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Interview With Newt Gingrich; Republicans Campaign in Iowa; Countdown To Caucuses; Gingrich Takes Heat About Healthcare; Iran: Growing Influence On Iraq?

Aired December 27, 2011 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, we're live from Dubuque, Iowa.

With just seven days until the caucuses, Republican candidates are barnstorming across this state. Newt Gingrich joins me live this hour for a one-on-one interview.

It's a two-state day for Mitt Romney, starting in New Hampshire, ending here in Iowa, but at each stop, it's a clear battle that is brewing and the rhetoric certainly getting sharper.

And there are seven major candidates now, but after seven more days, will some of those candidates start falling by the wayside on the campaign trail? That's coming up in our "Strategy Session" this hour.

I'm Wolf Blitzer. And you're in THE SITUATION ROOM.

We're here in Dubuque, a bit chilly, but no snow. It's getting ready, a week from today, the Iowa caucuses. You're looking at live pictures from Dubuque. This will be the first state to have an impact on the 2012 presidential campaign, and it's all happening here in Iowa.

The Republican caucuses -- candidates are out on the campaign trail today. They're scrambling to cover as much ground as they possibly can. Newt Gingrich slipping a bit, but still among the leaders, he's ready to roll across the state by bus. He will join me live here in Dubuque later this hour for an in-depth interview.

But let's begin with CNN's Jim Acosta. He's in Des Moines, the state capital.

Iowa certainly very much up for grabs, Jim, right now.

JIM ACOSTA, CNN CORRESPONDENT: That's right, Wolf.

Forget about all of the complaints about the Iowa caucuses. It is fitting that this race for the GOP nomination is getting its start here in the Hawkeye State. That's because it's not a bad reflection of the GOP field overall. It is wide-open.

(BEGIN VIDEOTAPE) ACOSTA (voice-over): Candidates, start your buses. With no snow on the ground in Iowa, the state is now blanketed with GOP contenders selling their message.

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: I want you to answer this question. Why should you settle for anything less than an authentic conservative who will fight for your views and values without an apology?

ACOSTA: And with a week and counting to the caucuses, the latest polls show Ron Paul, Mitt Romney and Newt Gingrich all tied up, making it a wide-open race. One potential spoiler in the field, Rick Santorum, boils it down about as good as any Beltway pundit.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: This libertarian primary which Ron Paul is going to win, and then you got the moderate primary, which Gingrich and Romney are scrumming for, and you got three folks who are running as strong conservatives.

ACOSTA: Add up the support for Santorum, Perry and Michele Bachmann and you would have another near-winning candidate. It's potentially a down-to-the-wire finish, something Iowa Republican Party chairman Matt Strawn hasn't seen in this state in a long time.

MATT STRAWN, IOWA REPUBLICAN PARTY CHAIRMAN: It's completely unprecedented to have a field and a cycle that has been this unpredictable, this turbulent this late in this process.

ACOSTA (on camera): And that's not hype. You're not hyping this up to get everybody watching Iowa. It's really that unsettled?

STRAWN: It really is.

ACOSTA (voice-over): One key X-factor is the escalating war of words between Gingrich and Romney. The former speaker has all but dropped his pledge to stay positive, with his campaign now referring to Romney as moderate Mitt, e-mailing to reporters this video of the former Massachusetts governor from 2002.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: That I'm not a partisan Republican, but I'm someone who is moderate and my views are progressive.

ACOSTA: Romney is countering that with a new ad promising a conservative White House agenda.

ROMNEY: I'm going to do something to government. I'm going to make it simpler and smaller and smarter.

ACOSTA: That includes scrapping the president's health care law that's so similar to the one Romney passed when he was governor of Massachusetts.

ROMNEY: He said that he was going to put in place a new health care system that would tell us all what health care we could have. Do you like that? CROWD: No.

(END VIDEO CLIP)

ACOSTA: There aren't any more debates before the Iowa caucuses, but four of the candidates, including Gingrich, will be calling into a town hall on the radio tonight. It's hosted by -- the show will be hosted by a prominent social conservative in this state.

One of the other participants, Rick Santorum is already setting expectations for the upcoming Iowa caucuses, saying if he finishes dead last, he's packing his bags and heading home -- Wolf.

BLITZER: Let's not forget, Jim, there are about three million people who live in this state, but Republicans are suggesting, if 120,000 actually show up for the caucuses a week from today, that will be pretty good. It's a major commitment. They can't just go into a voting booth and spend four or five minutes there.

They have to spend an hour or two or three, getting ready for this, so that undertakes a major commitment and it requires organizational skills to get these folks out there.

ACOSTA: That's right.

It requires a major ground operation, and some of these candidates simply don't have that at this point, and so it's going to be interesting to watch. When I was talking to Matt Strawn, the chairman of the Iowan Republican Party, he was really struck by the fact that really this is anybody's game at this point in Iowa.

