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Sanjay Gupta Approached About Surgeon General Position; Obama's $1 Trillion Problem; Senate Appointee Barred

Aired January 6, 2009 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, President-elect Barack Obama's $1 trillion problem. He's confronting a soaring budget deficit even as he promises to spend big to boost the economy. Does something have to give?
Plus, the new Congress is in session without the man who calls himself the junior senator from Illinois. This hour, bedlam, scandal, a Senate appointee shunned. What happens next?

And spy chief intrigue. The president-elect praises his reported choice to head the CIA, but criticism is growing among some key intelligence officials.

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

And we begin with the breaking news, a surprising prospect for a high-profile job in the Obama administration. The post, Surgeon General of the United States. This is the story that hits all of us at CNN close to home.

Our Chief National Correspondent John King has been working this story for us.

And it involves one name familiar, John, to all of our viewers. That would be Dr. Sanjay Gupta.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: And Wolf, here in the CNN family, we call him "The Good Doctor." We may soon be calling him "General Gupta."

We are told that he has been approached by the Barack Obama transition team -- in fact, some sources saying directly by President- elect Obama himself -- and asked to take the very high profile job of Surgeon General of the United States. Now, he is our chief correspondent here at CNN, our medical correspondent. He also does reporting for CBS as well.

We are told that the pitch to him has been that health care reform will be a top priority. That wellness, fitness, obesity, the issues he has focused on often here at CNN, will be a top priority, and that they want him to join the new administration, focus -- join Tom Daschle, the former Senate majority leader, is coming in as HHS secretary and being the point man on health care reform.

They have made the pitch to Dr. Gupta that he could help with the communications effort, travel the country, go on television, try to explain the arcane nature of health care policy to the American people much like he does on our network just about every day. It is a huge position in the government, a public spokesman for the administration.

Also, the Surgeon General is in charge of the public health service, the commission corps of the public health service, Wolf, which is about 6,200 uniformed officers who work at NIH, the FDA, other federal health agencies and who, at times, can be called into service in emergency military actions, to staff the USS Mercy, for example, a Navy ship that travels during war times or humanitarian crisis, and people from the public health service. The officers come in and help.

So we are told he has been approached. He is declining comment right now, but we are told these are very serious conversations. And from my sources, that he is inclined to accept the position very soon.

And I do want to get this statement on the record from CNN. CNN has released this statement.

"Since first learning that Dr. Gupta was under consideration for the Surgeon General position, CNN has made sure that his on-air reporting has been on health and wellness matters and not on health care policy or any matters involving the new administration."

So, obviously, we're trying to be careful journalistically internally. But again, this is a developing story. I am told that he has approached both CNN and CBS management about getting out of his journalistic contracts if he takes this job. He has not made a final decision, but from what I'm hearing, he is expected, and certainly the transition expects him, to take this position.

BLITZER: And as committed as Sanjay is to health, to good health, to wellness, to making sure especially young people stay strong and healthy, you know, it would be very enticing, very intriguing for him to lead this kind of a operation. And if the president, the incoming president of the United States, asks someone like Sanjay Gupta, we need your help, I'm sure it would be very hard for him to resist.

Remember, he was once a White House fellow in the Clinton administration. He worked for the then-first lady, Hillary Clinton, when she was involved in health care reform. He's passionate about these issues.

And you know what? He's also a son of immigrants to the United States. And it would be hard for him to turn down public service, especially as critically important as this.

KING: And you make a key point there. He has the policy experience in the Clinton White House, which he very much enjoyed, speechwriting and other policy work there.

He is a neurosurgeon. He performs brain surgery routinely. We view him as a journalist, but he is a practicing brain surgeon as well, and that has been the pitch to him from the transition, I'm told, that he has policy experience from the White House days, he's a practicing physician, and a very good one at that, plus he has the unique communication skills from his experience on television, that they believe the combination of those three things would be very helpful in selling the big health care reform policy the administration will undertake in its early days, and then a whole host of others, whether it's medical research, whether it's new drugs, changing in the Bush administration stem-cell policy, obesity, health and fitness and wellness.

They are promising him a very high profile in this position. He would take a pretty big pay cut if he took it -- Wolf.

BLITZER: He would take a huge pay cut, but there is that commitment that Sanjay has to public service. And I'm sure he's weighing all of that very, very carefully.

And it sounds -- correct me if I'm wrong, John -- that they want to sort of expand the traditional role of the Surgeon General of the United States and would give Sanjay much more of a role in helping Tom Daschle and the president and vice president put together the kind of health care reform that they spoke about during the campaign.

KING: My understanding, Wolf, from very senior levels in the transition is that President-elect Obama, soon-to-be Secretary Daschle -- we'll still call him Senator Daschle for now -- that they and others have promised Dr. Gupta, Sanjay, as we call him, that he would have a very high profile role and that he would have a broader public portfolio than traditional surgeon generals.

We've seen C. Everett Koop in the past get involved in the smoking issue. We've seen other surgeon generals get involved in the cancer issue or heart issue. But my understanding of the way they described this to him is he would have a very broad public portfolio and involvement not only in selling the policy, but in helping to shape the policy as well.

