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THE SITUATION ROOM

Spending Bill Dies; Julian Assange Speaks Out; Hollywood Treatment for Abramoff; "The Nature of Compromise;" Senator Lieberman: Our Own "Surge"; Tensions on the Korean Peninsula; Death of $1.1 Trillion Spending Bill

Aired December 17, 2010 - 17:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


SUZANNE MALVEAUX, GUEST HOST: Thanks, Brooke.

Happening now, breaking news -- President Obama has just signed into law the controversial tax deal he negotiated with Republican leaders.

Is this the beginning or end of the road to bipartisanship in Washington?

Also, Wolf Blitzer on his exclusive journey into Communist North Korea, just as tensions heighten with the South and new threats of an attack emerge.

He is standing by.

And as retailers attempt to boost sales this holiday season, new concerns about the cameras watching you while you shop.

Wolf Blitzer is in North Korea.

I'm Suzanne Malveaux.

And you're in THE SITUATION ROOM.

First, breaking news and the $858 billion tax package President Obama has just signed into law. Now, with Republican and Democratic leaders at his side, the president praised the bill signing as progress and what the American people expect lawmakers to achieve.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Candidly speaking, there are some elements of this legislation that I don't like. There are some elements that members of my party don't like. There are some elements that Republicans here today don't like. That's the nature of compromise -- yielding on something each of us cares about to move forward on what all of us care about. And right now, what all of us care about is growing the American economy and creating jobs for the American people. Taken as a whole, that's what this package of tax relief is going to do. It's a good deal for the American people. This is progress. And that's what they sent us here to achieve.

There will be moments, I am certain, over the next couple of years in which the holiday spirit won't be as abundant as it is today. Moreover, we've got to make some difficult choices ahead when it comes to tackling the deficit. In some ways, this was easier than some of the tougher choices we're going to have to make next year. There will be times when we won't agree. And we'll have to work through those times together. But the fact is, I don't believe that either party has cornered the market on good ideas. And I want to draw on the best thinking from both sides.

(END VIDEO CLIP)

MALVEAUX: Well, joining us now to talk about this landmark legislation, CNN political contributor and Democratic strategist, Paul Begala; CNN senior political analyst, Gloria Borger; and CNN political contributor and Republican consultant; Alex Castellanos.

Thanks for joining us in THE SITUATION ROOM -- you know, Paul, it's fun -- it was actually fun to watch this. We saw Biden. He started off this little press conference saying this is a big deal -- and he said I can't say that, because the last time it was a big blank deal. So he said this is an important deal this time around -- do -- Paul, do you think the Democrats could have gotten more out of this deal?

Did...

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Oh, absolutely.

MALVEAUX: -- did the president let them down?

Could he...

BEGALA: Absolutely.

MALVEAUX: Could he have squeezed a little bit more?

BEGALA: Al Franken, the senator from Minnesota, said the president punted on first down, which, for football fans, is kind of painful, but, I think, accurate. You know, but this is a big deal. I -- I want to learn the Chinese word for big. That's how big this is. Because it's $858 billion. That's more than the TARP bank bailout. That's more than the Obama stimulus package. And the highest estimate I found on jobs is that it will create 2.2 million jobs. Well, we need them. We need every one of them.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes.

BEGALA: That's $390,000 a job, though, Gloria. This is a bad deal.

MALVEAUX: Should he have held out longer?

BEGALA: Of course. He had until December 31st at least. And I think -- I have more faith in Barack Obama, maybe, than Barack Obama does. If he had gone out and campaigned for his ideas, which is stimulating jobs through the middle class tax cuts and then making those of us who are blessed pay a little more, he could have won that fight. I had more faith in him. He could have won it. I guarantee you he could have won it. BORGER: I'm not sure he should have held out longer. He might have started earlier on dealing with the tax issues before even the fall. Maybe he should have started last spring or whatever.

But when you look at the additional things that the president got in this bill, when you talk about the earned Investment Tax Credit, tuition tax credit, all kinds of things -- the payroll -- the 2 percent payroll tax reduction, that's, you know, Democratic mana, right?

So why aren't Democrats applauding that?

MALVEAUX: Alex, we saw some Republicans at the White House. This was touted as a bipartisan effort here, Mitch McConnell and some others.

Is this a Clintonian moment for President Obama?

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: It's not as good as moment as -- as it looks like and I think as President Clinton had. You know, the Bush tax cuts have now become the Obama tax cuts. And somewhere George Bush is saying mission accomplished. Great.

(LAUGHTER)

CASTELLANOS: But it's not that much. Not screwing the American people out of $4 trillion is not the same as helping the American people.

BORGER: But it does...

CASTELLANOS: And it really doesn't. It kind of maintains a status quo. There are a few new things in it. But Washington has decided not to rob the American people of $4 trillion and -- and tell them they're giving them a Christmas gift. It doesn't really change to do much...

MALVEAUX: You don't think the president...

CASTELLANOS: -- do much to stimulate the economy.

MALVEAUX: He doesn't get any credit?

You don't think the president...

CASTELLANOS: Well, here's the other thing...

MALVEAUX: -- gets any credit?

