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THE SITUATION ROOM

Obama Addresses Illinois Governor Scandal; Illinois Looks to Remove Blagojevich From Office

Aired December 15, 2008 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: And, to our viewers, you're in THE SITUATION ROOM.
Happening now, Barack Obama's major revelations, they involve important issues you care about. And he reveals some of what he knows about the Illinois governor scandal and says more revelations are coming.

Hillary Clinton is leaving it, Caroline Kennedy wants it, Senator Clinton's soon-to-be empty Senate seat. Wait until you hear what sources are now saying about Caroline Kennedy's interest. Stand by for that.

And what do Steven Spielberg, the owner of the New York Mets, and the Royal Bank of Scotland have in common? They appear to be victims in a potentially $50 billion scheme.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Barack Obama is talking about the political scandal hovering over the Illinois governor. And he says just wait for what details will come out next.

Moments ago, the president-elect answered a reporter's question on the matter. In particular, he addressed questions of whether or not he himself or any member of his transition team had any contact with Governor Blagojevich regarding putting someone in Barack Obama's Senate seat.

Let's start off our coverage this hour with CNN's Jessica Yellin. She's covering the transition in Chicago.

You're there at the Drake Hotel, where that news conference was. And he answered that question on this scandal.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: He did, Wolf, but he gave us no new information, Barack Obama saying that he is not going to release the details of his internal fact-finding no the Blagojevich matter for another week.

He said that's at the request of the prosecutor in this case and he doesn't want to interfere with the investigation. All he would say was this in answer to a question from a reporter who was present.

(BEGIN VIDEO CLIP) SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: As I said in a press conference last week, I had no contact with the governor's office, and I had no contact with anybody in the governor's office.

And what I indicated last week is that there was nothing that my office did that was in any way inappropriate or related to the charges that have been brought.

Now, beyond that, as we said in the statement today, we were prepared to release the findings of the review that had been done, which are thorough and comprehensive. The U.S. attorney's office asked us to hold off releasing those for a week.

So I would ask for your patience, because I do not want to interfere with an ongoing investigation.

But there is nothing in the review that was presented to me that in any way contradicted my earlier statements that this appalling set of circumstances that we've seen arise had nothing to do with my office.

(END VIDEO CLIP)

YELLIN: Now, Wolf, I can further confirm that the prosecutor's office, the U.S. attorney, Patrick Fitzgerald, in fact, says he did ask the transition team to hold off on releasing that information.

In a statement he released, he said after the president-elect announced an internal transition team investigation, the U.S. attorney's office requested a brief delay of the release of a report of that investigation to conduct certain interviews.

Clearly, he doesn't want the results of Obama's team investigation to influence any potential witnesses.

Now, finally, Wolf, I have talked to a person involved close to internal deliberations. They say, look, this is not frustrating for the Obama team. They think the nation has more important business. They insist that this is a media obsession, this Blagojevich story, although, you know, our viewers seem to be taking significant interest in it as well.

I'm told that they think, when they get this out next week, it will be sufficient and we will all be disappointed. They say there's nothing of terrible interest to us in there -- Wolf.

BLITZER: We will wait and see. We're a very patient bunch.

(LAUGHTER)

BLITZER: There's no doubt about that.

Jessica, he's already announced he's having another news conference in Chicago tomorrow. I'm talking about the president- elect. Do we know what he's going to be announcing then?

YELLIN: That's right.

I'm told by a Democratic source that he's going to be revealing his pick to be the secretary of education, a person named Arnie Duncan, who runs the education and runs the schools here in Chicago. So, that will be the story tomorrow. We will see Barack Obama again taking questions in the morning at a press conference -- Wolf.

BLITZER: And then the next week, he goes on vacation. Is that right?

YELLIN: Correct. He will be on vacation when they release all the Blagojevich news. He will be in Hawaii.

BLITZER: Let him rest up a little bit, because he's going to be a busy guy once he comes here to Washington. All right. He's been a very busy guy in fact for a long time.

Jessica, thank you very much.

The president-elect's news conference comes amid major developments in efforts to try to force Governor Blagojevich out of office.

Let's go to CNN's Drew Griffin. He's with our Special Investigations Unit, watching this story.

There were some interesting developments today. Update our viewers, Drew, on the latest.

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: Wolf, the latest is that the Illinois House could vote to impeach the governor sometime this week. That would trigger a trial in the Senate, members of his own party making good on their promise that if this governor doesn't resign, they're going to force him out.

(BEGIN VIDEOTAPE)

GRIFFIN (voice-over): With Blagojevich again going to work and acting like a governor, the powerful House speaker of Illinois announced enough is enough.

UNIDENTIFIED MALE: Today, we have announced the formation of a committee of inquiry concerning the possible impeachment of Governor Blagojevich.

GRIFFIN: The Illinois Democratic leader says he had been reviewing grounds for impeaching the Democratic governor -- quote -- "for about a year" based on allegations of abuse of power and because of recent federal court convictions of other people, including former top fund-raiser and adviser to the governor Antoin "Tony" Rezko.

Federal prosecutors charged Blagojevich last week with solicitation of bribery and conspiracy to commit mail and wire fraud. He's made no public comment on the accusations.

