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THE SITUATION ROOM

Michele Bachmann Interview; Herman Cain Campaign Near Collapse?; Financial Leaders Bid To Stop Potential Euro Collapse; American Airlines Files Chapter 11; Protesters Attack British Embassy in Tehran

Aired November 29, 2011 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now: uncertainty swirling around Herman Cain's presidential campaign a day after he first revealed right here in THE SITUATION ROOM allegations of an extramarital affair. We will talk about Cain's latest scandal with White House hopeful Congresswoman Michele Bachmann.

Also, a major U.S. air carrier files for bankruptcy. What should would-be passengers on American Airlines do right now?

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

Republican presidential candidate Herman Cain tells his staff he is reassessing the viability of his campaign less than 24 hours after he dropped a political bombshell right here in THE SITUATION ROOM.

During my interview with him yesterday, Cain revealed that an Atlanta woman is claiming she and Cain engaged in a 13-year extramarital affair, a claim Cain flatly denies. Coming on the heels of sexual harassment allegations, this leaves Herman Cain's campaign in a very, very precarious position right now.

CNN's Joe Johns is working the story for us.

What's the very latest on the Herman Cain campaign, Joe?

JOE JOHNS, CNN SENIOR CORRESPONDENT: Well, Wolf, with all the swirl in this campaign, this is not the first time Herman Cain has tried to reassess the state of the race. The question for him is about polls and fund-raising and support, but after the last 24 hours, there are some Republicans out there who don't think things are going to get any better for him.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): There's no telling how the world turns in the soap opera that is now the presidential campaign of Herman Cain. Question of the day, was he just friends or friends with benefits for more than a decade with one Ginger White, a down-on-her-luck Atlanta businesswoman and mother of two. Cain says one thing.

WOLF BLITZER, CNN ANCHOR: Did you have a 13-year affair with this woman?

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: No, I did not.

BLITZER: Did you know her for 13 years?

CAIN: Yes, but I did not have an affair.

JOHNS: Ginger White says another.

QUESTION: Are you sticking by your original story that it was a sexual relationship?

GINGER WHITE, ALLEGES 13-YEAR AFFAIR WITH HERMAN CAIN: Absolutely. And I can only imagine -- I can't imagine him actually confirming. It's the name of the game, I guess.

JOHNS: Ginger White's coming out on local Atlanta TV was enough for Cain to announce the latest reassessment of his campaign.

"National Review," which said it was on the conference call when Cain made the announcement to his staff, reported that Cain said it would be about the public reaction, whether the story would create too much of a cloud in some people's minds, affecting their ability to support the campaign, though when Cain launched his preemptive strike in THE SITUATION ROOM, he sounded determined to stay in the race unless private family considerations made him think twice.

CAIN: As long as my wife is behind me.

JOHNS: No word on the wife, but if the writing isn't on the wall yet, the scribbling continues. One of Cain's old buddies from talk radio, Neal Boortz, said it wasn't looking good, though another of Cain's hometown buddies, presidential contender Newt Gingrich, wouldn't go there.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I think it's a very difficult situation for he and his family. My heart goes out to them. I hope that he reaches whatever is the right decision for them. And beyond that, I'm not going to have any comment.

JOHNS: But given the four previous women who claimed Cain sexual harassed them, some in the Republican Party have been wondering for a while what Cain thinks he's doing.

Republican strategist Ron Bonjean:

RON BONJEAN, REPUBLICAN STRATEGIST: He's caught in political quicksand. His polling is dropping, which must mean his fund-raising is starting to dry up. He will probably have to hang it up eventually.

JOHNS: If there had been a pathway to the nomination for Cain, that pathway appears to be narrowing. A new poll shows Cain with 10 percent support in the early primary state of South Carolina. That puts him down 16 points since early October, which leaves an opening for someone in the race to benefit from Cain's latest slip.

BONJEAN: The biggest person who benefits is Newt Gingrich because he will get a bulk of those Tea Party supporters. Already, he's leading in Iowa. The person it hurts the most is Mitt Romney.

(END VIDEOTAPE)

JOHNS: A lot of the volatility in this race has been blamed on the so- called anybody-but-Romney sentiment. And Cain was seen as one of the alternatives to Romney. If people are turning away from Cain, the biggest question really is whether Gingrich can capitalize -- Wolf.

BLITZER: Good news potentially for Newt Gingrich. I write about this on my blog today as well. Check it out.

Joe, thanks very, very much.

During our interview yesterday, Herman Cain, he did open the door to the possibility, the possibility of ending his campaign, saying there's one factor that could lead him to quit the race for the White House.

