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President Obama Scolds Big Banks; Interview With South Carolina Senator Lindsey Graham

Aired December 14, 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: We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

President Obama has tried scolding, cajoling, even name-calling to try to get America's biggest banks to be less cautious in their lending. At the White House today, he pulled out his carrots and his sticks and delivered a message that the executives he calls fat cats should understand. He told them this: You owe us.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So my main message in today's meeting was very simple: that America's banks received extraordinary assistance from American taxpayers to rebuild their industry and now that they're back on their feet we expect an extraordinary commitment from them to help rebuild our economy.

(END VIDEO CLIP)

BLITZER: Here's what one banking chief said about the lending crunch after getting an earful from the president.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's the coal to our engine. Lending is what we do. And so we want to make more loans. We have to find a way to qualify more people and not put ourselves in risk three or four years from now because of actions we took at a moment in time that were not well-suited.

(END VIDEO CLIP)

BLITZER: Let's bring in our senior White House correspondent, Ed Henry. He's been reporting on what's going on.

All right, so, the bankers, I assume, liked some things they heard, didn't like some other things.

What's going on here, Ed?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, I think what's really going on when you talk to top White House aides, they realize the populist outrage all around the country about the fact that these bankers were bailed out by the taxpayers. Now they are getting healthy again. They're handing out bonuses, but they're not handing out loans. They're not giving loans to small businesses. They're not even refinancing for consumers who want to take advantage of those historically low interest rates.

And there is a fear here that some of the populist outrage might be turned on the president himself. He has called these bankers on the carpet before. His first month in office, he was railing against their big bonuses from the 2008 holiday season.

Now 2009 holiday season comes around, bonuses are back and they are still not lending to people. And so this White House is a little bit concerned that some of the outrage may be turned against this president. He's trying to get ahead of it and that is why he is being so aggressive.

But let's face it, he could end up facing a lot of pressure himself, political, Wolf.

BLITZER: Stand by, Ed, because we are going to continue our coverage of this coming up. I will be speaking with the president's senior adviser, Valerie Jarrett, about this White House pressure on Wall Street in the wake of the bailout. And we will also get a top Republican's view on some of the stories from Senator Lindsey Graham. He's standing by live as well, two very different perspectives coming up.

For Christmas, the White House may want the gift of a health care bill for the president to sign into law, but a new threat from independent Senator Joe Lieberman could deny Democrats what they want.

Let's go straight to Capitol Hill.

Our senior congressional correspondent, Dana Bash, is working the story -- Dana.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, Wolf, as we speak, Joe Lieberman is in a meeting with all Senate Democrats. This was an emergency meeting called to try to deal with the fact that he could throw this compromise that they have been working on into chaos basically and they are looking for plan C.

(BEGIN VIDEOTAPE)

BASH (voice-over): A political bomb potentially blowing up Senate Democrats' hopes that they were on the verge of compromise to pass health care.

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: This Medicare buy-in is, frankly, another way to try to get to a single-payer, government- controlled health care system.

BASH: Democratic sources tell CNN independent Joe Lieberman informed Democratic leaders he would support a GOP filibuster to block health care if it allows 55- to 64-year-olds to buy into Medicare.

LIEBERMAN: It has some of the same problems the public option had. It runs the risk of adding to the national debt. BASH: The problem is, Democrats had hoped expanding Medicare was the key to getting liberal Democrats to accept a health care bill without a public option, but they likely need Lieberman's vote to pass health care. A Lieberman spokesman tells CNN he made crystal-clear to Democratic leaders last week he had deep concerns about the Medicare buy-in, but senior Democratic sources say leaders are furious, they feel caught off guard by his outright opposition.

SEN. TOM HARKIN (D), IOWA: I have always thought that Senator Lieberman was OK with the Medicare buy-in.

BASH: One reason, he's advocated the idea in the past. In 2000, Lieberman even campaigned for a Medicare buy-in as Al Gore's running mate.

Left-leaning blogs are exploding with anger towards Lieberman, and one Democratic senator told CNN this is just the latest example of Lieberman poking Democrats in the eyes. Colleagues are still smarting over what many sees as a series of disloyal moves from his support for the Iraq War, to this speech at the Republican convention...

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: Senator Barack Obama is a gifted and eloquent young man who I think can do great things for our country in the years ahead. But, my friends, eloquence is no substitute for a record, not in these tough times for America.

(CHEERING AND APPLAUSE)

(END VIDEOTAPE)

BASH: Now, again, as we speak, Senate Democrats are all meeting. Joe Lieberman is there. On his way to the meeting, he spoke to our Ted Barrett. He said he was just trying to get a good health care bill. He said that he believes that the bill at its core is good and it will provide a lot of real reform for insurance companies.

One other very interesting thing. There is a lot of talk that perhaps that Democrats will just have to drop this idea of a buy-in for Medicare because of Lieberman's opposition. Talking to even the most liberal Democrats going into the meeting, Wolf, several of them said that they thought that was probably going to happen. A couple of them, Tom Harkin and even Jay Rockefeller, seemed to be resigned to that fact.

BLITZER: And so Lieberman might get his way.

