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New Watchdog for Federal Waste; Rice on Gaza Cease-Fire Plan; Obama Joins the Club

Aired January 7, 2009 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, President-elect Barack Obama gets advice from the only men alive who have men there and done that. And he's doing something none of his predecessors did in hopes of cutting government waste. Stand by.
A dramatic about-face by top Democrats on the fate of the barred Senate appointee. Roland Burris now sounds optimistic about taking the seat he was denied the day before.

And Hillary Clinton's big date. A hearing on her nomination as the secretary of state is now set. Will it go as smoothly as some people think?

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

But we begin in Gaza right now, actually at the United Nations, where there's an important development that has just occurred. The secretary of state, Condoleezza Rice, over at the United Nations, now saying the United States, the Bush administration supports a proposed cease-fire, a proposal put forward by the Egyptians and French governments. This, according to The Associated Press.

Earlier, the Israeli government itself said it is open to such a proposal by the Egyptians and the French. "We are continuing our dialogue," an Israeli government spokesman says, "with the Egyptians and the French to achieve a sustainable quiet on the basis of a complete cessation of hostile fire from Gaza into Israel and an internationally-supported arms embargo on Hamas."

Our Senior U.N. Correspondent Richard Roth is over at the United Nations. The Security Council has been meeting in emergency session. We're going to go to him shortly for full details. There could be a major breakthrough unfolding right now.

Stand by for more on this story.

In the meantime, President-elect Barack Obama got a rare and personal welcome to one of the world's most exclusive clubs earlier today. He had an historic lunch over at the White House with President Bush and the three living former presidents. Even as he took in their insights, the President-elect wants to show he's willing to do things differently, especially when it comes to fixing the ravaged economy.

Let's begin our coverage with our national political correspondent, Jessica Yellin. She's watching what's going on. And what's going on in terms of the budget deficit is shocking, I have to say, in all the years I've been covering Washington and money. What's going on right now is really, really depressing -- Jessica.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: And Barack Obama says as much, Wolf. He made the point this week that the budget deficit has ballooned to more than a trillion dollars. He insists that he is going to cut down on government waste. He says it's possible to both spend billions on a massive stimulus and still cut federal spending, but I'll tell you, the nation's top economists say it's not going to be easy.


YELLIN (voice-over): On the economy, no happy talk from the incoming president.

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: We have an economic situation that is dire.

YELLIN: He's trying to build public support for a stimulus that could cost as much as $800 billion. But don't worry about waste. He promises discipline.

OBAMA: We must scour this budget line by line, eliminating what we don't need or what doesn't work.

YELLIN: Today, he named a spending watchdog. Nancy Killefer will take the new role of chief performance officer. She'll decide which programs are worth funding over the long term. But the stimulus is a different story. To work, that money has to go out the door, fast. Even supporters say that leads to waste.

UNIDENTIFIED FEMALE: You know, whenever you try to spend a lot of money fast, some of it is going to be spent in ways that you might not put it there if you were being a little bit more thoughtful and taking a little bit more time.

YELLIN: Possible examples from this list of ready-to-go projects compiled by the nation's mayors, a $20 million Minor League Baseball museum; a $4.8 million polar bear exhibit, $500,000 for environmentally friendly golf courses in Dayton, Ohio. The mayors insist projects like these will jump-start the economy.

UNIDENTIFIED MALE: We must invest where we get the greatest return.

YELLIN: And some economists say a little bit of waste is worth it if it gets the economy back on its feet.

UNIDENTIFIED FEMALE: If the objective is money spent in the economy that's going to create demand and buy services from businesses and stimulate consumer spending, it probably matters a little less that those are the most thoughtful projects.

(END VIDEOTAPE) YELLIN: And Wolf, I should point out, those projects I listed in that piece are part of the mayors' wish list, they're not necessarily projects Obama will agree to fund. In fact, multiple Obama aides tell me that they're working with Congress to devise a plan so they can determine which projects are actually worth funding. One proposal would be that every project would have to get approved by federal, not state or local, agencies after a careful review. All of that designed to be sure that there is as little pork as possible in the package and as few favors to congressional districts as possible -- Wolf.

BLITZER: Easier said than done, as we all know.

Jessica, thank you.

I want to go to the White House in a moment, but I want to go to the United Nations Security Council first.

Richard Roth, our senior U.N. correspondent, is following the breaking news for us.

Just moving on The Associated Press wire, Richard, the secretary of state, Condoleezza Rice, saying the Bush administration now supports a French/Egyptian proposal for a cease-fire in Gaza?

RICHARD ROTH, CNN SR. UNITED NATIONS CORRESPONDENT: Well, Secretary of State Condoleezza Rice, through marathon negotiating here at the U.N., is walking a tight rope. She has given her most public support yet to this peace plan that President Mubarak of Egypt announced yesterday. However, other U.S. officials earlier were saying they were a bit more lukewarm.

