Return to Transcripts main page


Jobs Report: October Surprise?; The GOP's November Advantage; White House Shakeup; New Face of the GOP; Valerie Jarrett Discusses Jobs, Economy; Is Mass Transit Security Effective?

Aired October 8, 2010 - 17:00   ET


WOLF BLITZER, HOST: Brooke, thank you.

A new jobs report rubs salt in the wounds of many angry voters. This hour, the bottom line on employment, the economy and the election. I'll talk to the White House senior adviser, Valerie Jarrett, as well.

Also, is George W. Bush looking much better to Americans in hindsight? Or are they just fed up with President Obama? Standing by, we have new poll numbers that will interest you.

And the insult to women that's rocking one of the most important governor's races in the nation. We're looking at the fallout in California after someone in Jerry Brown's camp slammed Meg Whitman with a word most of us would prefer that we not use.

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

Up first this hour, in the last big jobs report before election day, could it be an October surprise that affects the outcome of the battle for Congress?

Both parties are finding something to seize on.

The report shows 95,000 jobs were lost overall in the United States in September. That's worse than many economists expected. And the jobless rate held steady at 9.6 percent.

Republicans are pouncing on those numbers.


REP. JOHN BOEHNER (R-OH), MINORITY LEADER: It looks a lot like the reports we've seen every month since President Obama signed the stimulus spending bill into law. Unemployment is high and millions of Americans are out of work. Private sector job creation remains flat. That's what you got for your $787 billion worth of spending -- high unemployment, a bigger government and an economy struggling to create jobs.


BLITZER: The president and Democrats are pointing to this figure -- private businesses added -- yes, added -- 64,000 workers in September. It's the ninth straight month that the private sector added jobs.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Yes, the trend line in private sector job growth is moving in the right direction. But I'm not interested in trends or figures as much as I am interested in the people behind them -- the millions of honest hardworking Americans swept up in the most devastating recession of our lifetimes.

As I've said, before, the only piece of economic news that folks still looking for work want to hear is, "you're hired."


BLITZER: Let's bring in Poppy Harlow of -- Poppy, private sector jobs increased, overall numbers decreased, as we just saw.

Break these numbers down for us.

POPPY HARLOW, ANCHOR, CNNMONEY.COM: Yes, I mean, look, the Republicans and the Democrats both have a point here. They both make valid points. We saw 95,000 jobs lost last month, Wolf. That's a lot worse than expected. What economists thought is we wouldn't gain or lose any jobs. And look at how much worse it is in August. It's almost double the job losses we saw in August. So the trend is that it's getting worse.

But let's take a look closer at these numbers, because the scary part is how many government jobs were lost -- 159,000. Now through this whole recession, it has been the government -- through stimulus, through other efforts -- that has added jobs. Not the case anymore, because you have extremely strained state and local budgets. Of those 159,000 government jobs that were cut, take a look. It was 83,000 in just state and very local government positions. You have state budgets, as I said, that are so strained right now, they have to cut positions.

And I think another troubling part of this report, Wolf, is it is those same sectors that get bashed time and time again -- construction jobs, a big loss there, 21,000 job cuts in terms of construction jobs. And let's take a look at manufacturing -- really, the base in the Midwest -- 6,000 manufacturing jobs lost. Again, where we saw the biggest gain -- this is what we've seen for the last two years -- health care. Health care jobs up by 32,000.

But I think the troubling part, Wolf, is the fact that we have the same sectors losing jobs month after month after month. The one silver lining, as President Obama pointed out, 64,000 private sector jobs added. We need a lot more than that. To give you some perspective here, economists say just to keep up with population growth, we need 150,000 jobs added every single month -- Wolf.

BLITZER: And these numbers don't even include people who have just given up looking for a job because they think it's hopeless.

HARLOW: Not at all. And that's something I've always thought is odd about the unemployment rate. It's 9.6 percent. They don't include people that have given up looking for work or people that just have part-time work because they can't find fulltime work -- can't find enough to live on.

The reality is, the unemployment rate is 17.1 percent in America. That is a much better picture of the unemployment issue in this country than a 9.6 percent rate. So it's pretty much double what the unemployment rate is. Nine-and-a-half million Americans are underemployed in this country right now, looking for fulltime work. They can't find it.

And what's interesting, Wolf, is when you talk about that nine- and-a-half million number, that has increased by almost a million in the last two months. So it's not just that it's a high number, it's the fact that the number is getting steadily worse and worse when we're supposed to be seeing some sort of economic recovery. We need the private sector to add jobs and much more than 64,000 jobs in a month. Unless these big companies add jobs, we won't see a turnaround -- Wolf.