While the national polls show this really as a race between Newt Gingrich and Mitt Romney, here in Iowa you have essentially according to the polls a slate of six candidates starting at the top at Ron Paul, going down to Rick Santorum and Michele Bachmann, who all have that potential to really take this right thing at the last minute, Wolf.

BLITZER: All right, we're watching and waiting around. Thanks very much for that, Jim Acosta in Des Moines.

Romney certainly has been taking heat for the health care law he signed as the Massachusetts governor. No one's been more critical than Newt Gingrich, but Gingrich once praised the Romney plan.

Mary Snow has been looking into this part of the story for us.

Mary, some new information coming out today.

MARY SNOW, CNN CORRESPONDENT: Wolf, those words of praise are found in a newsletter written five years ago, and it's put out by one of Gingrich's organizations.

His campaign, though, is pushing back on the notion it's an endorsement.

(BEGIN VIDEOTAPE)

SNOW (voice-over): The 2006 signing of Massachusetts' health care law is a moment Republican presidential hopefuls won't let rival Mitt Romney forget. Some equate it with what they call Obamacare, but five years ago Newt Gingrich in a newsletter called it a -- quote -- "exciting development, saying, "The health bill that Governor Romney signed into law this month has tremendous potential to effect major change in the American health system."

"The Wall Street Journal" dug up the 2006 newsletter from Gingrich's organization, the Center for Health Transformation. The Newt note does raise concerns about the Massachusetts plan, but goes on to say, "We agree entirely with Governor Romney and Massachusetts legislators that our goal should be 100 percent insurance coverage for all Americans."

Fast-forward to 2011. Here's Gingrich taking aim at Romney's health care plan at a CNN debate in October.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: Your plan essentially is one more big government, bureaucratic, high-cost system, which candidly could not have been done by any other state because no other state had a Medicare program as lavish as yours, and no other state got as much money from the federal government under the Bush administration for this experiment.

SNOW: On the contrast to Gingrich's 2006 comments, a Gingrich campaign spokesman says: "This is old news that has been covered already. Newt previously supported a mandate for health insurance and changed his mind after seeing its effects. The real question is why Mitt, the Massachusetts moderate, won't admit that health insurance mandates don't work."

Just this May, here is what Gingrich had to say about mandates on NBC's "Meet the Press."

GINGRICH: I have said consistently we ought to have some requirement, you either have health insurance or you post a bond, or in some way, you indicate you're going to be held accountable.

DAVID GREGORY, MODERATOR, "MEET THE PRESS": But that is the individual mandate, is it not?

GINGRICH: It's a variation on it.

SNOW: Political watchers say Gingrich's comments then and now underscore his long and complicated history with mandates, but conservatives may not be so forgiving.

RON BROWNSTEIN, CNN POLITICAL ANALYST: He's been the latest beneficiary of the attempts of conservatives dubious about Romney to unify behind one candidate, but his overall record really provides plenty of reasons for conservatives to get off the bus. And I think this coming out now just kind of reaffirms that basic dynamic.

(END VIDEOTAPE) SNOW: And, Wolf, Mitt Romney also weighed in today at a campaign stop in New Hampshire. He said he was aware, in his words, that Gingrich supported mandates in the past and was generally supportive of the Massachusetts plan and that he -- quote -- "changed his views in the election year." And it comes as Gingrich turns up the heat on Romney, questioning his conservative credentials -- Wolf.

BLITZER: The heat is getting turned up all around the state on a lot of issues. Thanks, Mary. Thanks very much.

Newt Gingrich, by the way, will join me live in a few minutes here in Dubuque, Iowa. I will ask him where he stands on health care, why he's apparently slipping at least a bit in the national polls and a whole lot more. Newt Gingrich coming up right here in THE SITUATION ROOM.

Meanwhile, while Republican candidates are braving the cold here in Iowa and New Hampshire, President Obama's enjoying a family vacation in Hawaii. But his reelection campaign will also kick into high gear soon enough.

Let's go live to our White House correspondent, Brianna Keilar. She's joining from us Honolulu.

Brianna, the president has already laid out his campaign message. The White House and his campaign are confident it's working. What is the latest?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, they're confident it's working, that it's gotten a toehold with voters, and so expect President Obama, the White House, the Obama campaign to really continue pressing the message that he laid out in his Kansas speech earlier this month.

And that was really that he is the candidate fighting for the middle class and that he has cast Republicans as wanting to do the same old thing, pushing for economic policies that led to the financial meltdown and the recession. That is how he framed his message. He will continue with that.

Of course, he's really going to be campaigning in earnest once Republicans have a single candidate, but, of course, that could be some time, and so in that time, what you will expect from him and his political operation is some of what we have seen him do in the past, which is especially at fund-raisers, where he's in front of a bunch of supporters, where the political language comes out more, to really target specific Republican attacks that his campaign fears could resonate with voters, and also some of the, for instance, assertions that they feel may leave some Republican candidates vulnerable, for instance, what Mitt Romney had said in his criticism of how President Obama dealt with the auto industry, but certainly sort of picking certain arguments that Republicans are making and trying to counter those -- Wolf.