Now, Democrats are being invited to the White House tomorrow to meet with the president. Do we know if Lieberman has been invited as well?

BASH: Well, he does officially caucus with the Democrats. This is an official Democratic caucus just taking place at the White House. So, it's hard to imagine he was not invited. We will see if he goes. I think probably a lot of it will depend on what happens in the meeting that is going on right now.

BLITZER: Because this is really a critical week right now.

BASH: Absolutely.

BLITZER: If they want to get it passed before they take off for Christmas, they have to get it going right now.

BASH: Absolutely.

And that is why in talking to Democratic sources here on the Hill and our colleagues talking to Democrats at the White House, the White House wants to get this done, just figure it out no matter how they do it.

BLITZER: All right, Dana, thank you.

Some critics are going after Senator Lieberman's wife. Hadassah Lieberman is a spokeswoman for the nation's largest breast cancer nonprofit organization, the Susan G. Komen for the Cure Foundation. Some liberal activists want the group to cut ties with Hadassah Lieberman, claiming she is tied to the health care industry.

The activists are asking celebrities like Ellen DeGeneres, Christie Brinkley, others associated with the breast cancer foundation, to sign on. No word if those celebrities will do that. The Susan G. Komen Foundation has just issued a statement saying it values Hadassah Lieberman's work and has no plans to cut ties with her at all.

Let's go to Jack Cafferty right now for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Joe Lieberman couldn't even win his Democratic primary last time out in the state of Connecticut. Here is one guy who has positioned himself in such a place that he could derail health care reform. How many insurance companies are headquartered in the state of Connecticut, where Joe Lieberman hails from? Check it out.

Turns out federal government workers haven't had it so bad during this recession, on average making nearly twice as much as workers in the private sector.

"USA Today" puts the average federal worker's pay at about $71,000, compared with about $40,000 in the private sector.

What's more, the number of federal workers making $100,000 or more went from 14 percent to 19 percent during the first 18-months of the recession, this at a time when more than seven million Americans lost their jobs in the private sector.

And this increase in federal workers making six-figure salaries is happening everywhere, big and small agencies, high- and low-tech jobs. The reasons for the jump in pay are substantial pay raises, along with new salary rules.

Consider this: Federal employees will get a 2 percent pay raise in January 2010. Fifty million Social Security recipients will get no cost of living increase next year for the first time in more than 30 years. But government workers, they are going to get a raise. The reason is that Social Security increases are pegged to the cost of living. And that actually went down over the last 12 months. It means the cost of living is less than it was a year ago.

So, no increase for the nation's elderly on Social Security, but government workers get a raise, even though they already average almost twice as much as workers in the private sector. Makes a lot of sense, doesn't it?

Here's the question: What does it mean that the average federal worker makes almost twice as much money as the average private sector worker?

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

BLITZER: Jack, thank you.

President Obama is asking bankers to help more Americans, but what will he do if they don't?

And is slapping huge taxes on banker bonuses an option? I will speak about that and more with Republican Senator Lindsey Graham and senior adviser to the president Valerie Jarrett. They're both standing by live.

(COMMERCIAL BREAK)

BLITZER: Could health care reform be a top pick on President Obama's Christmas list? Congress could be close to giving him a health care reform bill, but could major disagreements still stop that?

Let's talk about that and more with Republican Senator Lindsey Graham of South Carolina.

I want to get to the banks, Afghanistan and more. But will there be legislation that the president will sign into law on health care reform in the next few weeks?

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: I hope not this bill.

BLITZER: I know you hope not, but will there be?

GRAHAM: No, I don't think they have 60 votes. They have got multiple problems, not just Joe Lieberman. They have got a lot of problems within their own caucus.

Claire McCaskill said she couldn't vote for one that increased health care costs. Well, this new score is $284 billion. You have got some people who are very concerned about the Medicare addition, 55 to 64.

(CROSSTALK)

BLITZER: Lieberman hates that, but, if you dump that, he probably will be on board. And he's a good friend of yours.

GRAHAM: Well, yes, he is a good friend of mine. But we will have to see it. They dump that. They dumped the public option. You have got Ben Nelson with abortion. They have got multiple problems.

Their biggest problem is the public. The biggest problem is the American people don't want this.

BLITZER: So, what I hear you saying is that the president is not going to get a bill. The Senate won't even pass something before Christmas; is that what you're saying?

GRAHAM: I don't think so.

I mean, one, we don't even know what the compromise is. They promised transparency. They promised a new way of doing business. I can't believe we're talking about a proposal that no one knows about, including Senator Durbin, that is being scored behind closed doors. This is not going to -- this doesn't look right, it doesn't smell right and it's not going to pass.

BLITZER: When you say being scored, that's what the Congressional Budget Office estimating how much it will cost.

(CROSSTALK)

GRAHAM: Scoring what? I have no idea. I can't sit here and intelligently talk to you about what they're proposing, because I don't know.

BLITZER: And you don't think one Republican, including Olympia Snowe, will be on board?

GRAHAM: No. I think that this bill is fatally flawed on multiple fronts, and I don't think any Republican could vote for it right now.

