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Are Stocks a Good Deal Now?; Enemy Combatants No More; Creating Jobs with Stimulus; Selling Gold for Cash

Aired March 13, 2009 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thank you very much, Rick. Happening now, sale of the century, the Obama administration says it's a good time to invest in the economy and take advantage of some remarkable deals.

The U.S. orders more federal agents to the Mexican border, the backdrop for a deadly drug war. And Hillary Clinton will personally deliver a message about the growing violence.

And a child torn between two countries, it's being likened to the Elian Gonzales custody case a decade ago and now President Obama is likely to get directly involved. I'm Wolf Blitzer in CNN's command center for politics and the news that's happening now. You're in THE SITUATION ROOM.

Check it out, Wall Street's best week this year, the Dow Jones Industrial closing up again just moments ago the fourth straight day of gains. It's positive reinforcement to the Obama administration's more upbeat message today, which essentially is this. Stop. Repeat, stop being afraid and start investing again. Let's go straight to our White House correspondent Dan Lothian, he's got the latest. Dan?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Wolf, you know they acknowledge here that there are a lot of Americans who are afraid and every day that there's bad news, that feeling gets a lot worse. And that's why you're seeing a more upbeat message coming from this White House.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): With stocks, housing, and jobs in the tank, the president's top economic adviser suggested some may consider this crisis the sale of the century. And Larry Summers is advising companies sitting on the sidelines to jump in.

LAWRENCE SUMMERS, DIR., NATIONAL ECONOMIC COUNCIL: Those who have sound long-term strategies, who have investments that they want to make, who see productive opportunity are going to find this a very good moment. There are a very large number of things that are on sale today.

LOTHIAN: President Obama made a similar endorsement of the stock market last week.

OBAMA: Profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it.

LOTHIAN: The White House was quick to knock down suggestions that Mr. Obama was encouraging Americans to buy. Spokesman Robert Gibbs was at it again.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I don't think today's speech was designed to provide stock tips for the American people. But, instead, to demonstrate a road map forward that the administration and the economic team have developed to get our economy moving again.

LOTHIAN: And one of the cylinders to get the economic engine moving again appears to be confidence. In recent days, the administration has made a clear shift with more positive talk. From the president --

OBAMA: We're going to get through this. And I'm very confident about that.

LOTHIAN: And those around him.

SUMMERS: What we need today is more optimism and more confidence.

(END OF VIDEOTAPE)

LOTHIAN: The administration says that it's really too early to gauge the impact of their efforts and they say that they are encouraged, though, by some of the small signs. But jumping on that controversial banner that we saw during the Bush administration, Robert Gibbs, the spokesman here said today we haven't flown any mission accomplished banners. Wolf?

BLITZER: He's heading off to California I take it next week Dan, what's that all about?

LOTHIAN: He really is. And as you know Wolf, the president just feels so much more comfortable when he can get outside of the White House bubble and he's going out to California in part to host a town hall meeting, a chance to hear some of the concerns from the public and to give some reassurances. Wolf?

BLITZER: Dan Lothian at the White House. Thank you.

The Obama administration is getting rid of another vestige of the Bush White House, at issue terror suspects held at Guantanamo Bay and two words, loaded with controversy, those words, enemy combatant. Let's get to the breaking news, our homeland security correspondent Jeanne Meserve has the details. Jeanne, what's going on?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, that term, enemy combatant which allowed the U.S. to hold suspected terrorists for extended period of time without filing criminal charges has just been erased. In a dramatic reversal of Bush administration policy, the Obama Justice Department now says detainees will not be held on the president's authority as commander in chief but based on powers given to him by congress and international treaties. The Justice Department also says that detainees can only be held if their support of al Qaeda or the Taliban are substantial. That term substantial is not defined.

BLITZER: Jeanne, the president has already made a commitment to shut down the prison camp at Guantanamo Bay within a year, right?

MESERVE: That's right. The Justice Department has announced its intention to close Guantanamo Bay and review the cases of all the individuals held there. It is unclear exactly what impact this new higher standard will have. I should say that Attorney General Eric Holder says, quote, "It is essential that we operate in a manner that strengthens our national security, is consistent with our values and is governed by our laws." But you can bet, that is not the last comment on this. Wolf?

BLITZER: All right, no more enemy combatants at least for now. Let's see what happens. Jeanne, thanks very much. Let's check in with Jack Cafferty, he has the Cafferty file. Jack?

JACK CAFFERTY: Wolf, as drug-related violence escalates in Mexico there's been chatter this week about the possibility of sending U.S. troops to the border. President Obama says states including Texas have asked for National Guard troops to be deployed to the border but the pentagon says it has not received specific requests to do so. A pentagon spokesman says the U.S. is already providing the Mexican government with five helicopters, a marine surveillance vehicle, and hand held scanners. He adds that any troops that would be sent would only protect the U.S. side of the border and that there are no talks at this time of sending them into Mexico.

