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THE SITUATION ROOM

Terror Plot Suspect Appears in Court; President Obama Addresses Job Losses

Aired January 8, 2010 - 18:00   ET

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


MARY SNOW, CNN CORRESPONDENT: While it is impossible to know how many students in New Jersey are illegal immigrants, sponsors of the bill estimate there may be around 28,000 undocumented high school students currently in New Jersey -- Wolf.

(END VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR: Happening now: Shackled and burned, the suspect in the failed Christmas Day terror attack pleads not guilty. We will have a report on what happened inside the courtroom, also what happened outside.

Also this hour, millions of jobs lost on President Obama's watch. He is turning back to the economy on this day, an issue that could cost him and his party on Election Day in November.

And in the midst of America's deep freeze, clothes that could keep people warm are being trashed, and the garment industry which is now under fire.

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

He is arguably the most notorious terror suspect in the United States at this moment. And there are new images of him that are coming in right now. Today, reporters inside a Detroit courtroom got an up-close look at Umar Farouk Abdulmutallab, the man charged with trying to blow up a U.S. airliner on Christmas.

CNN's Deborah Feyerick was inside the courtroom when he entered his plea.

How did it go, Deb?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, you know, whatever dreams of glory this young man may have had, all the indoctrination leading up to the moment, the person sitting in that court appeared defeated.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): Arriving at federal court, Umar Farouk Abdulmutallab walked into the courtroom slowly and with apparent difficulty, the alleged Christmas Day suicide bomber having suffered second- and third-degree lap burns after detonating explosives hidden in his underwear.

Standing before the judge, his feet were shackled, his white T- shirt and khaki pants too big for his thin frame. The public defender for the 23-year-old Nigerian entered a plea of not guilty. Abdulmutallab told the judge he is on painkillers, apparently for his injuries, his lawyer saying that, despite that, Abdulmutallab understands the charges against him.

They include attempting to blow up a U.S. jetliner and kill some 290 people on board.

Hebba Aref was on the Northwest Airlines Flight 253 from Amsterdam, sitting six rows in front of Abdulmutallab. She said it was important for her to see the proceedings firsthand.

HEBBA AREF, NORTHWEST AIRLINES FLIGHT 253 PASSENGER: He looked the same, but he had a little more actions. When I saw him on the plane, he was very blank. He didn't move. He didn't struggle.

FEYERICK: Several dozen people came to protest against the alleged bomber, holding signs that read Islam is not terrorism.

Abdulmutallab is being represented by Detroit's chief federal defender, Miriam Siefer. She did not fight his detention.

(END VIDEOTAPE)

FEYERICK: Now, the hearing, Wolf, took less than 10 minutes. When it was over, Abdulmutallab was led out of the courtroom surrounded by U.S. marshals, that long trip he took from Yemen to Ghana to Nigeria to Amsterdam on to the U.S. ending not in the glory he thought it would, but in a small Michigan jail cell -- Wolf.

BLITZER: All right, Deb, thank you.

This failed plot is a wakeup call for many U.S. officials.

Let's bring in our homeland security correspondent, Jeanne Meserve. She's looking at this part of the story -- Jeanne.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, administration officials say they were surprised that al Qaeda in the Arabian Peninsula was at the point where it could launch an attack against the U.S. homeland. The question is, why and what is next?

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Yemen has been a very high priority of the intelligence community, according to a U.S. counterterrorism official. The U.S. was well aware of al Qaeda in the Arabian Peninsula's growing strength, but the intelligence community didn't realize the group had the operational capability to attack the U.S. homeland.

JOHN BRENNAN, U.S. DEPUTY NATIONAL SECURITY ADVISER: We had a strategic sense of sort of where they were going, but we didn't know they had progressed to the point of actually launching individuals here.

MESERVE: U.S. officials knew that the group used a bomb concealed in underwear in the attempted assassination of a Saudi official, but analysts didn't marry that up with al Qaeda's interests in striking the homeland and aviation. One former intelligence officials says, like 9/11, it reflects a failure of imagination.

But a current counterterrorism official rejects that comparison, saying, "We didn't have information about a specific plot. It is wrong for anyone to suggest that U.S. counterterrorism agencies didn't take a real hard look at the possibility that Yemeni extremists might try to do something abroad, to include the homeland."

Thursday, the CIA announced it's increasing the number of analysts focused on Yemen and Africa.

CHRISTOPHER BOUCEK, MIDDLE EAST PROGRAM ASSOCIATE, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: Arabic language skills are difficult to acquire and take a long time and a lot of dedication. And it will take a long time to gear up these -- these capabilities.

MESERVE: Offshoots of al Qaeda are also growing in Algeria, Somalia, and elsewhere, but one expert says one region should get the lion's share of the intelligence community's attention and resources.

BRUCE RIEDEL, BROOKINGS INSTITUTION: Yemen is an important subsidiary of the main al Qaeda core, but the strategic direction, overall planning, and, most importantly, the propaganda instrument remains in Afghanistan and Pakistan. And that's where we need to keep our focus and our activities.

(END VIDEOTAPE)

MESERVE: Does the intelligence community have the capability to cover all these bases at once? A U.S. counterterrorism official says, yes, but no one is saying this will be easy, Wolf.

