let's get some more now on Al Gore's comments about Vice President Cheney and more.

We're joined by our Democratic strategist, CNN political contributor Donna Brazile, and Republican consultant Alex Castellanos. He's also our CNN political contributor

I'll go to Alex first. What do you think about what the former vice president is saying about the current vice president?

ALEX CASTELLANOS, REPUBLICAN CONSULTANT: Well, I think any vice president or former vice president having too much power save for example in environmental matters is probably not a healthy thing. We might agree. In many ways, I think it will be characterized as an imperial vice presidency. Dick Cheney and the neo-cons had a lot of influence and he will be blamed for many of the since of the Bush administration. If so, we'll see down the road if the seeds of democracy that have been planted in Iraq bear fruit 20 years from now, he'll get much of the credit. If the Bush administration has kept us safe for seven years, then if Dick Cheney gets the blame, he should get the credit, as well.

BLITZER: It's interesting, Donna, you were the campaign manager for Al Gore's campaign back in 2000. He's only what, 60 years old right now. Do you envisage that one of these days he might still decide, you know what? I got really close in 2000 and maybe I should try again.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: I think he's a little shy of 60. He is young at heart and young in spirit and very smart. Nobel Prize now, an Oscar and a Grammy. What can I say? He failed, as you well know, to get 538 votes counted in Florida. I think what he had to say on that show is going to be pretty illuminating. Al Gore just doesn't speak to be heard. He tries to impart his knowledge about not just the office of the presidency and vice presidency but the country itself. As you well know, over the last couple of years, he has made a very important campaign to warn the world about the dangers of global warming. I'm sure he's going to continue to be in the national spotlight if not the international spotlight going forward.

BLITZER: And he's a Nobel Prize winner as well. That's nothing to sneeze at. All right. Alex, give us your evaluation, your grade so far of how the Obama transition to power is moving along.

CASTELLANOS: I would have given him an "a" till this past week. I thought the early part of the transition, he hit the ground running, the choice of Rahm Emanuel to help him manage. The biggest threat to a successful presidency and that would be an out of control majority in the house. I think brilliant choice. And then in the senate, Tom Daschle, a man known, you know, not only as an advocate as most senators are but somebody who could make the trains run on time, a man with sharp elbows. The same thing, help him manage majorities with which he can pass legislation.

Everything's going well and then this week it turned into the Clinton soap opera. Litigating the secretary of state position in public, will she or won't she? Does she really want to nor not? Is this an insult to her if she doesn't take it or to Obama if she does? And all of a sudden, it's like the Clinton campaign has touched the Obama administration one more time. And it makes you wonder if she does become secretary of state, would this be the way it plays out? If Bill Clinton says something three months from now that is not exactly Obama foreign policy, will our allies interpret that as code from the secretary of state Hillary Clinton? Will they see a division in administration policy?

BLITZER: Donna, it's a fair point. During the campaign, the Obama campaign, they were really well disciplined. You didn't get a whole lot of these leaks. All of a sudden we're seeing leaks like this crazy during this transition. Go ahead and respond to what Alex just said.

BRAZILE: First of all, I don't get called up into what I call palace intrigue but it seems that the Obama transition is well under way to being a very successful one. They have agency review teams already inside the administration working along their counterparts who are still in office to try to get on top of some of the most important crisis. They also have a policy team that are preparing options for the newly elected president once he gets into office to begin his administration and get off to a fast start.

We've heard members of the cabinet announced and I think not announced but leaked. That's because, Wolf, as you well know, once you begin to go through the vetting process, there's no way that you can keep that contained within a three or four-person room. It will get leaked whether it's FBI or other lawyers poring over people's lives, making phone calls, et cetera.

So I think this is a very good team, and they're doing a great job. I give them an A plus.

BLITZER: Let's talk about the implications of the auto bailout on the table right now. Alex, the Democrats by and large want the federal government to help these three auto companies survive. Republicans are taking a tougher stance. Maybe they should go into chapter 11 or bankruptcy before anything is done. Let's talk about the political implications for Republicans right now, specifically in Michigan, Ohio, and Indiana, three states that the Republicans lost this time around.

CASTELLANOS: Key states, key swing states in determining who's going to be president of the United States and if Republicans give the impression that they're pushing the auto industry into bankruptcy as a do nothing Republican position, huge mistakes. I think what Republicans need to make clear that a managed bankruptcy may be the best way to get the auto industry back on its feet. In other words, that's what would really force a change in management. Right now to, build an American car, you've got over $70 an hour of labor and legacy cost. Toyota has $48. American cars can't compete. Giving them more money now would be like giving an addict more heroin without exacting concessions. Republicans need to be clear that tough medicine may be what is needed to get the industry healthy and back on its feet. It's not a hands-off approach. It's hands on and a renewal.