The chairman of the Joint Chiefs of Staff, Admiral Michael Mullen, went to Mexico last week and is highlighting the need to work more with Mexico's military. He says the violence is rising there because the government is taking on the drug cartels more directly and that this is an opportunity for the U.S. to cooperate. Homeland Security Secretary Janet Napolitano says the U.S. will soon send a large contingent of federal drug agents to the border. Among other things they will step up car inspections.

Mexican officials say the violence killed more than 6,200 people last year and more than 1,000 in the first two months of this year. One U.S. official has called Mexican drug cartels the biggest organized crime threat facing this country. So here's the question. In light of increased drug related violence in Mexico, should the U.S. send troops to the border? Go to cnn.com/caffertyfile and post a comment on my blog. Wolf?

BLITZER: I'm going to go over to the Department of Homeland Security next week Jack and interview the new Homeland Security Secretary Janet Napolitano. This subject certainly will be high on the agenda. Thank you.

CAFFERTY: Yeah, I look forward to.

BLITZER: Next Wednesday. Thank you. He's on the wanted list in Mexico for being an alleged drug kingpin and he's on the Forbes list of top billionaires. Some say that's outrageous. What's going on?

Plus, he's been behind bars for one day. Is there really a chance that the Wall Street swindler, Bernard Madoff, could get out of jail? And call it if you will the money train. More than a billion stimulus dollars are going to Amtrak and its most powerful rider insists it's money well spent.

(BEGIN VIDEO CLIP)

JOE BIDEN: Let's get something straight here. Amtrak has not been at the trough. Amtrak has been left out. Amtrak has been left out much too long

(END OF VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Two major stories we're following right now. Some American teens tell their dramatic story of being hit men for Mexican drug cartels. Stand by.

And the first lady giving a network TV interview. You'll find out what Michelle Obama has to say today.

Could the killings, kidnappings, assassinations and drug war violence come to your city? What's happening in northern Mexico could spill over into the United States. The Homeland Security Secretary Janet Napolitano is sending a large contingent of extra federal agents to the southern border. They will increase the search of cars and more intelligence analysts will be on the border as well.

Meanwhile, the Secretary of State Hillary Clinton, will go to Mexico as a sign of America's support in fighting the drug cartel. The State Department says that will happen this month.

One man who officials say is partly responsible for the drug- fueled violence in Mexico and elsewhere has earned a very high honor. Let's bring in our homeland security correspondent Jeanne Meserve once again. She's got details of what is a strange, strange development.

MESERVE: Yeah, some people are not happy about this at all. Despite the global recession, Bill Gates and Warren Buffett are still at the top of "Forbes" magazine's annual list of the world's richest billionaires. But joining the software mogul and the investor on the list this year, Mexican drug lord Joaquin Guzman Loera, known as el Chapo. He is tied to 701st place with an estimated fortune of $1 billion. Guzman Loera heads the Sinaloa, a drug cartel that is one of the largest in Mexico, responsible for much of that surging violence we've been talking about along the U.S. Mexican border.

BLITZER: What's his background, Guzman?

MESERVE: He is 54 years old, he has a 30 year history Wolf of drug trafficking across north, central and South America. In the past few weeks, 781 members of his cartel have been arrested here in the U.S. and the DEA is offering a $5 million reward for his capture. Mexican officials are not at all happy that this drug kingpin is sharing the spotlight with the likes of Gates and Buffett. Mexico's attorney general said "Forbes" is quote, "Comparing the deplorable activity of a criminal with that of honest business men." "Forbes" magazine hasn't commented thus far but one reader of the magazine's website posted this comment, "Why did you leave Bernie Madoff off of your list." Wolf?

BLITZER: I guess there are some sensitivities there. All right Jeanne, thanks very much.

Where might terrorists who are bent on killing Americans and others call home in the future? Not in Iraq if Iraq's prime minister can help it. Speaking today during a visit to Australia, Nuri al Maliki said Iraq will not be a terrorist safe haven after U.S. combat troops withdraw. This comes amid fears that Iraq's lower level of violence could spike again now that the U.S. plans to remove all combat troops by the end of August 2010.

About 24 hours after Bernard Madoff went to jail in handcuffs, could his days in a cell like this one, take a look at it, be numbered?

And the outbreak of a child torn in an international custody case. Remember the infamous Elian Gonzales case? President Obama may get involved right now in something similar. Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The man President Obama wants as the next United States ambassador to Iraq is getting some serious criticism right now and it's coming from republican senators. Let's bring in our senior congressional correspondent, Dana Bash. Dana, they are questioning Chris Hill's experience. What's going on?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Right, this is Senator John McCain and Senator Lindsey Graham who are questioning his experience. But you know, let's look at Chris Hill. He has a long career in foreign service. Let's take a look at his experience in general. We have it here on the wall. First of all, most recently, he was ambassador to South Korea and while he was there he also was the U.S. leader in six-party talks on North Korea's nuclear issue.

