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THE SITUATION ROOM
Obama Raises Urgency on Economic Rescue; Bailout Of Auto Industry Questioned; Interview with Bill Gates
Aired December 3, 2008 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: Thanks very much, Rick.
Happening now: Barack Obama says his economic rescue efforts are growing more urgent by the day and he's promising Bill Richardson will be a power player in the job of commerce secretary.
Americans just say "no" to an auto industry bailout. Will Congress do the same? The public weighing in and the stakes for the nation keep rising on this -- the eve of bailout hearings on Capitol Hill.
And, he's one of the two or three richest people in the world. And he has some advice for the president-elect on how to get the economy moving again. My rare one-on-one interview with the Microsoft founder, Bill Gates. That's coming up.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Dire new warnings today about the state of America's auto industry and what its collapse could mean for all of us. A top Chrysler executive says the economy could plummet into a depression if one of the Big Three carmakers goes bust. The United Auto Workers Union now is agreeing to make more concessions to protect members' jobs and benefits. Autoworkers are joining with bosses to plead with Congress and the incoming Obama administration for help, insisting it's not a bailout.
(BEGIN VIDEO CLIP)
RON GETTELFINGER, UAW PRESIDENT: We've always said Main Street, Side Street and Rural America are all impacted by what the Congress of the United States does. And after all, we're asking for a loan here, a loan to be repaid. We're not asking for that famous term that everybody uses.
SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Certainly, my expectations that we should maintain a viable auto industry, but we should also make sure that any government assistance that's provide is designed for a -- is based on realistic assessments of what the auto market is going to be.
(END VIDEO CLIP)
BLITZER: President-elect Obama weighing in on the auto crisis as he formally named the New Mexico governor, Bill Richardson, as his choice for commerce secretary. CNN's Kate Bolduan is standing by on Capitol Hill. But let's go to our senior political correspondent, Candy Crowley. She's covering this transition to power in Chicago.
All right. Tell us how the president framed this Richardson announcement today, Candy.
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, listen, the Commerce Department, Wolf, is huge. It has more than 30,000 employees. It covers everything from the census to NOAA (ph), to promoting U.S. businesses abroad, to opening up markets. But the question has always been -- how much clout would the secretary of commerce have.
CROWLEY (voice-over): The well-credentialed Bill Richardson's resume includes talking dictators into freeing U.S. hostages and prisoners. He wanted and was considered for secretary of state.
OBAMA: Commerce secretary is a pretty good job.
CROWLEY: Secretary of commerce has never been seen as a high- profile power slot. But as a news conference featuring only Richardson, the president-elect seemed to go out of his way to talk of an elevated status for his nominee, calling him a leading economic diplomat.
OBAMA: His mixture of diplomatic experience, hands-on experience as a governor, experience in the cabinet, experience in Congress, means that he is going to be a key strategist on all the issues that we work on.
CROWLEY: Richardson is a former congressman, now governor of New Mexico, who helped bring 80,000 new jobs to the state, but put him down as a Washington insider in the "Obama for change" administration. Richardson was tap as secretary of energy and ambassador to the U.N. by Bill Clinton, adding a new layer to the already cliched notion of a "team of rivals."
GOV. BILL RICHARDSON, (D-NM) COMMERCE SECRETARY NOMINEE: It is my distinct honor and privilege to introduce mi buen amigo, the next president of the United States, Barack Obama.
CROWLEY: Richardson's primary endorsement of Obama angered Clinton world. James Carville compared him to Judas.
RICHARDSON: There's some who speak of a team of rivals. But I've never seen it that way. Past competitors -- yes. But rivals implies something harder edged and less forgiving. And in the worlds of diplomacy and commerce, you open markets and minds not with rivalry, but instead with partnership and innovation and hard work.
CROWLEY: Richardson is the third former primary challenger brought into the Obama fold. And like many of the nominees, he has a large personality. Not the type to fade into the gray bureaucracy of Washington.
CROWLEY: Now, there are a couple of things that might come up in confirmation hearings. When he was energy secretary, a couple of files from Los Alamos went missing for a while. That prompted Senator Robert Byrd to tell Richardson that he would never be confirmed for anything again. But those files were eventually found and never left the site. There are also some instances where Richardson was head of a board of a company, the company got into trouble. Richardson has always said, "Listen, I was just on the masthead here."
So, those may come up. But again, the Obama administration -- the Obama administration incoming has been pretty careful to shop around these nominees and wouldn't put anybody out there that they didn't think was almost certain to be confirmed -- Wolf?
BLITZER: And with 58 Democrats in the Senate, at least 58 Democrats, one more seat undecided, it looks pretty good for all of these Democratic nominees, no doubt about that. Candy, thank you.
With today's addition of Bill Richardson, President-elect Obama has revealed his choices to fill eight cabinet level or other top positions within his administration. They include Hillary Clinton for secretary of state, Timothy Geithner as the treasury secretary, and Robert Gates staying on in the post of defense secretary. Nine cabinet posts still have to be filled, including the secretaries of labor, transportation, energy, education, among others -- housing, as well.