CASTELLANOS: -- that the president, I think, could have done better. And I think if Paul and I were giving him political advice, we would have said, look, if you're going to embrace a deal, don't attack it at the same time.

He said, Republicans, I'm only doing this because they're -- they're taking the economy hostage. You can't -- you don't get credit for eating your spinach if you say, I hate spinach. It's bad for me. He should have embraced it or not.

BORGER: Well, but he's going to come back in a couple years and try and undo part of it, correct?

So...

CASTELLANOS: I think probably so. Look.

BORGER: So...

BEGALA: It does run counter...

BORGER: He (INAUDIBLE).

BEGALA: -- to one of the signature issues he campaigned on.

CASTELLANOS: Right.

BEGALA: And that's very different from President Clinton. When President Clinton moved to the middle, famously, he signed a welfare reform bill. Well, the first ad we ran in that campaign was in favor of welfare reform. Now, the bill wasn't exactly what Clinton had wanted, but it was consonant with his centrist presidential campaign.

This is not consonant with the Barack Obama...

BORGER: But the thing...

BEGALA: -- who ran and won in 2008.

MALVEAUX: Gloria...

BEGALA: It's just not.

(CROSSTALK)

MALVEAUX: -- we have to wrap it up real quick.

BORGER: The thing that's so interesting is it Clinton a -- a year, right, to -- to do welfare reform, to adjust -- or two years, really. And -- and it took Barack Obama, what, 90 days?

(CROSSTALK)

MALVEAUX: All right...

(CROSSTALK)

CASTELLANOS: But he is going to buy a ranch in...

MALVEAUX: We've got to...

CASTELLANOS: (INAUDIBLE).

(CROSSTALK) MALVEAUX: We've got to leave it there.

We thank you so much for joining us.

We're going to be taking a close look on some other things that are happening over at the Hill, where there are dramatic new indications that a repeal of the military's controversial policy barring gays from serving openly could once again be reality.

I want to bring in our senior Congressional correspondent, Dana Bash -- Dana, the first key Senate vote on repealing "don't ask/don't tell" is scheduled for tomorrow. And supporters of the repeal think that they may have the votes.

Is that right?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It is right. And it really is remarkable given the fact that, Suzanne, remember, it was just last week that we thought we might have seen the end -- the death of efforts to repeal the "don't ask/don't tell" policy, when Republicans were able to block a defense bill that had it in it.

But there was so much pressure on the Democratic leader to bring this back up that he is doing a standalone measure, so to speak. And that is going to be tomorrow.

Let me just show you why people are so, basically, happy about the fact of where they are. Look at the number of senators -- 56 Democrats. They believe they have at least four Republicans. And if you look at the -- the Republicans. I want to put that up on the screen. These four Republicans have come out in recent days. And they have said that they are going to be for a repeal. So that's why Democrats, at least, are very happy.

Listen to what Joe Lieberman and others said.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (I), CONNECTICUT: I think a lot of people felt that our efforts were doomed in this session. But we didn't give up. We essentially regrouped.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

STACY VASQUEZ, DISCHARGED GAY SOLDIER: This isn't process and procedure to me. It's not just a vote. This is my life. This is what I was called to do. It's what I want to do. It's what I'm inspired to do. It's what my soldiers call me every day to say, did you win yet?

Are you coming back?

And I have to answer, no, but maybe tomorrow. After this vote, I'll be able to say, yes. I, too, can return to the service. (END VIDEO CLIP)

BASH: And, Suzanne, that is what we heard from -- that was somebody who has been discharged, a gay soldier, and, of course, Joe Lieberman before that. He is somebody who says that they're happy what they're -- what he is calling a legislative surge right now.

It's going to be a very fascinating vote, this first key test vote probably tomorrow morning -- Suzanne.

MALVEAUX: And, Dana, what happens next, if it is repealed this weekend?

BASH: You know, that's a really important question. Obviously, it would go to the president's desk for him to sign it. But nothing would go into effect -- nothing, until the president and the Defense secretary certify that the repeal is in place. And what the Defense secretary, in particular, had testified and made very clear, especially to some Republicans who are on the fence, like Scott Brown of Massachusetts and others, is he won't certify anything until he believes that it could be implemented without hurting unit cohesion, without hurting military readiness. That could take some time.

So that -- that is something that we're going to look for. Unclear if it could take months, even up to a year. But nothing will happen until -- until that particular certification is signed.

And our Barbara Starr reports, 60 days after that, that is when the policy would formally be repealed -- Suzanne.

MALVEAUX: OK. Excellent work.

Thank you so much, Dana.

We are standing by to hear from Wolf Blitzer on an exclusive assignment in North Korea.

Meanwhile, new indications that the White House could be preparing for a weekend of worry, as tensions mount in the region.

Plus, the elusive WikiLeaks' founder speaks to CNN one day after being freed from jail. Ahead, what he says about the alleged source behind that infamous diplomatic document dump.

And a new plea from Sarah Palin, urging the Senate not to pass a critical nuclear arms treaty.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Wolf Blitzer is standing by with his exclusive look inside North Korea.

