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President Obama: 'Time for Action is Now'; Justice Ginsburg's Cancer Surgery; Revamping White House Faith Agency

Aired February 5, 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, facing the White House. This hour, President Obama's very personal account of his religious transformation and how he's transforming President Bush's faith-based initiative.

Plus, the breaking news on Justice Ruth Bader Ginsburg's cancer surgery. It's raising new questions about the future makeup of the Supreme Court under President Obama.

And senators are paring down an economic recovery package in an urgent search for a compromise. So what's going to stay, what's going to go? The White House budget director, Peter Orszag, he's standing by live to join us this hour.

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

Another first for President Obama. He scheduled a prime time news conference this coming Monday at 8:00 p.m. Eastern. Of course CNN will carry it live. And you can bet his economic recovery package will be a major topic of discussion.

But today, the president says government alone can't help Americans in deep economic distress. He says that's where faith can come in as well.

Let's go to our White House correspondent, Dan Lothian. He's working the story.

Dan, what happened?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, you know the president has always talked about the importance of faith and also a diversity of different beliefs. Well, today, sort of a more focused approach. He's creating a council of advisers, so he was really today juggling religion and continuing that push to get support for the stimulus bill.

(BEGIN VIDEOTAPE)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: Let us pray together...

LOTHIAN (voice-over): On a day that began at the National Prayer Breakfast, Mr. Obama rolled out his version of President Bush's Office of Faith-Based Initiatives. OBAMA: The goal of this office will not be to favor one religious group over another, or even religious groups over secular groups. It will simply be to work on behalf of those organizations that want to work on behalf of our communities.

LOTHIAN: The president signed an executive order and appointed 26- year-old Pentecostal minister Joshua DuBois to lead the new Faith Based and Neighborhood Partnerships. DuBois headed religious outreach in Mr. Obama's campaign. Now he'll lead an advisory board of 25 religious and secular members.

But the ailing economy continues to grip much of the president's attention. While visiting the Energy Department, Mr. Obama talked about making appliances more efficient and creating green jobs, what he sees as a key part of the stimulus bill. And his appeal to Congress to approve the plan appeared more urgent, more combative.

OBAMA: We end up bickering at a time when the economy urgently needs action.

LOTHIAN: White House Press Secretary Robert Gibbs didn't deny that the president's more forceful language was intentional.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY : I think when he said that the time to talk is over, I think it's fair to read impatience into that.

LOTHIAN: The president also took his argument to the pages of "The Washington Post." In an op-ed piece, he warned that, "Each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings, and their homes."

(END VIDEOTAPE)

LOTHIAN: And again, Wolf, the president will be hosting that first prime time press conference, the first press conference since he became president. Obviously he'll be dealing with a lot of questions about the economy, perhaps even Iraq as well. But the broader picture here is the president really trying to use his bully pulpit through this press conference, also a joint session of Congress, a speech there later this month, a chance for him to sort of get his message out there to the American people unfiltered -- Wolf.

BLITZER: Monday night, 8:00 p.m. Eastern, from the White House. We'll of course have it live here on CNN.

Thanks, Dan, very much.

Let's get to the breaking news right now, breaking news that could affect the future of the U.S. Supreme Court. Justice Ruth Bader Ginsburg, we learned today, has had surgery for pancreatic cancer.

Let's go to CNN's Kate Bolduan. She's working this story for us.

All right. What do we know about the justice, Kate? KATE BOLDUAN, CNN CORRESPONDENT: Well, Wolf, sources close to the justice tell CNN the surgery went well and they are cautiously optimistic. We're also told that Ginsburg was working out of her office until late last week. What you hear over and over again about Ruth Bader Ginsburg, both professionally and personally, don't count her out.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): Just days after appearing at the inauguration, court sources say Justice Ginsburg got the news -- early stage pancreatic cancer. Ginsburg is 75 years old, been on the bench almost 16 years, and is known as a liberal justice. But she's possibly better known as a fighter, as former clerks will testify.

MARGO SCHLANGER, FMR. GINSBURG LAW CLERK: She's very, very warm, but don't be fooled. She's tough. She's the toughest boss I ever worked for.

BOLDUAN: Ginsburg knows cancer well. Her mother had cervical cancer and died one day before her daughter graduated from high school. Ginsburg's husband Marty beat testicular cancer while the two were newlyweds. And a decade ago, Ginsburg herself had colorectal cancer. She worked from her hospital bed during the treatment.

DAVID SCHIZER, FMR. GINSBURG LAW CLERK: Some of us were angry with her, but we were wrong. We kept telling her to slow down, we kept telling her to take it easy. I sent her a couple of fiction books to read, and she wouldn't have any of it. She just bore down and went through the treatment, treated it as part of her work.

