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Obama to Dems: Give Me the Money; Treasury Pick's Tax "Mistake"; Bush Administration Profits; Governor's Senate Pick; Clinton Team Turf Wars; Bill's Backseat to Hillary

Aired January 13, 2009 - 17:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


WOLF BLITZER, CNN ANCHOR: I'm Wolf Blitzer. You're in THE SITUATION ROOM.
He hasn't even been sworn in yet, but Barack Obama is already threatening a presidential veto. He went to Capitol Hill today and made a face-to-face appeal to some doubtful Democrats, trying to convince them to free up hundreds of billions of dollars in bailout money to turn the economy around.

Let's go to Capitol Hill.

Our senior Congressional correspondent, Dana Bash, is working the story for us -- it's extraordinary, I think, Dana. He's get some push- back from members of his own party.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: (AUDIO GAP) that the president-elect took about 15 questions in this private meeting from Democratic senators. Most of them were about concerns about giving Wall Street even more taxpayer dollars. And I'm also told that Obama made his case. He made some promises. And as you said, he did something extraordinary. A week before he's taking office, he threatened a veto.

(BEGIN VIDEOTAPE)

BASH (voice-over): Barack Obama went behind closed doors and pleaded with skeptical fellow Democrats to give him what he needs to fix the economy -- authority to use the remaining $350 billion taxpayer dollars of the controversial Wall Street bailout fund.

SEN. BEN NELSON (D), NEBRASKA: I'm undecided, but I'm certainly not leaning in favor of doing it.

BASH: But it is a very tough sell -- even though it's their fellow popular fellow Democrat making the hard pitch.

NELSON: I understand that the president-elect wants to move forward. And I'd like to be supportive. But I'm not going to make -- I'm not going to be pushed into quick judgment on this, given all the circumstances. People back home generally didn't want the first go round. And I'm not going to jump out in front of a train on the second one.

BASH: Ben Nelson is one of nearly a dozen Senate Democrats CNN talked to who say the first $350 billion was so mismanaged and so unpopular, they are extremely wary of approving more -- despite the fact that Obama is promising to handle it better.

SEN. DEBBIE STABENOW (D), MICHIGAN: It's not enough just to have someone that you trust. We have to have specific criteria as to what is going to be happening -- will there be accountability, transparency?

We can't even get answers. There's a lot of us that need some reassurance.

BASH: Blanche Lincoln is one of many Democrats getting bombarded by outraged constituents warning against more money for Wall Street.

UNIDENTIFIED FEMALE: She's not taken an official stance, ma'am. But if you have an opinion on the matter, I'd be more than happy to pass that along to her.

BASH: Like many of her colleagues, Lincoln is torn between answering to the folks back home and her new Democratic president.

SEN. BLANCHE LINCOLN (D), ARKANSAS: We need to have a better understanding and a better idea of how those dollars are going to be spent and where they're going to go.

(END VIDEOTAPE)

BASH: Now, several Democratic senators did come out of that meeting and told us that do feel more comfortable with the fact that President-Elect Obama promised there would be more transparency in this program, promised that more of the money would go for homeowners who have problems, obviously, paying their mortgages.

But many Democrats tell us they still don't know, Wolf, if they can back him on this, his first big test of his clout here -- and, of course, his first test of the power of persuasion that he has -- Wolf.

BLITZER: Dana, thank you.

And let's get some more now on the breaking news we're following involving a key pick for Barack Obama's cabinet. The Treasury secretary nominee, Timothy Geithner, has revealed he failed to pay thousands of dollars in self-employment taxes for money earned several years ago. And he also failed to realize that a former immigrant housekeeper who worked for several months for him without the proper documentation.

Let's go back to Capitol Hill.

Our Congressional correspondent, Brianna Keilar, is looking at this.

All right, so what is the transition team saying now -- Brianna?

BRIANNA KEILAR, CNN CORRESPONDENT: They're standing by their man, Wolf. Robert Gibbs, the incoming press secretary for President- Elect Obama, saying that these were honest mistakes. That coming out after a meeting between Timothy Geithner and the Senate Finance Committee -- the primary committee involved in confirming him as the Treasury secretary.

That committee also releasing some documents detailing what happened here, Wolf. First, that basically Geithner failed to pay all of the taxes he owed over several recent years. And they said that he filed amended tax returns, that he paid those taxes, plus interest, to the tune of about $30,000.

The big issue being in 2001-2002 that he failed to pay self- employment taxes while working for the International Monetary Fund.

The other issue is that of a housekeeper -- that the illegal immigration status of one of his housekeepers expired for three-and-a- half months while that housekeeper was employed by Geithner. Still, the Democratic chairman of the Senate Finance Committee saying this should not derail Geithner's confirmation process.

Here's Max Baucus.

(BEGIN VIDEO CLIP)

SEN. MAX BAUCUS (D), MONTANA: These errors, although serious, and while they're corrected immediately, do not rise to the level of disqualification. And I hope very much that Mr. Geithner can be confirmed before the president-elect is -- is inaugurated.

(END VIDEO CLIP)

KEILAR: And, again, word from the transition team is that these were honest mistakes. They say that Geithner has someone who is dedicated his life to basically serving his country and that these honest mistakes shouldn't get in the way of that -- Wolf.

BLITZER: Brianna, thanks very much. Let's get more analysis on what's going on.

