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Mitt Romney's Secret Finances; Newt Gingrich Divorce Claims in Doubt; Legal Bet for Presidential Election; Report: Iran Conducts Military Exercises; Iraq Suicide Blast Kills Five, Wounds Dozens; What If Ron Paul Wins Iowa?; North Korea, Post Kim Jong-il

Aired December 26, 2011 - 17:00   ET

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


WOLF BLITZER, HOST: This additional note by the way, earlier today all day tomorrow, Pakistani and Indian officials are hold bilateral meetings on Islamabad on the use of nuclear weapons, it's part of a new phase of discussions between the rivals.

And you're in THE SITUATION ROOM happening now, new calls for the wealthiest White House candidate to open up about his secret finances. This hour, Mitt Romney's money under scrutiny with the first presidential voting just eight days away. Plus, what if -- what if future traders could place bets on the president election? There's a real push to make that happen. And it's raising some red flags.

And President Obama gets into the baby kissing on the campaign trail with some mixed results.

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

Right now, the Republican presidential candidates are buckling up for a frantic final dash across Iowa. The first 2012 contest only eight days away and the last hours and even minutes of campaigning potentially could make a difference. Rick Santorum actually is the only candidate in Iowa today but look for the rest of the pack to be all over the map, leading up to the caucuses on January 3rd, a week from tomorrow.

Ron Paul is holding his place at the top of the Iowa polls but the Obama camp still sees Mitt Romney as long term front-runner and his finances are coming under greater microscopic surgery right now.

Joe Johns is covering this pour as its crunch time in Iowa. These candidate, Joe, as you want to be president of the United States, they have to assume that every aspect of their lives, their personal, historic, financial, every aspect will be open for scrutiny.

JOE JOHNS, CNN CORRESPONDENT: That's true, Wolf. And even before Mitt Romney try to make a $10,000 bet in a debate, he's been fighting being defined as sort of moneybags candidate who has a lot of cash but not necessarily so much in common with many average Americans. Now the question is, how transparent will Mitt Romney be with his money?

(BEGIN VIDEOTAPE) JOHNS (voice-over): Mitt Romney is worth up to a quarter billion dollars according to a campaign estimate. That makes him by far the wealthiest candidate on the trail this cycle. And while running for president, he says, he plans to keep his tax returns secret at least for now.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I can tell you, we follow the tax laws and if there is an opportunity to save taxes, we, like anybody else, in this country will follow that opportunity. But we don't have any current plans to release tax returns but "never say never." We will see what the future holds. We have released, of course, all of the information required by law, which is a pretty extensive release. But down the road we will see what happens, if I'm the nominee.

JOHNS: And he doesn't plan to release the names fund raising bundlers either. Bundlers head up high rollers for big campaign dollars. He says he discloses all of the information that's required by law. That's true. The law does not require release of bundlers name or tax returns.

But campaigns off then do it anyway in the interest of transparency. Not disclosing this kind of information back in the old days was less after big deal but the last two general campaigns for a president did it. At a time when issues of wealth and inequity, revising the tax code and whether the rich should pay more this taxes is already the national debate, Romney's decision is starting to attract a lot of attention.

The presidential re-election campaign asked if Romney thinks he can play by a different set of rules than other politicians. One campaign watch dog organization says it raises the question whether the Romney campaign has something to hide.

NICK NYHART, PUBLIC CAMPAIGN: With Congress debating whether millionaires or billionaires should pay higher tax rates and if income earned from capital to pay the tax as the same rate as income were swept, those issues are central to the congressional debate. Our presidential candidate is going to be asked about those.

(END VIDEOTAPE)

JOHNS: We do know a little bit about these so-called bundlers working for Mitt Romney. For example, in the third quarter, six bundlers for Romney brought in a total of $479,000. We know that because the only thing the federal law requires is that bundlers who actually are registered as lobbyists be reported. That of course, is what Romney is talking about when he says he is complying with federal law - Wolf.

BLITZER: And those bundlers be the ones who raise a lot of money for his campaign, they are different from super PACs that are not directly affiliated with the campaign. They're in fact, they are not allowed to be affiliated with the campaign but it is obviously done by those who support Mitt Romney.

JOHNS: Absolutely. These are supporting Mitt Romney. They are turning money over to the bundlers so the bundlers can take that money directly back to the Mitt Romney campaign. Very different from super PACs that at least on paper say they are disconnected or independent from the candidate, Wolf.

BLITZER: Joe Johns, reporting from Iowa. Joe, see you there tomorrow. I'll be heading to Iowa. We have an interview lined-up Tuesday. That's tomorrow with Newt Gingrich. On Wednesday, I'll sit down with Mitt Romney along with his wife, Ann. Their son, Josh right here in THE SITUATION ROOM. I will be reporting tomorrow and Wednesday from Iowa. Our coverage will begin 4:00 p.m. Eastern.

