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THE SITUATION ROOM

Trouble in the War on Terror; Interview With Mike Huckabee

Aired December 24, 2007 - 17:00   ET

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


SUZANNE MALVEAUX, CNN CORRESPONDENT: And you're in THE SITUATION ROOM.
Happening now, trouble in the war on terror. One ally crossing the border to carry out attacks inside Iraq. Another ally accused of wasting billions of U.S. money meant to fight Al Qaeda.

And he says the Bush administration has a bunker mentality -- but would he cut U.S. funding for Pakistan or break the mold with a bold trip to Iran?

I'll ask presidential candidate Mike Huckabee.

A secret plan to round-up thousands of Americans classified for half a century. Now, the wraps are off.

What was J. Edgar Hoover up to?

Wolf Blitzer is off today.

I'm Suzanne Malveaux.

And you're in THE SITUATION ROOM.

Are the U.S. and key allies at odds over the war on terror?

Turkey once again targets rebels across the border in Iraq. A wink and a nod for the U.S. for now.

But is Turkey playing with fire?

And there are new allegations that now Pakistan is misusing American money meant to fight against Al Qaeda.

Our Pentagon correspondent, Barbara Starr, is standing by with that.

But we first turn to CNN's State Department correspondent, Zain Verjee -- Zain is Turkey going too far at this point?

How is the U.S. responding?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, Suzanne, Turkey says Iraq and the U.S. just aren't doing enough to help it fight terrorists. So Turkey is just taking matters into its own hands again. (BEGIN VIDEOTAPE)

VERJEE (voice-over): Turkish jets enter Northern Iraq, continuing their cross border campaign to pound Kurdish rebels. Their mission -- to target and destroy the PKK, which both Turkey and the U.S. call terrorists. Turkey has also launched limited ground incursions.

The strikes have happened with U.S. backing and intelligence, but the U.S. fears Turkey's stepped up raids could set one of Iraq's more stable regions on fire. Turkish Prime Minister Erdogan reached out to President Bush. And in a sign of continued U.S. support, the White House says during their phone call, they discussed common efforts to fight terrorism and the importance of the United States, Turkey and Iraq working together.

But with rising anger and mistrust between Turkey and Iraq, that may be a tough sell and the U.S. could be forced to choose between these two key allies. A new warning Monday to Turkey from the president of Iraq's Kurdish region -- stand down, stop the strikes.

MASSOUD AL-BARZANI, PRESIDENT, KURDISH REGIONAL GOVERNMENT: We have vehemently condemned the bombardment. The bombing targeted safe and secure areas and innocent people.

VERJEE: Turkey denies any civilians were killed in its raids.

(END VIDEO TAPE)

VERJEE: The question now is how long will the U.S. continue to support Turkey's strikes across the border and at what costs to their relationship with the Iraqi government? -- Suzanne.

MALVEAUX: And, Zain, I understand there might have been a political breakthrough, or at least some good news, when it comes to the Iraq government?

VERJEE: Yes, some positive signs, Suzanne. Iraqi leaders from Kurdish parties, as well as the Iraqi Islamic Party, got together and they signed a pact, they said, to boost relations. Now, the reason that's significant is because it is a step toward more political reconciliation. The U.S. has been wanting to see that, saying security gains have really given Iraqis a window to take advantage of a situation to make political gains.

MALVEAUX: OK.

Zain, thank you so much.

Al Qaeda is finding a new base of operations and a new target in Pakistan. That despite billions of dollars in U.S. aid meant to help Pakistan target Al Qaeda.

Let's go live to CNN's Pentagon correspondent, Barbara Starr -- Barbara, is the U.S. throwing good money after Pakistan?

Is this going to waste? BARBARA STARR, PENTAGON CORRESPONDENT: Well, Suzanne, Pakistan's government says it's doing everything it can to fight Al Qaeda. But it certainly appears there is a new round of mistrust between Pakistan and the Bush administration.

(BEGIN VIDEOTAPE)

STARR (voice-over): "The New York Times" headline -- "U.S. Officials See Waste in Billions Sent to Pakistan." The paper cites unnamed U.S. officials, who say aid to bolster Pakistani military units fighting Al Qaeda has been misused. Pakistan's ambassador says that's not the case.

MAHMUD DURRANI, PAKISTANI AMBASSADOR TO UNITED STATES: It's very, very sad that people make such comments. And in a partnership, when then there is a problem with partnership, people start shifting the blame. And that's, as I said, very unfortunate. This is also untrue.

STARR: Pakistan has long complained the U.S. doesn't appreciate the efforts it has made against Al Qaeda and that hundreds of its troops have been killed. Both sides agree more training and equipment are needed. The Pentagon is helping Pakistan expand its paramilitary Frontier Corps force. But the aid allegations come at a tough time. Campaigning is well underway for January parliamentary elections -- elections Pakistan says will show it's back on the road to democracy.

