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THE SITUATION ROOM

Egypt "In State of Revolt;" President Obama Goes Back to the Future; GOP Vs. President: The Day After; Next Stop for 'Obamacare Repeal'; Gun Control Not Part of President's SOTU Speech; Update on Congresswoman Giffords' Condition; 'Strategy Session'; WikiLeaks Suspect Unfairly Detained?

Aired January 26, 2011 - 17:00   ET

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


WOLF BLITZER, HOST: Brooke, thanks very much.

Happening now, President Obama tries to sell the heartland on his vision for winning the future. But on this day after the State of the Union Address, Republicans are trying to hold his feet to the fire. Stand by.

There's breaking news out of Egypt -- a crackdown on anti- government raids. Police in Egypt are clashing with protesters demanding the ouster of the president. This hour, the Obama administration's tough choices and worst fears, as unrest ripples through the Arab world.

And the big switch away from old-fashioned light bulbs, a staple in American homes for well over a century -- could history be changing sooner than a lot of people may think?

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

Let's get right to the breaking news -- new anger in the streets of Egypt and attempts by the government to beat back the protests. Our reporters on the ground say Egypt is in a state of revolt. It's all an enormous concern for the Obama administration right now.

We're told violent clashes are taking place in Suez this evening, as we speak. This after police in Cairo turned water cannons and tear gas on demonstrators demanding the ouster of the long time president, Hosni Mubarak. At least four people were killed during the height of the protests yesterday.

Egyptian officials are banning demonstrations and warning citizens not to open the door to chaos like the unrest that toppled the Tunisian government a couple weeks ago.

Now the United States is very anxious about the fate of a critical alley in the Middle East and the prospect of the Arab world unraveling.

Our senior White House correspondent, Ed Henry, is watching all of this unfold.

I know officials at the White House are deeply worried about what's happened in Tunisia, in Lebanon, but now, most important in Egypt -- Ed, what are administration officials saying?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Wolf, they are saying they are deeply concerned because this is a key moderate ally, obviously, in the Arab world, in Hosni Mubarak. And the fact of the matter is he's so critical, that's why President Obama brought him to the White House just last fall to help and try and broker Middle East peace here with the Israeli and Palestinian leaders -- a critical ally. And that's why the White House says they're monitoring the situation extremely closely, because of that intense situation on the ground.

Obviously, President Mubarak feels threatened enough right now that his government has arrested thousands -- hundreds of protesters, I should say. And for the second time in two days, top administration officials today urged calm, saying that there should be no violence on all sides, that the protesters should not be using violence, that the government should not be cracking down on the protesters and should allow them, as long as they're demonstrating peacefully, let them move forward.

But perhaps most important of all, Wolf, Robert Gibbs, the White House spokesman, and Secretary of State Hillary Clinton, today said all of this should be a real opportunity for the Egyptian government to enact some political and economic reforms that would help the Egyptian people.

Take a listen to the secretary of State putting it on the line.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: There are a lot of very well-informed, active, civil society leaders in Egypt who have put forward specific ideas for reform. And we are encouraging and urging the Egyptian government to be responsive to that.

(END VIDEO CLIP)

HENRY: And to give you a sign of how delicate the situation, is twice today, Robert Gibbs was asked directly by reporters on Air Force One, as the president went to Wisconsin, whether or not the White House still backs Hosni Mubarak. Now, the first time Robert Gibbs said, quote: "We have a close and important ally in Egypt." Asked a second time, though, "Do you back President Mubarak," specifically, and he said, quote, again: "Egypt is a strong ally." Perhaps significant, he's not directly backing President Mubarak. To be clear, though, he is saying Egypt is still a strong ally.

But it gives you an idea of just how delicate this is for the White House right now -- Wolf.

BLITZER: Well, Egypt is the most important Arab ally that the United States has. It's been in the forefront, Ed, as you know, in the peace process, with Israel -- establishing a peace treaty with Israel back during the Jimmy Carter administration. It's, potentially, one of the greatest threats to Israel if -- if it should go in the other direction, for example, if the Muslim Brotherhood or others would take over in Egypt. The Suez Canal is a strategic point. There are so many critical issues right now that the U.S. has to deal with. And I know they're deeply concerned over the -- at the White House. But they sort of feel helpless right now, don't they, these demonstrations could escalate?

HENRY: Absolutely. And they don't want to escalate the situation in any way. That's why they're monitoring it very closely. And that's why you heard Secretary of State Clinton choosing her words very carefully, just trying to calm the situation down. But I think it's significant, as well, that that their -- this administration is being direct with the government of Hosni Mubarak and saying, you need to enact some reforms here in order to give the protesters something, number one; but, number two, improve the lives of Egyptians so that they feel that the situation can calm down.