Let's get to the multibillion dollar question of the hour: Will the federal government bailout the auto industry?
On this the eve of make-or-break congressional hearings, let's go straight to CNN's Kate Bolduan. She's on Capitol Hill following the latest.
Lots of reservations, lots of concern up there, but the auto industry and the labor union, the United Auto Workers, they are forcefully making their case, Kate.
KATE BOLDUAN, CNN CORRESPONDENT: They are trying to make their case, Wolf. Lawmakers here say they need to hear more from auto executives in the hearings tomorrow. But at this point, there's no guarantee there will even be a vote on an auto bailout and some new poll numbers aren't helping.
BOLDUAN (voice-over): As if things couldn't get any worse for Detroit's Big Three, a new CNN/Opinion Research Corporation poll shows 61 percent of Americans, six out of 10, are dead-set against an automaker bailout, saying it won't help the economy, even in the Midwest.
KEATING HOLLAND, CNN POLLING DIRECTOR: You can imagine that in the northeast. You can certainly imagine that in the south where they don't have a lot of auto plants, but in the Rust Belt, particularly since Michigan is the home of the automakers, to see a majority of Midwesterners saying that this is not a good idea, that tells you something.
BOLDUAN: And despite giving Congress what it demanded, specific plans to slash costs and get more efficient, the automakers' request for an even bigger bailout loan has lawmakers, like Jon Tester, skeptical.
SEN. JON TESTER, (D) MONTANA: Truth be known, going from $25 billion to $34 billion in two weeks, that's a little disconcerting for me. I mean, that tells me that the figures they came in two weeks ago weren't very good, they weren't very well thought out.
BOLDUAN: Given the PR nightmare from the CEOs' last trip to Washington aboard corporate jets, Democratic leaders from Nancy Pelosi to the president-elect are not committing, calling the next round of hearings a critical test.
OBAMA: I want to wait and see specifically what's said during those hearings.
BOLDUAN: Meanwhile, auto industry supporters like Michigan Democrat Carl Levin say the Big Three cannot be allowed to fail.
SEN. CARL LEVIN, (D) MICHIGAN: If the president and the president-elect will speak out not just take positions which they have favoring bridge loans, but actively get involved in trying to work out this difference on the source of the bridge loans, then I think that we can get this done next week.
BOLDUAN: Now, the White House is also declining to commit here, Wolf, saying everything depends on how automakers, auto executives come across in these hearings. Now, leadership aides here say everything hinges on auto executives winning over lawmakers and maybe more importantly, the American public.
BLITZER: It may be symbolic, Kate, but how is the top executive, the CEO of G.M. arriving on Capitol Hill tomorrow?
BOLDUAN: Well, all three of them bumped out of those corporate jets. They're all coming in hybrids. And as you said, the executive for G.M. is actually said to be arriving tomorrow in the company's new electric car. So, as you said, it could be more symbolic than anything.
BLITZER: But it will have an impact, at least P.R.-wise.
BLITZER: Kate, thank you very much.
By the way, two of those top auto executives will be right here in THE SITUATION ROOM tomorrow -- the CEOs from G.M. and Chrysler. If you have a question for either of these two CEOs, you can send us your question on video. Do it at iReport.com/situationroom. We'll try to get a few of your questions to the CEOs of G.M. and Chrysler. They'll both be here tomorrow in THE SITUATION ROOM.
Go right to Jack Cafferty. He's got "The Cafferty File" -- Jack?
JACK CAFFERTY, CNN ANCHOR: What happened to the Ford guy?
BLITZER: So far, he has not accepted our invitation. We'd love him to join, as well.
CAFFERTY: No guts. He ought to show up, be there with the other two.
BLITZER: I agree.
CAFFERTY: I agree.
All right. So much for that filibuster-proof majority for the Democrats in the Senate, Republican incumbent Saxby Chambliss won the runoff yesterday in Georgia. He was expected to. The best the Democrats can do now is 59 seats in the Senate. That Minnesota race is still undecided. It was a much needed win, though, for beleaguered Republicans coming off that beating they took on Election Day.
Perhaps the bigger story is Sarah Palin. The hockey-mom-turned- Alaska-governor-turned vice-presidential-candidate-turned-national- joke flew into Georgia on Monday and campaigned around the state in a whirlwind tour for Chambliss, drawing huge crowds at several events. Georgia's a tailor-made state for her. Chambliss said that Palin had a huge impact on his win, quoting here, "She came in on the last day, did a fly around and man, she was dynamite," unquote.
Palin's former running mate, John McCain also campaigned for Chambliss. So did former Republican candidates Mitt Romney, Mike Huckabee, and Rudy Giuliani. But Palin is being given a large share of the credit for pushing Chambliss over the top and getting him this win.