The U.S. Congress isn't convinced. Lawmakers are withholding $50 million in aid until the State Department reports the government of Pervez Musharraf is really committed to democratic rule. But the Pentagon has even deeper concerns that Pakistan is not making an all out effort to crack down on Al Qaeda.

Pointed words from Defense Secretary Robert Gates.

ROBERT GATES, SECRETARY OF DEFENSE: We are beginning a dialogue with the new chief of staff of the Pakistani Army, in terms of how we can help them do a better job in counter-insurgency through both training and equipment.

(END VIDEO TAPE)

STARR: Now with the latest allegations swirling, Congress, at least, is making it clear any additional aid to Pakistan won't be with a blank check -- Suzanne?

MALVEAUX: Thank you, Barbara.

And should the U.S. be bankrolling Pakistan to help fight terror.

And is that anti-al Qaeda money being wasted?

That, of course, the question. Joining me now, former Senator and former Defense Secretary William Cohen.

He runs The Cohen Group here in Washington.

Thanks for joining us in THE SITUATION ROOM during the holidays, nonetheless.

WILLIAM COHEN, FORMER DEFENSE SECRETARY, THE COHEN GROUP: Nice to be with you.

MALVEAUX: First of all, Barbara's piece, it's very interesting -- "The New York Times,," as well. They talk about $750 million, a five year plan.

Is this money going to waste?

The Pakistani government says it is not. They deny this.

COHEN: Well, there's a lot of confusion about this issue. It seems clear from listening to the American diplomats and others who are being quote that the money is not going for the intended purpose.

The next question would be, for me, is, well, why aren't we overseeing it to make sure it's going for the established purchase?

You can't just give a pilot money to a government and say it's going to go where you would like to see it go without some oversight.

So the question is why haven't we been much more vigorous in seeing to it that the money that we are appropriating and sending to Al Qaeda is actually reaching there?

Now, the Pakistanis, by contrast, are saying we need the kind of equipment that you're not giving us -- upgraded helicopter capability, night vision goggles, UAVs -- unmanned aerial vehicles -- to help fight -- counter the terrorism. So there's some distrust or mistrust on both sides. But what we need to do is establish a fund. We need Pakistan in this fight against the Al Qaeda and Taliban and others. And so we need to have them and we need to have them be accountable, as well. And we need to exercise oversight.

MALVEAUX: Why do you suppose that the Bush administration has not been more aggressive in holding Pakistan accountable, Pervez Musharraf?

COHEN: Well, I think part of it had to do with the political situation that President Musharraf had found himself in, namely, he has to work with the United States. At the same time, he understands that he can't go so far that he loses all of his support within the -- within the Pakistani military and other elements. So he's been the subject of the -- a target of assassination for some time. So he's been walking a pretty thin line.

Overall, however, he has been helpful and we have to keep that in mind.

MALVEAUX: Let's turn to another key ally. Obviously, Turkey -- you have the situation where they are launching these attacks against these Kurdish rebels in Northern Iraq. You are a former secretary of defense.

If you had to choose one or the other in these critical allies -- if it was standing by Turkey or Iraq, who would you choose?

COHEN: Well, Turkey is a member of the NATO alliance and a longstanding ally of the United States and they are a very, very important country in the entire region. But we don't want to get into picking and choosing. What we want to say is Turkey is right to be concerned about the PKK, a terrorist group. We, the United States, have not done enough, the Iraqi government has not done enough to curtail the activities of the PKK.

Now, if we were being attacked from north of our border in Canada, or south from South America, would we just sit back and let that take place?

I think that the Turkish government and the parliament has said we are going to authorize cross border attacks. They should be limited in nature and specifically targeted -- understanding that you're going to kill innocent people no matter how targeted they are. So that means it's up to the Iraqi government to do more than curb those activities inside of its own country if they're going to avoid the Turks in taking this kind of action.

We want to see a cessation of these hostilities, but it requires the Turkish large in the Kurdish sector, as well as throughout the Iraqi government, to take action. And the United States wouldn't have to be in a position of choosing Turkey over an integrated, unified Iraq.

MALVEAUX: William Cohen, thanks for joining us here in THE SITUATION ROOM.

COHEN: OK.

MALVEAUX: Happy Holidays.

COHEN: (INAUDIBLE).

MALVEAUX: Jack Cafferty is off today.

Republican presidential candidate Mike Huckabee is surging in the polls.

So would he be willing to visit Iran if he's elected?

(BEGIN VIDEO CLIP)

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: You would never say what you're going to do in terms of dealing with a government like Iran. A lot of it depends on how responsible Iran's going to be.

(END VIDEO CLIP)

MALVEAUX: I'll press Mike Huckabee for a firmer answer. My one- on-one interview with him is coming up.

Also, working to stay one step ahead of a terrorist threat. We'll show you how experts are preparing for a radioactive dirty bomb. Plus, a secret plan to suspend a key part of the Constitution is revealed after half a century.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Well, they may both be Republicans, but that hasn't stopped Mike Huckabee from openly challenging President Bush over foreign policy.

