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California Firefighters Battle Massive Blaze; Hurricane Nears Tropical Paradise

Aired September 1, 2009 - 16:00   ET

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


SUZANNE MALVEAUX, HOST, THE SITUATION ROOM: Happening now: President Obama has something to tell you, but are you buying it? He says it will impact your pocket, and that his administration deserves credit.

A deadly California fire is now bigger than the city of Philadelphia. Thousands of firefighters largely cannot stop it. Wait until you hear stories from people who have escaped and others who still refuse to leave.

And their tests help decide if your children get into college, so what do you think of the college board pulling in hundreds of millions of dollars and paying executives hundreds of thousands of dollars?

Wolf Blitzer is off today. I'm Suzanne Malveaux in CNN's command center for breaking news, politics and extraordinary reports from around the world.

You're in THE SITUATION ROOM.

Well, you want proof that the economy is getting better. President Obama essentially says he's got some proof. He's trotting out numbers from a fresh report that shows U.S. manufacturing sector grew just last month for the first time in 19 months.

And the president says that manufacturers are making more items like cars, computers, appliances. But with a public that's eager for economic relief, is the White House under pressure to show positive signs?

Our Ali Velshi is traveling across the country. He's gauging public sentiment on the economy.

But let's begin with CNN senior White House correspondent Ed Henry.

Hey, Ed.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Suzanne, you're absolutely right, the president under pressure right now. His health push is struggling, unemployment rates still hovering near 10 percent across the country, so he has not had a lot of good news to tout lately.

So, he jumped all over this new report, first time in nearly two years the manufacturing sector has expanded in this country. As you noted, that means better auto sales, better sales computers, appliances, the president suggesting this shows his administration has put the economy back on the path to recovery, though he did add the usual caveats.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There's no doubt that we have a long way to go. And I and the other members of this administration will not let up until those Americans who are looking for jobs can find them. But this is another important sign we're heading in the right direction and that the steps we've taken to bring our economy back from the brink are working.

(END VIDEO CLIP)

HENRY: And the White House is going to continue this push on Thursday. We found out today that Vice President Biden later this week will be giving a speech right here in Washington at the Brookings Institution to really tout the benefits of that $787 billion economic stimulus plan.

The real subtext, of course, here is that Republicans have been charging that not enough of that money from the stimulus has been spent, only about $230 billion, and that it has not had the impact that Vice President Biden and President Obama touted earlier this year. That's why we're seeing both of them out there this week trying to push back on that -- Suzanne.

MALVEAUX: OK. Thank you very much, Ed.

The question, of course, is, how positive or sour are you about the current state of the economy?

Our CNN chief business correspondent, Ali Velshi, is traveling the country on board the CNN Express. He's been talking to people just like you, and he joins us from Mattoon, Illinois.

And, Ali, what are folks telling you?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, Suzanne, health care is really one of the biggest issues out here that we're talking to people about, but so are jobs, as Ed was saying. And the two are tied together.

Earlier today, I was in Evansville, Indiana, where we had just heard that Whirlpool plant is being shut down, those jobs in manufacturing being shipped to Mexico. And the two are connected, because now we have got 1,100 people in that small town in Indiana who are going to be looking -- 1,100 families who are going to be looking for health care.

We're driving north. We started in Atlanta. We're headed to Minneapolis. And we're now, as you say, in Mattoon, Illinois, about three hours south of Chicago. And -- and things are a little different here. Here's what people in this town had to tell me.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: With the economy right now, these places kind of struggle to stay in business, you know, especially when everybody is wanting to get out of the town.

UNIDENTIFIED MALE: Manufacturing jobs, though, have reduced, and there are a lot of my friends that are out of work, especially in the construction field and stuff like that, that people are hurting, but they are making do.

(END VIDEO CLIP)

VELSHI: Now, Mattoon is the self-proclaimed bagel capital of America. It's home to the Lender's bagel factory. It also has a plant, R.R. Donnelley, a major printing house that employs over 1,000 people, printing many of the magazines that you will be familiar with.

And there's a new energy facility coming into town here that is hopefully going to create some jobs. So a number of people are expressing some optimism, but this changes town to town, because, really, the issue is if people feel like their jobs are coming back or that they are stable, they will engage and start to spend.

We have seen some evidence of that, Suzanne, certainly with cash for clunkers, the stock market doing a little bit better over the last few months, a lot better, actually, and housing prices stabilizing.

But, ultimately, when we go town to town, it's got to do with whether people feel secure about the money they are going to be getting in, and that means their job. So, unemployment does continue to be a major, major concern -- Suzanne.

MALVEAUX: All right. Thanks for keeping the pulse on the folks there, Ali. Thanks again, Ali Velshi.

Many of you worry about a spreading virus, growing infections, and even death, but, regarding swine flu, President Obama says, instead of panicking, everyone should just simply prepare. The president met with Cabinet secretaries and other top officials today to discuss government preparations for what some fear could be an onslaught of the virus.

