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Obama Picks Agriculture Secretary; Caroline Kennedy Campaigns For Clinton's Senate Seat

Aired December 16, 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 are in THE SITUATION ROOM.
Happening now: the breaking news we are following, an informant against the embattled Illinois governor revealed this hour, Congressman Jesse Jackson Jr.'s newly disclosed role in the bombshell corruption investigation. Stand by for details.

Also, new information about Barack Obama's Cabinet. We are going to tell you the latest on what is going on.

And is President Bush scolding his longtime political adviser Karl Rove when it comes to the war in Iraq? We will have some of Candy Crowley's exclusive interview with the president. All that and the best political team on television.

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

Up first this hour, the breaking news in the corruption investigation of the Illinois governor. Congressman Jesse Jackson Jr. has firmly and emotionally denied any wrongdoing whatsoever. Now sources are revealing that Jackson does have a connection to the startling investigation that we didn't know about before.

Our national correspondent, Gary Tuchman, is joining us now from Springfield, Illinois.

Gary, tell our viewers in the United States and around the world what you are learning.

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Well, Wolf, Jesse Jackson Jr., who says he is cooperating fully with this investigation of the Senate seat for sale, may be cooperating in more ways than most expected.

According to sources close to the Illinois congressman, Jackson has worked as an informant with the feds for more than a decade, not regarding this particular investigation, though, but he has informed on Governor Rod Blagojevich in the past. This informant was confirmed to us this fact by a spokesman for Jackson, Kenneth Edmonds.

Now, another source close to Jackson gets more specific. He says back in 2002, Jackson's wife, Sandi, was being considered to be the director of the Illinois Lottery Committee. The source tells us it was known to Jackson that he should donate $25,000 to Blagojevich's first campaign for governor.

Jackson did not and Jackson's wife did not get the job. Now, after Blagojevich was elected, this source tells us the governor ran into Jackson and told Jackson something like, you see what $25,000 could have done? But although Jackson was talking to the U.S. attorney's office about local corruption matters at that time, he didn't tell authorities about what he felt was a pay-to-play attempt by the governor, that is, until 2006, Wolf.

That's when infamous developer Tony Rezko was on trial for fraud and corruption -- $25,000 contributions to the governor were being discussed in the trial. It jogged Jackson's memory, according to the sources. And that is what he reported it in 2006, what he thought was an alleged shakedown attempt years earlier.

Now, you may be wondering, why has Jackson been supportive of his fellow Democratic governor for the last six years if all this is true? Well, the source does tell us Jackson did not endorse Blagojevich in 2002 and his reelection bid in 2006, he tried to sit on the sidelines of the gubernatorial race.

Now, what does the Justice Department say about whether Jackson has been an informant? Well, they won't confirm it to us. They also won't deny it to us. And the governor's attorneys has not returned our calls when we asked them about this matter.

Now, Jackson was indeed hoping Blagojevich would pick him as a senator, but why did he think it would be a fair process, Wolf, if his accusations are true? That still is not clear to us.

BLITZER: Lots of questions still to be answered.

Gary, stand by. We're going to get back to you.

ANNOUNCER: This is CNN breaking news.

BLITZER: And there is more breaking news coming into THE SITUATION ROOM right now.

I want to go right to Chicago. Jessica Yellin is covering the transition to power for us.

What are we learning right now, Jessica?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Wolf, two sources confirm to CNN that Tom Vilsack, the governor of Iowa, is going to be named secretary of agriculture designee by Barack Obama.

He is, as you know, in addition to being the secretary -- in addition to being the governor of Iowa, a man who has championed the development of ethanol, an alternative energy, in Iowa, something that should dovetail with Barack Obama's vision for an energy-independent future, and something he can no doubt promote from the Department of Agriculture.

This leaves I believe two seats left on the Cabinet level that Barack Obama has yet to name people for. That would leave Labor and Transportation. He is going to be rolled out tomorrow. Vilsack will be rolled out, along with Ken Salazar, who we understand will be Obama's choice for the secretary of the interior -- Wolf.

BLITZER: Interesting. Vilsack, he was a supporter of Hillary Clinton in the race for the White House; is that right?

YELLIN: He and his wife, I believe, were active in the campaign, correct, and they divided their support, but now everybody in the Democratic Party is behind Barack Obama.

BLITZER: Yes, it's interesting stuff. And Ken Salazar, as you say, the governor of Colorado, tapped to become the secretary of the interior as well.

And amidst all of this, today, the president named the new secretary of education, even as he was having to deal once again with the whole Rod Blagojevich scandal.

YELLIN: That is right, Wolf. And, today, Obama wrested control of his message quite aggressively. He even interrupted a reporter to make sure that he stayed on his theme, which was education.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): At this Chicago school, President-elect Obama got friendly questions from one audience.

UNIDENTIFIED MALE: How will you feel when you move to the White House?

YELLIN (voice-over): But he had a rockier ride with another. He shut down a reporter who asked about contact his aides may have had with the governor's office.

BARACK OBAMA (D), PRESIDENT-ELECT: John, let me just cut you off, because I don't want you to waste your question.

YELLIN: Instead, the president-elect kept a tight focus on his agenda, naming his educator in chief, Chicago friend and basketball buddy, Arne Duncan, who once played professionally overseas.

OBAMA: I just want to dispel one rumor before I take questions. I did not select Arne because he's one of the best basketball players I know.

(LAUGHTER)

YELLIN: Duncan has run the Chicago school district for years, earning a reputation as a reformer and a centrist who has produced results. Scores are up, dropout rates are down.