BLITZER: Brianna, all eyes certainly on the Republican candidates, and they're all here in Iowa right now. With the president on vacation, do we have a sort of a game plan, at least after January 1, January 2, how much time he's going to be in Washington, how much time he's going to be out on the road campaigning?

Are they giving you a little guidance on that front?

KEILAR: We don't know specifically, exactly how much time he will be out, but we are expecting that he will be continuing some of the travel he's done and also that sort of we can't wait campaign that he staged with executive orders saying that you can't wait for Congress, trying to push some of these objectives, to sort of back up that message of fighting for the middle class and not waiting on Congress and really doing everything that he humanly can possibly do.

But I think, right now, as he's laying low here in Washington, he's kind of letting that political victory of extending the payroll tax cut sort of resonate as all of the focus goes to Iowa. And then he will have some big opportunities here in the next couple of months certainly to press his message. The State of the Union is January 24 and then the payroll tax cut extension, the temporary extension ends in the end of February.

So he will continue to push that message that he felt and his advisers feel was very successful with this last go-round, Wolf.

BLITZER: Yes, that State of the Union address before a joint session of Congress at the end of January, before prime-time national audience, that will be a good opportunity for him to restate his case about some new initiatives in the coming year.

Brianna, in Honolulu for us, thanks very much.

Brianna may be in Honolulu, but we're here in Dubuque, Iowa. This is the first stop for a Newt Gingrich bus tour on this day. He begins it. He will join me though this hour for a live in-depth interview.

So, what happens after Iowa? Who might drop out? Who might become more of a favorite? Our "Strategy Session" and a whole lot more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: I'm live here in Dubuque, Iowa. Let's take a look at the political landscape in Iowa, one week, exactly one week before the Iowa caucuses.

The state is one of the most evenly divided in the nation, Democrats, Republicans and independents each make up about a third of all registered voters. Barack Obama won the state by more than 9 percent in 2008. George W. Bush lost by less than 1 percent in 2000. He won the next time around, though, by again less than 1 percent.

Iowa is one of nine states that voted for Barack Obama in 2008, after voting Republican in 2004.

Newt Gingrich is going to join me later this hour. We're live here as I've been pointing out in Dubuque, Iowa. Just a few minutes from now, he'll be here.

Joining us right now in our strategy session, the Democratic strategist, Hilary Rosen, and the CNN contributor, Will Cain.

Guys, thanks very much for coming in.

I want you to listen to Newt Gingrich right now. He's getting a little bit more critical of Mitt Romney, even though he was going to try to take the high road. I'll play this little clip and listen to this.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: The strongest thing I'll say about Governor Romney is that he is a Massachusetts moderate trying to come down and pretend to be a conservative, but I'm not going to say anything stronger than that. I'm going to focus on positive things and frankly actually I think that kind of says it all.

(END VIDEO CLIP)

BLITZER: Will Cain, is that a smart strategy on the part of Newt Gingrich, to avoid the kind of tough talk that he's certainly getting?

WILL CAIN, CNN CONTRIBUTOR: Yes, when we say tough talk, normally we're talking about attacking someone going negative.

But I don't know on what grounds Newt Gingrich could attack Mitt Romney. I don't know -- he couldn't do it on character. If he tried to do it on substance for what, being a Massachusetts moderate for championing a health care mandate that he himself championed, that "The Wall Street Journal" and Mary Snow just talked, he, in fact, praised Mitt Romney's exact plan? I don't know what grounds he would go negative.

I would say this also, Wolf, you know, this seems like it's a little off but it's not. We spent a lot of time talking about the money of role -- the role of money in politics as though it's a big negative. But a lot of conservatives, Newt Gingrich's rise has been befuddling, you know, on substance, on character for a lot of reasons. And his star has diminished the same time ad spending has gone up in Iowa. Ads and money played a big role informing the public about Newt Gingrich and as such bringing his poll numbers down.

BLITZER: Hilary, Democrats have had no trouble going negative against Mitt Romney. They've got ads running, the DNC, they're going -- they've been going after him for months.

HILARY ROSEN, DEMOCRATIC STRATEGIST: Yes, there's a lot to go after Mitt Romney for, and, you know, whether Gingrich is a credible messenger for that doesn't really matter. What Newt Gingrich needs to do if he wants to win this nomination is make Mitt Romney be less attractive to all of the mainstream Republicans that are flocking to him, essentially so that Gingrich doesn't get the nomination.

You know, that's I think the challenge that Republicans have here, is that they can think they've got a moderate in Mitt Romney and therefore may be a better candidate against President Obama, but he's not going to be somebody that they can trust and that's their quandary. And Newt Gingrich has to exploit that, otherwise he ends up with nothing as well.