BLITZER: It will be very, very hard. And it certainly has proven to be.

Thanks very much, Jeanne.

Let's get to the other big threat to the United States right now. We are talking about the struggling U.S. economy. The unemployment rate remained grim last month, holding steady at 10 percent. The first year of the Obama presidency has been a rough one for workers -- 4.2 million jobs were lost in 2009, on this president's watch.

Today, the president refocused on the jobs problem, still issue number one for so many millions of Americans.

Let's bring in our White House correspondent, Dan Lothian.

The president is trying to juggle a lot right now, between the terror threats, the economy, jobs, health care. I could go on. DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That is right. And the White House still believes that it is important to continue to focus on the issue of terrorism, but they do want to change the subject a bit to focus on jobs and the economy. But it is a delicate balance with political implications.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Hours after a disappointing jobs report was released, President Obama freed up more stimulus money for clean- energy jobs.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We have to continue to explore every avenue to accelerate the return to hiring.

LOTHIAN: The administration, while pointing to positive trends, is under pressure, amid fears of an economic relapse.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The president is worried about today and worried about the future.

LOTHIAN: While the White House insists politics is playing no role in its big jobs push, political observers say Americans are speaking loud and clear on the issue, and their votes are crucial to Democrats in this fall's midterm elections.

STUART ROTHENBERG, EDITOR AND PUBLISHER, "THE ROTHENBERG POLITICAL REPORT": Well, the economy, and particularly the jobs issue, continues to be the number-one question on the public's mind, so it's crucial for the administration to turn to that issue, particularly given the many months of focus on things like health care.

LOTHIAN: And, more recently, a focus on terrorism. The president tried to turn the corner by taking full responsibility for intelligence failures, but this topic shift to the economy and jobs must be handled delicately.

ROTHENBERG: You know, if the White House doesn't get it right on jobs, the economy, and terrorism, then it almost doesn't matter what it does on health care or climate change or immigration.

(END VIDEOTAPE)

LOTHIAN: Now, the president plans to hit the road again to meet with Americans face-to-face to hear their concerns about jobs, about the economy. There is an event planned for two weeks in Ohio, and White House spokesman Robert Gibbs says that there will be additional events happening in the next few weeks -- Wolf.

BLITZER: I'm sure there will be.

Thanks very much, Dan Lothian, at the White House.

Most of the nation right now is under the grip of a deep freeze. Many homeless people could certainly use some extra clothes. Here is a question. Why are some businesses simply tossing bags of clothes out on the street? Wait until you hear what is going on.

(COMMERCIAL BREAK)

BLITZER: Right now, some Republicans are fuming at their party chairman, Michael Steele. He has been saying some provocative things from day one as the RNC chairman, but the anger at him within his own party is reaching a pretty remarkable new level.

What is going on? Well, our senior congressional correspondent, Dana Bash, is here to explain.

It is confusing, but go ahead and explain.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, I think the bottom line is that, in the year, really, Wolf, since Michael Steele has been chairman, many Republicans have had issues with him, because he has had some gaffes and what many perceive as weak leadership at the RNC.

But I have been talking all day to senior Republicans from Capitol Hill to campaign strategists and beyond, and I am floored at how harshly they are criticizing Michael Steele, saying he is selling a book to profit himself, instead of helping the party he is leading.

(BEGIN VIDEOTAPE)

BASH (voice-over): Republicans are blasting their own party chairman, saying his new book tour is taking the GOP on an unwanted detour with things like this...

MICHAEL STEELE, DNC CHAIRMAN: We walked away from the Contract with America. We walked away from principal leadership by trying to be Democrat-like, by trying to be something that we're not.

BASH: GOP congressional aides tell CNN that sounded more like an apology tour. And this...

STEELE: I'm not going to sit in January and predict we will take the House.

BASH: Republican congressional sources complain that undermines efforts to raise money and recruit candidates.

Anger at Michael Steele boiled over on an internal GOP conference call this week that sources participating called ugly. Republican congressional aides expressed deep frustration to RNC staff about Steele.

Multiple sources tell CNN congressional aides told Steele's aides he was throwing Republicans off message.

Many in the GOP agree.

JOHN FEEHERY, REPUBLICAN STRATEGIST: It's annoying and it's distracting and it's irrelevant and it's silly. And we don't need it. What we need is everyone working together on a common agenda. BASH: GOP strategists and aides say one reason they're furious is Steele's book revisits what went wrong for Republicans in the past, which leaders did last year. Many call it the wrong message now, an election year.

Suddenly, the RNC chairman is using his book tour to fire back at critics in his own party.

STEELE: That's why we've lost in the past. And I'm telling him, I'm looking him in the eye, and say, I have had enough of it. If you don't want me in the job, fire me. But until then, shut up, get with the program, or get out of the way.

BASH: He even she had this on the Christian Broadcasting Network.

STEELE: God, I really believe, has placed me here for a reason, because who else and why else would you do this unless there's something inside of you that says right now you need to be here to do this?