(BEGIN VIDEO CLIP)

OBAMA: We know that we usually get a second, larger wave of these flu viruses in the fall, and so response plans have been put in place across all levels of government. Our plans and decisions are based on the best scientific information available, and as the situation changes, we will continue to update the public.

We're also making steady progress on developing a safe and effective H1N1 flu vaccine, and we expect a flu shot program will begin soon. This program will be completely voluntary, but it will be strongly recommended.

(END VIDEO CLIP) MALVEAUX: In the meantime, the president urged states and health care providers to take precautions. And he reminded the public to take commonsense steps, washing your hands, covering sneezes with a sleeve, not your hands, that kind of thing.

Well, flames reaching 100 feet into the air, flames racing up mountainsides -- California is on fire, more than 120,000 acres -- that is 190 square miles -- burned north of Los Angeles.

And, today, urgent words from the governor.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I want to urge again all the residents, listen carefully when law enforcement talks and when they urge you to evacuate. So many times, we see people stay behind, and they try to be a little bit overly courageous. And then they get into deep trouble and get burned and get injured because of that. So, listen to it.

(END VIDEO CLIP)

MALVEAUX: CNN's Brian Todd is joining us now.

And, Brian, you have been talking to a lot of folks. Are they heeding the governor's warnings today?

BRIAN TODD, CNN CORRESPONDENT: Suzanne, some of them are. Some of them are not. We're going to have more on that a little bit later in the show.

Let me just show you what happens to some of the residents here that Governor Schwarzenegger is talking. Our photographer, John Torego (ph), he is going to kind of pan behind me here to this. You can see it's still smoldering. It's the remnants of a -- of some sort of a cottage or home there that was just completely charred.

Now, here's a -- kind of a perspective of the devastation here. Look at this canyon down here. The entire area is charred. The hillside over there is completely burned out. This fire has moved incredibly fast. Just a few minutes ago, we came off Tujunga Canyon, where we got very, very close to the flames.

We're showing you some pictures of that as we speak here. We did speak to some residents who were leaving, but then spoke to a couple of people who did not. And they gave various reasons why they didn't. They wanted to wait it out. Some of them wanted to see if they could battle the flames, if it came closer to their homes, battle those flames themselves. You're being advised not to do that.

I cannot tell you how frustrating for the firefighters that you talk to on these front lines saying that, you know, this is just ridiculous that people are not heeding these warnings.

We got a firsthand look at it just a few moments ago, Suzanne. This fire is moving incredibly fast. We were on a ridgeline here not far from here in Little Tujunga Canyon, where, over the span of about 10 minutes, the fire must have crept several hundred yards. I mean, it was really very, very fast-moving.

We are going to show you some of that later, some of the evacuation efforts, including a wildlife preserve at the top of this mountain where they are trying to get tigers, lions, bears, literally, those animals from "The Wizard of Oz." This is real stuff, but it's at a wildlife preserve. We are going to show that to later, the effort to get those animals off the mountain.

MALVEAUX: Well, Brian, excellent reporting, and we will definitely be getting back to you to see what the fate of those animals are as well. Thank you very much, Brian.

Well, fears of hell on a tropical paradise -- a dangerous Category 4 hurricane eyes a popular vacation getaway and could strike any moment. How are people evacuating or preparing?

And thieves victimize the wife of the powerful chair of the Federal Reserve. Now a measure of justice is served. Wait until you hear what happened to a wide-ranging identity theft ring.

And they administer the SATs your children sweat over to get into college. Well, what do you think of the college board scoring hundreds of millions of dollars and paying executives hundreds of thousands?

(COMMERCIAL BREAK)

MALVEAUX: Wind and rain are picking up in Cabo San Lucas. The popular resort town on the Mexican peninsula of Baja California is directly in the path of Hurricane Jimena.

Forecasters say that the Category 4 storm packing sustained winds of up to 135 miles an hour is extremely dangerous.

Our CNN's Betty Nguyen is in Cabo.

And, Betty, what -- what are you seeing? Are people getting ready for this thing? How are they doing?

BETTY NGUYEN, CNN CORRESPONDENT: Absolutely they are getting ready. In fact, there are long lines at the grocery stores, people stocking up on water, nonperishable food items.

But the really big concern here are for people who live in the shantytowns, these little shelters, these makeshift shelters that they call home. Many of them do not want to evacuate. Some 10,000, in fact, are being urged to get out of harm's way.

But a lot of them are refusing. So, that's a huge concern. But, at the resorts, as you can see, the winds are picking up. The palm trees are swaying. The surf is fantastic, if that's your thing, if you want to get out there in the water. But I will tell you, no one will let you. The red flags are up everywhere. There's not a single soul on the beach out here. And this resort in particular, everyone has been told to get out of their rooms, grab your bags, all your belongings, and go into an interior room. They are expecting the worst to hit this particular area about 7:00 local time. That's in -- three to four hours from now.