So the administration prodding ever so gently here -- Wolf.

BLITZER: All right.

Thanks very much.

Ed Henry is at the White House.

Ben Wedeman, by the way, in Cairo, in the midst of these demonstrations.

We're going to be joining Ben live later here in THE SITUATION ROOM.

He's been Tweeting about what's going on. He's concluded there's a revolt underway right now. Ben Wedeman will be standing by.

Let's get to some other important news right now.

The president returning to the White House after the traditional day after the State of the Union trip outside the D.C. Beltway. He went to Wisconsin to promote the themes from his speech last night. He chose that backdrop for some very clear reasons, both historical and political.

Our White House correspondent, Dan Lothian, is traveling with the president.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Wolf, President Obama took his message to Main Street yet again, in a state where the unemployment rate is about 7 percent -- much less than the national average. He said new manufacturing plants and tax incentives have helped to improve the economic climate. But even here, the economic recovery is far from over.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): President Obama is reaching into the past to set the country's course for the future, seizing on what he calls this generation's Sputnik moment to spur innovation and job creation. BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In this new and challenging time, when America is facing tougher competition from countries around the world than ever before, we've got to up our game. We're going to need to go all in.

LOTHIAN: And what better place to make that pitch than in Manitowoc, Wisconsin, a town where a piece of Sputnik 4 from the Soviet space race crashed to Earth almost 50 years ago.

OBAMA: I -- I couldn't have made this up. It wasn't until I was on my way here that I found out that a chunk of metal came crashing down to the Earth right here. I -- I promise you, we did not plan this originally. The press won't believe me.

LOTHIAN: White House aides say the real reason for the visit was to highlight three companies that are investing in new technology and creating jobs. The president toured facilities that make energy- efficient lighting, aluminum and wind turbine towers. But there's politics at play here, too. Wisconsin gave President Obama a double digit victory in 2008, then pushed Democrats out of virtually all statewide offices in the mid-term shellacking.

TOM KERTSCHER, "MILWAUKEE JOURNAL SENTINEL": It seems that he would pick a state that would be in play in -- in 2012.

(END VIDEOTAPE)

LOTHIAN: As in other parts of country, some voters here were unhappy with the administration's handling of the economy or had deep concerns about the federal deficit. President Obama will continue making his pitch on Main Street, pushing for more jobs and trying to change the minds of skeptical Americans -- Wolf.

BLITZER: Dan Lothian in Wisconsin, traveling with the president.

Less than 24 hours after the president spoke to the House chamber, this sweeping talk of the future and bipartisanship is being drawn out by Republicans, who are challenging his agenda head-on.

Let's bring in our senior Congressional correspondent, Dana Bash.

What's going on -- Dana?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, you know, the president did try to appeal to Republicans in his speech last night, Wolf. But the sun was barely up this morning when Republicans in the Senate formally introduced their legislation to repeal his top priority. That has been, of course, the health care law.

And in the House, Republicans were full steam ahead, too.

(BEGIN VIDEOTAPE)

BASH (voice-over): The morning after the president asked Republicans to come together and move on when it comes to health care, anything but.

REP. PAUL RYAN (R-WI), BUDGET CHAIRMAN: Why is this the Budget Committee's first hearing and why is it focused on health care?

Let's just put it very simply.

Our fiscal problem is a health care problem.

BASH: That message from two new powerful House GOP chairmen.

REP. DAVE CAMP (R-MI), WAYS AND MEANS CHAIRMAN: With unemployment rates stuck above 9 percent for the last 20 months and with my home state's unemployment at nearly 12 percent, I have one simple question today -- how is it that Congress passed a health care bill that is, quote, "counterproductive" to American employers.

BASH: But it is a new staggering report on the nation's deficit that's further entrenching both parties. The non-partisan Congressional Budget Office says this year's deficit will grow to an eye-popping $1.5 trillion. That's up from the last two years of the Obama administration, where deficits were already the largest since World War II.

SEN. KELLY AYOTTE (R), NEW HAMPSHIRE: The national debt threatens not only our security and our sovereignty, but the economic prosperity of our country.

BASH: President Obama used his address to plead with Republicans not to slash too much spending, but invest.

OBAMA: Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine. It may make you feel like you're flying high at first, but it won't take long before you feel the impact.

BASH: His fellow Democrats are more blunt.

SEN. PATTY MURRAY (D), WASHINGTON: What I heard from the Republican side was disconcerting. They want to have a fire sale. They want to sell off our country.

BASH: But Republicans called new sky high deficit numbers proof that investing is the wrong way to go.