Before that, he also was ambassador to Poland. He was a special envoy to Kosovo. He had a lot of experience in Europe Wolf. But look at the Middle East. That is an area where Chris Hill actually does not have experience, obviously, to be the U.S. ambassador to Iraq, that would be a big issue and that's why John McCain and Lindsey Graham are raising concerns. In fact, I spoke with Senator Lindsey Graham just a few hours ago and here's what he said about this

He said no matter how talented, he, meaning Chris Hill may be, he's coming into a position where he has no background. Let's go back to the map, Wolf, because I want to look back at North Korea and South Korea. The other thing that Senator McCain and Senator Graham are saying is that they don't think he did a very good job particularly in leading those six-party talks. Democrats say, look, he was just doing the work of the Bush administration whom he was working for.

BLITZER: The White House Press Secretary as you know Robert Gibbs was asked about Chris Hill earlier today, he defended him. Listen to this.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The political disputes that stand in the way of continued progress in Iraq, many that have been outlined for years, call for somebody who has the unique ability to both understand and solve those challenges. And we believe that Chris Hill possesses the skills to do exactly that.

(END OF VIDEO CLIP)

BLITZER: All right. So you covered the Hill, he has to be confirmed by the Senate Foreign Relations Committee and the full senate to be the next U.S. ambassador to Iraq. How much trouble is he in?

BASH: Well you know before coming on here I learned that John McCain, who has raised the concerns here, that he's actually going to meet with Chris Hill early next week. Talk to him about his post and assess whether or not Senator McCain will oppose Hill. You know, because the question -- one of the questions is, will either of these senators, any of these senators Wolf, put a hold on the nomination because the rules allow any senator to block any nominee and we might find out after this meeting next week.

BLITZER: The democrats have the majority in the U.S. senate, what are they saying?

BASH: Well you know they're publicly beginning to rally around Chris Hill. In fact, we have a statement that just came out from the Senate Majority Leader Harry Reid and I'll read it to you. He said, "Hill is precisely the kind of diplomat America needs in the Middle East and Iraq where a long-term resolution must be achieved politically and diplomatically, not militarily. I look forward to confirming him as quickly as possible." Now Wolf I have to tell you that's in public, in private I did speak to a senior democratic aide who said look, the reality is Chris Hill doesn't have experience in the Middle East and he's going to have some tough questions in a confirmation hearing. I should also tell you that confirmation hearing hasn't been set yet at the senate appropriations committee.

BLITZER: That's a sensitive issue indeed. Dana, thanks very much for that. Dana Bash is our senior congressional correspondent.

Zain Verjee is off today, Fredericka Whitfield is monitoring some other important stories incoming into THE SITUATION ROOM right now. Fred, what's going on? FREDERICKA WHITFIELD, CNN ANCHOR: Hello to you Wolf. The man who could be Wall Street's biggest swindler ever is trying to leave jail just after a day after arriving. Bernard Madoff's lawyers are appealing a judge's decision to put the financier behind bars while he awaits his sentence. Madoff pleaded guilty yesterday to 11 felonies. He confessed to ripping off customers by carrying out a $50 billion investment scheme. He is to be sentenced in June.

When kids at an Arkansas daycare center had a sip of their blue drink, workers weren't expecting a trip to the hospital. But investigators say the kids were actually given windshield wiper fluid by mistake. Ten children were sickened. One is still being hospitalized. Hospital officials say a daycare worker mistakenly put the wiper fluid in the refrigerator after shopping and then actually served it thinking it was Kool-Aid, giving that to the kids.

Former first lady Barbara Bush, is out of a Texas hospital after what doctors call a very quick recovery from heart surgery. Nine days ago surgeons replaced her aortic valve with a pig valve. The 83 year old says this Friday the 13th is a lucky one for her because she is going home feeling strong.

And NASA is now shooting for a Sunday launch of the space shuttle, that's if the repairs to Discovery actually work. The shuttle's fuel tank was leaking hydrogen gas forcing NASA to scrub Wednesday's launch. The space agency says it won't know whether repairs did the trick until the tank seals again during a launch attempt. Wolf?

BLITZER: All right Fred, thank you.

All aboard the economic stimulus train that is. Right now Amtrak is getting more than a billion in federal funding. Vice President Joe Biden says your taxpayer money will be put more -- will put more of you to work as well as improve your experience on the nation's largest passenger rail system. Our congressional correspondent Brianna Keilar is working the story for us. Some controversy here Brianna?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Yeah and the question as well is what are taxpayers going to be getting for their money Wolf? Well they aren't necessarily going to be getting cheaper tickets though it could mean a faster commute for some people. These dollars will fix up Amtrak's aging rail lines and tunnels across the country with a lot of money going towards the busy northeast corridor, between Boston, New York, and Washington. The fastest train between New York, the Amtrak Acela, takes about three hours, could shrink to two and a half and a big defender of giving Amtrak this money, as Wolf mentioned, Vice President Joe Biden.

(BEGIN VIDEO CLIP)

JOE BIDEN: You take people off the road. If we shut down the northeast corridor you would have to build seven new lanes of I-95 just to carry the people that ride this train every day. So I want to be very blunt with you, I'm tired of apologizing for help for Amtrak. It is an absolute national treasure and necessity. Now, for too long we failed to make the investments we should have been making in Amtrak in order to provide the kind of reliable and secure inner city rail service we need.