BLITZER: That's the line that Mitt Romney wrote in the "New York Times" op-ed page this week. He's a son of Michigan. His father, as you know, was a major auto executive. What do you think about all this Donna?

BRAZILE: First of all, organized labor, especially the united autoworkers have been at the table and given up major concession of the auto industry. They're partners now with the industry and trying to get them to come up with a viable restructuring plan. Earlier today, Speaker Pelosi and Majority Leader Reid sent a letter to the auto companies saying you have till December 8th. We'll bring congress back into session if you show us the plan perhaps the congress will be willing to show them the money.

CASTELLANOS: Wolf, Governor Romney's editorial in the "New York Times" had a real impact on Capitol Hill and gave a lot of people permission to take a tougher line and say what's right, not just what's politically popular.

BLITZER: Thanks very much. Donna and Alex, they're both part of the best political team on television.

And we heard from him just about every single day on the campaign trail. So why is President-Elect Barack Obama taking a relatively low profile right now while Washington and Detroit are struggling with the economic crisis?

Gas prices have been falling like a rock. We're taking a closer look what it might mean for drivers out there.

And also for the automakers and the incoming administration. Frank Sesno standing by live right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Cabinet speculation, in fact, speculation over a lot that's going on, including the turmoil over a government bailout. All of it happening without a lot of words coming in from the president- elect himself. CNN's Jessica Yellin is following the transition to power from Chicago.

Jessica?

JESSICA YELLIN, CNN CORRESPONDENT: Wolf, amid all this economic turmoil, Barack Obama has been noticeably silent this week. Well, today, reporters got a chance to ask him questions and what they found out had to do with corned beef presumably on rye.

(BEGIN VIDEOTAPE)

YELLIN: On the campaign trail, Barack Obama built up expectations.

SEN. BARACK OBAMA (D), PRESIDENT-ELECT: We are two days away from changing America. We are less than one day away from bringing about change in America.

YELLIN: But change appears to be on hold until he takes office. While the stock market dives and as congress deadlocks over a middle class stimulus package and an auto bailout, Barack Obama is home in Chicago working on his transition here taking a break. Most days, he's hidden behind tinted glass.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: The bottom feels like it's falling out for many people and they sense there's a total lack of leadership in Washington that the white house is silent. The treasury secretary has been battered and the president-elect is silent in Chicago. Somebody has to speak up soon.

YELLIN: But Obama is leaving that role to the current white house occupants. He has publicly backed aid to the auto industry and repeatedly supported a stimulus plan.

OBAMA: I want to see a stimulus package sooner rather than later. If it does not get done in the lame duck session, it will be the first thing I get done as president of the United States.

YELLIN: The president-elect's aides point out he no longer has a vote in the senate, and he does not yet have the authority of the oval office. Right now, they say, the president-elect is focused on building a government. And it would seem carefully avoiding questions on economic policy.

UNIDENTIFIED MALE: How do you feel about the auto industry?

OBAMA: I got the corned beef.

UNIDENTIFIED MALE: That wasn't my question.

(END VIDEOTAPE)

YELLIN: For Obama, there is a political advantage-in keeping his fingerprints off the bailout plans in case they don't work. But the question is, does he risk inheriting a bigger problem because he didn't speak up while he had the chance.

Wolf?

BLITZER: Jessica, thank you.

Motorists must be relieved they're paying a lot less that the pump right now. Frank Sesno has been looking at the wider implications of this price drop. What's going on here? Is it expected to last?

FRANK SESNO, CNN CORRESPONDENT: If I told you this isn't a silver ling. Yes, it may last. Look what's happened already. Oil peaked at $147 a barrel in July, today closed at $49.93. Turn that into translation for what you're paying at the pump. It was $4.11 a gallon in July. Today the average price across the United States of America, $1.99. Go to Independence, Missouri, sighted for $1.37 a gallon.

BLITZER: That's pretty cheap when you think where it was only a few months ago. So I guess the assumption is this is good for everyone.

SESNO: No, that's where we, you know have, to say no and part company. Because cheap gas is not good for Detroit, for example. The automakers are already on the ropes enough. They're now selling into an incredibly unstable market. Now they're selling cars less than $2 a gallon gasoline and need stability.