(BEGIN VIDEO CLIP)

CAIN: I don't want it to be tough on my family. And there comes a point that if it's tough on my family, I have to consider that at that particular point in time.

BLITZER: And you would drop out if it got overwhelmingly tough?

CAIN: I would -- I will make that decision depending upon the circumstances and how it is impacting my wife and my family. That's my number one concern by all of these accusations.

(END VIDEO CLIP)

BLITZER: All right, let's dig deeper right now with our chief political analyst Gloria Borger and our senior legal analyst Jeffrey Toobin.

I know you have been doing some serious reporting, Gloria. This reassessment, he's reassessing his campaign. What does he mean by that?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: It's about viability and that's largely about money.

Remember, after the sexual harassment charges were leveled against him, his fund-raising went up almost immediately by about $2 million. So now what they're trying to see is, look, are people going to run to defend Herman Cain or has this reached such a critical mass that in fact people are flocking away from him?

The second thing here in the reassessment -- and you just pointed it out -- is that I do think this is really a family issue for Herman Cain. We haven't seen his wife out there, Wolf, since this last allegation. And I think he made it very clear -- I spoke with Steve Grubbs, his Iowa state campaign chairman, who was on that conference call this morning who said Cain made it very clear that this has taken a toll on his family and that that would be a major part of his reassessment.

BLITZER: Here's something, Jeffrey, that was very awkward. He flatly denied this allegation of a 13-year affair of this woman, but his attorney who's highly regarded, Lin Wood, you probably know him, in Atlanta, he's had some high-profile cases. He didn't go that far. He just issued a sort of legalistic kind of statement that the news media should not pry into consensual sexual affairs, if in fact they exist.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Right.

And in fact Lin Wood's defense is one that you could actually at least try to go forward with. You could simply say I'm not going to discuss my personal life. Sexual harassment is a legal issue. It's a civil offense. You obviously have to deny and fight back against charges like that.

You could say with an allegation of an adulterous affair, look, it's none of your business. But that's not what Cain said in his interview to you. He said it didn't happen. Lin Wood said it's none of our business. So they obviously did not have their stories aligned, which makes the situation even more awkward.

BORGER: But Lin Wood clearly is not used to presidential campaigns because to say to the voters and to the media that this is not relevant is not the job of a lawyer for a presidential candidate, because everything has been relevant to presidential campaigns. It's up to the voters to decide whether they care or not.

TOOBIN: The Cain campaign is not I think a finely tuned political machine where there's, you know, conference calls, everything's organized. You get the sense there's a lot of freelancing going on and it didn't go well yesterday.

BLITZER: I saw David Brody, who works for the Christian Broadcasting Network.

BORGER: Right.

BLITZER: He basically suggested that it's over for the Herman Cain, as decent and as honorable as the guy may be and as much as he might like him.

But what are other conservatives likely to do if in fact Herman Cain decides it's over?

BORGER: If there could be an ideal conservative for evangelicals, I don't think Herman Cain at this point would fit the bill.

If you look at the polling, Joe mentioned it. And let me show you these polls. South Carolina, very important early state, conservatives, evangelicals. Look at how his support has dropped from October. He was at 26 percent. November, 10 percent. So more than half. Iowa, early caucuses, Herman Cain was once in the lead there. A Bloomberg poll in mid-November had him at 20 percent and that was in the middle of the sexual harassment charges. Now 10 percent, his support was cut in half and that was before this recent allegation. Herman Cain has gotten himself into trouble on substantive issues and also on personal issues and that doesn't sit well with conservatives.

BLITZER: We have covered stories of politicians getting in trouble because of extramarital affairs or whatever. Can he survive this?

TOOBIN: It doesn't really look that way frankly. If you're Bill Clinton and you're already president of the United States and you have been elected and gotten 270 electoral votes, you have a base of support to draw on.

Herman Cain's never been elected anything. He was utterly obscure six months ago. I just don't see how, given this crowded race, with Romney, with Perry and certainly with Newt Gingrich surging the way he is, that there's room for him in this campaign. And it's just going to be an embarrassment to his family.

BORGER: Yes. Steve Grubbs, who again is his chairman in Iowa, said to me the hill gets a little bit steeper. I think that is a complete understatement from a Cain loyalist.

I think right now, people believe, conservatives, if they don't like Mitt Romney, they see an alternative out there and that's probably Newt Gingrich for them. And I think at a certain point, things reach a critical mass and conservative voters, evangelical voters are going to say this is not going to be my standard bearer.

TOOBIN: It was possible to have sort of a conspiracy theory about the sexual harassment allegations, that they're going after him just like they went after Clarence Thomas. This is a little different, especially if she's got phone records. Is he really going to want to have those all come out in public?