(END OF VIDEO CLIP)

BLITZER: You know but there are still a lot of critics. Joe Biden rode the train, he was a commuter between Wilmington and Union Station here in Washington for literally decades but the critics are speaking up.

KEILAR: And the critics here Wolf are republicans because Amtrak already is subsidized by the federal government to the tune of about $1.3 billion. That's each year. Without that money, Amtrak would go belly up. Critics say it's a poorly-run company, this stimulus money is just throwing good money after bad.

BLITZER: The key question though will this create jobs because, after all, the stimulus package is supposedly designed to create a lot of jobs.

KEILAR: It's expected to create thousands of jobs. But the specific overall number, Amtrak hasn't released that yet.

BLITZER: They are insisting it will create thousands of new jobs?

KEILAR: It is expected to that's what they say with the different projects that they have going.

BLITZER: Brianna thank you very much. Brianna Keilar reporting.

Could we be seeing a turn around in the financial markets? The Dow has seen the best week so far this year.

And a stunning claim the NAACP accusing two of the nation's biggest mortgage lenders of racism in their lending practices. Stand by for details.

(COMMERCIAL BREAK)

BLITZER: To our viewers here in THE SITUATION ROOM, happening now. The call to kill. U.S. teenagers hired as hit men for a Mexican drug cartel. How were they recruited and why this is just the beginning of the story. Stand by.

Plus, he was a victim of the Nazis. Now his widow says she is a victim of the Wall Street swindler Bernard Madoff. The sacred artifacts she is now going to be forced to sell.

And just trying to get to school is a lesson in danger. The savage attacks targeting girls who dare to learn. I'm Wolf Blitzer, you're in THE SITUATION ROOM.

It's worth looking at again, if you have money in the markets an upbeat ending to the best week for stock prices this year. Poppy Harlow of cnnmoney.com is joining us. Poppy the market is up again once again today. Actually you're over there Poppy. There you are. The markets up again once today. Are we at a turning point right now or is it way too early to come to that conclusion?

POPPY HARLOW, CNNMONEY.COM: It is early but we'll take it four days in the green for stocks Wolf. Believe it or not the rally this week on Wall Street led by the banking stocks. Take a look at these charts here. Bank of America, Citi, JP Morgan. What we saw with Citi, they rose 73 percent this week alone. The reason for all of this Wolf, positive statements out of these three men. Let's start with Ken Lewis, the CEO of Bank of America issuing a statement earlier this week saying, listen, my bank made money in the first two months of 2009. We will be profitable this year and he says there is just too much ammunition being fired right now from too many directions, the government particularly not to take this beef down.

We heard from Dick Parsons, the chairman of Citigroup on Thursday telling Reuters at this point he does not think that Citigroup needs more capital from the government saying, it is one of the best capitalized banks in the world right now. Saying he has faith in the viability of Citi being held in private hands. That was welcomed by investors. And then Vikram Pandit the CEO of Citigroup on Monday in a memo to employee saying the bank made money in the first two months of this year. Again, he thinks the market is undervaluing Citigroup. At this point Wolf it is all about what these men have said. They talked up these stocks that helped the market this week.

BLITZER: How much more improvement is needed to really turn this economy around?

HARLOW: A lot is needed. Let's pull up the bank stocks over the past year. The gains this week will take them, there's a lot further to go. Take a look, Bank of America, Citi, JP Morgan folks, these are the stocks over the past year, how the stocks have performed over the past 52 weeks. When you look at Citigroup, Wolf it's still down 92 percent. And if we hear more talk of nationalization at these banks, you can bet investors are going to get worried because that means that common stockholders would be wiped out. There is still very (INAUDIBLE) to get back into the bank stocks. We'll take this week's gains. We have a lot further to go. Wolf?

BLITZER: Poppy Harlow from CNNmoney.com. Thanks Poppy very much.

Let's bring in Jared Bernstein right now, he's joining us from the north lawn of the White House, he's the chief economist to Vice President Joe Biden. Jared, thanks very much for coming in.

JARED BERNSTEIN, CHIF ECONOMIST TO V.P. BIDEN: My pleasure, Wolf.

BLITZER: Is it over for the banks? Will they no longer need more funding from the federal government?

BERNSTEIN: Oh I think that goes much too far. We want to very much appreciate. I know Poppy gave you a great review. We definitely want to appreciate the week we're coming out of now. I think lots of market actors have observed that there are aspects of our financial markets that are under priced and some folks are going to get back in and that's a good thing.

But, remember, we're not crafting our policies on financial markets based on a good day, a good week, or, for that matter, a bad day or a bad week.

(CROSSTALK)

BLITZER: Is it realistic, Jared, to think these banks, who got billions and billions of dollars in bailout money, the so-called TARP money, will ever repay taxpayers those moneys -- those moneys?

BERNSTEIN: I think it's absolutely realistic.

I mean, I think one of the things that we have tried, and we're going to do a lot more of that going forward, is, every time we're making an investment in one of these institutions to help clear some of the toxic assets off their balance sheet, we're taking -- the taxpayer, I should say, is taking a share in that investment.