BLITZER: Did the president do the right thing in sort of lashing out at the big banking chiefs today and saying to them, you know what, we saved you, you got this country into a mess, we saved you, meaning federal taxpayers, and now it's your turn to come back and instead of giving yourselves millions and millions of dollars in bonuses?

(CROSSTALK)

GRAHAM: I think so. I think, one, we did save the banks.

BLITZER: On this issue you don't have a problem with the president?

GRAHAM: Not at all. I'm glad he did what he did.

And lending money is -- you can't get a loan now, no matter how solvent you are. The only people they will lend money to is people that don't need to borrow money. So, yes, we need to allow better lending. BLITZER: So, what else should the government do in terms of restricting bonuses? And they are talking about billions of dollars in bonuses to all these -- what the president calls fat cats.

GRAHAM: I think the fundamental problem is that banks aren't in the position to lend people money for some reason. The bonuses just don't sound right.

BLITZER: The banks are afraid that they're not going to get repaid. That's what they say.

GRAHAM: Well, the problem is, you have a crippled economy. You got lack of consumer confidence. You still got 10 percent unemployment, but the idea of jump-starting the economy with more access to capital is what I would be pushing for.

And the bonuses, yes, we need to look at people who have borrowed money from us, the government, make sure they are being responsible when it comes to bonusing money.

BLITZER: You agree with Larry Summers, the president's economic adviser, that the recession is over?

GRAHAM: Well, it depends. Well, I agree with the other person who said, if you're unemployed, you're not.

BLITZER: Christina Romer.

GRAHAM: But, technically, it is. But we're at 10 percent unemployment. The president's right. We shouldn't be declaring -- we have turned a corner. We have got stability. I voted for TARP. I want him to be tough on banks.

But at the end of the day it's about creating jobs. And we don't have a model to create jobs. This health care bill, the stimulus package is going to make it harder to create jobs. That's my problem with the administration.

BLITZER: On Afghanistan, you have got some problems with what the president announced, but Hamid Karzai says it's going to take him at least five years to get some sort of internal security going. The U.S. wants to start withdrawing within 18 months.

GRAHAM: Well, here's my problem. Once you say you are going to withdraw, no matter what, in July of 2011, you have compromised, in my view, the ability of the success of the operation.

The 30,000 troops are needed. And to train the Afghan police and army to take over in a robust way and secure the country in 18 months is a tall order. That's the one problem I have with the strategy, but I support the extra troops.

BLITZER: Did you have a problem -- today we are learning that all these Iraqi oil deals, they are going to China and Russia, Angola, and zero to the United States, after all the blood and treasure that the U.S. provided. GRAHAM: Well, they bought a bunch of turbines from General Electric. GE sold some electric generators to produce power.

But I would hope that the Iraqi people and the Afghan people would do business with us, yes. But it's a free country.

BLITZER: And they are acting free, I guess.

(LAUGHTER)

BLITZER: Hey, Senator, thanks very much for coming in.

GRAHAM: Thank you.

BLITZER: As we have been reporting, the president certainly taking the nation's banks to task for not doing enough to help Americans struggling in this economy. He called top bankers to the White House this morning, telling them they need to do much more to help get the economy back on its feet.

Let's talk about that and more with Valerie Jarrett. She's a senior adviser to President Obama.

Thanks very much, Valerie, for coming in.

VALERIE JARRETT, SENIOR PRESIDENTIAL ADVISER: My pleasure. How are you?

(CROSSTALK)

BLITZER: Thank you.

Is it time to start taxing these mega-bonuses that these banking chiefs want to give themselves and their top executives?

JARRETT: Well, you know what? We will see.

I think what you heard from the president on "60 Minutes" and what he said again today is, is that the country really stepped in, and we took unprecedented action earlier this year to help stabilize the banks, and now it's time for them to give something back. We did our job. Now let's see what they can do to help.

BLITZER: Now, what if they say, you know, thanks but no thanks, we're not giving anything back? What do you do?

JARRETT: Well, what they said, actually, was on the four major issues that the president raised with them today they said that they are willing actually to move forward. So, first on the issue of lending to small businesses they said that they will redouble their efforts and look to see if the loans that are rejected we could take second look at them, and maybe some of those loans are actually good, sensible loans.

And, in fact, right after the meeting, Bank of America announced an additional $5 billion that they want to put towards small business lending. So, that's very fruitful. Secondly, the president mentioned how important it is to try to speed up the process of refinancing homes, so that people aren't losing homes through foreclosure, and see what we can do to get the paperwork going faster.

And the banks said it is in their interest to not displace people from their homes, so they are willing to work on that. Third, on executive compensation, the president has been very clear that there is this huge disconnect between Wall Street and Main Street and that they have to understand that at a time when the taxpayer has helped really right their ship that it doesn't make sense to be paying out exorbitant cash bonuses, and the banks said that they understood that message.

And then finally and very importantly on the area of regulatory reform, the president said we need to make absolutely sure that we don't end up back in the same situation we were a year ago. And, surprisingly, every single bank around the room said that they support regulatory reform, which is a very different message frankly than we have been hearing from their lobbyists.