BLITZER: And we, of course, would wish Sanjay only, only the best.

KING: Absolutely.

BLITZER: Can't speak highly enough about Sanjay Gupta, whatever his final decision might be.

All right. We'll stay on top of this story.

Thanks, John, very much.

Exactly two weeks before his inauguration, Barack Obama has been huddling with his economic team once again. The president-elect trying to show he's ahead of the curve in facing America's financial nightmares, but political and global conflicts all are competing for his attention right now.

Let's go to our National Political Correspondent Jessica Yellin. She's watching all of this. So is he getting distracted? What's going on?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, team Obama would like to stay focused right now on the theme of economic recovery, but with so many events erupting around him, that's a lot easier said than done.

(BEGIN VIDEOTAPE)

BARACK OBAMA (D-IL), PRESIDENT-ELECT: You got everybody?

YELLIN (voice-over): The president-elect's advisers predict a record high $1 trillion deficit this year. And that's before spending $775 billion on their proposed stimulus plan.

OBAMA: What I've said is I'm going to be willing to make some very difficult choices in how we get a handle on this deficit.

YELLIN: So Mr. Obama is promising that stimulus money will go to America's needs, not politicians' pet projects.

OBAMA: What I'm saying is we're not having earmarks in the recovery package, period.

YELLIN: But economic recovery isn't the only issue confronting the incoming president. There are the distractions not of his making -- violence in Gaza.

OBAMA: I am deeply concerned about the conflict that's taking place there.

YELLIN: And those his team created, like failing to inform the head of the Senate Intelligence Committee that he'd selected Leon Panetta to run the CIA before news leaked to the press. Even his vice president tells CNN that was a mistake.

OBAMA: I haven't made a formal announcement about my intelligence team. That may be him calling now.

(LAUGHTER)

YELLIN: We know who is not calling -- New Mexico Governor Bill Richardson.

GOV. BILL RICHARDSON (D), NEW MEXICO: It was my idea to withdraw.

YELLIN: Obama's vetting team missed or overlooked a few red flags on the one-time commerce nominee.

For now, the president-elect seems to have put some distance between himself and the investigation into Illinois Governor Rod Blagojevich. But there's this: the bizarre spectacle of Obama's would-be Senate replacement rejected by his own party. Today, no comment from the president-elect, who can only hope the problem goes away before he is asked to get involved. (END VIDEOTAPE)

YELLIN: Now, Wolf, Obama often seems intent on steering the conversation back to the economy no matter what is asked, but part of the transition to power will be accepting that in the White House. Unlike in the campaign, diversions are routine -- Wolf.

BLITZER: Jessica watching the story.

Thank you, Jessica Yellin, with all of that.

Let's check in with Jack Cafferty. He's got "The Cafferty File."

It's potentially big news involving Sanjay, Jack.

JACK CAFFERTY, CNN ANCHOR: You think we could get like free flu shots or something if he gets that job?

BLITZER: They only cost about $15. It's not bad. We can afford that.

CAFFERTY: Oh, OK.

You know what? He'd be terrific.

BLITZER: Yes, he would be.

CAFFERTY: That's arguably the best appointment, if he takes it, that President-elect Obama has made so far.

The 111th Congress convened in Washington today. Beware. Problems confronting this country are many: the economic crisis, energy, health care, climate change, among many others.

Democrats control both houses now, but Republicans are not without power, particularly in the Senate. And there are disagreements among Democrats as well over such things as runaway federal spending, what to do about the automakers, the right policy when it comes to the use of fossil fuels.

The public remains very skeptical. According to a new Gallup poll, only 19 percent of Americans approved of the job that the last Democratic Congress did in 2008, one of the lowest scores on record.

By the end of the year, Congress' approval rating had risen. It reached a low of 14 percent in July and it climbed to 20 percent in December. But overall, Americans remain dissatisfied with how things are going. And rightfully so.

Congress has done an awful job. A safe bet that if Congress does not improve on its past performance this time around, it will be a very short stay in our nation's capital for many of them.

So here's the question. When it comes to the economy, how much do you trust Congress to do the right thing?

Go to cnn.com/caffertyfile and you can post a comment on my blog -- Wolf.

BLITZER: Hope you got your flu shot this year, Jack.

CAFFERTY: I haven't actually as yet, and I'm a senior citizen now. They're recommended for us seniors.

BLITZER: Yes, they are. They're recommended for almost everyone. You better go get one.

CAFFERTY: All right. Well, I'll see you tomorrow.

BLITZER: All right. I'm calling Dr. Gupta to tell him you didn't get it yet.

All right, Jack. Thank you.

A top Democrat who came out swinging now has more to say about the president-elect's apparent choice to head the CIA. Does Senator Dianne Feinstein sound any less skeptical about Leon Panetta today? There's new information coming in.

And the Minnesota Republican senator, Norm Coleman, speaking just a few moments ago about whether he'll challenge the results of the Senate recount or concede.