BLITZER: I wrote on my blog today on our SITUATION ROOM blog, Will, that there's no doubt that Mitt Romney, Newt Gingrich, Ron Paul, they're heading to New Hampshire no matter what happens here in Iowa. Jon Huntsman, he's already in New Hampshire, he ain't going anywhere.

But these three other candidates -- Rick Perry, Rick Santorum, Michele Bachmann -- are all three of them likely to go to New Hampshire, all three of them likely to drop out after next Tuesday? Who's got another ticket from here to New Hampshire?

CAIN: That's a tough call and they're in a tough spot. Look, all three of those candidates -- Perry, Bachmann, Santorum -- they have candidates you think would be tailor made for Iowa. Iowa, which is unrepresentative of the larger Republican body. It's disproportionately small, the number of Republicans that turn out, and disproportionately evangelical.

You would think they could do well in Iowa. And if they can't do well there, where will you be betting on doing well?

Essentially, what they would be sticking around for is to hope that another campaign, one of those top three you just talked about, explodes. That's not a bad bet. That's happened several times but it's not necessarily a good bet. So, you're sticking around hoping something bad happens to somebody else.

ROSEN: Yes, if you look at -- if you look at --

BLITZER: Michele Bachmann -- as you know, Hilary -- Michele Bachmann, she was born in Iowa. She represents the neighboring state, Minnesota, her congressional district is there. Santorum has visited all 99 counties. He's basically lived here for the past several months. And Rick Perry is spending a ton of money here.

If they don't do well, then presumably, they're going to have to drop out.

ROSEN: I'm going to bet that, you know, I'll go out on a limb here the two most likely to drop out are going to end up being Rick Perry and Rick Santorum, for this reason -- Perry's not sort of a quixotic movement politician. He's essentially a legitimate politician who reads tea leaves and he's financed by a lot of big money backers, not a huge number of small donors. And those guys want a winner and they're going to move to Mitt Romney or Newt Gingrich after Iowa, if Rick Perry doesn't have a good showing.

Bachmann and Ron Paul, both of those campaigns are funded by huge amounts of small donors, really rabid true believers. They may -- you know, they can hold on for a while. There's not much as stake there.

Rick Santorum may be in the middle. He's more of a mainstream politician. Yes, he's one of the most extreme conservatives, but this is a guy who was a senator, who has another career, has other stuff to do.

You know, my guess is going to be that Rick Santorum and Rick Perry are the best candidates to drop out after Iowa.

BLITZER: All right. Well, we'll see, another week to go. We'll see how they do. They could surprise us as well.

Will Cain, Hilary Rosen, guys, thanks very much.

And please be sure to join us in the CNN election center for the first votes of the Republican presidential contest a week from today, January 3rd, anything could still happen. Our coverage of the Iowa caucuses will begin at 7:00 p.m. Eastern January 3rd.

The last time the debt limit need an increase, the fight drove our nation to the brink of default. This time it should be a whole lot easier, but the number is still likely to worry some deficit hawks.

And another unmanned drone runs into problems in Afghanistan and is forced to resort to desperate measures.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. We're only minutes away from my live interview with the former speaker, Newt Gingrich, the Republican presidential candidate. We're here in Dubuque, Iowa. That's coming up.

First, Lisa Sylvester is monitoring other top stories in THE SITUATION ROOM right now, including a story that sounds like deja vu to a lot of us.

Lisa, what's going on here?

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

Well, President Barack Obama plans to ask Congress later this week to raise the nation's debt ceiling, according to a Treasury Department official. The request will move the ceiling to $16.39 trillion, but don't expect a huge fight this time around. It's the third of three debt increases authorized by the agreement reached last August. The new debt ceiling would put off the possibility of default until the end of 2012.

And the economy may be improving but it's too little too late for many Sears and K-Mart employees. Sears Holdings plans to close at least 100 of the two retail stores. It blames the decision on a sharp drop in holiday sales. Shares of the company fell by 19 percent after the announcement. The share price has been cut in half over the past year.

And a new problem for the military's unmanned drone program. A NATO drone was forced to make an emergency landing in Afghanistan. NATO says it's because of a technical failure. The drone landed in Paktia Province.

Another unmanned surveillance aircraft crashed in Iran earlier this month. Iran considers the drone proof of U.S. spying -- Wolf.

BLITZER: Lisa, thanks very much.

Coming up next, Newt Gingrich live with me, right here in Iowa. My live one-on-one interview, that's next.

(COMMERCIAL BREAK)

BLITZER: I'm Wolf Blitzer. We're in Dubuque, Iowa, today. My interview live with Newt Gingrich, that's coming up this hour.

Here are some of the stories we're working on for our next hour here in THE SITUATION ROOM:

It's mud-slinging season in Iowa. Many voters are tuned in to the Republican race but turned off by the onslaught of ads. Ron Paul has many strengths as a politician -- actually making legislation, though, in Congress isn't necessarily one of them.