BLITZER: But what they have done is repay federal taxpayers for that TARP money, which is good, right?

JARRETT: It is good that they are all repaying. We only have one bank left, Wells Fargo, that hasn't begun that process of repaying.

But the point is, still, that, as we have a 10 percent unemployment rate, we need to make sure -- and the president has been very clear about this every day with his economic team and with the public -- let's wake up in the morning and figure out what more we can do. We're not going to simply just wait for the economy to recover on its own.

That's why he was so strong and bold in passing the Recovery Act when he came into office. That's why he's taken repeated measures to help small businesses along the way. And now we're asking the banks, the large banks that benefited greatly from this infusion of taxpayer dollars to see what more they can do. And I think it was a constructive and productive meeting.

BLITZER: Well, we are learning, by the way, the Associated Press, you will be happy to know, Valerie, the Associated Press is reporting that Wells Fargo has now decided to return about $25 billion that they took in TARP money. So, they will pay back federal taxpayers as well.

We have a limited amount of time, but let me get your thoughts on Joe Lieberman right now. How much of a problem is this for the president's desire to sign health care reform into law?

JARRETT: Well, you know, the president is committed. Wolf, you know that this is his top domestic priority is to try to get health care reform passed. We have got to deliver on behalf of the American people. They have been waiting for decades now. And we are so close and the president is confident that we're going to all take a deep breath and we're going to work collectively and we're going to get this done.

BLITZER: Is the president personally picking up the phone, calling some of these senators, including Joe Lieberman?

JARRETT: I don't know if he's called Senator Lieberman today, but I know that the president and his team have been working furiously around the clock throughout this process. He has senior folks up on his staff who are on the Hill around the clock. And we're not going to leave any stone unturned until we get this done. That's what the American people expect.

BLITZER: You heard Republican Senator Lindsey Graham just tell us he didn't think the president was going to be able to sign legislation into law now or in the next few weeks. He thinks there are simply too many issues that the Democrats themselves can't agree on. Is he right?

JARRETT: Well, listen, I am confident that we are going to move this forward. I think the American people are ready for it. I think there is a great deal of momentum.

Is it challenging? Is it hard? Of course it is. Wolf, if it was easy, it would have happened under the seven prior presidents that tried. But I think that we have made further progress than we ever have in our nation's history towards reform. We are very close and the president is committed to doing whatever it takes to get this done and to deliver on behalf of the people who have been waiting far too long for a health care system reform.

BLITZER: And I assume Senator Lieberman has been invited to come to the White House with the other Democrats tomorrow. Is that right?

JARRETT: I can't confirm who is on the guest list for tomorrow. But I certainly know that we have been working furiously with the senators, all of the senators, to try to make the strong case for why this is so important and so important to get done right now this week.

BLITZER: It would be a nice Christmas present for the president.

JARRETT: For us all. It would be a nice Christmas present for the American people.

BLITZER: Well, let's see if it happens before Christmas or after Christmas, whenever.

Valerie, thanks very much.

JARRETT: You're welcome, Wolf. Good night.

BLITZER: Good night.

A massive bailout for Dubai. Who's coming to the rescue of the struggling emirate with a $10 billion loan? (COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Damage control for Tiger Woods, Inc. Now that one of the golf world's big sponsors has cut him loose, what happens next? Just ahead, the financial price of the Woods scandal right now, and how much worse could it get?

(COMMERCIAL BREAK)

BLITZER: Happening now: Tiger Woods, his life imploded, and the scandal now costing him one of his biggest sponsors.

Senator Joe Lieberman could become a big problem for Senate Democrats who thought they were on the verge of a health care compromise.

And the fourth House Democrat in the past month announcing his retirement. What's going on?

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

Less than a month ago, he was the number-one brand in the world of sports, but now sponsors are reevaluating their relationship with Tiger Woods in the wake of his admitted infidelity, and some are leaving.

CNN's Mary Snow has been looking deeper into this for us.

Mary, what's the latest?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, it looks like another Tiger Woods sponsor reconsidering its deal with him.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP, COURTESY YOUTUBE/TAG HEUER)

UNIDENTIFIED MALE: Tag Heuer, what are you made of?

(END VIDEO CLIP)

SNOW: (voice-over): Time may not be on Tiger Woods' side when it comes to luxury watchmaker, Tag Heuer. As his personal problems sidelined Woods for golf for an indefinite period, the company tells the Associated Press that it's reassessing its long-term relationship with the golf great. Gillette says it's limiting its role in their marketing.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: He can see us.

(END VIDEO CLIP)

SNOW: But consulting firm Accenture cut its ties with Woods, dropping ads like this.

(BEGIN VIDEO CLIP, COURTESY YOUTUBE/ACCENTURE)

UNIDENTIFIED MALE: Go on, be a Tiger.

(END VIDEO CLIP)

SNOW: Accenture, says sports marketing veteran, Michael Newman, had a bigger risk than some other sponsors, as Woods was the center of their sales pitch.

MICHAEL NEUMAN, AMPLIFY SPORTS AND ENTERTAINMENT: They're not household names. Sometimes they can create almost overnight connectability with consumers when they choose an athlete like Tiger to associate with.