And, so, as we share in the downsides, absolutely, we will share in the upsides.

BLITZER: China says now it's beginning to get worried about the -- the credibility of the U.S. financial system.

Listen to the Chinese premier, because his words are ominous, given how much money the United States borrows from China.

(BEGIN VIDEO CLIP)

WEN JIABAO, CHINESE PREMIER (through translator): Of course, we are concerned about the safety of our assets. To be honest, I am a little worried. I call on the U.S. to honor its words to stay a credible nation and to ensure the safety of Chinese assets.

(END VIDEO CLIP)

BLITZER: All right. They are watching around the world, including in China, Jared, right now.

Speak for the United States government and -- and see if you can reassure them.

BERNSTEIN: I don't think that's a very heavy lift, in the following sense.

Look, it's well known, Wolf -- I'm sure you -- you cover this all the time -- the extent to which economies throughout the globe are facing really serious economic headwinds. And we have -- we have known that here for a while.

And no one can doubt that we have hit the ground running in crafting a set of plans to address the deep challenges we face. While all this is going on, what is the safest, most reliable bet in terms of borrowing from any government the world round? It's U.S. treasury debt. That remains the case today, absolutely clear signal in terms of the -- the quality of our debt.

And I think the important thing to -- to -- to add to that -- to add to that equation is the extent to which we are -- are forcefully addressing the challenges we face, with a recovery package, with a package targeted at financial markets, housing markets, all in the context of a fiscally responsible budget.

So, I think if you look the world round, this is the place where you want to see, both on the policy and on the lending side, that we're taking the right actions.

BLITZER: And they are still parking a lot of their money, whether from China, or Japan, or Saudi Arabia, or elsewhere, in the United States.

BERNSTEIN: That's exactly my point. That's exactly my point.

BLITZER: All right, Jared, Mark Zandi, a man you probably know, an economist at Moody's Economy.com...

BERNSTEIN: I know Mark well.

BLITZER: ... I spoke with him yesterday and asked him if he believes that another, yet another, stimulus package -- it would be the third, if you include President Bush's economic stimulus package last year for $150 billion, the recently passed 4800 billion Obama stimulus package -- I asked him if a third one was necessary.

And listen to what he -- what he told me.

(BEGIN VIDEO CLIP)

MARK ZANDI, CHIEF ECONOMIST, MOODYSECONOMY.COM: Yes, I think the odds are pretty high that we will need another one. We have underestimated the severity of this economic crisis all along, and there's still a good chance that we're underestimating it now, and that the $800 billion package, while large and well-designed, won't be enough.

(END VIDEO CLIP)

BLITZER: And he went on to say maybe another 400 or so billion dollar package should be seriously contemplated.

Are you doing that?

BERNSTEIN: You know, I really think it's too soon to seriously contemplate going back to that well.

I mean, the Recovery Act, as you mentioned, $787 billion, largest stimulus package, largest kind of a Keynesian injection into this economy that -- that we have ever undertaken.

And we have got to give this plan a chance to work. You know, as we speak, this money is going out the door, being implemented -- implemented quicker than any such package I have ever seen in my lifetime as following these kinds of government interventions.

Making-work-pay tax cuts are going to get into people's paychecks April 1. We have extended unemployment insurance benefits out the door, actually helping people who are facing labor market difficulties right now. We have state fiscal relief out the door, reaching some of those states.

Infrastructure, shovels are in the ground, as we speak. So, we have absolutely got to give this plan a chance to work before we go back to that well.

BLITZER: My full interview with -- with Mark Zandi will air tomorrow, 6:00 p.m. Eastern, in THE SITUATION ROOM, our Saturday edition.

Jared, thanks very much for coming in.

BERNSTEIN: My pleasure, Wolf.

BLITZER: Jared Bernstein is chief economist to Vice President Joe Biden.

One family's heartbreak has become an international incident. Some are likening the custody case to the famous Elian Gonzalez dispute a decade ago. Now President Obama may be getting ready to step directly in.

Also ahead, he's gone from being the new face of the GOP to being, at least in the eyes of some, an embarrassment. In our "Strategy Session": Who is piling on the new party chairman?

And where will detainees go when the Guantanamo Bay prison camp is closed? The U.S. is asking two countries right now for help.

Stand by. We will tell you what is going on -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Need work? Perhaps you should consider one very high- profile option.

Our senior political analyst, Bill Schneider, is standing by. He's joining us.

All right, where can we find these high-profile vacancies right now, Bill?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Try Washington, D.C., Wolf.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Unemployment has been rising, but there's one place that's having trouble filling positions: the Obama administration. Of nearly 500 high-level appointments that require Senate confirmation, only 34 have been confirmed so far.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: We are -- we are continually looking for good people. We're continuing to get them through a very vigorous process to serve.

SCHNEIDER: Actually, the Obama administration is ahead of where the George W. Bush administration was and nearly equal to where the Clinton administration was at this point.

GIBBS: I will refer again to many of those statistics that demonstrate that we're ahead of the game in filling critical positions.