BLITZER: And they're not doing it yet.


BLITZER: But Wall Street is doing just fine right now. I'm going to put some numbers up and we'll talk about it.


BLITZER: The Dow today closed above 11000. It's the first time in five months. It closed above 11000. Just some perspective, when President Obama was sworn in, January 20, 2009, nearly two years ago, the Dow was at 7949.


BLITZER: All right. It's gone up almost 3000 points or so since he took office. Give us some perspective. Wall Street seems to be doing just fine, even as the jobless numbers are going down.

HARLOW: Yes. It seemed like traders today sort of shrugged off -- and investors -- the fact that we had an abysmal jobs report overall. The fact of the matter is they care what the private sector does. They care what the companies they're investing in do. And, look, the private sector added jobs. They added 64,000 jobs. They like that.

But even more, here's what matters, Wolf. Next week, we have the Fed meeting in Washington. They're going to decide on monetary policy -- what do they do next?

And everyone is betting -- that I talk to on the Street -- after this number came out, that it was worse than expected, that the Fed is going to have to take even more action. They're going to keep rates extremely low.

And what they're probably going to do is what's been turned QE2, quantitative easing two. They're going to buy up a lot of bad assets. They're going to take them off the balance sheets elsewhere and they're going to make moves that is going to make the market a lot more liquid. And investors like that. So they look at this as the government saying, all right, we have to step in even more -- Wolf.

BLITZER: Poppy, thanks very much.

Poppy Harlow of

President Obama likes to remind Americans that the economy plunged into recession on George W. Bush's watch. But he may want to think twice about playing the Bush card based on our brand new poll.

Our national political correspondent, Jessica Yellin, is here -- Jessica, we asked, "Who's a better president, President Obama or President Bush?"

Tell us about the results.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Well, Wolf, remember, back in the campaign season, then Candidate Obama said history will not judge President Bush kindly.

Well, it looks like President Bush is making a comeback. The latest CNN polling shows 47 percent of Americans think President Obama has been a better president than George W. Bush. But 45 percent think Bush was better.

So, clearly, Bush is still trailing, but compare that to the numbers a year ago, when 34 percent thought Bush was a better president. He has gained 11 points in just a year.

Now, maybe absence makes the poll numbers grow higher, but the bottom line here is, Wolf, that when President Obama blames Bush for the economy, it might help the Democrats energize their own base, but it's not likely to win over Independents.

BLITZER: As far as trends are concerned -- and we always take a look at which party seems to be doing better -- a traje -- trajectory, if you will.

What -- what about the Republicans and the Democrats right now in this brand new poll?

YELLIN: OK, our latest polling shows that the Republican brand is opening an even wider lead on the Democrats. Look at what we call the generic ballot. It means basically which party do you prefer in Congress?

Republicans are favored 52 percent to Democrats at 45 percent. Compare that to the numbers in August, when it was 48 percent Republican, 45 percent Democrat, with 7 percent undecided or unsure. So that undecided has moved significantly. Now back there, we were polling registered, not likely voters. Still, this is a big split, with Republicans scoring much higher numbers among men, Independents and on the enthusiasm to vote category.

Top Democratic strategists, Wolf, tell me they think that Republicans have peaked, their brand has done all it can and it's the Democrats' turn to surge.

But what would you expect them to say with numbers this bad for them?

BLITZER: Yes. On that enthusiasm gap, this new poll among registered voters, "Are you extremely or very enthusiastic about voting this year?," 54 percent of Republicans said they were pretty enthusiastic. Only 34 percent of Democrats. That's a 20 point split, say they're very or extremely enthusiastic.

I know you've been speaking with some top strategists on this and other related issues.

YELLIN: That's right. And the Republicans are very excited that their base, they say, is energized.

Let's talk about how the Republicans hope to win the House. Top Republican strategists say that their plan is to have outside third party groups pour money into a large number of races, well more than the 40 needed to win the majority, which could force Democrats to spread their resources thin and make the battleground much larger than Democrats were hoping to have to fight in.

Now, on the Democratic side, I'm hearing from strategists a lot of talk about what they call the Christine O'Donnell effect. Now, she is the Delaware nominee for Senate. And these Democratic strategists say they're seeing an uptick in contributions by Democrats and even support for their candidate since they won -- that since Christine O'Donnell won, because they say they've been able to villainize her as the face of the Republican Party.

It's hard to see firm evidence of this. But be sure that Democrats will continue to try to make Christine O'Donnell the face of the Republican Party. They think it makes a difference because they think she's both outside the mainstream and, in their view, not credible.

BLITZER: And let's remind our viewers, I'll be co-moderating a debate...


