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THE SITUATION ROOM

Interview With New Jersey Republican Gubernatorial Candidate Chris Christie; Pay Cuts For CEOs

Aired October 21, 2009 - 18:00   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: the best political team on television on these stories.

The White House pushes for big pay cuts from bailed-out CEOs. We're digging deeper on the breaking news and the pressure on the president right now.

Also this hour, President Obama campaigning for an embattled Democrat. We're standing by for his remarks with New Jersey Governor Jon Corzine.

And Corzine's Republican challenger, Chris Christie, he will be joining us live. We will get his reaction.

And Americans split down the middle over health care reform. Still, our brand-new poll may give some liberal Democrats reason for hope.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: The breaking news this hour, a new move by the Obama administration to lift an embarrassing cloud over the financial bailout.

We're told the president's so-called pay czar is targeting seven firms that received the most bailout money, and he is expected to order those firms to drastically cut pay for top executives.

Let's go to our White House correspondent, Dan Lothian, who's learning about this.

Specific details, Dan. What do we know?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, first of all, here's how this pay cut structure would work, according to senior administration officials.

First of all, the 25 most highly compensated executives at these TARP companies -- these are companies that got the bailout funds -- would see their compensation, their total compensation, cut by 90 percent compared to last year. For all the other executives, they would see their compensation cut by about 50 percent. Now, here's the thing. While they will be seeing a cut, they will also receive stock. But the catch here, Wolf, is that they won't be able to sell those stocks, exercise them, for some time.

BLITZER: Which companies are specifically, Dan, being targeted?

LOTHIAN: Well, as you pointed out, seven companies here. We're talking about AIG, Bank of America, Citigroup, GM, Chrysler, GMAC, and Chrysler Financial.

But a senior source over at the Treasury Department also makes a couple of points to CNN, first of all, that most of the people who are being impacted here are highly compensated. They get a sizable pay package by anyone's count. Also, what's trying to be accomplished here is to protect the American taxpayer, while at the same time make sure that these companies can grow their way out of TARP -- Wolf.

BLITZER: All right, we will stay on top of this. Thank you, Dan.

The financial bailout that was supposed to save the banking industry may actually be making matters worse, that very grim assessment from the man who oversees the $700 billion rescue program. We're talking about the special inspector general Neil Barofsky. He now says it's unrealistic to think that taxpayers will ever get all their money back from the bailout.

I spoke with him just a little while ago.

(BEGIN VIDEO CLIP)

BLITZER: What has changed in terms of regulations and oversight over the past year, since the disaster of a year ago? And you have been in this business now for almost a year. What has significantly changed to make sure it can't happen again?

NEIL BAROFSKY, TROUBLED ASSET RELIEF PROGRAM SPECIAL INSPECTOR GENERAL: I think, actually, what's changed is in the other direction.

These banks that were too big to fail are now bigger. Government has sponsored and supported several mergers that made them larger. And that guaranteed, that implicit guarantee of moral hazard, the idea that the government is not going to let these -- these banks fail, which was implicit a year ago, it's now explicit. We have said it.

So, if anything, not only have there not been any meaningful regulatory reform to make it less likely. In a lot of ways, the governments have made such problems more likely.

(END VIDEO CLIP)

BLITZER: Wow, strong words from Mr. Barofsky.

President Obama says big banks don't need another taxpayer bailout. But today he offered some help to smaller community banks, his goal, to free up money for small businesses that are struggling. And it gave him a new chance to sing the new praises of the economic stimulus package, amid talk there might -- repeat -- might be a sequel.

Let's bring in our senior congressional correspondent, Dana Bash.

How likely is that, Dana?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, with unemployment climbing still and voter anxiety, Wolf, rising right along with it, Democrats here say another and more government stimulus is needed.

But don't expect them to call it that.

(BEGIN VIDEOTAPE)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: A very important meeting.

BASH (voice-over): Four-hour meeting with economists, where House Democratic leaders heard a lot of doom and gloom.

MARK ZANDI, CHIEF ECONOMIST, MOODYSECONOMY.COM: ... and the possibility of the economy slipping back into recession next year are uncomfortably high.

ALLEN SINAI, PRESIDENT, DECISION ECONOMICS: It's an unsatisfactory recovery, still with a lot of risks.

ROBERT KUTTNER, ECONOMIC COLUMNIST: We have avoided a Great Depression, but we're at still risk of a great stagnation.

BASH: The economists offered a slew of ideas to address the still ailing economy. Some, no coincidence, mirrored what Democrats are already considering, extending unemployment insurance benefits, now set to expire at the end of the year, through 2010, extending the tax credit for first-time homebuyers, expiring next month, into 2010, sending emergency funds directly to the states, and extending some tax breaks to small businesses.

KUTTNER: I think just about everybody in the room feels that there needs to be more stimulus.

BASH: But, when we asked the House speaker if she planned to push a second stimulus package, the answer was no.

PELOSI: We do not have plans for an additional stimulus package. But we do have plans to stimulate the economy in the -- the work that we are doing here.

BASH: In other words, Democrats will try to pass new proposals intended to spur the sluggish economy, but do it piece meal to avoid the label stimulus. Democratic leadership sources tell CNN there are two big political reasons why. One is this:

UNIDENTIFIED MALE: ... and show us what a world-class credit binge looks like.

(CHEERING AND APPLAUSE)

BASH: Bailout and spending fatigue in the country and Congress.

Second, CNN is told the White House opposes anything appearing to be stimulus two, for fear it would be a tacit admission that the president's $787 billion package didn't work, and undermine arguments like this.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So, there's no question that our Recovery Act has given a boost to every American who works in a small business or owns one.