SCHNEIDER: This week saw the new labor secretary sworn in.

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: Hilda Solis will demand to be heard. Ladies and gentlemen, why do I repeat that phrase? We have not heard much from this department in a long time.

(LAUGHTER)

(APPLAUSE)

SCHNEIDER: That leaves three Cabinet-level nominations still to be confirmed, secretary of commerce, secretary of health and human services, and U.S. trade representative. That's more unconfirmed Cabinet positions at this point than any of the last five presidents.

Deputy secretary is the number-two job in each department. Twelve out of 15 deputy secretaries have not yet been confirmed. The Treasury Department is facing the biggest challenges.

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: Critical parts of our financial system are damaged and are working against recovery. This is a very dangerous dynamic.

SCHNEIDER: But 17 out of 19 top Treasury positions are still vacant. The job is getting done, the White House says.

GIBBS: What's been done in a few short weeks with the Treasury Department exceeds anything that might have been imagined just a few years ago.

(END VIDEOTAPE)

SCHNEIDER: Why is the Obama administration having such a tough time filling these jobs?

Well, because it's imposing tough standards, and appointees are facing some tough scrutiny. In recent weeks, we have seen four people withdraw their names from consideration for top Treasury Department positions, including two for deputy secretary -- Wolf.

BLITZER: The vetting process clearly intense. All right, Bill, thank you -- Bill Schneider reporting.

Take a look at this. It's an adorable portrait, except for the fact that father and son have been torn apart. It's an international custody case. And President Obama may -- repeat, may -- be ready to get directly involved in.

Let's go to our foreign affairs correspondent, Jill Dougherty.

It potentially could be on the president's agenda as early as tomorrow, Jill.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: It could be, Wolf.

And, tomorrow, President Obama meets with the Brazilian president. And, you know, it's a very high-profile meeting. There are lots of important subjects on the agenda, energy security, the global economic meltdown. But one subject seems to be overshadowing a lot of this.

And that is the saga of an 8-year-old boy.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): For more than four years, David Goldman has been fighting to get his son, Sean, back from Brazil.

Now this family tragedy has exploded into an international custody battle just as President Barack Obama meets at the White House Saturday with Brazilian President Luiz Inacio Lula da Silva.

DAVID GOLDMAN, FATHER: On a family vacation.

DOUGHERTY: David Goldman's Brazilian wife took Sean, then 4 years old, to Rio their son for a vacation, but never returned. She filed for divorce, remarried, but died in childbirth, leaving Sean with his Brazilian stepfather.

GOLDMAN: I believed that -- that he would be coming home and we would finally be able to reunite.

DOUGHERTY: Secretary of State Hillary Clinton has taken a personal interest in the case, pursuing it with her Brazilian counterpart. Thursday night, she phoned David Goldman.

THOMAS SHANNON, U.S. ASSISTANT SECRETARY OF STATE: And underscored how important this case is to -- to the United States, and -- and how hopeful we are of a positive resolution as -- as quickly as -- as possible.

DOUGHERTY: A Brazilian judge granted custody to the stepfather. Goldman is appealing. But both the U.S. and Brazilian governments agree Sean Goldman should be returned to his biological father.

But a senior Brazilian diplomat tells CNN, "We have an independent judiciary in Brazil, and we cannot interfere."

Goldman is in Rio this week, able to visit with Sean. His last visit, he says, broke his heart.

GOLDMAN: He asked me where have I been for this amount of time, how come I never came to visit him.

(END VIDEOTAPE)

DOUGHERTY: So, I talked with the family adviser for the Goldman -- for Mr. Goldman today, and he said that the family is hoping for some type of resolution by the end of the month -- Wolf.

BLITZER: We will see what happens. You will stay on top of the story, Jill, for us. Thank you.

Bernard Madoff scammed, swindled many victims from virtually all their money. Now his crimes are forcing one family to do something unthinkable to so many people: sell items that are sacred.

And they killed without conscience and were paid to assassinate their targets. Now some American teenagers are revealing chilling stories as hitmen for Mexican drug cartels.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's get right to our "Strategy Session."

Joining us, the Democratic strategist and former Clinton campaign spokesman Mo Elleithee and Republican strategist John Feehery.

Listen to this DNC ad, very cute, very funny, going after the Republicans for constantly saying no. Listen to this.

(BEGIN VIDEO CLIP, DEMOCRATIC NATIONAL COMMITTEE AD)

UNIDENTIFIED MALE: No.

UNIDENTIFIED MALE: No.

UNIDENTIFIED MALE: No.

UNIDENTIFIED MALE: No.

UNIDENTIFIED MALE: No.

UNIDENTIFIED MALE: No.

(END VIDEO CLIP)

BLITZER: All right, there they are, the leaders.

What do you think about that?

JOHN FEEHERY, REPUBLICAN STRATEGIST: Well, Satchel Paige says: Don't look over your shoulder. Someone might be gaining on you.

And it might be the Republicans gaining on the Democrats, because they are spending all their time looking over at the Republicans.