(END VIDEOTAPE)

BASH: The RNC won't comment for the record on the explosive conference call aides there had with their counterparts on Capitol Hill, but some are clearly trying to distance themselves. One RNC aide told me -- quote -- "He is the RNC chairman, but it is his book and his voice."

And, also, a number of GOP sources tell us there is deep concern about the RNC's financial situation under Steele. The RNC has considerably less money now going into this election year as it did in the last two midterm election cycles. And several senior Republican sources, Wolf, they say that Republican donors, especially the big donors, they are not just willing to give to the RNC. If they are giving, they are giving elsewhere.

BLITZER: Well, they are getting ready for their big midwinter meeting, the RNC. Is there any serious talk of Michael Steele either being forced out or stepping down?

BASH: First of all, that RNC meeting, that's in Hawaii, which many people today have told me is case in point of Michael Steele not really dealing with the financials well. They don't need to spend all that money to go to Hawaii.

But to answer your question, I'm told right now the answer is no, and the reason is because it really is very difficult in terms of the bylaws and the rules of the RNC to get a chairman out. However, his term is up in a year.

BLITZER: Hawaii is a pretty good place to have a midwinter meeting, especially when there is a such cold chill out in most of the United States.

BASH: It sure is, but it costs a lot of money. BLITZER: You're right. All right. Thanks very much, Dana, for that.

BASH: Thank you.

BLITZER: Let's get to a controversy that is gaining some steam right now as the temperatures plunges in many parts of the country. At issue, we are talking about clothes, clothes that could have been helping needy Americans stay warmer. Instead, they are in tatters right now.

CNN's Ines Ferre has been looking into this story for us.

Ines Ferre, what is going on?

INES FERRE, CNN CORRESPONDENT: Well, Wolf, this all started when a woman passing by the back of an H&M store in Manhattan noticed lots of bags filled with clothes that had been slashed and cut. Days later, she noticed bags from another retailer on the same street, this time with holes punched in the back of them. That sparked a lot of discussion about the garment industry and why clothing would be destroyed this way.

(BEGIN VIDEOTAPE)

FERRE (voice-over): At the New York Clothing Bank, Luis Jimenez is taking off labels from clothing donated by various companies. He has convinced them to donate their excess garments to his efforts to clothe the poor. He promises to protect their brand by tearing off their labels.

Jimenez says he is not surprised when he hears about mutilated garments found that could have been donated.

LUIS JIMENEZ, NEW YORK CLOTHING BANK: I have seen truckloads of merchandise that has been damaged by a slit being cut across the front of the shirt or down the pant leg of a pair of jeans. That makes them -- unless you have somebody that could sew it and throw a patch on it or mend it, it is impossible to get that to the right folks.

FERRE: Recently, a woman passing by the back of an H&M store noticed what she called a mountain of bags filled with the store's garments, all of them slashed, like an angry person took a box cutter to them. Her findings became a sensation on places like Twitter, with angry consumers wondering why the clothes were not donated.

JIMENEZ: There's many times clothes get damaged or inadvertently ruined when they are trying to make sure it doesn't get out into the general population without any controls.

FERRE: One textile professor says in today's market of social responsibility and shrinking revenues, destroying clothes does not make sense.

STEVEN FRUMKIN, PHILADELPHIA UNIVERSITY: I would find it hard to believe that somebody would throw garments out, even if someone thinks That they don't want others to be wearing it, because you can get some good value out of that type of press and attention.

FERRE: H&M said the incident was isolated and that the garments had been destroyed for safety reasons, adding, "It is unfortunate that the situation that happened on 34th Street was perceived as us someone discarding excess inventory or unsold goods."

(END VIDEOTAPE)

BLITZER: (AUDIO GAP) donating some of these clothes?

FERRE: Yes. Well, H&M said that they are committed really globally to donating as many clothes as possible.

Now, separately, Wolf, destroyed Wal-Mart clothing was also found on the same street as the H&M garments. And Wal-Mart said it was left there by a supplier and that was not in compliance with Wal-Mart's longstanding practice of donating all wearable samples to local charitable organizations -- Wolf.

BLITZER: Ines Ferre reporting for us -- thanks, Ines, very much.

A bad economy is bad news for the party in power. How will it impact some of the most high-profile races in this years' midyear election? Coming up, we will take a closer look.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: The vice president, Joe Biden, today announced the death of his mother. Catherine Eugenia Finnegan Biden died at the family's home in Wilmington, Delaware. Mrs. Biden was surrounded by family members at the time of her passing.

Joe Biden spoke of his mom when he accepted the vice presidential nomination back in 2008. Listen to this.

(BEGIN VIDEO CLIP)

SEN. JOSEPH BIDEN (D), DELAWARE: You know, my mom taught her children -- all the children who flocked to our house -- that you are defined by your sense of honor and you are redeemed by your loyalty. She believes that bravery lives in every heart, and her expectation is that it will be summoned.

Failure, failure at some point in your life is inevitable. But giving up is unforgivable. And when I triumphed, my mother was quick to remind me, it was because of others.

My mother's creed is the American creed. No one is better than you, everyone is your equal, and everyone is equal to you.