BLITZER: The car industry needs that? You would think people would be more willing to buy new cars if the price were lower.

SESNO: What are you investing? Where are you putting your money? In more SUVs? The price goes up again? One of the reasons they're in the position they are now because we went very cheap to very expensive and cheap again.

BLITZER: This has real implications for Barack Obama's energy policy. He wants clean cars, a reduced pollution in terms of global warming and all of this has impact.

SESNO: This isn't good news for Barack Obama either. He wants clean green energy technologies. What does that mean? For many of them, you've got to be around $60 a barrel to make those viable economically. He wants $1,000 per family tax cut. He was going to pay for that with a windfall profits tax on oil companies. When their oil profits go down, they go down because oil prices go down. There's a whipsaw there, as well.

BLITZER: A lot of the implications. What if, as we like to say. Frank, thanks very much for that.

Once they were thought defeated. Taliban fighters have stage a resurgence, and it's not just with guns and bombs. We're going to show you the war of intimidation they're waging under the cover of darkness. Barbara Starr standing by.

And no elbow room in the city of big shoulders, Chicago. Folks are talking about how the security detail for the president-elect has intruded into their space.

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

(COMMERCIAL BREAK)

BLITZER: There's a security presence right now on the streets of Chicago like many people have never seen before. It's all because President-Elect Barack Obama is there in his hometown putting his new administration together. CNN's Sean Callebs has been looking at what all of this means to the people of Chicago.

What is going on, Sean?

SEAN CALLEBS, CNN CORRESPONDENT: Well, Wolf, with the new job comes heightened security. All around the transition office, police officers, federal officers and if you happen to do business in the shadow of that office, well, it can be a little bit difficult.

(BEGIN VIDEOTAPE)

CALLEBS: Whenever he comes and goes, the frenetic activity on the street outside President-Elect Obama's transitional office comes to a halt. Cops at every corner. Federal agents and barricades line the streets.

UNIDENTIFIED FEMALE: It is a little like a police the state.

CALLEBS: For the last four years, Read has managed a custom framing shop that now sits directly across the street from his office. Since all this sprouted up the day after the election, she says it's been a bit overwhelming and taken a bite out of business.

CARED SURPRENANT, FRAMING STORE MANAGER: There definitely are a lot of tourists taken aback. We get a lot of international tourism. A lot of them going, what is going on.

CALLEBS: We see the pictures of Barack Obama smiling, ordering at a Chicago deli. What you don't see are officers stopping traffic and stopping pedestrians as his motorcade races through the street.

UNIDENTIFIED FEMALE: We're not allowed to cross the street.

CALLEBS: Manager Javier Martinez says business suffered the first few days but things have now rebounding. Among the shops on the street, some have a different take on the operation.

You've got a front row seat to history here, don't you?

CARL ORR, PRINTING STORE MANAGER: We do. We enjoy it as well as try and work with what they're doing out there. You've got to realize doing out here and you have to realize this is our next president.

CALLEBS: True, but what happens when your business depends on the next delivery and can't be made because authorities have stopped the deliveries.

UNIDENTIFIED FEMALE: It's made it 10 times more difficult to get our deliveries in. We get three deliveries a week and it is really, we cannot any longer pull into this alleyway that is here, because they are using that for government vehicles.

(END VIDEOTAPE)

CALLEBS: Well, it is interesting because you hear her laugh about it, but really almost all of the businesses that we talked to are rolling with the punches so-to-speak in the area. They are catching on to how is it going. It did catch a lot of them off guard, but they said, hey, we are proud he is going to be the 44th president of the United States and this is only going to last for a few more weeks really.

BLITZER: Right. January 20th he makes the official move to the white house. I assume going back to Chicago from time to time, but not for long stretches. At times I think that the people there also assume, Sean, they love him, and they are happy to undergo a few minor discomfort shall we say?

CALLEBS: Yeah, without question. The framing shop, a lot of people are bringing in Barack Obama articles that some have had signed or maybe newspapers from the historic day after the election and same thing with the printing shop, and a lot of tourists come down because they know stuff is going on and they may pop into the restaurant. So it is a double-edged sword in many ways.

BLITZER: Sean Callebs working the story in Chicago.

President-Elect Obama, by the way, has made it clear when it comes to the war in Afghanistan, it is a top priority. U.S. commanders say the key to the victory is winning over the minds of the Afghans, but our Barbara Starr has found out that the Taliban are using a fearful new tactic to keep Afghans from cooperating with the NATO lead coalition. Barbara is joining us live.

