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THE SITUATION ROOM

Train Carrying Ethanol Collides In Indiana; High-Fat Diet May Lead To Brain Scarring; Interview With Herman Cain; Does Rick Santorum's Faith Turn off Some Voters?; Interview With Chairman of Council of Economic Advisers, Alan Krueger; Hiring Up, Unemployment Down; Romney's Rivals Fight on His Turf

Aired January 6, 2012 - 17:00   ET

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


WOLF BLITZER, HOST, CNN'S THE SITUATION ROOM: And you're in THE SITUATION ROOM.

Happening now, the one big thing that could help President Obama keep his job. This hour, a new burst of hiring and what it could mean for the 2012 election. I'll talk to one of the president's top economic advisers and to the Republican Party chairman.

Also, Mitt Romney's South Carolina surprise. Our new poll shows he's surging in a state that wasn't seen as all that friendly toward him.

Will the love last?

And Herman Cain's endorsement -- will it really matter?

I'll ask him about his former political rivals and whether he'll support someone before the race is decided without him.

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

Breaking news, political headlines and Jeanne Moos all straight ahead.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Every last vote in the battle for the White House could come down to every new job that's created or lost. New numbers out today show the economy added 200,000 jobs last month here in the United States and the unemployment rate fell to 8.5 percent, the lowest level in nearly three years.

President Obama says his policies have a lot to do with it. No surprise, the Republican presidential candidates don't buy that.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The economy is moving in the right direction. We're creating jobs on a consistent basis. We're not going to let up -- not until everybody who wants to find a good job can find one.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: In spite of President Obama's policies, the job market is beginning to pick up a little bit. I -- I think there might just be some optimism that -- that maybe Republicans are going to take the White House and maybe that's spurring people to start taking some risks. And I'll take that as a -- as a reason.

(END VIDEO CLIP)

BLITZER: Let's bring in CNN's Erin Burnett -- Erin, what's behind the increase in these jobs?

ERIN BURNETT, CNN ANCHOR: All right, Wolf, so, you know, it's funny. A couple of weeks ago, I was thinking we might some sort of an upside surprise, mostly just because you had seen the -- well, better than expected holiday sales.

Now, some of that could have been buying on credit, right?

Some of that could be temporary because who knows if people will continue spending money?

But you did see people spending more time in restaurants and you saw an increased employment there as a result.

You also saw improvement in health care, which, whether you think we need more or less of it in this country, it is a huge job creator. And, also, you saw manufacturing jobs continue to increase, which has been part of the story of this entire recovery, as tepid as it is. It's come from manufacturing.

You know, one thing that's fascinating, Wolf -- we're going to look at this tonight, but I spent a lot of time trying to look at what is the relationship between this jobs number and who is going to win in November. And when you look at it that way, it's really all about the trend.

Do you know Ronald Reagan got reelected -- one year before he was reelected, his jobs number was at 8.5 percent?

Does that ring a bell?

Of course, that's where it was today for Barack Obama.

So you -- you can get reelected with high unemployment rates. What matters is the direction that it's going. So one -- when election day came for Ronald Reagan, unemployment was down to 7.2 percent. So it's really going to be the trend from here.

But I can tell you this, Wolf, so far, the trend has been going in the president's direction. He's gotten more than 2.5 million jobs that he's created or has been created during his administration. And it's his -- and the unemployment rate has dropped a full percent for him over the past year.

So that's great, but that's the rearview mirror. It's what happens in the next six months. If this trend continues, it bodes extremely well for reelection for the president.

BLITZER: But if you take a look at the -- the numbers that were released this morning, Erin -- And I know you have -- there's not necessarily good news for everyone.

BURNETT: Oh, that's right. I mean you can look at people who have given up. I mean some of the drop in the unemployment rate -- this is an interesting thing. And it may sound technical, but it's really important for people to understand. The payroll number that you hear, 200,000 jobs added, that's a very factual number. It comes from what companies report to the government.