What high-ranking state Democrats want most is for the governor to voluntarily leave office. But the man who would take over in the job, Lieutenant Governor Pat Quinn, says the governor appears to be in a state of denial.

QUESTION: Have you had any communication with him or his office at all suggesting what he's about to do?

LT. GOV. PAT QUINN (D), ILLINOIS: I have had no communications with the governor. I don't have the faintest idea of what's going through his mind. I think watching on television his comments indicate that he doesn't realize how serious the situation is for the people of Illinois.

GRIFFIN: It is at least serious enough for the governor to consult one of Chicago's most high-profile defense attorneys. The governor spent eight hours Sunday inside the law office of Ed Genson, who today said prosecutors will have a fight on their hands.

ED GENSON, ATTORNEY FOR BLAGOJEVICH: If I'm trying the case, it's going to be a fight.

GRIFFIN: It's been nearly one week since his arrest and since Illinois politicians began demanding the governor resign. But today, in the only indication anyone is going anywhere, the governor's wife and children left home carrying a large suitcase. An hour later, the governor did what he had done every business day since his arrest, defiantly perhaps. He went to work.

(END VIDEOTAPE)

GRIFFIN: And, Wolf, his press secretary says again the governor is not talking of resigning. And I think you know this attorney is an attorney who takes cases to trial, so it look like Governor Blagojevich on all sides digging in for a fight -- Wolf.

BLITZER: This Ed Genson, this attorney, he's had some high- profile clients in the past, hasn't he?

GRIFFIN: Yes, R. Kelly most recently. He defended Mel Reynolds, the congressman. He even defended one of the lobbyists who was charged in the former governor's trial, a lobbyist who was accused in the last corruption case here. So, he's got a lot of experience here in Chicago defending corrupt politicians.

BLITZER: And we're going to take a look at his track record and see how he's done in the past and see what he might be able to do for Blagojevich.

All right, Drew, thank you very much.

Jack Cafferty is joining us once again. He's got "The Cafferty File" in New York -- Jack.

JACK CAFFERTY, CNN ANCHOR: Senator John McCain refuses to say that he would support his former running mate, Alaska Governor Sarah Palin, if she decides to run for president in 2012. McCain was asked directly during an interview on ABC's "This Week" program if Palin can count on McCain's support. He ducked. When he was pressed on the question, he ducked again, saying -- quote -- "My corpse is still warm" -- unquote.

Palin was McCain's running mate and yet he won't say he will support her? This is the person that he picked to be second in command to lead this country should something have happened to him had he been elected president. And now he not only pauses when he's asked, but he won't answer whether or not he will support her.

This was McCain's first Sunday political TV interview since he lost the election. He insists Palin helped his campaign and continues to publicly state his appreciation to the entire Palin family.

Maybe McCain is finally coming to terms with the real impact that she had on his campaign. Toward the end, his name didn't even appear on the posters at some of her rallies. Barack Obama hasn't even been sworn in yet and polls are already showing the Republicans want Sarah Palin in 2012.

So, here's the question: What's up with Senator John McCain unwilling to say he will support his former running mate? Go to CNN.com/caffertyfile. You can post a comment on my blog.

BLITZER: Jack, thank you.

New shockwaves right now from an alleged $50 billion scam.

(BEGIN VIDEO CLIP)

BRAD FRIEDMAN, PARTNER, MILBERG LAW FIRM: For most people, this was 100 percent of their liquid assets. They're now wiped out, penniless. They need money to live on.

(END VIDEO CLIP)

BLITZER: And the man prosecutors say is responsible, we're learning more about him. We're learning more about some of the people who may have lost millions and millions of dollars.

And Caroline Kennedy now said to be very interested in filling Hillary Clinton's Senate seat, but even some Democrats are now questioning her qualifications.

And this: How did it happen, President Bush targeted by shoes? Serious new questions tonight about the presidential security.

Stay with us. You're in THE SITUATION ROOM. `

(COMMERCIAL BREAK)

BLITZER: Big investors at banks around the world, charities, universities, pension funds all exposed to an alleged $50 billion pyramid investment scheme carried out by a Wall Street luminary, Bernard Madoff. Wall Street is becoming increasingly nervous as more and more firms and individuals admit exposure to Madoff's funds.

Let's go to our senior correspondent, Allan Chernoff. He's been looking at this scandal for us.

It's amazing that, if these allegations are true, that he got away with the enormity of this.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Bernie Madoff is a very charming fellow. He had a stellar reputation. And that's how he was able to attract so much money. But now federal investigators are looking into whether Mr. Madoff operated alone or whether he had help in duping so many wealthy investors.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Since the arrest of Bernard Madoff, the list of high-profile victims continues to grow, U.S. Senator Frank Lautenberg, Fred Wilpon, owner of the New York Mets. And Mort Zuckerman, owner of "U.S. News & World Report," had a charitable trust invested with Madoff. Some victims had entrusted their life savings.

BRAD FRIEDMAN, PARTNER, MILBERG LAW FIRM: For most people, this was 100 percent of their liquid assets. They're now wiped out, penniless. They need money to live on. They're having to put their homes on market in this depressed economy, where you can't even sell a home.