BOLDUAN: Just days after surgery, Ginsburg was out speaking to the public...

JUSTICE RUTH BADER GINSBURG, U.S. SUPREME COURT: I am still mending, but I progress steadily.

BOLDUAN: ... fighting then as she has throughout her career for gender quality.

GINSBURG: I had the great, good fortune to be alive and a lawyer in the 1960s, when, for the very firsts time in the history of this country, it became possible to urge before courts successfully that society would benefit enormously if women were regarded as people equal in stature to men.

BOLDUAN: Her former clerks, some of the people who know her best, call Ginsburg a gentle warrior, small in stature but fierce in presence.

SCHIZER: She works through the night, she's there during the day. And it's just this bottomless energy. It's quite remarkable.

(END VIDEOTAPE)

BOLDUAN: Now, when asked about the speculation of retirement or stepping down that inevitably comes with this type of news, sources close to Ginsburg say don't bet on it. We're told that if her health holds up, she has no intention of stepping down from the bench -- Wolf.

BLITZER: All right. Thank you, Kate, very much.

Let's bring in our Senior Legal Analyst Jeffrey Toobin. He's the author of the important book on the Supreme Court "The Nine," a huge bestseller.

But what do you make of this development? Because it's obviously got experts on the Supreme Court thinking.

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Well, it's enormously significant. I'm not a doctor, but think we all now pancreatic cancer is very serious. She's 75 years old.

I think the odds suggest that she will be leaving the court relatively soon. The question, of course, then becomes, how does the court change? And presidencies are defined by Supreme Court appointments.

BLITZER: And everybody assumes that President Obama would nominate a justice who, like Ruth Bader Ginsburg, would be to the liberal side of the judicial process.

TOOBIN: And that has never been more important, because the court is divided very evenly at the moment. There are four conservative justices, four liberal justices, and Justice Anthony Kennedy in the middle, the swing vote.

Ginsburg is one of the liberal justices. It is likely that Obama will appoint a justice very much in her mold. But the question is, who? And, of course, Ruth Ginsburg is now the only woman on the Supreme Court. So that would suggest that Obama would be very likely to name a woman as a replacement.

BLITZER: And if that woman ideologically similar to Ruth Bader Ginsburg, presumably the big difference though would mean someone in her 40s, should we say, or maybe early 50s.

TOOBIN: You know, generationally, the current Supreme Court is a very old court. John Stevens is 88 years old. There are four other justices in their 70s. Ruth Ginsburg is 75, the second oldest.

This could be yet just one of many appointments that Barack Obama gets to make, but we never know when justices are going to leave. And, you know, it needs to be said, of course, that we hope Ruth Ginsburg is fine and is back at work, but, you know, you never know.

BLITZER: We wish her a speedy, speedy recovery, of course.

Thanks very much Jeff -- Jeff Toobin -- for that.

Let's go to Jack Cafferty right now for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: There is no shortage of controversy when it comes to that massive stimulus bill, including whether or not it ought to include a "Buy American" provision. Supporters insist using only U.S.-made goods in work projects like bridges, roads and tunnels would help jump-start the American economy by giving business to American companies. Steel companies, labor unions are pushing for just such a provision, but others worry that restrictions like this could start a trade war and make the economic downturn even worse.

When the House passed its stimulus bill last week, it ensured that only U.S.-made iron and steel can be used for construction, with a few notable exceptions. But the Senate has now agreed to soften that "Buy American" language, saying it won't override any existing trade treaties.

President Obama says he doesn't want any provision in there that would violate U.S. trade agreements. Already, some of our closest trading partners are voicing concern about this.

The European Commission says it might challenge such a move if it becomes law, and Canada says it would violate NAFTA if the treaty provides that only American-made steel is used. The legislation rather, not the treaty.

Some economists are also hesitant, saying that now is not the time to institute any kind of protectionist measures. It's worth pointing out that protectionist ideas and practices in the '30s exacerbated the effects of the Great Depression. If the U.S. refuses to buy foreign- made goods, our trading partners might then decide to stop buying our exports, and that could hurt us even more in the long run.

So here's the question: Should is final version of the stimulus package contain a "Buy American" provision?

Go to cnn.com/caffertyfile and post a comment on my blog.

BLITZER: Jack Cafferty, thank you.

Senators are taking a scalpel to the president's economic stimulus package. We're going to go live to Capitol Hill for what's getting cut and when a compromise might be reached and voted on, if at all.

Plus, the 26-year-old minister at the center of President's Obama's new faith-based initiative, we'll talk about who he is and what he brings to the table.

And later, a just-released tape from the US Airways jet that went down in the Hudson River. You're going to hear the pilot's ominous warning to air traffic controllers for yourself.