It may come down to the wording. The U.S. is pushing a statement here which calls for an immediate and durable cease-fire. Arab delegates who have flown in, they are pushing for a resolution that wants an immediate cease-fire to stop the Israeli assault.

Big differences still on that. One U.N. Middle East official saying the Mubarak peace plan is the best thing going. Any statement out of the U.N. tonight will likely endorse the Mubarak proposal, but it all doesn't mean that diplomacy leads to a cease-fire or an end to the fighting, as we know right now. Most public support so far by the U.S., by Secretary Rice, it's what the Arab delegates want to hear, but there's still a disagreement on the cease-fire wording.

BLITZER: And this proposal is not only from President Mubarak of Egypt, but also President Sarkozy of France. It's a powerful combination that have come together.

ROTH: Yes. They're still waiting to see how Israel acts on it. Envoys may be going to Cairo, we might see a big regional conference there, but that's still not ending the fighting.

BLITZER: All right. Well, stay on top of it and let us know, Richard. Thanks.

Let's go over to the White House right now. There was an historic power luncheon today for the current, the future and the past presidents. Our Senior White House Correspondent Ed Henry is working this story.

It was a pretty impressive photo opportunity in the Oval Office -- Ed.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: It was, Wolf. And I just got off the phone with some Obama advisers who say this was very helpful for the president-elect from a philosophical standpoint. How do you approach one of the most pressure-packed jobs in the world? But also from a practical standpoint. How do you deal with big challenges like the economy and the Middle East.


HENRY (voice-over): A dramatic passing of the torch. Four white men welcoming the first African-American into one of the world's most exclusive clubs.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: One message that I have and I think we all share is that we want you to succeed. Whether we're a Democrat or Republican, we care deeply about this country.

HENRY: The gravity of the moment, the first such meeting since 1981, was sinking in for President-elect Barack Obama.

OBAMA: All the gentlemen here understand both the pressures and possibilities of this office. And for me to have the opportunity to get advice, good counsel and fellowship with these individuals is extraordinary.

HENRY: Lots of smiles, despite potshots and petty rivalries of the past. At lunch afterwards, down the hall from the Oval Office, aides say the men traded war stories and chewed over issues like the crisis in Gaza.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: Every one of these presidents has dealt with the challenges there as they've evolved over time.

HENRY: And every one of them learned there are few easy answers, something Mr. Obama realized earlier in the day when a reporter pressed on why he's not speaking out more on the Mideast.

OBAMA: I'm doing everything that we have to do to make sure that the day that I take office, we are prepared to engage immediately in trying to deal with the situation there. But until I take office, it would be imprudent of me to start sending out signals that somehow we are running foreign policy.

HENRY: While the presidents lunched, incoming White House press secretary Robert Gibbs dined with outgoing spokeswoman Dana Perino and got a few pointers at the podium for the battles ahead.

For now, however, everyone can still focus on the trappings of office, including the interior decorations. Former President Bill Clinton was overheard complimenting Mr. Bush on the carpet he selected for the Oval Office.



HENRY: Now, as you know, Wolf, every incoming president gets to select specifically the carpet they're going to have in the Oval Office. That's something Barack Obama's able to do now, a sign of how exclusive this club is, one little sign that now he's a member of that club. But tomorrow he's going to be turning back to serious business.

He's going to be giving a speech on the economy at George Mason University. Aides say he's not going to get into too much details, but we're going to hear a little bit more about this emerging economic recovery plan. That's going to be the first real test of how much clout he has with the new Congress -- Wolf.

BLITZER: It's a big speech. Do we know what time that speech is supposed to take place, Ed?

HENRY: It's morning, I believe, at 11:00 a.m. Eastern Time. It's going to be a chance for him to try to flesh out a little bit more where he's headed to deal with this financial crisis -- Wolf.

BLITZER: Ed Henry at the White House.

Thank you.

On Capitol Hill, the incoming chair of the Senate Intelligence Committee has changed her tune about President-elect Obama's reported choice to head the CIA. Democratic Senator Dianne Feinstein now says she intends to support Leon Panetta to lead the spy agency. Feinstein initially had expressed reservations about Panetta, saying the former Clinton White House chief of staff lacked experience within the intelligence community. She also was miffed that the Obama transition team had not consulted her.

Feinstein tells The Associated Press she spoke with Panetta on the phone last night and came away confident about how he'd lead the CIA.

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

JACK CAFFERTY, CNN ANCHOR: Barack Obama's inauguration is still 13 days away, not even in office yet, and some say that the Democrats are off to a bit of a rocky start in all this. Senator Dianne Feinstein, as you just heard Wolf report not 30 seconds ago, the incoming chair of the Senate Intelligence Committee, quick to publicly complain that she hadn't been notified that President-elect Obama intended to pick Leon Panetta to run the CIA.