He is the only television journalist accompanying New Mexico Governor Bill Richardson to the region. Meanwhile, tensions there are worsening. North Korea is warning it will launch a military strike against the South if it proceeds with previously scheduled military exercises on a South Korean island the North fired on just last month. The two countries have been poised, potentially, on the brink of war since that deadly attack.

Now the U.S. State Department says the exercises, which are scheduled to begin tomorrow, are not meant to be provocative.

Wolf is on the phone right now.

I want to start with you -- Wolf, essentially, tell us what you're doing. It's Saturday morning there. I understand you've been with Governor Bill Richardson. He's met with some North Korean officials.

Tell us who they are and what they accomplished.

WOLF BLITZER, HOST: Thanks, Suzanne.

Yes, I'm here in Pyongyang and it's early Saturday morning already. The -- the former U.S. ambassador to the United Nations, the current outgoing governor of New Mexico, Bill Richardson, he's -- he had some -- what he called very important meetings Friday with the vice minister in charge of foreign affairs for the United States, Ri Yong- ho. They met for about an hour and a half over at the -- at the foreign ministry. And then last night, they had an informal dinner or banquet in which they -- they could go through some of the more specific issues in a -- in a less formal way than sitting across a table.

I walked into that negotiating room when they began their talks yesterday and the North Koreans had a large delegation on one side. Richardson was on the other side, together with two of his advisers, basically. And they went through, for about an hour and a half, all of the issues, including the tensions that resulted last month, November 23rd, from the North Koreans shelling an island that the South Koreans have, Yeonpyeong; and earlier in March, the -- the de -- the destruction of that South Korean warship, the Cheonan. Forty-six sailors were killed. The North Koreans denied doing that. The South Koreans, the U.S., most of the rest of the world blame the North Koreans for that.

And there have been a lot of other tensions.

Today, the -- the -- the governor is going to meet for what will probably be a more important meeting with the chief North Korean nuclear negotiator, Kim Kye-Gwan. This is the individual who invited Richardson to come here to begin with. And that could set the stage for a visit to Yongbyon, the nuclear facility that the North Koreans have.

There will also be an added meeting, I'm told, tomorrow, that Richardson will have with some senior North Korean military officials.

All of this is designed to lower the temperature and to ease this crisis, which is probably the most significant since 1953, the armistice that ended the Korean War.

So it's a very tense situation. And right now, the latest exchange of rhetoric and threats between North and South Korea has further escalated the tensions. So there's no doubt about that.

MALVEAUX: And, Wolf, obviously you're live there inside North Korea.

Can you give us a sense of whether or not the governor or yourself have learned any new information -- any kind of reassurances about these -- this -- this tension that seems to be escalating here?

Has anybody talked to either one of you and -- and tried to reassure you and say, you know what, we are going to try to pull back here and -- and get an -- a clear understanding between the North and the South and what is taking place this weekend, specifically, with those military exercises that the North Koreans seem to be so upset about?

BLITZER: What -- what -- Richardson was pleased that he did get, at least in the first round of talks with these North Koreans, the clear impression they do want to ease the crisis, they do want to reduce temperature right now. And they believe that's one of the reasons they invited him to come at this time.

They also think it's one of the reasons why they invited two earlier U.S. delegations -- experts, unofficial representatives of the United States. Professor Siegfried Hecker of Stanford University was here a few weeks ago. He was allowed to go inspect the Pyongyang nuclear facility. And Jack Pritchard of the Korea Economic Institute in Washington, a former Clinton administration North Korea expert, he was here on a separate mission.

And Richardson is the third.

So Richardson does believe, at least based on his initial conversations, that the North Koreans are interested in easing this crisis right now. But there's a lot a stake -- a lot at stake, obviously, including prestige and...

MALVEAUX: Sure...

BLITZER: -- and the respective sovereignty of -- of both North and South Korea.

So it is a tinderbox. There's no doubt about that. One miscalculation, God forbid, could cause another war. And that's what I think everyone is trying to avoid right now.

MALVEAUX: Sure...

BLITZER: But the stakes, clearly, Suzanne, are enormous.

MALVEAUX: Wolf, I want you to stand by for a moment.

And I want to bring in our CNN -- CNN Pentagon correspondent, Barbara Starr, who's joining us live, as well -- Barbara, late today, there were new signs that the Obama administration could be preparing for a weekend, essentially, of -- of worry. They're worried about the situation.

How do they feel the tensions are between the North and the South?

BARBARA STARR, PENTAGON CORRESPONDENT: Well, I think what you just said, Suzanne, is spot on -- a weekend of worry. What we have learned is the White House, the Pentagon and the State Department have set up sort of a contingency stand by communications system through the weekend with their South Korean counterparts, with the government in Seoul, as these exercises unfold. Because, if, heaven forbid, as Wolf said, things escalate, the Obama administration wants to be able to be in immediate touch with the South Koreans. They want to know exactly what's going on. They want to talk to the South Koreans. They want to be able to try and defuse things. They want to lay out, as one official said to me, courses of action for the South Koreans. If the South Koreans see action by the North and feel pressured to respond, the U.S. wants to be party to that decision-making and try and get the South Koreans to understand that it's in the best interests of everybody to deescalate, to stay calm.

