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Senate Rejects Tougher Abortion Limits; Friction Within Obama Administration Over Afghanistan War Plan?

Aired December 8, 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: Senators, unlike their colleagues in the House of Representatives, they are refusing to tighten restrictions on federal funding for abortion, the vote playing out only moments ago, but the issue still is dividing Democrats and threatening health care reform. Stand by.

Is there something wrong with a bailout for Main Street? The Republican and Democratic party chairmen, they are standing by to join us live to debate the merits of the president's new jobs and stimulus package.

And I will ask the RNC chairman, Michael Steele, about his new beef with the Senate majority leader, Harry Reid. He is getting a lot of heat for a reference to slavery.

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

Abortion is always a difficult and emotional issue, perhaps even more so right now with health care reform at state.

Only a few moments ago, the U.S. Senate rejected a measure that would ban abortion in any insurance plan that covers people receiving taxpayer subsidies. The amendment is far more restrictive than what is in the existing Senate bill. It was co-sponsored by Democratic Senator Ben Nelson and it now puts him at odds with so many members of his own party.

(BEGIN VIDEO CLIP)

SEN. BEN NELSON (D), NEBRASKA: Our amendment does not take sides on abortion. It is about the use of taxpayer money. The question before us is whether public funds for the first time in more than three decades should cover elective abortions.

SEN. FRANK LAUTENBERG (D), NEW JERSEY: I urge my colleagues, please, use your judgment. Make your own choices about your own family. Make your decisions as to what you would recommend to a daughter or a wife. But, for God's sake, let the woman choose what is best for her.

(END VIDEO CLIP)

BLITZER: All right.

Let's bring in our senior congressional correspondent, Dana Bash. Dana, it is not the end of this issue of abortion by any means as far as health care reform is concerned.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Not even close, Wolf.

Abortion remains a very big unresolved issue that divides Democrats and does still threaten to throw he health care off of its tracks, because when you're talking about first of all the Senate vote, Ben Nelson, of course, who is a Democrat, you heard him there. He has said he won't vote yes unless he gets these restrictions.

Now, every single vote counts on the Democratic side, so if they lose Ben Nelson, it is going to be very, very hard to pick up at least one other senator. Now it's just one, but every vote is very difficult to pass health care reform.

Now when you are talking about the long-term picture and getting a health care bill to the president's desk, it is also going to be hard, because even if they figure out a way around this in the Senate, the House has already proven that anti-abortion Democrats there have enough power to stop health care without this vote.

That is why these restrictions are actually in the House bill. So, when you talk about melding these bills, it is going to be another very hard issue to come together on for these Democrats to get a health care bill to president's desk -- Wolf.

BLITZER: All right, abortion one issue, the so-called public option the other big challenge right now for the Democrats, the government-run program that would compete effectively with the private sector.

BASH: That's right. I want to put 10 pictures up on the screen. These are 10 Democrats, five moderates, five liberals. They have been negotiating round the clock all week really since late last week trying to figure out a way around a public option.

And they have been working all day. They insist they're making progress, but let me just put up on the screen some of what they are talking about as an alternative to a public option, first of all, not- for-profit private insurance plans, and these plans would be run by a government agency, the Office of Personnel Management.

That is one idea on the table. Another -- and that appeals to conservatives who don't want anything government-run. On the liberal side, what they are looking for is a buy-in for Medicare for people starting at age 55. They say that that would greatly expand insurance coverage for people who are now uninsured.

And there is something else. They are also talking about tightening insurance reforms, tightening the levers if you will on insurance companies, because all of the Democrats in that room, even though they are philosophically divided, agree and they believe that the insurance companies need to be reined in to lower costs to make insurance more affordable. They hope they're going to get a deal tonight, but these differences are very, very deep philosophically and they have not been talking that long, these moderates and Democrats -- and liberals.

BLITZER: And even if they work out some deal in the Senate, they have got to get the members of the House to come along, so this is by no means a done deal yet. Dana is going to be busy over the next several weeks, maybe months.

(CROSSTALK)

BLITZER: In Afghanistan, the defense secretary, Robert Gates, is hearing firsthand why U.S. troops may not be able to start withdrawing in 2011, as hoped. Gates making an unannounced visit to the war zone today and meeting with the president of Afghanistan, Hamid Karzai.

Karzai says it may be five years before his army is ready to take on the insurgents. Here in Washington, meanwhile, the top war commander and the U.S. ambassador to Afghanistan were grilled about the exit strategy on Capitol Hill.

Let's bring in our foreign affairs correspondent, Jill Dougherty.

Jill, how did it go?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, it was a whole day up there, really, and they were looking for daylight on Capitol Hill, daylight between the top general in Afghanistan, the top diplomat, and their on the policy that is now guiding this war. In other words, were they really on board with it?

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): Two key players running the war in Afghanistan, a few months ago, they appeared to differ on more troops. Now they're marching together...