The Democratic Senate refused to seat Roland Burris yesterday for the office vacated by the president-elect. Nancy Pelosi was talking earlier this week -- maybe it was last week -- about having to actually be supportive of the president of the United States. You know, take a little bit of a back seat. Didn't sound overly thrilled with the idea, because I think she likes it best when it's all about her.

And Harry Reid is a loose cannon. "The worst president we ever had," he said on "ABC News" Sunday.

There's the Rod Blagojevich scandal. The Illinois governor accused of pay-for-play politics.

New Mexico Governor Bill Richardson having to withdraw his nomination as secretary of commerce because of an investigation into a campaign donor.

And finally, there doesn't seem to be a whole lot of public support coming from members of the president-elect's own party in advance of his taking the highest office in the land. The silence is deafening.

So here's the question. Are the Democrats getting off to the right start ahead of Barack Obama's inauguration?

You can go to and post your thoughts on my blog -- Wolf.

BLITZER: Jack, thank you.

Jack Cafferty will be back shortly.

Coming up, we're going to be checking in on what the Democrats are saying right now. They seem to be changing their tune about the fate of would-be Senator Roland Burris.

Listen to this.


SEN. HARRY REID (D-NV), MAJORITY LEADER: There's going to come a time when the entire Senate is going to have to act on this. And that day, I hope, would come sooner rather than later.


BLITZER: Will the man appointed by the scandal-plagued Illinois governor become a U.S. senator after all?

And Hillary Clinton and other cabinet nominees are about to be put to the test. This hour, the prospects for confirmation controversy, what's going on.

And now we know why President-elect Barack Obama had to move into a hotel instead of the official White House guest house that's called Blair House. The identity of the VIP guest revealed.

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


BLITZER: Yesterday, he was turned away from the U.S. Senate. Today, a very different story. After essentially getting the door slammed on him, Roland Burris not only makes it behind Senate doors, but now appears to be one step closer to staying there.

Our Senior Congressional Correspondent Dana Bash is on Capitol Hill, working this story.

Twenty-four hours, a huge difference. What's going on, Dana?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Well, I can give you one indication, perhaps, something that I just got on my BlackBerry from a Democratic leadership aide, and that is that President-elect Barack Obama did actually speak with the Senate majority leader, Harry Reid, and according to this aide, "They agreed on the need for an amicable resolution to the situation in order to give the people of Illinois full representation."

So that could be some indication of the very dramatic change in tone today, the fact that there was a meeting today and Harry Reid made clear to reporters that that meeting, and all of the differences in what's happening today, was because of the fact that this had been a distraction for Democrats.


BASH (voice-over): One look at their smiles and it was clear. Democratic leaders wanted to calm the controversy over keeping Roland Burris out of the Senate.

REID: We're happy to have the opportunity to meet with Mr. Burris.

BASH: Forty-five minutes later, Democratic leaders announced they were changing course, laying out a path that would allow Burris to become senator.

REID: There's going to come a time when the entire Senate is going to have to act on this, and that day, I hope, would come sooner rather than later.

BASH: Even entertaining the idea of seating Burris is a dramatic reversal. Just last week, Senate Majority Leader Harry Reid said, "... anyone appointed by Governor Blagojevich cannot be an effective representative of the people of Illinois and, as we have said, will not be seated by the Democratic Caucus."

But a senior Democratic source admits to CNN Rod Blagojevich called their bluff by appointing Burris, despite their warnings.

SEN. DICK DURBIN (D), MAJORITY WHIP: No appointment by this governor, under these circumstances, could produce a credible replacement. BASH: Democratic sources acknowledge all the hype -- images of a rain-soaked fellow Democrat turned away from the Senate -- was incredibly problematic. So were accusations of racism which Democratic leaders raised unsolicited.

REID: So a lot of people tried to make this a racial issue, but Roland Burris has not and will not.

BASH: Reid said Burris could be seated with conditions. Burris makes the case his appointment wasn't tainted when he testifies at Governor Blagojevich's impeachment hearings. And a court forces the Illinois secretary of state to sign Burris' certificate of appointment. Then, the Senate Rules Committee would investigate and the full Senate would vote.

It's unclear if or when that would happen, but Burris told reporters he'll be a senator very shortly.

ROLAND BURRIS (D), ILLINOIS SENATE APPOINTEE: So I'm very pleased this afternoon, I'm happy.


BASH: Now, this afternoon, the Congressional Black Caucus, which had been divided, came out and formally took a position, saying that they do believe Senate Democrats should seat Roland Burris. And you know, Senate Democratic leadership aides say that the scenario that was laid out, it could take perhaps as long as a month. And privately, what they are hoping, Wolf, is that perhaps by that time, Governor Blagojevich will either be impeached or otherwise leave office, and that could change the dynamic and make it so that they wouldn't have to make this very tough decision here -- Wolf.