No one, however, knows what the North Koreans might do, if anything. And that's the real wildcard even tonight -- Suzanne.

MALVEAUX: Barbara, I want to get back to you.

But I want to go back to Wolf for a moment -- Wolf, what do you make of what Barbara's saying here?

Obviously, there are a lot of administration officials now involved in watching what is taking place right where you are live, essentially to see what happens over the weekend.

I spoke with Robert Gibbs, the press secretary. And he says, clearly, they are watching, as well, to make sure that things don't get out of hand.

What are you picking up from where you are?

BLITZER: Well, I -- I think the North Koreans would clearly appreciate it if the South Koreans decided to postpone or cancel this planned live fire exercise at this -- this island that was shelled back in November, November 23rd. I think the North Koreans would see that as positive gesture on the part of South Korea. And that would clearly ease the tensions somewhat.

But whether or not South Koreans, for their own political purposes, are going to do that, would that -- would that appear to be capitulating?

Would that appear to show weakness in the face of this -- this situation?

That's obviously an issue that would have to be discussed.

But the North Koreans, what you clearly get from them is -- is the sense, you know, that it's South Korea's fault, they're provoking this, they're backed by the United States, which, for whatever reason, is provoking this. They feel -- they feel that they're surrounded right now. And they're -- they're clearly hoping that the South Koreans blink, if you will.

I -- I su -- my own personal assessment is the South Koreans probably won't unless there's enormous pressure from the United States and from others to -- to hold off on this exercise. That seems to be the pivotal point right now.

There's no doubt, also -- one more point, Suzanne. China could play a really important role, given its enormously significant relationship with North Korea right now. And there's deep disappointment, I know from my talks in Washington before I left here, my meetings with U.S. officials. They're -- they're disappointed that China is not doing enough to try to ease this crisis.

Let's see if China gets into the game and does something.

MALVEAUX: OK, Wolf.

We'll be following your trip very closely.

I want to ask Barbara Starr one more question about the role that Russia is playing in all of this.

What do we know about their involvement here?

STARR: Well, the Russian Foreign Ministry now has spoken to both U.S. and South Korean officials and is urging South Korea not to conduct these exercises, that it could be very provocative, very destabilizing.

But as the U.S. State Department says, South Korea has every right to conduct these exercises and look after its own self-defense.

So at least for tonight, at least for now, everyone is holding to their position -- Suzanne.

MALVEAUX: Barbara Starr, thank you so much, from your post at the Pentagon; and, obviously, our Wolf Blitzer, who is live, who's on the ground in North Korea for these historic talks.

Well, they survived a dramatic boat crash off of Australia. We'll tell you what these asylum seekers are protesting about now.

And home for the holidays -- it is a long awaited homecoming in California, as thousands of Marines and sailors return to the U.S. and to home.

Stay with us.

(COMMERCIAL BREAK)

MALVEAUX: President Obama's health care law and the Supreme Court -- Brian Todd is monitoring that and some of the other top stories that are coming into THE SITUATION ROOM right now -- hey, Brian, what are you working on? BRIAN TODD, CNN CORRESPONDENT: Hi, Suzanne.

The federal government will not go straight to the Supreme Court for a review of the recent health care ruling in Virginia. A government source tells CNN the Justice Department will follow the usual route to an appeals court. This week, a federal judge in Virginia ruled that the individual mandate in the new law is unconstitutional. Virginia officials had urged the Obama administration to go directly to the high court.

Another auto recall. This time, General Motors is recalling 100,000 SUVs because the front seat belts could become loose in a crash. These models include Chevrolet Equinox, G.M. Terrain and Cadillac SRX compact Crossover SUVs. G.M. says the seat belts won't fail on first impact, but they could fail on a secondary impact. Owners will be asked to bring their SUVs to a dealer to fix the problem.

Mexican authorities dispute that a drone that landed in Texas this week belongs to their country. U.S. officials are investigating the circumstances of the crash in El Paso. The National Transportation Safety Board says it believes the unmanned aerial vehicle was owned and operated by Mexico. The U.S. frequently uses drones to look for illegal immigrants along the border.

And a happy homecoming just in time for the holidays in California. Two thousand Marines and sailors are returning to Camp Pendleton today. The servicemen and women were deployed for seven months overseas. They delivered aid to victims of those massive floods in Pakistan earlier this year and they helped fight pirates in the waters near Somalia -- Suzanne, you can't go wrong showing reunion video at Christmastime.

MALVEAUX: And they look -- I mean they look so happy.

TODD: They do.

MALVEAUX: I mean, it's so nice to see them just grab their kids...

TODD: That's right.

MALVEAUX: -- and, you know, hug their spouses.

TODD: A big relief.

MALVEAUX: Absolutely.

TODD: A big sigh of relief when they get back.

MALVEAUX: All right.

Thanks, Brian.

A new plea from Sarah Palin to the Senate against passing a critical nuclear arms treaty. We'll tell you why.

Plus, new details on testing the space shuttle after cracks in the fuel tank delayed its launch.

And a stunning new discovery that could help explain the mysterious disappearance of legendary aviator Amelia Earhart.

