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THE SITUATION ROOM

Stuck On Tarmac For 11 Hours; Why the Budget Will Be Delayed; 10,000 65th Birthdays-A-Day, Suspected U.S. Drone Strike Kills 10; Shake-Up at Pentagon?; 10,000 Flights Canceled; Encouraging President Obama to Run Again

Aired December 28, 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: Happening now, new snow disasters and more blizzard misery. Dozens of skiers trapped on a broken lift and dozens of airline passengers were trapped for hours on the tarmac.

Plus, President Obama's surprising shout out to football player and convicted felon, Michael Vick. Is the commander in chief rooting for the quarterback's come back?

And hundreds of thousands baby-boomers may not feel like celebrating the New Year. The U.S. is on the brink of a retirement explosion that could leave an entire generation in financial pain.

Wolf Blitzer is off today. I'm Suzanne Malveaux. And you're in the SITUATION ROOM.

Well, there are hundreds of thousands of fliers that have horror stories to tell, but this holiday blizzard nightmare may beat them all. Passengers on a flight from Vancouver spent 11 long frustrating hours stuck on the tarmac after landing at JFK Airport in New York. Now, they finally got off the plane this afternoon. Many are angry. They're trying to get answers from officials at Cathay Pacific Airways. Take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We landed. Everything was normal. We landed and we came running into a terminal. And then, all of a sudden, the captain that was very, very good, announced that there'd be a short delay. And then, about half an hour later, that could be another delay because we didn't have an actual terminal to come in to. And then, that took us to about 5:00 in the morning and then there was another delay.

And then, it just kept on going, every hour, and every hour, it was -- that there was no way that we could go into. There was baggage handler. I was needed baggage off. There was no staff to receive us. And at the end now, talking about getting am actual ladder and bringing it out to the runway, so we could get off of the plane there. That didn't happen. And then we went to another terminal for American airlines.

(END VIDEO CLIP) MALVEAUX: Unbelievable. Our CNN senior producer, Elise Zeiger, is on the phone from JFK Airport. Elise, give us a sense of what happened here and the mood amongst these travelers after being stuck -- stuck 11 hours on that flight. What are they saying to you?

ELISE ZEIGER, CNN PRODUCER (via telephone): It is unreal, Suzanne. Very, very hard to believe. I spoke to Vincent who you just heard from and several other passengers that were on that flight. Unfortunately, their ordeal didn't just start last night. They actually all set out on the same flight on Sunday, the 26th. They boarded the flight. Then, they sat in Vancouver on the plane for four hours on the tarmac. Then, they were told they were going back to the gate. They all went home.

Then, they started all back again last night, and their ordeal (ph) actually began when they took off last night, landed here at 2:15 in the morning, and, actually, didn't deplane, as you said, until about 11 hours later, about 1:00 p.m. As you would imagine, I mean, it's -- it was just an agonizing ordeal. They talked about, you know, how frustrated they were. People crying on the plane. Lots of kids on the flight. Just absolutely incredible.

MALVEAUX: So, what are the airlines telling the passengers? I mean, why didn't they, actually, you know, pull a bus stop or a ladder or something and try to get them off the plane even if they didn't have some sort of terminal to go to. Why didn't that happen? What are they saying?

ZEIGER: Right. Well, according to the passengers I spoke with, they were given many, many different reasons. You know, some of what they were told is that there was a lack of gate space as you've heard. And, you know, of course, they were being told that the weather was preventing them from getting to end gate, but they never got any definitive answer. And what's more frustrating for them now, the majority of them left.

They all got off the flight, like I said. They waited around to find out something about their baggage. Unfortunately, every single person I've talked with who has now left did not leave with their bags. And it may be 48 hours before they see them. These folks are with their kids. They -- you know, they essentially have nothing.

MALVEAUX: Elise, I want you to, honestly, we'll get back to you with the latest updates on how those passengers are doing, what they're doing, what the airlines are saying to them. But thank you so much for the latest information there. Obviously, just a very difficult situation for a lot of passengers who are trying to make it through this holiday season.

They are blinding snows and they are giving way to blinding rage, you could say, in the northeast. In addition to the backlog of these airports, after a thousands of flights were cancelled, many area residents are now fuming about storm damage that is closer to home. They're taking out their anger on some local officials.

Our Mary Snow, she's in New York with that part of the story. Mary, what are they telling you?

MARY SNOW, CNN CORRESPONDENT: Well, Suzanne, you know, if you stand here in Manhattan as we are right now, you can see behind me, the streets look like they're pretty much back to normal nearly 48 hours after this major snowstorm, but outside, directly outside of New York City and the cities of other Burroughs, it's quite a different scene, and New Yorkers are angry and they're taking aim at the city's mayor.

(BEGIN VIDEOTAPE)

SNOW (voice-over): In the Burroughs outside Manhattan, streets are still blanketed with snow, leaving New Yorkers like Lance Saw (ph) in Brooklyn on edge.