GENERAL STANLEY MCCHRYSTAL, U.S. COMMANDER IN AFGHANISTAN: Ambassador Karl Eikenberry, an old friend.

KARL EIKENBERRY, U.S. AMBASSADOR TO AFGHANISTAN: And friend of many years.

DOUGHERTY: ... and saluting President Obama's strategy.

MCCHRYSTAL: The mission is not only important; it is also achievable. We can and will accomplish this mission.

DOUGHERTY: Members of Congress itching to question General Stanley McChrystal on President Obama's target of July 2011 to begin withdrawal. McChrystal says, it's not a deadline.

MCCHRYSTAL: And by the following summer of July 2011, I think the progress will be unequivocally clear to the Afghan people. And when it's unequivocally clear to them, that will be a critical decisive point. DOUGHERTY: But McChrystal says he will do what the president wants.

MCCHRYSTAL: It is a solid decision the president has made. And I -- I operate under the assumption that we will begin to decrease our forces beginning in July of 2011.

DOUGHERTY: The general appears to further than his president, repeatedly talking about winning, defeating the Taliban by making them irrelevant.

MCCHRYSTAL: Preventing the Taliban from being an existential threat to the government of Afghanistan and thus to the Afghan people. So, rather than wipe out every Taliban member, what we need to do is lower their capacity.

DOUGHERTY: Ambassador Karl Eikenberry brushes off reports that, in leaked cables to Washington, he opposed sending large numbers of new troops.

EIKENBERRY: That at no point during this review process, Mr. Chairman, was I ever opposed to additional troops being sent to Afghanistan.

DOUGHERTY: And sharp questions about Afghan President Hamid Karzai.

UNIDENTIFIED FEMALE: We know that it's been completely and totally corrupt.

DOUGHERTY: But, despite misgivings Eikenberry expressed to President Obama in private, he now says:

EIKENBERRY: President Karzai, in his inauguration address, he did talk about efforts to go after corruption.

(END VIDEOTAPE)

DOUGHERTY: And in a striking moment, General McChrystal said he did not make a recommendation to president on the 2011 date for beginning the withdrawal of forces. And that is a keystone of President Obama's strategy, although, Wolf, he did say he is comfortable with it.

BLITZER: Jill Dougherty, thank you.

David Gergen, by the way, and the best political team on television on television are standing by to follow up on this so- called war of the generals. We will assess what is going on.

In the meantime, let's check in with Jack Cafferty for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: That July 11, 2011, departure date for our forces, that thing turned into Silly Putty in about a New York minute, didn't it? Now everybody is all over the lot, maybe not, maybe, and who knows, and it could be longer.

BLITZER: It's a little fluid, a little fluid.

CAFFERTY: A little fluid. I like that.

President Obama's approval ratings are a little fluid as well. They are moving south, not in the direction he would like. Double- digit unemployment, rising deficits, spending, unclear fate for health care reform, his decision to send 30,000 troops to Afghanistan, 30,000 additional ones.

A new CNN/Opinion Research Corporation Poll shows only 48 percent of Americans approve of how Mr. Obama is handling his job -- 50 percent now disapprove.

It is a pretty significant drop in approval from earlier in his term. In July of this year, he had a 56 percent approval rating. And in February, it was a whopping 67 percent.

President Obama fares even worse in the Gallup daily tracking poll. That puts him at 47 percent approval, a new low in that poll, which includes a measly 14 percent approval rating among Republicans.

Gallup points out, while most Democrats still approve of President Obama, he's seen big drops in support among both Republicans and independents.

Now, these new numbers are apparently getting under the White House's skin. Spokesman Robert Gibbs mocked the reliability of the Gallup daily tracking poll, saying that he was -- quote -- "sure a 6- year-old with a Crayon could do something not unlike that" -- unquote.

Gibbs says he doesn't pay any attention to the meaninglessness of it all.

Want to bet?

Here's the question: What's behind the collapse of President Obama's approval ratings?

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

When they start saying, I don't pay any attention to that, it means they are paying a lot of attention to that.

BLITZER: Sort of like TV executives say they don't pay attention to ratings.

CAFFERTY: Yes, exactly.

BLITZER: Yes.

CAFFERTY: Yes. But just let the ratings go down, and see how fast you are out on the corner going, taxi?

(LAUGHTER) BLITZER: Thanks, Jack.

CAFFERTY: Yes.

BLITZER: President Obama is the commander in chief, but are all commanders on the ground in Afghanistan on board with his new war plans?

And amid the new Afghanistan strategy, there is talk of discord between the top military commander there and a top diplomat. There's also talk of President Obama wanting to ensure agreement among all the military commanders.

(COMMERCIAL BREAK)

BLITZER: Amid the new Afghanistan strategy, there is now talk of discord between the top U.S. military commander in Afghanistan and the top U.S. diplomat in Afghanistan and talk of President Obama wanting to ensure agreement among all the military commanders.

