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THE SITUATION ROOM

Jobless Rate Near 3-Year Low; Gingrich's Colossal Cash-In; Gingrich: Loose Cannon?; U.S. Troops Leave Camp Victory; Saluting U.S. Sacrifices in Iraq; Reagan Shooter Makes New Bid For Freedom; Tracked While You Shop

Aired December 3, 2011 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: An unexpected drop this week in unemployment in the United States. So what's the real story behind the surprising new U.S. jobs report?

Also, Newt Gingrich running as on outsider while he made millions of dollars as perhaps the ultimate Washington insider.

Plus, a new privacy concern just in time for the holidays. Shopping malls tracking your every move through your cell phone.

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

(MUSIC)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: 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. That's nearly 3 million new jobs in all, more than half a million over the last four months. So, we need to keep that growth going.

(END VIDEO CLIP)

BLITZER: There are some new signs of life in the U.S. job market. With a strong showing in November that caught a lot of the analysts by surprise.

The Labor Department says employers added 120,000 jobs, helping push down the unemployment rate from 9 percent in October to 8.6 percent. That's the lowest level in almost three years.

But there's more to it than meets the eye. Lisa Sylvester standing by with more.

Lisa, so what's the story behind these latest numbers?

LISA SYLVESTER, CNN CORRESPONDENT: OK, Wolf. We're going to talk you through the numbers.

First, the positive news. Unemployment, as you mentioned, it did tick down, it went from 9 percent to 8.6 percent in the month of November. That's very good news.

And if you take a look at it in terms of the jobs created, 120,000 jobs that is higher than what economists were estimating. They were predicting around the range of 110,000 jobs.

And as an added bonus, take a look. These numbers have actually been revised higher. The numbers for the prior three months, October, September and August. Significantly higher than what was initially reported.

That's all the positive news.

But we have to qualify all of this. We can take a look. Here's the thing: 120,000 jobs, it might sound actually like a lot. But if you want to create more jobs and actually bring down, lower the unemployment rate, you're going to have to do a lot better than just 120,000 jobs.

In order to really make a dent and bring down the unemployment number, the economy needs to create about 300,000, 400,000 jobs in order to get back to the prerecession level.

Another thing that I want to point out to you, Wolf, and to our viewers, is if you take a look at it by race, all the different ethnic groups actually saw a decrease on the unemployment rate. The one exception is for African-American workers. You can see it went from 15.5 percent to 15.1 percent. It actually ticked up a little higher. And that's going to be a concern and a question for President Obama, particularly with his base.

And the last thing I will say is that even though the unemployment rate ticked down from 9 percent to 8.6 percent, the reason behind that is that many people simply gave up looking for jobs and they left the workforce, Wolf.

BLITZER: Lisa, thanks very much.

Let's dig a little bit deeper with Mark Zandi. He's the chief economist for Moody's Analytics.

One reason, as Lisa says, the unemployment rate dropped so much was because of these revised job numbers for the previous month. So let's take a closer look, Mark, at these original numbers.

In August, they said 57,000. Originally, they said zero. But that was revised to 57,000 up to 104,000. That is the latest estimate for August.

September, 158,000. It's gone up now to 210,000.

In October, originally they said 80,000 new jobs. Now 100,000 new jobs.

Is this normal for these significant increases to come forward a month, or two, or three later? MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, we always have revisions. It is very encouraging that we're getting upward revisions.

What that seems to suggest is that we're getting job growth at smaller businesses and establishments that are reporting late to the Bureau of Labor Statistics, the keeper of the data. So, as they get that information in, they revise their estimates, and the upward revisions indicate some small business job growth which, you know, has been a missing link in the economic recovery.

So, it is a positive sign and encouraging sign that is happening now.

BLITZER: So that's one reason why the jobless number went from 9 percent unemployment down to 8.6 percent.

The other factor and the critics of the president and the strategy are pointing out to this factor -- they say a lot of people are simply giving up hope. They're dropping out of the job market. They're forgetting about it as a result they're no longer being counted.

ZANDI: Yes. That's a problem. I mean, the 9 percent to 8.6 percent drop in unemployment overstates the improvement, improved in part because of better job growth. That's really good.

But it also improved because we did see more people drop out of the workforce. And that's not encouraging. We want more people to step in, to feel confident that they go out and look for work, they're going to find a job.

So the large decline overstates the improvement. But nonetheless, it was an improvement and it is a positive development.

BLITZER: Off the top of your head and you've been studying the numbers and Lisa just reported why was there an increase in the unemployment numbers for African-Americans?

ZANDI: Well, it can be a number of things. One possible explanation is that the unemployment rate for people with lesser skills in education is a lot higher and is a lot more volatile. It jumps up and down and all around. It generally is a lot higher. And that may be part of the explanation why that's been the case.

