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Cain to Make Announcement Tomorrow; Voter Disconnect from GOP Candidates; Gene Sperling Interview; Significant Drop in Jobless Rate; Will President Profit from Jobs Report?; Al Qaeda Abduction Of American; Fears for Freedom in Saudi Arabia

Aired December 2, 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, CNN'S THE SITUATION ROOM: And to our viewers, you're in THE SITUATION ROOM.

Happening now, Herman Cain says he'll announce the next step in his presidential campaign tomorrow. This hour, the Republican is back home in Atlanta to finally talk to his wife about the allegation he had a 13 year affair.

Plus, a revealing interview with Mitt Romney and his wife that could show him a way to try to reclaim the title of Republican presidential frontrunner.

And President Obama touts a significant drop in the unemployment rate, cheered by Bill Clinton and jeered by the Republicans who want his job.

We want to welcome our viewers in the United States and around the world.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Let's begin right now with Herman Cain. He just returned to his suburban home a little while ago to have what is likely to be a very uncomfortable conversation with his wife. That talk could be key to deciding whether or not he stays in the Republican presidential race.

CNN has learned that Cain will meet with supporters and donors tomorrow before he publicly reveals the future of his campaign.

CNN's Jim Acosta is following the Cain controversy.

What's the latest information we're getting -- Jim?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, we told you yesterday about Cain's plans to open up a new headquarters in Atlanta tomorrow. It turns out that's when and where Cain says he will make a big announcement about the future of his campaign.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): As the Cain train pulled into a town hall in South Carolina, the candidate left no doubt the end of the line could come in weekend, when he's scheduled to open up a new headquarters near Atlanta.

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: I will be making an announcement.

We are going to be opening our headquarters in Northwest Georgia, where we will also clarify -- there's that word again, clarify -- exactly what the next steps are.

ACOSTA: Cain has said his future is riding on a face-to-face chat with his wife, Gloria, about his alleged affair with Ginger White, a woman he calls a friend who needed money.

UNIDENTIFIED MALE: So if your wife asks you to please get out, are you out?

CAIN: Yes.

ACOSTA: The conservative businessman also wants to know if he can still raise money. In a last minute appeal to donors, Cain said the only way we can gauge true support is by the willingness of our supporters to invest in this effort.

The campaign also announced Mrs. Cain will chair something called Women for Cain, a self-described online fellowship that's seeking donations and comments from supporters. On the site, Kim Gash (ph) wrote: "If JFK was running today, my, what a feeding frenzy that would be. Yet he is an adored former president."

Lisa Watkins added: "I and many other women are standing by your man because he shows integrity, faithfulness and inspiration."

The site also features a picture of four women giving their thumbs up. The "Atlantic" magazine discovered it's a stock photo.

GINGER WHITE: I am deeply, deeply sorry if I have caused any hurt to her and to his kids.

ACOSTA: And while White is apologizing to the Cain family, the candidate's lawyer is poking holes in our story.

LIN WOOD, HERMAN CAIN'S ATTORNEY: And she's offered no proof, no facts. She offered some phone records. They prove nothing other than she knew Mr. Cain. He has admitted that he was a friend of hers.

ACOSTA: But when asked on Fox News if he would like reporters to fact check White's claims of encounters at hotels, Cain said hold on.

(BEGIN VIDEO CLIP FROM "HANNITY," COURTESY FOX NEWS)

SEAN HANNITY, HOST: Don't a lot of these hotels have videotapes that they -- some of them, I would assume, hang onto those tapes forever. And did this...

CAIN: Sean... HANNITY: Go ahead.

CAIN: Sean, do me a favor. Let's not play detective. Here's the deal. I am going to prove that -- I am going to reestablish my character, OK?

(END VIDEO CLIP)

(END VIDEO TAPE)

ACOSTA: For now, Cain's aides are keeping their lips sealed about the candidate's next step. Of course, that next step might be only known to two people at this point, Wolf, Mr. and Mrs. Cain. And as you just said a few moments ago, they're behind closed doors -- Wolf.

BLITZER: All right. We'll stay on top of this together with you, Jim Acosta.

Thanks very much.

Continuing the political news right now, new evidence that Republican voters aren't necessarily very enthusiastic about the presidential field, with just a month to go until the first Republican contest in Iowa. That's January 3rd.

A dozen Republican voters from the Washington suburbs shared their concerns last night during a focus group conducted by Democratic pollster, Peter Hart, for a nonpartisan policy center.

Our chief political analyst, Gloria Borger, was there -- all right, Gloria, I assume it was interesting.

What did you learn?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: It's interesting, you know, sitting behind the mirrors so they can't see you but You can watch them. And it's very clear, Wolf, these Republican votes want to beat Barack Obama more than anything else. But they're not sure that they have the candidates who can do it.