Our chief national correspondent, John King, is here in THE SITUATION ROOM. What do you think? What is going on?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, so much for "no drama Obama." He's up on the Hill threatening a possible veto if they don't send him the rest of the bailout money. He's had to withdraw his Commerce secretary, Bill Richardson. Now a bump in the road for his Treasury secretary nominee -- a bump.

By all accounts -- you've just heard Brianna Keilar. I've spoken to several transition officials. They think this will pass. But they also realize they have a problem.

Here's what they worry about most of all, Wolf. They say that they have the chairman. You just heard him, Max Baucus. They say most of the Democrats are fine. They're checking with the female members -- the women members of the Senate -- to see if they're going to say double standard. Remember back in the Clinton days, Zoe Baird, Kimba Wood. They insist this is different and they believe that time has past and they can put out the political temperature and calm that down on Capitol Hill by answering the question. Here's what they're worried about. They're worried about the Jay Lenos, the Jon Stewarts of the world mocking this guy, because in this memo put out by the Finance Committee, it says, yes, he made mistakes.

What it says on that issue of the self-employment tax, as Brianna just talked about, it says he received four documents while he was an employee of the IMF saying you must pay these taxes. And he acknowledges receiving the documents and still did not pay his self- employment taxes.

So they say it may be an honest mistake, but a mistake he should not have made if he was reading the documents given to him by his employer at the time.

He'll be in charge of Treasury and of all this bailout money. He'll be in charge of the taxes the United States takes in as secretary of the Treasury.

So they're expecting, in the Obama transition, a few days of the late night comics making fun of here's a guy who couldn't figure out his own taxes now in charge of the country's taxes.

BLITZER: And we're talking, what, about $30,000 or $40,000, is that right?

KING: Thirty thousand or $40,000 with taxes and interest. The chart is here. And, again, what the transition is saying we found this problem. We told them. We gave this information. We fixed the problem. He paid $34,000 in back taxes. He paid another $8,600 interest. So $42,700 he has now paid. Politically, they think this will pass. But it's a bump in a road that a new administration obviously doesn't want to have.

BLITZER: But just to be precise, the Obama transition team, led by John Podesta, the former Clinton White House chief of staff, they knew all about this, but they decided it was not a -- you know, a killer as far as his nomination going forward is concerned?

KING: Yes. They decided that they would deal with this because they wanted Mr. Geithner because of his expertise in the Treasury Department. And they say -- and the committee acknowledges on Capitol Hill -- that on December 5th, quite some time ago, that the transition team told the committee about this problem and put out the documents at that point.

So this has been bubbling privately for some time. Now it's spilling out publicly, as we begin to go through the confirmation process. They think this will work out, but they have some questions to answer.

BLITZER: All right. We'll see what happens.

John, thanks very much.

KING: Thank you.

BLITZER: Let's go back to Jack.

He has "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: It will only pass when we in the news media allow it to pass. And we're not ready to do that yet, apparently.

President Bush gave his last scheduled news conference yesterday. And now he plans to give a farewell address to the nation on Thursday night, 8:00. He's asked the broadcast networks to give up some of their coveted prime time schedules for it.

He'll deliver a 15-minute speech from the East Room of the White House in front of an audience -- a live audience -- of "courageous Americans."

According to the White House press secretary, Dana Perino, the president is expected to reflect on his eight years in office and how the country has changed during that time.

Boy, has it.

He'll defend his record, but he'll also share his thoughts on the greatest problems facing this nation and what he thinks it will take to solve them.

There's no law about if, how or when presidents say goodbye at the end of their terms, as they leave the White House. Past presidents have done it on Capitol Hill, in the newspaper, from the White House or not at all, as was the case with W.'s dad, Bush 41, before Bill Clinton took office.

So here's the question: It's probably your last time to do one of these -- what would you like President Bush to say in his farewell address to the nation Thursday night?

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

BLITZER: Jack, thank you.

An eye-opening report -- top Bush administration officials leaving government, then doing business with their old agencies and making money. We have details of a new watchdog report. Stick around.

And it may be the best kept secret in New York -- critics say perhaps, too secretive.

But what's going on, really, in the search for Hillary Clinton's Senate replacement?

And Sarah Palin lashing out at what she calls lying, pathetic bloggers.

What has the former vice presidential nominee so angry?

We'll tell you right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Former Bush administration officials are cashing in with companies that are doing business with their former agencies. It's all perfectly legal.

CNN's Brian Todd has been looking at a brand new report from a watchdog group.

What does it say -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, it says a lot of people who served in Mr. Bush's White House, like many others before them, haven't exactly been shy about cashing in on their government portfolios.

(BEGIN VIDEOTAPE)

TODD (voice-over): As Energy secretary, Spencer Abraham steered the Bush administration through the California brownouts and the New York blackout. After leaving government, he joined the board of an oil company, Occidental Petroleum. Later, with the help of a former aide to Abraham, Occidental secured a lucrative deal to ship oil to the United States.

That's according to a new report from the watchdog group Citizens for Responsibility for Ethics in Washington, or CREW. The report says 15 former Bush administration officials hold positions with companies that do business with their old agencies.

MELANIE SLOAN, CITIZENS FOR RESPONSIBILITY & ETHICS IN WASHINGTON: We've been saying that we're cracking down on it here in the nation's capital. But this just shows it really isn't true. As soon as cabinet officials leave, they take on lucrative jobs, always involving their former industries.