And North Koreans mourn their so-called "Dear Leader," but shedding tears for the cameras may not mean they'll miss Kim Jong Il for real.

Stand by. You're in THE SITUATION ROOM.

(MUSIC)

BLITZER: Newt Gingrich is coming up in just a few moments.

But let's go to Arwa Damon in Baghdad, first. She's getting new information on Iran's apparently very growing influence in Iraq, only days after all U.S. forces pulled out.

Arwa, what are you learning?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: That's right, Wolf. There's a lot of concern about this, and many analysts had been warning that Iran's influence here was only going to increase.

Now naturally, the two countries would have a relationship. The question is, what is the nature of that relationship and what's sort of a regional game is Iran playing?

(BEGIN VIDEOTAPE)

DAMON (voice-over): In the holy Shia City of Carbala, an hour's drive from Baghdad, you'll hear as much Farsi as Arabic, and the money changing hands is Iranian real as often as Iraqi dinars.

"It's like an Iranian occupation" (inaudible), an Iraqi fabric salesman jokes starkly. Following the fall of Sadam Hussein, Shia pilgrims from Iran poured into Iraq to visit shrines in Carbala, Samara and other cities.

For local shopkeepers, business is booming, but there's also concern about Iran's growing influence here. Jeweler Haidar Amin (ph), like other businessmen, has learned Farsi in recent years.

He says the U.S.-led invasion increased Iran's power in Iraq. "God willing in the future their political influence will decrease" he adds. It's better to only have economic and trade cooperation.

But Iran's influence extends far beyond buying power. Iraq's current Shia dominated government could not have been formed without Tehran's blessing and the two countries, which once fought a bloody border war are now discussing more military cooperation.

But U.S. officials say Iranian-backed militia are now a powerful force inside Iraq. Several months ago, this video was aired on (inaudible) TV, an Iranian-backed network.

It reports to show a Shia militant group known as (inaudible) carrying out attacks on the U.S. military. It's one of three militias. The U.S. says are backed by the Iranian Quds force, part of the revolutionary guard and playing a sinister role inside Iraq.

UNIDENTIFIED MALE: Regardless of what they say, the majority of their victims have been Iraqi, and Asaba Hawk in particular has maintained a very active assassination campaign throughout Baghdad. They just haven't gone out of their way to take credit for it. In fact, they don't claim to be participating because at the same time they claim not to be attacking Iraqis.

DAMON: Iran is already flexing its military muscle elsewhere as well. It is in the midst of naval war games close to the strategic Strait of Hormuz, about a fifth of the oil traded worldwide passes through these waters.

The war games a clear warning to the west. Iran's vice president says the country will close this vital ceiling if threatened. The Islamic Republic is displaying its power across the region.

(END VIDEOTAPE)

DAMON: And wolf, none of these recent developments bode well when it comes to regional security. When it comes to the stability and that, of course, is a great concern for the Iraqi population and naturally for U.S. interests in the region as well -- Wolf.

BLITZER: How serious is all the talk? I wrote about it on my blog yesterday, Arwa, potentially down the road, if these trends, these very disturbing trends continue, not only civil war erupting in Iraq, but sort of breaking up into a Shiite, a Sunni and a Kurdish area, the entire republic of Iraq in effect breaking up.

DAMON: They are very serious, Wolf, and politicians are very blunt in acknowledging that especially Sunni and Kurdish politicians and some Shia ones as well.

There is this realization that the recent developments especially when it comes to politics with those accusations of terror against the Sunni vice president being levelled by a Shia prime minister, et cetera.

That the government is becoming increasingly polarized along sectarian lines and people are greatly worried about this, as the deputy prime minister warns.

He said that if Iraq continues on this trend it most certainly will end up being divided and that division is going to be an incredibly bloody battle, a price most Iraqis really, Wolf, do not want to have to pay.

BLITZER: Arwa Damon on the scene for us, as she always is, in Baghdad. Arwa, we'll say very close touch with you. Thank you from Baghdad.

Let's go to the Pentagon right now. Our Pentagon correspondent Barbara Starr is getting new information on Pakistan's response to the U.S. suggestions that there was a mistake in that NATO air strike that killed 24 Pakistani soldiers. So what is the latest on this front? Because the stakes here in terms of U.S./Pakistani relations, Barbara, as you know, are enormous.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Absolutely, Wolf, relations between the two militaries as glacial as ever in the month since this incident took place. Pakistan now issuing its own report, could not be at more odds with the Pentagon.

Pakistan says that the U.S. and NATO had to have known within 15 minutes of this fire fight erupting that they were firing on Pakistani forces. Pakistan says all channels of communication were open.

Pakistan is making an adamant case that the U.S. fired first on lightly armed Pakistani forces on the border and that when Pakistan tried to rescue its own men, that rescue team also was killed by this inadvertent U.S. air strike.