SEN. JOHN CORNYN (R), TEXAS: He called it investment which, as we all know, is code here in Washington, is spending more money. And we've been doing that at an enormously accelerating pace.

BASH: The Democratic Senate Budget chairman suggested the president missed an opportunity in his speech.

SEN. KENT CONRAD (D-), BUDGET COMMITTEE: I would have liked very much if the president would have spent a bit more time helping the American people understand how really big this problem is. We are borrowing 40 cents of every dollar that we spend.

(END VIDE TAPE)

BASH: The Congressional Budget Office blamed the jump in the deficit this year largely on that huge tax cut deal that passed in December. And, Wolf, you'll remember -- and this is ironic -- that that passed with far more bipartisan votes than any other major piece of legislation since the president has been in office.

BLITZER: Yes. Date night on Capitol Hill didn't last very long, I have to say that.

All right, Dana.

Thanks very much.

Republicans are taking the next step in their attempt to repeal what they call Obama Care. I'll ask Senator Jim Mint -- DeMint -- about his new bill and whether it has any chance of passing in the Senate.

And get this -- gun dealers say that, on average, 56 weapons disappear every single day. We're looking into the figure. We're looking into the danger.

(COMMERCIAL BREAK)

BLITZER: A lot of pundits predicted that the Republican drive to repeal health care reform would likely die in the Democratic- controlled Senate, but that's not stopping GOP lawmakers from trying.

Today, Senator Jim DeMint introduced a bill virtually identical to the appeal legislation approved by the House of Representatives.

Senator DeMint is a Republican from South Carolina, certainly a Tea Party favorite. He's joining us now.

Senator DeMint, thanks very much for coming in.

SEN. JIM DEMINT (R), SOUTH CAROLINA: Wolf, thanks for having me.

BLITZER: You have 47 Republicans in the Senate -- 47 Republicans. Assuming all of them agree with you, all 46 of your colleagues agree with you, you still need four Democrats to get 51 votes.

DEMINT: Right.

BLITZER: Do you have four Democrats who are likely to join you?

DEMINT: Wolf, we don't know yet. The important thing for us as Republicans is to do what we promised during the last election, and just about all of us ran on repealing this health care takeover, as we refer to it. And the longer it's been out there, the more states are asking for waivers, organizations are asking for waivers, the states are telling us it's going to bankrupt them, it's going to cost a lot more money than has been estimated, and there's a lot more things we can do to fix the current health care system and replace it. So we're going to continue, as Republicans, to show Americans that we want to throw out this government model and move back to more of a free-market model where we create the right safety nets to help those people who can't get insurance now.

BLITZER: But even if you got four Democrats to join you, it's unlikely if the Democrats decided to filibuster that you would get 60 --

DEMINT: Right.

BLITZER: -- that you would need to break a filibuster. And certainly if you did, the president would veto it. You would then need 67 senators to override a presidential veto.

So the question is, why bother right now in the midst of all the other issues that are out there, the economic issues, jobs, why are you trying to do something that you know is not going to go anywhere?

DEMINT: Well, it will. It will make a big difference, and it will all be on record to tell Americans whether we support a government takeover of health care or do we want to move back and fix the best system in the world, and voters need to know that for the next election.

Now, we may not be able to pass it with Obama in the White House, but I think it's going to be a very important issue in 2012 because most parts of this health care bill will not be implemented by the next election. And so Americans will be deciding at that point do they want a president who will repeal this health care bill, and do they want representatives in Congress who will repeal it, or do they want it to stand?

So the important thing right now, Wolf, is for Americans to know where Republicans and Democrats stand on repealing this bill.

BLITZER: Well, obviously you -- you want to repeal it, but you've acknowledged it's unlikely in the next two years to be repealed, so why not take the president up on his offer last night to fix it, to make some improvements? Are you willing to work with him on that?

DEMINT: Well, no, because you can't fix a system that's built on the wrong foundation.

The health care bill that we've got now that the president passed is built on a government-control model, a collective or socialist-type health care system, and what we need to do is return to the system that we had between patients and physicians and fix that system. There were a lot of problems with it, a lot of people couldn't get health insurance, it was too expensive, but a lot of the problems were caused by bad government laws and regulations that that we could fix.

So going back and fixing part of the health care bill is only going to make it harder to replace it with the right model. So there's going to be disagreement obviously, Wolf, and there's some parts of this that affect small businesses that we need to fix, but the best way to do it is to throw out Obamacare and then move in a step-by-step approach to make the current health care system work better.

BLITZER: The -- the point that you're making about collectivist, socialist health care, they dropped the so-called public option. There's no public option in the current law, so how does it all of a sudden become collectivist or socialist?