Now to a story we brought you first on CNN. Court documents appear to contradict Newt Gingrich's claim that his first wife requested their divorce, not him. CNN has obtained divorce papers from a Georgia court that show Gingrich filed for divorce back in 1980 and that Jackie Gingrich responded by saying she did not want to end the marriage.

A former Gingrich confidant tells CNN the future republican presidential candidate told them back then that Jackie Gingrich wasn't young enough or pretty enough to be the wife after president. Gingrich's 2012 campaign Web site quotes his daughter, by Jackie Gingrich as saying it was her mother who asked for the divorce. The Gingrich camp tells CNN it stands by that claim.

Gingrich says he is now happily married to his third wife, Callista, but question persist about his checkered marital history and whether it will turn off voters, especially in Iowa.

CNN's Mary Snow is taking a closer look into this part of the story. Mary, what do you find?

MARY SNOW, CNN CORRESPONDENT: Well Wolf, as you surely know, the social conservatives make up a significant block of caucus goers in this first presidential contest. And while Newt Gingrich has made repeated attempts to address his personal past and move on, it is unclear how much it will count.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Newt Gingrich's wife, Callista, is a central part of Gingrich's presidential campaign, campaigning with him in Iowa, even appearing in a recent ad.

CALLISTA GINGRICH, NEWT GINGRICH'S WIFE: From our family to ours, merry Christmas and happy New Year. I'm Callista Gingrich.

SNOW: But a veteran political reporter in Iowa says that among caucus goers its questions about Gingrich's two previous marriages that have come up.

KAY HUTCHINSON, DIRECTOR, RADIO IOWA NEWS: For instance, Mitt Romney had telephone town hall meeting and one woman from Mason City Iowa made a point of thanking him for being married to the same woman for 42 years.

SNOW: This recent ad featuring Romney's wife, Ann, entitled character seems to be a not so subtle dig at Gingrich's multiple marriages.

ANN ROMNEY, MITT ROMNEY'S WIFE: If you want to know how a person will operate, look at how they have lived their life.

SNOW: And in this ad, Anita Perry touts her marriage to her high school sweetheart, Texas governor, Rick Perry. Gingrich hasn't shied away from addressing his three marriages and past infidelities, on his Web site and in public.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I have said upfront openly, I have made mistake as time, I have gone to God for forgiveness, seek reconciliation. But I'm also a 68-year-old grandfather and I think people have to measure who I am now, and whether I'm someone they can trust.

SNOW: In a socially conservatives state of Iowa, political watchers say, personal is political.

LARRY SABATO, UNIVERSITY OF VIRGINIA: The personal history does matter. At least in 2008, 60 percent of the participants in the Iowa caucus were evangelical Christians.

SNOW: But a strong tenant for evangelical Christian is forgiveness, making a direct appeal to them earlier this month. Gingrich signed a written pledge to defend and strengthen the family. The evangelical American family association endorsed it.

How significant is Gingrich's marital history, an ABC Washington Post poll of republicans nationwide found 72 percent says it is not a major factor. According to a CNN opinion research poll, 24 percent of Republicans found Mitt Romney was most honest and trust worthy compared to 12 percent for Gingrich.

(END VIDEOTAPE)

SNOW: And Wolf, one interesting observation from Kay Hutchinson. She's covered politics in Iowa for 25 - more than 25 years. She says the key factor or caucus goers is the question is who will do best in a general election match-up and she feels Gingrich has done well in the polls there because he is seen as a good debater against President Obama. But she says he gets bogged down when focusing on his time as house speaker in the 90s. And her view, she says, I once don't want to re-visit past fights to focus instead on the future - Wolf.

BLITZER: Mary, you have been speaking with some Iowa republicans that today. Are they giving you a sense that Newt Gingrich's personal life is going to be a big issue for them?

SNOW: I'm really getting a mixed bag. I talked to one county republican leader who said, yes, this personal history is an issue for him. But he says, he feels now that he will back Gingrich because the economy is his biggest issue.

But I talked to an evangelical leader who said, you know, he has gotten past Gingrich's marital history. But there are some other issues that are coming up and he is right now on the fence. And his words, this is one person. But he is saying, this is a tough choice for many people in Iowa that according to his personal view and he thinks there is a lot of last-minute people deciding at the very last minute who are they going to support.

BLITZER: Eight days and counting. We are watching every step of the way. Mary, thank you.

The stakes certainly sky high in the race for the White House. Some people eager to place money on their winner and do so legally on the floor of the futures market.

Lisa Sylvester has got some new information coming into THE SITUATION ROOM. What is going on the gambling front shall we say some.

