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THE SITUATION ROOM

Interview With House Minority Leader John Boehner; Dick Cheney Speaks Out on Afghanistan Decision; Senate Set to Expand Hate Crimes Law; Earthquake Rocks Afghanistan; Interview With John Boehner; First- Time Homebuyer Fraud; Cheney: President Obama 'Dithering'

Aired October 22, 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: new skepticism about the U.S. economy and whether the president's policies are really helping -- a top White House official now acknowledging that the stimulus won't necessarily do all that much good down the road. Stand by for details.

Dick Cheney says President Obama seems afraid to make a decision -- this hour, the former vice president on the war this Afghanistan and his claim that the White House, including the president, the White House is now dithering.

And soda drinkers in New York State face the threat of paying what's being called a fat tax. The governor's controversial proposal to pay for health care makes a comeback.

I'm Wolf Blitzer in CNN's command center for breaking news, politics and extraordinary reports from around the world. You're in THE SITUATION ROOM.

President Obama says American values are offended when bailed-out companies write fat checks for their executives. He spoke at a -- the White House just a little while ago. The Treasury Department is moving forward with a plan to order pay cuts at seven big firms surviving on taxpayer money.

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

All right, Dan, explain what happened today.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, first of all, Wolf, you know, President Obama has always talked about how excessive risk-taking that led to the collapse, the financial collapse, should not be rewarded.

So, what you saw today in this announcement is really in response to that and also to public outrage. So, Mr. Feinberg, Kenneth Feinberg, has now wrapped up his review, and the Treasury Department will be imposing these cuts on these seven companies. Twenty-five top executives at these seven companies will see their cash pay cut by 90 percent.

Now, this will begin in November and go through the end of the year. So, we're talking about November and December. And then there will be a lower base salary put into play in 2010. Also, overall compensation will be cut by 50 percent.

One other thing: They will see their perks limited, such as getting some of these country club fees back or using private jets for personal travel. Now, Mr. Obama at the White House today praised the Treasury Department, and in particular Mr. Feinberg, for striking a balance between protecting the -- the American taxpayers and also trying to fix the financial system.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have always believed that our system of free enterprise works best when it rewards hard work. This is America. We don't disparage wealth, we don't begrudge anybody for doing well, we believe in success. But it does offend our values when executives of big financial firms -- firms that are struggling -- pay themselves huge bonuses even as they continue to rely on taxpayer assistance to stay afloat.

(END VIDEO CLIP)

LOTHIAN: President Obama says that much more needs to be done. And he called on Congress to pass some kind of legislation that will give stockholders more of a say in the compensation of these executives, Wolf.

BLITZER: Dan, stand by for a moment. I want to get right back to you.

There's another move in the works here in Washington to crack down on pay policies that contributed to the financial crisis. For the first time, the Federal Reserve is now proposing that it police executive compensation at thousands of banks, including many that never got a bailout. The Fed wouldn't set pay, but it could veto pay policies that seem too risky or too reckless.

Let's bring back our senior political analyst, Gloria Borger, and Dan Lothian to discuss what's going on.

Gloria, some will start complaining that the federal government is weighing in way too heavily right now on private enterprise, if you will, on the free market system.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Sure, they will. That's -- that's inevitable.

But what the Fed is really trying to do today is to make sure that the banks don't encourage their bankers to have another meltdown, such as the one that we saw before. They want to encourage pay packages that say to bankers, look at the long term. Don't make reckless investments that you can profit from in the short term, but consider the long-term future of your banks.

So, they're going to be looking at these pay packages. They're not going to set caps, Wolf, on salaries. So, there will be plenty of people making multimillions of dollars. But they are going to take a look at executive compensation and say, it cannot be geared towards the kind of short-term gain that brought us the meltdown in the first place.

BLITZER: Dan Lothian, listen to this exchange that Jessica Yellin just had with Ken Feinberg over at the Treasury Department. He was announcing these pay caps on these seven bailout firms.

Listen to this.

(BEGIN VIDEO CLIP)

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Some of these companies, when they accepted the bailout, did not know that their salary, their executive salaries, would be capped. Is it un-American for the government to tell companies what they can pay employees?

KENNETH FEINBERG, WHITE HOUSE PAY CZAR: It's not a good idea for -- for the United States government to start micromanaging compensation practices at American businesses. But that's not this case.

These are, under the statute, seven specific companies that are, in effect, owned by the taxpayers of the United States.

(END VIDEO CLIP)

BLITZER: So, you hear, Dan, he's making quite a distinction between the bailed-out companies to the tunes of tens or -- or hundreds of billions of dollars, as opposed to all the other companies that won't be directly impacted by these rules.

LOTHIAN: That's right, because companies, Wolf, that did not receive any of this bailout money will not have these restrictions. They can still pay their -- their executives whatever they want.

And, you know, what the White House will point out again is, if any of these executives are not happy about this pay cut, they have to realize that the reason they have a job is because taxpayers have really -- have already put up all of this money to keep these banks solvent. So, they can't really complain now that their pay is being cut, when they have a job because of taxpayers in the first place -- Wolf.