Let's discuss with our senior political analyst Gloria Borger, conservative commentator Terry Jeffrey -- he's editor and chief of CNSNews.com, Democratic strategist and CNN political contributor Donna Brazile, and our senior political analyst David Gergen.

Is this a real battle that is going on between the top general in Afghanistan and the top diplomat there, who himself is a retired general?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Wolf, there are two concerns in the White House tonight. One is about this story in "The New York Times" today saying there is a serious, deep riff between our Ambassador Eikenberry, former general, former commanding general in Afghanistan, and General McChrystal.

The White House says, look, there are -- this is not without frictions. But they believe the story is way overblown, and that when the two men for example did not speak to each other, they were in separate compartments flying to the United States, that in fact Ambassador Eikenberry really wanted to sleep and he wanted a separate compartment.

So, they're not saying that there are no frictions, but they think the story is overblown. There is more heartburn in the White House over a sense that the generals may not be fully on board about the deadline in July of 2011.

And for that the president did call in both Eikenberry and McChrystal, very importantly McChrystal, the day before they testified yesterday -- or over the weekend to talk to them and put some steel in there. And I was told by one White House aide, he made it clear to General McChrystal that July 2011 was not a suggestion. It was not some sort of random idea. He meant it.

(CROSSTALK) BLITZER: But the White House did release, Donna, a picture of Eikenberry and McChrystal in the Oval Office with the president showing that they are all basically working together.

The president is surrounding by a lot of generals right now, his national security adviser, General Jones, a retired Marine Corps commandant, and he's got Admiral Mullen, the chairman of the Joint Chiefs. So, he's got a lot of generals he has got to deal with.

DONNA BRAZILE, CNN POLITICAL ANALYST: Well, it is clear to me that the president really would like to get the strategy exactly right this time so that we can begin to draw down our troops some time in the summer of 2011.

It is also important to understand that the president is calling the shots, that he is involved in making these decisions, that he is leading the discussion, but he is also getting a significant amount of support from a lot of his civilians as well.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: You know, they did testify today together on the Hill, and while they didn't appear to be joined at the hip, they were singing from the same page. And that is because they went through these murder boards, if you will, at the Pentagon over the Pentagon for a few hours, where they both had to kind of learn to give the same answers to those questions.

BLITZER: Rehearsals.

BORGER: Rehearsals.

I think the concern right now is that the secretary of state, Hillary Clinton, and the secretary of defense, Gates, are going to have to be mediating these relationships between McChrystal and the ambassador, Eikenberry, and that is a problem.

(CROSSTALK)

BLITZER: Let me let Terry weigh in.

(CROSSTALK)

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: Well, Wolf, it doesn't matter whether the general and the ambassador disagree. What matters is whether they carry out the policies of the president of the United States and whether the president is absolutely committed to that policy and he has arrived at it through an analysis that tells him this is the best way for the United States to succeed in Afghanistan.

What may be a problem is -- the reason that he is getting some resistance from the military is he has not persuaded them that this is the best way to proceed, especially with this deadline that David was talking about.

GERGEN: I agree with one point you just said, Terry. That is the real emphasis now is on implementation. That is the what central concern in the White House is.

And what I'm told is, contrary to what we saw earlier along with General McChrystal, when the president was not speaking to him very often, they are going to have a lot of conversations now. This pattern of having some 30 hours of meetings before they made the Afghanistan announcement, they want to continue to momentum of those meetings and continue to call them in to make sure that everybody is on the same page and they execute.

BORGER: And that is why Secretary Gates is in Afghanistan right now, because there is a change. You have got to start dealing with Karzai, not just complaining about Karzai.

(CROSSTALK)

BLITZER: In my experience, in all the years covering the military, when the commander in chief gives an order, they salute. They say, yes, sir. They implement that order.

So, Donna is absolutely right. The commander in chief, if he is firm and decisive, they will obey their commander. If not, then he's got -- they have all got some problems.

BRAZILE: There is a lot at stake, and I am sure that they are on board.

BLITZER: Don't go away. We are only just starting. We're going to talk about some more.

Also, there is a new probe of the Fort Hood massacre. This time, the FBI is the focus -- details of the investigators under investigation.

(COMMERCIAL BREAK)

BLITZER: The best political team on television is standing by.

(NEWS BREAK)

BLITZER: But let's back to Gloria, Terry, Donna and David right now.

Gloria, the so-called public option, as far as health care reform is concerned, is it alive or dead?

BORGER: It is on life support, I would say, because everybody is searching for a way to get 60 votes. And so you have all of these new plans, a quasi-public option, people buying into Medicare at the age of 55, all kinds of things floating around right now, because, as we always joke, it is kind of like a game of Whac-A-Mole, and you have to figure out where you can get your votes. And so, you know, this is kind of an ugly thing to be watching, as we are.

BLITZER: Alive or dead?

JEFFREY: Well, over and over and over again, Joe Lieberman has said he will not vote for cloture if it has a public option in it. So, if the Democrats are smart, Wolf -- and I hope they are not -- they will pull the public option out, because what they have left are heavily regulated insurance companies in a government exchange, where most people are going to get federal subsidies to buy insurance.

