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THE SITUATION ROOM

Chicago Loses Bid for Olympics; Letterman Sex, 'Blackmail' Shocker

Aired October 2, 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: Happening now, President Obama's Olympic defeat. Just a short while ago he shared his disappointment with the world.

This hour, how he failed to score for his hometown of Chicago.

David Letterman's extortion bombshell. The man who allegedly demanded $2 million from "The Late Show" host appears in court. Could Letterman himself be in any kind of trouble for having sex with women on his staff?

And a senator pays a new price for his affair with the wife of a former aide. The Senate Ethics Committee now launching an investigation of Republican Senator John Ensign.

I'm Wolf Blitzer in CNN's command center for breaking news, politics, and extraordinary reports from around the world.

You're in THE SITUATION ROOM.

President Obama says you can play a great game and still not win. That's how he's describing today's heartbreaking loss for his hometown.

Chicago was passed over by the International Olympic Committee to host the 2016 summer games. In fact, it was eliminated in the first round, even after the Obamas flew to Denmark to make a personal pitch.

The winner is...

(BEGIN VIDEO CLIP)

JACQUES ROGGE, IOC PRESIDENT: I have the honor to announce that the games of the 31st Olympiad are awarded to the city of Rio de Janeiro.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: Congratulations to Rio.

Let's go to our White House correspondent, Suzanne Malveaux.

Suzanne, the president only a few moments ago returned to the White House, and he made a statement. SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You know, Wolf, it was not a good day for this president. I was on the South Lawn. I saw the president and Michelle get off of Marine One, both of them holding hands. They had these tight smiles on their faces, obviously trying to put the best face forward here, but this is a president expending political capital. This time off, just did not pay off.

Robert Gibbs saying that the president watched aboard Air Force One that very announcement that we just saw a minute ago, that he was clearly disappointed, but he didn't regret necessarily that he took this 14-hour trip.

Here's what he said in the Rose Garden just moments ago.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: One of the things that I think is most valuable about sports is that you can play a great game and still not win. And so, although I wish that we had come back with better news from Copenhagen, I could not be prouder of my hometown of Chicago, the volunteers who were involved, Mayor Daley, the delegation, and the American people for the extraordinary bid that we put forward.

(END VIDEO CLIP)

MALVEAUX: And Wolf, he congratulated Rio's president, Lula da Silva, aboard the plane, and he also said that the U.S. athletes will see him on the field in 2016.

The president faced a lot of criticism from some folks who said it was a waste of his time, but Robert Gibbs, aboard the plane, simply said, look, if the president can't multitask, than he should not be president.

One of the other things he did, Wolf, when he was over there, a 25-minute meeting with General Stanley McChrystal. He's the top guy in Afghanistan.

They had a productive meeting. They talked about the way forward, Gibbs said, in Afghanistan. I tried to get a question to the president, shouted it to him in the Rose Garden about what they discussed exactly. He didn't respond, but that really is going to be another one of those big tests that he is going to need that political capital to move forward -- Wolf.

BLITZER: He's got huge issues ahead of him right now, Suzanne. Thank you.

A lot of Chicago Democrats, especially, still think the president's Olympic pitch was a very good idea, even though it didn't work out the way they hoped.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now from the north lawn of the White House, David Axelrod, a senior adviser to the president.

David, what happened?

DAVID AXELROD, SR. ADVISER TO PRESIDENT OBAMA: What happened, Wolf, there were four strong bids. There was an awful lot of intensive lobbying in the room. There were many relationships playing out there, and it didn't work out the way we would have wanted.

Chicago made a great effort, and the president was proud to have been a part of that effort on behalf of the city and on behalf of the country. And they decided to go another way.

BLITZER: Was it a mistake to send the president over there?

AXELROD: Look, Wolf, had he not gone, he would have been criticized for not going. Some will criticize him for going.

I think the important thing is that the president will go anywhere to promote the interests of this country, to try and bring something of this magnitude to this country. And I think it was time well worth spending.

He left at 7:00 last night. He'll be back this afternoon. All he gave up really was a little bit of sleep, and it was -- it was worth the effort. He'd do it again.

BLITZER: Some will say, and you know this because you're a good political analyst, that this was a personal slap at the president of the United States by the International Olympic Committee.

What do you say to that?

AXELROD: Well, look, I think this is a town where every day is Election Day and everybody is keeping score. I think in the big scheme of things, it makes very little difference.

I don't think this was a repudiation of the president. I think it was a reflection of some of the other relationships that came into play here.

The president -- the outgoing president of the IOC was there leading the bid for Madrid, and has longstanding relationships in that room. I'm sure that was part of what played out here. So, there are a lot of factors that go into this. But, you know, folks in this town will chew on it as they always do, and we'll move on to the next thing.

BLITZER: What is the next thing the president will move on to immediately once he gets to where you are right now?