(END VIDEO CLIP)

BLITZER: Jean Biden, the vice president's mother, dead today at the age of 92. She was an amazing, wonderful woman. And our deepest, deepest condolences to the vice president and his entire family.

We saw President Obama refocus on the economy today with a new plan to create thousands of so-called green jobs. Is that enough to help millions of people who have lost work since he started his job? Stand by for a debate about his policies. That's coming up next.

(COMMERCIAL BREAK)

BLITZER: Happening now: disappointing news on the job front, as the federal government reports a loss of 85,000 jobs in December. But who is at fault? Jessica Yellin is standing to explore the politics of unemployment.

John McCain has no qualms about playing the blame game. He points the finger directly at President Obama in a new ad that accuses the president -- and I'm quoting now -- "of leading a left-wing crusade to bankrupt America." Our political panel will tackle McCain's comments and motives.

And Rudy Giuliani speaks out on the shooting spree at Fort Hood, going father than any government official, and calling it a clear case of Islamic terrorism.

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

Eighty-five thousand jobs lost in December here in the United States. How will the unemployment crisis impact this year's midterm elections?

CNN's national political correspondent, Jessica Yellin, is working the story for us.

There are significant politics of jobs.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: There is, Wolf.

And you know it is true that a bad economy is usually bad news for the party in power, as voters try to look for change, so we took a look at the latest breakdown of unemployment by region, and you can see here how bad economic times are making for some tough races across the nation.

In California, the numbers there, 12.2 percent unemployment. Check this out. One city has 29.2 percent unemployment. That is the border city of El Centro in California -- 11 of the cities in that state have some of the nation's top unemployment rates.

And in that state, the Senate race, jobs is already playing a huge role. Longtime incumbent Democrat Barbara Boxer, a senator, is today under attack by her opponent, who put out a statement capitalizing on the latest bad jobs numbers, saying that Boxer is supporting legislation that kills jobs. There is also an open race for the governor's seat. And that is going to be fierce, as unemployment ranks high in concerns for the Californians.

Turn to Nevada. That is where Senate Majority Leader Harry Reid is fighting for his political life. Look at that eight-point -- we have got Ohio here. OK. Let's go to Ohio, where we know that unemployment there is 10.2 percent. The highest in the state is 13 percent, and all but three cities there have over 10 percent unemployment. In that state, the Senate race is wide-open.

Let's go to our next graphic and take a look at the state of Florida. This one is always a battleground, 11.5 percent unemployment, the highest in that state, almost 17 percent. Wolf, here, 17 of that state's 20 cities have unemployment over 10 percent. That is the nation's average. It is higher than the national average, two ferocious races there.

All of this are reasons why especially what we are seeing as a trend for big cities, having high, high unemployment rate, a big reason that Democrats are pressing President Obama to pass a jobs bill that will especially focus on cities. Highest unemployment rate right now in urban areas -- they need to fix that for this midterm election.

BLITZER: For all these unemployed people, it's simply a nightmare that continues on and on.

Jessica, thanks very much.

Let's talk a little bit more about the job loss under President Obama in this, his first year as president of the United States.

Joining us now, the former labor secretary during the Clinton administration, Robert Reich -- he is the author of book "Supercapitalism" -- and the economist Douglas Holtz-Eakin, a former adviser to John McCain.

Gentlemen, thanks very much for coming in.

Has President Obama, Professor Reich, done enough to create jobs?

ROBERT REICH, FORMER LABOR SECRETARY UNDER PRESIDENT CLINTON: Wolf, he's done a lot. I mean the stimulus package was a cu -- you know, the Republicans accused him of doing too much with the stimulus. But the fact of the matter is, when the dust settles, he's probably going to have to do much more.

The Democrats and the White House have to show the public this coming -- over the next six or eight months, as we get into the gravitational pull of the mid-term elections, show the public that they're really serious about -- about jobs.

Expect a big jobs bill. I can't say it's going to be huge dollar-wise, but there was a little bit of hoopla. There will be green jobs, maybe a new jobs tax credit, certainly some efforts to help small businesses, because small businesses are the engines of job growth.

Whether this really does very much is -- is a big question mark.

BLITZER: Well, what do you...

(CROSSTALK)

BLITZER: Let me bring in Professor -- Douglas Holtz-Eakin.

The -- the whole economic stimulus package -- it was nearly a trillion dollars -- was supposed to create a lot of jobs.

DOUGLAS HOLTZ-EAKIN, FORMER ECONOMIST UNDER PRESIDENT GEORGE W. BUSH: Yes, but it's not working, Wolf. I think the -- the evidence is in. The administration said the unemployment rate would not go above 8 percent. We're now at 10, generously. Real unemployment is much higher, probably 17 percent.

It was supposed to generate shovel ready construction projects and we've seen construction jobs declines. We've seen the kinds of employment -- heavy engineering, civil engineering -- that should be affected by a stimulus package, it continues to decline.

So this is an -- an effort that -- it didn't work in the '60s and '70s in the U.S., it didn't work in Japan, it's not working here now.

BLITZER: Why isn't it working, Professor Reich?

Well, I -- I think the real question is how bad would things be if we didn't have the stimulus package?