(COMMERCIAL BREAK)

MALVEAUX: Worries over a possible government shut down have eased now that Senate Democrats agreed to drop a massive spending bill that didn't get support from Republicans.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Yesterday, in the Senate, we saw a victory for the American people when the so-called Omnibus Bill had an untimely death. You know, Congress was gearing up for one last big spending spree before Christmas, with thousands of -- of earmarks. But the American people just wouldn't stand for it.

(END VIDEO CLIP)

MALVEAUX: Joining us now are Democratic strategist Paul Begala and Republican strategist, Alex Castellanos.

Both are CNN contributors.

You guys Omnibus Bill.

(LAUGHTER)

CASTELLANOS: We Omnibus Bill.

MALVEAUX: That's excellent.

I want to start off by talking about this spending bill. It was a trillion dollars. Trillion. It died, as Senator Harry Reid, the Senate majority leader, pulled it, because he realized he didn't have the votes.

But you've got to wonder, was this a missed opportunity?

If the president had gotten ahead of this and won some support from the Independents and Republicans who said this thing is way too big, it's way too expensive, I'm going to take the lead on this.

Did he miss an opportunity -- Alex?

CASTELLANOS: You know, there are some people that have issue with the president -- is he -- is he governing well?

But almost everyone thinks he plays politics pretty well.

I think he missed one here. He could have gotten out in front of the parade. He could have sent the signal that I worry about deficits, I worry about spending, and, P.S., this is going to happen anyway. He could have picked up the phone, said to Harry Reid, hold this bill. It would have demonstrated strength, and I think that's one of the president's biggest weakness. The world and American voters wonder, does he really have the strength to bring some discipline to government?

BEGALA: Well, but the deficit wasn't caused by earmarks. I mean, I know we get all upset about it in the media, and the Republicans and the Democrats scream about it.

All the earmarks put together in that bill were $8 billion. If you take them out, we would balance the budget in -- get it -- 163 years. Deficits were caused by tax cuts for the rich, two wars we didn't pay for, a prescription drug benefit that's full of corporate welfare.

MALVEAUX: But the president campaigned against earmarks consistently.

BEGALA: But he should -- well, in the Senate he had earmarks, but he disclosed them. So I think that's probably what a lot of people would like to know, is, like, what are your earmarks? But it's a silly and un-serious fight to have when the Republicans put the earmarks in and then Republicans complain about the earmarks.

CASTELLANOS: You're wrong again.

BEGALA: These are Republican earmarks that the Republicans are complaining about.

CASTELLANOS: My friend Paul, who is on occasion right about some things, just happens to be wrong. But why are earmarks so important? It's how Rudy Giuliani cleaned up New York city streetlights.

He fixes the small things first. It gives people a confidence to know you can tackle the big things together.

The president -- this was an important symbol, and the president whiffed on it. And by the way, tax cuts do not cause deficits.

BEGALA: Of course they do.

CASTELLANOS: Spending causes deficits.

BEGALA: No. The Bush tax cuts --

CASTELLANOS: If my friend Paul goes to the bar and blows the rent money -- I'm not saying you have done it again -- but if you blow the rent money, and then you fail to rob a rich guy to pay for it, the rich guy didn't cause the deficit. You caused the deficit when you blew the rent money at the bar.

BEGALA: Wait a minute. You lost me somewhere between getting drunk and mugging somebody.

But, no, President Bush cut taxes for the rich, he waged two wars without paying for it, and then he put a prescription drug benefit on the national credit card. That, plus the recession, those four things, are what caused the deficit. We need to address each of those four things.

CASTELLANOS: Spending --

BEGALA: We need to raise taxes on rich people like you, we need to end this God awful war in Iraq.

MALVEAUX: You guys are never going to agree on this.

I want to turn the corner if I can to START, the START treaty. We still don't know if that's going to happen.

This is interesting. Sarah Palin -- this was published, an op-ed today in "The National Review Online."

It says, "The proposed new START agreement should be evaluated by the only criteria that matters for a treaty. Is it in America's interest? I'm convinced this treaty is not. It should not be rammed through in the lame-duck session, using behind-the-scenes deal-making reminiscent of the tactics used in the health care debate."

Now you have got the U.S. and Russia, who are both agreeing, superpowers agreeing, to allow inspections of their nuclear arms and reduce them. The Democrats and Republicans can't get on the same page over this.

Is this a disagreement over policy or is this politics?

BEGALA: No serious person thinks Sarah Palin knows the first thing about nuclear weapons. Come on. I wouldn't trust her with a microwave oven, much less a nuclear weapon. She has no idea what she's talking about.

The interesting thing is she's wrong on facts when she says being rammed through. Senator John Kerry, the chairman of the Foreign Relations Committee, has spent months and months and months, 20 hearings, patiently walking his colleagues through this. Hundreds and hundreds of questions answered. So it's been fully vetted.

The question for the Republicans is, who will they listen to on national security, General Colin Powell, who supports this, Admiral Mike Mullen, who supports this, all the Republican former secretaries of Defense and State? Or will they listen to a woman who did keep us from being invaded in Alaska for the long 31 months that she was governor of that state?