AXELROD: Well, look, we've got serious issues to tackle, and they don't -- they don't change. We're trying to work our way through the deepest and toughest recession since the Great Depression. We've got more jobs figures today that reminded us that we have a lot of work to do. So it -- there's no dearth of things for us to pursue, and, you know, the president has a very active agenda. BLITZER: Where are the jobs? Another quarter of a million jobs lost in September, unemployment rate 9.8 percent. What's happened to the economic stimulus package and the creation of jobs?

AXELROD: Well, I'll tell you what's happened to it, Wolf. In three quarters since the president took over, we've seen job loss go from 700,000 in the first quarter, to 400,000 in the second quarter, to 250,000 in the third quarter. So, we're moving in the right direction. We're not moving fast enough for our satisfaction or anybody else's.

It's always been the case that jobs are the lagging indicator when you come out of a recession, and the president said in January that that was going to be the case. So, we -- each day we redouble our efforts. I think the stimulus has contributed to that forward progress, and without it we would have been in a truly -- in a much more difficult position than we are today.

BLITZER: One final question, David, while I have you.

The health care reform legislation, how important, if it is important, is it for you to get it passed before the elections on November 3rd of this year, the gubernatorial elections in New Jersey and Virginia which some see as a referendum of President Obama?

AXELROD: Yes. I don't really view those elections that way.

I think it's important to get this done because we have other things that we want to tackle and because we want to get the ball rolling on health reform, get insurance guarantees in place for the American people, and so on. So, you know, I'm not looking at that date circled on the calendar as a must-do date, but I think everyone feels a sense that we've been debating this for months and months and months, and now it's time to bring this debate to a close.

BLITZER: David Axelrod is the senior adviser to the president.

Too bad about your hometown of Chicago, David. We were all rooting for you, but it didn't happen.

AXELROD: Well, it's the world's loss, but Chicago is a resilient town. We've come back from fires and all kinds of other things, Wolf. Chicago will prevail in the end.

BLITZER: It's my kind of town, Chicago is. All right.

Thanks, David Axelrod.

AXELROD: Good to see you.

(END VIDEOTAPE)

BLITZER: And let's go to Jack Cafferty right now for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: He gambled and he lost, and now the whole exercise looks a little silly, doesn't it?

President Obama, the first lady, Oprah Winfrey, three airplanes, limousines, Secret Service staff and, of course, all that luggage trucking off to Copenhagen to try to lure the Olympics to Chicago. The Windy City finished fourth in a field of four. But that's sort of the way it's been going for the president lately.

Instead of Copenhagen, he might have gone to Chicago and addressed the brutal murder of a 16-year-old honor student in broad daylight at the hands of four street punks. Remember the lectures we got from Obama during the campaign about family values and the importance of a father figure in a child's home, et cetera? Well, here was a real chance to walk that walk, but he took a pass in favor of Copenhagen. Instead, all we got was the White House press secretary saying the beating video was chilling.

The Olympics news came the same day as the jobs report, and that news wasn't any better. Many more job losses than expected. The unemployment rate at its highest level in 26 years.

After months of debate, health care reform isn't going anywhere. Iran is thumbing its nose at our president and the world. They might soon be able to blow up the entire neighborhood over there. North Korea doesn't seem deterred by our change of administrations either.

Afghanistan is getting worse, and there's now disagreement within the administration on what to do about that, study it some more seems to be the short-term answer. Meanwhile, our troops are dying in record numbers there.

Except for the stimulus package, the scoreboard doesn't look too good for our new president.

Here's the question: What does President Obama have to do to start putting some wins on the board?

Go to CNN.com/caffertyfile and post a comment on my blog.

BLITZER: He's got a lot of work ahead of him, Jack. He certainly does. And you give a good outline there. Thank you.

A lot of people are wondering what David Letterman will say later tonight after telling viewers that someone tried to blackmail him. New developments in the case happening right now, and serious questions about the perils of office affairs.

Someone is paying a price for the flap over a tent for Moammar Gadhafi. There's more fallout from the Libyan leader's trip to New York.

And the danger when pilots chitchat in the cockpit, the rule that's being broken with deadly results.

(COMMERCIAL BREAK)

BLITZER: Right now the man who allegedly wanted to ruin David Letterman's life could see his own life ruined. Only moments ago, the suspect pleaded not guilty to claims he tried to blackmail David Letterman. The suspect is a longtime CBS News producer named Robert "Joe" Halderman.

He was arraigned in court today. The charge, attempted first- degree grand larceny.

Letterman revealed the shocking details last night on his own show, admitting the alleged scheme. Also admitting he had sex with females who work for him on his show.

Here's CNN's Alina Cho.

(BEGIN VIDEOTAPE)

ALINA CHO, CNN CORRESPONDENT (voice-over): It started out like it has for nearly three decades...

UNIDENTIFIED MALE: It's the "Late Show with David Letterman."

CHO: ... late night laughs.

DAVID LETTERMAN, HOST, "LATE SHOW WITH DAVID LETTERMAN": It's so bright and sunny, the skunks were coming out of the subway squinting.