ARNE DUNCAN, EDUCATION SECRETARY NOMINEE: It is the civil rights issue of our generation, and it is the one sure path to a more equal, fair and just society.

YELLIN: He has backed controversial policies, including paying students for good grades, closing failing schools, opening charters.

OBAMA: Let's not be clouded by ideology when it comes to figuring out what helps our kids.

YELLIN: The most controversial? He supported the creation of a gay-friendly high school. Proponents say it would have been a safe place for gay and lesbian teenagers who have experienced bullying. Duncan tells CNN, This is a kind of innovative idea we will look at and evaluate on the national level.

One reporter asked Obama, if he thinks so highly of Duncan's accomplishments, why didn't he send his girls to public schools?

OBAMA: First of all, I think Arne, Joe, myself all agree that the Chicago public schools aren't as good as they need to be.

(END VIDEOTAPE)

YELLIN: Now, Obama was also asked if he plans to name a Republican, another Republican, to sit on the Cabinet, as he said during the campaign he wants to have a bipartisan administration. He basically said, stay tuned.

Now, with the Vilsack post, we know that there are only two opportunities left now for him to add another Republican to his Cabinet -- Wolf.

BLITZER: We will watch tomorrow. Ken Salazar, the senator from Colorado, not the governor. I misspoke just a little while ago. A little snow in Chicago, which is beautiful.

YELLIN: Yes.

BLITZER: Let's go to Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: There is no denying, Wolf, that the Internet has changed all of our lives, information just a click away. People less sleep because they are logged on late at night after they should have gone to bed.

In fact, the Internet is so popular that some people prefer it to sex. Say what? That is correct. More than 2,000 adults were questioned in a survey by Harris Interactive -- 46 percent of women say they would rather give up sex for two weeks than give up Internet access.

Men apparently prefer sex a little more. Only 30 percent of men were willing to practice abstinence vs. losing their Internet access. But it's not just about sex, although without that hook, we probably would not have bothered to do this story at all.

Television is losing ground, too. Respondents, same survey, said they would be willing to give up two weeks of TV over one week of Internet use. The survey was commissioned by microchip maker Intel to gave America's reliance on the Internet -- 87 percent of those questioned said the Internet saves them money, which could make the World Wide Web even more important, since we're in the midst of a global recession and everybody is looking to save a buck any way they can.

Anyway, here is the question. Which would you be willing to give up for two weeks, sex or the Internet?

Go to CNN.com/caffertyfile and post a comment on the blog.

And what is your answer to that question, Wolf?

BLITZER: Just how dependent have we become on the Internet? Is that the question you are asking?

CAFFERTY: No, no, which would you be more willing to give up for a period of two weeks, not how dependent...

(CROSSTALK)

BLITZER: I know. Let me think about that. I will get back to you, Jack. Stand by.

CAFFERTY: Yes. OK.

(LAUGHTER)

BLITZER: All right.

You won't instantly be richer, but it will help you keep more money in your pocket. We're going to have more on what the government did today and how it benefits you. Our Ali Velshi is standing by.

And one man says there was -- quote -- "financial murder" in his home. Victims of a potentially $50 billion investment scheme are speaking out to CNN.

And you're also going to hear what President Bush is saying how he felt when he found out the truth about those weapons of mass destruction or lack thereof in Iraq. It is a CNN exclusive right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Investigators are coming through the books of the money manager accused in a $50 billion fraud scheme on Wall Street. They tell CNN that Bernard Madoff faked documents to hide massive losses to investors and they say it could take months to unravel the trail of paper and the deceit.

Some of the rich and powerful people who say they were bilked by Madoff now are venting their anger.

CNN's Deborah Feyerick has been looking into this alleged crime that is going on.

And it is shocking as we get more and more details, Deb. DEBORAH FEYERICK, CNN CORRESPONDENT: Absolutely, because the number of the people who were affected actually ran foundations, Jewish charities and foundations primarily affected, but the impact is really going to be felt by people who never even knew the name Bernard Madoff, people who have disabilities or victims of domestic violence, people who benefited from these foundations, from the kindness of strangers.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): They have all taken a hit -- hospitals, universities and religious schools, senior centers, even human rights programs providing legal help to Guantanamo detainees. All relied on money from Jewish charities. All are now tallying their losses, figuring out how to survive the alleged Bernie Madoff Ponzi scheme.

MORT ZUCKERMAN, EDITOR-IN-CHIEF, US NEWS WORLD REPORT : The purpose of all of that money in this charitable fund was to do good work, not to have it siphoned away by some crook.

FEYERICK: The charity run by real estate mogul Mort Zuckerman lost $30 million, about 10 percent of its value, because of the alleged fraud. He is one of several prominent Jewish donors including filmmaker Steven Spielberg and Holocaust survivor and humanitarian Elie Wiesel, whose charities have been hurt, if not devastated, by the Madoff scandal.

(on camera): So these are the offices that you were planning on selling back here.

ROBERT CRANE, JEHT FOUNDATION. They're not going filled yet.

FEYERICK: They're not going to be filled.

CRANE: Not by us, anyway.

FEYERICK: Robert Crane of the Levy-Church JEHT Foundation in Manhattan got the devastating news the charity was done the same day investors learned they lost virtually everything.

CRANE: We spent all weekend figuring out how we could reasonably put an end to the -- cease the work of the foundation in a way that was respectful to all the people that we fund, and to the staff and to our colleagues in philanthropy.