SNOW: Nike, Woods' biggest sponsor, is different.

UNIDENTIFIED CHILD: I'm Tiger Woods.

UNIDENTIFIED CHILD: I'm Tiger Woods.

UNIDENTIFIED CHILD: I'm Tiger Woods.

SNOW: Along with its ads, Nike has a golf line strongly relying on Tiger Woods. Nike is reiterating he has the company's full support.

DAVID DUESK, DEPUTY EDITOR, GOLF.COM: Nike Golf being a million portion of the Nike entire company, its founded itself -- its whole identity really centers around Tiger Woods and what he does on the golf course.

SNOW: And his absence on the golf course in the past has put a big dent in ratings. Nielsen found tournament ratings dropped nearly 50 percent when Woods was out for six months in 2008 recuperating from knee surgery. And when he returned, Nike capitalized on it.

(BEGIN VIDEO CLIP, COURTESY YOUTUBE/NIKE)

UNIDENTIFIED MALE: Hey, guys.

UNIDENTIFIED MALE: Hey.

UNIDENTIFIED MALE: Hi.

UNIDENTIFIED MALE: Welcome back.

UNIDENTIFIED MALE: Good to see you.

UNIDENTIFIED MALE: You, too, huh.

(END VIDEO CLIP)

SNOW: But returning to golf after this leap isn't likely to be as easy. How can Woods rebrand himself?

We asked Ann Green, who does research for advertisers.

ANN GREEN, MILLWARD BROWN: For a little while, he has to go quiet. And he does need to go about ensuring that he focuses on his own brand and managing his own brand in the sense of getting his personal life together and at also ensuring that when he comes back to the game, that he is at the top of the game.

(END VIDEO TAPE)

SNOW: Now, some marketers say this whole episode is likely making companies think twice about the risks of signing multi-million dollar endorsement deals with celebrities -- and, Wolf, some of the marketers we spoke with today say they're seeing more moral clauses built into contracts, allowing sponsors to opt out of deals if questions come up regarding celebrities' personal behavior -- Wolf?

BLITZER: Thanks, Mary.

Mary Snow working the story.

All right, let's bring in the best political team on television right now.

Joining us, our senior political analyst, Gloria Borger; Republican strategist and CNN political contributor, Alex Castellanos; Democratic strategist, Mo Elleithee; and our senior political correspondent, Candy Crowley -- Gloria, what's the latest on this threat -- supposed threat out there that if they can't get 60 votes, the Democrats have an option of going...

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well...

BLITZER: ...for what's called reconciliation -- getting it passed with 51 votes?

BORGER: Right. Well, we had been hearing earlier in the day and -- that this is -- this is something the White House had been considering. We reported incorrectly -- I reported incorrectly that Rahm Emanuel had pushed this with the White House -- with the folks on the Hill, the Senate majority leader.

The White House has not pushed it lately because they realize it's a nonstarter on the Hill because the Senate majority leader, Harry Reid, is not going back to square one.

And if you were to use the budget process to push health care reform, you would have to eliminate a lot of things from it, such as insurance reform.

So this is a very, very fast-moving story, Wolf. Clearly, this is a White House that just wants to get something done.

But again, let me reiterate, Rahm Emanuel did not push this notion on the Hill.

BLITZER: Candy, this -- this whole notion of Joe Lieberman now being the individual who could derail it, that's unlikely to happen, isn't it?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: That it will be derailed?

BLITZER: It's unlikely that the Democrats would allow that to get 59 -- get this close. They'll -- they'll make a deal, whatever it takes, to get 60.

CROWLEY: Certainly, that's the push is that -- I mean, again, they decided a long time ago -- the Democrats decided a long time ago that the worst thing to happen would be no bill. So if you have to scale it back, if you have to -- whatever it is that you have to do, they would like something that hits the consumers -- hits Americans next year at some point and can be paid for -- it can come out deficit neutral.

And whatever way you get to that, certainly it looks as though the Democrats are going to go ahead and do that, because it's -- to not have a bill, to move into next year, to move into the next elections and say, yes, I -- I know we have a Democratic White House and I know we have a Democratic Congress, but we couldn't get it done, it's not...

(CROSSTALK)

CROWLEY: It's just not acceptable.

BORGER: It's not governing...

(CROSSTALK)

BORGER: ...if they can't get a bill.

ALEX CASTELLANOS, REPUBLICAN CONSULTANT, CNN POLITICAL CONTRIBUTOR: But the world has changed a tremendous amount since the Democrats made that decision that they'd be better off having something than nothing.

What's changed?

Health care has become much more unpopular. We've moved to an agenda where we're worried about jobs and not health care. The president's popularity is down. His job ratings are down. And Democrats all over the country are seeing themselves in trouble in races because as always, this national wave opposing all this spending in Washington is threatening to sink them.

BLITZER: Well, Mo, what would be...

CASTELLANOS: So I'm not so sure...

BLITZER: What would be worse for the Democrats, a deal or no deal?

MO ELLEITHEE, DEMOCRATIC STRATEGIST: I think there's no question that no deal is the worst possible outcome for the Democrats. Yes, jobs is -- is still the number one top of mind issue out there for most people.