That effectively would put the government in control of the health care anyway, without a public option.

BRAZILE: The most expensive option is if we do nothing and allow people to continue to use the emergency rooms across the country to get health care. That is an option that I hope we don't go back to.

And I think that this -- it is still alive, Wolf. Gloria is absolutely right. It is on life support. And Senator Reid, I know, is fighting hard to keep those 60 votes.

GERGEN: Wolf, the name of the game now is to get to 60 votes to get it through the Senate. And I have been told both at the White House and on the Hill that they -- Senator Reid is reasonably confident about 58 votes. He needs two more. The focus is on three senators, Joe Lieberman, Olympia Snowe, and Ben Nelson.

Now, they have got to get two of those three in order to get to 60. They had the big vote on abortion this afternoon. Ben Nelson lost. That may mean that Ben Nelson is gone for the 60. So, they need the other two. They have to have the other two. The way to get Olympia Snowe and Lieberman is going to shrink -- is to shrink down the public option, make it much less robust.

And if they get that, it is conceivable they can get it. I think they are actually hopeful they will get the 60.

(CROSSTALK)

BLITZER: Let's say they get Lieberman and Olympia Snowe, the moderate Republican from Maine. Let's say you get that and you hold on to everyone else. It gets past the Senate, and they go to a House- Senate conference committee to reconcile the differences. Is it a done deal that they're going to reach an agreement between the House and the Senate?

(CROSSTALK)

BORGER: No, no. But -- and, first of all, if you get those folks, even before your conference committee, you could lose some liberals here.

GERGEN: You could. I think they think they won't.

(CROSSTALK)

BORGER: But they could.

(CROSSTALK)

BLITZER: Bernie Sanders of Vermont, Russ Feingold of Wisconsin. (CROSSTALK)

JEFFREY: Here is their real problem.

BORGER: And the president -- by the way, at a certain point, when you are talking about a conference committee, the president has to say, this is what I will accept and this is what I won't accept.

JEFFREY: If you just look at the numbers and the votes, here is their real problem. They put down Nelson's Stupak-type abortion amendment in the Senate today.

If that bill goes back to the House without the Stupak language in it, you already had 38 Democrats vote against the bill because of other reasons, even though the Stupak amendment was in it. Without that amendment, Stupak is gone and many other Democrats. It does not pass in the House without...

(CROSSTALK)

BRAZILE: Well, I just continue to believe that the Democrats will get it done. Getting there will not look pretty. It will be tough, but we will get it done.

And as we speak, you know, hundreds of people tonight are dying because they lack affordable health care. We need to do something.

BLITZER: Donna is a true believer.

BRAZILE: I am a believer.

BLITZER: And she's praying.

You're going to be in this church this Sunday praying for that, aren't you?

BRAZILE: If I am not on CNN.

(LAUGHTER)

BLITZER: Yes. You can do both.

(CROSSTALK)

BRAZILE: I do both.

BLITZER: You do both.

(CROSSTALK)

JEFFREY: Donna does not want to pray for abortion funding in the health care plan.

(CROSSTALK)

BLITZER: All right, guys. BRAZILE: Don't start tonight.

BLITZER: Thank you.

(LAUGHTER)

BLITZER: President Obama says America can afford another jobs and stimulus package, but is he borrowing from the bailout and ignoring the deficit? Stand by, a live debate coming up between the chairmen of the Democratic and Republican parties.

(COMMERCIAL BREAK)

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

Happening now: Creating jobs is a top job for President Obama. He has got a new plan. Critics accuse him, though, of ignoring something that will plague the U.S. long term.

In the health care debate, why is the Senate majority leader talking about Republicans and slavery? The heads of the political parties, the Democratic and Republican party chairmen, they are standing by live to debate what Senator Harry Reid said and a lot more.

And flags and flowers, prayers and praise -- traffic and people in the Seattle area stop to honor those four police officers recently shot dead by a gunman.

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

President Obama says America still needs to spend its way out of the recession. He laid out his new multibillion-dollar jobs and stimulus plan today. He says the nation can afford it because the Wall Street bailout is costing taxpayers less than he originally thought. Budget hard-liners see it differently, accusing him of ignoring the soaring federal deficit.

Let's go to our White House correspondent Dan Lothian. He has got the latest -- Dan.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, the administration is not putting a price tag on any of these proposals, not even giving any estimates at all. They simply say that this is an effort to get Americans back to work, to help small business, but some Republicans are not buying the whole package.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Just in time for the holidays, the White House is re-gifting, looking to tap unused bailout funds to increase lending to small businesses and tax credits to encourage them to hire, although that would require congressional approval.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And given the challenges of accelerating the pace of hiring in the private sector, these targeted initiatives are right, and they are needed.