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

(COMMERCIAL BREAK)

BLITZER: President Obama alters the office that steers government money to religious charities that performs social services. It will try to ensure that religious groups receiving money do not discriminate in hiring. Critics say under President Bush, faith groups were allowed to consider religion and related issues.

(BEGIN VIDEO CLIP)

OBAMA: The goal of this office will not to be to favor one religious group over another, or even religious groups over secular groups. It will simply be to work on behalf of those organizations that want to work on behalf of our communities, and to do so without blurring the line that our founders wisely drew between church and state.

This work is important because, whether it's a secular group advising families facing foreclosure, or faith-based groups providing job training to those who need work, few are closer to what's happening on our streets and in our neighborhoods than these organizations. People trust them. Communities rely on them. And we will help them. We will also reach out to leaders and scholars around the world to foster a more productive and peaceful dialogue on faith.

I'm not naive. I don't expect divisions to disappear overnight, nor do I believe that long-held views and conflicts will suddenly vanish. The work of Prime Minister Blair, the work of so many here, underscores how difficult it can be to overcome our differences, but I do believe that if we can talk to one another openly and honestly, and if perhaps we allow God's grace to enter into that space that lies between us, then the old rifts will start to mend, new partnerships will begin to emerge.

In a world that grows smaller by the day, perhaps we can begin to crowd out the destructive forces of excessive zealotry and make room for the healing power of understanding. This is my hope, this is my prayer. I believe this good is possible because my faith teaches me that all is possible, but I also believe because of what I have seen and what I have lived.

Prime Minister Blair shared a story of his awakening to his faith. Perhaps, like him, I was not raised in a particularly religious household.

I had a father who was born a Muslim but became an atheist, and grandparents who were nonpracticing Methodists and Baptists, and a mother who was skeptical of organized religion, even though she was the kindest, most spiritual person I've ever known. She was the one who taught me as a child to love and to understand and to do unto others as I would want done.

I didn't become a Christian until many years later, when I moved to the south side of Chicago after college. And it happened not because of indoctrination or a sudden revelation, but because I spent month after month working with church folks who simply wanted to help neighbors who were down on their luck no matter what they looked like or where they come from or who they prayed to.

It was on those streets, in those neighborhoods, that I first heard God's spirit beckon me. It was there that I felt called to a higher purpose. His purpose.

In different ways and in different forms, it is that spirit and sense of purpose that drew feriends and neighbors to that first prayer breakfast in Seattle all those years ago, during another trying time for our nation. It is what led friends and neighbors from so many faiths and nations here today.

We come to break bread and to give thanks. But most of all, to seek guidance and to rededicate ourselves to the mission of love and service that lies at the heart of all humanity.

St. Augustine once said, "Pray as though everything depends on God. Then work as though everything depended on you."

So let us pray together on this February morning, but let us also work together in all the days and months ahead.

(END VIDEO CLIP)

BLITZER: And the president's pick to lead this revamped faith agency is a 26-year-old Pentecostal minister.

Our National Political Correspondent Jessica Yellin is here.

Tell us a little bit about this minister, Jessica.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Well, Wolf, I did a piece on Josh DuBois during the campaign, and I just got off the phone with him. And he is young, 26, but also a very sort of accessible guy. He wears jeans and cowboy boots.

He talks about religion in very personal terms. And he has always been Obama's faith person ever since Obama got into the Senate. Going on four years now, he has served this role for Barack Obama.

Josh DuBois became a minister at the age of 18. He was officially an associate pastor with a church near his college in Boston. And he became Obama's chief aide for religion after he heard Obama deliver that 2004 speech at the convention, the Democratic Convention. He says he was moved by the way Obama talked about using religion to bring people together, and he just sent in a resume and got a job.

Now, Wolf, as you know, he ran Obama's religious outreach during the campaign, and he really had an active role in bringing people of different religions together in house parties, and activating them to support Obama.

BLITZER: Will the revamped, if you will, faith-based initiative allow federal money to go to religious charities that discriminate, won't hire gays and lesbians, for example?

YELLIN: The answer, it seems at this point, is, yes, it could. Right now, the Obama team is saying that it's up to Congress to pass a law making it illegal for any group to discriminate against gays and lesbians, that Obama does not himself support discrimination, he would rather this law pass, but that it's not up to this office to make that decision.

BLITZER: Jessica, thanks very much. Billions of dollars for college scholarships, millions for honeybee insurance, other spending wishes, they're in the plan to fix the economy, but will they really create jobs? I'll speak about it with the White House budget director. He's standing by live.

And first President Obama, now another Inauguration Day do-over. Why is Aretha Franklin redoing what she did in front of millions of people?

We'll explain, right here in THE SITUATION ROOM.