It just seems unlikely to me.

BLITZER: It seems a lot of it already has come out in public. And we will see what he does.

BORGER: And he's on the record with you absolutely denying it.

BLITZER: Denying it. We will see what happens.

We will speak with Congresswoman Michele Bachmann about this. That's coming up live this hour.

But let's go check in with Jack Cafferty. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: A dramatic change in the face of the Democratic Party. "The New York Times" reports that for the first time in next year's election the party will -- quote -- "explicitly abandon the white working class" -- unquote.

That's pretty big stuff. According to plans by party operatives, Democrats hope to cobble together a center-left coalition made up of highly educated voters like lawyers, professors and teachers, along with black and Hispanic lower-income voters.

As for whites without college degrees, Democrats are giving up on trying to win a majority of those. Instead they are hoping to keep the Republican winning margins to manageable levels, say less than 15 percent. In 2010, Democrats lost the white working class vote by a whopping 30-point margin.

One Democratic analyst write that -- quote -- "The Republican Party has become the party of the white working class."

Pretty stunning, really. Republicans, traditionally the party of the wealthy, you know, and Democrats long the friend of the working man, politically speaking, going back in this country.

Go back to the 1920s. It was FDR who put together the New Deal coalition that included unions, blue-collar workers, farmers, blacks, people on government assistance, and intellectuals without money.

Fast-forward to today, it's interesting that at a time when unemployment is holding at 9 percent, the Democratic Party is choosing to give up on these core voters and go in another direction.

Meanwhile, a recent poll spells trouble for President Obama when it comes to blue-collar Democrats. The CNN/Opinion Research Corporation poll shows half of all white Democrats with no college education say they don't want Mr. Obama heading their party's ticket. Ouch.

Here's the question. What does it mean if Democrats are giving up on white working class voters? Go to CNN.com/caffertyfile, and post a comment on my blog or go to our post on THE SITUATION ROOM's Facebook page.

BLITZER: Jack, a powerful question indeed. Thank you.

We're going to have a lot more political news coming up, including Republican presidential candidate Michele Bachmann. She's standing by to join us live right here in THE SITUATION ROOM in a few minutes. We will talk about her campaign, Herman Cain's new scandal, Newt Gingrich, immigration, much more.

And a potential financial earthquake that would be felt around the world, including right here in the United States. We're going to have a latest on efforts to stop a total collapse of the e uro.

(COMMERCIAL BREAK)

BLITZER: Looking at live pictures coming in to us from Tampa, Florida. You see the microphone there. Mitt Romney getting ready to take questions from the media. I assume reporters are going to be asking him about Herman Cain, what's going on with Newt Gingrich, the race for the Republican presidential nomination.

We'll go there live and hear some of the Q&A with Mitt Romney, the Republican presidential frontrunner in Tampa. He's getting some important endorsements today as well. Stand by for that.

Meanwhile, other important news we're following, European finance ministers were meeting at Brussels tonight in an increasingly desperate bid to stop a euro collapse that would send financial shock waves around the world.

CNN's Richard Quest is monitoring the story for us tonight from London.

Richard, first of all, explain how the collapse of the euro, which a lot of people think is certainly possible, would impact the average American who's watching us right now.

RICHARD QUEST, CNN CORRESPONDENT: It would impact it because if the euro were to collapse, which as a currency, I don't think it will. But if some countries were to leave or there was to be a major dislocation or disruption, some sort of collapsing event, then what would happen immediately is the credit markets would just freeze up. The money markets would freeze up. Banks would literally be looking over their shoulders at each other. Wondering who was next. Who had losses? How much was it going to cost.

And that would lead to not just the global recession, take away the "R" word and put the "D" word instead. It would lead to a global depression, probably.

One of other major factor, longer term, the U.S. last year exported more than $170 billion worth of goods to the European Union. The bilateral trade between these two blocks is so huge that any disruption will take everybody down where it. This is not something that European problem. And that's why President Obama yesterday at the White House said he was so concerned.

BLITZER: So, give us your assessment, Richard. Is it going to happen? How long will it take if it does happen? What should we be looking for?

QUEST: All right. Is it going to happen that the euro will collapse and disappear and the French will go back to the Franc and Germans will go back to the Deutsche Mark? I think that is just about impossible. There are more than 200 million people using that currency every day on the continent of Europe. To even think that the euro as a currency will disappear is just fanciful and delusional.

What could happen, though, is that some countries could leave, they could reformat it into a smaller block. They could make major changes and those on their own, Wolf, would be very disruptive and very damaging. But this idea that it will somehow go poof into a puff of smoke with the euro, it's just not going to happen.