CHERNOFF: In Palm Beach, some panicked victims are now looking to unload homes at the exclusive Breakers Resort, foundations organized by Steven Spielberg and Elie Wiesel were reportedly were invested with Madoff.

And, across the globe, major investment houses have announced losses, including Spain's Banco Santander, Japan's Nomura Holdings, and the Royal Bank of Scotland. Madoff offices in London and New York are shuttered, as Justice Department and SEC investigators pore through company records, trying to determine who, if anyone, was helping Bernard Madoff execute his fraud.

LINDA THOMSEN, DIVISION OF ENFORCEMENT DIRECTOR, SECURITIES AND EXCHANGE COMMISSION: We are acutely focused, with our -- with our colleagues in the Southern District of New York and the FBI, to -- to figure out exactly what's gone on, to pursue the cast that we have got, to preserve assets, to the extent we're able, and to bring everyone who was responsible for the conduct at the Madoff firm to justice.

(END VIDEOTAPE)

CHERNOFF: The SEC had concluded an investigation only last year and came up with absolutely nothing.

Now, one source speculated that Madoff's investment operations may have been entirely off the books, which would have made it tough for the SEC to uncover anything. Now, Mr. Madoff, according to the criminal and civil complaints, did confess to a federal investigator. Nonetheless, his attorney is saying that Mr. Madoff will fight to get through this unfortunate set of events -- Wolf.

BLITZER: I'm hearing that one Yeshiva University in New York may have lost millions and millions of dollars in its endowment fund as a result of this. I don't know if you're hearing anything along those lines.

CHERNOFF: No question that Yeshiva University has lost many millions of dollars. Mr. Madoff was the chairman of the Sy Syms School of Business, part of that Yeshiva University. He was a big player over at Y.U., as it's known, and they did have money invested with Mr. Madoff well. So, yes, they have taken a huge hit, one of the many organizations, educational and charitable, that have taken awful hits here.

BLITZER: It's unbelievable, what's going on. All right. Thanks very much.

I know Allan is going to be all over this story all week, because it's not going away.

We're also learning, by the way, to follow some potential bailout -- the potential of a bailout for the nation's Big Three automakers. There are developments unfolding right now.

While the automakers wait, though, at least for two of them, Chrysler and GM, the very existence hangs in the balance. Ford right now seems to be at least for the time being in a little bit better shape. The White House is pondering options to quickly get billions of dollars to these two automakers, but working out the details with Congress is proving to be not easy at all.

Let's go back to CNN's Kate Bolduan. She's on Capitol Hill working the story.

There are developments happening. And tomorrow could be a really critical day, Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Tomorrow could be a big day, Wolf.

While the ball is clearly in the administration's court now, both congressional Democrats and Republicans have been consulting Secretary Paulson on how to help the automakers, and, as expected, pushing their respective plans to put conditions on the money.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): From Congress...

UNIDENTIFIED FEMALE: On this vote...

BOLDUAN: ... back to the president. A senior Democratic leadership aide tells CNN to anticipate an announcement Tuesday of the Bush administration's plans to help the auto industry.

But big questions remain concerning how much the administration will lend, where the money will come from and with what strings attached.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I think all the signals coming from the White House are that they know that bankruptcy is not an option and that TARP funds are the only recourse that they have.

BOLDUAN: House Speaker Nancy Pelosi, along with other Democratic leaders, are calling on the president to attach the restrictions of the House-passed rescue plan to any automaker loan. This could include appointing a car czar, deadlines for restructuring, and proving a return to profitability.

SEN. CARL LEVIN (D-MI), ARMED SERVICES COMMITTEE CHAIRMAN: Once the president makes a deal, he is not likely to walk away from it.

BOLDUAN: But Republicans want the administration to adopt provisions introduced by Tennessee Senator Bob Corker...

SEN. BOB CORKER (R), TENNESSEE: What we have offered is incredibly reasonable.

BOLDUAN: ... including the congressional deal-breaker, reducing autoworker wages to be more level with pay at the U.S. plants of foreign auto companies.

A top Senate Republican aide warns, if the administration doesn't adopt the Corker amendment, Republicans won't be motivated to devote any more money to the auto industry.

(END VIDEOTAPE)

BOLDUAN: The truth is, outside of pushing for what they want to happen now, Congress -- there is little Congress can do now. They have no congressional review over how the White House proceeds, nor what restrictions the White House decides to put on the money for the automakers -- Wolf.

BLITZER: Kate Bolduan on the Hill, she is going to be busy tomorrow on this story.

We're getting word right now of Caroline Kennedy's interest in the seat being vacated by Senator Hillary Clinton.

Let's go straight to Mary Snow. She's in New York working this story for us.

Mary, what are you picking up?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, Caroline Kennedy has spoken to several highly-placed New York Democrats today, telling them she wants to be considered for the soon-to-be vacated Senate seat held by Hillary Clinton. (BEGIN VIDEOTAPE)

SNOW (voice-over): Caroline Kennedy is ready to step into the public eye that she's worked to avoid for most of her life. The 51- year-old daughter of the late President John F. Kennedy told Democratic officials she's interested in filling the Senate seat now held by Hillary Clinton, assuming her nomination as secretary of state is confirmed.