(END VIDEOTAPE)

BASH: Now, regardless of what Democrats are calling their new economic proposals that they're pushing, Republicans have a refrain, and they're not letting go of it. And that refrain, Wolf, is that the president's economic stimulus package so far has not done what everybody agrees really needs to get done. And that is create enough jobs -- Wolf.

BLITZER: Dana, while I have you, I want you to update us on a story you reported here in THE SITUATION ROOM yesterday about a proposal to get the doctors, if you will, on board by passing $250 billion in Medicare cuts, so the doctors don't get less income.

There was movement on that front today up on Capitol Hill. Tell our viewers what happened.

BASH: It was bad news for the Senate majority leader, Harry Reid.

And what this was, many view it as an opening salvo to the broader health care report -- reform package. And, Wolf, it went down. And it didn't just go down. It went down big. Twelve Democrats joined one independent and voted to block this, which is essentially $250 billion, again, to go to doctors, or at least in the Medicare program, to make sure that doctors' payments are not cut.

But the big problem, and the reason why pretty much all of these Democrats voted against it, is because it added to the deficit. It was not paid for. So, it definitely created a pickle for some of these Democrats who did vote for it. And I will give you one example, Blanche Lincoln, Democrat from Arkansas. She did vote for it. Already, Republicans are ripping her, saying that she went back on a pledge not to add to the deficit, particularly when it comes to health care spending -- Wolf.

BLITZER: All right, Dana, thanks for that update. We're going to get back to you.

Want to show you a live picture we're getting from New Jersey right now -- the president of the United States getting ready to speak at a rally in support of this man. That's the governor of New Jersey, Jon Corzine. The president will be speaking there.

We're going to listen in and then we're going to get reaction from Corzine's main opponent, the Republican challenger, Chris Christie. Stand by for that. There, you see Mr. Christie. We will talk to him. He will listen. We will all listen. Then we will talk.

Talk about David vs. Goliath. A politician not known much outside of the state must now survive a political onslaught from Democrats, including the president. We're talking about President Obama. He's campaigning for Jon Corzine. We're going to be hearing from Chris Christie.

Our coverage continues right after this.

(COMMERCIAL BREAK)

BLITZER: President Obama is getting ready to deliver a speech in New Jersey. He's back on the campaign trail. He's campaigning for the New Jersey governor, Jon Corzine, at this hour.

Corzine is speaking at this hour.

Let's listen in briefly, hear what he's saying.

(JOINED IN PROGRESS)

GOV. JON CORZINE (D), NEW JERSEY: ... mammograms for women, prostate screenings for men, and autism treatments for our children.

(CHEERING AND APPLAUSE)

CORZINE: Can you imagine my opponent would say no? He wants mandate-free insurance policies for New Jersey. I say no to that policy. We will fight to make sure they stay in place. That means mammograms for all women, no autism screening, and no 48-hour stays for new mothers.

(CHEERING AND APPLAUSE)

CORZINE: But I promise you, one thing it won't mean, it won't mean is more profits for the insurance industry. Mr. Christie is wrong when it matters most.

Consider education. I believe we have a moral obligation to provide every child with a world-class public education.

(CHEERING AND APPLAUSE)

CORZINE: Even while we cut the size of government -- and we have -- we have increased our investment in classrooms and teachers and enrolled 5,000 more kids in preschool.

(CHEERING AND APPLAUSE)

CORZINE: We have invested -- we have invested $4 billion in new construction. BLITZER: All right, a little flavor from Jon Corzine, the incumbent governor of New Jersey.

New Jersey, as all of you know, went for President Obama in the presidential election a year ago, typically votes largely for Democrats, not necessarily always, though. Will the voters this time oust the Democratic governor? Could there be voter backlash against the president, who's getting ready to speak in New Jersey for Corzine right now?

Our senior political analyst, Gloria Borger, is here. Our CNN correspondent Joe Johns is here. Our chief national correspondent, John King, the anchor of CNN's "STATE OF THE UNION," is joining us. And the man who hopes to defeat Jon Corzine, Chris Christie, the Republican challenger, is here as well.

Mr. Christie, thanks very much for coming in. We all have some good questions for you.

But it's -- how tough is it when the president of the United States, who's very popular in New Jersey, comes into your state at this moment to try to beat you?

CHRIS CHRISTIE (R), NEW JERSEY GUBERNATORIAL CANDIDATE: Well, listen, Wolf, it's a great day for New Jersey whenever the president of the United States comes here and our citizens get to see him. And, so, I think it's a great day for the state to have the president here.

But here's one thing the people of the state of New Jersey know. They know that Air Force One is leaving tonight and that, if they vote for Jon Corzine, President Obama is not going to come to the statehouse and run the state. We're going to be stuck with Jon Corzine.

And so I think the president being here is nice, but this race is between me and Jon Corzine.

BLITZER: How close is this race? We have seen polls showing he's slightly ahead.

CHRISTIE: Yes. I think the latest public polls have us about two points ahead. It's going to be a close race. We have always known it would be a close race.

But consider this. Barack Obama won this state by 15 points last November. There are 700,000 more registered Democrats than Republicans, and the governor has outspent me 3-1, and I am still ahead in the polls with 13 days to go. Things are going well here for us in New Jersey.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Mr. Christie, this is Gloria Borger here.

You have been dogged by all kinds of ethics concerns that have been raised during this campaign. And now Senator Lautenberg is calling for an investigation into whether or not you used your office for political gain.