But at the end of the day, people did send this president to the White House on a promise of -- of health care reform. They do still want to see some sort of health care reform.

And while there's still no -- no total unity among the Democratic Caucus, there are still united in that they want to get something done. There's not going to be a perfect bill that satisfies everyone, but I think they will get to something.

BLITZER: Here's the argument, though, that all Democrats -- I hear Democrats making this, Gloria. I'm sure you do as well. You know what, when they passed Social Security, it wasn't exactly what it's turned out to be. You get one foot in the door...

BORGER: Right.

BLITZER: ...and then you can continually make it better in the years to come.

BORGER: Yes. You know, we -- we hear, you know, don't let the perfect be the enemy of the good. But there is also the law of unintended consequences, to use another cliche.

And so they're worried -- they're worried on both sides of it. Look, they need to get something done.

What we see happening with this moving story is that are we going to do a Medicare buy-in?

Are we going to use this budget process to get 50 votes so we don't have to get to 60 votes?

How do we get 60 votes if we lose Joe Lieberman?

How do we possibly get around Joe Lieberman?

It's a very funny way to legislate such a huge piece of public policy...

BLITZER: Very quickly, will there be Senate legislation passed before Christmas...

CASTELLANOS: Not this year...

BLITZER: ...yes or no?

CASTELLANOS: No.

ELLEITHEE: I think so. CROWLEY: Well, I don't -- you know, it doesn't look like it right now, but honestly, there's nothing like that pending recess to kind of push Democrats into something.

BORGER: Yes. I -- I think they're going to get something done.

BLITZER: There's nothing like wanting to get out of Washington, D.C. for these lawmakers to force them into some vote.

All right, guys, don't leave. We have more to discuss.

Congressional Democrats right now retiring from some crucial swing different -- districts. The best political team on television is standing by.

(COMMERCIAL BREAK)

BLITZER: We're back with the best political team on television.

There's another Democrat in a swing district announcing, you know what, I'm not going to seek re-election. There's about four, if you add Wexler in -- in Florida. He didn't have any problem getting reelected, but he's number five.

Is this a big deal or a little deal that incumbent Democrats are saying you know what, I'm not running for re-election?

CROWLEY: It's getting to be a bigger deal. But right now, we're talking about a handful of what -- full retirements, as opposed to those who are going to go on and run for a different seat. Certainly, Bart Gordon had a -- a swing district. He might have had some problems there.

But you know what I find when you talk to people who are retiring or who are thinking about it, it's really multi-determined. It's not just -- it's -- it's almost as though I don't want to go through with it if it's going to be a hassle. I am 60 years old. I've got a young daughter, I need to go make some money. It tends to be a lot of things.

However, it does leave a lot of seats open and it leaves some targets for Republicans to go in and get back and at least narrow down that majority that (INAUDIBLE)...

BLITZER: Because, usually, Mo -- and you would know this very well -- it's a lot easier to beat someone who is not an incumbent, as opposed to an incumbent, especially when it comes to the House.

ELLEITHEE: Yes. I think that's right. But I -- I'm with Candy, I don't think this is any sort of major, you know, paradigm shift here. I think these are probably some isolated incidents.

Look, historically, history would tell us our party is probably going to lose some seats this -- this cycle. That's typical in -- in the mid-term elections (INAUDIBLE)...

BLITZER: It's one thing to lose a few seats, it's another thing to lose the majority.

(CROSSTALK)

ELLEITHEE: That's right. But we're also seeing a lot of Republicans stepping down, too. So I think it's a little too early.

CASTELLANOS: You know one of the signs that there's a wave election that's going to sweep a party out of power?

Denial. It's one of the leading indicators. Republicans, in 1994, where we had 40 retirements and Democrats gained a ton of seats, we're looking at that kind of election this year. There was a state senate race, a local race in Kentucky last week.

Do you know what the race was about?

Nancy Pelosi, where you had a Nancy Pelosi big spending Democrat.

Guess what?

The Republican was outspent three to one and won.

CROWLEY: Wow!

CASTELLANOS: So that's the kind of year Democrats are looking at.

(CROSSTALK)

BORGER: You had 26 retirements in 2008, Republicans. Now, so far, on the list, there are more Republicans still retiring than Democrats. And you can argue this both ways. You could say having an open seat could be better for a party if the incumbent was unpopular. But if the incumbent was not unpopular, then it's not good for the party that loses.

CASTELLANOS: And you're also seeing a ton of new Republican recruits stepping up, especially since the November elections, in Virginia and New Jersey. So Democrats are stepping back, Republicans stepping up -- a wave out there. We asked -- we've seen surveys where you asked people in New Jersey and Virginia this past election, were you voting to send the Obama administration a message?

Sixty and 70 percent were saying yes, we were.

BLITZER: But, Candy, it would be an earthquake if the Republicans could get a majority in -- in November...

CROWLEY: Well...

BLITZER: ...given the huge advantage the Democrats have, especially in the House.