BLITZER: -- with Christine O'Donnell and Chris Coons in Delaware next Wednesday night. It will be seen right here on CNN.

YELLIN: We'll be watching.

BLITZER: Thanks very much, Jessica, for that. President Obama says so long to his national security adviser.

Does the latest exit from the White House give us a new window into the infighting that's going on right now about the war and other issues?

And they're African-American and they're Republican -- and they're running for office this campaign season in record numbers.


BLITZER: A major, major shake-up over at the White House. It continues right now. Barack Obama has announced that his national security adviser, the retired United States Marine Corps general, Jim Jones, will step down from his post this month. The move, although long anticipated, is still the latest in a growing string of high profile departures from the president's team. The two men shared a mutual respect two years in the making.


OBAMA: Through these challenges, Jim has always been a steady voice in Situation Room sessions, daily briefings and with meetings with foreign leaders, while also representing our country abroad with allies and partners in every region of the world.



GEN. JIM JONES, NATIONAL SECURITY ADVISER: And I believe that where we are today in the global playing field and how the United States is held in the esteem of the rest of the world is an accomplishment that I, frankly, find astonishing in such a short period of time. And, Mr. President, we owe all of this to your leadership.


BLITZER: General Jones will be replaced by his current deputy at the West Wing, one serious Washington insider, Tom Donilon. Let's talk about this shakeup with our the senior political analyst David Gergen who knows a lot about White House shake-ups.

You've worked in four White Houses and I remember when you were brought in during one shake-up during the Clinton administration, David. I'm going to read to you what bob Woodward writes in his new book about this. This was in the book, "Obama's Wars."

"Gates," referring to the secretary of defense, Robert Gates, "Felt that Donilon did not understand the military or treat its senior leadership with sufficient respect. The secretary later told (General) Jones that Donilon would be 'disaster' as Obama's national security advisor."

Gates spoke about that a little bit today, listen to this.


ROBERT GATES, SECRETARY OF DEFENSE: I have thoroughly enjoyed working with General Jones. And I have and have had a very productive and very good working relationship with tom Donilon contrary to what you may have read. And I look forward to continue working with him.


BLITZER: A little awkward moment there given what Bob Woodward writes, suggesting Gates thought Donilon would be a disaster as the president's national security advisor.

Give us your perspective, David.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, Wolf, I had the opportunity to work with Tom Donilon very closely back in the Clinton years when he was chief of staff to the secretary of state, Warren Christopher. And I must -- we travelled the world together, became friends and I must tell you, I came away from that experience believing he was one of the most talented people I met in the Clinton administration.

He had a background as a lawyer. He'd long been in politics, all the way back to being the chief delegate counter for Jimmy Carter back in 1976. He's got a keenly analytical mind and he's a hard worker.

But most importantly, he was better in getting things done in government than almost anybody I've ever met. He's terrific as taking a problem, trying to break down the pieces and getting it solved and moving things. It's hard to move things in government.

And when he left the Clinton administration, he did it with the notion of, I'd like to make money for a while and then I'd like to devote my life to foreign policy. He's deeply enmeshed in foreign policy, not defense policy so much, and that may be where he had some friction with the Defense Department and with the military.

But my own sense was he's like Pete Rouse, the new chief of staff, extraordinarily talented, coming up, he's never run a big, big organization to my knowledge, nothing like the NSE that he's moving into. But if I had to bet, I'd say he's going to be successful at what he does. He's extremely good at sort of working through -- being in the cockpit, working with heavyweight players and coming to a resolution and then getting it moved. You've got to keep moving in government.

BLITZER: And very important, also, because I've known him as have you for a long time, he is extremely well liked. I don't know anyone who dislikes Tom Donilon. He's highly, highly respected and well liked, and we'll see how he does as the national security advisor to the president.

David, thanks very much. Now to the pivotal midterm election season and what could be a new wave of Republicans headed for Washington come November. This year, African-Americans are running on GOP tickets in record number.

Here's CNN's special correspondent Soledad O'Brien.


SOLEDAD O'BRIEN, CNN SPECIAL CORRESPONDENT (voice-over): Retired Lieutenant Colonel Allan West is the face of the new Republican Party.

LT. COL. ALLEN WEST (R), FLORIDA CONGRESSIONAL CANDIDATE: In this election cycle, you got about 42 black Americans who are running on Republican tickets.

O'BRIEN (on camera): It's, I think, an unprecedented number?

WEST: It is an unprecedented number because I think that we don't want to be seen anymore as some monolithic group.

O'BRIEN (voice-over): A victory would make West just the fifth black Republican elected to Congress in the past 100 years.