Stand by. You'll get all the information.

And new comments also coming in just now from the former Florida governor, Jeb Bush, about whether he'll run for the Senate in 2010 from Florida. He's made up his mind. We'll tell you what his decision is right after this.

(COMMERCIAL BREAK)

BLITZER: Here in Washington today, on Capitol Hill, a madhouse in the midst of some pomp and ceremony. Most members of the new 111th Congress were sworn in, but Illinois Democrat Roland Burris was not one of them. The man appointed by the scandal-plagued governor Rod Blagojevich tried to claim his seat but was turned away.

Our Senior Congressional Correspondent Dana Bash, she was there. She watched every step of this spectacle as it unfolded.

Tell our viewers, Dana, how it went.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Well, you know, actually, it wasn't really much of a surprise that Roland Burris' mission here today was unsuccessful, his mission to take Barack Obama's Senate seat and get sworn in. But the spectacle around it was stunning.

(BEGIN VIDEOTAPE)

BASH (voice-over): No, that's not an early inaugural parade. It's the Burris circus coming to town.

UNIDENTIFIED MALE: Keep going. Give him some space.

BASH: Throngs of reporters engulfing Roland Burris as he made his way through the rain towards the Capitol, overwhelmed but jovial.

ROLAND BURRIS (D), ILLINOIS SENATE APPOINTEE: I'm just playing.

BASH: Getting the very attention he was seeking in this act of defiance.

UNIDENTIFIED MALE: Spread out.

BASH: Democratic leaders blocking Burris from becoming a senator tried to calm the chaos by trying to organize his entrance into the building, sending the sergeant at arms, an old friend from Illinois, to greet him. Inside, Burris was guided through the hallway, ignoring our questions as we broadcast the scene.

(on camera): What do you expect to do right now, sir?

(voice-over): He squeezed on to the elevator to see the secretary of the Senate to appeal her refusal to allow him to be sworn in. Twenty minutes later, Burris reemerged, his bid to be seated denied.

Dozens of cameras and reporters followed Burris into the now pouring rain as he tried to cross the street and hold a press conference.

UNIDENTIFIED MALE: Come on, Roland.

BASH: The short trip was not easy. Burris now appeared frightened as uniformed officers and Senate aides tried to navigate. He finally arrived at the cameras and stated the obvious.

BURRIS: I presented by credentials to the secretary of the Senate, and advised that my credentials were not in order and I would not be accepted and I would not be seated.

BASH: Then he turned to leave the Capitol grounds.

UNIDENTIFIED FEMALE: Mr. Burris, did you try to get on the Senate floor, sir?

BASH: Still not answering reporters' questions, still not sure of his next steps, but sure he got noticed.

(END VIDEOTAPE)

BASH: Now, Burris' lawyers say they are considering a few options. One is to actually try to challenge this in federal district court. Another is to continue the avenue of discussion, discussion with Senate Democratic leaders.

In fact, Roland Burris will meet with Democratic leaders at some point tomorrow. But, you know, the challenge still, Wolf, is for the Senate majority leader, because he made clear today that he is blocking this on the grounds that this certificate of election is not actually valid because the secretary of state in Illinois hasn't signed it. But it is possible that Roland Burris will be successful in challenging that in court in Illinois, and that will leave the Senate leadership without that avenue to block it, so it might force their hand in trying to find that compromise.

This is anything -- I should say this is very complicated and definitely an unwelcome distraction for Democrats.

BLITZER: To put it mildly. All right, Dana. Thanks very much.

And this just coming in to THE SITUATION ROOM, another Senate vacancy right now. That would be the disputed seat from Minnesota. And only a few moments ago, the Republican incumbent senator, Norm Coleman, rejected -- rejected calls that he should concede, and he vowed to challenge the results of the long and painstaking recount.

Democrat Al Franken claimed victory yesterday after certified results of the Minnesota recount showed him 225 votes ahead of Norm Coleman. Almost three million votes were tallied.

There was no attempt to swear in Franken as a senator today. A legal challenge is expected to keep the official outcome of the race in limbo for at least a few more weeks. Coleman contends that some valid votes have not been counted and others have been counted twice.

(BEGIN VIDEO CLIP)

NORM COLEMAN (R), MINNESOTA: This race will be determined by Minnesota voters, not by Harry Reid.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: Today the Senate majority leader, Harry Reid, urged Coleman to concede rather than challenge the recount results.

Osama bin Laden may soon want to be afraid of this man. Leon Panetta is said to be a tough powerbroker, but his apparent choice as CIA director is causing controversy.

Incoming Senate Intelligence Committee Chairwoman Dianne Feinstein at first was not very happy about the Panetta pick, and today she issued this statement. Let me read it to you.

"I have been contacted by both President-elect Obama and Vice president-elect Biden, and they have explained to me the reasons why they believe Leon Panetta is the best candidate for CIA director. I look forward to speaking with Mr. Panetta about the critical issues facing the intelligence community and his plans to address them."

Still, this could cause Barack Obama a headache.

Let's go to CNN's Brian Todd. He's been working this story for us all day. Brian, what do we know?