So when Peter Hart was sitting around with them, he asked them some interesting questions. One of the questions he asked them was, which member of your family would Mitt Romney be?

Take a look at what they had to say.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: A cousin.

(CROSSTALK)

UNIDENTIFIED FEMALE: A second removed cousin.

PETER HART, POLLSTER: OK.

UNIDENTIFIED MALE: He's be my uncle.

HART: OK.

UNIDENTIFIED FEMALE: Uncle.

HART: Do you see him as close?

Can you relate to him?

Or distant?

UNIDENTIFIED MALE: Distant.

UNIDENTIFIED FEMALE: Distant.

HART: Why distant?

UNIDENTIFIED FEMALE: Because he's richer than the rest of us, so he wouldn't come to our events.

UNIDENTIFIED MALE: He's not me.

UNIDENTIFIED MALE: He's a mover. He's a shaker. He's not -- he's going -- he's making news. He doesn't have time for family, especially extended family.

(END VIDEO CLIP)

BORGER: So not exactly warm and fuzzy, Wolf, about Mitt Romney.

He clearly has these voters' respect, but he doesn't have their affection. And, as you know, people have to like you to really be behind you when you're running for president.

BLITZER: What -- what did they say about Newt Gingrich?

BORGER: Well, they actually like Newt Gingrich more. When asked the same question, about which member of the family would Newt be, they said father, grandfather, uncle. But they did have problems relating to his personality and his past.

So look at what they said.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I think when you enter a race that's this important, you have to know from the get go what your stand is and stick with it, period.

HART: OK.

UNIDENTIFIED FEMALE: I agree. He has experience enough to know that he should make the stand and stay with it.

UNIDENTIFIED FEMALE: Exactly.

UNIDENTIFIED FEMALE: That's why I described him earlier as volatile.

HART: OK.

(END VIDEO CLIP)

BORGER: Not -- not only volatile, Wolf, you see there, they're upset about his shifting positions on issues, but also his personal life, his three marriages, his admitted affair.

Take a look at this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's not a deal breaker, but it's a -- it is a minor concern of mine.

HART: OK.

UNIDENTIFIED MALE: It just goes to show his character.

UNIDENTIFIED FEMALE: I don't care how many marriages he's had, but it's the affair that -- that bothers me.

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED FEMALE: You would like your president to be held to a higher standard. You would like to be proud of him.

(END VIDEO CLIP)

BORGER: I would -- I would have to say, Wolf, that it's the women who really were unanimous in their concerns about the affair.

BLITZER: What did they say about Newt Gingrich's controversial comments the other night, some describe it as a humane way to deal with 11 million illegal immigrants in the United States?

BORGER: Here's what was so stunning to me. We all heard Newt Gingrich say that. We know that the issue of immigration is quicksand for any Republican. And his position is a much more liberal position, if you will, than most of the other Republicans on the stage, maybe save for Rick Perry.

All of these Republican primary voters last night said you know what, Newt Gingrich makes a good point. If somebody's been here for 20, 25 years, has been paying taxes, raised their family here, you can't just go and deport him.

So I believe that Gingrich has actually changed the Republican debate on immigration.

BLITZER: Interesting.

BORGER: Yes, really.

BLITZER: Very interesting. Gloria, thanks very much.

Let's get back to the economy a little bit. It's issue number one in the race for the White House. Thanks no doubt about that.

And what we've just seen is the most dramatic improvement in employment rates here in the United States. We've seen it in more than a year, that number falling to 8.6 percent in November, down from 9 percent the previous month.

The new numbers certainly seem hopeful, but there's still plenty to be concerned about when you read all the fine print.

Here's CNN's Christine Romans.

CHRISTINE ROMANS, CNN CORRESPONDENT: Wolf, hiring is up and unemployment is down. About 131,000 jobs have been added, on average, per month this year. And this is what the year looks like overall. You can see that we saw some growth earlier in the year, kind of a stall in the summer. And now something happened -- September, October, November, things got a little bit better. In November, 120,000 jobs were created. September and October were revised higher.

So that's what the job creation picture looks like. We saw some hiring, especially in the retail trade, leisure and hospitality. Now these are low wage jobs, but you saw jobs there nonetheless.

It's all incredibly political, of course, though, right?

You need 150,000 to 200,000 jobs added every month just to really make a dent in the overall number of jobs lost since the Great Recession.

This is what it looked like when the president took office, Wolf. This is what, each month, we were bleeding in terms of job destruction in this country. And then in December, our January to December 2010, you saw an attempt to try to dig ourselves out of the hole. This is Census hiring and the like. But it really stalled out.

And now here is this year, a year that's become incredibly political. One after the other, you're adding some job creation on there.

Now, a lot of people are asking why were these numbers revised?