BLITZER: Any political downside, Gloria, to the White House taking these steps?

BORGER: Well, you know, sure there is, Wolf. I mean, there are going to be people who say, this is big government, that it's -- it's going to do just what Dan was talking about, which is discourage good executives, have them leave the business entirely. It's going to slow down the process of getting these banks out of the trouble that they're in right now.

But, in the -- in the long term, Wolf, when you look at what the Fed is -- is -- is planning to do, it's -- it's trying to ensure that these kinds of problems don't happen again.

BLITZER: Gloria Borger and Dan Lothian, guys, thanks very much. A top White House official now says the president's economic stimulus package has done about all it can to jolt the economy and generate jobs. The economic adviser at the White House, Christina Romer, offered that assessment to Congress today, amid very intense debate about whether a second stimulus is now need.

(BEGIN VIDEO CLIP)

CHRISTINA ROMER, CHAIRWOMAN, COUNCIL OF ECONOMIC ADVISERS: Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009. And, by mid-2010, fiscal stimulus will likely be contributing little to further growth.

(END VIDEO CLIP)

BLITZER: That's a gloomy assessment right there. She has a lot more to say. And we're going to stay on top of this.

The American people are sending some mixed messages about the economy right now and about the president's handling of the recession.

Let's bring in our senior political correspondent, Candy Crowley. She's working this part of the story for us.

The mixed messages clearly reflected, Candy, in our new public opinion poll.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: They are, indeed.

And you know, we -- we so often separate this country between the blue states and the red states or the South and the North, the -- either coast. And now we're looking at what is a new kind of divide. And that is the people who look at, say, Wall Street and some other indicators about what the economy is doing, and then there are the people that live this economy.

(BEGIN VIDEOTAPE)

(BELL RINGING)

CROWLEY (voice-over): A week ago, Wall Street rang out a day above the 10000 mark. There are economic predictions the final quarters of this year will show economic growth.

Chiming in now, without celebration, the American people -- for the first time since December, the percentage of Americans who describe the economy as very poor has gone up to 42 percent. On Main Street, forecasts of economic growth and Wall Street milestones do not speak as loudly as other figures.

The jobless rate is still high. Some people are beginning to come to the end of their unemployment benefits. And small businesses continue to struggle. The unknown is also a powerful thing.

Martin Bailey once served as chairman of President Clinton's Council of Economic Advisers.

MARTIN BAILEY, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: What I think many people are sensing is a fear that this -- this recovery may not be as strong as the typical one, and, in fact, may be more like a jobless recovery.

CROWLEY: Overall, the latest CNN/Opinion Research Corporation poll shows 84 percent of Americans think the economy is either poor or very poor. In the glass-half-full column, more than two-thirds believe the worst is over and the economy has stabilized or is improving.

BAILEY: The main thing that makes it better is that we have sort of taken the Great Depression off the table.

CROWLEY: So far, the public's assessment of the economy does not seem to be taking much of a toll on the president's policies.

OBAMA: There's no question that the steps we have taken have improved the overall climate for small business across the country, But there's also no question that we have got a long way to go.

CROWLEY: In general, Americans seem to share that view. Fifty- six percent say the president's policies have or will improve the economy.

In short, beyond Wall Street, outside the wonky world of economic predictors, most Americans believe the president has made things better, the worst is over, but increasing numbers say it is still very bad out there.

(END VIDEOTAPE)

CROWLEY: Changing those numbers, of course, is just a matter of the economy changing. But several economists I talked to today say there is one big problem and one worry they have when they look at these sorts of numbers.

And that is, on an economy that is based so much on consumer spending, when you see how consumers are viewing the economy, what it means is, they won't spend. So, it becomes a sort of vicious cycle. Consumers need to spend in order for the economic recovery to take off.

But, when they look and see that the recovery hasn't taken off, they don't spend.

BLITZER: And the key...

CROWLEY: So, that's what's worrisome here.

BLITZER: The key indicator is the jobs. Are the jobs coming back? And Christina Romer, the White House economic adviser, today...

CROWLEY: Right. BLITZER: ... said, probably throughout next year, all of 2010, the unemployment number will remain at around 9.5 percent. That's a lot of unemployed people.

CROWLEY: It is. And that's -- that's a number that's so understandable across the board. And when you start talking to people about gross domestic product, you know, their -- their eyes glaze over. When you start talking about unemployment, immediately, you get it.

BLITZER: Millions of people looking for work right now. And they're going to continue looking for work...

CROWLEY: Yes.

BLITZER: ... or at least for the foreseeable future. Thanks very much, Candy.

CROWLEY: Sure.

BLITZER: Dick Cheney says America's foreign policy is adrift right now. He's saving some of his toughest criticisms for the president's handling of the war in Afghanistan.

Is Mr. Obama being deliberate, or is he dithering, as Dick Cheney argues?

Plus, an openly gay man says he was attacked because of his sexual orientation. Should that be considered a hate crime? Dana Bash has the story.

And they're trying to live the American dream, but there's a catch. Their parents came to this country illegally.