The fact of the matter is, Republicans are going through a period where they're saying no to a lot of big spending, a lot of bad taxes. And you know what? That's not a bad strategy. And if the Democrats want to highlight that, in five, 10 years, when we have stagflation, please will remember that the Republicans said no to this philosophy.

BLITZER: It was John Boehner, Eric Cantor, and Mitch McConnell, the Republican leadership in the House and Senate.

And Eric Cantor issued a statement after this funny DNC little Web ad came out, saying, "If Democrats want to highlight the plan Republicans designed and gave to the president that said no to government waste, no to tax increases, no to saddling every child in America with $70,000 of debt, and yes to creating small-business jobs, we applaud them for getting our message out."

I guess that was a pithy little response.

MO ELLEITHEE, DEMOCRATIC STRATEGIST: Well, what they have been saying no to is cooperation. And what they have been saying no to is offering up their own plan.

We haven't heard anything from the Republicans.

BLITZER: Well, he says they did have a plan that they offered up that the White House and the Democrats in Congress simply ignored.

ELLEITHEE: When the president went to Capitol Hill to make his case for his stimulus plan, the Republican leadership in the House said, you know what? Told all their members, we -- vote no. They said, vote no on this, before the president even arrived on the Hill.

BLITZER: Is that true?

FEEHERY: Well, they said vote no because the package had already been done before the Republicans even had a chance to say yes to things that they wanted. And they had a plan that would be half the cost and twice the jobs. And the Democrats said, thanks, but no thanks. We're going to -- Nancy Pelosi wrote her own plan, no Republican input. So, they had to say no.

BLITZER: If there's another economic stimulus plan down the works, it would be the second Obama stimulus plan, the third overall, since President Bush had one last year.

Do you think they will be greater or less cooperation -- I guess there couldn't be even less cooperation -- greater cooperation between the Democrats and the Republicans?

ELLEITHEE: Well, I think the first point is, let's give this stimulus plan some time to work. And it's starting to -- starting to work in states across the country. Look, I hope, moving forward, that the Republicans in the -- in the Congress are more willing to work with the Democrats, are more willing to work with the president. The -- there have been a number of Republican governors that have stretched out their hand and said, we're willing to work with you.

And I hope that the Republicans in Congress take a lead from some of their counterparts out in the states.

BLITZER: If there is another stimulus plan, do you think they will be more cooperative?

FEEHERY: Well, it depends. If it looks like the first stimulus plan, probably not. If it's actually a plan that will work, with better tax relief, better things to help small-business men, and smarter spending, they might cooperate.

BLITZER: Here's what Dana Milbank of "The Washington Post" said earlier today on "AMERICAN MORNING," when he was asked about the prospects of Michael Steele, the chairman of the Republican Party, surviving this current uproar.

Listen to this.

(BEGIN VIDEO CLIP, "AMERICAN MORNING")

DANA MILBANK, CNN POLITICAL CONTRIBUTOR: Yes, I think -- to put it lightly, I think it's safe to say that Chairman Steele has set the land speed record for going from zero to complete albatross in all of 40 days that he's been in office.

(END VIDEO CLIP)

BLITZER: All right, is that too harsh?

FEEHERY: You know, he's had a little tough start here. But, you know, it's OK.

As long as he can get his act together, stay disciplined, on message -- the biggest problem he has got is, he's kind of going all over the place, and saying a bunch of things to a bunch of people, and not having a disciplined message. He needs a disciplined message. He needs to spend more time on the organization, because, at the end of the day, if he's successful, it will be the organization.

And I think one thing he's doing that is good is, he's trying to widen that tent, so we have all kinds of people that flock to the Republican Party.

BLITZER: Well, he got into -- some controversy, because he suggested there was a place in the Republican Party for those who support abortion rights for women.

ELLEITHEE: Yes, look, I like Michael Steele. I think a lot of people like Michael Steele. And I think he has got potential to be a strong leader for the Republican Party. But -- but the problem isn't actually Michael Steele. I think the problem is, the Republican Party is -- is adrift right now. It doesn't know what direction it wants to go in. When Michael Steele repudiated Rush Limbaugh for saying, "I want the president to fail," he then backtracked and apologized.

That's just one instance of how this party seems to be drawn back to being the party of no, party wanting to fight the old ideological battles of the past.

BLITZER: We will leave it there, guys. Thanks very much.

ELLEITHEE: Thanks.

BLITZER: President Obama is making a change in the war on terror. Stand by for a full report on his latest move to undo a controversial Bush era policy.

And Afghan girls determined to go to school, despite the threat of having acid thrown in their faces.

And we're investigating new allegations of racism in the subprime mortgage crisis. Two lenders are now being sued. We will have details right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: It's become an increasingly trend in this economy, trading gold for money.

Let's go to CNN's Carol Costello. She has the story.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP, AD)

UNIDENTIFIED FEMALE: I sent in my diamond wedding band from my first marriage and got money the very next day.

(END VIDEO CLIP)

CAROL COSTELLO, CNN CORRESPONDENT (voice-over): We've all heard the cheesy commercials.