BRIAN TODD, CNN CORRESPONDENT: Wolf, this is considered maybe the most surprising pick of the transition. Within the next few days, we'll get the formal unveiling of Leon Panetta's nomination, but already some intelligence veterans are questioning the choice, the timing and the message it sends.

(BEGIN VIDEOTAPE)

TODD (voice-over): His nomination hasn't even been formally announced yet, but there's instant controversy over President-elect Obama's pick to head the CIA. Leon Panetta, former Clinton White House chief of staff, budget director, longtime congressman, comes into the job with virtually no hands-on intelligence experience, and that's got some in the spy community questioning, is this Washington political player ready for job number one at the agency, tracking down terrorists?

ROBERT GRENIER, KROLL MANAGING DIRECTOR: This is somebody who really doesn't know very much about the game as it's currently being played. And I think that is a particular deficit at this period in time.

TODD: Former CIA counter-terror chief Robert Grenier says Panetta may be a quick study, but he says the agency's efforts in Afghanistan, its cooperation with Pakistan and the war on terror, are complicated, largely unseen operations that will be more challenging for someone from the outside to pick up quickly.

Panetta's prospective boss defends his choice.

OBAMA: As chief of staff, he is somebody who -- to the president, he is somebody who, obviously, was fully versed in international affairs, crisis management, and had to evaluate intelligence consistently on a day-to-day basis.

TODD: But the man who once ran the CIA's unit tracking Osama bin Laden says Panetta has another problem.

MICHAEL SCHEUER, FMR. CIA OFFICER: I think the impression that will be brought in the intelligence community is that the Obama administration means to punish those people who were defending America through the rendition program or through Guantanamo Bay.

TODD: Panetta has publicly criticized coercive interrogation, one of the CIA's most controversial programs during the Bush era. From an op-ed last year, "We cannot and must not use torture under any circumstances. We are better than that."

To Panetta's supporters, that's a positive signal.

SEN. RON WYDEN (D), INTELLIGENCE COMMITTEE: He understands that these policies are of questionable legality and questionable effectiveness, and his record in that area will make a big difference.

(END VIDEOTAPE)

TODD: Several intelligence insiders we spoke to say one crucial component to watch here, whether Panetta retains some key CIA officials still in place. One former deputy director told us, "It's important that he turn to the professionals in the building and not show up with a coterie of outsiders to turn the place upside down."

Wolf.

BLITZER: Brian Todd, thank you.

Finding terrorists, collecting top secret intelligence with a vast bureaucracy, those issues await Leon Panetta if he becomes the next CIA director. Among the CIA's pressing responsibilities are hunting down leaders of al Qaeda, collecting intelligence to disrupt possible attacks against Americans, and providing analysis to others in the intelligence network and throughout the government.

As for the Office of the Director of National Intelligence, it was established back in 2004. The director essentially heads the overall intelligence community, overseeing all 16 institutions and agencies. One of those agencies being the CIA.

There's more death and devastation out in the Middle East. Also caught in the middle, a shelter where some people thought they could escape the violence. What exactly happened?

And will he or won't he? The president's brother, the former governor, Jeb Bush, he is now revealing whether or not he's going to be running for the U.S. Senate from Florida.

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, navigating the violent map of the Middle East. Barack Obama is about to get the lesson of a lifetime from four living presidents, the secrets they can share with the incoming commander in chief.

Stay with us for that.

Roland Burris blocked from the U.S. Senate today. You've heard his name. Now hear why his past paints the picture of the man you see today, information that's fascinating.

And rolling with the president, the dangerous history behind the inaugural ride.

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

But, first, let's go to Brianna Keilar. She's working a story for us about Florida and the Senate and a man named Bush who used to be a governor. He's made up his mind, Brianna. BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf.

We have learned that former Florida Governor Jeb Bush has decided that he is not going to run for the Senate seat that Florida Republican Mel Martinez announced last month he would be vacating in 2010. In fact, Jeb Bush putting out a statement saying that, "While the opportunity to save" -- pardon me -- "serve my state and country during this turbulent and dynamic time is compelling, now is not the right time to return to elected office."

He also says, "In the coming months and years, I hope to play a constructive role in the future of the Republican Party, advocating ideas and policies that solve the pressing problems of our day." He says -- goes on to say, "We must rebuild the party by focusing on the common purposes and core conservative principles that unite us all -- unite us all, limited government, a strong national defense, and safe homeland and the protection of liberty, tempered by personal responsibility."

He said there not really the right time to run. And, you know, he may be right, because, obviously, he shares the name with his brother. And, in the last poll that CNN conducted, President Bush's approval ratings were at 28 percent. But, at the same time, Jeb Bush has good approval ratings in Florida and his political future had really been talked up a whole lot lately by the president, as well as his father, the former President George H.W. Bush -- Wolf.

BLITZER: And I'm sure a lot of Republicans are disappointed by his decision. They thought he would do very, very well in 2010 in Florida.

Brianna, thanks very much.