UNIDENTIFIED MALE: Years. Years and years and years I've lived here and never have I seen it like this.

SNOW: Emergency crews like this fire truck in Manhattan face challenging conditions. Hundreds of buses were still stuck and stranded by Tuesday morning, and there was this video of damage while cars were being towed.

UNIDENTIFIED MALE: Oh, my God.

SNOW: The Department of Sanitation says the incident is now under investigation. The city councilwoman, Letitia James, a Democrat of Brooklyn and chairwoman of the Sanitation Committee has scheduled the hearing into what happened. She gives the city's response a failing grade, starting with Mayor Michael Bloomberg.

LETITIA JAMES, NEW YORK CITY COUNCILWOMAN: New Yorkers are angry. New Yorkers are angry that there's a disconnect between those in the outer Burroughs and the mayor of the state city of New York and his administration. And to me, it's just another reflection of a mayor who's, basically, out of touch.

SNOW: Asked about the response from angry New Yorkers, the mayor said, he's angry too, adding the city is doing the best it can.

MAYOR MICHAEL BLOOMBERG (I), NEW YORK: We won't get to everybody every time, we will make mistakes, but we have to continue plugging ahead. Yelling about it and complaining doesn't help.

SNOW: But Bloomberg wasn't the only politician under fire. In neighboring New Jersey, Governor Chris Christie, a rising star in the Republican Party gained attention for the fact that he's on vacation while his state was hit with a blizzard. And his lieutenant governor was vacationing as well, leaving the state in the hands of the state Senate president

UNIDENTIFIED FEMALE: They've both been gone. I mean, shouldn't they be taking care of the state?

UNIDENTIFIED MALE: It's hard for me to talk bad about the governor because he's one of the greatest governors we ever had. But I'm sure he's been in communication and the state's getting cleaned up.

SNOW: The governor's office answered criticism saying the response to the storm has been the same as it would be in other circumstances, adding, we are northeastern state and we get plenty of snow, including heavy hits like this, and we'll get through this just as we always have.

(END VIDEOTAPE)

SNOW: Suzanne, yet another politician in New Jersey is gaining tension, but for a different reason. Newark Mayor Corey Booker, Democrat of Newark, is gaining attention because he's apparently taking requests -- plow requests via his Twitter account, and in some cases, by his responses, it looks like he's actually gone out and helped dig some people out.

MALVEAUX: Well, that's one way of taking care of the problem. All right. Thanks, Mary.

SNOW: Sure.

MALVEAUX: Well, now to the ski slopes of Maine where more than 200 people found themselves trap in a broken chair lift today. They dangled up to 30 feet in the air for an hour or more until they were finally rescued. There were several chairs that hit the ground, the people in them screaming as they fell.

(BEGIN VIDEO CLIP)

MAUREEN ATKINSON, STUCK ON SKI LIFT (via telephone): With kind of a big bump, and then, all of a sudden, we said, oh, well, I didn't like that. And they (INAUDIBLE) off.

And two seconds later, we kind of looked up and just saw a big poof of powder up ahead and heard people screaming, and then we realized something. And then, we looked at the cable that our car is on and it's sagging. I mean, it looks -- you can tell that it's not right.

So, we kind of realized after we felt the bump and the car stopped that something was very wrong.

(END VIDEO CLIP)

MALVEAUX: Nine people who were injured are being treated at hospitals near the Sugarloaf Ski Resort and that's about 100 miles north of Portland. It's believed that it was the high winds up to 50 miles an hour that contributed to the accident.

Well, the U.S. military appears to be more reliant than ever on one of its most effective and deadliest weapons. We'll have a live report from a region at war.

And if you'll turn 65 in the coming year, you're definitely not alone. There's new reason, though, for an entire generation to worry. That their nest eggs are vanishing. And new evidence that Sarah Palin may want to think twice about a possible run for president in 2012.

(COMMERCIAL BREAK)

MALVEAUX: In Hawaii, right now, President Obama is doing his part for the local economy with his family, friends, horde of reporters as always for his winter vacation. When he comes back here to Washington, he's going to have to face, however, some cold economic realities.

Our senior White House correspondent, Ed Henry, he's one of those reporters that's covering the president's trip. Ed, I know that you're doing your best to support the economy as well, buying the shirt, the shorts, and all that.

(LAUGHTER)

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes, I am.

MALVEAUX: Give us a sense of the president's priority. And what he's talking about when he comes back from the economy taking stage?

HENRY: Well, you're right, Suzanne. The president is snorkeling right now in Hanauma Bay Reserve, nature reserve here on the Island of Oahu, but he has to get back -- when he gets back this coming weekend to Washington, two of those economic realities. In fact, we're told by his senior aides that when he does the State of the Union, which we believe will happen in late January, there'll be a lot on the economy, a lot on jobs, but before he even gets to that, he's got to deal with some personnel issues, largely replacing his chief economic adviser, Larry Summers.