(COMMERCIAL BREAK)

BLITZER: Earthquake in Afghanistan. Let's get some details just coming into THE SITUATION ROOM right now.

Fredricka Whitfield standing by.

Fred, what do we know?

FREDRICKA WHITFIELD, CNN CORRESPONDENT: So, Wolf, what we understand is an earthquake with a magnitude of 6.1 took place somewhere about 178 miles northeast of Kabul. Our own Pentagon correspondent, Chris Lawrence, is actually in the Kabul area. And he said that he actually felt it.

So, it's quite the tremor being felt from this 6.1 earthquake. Apparently, it has shaken a lot of buildings, not just in Afghanistan, but in nearby Pakistan as well. We don't have any more information about what kind of damage that may have resulted, but this taking place just moments ago. This is the latest that we have about this pretty sizable earthquake being felt by many people, including our own there on assignment -- Wolf. BLITZER: Yes, as if they -- they didn't have enough problems in Afghanistan, now they have an earthquake they have to deal with as well.

WHITFIELD: Right.

BLITZER: Fred, we're going to get some more information and get back to you. Thank you.

Here in Washington, the Senate is preparing a vote and send to the president a bill that would make anti-gay violence a hate crime.

Our report contains some language that viewers may find offensive.

Let's go to our senior congressional correspondent, Dana Bash. She's working the story on the Hill.

There are some who oppose this legislation, a lot of people in favor of it, Dana. But set the scene for us.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, in terms of those who oppose, many Republicans do. They say that it's not necessary to make it a federal offense to attack someone because they're gay.

They also are very unhappy that Democrats have attached this hate -- hate crimes legislation to a must-pass defense bill. But, Wolf, Democrats admit they had to in order to get the votes to pass this.

Now, this is named for Matthew Shepard. You remember him, of course. He was a young man tied to a fence and beaten to death about a decade ago. Well, we talked to somebody who was a victim of a hate crime who lived to tell his story and says this legislation is crucial.

(BEGIN VIDEOTAPE)

BASH (voice-over): When Todd Metrokin came here for late-night pizza last summer, he offered a slice to some people sitting outside.

TODD METROKIN, HATE CRIME VICTIM: I thought it was a nice exchange. And, as we were walking away, my friend mentioned, you know, that he said -- called me a faggot under his breath.

BASH: As they walked through this Adams Morgan neighborhood in D.C., Metrokin didn't realize they were being followed, until they were suddenly attacked.

METROKIN: The attack occurred right about here.

They were calling us names, "faggot."

BASH (on camera): What was the last thing you remember?

METROKIN: I -- the last thing I remember was the first hit. BASH (voice-over): He woke up in the hospital looking like this, bruises and broken bones, even a shoe mark on his face.

METROKIN: Somebody had to actually stomp on my face while I was on the ground to achieve that. And that's when it became just so crystal clear to me the kind of hate that requires someone to do that.

BASH: Attacks like this will now be a federal offense under legislation expanding the hate crimes law, which now covers race, color and religion, to also include victims targeted because of their sexual orientation.

SEN. PATRICK LEAHY (D-VT), JUDICIARY COMMITTEE CHAIRMAN: Violence against members of any group because of who they are is not going to be tolerated in our country.

BASH: Many Republicans object, arguing violent crimes are already illegal, and this creates what they call thought crime.

SEN. JOHN MCCAIN (R), ARIZONA: I do not believe an expansion of the federal criminal code is necessary to cover a certain class of citizens from -- quote -- "perceived injustices."

BASH: But supporters note this would punish acts, not beliefs, and point to government figures showing crimes against gays and lesbians are on the rise, and say federal dollars, attention and penalties this new law will provide are needed.

OBAMA: And I will sign it into law!

(CHEERING AND APPLAUSE)

BASH: Politically, the White House hopes passing this long- fought priority in the gay community will ease frustration that President Obama is slow to act on their issues.

(END VIDEOTAPE)

BASH: Now, gay rights groups do plan to release statements praising the president and congressional Democrats for passing what they will call the first piece of civil rights legislation for lesbian and gay Americans.

But, Wolf, privately, gay activists say that there is still some sufficient anger in the gay community because they do -- don't believe that the president is acting on other very big priorities fast enough. Those priorities are, of course, reversing don't ask, don't tell and also the Defense of Marriage Act -- Wolf.

BLITZER: So, when do we expect final passage that will enable the president to sign this into law?

BASH: Expect it either tonight or tomorrow. It's still up in the air. I think they're still negotiating that as we speak here in the Senate, but by the end of the week. That is certainly the plan. And expect a big signing ceremony sometime soon at the White House. BLITZER: Yes, within a matter of days, I'm sure.

All right, Dana, thank you.

Many are A students with big dreams for their future, but they're paying a price for decisions made by their parents. There are hundreds of thousands of undocumented students in the United States right now.

CNN's Thelma Gutierrez is -- has our story for us.

Thelma, I understand this young woman's parents came to the United States illegally, but she's a -- a brilliant student?