Pakistan saying they repeatedly told the U.S. and NATO that Pakistani forces were in the line of fire on the ground, and they feel very strongly in Pakistan that the U.S. had to know -- Wolf.

BLITZER: What is the U.S., the Obama administration, the Pentagon, the State Department, the White House, what are they saying about Pakistan's claims, which completely counter the official U.S. central command report?

STARR: Absolutely. You know, some U.S. officials are saying Pakistan is taking no responsibility so far in their view for this confusion. We had a briefing about all of this a few days ago from a U.S. military investigator.

He talked about confusion on both sides of the border, and now that we've seen the official U.S. report, a couple of key points from that, that we did not know prior to this. An AC-130 gunship, a U.S. military aircraft flew two miles into Pakistan.

So it could make an orbit, swing around, come back and fire against what it thought was insurgents, of course, turned out to be Pakistani troops on the ground. The U.S. report also, now that we have seen it, talks adamantly about delays and confusion on the U.S. side.

Let's wrap this up by just reading to you one of the concluding remarks from the military investigation out of the U.S. military saying, quote, "Headquarters and individuals did not respond correctly, quickly enough, or with the sense of urgency or initiative required, given the gravity of the situation."

Really a very critical report all the way around, but now that we see both sides, very critical of the United States. Pakistan could not disagree more adamantly. The next step, Wolf, whether any U.S. or NATO officials will be held accountable -- Wolf.

BLITZER: All right, we'll stay in close touch with you, Barbara, thank you.

Coming up next, my live interview with the Republican presidential candidate, Newt Gingrich. We're here in Dubuque, Iowa. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: He came charging back in the pack to become one of the leaders in the Republican race for the White House. Newt Gingrich certainly slipped a little bit in the polls recently, but he's still among the frontrunners.

He's kicking off a bus tour in Iowa on this day. We're here in Dubuque, the former House speaker, the Republican presidential hopeful, he's joining us live here in THE SITUATION ROOM. Wherever we are, it's THE SITUATION ROOM.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: That's right.

BLITZER: Mr. Speaker, thanks very for coming in.

GINGRICH: It's good to be here.

BLITZER: All right, let's talk a little about these polling numbers. I want to get to some substance too. The politics is very important a week before the Iowa caucuses, nationally, and I know you're not running nationally right now.

But in these Gallup polls, these tracking polls, back in early December, Gingrich 37, Romney 22, Ron Paul 8 percent. Now there are new numbers that came out today nationally, Gingrich 25, Romney 24, Ron Paul 11. You've gone down from 37 to 25. How do you explain that?

GINGRICH: I think there was an initial artificial burst when Herman Cain got out and then people are resorting themselves, but we're still -- none of us expected me to be in the top two at this point, let alone be the front-runner.

BLITZER: You did.

GINGRICH: No, not this early. I thought we wouldn't get there for another two months.

BLITZER: The attack ads. They are having an impact.

GINGRICH: Sure. Of course, they are.

BLITZER: I was watching TV, you can't -- I don't know how much TV you watch in Iowa, but if you watch commercials, they are hitting you hard.

GINGRICH: Yes, look, I think they will have spend $5 million, $6 million, $7 million, most of it false, and the amazing thing to me is we've held up as well as we have.

And I think now we're going to come back, this entire jobs and economic growth tour is designed to counter the negativity, and we always start out to be the top three or four.

I think we're going to be in the top three or four. We could end up as number one. It's a very confusing field right now.

BLITZER: It looks like you're lowering expectations a little bit.

GINGRICH: A little bit.

BLITZER: -- which is understandable. Let's talk a little bit about this. Romney, not Romney directly, it's a super pac, backed by his supporters. He as you know points out he can't have any involvement. I'll play a little clip, watch it and then we'll discuss, for viewers who may not have seen it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Barack Obama's plan is working, destroy Mitt Romney. Run against Newt Gingrich. Newt has a ton of baggage. He was fined $300,000 for ethics violations and took $1.6 million from Freddie Mac before it caused the economic meltdown. Newt supports amnesty for illegal immigrants and teamed with Nancy Pelosi and Al Gore on global warming.

(END VIDEO CLIP)

BLITZER: All right, you get the point. That's pretty tough ad. It's not directly from Mitt Romney, it's from a super pac.

GINGRICH: This is what is false about American politics. That pac is run by his staff, paid for by his friends. BLITZER: But there can't be any coordination. That would be illegal.

GINGRICH: All he's got to do is say publicly only run positive ads. That would be called leadership.

BLITZER: That's not necessarily smart politics though, is it?

GINGRICH: Well, it depends whether or not you think being negative and dishonest is good for the president of the United States.

BLITZER: What is dishonest about this ad and I'll give you a chance to respond. He was fined $300,000 for ethics violations.