CHO: But after the monologue, it quickly turned serious. The audience stunned.

LETTERMAN: This whole thing has been quite scary.

CHO: When David Letterman revealed he is the victim of an alleged extortion attempt.

LETTERMAN: This morning I did something I've never done in my life. I had to go downtown to testify before the grand jury.

CHO: Letterman said he received a package three weeks ago from a person who claimed to have information about his sex life. And he wanted $2 million. Pay up or he goes public.

LETTERMAN: I get to looking through it, and there's a letter in the package. And it says that I know that you do some terrible, terrible things. And I can prove that you do these terrible things. And sure enough contained in the package was stuff to prove that I do terrible things.

CHO: The 62-year-old host went to the Manhattan district attorney's office which began an investigation. Letterman said he set up several meetings with a man who he said wanted to turn his life off stage into a screenplay, possibly a book, and gave him a fake check for $2 million. On Thursday, an arrest, then another bombshell.

LETTERMAN: And I had to tell them all of the creepy things that I have done that were going to be -- well, now, why is that funny? That's, I mean...

CHO: The admission right from the host, right from his desk.

LETTERMAN: The creepy stuff was that I have had sex with women who work for me on this show.

CHO: He tried to break the tension by taking shots at his favorite target, himself.

LETTERMAN: And would it be embarrassing if it were made public? Perhaps it would. Perhaps it would. Especially for the women.

CHO: It is not known when the sexual encounters with staffers took place. Letterman married longtime partner Regina Lasko in March. The couple has been together since 1986, and they have a 6-year-old son, Harry.

(on camera): CBS News is reporting the suspect has been identified as 51-year-old Joe Halderman, a longtime producer at CBS News.

As for Letterman, the stunning admission comes at a time of great success in his career. After lagging behind Jay Leno for years, Letterman now consistently beats Conan O'Brien in the ratings. As for his future, Letterman said he hopes to protect his job. CBS, so far, isn't commenting.

Alina Cho, CNN, New York.

(END VIDEOTAPE)

BLITZER: When Alina filed that report, it wasn't clear, as she mentioned, when Letterman's sexual encounters with female staffers took place. We've just received word from a Letterman spokesman saying this -- and let me quote specifically -- "All the relationships David Letterman was referencing when discussing the matter on the Late Show predated his marriage to Regina." That marriage taking place last March.

New York prosecutors, meanwhile, are unveiling their case against the suspect. Today, the longtime Manhattan district attorney Robert Morgenthau talked about the alleged extortion package Letterman received.

(BEGIN VIDEO CLIP)

ROBERT MORGENTHAU, MANHATTAN DISTRICT ATTORNEY: Halderman waited outside Mr. Letterman's Manhattan home at 6:00 a.m. on September 9 to deliver a letter and other materials to him as he was leaving for work. Halderman wrote that he needed to make "a large chunk of money" by selling Letterman a so-called "screenplay treatment."

The one-page screenplay treatment attached to the letter referred to Mr. Letterman's great professional success and to his "beautiful, loving son." The document related then that Mr. Letterman's "world is about to collapse about him," as information about his private life is disclosed leading to a "ruined reputation" and severe damage to his professional and family lives. The package contained other materials supporting the "screenplay treatment" and directed Mr. Letterman to call him by 8:00 a.m. to make a deal. Mr. Letterman immediately contacted his attorney.

(END VIDEO CLIP)

BLITZER: All right. Once again, the prosecutors say Letterman gave the suspect a fake check for $2 million as part of the sting operation. The suspect allegedly deposited it into his bank account, and police then arrested him.

Given David Letterman's bombshell sex confession what, if any, impact might this have on him? We asked Brian Todd to take a closer look at this part of the story.

Brian, what's going on?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, we know the alleged extortionist faces grand larceny charges, but many are asking, could David Letterman's admissions also lead to legal trouble for him even though he's victim of this alleged plot?

(BEGIN VIDEOTAPE)

TODD (voice-over): He dropped a bombshell on his "Late Show" on CBS

LETTERMAN: What you don't want is a guy saying, oh, I know you had sex with women, so I would like $2 million or I'm going to make trouble for you.

TODD: Robert "Joe" Halderman, a producer for CBS' "48 Hours," has been arrested and charged with attempted extortion. He pleaded not guilty. But could David Letterman himself also himself be in trouble?

LETTERMAN: I have had sex with women who work for me on this show.

TODD: What does the law say about workplace trysts?

DEBORAH KATZ, SEXUAL HARASSMENT ATTORNEY: The question is whether the romances were unwelcome to the women he was having them with. If there was a consensual relationship, then he's not in legal trouble for sexual harassment. It's poor judgment, undoubtedly, but not legal trouble.

TODD: To date, no claims have been publicly made regarding Letterman by any employee. Indeed, he recently married a former employee of the show.

But a psychologist gives this warning...