THELMA GUTIERREZ, CNN CORRESPONDENT: Absolutely, Wolf. In fact, many of these students came to the United States as small children. They say the United States is the only country they have ever known. And they argue that they're not looking for a handout, just a path to legalization, so that they can use their degrees to give back to society.

(BEGIN VIDEOTAPE)

(CHEERING AND APPLAUSE)

UNIDENTIFIED FEMALE: GPA of 4.2.

(APPLAUSE)

GUTIERREZ (voice-over): Michelle graduated with high honors from high school. She was on the school swim team...

MICHELLE, USC STUDENT: The Latina festival is about to start.

GUTIERREZ: ... and a student leader on campus.

MICHELLE: I was accepted to nine schools.

GUTIERREZ (on camera): Nine universities?

MICHELLE: Yes.

GUTIERREZ (voice-over): Including Duke, Cornell, Berkeley, and USC wanted Michelle. But she couldn't go because of a family secret. Michelle and her parents entered the United States illegally.

ZAK TAY, MICHELLE'S HIGH SCHOOL TEACHER: They do have the potential to go to big universities, but there's no money. You know, and that does limit their dreams.

GUTIERREZ: Michelle is one of some 2.5 million undocumented students. She can't apply for federal aid because of her immigration status. And she can't work legally either.

(on camera): Do you ever worry that you will be arrested or deported, either you or your family? MICHELLE: That's definitely a fear that's hard to live with.

GUTIERREZ (voice-over): Michelle says her parents brought her from Guatemala 10 years ago. Her teachers soon noticed Michelle was an academic star.

(APPLAUSE)

VERONICA BENNETT, MICHELLE'S HIGH SCHOOL TEACHER: She has a goal. She has a focus. And it's going to be dentistry. And she's going to get there in whatever way she can.

GUTIERREZ: Immigrant rights groups are calling on Congress and President Obama to pass the federal DREAM Act, which would create a path to legalization for students like Michelle.

LUPE MORENO, CALIFORNIA COALITION FOR IMMIGRATION REFORM: No.

GUTIERREZ: The DREAM Act infuriates critics, like Lupe Moreno of the California Coalition For Immigration Reform.

MORENO: Nobody has compassion for my children. I have no compassion for them. Let them -- let them go to their country and demand of their country what they're demanding of our country.

GUTIERREZ: But Michelle's dream is still alive, thanks to a private full four-year scholarship from the University of Southern California, where she wants to study dentistry.

MICHELLE: We want to be doctors, dentists, professionals that are going to impact the -- the world. And -- and the U.S. should feel proud to have these type of people here.

(END VIDEOTAPE)

GUTIERREZ: And there are 133 legislators in Washington right now who have signed on as co-sponsors of the federal DREAM Act. In fact, when the president was campaigning himself, he said that he would make the DREAM Act a priority.

And the students are hoping that he hasn't forgotten -- Wolf.

BLITZER: Thelma Gutierrez with a controversial story -- thanks, Thelma, very much for that.

This note to our viewers: Tonight, "Latino in America," CNN's groundbreaking look at how Latinos are changing America, continues, part two tonight. The special airs at 9:00 p.m. Eastern -- Eastern. It will also be simulcast in Spanish on CNN en Espanol.

Coming up: Chris Lawrence. He's is in Kabul, where there's just been an earthquake. We're going to check in with him and to see what is going on, just what that country doesn't need right now.

And, also, a massive crackdown on Mexican drug cartels -- what's going on? Hundreds of arrests made nationwide -- we have the details. (COMMERCIAL BREAK)

BLITZER: A strong earthquake in Afghanistan also rattling parts of Pakistan.

Chris Lawrence is on the scene for us in Kabul, where he's been reporting on the war.

But, Chris, the last thing this country needs right now is an earthquake. I take it you felt it where you are?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Yes, Wolf.

It's -- it's almost 1:00 in the morning here. And this happened about 12:30 in the morning. I -- I had just gone to bed probably about an hour ago. And I woke up to just the shaking. You know, you -- we could feel pretty much the entire house that we're living in here in Kabul shaking.

And I -- I lived out in California for a long time. So, I have -- I have been through a lot of earthquakes. And I know the last thing you want to do when -- when you're shaking and it's nighttime is to go stumbling around in the dark while the shaking is going on. So, you -- you know, I laid there and I waited and waited and waited.

But the thing about this earthquake that I thought was so unusual was just the -- the length of time that the shaking went on. I have been through a lot of earthquakes where it lasts maybe less than 10 seconds, sometimes as little as like five seconds of shaking.

This went on at least about 20 seconds, if -- if not longer than that. And it was pretty considerable shaking. We could definitely feel the house moving here. I'm told it was about a 6.1-magnitude quake. And the epicenter was somewhere in the Hindu Kush region.

Probably the closest city to that area is a city called Faizabad. To give you some perspective of where that is, it's probably about 175 miles from -- from here in Kabul. And I'm told the -- the quake was -- the depth of the quake was about 103 miles deep.