MALVEAUX: Alex, let's broaden it beyond Palin here though. Obviously, we're talking about, is this something that Democrats and Republicans -- are they playing with the national security issue, as the White House believes?

CASTELLANOS: No. I think there are a lot of Republicans who are concerned about this.

I think the State Department establishment, Republican and Democrat, old secretaries of state and new, think it's a great idea. But right now there are a lot of people who wonder, you know -- Putin is back, the KGB is back running Russia. It's not the democratic country it was heading to be in a while, and all of a sudden, we're trusting people again who don't verify their treaties.

And, plus, the big nuclear threat now is not the Soviet Union, it's the metastasizing spread of nuclear weapons. We should be working with the Soviets to get rid of other people's nuclear weapons.

MALVEAUX: We've got to leave it there. All right.

Thank you, Alex, Paul. Appreciate it.

You'll get a last word in another time. Another time, Paul. You'll come back. You'll come back.

CNN is announcing a new 2012 presidential debate today. CNN and the Tea Party Express will co-host a primary debate among the 2012 Republican presidential candidates during Labor Day week. That is next year. The debate will have an emphasis on economic issues and government spending.

Well, the controversial WikiLeaks founder is speaking candidly one day after being released from jail. Ahead, what he's saying about the sex crime allegations that he's facing.

And the troubled lobbyist Jack Abramoff, he goes to Hollywood. My interview with actor Kevin Spacey on his new film, "Casino Jack."

(COMMERCIAL BREAK)

MALVEAUX: On his first full day as a free man, the WikiLeaks founder is now speaking out.

CNN's Atika Shubert was one of the reporters that he talked with.

(BEGIN VIDEOTAPE)

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT (voice-over): Julian Assange steps into the media spotlight out of the country home of a prominent supporter where, for now, he is living. Relaxed, but defiant, repeating that the accusations against him were part of a campaign to ruin his reputation.

JULIAN ASSANGE, FOUNDER, WIKILEAKS: This has been a very successful smear, but ultimately it will not be successful. Ultimately, people will see what is behind them.

Now, what is behind them, what are precisely the allegations? Well, we don't know precisely. In fact, the Swedish prosecution refused to give any evidence whatsoever to the British courts.

SHUBERT: He spent his first day out of prison making the rounds with the TV networks, camped outside in the snowy garden.

I asked him to comment on Bradley Manning, the Army private and alleged source of WikiLeaks' enormous cache of classified U.S. government documents. Manning was spending his 23rd birthday on Friday in a military jail in Virginia. ASSANGE: We see in this case a young soldier who has been embroiled by allegations that they have had something to do with some of the material that we have published. The helicopter motor (ph) videos, the first charge that he's alleged to have been involved in.

Now, as an organization, we have a very difficult position that our technology doesn't permit us to understand who our sources are. I never heard the name Bradley Manning until I saw it in the media. And that is right, because in the end, that is the only way which sources can be guaranteed that they are protected, if even the journalists don't know who they are.

SHUBERT (on camera): This is the new home of Julian Assange and WikiLeaks. It's an 18th century manor house set in 600 acres of parkland. But Julian Assange is restricted to this area. He also has to wear an electronic tag that monitors his movements, and every day he must check in with the local police.

(voice-over): And that's what he did Friday afternoon. He was greeted by curious locals who wanted his take on England's current cricket match against Australia.

ASSANGE: I've been in a black hole for 10 days. I don't know about the cricket.

SHUBERT: And he was in an equally talkative mood when he returned, bemused by his new circumstances.

(on camera): Do you feel safe here?

ASSANGE: I feel as safe as one can be. It's always a bit safer -- would feel much safer if I was here and no one knew I was here.

SHUBERT (on camera): Julian Assange has just returned from what will now become a daily routine. He must report to the Beckles (ph) police station every day between the hours of 2:00 and 5:00, just some of the conditions of his release. But despite these restrictions, Julian Assange says it's business as usual for WikiLeaks.

Atika Shubert, CNN, at Ellingham Hall, in Suffolk, England.

(END VIDEOTAPE)

MALVEAUX: The ultimate Washington insider, Jack Abramoff, gets the Hollywood treatment. Kevin Spacey plays him in a new movie. Wait until you hear about his meeting with Abramoff in a federal prison.

And later, the winners and losers now that the new tax deal is law.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SOLEDAD O'BRIEN, CNN ANCHOR: Hey, Suzanne. Good morning.

MALVEAUX: Well, good morning, Soledad. A legal source very close to the negotiations involving Jack Abramoff just confirmed that they are filing those papers now in federal court. He's pleading guilty to fraud, corruption, and tax evasion in federal court here in Washington.

(END VIDEO CLIP)

MALVEAUX: That was me breaking the Jack Abramoff story back in 2006.

Well, fast forward four years, and Mr. Abramoff goes to Hollywood. There is a new movie out about the troubled lobbyist and ultimate Washington insider.

(BEGIN VIDEOTAPE)

MALVEAUX: Actor Kevin Spacey joins us in THE SITUATION ROOM.

Hey, great to see you. Glad you could join us here.