Can you answer that charge right now here that you didn't have someone in your office to whom you loaned $46,000 work on your behalf politically?

CHRISTIE: That's absolutely, absolutely false.

Senator Lautenberg should spend time trying to get federal money back to New Jersey, since we rank 50th in America in the return on our federal tax dollars, and less time playing politics in a gubernatorial election.

There's no truth to any of that. My office has -- my old office has an extraordinary record over the last seven years and since I have left in fighting crime in New Jersey of all kinds. And this is just the kind of personal smear politics that the Corzine campaign has been playing ever since the primary was over. And we have broad shoulders, and we're used to it.

JOE JOHNS, CNN SENIOR CORRESPONDENT: Mr. Christie, it's Joe Johns.

There is a certain coziness to the story and the way it's been written. My question to you is, while you were running that office, did you set up a fire wall specifically saying that people like Michele Brown, your friends and others would not dabble in your campaign while they were working for the prosecutor's office?

CHRISTIE: Well, listen, I wasn't campaigning while I was in the prosecutor's office. And so the fact of the matter is, after I left and I resigned as U.S. attorney in December of 2008, I went off to decide what I wanted to do, decided I ran for governor.

And the folks back there continued to do the work that they did, the very good work of prosecuting all kinds of cases in New Jersey. And, so, the fact of the matter is, they did their job and I'm doing mine now.

JOHNS: So, you never asked her to help you?

CHRISTIE: No, sir.

BLITZER: John King, go ahead.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Mr. Christie, a couple of questions about the role of government relevant to the big debates right now.

Number one, do you think governors -- you want to be a governor -- need the public option or at least the state option of a public option in health insurance to provide competition to the insurance companies? And on the big issue Wolf started the show with, is it appropriate for the president of the United States and the federal government to be trying to regulate what they believe to be excessive pay? Many of the workers in the financial industry would live in your state of New Jersey if you were the governor. CHRISTIE: Well, listen, on the health care, I do not favor a public option. I think there are a lot of other things that we can do on health care reform and not have a public option. That's not something that I would favor, nor do I think it would be something that would be good for the state of New Jersey for the federal government to do.

Secondly, on regulating excessive pay, listen, I think that having broad kind of regulations on the way private industry works is not the way we should do it in this country. Do we need to look at those companies that have taken bailout money? Absolutely.

But, for those folks who have not taken bailout money, those kind of broader regulations, I don't think that's what the capitalism is all about.

BLITZER: Do you describe yourself, Mr. Christie, as a moderate or conservative Republican?

CHRISTIE: Listen, those kind of labels, quite frankly, mean very little here in the state of New Jersey.

I'm a Republican. I have talked about wanting to have smaller government, lower taxes. And I will leave the labeling to the pundits. I'm somebody who absolutely believes in the core Republican principles of smaller government, lower taxes, and allowing the entrepreneurial spirit in this state to grow, so we can finally grow private sector jobs, because now we have the highest unemployment we have had in the 33 years.

And we're the highest in the region, higher than New York or Connecticut, higher than Pennsylvania or Delaware. New Jersey is in bad shape because of Jon Corzine's policies. And we need a change.

BLITZER: And I want to play this ad -- I know you've seen it -- a lot of people in New Jersey have seen it -- from the Corzine campaign, Mr. Christie, because it calls -- it suggests that you're overweight. And I'm going to play the ad and then we will talk about this.

(BEGIN VIDEO CLIP, CORZINE FOR GOVERNOR AD)

NARRATOR: Christie threw his weight around as U.S. attorney and got off easy.

If you didn't pay your taxes, ignored ethics laws, would you get away with it?

Chris Christie, one set of rules for himself, another for everyone else.

(END VIDEO CLIP)

BLITZER: You saw the ad, I'm sure. "Christie threw his weight around."

CHRISTIE: Yes.

BLITZER: Then they have a picture of you walking out of a car, clearly a few pounds overweight.

But how do you respond to that kind of stuff?

CHRISTIE: Well, listen, I will let all of your audience in on a little secret, Wolf. I'm overweight. And I have struggled with my weight for the last 30 years on and off. And that's the way it is.

And, so, I think there's a lot of people out in New Jersey who have the same kind of struggles. And I think that kind of stuff is just beneath the office the governor holds.

And the worst part of it is that he won't even admit that is what he's doing. You all just saw the ad. It's obvious what they're trying to do.

But, when confronted about it, the governor denies it and says that there's nothing -- nothing meant by those ads.

Listen, I think we should talk about important issue of why New Jersey is 50th in terms of affordability in taxes in the country, why our unemployment is so high, why we have so little job creation in the state, worse than any state in the region. Those are the things we should be talking about. I'm willing to admit to the governor that I'm overweight and will continue to try to work on it.

BORGER: Do you think President Obama is more or less of a political asset than he would have been for Jon Corzine, say, six months ago?

CHRISTIE: Oh, geez, I don't know, Gloria.

BORGER: Yes, you do.

(LAUGHTER)

CHRISTIE: That's the kind of thing -- polls go -- no, listen, polls up and down. Polls go up and down.

I think there's a lot of people who have a great deal of respect for the president here in New Jersey. There's a lot of folks who disagree with some of the things he's doing and agree with others.

In the end, this race is about me and Jon Corzine. It's great to have the president in New Jersey, as I said. And I'm sure the governor is glad to have him here, too. But he's going to leave tonight. And when he leaves, it's going to be me and Jon Corzine. We're going to be the choices of who's going to be the next governor.

And I think that is what people in New Jersey will really focus on.