FEYERICK: The JEHT Foundation, which operated on money supposedly invested by Madoff, was distributing $20 million to $30 million a year to more than 150 organizations dedicated to human rights. Now all of those charities will suffer, as well, charities like the Innocence Project free wrongly imprisoned individuals and groups helping Guantanamo detainees.

(END VIDEOTAPE)

FEYERICK: And because Bernard Madoff was well-known and respected in prominent Jewish communities, a number of Jewish day schools and community centers, like the JCC, invested with him, Yeshiva University reportedly lost more than $100 million on investments in Madoff's funds.

Now everybody trying to figure out just what that means and how they are going to get on.

BLITZER: It's amazing. And I think this is just the tip of the iceberg, what we are learning right now.

All right, Deb, thank you.

An unprecedented move by the Federal Reserve today that sent shock prices shooting up. The fed unexpectedly cut a key interest rate to its lowest level on record.

Let's go to our chief business correspondent, Ali Velshi. He is standing by in New York with more.

What is the bottom line on what is going on, Ali?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: The bottom line is the Fed has cut its interest rates to near zero, something we have never seen before.

Interesting, though, it didn't set an exact number like it normally does. It said it's going to be between zero and a quarter of a percent percentage point. Now, how that affects you is that the prime is usually 3 percentage points -- always 3 percentage points higher than the Fed rate. That has been set at 3.25 percent right now.

So, if you a loan that is connected to the prime rate, maybe prime plus five or something like that, you will see an immediate decrease in that. Most mortgages, fixed mortgages, are not financed in this way, so they are not affected. And any kind of loan you have, a consumer loan or credit card that is not tied to prime won't necessarily go down.

We hear many credit cards in fact have been going up, as opposed to down, so this affects people who have loans that are tied to the prime rate -- Wolf.

BLITZER: Consumer confidence is down. Business confidence is down. Everybody seems to be very gloomy, so what else is the Fed doing to try to boost confidence?

(CROSSTALK)

VELSHI: It's interesting that we used to talk consumer confidence as one of the many indicators in the world of business. Now we realize how important confidence is.

The Fed has gone beyond its normal role of having -- being as I describe it a car with no steering wheel and no gears, just gas and brakes basically, lowering and raising interest rates. What they're doing now is, they have done a lot of other things. They have cut interest rates, obviously, as we have seen here.

They have injected funds directly into the financial system. They have started lending money directly to businesses. Businesses could not go to Fed to borrow short-term money. They had to go to investment banks and find investors. Now the Fed is doing that as well.

They are bailing out the financial industry. And they are offering -- they are buying up loan money, loan packages from Fannie Mae and Freddie Mac, allowing Fannie and Freddie to then take that money and buy more loans from the banks, allowing banks to offer more mortgages to people. So, it is all in an effort to try and get credit flowing all the way down the system to businesses and to individuals.

BLITZER: And how will this affect those businesses in the short term, medium term, no only businesses, but consumers out there?

VELSHI: Well, in theory, I will tell you how it works.

Obviously lowering interest rates makes it cheaper to borrow money. And if you save that money, if you are a business and you borrow a lot of money, the saving is fairly substantial. You are theoretically suppose to reinvest and expand your business and hire more people.

Obviously, we are seeing nothing but job losses these days. That is why I say theoretically. The same thing happens for people. They save money because their interest payments are lower if you get that lowering in your prime rate. And that should make you spend more money, but again, we have heard that people are having even with good credit ratings difficulty in borrowing money, so it doesn't actually matter that the interest rate is lower if people can't get access to that credit.

So, in theory, that is how it is supposed to help. In practice, we have not seen this or the previous nine Fed cuts over the last 15 months actually have the desired effect -- Wolf.

BLITZER: Yes. People are getting ready for 2009 and they're worried about it, as they should be. Ali, thank you.

VELSHI: Right.

BLITZER: Guess who is a huge fan of Caroline Kennedy? He's one of the most powerful man right here in Washington, and he wants her to replace Hillary Clinton badly enough that he has called New York's governor to try to convince him.

And there may not be any hanging chads, but there are certainly other problems with those disputed ballots in the Minnesota Senate race. You will see some of them.

And thousands of new pages regarding the Holocaust. Officials say they are being put out for one main reason, as a reminder that criminals who murder Jews will face justice.

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

(COMMERCIAL BREAK)

BLITZER: Caroline Kennedy has at least one big supporter of her bid to become the next U.S. senator from New York. He is one of the most powerful men in Washington right now and he is simply gushing about the prospect of having Kennedy replace Hillary Clinton.

Let's go to New York. Mary Snow is working this story for us.

What do we know, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, it is a big boost for Caroline Kennedy, Wolf. Senate Majority Leader Harry Reid is weighing in. He has revealed he wants Caroline Kennedy to replace Senator Hillary Clinton, who is president-elect Obama's choice to be secretary of state.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Caroline Kennedy now has the backing of the most powerful Democrat in the Senate. Majority Leader Harry Reid says he called New York Governor David Paterson urging him to appoint Kennedy to Hillary Clinton's soon-to-be vacant Senate seat. He made the comment in an interview on "Face to Face with Jon Ralston."

(BEGIN VIDEO CLIP, "FACE TO FACE WITH JON RALSTON")

SEN. HARRY REID (D-NV), MAJORITY LEADER: We have a lot of stars from New York, Bobby Kennedy, Hillary Clinton. I think Caroline Kennedy would be perfect.