(NEWSBREAK)

(COMMERCIAL BREAK)

BLITZER: President Obama is twisting senators' arms a little harder, hoping for a vote on his economic recovery plan.

(BEGIN VIDEO CLIP)

OBAMA: The time for talk is over. The time for action is now, because we know that if we do not act, a bad situation will become dramatically worse.

(END VIDEO CLIP)

BLITZER: We're tracking the public debate and the private negotiations on what to keep in the stimulus plan and what to cut out.

And why a very popular image of President Obama might be illegal.

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

(COMMERCIAL BREAK)

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

Happening now, the White House confronts another question. This time involving the president's nomination to be the secretary of labor, Hilda Solis. Is her nomination in any kind of trouble right now?

We'll have all the latest for you on this developing story.

And you might compare it to a reality show where voters call in "yes" and "no" votes, except the phones ringing in this drama are over on Capitol Hill. They're angry messages many people are leaving senators debating the economic plan.

And ever want to track your spouse or loved one's whereabouts? Now Google can help you, but is it a threat to privacy?

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

Right now, senators are racing against the clock with President Obama breathing down their necks. Their goal, to pass an economic recovery package within the next day or two or three, but first, there's a lot of slicing and dicing to do.

Let's go to our Senior Congressional Correspondent Dana Bash. She's watching all of these developments.

Dana, what is the latest?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Well, what's the latest is you talk about slicing and dicing, that's exactly what has been happening all day long behind these doors, Wolf. A meeting just broke up not too long ago of a very large bipartisan group of senators, and we're told they actually have -- so far, they're not done -- so far, cut about $100 billion out of the $900 billion stimulus bill. But when they broke up this meeting, they sounded a little bit less optimistic than they did earlier today, because they said, in many ways, it is very tough, very difficult to find what they called the sweet spot, enough money to cut but enough to spend to make everybody happy and to really stimulate the economy.

(BEGIN VIDEOTAPE)

BASH (voice-over): Seventeen senators, Democrats and Republicans, trying to hammer out a compromise, going program by program, dollar by dollar, debating what to cut from the $900 stimulus bill, excess spending they say won't jump-start the economy.

(on camera): And that's literally what you all have been doing there, this -- you're, as senators, going through each spending program, saying, do we think this is appropriate; do we think this will create jobs or not?

SEN. SUSAN COLLINS (R), MAINE: I know it's unusual to think of senators actually doing that kind of painstaking, thorough work, but that's exactly what we're doing.

BASH (voice-over): Senators even kicked their aides out of the room.

SEN. BEN NELSON (D), NEBRASKA: In this situation, that we needed to work with one another to put together something that we, as members, really can feel comfortable with.

BASH: Republican Susan Collins originally wanted to spend no more than $650 billion, but says, in a one-on-one meeting President Obama, he convinced her the economy needs more.

COLLINS: The president made a strong case for a proposal that would be in the neighborhood of $800 billion.

BASH: Word spread fast about this meeting, and not everyone was happy. Republican Senator Lindsey Graham has led bipartisan talks on other issues in the past.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Look at this bill.

BASH: But he ripped into this one. GRAHAM: If you believe this is a good process to spend $800 billion, we're on different planets. We're literally making this up as we go, Senator. If this is such a good process, why are 16 senators meeting in a corner, trying to figure out how to keep this thing from stinking up with the public?

(END VIDEOTAPE)

BASH: Even so, these senators meeting here say that they are doing it at the behest and really with the blessing of President Obama.

Still, Wolf, there seems to be a little bit of a good cop/bad cop going on the White House and Democratic leaders here. Harry Reid told reporters that these people working in this room can't hold the president of the United States hostage -- hostage. And he warned them about overreaching in the kind of cuts that they're working on, on this bipartisan basis.

And I can tell you, Republican Susan Collins was not happy about that. She said, very pointedly, his success depends on the success of the group trying to find compromise -- Wolf.

BLITZER: Dana Bash on the Hill -- thank you, Dana.

Let's talk a little bit more now about this effort to fix the economy, what -- what it means.

Joining us now is the White House budget director, Peter Orszag.

Peter, thanks very much for coming in.

PETER ORSZAG, DIRECTOR OF OFFICE OF MANAGEMENT AND BUDGET: Thanks for having me.

BLITZER: So, the House passed about an $820 billion version. It has gone up to about $900 billion in the Senate.

Is the president ready to go back down to closer to $800 billion?

ORSZAG: Well, again, the reason that went up in the Senate is that they added the alternative minimum tax, which I think the House is also comfortable with.

We think something in that range is about right. You have got to remember, the difference between how much the economy is producing today and how much it could produce amounts to $1 trillion a year or $2 trillion over the next two years. And, in that context, I think we're in about the right range.