That, to me, says -- you know, that's not close. You know, to be about 175 miles away and for us to feel that amount of shaking for -- for that length of time was pretty unusual -- Wolf.

BLITZER: And you're saying it happened around midnight your time there, in the middle of the night. So, we have -- I take it we have no reports yet of any injuries or deaths or damage. It's about 100 -- you say, 150 miles or so from Kabul, the capital?

LAWRENCE: Yes.

And the -- and the thing about that, Wolf, is, you know -- you know, when a quake like this happens out -- out West, on the West Coast of the U.S., you know, immediately, people start calling in or e-mailing and -- and calling in to police, and then get the helicopters out. And you start to get instant, instant accounts of what happened.

You know, that doesn't happen here in Afghanistan, obviously. Another big difference is, out on the West Coast, where you get a lot of earthquakes there in the U.S., you know, most of the older buildings have been retrofitted, reinforced, and all the newer buildings have been built specifically up to a code to withstand earthquakes.

I can guarantee you that's not the -- not the case here in Afghanistan. And, in a country that's, you know, very spread out, very rural, a lot of places with no paved roads, it -- it will be very difficult to -- to get an immediate assessment of what's happened, especially in the middle of the night.

We will probably have to wait until daylight to start trying to talk to some authorities, and -- and people can get out and start looking around, and -- and try to make some contact with -- with folks around the country.

BLITZER: And I'm sure the U.S. military and the NATO allies, the other troops, not necessarily expecting to have to get involved saving people's lives in an earthquake. But I'm sure they will do whatever they can in this kind of an emergency situation.

We're going to get back to you, Chris. Thanks very much. Stand by.

Chris Lawrence, our Pentagon correspondent, is in Kabul right now.

Let's bring in the top Republican in the House of Representatives, the minority leader, John Boehner of Ohio, who's joining us.

Mr. Leader, thanks very much for coming in.

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: Wolf, it's good to be with you.

BLITZER: Certainly an earthquake in Afghanistan. Given the enormous problems they already have, it's the last thing they need right now. But I'm sure the U.S. troops will do whatever they can to help in this kind of humanitarian emergency situation.

Let's talk about Afghanistan for a moment. I also want to talk about some other issues.

But what's wrong with the president of the United States, the commander-in-chief, spending some quality time with the military, the intelligence community, members of Congress, the top leadership, experts outside the government, and trying to figure out what to do now given the fact that if he deploys additional troops, you're putting a lot more young men and women in harm's way?

BOEHNER: Well, Wolf, this is a difficult decision. And I told the president that himself when I was at the White House several weeks ago. But this deliberation has been going on since Labor Day.

And my concern is that the troops that we have there today are in greater jeopardy as a result of the uncertainty that is being caused by the delay in this decision. And so I think there's enough information in the president's hands. And I do believe that the quicker he makes this decision, the quicker General McChrystal can get on with the task at hand and bring more safety to those troops who are on the ground today.

BLITZER: Because, as you remember, and I certainly remember, when President Bush was deciding whether to send additional troops in for the so-called surge in Iraq, he was deliberating not just for weeks, but for months before he came up with that final decision as well. He wanted to make sure he had it right. And it seems, at least as of now, to be paying off somewhat, that surge in Iraq.

So, isn't the president, the current president, doing what the former president did?

BOEHNER: Well, listen, I understand the deliberations. I just think they've gone on awfully long.

And secondly, the Hill's been asking for General McChrystal to come to the Hill and testify. This has been a bipartisan request in both chambers of the Congress, to have General McChrystal come up so members of Congress and the American people can understand the challenges we're facing in Afghanistan, and really understand the strategy that he's proposing. It has been unusual that the president has not allowed General McChrystal, our commander in the theater, to come and testify.

BLITZER: Have you asked for General Petraeus?

BOEHNER: We've asked...

BLITZER: McChrystal's boss, the central commander.

BOEHNER: We've asked for one or both. But at the end of the day, it's General McChrystal who's on the ground in Afghanistan. He's the one out in the villages talking to the troops every day. And it's his strategy that the president is considering.

BLITZER: Let's talk a little bit about the economy right now. It's a sensitive subject.

Christina Romer, the White House economic adviser, saying today that the economic stimulus package that the Congress passed without a whole lot of Republican support, she says has saved or created between 600,000 and 1.5 million jobs, which is a pretty good number if you think about 600,000 people or 1.5 million people.

BOEHNER: Well, I don't know where these numbers come from. All I know is this -- the president said that if the stimulus bill were to pass, that unemployment would not exceed 8 percent. It's now nearly 10 percent. And secondly, three million Americans have lost their jobs since this bill was signed into law. And it's pretty clear that the bill is not working. And that's because it's all about a bunch of government spending and not enough about allowing money to stay in the hands of American families and small businesses.

BLITZER: Well, she makes the point that instead of three million people losing their jobs, it would have been four million people potentially losing their jobs if there had been no economic stimulus package. Let me rephrase the question. Is it time for a new economic stimulus package? Because this one, at least according to Christina Romer, seems to have run its course and it's not necessarily going to do much in the next year.