Barbara, what is going on? I know you were just over there.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Indeed, Wolf. On my recent trip to Afghanistan we learned about Taliban tactics and new worries by the U.S. about what they are up to.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Somewhere up there or further the north, you will find Bin Laden and al Zawahiri, but if I knew where they were, I would go after them, I guarantee that.

STARR: The hunt for the most wanted terrorist continues but the U.S. does think it is having new success at strike target al Qaeda network. Some two dozen missile strikes so far this year like this Wednesday attack believed to be by CIA-operated unmanned aircraft in Pakistan's tribal region. The CIA won't acknowledge the attacks, but CNN has learned that the Bush administration believes that the raids have killed several top al Qaeda and Taliban commanders in Pakistan. Like Abdullah Azam al-Saudi considered to be a main link between the Taliban and al Qaeda operating in Pakistan killed this week. But here on the Afghanistan side of the border, a tough reality. U.S. commanders say insurgents are in the open running shadow governments in the eastern Afghanistan.

MAJ. GEN. JEFFREY SCHLOESSER, 101 ST AIRBORNE DIVISION: They have areas to sleep and where they can eat, and where they may have contacts and curriers to come to deliver money.

STARR: And continuing their brutal tactics.

BRIG. GEN. MARK MILLEY, 101ST AIRBORNE DIVISION: It is pretty, pretty terrible. They do -- they have tried to decimate the village elder structure. This is again a traditional society where the village elders have played a significant role for hundreds of years and the Taliban want to tear it apart.

STARR: They are using threatening night letters, because they are left in villages overnight, letters like this one warning local citizens if they cooperate with the coalition, it will be unforgivable and end by death and even threatening the children saying that after being caught, there will be no excuse.

(END VIDEOTAPE)

STARR: Wolf, that is the reality for the people in Afghanistan, growing intimidation and threats even as the U.S. administration plans to send thousands of more troops to the area early next year in the opening months of the Obama administration. A tough struggle say commanders to get a handle on the growing insurgency.

BLITZER: Will there ever be an end to the Afghanis? Such a wonderful people, but they have struggled for so long.

And coming up, Suze Orman is standing by in THE SITUATION ROOM with advice on what to do in the challenging economic times.

Happening now, news about more names that Barack Obama wants inside of his administration.

They are low on the totem pole on the hill, and we will show you how some members of congress live a Spartan existence.

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

(COMMERCIAL BREAK)

BLITZER: Let's get right back to Jack for the Cafferty File. Jack?

JACK CAFFERTY, CNN CORRESPONDENT: Wolf, the question this hour is are expectations too high for Barack Obama's presidency?

Lynn in Idaho writes, "I don't think our expectations are not too high. We all know how smart he is and he is in for great challenges. Those of us who supported him understand he cannot save the world single-handedly overnight, although I do expect complaining from the other side that he isn't living up to what he has promised if there not an immediate turn around." Erin in Illinois, "Perhaps, but at least he is aware of it. In every speech Mr. Obama has given since he has earned the Democratic nomination for the presidency, he has openly stated that there is difficulty ahead and that setbacks will occur and that solutions will not always be crystal clear."

Brian in South Carolina, "And that is a tough question. On the one hand where we are expecting him to save us from the economic abyss as if he could part the Red Sea, but on the other hand he beat Hillary and Bill Clinton and then went on to get them to support him in the general election which resulted in a landslide win. If he performs one more miracle, he is eligible for sainthood."

Jason in Florida, "Maybe they're a bit high but if we set the bar low, we are sure to reach it. Let's aim high, work hard, and not judge the results too quickly."

Dave in Ohio says, "How could they be? In his own words, he came from krypton to be the one to save planet earth from all its perils."

And Peter writes, "No, we know how much Bush messed things up. We will be realistic and patient and not see what he can do for us, but see what we can do for this country." Little play on the quotation by somebody else.

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

Wolf?

BLITZER: Thanks very much Jack.

To our viewers, you are in THE SITUATION ROOM.

Happening now, the breaking news, major surprises involving Barack Obama's cabinet. Some of the biggest political names mentioned for some of the most important posts.

Also, how should you spend your hard-earned money right now? And how could you get a hard-to-come-by loan? You will want to hear Suze Orman. She's standing by live. She's got some advice right here in THE SITUATION ROOM.

And if Hillary Clinton becomes secretary of state, take a guess at what would be at the top of her priorities. All of that, plus, the best political team on television.

We want to welcome the viewers in the United States and around the world. I'm Wolf Blitzer, and you are in THE SITUATION ROOM.