We're told by those senior aides to expect as early as next week that the president will finally unveil his replacement for Larry Summers. It's interesting because there are a lot of names floating around as to who will replace him. This has been sort of a guessing game. For weeks now, the expectation that the White House was going to get this done in December, but it's now carried on over through the holidays.

Some of the names out there, Jim Sperling who's a senior counselor there at the Treasury Department for the secretary, Timothy Geithner. He is well known. Served in the Clinton administration as well. Roget Altman, an investment banker. He's been seen at the White House a couple of times, interviewing with top officials, including the president. He was in the Clinton Treasury Department as well.

But what's particularly interesting is, you know, Larry Summers as a hold over, the president convinced him to stay until the end of the year. And I've been told by some sources that Larry Summer has been checking in by conference call with the president every day when they do that daily economic briefing here in Hawaii. Larry Summers is on vacation of his own in the Caribbean, and yet, he's had to call in every day and check in with the president. Obviously, probably, not too excited about having to do that here right before New Year's, but the bottom line is the hard work of dealing with the economy and the jobs issue goes on, Suzanne.

MALVEAUX: Yes. We know that wasn't part of the to-do list, the plans there for his own Caribbean vacation. Give us a sense -- I know that he's delivering the State of the Union at the end of January, and normally, the budget comes shortly afterwards. Why the delay here?

HENRY: Well, you know, White House aides say that they'll likely send the budget about a week later in February up to Capitol Hill in large part because, you remember, Senator Mary Landrieu, the Democrat from Louisiana, had been unhappy about some of the administration response to the oil spill and the moratorium on oil drilling. And she had a hold on Jack Liu's nomination to be the new budget director.

That finally -- that hold was finally dropped. You remember, he's since been confirmed. But the White House Budget Office really kind of got pushed back a little bit late and getting all of that. Bottom line is Congress is still going to get the budget a week later in February.

And the key is not going to be when it get there, but what it says. Because this president talked about spending cuts, the incoming speaker, John Boehner, has talked about spending cuts. Both parties, so far, have not been willing to step up and cut some of the projects. We'll see what the president actually unveils in February, Suzanne.

MALVEAUX: OK, thank you so much. Enjoy your week.

HENRY: Thank you.

MALVEAUX: Well, starting on January first, there will be an avalanche of Americans who are turning 65 years old. But as thousands and thousands of baby boomers hit retirement age, their birthdays -- well, they may not be all that happy. That is because Poppy Harley, CNN.com, she's looking at the reasons why, and the number one retirement in the years ahead is staggering.

What do we believe is ahead for this group?

POPPY HARLOW, CNNMONEY.COM: Sure. I mean, we know what's ahead. These numbers coming in from the Census, from the AARP saying basically that beginning in January, in just a few days, 10,000 baby boomers, Suzanne, will turn 65 every single day for the next 19 years.

Unfortunately, a lot of people are woefully unprepared for retirement. This is a combination of pretty poor financial planning by the baby boomers, and also the financial crisis. Both of those things converging in the last three years.

I mean, let's think about it. Overall, in the last decade, the stock market has not improved whatsoever. We're just back to where we were 10 years ago. The housing market collapse in the last three years. A lot of baby boomers were depending on the value of their home to retire on. That's not going be the case now. Also, pensions they may have also relied on are, they are all but disappearing.

So the mindset now for a lot of baby boomers heading to retirement is, OK, I'll just work through retirement. Wells Fargo actually polled 2,000 people and look what they found, 72 percent of those people expect that they will work through their entire retirement.

But here's the sticking point, unemployment is near 10 percent. It has been stubbornly high, according to the White House, for over a year now. Where are the jobs? It's going to be even harder for people to find jobs, Suzanne, if they're 55 years old and older. And especially if they've been unemployed for a long time.

Here's why, take a listen.

(BEGIN VIDEO CLIP)

LEX HARRIS, MANAGING EDITOR, CNNMONEY.COM: When you're over 55 and you have been unemployed for six months or longer, it's just that much tougher to get back to the workforce. And what that means is it makes it -- nothing hurts your savings more than being unemployed, cause you have to tap that savings.

(END VIDEO CLIP)

HARLOW: So, it's hitting them in two ways. It's harder for people 55 and older to find jobs and they're relying on that retirement savings to pay for their life right now.

On top of that, Suzanne, older workers, according to the AARP, they told me today, are facing the highest unemployment rate since the 1940s in this country -- Suzanne.

MALVEAUX: Poppy, that's pretty dire. I mean, what are the options that these millions of baby boomers have now? What can they do?

HARLOW: Sure. Of course, they can work through retirement, if they have a job. It's hard to save anything right now.

What they need to do, first of all, what experts tell us is take advantage of your 401(k), your IRA. Really maximize those.

The bottom line, though, according to retirement expert Walter Updegrave, who we spoke with today, is this is not just about smart investing. This really comes down to saving and saving in the long run.

Take a listen.