BLITZER: So, you're saying $900 billion is what the president wants?

ORSZAG: In about that range.

Again, there are outsiders who are saying the number should be bigger. Again, relative to a $2 trillion gap, there are outside economists saying that we need even more than that. I know that there are others who think something significantly smaller. We think we're in about the right range.

BLITZER: Because, you know, the critics are saying, yes, there's a lot of useful spending in this $900 billion -- trillion -- $900 billion bill, but does -- does everything in there really stimulate the economy and create jobs, which is the purpose of the whole exercise?

"The Christian Science Monitor" the other day included a list, for example, $150 million for honeybee insurance, $198 million benefiting Filipino World War II veterans, $600 million for more fuel- efficient government cars, $1 billion to fix the next census, $15 billion for college scholarships.

Now, those all may be useful, but do they really create jobs?

ORSZAG: Well, again, I think we need to remember the package as a whole has been estimated to create between three and four million jobs.

That's what our analysis suggests. It's what credible outsiders suggest. And I want to remember -- I want to keep in mind the context here. We are facing the worse economic crisis since the Great Depression. So, while the legislative process is working, and, undoubtedly, there will be some refinements and changes made, the package as a whole meets the criteria of putting the economy back on the path towards economic growth and avoiding further job losses.

We lost -- U.I. claims, unemployment insurance claims, this morning were over 600,000, the highest since 1982. The economy lost 2.5 million jobs last year.

Without this package, we would lose another five million next year. I really think we need to act, and act soon.

BLITZER: Well, but these specific programs that are being criticized, the ones I just mentioned, for example, do they create jobs?

ORSZAG: Well, again, I don't want to get into -- into the midst of a legislative process.

Some of those things, I would note -- making the federal fleet of cars more fuel-efficient boosts demand for automobiles now and it also saves money down the road, while also reducing greenhouse gas emissions. So, obviously, some of the things that are being held up actually do help both create jobs and create a path to both clean energy in the future and promote long-term economic growth also.

BLITZER: And a billion dollars to fix the census?

ORSZAG: Again, I don't want to get into -- into litigating all of the individual items. I think we are missing the big picture here, which is we are facing a severe crisis, and we need to act. BLITZER: Do you believe that you have 60 votes, which will be necessary if the Republicans filibuster, 60 votes in the Senate, to get this done?

ORSZAG: I believe that's what Senator Reid is working on. I saw some reports saying that he believes he has that. And this is for the Senate to complete its business.

BLITZER: Because I know that you're in touch with some of those moderate Democrats and Republicans, like Susan Collins, and Ben Nelson of Nebraska.

What are they saying to you? How low do you have to go in order to make it palatable to them, in terms of the overall number, the price tag?

ORSZAG: Well, I'm not going to get in the midst of those negotiations. I saw some reports that I was -- I was talking with them today. I have be here all day and have not been in the middle of those negotiations.

BLITZER: Here's what Karl Rove, the former politics adviser to President -- former President Bush, wrote in "The Wall Street Journal" today.

"Democrats want to spend $88 billion to increase the federal share of Medicaid. What American will be hired by a small business, factory, retail shop, hotel, restaurant or service company because of this spending? The answer is very few."

Is Karl Rove right?

ORSZAG: Karl Rove is absolutely wrong.

What that -- what that does, what that money does, is, it avoids states have to cut back, which would lay off teachers. It would mean that they're not investing in key projects at the state level. And it mean -- it would mean that they would be raising taxes on families.

What that money does is, it helps states relieve the pressure on their budgets. And under their balanced budget rules, they have to offset deficits by cutting back on spending, by laying off teachers, by doing painful things, or raising taxes. That fiscal relief, which is channeled through a particular program, helps to avoid those outcomes.

BLITZER: And, finally...

ORSZAG: So, I think he's -- he's dead wrong.

BLITZER: Finally, Peter, if this is passed in the next few days -- and do you have any idea when it might come up for a final vote in the Senate?

ORSZAG: I know that they're working hard, and they're hoping to get it done as soon as possible. The president has said, again, we would like to have it done by Presidents Day weekend. And I know that Senator Reid and others have said they're not leaving until -- until this is done.

BLITZER: But, if it passes, the way you want it, more or less, without huge changes, when do you think the American public will begin to feel some benefit from this, in other words, jobs will stop being lost and maybe some of them will actually be created?

ORSZAG: Well, it's going to take a bit of time. And we have to remember we're inheriting...

(CROSSTALK)

BLITZER: Define a bit of time for us.

ORSZAG: It will take weeks to months.

And -- and we -- we are in the midst of -- we're inheriting a huge mess here. And it's going to take time. What -- where you will see the results initially is in smaller job losses than would otherwise be the case. But the job losses will continue. They're just -- they just won't be as big as what we have been experiencing. It's going to take time to work our way out of this mess.