The unemployment rate, which is the number we all psychologically react to and the number that predicts the presidential election, actually comes from people calling up households across America and asking them if they have had jobs, when the last time that you've looked for a job was.

So these are not based on the same set of numbers, which is why sometimes the numbers don't agree.

And part of the reason you can see a decline in that unemployment rate is because a lot of people who need jobs and want jobs simply give up looking for jobs, which was part of the reason that we saw the drop.

So it is mixed. It isn't a uniformly good picture. But psychologically, that headline increases confidence. And that is -- is what becomes the predictor.

BLITZER: Yes. And unemployment for African-Americans actually went up. And I'm going to speak about that with the chairman of the president's Council of Economic Advisers, Alan Krueger. He's standing by to join us. We'll talk about that and a lot more.

I know you'll have a lot more coming up on "ERIN BURNETT OUTFRONT"...

BURNETT: Absolutely, Wolf.

See you then.

BLITZER: -- 7:00 p.m. Eastern. That's for our North American viewers.

The January 10th New Hampshire primary, next Tuesday, just around the corner. But anticipation is building for the Republican presidential candidates for a Southern showdown on January 21st. Our brand new CNN/"Time"/ORC Poll is the first snapshot of support in South Carolina taken after the squeaker in Iowa this past week. And look at this. Mitt Romney's support in South Carolina has surged. He now as an 18 point lead in the state. Rick Santorum has shot into the number two spot after his near victory in Iowa, neck and neck right now with Newt Gingrich.

Romney has an even wider lead in New Hampshire, but there's a very intense race underway for second place going on.

Our CNN political reporter, Peter Hamby, is standing by in South Carolina. We're going to have much more on the dramatic poll.

But first, let's go to CNN's Jim Acosta in New Hampshire for the latest from there -- Jim?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, with Mitt Romney heavily favored to win the New Hampshire primary, the real race in this state is for second place. But judging by this Rick Santorum town hall that just wrapped up in this parking lot that was filled with Ron Paul supporters and Occupy Wall Street protesters, the race is starting to feel like a circus.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): Rising in the polls and touring a New Hampshire gun shop, Rick Santorum could feel the target on his back.

UNIDENTIFIED MALE: Mitt Romney and John McCain are really coming after you right now.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: Well, that must mean they're worried. That's a good thing. I mean, when -- when two establishment moderate candidates come after you, I think that tells you that the conservative alternative is starting to catch fire.

ACOSTA: With Mitt Romney expected to win New Hampshire handily, Santorum is gunning for second place, with Ron Paul, Newt Gingrich and Jon Huntsman.

JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: You're getting screwed.

ACOSTA: It may be do or die time for Huntsman, who just won a key endorsement from "The Boston Globe" and who has bet big on New Hampshire. That may explain why a group supporting Paul released this outrageous Web ad attacking Huntsman's ambassadorship in China and even his adopted Chinese daughter, Gracie Mei.

(on camera): Governor, should Ron Paul disavow that ad from -- that video from his supporters?

HUNTSMAN: Well, if the group is any way affiliated with Ron Paul's organization, of course he should.

ACOSTA: Are you offended by that video?

HUNTSMAN: Well, it's -- it's just political campaign nonsense. That happens from time to time.

ACOSTA: Late in the day, Paul said the ad did not come from him.

REP. RON PAUL (R), TEXAS: I haven't -- I haven't looked at it, but I understand it's an ugly ad. And I -- I've disavowed it. And -- and, obviously, all campaigns have to suffer these consequences somebody goes up and they put -- put the candidate's name on there and you get bad press for it. But, obviously, it was -- it was ray -- way out of -- out of order for them to do that.

ACOSTA: As for Gingrich, he's struggling to make his comeback in this state, as he's been forced to explain his own comments about food stamps earlier this week.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: If the NAACP invites me, I'll go to their convention and talk about why the African- American community should demand paychecks and not be satisfied with food stamps.