Well, the Labor Department, every month, gets more information and new information in their surveys, and, frankly, late information from some employers that they revise and go back. So we saw things a little better the last couple of months.

Another big question we're getting today Wolf is, why is it 8.6 percent unemployment?

Why did it drop so quickly, in just one month, when you only had 120,000 jobs created?

It's because there are two different surveys that the government puts together and analyzes to get this labor market report every month. And in one of those surveys, it looks like people were -- were saying, when the government asked them, they were saying they were getting jobs. They were either self-employed or they were working for new, small companies. And, also, in another survey, it looked as though maybe some were dropping out of the labor market. That's one reason why it's only 8.6 percent unemployment, because some people, frankly, hundreds of thousands of people, frankly, dropped out because they were discouraged -- Wolf.

BLITZER: Good analysis.

Christine Romans, thanks very much for that.

The last time the unemployment rate was this low, Barack Obama was just two months into his presidency.

Let's take a closer look now at how the new jobs report may or may not necessarily help his bid for reelection.

Our White House correspondent, Dan Lothian, is standing by -- Dan, what's the reaction over there?

What are you hearing?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, first of all, Wolf, the White House is encouraged by these numbers. But 8.6 percent is still high. There's still a lot of Americans out there who are out of work. And that is something that Republicans have been highlighting today.

But politically, some say that these numbers are a small victory for the president as he tries to convince voters that he deserves a second term.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: He gives he advice all the time.

LOTHIAN (voice-over): President Obama was joined by former president, Bill Clinton, at a construction site near the White House, as they enthusiastically touted thousands of new green construction jobs. But Mr. Obama was more measured in his response to the better than expected employment numbers.

OBAMA: The unemployment rate went down and despite some strong headwinds this year, the American economy has now created, in the private sector, jobs for the past 21 months in a row.

LOTHIAN: White House spokesman, Jay Carney, was quick to dampen any notion of a celebration.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: We don't make much out of one month's numbers.

LOTHIAN: One word seems to dominate the 2012 presidential race -- jobs. And with recent CNN/ORC Polls that show 85 percent of Americans consider economic conditions poor and 63 percent disapprove of how Mr. Obama is handling the economy, some say the unemployment numbers offer the president a little break.

RON BROWNSTEIN, CNN POLITICAL ANALYST: Well, numbers like today are better than a hole in the head, as the saying goes, but not that much better.

LOTHIAN: Brownstein says voters want to see trends. And so do Republicans, who were quick to take swipes even as they acknowledged any job creation was welcome news.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The Obama administration promised that unemployment would not exceed 8 percent if we passed their stimulus bill. That promise has gone unfulfilled.

LOTHIAN: Republican presidential hopeful, Mitt Romney, fired off a strongly worded statement blaming the president's quote, "failed economic policies" for continued high unemployment.

"This is not exactly the hope and change that the American people bargained for," he said.

But while November's unemployment numbers may give the president ammunition to counter his critics, some political observers say it will only help so much.

PETER MORICI, UNIVERSITY OF MARYLAND: The president can use a lower number to shore up support in his base, the folks that want to believe. But people that are unemployed and facing stress in the labor market aren't going to listen very well.

(END VIDEO TAPE)

LOTHIAN: -- the payroll tax cuts, something that the president and Republicans agree is good for the economy. The president said that he would continue to push Congress to make sure that happens. But he also seemed to put a threat out there, saying that if they can't reach some kind of compromise by the holiday break, they might all be spending Christmas together here in Washington -- Wolf.

BLITZER: The president is pressing full speed ahead on making sure that that -- that payroll tax cut is extended, at least for another year. He's got his hands full on that issue.

LOTHIAN: That's right, Wolf. I mean that's something that the president, he says, will be pushing. He will be pushing Congress very hard to get it done. Someone asked if the president would be rolling up his sleeves and getting involved himself. White House spokesman, Jay Carney, not getting specific on how that will be done, but he said that high level conversations and meetings will be taking place to make sure it happens -- Wolf.

BLITZER: It's going to be a busy December here in Washington.

Thanks very much.

Dan Lothian at the White House.

Mitt Romney isn't known for showing a lot of emotion in public, but he lit up during an interview with CNN's David Gergen. David is standing by to tell us what he learned from talking to Romney and his wife.

And new information about the health of an American aide worker al Qaeda says it's holding in Pakistan.

(COMMERCIAL BREAK)

BLITZER: An important update right now on a story we brought you yesterday here in THE SITUATION ROOM. A U.S. official told CNN he was not surprised when al Qaeda claimed responsibility for the capture of an American aide worker in Pakistan. Seventy-year-old Warren Weinstein was abducted last August from his home in Lahore. Brian Todd is here. He's been working this story for us. What are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, an official with the U.S. Agency for International Development where he worked told us today they are concerned about the well being of Warren Weinstein. That they're working with Pakistani officials to find him and get him released. At the firm where he works, a contractor named JE Austin Associates, no one would talk to us and they kicked us off the property.