My view and the view of many, many people who are non-partisan in this -- Douglas Holtz-Eakin may have -- may have a different view. I'd be very interested -- is that unemployment would be much worse if we didn't have the stimulus package.

BLITZER: Well, let me ask him that.

REICH: And...

BLITZER: Do you believe...

REICH: ...and...

BLITZER: ...it would be much worse, Douglas Holtz-Eakin, if the economic stimulus package had never existed?

HOLTZ-EAKIN: I -- I think we should have done something. I don't think anyone should make the argument that if you dialed the clock back a year, somehow the U.S. Economy was fine and we didn't need to have intervention.

But we had big intervention, particularly by the Federal Reserve. Remember, this crisis started in housing and spread to financial markets. It ultimately dragged down Main Street America. The Federal Reserve should get top billing for the kinds of progress we've seen so far. It's extensive efforts on its part to get financial markets going again.

BLITZER: Well, I guess the question is this, Professor Reich -- did the American people get their money's worth with the stimulus package?

REICH: I think so, Wolf. Again, we won't know very much until all the data are in and maybe years from now, we'll look back and say -- as I think we will say -- the stimulus package should have been larger. I agree with Douglas Holtz-Eakin that the Fed deserves a gold medal -- or maybe a silver or a bronze -- in terms of its efforts so far.

But even there, we don't know that the Fed has done enough. If the Fed starts pulling in its horns, if it starts tightening too soon, if it starts ending its backing -- you know, it's backing of mortgage- backed securities, for example, we could see a double dip recession and even higher unemployment. Look, here's the...

BLITZER: Well, hold on...

REICH: ...here's the bottom line.

BLITZER: Hold on one second, because I want Douglas Holtz- Eakin...

REICH: Sure.

BLITZER: ...to answer the question. When he took office, unemployment was coming in at 600,000, 700,000 a month. Now it's down to 85,000 in December. And in November, there was actually a tiny little surplus -- a creation of jobs.

I guess the president deserves some credit for that, right?

HOLTZ-EAKIN: Well, presidents always get credit for whatever happens on their watch. And they get blamed for what happens on their watch. But the reality is that the economy would not have fallen continuously. There's a natural corrective mechanism to bottom out. Eventually, you've cut inventories as much as you can, eventually you start to hold onto just the structures you have.

So I think that's really what we've seen here. We had a very inefecent -- ineffective stimulus package. It's really inefficient. If you take the administration at its own word, this is $250,000 a job. The private sector can do much better than that.

So I don't think that we should double down on the strategy. We should do the kinds of things that would genuinely indicate that jobs are the top priority.

BLITZER: Did you believe, when the president took office, Professor Reich, that 4.2 million jobs would be lost in 2009? REICH: No, I did not really recognize -- I don't think anybody did -- the full extent of the job losses, Wolf. We haven't seen anything like this, you know, since the Great Depression, in terms of job losses.

And I think that, again, when the voters go to the polls in -- next November, the real issue is the direction the economy is taking, the direction the jobs recovery is taking. I think, as we've just gone over, that although there will be very, very high unemployment, a lot of hardship for a lot of people, there will be a sense that things are getting much better. There already is.

BLITZER: And in terms of the economic abyss, do you agree, Douglas Holtz-Eakin, that the economy no longer is on the precipice -- on the verge of the economic abyss of a full scale depression?

HOLTZ-EAKIN: Oh, no. I don't think we're there. But I don't think we're in as good a shape as some people might think. This is still an economy where, in December, 661,000 people left the labor force. There is no hope for them. There is no prospect of recovery and hiring for them. And so I don't think the direction is actually going the right way yet at all.

So...

REICH: But (INAUDIBLE)...

HOLTZ-EAKIN: ...the Obama administration really needs to think hard about making this the top priority. If you talk to any businessman, the idea of having an expensive health care bill, having the EPA regulate ozone and CO2, having unionization and higher labor costs, by putting those things first, you're really putting that ahead of jobs. You have to make it the top priority.

BLITZER: Two very smart guys. And we're going to invite both of you to come back, as this subject is not going away, by any means.

Robert Reich, Douglas Holtz-Eakin...

HOLTZ-EAKIN: Thanks very much.

BLITZER: Thanks very much, guys.

REICH: Thank you.

BLITZER: A sharp turn to the right -- is it -- by John McCain?

He's now accusing President Obama of quote, "a left-wing crusade."

That and more coming up.

The best political team on television is standing by.

(COMMERCIAL BREAK)

BLITZER: Fredricka Whitfield is monitoring some of the other top stories in THE SITUATION ROOM right now -- Fred, what's going on?

WHITFIELD: All right, beginning with this breaking story, Wolf. We're talking about a security incident that has taken place at London's Heathrow Airport. And, according to the Associated Press, apparently armed police officers boarded a plane that was bound for Dubai. It was British Airways Flight EK4 to Dubai. And apparently, according to eyewitnesses -- and the Associated Press reporting that one man was arrested. It's unclear what that person may have done on board that flight or just prior to this arrest. But that is the situation at Heathrow Airport in London.