(BEGIN VIDEO CLIP)

WALTER UPDEGRAVE, SENIOR EDITOR, "MONEY" MAGAZINE: For the most part, people think that retirement -- the retiring is an investment solution, I need to pick the right mutual funds or the right stockings, but it's really a savings question. So you should be, for the most part, putting away at least 10 percent, probably closer to 15 percent of your salary.

(END VIDEO CLIP)

HARLOW: And that sounds like a very big number, but he's talking about saving that much even in your 20s and your 30s. The amount you have to save, it all has to do with when you started saving.

And I wanted to show you something, because, Suzanne, this is something a lot of people in this situation, the millions of baby boomers, many of them watching now, haven't done. They haven't plugged in the retirement calculator where they stand. They need to plug in, we have one on CNNMoney, there's a lot out there. Plug in your age, plug in your income, and plug in how much you have saved. That's going to show you exactly where you need to be.

But the bottom line here is that the experts say, Suzanne, is that many people in this situation turning 65 in the next few years are going to have to adjust to the new normal. The new normal of retirement, which very well may not be living the way that you lived when you had a job.

That said, we also need to sort of debunk one of the big myths out there of retirement and that is that, hey, Social Security won't be around for me when I retire. There's a lot of people that are 20, 30, 40 years old now that say saying Social Security is disappearing.

That is simply not the case. We need an overhaul of the Social Security system, but it is not disappearing. And in fact, the promises of Social Security in the future generations are even bigger than they are to the current retiring generation.

So, that is a myth that Social Security is disappearing. That said, it's an astonishing number of people who are turning 65 starting in January.

MALVEAUX: A lot of very useful information, Poppy. And, again, you just go to the site, CNNMoney.com, you can plug your information in and get a sense of what you need to save?

HARLOW: Exactly. They have a whole calculator there. And it's never too soon to do it, Suzanne.

MALVEAUX: All right, I'll do that. Thank you, Poppy.

HARLOW: You got it.

MALVEAUX: Well, suspected U.S. drone strikes kill 10 alleged militants in Pakistan. Ahead, what's behind the dramatic increase in these attacks.

Plus, President Obama backs the controversial comeback of convicted felon and football star Michael Vick. Could it be a politically dangerous move?

(COMMERCIAL BREAK) MALVEAUX: Brianna Keilar is monitoring some of the other top stories that are coming in to THE SITUATION ROOM right now, including a major train fire in Israel.

Brianna, tell us what are you working on.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Yes, this is pretty serious. More than 100 people were hospitalized, Suzanne, after a fire broke out aboard a train bound for Tel Aviv. Passengers were forced to break windows to escape the blaze which destroyed two train cars and filled others with smoke. Rescue crews also helped with evacuations. And the cause here of this fire under investigation, but the authorities believe the electrical short could be to blame.

A Texas produce distributor is voluntarily recalling almost 7,000 cases of cilantro and curly parsley after samples in Michigan and Canada tested positive for salmonella. The company says there have been no reports of illnesses associated with the recalled vegetables. The recall comes just days after dozens were sickened by bacteria- tainted alfalfa sprouts in an unrelated incident.

And a potential new perk for any of you who are planning to ring in the new year from New York's Times Square, AT&T expanding its Wi-Fi hot spot in the area so it's going to be easier to text, e-mail, send all of those photos that you want to send from the festivities. And this is a hot zone -- the so-called hot zone here. It's part of a company effort to improve wireless data transmission to smart phones in certain urban areas.

And a new dad. Legendary musician Sir Elton John, he is now a father. The singer and his long-time partner, David Furnish, say that their baby Zachary is healthy and that they're proud happy parents. The baby, who was carried by a surrogate, was born on Christmas and he had a middle name, Levon, just like the subject in John's 1970s hit song.

A Christmas baby.

MALVEAUX: That's nice. Congratulations to both of them. That's really great.

KEILAR: Congratulations.

MALVEAUX: All right, thanks, Brianna.

KEILAR: You're welcome.

MALVEAUX: President Obama is bracing for the loss of key members of his national security team. We're going to talk about a possible shake-up at the Pentagon and how it might affect the president's war strategy.

And what's behind a startling increase in the number of police officers killed in the line of duty?

And the cost of the holiday season blizzard may be more than the northeastern U.S. can afford.

(COMMERCIAL BREAK)

MALVEAUX: Ten alleged militants are dead following two suspected U.S. drone strikes in Pakistan's tribal region today. The number of such attacks in the area is dramatically increasing.

Our CNN Pentagon correspondent, Chris Lawrence, is joining us with more from Islamabad.

Chris, what can you tell us about the strike?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Yes, Suzanne. This latest strike -- the death toll is now up to about 17 people. It happened in an area of North Waziristan; two strikes, really. Intelligence officials tell us the first one went after a suspected military vehicle, and then that was later followed up by several strikes on a hideout.

This follows a day yesterday in which we also saw several strikes in which 18 people were killed. So definitely more activity.