LOTHIAN: Laying out his plan at the Brookings Institution, the president also called for more infrastructure investment to create jobs modernizing highways, railways, bridges, seaports, and the new proposal to give Americans rebates for making their homes more energy- efficient.

But Republican critics are already picking the president's proposal apart, especially on using TARP money to create more jobs.

REP. JOHN BOEHNER (R-OH), MINORITY LEADER: This makes me so angry. I -- I was there, all right. I know all about TARP. All right. First, it was never intended that all of the money would have to be spent. But any money that wasn't spent was to go to the deficit. And the idea of taking this money and spending it is repulsive.

LOTHIAN: But the Obama administration sees more spending as a way to lift the economy and create more jobs.

OBAMA: Now, there are those who claim we have to choose between paying down our deficits, on the one hand, and investing in job creation and economic growth, on the other. This is a false choice.

LOTHIAN: It's false, says the president's top economic adviser, because employed Americans are an asset.

CHRISTINA ROMER, CHAIR, COUNCIL OF ECONOMIC ADVISERS: We know that putting people back to work is the -- one of the crucial things you can do to help the -- the deficit, because when people are working again, they're paying taxes again.

(END VIDEO TAPE)

LOTHIAN: So what they're really trying to do, Wolf, is to strike a balance between paying down the deficit and also creating jobs. And one senior administration official saying that they hope they can use between tens of billions of dollars -- perhaps as much as $100 billion -- to pay down the deficit from that TARP surplus -- Wolf.

BLITZER: A double challenge for the president -- creating jobs and reducing the deficit -- not easy by any means.

Dan, thanks very much.

Let's debate the president's new jobs plan and more.

Joining us now, the chairman of the Republican National Committee, Michael Steele. He is the former lieutenant governor of Maryland.

And his Democratic counterpart, DNC Chairman Tim Kaine. He's the outgoing governor of Virginia.

Michael Steele, the president wants to lower taxes for small businesses, which go out and create so many jobs. I -- I assume you like that proposal that he announced today.

MICHAEL STEELE, REPUBLICAN NATIONAL CHAIRMAN: I like it when it's real, but it's not real, Wolf. That's the reality of it. It's -- I mean small business owners are not stupid. You're telling them that we're going to spend money, we're going to cut down the deficit while we spend more money and we're going to give you a tax cut while we spend more money. This makes no sense. And -- and it is the same argument that we've heard now for the last few weeks, that people just aren't buying it.

The reality of it is if you want to get this economy started, you need to look at the source of that engine. And that engine is small business. That source is small business.

Why aren't we putting the dollars in the pockets of those small business owners instead of through this health care plan and now through this taking TARP money and putting it over here -- you know, $200 billion here and there.

BLITZER: But let me just rephrase the question. The president says he wants to lower taxes for small businesses. That's something Republicans like.

STEELE: Absolutely. I mean but that, in and of itself, is not going to help those small businesses get to where they need to be, Wolf, when, at the same time you're increasing the regulatory burden, the tax burden and other burdens on those very same small businesses.

BLITZER: All right. You've taken...

STEELE: You're not creating a marketplace for them to go into and -- and get the capital and credit that they need...

BLITZER: So you're hearing...

STEELE: ...to spend.

BLITZER: ...you hear the point he's making, Governor Kaine. You're going to give them a little benefit, but you're going to take away a lot more through regulation and all these other efforts that you're going to be putting in.

TIM KAINE, DEMOCRATIC PARTY CHAIRMAN: Well, Wolf, these guys' talking points is to be against anything the president is for. And so a year ago, when the economy was in freefall, he put a big recovery and jobs bill on the table that has already saved or -- or created 1.6 million jobs by all non-partisan estimates.

Today, he's laid out a strategy to go right at small business success, focusing on tax credits for hiring. And it looks like the reduction of capital gains taxes for new businesses and startups.

Startup businesses and small businesses are the engine in the American economy. And I don't know who Michael has been talking to, but I've been talking to a lot of business owners who are very, very excited about a proposal that -- that directly... BLITZER: All right...

KAINE: ...focuses on small business success.

BLITZER: Let's let Michael Steele respond to that.

STEELE: Yes, I bet you have been talking to them. And they -- and what they've been telling him is that -- it's something you're not listening to, Governor. It's something the president is not listening to. And what you've just described is a farce. I don't -- this (INAUDIBLE)...

KAINE: Michael, let me just say this...

STEELE: This -- let me -- can I make my point?

KAINE: Let me -- Michael, let me say this.

STEELE: I will -- I will make my point and then you can say whatever you want. But this is the real...

KAINE: Great.

STEELE: ...this is the reality that you have to face right now, Mr. Chairman, is that small business owners...

KAINE: Well, I'm going to tell you my reality.

(CROSSTALK)

BLITZER: Hold on.

(CROSSTALK)

BLITZER: One at a time.

KAINE: I am the governor of a state...

BLITZER: Governor, hold on one second.

Hold on.

KAINE: ...that is...

(CROSSTALK)

BLITZER: Go ahead.