But what would the presidential candidate do differently?

More now from my one-on-one interview with Mike Huckabee.

(BEGIN VIDEO TAPE)

MALVEAUX: Obviously, the back and forth that you've had with the Bush administration, calling President Bush's foreign policy kind of a bunker mentality. We've heard from secretary of state, Condoleezza Rice, saying that that was ludicrous. And, obviously, you said everybody has a right to their opinion here.

But take a page from the Republican playbook of a former president, Richard Nixon. He went to China. He changed that relationship and U.S. policy with that country.

Would you be willing to actually go and make a state visit to Iran?

HUCKABEE: You would never say what you're going to do in terms of dealing with a government like Iran. A lot of it depends how responsible Iran is going to be.

MALVEAUX: What would they have to do?

HUCKABEE: And would I do it today?

The answer would be no, because we don't know what they're doing with nuclear development. We don't know whether Ahmadinejad is willing to back down on his condemnation of Israel. So far he hasn't been. So you don't honor and reward him with, you know, a toast.

MALVEAUX: How is that not...

But here's what I think you need to recognize...

MALVEAUX: How is that not the bunker mentality that you criticized the Bush administration for?

HUCKABEE: Well, let me -- let's clarify that. What I'm talking about is that when military expert after military expert and general officer after another went to Rumsfeld administration and said here's how many soldiers we need, they were told no, that's not how many you're going to have. This is what we're going to give you. And it was a matter of saying we're right and you're wrong.

You need to listen to your battlefield commanders. I realize you have civilian authority in the military. But the Powell-Schwarzkopf doctrine in the military is how I would operate.

And here's how it is. First, you clearly define what the military mission is and you spell out what victory looks like. Secondly, it's not a light footprint -- it's both feet stomping when you go in. You go in with overwhelming force. And, thirdly, once you engage in battle, you don't let the politicians second guess your general officers out there in the battlefield command.

MALVEAUX: Governor...

HUCKABEE: You give them the tools they need and you make sure that they can succeed.

MALVEAUX: What would the Iranian leader, Ahmadinejad, need to do to satisfy the requirements for you to go ahead with a state visit, to say I am open to the discussions on that level?

HUCKABEE: Well, the specific reference to Iran -- we'd have to look and see exactly what we can get in terms of the way of intelligence, how far along is their development of nuclear program and what concessions they might be willing to make. There would have to be some back channel discussions before I would commit to anything.

MALVEAUX: Let's turn to Pakistan very quickly.

Osama bin Laden -- do you believe the top terrorist -- Al Qaeda terrorist -- is in Pakistan?

HUCKABEE: All indications are that he is. I think if we saw another terrorist attack, it would be postmarked Pakistan. We've spent $10 billion there since September 11th. The Musharraf government, certainly, I think, has some accounting to do for how much we've received for that $10 billion. Certainly, he's more friendly to us than some regimes. But we also need to be very clear in holding that government accountable for the way they treat their own citizens and also helping us to locate and to destroy Osama bin Laden.

MALVEAUX: And as president, how would you do that?

What would be any different in your administration than, say, what the Bush administration has done to go after Osama bin Laden or to hold the Pakistan government accountable?

HUCKABEE: The key thing we have to do is to make sure that we get better intelligence. One of the clear things that has to be fixed is the rift between the military and the CIA in terms of intelligence. We need to have agencies who work with each other, not work as competitors.

MALVEAUX: How are you going to hold Musharraf accountable?

HUCKABEE: And often our intelligence information has not been reliable. I mean the NIE report that came out that said that they had suspended their program in 2003. Then, later, there's information indicating they resumed it back in 2005.

MALVEAUX: So...

HUCKABEE: So we don't really have good intelligence. And that's one of the reasons that we have to get it fixed. The lack of good intelligence leads to bad decisions and bad execution.

MALVEAUX: So, Governor, how would you hold Musharraf accountable?

HUCKABEE: The main thing I would want to know is where you have spent the money, how much of it has actually gone toward combating terrorism and to finding Osama bin Laden?

We just need to have a full accounting. Maybe the administration has it, but I have not seen it publicly released.

MALVEAUX: Would you withhold funds if -- if he didn't comply?

HUCKABEE: Well, certainly. You don't just keep giving money if you don't know where it is. That's not our money, that's the taxpayers' money. You and I pay that money. Every person out there barely putting food on his own table has to pay for that.

I think one of the problems people have with Washington right now is that we spend all this money and they're barely being able to put a sandwich in their kid's lunch. And if the president and Congress can't answer for where that money is going, people in this country ought to be outraged.

They're paying $3 a gallon for gasoline and we're giving billions of dollars away to foreign governments that don't know where it's going?

You bet we ought to know where it's happening.

MALVEAUX: Let's turn to domestic issues. Obviously, one of the platform issue here is taxes. You want to do away with the income tax altogether and replace it with a tax on goods and services, 30 cents to the dollar.

But your critics say...