Meantime, other news taking place in this country. The Deep South caught up in the same deep freeze that has most of the country shivering. A fast-moving cold front combined with moisture from the Gulf of Mexico has dumped a dangerous mist of snow and ice across the Southeastern United States. And the temperatures in Florida down to the 40s. Winter weather is blamed for at least nine deaths around the country this week.

And a Pentagon official says Defense Secretary Robert Gates will stay on the job at least another year. Gates is the lone holdover from the Bush administration and has described his job as a quote, "painful thing that nobody should be doing -- enjoy doing."

One national security expert says that leaving now would be like quote, "a hand-off in midseason," end quote -- Wolf.

BLITZER: All right. Thanks very much, Fred, for that.

Here's a question -- was the Fort Hood, Texas shooting a massacre?

Was it a terror attack?

What exactly was it?

The former New York City mayor, Rudy Giuliani, says it was a terror attack. The best political team on television is here to weigh in.

(COMMERCIAL BREAK)

BLITZER: What constitutes a terror attack?

The answer may depend on your politics.

Let's talk about it with the best political team on television.

Joining us, our senior political analyst, Gloria Borger; conservative commentator, Terry Jeffrey, the editor-in-chief of CNSNews.com; and Democratic strategist and CNN contributor, Donna Brazile.

I'm going to play a little clip of what Rudy Giuliani told me about the Fort Hood massacre -- it was a massacre -- in Texas just a little while ago. Listen to this.

(BEGIN VIDEO CLIP)

RUDY GIULIANI (R), FORMER NEW YORK MAYOR: Fort Hood was clearly an Islamic terrorist attack. The man who was shooting off the guns and killing those people was yelling out ara -- Islamic phrases when he was doing it -- "Allah Akbar!" and things like that. He was clearly under the influence of Islamic terrorism.

(END VIDEO CLIP)

BLITZER: Do you agree, Donna, with the former mayor?

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: No. I don't know what the real definition is, but, you know, the attorney general of -- back in 2001, Mr. Ashcroft, described the shoe bomber as an attempted terrorist strike. Mr. Chernoff, the former -- Chernoff, the former homeland security adviser...

BLITZER: Chertoff.

BLITZER: Chertoff, I'm sorry. I don't get all my spelling incorrect.

he described the attempt to carry out a terrorist operation on al Qaeda on the El Al Airlines. So there has been so many different versions -- the 2006 attack at the University of North Carolina; and, also, the D.C. sniper was described as a terrorist.

So, look, they -- we know that they're doing bad things. We know that they're up to bad things. But I don't know if what Mr. Giuliani said it was -- it was the correct way of describing a terrorist.

BLITZER: You agree with Giuliani that what happened at Fort Hood was a clear act of terrorism?

TERRY JEFFREY, EDITOR-IN-CHIEF, CNSNEWS, CONSERVATIVE COMMENTATOR: I think what he said was exactly right. And to be precise, it's not -- it wasn't just an act of terrorism, Wolf. It was an act of terrorism by an Islamic radical. Further, we do know...

BLITZER: Who happened to be a U.S. Army officer.

JEFFREY: Who was -- who had penetrated the United States military. We also know that he was in contact with this cleric, Al- Awlaki, in Yemen, who has been associated with al Qaeda in the Arabian Peninsula, who's actually an American-born cleric who used to work in Falls Church, Virginia.

Peter Hoekstra, who is the ranking Republican on the House Intelligence Committee -- he used to be the chairman of the Intelligence Committee, yesterday put out a statement saying that he wishes that the administration would be forthcoming and release its report on the Fort Hood attack. We still don't know the full story. The president needs to come clean on that. BLITZER: Because there are some links that Al -- Al-Awlaki, that radical cleric who was born in the United States, is now in Yemen -- the connection between him and -- and Major Nidal Hasan and also the connection between him and the Nigerian who tried to blow up the airliner outside Detroit.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, he seems to be the link there, because he seems to have had communication with both men. And I think that that would qualify him as a terror attack in Fort Hood...

BLITZER: Well, the question, was he just inspirational or was he giving operational guidance?

BORGER: Well, and that's a -- and that's the answer to the question we don't know. I also would like to know a little bit more about what happened at Fort Hood. I think we all would. And we'd like to know if Mr. Hasan was getting orders from anyone, as -- as perhaps Mr. Abdulmutallab...

BLITZER: Hold on...

BORGER: ...was.

BLITZER: Hold on one second. We're going to fix your microphone, because apparently, you're a little off mike. But we will get...

BORGER: Oh, no.

BLITZER: We'll get that fixed.

BORGER: I hate when that happens.

(CROSSTALK)

JEFFREY: But, what...

(CROSSTALK)

JEFFREY: ...what's disturbing, Wolf, though, is it's not just that the administration isn't giving this information out (INAUDIBLE) to the American people, they're not giving it to Pete Hoekstra, the top Republican in the House of Representatives. He's specifically been trying to get this information from the director of National Intelligence. They will not even give it to him...

BLITZER: All right, let me play this little clip...

JEFFREY: ...(INAUDIBLE).

BLITZER: ...of what the president...

BRAZILE: Well, I'm sure they don't want to give him another opportunity to send out a fundraising letter.

JEFFREY: It's -- it's their job to oversee this.