And -- and I will tell you a lot of people here are worried about how strong of a storm this is going to be. We have heard Category 4, sometimes getting close to a Category 5. To put that in perspective, the last time the U.S. has seen a Category 5, that was in 1929 for Hurricane Andrew. And we all remember that that did some $35 billion in damages.

So, this is a powerful storm, some even calling it a monster storm that's going to hit the Baja Peninsula. And, at this resort, Suzanne, listen to this. When we checked in, they said, yes, we're prepared for a Category 3, but, if it's a Category 4, we have no idea what we're going to be able to withstand.

MALVEAUX: Oh, wow.

NGUYEN: Suzanne.

MALVEAUX: I hope they are ready. Thanks again for the good advice. And stay safe, Betty.

Well, forecasters everywhere are tracking Hurricane Jimena's furious advance towards the Mexican coastline. And one of them, of course, is our own CNN meteorologist, severe weather expert Chad Myers.

I want to go directly to Chad, who has got the very latest information.

Chad, what are you following?

CHAD MYERS, AMS METEOROLOGIST: Suzanne, I'm following a storm that's wobbling left and right and back and forth. And last night, about this time, this storm took a right turn, and it took a turn right towards Cabo, right toward to where Betty was, and then in the middle of the night turned back left again.

And now it's going to miss it again. And this is how this one degree wobble left and right can make such a huge difference. If you are under that eye wall, you are going to see winds to 135 miles per hour. That's not going to happen for Cabo San Lucas. That will not happen for San Jose del Cabo, which is the town that everybody lives in that works in Cabo San Lucas.

It will, though, travel itself right up the coast and dramatically hit the west coast of the Baja Peninsula as a Category 4, maybe a Category 3 hurricane. Then it will turn to the right. Then it will turn, in fact go all the way up into the Four Corners, up into Arizona and New Mexico. Love to see some that have moisture get to Southern California. That's really not very likely, as it does turn -- make the big right turn, as all hurricanes do when they get up to what we call the westerlies, those west winds that come in that direction and push it away.

We are going to keep our eyes on Betty, of course, down there in the hotel that I recommended, because I knew that hotel went through that storm, Category 3 storm.

MALVEAUX: Wow.

MYERS: And I knew they built it better than when it was before. So, there you go.

MALVEAUX: So, she's probably going to be OK in that hotel. Keep our fingers crossed.

OK.

(CROSSTALK)

MYERS: ... take care of her.

MALVEAUX: Thank you, Chad.

MYERS: Sure.

MALVEAUX: All right.

Yet another wrinkle in the release of the only man convicted of the deadly 1988 Pan Am bombing over Lockerbie, Scotland. Letters from the British government on the matter went public today -- why they have raised criticism from the Obama administration.

And the feds say they have nailed a large identity theft ring. What makes this one especially notable is one of the operation's many victims.

(COMMERCIAL BREAK)

MALVEAUX: T.J. Holmes is monitoring all the stories that are coming into THE SITUATION ROOM right now.

T.J., good to see you. What are you following?

T.J. HOLMES, CNN CORRESPONDENT: Hello. Good to see you as well, Suzanne.

Up first here: President Obama hosting a dinner at the White House tonight marking Ramadan. Of course, that's the holy month of Islam. The dinner comes almost two weeks after the president issued a video message marking Ramadan. This event it set to happen in the state dining room, will also highlight the contributions of American Muslims. Also, Bank of America offering to give some money back, yes, offering to pay back some of the billions in federal bailout aid it's received, in an effort to ease some of the government operations and some of the scrutiny over the bank's operations -- this report coming from "The Wall Street Journal."

Some analysts, however, wonder if it has the means to pay back the money right now and whether the government will actually let the bank do so. Both Bank of America and the Treasury Department declined to comment on the newspaper's report.

Also, some letters published today causing a bit of a stir -- British officials advised Scotland that there were no legal obstacles to returning the Pan Am bomber to his native Libya. That is according to these new letters we're just seeing today. They were published in England.

The release of Abdel Basset Ali al-Megrahi sparked criticism from President Obama, many others around the world, as well as the families of the victims of that Lockerbie bombing, most of those victims being Americans. Both Britain and Scotland insist, however, there was no deal made with Libya.

Finally here, the National Transportation Safety Board approved stricter recommendations today for medical helicopters. The board's action comes in response to several fatal crashes over the past two years, like the one you're seeing here, video from one that happened in Chicago last October. The NTSB wants better training and more sophisticated equipment for medical helicopters.

And that is a quick update for you, Suzanne. I will see you here shortly with some more updates.

MALVEAUX: All right, thank you, T.J.

HOLMES: All right.

MALVEAUX: FBI agents say that they have cracked a sophisticated and wide-ranging identify theft ring. Almost two dozen people are in custody for preying on countless victims. Now, no one was immune, not even the wife of Federal Reserve Chairman Ben Bernanke.