BOEHNER: Well, I'm really concerned about the talk about another stimulus bill. It sounds like more spending, more taxes and more debt. Exactly what the American people don't want.

If we're serious about getting the economy going again, the president ought to consider some of the ideas that we sent to him and sent to speaker Pelosi outlining ways to allow the American people to keep more of what they earn. Because until the American people begin to start spending more and small businesses begin to start creating jobs, I don't think that we're going to get out of this.

BLITZER: Let me ask you a very political question based on a story that was posted today at Politico.com by Jim VandeHei and Mike Allen. They write this -- and I'll read you the lead and then we'll get your reaction. "Many top Republicans are growing worried that the party's chances for reversing its electoral routs of 2006 and 2008 are being wounded by the flamboyant rhetoric and angry tone of conservative activists and media personalities, according to interviews with GOP officials and operatives."

Are you among those GOP officials and operatives who are worried about some of the so-called flamboyant rhetoric that we're hearing against the Democrats and against the president?

BOEHNER: Listen, Wolf, I think we're going to have a very good year next year. And Republicans have to do two things.

We've got to continue to stand on principle here in Washington. And whether it's against some of the proposals like this health care proposal, or higher taxes, or more spending. But in addition to that, we have to be the party of better solutions.

When I handed Nancy Pelosi the gavel in January, I said that if we had to oppose our new president, or oppose our Democratic colleagues in Congress, it was our obligation to say how we would do it better. And I thought we had a better solution on the stimulus plan, a better solution on the budget, a better solution on cap and trade, their national energy tax. And I think our ideas about making the current health care system work better are much better solutions than their big government-run health care plan.

BLITZER: So, is the flamboyant rhetoric, the angry rhetoric, helping or hurting Republicans?

BOEHNER: Listen, I know what I have to do here in the Congress. And I know what my colleagues have to do. We've got to continue to engage the American people, communicate with them about what's happening here in Washington, what the Democrat majority is doing, but what our better solutions are. And we're going to continue to do that.

BLITZER: John Boehner is the top Republican in the House.

Mr. Leader, thanks for coming in.

BOEHNER: Wolf, good to be with you.

BLITZER: Allegations of widespread fraud could threaten a program to help first-time homebuyers.

And graphic accounts of the deadly D.C. Metro train crash. A new documentary takes all of us where only one -- the only first responders at the time were allowed to go.

And how commercial airline pilots managed to fly more than 100 miles past the airport where they were supposed to land. What happened?

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

(COMMERCIAL BREAK)

BLITZER: Widespread fraud could jeopardize efforts to extend that $8,000 first-time homebuyer credit.

Let's go to Capitol Hill. Our congressional correspondent, Brianna Keilar, is looking into this story.

Some astonishing findings from Treasury, I take it, Brianna. What's going on?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Yes, Wolf. Of the million-plus Americans who have claimed this tax credit, including hundreds of thousands who would not have purchased a home without it, an IRS watchdog says of the wrongful claims, some of them could be fraud.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): Almost $4 million in first-time homebuyer tax credits were doled out to children. The youngest, a 4-year-old.

J. RUSSELL GEORGE, TREASURY DEPARTMENT: Most indications are that the parent is attempting to bypass the income limitations for seeking the credit by attributing the home purchase to a minor.

KEILAR: The IRS also OK'd $20 million in tax breaks to people who filed their taxes using only a taxpayer ID number, which doesn't guarantee they are living and working legally in the United States. And one of the most egregious examples of possible fraud?

GEORGE: ... that among those who apparently wrongly claimed the credit are a number of Internal Revenue Service employees.

KEILAR: Still, the National Association of Realtors estimates the first-time homebuyer program has generated 355,000 home sales that wouldn't have happened without the tax credit. And Democratic and Republican lawmakers are eager to extend the $8,000 tax break which expires December 1st. They want to buoy the depressed housing market as it goes into its traditionally slow season by reaching Americans who will legitimately use the credit, like Vina and Chris Gorres.

VINA GORRES, HOMEBUYER: It's been a very long process for us. It's been almost over a year that we've been looking for a house.

KEILAR: As they expand their family, they're eager to expand their living space and take advantage of the tax break.

CHRIS GORRES, HOMEBUYER: It definitely doesn't hurt. It would be a nice bonus to have.

(END VIDEOTAPE)

KEILAR: What became clear in this hearing today on Capitol Hill was that in an effort to get this money out the door, the screening process by the IRS really wasn't all that tight. Then in May, the IRS included some additional screening measures, and they're also now, Wolf, asking Congress for more authority to make their rules even tighter should Congress extend this tax break.

BLITZER: Brianna Keilar up on the Hill working the story. A lot of importance for a lot of people out there.

Thank you.

Dick Cheney's claim that the White House is dithering in Afghanistan. Should President Obama wait to see the outcome of the elections? We're going to talk about that and more in our "Strategy Session."

Plus, U.S. strikes at brutal Mexican drug gangs. We're taking a closer look at the huge operation under way by U.S. agents right now and the violent cartel known as La Familia.