BLITZER: Let me play this clip, Donna. And I want you to react.

Here's what the president said yesterday.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For now is not a time for partisanship, it's a time for citizenship, a time to come together and work together with the seriousness of purpose that our national security demands.

(END VIDEO CLIP)

BLITZER: It is a time of national crisis right now, as far as terror threats are concerned.

Are the Republicans, from your perspective, going too far in criticizing the administration?

BRAZILE: I -- I think, Wolf, when it comes to national security and trying to dismantle, disrupt and, as the president might say, defeat Al Qaeda, we should be one people. We should be one United States of America, working together to defeat those who are trying to kill us.

What I object to -- and I think the president should -- is the Re -- how far the Republicans have gone to politicize this incident, when President Bush took six days to respond to the shoe bomber. It makes no sense whatsoever to try to reap political gains and to raise money when we're all under attack.

BLITZER: And -- and listen to this. This is John McCain, who, almost everyone agrees, has always been a moderate on these kinds of issues, working with the Democrats and Republicans. He is going after the president in a new ad.

Listen to this.

(BEGIN VIDEO CLIP FROM POLITICAL AD)

SEN. JOHN MCCAIN (R), ARIZONA: President Obama is leading an extreme left-wing crusade to bankrupt America. I stand in his way every day. If I get a bruise or two knocking some sense into heads in Washington, so be it. I'll keep fighting for jobs and economic growth for Arizona as long as I'm in the Senate.

(END VIDEO CLIP)

BLITZER: Now, he's not talking about terrorism, he's talking about the economy...

BORGER: Right, he is.

BLITZER: ...and the domestic issues. But those are pretty strong words from John McCain. BORGER: Right. It sounds like he's still in the presidential campaign, doesn't it?

BLITZER: I don't know whether he's...

(CROSSTALK)

BLITZER: ...did he ever go that far during the...

BORGER: (INAUDIBLE)?

BRAZILE: Never.

(CROSSTALK)

BLITZER: Did he ever say during the campaign...

(CROSSTALK)

BLITZER: ...this is an extreme left-wing crusade?

BORGER: And...

BRAZILE: No, never.

BORGER: And what you're hearing here is -- is John McCain, who I think could be primaried, as we call it. He could be facing a challenge on his right in Arizona from J.D. Hayworth. I feel like I should burst into song here. And...

(LAUGHTER)

BORGER: And I think that you're hearing a John McCain who sees the Republican Party moving to his right. And he's got to be there if he's going to get re-elected.

BLITZER: Guys, stand by, because we've got to leave it right there.

But John McCain is going to be among John King's guests Sunday morning on "STATE OF THE UNION," 9:00 a.m. Eastern.

Let's check in with Soledad to see what's coming up at the top of the hour -- Soledad, what are you working on?

SOLEDAD O'BRIEN, CNN ANCHOR: Hey, Wolf, thanks.

Coming up at the top of the hour, the king goes platinum -- Elvis Presley would be 75 years old today. He's been gone, of course, for over three decades. But he's still drawing big crowds and making some seriously big money. He sold more albums since his death than -- than he ever did in life. And only a select few reach American icon status, of course. Elvis most definitely tops that list.

So the question is, why has his legend endured for so long?

What exactly is it about Elvis Presley?

We'll talk about that and much more, all at the top of the hour.

See you then.

BLITZER: See you then, Soledad.

Thank you.

It was one of the most anticipated debates in the presidential campaign.

So what was going through the mind of the McCain campaign manager as Sarah Palin faced Joe Biden?

We have some revealing new insight.

Plus, details of a lawsuit that could have a huge impact, not just on pro-football, but on basketball, hockey and more.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Jessica Yellin.

She's got our Political Ticker -- Jessica?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, it looks like former Tennessee congressman, Harold Ford, Jr. Is getting more serious about a possible run for the U.S. Senate in his home State of New York. The Democrat is weighing a primary challenge against Kirsten Gillibrand, who was appointed to replace Hillary Clinton in the Senate. Now, Ford, who was originally from Tennessee, has hired a spokesman for his would-be campaign. And sources tell us he's also signed up pollster Doug Schoen and Bradley Tusk, the former campaign manager for New York mayor, Michael Bloomberg.

Revealing -- revealing new details about the McCain's anxiety before Sarah Palin debu -- debated George Bi -- Joe Biden in 2008. McCain's former campaign manager, Steve Schmidt, says aides feared that Palin's performance in the vice presidential debate would be a quote, "debacle of historic and epic proportions."

Yikes.

It wasn't. Schmidt tells CNN's Anderson Cooper that Palin kept getting Biden's name wrong in rehearsals, calling him Senator O'Biden. It's one of the reasons she asked if she could just call him Joe. That Schmidt interview is set to air on CBS' "60 Minutes" on Sunday.

Well, New Hampshire lawmakers are hoping their state will keep the tradition of being the first to hold a presidential primary during an election year. The statehouse will vote Wednesday on whether to give that -- the state secretary more latitude in setting the primary date. That would solidify New Hampshire's standing of being first. Next, the state would vote on that measure, which is expected to become law -- Wolf. BLITZER: All right, Jessica.