This Iraq vet caught fire with a YouTube call to arms, ironically against the first black president.


WEST: The Constitution says, promote the general welfare, not provide welfare. It is about steady conditions.


O'BRIEN (on camera): What happened after that speech?

WEST: I mean, it went viral and then the next thing you know, people started to pay attention, people go to the website, the fundraising really picks up.

O'BRIEN (voice-over): In his bid to represent Palm Beach, Florida, West raised more money in the second quarter of this year than any other congressional challenger.

ADVERTISEMENT ANNOUNCER: America needs a new way forward.

O'BRIEN: Along with Ryan Frazier in Colorado and Tim Scott who's running strong in South Carolina, the three are the black Republican congressional candidates given the best chance in recent polls of winning.

(on camera): They have a black chairman of the party.


O'BRIEN: They have candidates who are viable candidates. KAINE: I think that's great. Though, at the end of the day, the face is less important than the proposals and the substance and the policies.

O'BRIEN (voice-over): Those policies may not win over black voters who traditionally go for Democrats.

MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: So you're saying because there's a black candidate all of a sudden black folks are going to vote Republican?

O'BRIEN (on camera): I think that's probably part of the strategy.

STEELE: Well that's not very smart strategy if you think that.

O'BRIEN: Isn't that part of the new face of the party is about?

STEELE: No, it's not. I think it's insulting to even think it is.

O'BRIEN (voice-over): But if blacks do vote Republican, it could change politics.

DAVID LUBLIN, POLITICAL SCIENTIST, AMERICAN UNIVERSITY: The black vote is growing and if you got even a fifth or a quarter of the black vote, the Republicans would almost never lose.

O'BRIEN: The new wave has something else in common, the military. Of the 14 black GOP candidates still left, seven come from strong military backgrounds. Data from a "Military Times" poll show 12.3 percent of black Americans in the military identify themselves as Republican, that's more than twice the national civilian average.

WEST: I think there is a relationship based upon the conservative principles and values of limited government, national security, individual responsibility. Sometimes it takes a little bit more character to swim against the tide than to go with it.

O'BRIEN: And that could mean changing the traditionally Democratic black political establishment.

WEST: It's funny, because members of the Congressional Black Caucus came out and said they were going to come down here and campaign against me.

O'BRIEN (on camera): Can you join the Congressional Black Caucus, if you win?

WEST: Absolutely. I don't see why not, unless they going to change the name to the Congressional Black Democratic Caucus.

O'BRIEN: Well, you know, they don't have Republicans in the Congressional Black Caucus.

WEST: Well, I think it's about time they do. O'BRIEN: Reporting for "In America," Soledad O'Brien, CNN, Miami.


BLITZER: We're following more top stories, including what' being called an appalling and unforgivable smear in California's ugly race for governor. And the word in question is one that most of us would prefer not to use.

Plus, a major bank now freezing foreclosures in all 50 states. We're going to tell you why.


BLITZER: Mary Snow is monitoring some of the other top stories in THE SITUATION ROOM right now, including a major decision by the nation's largest bank.

What's going on, Mary?


Well Bank of America says it's halting foreclosure sales in all 50 states. The move comes as officials investigate whether homes are being seized based on false data. Other banks are freezing foreclosures and that includes J.P. Morgan, Chase and Ally Financial.

A reversal on that BlackBerry ban in the United Arab Emirates. The state's news agency reports that because all BlackBerry services will conform to the government's regulations. Back in August, the UAE had threatened to block access to e-mail, web browsing and text messages on BlackBerrys. It wanted the producer to give the government access for security investigations. The ban was set to go into effect on Monday.

And now to California where the candidates for governor are sparing over a derogatory slur. Someone in the campaign of Democrat Jerry Brown was caught on tape using the term to describe Republican Meg Whitman. The campaign was implying she'd sold out to special interests.

Take a listen.


JERRY BROWN (D), CALIFORNIA GOVERNOR CANDIDATE: Do we want to put an ad out? That I have been warned is I crack down on pensions, I will be -- that they'll go to Whitman, and that's where they'll go because they know Whitman will give 'em, will cut them a deal, but I won't.

UNIDENTIFIED SPEAKER: What about saying she's a whore?

BROWN: Well, I'm going to use that. It proves you've cut a secret deal to protect the pensions. (END VIDEO CLIP)

SNOW: Now Whitman's campaign calls it an appalling and unforgivable smear. Brown's campaign has apologized to Whitman and anyone else who was offended. We'll have much more on this story later on in THE SITUATION ROOM -- Wolf.

BLITZER: Yes, but it wasn't Jerry Brown that used that word, it was someone else on his staff that used that word?