BLITZER: The president of the United States, by the way, Mr. Christie, he's getting ready to speak right now. I assume he's going to thank a lot of his supporters out there.

Actually, he already is. Let's listen in, Mr. Christie. I want you to listen briefly to the president, and we will get your reaction.

(JOINED IN PROGRESS)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Jon is running for reelection during a challenging time for New Jersey and for America.

I don't have to tell you that. You have seen it in your own lives. You have seen it in your own communities. There are too many folks who are out of work and too many people who are looking for a job. There are too many hardworking families being squeezed by skyrocketing costs on the one side and shrinking wages on the other.

We have got men and women who have worked hard all their lives, who have done the right thing, all their lives, and now they're worried they won't be able to be the kinds of husbands and wives, mothers and fathers they had hoped to be because of economic factors beyond their control, seniors worried about whether they can stay on retirement, young people worried about whether they're going to be able to afford a college education.

(CHEERING AND APPLAUSE)

OBAMA: So, I know these are challenging times. And Jon knows these are challenging times.

I know folks are hurting, but I also know this. For the past four years, you have had an honorable man at the helm of this state during one of the most difficult periods in its history. You have had a leader who has put the interests of hardworking New Jersey families ahead of the special interests.

You have had a leader who has fought for what matters most to the people of New Jersey. That's the kind of Jon -- the kind of governor that Jon Corzine's been. That's the kind of governor that Jon Corzine will continue to be.

BLITZER: All right, so there you hear the president making the case for Jon Corzine.

Chris Christie, the main challenger to Governor Corzine, how do you respond to the president?

CHRISTIE: Well, listen, the president is right. These are awful times in New Jersey. We have the highest tax-burden state in America. We have the highest unemployment in the region.

We have had no private sector job growth under Jon Corzine. He diagnoses the problem correctly. I just think that Jon Corzine is not the solution. And I think the people of the state of New Jersey know that we have to get back to the policies that will lower taxes, cut spending in New Jersey, not continue to grow taxes.

President -- the governor, rather, has promised a billion-dollar tax increase next year. He said he would be happy to raise the gas tax. This is already the most heavily tax-burdened citizens in America.

I just think the president diagnoses the problem correctly, but his prescription is wrong. Jon Corzine is not the guy you want for the next four years, if you want New Jersey to get back on the right track.

BLITZER: Chris Christie, we will thank you very much for coming in.

And we will invite Governor Corzine to join us here in THE SITUATION ROOM as well.

Appreciate it. We will be watching that election very closely. Thanks very much.

CHRISTIE: Wolf, thanks for the opportunity.

Thanks everyone else for your questions.

BLITZER: Thank you, Chris Christie.

John King, New Jersey, there's a big race in New Jersey, a big race coming up in Virginia. What, if anything, will we learn about the state of 2010, looking ahead to 2010, the midterm Senate and congressional elections, based on what happens in a couple weeks in New Jersey and Virginia?

KING: It's always tricky, Wolf, to project these state races on to an election that's still 13 months away.

But, back in 1991, we did learn a little bit about 1992. In 1993, some of the odd-year elections gave us a clue about voter disillusionment in 1994. I would look at these two questions. One, the president has decided to go out publicly in Virginia and in New Jersey. He has taped an ad in Virginia. He will be active in New Jersey.

He is putting his personal prestige on the line. So, number one, he does have a bit more at stake now that he's personally involved. Number two, one of the big questions is, voter turnout traditionally goes down in non-presidential years.

Can the Obama campaign machine and the Democratic machine do in these odd-year races in New Jersey and Virginia what they were able to do last year in the presidential races, get young people to vote at a higher rate than normal, get African-American turnout at a higher rate than normal? And will they lose the senior vote?

Seniors have a lot of questions about health care and about some other issues in Washington. They are trending against the Democrats right now. That -- if you're trying to project what happens in those races to what might happen next year, I would watch turnout and I would watch how the seniors vote. BLITZER: All right. We're going to watch all of that. Guys, don't go away. We have more to discuss. Ed Rollins and James Carville are coming in as well.

The White House is ready to order bailed-out executives to give something back. Will demands for big pay cuts fly? James and Ed, they're getting ready to join our conversation.

And the nation is divided over health care reform, big-time. But a government-run option appears to be gaining some momentum.

(COMMERCIAL BREAK)

BLITZER: It's time to check the pulse of the nation when it comes to the heated debate over health care reform. We have some brand-new poll numbers.

Our senior political correspondent Candy Crowley, has been looking over the numbers.

Candy, what do we see?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, what we're seeing is, remember when we looked back in summer and we talked about how tough it was on the cause of health care reform, at least for the president's vision of health care reform? As it turns out, fall is not that much easier.

(BEGIN VIDEOTAPE)

OBAMA: And there are going to be some fierce arguments in the days ahead. That's how it should be.

CROWLEY (voice-over): The more difficult, the more personal the issue, the harder the fight and the closer the polls. The latest from CNN/Opinion Research Corporation found that 49 percent of Americans favor what they believe to be the president's plan for health care reform -- 49 percent oppose.

REP. MIKE PENCE (R), INDIANA: Republicans have a better plan. The Republican plan will create more jobs and more opportunity and more choices in health care, while containing costs and increasing access.

CROWLEY: Except that even though Americans are split about the president's plan, 50 percent still trust him more than Republicans to handle the big reform issues. Just 34 percent trust Republicans more.

And even as the idea of a government run insurance option seems somewhere between iffy and doubtful in the Senate...

SEN. HARRY REID (D-NV), MAJORITY LEADER: Leaning toward talking about a public option. No decision has been made.