But, you know, it's hard to read a lot into any given month, particularly when you're looking down into particular demographic groups because, you know, you don't have a large sample and it could be more statistical than reality. So, we'll have to wait for a few more months to make sure that what we're observing is actually reality.

BLITZER: And another source of concern is the underemployed. A lot of people have gone into the job market, they've taken jobs, and a lot less money than they used to. Let's say someone who was making $70,000 a couple years ago but it's been out of work.

And now, they go back and make $30,000. They have a job. They're making $30,000 a year but it's a lot less than they used to make.

Do we have any indication how that is playing out?

ZANDI: Yes. That's a good point. The number of people who are out there working, but working part-time because they can't find a full time job, remains very, very high. You know, it hasn't really improved at all so far in the economic recovery.

And this goes to a broader point. And that is, you know, our job market is very weak by lots of different metrics. The unemployment rate, even with last month's improvement, is very high. We got a lot of people that are underemployed, not working as much as they like.

And the other thing that we learned from Friday's jobs numbers is that wages actually fell during the month. And so, wage growth remains very, very weak, tepid. It's not really even heating up with inflation.

So the job market is much better. It's certainly moving in the right direction, much improvement. But we are and still a very deep hole and it's going to take a long time, as Lisa was pointing out, it's going to take a very long time to get out of it.

BLITZER: And one wild card going on in Europe right now. It could have an enormous effect on the U.S. economy, the jobs market and the economy. How do you see that, at least in the short term playing out?

ZANDI: Yes. There's two key things I think that are going to be very important for the job market, the broader economy into next year. One is Europe. The European situation is very unsettled.

I'm hopeful European policymakers will get it together reasonably well. And keep the euro zone together. They seem to be moving in that direction.

I think they understand this. It's just the political constraints that are slowing down the process. But at the end of the day, I think they realize they've got to do this and they will.

The other, of course, is here at home. Congress and administration have to come together and extend the payroll, at the very least, extend the current payroll tax holiday. If they don't do that, everyone is going to experience a tax increase next year. It's a pretty hefty tax increase, $120 billion over the calendar year. I think the economy is too fragile for that.

So that also is very important for the job market outlook into 2012.

BLITZER: Yes, I think everyone agrees. They got to continue to extend that payroll tax cut. But they're disagreeing how to pay for it. Let's see if they can get their act together.

All right. Mark, thanks very much for joining us.

ZANDI: Thank you.

BLITZER: Mark Zandi of Moody's Analytics -- appreciate it.

He's now a Republican front-runner, and that's bringing new attention to the millions of dollars Gingrich made as a Washington insider.

Plus, on a very, very different note, Kermit the frog, he's here in Washington to help light the national Christmas tree. And guess what? He's also here with me in THE SITUATION ROOM.

(BEGIN VIDEO CLIP)

SANTA CLAUS: You will crush my candy cane.

KERMIT THE FROG: Well, I understand. I'm so sorry about that. But, you know, I'm glad you could make it. I was hoping, Santa, that you might help me with the Christmas list.

SANTA CLAUS: Well, that is --

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: He spent 20 years in Congress, eventually working his way up to become speaker of the House, second in line for the presidency. Since leaving office, Newt Gingrich cashed in handsomely on his Washington experience. But despite that, he continues to brand himself as a Washington outsider as he seeks the Oval Office for himself.

Lisa Sylvester has been taking a closer look at what some folks are calling Newt, Inc. over the years.

What are you finding out?

SYLVESTER: That's right, Wolf.

Well, Newt Gingrich has been portraying himself as a guy with big ideas. And he has helped companies problem-solve and develop creative solutions. These companies, they have paid him very well. But the issue now is: was he actually working as a lobbyist for them?

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): The Gingrich Group and the for-profit Center for Health Transformation grossed nearly $55 million in revenue in the last decade. Since leaving Congress, Newt Gingrich has become a master of branding, Newt Inc.

KAREN TUMULTY, WASHINGTON POST: What Newt Gingrich did was took the power of his name and applied it in any number of for-profit arenas.

SYLVESTER: But these for-profit groups are now dogging him. In 2008, the Center for Health Transformation helped to get a new health care law passed in Georgia. Gingrich touted the group's influence out of members only meeting that year. NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: We do no lobbying of any kind. What we do is education. So, we did not lobby for the bill in Georgia. We did write the basic document that the bill would grow out of.

SYLVESTER: That's at the heart of this. Where does education begin and lobbying end? Gingrich insists he hasn't had to work as a paid lobbyist. According to him, he was making a fine living giving speeches.

GINGRICH: I was charging $60,000 a speech, and the number of speeches was going up, not down. Normally, celebrities leave and they gradually sell fewer speeches every year. We were selling more.

SYLVESTER: But companies paid as much $200,000 a year to be a member of the Center for Health Transformation, and Gingrich in pitching his ideas to reform health care, often pointed to his member clients as providing the solutions, like here where he promotes Intermountain Healthcare of Utah, which happens to be a client.