(END VIDEO CLIP)

SNOW: In New York, some Hillary Clinton supporters are not so enthusiastic, and still feel the sting of Kennedy's endorsement of Obama.

UNIDENTIFIED FEMALE: I don't think she has the experience, and I think it would be a slap in the face to Hillary to give her the job.

SNOW: And as for Senator Clinton, she is not commenting on the process. Her spokesman has said it is entirely Governor Paterson's decision. And she has not commented on any individual candidate.

A person familiar with the replacement process says, supporters who made anti-Caroline Kennedy comments were immediately rebuked by the Clinton team, which included Congressman Anthony Weiner and Robert Zimmerman, a CNN contributor, DNC member, and Clinton supporter.

Weiner was not available to respond, but Zimmerman says he is not speaking for Clinton when he questioned Kennedy's qualifications.

ROBERT ZIMMERMAN, CNN CONTRIBUTOR: That's her challenge, to demonstrate her qualifications, her passion, her experience that enables her to hold this particular post. SNOW: Former New York City Mayor Ed Koch, who supported Clinton, chided critics who questioned Kennedy's qualifications.

ED KOCH (D), FMR. NEW YORK MAYOR: I say it's baloney. I say she's as qualified as any of those in the Senate.

SNOW: Koch says he favors either Kennedy or State Attorney General Andrew Cuomo over the roughly dozen potential candidates. As one political observer notes, while it is not an election, the lobbying efforts make it feel like one.

UNIDENTIFIED MALE: This is a very weird non-campaign campaign. Everybody says, oh, it is not a campaign, but of course it is. There is an electorate of one, which is truly bizarre.

(END VIDEOTAPE)

SNOW: And that electorate of one of course is New York's governor, David Paterson.

To make her case, Caroline Kennedy has hired a political consultant who has worked for other New York politicians, including Senator Schumer and New York Mayor Mike Bloomberg -- Wolf.

BLITZER: We will see what the governor decides. It is totally, as you say, up to him.

The announcement of a winner in the only unresolved U.S. Senate race is still seen as at least several days away, maybe even longer. Tomorrow, the Minnesota Supreme Court will hear arguments in a battle over some 1,600 absentee ballots. And officials are reviewing more than 1,000 ballots being challenged by Democrat Al Franken and Republican Norm Coleman, Norm Coleman the incumbent.

Abbi Tatton is following these developments online.

It is fascinating stuff, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, this has been going on all afternoon, a state canvassing board in Minnesota looking one by one at hundreds of these challenged ballots, trying to work out what the voter intended when they filled them out.

This is the kind of thing they're up against. In this one, Norm Coleman is marked, as is Democrat Al Franken, but then there is a line through it. Is that line through Al Franken's name or is it emphasizing it, underlining it? That one is challenged by the Franken team.

In some cases, the voter intent seems very clear, Al Franken marked here, but someone noting that's just because he is on the Democratic ticket, that one challenged by the Coleman team for marking or identifying the ballot, which is not allowed.

Then there's this one, which when it was posted online caused a lot of people to comment, this person marking the ballot for Al Franken, but also writing in "Lizard People," if you can see that at the bottom.

What was the intent of that voter? Well, the canvassing board has just wound up their activities for the afternoon. They got through about 170 of these ballots, many hundreds to go, and, Wolf, that board just advising the representatives of both campaigns to limit any frivolous challenges, because they think they're never going to get this done.

BLITZER: We might not know for a while.

TATTON: It could be some days.

BLITZER: All right, Abbi, thank you.

Coming up, unsolved cases of accused Nazi war criminals hunted down in the United States, never brought to justice, we have newly released documents telling their stories.

And President Bush opening up about how he felt when he learned that weapons of mass destruction intelligence in Iraq, that intelligence was simply flat-out wrong.

And is Barack Obama willing to do what it takes to reform education in America, including standing up to the teachers union? The best political team on television is standing by.

(COMMERCIAL BREAK)

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

Happening now: educator in chief. President-elect Barack Obama names his choice for secretary of education. Who is Arne Duncan? And is he a strong choice?

George W. Bush in the waning days of his presidency reflecting on his actions in Iraq. Would he have done something different if he had a do-over? CNN's Candy Crowley has a frank, reflective and exclusive talk with the president.

And they are the ultimate cold cases. The Holocaust Museum right here in Washington takes possession of documents on the relentless pursuit of Nazi war criminals. CNN's Brian Todd is standing by. He's been following some of the Justice Department's most diligent work -- all of this coming up, plus the best political team on television.

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

President Bush is walking and talking to CNN about his time in office. He is reflecting on the last eight years, especially a major part of his presidency. That would be the war in Iraq.

And he spoke exclusively today to CNN's senior political correspondent, Candy Crowley.

And you had a chance, Candy, among other things, to get his reaction to when that guy -- that journalist in Baghdad threw not one, but two shoes at the president.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: And as you will see, when I just said "shoes" to him, he started to laugh. This is clearly something that he -- and, in fact, the White House team -- is throwing it off.

But I asked him if he didn't -- even if he didn't take it personally, whether there something about being the leader of the nation that was wrong about this action.

And here's what he had to say.

(BEGIN VIDEOTAPE)

CROWLEY: Can I ask you about the shoe thing in a slightly different way...

(LAUGHTER)

CROWLEY: ...simply because you are the symbol, really, overseas, of the United States.

Was there ever a part of you that, in reflection, went wait a second, we have poured billions of dollars -- not to mention U.S. blood and treasure -- into this country, how dare this guy...