So, here's our question: What does Saxby Chambliss' win in Georgia mean for Sarah Palin who went there to campaign for him? Go to CNN.com/caffertyfile and post a comment on my blog. It might be the reddest state in the country, so it's not surprising she's very popular there.
BLITZER: She's very popular there. She's very popular in Alaska, too, you know. That's her home state.
CAFFERTY: But not as popular as she was before she made a few boo-boos on her way to losing the presidential election.
BLITZER: Absolutely, you are correct. Thank you, Jack. Stand by.
If anyone knows how to make money, it's Microsoft founder Bill Gates.
(BEGIN VIDEO CLIP)
BILL GATES, MICROSOFT FOUNDER: We're in uncharted territory and we're certainly going to have a fairly serious recession.
(END VIDEO CLIP)
BLITZER: Bill Gates in a rare interview with me. He's revealing his greatest fears about the state of the U.S. economy right now. That interview -- coming up. We're only moments away from it.
And, Hillary Clinton versus the U.S. Constitution. Why there are some lawyers out there who contend she's not really eligible to become the secretary of state.
And just when you may have thought the Bush family was getting out of politics, guess again. Is Jeb Bush ready to run for another office? Stay with us. You're in THE SITUATION ROOM.
BLITZER: He's one of the most famous men in the world. One of the richest men in the world as well, but also making sure huge, huge sums of his money get to those less fortunate. That would be Bill Gates. I sat down with the Microsoft mogul earlier today over at George Washington University here on the nation's capital. We covered a wide range of topics including his charitable crusade and his advice to President-elect Barack Obama. But we begin with the number one issue on your mind.
(BEGIN VIDEO CLIP)
BLITZER: And joining us now Bill Gates. Mr. Gates, thanks very much for coming in.
GATES: Thank you.
BLITZER: How worried are you about the U.S. economy right now?
GATES: Well, we're in uncharted territory and we're certainly going to have a fairly serious recession. I think the right things are being discussed about stimulus and, you know, I'm sure we'll come out of it. But it could be a tough period.
BLITZER: What worries you the most?
GATES: Well, a recession has a way of building on itself. And that as people cut back on spending that means jobs get cut back, and the federal government is one of the few sources that can be counter- cyclical, figuring out how to do that in ways so that the incentive structure is right, and so you come out of it the right way. It's a challenge because it's a global downturn.
BLITZER: Because I know you're worried not only about the short- term but the long-term, as well. Now, specifically, how deep, how long will this recession, in your opinion, go on?
GATES: Well, I'm not an expert on predicting the length. I'd just (ph) say, my big focus is that during this time period, we continue to make the key investments that have improved life so dramatically, the investments in education that are key to equality in this country and the investments in helping other countries get to the same type of prosperity that we take for granted.
BLITZER: Because global poverty, that's your issue, right?
GATES: Well, it's a big issue for the foundation. The two big issues for us are global disease and poverty, and then, U.S. education.
BLITZER: And I want to get to both of those at length. What was the crucial turning point, in your opinion that, resulted in this collapse -- if you want to call it that -- of the economy?
GATES: Well, collapse is a little strong, fortunately.
BLITZER: But it's arguably the worst crisis since the Great Depression.
GATES: Well, there are various economic statistics that some of them should cause concern. And we had a credit expansion over a 50- year period. And so, more than looking at the particular things that slid out in reverse, you have to say -- OK, how far out do we get in terms of the consumers' balance sheet and what it's going to take to bring that back in line.
You know, clearly, we'll have a few years where consumers are spending less and their savings picture gets to be far more healthy. The U.S. was actually the -- has a much higher level of consumption than any of the other rich economies.
BLITZER: So, if you were going to give Barack Obama right now one piece of advice in dealing with the immediate economic crisis, what would that be?
GATES: Well, clearly, we need a stimulus that doesn't undermine the incentives for businesses to be careful about their spending and making those correct investments. And the key point I'd make is that in addition to that stimulus, you've got to fund the kind of scientific work and educational investments that can really have us be a much better country as we emerge from the recession.
BLITZER: Because as you know, he's thinking about, at least according to the reports, $500 billion or $700 billion, what they're now calling a recovery plan. That's a lot of money. Is that going to do it?
GATES: Well, I think, you know, we're learning as we go along, there's many, many measures that have already been taken for stabilization. And you can add those up in a variety of ways. You know, it should be his top priority. He's bringing in a smart team. And so, you know, my particular expertise is that the foundation has learn a lot about how investments in education and technological advances can help us on both a global basis and here in this country.
BLITZER: All right. So based on your lessons learned, over what you've been doing over these years, what should he be paying attention to right now as he tries to stabilize this economy and make it robust again?
GATES: Well, the president-elect has said a lot of important things about education, about focusing on teachers who really do the job well, allowing charter schools to be expanded, both because there are some great ones and because they serve as a model. He's talked about being data-driven. And so, the foundation my wife and I have, we want to, you know, work together with the government. We are saying that we believe strongly that even in this tough time, these investments in education are very, very important.