GINGRICH: Somebody estimated at the Dartmouth Health Atlas that if all health care in America were as effective as Intermountain, you would reduce the cost of Medicare by 50 percent while improving the outcomes.

SYLVESTER: Gingrich also gave his clients access to lawmakers. Here again from the 2008 speech, Gingrich talks about building ties to people like then-Senator Hillary Clinton and former Senate Majority Leader Bill Frist.

GINGRICH: If we can create the relationships -- and this goes all the way back to Bill Frist and working with us to host a series of leadership dinners that Hillary Clinton and others came to on electronic information technology, which really did begin to build a bipartisan pattern in the House and Senate in a way that was very different.

(END VIDEOTAPE)

SYLVESTER: The Gingrich Group and Center for Health Transformation in a statement reiterated that its mission was only to provide strategic thinking, policy analysis and planning. Quote, "We do know lobbying for clients and always make that very clear from the outset. We clearly stipulate that fact in our contracts."

And, in fact, Newt Gingrich himself has said that he did not promote any ideas that he did not personally believe in and he says he was in a position financially where he could pick and choose his clients -- Wolf.

BLITZER: He always makes the point that he never formally registered as a lobbyist with Congress or the Justice Department or anyone else. Very sensitive issue.

SYLVESTER: Yes, it is.

BLITZER: Lisa, thank you.

Over at the White House, President Obama's taking bold new steps to push his bid for re-election. And he's hitting the road on trips critics are charging aren't fit for a commander-in-chief but rather for a campaigner-in-chief.

Let's go to the White House. Our correspondent Brianna Keilar is standing by.

Brianna, the White House strongly resisting suggestions the president is campaigning out there on these trips.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. They resisted that suggestion over and over for months now. But the president paid yet another visit to a battleground state this week to Pennsylvania.

And now, all you really to do is turn on your television and you can see that it's campaign season, both for Republicans and for the president.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): He's off and running.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The 2012 campaign is underway. And the outcome will depend not on what I do, but on what you do.

KEILAR: The president's re-election campaign launched its first ads Tuesday looking for volunteers.

OBAMA: To help build our campaign in your community.

KEILAR: The same week, the DNC put out this ad resembling a movie trailer.

UNIDENTIFIED MALE: The story of two men trapped in one body.

KEILAR: Hitting Republican rival, Mitt Romney, as a flip-flopper even before the first caucus and primary. The president travels to Pennsylvania, one of many battleground states he's visited to promote his jobs plan.

OBAMA: It is good to be back in Asheville, North Carolina!

(CHEERING)

OBAMA: Great to be back in Virginia.

KEILAR: During his third year in office, Mr. Obama has held 55 events in swing states, more than any other president according to the "Wall Street Journal". Republicans are hitting him saying he's campaigning on the taxpayers' dime, but the White House denies the travel is political. JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Every president ought to be able to travel everywhere in the country. It's part of his responsibility serving the American people to get out and be among them and to speak with them about his agenda or her agenda. This president will continue to do that.

KEILAR: Republican strategist, Alex Castellanos, says the president should be out on the campaign trail.

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: Nothing's getting done in Washington from now until next November. So, it's not too early for the president to get out there and start campaigning.

KEILAR: But Castellanos also says it's understandable the White House is resistant to calling what look and sound like political events political.

CASTELLANOS: I think the president is caught in a catch-22 here, and that is that he is running against politics in Washington. He says that's what's preventing anything from getting done, but then, he's going out there and becoming political. And that is open seam, I think, to the charge of hypocrisy, and I think that's what he's trying to avoid.

(END VIDEOTAPE)

KEILAR: The other sensitivity, Wolf, is presidential travel. It's very expensive and taxpayers pick up the tab for the majority of it. That's perfectly legal. But it doesn't always sit well with voters when it's political travel.

BLITZER: Yes, I suspect we're going to be seeing a lot more of this in the coming weeks but over the many, many months to come as this battle heats up. Brianna, thanks very much -- Brianna Keilar over at the White House.

So, can Newt Gingrich be his own worst enemy? Our political analysts, Gloria Borger and Ron Brownstein, they're both standing by to talk about that. The week in politics and a lot more.

Plus, abortion controversy swirling around, of all things, the new iPhone.

(COMMERCIAL BREAK)

BLITZER: It's called Siri, a popular personal assistant app on Apple's new iPhone 4S that can help you locate phone numbers and addresses, but some customers say Siri's answers are biased against abortion rights.

CNN's Mary Snow is following the story for us. She's joining us in THE SITUATION ROOM.

What's going on here, Mary?

MARY SNOW, CNN CORRESPONDENT: Hi, Wolf. Well, you know, with critics questioning whether moral message was at play, Apple has come out to deny that, blaming technical issues to explain why Siri can't seem to locate abortion clinics.