New York Governor David Paterson has the power to appoint a replacement and says she has spoken with Kennedy.

GOV. DAVID PATERSON (D), NEW YORK: She told me she was interested in the position. She realized that it was not a campaign, but she was talking to other people, because she thought that a number of people, she felt, should know that she's interested in the position.

SNOW: Kennedy has largely stayed out of the public eye until this year, when she endorsed Barack Obama during the Democratic primaries and even campaigned for him.

CAROLINE KENNEDY, DAUGHTER OF PRESIDENT JOHN F. KENNEDY: I have never had a candidate who inspires me the way people tell me my father inspired them. But I do now.

SNOW: Kennedy is an attorney, author, and mother of three. She oversees her father's presidential library. And, in New York, she's worked to raise money through private partnerships for New York City public schools. The school chancellor, Joel Klein, says he was among those who encouraged her to run.

But some Democrats in New York have questioned her qualifications. And New York Democratic Senator Charles Schumer was asked whether he thought she was qualified.

SEN. CHARLES SCHUMER (D), NEW YORK: I think there are 12 candidates whose names have been mentioned. I think every one of them is qualified.

SNOW: One of the candidates whose name has been thrown out, State Attorney General Andrew Cuomo, who was once married to Kennedy's cousin, Kerry.

One Democratic strategist says one thing is certain. This will be a hotly contested seat.

HANK SHEINKOPF, DEMOCRATIC STRATEGIST: What you do know is Caroline Kennedy has no public profile, has never served in a legislative office. Frankly, nobody knows much about her. And the Kennedy name, well, this is not 1960 anymore. This is 2008.

(END VIDEOTAPE)

SNOW: And, in 2010, whoever replaces Senator Clinton will face a special election. New York Republican Congressman Peter King is interested. And, this afternoon, he told us that Caroline Kennedy's news today makes him more determined than ever to run. He told us he feels strongly that in his words no one has a hereditary right to a Senate seat -- Wolf.

BLITZER: Congressman Peter King, he is no shrinking violet, as all of us who have covered him over the years know.

Mary, thanks very much for that.

A major new ruling in favor of smokers -- what the U.S. Supreme Court has to say about big tobacco and the marketing of those so- called light cigarettes.

Plus, homeowners across the United States see the value of their greatest asset plunging -- sobering new numbers on the nation's housing crisis.

And the shoe-throwing incident, how will it affect President Bush's plans for his last days in office? Wow. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: It's an act full of symbolism, and now it's raising a flood of questions. How did an Iraqi reporter manage to throw two shoes at President Bush during a news conference?

And we're going to have more on Senator Hillary Clinton's potential replacement, Caroline Kennedy. JFK's daughter now said to be showing interest in filling Hillary Clinton's Senate seat. It's not a done deal, by any means, though. We will assess.

And wind chills at Siberian levels, sheets of ice. We're getting amazing images of the severe winter-like weather gripping the nation -- those pictures coming in from our I-Reporters.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now: president-elect Barack Obama fielding questions about the scandal surrounding the Illinois governor and contacts between the Obama transition team and that governor and his office. What did we learn today?

Also, as we reported, Caroline Kennedy calling about Hillary Clinton's Senate seat. But is she qualified? Can she win? All this coming up with the best political team on television.

And presidential security under the microscope after a reporter throws his shoes at President Bush during a news conference in Baghdad. How did this happen and why?

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

By now, I'm sure you've seen the video of President Bush ducking out of the way as two shoes are thrown at him as he gave a news conference with the Iraqi leader standing right by his side during that surprise visit to Baghdad.

CNN's Brian Todd is working this story for us.

He's checking in with sources -- how is it possible, Brian, that this could have happened?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, the Secret Service tells us that there were many layers of security at that press room in Baghdad -- that everyone there had been searched for weapons, had their I.D.s and credentials checked. Still, in the span of about two- and-a-half seconds, one agitator was able to cause a scare and set off a wave of security questions.

(BEGIN VIDEOTAPE)

TODD (voice-over): He got off two accurate shoe throws and a verbal insult before being swarmed.

Was security no match for an angry journalist?

An official with the Secret Service tells CNN the response from its agents was quick enough, even though the man was able to snap off a second throw. We ran that by Bill Pickle, a former Secret Service agent who headed Al Gore's protective detail during his 2000 presidential campaign.

(on camera): One throw you can understand.

BILL PICKLE, FORMER SECRET SERVICE ASSISTANT DIRECTOR: Like that.

TODD: Two, even though it was in quick succession, shouldn't an agent maybe have been there...

PICKLE: No. Physics.

TODD: ...even quicker?

PICKLE: It's pure physics. It's you -- again, it's two to two- and-a-half seconds. So you have a human reaction. You see something, you process it and then you react. It would be almost impossible, unless you knew it was going to happen, to respond any quicker.