TODD: In an e-mail, Spencer Abraham's firm said: "We are very careful to fully comply with all ethics laws" and that Abraham has never lobbied for Occidental Petroleum's board.

Another example, CREW says former Health & Human Services secretary, Tommy Thompson, holds positions with 30 companies that deal with HHS now. Contacted by CNN, Thompson said he's never been a lobbyist -- that some of those companies are charities. Some don't pay him and some don't even exist anymore.

Even CREW says none of these former officials has broken any lobbying laws.

John Feehery, who once worked for House Speaker Dennis Hastert and now has his own consulting firm, says as long as cabinet officials obey ethics rules while they're in office and respect the waiting period afterwards...

JOHN FEEHERY, THE FEEHERY GROUP: You cannot prescribe what their careers are and what kind of money they make after they leave the government. That is not appropriate.

TODD: CREW is considered by some to be a left-leaning group, which it denies. But CREW has never reported on former Clinton White House officials, including former Defense secretary, William Cohen, a frequent analyst on CNN, whose clients also have business before their former agencies.

(END VIDEOTAPE)

TODD: Melanie Sloan says that's because CREW was established in 2003, well after the Clinton team left office. She promises her group will monitor the Obama administration just as vigorously, Wolf.

And we'll see if they do.

BLITZER: Yes. And in fairness, this kind of stuff has been going on for a long, long time.

TODD: That's right.

BLITZER: Henry Kissinger, after he left government, created Kissinger Associates...

TODD: Yes, he did.

BLITZER: ...which did a lot of business with the U.S. government and foreign governments, as well.

TODD: That's right.

BLITZER: Let's talk a little bit about the Bush administration specifically. Not everyone who left a high level job in the Bush administration has struck it rich.

TODD: That's right. And even CREW points out, Ann Veneman, Mr. Bush's former Agriculture secretary, now is head of UNICEF, which is a non-profit.

And in recent interviews, we've learned that Alberto Gonzales, who was the attorney general, says he can't get a job because firms are worried that he's going to be indicted. So, right, not everyone is raking it in right now.

BLITZER: All right. Thanks very much, Brian Todd, with the story -- a comprehensive and fair story, I should say, as well.

So what did these former officials make in their cabinet posts?

Spencer Abraham, Tom Ridge, Tommy Thompson -- they all earned more than $175,000 as secretaries of their respective departments. That according to the government's Plum Book.

All eyes are still on New York. Governor David Paterson right now. But there's little to see as he tries to decide on a replacement for Hillary Clinton in a process critics are calling way too secretive. Let's go to New York.

CNN's Mary Snow is working this story for us -- why are so many folks up there in New York, Mary, upset?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, critics say, you know, in light of the debacle in Illinois over Barack Obama's Senate seat, they want more transparency.

The governor here in New York is defending his actions on why he thinks some information should remain private.

(BEGIN VIDEOTAPE)

SNOW (voice-over): As New York's junior senator takes a step closer to becoming secretary of State...

SEN. HILLARY RODHAM CLINTON (D-NY), SECRETARY OF STATE NOMINEE: If confirmed, I will accept the duties of the office.

SNOW: ...the pressure is increasing on New York governor, David Paterson, who is charged with naming her Senate replacement. Some government watchdog groups are criticizing him for what they call a secret selection process.

BARBARA BARTOLETTI, NEW YORK STATE LEAGUE OF WOMEN VOTERS: I think one of the most disturbing things is there's a real guessing game here in Albany as far as who is even on that list.

SNOW: The governor has only said there are about 10 people in the running. They include Caroline Kennedy; members of Congress Steve Israel, Carolyn Maloney and Jerold Nadler. New York attorney general, Andrew Cuomo, is also said to be in the running. Paterson asked each to fill out a questionnaire like this one obtained by "The New York Times." It asked about conflicts of interest to charges of sexual harassment.

But the governor won't disclose the content and defended his actions.

(BEGIN VIDEO CLIP, COURTESY NEW YORK STATE)

GOV. DAVID PATERSON (D), NEW YORK: There is no duty on the part of a governor to in any way look at any of the private records of the candidates. I asked the candidates to do it for me so that I would have a good idea whether or not I was going into an area that I didn't want to go into.

(END VIDEO CLIP)

SNOW: But the head of New York State Committee on Open Government faults Paterson for refusing to make public the blank questionnaire he sent prospective candidates and for keeping their names confidential.

ROBERT FREEMAN, NEW YORK STATE COMMITTEE ON OPEN GOVERNMENT: The tone that so many of us have attempted to establish, including the governor, involves transparency, involves openness, involves accountability. And in this instance, it seems that -- that there has been a decrease in, let's say, the desire to abide by those kinds of goals.

(END VIDEOTAPE)

SNOW: Governor Paterson is expected to announce his decision within days, as soon as senator Clinton is confirmed as secretary of State -- Wolf.

BLITZER: Mary, any update on Caroline Kennedy herself?

SNOW: Well, you know, there's so much attention on her. Governor Paterson was asked by "The Daily News" yesterday whether or not she was the frontrunner. He said he was impressed with her, but indicated he was not ready to call her the frontrunner. In recent days, he's also been critical in several interviews, citing her lack of experience.