CROWLEY: ... supporters may find reason to hope in these numbers -- 61 percent of Americans now favor an option for people to buy into an insurance plan run by the federal government. That's a six-point jump since the noisy town hall days of August.

OBAMA: Too many Americans -- too many Americans have waited too long for this to happen. We are going to pass health care reform by the end of this year.

(CHEERING AND APPLAUSE)

CROWLEY: The president is preaching to the choir on that one.

Whatever their reservations, most Americans, 53 percent, say the president's reform would be better for the country than no reform at all.

(END VIDEOTAPE)

CROWLEY: A lot of strategists I talked to today believe that it's quite possible those 49/49 split over Obama Care may not change at all while this process moves forward. The real numbers, these strategists say, that will count is after health care reform gets put in place and people begin to see what it does or doesn't do -- Wolf.

BLITZER: Candy, why is 61 percent, you say, now say they support some sort of public option. Back in August, it was 55 percent.

Is there an explanation why this has gone up?

CROWLEY: Well, a couple of things might have factored into it. And -- and one of them is that the town hall meetings, the more they went on, the more we saw them disrupted, the more a lot of people got turned off. But the other thing to keep in mind here is that a lot of people have different ideas of what a public option is. So lots of times if pe -- if you say, well, this will increase competition, they'll say, well, then I'm for that. If you say well, this may mean that your employer drops health care that he's now providing you and you will take the public option, then they're not for it.

So it depends on, really, what the concept is. But there is no doubt that, over time, the Democrats have done a good job. And the president, who is his own best salesman, has done a good job talking about the public option. What Democrats would really like is for the president to push it a lot more up on Capitol Hill.

BLITZER: Candy Crowley, thanks very much.

Let continue our conversation. Now, Democrats certainly looking for ways to make a government-run health care option acceptable to moderates and conservatives within the party. There are several plans on the table right now.

The most liberal proposal would have the federal government directly pay doctors, much like Medicare. That's what's in the House reform bill.

But opponents fear private insurers couldn't compete with the Feds and might be driven out of business. So one compromise would let states opt out of the public option. That's designed to reassure moderate Democrats worried about the impact on insurers in their states.

A third, more conservative approach, would trigger a public option in the future. That's if private insurers didn't provide more affordable coverage.

Let's bring back the best political team on television.

And Ed Rollins and James Carville will be joining us, as well, two CNN contributors -- Ed Rollins, why is it that this public option seems to be gaining ground?

ED ROLLINS, REPUBLICAN STRATEGIST: Well, I think Candy gave a very good explanation. People don't understand what -- what it all means. They think they're going to get something for free...

BLITZER: Right.

ROLLINS: And certain Americans are going to get something subsidized. So I think that they become in favor of it. If you get free -- free health insurance and you don't have it today, you're all for it. If you get subsidized health insurance.

But the bottom line here is what is this thing going to cost us?

And I think as you saw with the vote today, Americans and senators are very concerned about this deficit and are very concerned what all this is going to cost us.

BLITZER: James, the 60 vote margin you need in the U.S. Senate...

JAMES CARVILLE, CNN CONTRIBUTOR, CLINTON SUPPORTER: Right.

BLITZER: ...Olympia Snowe, the Republican -- lone Republican to vote for it right now, she says she might vote for something that would trigger the public option down the road...

CARVILLE: Right.

BLITZER: ...but not a formal public option included to go into effect right away.

Can the Democrats get to 60 with a public option?

CARVILLE: You know -- well, first of all, it's popular -- 61 percent. It's cheap. The CBO, of which the Republicans...

BLITZER: But politically, can they get...

CARVILLE: ...are always touting all the time...

BLITZER: ...can they get there? CARVILLE: And now says -- well, let me -- I'm trying to get to the -- I'm trying to answer it, Wolf. I just -- we need a setup here. Give me a second.

So it -- it's popular and it saves money. That might doom it in Washington, you know, it's the combination of those two things.

I don't know if they could get there or not. But the president -- I think what the Democrats are going to do is get 57 votes and go to the president and say, you've got to work to get the other three. And I think the president is really committed to this. And we'll see if he can do it.

Look, it's tough to get to 60, no doubt about it. But there's no doubt they're -- they're awfully close. The polls are going in their favor. The CBO is giving them good numbers. They've got a little wind at their backs. They might get this thing done. Let's give them a chance.

BLITZER: Joe Johns, you covered Capitol Hill for a long time.

Can they get to 60, realistically, if what the House Democrats want, that public option, is included in the final version?

JOE JOHNS, CNN CORRESPONDENT: Well, it -- it's whether you mean big public option or little public option, because there's a lot of concern out there about this thing. And it really breaks down along philosophical lines, which we've heard again and again over the years on Capitol Hill.

And that is, who do you trust, government to take care of your health care or private industry to take care of your health care?

So -- so it could be a bit of a tough sell. But I know there are a lot of Democrats who say if we don't have some kind of a public option, why did we do health care reform?

BORGER: Here's the difference from 16 years ago. Our poll also shows that people believe that the status quo is unacceptable.

And let me go to John on this, because you're out there talking to people about this.

Whether or not they know what a public option is or is not, how do they feel about the status quo?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, they don't like the status quo. That is universal. This is my 41st state in the next -- in the last 41 weeks. But this is conservative Nebraska. One of the people who says wait a minute when you bring up the public option is a Democratic senator from this Republican state, Ben Nelson.

Now, could he support a trigger?

He might be open to that. Is he going to support what Speaker Pelosi wants, a robust public option -- what is being described by Republicans as a much bigger government role?