SNOW: Yes, correct, someone on his staff.

BLITZER: All right, more on this story coming up. Thanks, Mary.

President Obama is desperate to create more jobs in America. Right now, some of the titans, though, of business, including some Democrats have turned against him. I'll ask the White House senior advisor Valerie Jarrett what, what if anything the administration can do about this?

And Sarah Palin's new answer to the old question -- will she run for president of the United States? Her days of just hinting about that may be over.


BLITZER: Here's the way one economist sums up today's new jobs report -- "The economy is no better, no worse. America's workers are still in hell."

It's a huge problem for the president, for his party, for the country, only 25 days before the midterm election.

Let's go to the White House right now. The senior adviser to President Obama, Valerie Jarrett, is joining us.

Valerie, thanks very much for coming in.


Good afternoon.

How are you?


I'll -- I'll play a clip. John Boehner, the Republican leader in the House, who wants to be the next speaker of the House, he came out swinging today against you and the Democrats.

Listen to this.


REP. JOHN BOEHNER (R-OH), MINORITY LEADER: Millions of Americans are out of work. Private sector job creation remains flat. That's what you got for your $787 billion worth of spending -- high unemployment, a bigger government and an economy struggling to create jobs.


BLITZER: All right, go ahead, Valerie Jarrett. Go ahead and respond to John Boehner.

JARRETT: Well, first of all, the Recovery Act that he referred to created over 3 million jobs. So there are 3 million people out there today who have jobs who wouldn't have had them --

BLITZER: But it didn't create --

JARRETT: -- but the --

BLITZER: -- it may -- may have saved, but didn't create.

JARRETT: Well, but let's -- let's put it this way, they're working today and they wouldn't be working if it wasn't for the Recovery Act. So that's three -- that's 3 million people, 3 million families.

I would also say that we have had now, nine consecutive months of private sector job growth. Now, we could compare that to the last four -- last six months before President Obama took office, where we had lost 4 million jobs. We also had 22 months of job loss.

So we certainly have turned the ship around. We're moving in the right direction. We're not satisfied. We're still doing everything we can to stimulate the economy, but every economist recognizes that it's going to take a while to dig ourselves out of this very, very deep hole that began two years ago.

BLITZER: So give me some specifics. Where are the jobs that you're going to create? Tell us how you plan on creating some jobs.

JARRETT: Well, I'm glad you asked me that, because Monday, the president is having a meeting here in the White House where we're focusing on infrastructure. Right after Labor Day, he announced that we need to invest in infrastructure, additional stimulus dollars for infrastructure, because so many of the jobs that we've lost are in the construction field.

And so, infrastructure will help put those folks back to work. It also will build our nation and make it globally competitive. So that's what we're focusing on Monday.

BLITZER: Are these new stimulus dollars that you're talking about --

JARRETT: He's put --

BLITZER: -- or stimulus dollars from the old package?

JARRETT: These are new dollars that he proposed right after Labor Day that we're going to be pushing and working with Congress to pass in the --

BLITZER: So this is a second stimulus package?

JARRETT: -- in the next summer. So this is -- it's -- it's intended to focus on construction and infrastructure.

We also think that we can do --

BLITZER: How much is it going to cost?

JARRETT: Fifty billion dollars.

We're also hoping, though -- and this is really important, Wolf -- that that 50 billion will leverage private -- private sector investment, as well. So you won't just have the public dollars, but you'll have the private sector investing in an infrastructure bank.

In addition to that, what we've heard from businesses as we asked them, "What's going to help you invest in this country?," is that they say we need some incentives to do research and development. So we're going to have a tax credit for research and development.

Another --

BLITZER: How much is that going to cost?

JARRETT: Well, that will depend, and we're going to be working with Congress in the coming session to determine how much we want to invest in that. But the tax credit will be very important to businesses who want to do research and development and develop and -- and do the innovation that our companies here in the United States are so good at and have historically done.

So we want to incentivize them to do that. We also want to do some --

BLITZER: Let -- let me interrupt for one second.

Is it fair to call all of this, this bundling of these new initiatives that you're coming forward with, a second stimulus package?

JARRETT: I wouldn't call it a second stimulus. What I would say is that the phase that we are at now is to really do targeted investment to induce businesses to do what they do best.

We want them to grow. We want to foster an environment where it's conducive. We want to encourage them, as they're thinking about it and they're not quite sure that they want to do another research project that will lead to innovation and jobs of the 21st century, that we give them that extra little tax credit that will induce them to do it.