BLITZER: Based on the confirmation hearings today, he's going to make up -- have to make up his mind very quickly, because it looks like Hillary Clinton is about to be confirmed and will give up her job as a senator there. And New York State is going to need a new junior senator.

Mary, thanks very much for that.

And, as we just said, Hillary Clinton -- she's poised to become the next secretary of State, with considerable bipartisan backing.

Here's the question -- is the era of Clinton bashing over?

James Carville and Bill Bennett -- they're standing by.

And Dick Cheney, the vice president, suggesting that Barack Obama may be ready to make what he calls "a bad decision." Why at least one pundit now says Cheney, though, could wind up being the next president's best friend. We'll explain right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Zain Verjee is monitoring some other important stories incoming in to THE SITUATION ROOM right now -- Zain, what's going on?

ZAIN VERJEE, CNN CORRESPONDENT: Hi, Wolf.

Israel's chief truce negotiator will go to Egypt for what officials are calling decisive cease-fire talks with Hamas. This comes as Israeli tanks rolled into Gaza City from two directions early today. Palestinian medical sources say 18 days of fighting have killed 971 Palestinians. Three hundred and eleven of the victims are children. Israel's police and military say 13 Israelis, including 10 soldiers, have also been killed. Ethiopia is pulling out of Somalia and handing security duties to a Somali force. The move raises fear the country will sink further into lawlessness. Somalia is battling an Islamist insurgency and widespread piracy. The government isn't expected to be able to ensure security despite a power sharing agreement with an Islamic faction. And Somalia hasn't even had a functioning government since 1991, when warlords overthrew a dictator.

And President-Elect Obama's stepgrandmother on her way to the U.S. for next week's Sarah Obama left her hometown for the Kenyan capital, Nairobi, where she'll fly to Washington. She says that she and Kenya as a whole are happy for her grandson's achievement, becoming the first African-American president of the U.S.

And from YouTube sensation to performing at the inauguration -- it's all in a day's work for a group of inner city private school students in Atlanta. About 20 students from the Ron Clark Academy found out today that they will perform "Dear Obama" at the least four inaugural balls.

(BEGIN VIDEO CLIP)

RON CLARK, TEACHER: We have gotten so many calls to perform this song, that we've even got some very special calls. And next week, we're going to the inauguration.

(CRYING)

(APPLAUSE)

(END VIDEO CLIP)

VERJEE: Isn't that amazing, Wolf?

Their new song, "Dear Obama," is a follow-up to their hit "Vote However You Like," which they performed right here on CNN. They're really an amazing bunch of kids -- so much energy and really great. You can just see their enthusiasm there -- Wolf.

BLITZER: We're excited to see them here in Washington in a few days, Zain.

VERJEE: Yes.

BLITZER: Adorable.

Thanks so much.

I'm talking about the kids being adorable, Zain.

VERJEE: Yes, I know.

(LAUGHTER)

VERJEE: Thanks, Wolf.

BLITZER: I know you're adorable, too, but the kids are really adorable.

Thank you very much.

VERJEE: You are, too, Wolf.

BLITZER: Thank you.

Sarah Palin says that some of them are "bored, anonymous and pathetic." The Alaska governor lashing out at bloggers. And she says, yes, you can see Russia from her state.

Plus, a dozen years before they became the nation's first couple, Barack and Michelle Obama posed for a photographer who was working on a book. A look at those rarely seen photos coming up.

And the wild story of a millionaire businessman who might have faked his own death with a plane crash. The latest on what police have found coming up.

(COMMERCIAL BREAK)

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

Happening now, bringing back diplomacy -- Hillary Clinton explains what her approach will be as the next secretary of State.

And taking on bloggers and traditional news media -- Sarah Palin lashes out at her critics once again in her latest interview.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Big personalities facing a daunting task and Hillary Clinton is facing questions about the power team she's putting together for her State Department.

Let's go to our senior White House correspondent, Ed Henry, with more on this story -- Ed, what's the concern here?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, we've heard a lot about the so-called team of rivals. But now some senators are wondering whether a so-called team of egos at the State Department could make it difficult for the U.S. to solve some big diplomatic problems.

(BEGIN VIDEOTAPE)

CLINTON: Thank you very much, Mr. Chairman and...

HENRY (voice-over): With Hillary Clinton poised to become the next secretary of State, Senate Democrats are expressing confidence the so-called team of rivals will be a magical panacea.

SEN. BARBARA BOXER (D), CALIFORNIA: You are working with your toughest rival and you've set your ego aside for world peace, world stability and for the good of the country.

HENRY: But there are new questions about whether Clinton's State Department will be hampered by turf battles, as transition officials confirm she's planning to bring in power players as trouble-shooters, like Richard Holbrooke on India and Pakistan policy, and Dennis Ross to help with Iran and the broader Mideast, while Susan Rice, the incoming U.S. ambassador to the United Nations, is no shrinking violet.

SEN. GEORGE VOINOVICH (R), OHIO: One of the things that -- that I'm concerned about is the turf. And you've got Susan Rice going to the United Nations. And I hope that there's a lot of discussion given about who is responsible for what and a recognition that there will be times when you'll all be stepping on each other's toes.

HENRY: Clinton allies suggest the extra layer of advisers will help solve problems and help provide a clean break from the Bush years.

JAMES RUBIN, FORMER STATE DEPARTMENT SPOKESMAN: Let's remember what we're seeing today is the end of an era of unilateralism and the beginning of an era of American diplomacy.