TODD (voice-over): But this journalist, Muntathar al-Zaidi, caused a stir beyond this modest press room. Observers say images of this are plastered on Web sites and newspaper covers from Baghdad to Beirut. OCTAVIA NASR, CNN ARAB AFFAIRS EDITOR: More people are hailing him as a hero -- as a national hero -- someone who dared to pick up his shoe and throw it at the U.S. president and in the setting that he did it in. So, basically, people are saying that he represents them.

TODD: Others in the region are looking upon this as shameful -- against the Arab Muslim cultural dictates as treating guests as royalty. Experts also point to this image -- Iraqis pounding the fallen statue of Saddam Hussein with their footwear after Baghdad fell to U.S. forces in 2003. They say there literally could not be a more insulting gesture in the Muslim world than to be assaulted with one's shoe.

AKBAR AHMED, AMERICAN UNIVERSITY: The shoe is seen as unclean. When people go to a mosque, they take it off to say their prayers. The shoe was then aimed at striking the head, which is considered, in Islam, the repository of wisdom and knowledge.

(END VIDEOTAPE)

TODD: Akbar Ahmed says if this had happened on the street anywhere in the Muslim world, between two ordinary guys, it would have turned violent and escalated very quickly -- Wolf.

BLITZER: Brian Todd.

Thanks very much.

Amazing, amazing pictures from that news conference.

Let's take a closer look now at some other security incidents during the Bush presidency.

At his first inauguration, protesters, you might remember, forced the Bush motorcade to speed up. At one point, police were so concerned they actually had to stop that motorcade.

In Chile, a small scuffle broke out when the president grabbed his Secret Service agent after local authorities tried to block him from going into a dinner. You might remember that one, as well.

Most troubling, perhaps, was the tossing of the hand grenade into a crowd in the Republic of Georgia. Georgian authorities reported finding the grenade after the president's speech and said it was harmless. But the FBI later said the incident had posed a threat to the president of the United States.

I want to go to our senior White House correspondent, Ed Henry.

He's got more now on what the White House is saying about the shoe incident -- Ed?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, this incident is awful timing because it comes just as some of the president's former top aides are trying to step up their efforts to defend his legacy. (BEGIN VIDEOTAPE)

HENRY (voice-over): Critics of the Iraq War are no longer just hurling verbal insults at the president -- they're firing shoes at his head. But even before Sunday's incident, a loyal group of former aides had been rallying to Mr. Bush's defense -- trying to burnish his image.

ARI FLEISCHER, FORMER WHITE HOUSE PRESS SECRETARY: I think one of President Bush's legacies, he -- because he hung so tough on Iraq -- has now made it very likely that Barack Obama will be able to -- thank God -- bring our troops home, but home in a position of victory.

HENRY: CNN has learned this coming Friday night, the president will host a pre-Christmas dinner with a slew of his former and current senior aides -- a final White House reunion for Ari Fleischer, Karl Rove, Dan Bartlett and Karen Hughes, among others -- just days after the president's farewell tour of Iraq.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: The war is not over. But with the conclusion of these agreements and the courage of the Iraqi people and the Iraqi troops and American troops and civilian personnel, it is decisively on its way to being won.

HENRY: Immediately after that statement, however, an Iraqi journalist threw both of his shoes at the president and called him a dog. The president later noted the mood of the Iraqi people could not be judged by one protester. But it was a dramatic reminder of the mixed legacy for a president who's been getting sentimental since shortly after the election.

BUSH: I will be honored to stand with you at the finish line. May God bless you.

HENRY: A mood likely to continue at Friday night's celebration with staff.

FLEISCHER: I think It's going to be very nostalgic. I wouldn't be surprised if the president tears up. He's going to remember what it was like for him coming here on January 20th, 2001.

HENRY: And there's just been an addition to the president's schedule for Thursday -- a speech touting his domestic policy achievements. But there again, a mixed legacy, especially on the economy -- dozens of months of job growth now wiped out by the recession -- Wolf.

BLITZER: Ed Henry at the White House for us.

Thank you.

President-Elect Barack Obama answering questions about his staff and contacts with the embattled Illinois governor.

So what did we learn today? Plus, some Democrats questioning Caroline Kennedy's experience and qualifications now that she's formally expressing interest in filling in Hillary Clinton's Senate seat. The best political team on television is here to discuss that and more.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: But there is nothing in the review that was presented to me that in any way contradicted my earlier statements that this appalling set of circumstances that we've seen arise had nothing to do with my office.

(END VIDEO CLIP)

BLITZER: President-Elect Barack Obama speaking about 90 minutes or so ago about contacts between his transition staff and the office of the embattled Illinois governor, Rod Blagojevich.

Let's discuss what's going on.

Joining us, Karen Tumulty of our sister publication, "Time" magazine, along with our political contributors Dana Milbank of "The Washington Post" and Steve Hayes of "The Weekly Standard".

What do you think of the way this is handling -- this has been handled on this day, Karen?

KAREN TUMULTY, "TIME" MAGAZINE: Well, it was really interesting, because the Obama -- the Obama transition office was actually originally intending to release all this information today.

BLITZER: They wanted to.

TUMULTY: Today, in fact. And it was just at the very last minute, when Greg Craig, the incoming White House counsel, told the U.S. attorney's office in Chicago that that's what they intended to do, that they were asked to please not do that...