And just to put this in some sort of context, when you look at the map, South Waziristan is where the Pakistani military went in on the ground. They've largely rooted out a lot of the militants in that area. North Waziristan, no Pakistani military boots on the ground. That's where you see a concentration of drones.

And north of that is Khyber where a senior Pakistani military official told me a lot of the drone strikes have driven some of that Taliban leadership. And in fact, it was borne out just last week when on one day we saw three drone strikes in that Khyber agency for the very first time killing a record 57 people -- Suzanne.

MALVEAUX: Chris, how does this compare to last year, the use of drones? What is the meaning of this increase?

LAWRENCE: What it means, Suzanne, I mean, the Obama administration has taken the use of unmanned drones to an almost unprecedented level. By our count, so far this year, there have been 110 drone strikes in this tribal area of Afghanistan -- of Pakistan where U.S. troops believe a lot of the Taliban leadership is hiding out. Compare that 110 to last year when there were only 52.

I also spoke with a senior Pakistani military official who sort of reiterated Pakistan's demand to get more of the drones under their control. I asked him, you know, is this a matter of trust on the U.S.'s part, and he said, that's really too simplistic of an answer. He said he felt there were disagreements among officials and agencies within the U.S. government over how much to use the drones and how much control to give the Pakistanis, but he also realized that India played a part as well, that giving technology to the Pakistanis always has to be balanced with its relationship with India. As he put it, there are regional concerns to this situation as well -- Suzanne.

MALVEAUX: OK. Chris, thank you so much. Chris Lawrence from Islamabad.

Meanwhile, U.S. strategy in Afghanistan and Pakistan could soon be in new hands at the Pentagon.

Joining us to talk about that, our CNN Pentagon Correspondent Barbara Starr, and CNN Senior Political Analyst David Gergen.

Thanks for joining us in THE SITUATION ROOM.

I want to start off first, Barbara, with you. We heard from Robert Gibbs. He said there's not going be any major cabinet shake- ups. But clearly, there is going to be a change of the military leadership up at the top.

Who's on the list? What do we know?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Suzanne, there will be big changes, it's expected here at the Pentagon, in the coming months, maybe sooner rather than later.

Up first, Secretary of Defense Bob Gates has long said that he wants to step down. He has stayed twice at the request of President Obama. Now he is making it very clear he would like to step down this year.

The thinking is it may be by midyear, because he has to give his replacement at least 18 months in the first Obama term of office. The president has to get comfortable with the new secretary of Defense.

So who's on the list, the short list, maybe, to replace Secretary Gates? A name you continue to hear is John Hamre. He is a former deputy secretary of Defense, still at a think tank here in Washington, very well known in the U.S. military and on Capitol Hill.

There will be a second change, Admiral Mike Mullen, who we always see at Gates' side, chairman of the Joint Chiefs. His term is up in October. And that is very routine. He is expected to step down.

Who could replace him? Well, one of the best is it may be a man named General James Cartwright. That is somebody that most Americans do not know but President Obama knows very well, a very sober-minded vice chairman of the Joint Chiefs.

A name you still hear around the Pentagon maybe to replace Gates, Hillary Clinton, even though she says she's not interested maybe in another job. I've got to tell you, a lot of military people wonder if maybe she's going to be on tap to come over here.

MALVEAUX: And that's a big question. Obviously, a lot of chatter about that one.

David, I want to bring you in here.

If we could talk about the late Richard Holbrooke, obviously a diplomatic giant in his own right, in Afghanistan and Pakistan, representing the United States. Do we have any sense of who the Obama administration might tap for his position?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: No, we don't yet, Suzanne. I think they're likely to get a foreign service officer who is of -- would be of less stature and perhaps a sort of more modest sort of person. I don't think they want to go exactly for the Holbrooke model.

But their big, big concern right now is what they do about Defense, because the president has gained enormously from having a heavyweight like Bob Gates there, arguably the best defense secretary in the last half-century. And I think it's important for the national security stature not only at home, but overseas, to have someone like Gates there either at the secretary of Defense or at the Joint Chiefs.

I think one or the other has to be someone who's internationally known. So if he goes for John Hamre, who's a first rate individual but not as well known, I think the odds go up that he may reach out to General Petraeus to come in and be head of -- chairman of the Joint Chiefs.

MALVEAUX: Does he go for someone who shares his vision, or does he follow the approach of a team of rivals? Either one of you.

STARR: Well, I think right now, David is absolutely right. Let's keep in mind the calendar is ticking.

This will be the national security team that takes President Obama into the 2012 election cycle, and what they cannot have, of course, is the war in Afghanistan suddenly rear up, get worse, and be a major issue in the campaign. So the job of whoever comes in is to make sure everything stays very cool, very calm, that the war goes well, that they get out of Iraq.

You know, this is the no drama Obama administration. That's what they want to see the next team do as well.

MALVEAUX: David?

GERGEN: Yes. And I think, Suzanne, it's been very important as Obama has come in, untrained, unschooled, basically, in a lot of international affairs management, to have someone like Bob Gates there who gave the country enormous confidence that national security was in good hands.