(CROSSTALK)

BLITZER: Finish your point.

STEELE: Small business owners in this country are closing their shops, they're not hiring people. Now, I don't know what this imaginary 1.6 million people who had their jobs saved.

Did anyone tell them, because the -- the line at the unemployment office is now 4 point million people.

So the reality right now for small business owners is that you're not doing the job. The president is not doing the job in connecting their reality to their...

BLITZER: All right...

STEELE: ...to their bottom line.

BLITZER: Governor?

KAINE: All right, let me come back.

First, when the economy was losing 800,000 jobs a month a year ago, Michael and his colleagues were just standing around and saying heck of a job. This president tackled it through a recovery act. And the non-partisan estimates, the Congressional Budget Office, non- partisan economists looked at by "The New York Times," and even John McCain's principal campaign economist, Mark Zandi, has said that the recession is coming to an end because the stimulus is working.

Last month, the job losses were 11,000 -- down like 800 percent -- 80 percent from just a year ago.

This bill that goes after small businesses is something I know about. Virginia, eight times in the last four years, has been named the best state for business in the United States and one of the top five states to start a business. And the way we do it is we go and we look at the ways to make the tax code fair to small businesses.

STEELE: But Governor...

BLITZER: All right. Hold on...

(CROSSTALK)

KAINE: That's what this pres...

BLITZER: Hold on.

KAINE: That's what this president is proposing to do...

BLITZER: All right...

KAINE: And that's exactly what the small business sector in this economy needs.

BLITZER: I want both of you to take a breath.

We're going to continue this debate. We'll take a quick break.

We'll also discuss that controversial comment by the Senate majority leader, Harry Reid, comparing health care reform and associating it with the abolition of slavery.

What was he referring to? Stand by.

(COMMERCIAL BREAK)

BLITZER: We'll get back to the chairmen of the Republican and Democratic Parties in just a moment.

But Betty Nguyen is monitoring some other important stories right now incoming into THE SITUATION ROOM right now -- Betty, what's going on?

NGUYEN: Hi there, Wolf.

Well, a somber procession today in Tacoma, Washington. Thousands of police and other emergency responders from around the world and back joined together for today's memorial to four Lakewood police officers gunned down November 29th at a coffee shop. The procession of more than 2,000 police and fire vehicles delayed the service at the Tacoma Dome. But the Dome seats some 20,000 people and telecasts were made available for the public at several other sites.

Lead plaintiff Eloise Cobell and thousands of Native Americans stand to receive up to $1,000 each under a proposed settlement offered by the U.S. government. It stems from a $1.4 billion class action lawsuit over government mismanagement of tribal lands. That suit was filed back in 1996. A federal judge must approve the plan and Congress would also have to pass a bill to implement it.

Well, the first woman to win an Indy car race will try her hand at NASCAR. Danica Patrick announced today that she will drive for a stock car team owned by Dale Earnhardt, Jr. She'll make her NASCAR debut at Daytona International Speedway on February 6th. But Patrick isn't leaving Indy. She finalized a three year contract extension with Andretti Auto Sport last week and she did not say how many NASCAR races she might run next season. But you get -- bet people will be interested in seeing how well she does -- Wolf.

BLITZER: She's always exciting to watch.

NGUYEN: Yes.

BLITZER: There's no doubt about that.

All right, Betty.

The Senate majority leader, Harry Reid, he stirred up some controversy yesterday by comparing the battle over health care reform with the fight ending slavery.

We're back with the Republican Party chairman, Michael Steele, and the Democratic Party chairman,

Tim Kaine.

Governor Kaine, this is what Harry Reid said yesterday, in part.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D-NV), MAJORITY LEADER: If you think you've heard these same excuses before, you're right. When this country belatedly recognized the wrongs of slavery, there were those who dug in their heels and said slow down. It's too early. Let's wait.

(END VIDEO CLIP)

BLITZER: Would you have used that comparison, that analogy, slavery -- digging in your heels and trying to keep slavery going and make that analogy to health care reform?

KAINE: Wolf, I probably wouldn't, just because it's intense. But I know that feelings are very, very strong. They're strong on the Republican side, too. The other day, Senator Lamar Alexander compared Medicaid to a ghetto. That's language that probably isn't appropriate either.

But the fact of the matter is this. The Democrats are trying to what the American public wants them to do, which is to reform health care so that we provide security for the insured, coverage for the uninsured and hold costs down.

And the Republicans, as was evidenced by a memo released within the last 10 days by Senator Judd Gregg, are trying to figure out every way they can to slow it down and delay it.

We're going to move forward to make something happen. It's time for action...

BLITZER: All right...

KAINE: ...if the other side believes it's time for delay, that's their prerogative. It's not what the American public wants.

BLITZER: Yesterday, Senator McCain asked Senator Reid, Michael Steele, to either apologize or clarify.

Today, the majority leader said this.