HENRY: Almost on cue at the White House, the man accused of unilateralism was awarding the Medal of Freedom to his closest allies on the Iraq War -- former Prime Ministers Tony Blair of Britain and John Howard of Australia.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Each one of them a true friend of the United States, who met historic challenges with great tenacity and who provides a lasting example of statesmanship at home and abroad.

HENRY: President Bush has previously faced heavy criticism for doling out the medal to people accused of mismanaging the war, from retired General Tommy Franks to Paul Bremer.

(END VIDEOTAPE)

HENRY: Now, for her, part, Senator Clinton today avoided any direct hits on the Bush administration and its diplomatic policies, though at one point she took a veiled shot when she said that U.S. leadership around the world has been wanting, but is still wanted right now -- Wolf.

BLITZER: Ed Henry, thank you very much.

And, as he says, Hillary Clinton was certainly in the spotlight today at her confirmation hearings to become the secretary of State.

But here 's a question -- her husband, the former president, is he really ready to take a back seat to his wife?

Let's talk about that and more with our CNN political contributors, the democratic strategist, James Carville; and Bill Bennett, the host of the national radio show "Morning in America" and a fellow at the Claremont Institute. His new book, by the way, is called "The American Patriot's Almanac."

Guys, thanks very much for coming in.

WILLIAM BENNETT, CNN CONTRIBUTOR: Thank you.

BLITZER: James, you hinted strongly you spent some time in recent days, including at a football game with the former president of the United States.

Is he really ready to take a back seat, to acknowledge this is Hillary Clinton's moment, not necessarily his anymore?

JAMES CARVILLE, CNN CONTRIBUTOR, CLINTON SUPPORTER: You know, I made a terrible error and Secretary Bennett pointed it out to me. And I referred to it on your show as the national championship game. It is no such thing. It is a BCS game that has -- that is basically a flawed system that college football has worked out. But that for another day.

BLITZER: I agree with you on that. And so does Barack Obama.

CARVILLE: So does Barack Obama. So I wanted to -- very much deserve to be chastised, and I was for referring to that. He's a guy that -- he's very supportive of his wife's candidacy. He's very fired up about her being the secretary of state. And, you know, but he, I'm sure he'll say some things from time to time. They are working day and night with the CGI and the foundation. You know, they got hundreds of millions of people that are relying on that. I think he's going to spend most of his time doing that quite honestly. I think that's his first focus.

BLITZER: Is the era for republicans and conservatives, Bill, the era of Clinton bashing over.

BENNETT: Well, it all depends, I suppose. We'll see what the Clintons do. In terms of relations between Bill and Hillary Clinton, you know, the bible says not even the devil knows the mind of man. Who knows the mind of the Clintons. How they work this thing out is -- I don't know how it is. But people work it out. So we'll see.

But I think it was a mistake today to rebuff Senator Lugar the way Senator Clinton did. Or I guess secretary of state designee Clinton by saying no we're going to take that money while I am secretary of state, that foreign money. I think it's a mistake.

The Democratic Party just went through this long, difficult thing about, you know, money being used to buy a senate seat in Illinois and now the question of whether money could influence policy at the State Department is off the table? That's a ridiculous question. I don't think so. It's not a ridiculous question.

BLITZER: Go ahead, James.

CARVILLE: Well, first of all, the governments -- it's basically a climate change thing. A government like Ireland I think is a big contributor, Canada, et cetera. No one says that president Bush 41's library. No one ever brings that up. President Bush 43 is raising money for his library in Texas while he's president of the United States. The idea that and by the way, the whole Clinton CGI is $46 billion in commitments. It affects 200 million lives. I can't understand why they aren't having a parade for the Clintons. The rest of the world says what's wrong with that country? These people are doing all this good all over the country. She's giving up a state senate seat to be secretary of state of the United States and they are knit-picking about at which point you disclose this or that. It's all been through the ethics part of the White House. It's all been vetted. It's all been transparent. They're going to move the ball a little bit. They'll compromise something and they'll work this thing out to everybody's satisfaction. Everybody will get to save a little face. I just hope at the end of this somebody stands up and says three cheers for President Clinton, three cheers for the new secretary of state for doing this. These people have made remarkable services.

BLITZER: It is true, Bill, that the Clinton Global Initiative has done major work around the world, saving lives, as James says, as far as AIDS and malaria and all sorts of other things.

BENNETT: No question about it. It's done a lot of good work. Nevertheless, the job of secretary of state is to represent the interests of the United States. The Clinton Global Initiative has the name Clinton on it. Don't tell me this is the only way to get money to help people. Don't tell me this isn't the only global initiative. There are many other global initiatives.

You have to face the question that when you are talking about huge sums of money going to the Clintons or to the Clinton foundation and she is the secretary of state, you want to be sure that her head is not turned, her emotion is not affected by those contributions, particularly in the world in which we live. There's other ways and other vehicles to get that money to those needy people.

I just -- it's not going to change anything, Wolf. She's going to be confirmed and Dick Lugar who raised the question will vote for her. But it's a marker, and we may want to take note of it.

CARVILLE: I think first of all, there's nobody in the world that has the prestige that President Clinton does. You can make it the Smith Global Initiative or something like that. It's not going to be the same thing.