KEVIN SPACEY, ACTOR: Thank you. I'm sorry I'm not with you there in Washington, but at least we can speak to each other remotely this way.

(LAUGHTER)

MALVEAUX: Absolutely. We get a chance to see you.

I understand that you are starring in a new role, a new movie, "Casino Jack." You play Jack Abramoff, the disgraced Washington lobbyists. The last we checked, he had a gig at a pizza joint.

Have you had a chance to meet him or talk with him about this role?

SPACEY: I did have a chance to meet him. Before we started shooting, George Hickenlooper, who directed this film -- I think quite brilliantly -- and who we sadly lost last month -- he passed away quite suddenly and unexpectedly -- George had met with Jack Abramoff about four times. And then I had the opportunity to go to Cumberland, Maryland, Federal Prison and spend a number of hours with the man, himself.

And it was a very useful, very helpful opportunity to try to understand the emotional terrain of what was going on in his life, in his relationships, and to try to understand as much as I could about the culture of lobbying and the environment that he found himself in that got him in so much trouble. And to answer your question, he actually was working at a kosher pizzeria most recently, and I believe as of December 4th, he became an entirely free man from his prison sentence.

MALVEAUX: That's right.

What was your impression of him?

SPACEY: Well, one of the things that I always try to keep as a sort of steadfast rule for myself as an actor is that I can't judge the characters that I play. I have to -- I think one of the things that I love about acting is I think it's a very humanizing profession, because if you spend your life having to put yourself in other people's shoes and trying to have some degree of not sympathy, but empathy for their situation, because but for the grace of God it could be us, or you, so I found it an incredibly helpful opportunity to listen to him.

I found him, by the way, from all the things that I had read, far more charming, funny. He does lots of impressions which I do in the film as well as he did in life. Very passionate about what he believed in.

He believed in Republican principles and ideals. He's a very, very devout Orthodox Jew, and has been devoted to his family.

So you try to take all of the commentary that's been said about him, you look at the case itself, you look at the environment in Washington, D.C., and in this case I tried to play a fully rounded character rather than just a one note sort of villainous character.

MALVEAUX: In your conversations, did he seem remorseful? Did he seem that he regretted some of the actions?

SPACEY: Well, I think it would be inappropriate for me to speak for him. I suspect that now that he's out, he'll find the right time and place that he wants to say what he has to say.

But there was no doubt that he knew he crossed the line in certain ways. But I also suspect that he felt that he was working and living in an environment in which lots of people were doing very similar things, and that to some degree, perhaps, there's an impression that's been left that, by throwing a man like that into jail, and sort of calling him the worst human being that ever walked the face of the earth, that there's an impression that they cleaned up the lobbying industry. And I suspect you and most people down in Washington, D.C., know that that isn't entirely true.

MALVEAUX: Do you know if -- has he had a chance to see a little bit of the movie, a clip or anything?

SPACEY: I don't know if he's seen it. I know his family has seen it.

In fact, I met his two children in Los Angeles a couple of weeks ago, and we had an AFI premiere there. And I know that for them, they said to me that although parts of the film are a bit painful to watch, they were very relieved that they felt we had been fair and that we had shown both his good and bad qualities in the movie, and that I turned him into a human being.

And for me, as an actor, that's where you want to be. You want to be able to try to humanize someone who has been really very dehumanized in the press.

MALVEAUX: You talk about this culture of corruption in Washington, and this was a time -- I had actually covered the Abramoff trial, as well as the White House. This was a time when President Bush was in office. Now that the Democrats are at the White House, and at least, for now, responsible, in charge of Congress, do you think that they've helped clean up that culture of Washington at all?

SPACEY: Look, I think this is not a one-party issue. I think that there is no doubt that influence and power and money have invaded our political system. And whether it's Democrats or Republicans who are a part of that, whether these issues need to be looked at by the American public, I think is a valuable and important question. To me, if we leave the notion of campaign reform or lobbying reform in the hands of the politicians, I don't think a heck of a lot's going to get done.

MALVEAUX: President Obama just recently negotiated a tax cut deal with the Republicans. And initially -- you're a big Democratic supporter -- initially, you were a Hillary Clinton supporter.

Do you think if she was in the White House, that she would have handled it the same way, that we would see such a deal?

SPACEY: Look, I'm not a political expert. I'm an actor, and I'm sure most people in America don't give a hoot what I think about these kind of situations. But I do believe that Hillary Clinton has known for a very long time that you don't get very well in politics in this country unless you do understand the notion and the importance of compromise.

And so I think that what we have to try to look at over these next couple of years is, how much can these two parties work together to try to do good things for the people in this country and try to avoid too many bad things happening? And I think that it's not an easy game to play.

I certainly don't -- you know, I imagine that what the president has inherited has been a very difficult series of very problematic situations in this country. And the truth is, is that I think to, some degree, we can't assume that he has a magic wand.

These are very difficult, deeply-embedded problems that are going to take a long time to solve. But the more I think that the two parties work together, the better chances we have of getting some kind of movement in the direction that we want to go.

(END VIDEOTAPE)

MALVEAUX: That movie, "Casino Jack," opens today.