(BEGIN VIDEOTAPE)

SNOW: Where can I find a supermarket?

(voice-over): It's one of the hottest functions of the new iPhone.

Siri, the virtual assistant. Ask it just about anything, and it finds an answer. If it can't, it leads you to a search engine.

But Apple is having to respond to questions about its new voice- activated assistant. Those questions were first raised by bloggers asking why Siri could find anything from strip clubs to Viagra, but apparently draws a blank when asked about abortion and contraception.

(on camera): We're standing outside a Planned Parenthood Clinic here in New York. Where can I find an abortion clinic?

This is the latest iPhone with the Siri app.

SIRI: Sorry, I couldn't find any abortion clinics.

SNOW (voice-over): Ask the same question in Washington, D. C. and the blog "Raw Story" says Siri comes up with anti-abortion center in Virginia and one in Pennsylvania.

A similar search on Google directs users to several clinics where abortions are performed.

The ACLU and abortion right advocates raise concerns, but Apple is blaming it on a technical glitch, saying, "These are not intentional omissions meant to offend anyone. It simply means that as we bring Siri from beta to a final product, we find places where we can do better, and we will in the coming weeks."

Not everyone is buying it. Eli Pariser is the former executive director of MoveOn.org and author of "The Filter Bubble."

ELI PARISER, AUTHOR, "THE FILTER BUBBLE": I think it's a pretty damn answer. The fact is that for a long time, many companies have made it more difficult for women to find family planning assistance. This is not the first time that this has happened.

SNOW: One analyst who covers Apple says he doesn't believe there's a hidden agenda since Apple doesn't use its own database, but rather relies on information gathered from partners. But he says the company's culture of silence will likely only add to suspicions.

VAN BAKER, RESEARCH V.P., GARTNER: You see lots and lots of pretty wild theories and speculations about new products and services and you know, hidden agendas and all those kinds of things with Apple more than you do with other companies because they tend to constrain the amount of information they make available to the marketplace. (END VIDEOTAPE)

SNOW: Now meantime, the abortion rights group NARAL Pro-Choice America Foundation posted an email received from Apple's CEO after writing him. The group says it appreciates the prompt response and says it will monitor Siri until Apple's efforts to work out the case are finished -- Wolf.

BLITZER: What else do we know about the Siri technology? We know it's been around even before Apple purchased it? But what do we know about it?

SNOW: Right, Siri was sold to Apple in 2010.

You know, we talked to one of the former directors of Siri. We asked him about this technology. And he said while he had this company, there were no known filters that would have filtered out anything having to do with abortion.

BLITZER: Mary Snow, we'll stay on top of this story -- fascinating story indeed. Thank you.

So if you're planning a holiday shopping trip to the mall, beware. Someone may be tracking your every move.

And Newt Gingrich keeps climbing in the polls at Mitt Romney's expense. But will the former House speaker stumble before primary season gets under way?

(COMMERCIAL BREAK)

GINGRICH: Critics warned Newt Gingrich maybe sounding overconfident as he basked on his new role as the Republican presidential frontrunner. A new Florida poll out this week offers more proof that the former House speaker has soared to the top of the GOP pack while Mitt Romney's support has clearly gone down.

We're joined now by our chief political analyst Gloria Borger, and our senior political analyst Ron Brownstein.

Look at these numbers, Gloria. Gingrich, in October, 11 percent, up to 50 percent in Florida, which is a key state, obviously. Romney has gone down from 28 percent to 19 percent.

Look at Herman Cain -- 34 percent in October, 10 percent now, probably still going down. I think it's fair to say almost all of those Herman Cain supporters, they're not going to Mitt Romney. They're going to Newt Gingrich.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Yes, they're going to Newt Gingrich. But it just shows you the volatility of this field and the fact that Republicans can't seem to fall in love with Mitt Romney. He maintains his sort of 20 percent to 25 percent base in the Republican Party.

And the other candidates are the ones going up and down. Newt Gingrich is clearly the beneficiary of Herman Cain going down in the polls.

BLITZER: Is it fair to say this was a really good week for Newt Gingrich? Not such a good week for Mitt Romney.

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Absolutely and what's interesting about this poll, and again, you have to be careful about putting too much weight on any single poll, especially by a polling organization that is not really a specialist in Florida.

But it is especially important because Florida is so key in the way Mitt Romney views the road to the nomination. He is making an extraordinarily minimal effort in South Carolina, which is the one state that picked the Republican winner in every race since 1980.

And their assumption is Florida is their fire wall if they don't do well in South Carolina. So if he is facing trouble in South Carolina now, imagine what Florida will look like after a South Carolina result that doesn't go well for him.

So this is, you know, again, you can't put too much weight on any single poll, but this should be a wakeup call about what the trend lines are right now in the race.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: I think this whole week has been a wakeup call to them.