In the announcement, al Qaeda leader, Ayman al-Zawahiri, not only claimed responsibility for the capture of the 70-year-old Weinstein back in August, he also said two U.S. officials, quote, "we have never tortured your prisoner. We are honoring your prisoner." Today, we went out to Weinstein's neighborhood in Rockville, Maryland.

Someone's placed a yellow ribbon around the tree on his front yard. I knocked on the door looking for his wife. No one answered, and some neighbors would not talk to us, but Weinstein's next door neighbor, Jeanne Waggoner, did speak to us, and she revealed something about his health when I asked her about al Qaeda's declaration that they haven't tortured Weinstein.

(BEGIN VIDEO CLIP)

JEANNE WAGGONER, WARREN WEINSTEIN'S NEIGHBOR: Are they providing him with nutrition, food? Are they letting him have books to read? Are they letting him have medicine because he has a heart problem, you know, things like that. I mean, if you withdraw any of those things, that's what I would consider torture.

TODD: Does he have any kind of medical condition that you know? Does he has a heart problem?

WAGGONER: He has a heart problem, yes. He was, you know, retiring because of his age, and you know, his heart wasn't good and he wanted to take good care of himself, you know? The reason he was coming home and retiring from the work that he was doing in Pakistan.

(END VIDEO CLIP) TODD: Jeanne Waggoner says Weinstein was abducted just a couple of days before he was going to return to the U.S. from Pakistan, Wolf. That makes it all the more harrowing for his family.

BLITZER: Yes. Pretty sad story, indeed. What else did she tell you about him and his family?

TODD: She described them as very nice neighbors, nice people. She said she talked to Weinstein a lot about gardening, things like that. She says he's got two daughters and at least two grandchildren.

She also said that he lives most of each year in Pakistan, even though his wife lives here, but that his wife would often join him, travel, meet in places, and join him there. So, for this couple, you can only imagine what they're going through.

BLITZER: Yes. What a tragedy. He wanted to help the people of Pakistan. That's why he was involved in aid and development there.

TODD: That's right.

BLITZER: Look what happens. All right. Brian, thanks very much.

The NATO attack that left two dozen Pakistani soldiers dead sparked anger and outrage in that country. Today, new details are emerging about the timeline and who knew what and when. Our pentagon correspondent, Barbara Starr, is getting more information. What are you learning, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, Pakistani officials are still adamant that the U.S. had to have known it was bombing the Pakistani military site. U.S. officials have a very different story.

(BEGIN VIDEOTAPE)

STARR (voice-over): U.S. officials tell CNN it was here, in a remote region, where Pakistani military troops fired first at U.S. and Afghan forces. The Pakistanis, perhaps, thinking they were being attacked by insurgents. The border is so uncertain here, U.S. officials say no one may be sure exactly where Afghanistan ends and Pakistan begins.

When combat broke out, U.S. and afghan commandos on their side thought they were taking insurgent fire from inside Pakistan.

CAPTAIN JOHN KIRBY, PENTAGON SPOKESMAN: Clearly, something went wrong here. That's why we're investigating it.

STARR: Two U.S. military officials familiar with the investigation say the U.S. checked with Pakistani authorities at a joint border control center before carrying out the airstrike, which killed 24 Pakistani troops. The U.S. says Pakistan told them it had no troops in the area. The Pakistani troops were killed when U.S. warplanes struck a group of tent (ph) described as a temporary Pakistani military encampment.

Some officials on both sides had described it as a more permanent and marked border outpost. No one can say if the Pakistani soldiers had notified their commanders they were there. So far, the U.S. military has only expressed condolences. There is no apology yet.

KIRBY: What we aren't going to do is get into fixing blame or fault right now.

STARR: Anti-U.S. protests continue in Pakistan where the government denies it gave the U.S. permission to bomb. U.S. officials say they never asked for permission. They thought they were under fire from insurgents. They acted in self-defense.

(END VIDEOTAPE)

STARR (on-camera): But all of these preliminary findings, still could change, of course, if new facts come to light. But the problem, the truth may never be fully understood here because a still furious Pakistan has said it will not participate in this ongoing U.S. military investigation -- Wolf.

BLITZER: All right. What a story. Lot of ramifications there. Barbara, thank you.

The new unemployment numbers were welcome news in the United States by the White House, but analysts worry that they prove the recovery is still relatively weak. Just ahead, we'll hear from one of the president's top economic advisers. Gene Sperling is standing by.

And Mitt Romney once had the nomination in his sight, but he's had some problems sealing the deal in recent days with the Republican voters. What's going on? Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's get back to our top story right now. The Republican race for the White House and Herman Cain's announcement expected tomorrow about the future of his embattled campaign. Let's bring in our senior political analyst, David Gergen.