DEMINT: Well, Wolf, the government is basically deciding that every American has to have a government-approved insurance policy. They are going to decide the criteria of what meets that standard of what you can buy, and it's going to limit the choices and what you're going to see fewer and fewer insurance companies in the private sector.

And as the president is on record as saying, the whole idea of this is to move us towards a single-payer government system like they have in Europe.

So there's no question to anyone who understands health insurance and how it works, that this will destroy the private sector health insurance system and we will have a government system within a few years. So --

BLITZER: So when the president says he wants to try to improve, it get rid of, for example, the requirement for small businesses to file these 1099 forms whenever they pay someone $600 or when he says he's open to tort reform or medical malpractice reform, you don't even want to take him up on those offers?

DEMINT: Well, when he was in the Senate we tried to pass tort reform, Wolf, and he would not help us on that.

Now if he's serious about that and other things he mentioned in the State of the Union such as tax reform, lowering our corporate tax rate, we're going to work with him wherever we can. But so far he has not been sincere during the health care debate on doing anything that would make the current health care system better.

Everything he wanted implemented in his plan would eventually destroy the private health insurance market, and that's just not the America I know. And so I for one want to fight for free market health care system that really is a model to the world, not one that copies the government models that we see in Europe.

BLITZER: One final question. Are you going to run for the Republican presidential nomination --

DEMINT: No.

BLITZER: -- in the next year?

DEMINT: No, I'm not.

BLITZER: That's a pretty precise answer. Senator, thanks very much for coming in. We'll hope to have you back.

DEMINT: Thanks, Wolf. Good to be with you.

BLITZER: Thank you.

Privacy concerns about Facebook stoked again after the founder of Facebook gets his fan page hacked. We have the story, the details coming up.

Plus, we'll have an update on the hawk that's been trapped inside the Library of Congress in Washington for a week. You're going to want to see this.

(COMMERCIAL BREAK)

BLITZER: A colorful change for Homeland Security. Kate Bolduan is monitoring that and some other top stories in THE SITUATION ROOM right now.

Kate, what's going on here?

KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Wolf, lots going on. Let's get right to it, everybody.

CNN confirms that the government will drop the color-coded terror alert system in April. Instead, they will use a system that focuses on specific threats and geographical areas. It will be called the National Terror Advisory System. Department of Homeland Security Secretary Janet Napolitano is expected to announce the change tomorrow.

And Israeli police have arrested four Palestinian men in connection with the December murder of Kristine Luken. They will be charged with killing Luken and an Israeli woman. The men have admitted to the crime, they told police their motive was revenge for the killing of a Hamas leader.

And a high-profile hacking on Facebook. Founder Mark Zuckerberg's fan page was hacked, of all fan pages. The social networking site hasn't commented yet, but the breach raises questions about the company's security and privacy. French President Nicolas Sarkozy's Facebook page was also hacked this week. Good luck with that.

And the Library of Congress has lost a patron, but don't worry, everyone, she was probably happy to leave. Wildlife officials safely captured the hawk that was living in the main reading room for a week. They laid a trap for the so-called "Jefferson the Hawk" with two birds as bait. They say Jefferson was in generally good health, but had lost some weight. She headed for rehab before her release.

I think we now have to come up with a new name for Jefferson, the female hawk. I don't think it's an appropriate name for her.

BLITZER: Yes. Jeffy?

BOLDUAN: Jeffy? That's more manly. How about Jeffersonia? I don't know.

BLITZER: Brian Todd did a whole piece on that last week, an excellent piece. All right, mission accomplished. Thanks very much.

The nation is on alert right now on gun violence after the Tucson shooting, but get this, dozens of guns apparently vanishing every single day. What's going on?

And another move for Congresswoman Gabrielle Giffords. We just received an update on her condition.

(COMMERCIAL BREAK)

BLITZER: President Obama mentioned the Tucson shootings in his State of the Union address last night, but he chose not to bring up the hot button issue of gun control, and that's angering a top gun control group.

The president of the Brady Campaign to Prevent Gun Violence blogged that the president failed to grab an important opportunity. The Brady Group also released a shocking report on the number of missing guns out there.

Our homeland security correspondent Jeanne Meserve has the details.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, tens of thousands of guns are disappearing from the nation's gun shops.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Guns, thousands of them, are disappearing from gun dealers without a record of being sold. According to the Bureau of Alcohol, Tobacco and Firearms, more than 21,000 guns went missing last year; more than 62,000 disappeared over the past three years.