BROWNSTEIN: Yes.

BORGER: Because it's clear that nobody in the party loves them and the fact that Newt Gingrich, somebody they discounted a while ago is back out there. Well, all of us including them and they're sort of sitting there.

When you talk to people in the Romney campaign, they're sitting there saying why doesn't the American public understand Newt Gingrich's past and his history and his nature?

And they worry that between now and the Iowa caucus there's isn't enough time to get that story out to the voters.

BLITZER: So you see, Mitt Romney is not really expecting to necessarily win Iowa. Newt Gingrich could clearly win Iowa, but he is fully expecting to win New Hampshire, which is a week later.

Here's the nightmare scenario for Mitt Romney. This is the nightmare scenario. Newt Gingrich does increasingly well in New Hampshire in the coming weeks. He is beefing up the staff there as you well know. Huntsman starts doing better. So huntsman supporters could be Romney supporters. But if Romney doesn't win in New Hampshire --

BROWNSTEIN: Look, no Republican has won both Iowa and New Hampshire since Gerald Ford in 1976. The reason is because the electorates are almost mirror images. Iowa is so heavily Evangelical and New Hampshire is much secular and libertarian.

So it will be difficult for whoever wins Iowa to win New Hampshire. And New Hampshire remains the most important state on the map for Romney because it is the one that can give him a burst of energy.

If he wins New Hampshire, he will be elevated in the eyes of many voters. I think the risk he faces is that if Gingrich wins Iowa convincingly, that that is the signal to the Evangelical and Tea Party side of the party.

This is the guy and the scenario that Romney people are most concerned about is consolidation on the right becomes more likely.

BLITZER: And it also -- but also, the -- that's why it explains the irritation that Romney feels towards Jon Huntsman.

BORGER: And also Huntsman is depending on the fact that independent voters can vote in the New Hampshire Republican primary. And those independent voters are not going to be attracted to Newt Gingrich. They are going to be attracted to Jon Huntsman.

So even if Romney wins New Hampshire, but he wins by a little instead of a lot, don't forget, recent polls of three weeks ago showed them 40 points ahead in New Hampshire. Even if he decreases that lead but wins, we're going to be saying, you know, he eked it out.

BROWNSTEIN: Although the flipside is as a warning to Gingrich, the fact that what goes up this fast can also go down this fast. People are operating very little information beyond the debates. He really hasn't built any of that kind of structures you would expect from a presidential frontrunner. And as new information gets released, it could puncture the balloon.

BORGER: People just know who he is.

BLITZER: All of us know Newt Gingrich. We've covered him for a long time. The argument against him is that, you know, he has so many ideas brewing all the time. He's capable of saying something that will undermine his support. Let me play this one sound bite. Newt Gingrich this week, which has caused a stir.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: Really poor children and really poor neighborhoods have no habits of working and have nobody around them who works. So they literally have no habit of showing up on Monday. They have no habit of staying all day. They have no habit of I do this and you give me cash unless it's illegal.

(END VIDEO CLIP)

BORGER: That's newt. That's Newt Gingrich. I mean, Newt Gingrich will shoot his mouth off. I was at a focus group last week conducted by the Democratic pollster, Peter Hart with Republican primary voters in the state of Virginia.

And one of the voters said, look, here's what we know about Newt Gingrich that he's careless and that he's combustible. And these are -- so they're worried, the voters are worried because he can mouth off and say things and alienate a group of voters in a nano second and that's not what Republicans need.

BROWNSTEIN: Don't forget, Newt Gingrich came into Congress in the 1970s. He founded the conservative opportunities society, which was designed to transform the Republican minority in the House from a junior partner in governing to a true opposition party.

And the way they did was with bombastic rhetoric and late night speeches attacking Democrats in very vitriolic terms. He is never entirely unlearned those lessons even when he rows to the top of the Hill as the House speaker.

David Maron wrote this great book on the first year of the Republican takeover, the title was "Tell Newt To Shut Up." The quote wasn't from a Democrat. The quote was from another senior Republican.

Because this is someone who has a tremendous command of a lot of issues, but also has this tremendous draw toward the especially volatile remarks.

BLITZER: I will say this, no matter what happens in this GOP race and has been volatile, it probably continues to be volatile. You got to give Newt Gingrich amazing credit for coming out of nowhere.

BROWNSTEIN: Tenacity and the recovery is remarkable.

BORGER: But he said he knew all along this was going to happen.

BROWNSTEIN: World historical figure.

BORGER: Transformation.

BLITZER: We'll watch it together with you. Thanks very much.

America's sacrifices in Iraq are being honored with just weeks to go before the U.S. mission is over. We're following the transition though the bloodshed continues until the bitter end.

And a new bid for freedom by the man who shot President Ronald Reagan 30 years ago.