CNN Homeland Security correspondent Jeanne Meserve, she is joining us now.

How did the feds close in on this operation, Jeanne? What do we know about this?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well, it's very interesting. It's a case, Suzanne, that illustrates how even low-tech identity fraud can impact high-level individuals.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): As chairman of the Federal Reserve, it's Ben Bernanke's job to protect our money supply, but his own money was put at risk when his wife, Anna, became a victim of identity fraud.

After her purse was snatched at this Washington, D.C., Starbucks last summer, her identity and checking account were among those used by a crime ring to scam 10 or more banks out of more than $2 million.

Shonya Michelle Young, arrested Monday in Miami, allegedly used wigs and fake identity documents to impersonate legitimate account holders at banks. She and other members of the ring allegedly wrote counterfeit checks from one compromised account to another. But, when depositing, they would ask for some cash back. They often got it.

MARK RASCH, FORMER FEDERAL PROSECUTOR: The idea behind that is to make people feel comfortable. Why would you be breaking into somebody's bank account to put money in? So, these are all forms of what we call social engineering, ways to convince the bank that these transactions are ordinary and normal transactions.

MESERVE: Ten individuals have been charged in the case. Of those, three have pled guilty and three are still at large.

In a statement, the Fed chairman called identity theft "a serious crime that affects millions of Americans each year. Our family was But one of 500 separate instances traced to one crime ring."

(END VIDEOTAPE)

MESERVE: Court documents allege that the ring obtained information about some checking accounts from the Combined Federal Campaign for the National Capital Area, which federal workers use to make charitable contributions. The group says a very limited number of checks were involved, account holders were notified, and they have taken new steps to ensure the security of their system -- Suzanne, back to you.

MALVEAUX: It goes to show it can happen to everybody. Thank you, Jeanne.

Well, is President Obama's approval rating approaching a freefall? We have fresh poll numbers, and you will see just how much his job approval rating is sliding and who appears to be blaming.

And amid a looming report about the state of Afghanistan, what do you think about the war and the president's handling of it?

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now: California in the line of fire: 190 square miles charred, and firefighters are trying to get a leg up. We will show you the flying supertanker that may give it to them.

And CNN's Ali Velshi on the CNN Express -- Ali takes the pulse of people in a tough economy, a town hall subject, health care, and people are far from happy. And liquidating another Bernie Madoff asset -- the big-time Ponzi scammer's seaside home is for sale. You will get a tour of his relatively modest retreat.

I'm Suzanne Malveaux, and you're in THE SITUATION ROOM.

Well, worries are far from over. Worries about war, job loss, and money all appear to be conspiring against President Obama. Right now, fresh poll numbers show that -- something we have never seen regarding the president's approval rating.

We have assembled our team now to talk about. And we want to begin with our CNN national political correspondent, Jessica Yellin.

Jessica, what are you looking at?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Suzanne, summer has been hard on President Obama. His -- his support is eroding. And, from a president who ran on bipartisanship, he's losing it from a very important bloc.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): Health care deadlock, a ballooning deficit, and President Obama is taking it on the chin.

A new CNN/Opinion Research poll shows the president's approval rating is now at 53 percent, down three points in the last month, down 13 since April -- driving the slide, independents. CNN polling shows, for the first time, a majority of independents, 53 percent, do not approve of the way the president is doing his job. Forty-three percent approve.

UNIDENTIFIED MALE: Come on.

(SHOUTING)

YELLIN: Should the president blame those falling numbers on his top issue, health care reform?

OBAMA: You know, passing a big bill like this is always messy.

YELLIN: Well, yes and no. Fifty-three percent of Americans disapprove of his handling of health care reform. But guess what? The numbers are just as bad on general economic issues.

When it comes to the president's handling of the deficit, only 36 percent approve. Break it down, and only 25 percent of independents approve.

On taxes, 45 percent approve. Only 35 percent of independents approve. And those numbers have been on a downward slide for months.

CROWD: Yes, we can!

(APPLAUSE) OBAMA: Yes, we can.

CROWD: Yes, we can!

YELLIN: There is one group that's holding strong for the president: Democrats.

OBAMA: Thank you so much for your unbelievable dedication.

(APPLAUSE)

OBAMA: It's good to be here.

(CHEERING AND APPLAUSE)

YELLIN: CNN's polling shows, in recent weeks, the president's actually gained some support among Democrats.

KEATING HOLLAND, CNN POLLING DIRECTOR: That indicates that we may see the same pattern of polarization that we saw during -- during George W. Bush's administration reasserting itself.

(END VIDEOTAPE)

YELLIN: Now, it is noteworthy that the issues most hurting President Obama, the deficit, taxes and health care, are all issues the Republicans have targeted. This could be a sign that the Republicans' P.R. messages are working.

But, Suzanne, we should also point out that most presidents do see their poll numbers start to fall their first year in office.

MALVEAUX: So, not unusual.