BLITZER: All right. Thanks, Dana. You'll stay on top of this story for us.

Meanwhile, the stage is set for some high-stakes political theatre. Within days, right here in Washington, you can expect to see some of the most famous names in politics being questioned, perhaps even interrogated, by a high-profile political jury. It could be a true test of Barack Obama's ability to get his nominees actually confirmed by the U.S. Senate.

Our Senior Political Analyst Gloria Borger has been working this story for us.

The Hillary Clinton confirmation hearings, a date has now been set.

GLORIA BORGER, CNN SR. POLITICAL ANALYST: Next Tuesday, she is going to try and get confirmed. And I think, Wolf, what we have to say starting out here is that you have to give the presumption to the president-elect that his nominees will get confirmed.

Hillary Clinton is a particular case where, of course, she has served in the Senate, she's actually made a lot of friends on the Republican side of the aisle. Dick Lugar, the ranking Republican on the Foreign Relations Committee, is a good friend of hers. So, by the way, is John McCain. People take him very seriously on foreign policy in the Senate.

However, her main problem, as usual, is going to be her husband. And questions will be asked about the separation between the Clinton Foundation and Hillary Clinton as secretary of state. And also, there have been some stories circulating in the press about whether donations to the Clinton Foundation ever affected the work that Hillary Clinton did on behalf of people in the United States Senate.

So she'll be getting some tough questions.

BLITZER: And we'll have extensive coverage of that hearing before the Senate Foreign Relations Committee.


BLITZER: The Senate Judiciary Committee will have to confirm Eric Holder as the next attorney general. There could be some problems there.

BORGER: Yes, there could be some problems. Republicans have made it clear that this is the person that they're really going to focus on. And in particular, Arlen Specter, who's the ranking Republican on that committee, took to the Senate floor and made it very clear that he's not so sure that Eric Holder should be the next attorney general.

BLITZER: In fact, we have a clip...


BLITZER: ... of what Senate Specter said.


SEN. ARLEN SPECTER (R), JUDICIARY COMMITTEE: There is also the issue of character. And sometimes, it is more important for the attorney general to have the stature and the courage to say no instead of to say yes.


BLITZER: So that could be lively, that hearing.

BORGER: Well, he went on to say and compare Eric Holder to, of all people, Alberto Gonzales, whom he said was too close to George W. Bush to actually be a good attorney general. And he's going to make the case that Eric Holder is too close to Barack Obama. And he's going to say he wasn't even independent enough when he served Bill Clinton and didn't stand up to him, for example, on the pardon of Mark Rich, that controversial financier whom Bill Clinton pardoned in his last days in office.

BLITZER: Yes. So we'll have extensive coverage, as I said... BORGER: Should be very interesting.

BLITZER: ... of all of these hearings.

Thanks, Gloria. We'll be watching.

We all know certainly about Guantanamo Bay, but there's another military prison that could give Barack Obama a big headache. Why detainees here are fighting the government.

And arguably the world's most famous plumber, he has a brand new job. Joe the plumber is putting down his work tools and heading straight into one of the most dangerous assignments out there right now.

We'll explain right here in THE SITUATION ROOM.



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

Happening now, Israel accused of targeting Gaza with white phosphorous. That's a banned substance that can severely burn civilians. Is there any photographic proof?

We're going to go live to the Pentagon. Barbara Starr will have a fact check for us.

Commanded to kill -- a new report releases some chilling details of that deadly attack in Mumbai, India, claiming the gunmen took orders from handlers over the phone, telling them when and how to kill civilians.

And security interrupted -- President Bush's Secret Service protection now set to expire in just 10 years, an unprecedented cost- cutting measure.

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

The moment Barack Obama is sworn in, he will face a host of world problems, one of them, what to do with some men accused of being among the most dangerous terrorists in the world.

Brian Todd is looking into this story.

What are you finding out, Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, as you know, the president-elect has vowed to close Guantanamo Bay, but America's controversial practice of holding terror suspects indefinitely will not end when Mr. Obama is sworn in.

Another facility that will remain open and is in fact expanding may present a real headache for the Obama team. (BEGIN VIDEOTAPE)

TODD (voice-over): The sprawling airfield at Bagram, Afghanistan, about 40 miles north of Kabul, one of the most heavily guarded of all U.S. bases, it holds some so-called unlawful 600 enemy combatants. Some have been there since the early days of the war on terror.

And a court case involving a small group of Bagram detainees is presenting a challenge for president-elect Barack Obama, who vows to close America's other controversial holding facility at Guantanamo Bay.