BLITZER: Good luck, Peter, a lot at -- a lot at stake here, as you well know.

Peter Orszag is the new budget director over the White House.

Thank you.

ORSZAG: Thanks for having me.

BLITZER: Lawmakers say, heads should roll at that peanut plant linked to a deadly salmonella outbreak -- a new investigation and new outrage over contaminated peanut butter products.

And in our "Strategy Session: Should President Obama be defending his economic rescue plan or changing it?

And, later, does the stimulus package throw money at the Pentagon without helping to defend the nation?

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

(COMMERCIAL BREAK)

BLITZER: Phones are ringing off the hook on Capitol Hill right now, a lot of people pretty upset about the economic stimulus package, and others want it passed, and they want it passed right away.

Brian Todd is up there on the Hill gauging what is going on. Stand by. We will get to him shortly.

At least one U.S. senator says he would like to see some of the people reasonable for contaminated peanut products go to jail. Let's go to CNN's Abbie Boudreau of CNN's Special Investigations Unit. She's been looking into this problem.

How could this happen, Abbie?

ABBIE BOUDREAU, CNN SPECIAL INVESTIGATIONS UNIT: Well, that's what we're looking into. Some say the system to protect Americans from dangerous food is overly complicated, secretive and confusing.

And now some members, just like you say, some members of Congress say food manufacturers who ship out contaminated foods should face stricter penalties, maybe even jail time.

(BEGIN VIDEOTAPE)

BOUDREAU (voice-over): Jeff Almer didn't think he needed to worry about his 72-year-old mom eating a piece of peanut butter toast.

JEFF ALMER, SON OF SALMONELLA VICTIM: (INAUDIBLE) was going to be home tomorrow for Christmas. You know, it just didn't seem real.

BOUDREAU: Shirley Almer's death is one of eight now linked to the outbreak nationwide. Only after she died did Minnesota health officials start piecing together the puzzle.

ALMER: And they said that, your mother had a stool sample tested, and she tested positive for salmonella. We were just like, what? How? How could that have happened?

BOUDREAU: National food safety experts tell CNN it happened because the system in place to protect the public from bad food is seriously broken.

Experts say, in this case, the government failed to regulate the safe production of peanut products from this Blakely, Georgia, plant and also failed to rapidly detect the source of the outbreak. So far, more than 500 people have become sick.

WILLIAM HUBBARD, FORMER ASSOCIATE COMMISSIONER, FOOD AND DRUG ADMINISTRATION: It's an embarrassment that, in the United States, in the 21st century, we have 76 million people getting sick from food- borne contamination each year. Three hundred and twenty-five thousand of them will be hospitalized, and 5,000 will die.

I was at FDA for 27 years.

BOUDREAU: Food safety expert William Hubbard, who testified today before the U.S. Senate, says outbreaks like this one highlight the first basic problem: There's virtually nothing in place to stop companies from shipping contaminated food.

HUBBARD: American food processors are able to essentially make anything they want any way they want. And the burden is on the FDA to find a problem and correct it. It should be the other way around.

(END VIDEOTAPE) BOUDREAU: Wolf, also today, the U.S. Department of Agriculture suspended Peanut Corporation of America from participating in government contract programs for at least one year.

And, in just a couple of hours, on "LOU DOBBS TONIGHT" at 7:00 p.m. Eastern, we will have our full investigation into all of this, and we will also examine why many experts and health officials say the system failed to protect Americans in this case -- Wolf.

BLITZER: Abbie, thanks very much. We will look forward to your full report later. Thanks, Abbie Boudreau.

The first lady weighs in, in the debate over the plan to fix the economy.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, WIFE OF SENATOR BARACK OBAMA: I am very, very pleased that the stimulus plan is going to make much-needed repairs to military military -- family housing.

(END VIDEO CLIP)

BLITZER: Could the first lady actually help her husband get the plan passed? We will discuss that in our "Strategy Session."

And the man tapped to lead the CIA faces some tough questions. Leon Panetta sits before the Senate Intelligence Committee and has to answer if he has the right experience to lead the spy agency.

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

(COMMERCIAL BREAK)

BLITZER: Let's get right to our "Strategy Session."

Joining us, Democratic National Committee Karen Finney and Republican strategist John Feehery.

You know, a lot of Republicans think they have got the wind behind their backs right now. They're feeling sort of confident that things are moving in their direction.

KAREN FINNEY, COMMUNICATIONS DIRECTOR, DEMOCRATIC NATIONAL COMMITTEE: Yes.