I want to go also, as well, to a key report that is coming out. It is really about the state of the war in Afghanistan.

I want to bring back in our CNN senior White House correspondent, Ed Henry.

What do Americans think about the war effort so far, Ed? What are you finding?

HENRY: Suzanne, as you mentioned, this big report from General McChrystal, it's sort of his latest assessment of the situation on the ground in Afghanistan. We have heard from many other top officials. They believe the situation is serious and deteriorating.

And, right now, the public's mood is very sour on the war in Afghanistan. Take a look at this. Right now, our poll today is showing that opposition to the war has reached an all-time high. Only 42 percent of Americans support the mission right now. And look at how opposition has increased during the Obama presidency.

Back in April, opposition to the war was just 46 percent. In May it inched up to 48 percent. In July, 54 percent opposed -- now 57 percent, far more than a majority, saying they oppose the war in Afghanistan, they oppose the mission.

And what has been happening during that time, of course, there's been a sharp increase in the number of U.S. military deaths. Take a look at how the public views the president's handling of the situation.

Back in March, 67 percent approved of how he was handling the war, 29 percent disapproved. Now it slid 18 points. Only 49 percent of the public approving of the president's handling of the war, 46 percent disapproving.

And he's getting pressure from all sides. You saw it today in a column by George Will, from the right, saying he thinks it's time to pull out of Afghanistan. That's just a few days after liberal Democratic Senator Russ Feingold says the president needs a timetable to withdraw like he endorsed for Iraq, that he now needs that for Afghanistan.

We're told by Robert Gibbs, the White House press secretary, the president is going to have this new report by General McChrystal, bring it to Camp David with him tomorrow. He's got a lot of tough decisions ahead about whether to send more troops or not -- Suzanne.

MALVEAUX: Absolutely, Ed.

I want to talk more about the public perceptions of the administration as well, and President Obama.

Also joining me is CNN Senior Political Analyst Gloria Borger.

What does it mean, Gloria, for the president to be losing out on these Independents?

GLORIA BORGER, CNN SR. POLITICAL ANALYST: I think it's a real possible for him. Remember that President Obama won the election with 52 percent of Independent voters. That number is down considerably to 43 percent, and Independents are the margin of difference here for him.

Now, the key to keeping those people is, right now, they are worried about the deficit. They see the president as a big spender. They see him aligned with so-called liberal leaders in the Democratic Congress. So, what he's got to do when -- after Labor Day is kind of show them that he is the kind of so-called post-partisan president that many of them thought they were electing.

The good news for President Obama in this is that they are not realigning themselves with the Republicans yet, because the Republican Party still has very high disapproval ratings.

Now, Jessica, you've been watching something as well, which it looks like to be a generational gap in these numbers.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Absolutely. Well, we know the president did exceptionally well with the young during the election, and that has held strong. Sixty-five percent of the young still approve of the job the president is doing, but it's seniors that we keep talking about, especially in light of health care reform.

He has only a 42 percent approval with seniors. That's very low, and that's right now. So, our numbers don't necessarily tease out that it's because of health care reform, but it's likely that this is a direct effect of the current debate. And if the president is able to get some sort of health care bill through, if he's strong on seniors, protecting them, protecting their Medicare, we could see that number rebound.

BORGER: But don't forget, they're going to have to take on Social Security at some point, and that could cause some more problems.

YELLIN: Ah, that's next year. We'll worry about it later.

MALVEAUX: Well, it almost seems like a perfect storm here of some pretty bad numbers, bad poll numbers.

Ed, how does the White House deal with this?

HENRY: Well, you're right, and that's why we saw the president today jump on this new manufacturing report, suggesting, look, maybe there's been some growth out there in the economy, because the jobless numbers still very poor. You add that to health care, as you've been saying, and what we just talked about with Afghanistan, it is almost like a perfect storm for this president.

But what they say inside this building is, look, they heard a lot of this talk in the first 100 days, during the debate about the stimulus, that that all was lost. The president put his chips on the table, fought it out, and he won on the stimulus. They realize he's unlikely to get everything he wants on health care right now, but they are still very confident he's going to get at least a scaled-back bill that he can call a victory before the end of the year -- Suzanne.

MALVEAUX: Thank you, Ed.

And I'm wondering, if we're looking at these numbers, how health care actually impacts his job approval and how he's been doing so far. Has he increased in support?

BORGER: No.

MALVEAUX: Are people beginning to catch on to this, or is that getting worse?

BORGER: No. I think health care is a big part of the problem.

I think what the president has to do going forward is get a clear message about what he's really selling with health care reform. Is it universal access? Is it deficit reduction? Is he taking on the big, bad insurance companies? Is he going to save health care?

I mean, he doesn't have a clear message yet, which is why seniors are worried about this.

YELLIN: I do think that once he's really back in the game, Congress is back in session, we'll see the White House very strong with a clear message on where he stands on health care reform. And if he does that and if he gets a win, his numbers will go up, at least for a while, because everybody likes a winner. A win always bounces numbers.