Absolutely not. And that's why you still have this tug of war within the Democratic family, which makes it hard to see the 60 votes in the Senate right now.

But if you come out here anywhere in the country and say you want something to compete with your insurance company to bring the prices down...

BORGER: Right.

KING: Everyone at the table will say yes. If you say, do you want the government to play that role, that's where people start to divide. And it's a very different answer in Nebraska than you might get in New Jersey or in Oregon.

So that's what's making this so complicated and why Leader Reid in the Senate right now, has, perhaps, the most difficult job in Washington in the short-term.

BORGER: But that's what also leads me to believe that actually something will happen. Whether it's as large as President Obama wants remains to be seen. But, you know, I covered Hillary Clinton when she tried to do health care reform and people did not have the sense that they have right now that the system is broken. And now people really seem to understand that the system is broken and that we can't afford it anymore.

BLITZER: What, if anything, James, can the president do at this point to get that support he needs?

CARVILLE: Well, he's got to bring people in and -- and be very persuasive. I mean it's the old Lyndon Johnson thing. He's got to come and say let's reason together. And he's got to close the door and say we're not going to come out until we can get a deal.

And who knows if it's going to be a trigger or a limited public option?

And I think that Speaker Pelosi is right, they're going to try to pass something that is as strong as they can. It will get in the conference committee. You know, it won't come out the same way it went in. That's part of the legislative process.

But at a point, the president is going to have to -- and I think that he will -- he'll intervene very strongly. And I think Senator Reid is going to go to the president and say, look, I got you 57 votes here, Mr. President, on this thing. You've got to -- you've got to get the other three for me. And that's going to be where this thing is going to get very, very interesting.

BLITZER: Well, Ed Rollins, LBJ was a tough guy. He could persuade members of his own party and sometimes reluctant members of the opposition party.

Here's the question for you -- is Barack Obama capable of using those "LBJ tactics?"

ROLLINS: Well, he didn't have the experience that LBJ had as the majority leader. He didn't have the size and he may not have the stature. LBJ would basically drag you in and put -- put his arms around you and tell Wilbur Mills or somebody else, you do it or else. Look, I'm going to give this base back in your district are doing this. He swapped things to get his Medicare.

And he kept saying whatever you do, don't talk about the price. We'll lose if the people know how much this thing is going to cost.

So I think the key thing here...

BORGER: Too late.

JOHNS: Yes.

ROLLINS: I mean it's...

BORGER: It's too late.

ROLLINS: And I -- I've been around a long time, so I know history. But the bottom line here is the price is still the critical thing here. And people may be unhappy, as Gloria said, but they're going to be more unhappy if those who have health insurance have to pay more for those that don't have it. And that's the way it's going.

CARVILLE: But the -- but the CBO says it will save money. So why -- so we can talk -- see, Obama can talk about the price...

ROLLINS: Well, we don't...

CARVILLE: ...on this one because...

ROLLINS: We don't know, James.

CARVILLE: ...because (INAUDIBLE) going to come in...

ROLLINS: We don't know whether...

CARVILLE: Well, I know. But the CBO was right when it said it would cost more money. But now we say it's wrong because...

ROLLINS: No, no, no.

CARVILLE: (INAUDIBLE).

ROLLINS: What I'm simply saying is that nobody...

(CROSSTALK)

ROLLINS: ...nobody knows what this is going to cost.

UNIDENTIFIED MALE: Right.

ROLLINS: You can't add more people and subsidize their health care and it not cost money. Medicare now is broke. Medicaid now is broke. Social Security is now broke. Our country is now broke. And you're going to spend money on more people, it's going to cost you more money.

CARVILLE: No. But we're actually going to spend less (INAUDIBLE), see, just for the record. They say that. I don't know if...

ROLLINS: They say that.

CARVILLE: I don't know, but everybody believed them when they said more. So we -- what, so we don't -- we can just believe them when they say more...

ROLLINS: I don't think...

CARVILLE: ...but we can't believe them when they say less?

ROLLINS: I don't think anybody knows.

BLITZER: All right. We're just getting started.

Gentlemen and lady, stand by. We have a lot more to discuss, including the Obama administration moving to order pay cuts for top executives at those bailed out banks and the carmakers.

Should the government be regulating how much Americans make?

The best political team on television will tackle that.

(COMMERCIAL BREAK)

BLITZER: Let's get back to the breaking news this hour. The Obama administration will order companies that received the biggest government bailouts to slash the pay of their highest paid executives -- John King, how is this going to play?

It's being interpreted as a rather populist move.

KING: I can tell you, Wolf, that small town America, especially a place like this, people think the bailout money went to the rich corporate executives on Wall Street and hasn't come to them. Nebraska has 4.9 percent unemployment -- one of the lowest in the country.

And yet, you see the farms behind me?

Here's some of their product here, the local product, some corn. These farmers say they're still having trouble when they go to the small banks to try to get a credit line. There's still trouble for them.

And so if you're talking about bashing Wall Street or cracking down on Wall Street, that has almost universal appeal. There are some who, as we talked about with the candidate for governor, Mr. Christie, earlier, who question the role of government in all this.

But do they think in small town America that the bailout plans worked for them?

No.

BLITZER: How is it going to play from your perspective, James?

CARVILLE: Well, I -- look, I don't know what the bankers -- what they -- what they were drinking or what they were smoking. But if they thought they were going to run the country in a ditch and run their banks in a ditch and then have the government come in and spend hundreds of billions or trillions of dollars to bail them out and then go back to business as usual, they're -- they were being absurd and ridiculous. And, of course, the administration had to do this.