BUSH: No.

CROWLEY: Even if he's a single guy?

BUSH: No. I -- look, I mean, first of all, I didn't have much time to reflect on anything. I was ducking and dodging. And I -- I -- I first of all, it's got to be one of the most weird moments of my presidency. Here I am getting ready to answer questions from a free press in a democratic Iraq and a guy stands up and throws a shoe. And it was -- it was bizarre. And it was an interesting way for a person to express himself.

I was asked about it immediately after the incident. And I said here's a person that obviously was longing for notoriety and he achieved it. But I -- no, I don't view this as a -- I'm not angry with the system. I believe that a free society is emerging and a free society is necessary for our own security and peace.

CROWLEY: Do you think that they ought to let him out of custody?

BUSH: I don't know what they're going to do there, you know. He's -- and I'm not even sure what his status is. They shouldn't overreact.

CROWLEY: The last time I interviewed was the night before -- interviewed you -- was the night before you were inaugurated. As we were walking out, someone congratulated you and you said, "I won't let you down. I won't let you down."

BUSH: Yes.

CROWLEY: Has there been a time in the past eight years when you thought, I've let the American people down at this moment?

BUSH: I have given it my all. I have poured my heart and soul into the job. And I have -- I understand the institution of the present is more important than the individual. And by recognizing that, you work to strengthen the institution. And I'm sure people have disagreed with my decisions, but they've been made with a lot of deliberation. And they have been made with one thing in mind -- what's best for the United States of America.

CROWLEY: Three yes or nos.

Have you told Jeb to run for the U.S. Senate in Florida?

BUSH: Yes.

CROWLEY: Is he going to?

BUSH: I don't know.

CROWLEY: You really don't know?

BUSH: I really don't know. I wish he would. He would be a great senator.

CROWLEY: Kay Bailey Hutchison versus Rick Perry, who's your pick there?

BUSH: Neutral.

CROWLEY: That's no fun.

And any -- any thought that you might commute the sentence of Governor Ryan -- former Governor Ryan of Illinois?

BUSH: I won't be discussing pardons or commutations on this show, but thank you for trying to make news.

CROWLEY: I like to -- I like to ask.

BUSH: Thank you for trying to make news.

CROWLEY: But Jeb is interesting, so you've told me...

BUSH: Well, I did answer Jeb...

CROWLEY: Yes.

BUSH: ...because if I said I hadn't, then you'd say well, why don't you talk to your brother?

So I decided to just lay it all out there.

CROWLEY: That's fine.

Does your dad want him to run? BUSH: I haven't talked to my dad about whether or not he wants Jeb to run. I -- first of all, knowing my dad, I bet he would say I want Jeb to do that which is best for him. And then he would go on to say, but if he chose to run, he'd be a great United States senator. And he would be.

(END VIDEO TAPE)

BLITZER: He also told you he disagrees with Karl Rove, his former chief political adviser.

CROWLEY: Right. We talked -- Karl Rove said recently well, if we'd known the WMD weren't there -- wasn't there, if we had known that there was no connection between 9/11 and Saddam Hussein. So I said, look, even your own, you know, personal friend and political adviser -- and he said you don't get do-overs. And he doesn't understand that. There is no sense of going back, back, back. He didn't want to do that.

And he added, listen, the world is better off without Saddam Hussein. But there obviously is tacit agreement there. I asked him whether he was mad when he found out that the intelligence was wrong -- the whole thing that we did the war on was wrong.

And he said, well, he wasn't angry, but he wasn't happy.

BLITZER: To put mildly, apparently.

CROWLEY: Yes.

BLITZER: All right, Candy, thanks very much.

Candy sat down in the Oval Office, walked around with him, as well.

A detailed picture is now emerging of American efforts to hunt down Nazis living here in the United States. The U.S. Justice Department has just turned over 50,000 document to the U.S. holocaust Memorial Museum.

CNN's Brian Todd is following this story for us -- Brian, this covers 30 years of work.

BRIAN TODD, CNN CORRESPONDENT: It certainly does, Wolf.

Now, if you look at some of the more difficult crime cases these days and wonder if they'll ever be solved, take heart. Without modern technology or the benefit of much DNA evidence, a special unit at the Justice Department has tracked Nazi war criminals for nearly 30 years. They call these the ultimate cold cases.

(BEGIN VIDEOTAPE)

TODD (voice-over): Worcester, Massachusetts -- November 23, 1955. Aleksandras Lileikis has a wry smile as he celebrates his first Thanksgiving in America. He had arrived the day before and now he thinks that he can put his sinister past behind him.

For decades he does, working for a Lithuanian encyclopedia company. Not until the early '80s is Lileikis confronted at home by a young American prosecutor, who believes Lileikis had been chief of a Nazi allied security force in occupied Lithuania during World War II, in charge of rounding up Jews for extermination.

The prosecutor has a document. He thinks it's evidence enough to tie Lileikis to the war crimes.

ELI ROSENBAUM, OFFICE OF SPECIAL INVESTIGATIONS: He very coolly looked at me and said, "I've never seen that. Show me something that I signed."

TODD: Eli Rosenbaum doesn't give up and a decade later, goes back with documents signed by Lileikis that sent innocents to die.

ROSENBAUM: The one that -- those of us who worked on the case really can't ever forget is -- is -- was a death warrant for a 6-year- old girl and her mother.

TODD: One of tens of thousands of pages just handed over to the Holocaust Museum from the Justice Department's Office of Special Investigations, set up in the late '70s to track and prosecute alleged Nazi war criminals who had made their way to America.