LISA SYLVESTER, CNN CORRESPONDENT: Now, some people say call it gambling. Some people say something else. But this is what we know. The small retail in Chicago exchange, they want to allow Americans to bet on the outcome of political event, including the presidential race. And if approved, it would be the first of its kind in a regulated market. But some critics say this isn't trading. They say that this is gambling.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): You can bet on your favorite team. You can bet if you think the price of oil will rise or fall. You can even bet if you think the unemployment rate is going to go up or down. And in the near future, you may be able to win big if you accurately predict who will win the next presidential race.

The North American derivatives exchange who are indeed in Chicago has filed an application with federal regulators to offer trading on political events. Nadex says trading would be similar it the way a farmer might trade for future price of wheat or corn.

TIMOTHY MCDERMOTT, Nadex: While you are talking tax policy or healthcare costs or energy policy, elections matter and can have a really significant economic impact on people. So we think these contracts fit squarely within the traditional functions performed by futures exchange.

SYLVESTER: You can you place political bets currently through the Iowa electronic markets and then exchange in Ireland called In-trade. But the difference with Nadex is you could have big money on line. These markets could be a predictor of not only who sits in the White House but also which party controls the house and Senate.

(END VIDEOTAPE)

SYLVESTER: So, here's how this would work and this is just a hypothetical example. . Say you have a buy or who predict President Obama will win the next election. He puts up $50. You have a seller who says, no, it's not going to be President Obama who win. It's actually going to be Mitt Romney. He puts up $50. If the buyer is correct, the buyer pockets $100, the seller gets zero.

On the other hand, if the seller is correct, then its seller pockets $100 and the buyer ends up with zero.

(BEGIN VIDEOTAPE)

SYLVESTER: The value of contracts would rise and fall before election as the candidate's fortunes ebb and flow. The commodity future trading commission which regulates future trading can reject Nadex's application. And at least one of the five commissioners opposes the proposal.

Bart Chilton notes that federal law prohibits contracts n other events like terrorism acts or political assassinations.

BART CHILTON, CTFC COMMISSIONER: I'm not sure we want to throw the political process into the trading pits where a few healed speculators could theoretically wager on the outcome of an election and thereby take away the power of actually people who vote. So even in Vegas, they don't allow gambling on election answers they know something about election gambling.

SYLVESTER: But Nadex insists political outcome straitening has a public merit and it hopes to have the options list January 4.

(END VIDEOTAPE)

SYLVESTER: If the CFTC doesn't act by January 4th and the application is automatically approved, three of the five commissioners would have to vote to stop the trading from going forward. Another option is that they could ask for more time to review this Nadex proposal - Wolf.

BLITZER: I think a lot of people would like to bet on those elections. They would probably make money.

SYLVESTER: Well, there is a lot of high interest. And you know that there are so many political junkies out there. So, it is somewhat surprising that they don't have this right now but I mean, they don't want this to be a political theater. I mean, that's a very serious thing as you well know elections and that's where the argument is. Both sides make very compelling cases.

BLITZER: You're right. See what they decide it do. Thanks very much, Lisa.

Please be sure to join us on the CNN election center for the first votes of the Republican presidential contest on January 3rd, a week from tomorrow, anything could still happen on coverage of the Iowa caucuses, begins 7:00 p.m. Eastern.

If you can lay bets on the Iowa caucus results, a lot of money would lay money on Ron Paul right now. We are going to talk about his prospects for winning Iowa and how it potentially could change the race.

An Iranian battle ship takes to the sea for a parent round of war games. Could it be a warm-up for the real thing? Stay with us. You're in THE SITUATION ROOM. (COMMERCIAL BREAK)

BLITZER: New video being broadcast by Iranian state television has caught the attention of the United States and much of the world. The footage reportedly shows a series of military exercises being conducted, although, CNN has not been able to independently confirm them. Let's bring back our Pentagon correspondent, Barbara Starr. She's got more.

Barbara, why is Iran doing this right now? How concerned are U.S. officials about this exercise?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, look, Wolf, you just have to look at the map and where this is taking place, and that really spells it out. This is in the Gulf of Oman in the North Arabian Sea. The Iranians want to demonstrate to world that they can operate their military force, not just at their coastline, but that they have real strategic reach.

They are just outside the Strait of Hormuz with about 30 or so maritime ships, aircraft, that sort of thing. And the message is clear, they are saying if they wish to, they will shut down those shipping lanes. That would be there goal, to be able to do that some day. That is not something the U.S. or the coalition partners in the region are going to let happen -- Wolf.

BLITZER: It also comes at a time when we're seeing, apparently, growing Iranian influence over the situation in neighboring Iraq. What's going on?