David, a lot of confusion. We don't know what Herman Cain is going to announce tomorrow. Mixed signals we're getting. He's opening up campaign headquarters in Atlanta tomorrow. He's sending out e-mails, creating new committees. Women for Cain.

On the other hand, some associates believe he will drop out after spending some quality time with his wife of 43 years, Gloria Cain. What do you think is going on right now?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I don't think -- I don't know for sure, Wolf, but if his wife is the determining factor, I actually wouldn't be surprised if he stays in. Every step along the way, when she has stepped out of the shadows into the forefront, she's been very supportive and encouraged him to go forward. You know, from a point of view of his political consultants, I'm sure they think this is finished, and he should have a graceful exit.

His chances of winning the nomination are below one percent, according to, you know, (inaudible). So, this is sort of a hopeless cause, but on the other hand, given who he is, his personality, the sense of, you know, I've surprised everybody so far, I think his wife is likely to give the green sign to go ahead with it, and I wouldn't be surprised if he continues.

BLITZER: We'll know tomorrow afternoon, presumably. That's what he says.

GERGEN: We'll know.

BLITZER: We'll -- he'll make an announcement. Let's talk about Mitt Romney right now. You spent some quality time. You interviewed him for "Parade" magazine. You wrote a terrific piece in CNN.com. He's in trouble right now. Newt Gingrich, all of a sudden, almost out of nowhere, seems to be the frontrunner. How much fight does Mitt Romney have left in him?

GERGEN: I think he's got a lot of fight. The question is, can he work it into some momentum on his behalf. This has been one of the most dramatic changes we've seen, Wolf, in a presidential race. There've been so many would-be contenders against Romney who've fallen by the way side, but for the first time, he now has a rival in Newt Gingrich. If Newt survives the vetting he's going through right now, Romney can actually lose this thing.

You know, talking about in trade, this where people bet on the likely outcomes. Romney has been running in the high 60s, even low 70s as the percentage chance. In other words, two-thirds chance that he's going to get the nomination. Today, that's below 50 percent, and Gingrich is surging.

He's up to around 36, 37 percent, and you can see it in the national polls. I mean, Gingrich has got a significant 20-point lead over Romney nationwide in one poll or Rasmussen poll yesterday. So, he's got -- I don't think that Mitt Romney can afford to just sit tight and be complacent about this. I think he's got real trouble on his hands.

BLITZER: In your interview, and I read it David, you had a sensitive discussion with him about the whole issue of him being a Mormon, some evangelical Christians, some others are not happy about having a Mormon, if you will, in the White House. Some saying it's a cult, if you will. Talk a little bit about how he responded when you discussed this issue with him.

GERGEN: Well, he's not someone who's wearing it on his sleeve, but when you actually have a conversation about his faith, it turns out he's deeply anchored in his faith, and I think it's actually something that he should talk about more because here's a man who lived the discipline of a Mormon faith for a long time, not smoking, not drinking.

You know, he has -- he is tithes every year. What that means is he gives at least 10 percent of his pre-tax income every year.

Now, this is a man whose wealth has been estimated up to $250 million, so he's given away millions and millions of dollar, much of it to the Mormon Church. And he also has that same frugality you find with many Mormon businessmen. Some once joked that when he went to the movies, he used to pop his own popcorn before he went and carried it with him.

But I came away feeling two things about him. One is, he's deeply anchored in his faith, and he's equally deeply anchored in his family, and that Ann Romney has a huge influence on his life. Both he and she said that he had some reluctance about running in this presidential campaign, and she is the one who persuaded him to do it. Now, this is a woman who has in periodic times in his life has persuaded him to make big, big decisions.

BLITZER: So, these next four weeks or so, before Iowa, New Hampshire, these are going to be critical weeks. What do you expect? How is he going to deal with this emerging threat of Newt Gingrich?

GERGEN: I'm not sure they've made up their minds yet. I think his campaign, the one thing they can't do is panic, of course. But he's got to shake it up a little bit. I came away with the impression that he needs to humanize himself.

You remember how important it was for Hillary Clinton when she was running against Barack Obama in the primaries? She got that in a moment in New Hampshire when she teared up, and suddenly she became very human in everyone's eyes. It really helped her campaign, because it gave us a glimpse into the true Hillary Clinton.

And what we're seeing in Mitt Romney, if I may say so, is we're only seeing a part of him, the business side. He seems more robotic. And when you actually talk to him about his family, when Ann Romney walked into the room, he literally lit up.

I mean, he talked continually about how important she was in his life, how much of his life was about pleasing her, how the weekends are so essential to him, to spend time with family. He need to humanize and allow people to understand the rest of Mitt Romney.