President-elect Barack Obama is vowing today to bar lawmakers' so-called pet projects from massive -- from his massive plan to jump- start the economy. And he says he will bring accountability to federal spending, as he faces a soaring budget deficit.

Let's listen to the president-elect's extended remarks during his meeting with economic advisers earlier today. He was asked about the size of the budget he will propose and whether he will -- he's addressing concerns about deficit spending.

(BEGIN VIDEO CLIP)

OBAMA: I don't want to get into particular budget numbers, because we're obviously still in the process of reviewing what the existing budget looks like, where we can obtain some savings, what programs we can potentially eliminate.

We will be submitting that budget later, after we've submitted the recovery and reinvestment plan.

I can give you a set of general principles, though. We know that we're going to have to spend money to jump-start the economy. I spoke about that yesterday.

We know that even if we did nothing that we have close to a trillion-dollar deficit, even if we were on the current path that we're on. And we know that we have to then implement a set of fiscal measures that deal with the medium and long term so that we have a sustainable path of economic growth.

So what I have assigned Peter to do is -- and Rob and others -- is to work with my economic team. They are part of the team that is putting together the accountability and oversight measures into the recovery act, but they also have this broader charge, which is, how do we get a fix on this budget so that, as the economy recovers, we start stabilizing the economy and -- and getting our budget under control?

It's not just Democrat or Republican colleagues on the Hill that are concerned about this; I'm concerned about this.

And so what I have said is, I'm going to be willing to make some very difficult choices in how we get a handle on this deficit. That's what the American people are looking for.

And, you know, what we intend to do this year, next year, and all the years that I'm in office is to demonstrate our seriousness, not by gimmicks, not by punting to future administrations the tough choices, but by making some of those tough choices while I'm in office.

QUESTION: You mentioned -- over earmarks, you said there will be none that get in there without review. Some people would argue even the so-called bridge to nowhere got review, some level of review...

(CROSSTALK)

OBAMA: No, no, no. What I'm saying is -- let me repeat what I said (INAUDIBLE) We will ban all earmarks in the recovery package. And I describe earmarks as the process by which individual members insert pet projects without review.

So what I'm saying is, we're not having earmarks in the recovery package, period. I was describing what earmarks are.

QUESTION: So there's -- you're not suggesting there's some level of review that might...

OBAMA: I'm saying there are no earmarks in the recovery package. That -- that is the position that I'm taking.

(CROSSTALK)

QUESTION: ... could I ask one?

OBAMA: Well, did you have a follow-up?

QUESTION: Well, if I may, I was just wondering if $200,000 sounds like about the right level at which the tax credits would be phased out. I know that's been thrown out there (OFF-MIKE) OBAMA: You know, look, I think you can get some guidance from what I said during the campaign, but I don't want to be locked in to a particular number, Chuck, just because we're still formulating the details of the plan.

(END VIDEO CLIP)

BLITZER: The president-elect speaking just a little while ago.

Meanwhile, in the Middle East, death and tensions are rising. Violence today shows that the attacks and counterattacks between Israel and Hamas in Gaza are swelling, no end in sight, at least not now -- the latest casualties, two United Nations schools.

CNN's Paula Hancocks is along the border between Israel and Gaza and joins us now with more.

What do we know today, Paula?

PAULA HANCOCKS, CNN CORRESPONDENT: Well, Wolf, over 40 dead and 55 injured, according to the U.N., when artillery shells landed outside a U.N.-run school where hundreds were taking shelter.

Israel insists it was returning fire.

(BEGIN VIDEOTAPE)

HANCOCKS (voice-over): As the sun sets over Gaza, a thick haze of smoke drifts across the whole strip. Day 11 of Israel's onslaught, ambulance sirens in Gaza have become background noise to the constant explosions. Within hours, two U.N.-run schools, both being used as shelters for hundreds of people, were hit. The U.N. in Gaza says three artillery shells landed near a school in Jabalia, killing dozens.

JOHN GING, DIRECTOR OF OPERATIONS IN GAZA, UNITED NATIONS RELIEF AND WORKS AGENCY: We're demanding full accountability in accordance with international law and the duty of care that the parties to the conflict are obliged to adhere to. We don't care to pass judgment. We have to deal with the consequences. And we will be satisfied with the -- with the outcome of an independent investigation in due course.

HANCOCKS: The Israeli military says it returned fire after mortar shells were fired from the school.

Many Palestinians are caught in the middle. This man asks Israel, "How can you let your army destroy everything, the young, the old, men, women, while everyone else is just watching us?"

The Red Cross in Gaza is calling it a full-blown humanitarian crisis. Israel's military believes it killed 130 Hamas militants since the ground operation began Saturday night. It has also lost six soldiers in that time.

As troops advance on the outskirts of Gaza City, militants continue rocket fire into Israel, hitting farther than ever before. The town of Gedera, 36 kilometers, or 23 miles, north of the border, suffered its first hit.

This policeman says: "We knew it would come. We just didn't know when."

E.U. diplomats are meeting and talking and calling for an immediate cease-fire.