JEFFREY GARDERE, CLINICAL PSYCHOLOGIST: Even if these women said, OK, I want to be involved with you, David, the fact is that he is a powerful person. He is the boss. And maybe even subconsciously, they are giving in to his sexual advances because it could be a quid pro quo situation, or a situation where they may feel that, if I don't do this, then I won't be able to move up in the ranks. So, it's not healthy.

(END VIDEOTAPE)

TODD: Now, attorney Deborah Katz says CBS or Letterman's production company could possibly undertake an internal probe on the show's workplace environment, but a CBS spokesman declined to comment on that particular question -- Wolf.

BLITZER: What are the general rules about sexual harassment in the workplace as far as the law is concerned?

TODD: We asked the workplace attorney Deborah Katz about that. She said a lot of it depends on whether one person is the boss or not. If one person is the boss, then that could involve so-called quid pro quo or pressure, sex in exchange for keeping your job, sex in exchange for advancement. If neither person is the boss, it's unlikely to end up in court, she says. But, you know, the employer may have a policy to discourage you from working together, or they might at least make you disclose what you're doing.

BLITZER: Brian Todd, thanks very much for that part of the story.

Roman Polanski could be punished in the United States for what he did decades ago, but a former Swiss official says something is raising this question -- should Polanski have been caught the way he was in Switzerland?

And get this regarding Sarah Palin. The man who managed John McCain's presidential campaign and helped put Palin on the ticket now says if Palin becomes the next presidential nominee, it would cause Republicans, and I'm quoting him now, "catastrophe."

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, a late-night shocker. A CBS News producer charged with trying to blackmail David Letterman for having sex with staffers. More on that producer's not guilty plea in the courtroom this afternoon. That's coming up.

Plus, we're going to talk to his uncle who is emerging as his spokesman. Stand by for that.

And tragedy and loss in Samoa. We're going to hear from our reporter on the ground there as residents struggle to cope after a devastating tsunami.

And what's always on the mind of Willie Nelson? He's here to talk to us about his benefit concert this weekend and serious concerns for farming in America.

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

Right now, a lot of Chicagoans are feeling the same way as the president of the United States. They're deeply, deeply disappointed that their city wasn't chosen to host the 2016 Olympics.

Our Mary Snow was in the middle of all the shock and deep sadness when the big announcement was made -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, as one person described it to me, you could almost feel the city of Chicago get a punch in the gut when that announcement came out. Crowds had gathered for what was supposed to be a big celebration, until it took a very stunning turn.

(BEGIN VIDEOTAPE)

JACQUES ROGGE, PRESIDENT, INTERNATIONAL OLYMPIC COMMITTEE: The city of Chicago, having obtained the least number of votes, will not participate in the next round.

SNOW: Chicago has just gotten eliminated. People are just standing around watching the screen, stunned, including this woman right here.

Your thoughts?

UNIDENTIFIED FEMALE: Yes, it's so sad. Oh, no.

UNIDENTIFIED FEMALE: I'm sorry for us as a city. I'm sorry for the country. I'm sorry for the mayor. How awful.

UNIDENTIFIED MALE: I'm thinking, is this a -- a bad dream or something? I mean, we have been contesting for these games for so long and to really show the world what we're made of. And now we don't get a chance to prove it.

SNOW: Just a few minutes after that announcement was made, this crowd has quickly thinned out, people just absolutely stunned, including some former Olympic athletes.

UNIDENTIFIED MALE: Hi.

SNOW: Your reaction?

TOM PUKSTYS, FORMER OLYMPIC ATHLETE: Devastation, heartbreak, complete heartbreak, with no expectation. I'm born and raised here. We're speechless. And I'm in pain.

SNOW: Right. Yes.

JOHN COYLE, FORMER OLYMPIC ATHLETE: Didn't expect it, for sure. I mean, there's been a lot of planning. And -- and, you know, we watched the -- sort of the polls and the insiders, and it definitely didn't -- this was not at all in the plan.

SNOW: I see you already have put a past tense on your sign. It says, "I backed the bid at..."

UNIDENTIFIED FEMALE: Chicago. I still back Chicago. We are a city that works. It's a disappointment. But, you know, we will get up, brush ourselves off, and get our own Olympians together to make sure they bring home the gold.

SNOW: You were standing in the middle of a packed crowd here when that announcement came out. Describe for me what it was like.

UNIDENTIFIED FEMALE: You could hear a pin drop. The energy died. It was just -- you could feel everyone's hearts drop. It was so heartbreaking, and the same here. I was just flabbergasted.

ROWDY GAINES, FORMER OLYMPIC ATHLETE: Should we give up on hosting the Olympic Games?

CROWD: No!

SNOW: And we're going to talk now to Beth White, who was working on the committee for the Olympic bid here in Chicago.

Beth, we were with you yesterday. Your thoughts today?

BETH WHITE, CHICAGO 2016: Well, it's just shocking. I -- I was shocked. It took the air right out of me, obviously. It was very tough to do live on the air, but, just like we said, it's such an effort. It was a worthy effort. We're glad we did it.