BLITZER: And Patrick...

TUMULTY: ...for another...

BLITZER: Patrick Fitzgerald, the U.S. attorney, saying, you know, hold off at least for a week, because I've got to do some interviews.

DANA MILBANK, CNN CONTRIBUTOR "WASHINGTON POST": And in the process, he's given them an absolutely brilliant strategy. There's going to be a Christmas Eve dump now and nobody is going to pay any attention to this.

So either there was somebody hey, you know, maybe you should ask us to hold off for a week or they're extraordinarily lucky.

BLITZER: But you're not suggesting that Patrick Fitzgerald is in any sort of conspiracy with the Obama transition team, are you?

MILBANK: Well, as we discussed earlier, maybe he's gunning for that Senate seat. But, no, no. Nobody can seriously...

BLITZER: No. He's a straight -- you know, as straight as they come.

MILBANK: He is absolutely.

TUMULTY: Correct.

MILBANK: But it's not clear to me whether he said seven days or whatnot -- or perhaps the 24th of...

BLITZER: The week of...

MILBANK: ...of Christmas. It would be a very good time.

BLITZER: The week of the 22nd or something like that.

MILBANK: When he happens to be on vacation.

BLITZER: Yes. Well, that's all right. Everyone is entitled to go away on vacation.

(LAUGHTER)

BLITZER: And he's been working pretty hard.

It does say to me -- and I don't know if you're as skeptical about this as I am, or as worried as you -- as I am -- that Patrick Fitzgerald has something he's up to that he needs a week to try to resolve, you know, before these dates and this chronology is made public.

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Yes. I think so. I mean I think there's reason to be at least a little skeptical of the official story. It is a benefit to give them this -- this dump during Christmas week. But, yes, I would think there's -- this has got to be a very intense time for Patrick Fitzgerald, having gone public with, you know, a bulk of information. We now know that he's probably doing follow-up interviews and trying to squeeze people -- did you talk to so and so, did you talk to so and so?

So it's probably, on balance, not helpful for him to have more of this going on now.

BLITZER: And we know, based on his experience with the "Scooter" Libby investigation, perjury is something that they're very sensitive to. They -- they want to make sure that if they're questioning people before grand juries or whatever, that it sort of all likens up.

TUMULTY: Right. And that, you know, if there are more than one party involved here, that people won't have a chance to get their stories straight before they go into the grand jury. So the Obama people are absolutely assuring reporters today that what is -- what is in this information -- it was described to me as "milk toast stuff."

BLITZER: Yes. They looked pretty confident. If you saw Rahm Emanuel standing on the sidelines with David Axelrod...

MILBANK: Right.

BLITZER: ...and the others, they were...

HAYES: Yes.

BLITZER: ...they were pretty confident that this is not going to be a problem for them.

MILBANK: And there's all evidence that that's the case. There's a new "Washington Post" poll -- 51-34 percent say that he's said enough already. And it's almost sort of like this strategy of boring people to tears -- a press conference every day; you know, have some Energy secretary we've never heard of give a long acceptance speech.

I'm not sure the reporters are going to want to ask him another question about this at tomorrow's news conference.

BLITZER: Because he's going to announce his Education secretary tomorrow.

And -- but what did you think of the message, though, he sent by his new energy and environment team, the people he selected today?

HAYES: Well, I think, certainly, this is a group that's more likely to please the left side of the Democratic Party than his national security team. I mean he's got people who are veterans of the Clinton administration, people who are well-respected in their fields and people who are, I think, sort of bullish on the things that matter to liberal environmentalists.

So I think the left is going to be happy today.

BLITZER: I want somebody to investigate -- when was the last time a Nobel Prize winner has been in the cabinet of a -- do you know the answer to this?

TUMULTY: I -- well, no, but I think that is -- that is important there. Because I think the signal that they are trying to send here, too, is that they are going to ground this administration's approach toward energy in the science. And that is certainly something that the Bush administration has been accused of not doing.

BLITZER: Is it a slam dunk that Caroline Kennedy will be the next senator from or New York State?

MILBANK: Very hard for Governor Paterson to sort of stop this bandwagon, I think.

BLITZER: Is this train leaving the state?

HAYES: Yes, I think it's more likely than not. I mean, certainly, you wouldn't want to be the governor who denies her the opportunity to be the next senator.

BLITZER: Karen?

TUMULTY: I think so. I think so. There's a real question, though. I mean, she seemed to be the one Kennedy who had not inherited the politics gene. I -- it's really hard to picture her out there on the campaign trail doing all the kind of drudge work that goes with politics -- calling up the donors, you know, touring the little hamlets.

It will be -- it will be interesting to see.

BLITZER: I want to see her in my home -- old hometown of Buffalo, New York, going into some of those little pubs over there and shaking...

MILBANK: In the winter.

BLITZER: ...shaking hands. That's right.

All right, guys.

Thanks very much.

Arctic temperatures and no power for residents in parts of the Northeast. We have some new iReporter pictures coming in. Devastating ice storms making life miserable right now.