BLITZER:

The cover story of the new "Parade" magazine, "A Mitt Romney You Haven't Seen Yet."

I'm sure our viewers will want to read it, want to read your comment at CNN.com as well, David. Thanks very much.

GERGEN: Thank you very much, Wolf.

BLITZER: A portion of President Obama's political base is lagging behind the rest of the country when it comes to jobs. A top economic adviser to the president, Gene Sperling, he's standing by. We'll discuss.

And new allegations of a political crackdown by the Saudi ruling family may be putting the U.S. government in an awkward position.

(COMMERCIAL BREAK) BLITZER: The unemployment rate here in the United States has dropped to its lowest level in nearly three years. Election Day still is 11 months away. The president acknowledges that the nation still needs to create a lot more jobs.

Let's discuss what's going on with the director of the White House Economic Council, Gene Sperling.

Gene, thanks very much for coming in.

GENE SPERLING, DIRECTOR, WHITE HOUSE ECONOMIC COUNCIL: Thanks, Wolf.

BLITZER: Explain a couple curious things to me, because I'm a little confused. Unemployment goes down from 9 percent to 8.6 percent, but for African-Americans, it goes up from 15.2 percent in October to 15.5 percent now.

What's going on?

SPERLING: Well, you can't judge too much in any one month, particularly on a subset. But I think there's no question that there is just a lot of struggles still in this economy. And African-American unemployment is just too high. Youth unemployment is too high.

And what's really troubling, Wolf, is that there's a very large percentage of Americans who have been out of work for six months or a year, long-term unemployed, and this is a real problem, because when people are out of work for too long, the stress is tremendous. They can lose their house. It's very difficult. And it's why nobody -- and I mean nobody -- should be satisfied even with the good news today.

8.6 percent is unacceptably high, and it's why we are spending so much time trying to do more to help this economy create jobs, help small businesses hire more. It's why the president's pushing so hard on the payroll tax cut.

It's not about politics. It's about getting more money into people's pocket, more spending, more customers, so that more small businesses are hiring more people, putting them back to work, and so that we can start to see the unemployment rate for everyone in our country going down.

BLITZER: One of the reasons it's gone from 9 percent to 8.6 percent is because you revised the numbers for August, September, and October -- August, September, October, and November, for that matter, higher. That's one of the reasons it's gone down. Another reason is a lot of people, about 300,000 people, apparently, have just given up. They're no longer considered in the job market because they can't find a job, they've walked away.

Reince Priebus, the chairman of the Republican Party, he wrote a tweet. He said, "We lost the equivalent of the entire city of Pittsburgh, Pennsylvania, in the labor force last month alone. This is unacceptable."

What's going on with all these 300,000 or so who just give up hope? SPERLING: Well, Wolf, as I said, it's hard to know when you're looking at a particular month, but it's absolutely true. Some of the movement down from 9 percent down to 8.6 percent, some of that was for good reasons, as you said, job growth. We know we created more jobs in September and October than we thought, but there were so people who appeared to have dropped out of the labor force.

And this isn't a tit for tat political thing. We are making this point. That is why we pushed for the American Jobs Act, Wolf. That's why it's so important for us to cut payroll taxes in half for every small business, for every worker.

Top experts think that would mean 600,000 to a million more jobs. So let's agree, we inherited the worst recession since the Great Depression. We are in a deep hole. And let's agree this is not good enough, Democrats and Republicans, but then let's agree to do something.

Let's pass the payroll tax cut, a larger one to cut payroll taxes in half for six million small businesses who employ 56 million people. Let's pass the payroll tax cut for individuals. Let's do infrastructure and school construction and put out-of-work construction workers back to work rebuilding our country.

So, we should all be agreeing on this, and it's a shame that politics is getting in the way of us acting as we should with an imperative to get something done, as opposed to just talking about, get something done to get more jobs going in our country.

BLITZER: You know, the Republicans say they're ready to extend the payroll tax cut. They're ready to work with you. The fight is over how to pay for it. You either cut spending, you raise taxes, elsewhere you want to raise taxes for rich people. They say that's a nonstarter.

Where does it stand right now? How close to a deal are you, shall we say, with the House Speaker, John Boehner?

SPERLING: Well, Wolf, first of all, I just want to let everyone know who's watching, there are big differences besides the pay-for. The president called for expanding the payroll tax cut so that a typical family would get $1,500. The Republicans have not agreed to expand the payroll tax cut.

The Democrats talk about cutting payroll taxes in half for every small business. That could be $150,000 tax cut for small businesses to hire or give their workers raises. The Republicans have not offered one penny, not one penny in small business tax cuts, even though they have said they're concerned about job creators and entrepreneurs.