(COMMERCIAL BREAK)

BLITZER: New finger-pointing over the failures in the war in Afghanistan. The former vice president, Dick Cheney, hitting hard at the Obama administration.

Our Brian Todd is following this latest war of words that's going on.

Brian, ,it's heating up. BRIAN TODD, CNN CORRESPONDENT: It sure is, Wolf. And the title of Dick Cheney's speech says it all. It's called "Concerns About America's Foreign Policy Drift." How's that for ambiguity?

He slams President Obama for changing the missile shield plan, for pursuing better relations with Iran, and for what he called "dithering" over what to do in Afghanistan.

(BEGIN VIDEOTAPE)

RICHARD CHENEY, FMR. PRESIDENT OF THE UNITED STATES: President Obama now seems afraid to make a decision and unable to provide his commander on the ground with the troops he needs to complete the mission.

TODD (voice-over): Dick Cheney says it's time for the president to give U.S. forces a clear mission in Afghanistan and the means to achieve it. Since leaving office, Cheney's never needed much of an excuse to tweak the current administration. And a remark by Mr. Obama's chief of staff, Rahm Emanuel, on CNN's "STATE OF THE UNION" gave the former vice president another opening.

RAHM EMANUEL, WHITE HOUSE CHIEF OF STAFF: And when you go through all the analysis, it's clear that, basically, we had a war for eight years that was going on that's adrift, that we're beginning at scratch and just from the starting point after eight years.

TODD: Cheney says when Obama's staff arrived at the White House, the Bush team handed them an updated Afghanistan strategy.

CHENEY: The new strategy that they embraced in March with a focus on counterinsurgency and an increase in the number of troops bears a striking resemblance to the strategy we passed to them. Now they seem to be pulling back and blaming others for their failure to implement the strategy that they embraced last March.

TODD: The Obama team says they increased troop levels in March after their predecessors didn't.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Given the fact that an increase in troops sat on desks in this White House, including the vice president's, for more than eight months, a resource request filled by President Obama in March.

TODD: Will Cheney's criticisms increase the pressure to send more troops?

DAVID GERGEN, CNN SR. POLITICAL ANALYST: The Cheney speech could help to crystallize the arguments from conservatives, but I think the true pressure is coming from the general on the ground, General McChrystal.

(END VIDEOTAPE)

TODD: Now, the White House said today the president's decision could come at any time. Clearly, one of the most highly anticipated announcements of his young presidency -- Wolf.

BLITZER: Brian, what did Dick Cheney say about the president's policies toward Iran?

TODD: Well, he said that the president seems to be just pursuing better relations for better relations' sake, and that diplomacy won't work unless Iran fears real consequences. But Secretary of State Clinton said this week the administration is pursuing a dual-track approach, talks and sanctions, and that while the door is open to Iran for talks, it is not open-ended.

BLITZER: Brian Todd, thanks very much.

Let's bring in our "Strategy Session" guests.

Joining us now, Don Baer. He's a Democratic strategist, has clients in the financial and health care industries. And Mary Matalin, our CNN political contributor, the Republican strategist.

Eight months, Dick Cheney and George Bush sat on the recommendations of the military to deploy more troops to Afghanistan? And it took President Obama to finally make a decision to send more troops out as soon as he took office, Mary?

MARY MATALIN, REPUBLICAN STRATEGIST: Can you even say that with a straight face?

BLITZER: That's what they're saying at the White House.

MATALIN: It's one thing for the press secretary for the...

(CROSSTALK)

BLITZER: Is it factually true?

MATALIN: It's completely untrue.

BLITZER: You worked for Dick Cheney.

MATALIN: Of the troops that McKiernan, the predecessor to McChrystal, asked for, a third of them were remissioned to Iraq. The following two-thirds that the administration, the Bush administration, was asked to hold on by the incoming Obama administration. So, that's dissembling.

What the chief of staff said on Sunday on this network...

BLITZER: Rahm Emanuel.

MATALIN: ... that there was no plan, they had to start from scratch.

The Bush administration, in an unprecedented transition, handed them a plan. Again, the national security advisers said sit on the plan. They adopted the plan in March and they're still dithering. They've had the benefit of the consultations of the best minds in defense and foreign policy. They've had it for a year. It's time to make a decision.

BLITZER: You worked in the White House during the Clinton administration, Don. Why are they still dithering?

DON BAER, DEMOCRATIC STRATEGIST: I don't understand this "dithering." I think what the American people want is for the president to apply his judgment, listen to what the experts say, and move forward on this.

And clearly, he's going to do that after he's heard the evidence and made his decision. It's his decision.

And with all respect to the former vice president, for him to be leveling a charge about dithering after the many, many years in Afghanistan when we didn't complete the mission, and the many, many years in Iraq where we didn't finish the job, I just don't think is an accusation that works.

BLITZER: Hold your thoughts, guys, because we're going to take a quick break, continue this conversation.

A lot more of our "Strategy Session" coming up.

We're also taking a closer look at President Obama's to-do list. Is it getting longer?