The unit's goal is to convict them for lying about their identities when they entered the U.S. and send them back to their home countries for war crimes trials. Officials say they want one message to come from this release.

PETER BLACK, U.S. HOLOCAUST MUSEUM HISTORIAN: To those who murder, even when they use national security or reasons of state as the justification for that -- for that murder, that some day -- and whenever possible -- they will be called to account.

TODD: Even Ivan Kalymon, a former officer in the Nazi-sponsored Ukrainian police, nailed with his own handwritten note that he'd shot Jews. By the time Kalymon was found living in Troy, Michigan and prosecuted, officials say it was the oldest murder ever proven in a court of law. The span between the killing and the court victory -- 64 years, seven months.

(END VIDEO TAPE)

TODD: But it doesn't always work out in the end. Ivan Kalymon is still living in Michigan. He lost the appeal of his conviction, but that's being reviewed. He may or may not be extradited to Ukraine. Alexander Lileikis eventually lost his U.S. citizenship and fled to Lithuania. He was prosecuted, but the trial got hung up in red tape. He died a free man in 2000 -- Wolf.

BLITZER: This special investigations unit over at the Justice Department, Brian, it doesn't just investigate the Holocaust cases, does it? TODD: No. Its mission was expanded a few years ago. They have tracked people from the Liberian civil war. And last year, they successfully prosecuted a defendant who had killed seven Muslim men in the former Yugoslavia in the early '90s. They go after anybody who commits these kinds of crimes.

BLITZER: Brian Todd working the story for us.

Thank you, Brian.

Congressman Jesse Jackson, Jr. revealed now to have been a government informant. Sources saying the embattled Illinois governor -- the embattled Illinois Congressman, that is -- is working -- is working in dealing with this entire scandal involving the Illinois governor. We're following the breaking news for you.

And he's just announced his new Education senator -- secretary, that is.

Is Barack Obama ready to fix the nation's public schools?

The best political team on television is here to assess.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's get back to the breaking news we're following about Democratic Congressman Jesse Jackson, Jr. of Illinois. Now we've confirmed he's been a government informant for at least a decade. That's what the sources are telling CNN, saying Jackson also has informed on the embattled Illinois governor, Rod Blagojevich.

Let's talk about that and more with Karen Tumulty of our sister publication, "Time" magazine; along with our CNN contributors, Dana Milbank of "The Washington Post" and Steve Hayes of "The Weekly Standard."

It's a strange twist, you know, in a bizarre story to begin with.

KAREN TUMULTY, "TIME" MAGAZINE: Could this possibly get any stranger?

I don't know about your, but I want the screenplay rights. What this suggests is that Congressman Jackson was onto what the deal was with the governor, but that he also knew that the Feds were onto what the deal was with the governor -- this pay for play scheme, which does suggest that it does give some credence to his assertions that, in fact, he was no part of any kind of arrangement like this.

BLITZER: And if he's been cooperating all along with the U.S. attorney, that would put him, presumably, in pretty good stead right now. DANA MILBANK, CNN CONTRIBUTOR "WASHINGTON POST": I suppose. I mean, it's looking more and more like Colonel Mustard in the conservatory with the candlestick at this point.

(LAUGHTER)

BLITZER: I don't get that.

(LAUGHTER)

BLITZER: Oh, yes, but -- but go ahead.

MILBANK: Well, the plot thickens, Wolf. It's becoming a very intriguing mystery. Now, as far as Jackson is concerned, it has every appearance of being some sort of inoculation, saying well, what's he expecting to come out that his people are coming out and pre-empting it with this?

He's bound to antagonize Fitzgerald with this. You know, as we know, Fitzgerald wants people to keep quiet, as we've seen with the -- with the Obama side.

BLITZER: The word informant has, sometimes, a sinister connotation, Steve, as you know. But if, in fact, a United States congressman -- a sitting Congressman -- is cooperating with the U.S. attorney who is investigating political corruption, that's good, right?

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Well, it could be good. I think that Dana is onto something when he says that, you know, he probably antagonized Fitzgerald by coming out with this. We just had...

MILBANK: Oh, I thought you would agree with Colonel Mustard.

HAYES: No, no, no.

(LAUGHTER)

HAYES: No. I'm not with the Colonel Mustard. But I think, you know, he probably antagonized Fitzgerald by coming out now. We just had, yesterday, Fitzgerald saying that he wanted the Obama people to keep this all quiet so that people didn't know who he was going to be talking to, presumably.

So I think this is a risky move. But, you know, one wonders now -- you sort of jump ahead -- what is it that he's trying to sort of guard against?

BLITZER: Yes. We'll be watching. And -- but I want to move on and talk about issue number one, which is the economy -- a mess, as all us know. And presumably it's going to get worse as we go into 2009.

Both the president and the president-elect spoke about it today. And I want to play these little clips.

(BEGIN VIDEO CLIP, COURTESY ABC)

BUSH: And I feel a sense of obligation to my successor to make sure there's not a -- you know, a huge economic crisis. Look, we're in a crisis now. I mean this is -- we're in a huge recession. But I don't want to make it even worse.

(END VIDEO CLIP)

BARACK OBAMA (D), PRESIDENT-ELECT: We are running out of the traditional ammunition that's used in a recession, which is to lower interest rates. They're getting to be as low as they can go. And although the Fed is still going to have more tools available to it, it is critical that the other branches of government step up.