(COMMERCIAL BREAK)

BLITZER: Iraq now controls one of the largest U.S. military bases in the country. The last American troops left Camp Victory in Baghdad on Friday. It's another milestone as the U.S. prepares to withdraw its remaining 13,000 forces by the end of the year.

CNN's Martin Savidge has more from Iraq on the transition.

(BEGIN VIDEOTAPE)

MARTIN SAVIDGE, CNN CORRESPONDENT (voice-over): Amidst the marvel and opulence built for a dictator, U.S. and Iraqi leaders saluted the sacrifices that have launched a democracy. It was the first of numerous ceremonies for departure of U.S. troops from Iraq. But it may be the only one where U.S. and Iraqi leaders and U.S. and Iraqi soldiers stand side by side honoring the occasion. While the complete withdrawal of American forces is still weeks away, this event signified that Iraq is now very much in charge.

The salute honoring the followed was made by an Iraqi honor guard. And when the "Star Spangled Banner" poured through the palace, it was played by an Iraqi band.

The speeches shared a common theme that Saddam Hussein was to blame the war, that it's end brings a new chapter in American-Iraqi relations and that is U.S. soldiers leave, they go with the gratitude of the Iraqi people.

PRESIDENT JALAL TALABANI, IRAQ (through translator): We thank all the United States and the friends who helped in ending the oppression and build an Iraqi and democratic Iraq.

SAVIDGE: Vice President Joe Biden praised the troops from both nations for their efforts and sacrifice.

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: All of us are gathered here for the same reason. We're gathered here to thank the arms forces of Iraq and America and to honor your sacrifice, to honor your success as well as your commitment.

SAVIDGE: Then Biden spoke the words many Iraqis and Americans have waited years to hear.

BIDEN: And because of you and there is no exaggeration to say that, because of you and the work of those of you in uniform have done, we are now able to end this war.

SAVIDGE: But on the same day that leaders praised Iraq's success, 20 people were killed in violent attacks just north of Baghdad. And that would bring to a total of 56 people that have died in just the last eight days. Iraq's prime minister admits his nation still faces a difficult future. But --

NURI AL-MALIKI, IRAQI PRIME MINISTER (through translator): I'm confident that our security forces are ready and to carry out its task of protecting the country and citizens.

SAVIDGE: In other words, for the first time in nearly nine years, the job of ruling and running Iraq rests solely in the hands of Iraqis. Martin Savidge, CNN, Baghdad.

BLITZER: Thirty years after the attempted assassination of President Ronald Reagan, his shooter is trying to win his complete freedom. We have new information on the fate of John Hinkley Jr.

And your cell phone could be giving away your location to someone tracking your next shopping spree. Stay with us. You're in THE SITUATION ROOM:

(COMMERCIAL BREAK) BLITZER: The man who shot President Ronald Reagan in 1981 is making awe new bid to be released from the mental hospital where he spent most of the last 30 years.

CNN's Brian Todd is here in THE SITUATION ROOM watching all of this unfold. John Hinckley Jr., you were at the courthouse earlier in the week. Some dramatic developments. The stakes are pretty significant.

BRIAN TODD, CNN CORRESPONDENT: They're very significant this time, Wolf. You know, Hinckley's lawyer called him a decent person, a flawed, but fundamentally decent person. Not a danger to the community. Government lawyers called him deceptive.

We learned new details about Hinckley's behavior in recent months.

(BEGIN VIDEOTAPE)

TODD (voice-over): More than three decades after his bullet came within an inch of Ronald Reagan's heart, John Hinckley sat expressionless as lawyers argued over whether he should eventually be freed. Hinckley's attorney, Barry Levine telling the judge the would- be assassin is flawed, but fundamentally decent.

He is asking for Hinckley to be granted more extended leave from a mental hospital and eventually live full time with his mother. His lawyer says he's not been violent and a doctor at the hospital says there is a low risk Hinckley would be a danger to himself or others. A psychiatrist who once evaluated, but didn't treat Hinckley says this --

DR. E. FULLER TORREY, PSYCHIATRIST: If he is on medication, Mr. Hinckley could move in next door to me as far as I'm concerned. If he's not on medication, I would do everything I could to block him from moving in next door.

TODD: Hinckley's lawyer says he's been reliable about taking his anti-psychotic drugs, but government attorneys counter that Hinckley's been consistently deceptive. They say the secret service watched him this year without his knowledge during unsupervised free time.

On more than one occasion, they say, Hinckley was supposed to go to the movies or shopping, but instead he went to book stores where he looked at books about Ronald Reagan and presidential assassins.

They say Hinckley is also deceptive about dealings with women, searching the internet for pictures of his female dentist then lying about it, faking an emergency to spend time with his dentist, episodes reminiscent of his infatuation with actress, Jody Foster, before the assassination attempt.

JODIE FOSTER, ACTRESS (via telephone): Do you understand why I can't, you know, carry on these conversations with people I don't know. You understand it's dangerous and just not done. It's not fair and it's rude, all right?