(BEGIN VIDEO CLIP)

REID: And at pivotal points in American history, the tactics of distortion and delay have certainly been present. They've been used to stop progress. That's what we're talking about here. Anyone who willingly distorts my comments is only proving my point.

(END VIDEO CLIP)

BLITZER: All right.

Are you satisfied with that explanation, Michael Steele?

STEELE: No. And there's no distortion of his -- of his point. He said what he said and it was very clear. I said yesterday and I'll repeat it again, it was an ignorant statement to make. And as a leader in the United States Senate, he should either come to the well and apologize to the American people, to his colleagues for making such an ignorant remark or, in my view, should consider another line of work. But we're working on that. That will take care of itself in time.

The reality for -- for the country right now, is that you're seeing played out in -- in large measure the arrogance of power, where Democrats feel that they can come to the well of the Senate, say whatever they want to say, do whatever they want to do and there's not a doggone thing you can do about it, America. You can't stop us.

Well, I'm here today to say you can. You're empowered because we are still a government...

BLITZER: All right...

STEELE: ...of, by and for people. And this kind of hot rhetoric, whether -- whether what side it comes from, has no place in this debate. And I think the senator should step away from it.

BLITZER: I think it's fair -- and, Governor, you -- I'm sure you agree, the American public hates this kind of discourse when they hear politicians getting this passionate, this angry about these kinds of issues.

KAINE: Well, Wolf, I think that's right. I think what American -- the American public wants to see is action. And so, you know, they don't like rhetoric.

But another thing they don't like is they don't like gridlock, delay, obstruction. They want to see progress and results.

Every Democratic president since Harry Truman has made efforts to try to do fundamental health care reform so that those without insurance have access to health care and those with insurance get some basic and fundamental protections.

This is not a new thing. It's been on the table as a dream for this country for a very long time. And we have now gotten bills through most committees and through the House. We are on the verge of a major historic landmark in the health care future of this nation.

And, obviously, there are folks who want to delay it and -- and obstruct, just as there was with Medicaid or Social Security. But we're not going to be slowed down by those who just kind of want to get in the way. We're -- we're working to find a common sense set of solutions that will serve the American public and we feel very, very...

BLITZER: All right. I think...

KAINE: ...good about the chances of making that happen.

BLITZER: I think that if Harry Reid would have said what you just said, Social Security and Medicaid, he wouldn't have been in such hot water right now. But whenever you bring up slavery or the Holocaust, for that matter, and make those kinds of comparisons, you know you're in trouble.

A final quick question for you, Michael Steele.

Peter Hamby, our producer, tells me you've got a book coming out next month.

Is that true?

STEELE: That's what I'm hearing some -- somewhere down the line, that we're going to be sharing some ideas about the future direction of our country and our party. And I think it speaks to this very moment we're in right now and certainly to what Governor Kaine just mentioned.

This is not about obstructing and delaying. This is doing what the American people want. It is paying attention to what they're saying. We're listening to the American people...

BLITZER: All right...

STEELE: ...and we're trying to get it very -- made very clear to them that we stand on their side.

And I'll just end with this one point and I think it really says it all. In -- in comments by Representative Conyers, who -- who was quoted in an interview saying: "With respect to the health care bill, what Rahm Emanuel wants is just give us anything and we'll declare victory."

Well, if that's what this is all about, Governor, then I think the American people want a little bit more than that.

BLITZER: All right. I want both of you to come back and continue this discussion, if you will. We'll certainly have you back, Michael Steele, when your book comes out. But we hope to have both of you back in the coming days, because we have a lot more to discuss.

A good -- a good debate between the two party chairmen.

KAINE: Wolf, we'll come back and talk about...

STEELE: Thanks, Wolf.

KAINE: ...the health care bill when it passes.

Thanks very much.

BLITZER: Maybe even before it passes...

STEELE: God help us.

BLITZER: ...now, Governor.

Guys, thanks very much for that.

Two good guys coming into THE SITUATION ROOM. After the break, Jack Cafferty and your e-mail. This hour's question -- what's behind the collapse of Obama's approval ratings?

Stand by.

(BEGIN VIDEO CLIP)

OBAMA: And with my new economic team, at the headquarters of my presidential...

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Let's get right back to Jack for The Cafferty File -- Jack.

CAFFERTY: The question this hour, what's behind the collapse of President Obama's approval ratings?

The latest Gallup daily tracking poll is down to 47 percent approval of how he's doing his job.

Chris in Philadelphia: "Obama was the savior. He was going to ride in from Illinois and save the country in record time. In this world of instant gratification, he hasn't worked fast enough. Therefore, he hasn't lived up to the crazy expectations. Around election time, as long as the economy isn't still falling and people are back to work, he'll be fine."

William writes: "It's easy. The American people, in large, don't agree with his agenda. He ran as a centrist, but he governs from the far left. This America. We don't like socialism. What's so hard to figure out?"

Frank writes: "President Obama's so-called transparency in government is anything but. His blatant arrogance and pushing the miserable health care agenda are also getting him nowhere. Continuing like this will result in a one term president."