Secondly, no one has the commitment that he does. No one spends the time that he does. No one has the knowledge, the background. He's got -- this is his life's work. This is what -- you talk about spending time with him. This is this man's life work right now to see this gets through. I think that they're going to work. You know, the way these things work in Washington, and I'm sure they're going to address it. Senator Lugar if he has a concern, they'll sit down and deal with it. But understand who these governments are and what they are contributing.

BLITZER: James, the -- Bill Bennett had an interview with the vice president, Dick Cheney, on his radio show. I want to show a little clip for you and get your response. Listen to this.

(BEGIN VIDEO CLIP)

BENNETT: The papers are reporting this morning that President- elect Obama may on the first day or first week close Guantanamo. Good decision? Bad decision?

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: I think it's a bad decision. Guantanamo is sort of a symbol, I guess, to the left in this country, and maybe to some of our critics overseas. But the fact is it's a very well-run facility.

BLITZER: All right. I just want to point out that he may sign an executive order to close the Gitmo facility, but it could take up to a year, maybe even longer to actually follow up. But go ahead. Is the vice president, James, right?

CARVILLE: First of all, I disagree with him, but we had an election. This was an election and the new president said during the election, which he won, that he was going to do this. And apparently it's going to take some time to untangle this thing. They'll do it over a period of a year. He'd look pretty ridiculous if he didn't do it. I think the world will applaud this. And something tells me that we're going to do just fine without Guantanamo. He's entitled to his opinion. Obviously he opened it so he thought it was a good idea. The new president doesn't think so. That's what happens when you win elections.

BLITZER: There are, Bill, other well-run prisons, facilities, where these detainees can be moved.

BENNETT: There are some but I think there's a confusion here. I don't argue that President-elect Obama has the right to do this. But there's a difference between having the right to do something and whether it's the right thing to do, whether it's the right decision to make.

I do not think it is. It is a well-run facility. Many senators and congressmen have been down there and think it so. There is a problem of where to put these people. If you send them back to their home countries, you might send them to places where their human rights will be violated in a serious way or places where they won't, their human rights won't be violated but they'll sign up for more duty against the United States.

I think Guantanamo is a model institution, and the United States is a protector of civil rights in its prisons. It's done a much better job in its history than the other countries we're talking about.

Here's what I think. I think he'll make an announcement, but I think it's going to be a long time before you see a lot of people moving out of there.

BLITZER: Let's talk about Sarah Palin.

CARVILLE: There are a lot of military officers that disagree with that that are resigning because of that. I saw it on a rival network last night. That people are resigning because -- these are military officers. These are not like ACLU lawyers. These are jag officers.

BLITZER: All right.

BENNETT: It's a highly contentious issue for sure.

CARVILLE: They have a different view.

BLITZER: There's a new interview with Sarah Palin just published in "Esquire" magazine, James, one of your favorite subjects. I'm going to read a quote to you of what she says about the bloggers. "Bored, anonymous, pathetic bloggers who lie and annoy me. I'll tell you, yesterday the Anchorage Daily News they called to ask double, triple quadruple, check, who is Trig's real mom? And I said, come one, are you kidding me? We're going to answer this?" She's not being irreticent at all even in these days about lashing back at her critics.

CARVILLE: The liberal bloggers hate me, too, so I don't know. But I think that what would be a good idea for the governor is to take a little vacation from the national media and for us to take a vacation from her. They got several budget crises up there. Her family is obviously going through a very difficult time. And I think that us in the media and Sarah Palin, we can do without each other here for the next six months. There are other things to do. She'd probably do better to just be quiet for a little bit.

BLITZER: All right, Bill.

BENNETT: Yeah, we agree. For god's sakes, leave her alone. Stop requesting the interviews. And Sarah Palin ought to take a break from giving these interviews or volunteering for them. She should do Alaska business. Remind people she's the governor of Alaska, talk about that. Stay away from this other stuff. She does have issues to deal with, and I think a break for Sarah Palin and from Sarah Palin will be good for all parties.

BLITZER: On that note of agreement, we'll leave it, guys. Thanks very much.

And we all agree on college football championships, right?

BENNETT: Yeah, Utah, USC, Florida. We don't know.

BLITZER: Good.

CARVILLE: We don't know.

BLITZER: All kinds of agreements. All right. Thanks, guys, very much.

The nation's capital facing what could be an unprecedented challenge. A crowd of millions pouring into this city for the Obama inauguration; how to get them in, how to keep them safe, how to get them out and a lot more. Plus, pictures of Michelle and Barack Obama you've probably never seen before. They are more than a decade old and have nothing to do with politics.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: This just coming in from the white house. President Bush has declared what's effectively a technical emergency here In Washington, D.C., because of the inauguration. It authorizes federal aid and stepped up efforts by the department of homeland security and FEMA. This comes on the day we're learning more about just how many people are coming to the area. But it's still a pretty overwhelming concept. Our homeland security correspondent Jeanne Meserve is joining us now live.

Jeanne, what else are we learning?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: There's really no way to reliably predict how many people will come to the inauguration. Estimates range from 1 million to 2 million. It may be the largest crowd in the capitol's history and that poses an enormous challenge.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Port-o-potties side by side, row upon row on the national mall, in preparation for a very big inaugural crowd. A poorly managed crowd can be destructive, even deadly. Just a few weeks ago, a Wal-Mart security guard was trampled by shoppers on the hunt for a bargain. Inaugural officials have consulted a crowd management expert who has studied events like the hajj, the annual pilgrimage to Mecca.