MARK REGEV, ISRAELI FOREIGN MINISTRY SPOKESPERSON: Any future arrangement has to prevent Hamas from continuing to re-arm, to get stronger and longer-range rockets. A vital ingredient is a total, total ban on any weapons entering the Gaza Strip.

(END VIDEOTAPE)

HANCOCKS: But talk of a cease-fire certainly hasn't reached Gaza at this point. Neither side is showing any signs of letting up -- Wolf.

BLITZER: Paula, thanks very much.

And we just got a statement in from the embassy of Israel here in Washington on this incident at this school. And, among other things, the Israelis are saying this: "Initial inquiries by Israeli forces operating in the area indicate that a number of mortar shells were fired at IDF, Israel Defense Forces, forces from within the Jabalia school. Israeli forces had no knowledge of those present at the site. However, it is clear that this was not operating -- that it was not operating as a school."

The Israelis say they regret the loss of any innocent lives, but they say that Hamas leaders were there on the scene. They say that two of them -- and they identify these two Hamas leaders -- were identified as casualties at the site of this Jabalia school.

We will continue to watch this story for you.

The race, meanwhile, is on to replace the California governor, Arnold Schwarzenegger. And there's a surprising contender who got her start in the corporate world. We will update you on that.

The Obama team now apparently is in damage control over the choice of Leon Panetta to head the CIA. Can critics be swayed? Stand by. Our "Strategy Session" is coming up.

And the new president's inaugural wheels -- we're checking out his posh, but very high-tech ride for the big day in two weeks.

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

(COMMERCIAL BREAK)

BLITZER: The field of candidates wanting to take over for the California governor, Arnold Schwarzenegger -- Schwarzenegger -- is growing.

CNN's Ted Rowlands is out in Los Angeles following the story for us.

And we're hearing new names, Ted, all the time, including a prominent woman.

TED ROWLANDS, CNN CORRESPONDENT: Yes, Meg Whitman was the CEO of eBay. She got a little bit of national attention during the presidential campaign. People close to her say that she's been thinking about this for the past 18 months.

They say that she has made a decision, and every indication is that that decision will be that she's going to make a run for governor here in California.

(BEGIN VIDEOTAPE)

ROWLANDS (voice-over): Former eBay CEO Meg Whitman has joined the ranks of hopefuls interested in the job of governor of California, after Arnold Schwarzenegger leaves office in 2010 because of term limits.

Whitman, who left eBay in 2008 after 10 years, campaigned for both Mitt Romney and John McCain. McCain even threw her name out as a possible secretary of the treasury during one of the presidential debates.

SEN. JOHN MCCAIN (R), ARIZONA: I like Meg Whitman. She knows what it's like to be out there in the -- in the marketplace. She knows how to create jobs.

ROWLANDS: What Whitman doesn't have is any real political experience, which, Professor John Pitney, who teaches government at Claremont McKenna College, says could work to her advantage, especially in California.

JOHN PITNEY, ASSOCIATE PROFESSOR OF GOVERNMENT, CLAREMONT MCKENNA COLLEGE: The key thing for Meg Whitman is that she's out of politics entirely. She comes from the business world. She doesn't come from the political world. And, for California voters, coming from the political world isn't necessarily a -- a great calling card.

ROWLANDS: Money wouldn't be an issue for Whitman. She's wealthy enough to fund her own campaign. Considered by state Republicans as a moderate, many in the party are taking a wait-and-see approach.

ALLAN HOFFENBLUM, POLITICAL ANALYST: What we don't know about her is how an effective campaigner she is. How is she up on the stoop? How is she working the crowd? How is she giving talks? How is she as being credible, as being knowledgeable on those issues that the state is facing?

ROWLANDS: Whitman, who lives in Northern California, is married to a neurosurgeon and has two college-age children.

(END VIDEOTAPE)

ROWLANDS: And, Wolf, she will have lots of competition on the Republican side. Steve Poizner, who is the insurance commissioner, also a very wealthy man, will be her most stiff competition.

And, then, on the Democratic side, a lot of people, Gavin Newsom, mayor up in San Francisco, maybe Antonio Villaraigosa, L.A.'s mayor, and Jerry Brown also is considering a run. A lot of Democrats would love to see Dianne Feinstein step in. Probably unlikely. If she does, everybody of course on that side will acquiesce and back off.

But it should be very interesting, everybody vying for Arnold's seat, which is up in 2010 because of term limits.

BLITZER: California politics always fascinating stuff.

All right, thanks very much, Ted. See you out there. I will be out in Los Angeles on Thursday.

One of the highest-ranking African-American members of Congress is not very happy that the African-American hoping to be seated in the Senate was rejected. Do Democrats run the risk of turning off black voters?

And a well-known funny man talks to our own chief national correspondent, John King, but makes a bit of a comical error.

(BEGIN VIDEO CLIP, "THE COLBERT REPORT")

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": John King's new show on CNN Sunday mornings at 9:00 a.m. I believe it's called "Seinfeld."