HINCKLEY: Well, I'm not dangerous. I promise you. TODD: Former U.S. Attorney Joe Digenova remembers Hinckley's prosecution in the early '80s.

JOSEPH DIGENOVA, FORMER FEDERAL PROSECUTOR: I don't think are any set of circumstances that Hinckley should be unmonitored walking freely. He's going to have to self-medicate. There is no way to guarantee he's going to take his medication.

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TODD: Digenova says that means the secret service is going to have to devote considerable resources to monitoring Hinckley. Resources that Digenova says would be taken away from some protective detail.

We called the secret service about this. They would not discuss any monitoring operations and would not discuss these proceedings in any way. These hearings are going to play out over at least the next few days and then the judge will rule on whether John Hinckley merits more freedom.

BLITZER: Do we expect Hinckley to testify?

TODD: He's actually on the list to testify. He's on the list of potential witnesses put out by his defense attorney. But if he does testify, that means the prosecution is going to want to cross examine him. Hinckley's defense team does not want that to happen. So he may not testify.

BLITZER: All right, Brian. We'll stay in close touch. Let us know what the final decision has been made. Brian Todd reporting.

If you're concerned about Uncle Sam looking over your shoulder, maybe you should worry more about your own neighborhood ball.

CNN's Mary Snow is back from New York. Mary, what's going on that shoppers, especially around this Christmas season, should know about?

MARY SNOW, CNN CORRESPONDENT: Wolf, you know, CNN Money first reported on this new technology being launched to two shopping centers in the U.S. to keep tabs on consumers. It's generated a lot of backlash and a change of plans for now.

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MARY SNOW, CNN CORRESPONDENT (voice-over): As shoppers hit stores on Black Friday, two malls kept a closer eye than usual on where people went literally.

They monitored signals from shopper's cell phones in Richmond, Virginia and in Southern California. This animation shows how the technology works. Its makers insist personal data isn't collected and that it's used to track shopping patterns.

But it's used is now on hold with the manager of two U.S. malls saying we have temporarily suspended further trial of the technology while we work with a system developer on possible enhancements and a difference to concerns raised by Senator Schumer.

New York Democratic Senator Charles Schumer has raised privacy concerns. He says while consumers can turn off their phones when they see signs outside of stores warning about the technology, they shouldn't have to.

SENATOR CHUCK SCHUMER (D), NEW YORK: If retailers want to tap into your phone to see what your shopping patterns are, they can ask your permission.

SNOW: The company that makes the technology is called "Path Intelligence" based in the United Kingdom.

(on camera): Why is it necessary to track shoppers?

SHARON BIGGAR, CEO, PATH INTELLIGENCE: It's necessary in the offline world to create a level playing field with what's going on online.

SNOW (voice-over): CEO, Sharon Biggar compares what her company is doing to the information online site's track, but she says in this case, cell phones are counted and personal information isn't detected. And she says having people agreeing to have cell phones tracked poses a problem.

BIGGAR: It would be going from a situation today where we have no information on the individuals, no details about cell phone numbers or demographics to a situation where we are required by law to hold personal information.

SNOW: Despite assurances, the ACLU's Chris Calabrese isn't sold.

CHRIS CALABRESE, ACLU: It's hard to take comfort in the idea that the company says this is anonymous information because it's very easy to link people's cell phones and their individual identity.

Every time you do something for a smart phone, say sign up for a service or provide your e-mail address, your linking your identity and the phone that that information is routinely bought and sold.

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SNOW: And while this technology is being suspended in two U.S. malls, the management company of those malls says it does plan to pursue an easier opt out option for consumers other than turning off their cell phones -- Wolf.

BLITZER: Mary, where else is this technology used?

SNOW: Well, you know, the makers of this attracting technology say that it's being used in several other countries and that it hasn't seen such a big backlash -- as big of a backlash as it has here. And there are some U.S. retailers who have looked at this technology but, so far, say they don't plan to use it.

BLITZER: Mary Snow reporting for us from New York, thank you. All right, get ready. Standby for a huge name, a big name guest who may make TV news rivals green with envy. Yes, Kermit The Frog, my new best friend right here in THE SITUATION ROOM with me.

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BLITZER: Here is a look at this hour's hot shots. In an Indonesians Province, men with painted faces and bodies rally to mark the region's 50th anniversary of independence from Dutch colonial rule.

In London, members of the British army do a risky motorcycle ship doing a preview of the tournament.

In Israel, an artist plays with a giant bubble. And in Nepal, look at this, players participate in the 30th international elephant polo competition.

"Hot Shots" pictures coming in from around the world.

BLITZER: Always an exciting moment here in Washington. This was Thursday when the president and the first lady lit the national Christmas tree outside the White House, always an exciting moment, indeed. And the president spoke about it.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: This holiday season, let us reaffirm our commitment to each other. As family members, as neighbors, as Americans, regardless of our color or creed or faith, let us remember that we are one and we are family.