HANI MAHMASSAN, NORTHWESTERN UNIVERSITY: People learned from mistakes that have been made in terms of massing very large numbers of people there, in terms of having hard start where you simply open the flood gates and then get these stampedes.

MESERVE: Washington is used to big gatherings like Fourth of July celebrations and the police know how to handle a crowd. But the challenges on inauguration day could be unprecedented.

CHIEF CATHY LANIER, D.C. POLICE: Information is my best friend.

MESERVE: Text messages, jumbotrons and loud speakers will all be used to communicate with the crowd in an emergency. If long waits lead to frustration and anger, officials have plans to defuse it.

LANIER: We actually have customer service folks that will be walking up and down lines of people, giving them maps and telling them where to go. Kind of being ambassadors to make people feel a little more comfortable with what they want to do.

MESERVE: Officials are already publicizing the basics. Screening checkpoints will open at 7:00 to let the first 300,000 or so people on to the parade route. Backpacks, coolers, strollers, large umbrellas will all be banned. Restrictions will be looser on the mall where the overflow will be sent. Spectators can stake out a mall spot early, though camping is prohibited. Officials deny they are trying to discourage people from attending.

MALCOLM WILEY, U.S. SECRET SERVICE: It's quite to the contrary. Our efforts to make sure people are safe. We'd like for as many people to come as would like to come.

(END VIDEOTAPE)

MESERVE: Some experts say the number of portable toilets, about 5,000 by some estimates, is grossly inadequate for the crowd. Others are worried about food and drink. But planners believe they are as ready as can be but warn this won't are your average day out. People should plan carefully and dress appropriately for the weather.

BLITZER: And this decision by the Bush administration to declare this emergency, Jeanne in Washington in advance of this -- in advance of this -- in advance of the inauguration. I take it this is the first time this has ever happened?

MESERVE: We're still making calls on that. It's certainly going to ease the worries of some of the local officials. I was at a press conference with the mayor, the governors of Maryland and Virginia, they were all talking about the price tag for all this security. They'll be relieved to hear some money will be loosened up for that.

BLITZER: Huge crowds coming. All right. Thanks. Better to be safe than sorry.

As Jeanne notes, it's still a guessing game to see how many will actually gather here in Washington, D.C., for the inauguration. Officials say the crowd could easily top 2 million. That's five times the size of the last inauguration crowd. This is how it looked when an estimated 2.9 million people attended this year's hajj, the Muslim pilgrimage in Mecca in Saudi Arabia. That one extended more than five days. 250,000 may have been present when Martin Luther King Jr. gave his famous speech here in Washington in the 1963 march on Washington. And in 1969, an estimated 400,000 people gathered for the music festival at Woodstock.

They were young, relaxed and photogenic when a photographer took pictures for possible use in a book. Now those early photos of the Obamas, they are revealed. Let's go to CNN's Deborah Feyerick. She's joining us with the story behind these pictures -- Deb?

DEBORAH FEYERICK, CNN CORRESPONDENT: Wolf, you know it's fascinating to look at old photos of people who go on to achieve phenomenal success. One year a photographer captured Michelle and Barack Obama in a particularly unguarded moment in a picture that speaks volumes about the soon-to-be president and first lady.

(BEGIN VIDEOTAPE) FEYERICK (voice-over): Long before they were America's first couple, some 12 years ago, Barack and Michelle Obama posed for photographer Mariana Cook who was on a quest to find out about relationships in America for her book "Couples."

This is a camera you used to shoot the Obamas.

Cook who has shot the likes of playwright Lillian Helman and former French president Francois Miderand was struck by the low-key couple.

MARIANA COOK, PHOTOGRAPHER: They talked easily together. There was no tension between them.

FEYERICK: He is smiling. His face is more open. She's a bit more serious. They are different people.

COOK: They each have their own minds and feelings, and they are very different. And yet, from the body language, you can see how comfortable they are together. She's leaning into him. She's resting her hands on his knee. His hands are open and entirely relaxed. They haven't changed, really.

FEYERICK: Cook says she can't remember why she chose the Obamas, just that many of the couples were referred by word of mouth.

COOK: At the time he was a lawyer and a writer. I guess if I had been told he was going to be president of the United States one day, I would have paid more attention.

FEYERICK: In fact, the Obamas never made it into the book, though a more controversial couple whose name surfaced during the 2008 campaign did. Oh, and Bill Ayers. They made the book.

COOK: They made the book. Bill Ayers made the book.

FEYERICK: The photo which appears in this week's "New Yorker" magazine was accompanied by interviews the photographer did with the couple married four years.

COOK: There's a strong possibility that Barack will pursue a political career, although it's unclear.

FEYERICK: Cook has shot more than 400 portraits since the Obama photo shoot but said something in him stood out even then.

COOK: He really had a vision of what this country needed. There's a depth to him. You can see it in his eyes.

(END VIDEOTAPE)

FEYERICK: Mariana Cook says it's impressive that the Obamas as a couple remain so comfortable around one another, even now.

BLITZER: And they look so much younger in those pictures. Thanks very much. He has thousands of victims who lost millions and millions of dollars. Now there's word of a deal between prosecutors and Bernard Madoff.