ARTHUR HERBERT, ASSISTANT DIRECTOR, ATF: A lot more guns are missing than -- than I think anyone would like to have. I believe that it's very important for us to have accountability of firearms, to know where the firearms are.

MESERVE: But the ATF numbers, as large as they are, don't reflect the full extent of the problem because the agency only has enough staff and resources inspect about one in ten gun dealers each year though it does try to target known or suspected bad actors.

Sixty-seven dealers had their licenses revoked last year for not reporting or misreporting missing firearms, but in many cases dealers tell authorities the guns were lost or stolen.

The Brady Center to Prevent Gun Violence maintains that some dealers are corrupt, selling guns under the table, off the books, without background checks of the buyers.

PAUL HELMKE, BRADY CENTER TO PREVENT GUN VIOLENCE: These are the guns that are prized by the gangbangers because they know it's not traced -- not easily traced back to them or the place where they got the gun.

MESERVE: We were unable to reach a trade group representing gun sellers and the National Rifle Association said it had no comment because it isn't involved in gun sales.

The ATF says it would be easier to keep track of guns if dealers were required to do annual inventories to account for every firearm. Under current federal law, they do not.

(END VIDEOTAPE)

MESERVE: It might also be easier to keep track of guns if the ATF had additional resources and clout. But it has been almost five years since the agency had a permanent director to effectively make its case for money, manpower and additional authority.

Wolf, back to you.

BLITZER: All right, Jeanne. Thank you.

Tucson shooting survivor Gabrielle Giffords now is recovering in a Houston rehab facility. She was moved there from a nearby hospital today. Doctors gave an update on her condition just a little while ago, and our senior medical correspondent, Elizabeth Cohen, is watching all of this in Houston.

Elizabeth, what did we learn?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: What we learned is that her condition, Wolf, has been upgraded from serious to good, and here's what her neurosurgeon had to say this afternoon.

(BEGIN VIDEO CLIP)

DR. DONG KIM, NEUROSURGEON: Since Gabby arrived last Friday, we have noticed daily improvements in her neurological condition. We're very pleased with that, and in terms of recovery for brain issues, this is really at lightning speed.

(END VIDEO CLIP)

COHEN: Now, while they are pleased with her progress, Wolf, they are saying that she still is not sitting up or standing up on her own, and she still is not able to speak -- Wolf.

BLITZER: We also heard a lot about the fluid in her brain creating a potentially dangerous situation. What's the latest on that?

COHEN: Right. When she arrived from Houston last week, she had a drain in her brain because she was accumulating all this fluid which can really be a problem. But over the next couple of days that problem resolved. The fluid went down. They were able to take out the drain. They did a CAT scan, and they say she's doing just fine without it -- Wolf.

BLITZER: So what's the latest, Elizabeth? How long is she going to be in rehabilitation?

COHEN: You know, we were told by doctors here to expect sort of a four-to-six-month recovery, but we know from talking with other patients with this kind of a brain injury that physical therapy can go on for years. I mean, some people are doing physical therapy for the rest of their life. Not in a hospital, of course, but the recovery for this kind of an injury, Wolf, is a marathon. It is not a sprint.

BLITZER: Elizabeth Cohen on the scene for us in Houston.

Thanks very much.

A plan to honor the judge killed in the Tucson shooting is moving forward today. Senator John McCain introduced a bill to name a soon- to-be-constructed federal courthouse in Yuma, Arizona, after Judge John Roll.

Some Republicans say Tea Party favorite Michele Bachmann has gone rogue. Was that the message of her unusual response to the president's State of the Union Address last night?

Donna Brazile and Mary Matalin, they are both standing by live for our "Strategy Session."

And this was no "Margaritaville" for the singer Jimmy Buffett. Stand by for the story behind this video from TMZ.

(COMMERCIAL BREAK)

BLITZER: Russia is pointing fingers in that deadly airport blast in Moscow.

Kate Bolduan is monitoring that, some of the other top stories in THE SITUATION ROOM.

What's the latest on that front, Kate?

BOLDUAN: Yes, an update from Russia, Wolf. Let's get right to it.

Russia's president has fired top airport security officials in light of this week's deadly bombing. Speaking in Davos, Switzerland, Dmitry Medvedev said the transport police were "absolutely passive," he said. He has blamed security violations on Monday's bombing at Moscow's busiest airport.

It killed 35 people. As many as 180 others were wounded. Moscow is observing a day of mourning today.

And more from Davos, which still looks a lot like an old boys club, it seems. And a quota to boost female participation hasn't done much.

The World Economic Forum is requiring many larger companies to include at least one woman among their five delegates. They say this has doubled the number of women, but that means only 16 percent of the 2,500 participants are women at this point.

And some alarming health statistics we want to tell you about.