BLITZER: Can the public school system survive and grow and become really great again with the teachers unions as they are right now? Because that's one of the criticisms that the teachers unions are simply tool powerful and it sort of in the end undermines education.
GATES: Well, there's a lot of issues about governance, whether it's school boards or unions where you want to allow for experimentation in terms of pay procedures, management procedures to really prove out new things. As those things start working on behalf of the students, then I believe that the majority of teachers and voters will be open-minded to these new approaches. And so, we have to take it a step at a time. They have to give us the opportunity for this experimentation.
BLITZER: The unions do?
GATES: The unions, the voters. The cities where our foundation has put the most money in is where there's a single person responsible -- in New York, Chicago, Washington, D.C., the mayor has responsibility for the school system. And so instead of having a committee of people, you have that one person. And that's where we've seen the willingness to take on some of the older practices and try new things and we've seen very good results in all three of those cities.
So there are some lessons that have already been learned. We need to make more investments. And I do think that the teachers will come along, because after all, you know, they're there because they believe in helping the students, as well.
(END VIDEO CLIP)
BLITZER: All right. Wait until you hear what else Bill Gates is saying. He has some serious thoughts on that $700 billion Wall Street bailout and he also says something rather surprising. If private investors aren't rushing to bail out the Big Three U.S. automakers, maybe taxpayers and the federal government should think twice about doing that. You're going to hear precisely what he's saying.
And the former President Bill Clinton -- he is making some revealing comments in an exclusive interview with CNN. Among them -- his wife's reaction when to first being mentioned to lead the State department.
(BEGIN VIDEO CLIP)
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: And I'd say (ph) she didn't know or any thought of becoming secretary of state. I think she was shocked. She first read about it in the newspapers.
(END VIDEO CLIP)
BLITZER: Fredricka Whitfield is monitoring other important stories incoming to THE SITUATION ROOM right now. Fred, what's going on?
FREDRICKA WHITFIELD, CNN CORRESPONDENT: Hello there, Wolf.
U.S. Attorney General Michael Mukasey is calling the terrorist attacks in Mumbai, India, a lesson on the need for vigilance and continued surveillance of suspected terror groups. One hundred seventy-nine people were killed in last week's attacks, including six Americans. Mukasey says if sufficient evidence is collected, the U.S. could bring criminal charges against any conspirators but it would not comment on the likelihood of that happening.
Worker productivity rose just over 1 percent in the third quarter. That boost wasn't as growth that was expected in the second quarter but it was stronger than economists had expected. Another better than expected report on wage pressures -- they went up in the third quarter but not as much as experts had feared. The reports are unlikely to raise inflation red flags at the Federal Reserve.
And renowned folk singer, Odetta has died. She passed away of heart disease yesterday after being hospitalized for nearly three weeks with kidney failure. Odetta's Grammy-nominated songs inspired musical greats like Bob Dylan and Harry Belafonte. She sang at the historic march on Washington in 1963, and 36 years later, received the National Medal of Arts from then-President Bill Clinton.
Despite her failing health, the legendary singer continued to wow audiences, performing 60 concerts in the last two years alone, Wolf. Odetta was 77 years old.
BLITZER: She was amazing. I remember hearing her on many occasions, a really, really gifted artist.
BLITZER: Thanks very much for that, Fred.
One of the world's richest men has a warning. Should you be worried about your job?
(BEGIN VIDEO CLIP) GATES: There's very few industries that aren't going to suffer in this downturn and those industries will be cutting back jobs.
(END VIDEO CLIP)
BLITZER: Bill Gates on the possibility of even greater job losses. More of my rare interview with one of the world's richest men, Bill Gates. That's coming up.
And Hillary Clinton wants to be secretary of state. But one group says the U.S. Constitution makes her ineligible and warns of a possible constitutional battle. Stay with us. We'll explain.
BLITZER: To our viewers here in THE SITUATION ROOM.
Happening now -- the president-elect, Barack Obama, nominates Bill Richardson as commerce secretary, but his confirmation potentially could find some not so smooth sailing. Past affiliations could come back to haunt him. Brian Todd is working this history.
Americans weigh in on Barack Obama's cabinet picks and they're not holding back. There are dramatic new poll numbers just coming in to THE SITUATION ROOM.
And, guns in the cockpit. Pilots armed to boost security but a federal investigation now concluding those guns could actually pose a risk to passengers. We'll have a live report.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Moments ago, you heard one of the world's richest men offer some advice to Barack Obama involving the economy.
Now more of my rare interview with Bill Gates. We spoke about the idea of the federal government bailing out big business. But, also, listen very closely to what he says about the logic behind bailing out the Big Three U.S. automakers -- Bill Gates on the economy.
BLITZER: Was the $700 billion bailout of the financial sector, of the banks, was that a good idea?