And the wild story of a millionaire businessman who might have faked his own death with a plane crash. The latest on what police have just found. That's coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The mysterious crash of a private plane. Investigators say the pilot was trying to fake his own death and now they think they know why. Turns out he's accused of bilking investors and he's now on the run. CNN's Brooke Baldwin is joining us once again.

Brooke, what do we know? What's the latest?

BROOKE BALDWIN, CNN CORRESPONDENT: Wolf, we're learning that Marcus Shranker had planned and placed to skip town on two wheels. We're also hearing he apparently has read about his own disappearance on CNN.com. And he had reason to run.

(BEGIN VIDEOTAPE)

BALDWIN (voice-over): Marcus Shranker appeared to have it all, a multi-million dollar home, planes, the perfect marriage. But according to a new e-mail, allegedly from Shranker, it was a life that was spinning out of control.

TOM BRITT, COLLEAGUE: And at the end of the email, the most disturbing part he said, by the time you read this, I'll be gone. I interpreted that as a suicide note.

BALDWIN: Tom Britt says he got an e-mail from Shranker Monday night the day after authorities say the 38-year-old businessman faked a distress call, parachuted out of his plane over Alabama, leaving it to fly empty on auto pilot, eventually crashing in Florida. In his e- mail, Britt says Shranker claimed the crash was an accident. He also wanted to defend his financial firm and recent allegations of securities fraud.

BRITT: He had no wrongdoing in that, that him and his wife did everything they could to try to save that business. And that that really wasn't his fault.

BALDWIN: Since Shranker's disappearance, the state of Indiana has issued two warrants for his arrest. The charges? Investment fraud.

UNIDENTIFIED MALE: This guy's particularly brash. And he's been very difficult to work with in terms of trying to prosecute him, and clearly very confident of himself and his practices. So it's been somewhat difficult getting closure on this.

BALDWIN: So confident, the U.S. marshals say Shranker stashed a motorcycle last Saturday in this storage facility in Harpersville, Alabama. Wanda Brooks says her sister rented this unit to Shranker who appeared in person with a red Yamaha in tow.

WANDA BROOKS, OWNER, MINI-STORAGE: He told her on Saturday he said I just need it for tomorrow and I'll be back Monday.

BALDWIN: By Monday night, the motorcycle and Shranker were gone.

BROOKS: He talked to her for awhile. She said he was really nice, a gentleman. She had no idea about it until yesterday afternoon when she saw the news. And when she saw his face, she said, I rented him that building.

(END VIDEOTAPE)

BALDWIN: This afternoon, an Indiana judge has already set Shranker's bail for $4 million in cash. Wolf?

BLITZER: Wow. Thanks for that story, Brooke, Brooke Baldwin is in Harpersville, Alabama, staying on top of it. Appreciate it.

By the way, Hillary Clinton promising all hands on deck in her State Department but facing some tough questions about her husband's charity fund. The new details of her confirmation hearing. That's coming up.

He's accused of bilking investors out of billions of dollars. But it could be years before Bernard Madoff goes to prison, if ever. Will there be a plea deal? We're watching this story and have new information for you right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's checking in with Jack Cafferty. He has "The Cafferty File" -- Jack?

CAFFERTY: Indeed I do. The question this hour: What would you like President Bush to say in his farewell address to the nation on Thursday night?

Anj in California: "Didn't we already hear his feeble attempt to rewrite his presidency at yesterday's news conference? I'd like him to keep this to one word, good-bye."

Mitchell in Arkansas: "That he had to cancel for lack of interest."

Jan in Georgia: "I'm leaving five days early. Tough."

Al in Iowa: "If the man had a half a brain or a fragment of a conscience, he would apologize to the families of the 100,000 dead Iraqis whose blood is on his hands instead of twisting the truth into a web of lies and distortions to create for himself a fictional legacy."

Keith in Cleveland writes: "I think we've all misunderestimated him. He's to be commended for having a mind of his own and language of his own. Do they teach English in Texas? Forget the farewell speech. I know less after he talks than I did before."

Paul in South Carolina: "I tried to clean up the dangers and financially irresponsible policies created by Carter and Clinton but there just wasn't enough time."

Sandra in Texas writes: "I don't care what he says, I won't be watching. After living through eight years of 9/11, Katrina, the Iraq debacle, warrantless wiretapping, torture, et cetera, and finally, the largest financial crisis since the great depression, I just want him to go away. Don't say goodbye. Just go."

And Joe writes: "I'd like to hear President Bush say, wow, I really had no business being here. My bad."

If you didn't see your e-mail here, go to my blog CNN.com/CaffertyFile and look for yours. We got a lot of mail on this particular question. Some of it's pretty funny.

BLITZER: Did anybody say anything nice about the president?

CAFFERTY: I don't know. I didn't read them all.

BLITZER: All right. Just checking. Jack, thank you.

CAFFERTY: Go to my blog and find out.

BLITZER: We will.

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

Happening now, the breaking news, embarrassing revelations about Barack Obama's choice for treasury secretary. Could this sink the nomination and damage the Obama economic rescue team?

Also this hour, Hillary Clinton's power grab. She gives a heads- up to the senate about the muscle she expects to bring to the State Department.

The president-elect pleads with congress to show him the money. But even a personal appeal may not be enough to convince some democrats suffering from what's being called bailout burnout. All that, and the best political team on television.

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

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