Amin al-Bakri and three others at Bagram are trying to get the same legal standing that Guantanamo prisoners got last summer, the right to challenge their detention in a U.S. court.

We spoke to one of the detainee's lawyers who presented the case to a federal district judge in Washington.

UNIDENTIFIED FEMALE: Six years without any due process at all, and this is not U.S. law. It has never been our law.

TODD: The Bush administration is pushing back hard on that, arguing to dismiss this case on the grounds that Bagram is situated in a war zone, and giving detainees the same rights would only hinder America's ability to fight that war.

A former White House lawyer under President Bush agrees.

BRADFORD BERENSON, FORMER ASSOCIATE WHITE HOUSE COUNSEL: It would mean that you could have potentially thousands or tens of thousands of civil lawsuits being filed against the president of the United States military right in the middle of combat. It -- it would be crippling to our ability to fight a war.

TODD: We asked a former Air Force JAG attorney, if those rights are extended to a typical terror suspect at Bagram, what would have to be done with him that's not done with those at Guantanamo.

SCOTT SILLIMAN, PROFESSOR OF THE PRACTICE OF LAW, DUKE UNIVERSITY LAW SCHOOL: You would have to have some kind of testimony from the soldiers that picked him up. There may not be sufficient evidence of any kind of criminality at that point.


TODD: Contacted by CNN, The Obama transition team wouldn't comment on the Bagram case. The Obama team has not decided yet what to do with the prisoners at Bagram, and won't until after the president-elect takes office.

But it's worth noting the facility at Bagram is expanding as we speak. They're building a new prison there, which won't be complete until after well after the Obama team is in the White House. Wolf, this is going to be a headache right off the get-go. BLITZER: Yes, one of many headaches...

TODD: Right.

BLITZER: ... that he's going to be facing. I don't envy the guy at all.

TODD: Right.

BLITZER: Brian, thank you for that.

I want to turn back to one of our top stories right now, the president-elect naming Nancy Killefer as his chief performance officer. So, what exactly is that and how might she help all of us?

Our senior correspondent, Allan Chernoff, is in New York. He has been looking into this.

All right, tell us what it means, Allan.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, lots of questions about this new title. Is it some sort of touchy-feely, New Age, bean-counting efficiency guru coming to Washington? The president-elect says, this is for real; it's not a joke. His chief performance officer, he says, is going to change government.


CHERNOFF (voice-over): President-elect Obama promised change.

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: The appointment I'm announcing today is among the most important that I will make.

CHERNOFF: Meet the nation's first chief performance officer, Nancy Killefer.

OBAMA: Nancy is an expert in streamlining processes and wringing out inefficiencies so that taxpayers and consumers get more for their money.

CHERNOFF: Can the chief performance officer get more bang for our taxpayer buck? Consulting experts say she will need cooperation and lots of clout to get administration officials to change their ways.

UNIDENTIFIED MALE: Are there consequences for them doing it or not doing it? Very hard things to do in government, hard to do in public -- in public corporations, much harder to do in the government sector.

CHERNOFF: Killefer is a management consultant from McKinsey & Company, who, under President Clinton, helped modernize the IRS.

NANCY KILLEFER, INCOMING OBAMA ADMINISTRATION CHIEF PERFORMANCE OFFICER: I know from my experience, bringing about change in the private and public sectors, that government has the capacity to deliver services more efficiently and effectively. I have seen it done.

CHERNOFF: But whether Killefer can get much done remains to be seen, says the nonpartisan group Taxpayers For Common Sense.

RYAN ALEXANDER, PRESIDENT, TAXPAYERS FOR COMMON SENSE: We are concerned that just creating a position without very clear definitions, without very clear authority, may mean that this yields the budget recommendations, but not lots of action.

CHERNOFF: Obama, the nation's next CEO, says his CPO will have major influence.

OBAMA: In order to make these investments that we need, we'll have to cut the spending that we don't, and I will be relying on Nancy to help guide that process.


CHERNOFF: More than 15 years ago, Vice President Al Gore led a campaign to reengineer government. He was able to cut costs, but no one would argue that he succeeded in creating a model of efficiency in Washington -- Wolf.

BLITZER: All right, Allan, thank you. Very interesting stuff.

Even as Barack Obama brainstorms ways to jump-starts the economy, he's proving to be a one-man cottage industry -- why so many are out there profiting from his historic election right now.

Plus, Senate Dianne Feinstein's change of heart. Why has she dropped her reservations about Leon Panetta becoming the next CIA director, after first venting those concerns rather publicly?

And, later, new options for Americans who simply can't pay their taxes on time. We have information you might need to know -- right here in THE SITUATION ROOM.


BLITZER: A mystery surrounding the Obama transition appears now to have been solved. At issue, why the Obama's had to move into a luxury D.C. hotel, instead of the official presidential guest house across the street from the White House.