(LAUGHTER)

COLBERT: Watch it.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: The first day of the new Congress saw the Senate turn away Roland Burris, as he attempted to fill the seat left vacant by Barack Obama. Now some are raising questions about how the rejection will face race relations.

Let's discuss this and more in our "Strategy Session" with our CNN political contributor the Democratic strategist Donna Brazile, and Republican strategist Rich Galen.

Jesse Jackson Jr., among others, are saying this, the congressman: "His credentials are in order. There is a strong constitutional legal case for his seating. The longer this process takes, the more racialized this seat becomes, and the more difficult it becomes for Democrats to hold it in 2010."

Charlie Rangel also saying, you know what, Democrats have got to get over this.

DONNA BRAZILE, CNN POLITICAL ANALYST: I consider all of these individuals to be mature politicians.

And Harry Reid is going to sit down with Roland Burris tomorrow. Roland Burris understands that Harry Reid would like him to come with some credentials that perhaps he doesn't have right now. That's a signature from the secretary of state, Mr. White.

But I think, in the long run, Wolf, this matter will be resolved, and Roland Burris will be seated, as unfortunate as it may sound to some people that he will be seated, because of the governor's -- and the taint involved.

The truth is that is that, if -- if -- if his papers are in order, he should be seated.

BLITZER: And -- and will he have to make a commitment not to seek a formal election in 2010? That's one of those, you know, compromise proposals out there.

BRAZILE: I -- I find that insulting, to -- to even suggest that. That's up to the -- Roland Burris and the people of Illinois. If he is seated, he might decide to run. He might not decide to run.

BLITZER: He told me yesterday here in the her he didn't like that idea. He -- he -- you know, he wants to leave open the option, of course, of running in 2010.

RICH GALEN, REPUBLICAN STRATEGIST: I absolutely agree with him.

But the thing that surprised me a little bit today, first of all, this thing has not been dragging on. The Senate opened at noon Eastern time today, and it's now just about 5:00. So, this thing is only five hours old. So, we have plenty of time to get this thing resolved.

I suspect what will happen is, the Illinois Supreme Court will rule that the writ of mandamus that was filed by Burris's lawyers to make the -- to force the secretary of state to sign the papers will be enforced, and he will be seated some time late this week, early next week.

But here's the thing that surprised me. The Black Caucus in the House, even Charlie Rangel, who -- you know, who can get up on his high horse literally, pretty easily, even though Mr. Rangel did sort of kind of sidle up to it, there wasn't that -- that outcry that you would normally get from the Black Caucus when they think that a black person is being dealt with unfairly. And that kind of surprised me a little bit.

BRAZILE: Well, I'm not surprised, because I think members of the Black Caucus have a great working relationship with Harry Reid. He's had an open door to members of the Black Caucus. He has an excellent civil rights record.

And I think Harry Reid would like to get this matter behind him, so that the Senate Democrats can focus on president-elect Barack Obama's stimulus package. BLITZER: And, when you think about it, the fact is, there are 100 U.S. senators. And, if he's not one of those senators -- Barack Obama was the only African-American out of 100. And, you know, that -- I think that plays a role, because a lot of people are just -- in this day and age, saying, what? There's no African-Americans in the United States Senate.

It's still pretty shocking, when you think about it.

BRAZILE: Well, you know, since -- since -- since Reconstruction, we have only, you know, elected three African-Americans. Many have tried.

But, clearly, this is one area where African-Americans, in the future, along with Hispanics and women and others, will continue to try to win these important Senate races.

GALEN: Just wanted to make the case, one of them was a Republican.

BRAZILE: That's OK, Edward Brooke from Massachusetts. I know my history.

(LAUGHTER)

BLITZER: He was a good senator from Massachusetts.

BRAZILE: Indeed. Good man.

BLITZER: Let's talk about Joe Biden and Barack Obama.

They're -- they're -- yesterday, when we -- we spoke of 24 hours ago, Dianne Feinstein was irritated, as the incoming chairman of the Senate Intelligence: Well, nobody told me about Leon Panetta. Why didn't they check with me?

And, today they are coming back and they're saying: We should have spoken to you. We're sorry.

Listen to Biden.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: Was it a mistake not to talk to Feinstein ahead of time?

SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENT-ELECT: I'm still a Senate man. I always think this way. I think it's always good to talk to -- to talk to the requisite members of Congress.

UNIDENTIFIED MALE: Why didn't -- why didn't that happen?

BIDEN: I think it was just a mistake.

(END AUDIO CLIP)

GALEN: Which means that they didn't talk to Biden either...

(LAUGHTER)

GALEN: ... because he would have -- he would have -- he would have known.

(CROSSTALK)

BLITZER: I'm sure they spoke to Biden, but that's another matter.

BRAZILE: Well...

(CROSSTALK)

BLITZER: I'm sure Barack Obama wouldn't make a decision on the CIA director without checking with his vice president.

(CROSSTALK)

GALEN: And you don't think that Biden said, we better call Feinstein; she's chairman of Intelligence?

BLITZER: He obviously says it was a mistake. He didn't...

(CROSSTALK)

BLITZER: They didn't do it. They should have.