So, there is a big difference, and that's why we need the larger proposal. I don't understand why they don't accept the president's way to pay for it. It's just asking 300,000 Americans who make over $1 million to pay a little more so we can help six million small businesses and 160 million workers have a little bit more in their pocket to spend, to get our economy going, to create more jobs. BLITZER: They make the point that those are the people who create the jobs, and if you raise taxes on the wealthiest Americans, it's going the hurt -- it's going to trickle down and hurt a lot of folks who are looking for jobs.

SPERLING: Well, Wolf, let's just go back to the numbers I just mentioned -- 300,000 Americans total make over $1million. You and I both know some of them are very well-known TV commentators and athletes and lawyers and doctors. There's probably a few small businesses of that 300,000.

But what's clear is that the president is offering payroll tax relief to six million small businesses -- six million who employ 56 million Americans right now and could have incentives to hire more. So, if we care about entrepreneurship, which the president does very much, small businesses and job creation, they should be strongly supporting the president's proposal.

BLITZER: If they hold firm though and vow that they're not going to raise taxes on millionaires or billionaires or anyone else, what's Plan B for extending the middle class tax cut?

SPERLING: Well, you know, obviously, we're going to have to try to do something. And I can't tell you exactly where that agreement will come, but again, you know, you look at the president's proposal, which, again, was the larger payroll tax cut that, as you said, did ask those that make over $1 million to pay a little bit more, that got 2.5 times more votes than the Republican proposal. So I think if you're looking for what the public supports, Democrats, Republicans and Independents, it is very much close to what the president is supporting, tax cuts for small businesses and workers, paid by a little bit of contribution for those who are doing the best in our economy and who can most afford to contribute.

BLITZER: Gene Sperling is one of the president's top economic advisers.

Gene, thanks very much.

SPERLING: Thanks, Wolf.

BLITZER: Congress wanted answers about the so-called Fast & Furious gun operation. It's getting a flood of documents just before the nation's top law enforcement official visits Capitol Hill to talk about the controversial program.

And a custody battle that has fascinated the nation. Now Mindy McCready's mother is pleading with her to return her own child.

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BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now, including a flood of documents about that controversial Justice Department program, Fast & Furious.

SYLVESTER: Yes, that's right, Wolf. The Justice Department has sent 1,400 documents on the controversial Fast & Furious operation to Congress. The documents were sent ahead of Attorney General Eric Holder's appearance on Capitol Hill next week. Officials say the documents reflect the debate at the Justice Department over allegations that agents allowed guns to be taken illegally across the border to Mexico.

And an historic moment today in Iraq as the U.S. handed over Camp Victory to the Iraqi government. There's no high-profile ceremony that marked the occasion. The sprawling military base near the airport was one of the biggest in Iraq. Camp Victory once housed as many as 40,000 service members. It included palaces built by Saddam Hussein. After his capture, the former dictator was held at a prison on that base.

And Mindy McCready's mother is asking the country singer to return her granddaughter Zander. McCready took her daughter from her parents' home in Florida despite not having custody. She hasn't been charged with any crime, but this week a judge ordered McCready to surrender the 5-year-old to authorities. McCready has waged a public battle with drug addiction over the past several years.

And a Mississippi school bus accidents has sent more than a dozen children to the hospital. The Montgomery County bus collided with an empty logging truck this morning. Four children had to be airlifted to the hospital. About 20 children were on the bus at the time of the accident, including elementary and high school students. Police are investigating the cause of that accident.

Southern California is bracing for fierce winds again tonight after Santa Ana winds pummeled the region Wednesday night. Parts of Los Angeles still look like they were hit by a hurricane. Santa Ana winds uprooted trees and knocked out power to 200,000 customers. A state of emergency is still in effect for Los Angeles County.

Look at those pictures. It does kind of look like a hurricane went through there when you see those trees uprooted.

BLITZER: Yes. Those winds are powerful winds. A sad situation. Thanks very much, Lisa.

Saudi Arabia's track record on civil liberties has been pretty spotty, shall we say, over the years. A human rights group is now warning though that a new law in Saudi Arabia could have a rather chilling effect on free speech, could crush dissent in the kingdom.

We'll have the latest.

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BLITZER: New allegations are being leveled against the rulers of Saudi Arabia, adding to pressure for reform in a country that's key to U.S. strategy in the Middle East.

Our own Lisa Sylvester is looking into these allegations that were posted by Amnesty International.

What are they saying?

SYLVESTER: That's right, Wolf.

Amnesty International has a new report out, and it is based on government statements and interviews with lawyers and former prisoners who have left the country. And the group as concluded Saudi Arabia has been engaging in a campaign to quash dissent.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Amnesty International accuses the Saudi government of cracking down on peaceful protesters, arresting hundreds of mostly Shiite Muslims in the eastern part of the country. Those detained, according to the report, include political critics, bloggers, and academics.