And I think that for the purposes of winding down these wars, and also shrinking the military and figuring out what the military strategy, what a U.S. presence is going to be like around the world, it's going to be extraordinarily important for him to have someone in those two -- one of those two positions, and maybe both, who sends a message, look, folks, the country is in really good hands, you can depend on this person. He'll work with the president, and the president will be fortified by that. Just as Hillary Clinton, I think, has helped him so much on foreign policy.

MALVEAUX: And Barbara, tell us, what is the Pentagon to-do list, if you will, for 2011? What are their priorities going into the new year?

STARR: Well, whoever takes over at the top. Again, the war may be priority number one, to keep that going smoothly.

The economy, the defense economy, to get defense spending reformed and under control, that's been a major Gates initiative, and they haven't made a lot of progress on it. That's going to be very major. And, of course, implementing "Don't Ask, Don't Tell," lifting the ban on homosexuals openly serving in the military.

But to circle back, you know, there's still one thing hanging out there. What if the president comes to Bob Gates because of everything David just laid out and says, one more time, please don't leave, I need you to stay to the end of the term? Nobody's discounting that as the plan B option just yet.

MALVEAUX: And David, final question. Obviously, with the turnaround at the Pentagon really at the top level, the top brass, how do we anticipate this impacting the mission in Afghanistan?

GERGEN: I don't think it's going to have much impact. I would imagine that by the time Secretary Gates leaves, the president will have reshaped his policy, basically saying we're going to be there until 2014 anyway. He's on a glide path down. It may change some, but I would reckon, to go to Barbara's point, that the next secretary will be carrying out over the 18-month period a policy that's in place rather than reshaping and rewriting that policy.

MALVEAUX: All right. David Gergen, Barbara Starr, thank you so much. Appreciate it.

GERGEN: Thank you.

MALVEAUX: A deadly accident on what could be one of the most dangerous roads in the world. Stand by for the latest on a 100-car pileup. Yes, that's right. You heard it, 100 cars.

We'll show you a new disaster zone hit hard by record flooding.

And as quarterback Michael Vick prepares for a big game tonight, why is President Obama so interested in seeing the convicted felon get a second chance?

(COMMERCIAL BREAK)

MALVEAUX: Record flooding is plaguing parts of Australia. Our Brianna Keilar is monitoring that and some of the other top stories that are coming into THE SITUATION ROOM right now.

Brianna, what do we know?

KEILAR: Well, Suzanne, emergency workers say that this already dire situation is likely to get worse. One part of eastern Australia has been declared a disaster zone, and flood warnings are in effect for several rivers which could rise another five feet.

Some residents have sandbagged their homes and hundreds have been evacuated. More rain in the forecast for the next few days.

And new signs that the housing market could be on the verge of or already in a double-dip slump. Home prices took a dramatic widespread plunge in October, dropping 1.3 percent from the month before in 20 key cities. Analysts weren't predicting such a severe fall there.

And Democrats are weighing in on where their party's 2012 nomination convention should be held. A new CNN/Opinion Research Corporation poll shows that of the four finalists, most prefer Cleveland. The other finalists are Charlotte, North Carolina; Minneapolis; and St. Louis. And the Democratic National Committee is expected to make its final decision soon. Republicans, of course, have chosen Tampa, Florida, for their 2012 convention site -- Suzanne.

MALVEAUX: Florida, not a bad pick, huh, for the Republicans?

KEILAR: No, not bad. Tampa.

MALVEAUX: Pretty smart. Yes, the weather is not going to be too bad either.

KEILAR: No, I think it will be great.

MALVEAUX: I guess we'll cover the Republicans this time.

KEILAR: Right? Come on.

(LAUGHTER)

MALVEAUX: All right. Thanks, Brianna.

KEILAR: You're welcome.

MALVEAUX: Ten thousand flights cancelled since the start of that blizzard paralyzing the Northeast. We're going to go to New York's LaGuardia Airport for the very latest.

Plus, some call them nuclear bad boys. Ahead, the look at the potential threats that Iran and North Korea could pose to the U.S. in the coming year.

(COMMERCIAL BREAK)

MALVEAUX: The number of flights cancelled because of holiday season snow is now up to 10,000. More than 1,300 flights were cancelled today alone.

Now, New York's LaGuardia Airport has experienced some of the worst delays and the biggest backlog. It reopened just a little over 24 hours ago.

Our senior correspondent Allan Chernoff is there.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Suzanne, Mother Nature delivered a body blow to the air travel system, and it's taking some time to get off the canvas. Early this morning, before dawn, LaGuardia Airport had very few planes on the ground, at the gate, ready to go. In fact, only 15 percent of its normal amount. So the airlines had to fly planes in.

Not until midday were they actually operating at two-thirds of their normal capacity. And yet, still, there were hundreds of cancellations.