CROWLEY: And a -- and a heck of a story. So sometimes we root for heck of stories. But, listen, I mean I just don't think you can take these four retirements and go, OK, big earthquake. I think Alex is exactly right. I think people out there are very upset. I think there are -- they're getting better recruitment. They're getting some strong names in there to run some of these races.

But I just -- you know, it's December.

ELLEITHEE: Right. And it's way too early to decide what kind of election this is going to be. A year ago, people were beginning to write the obituary of the Republican Party. So it -- we've got a long ways to go.

BLITZER: We're only days away from 2010, so it's not too early.

ELLEITHEE: Yes.

BLITZER: We've got a lot to discuss.

BORGER: We're going to have a countdown clock.

BLITZER: Yes. All right, guys, stand by.

Jessica Yellin is monitoring some of the other top stories in THE SITUATION ROOM right now -- Jessica, what do you have?

YELLIN: Hi, Wolf.

It seems the U.S. is one of the biggest losers in the latest battle over rights to tap a Iraq's lucrative oil fields. The Iraqi government held its second international oil auction, awarding survey and contracts to foreign firms to develop oil fields Russia, European and Chinese companies were among the seven -- not American companies.

Well, Palestinian Christians in the West Bank will be able to move more freely in Israel this holiday season. Israeli military officials are issuing a month long permit to thousands of Palestinians in the West Bank so they can visit Jerusalem's holy sites. Now, typically, only small numbers have been allowed to enter Israel and only for urgent matters.

And here's some bad news. Holiday plans for tens of thousands of travelers could be thrown into utter chaos. British Airways' cabin crews union announced today that they are going to strike over Christmas and New Year's. The union says they're going to walk out next Tuesday and they won't go back to work until January 2. More than 90 percent of all those workers voted for the action. The union and B of A are locked in a bitter dispute over jobs, pay and working conditions. The airline says it's trying to return to profitability -- but, Wolf, anyone flying one of those flights better think about maybe a staycation (ph).

Have you heard of that?

BLITZER: I've heard of those vacations. (INAUDIBLE). I'm going to do one of those myself. YELLIN: Yes.

BLITZER: All right. Thanks, Jessica.

The -- what does it mean when the average federal worker makes almost twice as much as the average private sector worker?

Jack Cafferty has your e-mail.

That's next.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Jack for The Cafferty File -- Jack.

CAFFERTY: The question this hour, Wolf, is what does it mean that the average federal worker makes almost twice as much as the average private sector worker?

Michael in Fort Hood Texas: "I don't fault workers being paid an honest day's pay for an honest day's work. But as an Army officer, when I see my enlisted soldiers living at the poverty level and barely making it, I am incensed at the lack of priorities. That's the attitude of greed, though, that has gripped our nation for decades now -- get what you can any way you can and let the rest of the country be damned."

Tim writes: "There are a lot of stereotypes out there about government workers that aren't accurate. My partner is a federal employee, averages more than 60 hours a week. He worked nine hours on Thanksgiving Day. He brings work home every night. His weekly work hours are not that unusual. Does he make more than the average U.S. worker? Yes. But we also live in a city where a small two bedroom condo costs more than $400,000."

Gloria in California says: "I'm a retired federal government employee. During the course of my life, I've worked for several government agencies. Many of the jobs I was assigned to had me sitting at my desk doing nothing -- reading cookbooks, doing crossword puzzles. It got to the point where, in many instances, I dreaded going to work. Overpaid?

No. Some positions are not required."

Mike writes: "If a closer look were taken at the hiring that has been done over the last year in the agency I work for, most Americans would be outraged. As an older federal employee, I've watched newer, younger employers promoted to the highest grades within a couple of years that it normally took 15 to 20 years to attain. In many, many cases in the region I work for, the new employees are related to each other. We have two sisters working side by side and their mother works in an adjacent department."

H.W. writes: "Wow! I didn't know I had it so good. I've been a federal employee for 20 years. I still don't make $70,000. Where is Cafferty getting his info from?" Actually, the story was in "USA Today."

"Yes, I'm blessed to have a good job during these times. The only thing I have to look forward to is the cost of living increase. And when it's 3 percent or less, well, that means an extra $40 a pay period. That ought to be enough to go out and buy my caviar and champagne."

If you want to read more on this subject, you can find it at my blog at CNN.com/caffertyfile. Check it out.

BLITZER: You know I have a soft spot for federal employees. A lot of them do some really good work, Jack.

CAFFERTY: I -- I have never suggested otherwise.

BLITZER: I know. I know.

CAFFERTY: But there are discrepancies and there is room for reasonable people to debate these issues.

BLITZER: Totally factual, as always, Jack.

Thank you.

CAFFERTY: OK.

BLITZER: Let's check in with John Roberts to see what's coming up at the top of the hour -- John, what are you working on?

JOHN ROBERTS, CNN ANCHOR: Hey, Wolf, good to see you.

Coming up tonight at the top of the hour, President Obama today coming down hard on bailed out banks -- shaming Wall Street into doing more to help get Main Street out from under the bad economy. One good sign, banking giant Citigroup paying back $20 billion of the TARP rescue money.

But what happened to the rest of the $700 billion?

What did Wall Street do with all of your money?

And what was it like inside that meeting?