So it's very targeted. It's focusing on, for example, construction, where we know we have a -- a large unemployment in the construction field. It's focusing on small businesses -- BLITZER: All right --

JARRETT: -- medium and large.

In fact, you know, as you know, Wolf, last week, we passed an important small business package that will create additional incentives for small businesses --

BLITZER: So there are --

JARRETT: -- to grow.

BLITZER: So there's some new initiatives.

Here is the problem that a lot of people are suggesting, economists. And I'll read from today's "Washington Post": "Sitting on these unprecedented levels of cash, U.S. companies are buying back their own stock in droves. So far this year, firms have announced they will purchase $273 billion of their own shares, more than five times as much compared with this time last year."

You're the liaison with the big business community from the White House. These companies have tons of cash, but they're not creating jobs because they're nervous. They don't know what the future lies as far as taxes, health care expenditures.

How are you going to fix that?

JARRETT: Well, first of all -- first of all, I think you have to remind yourself that the businesses -- small, medium and large -- and we reach out to all businesses, not just large businesses. What they experienced over the last two years was cataclysmic, and so they're just now getting their footing.

And in many cases, for example, employers laid people off, but they also reduced hours. And so, before they add employees, they're going to bring people up to working full-time again. They're being very cautious.

But the primary driver is going to be demand. And not all businesses aren't growing, many businesses are. Many are hiring people. And so it depends upon the industry.

But when demand starts to come back and when people begin to feel like they have surer footing, then they're going to be more likely to invest.

But as you'll see in the coming weeks, there are many companies that are going to invest, they're going to build factories, they're going to hire people because they believe in the United States.

The president is going to be going -- is going to be going off to the Far East and we're looking at helping our American companies not just invest here and -- but grow here by having export opportunities all over the world, because they're competing --

BLITZER: All right --

JARRETT: -- in a global marketplace now.

So I think we have reason to be optimism because of the trajectory. But, Wolf, everyone would say we're not anywhere near where we want to be and we're not going to stop and be satisfied until we get ourselves firmly out of this ditch. But we are moving in the right direction.

BLITZER: So let's hope in the next three months, six months, down the road, at some point next year, that 9.6 unemployment rate is way down, below 9 percent. That would be encouraging.

I'm sure we'll speak, Valerie Jarrett, many times before that. Good luck.

JARRETT: Thank you, Wolf. Thank you.

BLITZER: The American people are counting on the president and you to get those jobs. That is issue number one, as you know.

JARRETT: We know. And believe me, we're working on it each and every day.

BLITZER: Thank you very much.

Valerie Jarrett is over at the White House.

We're following the search for an American tourist who's missing in Mexico. A lot of questions are being asked right now about his wife's claim that she was shot -- that he was shot and killed by pirates.

And has Sarah Palin stopped dancing around this question, will she run for president of the United States?


BLITZER: Mary Snow is monitoring some of the other top stories in THE SITUATION ROOM right now, including the latest on a reported pirate attack in Mexico.

What's going on here?

SNOW: Well, Wolf, Mexico says it's stepping up the search for that missing American citizen. The government denies it's not doing enough to find him. David Michael Hartley has been missing since a reported pirate attack September 30th on Falcon Lake. Hartley's wife, Tiffany, says he was shot and killed by pirates during a sightseeing trip. But since no body has been found yet, some are now questioning her story. Tiffany said she might take a lie detector test.

The Supreme Court is delaying the execution of a Texas man. The court issued a temporary stay of execution for death row inmate Gaylord Bradford. His lawyers say he's mentally deficient with an IQ of about 68. The stay gives the lawyers time to file a full appeal. Bradford was convicted of the 1988 murder of a convenience store security guard.

As for the guessing game about Sarah Palin, Sarah Palin says she'll run for president, quote, "If the American people want me to," unquote. Palin reportedly talked about her political future at a taping of a conservative magazine. The former Alaska governor has previously said she'd run for president if no one else steps up with the solutions to get the economy back on track.

Stay tuned. BLITZER: We'll see if she runs. If she runs, will she win the Iowa caucuses. There's a good chance she could win those Iowa caucuses. But it's premature right now. Let's see what she decides.

Thank you for that.

A lot of debate over new unemployment numbers. We'll see if our guests can agree on one thing President Obama can do right now to create jobs and boost the economy.


BLITZER: President Obama is warning the damage left by the recession is so deep it's going to take a long time to get out of it. A total of 95,000 jobs lost in September, the headline of a new employment report giving both parties ammunition.

Joining us now, Robert Reich, the former labor secretary during the Clinton administration, he's a professor at the University of California at Berkeley; and Stephen Moore, he's a senior economics writer for "The Wall Street Journal."