MALVEAUX: And Ed, one of the things the numbers seem to be showing is that he's getting more support from Democrats, less support from Republicans.

How does he deal with bipartisanship in Washington, bringing health care reform, when it looks like the country is even more polarized now?

HENRY: It does. It's very difficult, and it seems more and more, when you look at the situation in the Senate, that, as Jessica was saying, that we're a pretty polarized nation, and that it's probably going to continue to be a polarized health care debate. And he's more likely to go down the route of using this procedural maneuver of just using only Democratic votes.

That's only going to polarize the nation more and suggest that he's not bringing people together. The White House is going to say, look, we've tried to work with Republicans, they haven't come along for the ride, and they're very likely to just go the partisan route to get some sort of a victory here. And I think he's going to -- as Gloria was saying, have to get more specific on health care -- going to have to get more specific about the mission in Afghanistan, too, to explain the stakes to the American so that those numbers don't continue to slide.

MALVEAUX: OK. Ed, Gloria, Jessica, thank you very much for making sense of all those poll numbers. We'll see how it works out.

Hundreds of colleges and universities are opting out of the well- known SAT as their entrance exam of choice, but the college board doesn't appear ready to fold. In fact, this nonprofit is proving to be a growth industry.

Astronauts on the Space Shuttle Discovery are prepping for the first spacewalk of their mission. We'll check in on their progress.

And southern California, why it could take weeks to get raging wildfires under control.

(COMMERCIAL BREAK)

MALVEAUX: The SAT has been the college entrance exam of choice for decades, but hundreds of universities are turning away from the SAT. It's unlikely it will fade away anytime soon, however, because as CNN's Carol Costello discovered, the SAT is big business.

CAROL COSTELLO, CNN CORRESPONDENT: Suzanne, some 800 universities are now SAT-optional for most applicants because they don't think it really demonstrates what your kid can do in college. So, is this a trend? Will more and more universities go SAT - optional.

Some critics say unlikely, and not just because many universities still value the SAT, but because the SAT is no longer a simple test, but an industry.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): They are the buzz words in the SAT biz -- "text anxiety."

ED CARROLL, THE PRINCETON REVIEW: I started in this business as a teacher and a tutor, a private tutor working with people in their homes. And I, after a while, found more like a test prep therapist.

COSTELLO: SAT tutor Ed Carroll says parents' desire to cure test anxiety has transformed what was a simple test into a growth industry.

Take New York's "Princeton Review." This for-profit test prep service pulled in $138.7 million last year in revenue, and it's just one of hundreds of such services across the country. Never mind the man who oversees the SAT says such anxiety-beating services are unnecessary.

LAURENCE BUNIN, THE COLLEGE BOARD: I always tell parents and students, keep it in perspective. The SAT is just one thing they look at. They're looking at your grades, they look at what else you do, sports, athletic, music, art.

COSTELLO: Still, the College Board, the nonprofit organization that offered that advice, sells its own online court for $69.95, and it offers a study guide for $21.99.

That bothers Robert Schaeffer of Fair Test, a consumer watchdog group that opposes pretty much all standardized tests from No Child Left Behind to the SAT. He claims the College Boards' drive to make money has impacted its mission to, quote, "connect students to college success and opportunity."

ROBERT SCHAEFFER, FAIR TEST: It's a huge business, multiple hundreds of millions of dollars a year in tests and test prep material that come out of our parents' pockets and into the pockets of test makers.

COSTELLO: The College Board does generate big money. According to its 2007 federal tax returns, the College Board pulled in some $621 million. Because it's nonprofit, it's tax exempt.

While the College Board would not comment on camera about how much money it brings in, it did tell us, "We do not generate profits. All revenues from our products, services, or grants are reinvested into improved services that support our mission."

But Schaffer says the nonprofit uses a lot of that revenue to line the pockets of its executives. SCHAEFFER: The top officers of the College Board, allegedly a nonprofit organization, earn $500,000, $600,000, $800,000 a year. That's where lots of that money is going.

COSTELLO: According to 2007 tax returns Gaston Caperton, the president of the College Board, made nearly $900,000 in salary, benefits, and perks. And 12 of the nonprofit's top executives made more than $300,000 a year in salary and benefits.

Schaeffer says that's excessive. He'd rather see more of the college board's money working to make the tests more fair for students who can't afford those pricey college prep classes. The College Board says it already does that.

BUNIN: We have a lot of free programs and services. Each year we give away $30 million, $40 million, $50 million worth of free services to low-income students.

(END VIDEOTAPE)

COSTELLO: As one expert put it, what citizens expect of a nonprofit and what the law says are different. It's not illegal for a nonprofit to turn a profit, so to speak, as long as those moneys go back into the organization.

It is also not against the law for nonprofits to pay their executives high salaries. The fact is, generally speaking, there are many large nonprofits who pay their executives just as much or more as the college board -- Suzanne.