Plus, the hour's question -- what's up with Senator John McCain unveiling -- unwilling, that is -- to say he'll support his former running mate? That's Jack's question. The "Cafferty File" and a lot more, coming up.

(COMMERCIAL BREAK)

BLITZER: Lou Dobbs is getting ready for his show, that begins right at the top of the hour -- Lou, what are you working on?

LOU DOBBS, CNN ANCHOR: Thank you, Wolf.

Tonight, impeachment -- the Illinois state house -- the first step to remove Governor Blagojevich is underway. The Obama transition team says the president-elect's staff has no inappropriate discussions with the governor -- or had none. We'll have complete coverage of that.

Also, no deal for the auto industry yet. The White House has again delayed aid for the nation's auto industry.

And it could be the largest Ponzi scheme in history. Tonight, we'll be telling you about that $50 billion fraud -- some of the nation's best known names losing millions and millions of dollars. And four of the best political minds in the country join me to assess what in the world is going on in this country, in case you've noticed something just a little odd about these times we're living in.

Join us at the top of the hour for all of that, all the day's news and more, from an Independent perspective -- Wolf, back to you.

BLITZER: Lou, we'll see you in a moments.

Thank you.

DOBBS: You got it.

BLITZER: Let's check in with Jack Cafferty.

He's got "The Cafferty File" -- Jack.

CAFFERTY: The question is: What's up with Senator John McCain being unwilling to say that he'll support his former running mate, Sarah Palin?

George Stephanopoulos asked him the question twice yesterday on ABC and twice Senator McCain ducked it.

Dave in Florida writes: "It's about the smartest thing he's done since he became a candidate a few years ago."

Sherrol in Canada: "Funny, he didn't have a problem with her when she was his running mate, stirring up division and putting her stamp on polarization. Again, it says a lot about the man who wanted to be president, the man who knows where the wind blows, who would do anything to get what he wants."

Alex writes: "Sarah Palin damaged McCain's chances of winning. And, as a result, McCain wants to return the favor by damaging Palin's chances of winning the presidency in 2012."

Jeremiah in Virginia: "I think he is still upset about not winning the presidency. He went all in when he chose Palin to be his V.P. in an attempt to capitalize disappointed Hillary supporters. He ended up losing his shirt."

Susan in Tuscaloosa, Alabama: "McShane was not about foisting Daisy Mae Mooseburger off on the rest of us in order to solidify the right-wing nut GOP base. I guess now that he knows he'll never be president no matter how much of his soul he sells out, he's back to putting country ahead of expediency. Personally, I'd like to see Trailer Park Barbie as the next Republican nominee. It would make 2012 a cake walk for Obama's reelection."

Barbara in Massachusetts: "This is as plan as the nose on your face -- she's not qualified, period. He doesn't need her now or ever again."

And David in Texas: "Jack, Jack, Jack, why doest thou persist in perpetuating the Palin anomaly? Please just let it go. Just let her fade back into the six months of obscured darkness from whence she came."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there, among hundreds of others -- Wolf.

BLITZER: Jack, thanks.

CAFFERTY: Your welcome.

BLITZER: All right. This just coming into THE SITUATION ROOM.

The vice president, Dick Cheney, has given ABC News an interview and confirming now publicly that the Bush administration did engage in the very controversial interrogation tactic of waterboarding.

Listen to this exchange.

(BEGIN VIDEO CLIP)

JONATHAN KARL, ABC NEWS CORRESPONDENT: Did you authorize the tactics that were used against Khalid Sheikh Mohammed?

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: I was aware of the program, certainly, and involved in helping get the -- the process cleared, as the agency, in effect, came in and wanted to know what they could and couldn't do. And they talked to me, as well as others, to explain what they wanted to do. And I supported it.

And there was a period of time there, three or four years ago, when about half of everything we knew about Al Qaeda came from that one source.

So it's been a remarkably successful effort and I think the results speak for themselves.

KARL: In hindsight, do you think any of those tactics that were used against Khalid Sheikh Mohammed and others went too far.

CHENEY: I don't.

KARL: And on KSM, one of those tactics, of course, waterboarding -- was waterboarding. And that seems to be a tactic we no longer use.

Even that, you think, was appropriate?

CHENEY: I do.

(END VIDEO CLIP)

BLITZER: There you have it. The vice president of the United States speaking bluntly on this controversial interrogation tactic of waterboarding.

We'll stay on top of this story and see what the fallout is.

Let's get to our I-Report Hot Shots right now. Many people are shivering across the country and freezing temperature is out there. Temperatures fell below zero in parts of the Midwest and the West and in the Northeast, as well. Many people are still trying to recover after an ice storm.

Our Internet reporter, Abbi Tatton, has the latest on what's happening out there -- some of these pictures, Abbi, are really scare.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, it's a lot warmer in the Northeast today. But, still, hundreds of thousands of people waiting for the power to come back on.

Over the weekend, Erik Shifflet drove on this highway in New Hampshire for 50 miles, he said, without seeing any electricity on at all -- no house lights, no traffic signals. Erik is with his family in Manchester, New Hampshire, hasn't had power since last Thursday, doesn't expect it back until Friday.