The Olympic spirit is all about aspiring and trying to lift up and reach up for that ring. And I -- we did it. And -- and I look around the city, I look around this plaza now, and what I see is, people are still here. People are chanting 2020. They have flags that say, "We still love Chicago."

This is why I love this city, and this is why I know this city will maybe some day be a great Olympic city.

(END VIDEOTAPE)

SNOW: But not everyone was heartbroken. There are people here who are relieved that Chicago was eliminated. They never felt that the Olympics should be held here. They thought that this was just not the time, and that Chicago has to focus its efforts on other problems here in Chicago, and not the Olympics -- Wolf.

BLITZER: All right, Mary.

And Mary Snow is in Chicago.

President Obama certainly took a gamble by attaching his name and face to Chicago's Olympic bid. And he lost.

Let's bring in our senior political analyst, Gloria Borger, and our chief national correspondent, John King, the host of CNN's "STATE OF THE UNION."

Does this loss, Gloria, really have political consequences for the president?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I think, in this case, it could be the tipping point for those who are kind of wondering whether the president's been overexposed, because the question was, did he have to go to Copenhagen unless there was really a deal, a done deal?

You know, usually in a policy summit, you don't send the president until you're sure that he can just ink the deal. The feeling was, particularly with senior adviser Valerie Jarrett, who really pushed this, was that it was almost a done deal and the president was going to push it over the finish line.

Well, as it turns out, we didn't even get into the second round. So, I think those folks who are inclined not to like this president are really going to make a big deal out of that.

BLITZER: That was really stunning, that, of the four cities remaining, Chicago got the least number of votes.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It was stunning.

And, so, critics of the president are saying, I thought you were going to increase our stature around the world, and you couldn't even get into the second round, let alone win.

BORGER: Right.

KING: You -- you will see a dichotomy, Wolf, in the reaction, someone who might run against this president in four years, Mitt Romney, once ran the Olympics, he said, good for the president for trying. Sorry we lost -- a pretty measured reaction.

The Republican National Committee putting this out, saying, you know, the president spending more time worrying about the Olympics than he is about Afghanistan; it's a defeat for the president.

What are they trying to do? Keep their base ginned up for the two gubernatorial elections that are a little more than a month away than worrying about 2010.

In the short term, if you don't like the president, you try to fire up the conservative base. In the long term, he will be judged in 2012 on the strength of the economy, how things go in Afghanistan, not on Chicago not getting the Olympics.

BORGER: And, you know...

BLITZER: Speaking of 20 -- go ahead.

BORGER: Well, he did finally get to have a conversation with General McChrystal...

(LAUGHTER)

BORGER: ... you know, on the flight back, which...

BLITZER: On -- on Air Force One.

BORGER: On Air Force One, which McChrystal has said he hadn't spoken with the president in 70 days. So, maybe that was a good use of his time.

BLITZER: Yes. They could have had a conversation someplace else, too.

(LAUGHTER)

BLITZER: Didn't have to go...

BORGER: That is true.

BLITZER: Didn't have to go to Copenhagen for that conversation.

BORGER: That is true. That is true.

All right, John, had a -- you spoke to Steve Schmidt, who was one of the top, if not the top political adviser to John McCain in the campaign. And, speaking of 2012, you had this exchange with him. Let me play it.

(BEGIN VIDEO CLIP)

KING: As someone who has won campaigns and lost campaigns and has worked very closely with her, does she have what it takes?

STEVE SCHMIDT, FORMER MCCAIN CAMPAIGN SENIOR ADVISER: I think that she has talents, but, you know, my honest view is that she would not be a winning candidate for the Republican Party in 2012. And, in fact, were she to be the nominee, we could have a catastrophic election result.

(END VIDEO CLIP)

BLITZER: She being Sarah Palin. Wow. That's a pretty strong statement.

KING: That was at a panel this morning over at the Newseum organized by "The Atlantic."

And I think you get a good sense there, Wolf, that Steve Schmidt does not think he will be treated kindly in Sarah Palin's book, "Going Rogue..."

(CROSSTALK)

BORGER: You think?

BLITZER: Which comes out in mid-November.

KING: ... which is about to come out.

This shows you the big split in the McCain campaign. He was among those who, late in the campaign, thought that she had gone off the reservation and was working in her own self-interests, or certainly against John McCain's interests. There was a big split at the end. And you see it there.

Steve Schmidt is not running campaigns at the moment. He has the luxury of being a bit detached. He's disagreed with the Republican Party on gay rights and other issues since then, but wow. That's the highest level public...

BLITZER: Right.

KING: ... public to Sarah Palin from the McCain campaign.

BORGER: I tell you, Steve Schmidt is going to read that book backwards. He's going to go right to the index and look at...

(LAUGHTER)

KING: The old Washington read. "Where am I?"