We get the skinny from one of the so-called "fat cats".

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

BLITZER: All right, John.

See you in a few moments.

Thank you.

We all know the president loves his BlackBerry, but sometimes they're off limits at the White House and we have the photo to prove it.

(COMMERCIAL BREAK)

BLITZER: Let's get back to Jessica for our Political Ticker -- Jessica.

YELLIN: Wolf, gay rights activists see the new mayor-elect of Houston, Texas as a groundbreaker and a role model. Annise Parker says yes, that's true, but she's more worried about the nuts and bolts of running America's fourth largest city. Next mo, Parker will be sworn in as Houston's first openly gay mayor. Two days after her historic election, Parker told reporters she thinks her sexual orientation will and won't affect the city.

(BEGIN VIDEO CLIP)

ANNISE PARKER (D), HOUSTON MAYOR-ELECT: The City of Houston is going to change with me as mayor because I face a very different set of circumstances than previous mayors and it's a new city. But the fact of my sexual orientation has never particularly impressed Houstonians. And I don't think that that had anything to do with who voted for me in this election.

(END VIDEO CLIP)

YELLIN: Now, check out this photo from the White House Web site. These are the BlackBerries of top administration officials thrown into a basket that -- before a meeting with the president. If you can see here, there's one with -- for Attorney General Holder, one for U.N. -- U.N. Ambassador Susan Rice. I think she seems to have three different BlackBerries in there.

I can't figure out why.

Now, you might think the White House would have a higher tech way to keep those BlackBerries straight than Post-It Notes, but I guess they go good old-fashioned sometimes.

And, Wolf, would you ask for advice from this woman?

Ashley Dupre is the former call girl whose affair with Eliot Spitzer cost him the New York governor's job. I guess the perfect credentials for being an advice columnist for "The New York Post." The newspaper says Dupre's Sunday column will provide no-nonsense advice on sex, relationships and love. "The Post" says sure, Dupre's made some mistakes, but she's going to share what she's learned -- Wolf, if this is the future of journalism, we're all in trouble.

BLITZER: All right. No comment.

Thank you, Jessica.

Before you drink another can of soda, get ready for Jeanne Moos' Moost Unusual moment.

(COMMERCIAL BREAK) BLITZER: Viewers beware -- in all that fizz, a lot of fat.

CNN's Jeanne Moos finds New York City's latest public health campaign Moost Unusual.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: (voice-over): Watching someone pour a soda -- why would that make folks make these kind of faces?

UNIDENTIFIED FEMALE: Yuck.

UNIDENTIFIED FEMALE: Disgusting.

MOOS: It's the latest campaign from the New York City Department of Health -- drinking one can of soda a day can make you 10 pounds fatter in a year.

The American Beverage Association calls it "a sensationalized video that inaccurately portrays our industry's products -- products that are fat-free," but full of sugar that will put on the pounds, says the Health Department.

But we have lots of no calorie soda, too, says the industry.

JAY JACOBS: It seems like the government is trying to micromanage everything here. I mean there's a lot of stuff. Look, I smoke, you know. But, you know, I take what comes with it.

MOOS: But everyone else rated the "Don't Drink Yourself Fat" campaign...

UNIDENTIFIED FEMALE: I would say horribly effective.

MOOS: Even more horrible are the guys on YouTube who actually do drink pure fat on a dare -- fat from a George Foreman grill...

(VIDEO CLIP)

MOOS: ...Chicken fat, good, apparently, to the last drop.

(VIDEO CLIP)

MOOS: But the drinking fat viral ad is what has people saying.

UNIDENTIFIED MALE: Wow!

MOOS: Jay Jacobs can relate. Look what he sells.

JACOBS: Do you want to touch it?

MOOS: My Pet Fat is what it's called.

UNIDENTIFIED MALE: Oh my goodness.

UNIDENTIFIED FEMALE: Pretty gloppy. JACOBS: Five pounds of anatomically correct body fat. It's a medical model.

MOOS: Meant to deter the owner from eating. Jay weighed 400 pounds when he started marketing My Pet Fat five years ago. In his own personal battle against weight, Jay says he finally had a face to his foe.

When he first used My Pet Fat, Jay lost 150 pounds, but then gained it back. Now he's lost 30 on what he calls the Smart Phone diet, using My Pet Fat as his wallpaper.

JACOBS: I upload images of -- of whatever I'm eating that day.

MOOS: On a Japanese game show, contestants were asked to guess what My Pet Fat was. One answered a sex toy.

(VIDEO CLIP)

MOOS: Actually, you're supposed to put it near your food supply.

JACOBS: I'm going to put one right inside the fridge.

MOOS (on camera): Uh-huh.

JACOBS: Whoa. Five pounds of fat in the fridge works every time.

MOOS: Well, not every time.

JACOBS: No.

MOOS: We don't know if you'll drop pounds, but you'll drop 150 bucks.

UNIDENTIFIED CHILD: It's really heavy.

MOOS: Imagine carrying it on your belly, kid.

CHILD: It hurts my arm.

MOOS (on camera): It hurts your arm?

(voice-over): Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

BLITZER: I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "CNN TONIGHT."