Just ask the Dugdale family, trying to get down to Charlotte. They had made their reservation well in advance. Nancy Dugdale called the airline, e-mailed the airline, she said, a dozen times. Yet, when they got to the airport, something was wrong.

(BEGIN VIDEO CLIP)

NANCY DUGDALE, STRANDED PASSENGERS: On the way to the airport, I did it again, I called again. And it was still on time.

They texted me again. So we walked into the airport and went to the kiosk to get a boarding ticket, and they wouldn't give us a boarding ticket. So we looked up at the screen and it said "cancelled."

(END VIDEO CLIP)

CHERNOFF: American Airlines told Nancy Dugdale she could not get a ticket until Friday. So, instead, the family rented a car, and right now they are driving down to Charlotte.

Not a bad idea, because it is going to take the air travel system several days to get back to normal, to finally get all of those passengers whose flights were delayed and even cancelled to get them where they want to be -- Suzanne.

MALVEAUX: Thank, Allan.

Ahead, we'll check in with Chad Myers in the CNN Weather Center for the latest on the airline flights, some delays, possible costs of the storm, all of that. Could it be passed along to consumers?

Plus, if you think gas prices are high right now, one industry insider predicts that you're going to pay $5 a gallon at the pump very soon.

And if President Obama needs any encouragement to run for re- election, well, he's getting it. Stand by for our new poll.

(COMMERCIAL BREAK)

MALVEAUX: 2011 is almost here. And that means that the 2012 election cycle is closer than you might think.

We have new poll numbers on the upcoming presidential race. Want to bring in our CNN contributor and national talk radio host, Bill Bennett.

Bill, thanks for joining us here in THE SITUATION ROOM.

BILL BENNETT, CNN CONTRIBUTOR: Sure.

MALVEAUX: There are some really interesting numbers here I want to get to. It's good news for President Obama, not so good news for Sarah Palin.

This is when you take a look here at who the Democrats support for their guy in 2012. It is clearly still Obama, despite the fact that he had the tax cut deal. A lot of liberal Democrats thought, oh, you know, he's leaving us for the party. But here, take a listen -- 85 percent of liberal Democrats support him as their head guy; 78 percent of Democrats say they want to see him at the top of the ticket in 2012; only 19 percent of Democrats say they want to see somebody else.

It looks like he didn't really pay a political price for making some of those compromises before the new year.

BENNETT: Well, I think that's right. I mean, one could say it's early and a lot could happen between now and the election time, but, look, he is a liberal Democrat, he proposed a liberal Democrat agenda -- stimulus, health care, "Don't Ask, Don't Tell" -- and he got it. He got a lot of it.

I have been reading a lot of the liberal blogs. I do that just so I know what people think.

MALVEAUX: Oh, you do, huh? OK.

BENNETT: You have to keep up.

MALVEAUX: All right, Bill.

BENNETT: And, you know, people said, look, he has increased the role of government, the size of government, all the things -- a lot of the things we don't like on our side he has done, and he has done faithfully.

(CROSSTALK)

MALVEAUX: Is there something that he could do that would throw off the liberals of his base, or do you think this is pretty much a shoo-in?

BENNETT: Well, if you read Frank Rich's columns, you read some of the other critics columns, you'll see they are piling on him every week. But at the end of the day, he has pursued a liberal Democrat agenda, he is popular with the American people. You did that poll yesterday showing that he's most admired. And America still kind of likes the idea of Barack Obama.

Now, a lot of us do not like the policies of Barack Obama, but, you know, he's a good guy, a good family guy. People like him, people respond to him, and he's the obvious candidate, unless something calamitous happens. MALVEAUX: All right. So let's take a look on the Republican side here.

These are some very interesting numbers. You have only 49 percent of Republicans say that they are likely to support Sarah Palin as their nominee. That puts her well behind potential rivals.

For instance, Mike Huckabee, he gets 67 percent. Mitt Romney gets 59 percent. They've got Newt Gingrich, who gets 54 percent.

Now, Sarah Palin, she's got the book tour, she's got the reality show, she's got her daughter on "Dancing With the Stars." Is she doing something wrong here? I mean, the more popular she is, the less viable she is as a Republican candidate. Why?

BENNETT: It's not wrong, it's just different. I mean, all of those things increase her notoriety and her fame and, no doubt, her fortune, but they don't necessarily contribute to people's thinking or enhance people's thinking about her as a political candidate.

MALVEAUX: Isn't that a problem for her?

BENNETT: Well, if she decides to run for president, maybe. But, again, this is like picking college for your kids when they're born. This is so early.

I knew you were going to ask me this, and I went back and looked. In 2007, December, 2007 -- think about that -- John McCain was way behind Rudy Giuliani. You know, Rudy Giuliani didn't win any primaries.

MALVEAUX: That's right.

BENNETT: He was way behind Fred Thompson. We all remember what happened there.

MALVEAUX: That's right.