HUCKABEE: No, it's not 30 percent.

MALVEAUX: ...they're...

HUCKABEE: ...Suzanne. It's 23.

MALVEAUX: 30 cent to the dollar...

HUCKABEE: No, 23.

MALVEAUX: It's 23 percent?

HUCKABEE: It's 23.

MALVEAUX: Right. Twenty-three percent.

HUCKABEE: The fair tax is based on 23 percent.

MALVEAUX: Which 30 -- 30 cents to the dollar.

HUCKABEE: No, it's 23.

MALVEAUX: Or 23 percent.

OK.

HUCKABEE: It's 23.

MALVEAUX: Twenty-three.

HUCKABEE: OK.

MALVEAUX: I want to ask you about this, though.

Your critics are saying that -- and they take issue with that number, whether it's 23 or 30. But they say you can't really afford to run the government based -- based on that tax alone.

How are you going to convince Congress otherwise?

HUCKABEE: Well, the leading economists in the country, who put that tax system together, from MIT, Harvard, Stanford, Boston University -- I think they're probably a little more in tune with how it works than the critics are.

And you know who the critics are?

The 35,000 paid lobbyists in Washington who wouldn't have nearly the power they do if we had a tax system that was actually fair and that treated everybody the same instead of the tax system we have now, which creates winners and losers. And most of the losers are the people out there in middle income America who pay taxes that the people who are in the underground economy don't pay. Illegals don't pay taxes. Drug dealers don't pay those taxes. Prostitutes, pimps and gamblers don't pay. They're in the underground economy.

What if everybody's tax system was above board and above the table?

We'd end the 22 percent embedded tax in all those products we buy, because companies don't pay taxes. They build it into the cost of doing business. Ten trillion dollars is parked offshore.

Why is it parked offshore?

To get away from our tax structure.

What happens if that money comes home? We see jobs and economic development come back to America. And the fair tax un-taxes the poor. It has the pre-bate provision that makes it so that they don't have to pay even the sales tax on their basic items of necessity.

So it stimulates the economy and it means that we'd get our whole paycheck. You go to the store to buy something, you actually go with all that you earned and we don't penalize you for being productive. Penalizing productivity is counterintuitive to a good economic system.

MALVEAUX: Governor you're from Hope, Arkansas, as well. We know somebody very popular, as well -- former President Bill Clinton -- from Hope, Arkansas. Your paths have intersected recently, we know.

Is there anything that you would take away from his presidency, his administration, and apply it to your own?

HUCKABEE: You mean while he was president, things that he did?

MALVEAUX: Yes.

HUCKABEE: You know, I appreciate the fact that he signed welfare reform and the NAFTA agreement. He clearly was willing to work with Republicans who brought those ideas to the table. But he worked with them and I commend him for that. I'd like to be the kind of president that would work with people regardless of what party they're from, if it was good for America.

I think America is looking for a people's president -- not just a Republican president or a Democrat president. They honestly want somebody who will look at a problem -- whether it's the tax system or the immigration issue or any number of things -- and say, look, it's time to quit fighting left, right, liberal, conservative. It's time to move this thing either up or down and let's move it up. Let's make it better for the American people.

And who cares who gets credit?

If the Democrats get credit for it, great. Let's just fix it and give people out there working hard a chance to feel like they can be proud of their government again. And right now, they're ashamed of their government, as reflected by the approval ratings that you see for Congress.

Governor, thank you so much for joining us here in THE SITUATION ROOM.

Happy Holidays.

HUCKABEE: Thank you so much.

Merry Christmas.

MALVEAUX: Thank you.

Merry Christmas. So, what is the fair tax?

It's a national tax on consumer goods and services that would replace income and investment taxes. Now, supporters say it would amount to a 23 percent of every purchase. So, for example, if you buy something for $1.30, 30 cents of that, or 23 percent of the total, would be taxed. But critics say that's voodoo economics. They argue that the item costs $1 before tax if that's the case. And if you pay $1.30, then that's a 30 percent tax rate. It all depends on how you calculate the sales tax as a percentage of the price -- before tax is applied or after.

A newscast where this just in has a special meaning.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Michelle and the weather made the rescue work all that much more -- oh!

(END VIDEO CLIP)

MALVEAUX: We will show you what Chicago viewers saw when that minivan crashed into the studio.

And a holiday horror at a shopping mall near Atlanta. A police chase and a shooting -- we'll tell you what happened. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Carol Costello is off today.

Zain Verjee is monitoring the stories incoming to THE SITUATION ROOM right now -- Zain what are you following?

VERJEE: Suzanne, a holiday horror unfolding in front of last minute shoppers at a mall near Atlanta. Police shot and wounded a man suspected of robbing a security guard. That followed a brief chase through the parking lot, during which police say the man showed a gun. They also say his wounds are not life-threatening.