GATES: The steps needed to be taken to avoid destabilization.
And, you know, people will be second-guessing that for all time. But I think Secretary Paulson and the administration have done the key things that needed to be done. Clearly, now, as the economy itself is suffering the credit contraction, there's more that will need to be done.
BLITZER: Like what?
GATES: Well, the stimulus is -- some type of stimulus. And, you know, people will endlessly debate what that should be.
My push on it is that investments in education and some continued focus on the international role of the U.S., in terms of helping the poorest, those are very good investments that I think do make the cut, even in a tough budget time.
BLITZER: I don't know if you have studied the Big Three automakers and their proposals now to restructure their industry, but should the Congress and the American taxpayers provide maybe $30 billion or $35 billion in a loan -- that's what they're calling it -- to try to make sure that the Big Three U.S. automakers survive?
GATES: Well, there's a lot of industries that are -- are suffering right now.
And you have to have some clear criteria. When do you have the government come in, and to what degree is the government insisting on and able to judge whether there's profitability down the road? After all, you have to say, if no one else is willing to invest, why is that? What is it that investors are seeing about this business model or cost structure that makes them unwilling? And why, in that case, is the government alone in stepping forward in these ways?
What you would like is something where some private investors, the executives, are all in the same economic deal, and then you say, OK, they're putting -- we have some private investors who are endorsing this, and -- and the government can play a role. That's the ideal. I don't know, industry by industry, if that's achievable.
But, when you don't have any private investors, you really have to say, is taxpayers' money going to have the desired effect?
BLITZER: So, when it comes to the auto industry, what's the answer?
GATES: I think that there's not a structure today that also brings in a private investment piece, as far as I know. But, you know, people are talking. And the Congress, very appropriately, said, hey, we need to understand a lot more before we do something.
But, you know, I -- I take it in a broader context of, what is the general policy industry by industry? There's very few industries that aren't going to suffer in this downturn. And those industries will be cutting back jobs.
How does the government take its finite resources and decide how much restructuring or change is expected there? And, ideally, you look at the sign of private investment as -- as part of how you say, OK, that really is a good investment plan.
BLITZER: All right, we're going to have a lot more with Bill Gates tomorrow, part two of the interview.
Even with his billions, Bill Gates talks about losing some net worth in this economic downturn. He also urges president-elect Barack Obama to stand by one major promise he made during the campaign. And Gates also explains why financially-strapped Americans should, indeed, continue to send money to others in needy nations -- all that coming up, part two of the interview with Bill Gates, tomorrow, right here in THE SITUATION ROOM.
And -- and this note: You can sign up to receive Bill Gates' annual letter. In early 2009, he will be sending out this candid letter that looks at the issues his foundation faces. You can go to CNN.com/ticker to sign up for the Bill Gates letter.
Hillary Clinton wants to be the next secretary of state, but one conservative watchdog group claims she can't be, at least not now. And it says the U.S. Constitution makes Senator Clinton ineligible to become secretary of state. And it's warning of a possible constitutional battle if her nomination moves forward.
Let's bring in our own Samantha Hayes. She's looking at this story.
It sounds sort of way out there. But explain what's going on.
SAMANTHA HAYES, CNN CORRESPONDENT: Wolf, it's a clause in the Constitution that has a lot of people talking and wondering why it's there to begin with.
HAYES (voice-over): In a way, it makes sense. You shouldn't be able to vote for a salary increase for a position you end up filling. That's the gist of Article 1, Section 6 of the Constitution. And that's what happened during Senator Clinton's last term. The salary for secretary of state and other Cabinet positions was raised by $4,700.
JEFFREY TOOBIN, CNN SENIOR ANALYST: This is an issue for Obama and Clinton to resolve.
HAYES: And there seems to be a way around it. Congress has simply changed the salary of the office in question back to what it was before. That's what happened when Senator William Saxbe became President Nixon's attorney general and before Senator Lloyd Bentsen became President Clinton's treasury secretary.
TOOBIN: There are many ways around this problem. One is for Congress to vote a lower salary. Another way is for Hillary Clinton simply to take a lower salary. Another way is simply to ignore the problem, on the idea that no one has the right, has the standing to sue to stop her from being secretary of state. So, this is not going to be an impediment to her being secretary of state.
HAYES: But Judicial Watch, a conservative public interest group, disagrees with that precedent.
TOM FITTON, PRESIDENT, JUDICIAL WATCH: We think it's inadequate. You can't amend the Constitution through legislation like that. The Constitution doesn't have any caveats. It's plain as day.
HAYES: And points to what another president did.
FITTON: Ronald Reagan took a look at this clause and decided against appointing Orrin Hatch, who was a senator, and still is, to the Supreme Court.
HAYES: I have been in touch with a Clinton spokesperson, who says the senator and president-elect Barack Obama were well aware of this issue. And Senator Harry Reid's office says that Democrats in Congress are moving forward with a measure similar to what's been done in the past.