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

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

Our friend Mark Halperin of "TIME" magazine, he says that there's a lot of stuff the president is not doing right now. He's punting, delaying acting on immigration reform, for example, climate deal, deficit reduction, ending "Don't Ask, Don't Tell," don't pursue, all of that.

Go ahead and explain. Why is the president doing everything at the same time?

BAER: Another accusation I don't get. Right?

The flip side of this is the president's been accused of trying to do too much, too fast. Right? Not focusing on things in sequence. But then they can always lop on sort of more logs on the fire that he hasn't dealt with.

You all know. You've worked in the White House. You've covered the White House.

Right now is the time I'm sure when the folks in the Obama White House are working on the State of the Union Address for next year. He's going to need an agenda for next year. These are all the kind of things he's going to take up.

He's got to get through health care, Afghanistan, some of these other issues. And success is going to lead to success.

BLITZER: Does that make sense to you?

MATALIN: Don is exactly right. The reason that his popularity has fallen so precipitously, and support for his policies more so, is because he has done too much, too fast, too big. Slow down. Triple the deficit in nine months.

So, when they get to their State of the Union speech, if they care about reducing the deficit, which should be their number one priority, it's the people's number one priority, they're not going to be able to do this -- all this other nonsense, cap and trade and all the rest of it. Too much, too fast. He can punt on some of these other things.

Climate change is a fake issue anyway. "Don't Ask, Don't Tell" is going to happen. The military wants it.

BLITZER: Why is it a fake issue?

MATALIN: Because it's just -- there is not the science that they say is so. It's just an effort...

BLITZER: No global warming?

MATALIN: There is not consensus science on what is causing global climate change. There is climate change, but for the last decade the climate has been cooling.

There is the science. There is the data on that. They want to do this because they like to have all these programs being controlled by the government.

BLITZER: You know Al Gore is coming out with a new book in the next few weeks. He's coming after you, you know.

MATALIN: Whoa.

BLITZER: Get nervous.

MATALIN: It's going to be inconvenient for him to have to actually answer some questions about all the falsities in his original book.

BLITZER: Do you buy that notion of climate change and global warming?

BAER: No. And I don't think that's generally the accepted science at all. And I do think the administration will be moving aggressively on that in the next year. And they have to take what's on the plate right now.

As to the whole point about increasing the deficit, it's a huge problem. They are going to have to deal with it. But let's not forget what they inherited and why the deficit...

(CROSSTALK)

BAER: And why they've had to do these investment programs to get the economy moving again.

MATALIN: One, the deficit that President Bush left them with was fully one-third less than what it is now.

BAER: And he left them with a completely crashed economy also. So, they have been working through that. And...

MATALIN: George Bush had the longest peacetime recession recovery in the history of this nation, 52 consecutive months. And growth was great.

There was that issue with the derivatives which was a global issue. You can continue trying to blame that, as this administration does everything. At some point we're going to cross over to a place where every answer isn't Bush's fault, Bush's fault, Bush's fault.

BAER: Well, I agree with that. It's time -- they were moving -- they're dealing with the issues they have to deal with it. So, there's really no credibility to the idea that they're not taking on the issues they have to take on.

BLITZER: We've got issues coming up here in THE SITUATION ROOM as well, guys. Thanks very much for coming in.

Graphic accounts from first responders to the deadliest subway crash in Washington, D.C.'s history. The emergency workers who pulled survivors out of the wreckage this summer, they tell us now what they saw.

Plus, an unprecedented crackdown on a Mexican drug cartel going on right here in the United States as federal agents confiscate almost 12 tons of narcotics.

And a year and a half in an isolation chamber with the cameras rolling the whole time. We're going to tell you how much the European Space Agency is paying for this simulated mission to Mars.

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BLITZER: It's big brother meets mission tomorrow as the European Space Agency is calling for candidates to spend -- get this -- 17 months in an isolation chamber to study the psychological effects of astronauts on a future mission to Mars.

Let's bring in our Abbi Tatton.

This is a big thing. Not everybody's going to be willing to volunteer for this.

ABBI TATTON, CNN INTERNET REPORTER: Yes, it's hard to imagine who would do this. There's an almost 2,000 square foot chamber -- you can see it there -- in Moscow. But you'd be sharing it with five ore people for 520 days. And what you'd get for your trouble? About $25,000.

That's what the European Space Agency is offering participants to simulate this 17-month mission to Mars. You can see the chamber here that you'd be spending your time in.

And if you look at what they're doing, it reads a little more like reality TV at times. You'd be in there for 520 days. You've got delayed communication with the outside. You've got cameras on you 24/7.

There's no shower, limited bathing facilities as well. And constant medical and psychological testing.

And that's what this is all about. The European Space Agency is hoping this will help them examine the stress, the lack of privacy, isolation, confinement puts on human beings.

BLITZER: What a nightmare. Who would want to do this?

TATTON: Well, they've actually done it before, and they got applicants. They did a shorter trial earlier this year, just 105 days. And they had a flood of applications.

These guys actually went through the 105 days. And they invited some of them back to do the longer trial.