But you know what? They have got to remember that, when we talk about these big numbers of people who have been laid off or filing for unemployment, those are people. They're here doing sort of the death by 1,000 cuts. They're the opposition party. That's what they're supposed to do, kind of shred it piece by piece.

But they have still got to go home and face their constituents, who, you know, these are people who are out of jobs.

BLITZER: The president wrote an op-ed in "The Washington Post" today.

Among other things, John, he said: "We can once again let Washington's bad habits stand in the way of progress. Or we can pull together and say that, in America, our destiny isn't written for us, but by us. We can place good ideas ahead of old ideological battles, and a sense of purpose above the same narrow partisanship."

How much of a risk are Republicans taking right now, at least of lot of them, in so fiercely opposing his economic stimulus plan?

JOHN FEEHERY, REPUBLICAN STRATEGIST: I thought that op-ed was oddly disconnected from the debate.

What is going on in the Senate -- and it's not just Republicans -- there's a lot of conservative Democrats, a lot of moderate Democrats who are trying to come together, hash out a program that's going to work. Republicans in the House and conservative Democrats in the House said, this is not the right plan. Let's fix the plan.

I think a plan is going to happen, but it's going to be a better plan than initially came out of the House.

FINNEY: You know, actually, though, I think the op-ed that the president wrote was actually trying to say, folks, let's get real. We have got to get to what this is really about. And that is, we need a package.

And all this sort of sausage-making, talking about this program, that program, at the end of the day, it's got to be about a package that deals with the fact that we are facing the worst economic crisis probably we have ever faced.

BLITZER: Because he keeps making the point that there's not a whole lot of time. It may not be perfect, but we -- you have got to do something in order to -- to stop the hemorrhage.

FEEHERY: Well, it's going to -- there is going to be a package. It's going to happen. It's get to get through the Senate. Sausage- making is all part of the political process. You are going to have to bring people together.

And that is what Barack Obama said: I want to bring people together.

And...

(CROSSTALK)

BLITZER: But his argument is that even two or three or four weeks could cause a lot of people pain, if it's delayed that long.

FEEHERY: Well, I'll tell you what. We're going to get a package that's much better.

And the other thing is, this is a credit crisis. And it's because we had too much credit out there. And the worse thing you can do is have the wrong package that's going to destroy the future economic vitality of this country. And that's why the Senate is saying, hold on. That House package was bad. We need a better package.

BLITZER: We have been seeing and hearing a lot from the -- relatively speaking -- from the first lady, Michelle Obama. How much of a secret weapon is she on this economic issue, if at all?

FINNEY: Sure.

Well, this is really the role that she played during the campaign. I mean, she was the -- the secret weapon. I'm not sure that her trips to the different agencies is necessarily about the stimulus package. I think that is part of it.

But it's also about rallying the troops. And, you know, a lot of times, the folks who work on those agencies don't get see a principal or the first lady or the president. So, I think it's smart, and reminding those folks what role they're going to play when this package passes.

BLITZER: She's a very popular first lady, you have to admit.

FEEHERY: She is.

You know, my own personal advice -- I'm not sure if they're going to take my advice -- is...

(LAUGHTER)

FEEHERY: ... let -- roll her out and have her build a lot of political capital, become popular, getting these popular photo-ops on other things. They don't necessarily have to roll her out on this first big package and have her use up all her political capital. She's popular, but she doesn't need to be partisan yet. I think they need to kind of let other politicians take...

(CROSSTALK)

BLITZER: You were a good head-counter in the House when you worked for speaker, Republican speaker at the time. But what about the Senate?

Do they have, does the White House and its allies have 60 votes in the Senate to get this passed in the next couple days?

FEEHERY: Not yet, no. I think they -- they will get there.

I think they have this gang of 14, the gang of 16, whatever the gang is going to be.

(CROSSTALK)

BLITZER: Moderate Republicans, moderate Democrats.

FEEHERY: And that will -- and, ironically, that's going to be the group that is going to put through a package. I think Harry Reid wants that group.

And it's going to be a much better package that comes out than the House...

(CROSSTALK)

FINNEY: But, again, at the end of the day, we have got to keep the pressure on them to actually hash it out. We cannot delay two more weeks. You know, last week, more people than ever filed for unemployment for the first time. Those folks can't wait for help.

BLITZER: Half-a-billion or whatever. That number was just -- just -- just released.

FINNEY: That's right. And that is more than in the history of our country.

BLITZER: So, the pressure is clearly on both sides.

But what you're saying, John -- and I know you know Capitol Hill very well -- is that, soon, within the next day or two or three, you believe that this moderate center will reach a compromise that will be acceptable to not only Harry Reid, but the president?

FEEHERY: I do think so. I think that the president will sign just about anything that comes through. And it's only...

(CROSSTALK)

FINNEY: I wouldn't quite say that.