BLITZER: All right, thanks very much, Samantha Hayes checking history for us, as she does well.
Republicans have stopped Senate Democrats from making their wildest dream come true. How did Georgia's incumbent senator finally win reelection last night? The secret to his success and what it means for his party.
Plus, Barack Obama says commerce secretary -- the commerce secretary job is a pretty good job. Is it really more than a consolation prize, though, for Bill Richardson? Stand by for our "Strategy Session."
And the former President Bill Clinton, in an exclusive interview with CNN, he gives his prediction on when the economy may finally turn around.
(BEGIN VIDEO CLIP)
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I don't -- I don't think we can turn it around in less than a year, because too much wealth has already disappeared.
(END VIDEO CLIP)
BLITZER: It's official now. The Democrats' dream of winning a filibuster-proof 60-seat majority in the U.S. Senate has been crushed, at least for now. Republican Saxby Chambliss run a cliffhanger Senate runoff in Georgia last night. It didn't turn out to be much of a cliffhanger when all was said and done. He's urging his party to return to its conservative roots to keep Democratic power in check.
(BEGIN VIDEO CLIP)
SEN. SAXBY CHAMBLISS (R), GEORGIA: You have delivered a message that a balance of government in Washington is necessary. And that's not only what the people of Georgia want, but what the people of America want and have demanded by their participation.
(CHEERING AND APPLAUSE)
(END VIDEO CLIP)
BLITZER: Our congressional correspondent Dana Bash has just come back from Georgia. She covered this runoff for us.
It was close in the -- in the general election. But Chambliss didn't get the 50 percent, plus one, he needed. So, they -- they had this runoff under the rules in Georgia. But it turned out to be rather lopsided yesterday.
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It definitely did. And, historically, Republicans do tend to do better in runoffs, particularly in a state like Georgia.
But, you know, what you just heard from Saxby Chambliss, his central argument during the past month of this runoff, was that they need to send him back to Washington to be a firewall against Barack Obama's agenda.
And, you know, in a Southern conservative state, one that actually voted for John McCain, not Barack Obama, that really did resonate and it actually got conservatives to the polls for him.
BLITZER: And it was a major moral victory, I think, for the Republicans right now, because they have been demoralized over the past few weeks.
BASH: Oh, yes, big time.
Wolf, I have to tell you, being in a room of celebrating Republicans was bizarre last night.
BASH: It's just not something that we're used to.
You know, I covered John McCain. I was down, as you were, with the Republican governors last month, talked to Republican senators on Capitol Hill. The depression inside the Republican Party, it is wide, and it is deep. So, what they're hoping is that last night's victory is kind of political Prozac for the GOP.
Never mind the reality is that Saxby Chambliss, a couple of months -- months ago, nobody even thought that this would be a tough race for him, but the climate made it so.
BLITZER: And there's still one more race that has to be decided...
BLITZER: ... the recount up in Minnesota. We will talk about that later.
But the chairman of the Republican National Committee, Mike Duncan, you're getting new information on what might be happening on that front.
BASH: That's right. I actually spoke with Mike Duncan last night.
And he actually told me that he's going down to his home state of Kentucky this weekend, and he's going to make a decision about whether or not he wants to stay in his post, and whether or not he wants to basically run for reelection for his post.
And he's actually going to probably make announcement some time next week. Here's the reality. The reality is, as you know, Wolf, that, because of two straight elections of stinging losses for Republicans, there's a big desire for change inside the RNC.
And a number of Republicans have already said that they want to challenge Mike Duncan. So, it would be tough for him to keep his job. But, you know, talking to him yesterday, it was really torn. It was clear he was really torn as to whether he even wants to try. But we will find out next week.
BLITZER: And we know the former lieutenant governor of Maryland, Michael Steele, is among those...
BLITZER: ... who would like to become the next chairman of the RNC.
BASH: Thank you.
BLITZER: ... very much.
Welcome back to Washington.
BASH: Thank you.
BLITZER: In the Minnesota Senate recount, Republican incumbent Norm Coleman leads Democrat Al Franken by just over 300 votes with 93 percent of the ballots tallied.
The recount ends on Friday. But, later this month, the state will rule on the ballots being challenged by both campaigns.
Our Internet reporter, Abbi Tatton, has been looking into some of these ballots online.
It's pretty amazing how some of these ballots are being disputed.
ABBI TATTON, CNN INTERNET REPORTER: And there's about 3,000 disputes on each side, Wolf. And it's up to the state canvassing board, who has to review each and every one of them, to see whether they can determine if there's voter intent there. These are some of the things that they're looking at. These have been posted online. Here, clearly, there's an X right there, but is it for Norm Coleman or is it for Al Franken? It looks lightly closer to Norm Coleman's name there -- that ballot being challenged by Al Franken's team, saying that the voter intent there is unclear.