The CDC says almost 26 million people have diabetes and about seven million of them don't even know it. In addition, more than one- third of adults have something called pre-diabetes. That means their blood sugar levels are higher than normal. And people with diabetes are at a higher risk for many illnesses, including heart disease, stroke, blindness and amputations.

And take a look at this. That was poor Jimmy Buffett in a video from TMZ. He was -- he's in an Australian hospital after you see right there falling off a concert stage.

The hospital says the singer is in stable condition. There are no further details on his injuries at this point.

Buffett has been singing to sold out crowds in Sydney for the past week. He's 64 years old.

Some of my favorite songs are Jimmy Buffett songs, Wolf. A little "Margaritaville" never hurt anybody.

BLITZER: Yes. I love Jimmy Buffett. I hope he's OK. You'll keep us informed. I hope he's going to be just fine.

Thanks very much.

What a talent Jimmy Buffett is.

BOLDUAN: Yes.

BLITZER: Not one, but two Republican responses to the president's State of the Union speech. Does that signal dueling agendas within the GOP? Today's "Strategy Session" just ahead.

And later, Egypt right now in a state of revolt. Massive violent protests are sweeping the country. We're taking you live to Cairo right at the top of the hour.

(COMMERCIAL BREAK)

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

Joining us, the Democratic strategist and CNN political contributor Donna Brazile, and the Republican strategist and CNN political contributor Mary Matalin.

Mary, what did you think of Congresswoman Michele Bachmann's response last night to the president's State of the Union Address? She was speaking not as necessarily a Republican, but as a representative of the Tea Party Express movement, and it was a little awkward because you saw she was looking at the wrong camera.

MARY MATALIN, CNN CONTRIBUTOR: Well, honestly, Wolf, I did not watch it, but I read it. And the substance of it comports with what Republicans believe, what a fair number of Democrats believe, and a fair number of Democrats attended the Tea Party Caucus inaugural event there. So I don't know one Republican who disagrees with what she said.

And she laid out the substance very well. And it was in response to an invitation from the Tea Party, not in competition to Paul Ryan, who was the official Republican responder of last night.

BLITZER: I just want to be precise. She was looking at the camera that was streaming her response online, as opposed to the TV -- the network TV pool camera. We were taking that live. That's why it looked a little awkward.

What did you think of her response to the president, Donna?

DONNA BRAZILE, CNN CONTRIBUTOR: Well, first of all, I thought it was unnecessary to have a rebuttal to the rebuttal. She was not consistent with Mr. Ryan's approach, which was to pretty much lecture us on how we've spent so much over the last two years, and not looking at the complete picture, which I thought the president laid out in a very good fashion.

Look, Wolf, I didn't get distracted by Ms. Bachmann looking off to the side. I got distracted by the pitch, the charts. It didn't seem like she had her act together. And as you know, PolitiFact and some others have said that much of what she even presented was erroneous.

So I don't know why the Republicans are still dealing with these divisions. The Tea Party members are now part of the Republican Caucus. They are in the leadership in the House of Representatives. And I think in the future they should perhaps just settle on one person to deliver the rebuttal.

BLITZER: You know, Mary, she recently, the other day, was in Iowa. She's now going back in March. She's going back to Iowa. A lot of speculation she may seek the Republican presidential nomination, especially if Sarah Palin decides not to seek the Republican presidential nomination.

Did her response last night help or hurt her if she wants to run for president?

MATALIN: First of all, the notion that there would be competition in a Republican primary in a very fertile 2012 territory does not mean that there's divisions in the Republican Party any more than competition in the Democratic primary did last time around. People know that -- particularly Republicans, conservatives and Independents know that Obama is vulnerable. We're way far out from there.

But there's no division. There's no light between fiscal conservatives who are the heart and the soul of Tea Party Caucus, or the Tea Party Express, or whatever they want to call themselves. And it is a notion in essence with which many Democrats, including former Speaker Nancy Pelosi, said she agrees, which the president also said last night, we must cut spending.

(CROSSTALK)

BLITZER: But Mary, the question is, did she help herself last night or hurt herself last night if she wants to run for president?

MATALIN: I can't -- one instance doesn't hurt anybody. And thanks to CNN for covering her. Maybe she didn't expect to be covered the way she was. But I can't believe that anybody who cares about what she has articulated would think that looking in the wrong camera has anything to do with her philosophy of government and her ability to execute on that philosophy.

BLITZER: And we should just be precise. She was told to look into that camera which was streaming. The teleprompter was in that camera that was streaming it online. There was a separate network pool camera that didn't have the prompter. She didn't look in that, but that's the one we were taking.