BORGER: ... and look at his name, because there was a lot of friction between -- between him and Sarah Palin at the -- at the end of the campaign.

BLITZER: Because -- I think, in part, because of that Katie Couric interview. But there were other issues as well where there was a total disagreement.

BORGER: Yes, there -- there were lots of -- of issues. And we have -- we have heard them recounted. You know, she wanted to speak on the -- on the evening that McCain said he wasn't -- you know, he didn't win.

So, I -- I think there were lots of things during the campaign, but I think the question, is, you know, is she viable, as you asked, and I think there's a vacuum in the Republican Party right now. But the only folks who are really rooting for her are the Democrats.

(LAUGHTER)

BLITZER: You know, her publisher is rooting for her right now.

BORGER: Yes. OK. OK. OK.

(LAUGHTER)

BLITZER: They released the cover.

I want to show -- show our viewers the -- the book jacket. There it is, Sarah Palin, "Going Rogue." There -- there she is. I think they are printing, in a first printing, John, 1.5 million hardcover copies. So, they are expecting a huge sale.

KING: That first printing on par with the late Senator Ted Kennedy's memoir that just came out as well.

They are expecting -- they say the advanced sales are off the charts. And even Steve Schmidt conceded that as proof that she has a very strong loyal support. He doesn't think it's enough to win the presidency. And he thinks -- he thinks -- it would hurt the party.

There's, of course, a big debate within the Republican Party. And this is part of the tug-of-war in the Republican Party over, who should our messenger be and, more importantly, what should our message be?

BLITZER: Who is on "STATE OF THE UNION" Sunday morning?

KING: We are going to talk a lot about Afghanistan. The president's national security adviser, General James Jones, will be with us. We will also talk a bit about foreign policy, including Afghanistan and health care, with Senator Jon Kyl of Arizona, the number-two Republican in the Senate, and Senator Barbara Boxer, one of the more prominent liberal Democrats who probably aren't that happy with the version of the health care bill about to come out of the Finance Committee.

BLITZER: Nine a.m. Sunday morning, General James Jones, the retired U.S. Marine, the national security adviser to the president. He was right in the White House Situation Room for those critical meetings on Afghanistan this week.

KING: That's right.

BLITZER: Guys, thanks very much.

(CROSSTALK)

KING: Nine a.m. Sunday morning, "STATE OF THE UNION."

We're going inside President Obama's secret strategy meetings ourselves. We want to get a better understanding of how he's rethinking the battle plan in Afghanistan and when a decision will be made.

Also ahead: The CBS employee accused of blackmailing David Letterman, why did he allegedly want to ruin the TV host's life? The suspect's spokesman, who happens to be his uncle. ,he's standing by live to join us.

And new reason to worry about pilots taking -- talking and joking in the cockpit -- the possible link between idle chatter and deadly crashes.

(COMMERCIAL BREAK)

BLITZER: As he prepared to leave Copenhagen, after pitching for the Olympic Games, but before he learned the pitch failed, President Obama met with the top U.S. military commander in Afghanistan. The president and General Stanley McChrystal talked aboard Air Force One before it took off from Copenhagen -- the topic, next steps for the war, especially whether or not more U.S. troops should be sent to Afghanistan.

The White House press secretary, Robert Gibbs, says no decisions were made.

Meanwhile, what might be happening behind the scenes as officials debate the war?

Our Pentagon correspondent, Chris Lawrence, has more -- Chris.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Wolf, we're going to try to take you inside this process to get a better idea of how the Afghanistan strategy is being reviewed.

(voice-over): Perhaps no one better understands what's happening in President Obama's secret strategy meetings than this man.

STEPHEN HADLEY, FORMER U.S. NATIONAL SECURITY ADVISER: The national security advisers is, in some sense, the convener and monitor of those kinds of meetings.

LAWRENCE: And that was Stephen Hadley's job under President Bush. He sat where General Jim Jones now sits and would read the president's body language as the different secretaries and generals would speak.

HADLEY: And I would spend a lot of time watching the president and to see how he was reacting to the information he was receiving.

LAWRENCE: Hadley has special insight into who may be saying what to President Obama.

HADLEY: So, he will want to hear the assessments of our diplomats in neighboring countries, because there is a regional dimension to solving this problem that he needs to take into account as well.

LAWRENCE: The question of where America goes next in Afghanistan goes beyond the assessment of its military commander.

HADLEY: And, of course, it's not just General McChrystal, because a strategy in this kind of operation is an integrated strategy.

LAWRENCE: And one developed several levels above the battlefield commander.

President Obama and his team developed their strategy in March. He decided on fighting a counterinsurgency after consulting with his Cabinet and military leaders. That strategy went down the chain of command. And, in May, General Stan McChrystal was hired to assess the situation and tell his bosses the cost of implementing that strategy.

(on camera): Take us back to the decision to go with a surge in Iraq. How quickly was that made? HADLEY: It took a long time.