GINGRICH: I wasn't fined. I paid the cost of the investigation. The fact is, the U.S. court later said I was totally right. The SEC said I was totally right and the IRS said I was totally right.

The $300,000 I paid was having had a lawyer draft a letter that was technically wrong. Out of 84 charges, 83 were totally thrown out, one ended up being a letter written by a lawyer, so it's not a fine. I paid for the cost of the investigation.

BLITZER: All right.

GINGRICH: Let's go to the next one.

BLITZER: The next one, he took $1.6 million from Freddie Mac before it helped cause the economic meltdown.

GINGRICH: First of all, this would be like ascribing to Romney all of the income of Bain Capital. He knows better. His staff knows better. The company was paid over a six-year period. The company had three offices in three different cities. My share of that was probably $35,000 a year.

BLITZER: That's all?

GINGRICH: Yes.

BLITZER: Out of $1.6 million?

GINGRICH: Yes, really and he knows better because he's a businessman. If we were to ascribe the gross revenue of Bain as his income, he would immediately scream foul.

Secondly, the only time I ever publicly talked about Fannie Mae and Freddie Mac to the House is in the "New York Times" in July of 2008 and I told them to vote no on bailing them out.

So the only time you can find me publicly talking about it I am against giving them taxpayers' money so that piece is fundamentally misleading.

BLITZER: All right, let's go to the next one, Newt Gingrich supports amnesty for illegal immigrants. GINGRICH: I support residency as an option, without citizenship, for people who have been here 25 years, who have a family, and have an American family willing to sponsor them.

Now to jump from there to amnesty is a gross distortion, and it would be like my running an ad saying Mitt Romney wants to go out and track down every single illegal alien and forcibly kick them out of the country, even if he breaks up families. He would immediately scream foul.

BLITZER: The other point, we know about this, he helped Nancy Pelosi and Al Gore on global warming. We remember the --

GINGRICH: Two things. I've said publicly dumbest single thing I've done in the last four years was doing an ad with Nancy Pelosi, but they then, none of the ads jump on to say I was for cap and trade.

That's not true. You go to newt.org. We have the video of me testifying in the House against cap and trade. I was the first witness after al gore. He was for it. I was against it. It would be nice if they got the facts straight.

BLITZER: All right, we're only getting started. Wait until you hear some of these ads that Ron Paul are putting out here in Iowa. We're going to continue our conversation with the Republican presidential candidate, Newt Gingrich, here in Dubuque, Iowa, right after this.

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BLITZER: Welcome back. We're here with Republican presidential candidate Newt Gingrich. We're here in Iowa.

Just wrapping up this one, are you going to attack them? Are you going to fight back because under the theory if you're slapped, you should slap back. You don't want to do that?

GINGRICH: I'm going to stay totally positive. The ads we're going to put up are on jobs and economic growth. We're going to talk about leadership to create jobs and economic growth.

And I think the people of Iowa have a great opportunity in the caucus to send a signal in the country that negative ads written by dishonest consultants on behalf of irresponsible candidates do not deserve getting votes.

BLITZER: Will you hold on to that if you get the Republican nomination in a fight against President Obama?

GINGRICH: Sure, all you have to do is tell the truth about Obama and it feels like a negative ad.

BLITZER: But your super pacs or whatever, they'll go after --

GINGRICH: We'll tell the truth. I mean, I'm happy to say he's the best food stamp president in American history. That's not an attack. That's a statement of fact. It's a little -- I mean, you have to distinguish between being allowed to have a factual debate and the kind of negative ads you were describing that are drowning the people of Iowa.

BLITZER: The story in the "Wall Street Journal" this morning, we'll get to the president later. Gingrich applauded Romney's health plan. The 2006 newsletter, from your consulting firm, company, under a section called Newt notes wrote this.

We agree entirely with Governor Romney and Massachusetts legislatures that our goal should be 100 percent insurance coverage for all Americans.

It went to say, Massachusetts leaders are to be commended for this bipartisan proposal to tackle the enormous challenge of finding real solutions for creating a sustainable health system.

GINGRICH: Very same time, the Heritage Foundation said this is a very important experiment in the right direction.

BLITZER: The Heritage Foundation said that in the early '90s.

GINGRICH: But also at the time of Romney's passing the bill. They said there are a lot of useful things.

BLITZER: So you liked the mandates --

GINGRICH: And then you watched it go to work. Where Romney and I are different is, I concluded it doesn't work. He still defends it. I think when you look at the cost, when the degree to which they politicized health care, when you look at things like putting Planned Parenthood in a position of decision, having the state pay for abortions.

There are a lot of details of Romneycare that are unacceptable. And the difference in Romney and me is I've now concluded, I'm prepared to say publicly, I concluded just as the Heritage Foundation did.

That idea didn't work and I have shifted towards John Goodman's patient power. Romney's still defending the mandate that he passed.

BLITZER: There was an interview you did with "Meet The Press" earlier this year. I think it was in May, you seemed to still at that time, be supporting some form of mandates.