MALVEAUX: Thank you, Carol.

A groundswell of unpopular issues piling up on Washington and the White House. The tables and latest polls turn on the Obama administration. What will it take to get back those approval ratings?

And a new wrinkle in the case of the sex offender accused of kidnapping and holding an 11-year-old girl for 18 years. His father says it could all be because of a brain injury.

(COMMERCIAL BREAK)

MALVEAUX: A groundswell of public discontent over health care reform, taxes, deficits. They are all issues that are piling up on Washington and the White House.

President Obama's approval ratings have dipped. And can he get them back up? That, of course, the question.

Joining me for today's "Strategy Session" are Democratic strategist Karen Finney and former Republican representative from Virginia Tom Davis.

Thanks for joining us.

I want to start out with these poll numbers here, obviously, taking a look at health care reform, where the president is doing. How is he handling health care?

Back in March, the approval rating was 57 percent. It's now at 44 percent. Disapproval -- again, it was 41 percent in March. Now more people, 53 percent, disapprove of how he's handling health care.

As those of you who have worked on legislation before in your experience, Karen, first of all, how does he approach the Democrats? How does he approach Republicans to try to turn this around?

KAREN FINNEY, DEMOCRATIC STRATEGIST: Look, I think a lot of us believe at this point that we're probably not going to see a bipartisan solution, so it may be time to kind of let that go and focus on getting something that all the Democrats can agree on. But the key to that is really having a clear message about what it is we're trying to accomplish. And also, I think articulating to the American people what it means for them, because, you know, we've had discussions about costs and death panels and all these things that really don't have anything to do with what we're really trying to accomplish in terms of ensuring access to quality, affordable health care, looking at some of the reforms that need to be done with regard to insurance itself.

So, I think a clear message and then, you know, getting the Democrats on board.

MALVEAUX: Tom, there's been a lot of discussion about having the president actually go ahead, be a lot more aggressive in signing his name and presenting legislation to the members of Congress, that that would be much more successful. We heard even former Senator Bob Dole suggest that to the president.

Is that one approach that would help him get more Republicans on board?

TOM DAVIS (R), FMR. VIRGINIA CONGRESSMAN: Well, I don't know if -- the difficulty he has is the leadership in both houses that moves this as Democrats, and they are bound to their caucuses. And they have certain principles that are kind of antithetical to what the Republicans want.

But the president has to get a hold of this. The longer this keeps dangling out there with the transparency it's gotten, and the arguments and the town meetings, the worse it's gotten for him and his party.

MALVEAUX: How does he do that? What would be the most important thing for him to do?

DAVIS: Well, I think the Democrats have to understand to some extent that their destinies are intertwined. If they don't get it through, it's going to be worse than getting through what they are talking about doing.

They're going to probably have to take a minimalist approach, get through what you can. If you can bring Republicans on board, great. But you can't wait forever, because then if it goes into next year, you don't get anything.

FINNEY: I think that's a really important point that, you know, Democrats in Congress, their destinies are tied to the president. That is what the people voted for. I mean, the president campaigned on doing exactly what he's doing, so they need to, you know, get behind the president and get behind something that they can all agree on.

MALVEAUX: Let's take a look at the numbers on taxes here. How is he handling taxes? Back in March, approval rating was 62 percent, but now it is just 45 percent.

These two issues, obviously health care reform and taxes, are linked here, and a lot of people are looking at this and saying, if you make more than $250,000, you're going to be taxed more under the Obama administration.

Is that hurting him ultimately, where there are folks, especially the Independents who support him, who don't want to see their taxes go up?

FINNEY: But again, I think that is part of the misinformation campaign that we've seen from the Republicans. And I think, frankly, they have been quite effective.

I mean, the truth is, under the economic recovery package, 95 percent of Americans actually got a tax break. And there's -- you know, in terms of...

MALVEAUX: How do you actually counter that though? How do you counter that message that seems if it's misinformation, if it's out there, and it's successful -- because you see the numbers going down -- what do you do?

FINNEY: Well, again, I think a clearer message to begin, because you have some folks in the House and some Democrats in the Senate, and the then the administration kind of saying slightly different things. I think everybody's got to be saying the same thing.

And certainly this is, you know, a breed-and-butter issue for Republicans. We sort of took defense off the table. They've gone back to taxes as an issue. We need to counter it with a much stronger message and much clearer picture about what the truth is.

DAVIS: Suzanne, Obama carried voters making over $250,000 a year. He won't carry them again. I think that's pretty clear.

And as the voters look and see what he's doing to that group, they see themselves coming next and looking at these mounting deficits. You can't solve this with people just making over $250,000 a year. I think they know they are next, and I think that feeds into this

MALVEAUX: I want to go into something related here, the latest on the handling of the budget deficit. We see in March, approval of 52 percent. Now down to 36 percent. That really is a dramatic drop here.