LAWRENCE (voice-over): And a lot of internal arguments. But Hadley says that was private, unlike the Afghanistan military assessment that leaked a few weeks ago.

HADLEY: One of the things that is putting pressure on the administration is, that strategy review in Iraq really did not become public until late in the process.

LAWRENCE (on camera): Hadley told me the national security adviser may not say much during the meeting, but he has private time with the president that, say, Secretaries Clinton and Gates do not.

He says his advice would often come at end of the day, when the president puts his feet up on the desk and asks, how do you think that went? -- Wolf.

(END VIDEOTAPE)

BLITZER: Chris Lawrence, thank you.

Meanwhile, there's new evidence right now that friendly banter between airline pilots can be deadly. Accident records show just how often cockpit crews are breaking a federal ban on chatter during takeoff and landing.

Here's our homeland security correspondent, Jeanne Meserve.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Minutes before a 2004 plane crash in Kirksville, Missouri, that killed 13 people, a joking pilot says, "Love to poke my head back around and say that, you know, ladies and gentlemen, we've thought about it." A laughing co-pilot chimes in, "It was unanimous up here." The pilot continues, "We've come to the conclusion that you people should all shut the blank up."

ROBERT SUMWALT, NATIONAL TRANSPORTATION SAFETY BOARD MEMBER: It's really sad to listen to a cockpit voice recorder where the pilots are sitting there, laughing, carrying on, having a great time, not aware they're about to run into the ground.

MESERVE: After 24 years as a commercial pilot, Robert Sumwalt is now a member of the National Transportation Safety board. He believes the sterile cockpit rule, which bans nonessential talk during taxiing, takeoff, and landing, is frequently violated. And for safety's sake, he says that must change.

SUMWALT: I think people need to draw a line in the sand and says, this is a regulation, we will adhere to it.

MESERVE: The NTSB has cited violations of the sterile cockpit rule in six crashes since 2004, according to a survey by "USA Today." In Lexington, Kentucky, in 2006, chatting cockpit crew took off on the wrong runway -- 49 were killed. In Jefferson City, Missouri in 2004, the pilot and copilot were laughing about alcohol minutes before impact. They both died. Investigators are also looking at whether cockpit small talk contributed to the 2009 Colgan Air crash in buffalo, New York.

The Air Line Pilots Association believes pilots usually do adhere to the sterile cockpit rule, but says to improve compliance, there should be more training and more observation.

CAPTAIN PAUL RICE, VICE PRESIDENT OF ADMINISTRATION, AIR LINE PILOTS ASSOCIATION: But a properly trained airline pilot sits in the jump seat and observes his or her fellow airline pilots and has the ability to comment, to question.

MESERVE (on camera): In that situation, however, a pilot might be careful not to break the rules. A more realistic way to get a sense of the problem might be to pull cockpit voice recorders and listen to conversations. But people on all sides of this debate say that is a nonstarter.

Jeanne Meserve, CNN, Washington.

(END VIDEOTAPE)

BLITZER: A longtime CBS News producer accused of trying to blackmail David Letterman pleads not guilty. How might he defend himself against damning allegations? The suspect's spokesman is here in THE SITUATION ROOM.

And you might say he's on the road again. Willie Nelson is performing again this weekend, but he talks with me first. He's long been passionate about helping farmers across America. Wait until you hear what Willie Nelson has been doing about that lately.

(COMMERCIAL BREAK)

BLITZER: We're just getting video now of the suspect in the David Letterman case walking away from the court. He's just been released on bond, $200,000. There he is, Joe Halderman. He's got his hand in front of his face in the car.

Joe Halderman is the suspect allegedly trying to extort $2 million from David Letterman.

Coming up at the top of the hour, we are going to be speaking with Halderman's uncle, who is his spokesman in this case, get his side of the story, what was going on. That's coming up in a few moments. Stand by for that.

Savagely beaten, he will be laid to rest this weekend. Funeral services are set for tomorrow for that 16-year-old honor student beaten to death in Chicago. Derrion Albert's final moments alive were videotaped. Might efforts to find the killers be hurt because witnesses simply won't come forward? Here's CNN's Joe Johns.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN SENIOR CORRESPONDENT (voice-over): It would seem obvious, right? If you saw this happen, if you were a witness to this murderous beating of 16-year-old Derrion Albert, you would call the police and tell them what you saw and the names of the guys who did it.

Four teens identified from the video have been arrested, and three others are being sought. But, to this moment, cops tell us no one has called, no kids, no parents. Why? Call it a code of silence urban schoolchildren learn early, especially in tougher neighborhoods: Mind your own business. And that means don't talk to the police.

(on camera): The death of Derrion Albert brought an outpouring of sympathy here. It also brought quite a police presence. Take a look, one, two, three, four police vehicles near the community center where Derrion was beaten.

But the question really right now is not about police presence. It's about who's talking to the officers, why parents and children who may have seen something or heard something aren't coming forward.

UNIDENTIFIED MALE: People don't they don't want to get jumped.