Jazz piano legend Oscar Peterson has died. His career took off in his native Canada in the 1930s, and he went on to play with some of the biggest names in jazz, including Ray Charles -- who you see here with Peterson -- as well as Ella Fitzgerald and Dizzy Gillespie. French President Nicolas Sarkozy issued statements saying one of the bright lights of jazz has gone out. Oscar Peterson was 82 years old.

A local TV newscast in Chicago was interrupted when a minivan crashed into the studio. Take a look at what viewers saw.

(BEGIN VIDEO CLIP, COURTESY WLS)

UNIDENTIFIED MALE: Michelle Diardo (ph) joining us live now from the scene of one fire tonight, where two people were injured, Michelle, and the weather made the rescue work all that much more... Whoa!

(END VIDEO CLIP)

VERJEE: No one was hurt in this accident. The driver, though, was charged with reckless driving and causing property damage.

Talk about breaking news -- Suzanne.

MALVEAUX: Yes.

VERJEE: That kind -- that put the -- it startled the anchor.

(LAUGHTER)

VERJEE: I believe it did.

MALVEAUX: Fortunately, no breaking news of that kind here.

VERJEE: No?

MALVEAUX: OK...

VERJEE: It's never -- it's never happened to you?

MALVEAUX: Not that I know of, thank god.

Thanks, Zain.

The presidential primary race up for grabs in some key states. With voting just days away, we will show you new poll numbers shaking up everything on the campaign trail.

Also, we'll show you how a diaper-inspired new technology that could be used in case of a terror attack.

Plus, J. Edgar Hoover's plan to detain thousands of Americans and suspend a key part of the Constitution. Secret details now revealed.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: You're in "THE SITUATION ROOM." Happening now, an apparent terrorist plot thwarted. Witnesses alerted police to several small bags in Istanbul, Turkey. The bags turned out to contain explosives. One person detained that scene and another at a house where more explosives were found.

Also President Bush is spending the Christmas holiday at Camp David where he made the traditional phone calls to U.S. servicemen and women. He spoke with a total of ten serving in Iraq, Afghanistan and the Persian Gulf and representing all branches of the military. And Rudy Giuliani reassures voters that he is healthy, telling reporters in New York, "I am perfectly healthy. I don't have cancer." But he and his doctors still have not given details on why he was hospitalized briefly last week after suffering what Giuliani described as a bad headache.

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

The race for the White House up for grabs in early primary and caucus states. New polls show no clear Democratic front-runner in Iowa and New Hampshire. And Republican candidates all over the place.

Well, here to talk about it, CNN Congressional correspondents, Dana Bash and Jessica Yellin in Iowa, with the CNN Election Express and CNN Senior Political Analyst Bill Schneider in Los Angeles, all part of the best political team on television.

You know, it's got to be an exciting time here. I'll start with you, Bill, because have we seen this scenario play out before? Is this the first time we don't have front-runners so close to a first contest?

BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: I don't recall it and I've been covering these races for a long time. This is the first race in over 50 years where you don't have a president running for re- election or a vice president running to succeed the president. We haven't had that happen since 1952.

The Republican race is even more confused than the Democratic race. Typically, the Republicans have an orderly succession and the Democrats have for a free for all but the Republican race is more wide open an than the Democratic race with more front-runners in different states.

MAL: Jessica, what is going on here? Senator Obama, as well as Hillary Clinton, are they seeing Edwards as an emerging threat right now?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: I think they are, Suzanne. You know, we've seen the storyline play out for the past few weeks of Obama and Clinton going after one another but all of a sudden both campaigns are waking up to the reality that John Edwards could really win this one, at least in this state, we've seen Obama take out on special interest and then Clinton has adopted some of Edwards-talk about poverty in one of his key proposals.

Whether they're tuning into the quiet support Edwards has had in this state all along or tracking real growth, both campaigns are clearly nervous that Edwards could walk away with Iowa.

MAL: Dana, who are they getting nervous about on the Republican side?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: I think what is most interesting to look at is who they're not nervous about. Rudy Giuliani was the guy, Suzanne, ahead in the national polls for months and months and months and everybody was scratching their heads saying, wait a minute, how could a guy who is for abortion rights and gay rights and somebody who is against gun rights, I should say, how could he be ahead in the Republican polls among Republican voters?

And what you're seeing now in the national polls and in those early contest states. This one and more importantly for Rudy Giuliani in New Hampshire, his numbers are slipping. His numbers are slipping big time. The Republican candidates, voters are waking up and saying, oh, that's not exactly the kind of guy we I want.

But also, it's interesting. The issues that really help Rudy Giuliani, terrorism and Iraq, if you look among Republican voters and what they care about most, that's really slipping. That seems to hurt Rudy Giuliani.

MAL: What is really interesting on the Democratic side, very nuance, these positions? A lot of the Democrats seem to take a very similar stand, anti-Iraq war, universal health care. So, how will they distinguish one from the other when it seems to be so similar when it comes to those issues?