(END VIDEO CLIP)

BLITZER: And I think it's clear to all of us that the president- elect is planning on stepping up with a huge stimulus package that he's going to introduce, with numbers that are astronomical.

TUMULTY: In fact, Nancy Pelosi, this week, was suggesting that this package could be over $600 billion. Now, as recently as September, President Bush was saying he would veto a package that was one tenth that size.

So it suggests that, yes, in fact, this economic problem has really exploded, even in this short period of time.

BLITZER: And this is a time when -- that we could be facing, in the current fiscal year, a trillion deficit.

MILBANK: Yes. I mean this -- and I suspect the $600 billion is just sort of the starting point for the bidding here.

BLITZER: Yes. I'm hearing it could even be more than that.

MILBANK: Yes. And poor Steve Hayes is going to be having a fit about this, but it definitely seems like it's -- you know, in January, the shops open, who needs some money out there?

BLITZER: But they need to stimulate the economy. They need to create the jobs. He's got an infrastructure plan that's not going to be cheap, but in the process, will do some good for the country, which needs a lot of infrastructure rebuilding.

HAYES: Well, yes. There are projects that have been on a list for a long time that could use some -- some money. But there are other ways to stimulate the economy besides just throwing government money at it one time after another.

I think the biggest way that President Bush has helped President- Elect Obama is politically -- by getting this ball rolling, by starting with these massive bailouts, by sort of reorienting how the American citizenry -- not to overstate it or be dramatic -- but how the American citizenry is related to its government, the relationship between the two. By having these massive government interventions, it gives him enormous, enormous political cover for him to do things like a trillion dollar stimulus package.

BLITZER: Can you imagine?

It's going to be huge.

All right, we'll watch and see how huge.

Education -- there's going to be a new Education secretary. We learned who it was today at the top of the hour. We did a report. Jessica Yellin that. The names are coming in pretty quickly on other cabinet positions.

But in terms of reforming education, the nation's public schools, can this president-elect and the incoming Education secretary do it without antagonizing and going to war, at times, with the teachers' unions?

TUMULTY: Well, if you look at Arne Duncan's record, he has, in fact, done exactly that. He has done a lot of reformist measures -- things like closing down failing schools. He's talked about teacher merit pay. But he has done it while keeping the teachers' unions on board.

So maybe Barack Obama is serious when he says he really thinks you can get past these old arguments.

BLITZER: Do you think he'll do it?

MILBANK: Yes. I suspect it's not going to be the most urgent priority at the moment, but I certainly don't see this administration in (INAUDIBLE).

BLITZER: Education is important because a whole generation of kids could use it.

All right, guys, stand by.

We're going to continue the conversation.

Our question of the hour, by the way, is this -- which would you be willing to give up for two weeks -- this is Jack Cafferty's question.

Would it be sex or the Internet?

Jack is standing by with your e-mail.

And so what? It's the phrase on the lips of presidents, pop stars and more. Jeanne Moos shows us exactly what.

We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Jack Cafferty.

He's got The Cafferty File -- Jack.

CAFFERTY: The question this hour is -- which would you be willing to give up for a period of two weeks, sex or the Internet?

Kelly writes: "Do I have to choose? I'd have to give up sex. The Internet's become such a large part of my business that my income depends on it. Thankfully, my income does not depend on sex."

Jonni in L.A. writes: "I'm married. I already gave up sex. I'm not giving up my Internet, too."

Annie in Atlanta writes: "Well, here I am again, as is the case every Monday through Friday. So there you go. Have you considered doing this on Saturday and Sunday, too?"

No.

Bill in New Jersey: "Well, let's see, they both require at least some up front investment. They both sure require some skill if a person is to properly enjoy their benefits. And, of course, a person can catch nasty viruses from either one. I'm not so sure they're not the same thing."

Scott in Santa Maria, California: "Sex? What's that? Hold on a minute. I've got an instant message coming in."

Anne in Florida: "Maybe I just haven't met the right man, but, yes, the Internet is more interesting than sex. When my computer is malfunctioning and I don't have access to the Net, I feel downright panicky. Sad, I know. But, yes, I think we have all become too dependent on the Internet."

David in Raleigh, North Carolina: "The Internet's great. It doesn't talk back."

And Jay in Atlanta writes: "We could do without the Net, but life would be slower. And I'm guessing the newspapers would be happier. In terms of better than sex, I never woke up in the morning having to consider gnawing off my own arm in order to make a clean getaway from the Internet."

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.

These are worth reading.

And what is your answer to the question, Wolf?

BLITZER: Oh, well...

CAFFERTY: Which one would you be willing to give up for two weeks?

BLITZER: You know, there's also Internet sex, Jack, if you're familiar with... CAFFERTY: Really?

BLITZER: Yes.

CAFFERTY: I didn't know that, Wolf.

(LAUGHTER)

CAFFERTY: Tell us about it.

BLITZER: I don't know much about it myself.

CAFFERTY: I had no idea.

BLITZER: But Kenny, my photographer here, he told me about it a little while ago.

CAFFERTY: Nice.

BLITZER: All right...

CAFFERTY: I see.

(LAUGHTER)

BLITZER: See you tomorrow, Jack.

CAFFERTY: OK.

BLITZER: Let's check in with Zain Verjee.

She's monitoring some other important stories incoming into THE SITUATION ROOM right now -- Zain, what's going on?

VERJEE: Wolf, 27 years later, the case of Adam Walsh is closed. Police in Hollywood, Florida today pinned the abduction and murder of the 6-year-old boy on a now dead drifter long suspected of the crime. Adam's death promoted the establishment of the National Center for Missing and Exploited Children and sent his parents on a life-long mission to safeguard children.