BLITZER: Let me make a quick turn to American Airlines right now. You're CNN's aviation expert. You got to speak with American Airlines new CEO. Bottom line, now that its this parent company is filing for bankruptcy, what should American Airline passengers, customers, worry about?

QUEST: They should worry about one very simple thing. Is the seat comfortable and is it on time? In other words, don't worry at all. The planes are going to fly. People like you, me and everybody else watching, we've had experience of flying airlines in Chapter 11 -- United, Continental, Delta, Northwest, U.S. Airways twice.

So, the airline's not going away in any shape or form. Employees will have to worry about what happens to their wages and benefits over the longer term. I put all this to Tom Horton, the new chief executive, because after all, American has a big task to try and cut its cost.

(BEGIN VIDEO CLIP)

THOMAS HORTON, CEO, AMERICAN AIRLINES: The gap between our cost structure and the rest of the industry had become too wide, and really just not something we could sustain any further. And at the same time, you know, great economic turmoil in the global economy and high and volatile oil prices. So, all of that taken together created an atmosphere where our board felt that the best decision was to per sue a full restructuring of the company to make us more competitive and successful for the long-term.

(END VIDEO CLIP)

QUEST: So, Wolf, putting this together. Investors are going to take a hit. The shares are just about worthless. Those who've got debt will take a hit. It will be written. Employees will take a hit because eventually, their contracts, pilots, maintenance and flight attendants, those contracts will be rewritten.

But passengers, frequent fliers, American advantage members, they don't need to worry.

BLITZER: Reassuring words. Thanks very much, Richard Quest, on the scene for us, as you always is.

A frightening scene in Iran's capital today as a mob of students storms the British embassy in Tehran. We're going to tell you why it happened. What's going on? What are the Iranians saying? Lots at stake right now.

And could she stand to gain if -- if -- it's a huge "if" right now -- if Herman Cain decides to drop out of the race for the White House? Presidential candidate, Congresswoman Michele Bachmann, she's standing by to join us live.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now, including really frightening attack on the British embassy in Iran.

LISA SYLVESTER, CNN CORRESPONDENT: Yes, that's right, Wolf.

The U.N. Security Council is strongly condemning today's attack on the British embassy in Tehran. A group of hardline students stormed the compound. The protesters hurled stones at embassy windows, burned the British flag and chanted, "Death to England."

The anger comes after new Western sanctions. Police say all students have been removed. Iran's foreign ministry is expressing regret, promising legal action. And we will have much more on this story in the next hour.

And after more than a dozen interviews, doctors in Norway have ruled that Anders Behring Breivik is insane. But the mass murder suspect will still stand trial for July's bombing and shooting rampage that killed 77 people. Doctors say Breivik is paranoid and schizophrenic. If convicted, he'll be held in a mental hospital for life. His trial starts in April.

And home prices are falling again, down to their lowest levels in eight years. A new report shows prices dropped nearly 4 percent in the third quarter across most major U.S. cities. Among them, Atlanta, Las Vegas and Phoenix posted record lows. The number of foreclosure is also up, after months of decline. It's a trend experts say will continue to keep the housing market weak.

And a major shake up for the Jacksonville Jaguars. The NFL franchise is being sold and the team has fired Coach Jack del Rio. The Jags haven't had a winning season in four years. And after a 3-8 start this season, hasn't been any better. The team's new owner, a Pakistani-born businessman, is expected to keep the Jaguars in Jacksonville. So, a lot of changes there, Wolf.

BLITZER: He's a real success story, this Pakistani born businessman, a student, came to the United States when he was 16. Student at the University of Illinois and he goes on to do really well and buys himself an NFL team.

SYLVESTER: Yes. Now, he owns an NFL team.

BLITZER: Only in America could that happen.

SYLVESTER: Yes.

BLITZER: Good for him. Thanks very much.

A Republican presidential candidate, Michele Bachmann, is standing by to join us live. We're going to get the latest on her late night uproar that prompted an apology from Jimmy Fallon. But was that enough? We've got a lot to discuss with Michele Bachmann when we come back.

(COMMERCIAL BREAK)

BLITZER: I'm Wolf Blitzer.

Here are some stories we're working on for our next hour:

A judge throws the book at Michael Jackson's doctor, sentencing him to the maximum punishment.

President Obama is hitting the road, heading to some key battleground states. So why is the White House insisting he's not campaigning?

And the death-defying jet man is at it again with four engines and a wing.

Stand by. You're in THE SITUATION ROOM.