SCHNEIDER: They tend to have huge disagreements over very small differences about whose proposal is more universal than the other one. How are they going to decide? They're going to decide on personal qualities. That's where they see a difference and you're seeing that in both parties. Seeing voters looking for candidates who don't sound like typical politicians or who are outsiders, which explains the attraction to Mike Huckabee on the Republican side and Barack Obama on the Democrat side. Neither of them sounds like a typical politician.

MAL: Jessica, you've been talking to the folks on the ground there. What are they saying? What are they telling you?

YELLIN: What I'm surprised by, Suzanne, how many people who show up for these events are truly undecided. These people care enough and engaged enough to make the drive and take the time to see the candidates. And I've walked around and talked to quite a number of people, especially even this last weekend and they say that they are weighing this choice and they simply don't know.

On the Democratic side, I ask what will tip your vote and make you go one way or another. The two things I hear, one, who do I believe? It echoes what Bill has said. They think that issues on the issues they're very similar, but who do they think will make good on the promises. And, two, who will win. They really want to beat the Republicans. They really want to get the White House back so electability matters.

MAL: Dana, what are you hearing from the Republicans because people outside of Iowa are going crazy about this? Why can't they make up their minds there?

BASH: What's interesting on the Republican side is that there are as many -- actually, more undecided voters if you look at the polls on the Republican side, but it's for the flip side, the reason is the flipside of what Jessica was just talking about.

On the Democratic side you have undecided because they can't make up their mind among candidates they really like.

On the Republican side, this discontent and you talk to Republican voters at these events and a lot of people who are unsatisfied with the crop of candidates they have. Mike Huckabee, they like, he's authentic but they fear he doesn't have experience. Mitt Romney they don't think he's necessarily true to his word, on social issues and tacks and things like that. There is still that discontent.

I was with Fred Thompson last week and more voters I talked to said they came back to him to give him a second look because they didn't like any of the other candidates. That's what's fascinating about the undecided on the Republican side.

MAL: We'll have you guys join us just back in a minute.

Ahead, Democratic presidential candidates talk about faith and politics. A special candidates' forum and the first caucuses and primaries are days away and our best political team will take you behind the scenes and share the stories that haven't made it to the television.

Plus, details of drastic FBI plan that would have put thousands of Americans in camps just like Guantanamo Bay.

Stay with us, you're in "THE SITUATION ROOM."

(COMMERCIAL BREAK)

MAL: They've been listening to the candidates for months, but some voters in Iowa, New Hampshire and other early caucus and primary states are still sitting on the fence with only days left to decide.

We're back with the best political team on television. CNN Congressional correspondents, Dana Bash and Jessica Yellin in Iowa, and CNN Senior Political Analyst Bill Schneider in Los Angeles.

Bill, you lucked out, Los Angeles. Nice and warm over there, boy, I tell you, inside.

I want to start off -- I don't know here. Obviously, some behind-the-scenes moments not making TV.

Jessica, let's start with you. What are some things you're seeing on the road that haven't translated on television?

YELLIN: Two things. One, I'm surprised by how many of the Iowans I've haven't even focused yet and decided, not even that they're undecided, just haven't looked into the presidential issue as they plan to. And they plan to make the decision in the next week.

The second is how not cynical people are here. They don't come into these events thinking this is just another politician that is going to lie or has ego issues and wants to say anything to win. They really take this process as an experience and entitle it how will you fix my life and ask personal questions about the issues in their lives, the challenges they're facing and challenge these people to do something that will help them in their every day. It's a refreshing approach because they have this one-on-one contact with the candidates. They truly feel engaged in the political process and it's nice to see as a reporter.

MAL: Dana, what are you seeing on the Republican side? Is it the same?

BASH: Just to sort of -- yeah, just to sort of carry on that thread there, what is just fascinating to me, still, to go to event after event after event whether it's Mitt Romney or Mike Huckabee or Fred Thompson or any of these Republican candidates in Iowa, sometimes they go to these little hotels, ball rooms, if you will, sometimes even barely that, sometimes a conference room and sit and talk to maybe 25, 30 people at a time. And there really are intimate gatherings.

Even at a time when we have CNN, international news, the internet, blogs, the process is still kind of old-fashioned in that it is about retail politics and just like Jessica was saying, the one-on- one contact that the voters demand and that really seem to play out, still, even despite the technology we have these days.

MAL: Bill, you know, sometimes we journalists we get a little cynical, even bored because we hear the same stump speech over and over again, some of the lines. What are the polling numbers showing here? Are they moving, are the Iowans or those in New Hampshire moving one direction or another based on what folks are saying?

SCHNEIDER: They're all over the place. That's the odd thing about this election. People not only can't make up their minds but are becoming more uncertain, not less uncertain, as time goes on. That's why there is really no front-runner in this race. They really cannot make up their minds.

One of the things about Iowa, remember one thing that is important. Only fewer than 10 percent of the eligible voters actually show up for these caucuses. Very tough thing. While they take it very seriously, those who do show up, not many people bother. Public voting and you have to stand up and declare who you're for and spend an evening, not an election, it's a meeting. So a lot of people don't bother. The ones who do take it very seriously, but a lot of people who don't.