CNN's Samantha Hayes has been looking into story for us and has the answer to that mystery.

What is it, Sam?

SAMANTHA HAYES, CNN CORRESPONDENT: Well, Wolf, the Blair House is usually available for incoming presidents, so, when the Bush administration said it was booked, the question came up, well, who's staying there? Well, at least on the night of January 12, it is the former Australian Prime Minister John Howard. He will be receiving the Presidential Medal of Freedom on the 13th, along with former British Prime Minister Tony Blair and Colombian President Alvaro Uribe. Now, that announcement came from White House spokesperson Dana Perino on Monday.


DANA PERINO, WHITE HOUSE PRESS SECRETARY: All three leaders have been staunch allies of the United States, particularly in combating terrorism. And their efforts to bring hope and freedom to people around the ground have made their nations, America, and the world community a safer and more secure world.


HAYES: Well, apparently, Blair and Uribe found other places to stay in Washington.

A spokesperson for first lady Laura Bush, Sally McDonough, tells CNN that the Blair House was booked months in advance to accommodate visiting dignitaries and also host lunches and farewell parties for outgoing administration officials.

You know, today, for instance, Mrs. Bush attended an event at the Blair House for the Global Cultural Initiative. And, in December, there was a goodbye party for the chief of protocol for the State Department.

Now, McDonough said that, usually, the Blair House is scheduled to be available for the incoming president around the 15th, but the Obama family wanted to come to Washington early, so their girls could start school. So, right now, they're staying in the luxurious Hay- Adams Hotel.

And where might that be? Well, I'm standing on the roof of a building near the White House. And the Hay-Adams Hotel is right in back of me. You may be able to see the corner there on the side of your screen. Of course, it faces the White House, Obama's eventual destination. We know it will be available for him after the inauguration -- Wolf.

BLITZER: It's got a great view of the White House, the Hay-Adams Hotel.

HAYES: It does.

BLITZER: There's no doubt about that.

All right, Sam, thanks very much.

A lot of people are trying to sell things with the name Barack Obama attached to it.

Let's go to Mary Snow in New York. She's looking at this story. Could -- could all these sales propel, stimulate the economy a little bit, Mary?


You know, as the country prepares for Barack Obama, the president, merchandisers are cashing in on Barack Obama, the brand. And that brand is proving to buck the recession so far.


SNOW (voice-over): As he tries to solve the country's crisis, president-elect Barack Obama is also unwittingly doing his part to stimulate the economy. From bobbleheads, to T-shirts, all things Obama are raking in cash.

This store in Washington, D.C., expects to make an extra $80,000 in sales during the next two weeks. Vendors are saturating New York street corners with memorabilia, even snow globes.

But there are other companies that are making millions.


ANNOUNCER: A limit of two plates per caller.


SNOW: The company selling these Obama victory plates says it has sold 700,000 so far, meaning nearly $14 million in sales.

"The New York Times" says sales of Obama and election-related amount to $2.3 million so far. "The Chicago Tribune" estimates $1.4 million in sales.

The founder of one New York marketing firm says it's hard to pinpoint an exact dollar amount on this historic presidency.

ROBERT PASSIKOFF, FOUNDER AND PRESIDENT, BRAND KEYS: I believe that this is hundreds of millions of dollars worth of -- of branding that is available.

SNOW: TV retail giant QVC is seizing the moment.


LEAH WILLIAMS, PROGRAM HOST, QVC: And we have amazing collectibles in the next 60 minutes that we're going to talk about.


SNOW: QVC is moving its show to Washington, D.C., for the inauguration, touting everything from coins, to simulated pearls, to a portrait of the president-elect.

QVC wouldn't discuss sales figures, but says its commemorative coins started selling minutes after Barack Obama was elected president.

DOUG ROSE, VICE PRESIDENT OF PROGRAMMING, QVC: Already, we have seen over 100,000 of our customers ordering commemorative products related to the inaugural.

SNOW: While presidential memorabilia isn't anything new, the high interest in Obama is being compared to the type seen when President Kennedy was elected.

PASSIKOFF: Obama the brand is almost 100 percent emotionally based.


SNOW: As you might imagine, newspapers are expecting to be hot sellers on Inauguration Day.

In Mr. Obama's hometown of Chicago, "The Chicago Tribune," for one, is planning commemorative sections, along with a special everything edition on January 20 -- Wolf.

BLITZER: All right, Mary, thanks. I'm sure that a lot of those front pages will be framed and sold, and people will be making some money out of all of this.

Thanks very much. It is an historic day. It will be, indeed.

The current president says something special is coming to the incoming president.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: One message that I have and I think we all share is that we want you to succeed.


BLITZER: Was that hard for President Bush to say, after some of the bruising comments made during the campaign?