PHILIP LUTHER, AMNESTY INTERNATIONAL: They're often held without charge, often held in isolation from the rest of the world. So they have to access to their families, they often have no access to a lawyer. Often no access to a lawyer while they're being interrogated and, in fact, in some cases even while they're being tried.

SYLVESTER: The government of Saudi Arabia is ruled by the royal family, with final authority resting with King Abdullah. Protests that have swept across countries like Tunisia and Egypt have put pressure on the kingdom for reforms.

In response, the Saudi government has increased salaries for the military and government workers, and it has promised reforms including allowing women the right to vote in municipal elections in 2015. That's the carrot. But there has also been a stick, according to Amnesty International.

The group says the government has drafted an anti-terror law that would classify peaceful dissent as a terrorist crime. The Saudi Arabian Embassy in London responded to the report, saying only people who were endangering the safety and lives of other citizens or policemen were arrested. The ambassador issued a statement. "The kingdom of Saudi Arabia is committed to and respects human rights in accordance with Islamic Sharia, which is the foundation of our legal system."

Human rights groups have criticized the U.S. government for not pressing harder for political changes in Saudi Arabia.

SIMON HENDERSON, WASHINGTON INST. FOR NEAR EAST POLICY: Saudi Arabia is a crucial country in the Middle East. It's the leader of the Islamic world, very much the leader of the Arab world, and also, it's a crucial supplier of oil to the international economy.

SYLVESTER: Change has coming at a glacial pace in Saudi Arabia. Women are still unable to travel or marry without the permission of a male guardian. And Saudi Arabia is the only country in the world where women are not allowed to drive. There have been calls to lift the driving ban, but a group of religious leaders reportedly issued a report to the Shura Council that advises the king, warning that a repeal of the ban would be the end of virginity and would provoke a surge in prostitution, pornography, homosexuality and divorce.

(END VIDEOTAPE)

SYLVESTER: And there are certainly strong forces in Saudi Arabia resistant to change. And the U.S. government is likely to tread lightly on the issue of human rights reform. Relations between the United States and Saudi Arabia have been strained recently over the Palestinian issue and what the Saudis see as America's betrayal of former Egyptian leader Hosni Mubarak -- Wolf.

BLITZER: Yes. They were very upset about that, when Mubarak went down and the U.S. and the West basically allowed that to happen without -- and some would say even encouraged it to happen.

Thanks very much, Lisa. Thanks for that report.

We're told that the secretary of state, Hillary Clinton, was awestruck during her talks with a pro-democracy icon. Secretary Clinton spoke with our own Jill Dougherty. We're going to tell you what happened, her meeting -- her dramatic and historic meeting with Aung San Suu Kyi. That's coming up.

And will the new drop in the jobless rate have a long-term impact on the economy or on the presidential race? Our North American viewers will get more on "JOHN KING USA."

Stand by for that as well.

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BLITZER: The icon of Myanmar's democracy movement has gotten some tips from a woman who knows what it's like to run for high office. We're talking about Hillary Clinton.

Our foreign affairs correspondent, Jill Dougherty, is traveling with the secretary of state.

(BEGIN VIDEOTAPE)

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT (voice-over): It's not often Secretary of State Hillary Clinton looks in awe of someone, but meeting with Nobel Peace Prize winner and icon of Myanmar's democracy movement, Aung San Suu Kyi, she did. The smiles, the hugs, said it all.

AUNG SAN SUU KYI, PRO-DEMOCRACY ADVOCATE: Because of this engagement, I think our way ahead will be clearer and we will be able to trust that the process of democratization will go forward.

HILLARY CLINTON, SECRETARY OF STATE: We do see openings today that as Aung San Suu Kyi just said, give us some grounds for encouragement.

DOUGHERTY: Even the location of their meeting had significance.

(on camera): This is the residence of Aung San Suu Kyi, her family home, but also, for nearly two decades, her prison. After all, this is where she was confined by the military regime, unable to leave. She was released about a year ago, and is now a candidate for political office.

(voice-over): In a one-on-one interview with CNN, Secretary Clinton spoke of Aung San Suu Kyi.

CLINTON: Because of all of the information that I had about her, and the interactions that friends of mine had with her who carried messages back and forth, and I just really felt like it was meeting an old friend, even though it was our first time.

DOUGHERTY: U.S. officials traveling with Secretary Clinton say it was Aung San Suu Kyi's belief that the first steps toward reform here in Myanmar are genuine that help make Secretary Clinton's unprecedented visit possible.

Jill Dougherty, CNN, Yangon, Myanmar.

(END VIDEOTAPE)

BLITZER: History unfolding over there.

That's it for me.

Thanks very much for watching.

I'm Wolf Blitzer, in THE SITUATION ROOM.

The news continues next on CNN.