(BEGIN VIDEO CLIP, AD)

ED MCMAHON, ENTERTAINER: Now is the time to send your unwanted gold for cash.

(END VIDEO CLIP)

COSTELLO: Who knew so many would take Ed's idea and run?

UNIDENTIFIED MALE: This is your 14-carat.

COSTELLO: Selling gold has been, well, a gold mine for places like U.S. Gold Buyers in New York.

JOSE CAVA, U.S. GOLD BUYERS: Business is very good. Business is very good.

COSTELLO: Business is good across the country.

UNIDENTIFIED FEMALE: That's $500.

COSTELLO: From a gold-selling house party in Connecticut...

UNIDENTIFIED FEMALE: Four, five, six, seven.

COSTELLO: ... to the gold booth at the Mayfair Mall in Wauwatosa, Wisconsin.

UNIDENTIFIED MALE: These are 10 carats.

COSTELLO: Gold sellers say it's insane. Customers say, hey, times are tough.

LEROY ENGLISH, SOLD GOLD NECKLACE: I got some extra gold laying around the house. I need a little money for the gas tank, you know, for the table, so I will go down and get some cash for it.

COSTELLO: And they're willing to give up everything and anything to pay the bills. And I mean anything.

CAVA: We get a lot of necklaces. We get a lot of class rings. Dental gold is big, a lot of people sending in dental gold.

COSTELLO: He isn't kidding. Back in the '80s, gold fillings were the rage. Today, yanking them out is.

CAVA: We ask customers not to send in the teeth, the enamel. In this case, this gentleman sent in some items like that, and we end up knocking all off the enamel. Yes, it's pretty gross. It was in somebody's mouth but at the end of the day it's going to turn into somebody's ring.

COSTELLO: Don't laugh. Depending on the quality of the gold, you could get 45 bucks a tooth. If it sounds desperate, it is.

UNIDENTIFIED FEMALE: When you have late bills to pay and some other emergency expenses, then you're just trying to catch up.

COSTELLO: If you're wondering if it's worth it to sell your valuables, Cava says it depends on how much you love the item you're giving up. Once it's melted down and molded into a gold bar, you can't get anything back but cash.

CAVA: On the average transaction, for a necklace, you're looking at about $200 and up depending on where the market's trading at. If you're talking about a higher quality necklace like 24 carats, you could be looking at $900 and up.

COSTELLO: Not a gold mine but more than enough to pay the electric bill, at least for a month or two.

UNIDENTIFIED FEMALE: One-fifty-two, 253, 354.

COSBY (on camera): Cava says he has a 2.5 percent profit margin, so, on a $700 payout to a customer, he makes around $17. But he says he makes up with it for the volume of orders he's getting nowadays.

Now you know.

Carol Costello, CNN, Washington.

(END VIDEOTAPE)

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

JACK CAFFERTY, CNN ANCHOR: The question this hour, Wolf, is, in light of the increased drug-related violence in Mexico, should the United States send troops to the border?

Mark writes: "It may very well come to that, but, if so, the issue of U.S. troops on the border would need to be handled with a great deal of sensitivity. We have got to start treating the Mexicans as allies and friends, because, after all, Mexico's people, police forces, and army are the ones who are paying the ultimate price for America's appetite for illegal drugs."

Terry writes: "No. Our troops are spread too thin as it is. Boycott tourism to Mexico. It costs the U.S. less, saves the lives of our troops, and sends a message that Mexico's government needs to clean up its own mess."

Lucy in Illinois: "The Russians put up the Berlin Wall, shot everyone who tried to cross it. That is what needs to be done on our borders. We have to protect -- we must protect U.S. citizens from the violence and drugs coming from Mexico."

Roland in South Carolina: "When people decry the spending of our national treasure for skeptical purposes, does anyone consider how many billions of dollars we have spent on the 'war on drugs' over the last 40 years? We have spent hundreds of billions in Colombia alone. Media and political types hype about the success or failure of wars in the Middle East. Has anyone measured the abject failure of this particular conflict?"

Mark in New York: "The idea that the killings happening in Mexico right now are just a few miles from the border is scary. Sending troops to the border to protect us from this potential threat makes more sense than sending troops for years and years to a foreign country."

And Brandon in Jamestown, Virginia, writes: "Being a Bill Buckley conservative, I say cut the drug cartels off at the source: legalize it. Every year, the war on drugs costs us billions and billions, and, every year, the cartels get bigger, and richer, and more successful, and more resourceful. You can send all the troops you want. The demand will still be there, and the problem will continue to grow."

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

BLITZER: Thank you, Jack.

And, to our viewers, you're in THE SITUATION ROOM.

Happening now: The Obama administration may have a plan to ship out some terror suspects, so it can shut down the prison camp at Guantanamo Bay, getting a head start by getting rid of some very loaded language.

American teenagers, hitmen for a Mexican drug cartel, and proud of it. Authorities say there are more of them in sleeper cells across the United States.

And a rabbi's widow left in debt by the swindler Bernard Madoff, now she's forced to sell off sacred religious heirlooms.

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