BENNETT: So it's very, very early. Look, there is a lot of interest in Sarah Palin because she's an interesting character and she's very flamboyant, but she hasn't indicated she is going to run, and there are some negatives, ,such as what you just pointed out in her own party, and strong negatives in -- among Independents and Democrats.

MALVEAUX: Is part of this overexposure, do you think? Maybe she is peaking too soon? Is that possible?

BENNETT: It's possible. There's a lot of Sarah Palin out there. But, it's very good for Sarah Palin as a person, very good for Sarah Palin as an investor. Whether it's good for Sarah Palin as a candidate remains to be seen.

To be a candidate, what she has to persuade people of is that she is up to the job, and there, I think, that that case hasn't been made. Can it be made? Sure it can be made. Will she make it? Don't know yet.

But, you know, it's so early. It think we have 15 people who could be president on our side, and I believe the person who is going to be our nominee isn't somebody in that list.

MALVEAUX: You don't?

BENNETT: I don't.

MALVEAUX: Who do you think would be?

BENNETT: I think you're going to see somebody like Paul Ryan, Mike Pence, someone like that. When Ryan takes the gavel as chairman of the Budget Committee this spring, he is going to be at the center of the storm.

How does he weather that? How does he command that?

You know, Barack Obama, let's give him credit. He broke the precedent about experience, when you have to run two or three times.

Look what he did. He ran, and he ran against the Clintons, both of them, and he beat them. And this suggests that people can come from out of nowhere.

MALVEAUX: What do you make of some of the high numbers that we have here? Mike Huckabee, for instance, at 67?

BENNETT: Yes. Well, people like Mike Huckabee. I had a caller yesterday, Suzanne, who said, "Mike Huckabee has got it all. He's as good a communicator as Ronald Reagan, he's conservative on the social issues, and he's experienced."

MALVEAUX: I want to turn the corner here. The snowstorm that has just paralyzed the Northeast -- and we have seen New York, New Jersey. Governor Chris Christie, obviously, he's the darling of the Republican Party, he's a straight shooter. You know, a plain talker, everybody really likes him.

He heads off to Disney World right before the snowstorm. He knows it's happening, he knows it's coming. The lieutenant governor is gone, too. And he leaves the Democrats in charge.

Is that a mistake?

BENNETT: The Democrats can handle snow. Can't they?

MALVEAUX: Oh, come on. I mean, really, was that a failure in leadership?

BENNETT: I don't think so.

MALVEAUX: Why not?

BENNETT: You don't want Chris Christie shoveling snow, do you? You really don't. I mean, say that as one big man about another big man.

But second, look, they can handle this. I believe in vacations.

President Obama, you're doing a story and you're going to do it again about Iran and nuclear weapons. That's a presidential responsibility. He's in Hawaii. He should be in Hawaii. He should take a vacation.

All these guys, all these folks should get vacations. And there is not a thing that Chris Christie can do in New Jersey that he can't do from Florida. He can call up and say, how is the snow removal going? That's all he is going to do. And he's going to do that no matter where he is.

Let's these guys get breaks. These are hard jobs.

MALVEAUX: And to be fair to the governor, his spokesman said it was Christmas week, his kids were home from school, it was a family vacation. And his response to the storm would have been the same as it would have been under any circumstances.

BENNETT: Yes. Now, if he could have been up there and said, "Stop," and the snows had stopped, we have got ourselves another candidate.

MALVEAUX: Maybe Obama could have done that.

BENNETT: Well, maybe. It used to be believed that he could.

MALVEAUX: That he could.

BENNETT: That's right.

(LAUGHTER)

MALVEAUX: All right. Thanks again. Good to see you, Bill.

BENNETT: Thank you.

MALVEAUX: Strong words from Iraq's prime minister. In a new interview ahead, why he says he wants U.S. troops out of the country at the end of the new year.

Plus, President Obama makes a vacation stop for Hawaiian shaved ice and he picks up the tab.

(COMMERCIAL BREAK)

MALVEAUX: Here's a look at "Hot Shots."

In South Korea, a man stands in front of a monument covered in snow.

In Afghanistan, a soldier on patrol clears an area from explosives.

In India, workers unload onions from Pakistani trucks as onion prices are soaring.

And in Germany, a seagull flaps its wings while standing on a sheet of ice.

"Hot Shots," pictures worth a thousand words.

Well, for President Obama, a vacation in Hawaii wouldn't be complete without one of his favorite treats. He stopped by a shop yesterday for what's called shaved ice. It's the Hawaiian version of a snow cone. He placed about a dozen orders for family, some friends, including his daughters, Sasha and Malia, and he ordered a fruity combo cone for himself.

Take a listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think that's about it.

UNIDENTIFIED FEMALE: Thank you.

OBAMA: All right. Thank you, guys.

I'm going to try the (INAUDIBLE). He says it's good.

(END VIDEO CLIP)

MALVEAUX: Mr. Obama picked up the tab, $38.12. He paid it with two 20s, told the person at the cash register to keep the change -- that's not a lot of money, but anyway.