The public was in -- was just outraged by it. I mean it was ludicrous. And again, one has to wonder exactly what these guys were thinking. I don't -- I don't know. I'd love to hear from them.

BORGER: You know, Wolf, if there ever was incentive for companies to pay back their TARP money, this is it, because their top executives are getting their pay slashed by 90 percent. And instead of cash, they're getting stock. So, you know, they're going to want to pay back that TARP money, get their companies back on their feet and get -- get out of the umbrella of the -- of the federal government.

BLITZER: Yes. But some of those companies, Ed Rollins, like AIG, for example, they're going to have a pretty hard time paying back the billions that they took in U.S. Government loans and cash.

ROLLINS: Look, they are never going to pay it back. And to answer James' question, what are they drinking, they're still drinking expensive scotch and smoking big fancy cigars.

The bottom line...

(LAUGHTER)

ROLLINS: The bottom line, if the federal government -- this is good politics. This may not be good business, but it's good politics. And at the end of the day, if these people can't see that -- if the federal government is coming in, it's taken the role, almost, of a shareholder. And a shareholder or an executive on a board has a right to set management salaries. And I think that's the role -- I don't like the idea of some bureaucrat in Washington doing this. But they're not going to do it themselves. And I think, to a certain extent, as long as the federal money is still in there, they -- we have an obligation to make sure it's being spent wisely.

JOHNS: You know, one thing that's really interesting...

CARVILLE: I can't understand why somebody didn't say, look, fellows, let's just take a little bit more because we -- this is -- this is going -- this is -- this is put -- they're going to get us for being out of control. They could have been a little bit more clever about it and they probably could have gotten away with a little bit more.

JOHNS: Yes. You know, it's still symbolic, though, when you really think about it, because what Kenneth Feinberg and the administration are doing is...

BLITZER: He's the so-called pay czar.

JOHNS: Exactly. They're -- they're handling the salaries of like, something like 25 employees at...

BLITZER: The top 25 at seven companies.

BORGER: Yes.

JOHNS: At only seven companies. So when you think of all the excesses we've heard about in a variety of different, very large companies around the country, that did get TARP money, he's not even dealing with those. But perhaps it sends a message.

More importantly, politically, there are people out there who see this as an outrage. They think it's crazy they don't understand it. So, again, it's good politics.

BLITZER: It would be a totally different matter, Gloria, if the White House, the Treasury Department and the Obama administration said to a company like, say, like Goldman Sachs or JPMorgan, which did reimburse...

BORGER: Sure.

BLITZER: ...repay all of the loans they got from the -- from the Treasury and say to them, you have to make sure you limit the pay sal -- the salaries, the bonuses, the perks for your executives?

BORGER: Right. I mean right now, these are the companies that still owe us. They're shareholders. We're the shareholders.

BLITZER: The seven companies that they...

BORGER: Right.

BLITZER: ...they put up there.

BORGER: Right. As Ed pointed out, we are shareholders, effectively. We're American taxpayers who have propped them up and say to them, you've got to live by certain rules. And, by the way, it's not only salaries, it's also perks. So if you used to take the corporate jet, your country club membership was a part of your salary, not anymore.

BLITZER: And you heard Neil Barofsky, Ed Rollins, the TARP -- the special inspector general. He oversees how this money is going. We played this sound bite earlier. And I asked him specifically, given what you know right now -- and he's studied this stuff for almost a year, he's investigated, done all the work -- is -- if there were another financial disaster now, as occurred a year ago, given what the administration and the Congress have done in terms of regulations and oversight, would we all be better off?

And he said exactly the opposite, because nothing -- repeat nothing has been done in terms of oversight and regulation.

Now that was a damning indictment -- Ed Rollins.

ROLLINS: Well, I think -- I think it's a damning indictment and I think it's very true. I think the bottom line is that many people, Republicans and Democrats, because we did it at a time of transition, basically bailed out some people that they were friendly with, in some cases. And I'm not accusing them of anything, they just -- these are the banks that were in trouble. Many of them had come from those banks. And I think, at the end of the day, is they didn't put any strings around it. They didn't basically say, all right, how are you going to take this money and get it back to the small business guy?

How are you going to basically do what banks are supposed to do?

How are you going to make this a better system for American taxpayers?

They didn't do that. They just said go do your thing. They did their thing and (INAUDIBLE)...

BLITZER: And, James...

ROLLINS: ...back doing their thing again.

BLITZER: ...he said, also, if the banks were too big to fail then, that it's even worse now, because they're even bigger.

CARVILLE: All this can be true. But I do think that it started with President Bush. I want to be fair here. And it continued under President Obama. There are a lot of people that thought that we were going to have a collapse of the financial system. I'll never forget President Bush said, "This whole sucker could go down" -- sucker meaning the financial system.

That didn't happen. And, you know, maybe some credit is -- should be given to these -- to these guys for coming in and intervening. Certainly you can't say that everything they did was right. But I have -- again, I have no idea why the people in these banks that -- that got the bailout money and haven't paid it back that that they were just going to go on like nothing ever happened. It's sort of beyond me. And -- and I don't know buy they'd be surprised that this happened. It is totally within the realm of what should happen.

BLITZER: All right, guys, we'll see you back here tomorrow.

Thank you.

Thanks to all of you. The president of the United States talking about cleaning up the mess left behind. Jeanne Moos is getting ready to take a closer look at that.

It's Moost Unusual.

(COMMERCIAL BREAK)

BLITZER: On our Political Ticker, check out this new ad promoting a government-run option for health care reform. That's the actress Heather Graham playing the role of the public option in a race against big insurance companies. The MoveOn.org spot is scheduled there on national and cable TV and on the Web.