STARR: Well, you see these Iranian militias, these Iranian surrogates, all over the region. Now, you are absolutely right, Wolf. They are deep inside Iraq, exercising their influence, in Afghanistan exercising their influence, and Lebanon, Syria, the traditional surrogate operations of the Iranian regime, of Iranian terrorist networks.

People will tell you inside the national security community, these operations all over the region are the things that really concern them, aside from the nuclear program, of course. These surrogate operations are really promoting instability in the region. Something of great concern. You'll recall just last week, Wolf, we saw the U.S. trying and take action to shut down an al Qaeda network that was operating inside Iran with the protection of the Iranian regime -- Wolf.

BLITZER: All right. Barbara, thank you.

Meanwhile, in Iraq, a horrific scene again. At least five people were killed, dozens wounded during another suicide blast. This is just days after a string of deadly bombings left almost 70 people dead and hundreds more wounded. And Arwa Damon is joining us now from Baghdad.

Arwa, it's just been a little bit more than a week since all U.S. forces have left Iraq, but it looks like the situation is going from bad to worse, yet, another horrendous terrorist attack. This one, just outside, what, the interior ministry?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: That's right, Wolf, at one of the main checkpoints, and this is a heavily fortified compound. Now, the attack left at least five people dead. What makes it especially disturbing, though, is that according to an official from the ministry of interior, they believe that the suicide bomber came from outside of Baghdad, and that means he would have had to go through, at least, six Iraqi security checkpoints.

This, at a time, when following the attacks that took place on Thursday, they're supposed to be on high alert. Searches are supposed to be more stringent. Now, the official tells us that the suicide bomber was driving an ordinary car, the kind that you find on the streets of Baghdad fairly off then.

So, they're trying to figure out what kind of ID cards he may have had to be able to get through, but it's raising the question of not only how capable are the Iraqi security forces, but to what degree have they possibly been infiltrated.

BLITZER: You know, the other point that some analysts have suggested, Arwa, and I want your input on this, that these are Sunni related terrorist groups. They're going after Shiite targets, the ministry of interior, in part because of the arrest warrant out for one of the leading politicians, a Sunni politician, in Iraq, the Vice President Hashmi. Tell us what's -- if there's connection here, what do analysts in Baghdad think?

DAMON: Well, if there's a direct connection or not, we'll have to wait and see if al Qaeda or the Islamic state of Iraq, that umbrella organization that encompasses al Qaeda, come out and make a claim of responsibility. That being said, there are a number of insurgent groups that would want to try to bring down this current government.

Now, whether or not the two are directly linked aside, there is also the reality though that politics and violence here do tend to be intertwined in the sense that political instability creates a vacuum and that vacuum, when it comes to Iraq, is filled with violence.

There are extremist groups on both sides, Sunni and Shia, who do not believe in politics, who do not believe in national reconciliation, who believe that the best way to make a grab for power is through violence. And that's why many here are saying that, unless, Iraq can somehow solve these various political challenges it has, it is never going to be able to bring violence fully under control -- Wolf.

BLITZER: One final question, Arwa. This Camp Ashraf, these Iranian refugees who have been staying there, these are opponents of the regime in Tehran right now. I understand there's a new effort under way to remove them and provide them some safety. What's the latest?

DAMON: That's right, wolf. Now, the Iraqi government had been wanting to clear out the Camp Ashraf by the end of December. It is home to the Mujahedeen al-Khalq (ph), which is the Iranian opposition group. Though interestingly, it is designated a terrorist organization by the United States, although, they were then given the designation of noncombatant.

So, the U.S. was protecting them, and there were great concerns that the Iraqi government was going to storm in, forcibly clear them out, or forcibly extradite them to Iran where they would face most certain death, if not life in prison.

Now, the Iraqi government with the United Nations has managed to come up with a plan where they're going to be temporarily relocated to another location in Iraq and then working alongside UNHCR, have them all eventually relocated to another country. So, it's a crisis that's been averted if the plan is implemented the way it's supposed to be.

BLITZER: That's a big if, as we all know. Arwa, thanks very, very much.

And the situation in Iraq is the topic on my blog post today. You can read more at CNN.com/situationroom. Check it out. Send me a comment.

Meanwhile, a surprising visit to North Korea to honor the late leader, Kim Jong Il. It could say a lot about the future tensions on the Korean Peninsula. We're all over this story.

And new evidence that Newt Gingrich is now going negative against Mitt Romney. The final days before the Iowa caucuses.

(COMMERCIAL BREAK)

BLITZER: We certainly have learned to expect the unexpected in this, the 2012 Republican presidential race. And as we get closer to the Iowa caucuses a week from tomorrow, a Ron Paul victory is seeming more and more like a very real possibility. Our own Lisa Sylvester is taking a closer look now at this Ron Paul phenomenon. It's pretty amazing. What are you finding?