Thanks very much.

Here's a question -- is the National Football League shielded from anti-trust laws?

The U.S. Supreme Court will decide in a case that could have huge implications beyond the football field.

(COMMERCIAL BREAK)

BLITZER: We have a very special edition of our Hot Shots, brought to you today by our own Abbi Tatton -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, it's not just the U.S. in the middle of a deep freeze. We've got pictures here from across Europe. First of all, in Spain, a woman takes a photo of herself while sitting on a bench covered in ice and snow.

On to the Netherlands, where a man ice skates down a frozen canal.

Take a look at this picture now from the U.K. -- a beautiful satellite picture of the U.K. frozen from top to bottom.

You know, one of the coldest places in the last couple of days is my hometown of Oxford, in the southeast of England, where the students have been lining the streets with snowmen and women, as you see there. Those two not students. That's my mom and dad, who say that, Wolf, even an igloo created at the end of their road, it's so cold.

BLITZER: It's a lovely, lovely picture. It's one of the Tatton family.

All right. Stand by.

We've got something to discuss. The Hot Shots gig certainly isn't much, but it is -- it is the least we can do on this very, very sad day for all of us, as we say good-bye.

Abbi is leaving us after a decade at CNN, first behind-the-scenes and then on the air. She's a valued member of my team -- the team I call the Wolf pack. We hate to lose her.

Here's a closer look at how we'll all remember Abbi Tatton through the years.

(BEGIN VIDEOTAPE)

BLITZER: Our Internet reporter, Abbi Tatton, here is looking at some iReports coming in.

What are they sending in -- Abbi?

TATTON: Wolf, record turnout means those long lines. And take a look at the wall here -- all our iReporters that have been sending in these photos from them. Let's start from New Orleans, Louisiana. Early voting started there on Tuesday. Paul sends in these pictures from city hall -- the lines snaking through the halls.

Wolf, you've got to look at this picture that we just got into CNN's iReport. Think about where this plane went down, surrounded by people in office buildings, in their apartments. From Julie Perkowa (ph). She was in her office on the 46th floor in Manhattan. And this photo that clearly shows the people standing on the wings.

Nine sites attacked -- hotels, a hospital, a restaurant. This is how it unfolded around the city, in the southern part of Mumbai, over the last few hours, starting with The Taj Mahal Hotel, a luxury hotel. Gunmen taking over that location earlier on. Five hours later -- we saw it right here on CNN -- smoke billowing from the roof of that building.

And there are several called PUMA. That stands for party unity my ass.

BLITZER: PUMA?

TATTON: PUMA.

BLITZER: What does that mean again?

TATTON: Oh, now you're going to make me say it again in my accent. That is party unity my arse.

BLITZER: OK. I just wanted to make sure I heard it right.

(LAUGHTER)

CAFFERTY: How do you follow that?

BLITZER: I know, you can't.

CAFFERTY: You can't follow that.

BLITZER: You've got nothing better than PUMA.

CAFFERTY: Party unity my arse. I...

(LAUGHTER)

CAFFERTY: ...I like it, my arse.

TATTON: Wolf, I want to bring you the latest video -- amateur video that we have from Tehran. You can see from this video a cluster of security forces in black around a guy who appears to be on the ground, appears to be being dragged, beaten. He has the green banner, the green being the color of the Moussavi campaign.

MoveOn calls the 111 Resolution an important first step. On the other side -- lights back, no computer. Long shot pink again at seven to one. At two to one, white or silver is a good bet. It's not going to pay you much. The wager is specifically on the base of the hat. It's not on the trim or on the decoration. It's not on.

BLITZER: Thank you, Abbi, with an important story on the hat.

TATTON: And then for after is my favorite, Bakewell tart.

BLITZER: Bakewell tart.

What is that?

TATTON: OK, you've got pastry, jam, sponge with almonds. And I promise you, it's delicious.

BLITZER: It's an English type of a...

TATTON: Very, very English.

BLITZER: You grew up eating that, right?

TATTON: Yes, my mom's, not daily, though.

BLITZER: How did she do it?

How did she make it, well?

TATTON: Very, very well. She should be there.

BLITZER: She should have been.

(END VIDEO TAPE)

BLITZER: Thank you, Abbi.

And the sad news, you're leaving THE SITUATION ROOM.

You're leaving CNN.

Is today your last day, really?

TATTON: It is my last day -- a very, very sad day for us. What an amazing 10 years I've had here doing -- bus producing (ph) those pictures all around the room of all the different things I was doing, field producing. And then you guys put me on camera.

Very hard to leave, but exciting things I have (INAUDIBLE)...

BLITZER: And I know you've got some announcements of where eventually you will wind up. And we want to wish you only, only the most wonderful success.

TATTON: Thank you, Wolf.

BLITZER: We loved every minute of those 10 years. You'll always be a valued member of the Wolf pack.

TATTON: Thank you very much.

And thanks to everyone behind the camera, as well.

BLITZER: Abbi Tatton -- a great, great producer and a great, great Internet reporter. And only just beginning for you.

Thanks very much.

TATTON: Thank you.

BLITZER: I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "CNN TONIGHT".