(MUSIC)

BLITZER: The Republican race for the White House may be on the verge of a major shake-up, with Herman Cain now reassessing his campaign in the wake of serious allegations of an extra-marital affair.

Joining us now to talk more about that, one of Herman Cain's major Republican rivals, Congresswoman Michele Bachmann.

Congresswoman, thanks very much for coming in.

MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: Wolf, always a pleasure to be with you.

Thank you.

BLITZER: Thank you very much.

Herman Cain flatly denied, right here in THE SITUATION ROOM yesterday, the allegations that he did have this 13 year affair with this woman in Atlanta.

Do you believe him?

BACHMANN: Well, that's not for me to say. That's -- that's for the voters to determine and he'll have to make the determination about where he goes from here on his campaign.

BLITZER: Well, what do you think about all of these allegations?

Four other women accusing him of sexual harassment, now a fifth woman accusing him of having an extra-marital affair?

What -- what does that say about his campaign?

Put on your political pundit hat for a second.

BACHMANN: Well, I'm not a political pundit. I'm running as a candidate for the presidency of the United States. And, clearly, it's not helpful for his campaign. But he'll make that determination going forward, about whether or not he sees himself as a viable candidate.

More importantly, it's the voters that will make that decision.

BLITZER: Do you think he should drop out?

BACHMANN: That's not for me to say. He'll make that determination. I imagine it will be made fairly soon.

BLITZER: He suggested to me that maybe there's some sort of conspiracy out there, elements working to derail what he called the Cain train.

Do you believe there's some conspiracy out there to hurt him?

BACHMANN: You know, I -- I don't see a conspiracy on the horizon. But again, that will be for the voters to decide. And his campaign as he -- as you said, is reassessing where he's at. And I'm sure that they'll make a decision before too long.

BLITZER: If, in fact, he does decide to drop -- drop out -- and he says now he's reassessing his campaign. He told his supporters that, his staff that, earlier today, what would you say to those supporters of Herman Cain to -- to -- to leave Herman Cain, if he drops out, and come to Michele Bachmann?

BACHMANN: Well, I would tell them that I've been a consistent conservative from the beginning of this race. There's been no surprises with me. We actually launched a Web site called NoSurprises2012.com. You can look at a lot of the other candidates. You see a lot of inconsistencies, a lot of flipping back and forth.

You don't see that with me. I have a new book out. It's called "Core of Conviction." We just launched it this week. And what it tells people is that over the 55 years of my life, I've lived a consistent life with core principles. And I talk about who I am in an unfiltered way so that people can get a look at me in a 3D picture. It's "Core of Conviction" and I'm going across the country now to let people know, without having to go through the barrier of the media, who I am, what I stand for and what my core convictions are.

BLITZER: You're suggesting that other candidates may be flip-flopping, if you will. I think I know who you're referring to.

But let me talk about Newt Gingrich for a minute. He denies he ever supported what's called amnesty for illegal immigrants in the United States.

Let me play this clip.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: It is an absolute falsehood to suggest that I favor amnesty for 11 million people period period. And anybody who says it from this point on has been served notice that they are something -- saying something which is not true, which in itself should disqualify them as a candidate the be president of the United States.

(END VIDEO CLIP)

BLITZER: You put out a press release saying he does support -- or at least he once supported amnesty.

BACHMANN: Well, his position would be inconsistent because he signed a letter that was published in "The Wall Street Journal" in 2004 saying that, in fact, he did support President Bush's comprehensive immigration reform, which was commonly known as amnesty, because what it would do is make legal 11 million illegal workers in the United States.

And he was also in support of the federal DREAM Act, which would provide taxpayer subsidies for college tuition for the children of illegal aliens.

That's just a fact. It's just on record. He may have a different position today, but even as recently as the last debate, he said that he, in fact, favored making legal illegal workers. That's -- those are two different positions and he'll have to reconcile those.

But again, those aren't the only times where he's had inconsistent positions. He came out in favor of entering into Libya in the no fly zone and he also came out later saying he was not in favor of Libya. He said he was not in favor of TARP and then he was in favor of TARP.

He was sitting on the couch with Speaker Nancy Pelosi saying that we needed to do something about global warming. Now, he's not so sure.

So he was also the father of the individual health care mandate and admitted as much on stage when he was questioned by Newt Gingrich. And it's highly doubtful to think that our Republican nominee could -- could have championed the individual health care mandate, have taken millions of dollars to advance that mandate and then think that they are going to actively work to repeal ObamaCare.

And he also took $1.8 million to offer influence in Washington, DC on behalf of Freddie Mac, all while I was fighting Freddie Mac and trying to put them into receivership, which is bankruptcy.