JOHNS: What do you mean they don't want to get jumped?

UNIDENTIFIED MALE: Because, if they snitch, they are just going to get beat up.

JOHNS (voice-over): And, yet, it is clear a message that it's OK not to get involved may send kids a message that crazy, senseless violence is OK. And it's not.

REVEREND MICHAEL PFLEGER, CHICAGO ACTIVIST: We have got to get to the hearts of our children because nothing, nothing excuses or justifies the actions of an individual who would beat another individual. Nothing justifies that in this society.

JOHNS (on camera): So, why is it that people don't want to talk to the police?

UNIDENTIFIED MALE: Because it's -- some call snitching, snitching. Don't snitch. It's not your business, OK? So...

JOHNS: Now, is that something somebody told you, or is that something you tell people?

UNIDENTIFIED MALE: No, that's the way of the street. You snitch -- snitches get stitches. Put it like that.

UNIDENTIFIED MALE: As my momma said, she said that the -- the kids should be burying their parents, but the parents should not be burying their kids. JOHNS: Whatever reasons high school students on the streets may give, experts say one of the main things driving this behavior is fear, fear of what could happen if you talk to the police. It's not just a Chicago phenomenon. It happens all over the country, and it undermines the criminal justice system.

What people here in Chicago and other cities are trying to figure out is, what do you do about it?

(voice-over): "Keeping Them Honest," one problem is that the heavy police presence that's supposed to provide a sense of security is often viewed in big-city neighborhoods as very temporary. Once the TV cameras leave, it's back to business as usual.

MIKE MOSEBERRY, RESIDENT OF CHICAGO, ILLINOIS: They know that this police presence is not going to last. It's not going to last, a couple of weeks or two. It's not going to last, and these kids are going to be out here by their self, and then another kid get killed.

JOHNS: Of course, it's complicated, but, if people don't feel safe and will not go to authorities, then experts say intervention is needed even before violence erupts.

TIO HARDIMAN, DIRECTOR OF GANG MEDIATION AND COMMUNITY ORGANIZING, CEASEFIRE: Because, if people are not willing to break the code, they should be willing to step up and stop it on the front end then.

(CROSSTALK)

HARDIMAN: That's it right there. Derrion, somebody in the crowd should have said, you know what, I'm not going to tell on nobody, but I tell you what you I'm going to do. I'm going to stop all this mess from happening.

JOHNS: And, finally, we have checked again. So far, police say no one has come forward to report what they saw outside the community center.

Joe Johns, CNN, Chicago.

(END VIDEOTAPE)

BLITZER: A United States senator now faces an ethics investigation stemming from his affair with the wife of a former aide. Senators are going to decide whether Republican John Ensign acted improperly.

And I will speak with the singer Willie Nelson about one of his favorite causes, Farm Aid. He's gearing up for a big concert. We will speak live right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is standing by with "The Cafferty File" -- Jack. CAFFERTY: The question this hour is, what does President Obama have to do to start putting some wins on the board? We asked that in the wake of that rather resounding nose-cleaning he got over there in Copenhagen.

Nathan writes: "Obama can withdraw the opportunity he gave Congress to work together and start telling them what to push through and what not to. If he doesn't start acting like their boss, they're going to squander his only term in office."

Spencer writes: "In order for Obama to start putting some wins up, he's got to walk the walk that he touted during the campaign. He spoke of change, like no more pork, but put his autograph on a stimulus bill loaded with it. From the stimulus on, the president has done nothing but create a disjuncture between his presidency and the values he campaigned on."

Norma writes: "I'm beginning not to care for you much, Cafferty. You're beginning to sound too much like those on that other channel."

Ernie writes: "Abandon the far-left agenda. Start paying attention to the hurting center of this country."

Andy in Nevada writes, "Two words, Jack: Create jobs."

Philip writes: "Maybe it's time the president started acting like the president, instead of the celebrity in chief. He may not put more wins on the board, but at least then he would be fighting the fights that matter and would have more of the public behind him. Slowly, his supporters are starting to wonder when he's going to actually do something."

Jeff in Hawaii writes, "He needs to quit being so damn nice."

And Russ in Pennsylvania: "One, put an end to the Patriot Act. Two, pull the troops out of everywhere. Three, get the government out of health care completely. Four, end the Federal Reserve. Five, have a beer."

If you didn't see your e-mail here, go to my blog at CNN.com/Caffertyfile. You might find yours there -- Wolf.

BLITZER: Jack, thank you.

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

Happening now: a late-night TV bombshell -- David Letterman revealing he had sex with some of his fellow employees, and someone tried to extort $2 million in hush money.

Also, missing for three years, an Israeli soldier captured by Palestinian militants, now proof that he's alive -- but can Israel get him back?

And country legend Willie Nelson, he's fighting to save American family farms. He's been doing so for a quarter-century. Have things gotten any better during that time? I will ask him -- Willie Nelson standing by to join us live this hour.

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