And he may be the world's most famous plumber, but he now has a new job and he also has a passport. We will explain what is going on -- right here in THE SITUATION ROOM.


BLITZER: A major power lunch over at the White House today, among President Bush, all three living former presidents and the president-elect, Barack Obama.

The historic meeting tops our "Strategy Session" right now.

Joining us, the Democratic strategist Paul Begala and the Republican strategist Bay Buchanan. They're both CNN contributors.

When you saw that photo, it's pretty dramatic. You were in the Oval Office when there was an earlier transition. You never get -- you never get dulled by seeing that kind of stuff.

PAUL BEGALA, CNN POLITICAL ANALYST: No. And -- and you could tell already that he's going to have to become accustomed to it, though.

It's a place of great reverence, but it's also a place he's going to have to work. And I think when -- the first time I walked there, I was with President Clinton. He had just been sworn in a few days before.

And my knees kind of buckled. And he said -- he put his arm around me and he said, and don't let this get to you, Paulie. This is also the crown jewel of the federal penal system, right, meaning he didn't want to just be boxed in. As beautiful as that round room is, he was very -- also -- every one of those men, I'm sure, has gone through that experience of both seeking that office so much, but then not ever wanting to be a prisoner of it.

BLITZER: Pretty exclusive job, when you look at that.

BAY BUCHANAN, CNN POLITICAL CONTRIBUTOR: I remember, Ronald Reagan said he could never go in there without his suit and tie on. You know, he just -- he couldn't -- it wasn't a place he could be casual. This was serious, a great honor, and he always revered that -- that room as what it symbolized.

BLITZER: You know, he just gave an interview to CNBC. I want to play a little clip, because I think it says something about Barack Obama, where he's coming from. Listen to this.


OBAMA: I think it's important not to live in the bubble. So, you have got to be open to outside information, particularly criticism.

I will tell you, I very rarely read good press. I often read bad press, not because I agree with it, but because I want to get a sense of, are there areas where I'm falling short and I can do better?


BLITZER: It's pretty smart, if he really does that.

BEGALA: It's very smart. And I'm sure it is what he does.

I mean, you certainly know from the campaign that he was tracking the coverage, good, bad, and indifferent.

It's -- it is critically important. I do think one of the many disappointing moments in the Bush presidency was when he told I think it was Brit Hume of FOX News that he didn't read the newspapers, that he had his staff brief him.

And, having been a staffer, that's too much power to give to a staffer. You need to know for yourself what is going on. Also, Bill Clinton switched the phones in that room, so he could dial them out himself. And he often would pick them up and call deep down into the bureaucracy -- this is something Dick Cheney does -- I think it's a good idea -- what is going on over at your agency?

And, so, it's not just that -- so, you don't become a prisoner of the Praetorian Guard.

BLITZER: The problem you get when do that, and you're president of the United States, people on the other end, they don't believe it's really the president of the United States.



BUCHANAN: That's exactly right. They're start laughing at you.


BUCHANAN: But, you know, I agree with Paul. It is good to get different input from people that aren't just staff and saying what maybe that you want to hear.

But I think, reading everything, you should be cautious about that, because there's a lot of people out there just writing negative stuff. It's partisan, beating you up. And you need to stay very strong, very positive, know your focus, not worry about the critics, and just do what you believe is right.

And I think, if you read too much of that stuff, you might start trying to please, appease. Richard Nixon, he pulled back and make certain someone else analyzed. And he, of course, read all of it, but, once he got to be president, he had someone else analyze it, put the news together, and report it to him.

BLITZER: You know, when the Congressional Budget Office today announced that president-elect Barack Obama will be inheriting a $1.2 trillion annual budget deficit, and Obama said today there's going to be trillion-dollar deficits for years to come, you know, those of us who remember, when Clinton came in, he inherited, what, $200 billion deficit, and he had to cancel his middle-class tax cut. He had to rethink everything else.

That seems quaint now.

BEGALA: Right.

And you know what, though? I was with him on that day when he held up -- he had that big poster. I think you came in the Oval Office with us and a bunch of others. And he drew a big zero, when the federal budget deficit finally went to zero, and we started to move into surplus.

This will -- in time, this is going to do enormous damage to our country. This is part of the Bush legacy that will last 10 years, 20 years, 30 years, maybe 50 years, because we have simultaneously driven the country into debt and nearly into a depression.

And the only way out right now is to prime the pump with even more deficit spending, not something actually that Barack Obama's eager to do, but he's going to have to do it.

BLITZER: And that deficit spending is only going to further increase the deficit and the national debt.

BUCHANAN: That's correct. That is exactly right.