So there's been a lot of inconsistencies and that's, again, going back to my book, "Core of Conviction." I've been -- I've had, on the basis of my core of conviction, a very consistent walk and talk in Washington, DC standing up for conservative principles.

BLITZER: So who is a bigger, as they say, flip-flopper?

Would it be Mitt Romney or Newt Gingrich?

BACHMANN: Well, I think both of them have a lot to talk -- to answer for to the voter on being on both sides of the issues. Governor Romney has also advocated for mandating that every citizen in the state of Massachusetts also purchase health insurance, which is exactly the same as ObamaCare and was a pattern for ObamaCare.

He's been on both sides of the abortion issue. He is -- he was for abortion. He was against abortion. He we are for same-sex marriage and, in fact, I believe had signed 189 marriage licenses for same sex couples and then came out against it.

And so on issue after issue after issue, Governor Romney has been on both sides and Speaker Gingrich has to answer for that, as well. BLITZER: Let me ask you about an upcoming vote you probably are going to have to take in the House of Representatives that would effectively raise taxes on the middle class. If you don't vote to extend the payroll -- the payroll tax cut, the $1,000 for each family that would end at the end of the year unless you vote to continue it.

Where will you vote on this issue?

BACHMANN: Well, I won't be voting to continue the -- the current payroll tax rate at where it's at right now. And I'll tell you why. I was against this. The bill first came up last December. And I was against it because it blew a hole in the Social Security Trust Fund of $111 billion this year. That's a massive hole at the worst possible time.

We have to continue to keep our promise with senior citizens. We have to continue to set out -- send out the checks that they have been promised.

When we blow a hole in that account of $111 billion, we don't have the money in the general revenue to make that up...

BLITZER: But let me interrupt for a second, Congresswoman...

BACHMANN: We also...

BLITZER: -- you -- you...

BACHMANN: -- let me...

BLITZER: -- you've pledged...

BACHMANN: Let me just mention one more...

BLITZER: Well, you -- you mentioned this...

BACHMANN: Let me just mention one...

BLITZER: -- let me just...

BACHMANN: -- let me mention one...

BLITZER: -- let me just -- go ahead.

BACHMANN: -- more thing about that, Wolf.

BLITZER: Yes.

BACHMANN: I just want to mention one more thing. President Obama's own economic adviser has said that not one job has been creating because of lowering that payroll tax deduction. That's -- that's why President Obama -- or the payroll rate.

That's why President Obama wanted to put it in in the first place. That was his reasoning. He said it would create millions of jobs. Even his own adviser has said it hasn't created jobs. Therefore, there is no basis to continue it at that rate.

BLITZER: All right. But doesn't it help middle class families?

A thousand dollars a year?

That's a lot of money for a lot of families. And -- and wouldn't this violate your pledge never to increase taxes because, in effect, what you would be doing by voting against a continuation of this, you would be increasing taxes on almost every family in America.

BACHMANN: Well, again, I didn't vote for this measure in the first place. So I wouldn't be inconsistent at all, because I was the one sounding the warning bell with my own Republican colleagues, saying, look, if you go along with this -- and I urged them not to -- I said if you go along with this, you will blow a hole in the Trust Fund of $111 billion. And I told them, you will also be accused of raising taxes on the middle class, which I don't think any of you want to be in that position for doing. so I was the one sounding the trumpet about a year ago on this issue, saying don't fall for what President Obama is putting forward, it's not going to help the economy. It didn't. And it's also going to hurt senior citizens.

So I'm -- I -- I was right on this issue before. And as president of the United States, what I will do is abolish the tax code and lower people's tax rates so that people are paying something much more fairer than what they're paying now...

BLITZER: All right.

BACHMANN: -- the tax code isn't fair. It's not flat. And I want to -- I want to completely change the tax code. I'm a tax lawyer and that's my area of expertise.

BLITZER: All right, we're going to take a quick break and continue this conversation, Congresswoman.

I've got a lot more questions to ask.

Standing by for a moment.

BACHMANN: Thank you.

BLITZER: Much more with Michele Bachmann when we come back.

(COMMERCIAL BREAK)

BLITZER: We're continuing our conversation with Congresswoman Michele Bachmann, a Republican presidential candidate.

If you were president, Congresswoman, right now, given the state of U.S.-Pakistani relations in the aftermath of the killing of some 24 Pakistani soldiers over the weekend by NATO troops, what would you do to try to create a better climate between these two countries? BACHMANN: Well, it's a very difficult relationship, at best, that we've had with Pakistan. It's not a perfect actor nor a perfect partnership.