And is the president having a problem here when he points to former President Bush and says this is his fault, I inherited this? Obviously, people seem to be looking at this president and saying you're responsible, too, in some way.

FINNEY: Well, and, look, I think the president has taken responsibility. I think it's sort of a false argument to suggest that he's blaming the president.

It is a statement of fact that the numbers were where they were when he became president. I think he has taken ownership of it by passing, you know, the economic recovery package. He has said that health care reform has to be deficit-neutral. He has passed a budget, said he wants his budget to address the deficit.

MALVEAUX: All right, Karen. I've got to leave it there.

Thank you so much, Representative Davis. Appreciate it.

Well, it is a bizarre story virtually unlike any other missing persons case regarding the man accused of kidnapping then keeping a young girl for some 18 years. We'll hear from the FBI agent who followed the case. He was there when she was reunited with her mom.

And the latest on the blazes that the governor says are putting California up in flames.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: The are fires from the northern border all the way south, and from the Pacific to the Sierra Nevada. Fires, fires, fires.

(COMMERCIAL BREAK)

MALVEAUX: On our "Political Ticker," now that Ted Kennedy has been laid to rest, some politicians are wasting no time clamoring for his Senate seat. The latest interested party, Massachusetts Attorney General Martha Coakley. The Democrat has picked up nomination papers for the race, the first to do so.

Yesterday, Massachusetts Governor Deval Patrick set January 19th as the date for the special election for voters to pick Kennedy's replacement.

Meanwhile, we do know who does not want to be a senator, at least not right now. Republican Congressman Peter King of New York, he has decided not to challenge Democratic Senator Kirsten Gillibrand in next year's race, citing money woes. She, of course, replaced Hillary Clinton after Clinton left the Senate to become secretary of state.

New York Governor David Paterson appointed Gillibrand, but voters will decide if she'll serve the final two years.

And the Senate majority leader is not welcome to one ongoing Tea Party. The conservative caravan called the Tea Party Express stopped in Nevada. Participants expressed their dislike of Senator Harry Reid, some saying he should go. The Tea Party Express is rolling across the country en route to Washington.

And ice-cream sprinkled with controversy. Ben & Jerry's popular flavor Chubby Hubby is renamed Hubby Hubby temporarily. It will be served in Vermont ice-cream shops this month.

Some packages depict two men atop a wedding cake. The Vermont- based ice-cream maker is marking Vermont becoming the fourth state to allow same-sex marriage starting today. Not everyone thinks the law is sweet. Some are in the streets to protest.

And remember, for the latest political news any time, check out CNNPolitics.com.

Well, what a difference 10 months make. In November, New Jersey and Virginia voted blue, helping Senator Obama become President Obama.

Well, today, Democrats are hanging on for their political lives. There are governor races in both states.

And I want to bring in our CNN Deputy Political Director Paul Steinhauser.

With about two months to Election Day, are Republicans optimistic that they can score these victories in these critical states?

PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Yes, they're optimistic, Suzanne, for two reasons. One, it's tough being an incumbent in this climate. And two, we've got polls in both states showing the Republicans ahead.

In New Jersey, two new polls out today show the challenger, the Republican challenger, Chris Christie, ahead of the incumbent Democrat, Jon Corzine, the governor who's fighting for re-election. You know, a New Jersey Republican hasn't won statewide in 12 years, but Corzine is in trouble, and he's got his work cut out for him. He's got a lot of money, he's got time to bring it back, but he's got his work cut out for him

In Virginia, Suzanne, you've got a similar story. You've got the Republican ahead in that state as well. That person is Robert McDonnell, the former attorney general. He is ahead of the Democrat, Creigh Deeds, in polls.

Again, why should you care? If you don't live in New Jersey or Virginia, why should you care about these races? Because while they are local races, they also have national implications. They're kind of referendums on Barack Obama and the Democrats in Congress.

The Republicans would love to grab these seats away from the Democrats. They say it can give them momentum going into next year's big election -- Suzanne.

MALVEAUX: And Paul, there's also the issue of this 1989 masters thesis that was written by the Republican candidate, Virginia Attorney General Bob McDonnell. And it describes working women and feminists as detrimental to the family. It said government policies should favor married couples over "cohabitators, homosexuals or fornicators."

How does this impact the Virginia race?

STEINHAUSER: It could have a big impact. McDonnell says, listen, this is old news. He wants to talk about the future.

He wants to make this race about Barack Obama, the Democrats, about the economy. But the Deeds campaign and the Democrats have really hammered away. They've been trying to say that McDonnell is too conservative for the state, and especially the moderates in voter- rich northern Virginia. This thesis now gives them a lot of ammunition to fire away at McDonnell on that charge.

And one other thing. We talked about McDonnell yesterday. We showed the wrong picture of him. We showed Deeds instead -- Suzanne.

MALVEAUX: All right. Thanks for the clarification, Paul. Thank you.

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