SYLVESTER: Well, Wolf, you know, Ron Paul was in the middle of the pact candidate, but now, he's leading among likely Republican Iowa caucus goers, and one major reason is his ground game with his loyal enthusiastic followers.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: So many people vote for a flash and style and charisma rather than substance.

SYLVESTER (voice-over): At the Ron Paul headquarters in Des Moines recently, volunteers work the phones. It's a hub of activity. In contrast to the Iowa campaign offices of Mitt Romney, which on this day, was still closed at mid morning. Paul is leaps and bounds ahead of Romney and Newt Gingrich in the ground game in Iowa, and it's now paying dividends.

REP. RON PAUL, (R) PRESIDENTIAL CANDIDATE: One thing that is characteristic about our campaign is when people join our campaign, they rarely leave. They're real solid, determined supporters. They understand what the message about and they agree with that. So, I think it's a very good sign. I think, in political terms, it means that we're probably peaking at the right time.

SYLVESTER: The latest polling from the American research group shows Ron Paul leading the Iowa presidential caucus with 21 percent, Romney at 20 percent, Newt Gingrich with 19 percent. Paul supporters are not likely to sway in the political breeze. They eagerly eat up his message, smaller government, fiscal discipline, and strict interpretation of the constitution.

Paul support comes from a variety of passionate groups, the youth, Tea Party members and homeschoolers, a group very politically active in Iowa. Conservative radio show host, Steve Deace, says Paul has a very good chance of pulling off an upset in this state.

STEVE DEACE, IOWA RADIO TALK SHOW HOST: Organizationally, he's very well organized, has really a devoted following. He also has several people around the state, people that I know that have done a very good job, for lack of a better word, evangelizing the Ron Paul philosophy of governance.

SYLVESTER: Paul has an authentic folksy style that plays well, not just in Iowa but also with this breakfast crowd in a New Hampshire deli. He also has, though, what some conservatives see as political baggage, particularly, on foreign policy. Paul wants to end all foreign aide, including to key U.S. ally, Israel, and he wants the U.S. to have a much smaller role on the world stage. That might make it tough for Paul to sell his message beyond the Iowa caucuses.

CHERI JACOBUS, REPUBLICAN STRATEGIST: He has very passionate followers. His supporters are very passionate and will do anything for him. It is a little bit difficult for Ron Paul to expand his list of supporters. He is not going to take a lot of people who previously were hard core Republicans, a hard core Democrats and become Ron Paul supporters.

(END VIDEOTAPE)

SYLVESTER (on-camera): Now, Ron Paul strategy includes wooing independents in Iowa, but they can take part in the caucuses. If Paul wants to win in Iowa, if he can pull that off, then maybe, perhaps, he can take that momentum to New Hampshire and beyond, Wolf.

BLITZER: Independents can certainly get involved to the primary in New Hampshire and in other states. How is he doing so far with the independents?

SYLVESTER: Actually, he's doing quite well in Iowa. That same poll, he's ranking about 33 percent. He's actually leading, compare that to Gingrich and Romney. They both have 17 percent, but the challenge for Ron Paul is going to be getting his supporters to participate in the caucus because they're not the bunch that typically will take part in these caucuses. Typically, his supporters are not real -- a big supporters of government or the government process, and that's going to be the real challenge for Ron Paul going forward next week.

BLITZER: Lisa, thanks very much. Let's dig a little bit deeper right now about this Ron Paul phenomenon. Joining us are CNN political contributors, the Democratic strategist, Maria Cardona and Will Cain, he's the columnist for TheBlaze.com. Will, first to you. What would it mean for the GOP if Ron Paul wins in Iowa a week from tomorrow?

WILL CAIN, CNN POLITICAL CONTRIBUTOR: It would mean that Republican voters just can't settle on a candidate, I think, Wolf. I mean, I think it would mean we are no closer to a candidate on January 4th than we are today or that we were yesterday, because I just can't see this support is going to coalesce around Ron Paul and he's going to ride that through New Hampshire, to South Carolina and Florida. It will mean this thing is a fractured field and it's up for grabs still.

BLITZER: How would you view it, Maria?

MARIA CARDONA, CNN POLITICAL CONTRIBUTOR: I tend to agree with Will. And I definitely think there's a possibility that Ron Paul can win in Iowa because of everything that was just mentioned, the ground game, the passion of his followers, which can be very contagious. But I also think a critically important thing that Ron Paul has for Iowa voters, for especially those conservatives for whom character is a key ingredient for whoever they want to see as their nominee is that Ron Paul is seen as one who has never changed his political core to go with the political wins.