Fox News, by the way, was the pool representative for all the networks shooting that separate pool camera. I just want to be precise on that.

All right. Let's move on.

BRAZILE: But Wolf --

BLITZER: Yes, go ahead, Donna.

BRAZILE: -- what are we talking about today? We're talking about Michele Bachmann. We're not talking about Paul Ryan. We're not talking about John Boehner. We're talking about Michele Bachmann and her presidential aspirations.

Again, it's about message. And if you want to have a united message so that you can show the American people that you're ready to lead and ready to govern, then you put one person out there and you try to stick to the script.

BLITZER: I guess the argument, Donna and Mary -- the argument --

MATALIN: You know what, Wolf?

BLITZER: -- is maybe she's not yet ready for prime time if they have these problems making sure she's looking into a camera that will show live what she's saying to the American people. I guess that's one of the arguments that's being made right now.

But let's move on. Enough about Michele Bachmann. We'll have plenty of opportunities to talk about her down the road. And we've, of course, invited her to join us. I hope she joins us in THE SITUATION ROOM in the coming days. We would love to talk to her about all of this and a lot more.

Let's talk though about budgets and deficit spending and what's going on -- 1.5 trillion they now estimate our budget deficit will be this year alone. A huge, huge number.

When we ask the American people though what do they want to cut -- because you've got to start cutting important stuff -- what's more important, reducing the deficit or preventing cuts in veterans benefits? Nobody wants to cut veterans benefits.

Preventing cuts in Medicare? Nobody wants to cut Medicare.

Preventing cuts in Social Security? Nobody wants to cut Social Security.

Preventing cuts in roads and mass transit? Sixty-one percent say don't cut roads and mass transit.

You know, Donna, people want to cut, but they want to keep all the popular programs going.

BRAZILE: And Wolf, we have a spending problem. Everyone agrees. But we also have a revenue problem. And as you know, we have to pay for those tax cuts. We're borrowing money --

BLITZER: So are you saying raise taxes? Is that what you're saying?

BRAZILE: Wolf, I agree with some portions. Not all of the items from the deficit commission, but I believe that we've got to put it all on the table.

We've got to look at revenue shortfalls, but we also have to look at spending and get rid of programs that are no longer functioning. The president laid out his plan. The Republicans need to lay out their plans. We need to come to the table. And it's going to require us to make some very difficult and painful choices.

BLITZER: Can you do this without raising taxes on the wealthy, Mary?

MATALIN: Absolutely. And even if you did, that would barely put a dent in the deficit.

And the problem is not deficit as a percentage of GDP, which have grown exponentially under this president. It is the reform of long- term entitlements which are unsustainable, unaffordable.

And the consensus in the last election was that something must be done about them. There is no alternative.

The way that data was put out -- with respect to our pollsters -- and I'm sure they know that -- but when you just say let's cut this or that, and people presume that's to the exclusion of everything else, of course they are going to be against it. But 2-1 in every poll across the board, people say the number one priority, because it's a job-killer, is to reduce the deficit and reform these entitlement programs that are causing us structural debt.

(CROSSTALK)

BLITZER: Donna, very quickly.

BRAZILE: I don't think the -- the deficit is a problem, Mary, but we cannot cut our way back to economic growth. We have also got to have a sustainable set of resources and revenue coming in as well to the government to help pay for these expensive programs.

BLITZER: All right. To be continued.

MATALIN: There's plenty of revenue coming in, Donna. Out of your check, too.

BRAZILE: Yours, too, Mary.

BLITZER: All right, guys. Mary and Donna -- guys, thanks very much.

MATALIN: I know it.

BLITZER: One Republican is calling it light bulb socialism. We're taking a closer look at the law that's helping to sweep the old- fashioned light bulbs out and put them in the dustbin.

(COMMERCIAL BREAK)

BLITZER: President Obama took a big part of his speech last night at the State of the Union -- the speech -- on the road today. The president visited a Wisconsin company that makes high-efficiency lighting a day after expressing the importance of investing in clean energy.

The federal government is phasing out the production of some incandescent light bulbs in favor of more energy-efficient lighting, and that apparently doesn't sit well with Congresswoman Michele Bachmann. The Minnesota Republican mentioned the phase-out during her Tea Party response to the president's speech last night. She brought the issue up with a conversation about government spending.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), MINNESOTA: Well, what did we buy? Instead of a leaner, smarter government, we bought a bureaucracy that now tells us which light bulbs to buy.

(END VIDEO CLIP)

BLITZER: Joining us now with details on when we'll no longer be able to buy the old-fashioned incandescent light bulbs, and what will be taking their place, CNN's Kate Bolduan once again -- Kate. BOLDUAN: Hey there, Wolf.