He's the popular Florida governor who wants to be the next senator from Florida. But Governor Charlie Crist's lead over a political opponent is slipping. In the Republican primary, Crist's lead over Marco Rubio has been cut in half. That according to a new Quinnipiac University poll.

And it's Dick Armey versus Newt Gingrich in a key Congressional race -- not exactly. Armey, the former House majority leader, is breaking with his party to endorse a Tea Party planner running on the Conservative Party ticket in New York's 23rd District. The former House speaker, Gingrich, is backing the Republican candidate. They're both running against Democrat Bill Owens, who, of course, is backed by President Obama.

Remember, for the latest political news at any time, you can always check out CNNPolitics.com or read my Tweets at Twitter.com, wolfblitzercnn -- wolfblitzercnn, all one word.

Let's go to Lou and see what's coming up at the top of the hour -- Lou.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": A lot is coming up, Wolf.

Thank you very much.

A Democratic health care measure has been killed by Democrats. The president's party now deeply divided. New polls reveal that the entire country is divided, as well. We'll be reporting on both.

What kind of health care plan could possibly pass in these circumstances?

We'll also be examining that question. And alarming new concerns about the swine flu. Panicked parents dealing with widespread vaccine shortages. The government now telling pharmacies to stretch their supplies and to ignore expiration dates for the protection of our children.

Who is responsible for this mess?

We'll be reporting on that. And bailed out Wall Street executives facing big pay cuts if they decide to listen to the pay czar. The president's pay czar slashing salaries at the big companies that received the most taxpayer money in the bailouts.

But does it go far enough and will anybody pay attention?

And a very tied gubernatorial race in New Jersey -- a referendum on the president's policies and the man who has been governor. An Independent candidate may make the difference. Chris Daggett, that candidate, will join me.

Please be with us for all of that, all the day's news and a lot more at the top of the hour -- Wolf, back to you.

BLITZER: A full show coming up.

Thanks, Lou.

See you then.

The president and the mop -- Mr. Obama is wringing everything he can from a Moost Unusual turn of speech.

Jeanne Moos is next.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some Hot Shots.

In Lebanon, a former Dallas Mavericks star teaches boys to dribble the ball.

In Germany, an artist helps restore part of the Berlin Wall.

In India, a Bollywood actress smiles during the 55th Annual National Film Awards.

And in New York, check it out -- a diamond ring the size of a walnut goes to auction over at Christy's.

Hot Shots -- pictures worth a thousand words.

President Obama is talking about using a mop to clean up the mess the Bush administration left behind. It's a Moost Unusual metaphor. So as usual, we turned it over to Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: (voice-over): He is chortling.

(VIDEO CLIP)

MOOS: He is chuckling.

(VIDEO CLIP) MOOS: Not even a mop could wipe the smile off the president's face.

OBAMA: I'm grabbing my -- my mop.

And with our mop cleaning up somebody else's mess.

MOOS (on camera): It's one thing for a politician to wrap himself in the American flag, but to wrap yourself in a mop?

(voice-over): President Obama is trying to mop the floor with critics who go after him for not having fixed the country's problems yet.

OBAMA: We don't want somebody sitting back saying, you're not holding the mop the right way.

MOOS (voice-over): Not since Gene Kelly practically made love to one has such attention been lavished on a mop.

(VIDEO CLIP)

OBAMA: Don't just stand there and say you're not mopping fast enough. Don't accuse me of having a socialist mop.

MOOS: But that's exactly what some are saying. There's even a socialist mop tie for sale.

(on camera): Critics of the president say the mop stops here.

(voice-over): That President Obama can't keep blaming his predecessor for the mess.

(BEGIN VIDEO CLIP FROM RUSHLIMBAUGH.COM)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: And then he says, "You're not holding the mop the right way." Well there -- there is a right way to hold a mop. I'm using the wrong end of the mop. It's the socialist mop. Heh, heh, Bush, I hate Bush.

(END VIDEO CLIP)

MOOS: Conservatives seem to take the mop rift as a slap in the face.

(BEGIN VIDEO CLIP FROM YOUTUBE.COM)

UNIDENTIFIED MALE: Now you win.

(END VIDEO CLIP)

MOOS: Everyone is putting their own twist on the metaphor.

(VIDEO CLIP)

MOOS: Even Jay Leno. (BEGIN VIDEO CLIP FROM "THE JAY LENO SHOW," COURTESY NBC)

OBAMA: Why don't you grab a mop?

Why don't you help clean up?

You're not holding the mop the right way. That's a socialist mop.

(END VIDEO CLIP)

MOOS: President Obama's supporters even taunted the opposition.

UNIDENTIFIED SUPPORTERS: Get a mop!

OBAMA: That's right.

MOOS: So while Mrs. Obama is grabbing a hula hoop to promote exercise for kids...

(VIDEO CLIP)

MOOS: Mr. Obama is grabbing his imaginary mop.

OBAMA: Saying you're not holding the mop the right way.

MOOS: And while critics call it stupid and they wish it would kick the bucket, the president is holding onto the metaphor like a dog with a mop.

(VIDEO CLIP)

MOOS: Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

BLITZER: Let's mop.

This important programming note for all of our viewers. Please be sure to watch the debut of Soledad O'Brien's groundbreaking report, "Latino In America." The two night event begins this evening, 9:00 p.m. Eastern, only here on CNN. It will also be simulcast in Spanish on CNN en Espanol. That's coming up tonight.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.