MAL: Thanks for toughing it out in the cold there and...

SCHNEIDER: I shall be in Des Moines tomorrow.

MAL: All right, I'll see all of you out there very soon. Happy holiday.

Thank you so much, all of you.

BASH: Thank you.

YELLIN: You too.

MAL: A special presidential forum on faith and politics at the top of the hour. Still ahead in "THE SITUATION ROOM," planning for a terror attack. We'll show you how researchers are working to stay one step ahead of that threat, developing technology that could help save lives.

Plus, details of the plan for mass arrests of American citizens. And suspending a key constitutional right all because of the Korean War. Stay with us, you're in "THE SITUATION ROOM."

(COMMERCIAL BREAK)

MAL: What if terrorists smuggled a dirty bomb into a U.S. city? U.S. scientists are working to stay one step ahead of that potential threat.

CNN Homeland Security Correspondent Jeanne Meserve gives us a look behind the scenes.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Suzanne, there are few scenarios more frightening than a nuclear or radiological attack. But researchers at Argonne National Laboratory are working on techniques to detect them and stop them.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): It looks like someone making a mess, but, in fact t is someone cleaning up.

UNIDENTIFIED LAB WORKER: It's got kind of like a slime consistency.

MESERVE: This gloppy mixture is a super gel, engineered to draw radio active contamination out of concrete, tile and brick. The inspiration -- baby diapers.

MIKE KAMINSKI, ARGONNE NATIONAL LABORATORY: I was up with my son changing diapers and we could use the same material to soak the water out of the wall.

MESERVE: Along with the water, radioactive contaminants, which the gel unsticks within the pores of building materials. Vacuum it off, dry it out and then dispose of the radioactive residue. The equipment, a pump usually used for applying tar to house foundations and a wet vac with a squeegee.

KAMINSKI: We don't know if and when there would be an incident that we would need such a technology. Our goal was to try to use as much off-the-shelf technology as possible.

MESERVE: Elsewhere in the lab, research on detecting elicit nuclear activity. In the lab, this millimeter wave technology instantly identifies liquid nitrogen. In the field it can I.D. chemicals coming out of smokestacks, like the byproducts of nuclear fuel processing.

It can potentially operate from miles away, perhaps allowing nuclear weapons inspections to be conducted covertly from an aircraft. Some of the technology being developed at Argonne may seem a bit pie in the sky.

MARY ANNE YATES, ARGONNE NATIONAL LABORATORY: You can never tell what will make a difference. It's best to let people have great ideas and then as the world evolves and society evolves, the opportunity to use those ideas becomes evident.

(END VIDEOTAPE)

MESERVE: The national labs were started to develop nuclear weapons. Now, ironically, they're working to protect us from the very technology they helped create -- Suzanne?

MAL: Thanks, Jeanne.

Argonne itself was never a weapon's laboratory but a descendant of the University of Chicago lab that worked on the World War II Manhattan Project that developed the atomic bomb. After the war, the mission was to develop nuclear reactors for peaceful purposes and now develops new technologies for decontaminating aging reactors like the Soviet air facilities.

As Jeanne noted, Argonne's national security role includes chemical, radioactive and biological threats. Other research is aimed at deterring weapons proliferation or actual attacks.

There are shocking new details about plans for mass arrests of Americans by long-time FBI director J. Edgar hover. Hoover got his start by keeping files on tens of thousands of Americans and rounding up alleged radicals after World War I. Now secret papers showed he had a similar scheme in mind during another war.

CNN's Brian Todd has been looking into this.

BRIAN TODD, CNN NEWS CORRESPONDENT: Suzanne, we're learning that during one of the most frightening times in U.S. history the FBI director seemed willing to subvert American law to get at people he suspected of being disloyal.

(BEGIN VIDEOTAPE)

TODD (voice-over): America at war with a feared ideological enemy and a powerful U.S. official tells the White House he has a secret plan to round up dissenters.

The enemy -- communist North Korea. The year 1950, just after the breakout of the Korean War. In newly declassified documents obtained by CNN, a letter to President Harry Truman top national security aid from J. Edgar Hoover. The FBI director says he has a plan to arrest and detain about 12,000 people who are potentially dangerous to the internal security of the country. Nearly all of them, hover says, are U.S. citizens. RONALD KESSLER, AUTHOR, "THE TERRORIST WATCH": Hoover kept his index cards where he would keep records on what people said, anything critical about the government, if they were pacifists if they knew someone who was a communist.

TODD: Hoover wants to suspend habeas corpus, the century's old protection against illegal detection. The U.S. Constitution says habeas cannot be suspended unless there is a rebellion or invasion. In his letter, Hoover stretches that to include threatened invasion or attack upon U.S. troops in legally occupied territory.

His plan calls for the suspects to be held at federal prisons or military bases, that they'd eventually be allowed a hearing but the hearing would not be bound by the rules of evidence.