ACOSTA: Gingrich fired back at critics who called the remarks racist.

GINGRICH: I repudiate the kind of grotesque reinterpretation that some people have done.

ACOSTA: There's even drama back in Iowa, where one political supporter claims a typo mistakenly gave Romney too many votes in one precinct.

EDWARD TRUE: When Romney won Iowa by eight votes and I've got a 20 vote discrepancy here, that right there says Rick Santorum won Iowa, not Mitt Romney.

ACOSTA: Republican officials released a statement saying they don't believe the results from the county in question will change the outcome of Tuesday's vote. No big deal, says Santorum.

SANTORUM: Thank you.

ACOSTA (on camera): Hey, Senator, any chance you've won the Iowa caucuses, do you think?

SANTORUM: Oh, I -- I don't know.

UNIDENTIFIED FEMALE: Senator, can you stop, please?

SANTORUM: I don't know.

(CROSSTALK)

SANTORUM: We -- as far as I'm concerned, we won the Iowa caucuses by doing as well as we did.

(END VIDEO TAPE)

ACOSTA: Mitt Romney isn't taking any chances in New Hampshire. Over the weekend, he's going to have some of his top surrogates at his side. That includes Chris Christie.

But this race for the GOP nomination could change all over again this weekend, when the candidates meet for yet another debate on Saturday night.

But, Wolf, do not count out Rick Santorum. He has had four events today where the fire marshal had to show up because the crowds were too loud. One of those events was right here in this parking lot. It had to be moved out of the restaurant and into the parking lot. It just cleared up a few moments ago -- Wolf.

BLITZER: I'm not counting him out at all. I'm not counting anyone out, at least not now.

We'll see what happens. This whole race has been crazy from day one, up and down, up and down.

ACOSTA: That's right.

BLITZER: Thank you.

Let's go to South Carolina right now and our CNN political reporter, Peter Hamby, who has spent a lot of time in South Carolina over these past several years -- for a long time, Peter, as you well know, a number of -- few people thought Romney could win a conservative state, Republican voters in South Carolina. But he is leading impressively right now.

Why?

PETER HAMBY, CNN POLITICAL REPORTER: Yes, Wolf, ever since he finished fourth here in the primary in 2008, there have been questions as to whether a moderate Massachusetts governor with sort of squishy positions on the social issues that really motivate conservative voters here could do well.

But the picture here is the same as it is in Iowa, in many ways. You have a divided, conservative vote and Mitt Romney doing well because of it.

But he's also outperforming his rivals across the board. He's doing better among born-again Christians, among Tea Party activists, among upscale voters, downscale voters, men, women. He's beating them across the board.

And -- and I think there's a lot of misconceptions about the state, too. It's sort of viewed, I think, inappropriately, as a state that's just a den of Evangelicals and good old boys, where you have, in upstate, a lot of international companies along the coast. You've got a strong military presence. You have a lot of retirees. It's a different state than it was 10, 20 years ago. And it's really playing to Romney's strengths right now -- Wolf.

BLITZER: Rick Perry, the governor of Texas, is putting all his bets on South Carolina. But he's only at 5 percent in our brand new poll. Realistically, does he have a shot there?

HAMBY: It's tough. I mean his -- his advisers here understand that they're the underdog. They do think he has a substantial cultural appeal here, being a Southern governor, at least having a Southern accent. He's a veteran and there's a lot of veterans, again, in this state.

South Carolina is very TV oriented state. You need to run a lot of TV ads to do well here. The people in the Perry campaign that I've talked to estimate there's between $1.5 million and $3 million in the bank.

About $300,000 to $400,000 will get you a week of TV ads statewide here. So he can blanket the TV airwaves here and try to drive those poll numbers up, attack his rivals. But as we know, he spent a lot of money in Iowa and it didn't really get him much up there -- Wolf.