I think that they see him as one of the most honest, the one that has the most principle. He is never seen as flip-flopper. And when you're going up against Romney and Gingrich, who both have baggage, both personal, as well as substantive, in term of issues, I think that's a very powerful thing, especially for Iowa caucus voters.

BLITZER: You know, that "Des Moines Register" -- we'll show the front page -- a big headline asking the question, "Could Ron Paul Win in Iowa?" There it is right there.

But both of you know Andrew Sullivan. He's an influential blogger. He endorsed Ron Paul, but in recent days, as more information has come out once again about those newsletters that Ron Paul supposedly wrote 20 years ago, although he says he never wrote those newsletters, never read those newsletters, by and large, Andrew Sullivan is now writing this, and I will put it on the screen: "If Paul did not write these newsletters, then he has an obligation to say if he knew who did or conduct an investigation. A person who has that kind of bigotry directly printed under his name, without a clear empirical explanation of why he is innocent, cannot be an honorable president of the United States.

Will Cain, what do you think?

CAIN: You know, Wolf, I do think there are some questions left to answer here. Here's the deal.

Did Ron Paul write the letters? It's very plausible, possible he did not. Did he ever read them? OK, still plausible. We're stretching a little bit, but still plausible.

Did he know about them? Well, listen, I was a small town newspaper publisher in Texas, and if something got published in one of my newspapers, it's very possible it would have happened once. But after that, it would have been drawn to my attention and I would have done something about it.

But I still want to say I think this misses the bigger question which we're all really not asking, and that is, is Ron Paul a racist? And by most accounts, for most people's interaction with him, the answer is no. And buy the argument that his libertarian philosophies essentially make that question meaningless. They would have no place in the government anyway. But I do think it raises big questions about his abilities as manager, and more as a leader, and of some of the fringe elements he's aligned himself with.

BLITZER: Does he need to do more to explain all of this, Maria?

CARDONA: Yes. There is no question that he needs to do more, Wolf, especially if he does win Iowa, because what his problem has been all along is that he has never been able to get above the ceiling of those passionate, consumed followers of his, which he will have to do if he is going to be a viable candidate after Iowa. And the only way to do that, if these questions are going to continue, is for him to come out and explain himself.

And if Will Cain is right that he actually is not a racist (ph) and he doesn't believe in any of these things, then he ought to come out and do a press conference and unequivocally say so, and unequivocally say that he's going to investigation how these newsletters came out, who wrote them, and why his signature is on them. Those are not questions that are going to sit well for voters in the other states that are coming up after the Iowa caucuses.

BLITZER: His campaign says it was a robo signature, if you will. It was an automatic signature. He never signed it, but somebody in the office just put it up there.

All right. I want to move on and talk about Rick Santorum for a moment, Will.

He is out there in Iowa. He's the only candidate campaigning in Iowa today, but he is actually hunting with Congressman Steve King, who is popular in Iowa, hasn't endorsed anyone.

Let me play a clip, the two of them getting ready to hunt.

(BEGIN VIDEO CLIP)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: Christmas, not a particularly great day to go and do a lot of town hall meetings. So I just thought we would do something that was fun, something that I enjoy doing, and I know the folks here in Iowa enjoy doing also and, you know, doing it with some good friends. So it was an opportunity for me to get out and participate in a sport that I know is a popular one here in the state of Iowa, is bird shooting. And we did some bird shooting today.

(END VIDEO CLIP)

BLITZER: Doing some bird shooting. You see him wearing his NRA, National Rifle Association, cap out there.

This is after they went hunting, Will. You know, if Steve King were to endorse Rick Santorum, Will, how big of a deal would that be?

CAIN: I think it would help. I think there is a potential here for Rick Santorum to be a surprise in Iowa.

Look, he is the only candidate at this point who hasn't had his shot at the front of the line. If you put Rick Santorum on paper as well, and lay out his positions, they are pretty in the mainstream of Republican beliefs.

I had an analyst one time ask me, "What is the deal? Why hasn't Santorum had his shot? Why are voters not looking to him?" And honestly, I can only come up with one plausible explanation. And that is his personality. He's just not charismatic or likeable enough for the voters to really gravitate towards him.

BLITZER: I've been surprised, too. In that recent poll that we showed earlier, he was actually, Maria, in Iowa, below Huntsman, who isn't even really running in Iowa. I simply don't understand that.

CARDONA: I do think it has a lot to do with personality and dynamism, or lack thereof. But I think the one thing we have to all keep in mind -- and you've said this many times, Wolf, and it's one of the reasons we are finding this process so fascinating -- going into the Iowa caucuses, the majority of voters are still undecided. And the majority of voters who said they have chosen a candidate have also said they could very easily change their minds.