This -- what we're engaged in right now is the concern of Pakistan obtaining and having nuclear weapons, well over 100 of them. And we're worried about those weapons either, A, being interdicted or obtained by radical jihadists. We know that al Qaeda is present in Pakistan. Other terrorist militia groups are, as well.

But we're also concerned, Wolf, about nuclear weapons leaving Pakistan and coming into the United States as well as fissile material. That can never happen.

And so we have to work with the Pakistanis, as imperfect as they are, to make sure that we don't have jihadists that can be successful in reaching their goal.

There are at least 15 different sites that have been identified -- this is open source documents. You can find it in "The Atlantic" magazine, in the December issue. At least 15 different sites that are potentially penetrable by Islamic jihadists. And six attempts have already been made. This is not an existential threat. This is a real threat. And this is something that we have to continue to pay attention to, because as the article says, Pakistan is too nuclear to fail. We cannot allow nuclear weapons to travel into the hands of Islamic terrorists.

BLITZER: And when you say six attempts, who -- who were behind those six attempts to penetrate those Pakistani nuclear arsenals?

BACHMANN: Well, according to the -- to the article, it is elements of militia, jihadist groups and terrorist organizations.

BLITZER: Al Qaeda, Taliban, the Haqqani network?

Do you have -- I mean I know you're a member of the Intelligence Committee and you're restricted in what you can say based on classified information.

But based on what you can tell us, can you give us some more information on that, because it really jumped out at me at the debate the other night?

BACHMANN: Oh, I think, again, I'd refer people to go to the article with -- a very well written, very well researched article that is in this December's issue of "The Atlantic." And I think that it lays out the clear threats that we face. And it's a challenge. It's not an easy puzzle to solve.

We have to do a better job of holding the Pakistanis accountable. And we can do that, also, with the form of aid. And it's really security assistance that we're providing to Pakistan. We're working on counter- terrorism tactics and we're also dealing with intelligence gathering. And that's something that we need to continue to do.

This benefits Pakistan as well as the United States. And it's -- it's for their benefit, as well...

BLITZER: All right...

BACHMANN: -- to be cooperative, to try to oppose al Qaeda in their midst.

BLITZER: One quick final question.

You -- it's caused a big uproar out there. When you were on Jimmy Fallon's late night show the other night, you were introduced -- I'll play the clip -- and a song with an awful name was played. I don't even know if you knew what that song was when you walked out.

But let me just remind the viewers of the scene.

Listen to this.

(BEGIN VIDEO CLIP FROM "LATE NIGHT WITH JIMMY FALLON," COURTESY NBC)

JIMMY FALLON, HOST: Please welcome to the show, Minnesota Congresswoman Michele Bachmann.

(MUSIC)

(END VIDEO CLIP)

BLITZER: Did you know what that song was?

BACHMANN: I had absolutely no idea. In fact, I didn't even know until later in the day, just before I had come on CNN for the debate with you, Wolf, it was shortly before that that I even heard about what had happened and I was appalled that a group would do that to a serious Republican presidential candidate.

And what struck me is has it -- had it been Michelle Obama that had walked out on the stage rather than Michele Bachmann, I think that there would have been a very different reaction from NBC. I think the president of NBC would have gone crawling and begged for forgiveness and they probably would have fired the band.

And the job situation is so bad, I'm not calling on anyone to be fired, but I think it would have been appropriate for the president of NBC to issue an apology.

It wasn't Jimmy Fallon's fault. He had called immediately and said that he was horrified when he heard about it and that he had no prior knowledge. And I believe him. He asked me to come back on a show. And, of course, I'd be delighted to. He's a great late night host.

This is an error in judgment on -- on the part of the band. And I think that, really, it's NBC's responsibility.

BLITZER: Michele Bachmann, as usual, thanks very much for coming into THE SITUATION ROOM.

BACHMANN: Thank you, Wolf. BLITZER: We'll take a quick break. When we come back, our strategy session, stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Straight to our "Strategy Session." Joining us, our CNN political contributors, the Democratic strategist, Donna Brazile and the Republican strategist, Mary Matalin.

They're both here in THE SITUATION ROOM. Guys, thanks very much. Mary, first to you, you heard Michele Bachmann really going after not only Mitt Romney for flip-flopping, but Newt Gingrich for flip-flopping. It was unclear who's a bigger flip-flopper in her mind. Were you surprised by the tough talk from her?

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: No, this field is consolidating. It will consolidate even quicker with the recent unpleasantness in the Cain campaign, but this has been her M.O. through all of it and she's got to do it.

Whoever distinguishes him or herself as the consistent conservative that can be elected and there are few weeks to go here, that's the mission for 75 non-Mitt people.