In Methuen, Massachusetts, Jennifer Plouffe shows us what it's like in her neighborhood -- what the rescue crews are dealing with -- trees down in street after street.

And in Amherst, Massachusetts, Stephanie Wales here shows us why so many people's power is out. The tree there literally balanced on the power line. Stephanie telling us that she's not in a rural area. She's just off the highway. But still not expecting her lights to come back on for days.

BLITZER: I hope they get -- they're OK.

All right, thanks very much, Abbi, for that.

And thanks to all of our I-Reporters, as well.

We've been seeing this shocking image over and over -- an insult literally hurled at the president. Jeanne Moos is standing by. She'll have a "Moost Unusual" look at the incident that has everyone talking.

(COMMERCIAL BREAK)

BLITZER: It was a "Moost Unusual" incident -- shoes flung at the president as he made a farewell trip to Baghdad.

CNN's Jeanne Moos looks at an unlikely weapon.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): The weapons of mass destruction finally surfaced...

(VIDEO CLIP)

MOOS: ...and we in the press couldn't get enough.

UNIDENTIFIED FEMALE: Nearly Bush whacked in Baghdad.

MICHAEL WARE, CNN CORRESPONDENT: Talk about reinventing duck and cover.

MOOS: Duck was all over the covers of newspapers. There were good puns...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Shoe aside (INAUDIBLE).

(END VIDEO CLIP)

MOOS: And ones we had to struggle to get. It turns out shoe- nibomber is a play off on the Unabomber.

At Beano's Shoe Repair, President Bush's image got polished.

UNIDENTIFIED MALE: I thought is -- he was deft and he was very agile.

UNIDENTIFIED MALE: He was very graceful, actually. I didn't know he had it in him.

UNIDENTIFIED FEMALE: Oh, yes. That was a pretty good dodge, all right. Dodging and weaving -- I mean he has done that through his whole administration, but we've never actually seen it filmed.

MOOS: Critics loved seeing it.

UNIDENTIFIED FEMALE: I would have liked to have done it myself.

UNIDENTIFIED MALE: But I think he threw one for the world.

UNIDENTIFIED FEMALE: He deserves it.

MOOS: Good thing it wasn't a female shoe-i-side bomber.

(on camera): This would be a perfect shoe to throw at someone.

(voice-over): The first movie clip everyone thought of...

(BEGIN VIDEO CLIP FROM "AUSTIN POWERS MAN OF MYSTERY," COURTESY NEW LINE CINEMA)

UNIDENTIFIED FEMALE: Look out!

(END VIDEO CLIP)

MOOS: ...was Austin Powers.

(BEGIN VIDEO CLIP FROM "AUSTIN POWERS MAN OF MYSTERY," COURTESY NEW LINE CINEMA)

UNIDENTIFIED MALE: Who fills this shoe?

(END VIDEO CLIP)

MOOS: The next thing you know, on YouTube... (BEGIN VIDEO CLIP FROM YOUTUBE.COM)

UNIDENTIFIED FEMALE: Look out!

MOOS: ...the Austin Powers George Bush hybrids bloomed.

(BEGIN VIDEO CLIP FROM YOUTUBE.COM)

UNIDENTIFIED MALE: Who fills this shoe, honestly?

You fight like a woman.

(END VIDEO CLIP)

MOOS: Instead of shoes, Saddam Hussein's head was thrown. The Three Stooges were edited into the act. In no time at all, there was a Bush shoe target purse and even the official George W. Bush shoe throw game. You try to hit the president with the shoe.

(on camera): Would you dare toss these shoes?

UNIDENTIFIED FEMALE: They're expensive. I wouldn't toss them.

MOOS: And now the Secret Service, let's say I don't like their reaction.

UNIDENTIFIED MALE: They were having cigarettes and coffee.

UNIDENTIFIED FEMALE: How do you let someone throw two shoes at the president?

MOOS: As for where the now famous shoes should end up...

UNIDENTIFIED MALE: I think they should be impeached along with Bush.

UNIDENTIFIED FEMALE: They probably need to go in like the Smithsonian or something.

UNIDENTIFIED FEMALE: And you know how you can like bronze baby shoes?

MOOS (on camera): Yes.

UNIDENTIFIED FEMALE: Like bronze those.

UNIDENTIFIED FEMALE: I think they should auction them off to raise money for the car industry.

MOOS (voice-over): Actually, they're being held as evidence. It could have been worse if the Iraqi had done what this Minor League manager did. Nah, not shake his shoe, but say, "You stink," with an armpit offensive.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: Leave it to Jeanne Moos.

Thank you, Jeanne.

We want you to check out our CNN political pod cast. To get the best political team to go, you can subscribe at CNN.com/situationroom. I think you'll enjoy it if you haven't done it yet.

Thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT"' -- Lou.

DOBBS: Thank you, Wolf.

Tonight, the Obama transition team says the president-elect had no contact with Illinois Governor Blagojevich over the successor to Senator Obama's seat. The Illinois House takes the first step toward impeaching the governor and removing him from office. We'll have complete coverage of those developments.

And tonight, still no deal for the auto industry. The White House has again delayed a bailout for the car industry.

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