BLITZER: And he didn't spend today or yesterday in South Carolina. Instead, he's been in Texas, getting ready, I assume, for the debates over the weekend in New Hampshire. He'll be in South Carolina next week.

Thanks very much, Peter.

Herman Cain has said he'll endorse one of his former presidential rivals. I'll ask him, what is he waiting for?

Plus, does President Obama deserve credit for the new jobs numbers?

The Republican Party chairman says that's a joke. I'll speak with a top Obama economic adviser. That's coming up, as well.

And how Rick Santorum's devout faith shapes his life, his political views and his presidential campaign.

(COMMERCIAL BREAK)

BLITZER: The Beatles, of course, sang "Money Can't Buy Me Love."

But can the same be said for votes?

The Republican presidential candidates are already finding out.

CNN's Mary Snow has been doing some math for us -- Mary, what are you seeing?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, Iowa's results raised questions about the money in this race, with Rick Santorum operating on practically a shoestring budget, losing by only eight votes to Mitt Romney. A closer look at spending by outside groups shows he was helped not only by supporters, but by money not spent targeting him.

(BEGIN VIDEOTAPE) SNOW (voice-over): Rick Santorum is blanketing New Hampshire with a $2 million boost. Money, his campaign says, raised in the 48 hours after his razor thin second place finish to Mitt Romney in the Iowa caucuses. Still, his cash pales in comparison to camp Romney, which is expected to have raised $20 million this past quarter alone.

In Iowa, Santorum trailed his Republican contenders in cash flow, but instead, invested in his ground game, campaigning in each of the state's 99 counties. He also got some late help from outside groups.

UNIDENTIFIED MALE: Rick Santorum is ready to take on Barack Obama.

SNOW: Super PACs groups that have no limits on spending bought more than $600,000 in ads counting Santorum in the final days leading up to the caucuses. That's according to the watchdog group, the Sunlight Foundation. The group's Bill Allison says Santorum also benefitted from the lack of money spent targeting him in negative ads.

BILL ALLISON, SUNLIGHT FOUNDATION: And Santorum did kind of squeak through. I mean, in a sense, he was the, you know, the last man standing in the carousel of candidates other than Mitt Romney to get popular support in Iowa.

SNOW: Newt Gingrich had been leading the polls until a barrage of negative ads deflated that lead. The Sunlight Foundation reports Super PACs have spent $13.1 million, so far. Group supporting Mitt Romney make up one-third of them. Also high on the list were backers supporting Rick Perry. But as political watcher, Stew Rothenberg, points out, money only goes so far.

STUART ROTHENBERG, THE ROTHENBERG POLITICAL REPORT: He didn't seem smart enough, knowledgeable enough, serious enough. And that proves an important rule. Money can get you attention and visibility and put you before the public, but the candidate has to sell himself or herself, and he just didn't do it.

SNOW: Candidates have plenty of selling to do, and with nine months until November, it will likely result in unprecedented spending.

ALLISON: Outside groups spent about four and a half times as much in 2010 as they did in 2006. I'm not saying that we'll see that with presidential candidates, but if we do see that same kind of explosion, you can be looking at about $1.2 billion spent by outside groups to influence the election.

(END VIDEOTAPE)

SNOW (on-camera): And Wolf, that eye popping estimate of potentially 1.2 billion spent on this presidential campaign does not include spending by candidates and political parties -- Wolf.

BLITZER: All right. Mary, thank you.

A lot of voters are taking a much closer look at Mitt Romney after his dramatic Iowa win heading into the New Hampshire primary and South Carolina. Lisa Sylvester has been studying his economic plan and going through it. It's really complicated. What are you finding out?