And Joe in Corvallis, Oregon: "People expect too much. Rome wasn't built in a day. This nation's problems took years to develop. Obama is taking these issues head-on. People expect him to just make them disappear instantaneously. That's illogical, especially with the GOP doing all they can to tamper with his agenda. Give the man some time, let the Dems do what they have to do and his approval ratings will be back at 60 or 70 percent soon."

Ed in New York: "Americans see the traditional America slipping away, with our president trying to replace it with a culture of government dependency, as he travels the world bowing to world leaders and apologizing for America. He doesn't seem to understand how we became the strongest, most successful democracy in the world. And he seems not only ready, but anxious, to give it all up for a new and ominous direction." Iris writes: "The reason behind the president's drop in the polls is due to the number of gullible people who fall for all of the ridiculous lies spewed by whack jobs like Rush Limbaugh, Sarah Palin, Glenn Beck and John Boehner."

If you want to read more on this subject -- and you know you do -- go to my blog at CNN.com/caffertyfile.

It's where Wolf goes.

BLITZER: All the time. Every day, Jack.

CAFFERTY: OK.

BLITZER: Thank you.

Let's check in with Jessica Yellin to see what's coming up at the top of the hour -- J.Y., what are you working on?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Hey, W.B.

Coming up at the top of the hour, the president's new job creation plan -- billions more for roads and bridges.

But where will the money come from?

And what about all those so-called green economy jobs?

What will they bring?

We'll debate whether it's realistic.

And a tragic story about the man behind on his mortgage payments.

Was he really hounded to death by abusive debt collectors?

Please join us for all that and more at the top of the hour -- Wolf.

BLITZER: Can't wait.

J.Y., thank you.

To hear one politician tell it, President Obama has something against the beloved Christmas tree special -- a new development in the spat over Peanuts.

(COMMERCIAL BREAK).

BLITZER: On our Political Ticker, voters in Massachusetts are taking the first step toward filling Ted Kennedy's former Senate seat. Four Democrats are facing off in their party's Senate primary. Ted Kennedy's widow, Vicki, says she called them to wish all of them good luck, though she avoided endorsing anyone. The Democratic nominee will face off in January against one of two Republicans vying in today's GOP primary. A mayor in Tennessee is apologizing for accusing President Obama of deliberately interfering with a beloved holiday tradition. Russell Weisman of Arlington, Tennessee claimed that the president intentionally timed his speech about the war in Afghanistan to preempt the Peanuts Christmas special. He now says the remark on his Facebook page was, "A poor attempt of tongue in cheek humor" and he went too far.

Sarah Palin has had to face some critics during her book tour, but none quite like this one. A Minnesota man was arrested yesterday for throwing two tomatoes at the former Alaska governor. It happened while she was signing books at the Mall of America in a suburb of Minneapolis, St. Paul.

Some things you just have to see to appreciate. That's coming up, when we come back.

(COMMERCIAL BREAK).

BLITZER: What do you get when you put Queen Elizabeth and pop star Lady Gaga in the same receiving line?

You get a Moost Unusual meeting.

Here's CNN's Jeanne Moos.

(BEGIN VIDEO TAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): When Lady Gaga meets the queen, what's a girl to wear?

How about that white latex number from the bad romance video?

Nah, you couldn't even see the queen. Or that red gartery looking outfit. The queen would see too much of Lady Gaga. Or the revolving thing. But that could bump the queen. Wonder what Madonna wore. Hmmm, classy black. That settles it.

UNIDENTIFIED FEMALE: Latex and fishnets.

MOOS: Watch the queen give Lady Gaga the once-over. Lady Gaga curtsies. They maintain eye contact, which can be tricky when you you're looking into eyes painted like a panda's.

But at least Lady Gaga didn't get down on the floor and crawl -- or fall, as she did recently performing in Montreal. And to think that Michelle Obama got flak from some who thought she was too casually dressed when she met the queen and for touching her royal highness.

(on camera): Lady Gaga didn't play it safe. She stuck her neck out -- literally.

(voice-over): On her Web site, you can see the Elizabethan collar she wore when she performed at the royal variety show benefit, just like the collar Elizabeth I wore. Queens are nothing new for Lady Gaga.

(VIDEO CLIP)

MOOS: They impersonate her all the time. When she performed at the Human Rights Campaign, she even got a shout-out from the president.

OBAMA: It is a privilege to be here tonight to open for Lady Gaga.

MOOS: Now, here she is with the queen. "It's like someone from "Star Wars" meeting someone from Earth," read one post. "She looks like a tube of lipstick," said another.

She opted not to wear her famous bird nest -- head gear some mocked as "alien wear."

UNIDENTIFIED MALE: Because we are wearing our receivers.

MOOS: At least she didn't dare to wear her fire shooting bosom. That could have left the queen with third degree burns.

Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

BLITZER: I'll leave it there.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "CNN TONIGHT."