FEEHERY: Well, I think he will, because the Democratic House is not going to send him something that president is not going to sign, so something that is going to pass both chambers that's going to be...

(CROSSTALK)

BLITZER: Because once -- if it does pass the Senate, then it has to go to a House-Senate conference committee.

(CROSSTALK)

BLITZER: And you're going to get Nancy Pelosi. And the Democrats in the House, they are going to try to make some changes.

So, the process is by no means over yet.

FINNEY: That's right.

FEEHERY: That's right.

BLITZER: Legislation.

(CROSSTALK)

BLITZER: ... making sausage. (LAUGHTER)

FEEHERY: Beautiful process.

BLITZER: Thanks, guys.

(LAUGHTER)

BLITZER: We're told there is a new and very real concern that al Qaeda's trying to mount fresh attacks, how terrorists could strike from a brand-new safe haven.

Plus, a popular image of President Obama may actually cross a legal line.

And we're standing by for President Obama's first flights as president of the United States aboard Marine One and Air Force One.

Stay with us. You will see the pictures right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right, we're getting ready to see the president of the United States board Air Force One for the first time. Barack Obama, the president of the United States, will be flying out of Andrews Air Force Base aboard the huge 747. We're going to have live coverage of that.

Before that, though, we will see him board Marine One, as he leaves the South Lawn of the White House aboard that helicopter to fly over to Andrews Air Force Base, first time he's going to be boarding Marine One and Air Force One. We will have live coverage here in THE SITUATION ROOM. Stand by for that.

We have all seen the iconic red, white and blue image of President Obama Barack Obama from the artist Shepard Fairey. It's based off an Associated Press image from back in 2006. Now the AP is accusing the artist of copyright infringement.

Let's bring in our Internet reporter, Abbi Tatton, to explain what is going on, because, Abbi, as you know, this image is everywhere.

ABBI TATTON, CNN INTERNET REPORTER: We have all seen it.

Let's take a look at it. The image by artist Shepard Fairey became an unofficial emblem of this Barack Obama campaign. And this is a 2006 Associated Press photo.

And Fairey has acknowledged that he used an AP photo. The AP says that required permission. But Fairey's lawyer disagree. Anthony Falzone with Stanford University's Fair Use Project says there's no infringement here. At a minimum, fair use protects Shepard's right to do what he did. What Fairey did, of course, turned into a phenomenon. We have all seen these pictures across walls and Web sites. It's in the National Portrait Gallery at this point. This one here, a version of it sold for over $100,000 on a charity Web site, reproduced on T- shirts, on buttons for the inauguration.

There's even one version that was in -- reproduced in a field in Pennsylvania by a Barack Obama supporter. What's next for that image, that is now a subject of discussion from the two sides. Fairey's lawyer declined to comment further, as those discussions were going on. The AP says they're hoping for an amicable solution.

BLITZER: That means money, right?

(LAUGHTER)

TATTON: We don't know at this point.

(LAUGHTER)

BLITZER: OK.

TATTON: Compensation probably would come into it.

BLITZER: Abbi, thanks very much.

Let's go back to Jack for "The Cafferty File" -- Jack. .

JACK CAFFERTY, CNN ANCHOR: The question this hour is, should the final version of the stimulus package contain a buy-American provision?

Billy in Vegas writes: "The argument that buy American would start a trade war is bogus. This country has been in a trade war for decades. Our manufacturers and farmers have been screwed over by European, Japanese and Korean import duties on American products going all the way back to just after World War II and by the Chinese since the early 1990s. There never has been a level playing field with these countries."

Jim, also in Las Vegas, says: "Absolutely, yes. What is it -- what good does it do if we spend a trillion dollars, and all of it winds up going overseas in one form or another? We are already a net- importer, which is a big part of our problem. One of the reasons Obama was so popular in the Rust Belt during the campaign was his stance on bringing jobs back to America. It's time for him to follow through on this."

Robert in Galveston: "How are we going to buy only U.S.-made products, when U.S. companies have been sending our manufacturing jobs overseas for the last 30 years? Most of our steel mills are closed or packed up and sold overseas. Our cars are made here, but with components made elsewhere. There are no TV manufactures in this country anymore. And the list goes on and on and on."

Patrick says: "Jack, absolutely, we should have buy-American provisions in any stimulus package. The purpose of the bill is to stimulate the American economy, not Canada's, not Britain's, and definitely not China's."

Wayne says: "How shortsighted. We expect the rest of the world to lend us the money to fund our stimulus package, and then add a buy- American clause to shut them out. It would serve us right if foreigners quit buying our treasury bonds and let us go into a really deep depression."

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

BLITZER: All right, Jack, thank you.

And, to our viewers, you're in THE SITUATION ROOM.

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