(CROSSTALK)

GALEN: So, they -- so, they didn't follow his instructions. Worse yet.

BLITZER: I don't know if...

BRAZILE: Someone -- someone dropped the ball.

BLITZER: Right.

BRAZILE: Someone didn't call and communicate with Senator Dianne -- Dianne Feinstein, her recommendations, perhaps someone that she had on the table. This caught her by surprise.

And, Wolf, clearly, you know what happens in D.C. If you don't follow through, somebody gets upset.

(CROSSTALK)

GALEN: This is all -- this all internal California politics, too.

Pelosi, Jane Harman from California, Dianne Feinstein from California, Norm (sic) Panetta from California.

BLITZER: To be continued, guys. Thanks very much. Days of fighting, a death toll that keeps climbing -- is there any hope in the Middle East? Condoleezza Rice has a plan for peace. But what she's presenting to the United Nations, that's happening right now. Stand by.

And presidential protection, the so-called beast that's supposed to keep President Obama safe on the road. We have new details of the vehicle.

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

(COMMERCIAL BREAK)

BLITZER: And some anticipation building for CNN's new Sunday morning show that will be anchored by John King.

Even the mock newsman Stephen Colbert apparently excited about the prospect.

Listen to this.

(BEGIN VIDEO CLIP, "THE COLBERT REPORT")

COLBERT: The big news is that you are soon to be the host of CNN's new Sunday morning program, starting at 9:00 a.m. You are going to be up against "Meet the Press," "Face the Nation," that thing Stephanopoulos does. You know?

(LAUGHTER)

COLBERT: You are going head-to-head with these big guys. What is the show called?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: We're working on that. We're close, another day or two. It's caught up in lawyer land at the moment.

COLBERT: You don't -- I -- you don't have a name?

KING: I thought "The King Report"?

(LAUGHTER)

KING: No?

COLBERT: How -- how about "The Lawyer Bait"?

KING: You would sue me, wouldn't me?

(LAUGHTER)

KING: You would sue me, wouldn't me?

COLBERT: But do put your name in there, because I find that putting your name in a show really -- really helps it.

How about the "Magic King-dom"?

KING: I like that.

(LAUGHTER)

KING: That is good.

COLBERT: "King For a Day"?

KING: It's good to be King.

COLBERT: Yes.

"On the John."

(LAUGHTER)

COLBERT: No?

KING: People would talk about that.

COLBERT: No?

KING: That would generate a little buzz.

COLBERT: How about "Fight Club"?

KING: "Fight Club" is excellent.

(END VIDEO CLIP)

BLITZER: John King's new show starts January 18, 9:00 a.m. Eastern. That's on a Sunday.

Let's check in with Jack. He's "The Cafferty File."

It's funny stuff.

JACK CAFFERTY, CNN ANCHOR: What is it going to be called?

BLITZER: You know what? I think I know, but I can't tell you yet.

CAFFERTY: Oh, that's -- so, we're promoting a show...

BLITZER: Right.

CAFFERTY: ... that we -- that we cannot reveal the title of?

BLITZER: No, because, you know, you have got to go through the lawyers and make sure that it's not -- not been taken by someone else.

CAFFERTY: It's beginning to resemble Washington around here.

BLITZER: Right.

CAFFERTY: The question this hour is, when it comes to the economy, how much do you trust Congress to do the right thing?

Dick in Virginia writes: "Not at all. It's yet another inept, misguided, misled mob. Name one thing this body has done right yet in a crisis. Gave the banks all that money. No oversight. How about the knee-jerk reaction to Burris' appointment? Did not even wait for the facts or a legal position. If Pelosi, Reid, Feinstein, et cetera, want respect from Obama and the American people, they darn well better start to earn it."

C.J. in Atlanta: "We collectively elected them, so I guess we will have to live with the decisions they make regarding the economy. Funny how Congress has the lowest approval ratings ever, yet, incumbents got reelected in November."

That is strange.

"Next time, try harder if you want change."

Karen in Tennessee: "It's a joke, right? They're politicians."

Janie in Massachusetts: "Not while Pelosi and Reid are at the helm, and continue their stupid power plays. I predict Obama's toughest opposition will be these two jokers, as they will want to constantly control every move the new president makes. I hope Obama has the intelligence and wisdom to reject their ideas if it is in the best interest of the American people."

Frankie writes: "I trust Barack Obama's goals. The Republicans deliberately succeeded in hamstringing the Democrats, who could not prevail against a presidential veto by Bush. The Republicans chose gridlock over compromise. So, it's unfair to judge the Democrats by the past, but our whole government had sure better be judged for what they all do next."

John in California: "Trust them? Every time Congress makes a joke, it becomes a law. And, every time they make a law, it becomes a joke."

And Ron in San Antonio, Texas: "Trust them? Hell no!"

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.

At what point will we be able to reveal the name of John King's Sunday morning program, do you suppose?

BLITZER: I am looking forward to tomorrow.

CAFFERTY: There you go.

BLITZER: All right, thanks.

CAFFERTY: OK.

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

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