Thank you for coming in. Nine point six percent unemployment, once again, Professor Reich, what is the single most important thing President Obama can do right now to start creating jobs?

ROBERT REICH, FORMER CLINTON LABOR SECRETARY: Well, the most important thing, Wolf, is to get customers, consumers, buying again. The way to do that? Well, there are a number of things he could do.

For example, exempting the first $20,000 of income from the payroll tax and maybe making it up by subjecting the payroll tax top income earners to the payroll tax, incomes of over $250,000.

Or he could expand the earned income tax credit which is waived subsidy up to the middle class and pay for it with a carbon tax. That's what I suggest in my new book.

There are a lot of things that he could do, but until we get consumers back buying again, where there's no way we can actually get jobs back again.

BLITZER: Stephen Moore, same question to you. What do you believe is the single most important thing the president can do right now to create jobs?

STEPHEN MOORE, "THE WALL STREET JOURNAL": He should make an announcement tonight 9:00 East Coast time saying he's going to extend all of the tax cuts. That now is not a good time to be raising taxes on anyone.

This officially, Wolf, this recession is over according to the economists, but most Americans and most families don't believe that. I think the new numbers really reinforce that.

You know, I'm in Dallas right now, Wolf, and I've been talking to a lot of small businessmen here. Give you an example of some of the things they complain about. The health care costs, they're telling me -- I ran into a restaurant owner who has 1,200 employees here. He says the new health care bill is going to cost $1,200 in higher health care costs per worker.

Those are real costs that reduce employment. There are a lot of things we can do to bring down regulation and taxes to get businesses hiring again.

BLITZER: A lot of companies, Professor Reich, they are saying that they're sitting on a lot of money right now, but they're reluctant to hire people because of the uncertainty. They don't know what the taxes are going to be next year and beyond. They don't know what the health care costs are going to be. So instead of hiring people, they're just sitting on a ton of money that they have right now.

So Steve Moore makes a fair point, right?

REICH: I think Steve Moore makes a point. I don't think it's a fair point, though.

Look, no business is going to hire without customers. Look, I hear this every time there is a Democrat in the White House. Again, the business community, particularly, Republicans say, oh, uncertainty, uncertainty, uncertainty. But every time there is a Republican in the White House I hear uncertainty is good for business. That's what drives entrepreneurialism.

No, the real problem right now, and every mainstream economist will tell you this, is that there are not enough consumers out there with enough money in their pockets to buy the things that businesses can create.

Look, Steve Moore, I agree. The tax cuts should be extended for 98 percent of the Americans, but there's no reason to extend it for the top 2 percent because they don't spend nearly as much as most Americans spend. Why give them $36 billion?

MOORE: It may be true they don't spend. Rich people do spend. Wolf, the people in the highest income brackets do, they hire people, they're employers. You keep punishing the employer in this economy, you're not going to get a lot of jobs created.

You know, Bob, I have to give you credit. You were one of the architects of that $800 billion stimulus plan. You had the bat phone connection with the White House. The truth is that program has not worked, we need a change in direction.

That's why, by the way, Wolf, we're going to see a change in this election, because people just don't think what Washington has been doing for the last two years has worked to make the economy better.

BLITZER: Before Robert Reich responds, I'm going to play this clip. The president shortly after the unemployment numbers were released Friday morning, he said the stimulus package has worked and he cited these numbers. Listen to this.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We've now seen nine straight months of private sector job growth. In all, more than 850,000 private sector jobs gained this year, which is in sharp contrast to the 800,000 jobs we were losing when I first took office.


BLITZER: What about that? Nine straight months, private job growth albeit modest but significant in the fact that you're not losing jobs in a private sector, you're gaining jobs.

REICH: Well, look it's true.

MOORE: The --

BLITZER: Let Steve Moore respond to it.

MOORE: All right, what Bob Reich and I know is true, Wolf, we've had private sector job growth. It's anemic. We need about 150,000 new jobs per month just to keep up with the increase in the -- in the -- in the increase in the workforce. So we're not -- it's not that we're not creating jobs, we're just not creating enough jobs to get Americans back to work.

BLITZER: Go ahead and respond to that.

REICH: I will agree. I certainly will agree with that. The -- the stimulus, though, according to the Congressional Budget Office, according to most economic analysis, did save or create 3 million jobs. We would be much worse off today without that stimulus.

I don't think it was big enough from the beginning. I don't think the political whims, though, are behind any larger stimulus.

But I think the thing -- there are things that the president can do to bring down taxes for the middle class, not for the top. But to bring down taxes for the middle class and also to thereby create more money in people's pockets.

BLITZER: Do you want $800 billion or a trillion dollars that the federal government should shell out right now to try to create jobs?