BLITZER: She didn't really want to comment on Herman Cain's issues right now on the aftermath of this latest allegation of an extramarital affair. This is what Newt Gingrich said earlier in the day. Listen to this.

(BEGIN VIDEO CLIP)

GINGRICH: Very briefly on Herman Cain, since all of you have asked me, I think it's a very difficult situation for he and his family. My heart goes out to them. I hope that he reaches whatever's the right decision for them. And beyond that, I'm not going to have any comment. I think it's his decision to make. He has to do what he thinks is best.

(END VIDEO CLIP)

BLITZER: What do you think is going to happen?

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: I thought, first of all, that was an appropriate statement, but look, I think Herman Cain will never regain his frontrunner status. I don't believe he will drop out unless as he told you yesterday, Mrs. Cain says it's time to come home, honey. But he has a lot of problems right now.

His campaign has been rocked by these allegations. He will have trouble raising money. He will have trouble gaining the kind of support he needs to win the Iowa caucuses and I believe that Herman Cain has to do a reassessment, but at the end of the day, he might stay in the race.

BLITZER: When you heard earlier in the day that he was reassessing his campaign and would make some decision in the coming days, what did you think?

MATALIN: We are all thinking, you don't say that. You don't telegraph something like that unless you're going to re reassess in a way that's not favorable to your candidacy. Hugely decent man, remarkable inspiration, great career, happy warrior, we're going to be sad if he gets out.

But there's only so many blows he can take in this, in any race and again, his wife, his family. He said that to you yesterday, said it again today. Would deny the charges are false, but at some point, your family just -- can't take it anymore.

BLITZER: You know, people are already looking ahead. I already did on my blog today. What happens if he drops out, in one of our recent CNN/ORC polls, we asked Herman Cain voters who their second choice would be if he were to leave.

Gingrich got 38 percent, Romney 25 percent, Perry 10, Bachmann 9, Ron Paul 6. I suspect and this is what I wrote, that Newt Gingrich would be the big winner taking most of those Herman Cain votes, but what do you think?

BRAZILE: You know, Newt Gingrich is well-known. We know his baggage. It's the carry on kind of baggage. People know about his past. They know about his mistakes. They know about the scandals he's been involved in.

And because of that, conservatives who are still looking for an alternative to Romney, they might park temporarily in the Newt Gingrich camp, but I still believe that some of the other second tier candidates may have an opportunity to move up in this field.

BLITZER: What do you think, Mary?

MATALIN: You had it right on your blog. It's not predictable at this point exactly who benefits the most. What is to be sure is the bigger the field, the better is for Romney. If that shrinks better, worse for him rather so --

BLITZER: Yes, I think these latest developments have been good for Newt Gingrich. Not so good for Mitt Romney, but we'll talk about that later as well. Guys, thanks very much.

The "Cafferty File" is up next, then at the top of the hour, Mitt Romney secures three key endorsements in one critical state. Could he also be securing his frontrunner status or not? Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Jack is back with the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Question this hour, what does it mean if the Democratic Party is giving up on white, working class voters?

Lauren writes, "Working class whites are no longer part of the Democrats constituency. Working class whites realized the money to pay for all the programs the Democrats are pushing comes from them, but doesn't come back to them.

They realize the Democrats sold them out for Hispanic voters and sent their jobs to China. Working class whites woke up to the fact that the Democrats care about them about as much as the Republicans do, but at least the Republicans are honest about not caring."

Kim writes, "The Democrats are only reading the future in 2041, whites will become a minority in the United States. Blacks and Hispanics will be in the drives seats and the Democrats will be after them to vote their way. White people will not be important at all and the Democrats are already drooling for their new voters."

Kevin writes from Maryland, "Pretty silly and unnecessarily provocative question. What makes you think they're doing that? What? The Democrats are at war with unions? There are tons of more of these stories and topics. Why don't you pick one of those?"

Roy in Florida writes, "It means the Democrats have come to the conclusion that they can't sell socialism to those willing to work, find work and assume responsibility for themselves and their families."

Bob writes, "The only votes the Democrats have are the ones that depend on the government to survive. If they win the next election, we'll all be on government help."

Sue writes, "Clearly, problems that affect millions of Americans will not be addressed and the people who most need help will not have a voice or any hope for progress. The 99 percent just keeps getting bigger. It's time for working class Americans to join those smelly hippies, galvanize the occupy movement and give it some direction."

And Tammy in Illinois writes on Facebook, "I guess the Democrats are telling us they don't need our votes."

If you want to hear more about this, go to my blog, cnn.com/caffertyfile or through our post on THE SITUATION ROOM'S Facebook page.

BLITZER: Jack, thank you.