Ron Kessler, author of several books on the FBI, sees a big difference between suspected terrorists now and what hover wanted to do then.

KESSLER: The courts have allowed all of the measures that the Bush administration has used to find terrorists to continue. Congress has allowed all the measures to continue, as well. So, it's quite a contrast from the days of J Edgar hover.

(END VIDEOTAPE)

TODD: A footnote in those documents says Truman's national security aide sent Hoover a noncommittal reply to that letter and there's no proof that Truman or any other president approved Hoover's plan.

Contacted by CNN, an FBI spokesman said the bureau would have no comment on the letter -- Suzanne?

MAL: Fascinating, Brian.

J. Edgar hover was the founding father of the FBI and the bureau's director for five decades spanning eight presidential administrations from Coolidge to Nixon. Hoover became legendary for his leadership against the gangsters of the 1930s and his anti- communist effort in the 1950s. But he gained notoriety for his enemy's list, which included figures such as Martin Luther King, Jr.

Faith and politics, presidential candidates speak out, including Hillary Clinton, Barack Obama and John Edwards. A special report you'll see only on CNN, coming up at the top of the hour.

Plus, the story that touched the hearts of CNN viewers around the world. A little Iraqi boy finds new hope in an American burn ward after an unbelievable attack. Stay with us, you're in "THE SITUATION ROOM."

(COMMERCIAL BREAK)

MAL: Here's a look at some of the hot shots. In the West Bank, a young boy dressed like Santa Claus leads a marching band to the Church of the Nativity.

In Fort Dicks, Texas, Major David Strauss (ph) kisses his wife after returning home from Iraq.

In Los Angeles, children are chased by a large tumbleweed pushed by strong winds.

In Canton, Ohio, a newborn baby takes a nap with Santa Claus at the mall. That is this hour's hot shots. Pictures worth 1,000 words.

Carol Costello is off today. Zain Verjee is monitoring the stories coming in to "THE SITUATION ROOM."

Zain, what are you following?

ZAIN VERJEE, CNN NEWS CORRESPONDENT: Suzanne, you're looking at a live picture from the Church of the Nativity at Bethlehem. A midnight mass service is now underway. For the first time in several years tourists are headed to Bethlehem in droves as fears subside. About 65,000 people will visit Jesus' birthplace this Christmas. This is live picture we're watching coming to us now from the Vatican.

Renewed peace talks for people heading to Bethlehem have really been one of the main reasons that tourists are going there, really sensing that things are a little bit safer and there's progress between Israelis and the Palestinians -- Suzanne?

MAL: Thank you, Zain.

An Iraqi boy disfigured in a savage attack, one of the most emotional stories of the year and now the subject of a one-hour documentary on CNN hosted by Dr. Sanjay Gupta.

He joins us with a preview -- Sanjay?

DR. SANJAY GUPTA, CNN SENIOR MEDICAL CORRESPONDENT: Suzanne, thanks. I have it tell you this story about Youssif is one of the most remarkable I've seen as a journalists and the way it all came together. Donations from you, the CNN viewer and CNN.com users was enough to pay for Youssif and his family to come to the United States to live and get the treatment they need.

I'll take you inside the operating room where I get a first-hand look at what exactly happened to him. Keep in mind, everything just seemed almost impossible for Youssif's parents for the longest time.

(BEGIN VIDEOTAPE)

GUPTA (voice-over): Desperately wanting to help his son heal, Youssif's father wrote letters to government officials, hoping someone would help.

That's when this father's love prompted him to take an enormous risk to put his own safety in jeopardy for his son. For his safety, we're not identifying him in any way. ARWA DAMON: His father had been pounding the pavement in Baghdad for about nearly eight months. He happened to be in a store where he heard about CNN, and was told that perhaps CNN could help.

GUPTA: Just going to the CNN bureau in Baghdad, Youssif's father was risking his life.

Youssif's father returned to the CNN bureau four times before the producer, Mohammad (ph), had time to see him. For his safety, we aren't showing his face either.

MOHAMMAD (ph), CNN PRODUCER: He showed me the first picture of Youssif before the incident and that's smile -- I couldn't help myself but to cry. I said, oh, my god. This is your son before the incident. I run with this picture to Arwa and Arwa was also like in the middle of something busy. I said look at this picture.

DAMON: For us, that was it. We were going to do the story, if only for the sole reason of trying to get this kid help.

GUPTA: Baghdad Correspondent Arwa Damon's stories did just that on CNN and CNN.com really prompted this outpouring of support from people all over the world enough to bring Youssif and his family here. He had three operations and his appearance is already remarkably improved. Suzanne, back to you.

MAL: Thank you, Sanjay.

Tonight at 10:00, you can see more of Youssif's incredible story. It begins at 10:00 p.m. And don't miss this "Impact your World" special.

I'm Suzanne Malveaux, in "THE SITUATION ROOM." The forum on faith and politics with "Soledad O'Brien."

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