(BEGIN VIDEO CLIP)

(BEGIN VIDEO CLIP, COURTESY WSVN)

JOHN WALSH, HOST, "AMERICA'S MOST WANTED": For 27 years, we've been asking, who could take a 6-year-old boy and murder him and decapitate him?

Who?

We needed to know. We needed to know. And today, we know.

(END VIDEO CLIP)

VERJEE: The man police believe is guilty of the crime, Ottis Toole, twice confessed to killing the boy and twice recanted his story, saying he made it up. It could not be learned what, if any, new evidence exists.

Eight U.S. embassies are now among the latest recipients of mailings with a white powdery substance. The State Department saying U.S. embassies, including those in Dublin, Berlin, Rome, all received the suspicious powder today. So far, two of the mailings tested negative. Only one has a Texas postmark. Within the last week, governors' offices in more than 40 states have received similar mail. All of those had Texas postmarks, but were deemed harmless -- Wolf.

BLITZER: Zain, see you tomorrow.

Thank you.

It's a refrain we're hearing more and more -- is this the verbal equivalent of a shrug or something a bit more arrogant?

We're taking a Moost Unusual look.

(BEGIN VIDEO CLIP, COURTESY ABC)

BUSH: So what if a guy threw a shoe at me?

JEANNE MOOS, CNN CORRESPONDENT: So what?

So what?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: There's a new buzz phrase emerging from the waning days of President Bush's time in the White House.

CNN's Jeanne Moos takes a Moost Unusual look.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): 'Tis the season, all right -- the season of

(BEGIN VIDEO CLIP, COURTESY ABC)

BUSH: So what?

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, COURTESY ABC)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: So?

(END VIDEO CLIP)

BUSH: So what if a guy threw a shoe at me?

(END VIDEO CLIP)

MOOS: Easy for him to say. He didn't get a black eye like his spokesperson did, who scuffled to subdue the shoe thrower. But lately it seems what's been thrown around is "so what?"

(BEGIN VIDEO CLIP FROM "CAMPBELL BROWN

NO BIAS, NO BULL")

CAMPBELL BROWN, CNN ANCHOR: So what if he was? So what if Obama was Arab?

(END VIDEO CLIP)

MOOS: An Obama impersonator...

(BEGIN VIDEO CLIP FROM YOUTUBE.COM)

UNIDENTIFIED MALE: (INAUDIBLE). Gambolier.

MOOS: ...even rapped "so what?"

(VIDEO CLIP)

MOOS: But it was Vice President Dick Cheney we first noticed, in an ABC interview replying to a question about how three quarters of Americans say the Iraq War is not worth fighting.

(BEGIN VIDEO CLIP, COURTESY ABC)

CHENEY: So?

UNIDENTIFIED FEMALE: So?

(END VIDEO CLIP)

MOOS: And then the other day, President Bush was justifying invading Iraq by saying Iraq is where Al Qaeda said it was taking a stand.

(BEGIN VIDEO CLIP, COURTESY ABC)

UNIDENTIFIED FEMALE: But not until after the U.S. invaded?

BUSH: Yes. That's right.

UNIDENTIFIED FEMALE: So...

BUSH: So what?

(END VIDEO CLIP)

MOOS: So what -- that comeback that sounds like a putdown, something kids say. Something "The Sopranos" gang says over a dead horse.

(BEGIN VIDEO CLIP FROM "THE SOPRANOS," COURTESY HBO)

UNIDENTIFIED MALE: You cooked that (EXPLETIVE LANGUAGE) horse alive?

UNIDENTIFIED MALE: No, I did not. But so what?

UNIDENTIFIED MALE: So what?

(END VIDEO CLIP)

MOOS: So what?

So passive aggressive. Congressman Barney Frank used it telling "60 Minutes" how he answered a newspaper reporter who asked him if he was gay.

(BEGIN VIDEO CLIP FROM "60 MINUTES," COURTESY CBS NEWS)

REP. BARNEY FRANK (D), MASSACHUSETTS: Yes.

So what?

We were (INAUDIBLE).

UNIDENTIFIED FEMALE: Yes.

So what?

FRANK: Yes.

So what?

UNIDENTIFIED FEMALE: Yes.

(END VIDEO CLIP)

MOOS: There's even a gay blog called "so gay, so what?"

There's a marketing firm named So What that took its name from a Miles Davis piece entitled, "So What?"

(VIDEO CLIP)

MOOS: Pink made a hit out of her song, "So What?"

(VIDEO CLIP)

MOOS: So, if there's another 500 point swing in the stock market...

(on camera): So what?

(voice-over): If you feel like you can't trust anyone these days...

(on camera): So what? (voice-over): If the excess cheer of the holidays has you down...

(VIDEO CLIP)

MOOS: So what?

Jeanne Moos, CNN...

(on camera): So what?

(voice-over): ...New York.

(END VIDEO TAPE)

BLITZER: So what?

All right, Jeanne, thanks very much.

Remember, you see Jeanne Moos and her reports weekdays right here in THE SITUATION ROOM. And that's one of the reasons you like this show.

Thanks very much for watching.

We want you to remember to check out our CNN political pod cast, as well. To get the best political team to go, you can subscribe at CNN.com/situationroom. It's a good idea to do so.

Thanks very much for watching.

Up next, "LOU DOBBS TONIGHT" -- Lou?

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