LISA SYLVESTER, CNN CORRESPONDENT: Yes, Wolf. Well, first off, the economy is the number one issue of concern to Americans. The unemployment rate is 8.5 percent, and Romney has criticized President Obama's handling of the economy. Instead, Romney has offered his own fix, including cutting corporate taxes and reducing government regulation.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Mitt Romney's economic plan isn't as flashy as former candidate, Herman Cain's, 9-9-9 plan and doesn't go as far as Newt Gingrich's flat tax plan, but it is a tax for conservative platform. Romney has signed a pledge opposing any new taxes if he is president. He also plans to slash taxes on savings and investments by the middle class.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: I want to get our rates down. I want to simplify the code, broaden the base, at the same time, I want to make sure that we help people who need the help most.

SYLVESTER: His proposals include cutting the current 35 percent corporate tax rate down to 25 percent, eliminating the estate tax, reducing non-security discretionary spending by five percent, eliminating regulations enacted under President Obama, and working to repeal the Obama healthcare plan.

Romney says his experience as former CEO of Bain Capital and as governor of Massachusetts positions him as the best candidate to jump- start the economy. Conservative writer, Stephen Moore, gives Romney's plan a B.

STEPHEN MOORE, SR. ECONOMICS WRITER, WSJ EDITORIAL PAGE: Our business tax system works against employment and works against jobs in the United States and actually encourages outsourcing. So, if you can lower those tax rates, business investment, and business spending, I think you'll have more of it.

There's an old saying, if you tax something less, you get more of it, and that's really at the hurt of what Mitt Romney is talking about.

SYLVESTER: But critics including the liberal Economic Policy Institute disagree, arguing Romney's plan won't have a big impact on unemployment.

JOSH BIVENS, ECONOMIC POLICY INSTITUTE: His plan is kind of a fundamental misdiagnosis. I mean, between 2007 and 2010, we lost eight million jobs. We're starting to get some of them back. We didn't raise taxes, all of a sudden, in 2007. We didn't have an explosion of regulation, and so, I don't think his plan, at all, addresses what the fundamental problem in the economy actually is. SYLVESTER: That problem, according to Bivens, not enough consumer and government spending, and Romney has been hit with criticism from the other side, by Tea Party conservatives who argue his plan doesn't do enough to slash the federal budget.

(END VIDEOTAPE)

SYLVESTER (on-camera): Conservatives would like Romney to go a lot further on tax reform. On income tax rates, Romney, so far, has not outlined any specific changes to the current tax brackets, and he is the only GOP candidate not to do so, Wolf.

BLITZER: Lisa, thanks very much. Good report. We're going to be speaking with Herman Cain. That's coming up this hour. Also, the chairman of the president's council of economic advisers. We'll get his thoughts on what's going on in the economy as well. So, a lot more on that front. A lot more on politics coming up.

Also, some other news, including a week into the New Year, are you struggling to keep that resolution to lose weight? There might be a reason you may not have thought of before.

Plus, Joran Van Der Sloot on trial for murder, but now, the trial is delayed. We'll tell you what's going on.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories in the SITUATION ROOM right now. Lisa, Indiana authorities blocking off-roads after a train collision?

SYLVESTER: Yes. That's right, Wolf. This is the scene after three freight trains collided about 30 miles southeast of Gary, Indiana. One of those trains is carrying ethanol. And official with the highway department says roads are being blocked off to keep people safe from the very volatile flammable liquid. No word on injuries yet.

And Joran Van Der Sloot is asking for more time to reflect on the plea he'll make at his murder trial. The Dutch national is accused of killing a 21-year-old Stephany Flores woman in his hotel room in 2010. Earlier, his attorney said Van Der Sloot was expected to plead guilty to all charges. His trial is postponed until Wednesday. Van Der Sloot was arrested twice but never charged in the disappearance of Alabama teenager, Natalee Holloway, in Aruba.

And scientists say scarring in one area of the brain may be why obese people have troubled keeping weight off once they lost it. A new study found a long-term diet of high fat foods cause permanent damage in the brains of rats and mice. Researchers don't know yet if the same thing happens in humans, but they say it's the first step toward understanding the complexities of weight loss.