And I'll tell you what is going to happen here. We all hope Obama is successful. There's no question, all of us want to see this economy turn around. But if he goes and spends these huge sums of money, and then it's not turning around, the unemployment's not coming down, and things do not look positive, he will be held responsible.

This is too much money to be spending, I think. I think he should be much more cautious and -- and -- and careful, because, if it -- if he fails, this is his problem, and not Bush's.

BLITZER: This is an enormous -- an enormous challenge. And I'm, like all of us, very worried about what is going on in the economy in this year. We will see what happens.

Guys, thanks very much.

Joe the plumber will soon be known as Joe the war correspondent.

Samuel Joe Wurzelbacher, the man made famous by the McCain campaign, is headed to Israel to cover the conflict in Gaza. I'm not making this up.

Our Internet reporter, Abbi Tatton, is joining us now.

Abbi, what is going on here?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, yes, Joe is branching out from plumbing.

A spokeswoman from the conservative Web site Pajamas Media says Wurzelbacher is today getting his passport sorted, so he can spend 10 days in Israel, reporting for the site's online channel.

During the campaign, you will remember Wurzelbacher lashing out at as biased. Well, now he says he will be reporting himself to help the Israeli people, he says, or the averages joes, as he calls them, get their voices heard.


JOE WURZELBACHER, RESIDENT OF OHIO: We don't really get the full story. And, so, I'm going to go over there, interview some Israeli soldiers, civilian population, and get their take on what is going on.

(END VIDEO CLIP) TATTON: Since the election, Wurzelbacher has made the most of his fame, establishing a Web site, where he's selling his book, "Fighting For the American Dream," which, his publisher tells me, is selling in significant numbers for a one-time plumber, although he didn't disclose those numbers -- Wolf.

BLITZER: Well, maybe he will be qualified to be a journalist. I'm certainly not qualified to become a plumber. I can tell you that.

Abbi, thanks very much.

Some food for thought about the new White House china and who is footing the bill.

And, later, a CNN investigation into the ties between the embattled Illinois governor and his U.S. Senate appointee, Roland Burris. Drew Griffin standing by with his own investigation.

And a stunning report that the gunmen behind the deadly rampage in Mumbai, India, got some real-time commando advice over the phone. We have new information for you -- right here in THE SITUATION ROOM.


BLITZER: Call it a housewarming gift for the Obamas.

The first lady, Laura Bush, today unveiled the new gold-rimmed set of White House china. The official George W. Bush state dinnerware cost almost $500,000 and was privately funded.

White House china has created quite a stir in the past, as many of you probably remember. Back, in the late 1870s, Rutherford B. Hayes served up an unusually floral pattern design. In the early 1900s, Woodrow Wilson ordered the first American-made White House dinner service. Previous presidents bought their china from France.

In the 1980s, the Reagan got heat for ordering $200,000 in scarlet china when the federal budget was being slashed. So, a private foundation was created to pay for the china. That's a tradition that continues today.

Let's go back to Jack for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question is, are the Democrats getting off to the right start, ahead of Barack Obama's inauguration?

Denis writes Pennsylvania: "So far, Obama, yes, the Democrats in Congress, no. In the first 160 days of the new administration, the Democrats in Congress will most likely make fools of themselves. Pelosi will have hissy fits that will show how incompetent she and her colleagues are. Republicans will fare much better. Overall, the approval rating of Congress will stay about the same. Same old, same old. President-elect Obama will give us a chance. The Democrats in Congress will take it away."

Terrell in California: "Jack, as a lifelong Democrat, I have to say nope. With the Blagojevich-Burris thing, the Feinstein snit, and the Richardson investigation, we are well on our way to shooting ourselves in the foot yet again."

Karen in Dodge City, Kansas: "Democrats aren't used to working as a team. And, for that reason, Obama's biggest handicap is his own party. Hopefully, he will give them the 'my way or the highway' speech, get rid of some of the dead weight, like Reid and Pelosi. That would go a long way toward convincing the public that Obama is serious about building an effective administration."

Krishna in California: "I don't think that they are, I am sorry to say. They have enjoyed complaining. When they were put in charge, they have failed to deliver. Pelosi and Reid are pretty inept. Feinstein has been part of the Bush-Cheney camp as far as CIA actions go. She was asleep at the switch when atrocities were going on there and failed to render oversight. She has no credibility now, in my opinion."

Tony in Connecticut: "Are you serious? It's the Keystone Cops visit Washington, D.C. I can imagine the newspaper articles if these guys were Republicans. The Burris incident has Governor Rod Blagojevich pulling the strings of Reid, Durbin, Pelosi, and Obama. It's that Chicago training."

And Karen in Nashville writes: "Sounds about normal. We have a chorus of prima donnas, and the conductor isn't even on the stage yet."

If you didn't see your e-mail here, you can go to my blog at, look for yours there -- Wolf.

Jack, thank you.