And another version here, look at that, kind of indiscriminate scribbling next to both the names, although there is a little bit more scribbling over Norm Coleman's name, another one they're going to be looking at, a challenge by Norm Coleman's team here.
This one has a pretty clear mark for Al Franken, but their problem is elsewhere on the ballot. If you look at the other side, you will see that the name Joe the plumber has been written all over the place. And they have been challenging that one as identifying the ballot, something that would render it defective.
The secretary of state has asked both sides to limit these challenges, saying that they produce a tremendous amount of work and that a lot of them will not stand up to scrutiny.
And, today, Democrat Al Franken's team says that they're going to withdraw 600 of those challenges. Senator Norm Coleman has said he's willing to withdraw some as well.
BLITZER: All right, it reminds me of Florida 2000.
BLITZER: All right, we will watch very closely. Interesting information. Thanks, Abbi, very much.
Coming up in our "Strategy Session": some tough questions for Barack Obama about the diversity of his Cabinet.
(BEGIN VIDEO CLIP)
OBAMA: There's no contradiction between diversity and excellence. I'm looking for the best people, first and foremost, to serve the American people.
(END VIDEO CLIP)
BLITZER: Here's the question: Was Bill Richardson appointed to a position he's most qualified for, or is Commerce a consolation prize?
And could there be another Bush headed to the Washington? The former Florida governor, Jeb Bush, always very popular in that state, is he eying a run for the U.S. Senate in the 2010?
All that with Jamal Simmons and Rich Galen -- they're standing by live, right here in THE SITUATION ROOM.
BLITZER: A political power broker earns a top spot on Barack Obama's Cabinet secretary list, but is it a consolation rise?
Let's discuss in our "Strategy Session." Joining us, Democratic strategist Jamal Simmons and Republican strategist Rich Galen.
Here's how Obama responded today when he asked about this notion that picking Bill Richardson to be commerce secretary was almost a consolation prize.
Listen to this.
(BEGIN VIDEO CLIP)
OBAMA: I think people are going to say, this is one of the most diverse Cabinets and White House staffs of all time.
But more importantly, they're going to say these are all people of outstanding qualifications and excellence.
(END VIDEO CLIP)
BLITZER: No doubt Bill Richardson would have loved to have been secretary of state.
JAMAL SIMMONS, ADVISER, DEMOCRATIC NATIONAL COMMITTEE: Oh, I'm sure he would have.
And, so, the Commerce Department can be a very important job. I actually worked there in the Clinton administration under Mickey Kantor. And if you think about -- the biggest issue is going to be how close the commerce secretary is to the president. You think about people like Ron Brown or someone like Don Evans, they were very close to their presidents, and so the Commerce Department was a big job.
you know, you haven't heard as much from Carlos Gutierrez. But -- so, the question is going to be what happens with Bill Richardson and whether or not his personality really brings that job to the forefront.
BLITZER: And we know he's got a lot of personality...
BLITZER: ... as all of us know.
What do you think?
RICH GALEN, REPUBLICAN STRATEGIST: Well, I think it's -- he wanted to be president. That don't work out. He wanted to be vice president. That didn't work out. We talked the other day about the beard. He lost that, you noticed. And he wanted to be secretary of state. That didn't work out.
So, he -- this is -- this is what they threw him. I guess somebody else is going to get Interior, so he couldn't get that. But, you know, the big -- the problem for Hillary Clinton is that -- that we know the history between -- between Hillary and Richardson.
Our friend James Carville still has not backed down from his -- from his position on that whole thing. So, you have got Bill Richardson, who wanted to be secretary of state, endorsed Barack Obama, didn't get the job, in favor of Hillary Clinton, whom he didn't endorse, and Obama gave her the job. So, and...
BLITZER: But you never know. You never know. This is four years of an Obama administration, maybe eight years, and there are potential openings that could come forward down the road.
GALEN: Listen, I have to write three -- I have to write three days a week. Chaos is my friend.
BLITZER: Jeb Bush, you know, there's a lot of speculation down in Florida right now that he's thinking, with Mel Martinez announcing he's not going to seek reelection in 2010, that maybe Jeb Bush, who is very popular down there, should throw his hat in the ring.
How worried would Democrats be if that were the case?
SIMMONS: Well, that's what America needs right now, another Bush in Washington.
BLITZER: But he was very popular in Florida, Jeb Bush.
SIMMONS: He was popular in Florida. We will see what happens.
I talked to some of the folks down in Florida today. The Democrats are talking about people like Alex Sink, who is the CFO down there. And she may be the one that gets in.
On the Republican side, if Jeb Bush gets in, he probably clears the field. And, if that happens, I think there will be a -- he will have to carry the legacy of his brother, as well as his own legacy as governor.
GALEN: Oh, that's ridiculous.
Their -- their -- their terms overlapped. The people of Florida are smart enough to remember which one's George and which one's Jeb. Jeb left office with a more than 60 approval ratio -- or rating -- when his brother was still president. And, so, they get the difference. It's not a problem.