(END VIDEO CLIP)

BLITZER: The president had some help, as you can see right there not just from Santa Claus, but Kermit The Frog was over with the president and the first lady and the first family.

He participated in this event and guess what? Just before he went over to the white house for this special ceremony, Kermit The Frog, yes, Kermit The Frog was right here in THE SITUATION ROOM with me.

(BEGIN VIDEOTAPE)

BLITZER: Joining me here in THE SITUATION ROOM right now, our special guest, Kermit, The Frog. Kermit, thanks very much for joining us.

KERMIT THE FROG, THE MUPPETS: Thank you, Wolf. Thank you for having me. There is a situation I think we should discuss.

BLITZER: Let's discuss that situation. You're here in Washington right now for a very special reason. Tell our viewers in the United States and around the world what's going on, Kermit.

KERMIT THE FROG: Well, folks, breaking news. At Christmas time, sometimes bad stuff can happen if you're not careful.

BLITZER: Like what?

KERMIT THE FROG: Well, like for instance, my friends at Underwriters Laboratory have given me a list of safety tips for you home during the Christmas season. Very, very important.

BLITZER: How many tips are there?

KERMIT THE FROG: Well, there at least three. I'm only giving you the Christmas three ones.

BLITZER: All right, can you remember those three tips?

KERMIT THE FROG: I can, because they're important.

BLITZER: Number one, two and three. It would be embarrassing if you couldn't remember number three.

KERMIT THE FROG: I think I got it. Number one, number one, I forgot it already. Only kidding. Number one, water your Christmas tree every single day.

BLITZER: All right.

KERMIT THE FROG: Do not let it go by. Number two, this is very important. Do not keep that live Christmas tree for more than four weeks even if you watered it because they dry out and it could be a fire hazard.

BLITZER: Really?

KERMIT THE FROG: Yes, and it could be a situation.

BLITZER: Wow.

KERMIT THE FROG: Number three, what's number three? This is very important. Make sure you check those Christmas lights that you put on that tree because they get hot.

And I mean, hot when I say hot. You do not want a fire on your Christmas tree, so check for shorts, check for problems. If there is a problem, buy new lights. Stimulate the economy, folks.

BLITZER: That's very important at this time of the year. I'm really glad because our viewers not only in the United States, but around the world are going the pay attention because they know you and you look good by the way.

KERMIT THE FROG: Thank you very much. It's even more important in those countries because the voltage is higher.

BLITZER: What does that mean?

KERMIT THE FROG: I don't know. Just sounds interesting. I'm trying to sound studious and intelligence.

BLITZER: We have a major show here in THE SITUATION ROOM. Do you watch us in THE SITUATION ROOM?

KERMIT THE FROG: I certainly do.

BLITZER: Every day?

KERMIT THE FROG: Well, yes. Yes, every day.

BLITZER: This is the first time you've been a guest.

KERMIT THE FROG: I have never been on your show before, but I'm happy to be here.

BLITZER: I know you're getting ready for something really special.

KERMIT THE FROG: I am. I'm very excited about it. I get to be a part of the tree lighting, the national tree lighting in sort of the backyard of the White House.

BLITZER: And you're going to meet the first family.

KERMIT THE FROG: I am.

BLITZER: Have you met them already?

KERMIT THE FROG: I have not. We've rehearsed without them. They didn't make it to rehearsals. Some sort of a secret service thing. But they will be there. They will be there. I get to read "Twas The Night Before Christmas" with the first lady.

BLITZER: Wow, you can do that?

KERMIT THE FROG: I do. It took me like ages. I mean, the poem is easy, but trying to figure out what -- meant.

BLITZER: I love having a frog here in THE SITUATION ROOM. I hope you'll be a frequent visitor.

KERMIT THE FROG: Well, listen, I'll just keep coming up with more situations.

BLITZER: You're a good man. You're a good frog. Thanks for those tips.

KERMIT THE FROG: Thank you, sir. It has been my pleasure.

BLITZER: I think you're going to save a lot of peoples' lives. It's very important.

All right, that's it. Kermit The Frog, thanks as much. He's here in THE SITUATION ROOM doing an important work.

KERMIT THE FROG: Have a very happy holiday.

(END VIDEOTAPE)

BLITZER: Love Kermit The Frog and I'm sure Flotus, first lady of the United States and Potus, president of the United States and the kids, I'm sure they all love Kermit The Frog, as well, always special to have them first time not the last.

That's it for me, thanks very much for watching. I'm Wolf Blitzer. Join us weekdays in THE SITUATION ROOM from 4:00 p.m. to 6:00 p.m. Eastern, every Saturday at 6:00 p.m. Eastern right here on CNN and at this time every weekend on CNN International. The news continues next on CNN.