REICH: Well, when you talk about another $800 billion or $1 trillion and shelling it out, no. I don't think we can possibly afford that much.

But I do think that the state and the local governments do need help there. There is no excuse for laying off a lot of teachers and firefighters and police officers. There is no excuse for having bigger classrooms.

If anything, we ought to be investing in education. We ought to be investing in infrastructure and right now it is crumbling around America and we should get money cheap, and everybody around the world is buying dollars and it is easy for us comparatively speaking to get on with what needs to be done with infrastructure projects and we can thereby hire lots of Americans.

BLITZER: The president makes the point, Steve, that a lot of government jobs, federal jobs whether with the Census, those were temporary jobs, but local and state jobs, teachers and firefighters and others, and yes, there were a lot of the job losses in the government sector, but there would have been even much more had it not been for the stimulus package.

MOORE: Well, Wolf, we could avoid -- states and localities could avoid all of these layoffs and actually be hiring workers if they would simply bring state and local salaries and pensions and health care benefits in line with what private workers are making.

You saw that "USA Today" study just a couple of weeks ago that the average state and local government employee is getting twice what a private sector worker is getting. So you could have a lot more if you just brought the wages down.

But I believe you asked that question of Bob Reich, should we have another stimulus. I do think we should have a stimulus, but we should do what Ronald Reagan did and Jack Kennedy did and other presidents when we've had tough times is to cut rates, make it easier for businesses to hire workers because look, I just don't think this $800 billion stimulus bill has created anything but more debt. If we gotten something for the money, Bob, I would have been in favor, but I just don't see any lasting consequences.

BLITZER: Very quickly, Robert Reich.

REICH: Well, let me respond to that.

First of all, teachers and firefighters and police officers, there is no corresponding group in the private sector. If anything, we ought to be paying teachers more. If we want good teachers and talented people to choose teaching over say investment banking, then we should pay them more.

BLITZER: Bob, you are just saying that because you're a professor?

I'm going to cut both of you off. I think he's saying it because he's obviously believes it.

And, Steve, I know you are saying what you're saying because you believe it as well.

We will continue this conversation down the road. Robert Reich and Stephen Moore, guys thanks very much for coming in.

REICH: Thanks Wolf. Have a great weekend.

BLITZER: And Robert Reich writes about the next chapter of America's economy in the brand new book entitled "Aftershock" and there you see the cover of it.

So what if terrorists launched a major attack on mass transit in the United States? Is America's rail system ready?


BLITZER: Millions of Americans ride trains in this country every single day making mass transit a prime would-be target for terrorists. So what if a major attack were launched on the rail system in this country?

Our homeland security correspondent Jeanne Meserve is outside of Union Station in Washington, D.C., and she takes a closer look at some efforts to prevent this from happening -- Jeanne.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, terrorists have hit mass transit before, and there is every expectation, they will try again.


MESERVE (voice-over): There were more police, more bomb-sniffing dogs and random bag screenings at Amtrak stations Friday, part of a security exercise called Operation Rail Safe. It was scheduled long before the European terror alert but concern about possible transit attacks here is always high.

CHIEF JOHN O'CONNOR, AMTRAK POLICE: The longer we go without an attack, we may be possibly getting closer to an attack, so we need to build up the capability and we need to make sure we are partnering with other agencies to help protect the rails.

MESERVE: Each weekday in the U.S., more than 12 million passengers use the rail transit and the crowds make it an inviting target. There have not been any successful attacks on the U.S. systems, but overseas the record is grim with large-scale lethal attacks in India, Britain and Spain.

Exercises like Operation Rail Safe are intended to improve U.S. law enforcement capabilities and deter anyone casing the system.

UNIDENTIFIED MALE: More power to the people that protect us. I have no problem with it at all.

MESERVE: But one passenger picked at random for screening was skeptical. UNIDENTIFIED MALE: If they do screening, they should screen everybody, and have a metal detector just like at airports or some other technology. But to pick one person out of a crowd is not right.


MESERVE: There are experts who say that if mass transit is going to do what it is designed to do, that is move a lot of people quickly, then airline-style security measures simply will not work, but there are critics who don't feel mass transit has gotten its share of security attention and funding and they feel it will take a tragedy to change the focus.

Wolf, back to you.

BLITZER: Jeanne Meserve, thank you very much.

We may be, may be, repeat, hours away from a dramatic rescue of 33 miners trapped thousands of feet underground. Stand by with new information coming in.

And could his pitch on the baseball field be a metaphor for struggling Senate campaign? Stand by with my interview with the Florida governor, Charlie Crist.