SIMMONS: Yes. And there also is a difference between being a governor and being a senator in Washington. So, the issues are going to be different. I think people will take that into account when they make their choice.
BLITZER: And Florida did go for the Democrats this time, as opposed to the last -- the last couple of times.
GALEN: They didn't have Jeb on the ballot.
BLITZER: All right, guys, thanks very much.
BLITZER: There's something a little different about Bill Richardson today. As we noted, the beard is gone, clean-shaven. He's been sporting it since is he dropped out of the presidential race. What Barack Obama said about the beard today. Stand by.
And former President Bill Clinton, he gets emotional when he talks about what he regrets. You're going to hear it yourself -- our exclusive interview with Bill Clinton, the full interview, coming up.
(BEGIN VIDEO CLIP)
CLINTON: I wish had I intervened in Rwanda. And I have spent the rest of my life and will spend the rest of my life trying to make it up to them.
(END VIDEO CLIP)
BLITZER: On our "Political Ticker": You may have noticed something different today about the new commerce secretary-designate, Bill Richardson, the beard he grew after ending his presidential bid now gone.
A reporter asked Richardson about that, but president-elect Barack Obama jumped in and answered for him. Listen to this.
(BEGIN VIDEO CLIP)
OBAMA: I think it was a mistake for him to get it -- get rid of it.
I thought that whole Western, rugged look was really working for him.
OBAMA: For some reason, maybe because it was scratchy when he kissed his wife, he was forced to get rid of it. But we're deeply disappointed with the loss of the beard.
(END VIDEO CLIP)
BLITZER: There it is. What do you think? You like the beard? Not like the beard?
Jack Cafferty, what do you think?
CAFFERTY: I like the beard.
BLITZER: I like the beard, too. But I'm prejudiced.
Have you -- have you ever given any thought to eradicating your own facial fuzz?
BLITZER: I have thought about it a lot. I have thought about many times over the years, especially -- I don't know if you have noticed -- it started turning a little gray a few years ago.
CAFFERTY: I don't -- I don't pay that close of attention.
BLITZER: Hard to believe, this used to be dark -- it used to be almost reddish, my beard.
BLITZER: But I have kept it for -- I don't know why.
CAFFERTY: How long have you had that thing?
BLITZER: Probably 30 years.
CAFFERTY: Oh, wow.
CAFFERTY: Back since you were in high school.
BLITZER: Oh, yes, started growing in elementary school.
CAFFERTY: The question this hour is: What does Saxby Chambliss' win in Georgia mean for Sarah Palin, who went there to campaign for him? It's a slow day. What do you want from me?
Agnes in Scottsdale writes: "It means that the South is solidly Republican and firmly flyover country. Sarah Palin is an embarrassment to progressive, forward-looking citizens of either party. This was her swan song. No doubt, the GOP top dogs will put a lid on her, except when they're afraid they can't get a full audience at some event. She's great at pulling in the dinosaurs."
Paula in Indiana: "It means the base loves her. The rest of us, who find her circumlocutory speech patterns as abrasive as nails on a blackboard, are doomed to a future of listening to her butcher the English language. Dick Cavett hit the nail on the head when he called 'The Wild Wordsmith of Wasilla' in an article he wrote." Aaron writes: "Come on, Jack. A Republican won in a runoff election in Georgia. What did you expect?"
Mac in Michigan writes: "It means that Georgia is still part of the bass-ackwards part of the country that supports right-wing conservatism, and Sarah Palin can still find an audience in a state where the collective I.Q. is about 37."
Julianna writes: "It means nothing for her. She is self- absorbed, arrogant, and doesn't want to let go of her 15 minutes of fame. The GOP candidate in 2012 will be Governor Bobby Jindal of Louisiana. Besides, president-elect Obama hasn't even started his term. So, stop talking about Sarah Palin."
Jeff in Michigan writes: "It means Palin didn't hit the campaign trail early enough to ruin Chambliss' chances of winning, the same way she damaged McCain's chances in the general election."
And Ondrya in San Fernando Valley, California, says: "It means that you can carry on your absolute, total obsession for Sarah Palin for at least one more day. Face it, super-old dude. Don't lie. You have got the hots for Caribou Barbie."
If you didn't see your e-mail here, go to my blog at CNN.com/Cafferty file. Look for yours, among hundreds of others -- Wolf.
BLITZER: Jack, thank you.
And, to our viewers, you're in THE SITUATION ROOM.
Happening now: The former President Bill Clinton, he's speaking candidly and exclusively to CNN about his wife's loss to Barack Obama, her reaction to being tapped for secretary of state, and the concessions he had to make to help her get the job. Stand by for the interview.
Also, the New Mexico governor, Bill Richardson, nominated by Barack Obama to be commerce secretary, but the nomination could face some challenges. Stand by for that as well.