GINGRICH: Notice the phrase here. I think it would be great to find a way to get every American covered. I think that would be better for the country. Can you do that without a mandate?

Part of what John Goodman does is he creates a pulse of you don't want to buy insurance, you're not compelled to. Your share of the tax break would go into a charity pool.

If something happens to you, the charity pool takes care of you. There are ways to do it that you don't infringe on constitutional freedom.

BLITZER: All right, here's an ad that Ron Paul is playing. This is not a super pac. This is Ron Paul's campaign and it's very tough on you. I'll play it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Support for an individual mandate, a key tenant of President Obama's healthcare law.

UNIDENTIFIED MALE: Support for an individual mandate? Folks, don't ask me to explain this.

UNIDENTIFIED MALE: Everything that Gingrich railed against when he was in the House, he went the other way when he got paid to go the other way. He's demonstrating himself to be the essence of the Washington insiders.

UNIDENTIFIED MALE: It's about serial hypocrisy.

(END VIDEO CLIP)

BLITZER: Serial hypocrisy, that's what Ron Paul is accusing you of. And you're telling me and I've covered you and have known you for a long time. Somebody says you're involved in serial hypocrisy and you're not going to fight back?

GINGRICH: Well, first of all, as people get to know more about Ron Paul, who disowns 10 years of his own letter, says he doesn't really realize what was in it, had no idea what he was making money on, that it was racist, anti-Semitic, called for the direction of Israel, talked about a race war.

All this is a sudden shock to Ron Paul? There will come a morning people won't take him as a serious person. This is a man who happened that have had a good cause, auditing the Federal Reserve, cleaning up the Federal Reserve and I think as a protest, he's a very reasonable candidate.

As a potential president, a person who thinks the United States was responsible for 9/11, a person who believes who wrote in his newsletter that the World Trade Center bombing in 1993 might have been a CIA plot.

A person who believes it doesn't matter if the Iranians have a nuclear weapon. I'd rather just say you look at Ron Paul's total record of systemic avoidance of reality. And you look at his newsletters and then you look at his ads. His ads are about as accurate as his newsletters.

BLITZER: Now, if he were to get the Republican nomination --

GINGRICH: He won't.

BLITZER: Let's say he would. Could you vote for him?

GINGRICH: No.

BLITZER: What would you do? Could you vote for President Obama?

GINGRICH: Somebody just saying I don't care if Israel's destroyed? I don't care if the Iranian get a nuclear weapon?

BLITZER: I'm not so sure he says Israel destroyed. But he does say he doesn't think Iran represents a threat to Israel even if it had a nuclear bomb.

GINGRICH: What he says is that's a risk he's willing to take and he just had one of his former staff say flatly that he said over and over again that Israel was a mistake.

I think it's very difficult to see how you would engage in dealing with Ron Paul as a nominee given the newsletters, which he has not yet disowned.

He would have to go a long way to explain himself and I think it would be very difficult to see today Ron Paul as the Republican nominee.

BLITZER: What would you do if the choice were Ron Paul or Barack Obama?

GINGRICH: I think you'd have a very choice at that. I think Barack Obama is very destructive to the future of the United States. I think Ron Paul's views are totally outside the mainstream of virtually every decent American.

Now, that's going to be very controversial, but I just suggest to people, before you decide that I'm wrong read the newsletters. Look at what he said and ask yourself, this is a very serious question for the United States. It's a very serious question --

BLITZER: So, you don't accept this explanation. He never read that. He never wrote it. Only years later that he look at it.

GINGRICH: So he spent 10 years -- he's attacking me for serial hypocrisy and he spent 10 years earning money out of a newsletter that had his name that he didn't notice.

All I'm saying is, I think he's got to come up with some very straight answers to get somebody to take him seriously. Would I be willing to listen to him? Sure.

Are there circumstances you have to weigh heavily? Yes. I think the choice of Ron Paul or Barack Obama would be a very bad choice for America.

BLITZER: Would you run as the third party candidate?

GINGRICH: It's not going to happen. He's not going to get the Republican nomination.

BLITZER: What if he did? He might win here in Iowa. GINGRICH: He's not going to get the nomination. It won't happen. The people of the United States are not going to accept somebody who thinks it's irrelevant if Iran gets a nuclear weapon.

I think that is a national security threat to the United States of the first order and I'm very willing to draw the line and say to everybody in this country.

If you think it doesn't matter for the Iranians to have a nuclear weapon, then Ron Paul's reasonable candidate. But if you think that the Iranians might use it on an American city, you better find a different candidate than Ron Paul.

BLITZER: Now let me move on to Virginia. We have a question from somebody from Facebook, but you know what? Let me take a quick break.

We'll talk about it after this commercial break. We have questions from Facebook, from Twitter. A lot more for Republican presidential candidate, Newt Gingrich, right here in THE SITUATION ROOM right after this.

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