Well, a lot of people are talking about this. A lot of talk about the light bulb.

The light bulb is one of those absolute essentials in our lives that really has changed much actually when you think about it, relatively speaking, since it was invented in the 1800s. But now it's really changing.

Things are changing, and the government estimates these changes could save nearly $6 billion in electrical bills every year. But not everyone is happy about that.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): This month furniture giant IKEA pulled traditional incandescent light bulbs from its shelves. IKEA says it's the first of what will be thousands of companies that will no longer sell the incandescent bulb by 2014.

In 2007, Congress passed the Energy Independence and Security Act, which essentially forces a phasing out of traditional incandescent bulbs in favor of more energy-efficient alternatives like compact fluorescent, halogen, and LED light bulbs. But lights off for the inefficient bulbs may come with some unintended consequences -- higher prices for consumers, and some say the loss of jobs in the U.S.

Republican Congresswoman Joe Barton says the law leaves consumers with too few options.

(END VIDEOTAPE)

BLITZER: All right. Obviously we're having some technical problems with Kate's piece.

Kate, you still there with us?

BOLDUAN: I'm right here, Wolf.

BLITZER: All right. Let's just talk about this for a moment.

Give us the gist of what is happening right now.

BOLDUAN: The gist of this -- and I'm not sure how much our viewers were able to hear. There was a 2007 act. It was called the Energy Independence and Security Act. And the whole goal dealing with light bulbs was to move the country towards more energy-efficient light bulbs because it would save billions of dollars, they think, in electrical costs, as well as obviously helping the country move a little greener and save money for people.

Well, that's causing some controversy. Some congressmen saying it's not a good idea because it's potentially hurting job creation in our country. And it's also offering too few choices in light bulb options for some people. And that's led some people to probably, a little jokingly, call it "light bulb socialism." But in the end, what's going on here is this 2000 act, it's obviously in place. And by 2014, the traditional incandescent bulb will be phased out for more energy-efficient options.

And what you see right here is one of those options. This is a compact fluorescent light bulb, CFLs, for short. This is really the best alternative when the incandescents are phased out. And that's really what people are going to be move towards when this all occurs, getting a lot of people talking, if you will -- Wolf.

BLITZER: It certainly is. All right, Kate. Thanks very, very much.

I apologize to our viewers. We didn't have that piece finely tuned as we should have.

Our correspondent in Egypt tells us the nation right now is in revolt.

Stand by. We're watching breaking news on the streets of Cairo and elsewhere. We're going there live.

And is the U.S. soldier accused in the WikiLeaks case being treated unfairly? New information coming in.

(COMMERCIAL BREAK)

BLITZER: A dramatic new twist in the case of the WikiLeaks suspect, Private First Class Bradley Manning. His attorney now says he's being unfairly treated in detention.

Our Pentagon correspondent Chris Lawrence has the latest -- Chris.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Yes, Wolf. Manning's attorney is pinning his hopes on a new development in this case which is a new commander has taken over the Quantico brig where he's being held just this week.

Now, Manning's attorney says he's been in max custody under a special prevention of injury watch for over five months now. That means basically he's confined to his cell by himself for 23 hours a day, allowed out for an hour for exercise. At night he has to strip down to his underwear and hand in his clothes, although he does get a padded mattress and a few blankets.

Now, just last week, the previous brig commander upped his status to suicide watch for a few days, which temporarily put even more restrictions on it. The complaint alleges that this brig commander abused his authority by keeping Manning confined like this. And Manning's attorney says the military's own forensic psychologists have examined him several times and found no medical reason why he should be kept under this prevention of injury watch. Now, the military says yes, the brig commander does take that recommendation into account, but also looks at what his physician says and what Manning's guards who are with him around the clock, what they say as well. The bottom line, his attorney has written that there's no real reason to protect Manning the from himself, but the Pentagon defends the brig commander's decision.

(BEGIN VIDEO CLIP)

GEOFF MORRELL, PENTAGON PRESS SECRETARY: That may be, that there are reasons that they think it is for his own benefit that he be held so. But it can also be that he's being held behind bars because he's deemed a threat, that he has been alleged to have committed a serious crime that potentially undermines our nation's security. And therefore, he needs to be confined during the course of a trial.

(END VIDEO CLIP)

LAWRENCE: Again, a new brig commander just took over on Monday. The military says the old brig commander was scheduled to leave several months back, before all of this came through. And so the attorney is now pinning his hopes on that this new commander will take another look at Manning's case and perhaps lift some of the restrictions -- Wolf.

BLITZER: Chris Lawrence, thank you.