Well, as Wolf Blitzer makes that incredible journey to North Korea with Bill Richardson, you can be sure that U.S. officials are eagerly awaiting their return home. The details they'll try to learn.

And those video cameras aren't just to prevent shoplifting. How retailers track you while you shop and what they do with that video.

(COMMERCIAL BREAK)

MALVEAUX: The latest on the survivors of the dramatic boat crash off of Australia.

Our Brian Todd is monitoring that and other top stories.

Brian, what do we know about this?

TODD: Well, Suzanne, dozens of asylum seekers in Australia held protests near their detention center. The Iranian, Iraqi and Kurdish demonstrators were on board that boat that crashed into the cliffs along Christmas Island last Wednesday.

They're protesting the conditions in the detention center. They also say the Australian navy didn't do enough to save the lives of their fellow asylum seekers. At least 28 people died in that crash.

NASA says the test of the space shuttle Discovery's fuel tank is proceeding well. Technicians are looking for foam cracks, ice buildup, or other abnormalities. Cracks found in the foam of the external tank have repeatedly delayed the shuttle's final launch since November. The space agency says the earliest possible launch date is February 3rd.

And the first lady played Santa Claus today. Michelle Obama went to a Washington-area warehouse carrying a giant red bag of presents donated to Toys for Tots by the White House staff and family. Mrs. Obama thanked the volunteers and those who donated before sorting gifts.

She encouraged people to buy gifts for older children. Mrs. Obama said Toys for Tots is for all children from "kids who are barely walking to kids who are already talking back." So, clearly, my kids are qualified for Toys for Tots. They're in that latter category.

(LAUGHTER)

MALVEAUX: If you're naughty or nice, you get something.

TODD: That's right.

MALVEAUX: All right. Thanks, Brian.

Well, President Obama signs a landmark tax deal into law. Is it a symbol of new bipartisanship in Washington?

Plus, the mysterious disappearance of aviator Amelia Earhart, the details of a stunning discovery that could shed new light on what happened to her.

(COMMERCIAL BREAK)

MALVEAUX: She was the first woman to fly solo across the Atlantic Ocean and disappeared while trying to circle the world. What if we could solve the mystery of what happened to aviator Amelia Earhart almost a century later?

Our CNN's Tom Foreman joins us with stunning new findings.

Tom, what do we know? TOM FOREMAN, CNN CORRESPONDENT: This is just exciting, exciting stuff. Yet another possible step toward ending this enduring mystery of what happened to Amelia Earhart.

We all remember the story.

In 1937, she started out here in California. Let's look out at the path here that she was taking around the world.

She flew down here across Florida, across the northern side of South America, this way, then on across the big part of Africa, over India, down over a little part of Australia, coming around here. And then, July 2, 1937, the last time she was seen in Papua New Guinea. She had her engineer with her, Fred Noonan, flying along in their Lockheed Electra.

They talk off from here, headed out here, to what was supposed to be Howland Island. We all know this. But they never arrived.

They were hoping to land here. They disappeared. And then for several days, there were radio messages, and they were trying to figure out where they were coming from.

Well, now the focus is on this place, 400 miles to the south, this other island down here. And there have been some new developments in the area. This is called Nikumaroro Island.

MALVEAUX: Tom, what did they find?

FOREMAN: Well, what they found, Suzanne, is that after all this time, they found a campsite there that was actually identified back in about 1940, when they found some bones there that they thought initially -- upon initial examination -- and this is one of the ships that helped look for her at the time -- they thought it was a man. But now they have looked at it more closely, and they have found that they are actually the bones of the woman, and more importantly, the team from this team called Tiger (ph), which is one of the big search groups in all of this, has been down here going through the campsite they found, and they found some tiny fragments of more human bones.

They have no doubt that some kind of castaway lived on this part of the island, because they found all sorts of fish bones and clamshells and turtle shells and various tools that were fashioned out of things which may have been come from an airplane. They also found back in 1940, a couple of pieces of shoes, one from a man, one from a woman.

So, the bottom line is they're thinking if they can somehow get these bone fragments and get out of them a tiny piece of DNA, they might be able to get enough to compare it against known ancestors of Amelia Earhart's family and determine whether or not those radio signals that came from here -- in fact, came from somebody who survived on this island -- in a perfect world, they believe that the airplane ditched somewhere up here on a coral reef, in high tides, was swept down a very steep underwater embankment -- they won't have a chance to look for the plane -- and that she ended up settling down here on the island in an area that was probably the best place to live, and possibly survived there for really quite some period of time, maybe a few years, even, trying to be rescued. But nonetheless, the rescue never came.

In any event, the big news, Suzanne, for this group Tiger (ph) and the folks who are involved is that they believe that maybe, maybe, maybe, with this DNA evidence, if they can prove that this is actual DNA in these tiny bone fragments, they may establish that this is where she was. It's hundreds of miles off from where other people thought she was going to wind up, but after all these decades, the mystery endures, and maybe we're a tiny bit close this holiday season to getting an answer.

We'll of course keep you apprised on all of that -- Suzanne.

MALVEAUX: Absolutely fascinating. Thank you, Tom.