So, I agree that, at this point, we should not say that anybody is out of this race right now. It has been so volatile up to now, and in the next several days anything can happen.

CAIN: Absolutely. You can still hang an "undecided" sign.

BLITZER: Yes. Will, one thing that is going to happen in these next eight days, these final eight days, maybe too late, maybe too little, but Newt Gingrich is about to go negative. He is already signaling that. He has been hammered by these campaign commercials out there.

Is it too late for him to fight back?

CAIN: You know, it might be too late. Here is a couple facts we know.

He knew he had to change his message. We thought he was going to move it to the economy over the next week. He knows he has been pummeled over the last several weeks, he's been bleeding support, and he's being hit with negative ads left and right.

But the interesting thing is, I think if he goes negative, after Romney, essentially, the person who has really benefited from all the ads attacking Newt has been Ron Paul. So I don't know what a negative ad for Romney is going to do for Newt in Iowa, but I guess he does need to do something.

BLITZER: In general though, Maria -- and you have worked in these campaigns -- if someone hits you, shouldn't you hit back?

CARDONA: Oh, there is no question, Wolf. And you and I had this conversation on your show last week, which is he absolutely needed to hit back immediately.

Let's not forget what happened to John Kerry in '04. Because right now, what is happening is that all of those negative attacks have had time to solidify in voters' minds. He should have done this a long time ago.

In fact, you said this -- have a press conference and talk about how Mitt Romney is not a core conservative. Today he put out a statement. That's a good way to go. Do a Web video. Those are very cheap.

He can use Mitt Romney's words against himself, and that doesn't even -- it wouldn't even seem like a negative ad if you are using Mitt Romney's own words. And there is so much there if he needs to.

(CROSSTALK)

BLITZER: All right.

CAIN: To Ron Paul's benefit though? To what?

CARDONA: To Gingrich's own benefit. It will make voters see that he is fighting back and that he is setting the record straight.

Voters like candidates who are going to fight back. If they are not going to fight back for themselves, how are they going to fight back for the voters?

BLITZER: I'm going to have a chance to speak with Newt Gingrich tomorrow. I'll be in Iowa. He'll be in THE SITUATION ROOM. We'll be broadcasting from Iowa tomorrow. Mitt Romney on Wednesday.

Guys, thanks very much.

CARDONA: Thanks, Wolf.

BLITZER: An amazing journey more than a century back in time. Just ahead, you're going to hear -- yes, you will hear the recordings of Alexander Graham Bell for the first time ever thanks to the power of a brand new technology.

And from computer bag to bulletproof vest, the product that may be transforming workplace security.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: Historic events are playing out right now as North Koreans prepare to bury the communist strongman and embrace his son as their new leader.

Here's CNN's Paula Hancocks.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: A campaign for a smooth transition of power from Kim Jong-il to Kim Jong-un appears to be gaining momentum in North Korea.

Over the weekend, Kim Jong-un was referred to as the "Supreme Leader" of the military. And on Monday, the state-run newspaper reportedly referred to him as the head of the party's central military commission. Now, this is a title that Kim Jong-il still holds at this point. It is unlikely it has been officially given to his son, but it is an indication that the succession is moving at a pace.

Meanwhile, a South Korean delegation moved into North Korea on Monday to pay their respects. Now, this wasn't a government delegation in any way, just a civilian delegation of 18 people which was led by the widow of the former South Korean president, Kim Dae-jung. Of course, Kim Dae-jung held the first-ever summit in Pyongyang in 2000 with Kim Jong-il, and he also won the Nobel Peace Prize for his efforts towards reconciliation.

Also, there was among this delegation widow of the former (INAUDIBLE) chairman. He had been pushing for inter-Korean investments and joint economic projects in North Korea.

Now, they will be there in Pyongyang this Monday. They will stay the night and they will come back to Seoul on Tuesday. They won't be staying for the actual funeral.

But this was not enough, according to North Korea. Looking at the state media, there was criticism that South Korea is not actually sending an official delegation to mourn the loss of Kim Jong-il. A quote here saying, "Their obstructions will entail unpredictable catastrophic consequences to the North/South relations."

But by even expressing condolences last week to the North Korean people for the loss of Kim Jong-il, the president of South Korea, Lee Myung-bak, had actually softened his stance. He had had a very hard- line attitude towards the North Koreans before that.

Meanwhile, North Korea television has shown footage of Kim Jong-un's uncle, Jang Song-thaek, standing close to Kim Jong-un, wearing a military uniform with a general's insignia on it. Now, he usually wears business suits. He is considered the mentor for Kim Jong-un. He is considered the man who will help him at the beginning of his reign. So, of course this is leading to speculation as to whether or not he has been promoted.

So, the public face of North Korea shows that this succession from Kim Jong-il to Kim Jong-un is progressing smoothly. Of course, the private face, it is impossible to know what is really happening.

Paula Hancocks, CNN, Seoul.

(END VIDEOTAPE)

BLITZER: The recordings of Alexander Graham Bell revealed now for the first time more than 100 years after he first made them. You're about to hear what happened.

(COMMERCIAL BREAK)

BLITZER: Get ready to take an amazing journey more than a century back in time through some of the first sounds ever documented.

Our Brian Todd takes a closer look at some stunning new technology that brings the age of the first phonographs and telephones to life.

BRIAN TODD, CNN CORRESPONDENT: Wolf, scientists had invented ways to record sound more than 100 years before the iPod, the CD, and even the eight-track tape. The Smithsonian Institution here has had some of the earliest audio recordings dating back to the 1880s in their archives for more than 100 years. Recently, thanks to some digital technology, they have figured out ways to listen to some of those recordings.

(BEGIN VIDEOTAPE)

TODD (voice-over): The audio clips, among the earliest ever recorded, have been virtually unplayable for over a century. In the past year, scientists have found a way to listen to them.

After Thomas Edison invented the phonograph in 1877, there was a rush of competition among scientists to make sound recording commercially viable.

UNIDENTIFIED MALE: Edison and the Bells had settled on the cylinder as the format.

TODD: Alexander Graham Bell, inventor of the telephone, was part of the competition. He sent several sealed tin boxes to the Smithsonian Institution with early prototypes of recordings to protect himself in case of a future patent challenge. The recordings have been stored in the Smithsonian since the 1880s, but with no device to play them, they sat on the shelf.

Enter Carl Haber of Lawrence Berkeley National Laboratory.

CARL HABER, LAWRENCE BERKELEY NATIONAL LABORATORY: We can use this camera to take a large number of pictures of the item and create a very, very detailed digital representation of the structure of the surface. I'm going to rotate the record now and you'll see this starting to move up and down, as if a needle was riding up and down in it.

TODD: Around 18,000 optical images are taken for each rotation of the disk. Then the computer does its work to play back sound from the images.

HABER: This kind of a bowl is the groove that the stylus would sit in.

TODD: There's a reading from Shakespeare's "Hamlet."

UNIDENTIFIED MALE: "To be or not to be" --

HABER: "To be or not to be."

TODD: And "Mary had a little lamb."

UNIDENTIFIED MALE: (INAUDIBLE).

HABER: At that point, the first part of the record ends. Something apparently went wrong. It's probably the first recorded example of somebody being disappointed.

TODD: The digital imaging system is ideal for archivists trying to protects the historically valuable disks because there is no physical contact needed to hear the audio recordings.

(END VIDEOTAPE)

TODD: The Smithsonian has about 200 early audio recording from Alexander Graham Bell's Volta Laboratory. So far, they have used the optical imaging technology to decipher six of those recordings. You can listen to them by logging on to americanhistory.si.edu -- Wolf.

BLITZER: Brian Todd, thanks very much.

President Obama may want to think twice before he embraces another photo opportunity with a little baby. We're going to show you why.

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BLITZER: Now to a picture of President Obama that's getting a lot of attention. It got us thinking about the role babies traditionally play out there on the campaign trail and whether the president is making the most of it.

Here's our White House correspondent Brianna Keilar. She's with the president in Hawaii.

(BEGIN VIDEOTAPE)

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT (voice-over): It's rare to get this close to President Obama, and even rarer to get away with this: 8-month-old Cooper Wagner (ph) sticking his whole hand right in the president's mouth. But then again, we're heading into an election year, and babies are a mainstay on the campaign trail.

Just like in politics, the reception isn't always warm. This kid didn't even want to be seen with the president, as he and first lady Michelle Obama visited military families in Hawaii Christmas Day. When the Obama's first entered the chow hall here, the president went straight for a newborn who didn't seem too impressed.

Perhaps it's no surprise the president gravitates towards his youngest constituents. He does well with them. Back in June, as the Obamas worked the rope line on the south lawn of the White House during the congressional picnic, a baby that could not be consoled by the first lady was immediately won over by the president.

In comparison, these visits in Hawaii weren't quite as successful. But hey, on the campaign trail, at least this wasn't a foot.

(END VIDEOTAPE)

KEILAR: Now, President Obama has been keeping a pretty low profile here on Oahu, Wolf. That event at the Marine base was actually by far the most time cameras have spent trained on him. Mostly, he's just been doing normal vacation activities -- a hike this morning, golfing this afternoon, the second time he's been golfing in three days -- Wolf.

BLITZER: We'll check back with you tomorrow, Brianna. Thanks very much.

That's it for me. Thanks for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

The news continues next on CNN.

END