And the Girl Scout cookie season is launching 2012 with a new treat. The organization is celebrating its 100th anniversary with the introduction of Savannah Smiles. They are lemon cookies named for the home of Girl Scout founder, Juliette Gordon Low. So, new cookies something to look forward to --

(CROSSTALK)

BLITZER: Savannah Smiles, I'll buy a bunch. All those (ph) Girl Scouts. Thanks very much.

So, what's President Obama doing to help jobless African- Americans? They are being hit the hardest right now by the unemployment crunch. We'll talk to one of the president's top economic advisers.

Plus, Herman Cain. He's here in the SITUATION ROOM. He's walking in right now. Welcome, we're going to speak to you.

HERMAN CAIN, (R) FORMER PRESIDENTIAL CANDIDATE: Wolf, good to see you.

BLITZER: Meet Lisa Sylvester.

CAIN: Hello, Lisa. Wonderful.

BLITZER: Herman Cain getting ready in the SITUATION ROOM. We'll discuss.

CAIN: Yes.

(COMMERCIAL BREAK)

BLITZER: The Republican presidential candidates returned to the debate stage this weekend in New Hampshire just days before the primary in that state. Their former opponent, Herman Cain, won't be there, but he's here right now in the SITUATION ROOM. Mr. Cain, thanks very much for coming in.

CAIN: Hello, Wolf. Happy to be here.

BLITZER: Feel badly you're not going to be on the debate stage this week in New Hampshire.

CAIN: Well, it's bittersweet, you know? The sweet is I don't have the media spinning and re-spinning all those false accusation. The bitter is, I won't be there to mix it up with them. So, it's a bittersweet thing, but I do not regret the decision that I made based upon family first.

BLITZER: You don't regret the decision to suspend your campaign?

CAIN: Correct. Right.

BLITZER: Even when you saw the numbers coming in from Iowa, did you say to yourself, you know, I could have done that?

CAIN: No. When you say family first, and that's exactly the basis of that decision, yes, I don't say, well, I wish I was still in. No, it's not that at all. My focus coming out of Iowa, Wolf, first of all, my observations on Iowa, this shows that the electorate is very splintered because of all the negative attacks which created indecision in decision in the , and I think we're going to see more of that.

The polls everyday going up and down and who's changing places. I don't get as excited about, so we're going to do that. But the thing that didn't come out of Iowa that was most disappointing was more focus on solutions. How are you going to fix these problems? Not just what's wrong.

BLITZER: All right. I want to get to your family. We'll get to all the family first stuff later, but let's talk a little bit about politics. I'm going to mention a candidate, and you got to know them on the debate stages and elsewhere. Give me a quick thought. Pros and cons what you think of each of these Republican candidates. We'll start with Mitt Romney.

CAIN: Mitt Romney, very articulate. His economic plan doesn't go far enough.

BLITZER: That's it?

CAIN: That's it.

BLITZER: You want to say anything else about him?

CAIN: Well, the other thing is, obviously he's very seasoned, he's very good in the debate situation, and I think he would be a good president.

BLITZER: Rick Santorum?

CAIN: Rick Santorum, a solid politician, has been around a long time, but in my opinion, not specific enough on what his economic proposals are because, as you know, getting this economy really going is our biggest challenge. So I don't think that he is specific enough and he doesn't go far enough.

BLITZER: Not yet ready for prime time?

CAIN: I would happen to agree with that.

BLITZER: Ron Paul?

CAIN: Ron Paul, ideas too extreme. When Iran is rattling their sabers, threatening the United States of America over in the Strait of Hormuz, let me tell you, that's -- and when he says we shouldn't worry about that, yes, we should worry about that.

Eliminating the Fed, we need the fix the Fed, not eliminate the Fed. I could go down the list, many of his ideas, too extreme, not just bold.

BLITZER: Newt Gingrich?

CAIN: Newt Gingrich, the guy with the most creative ideas for addressing our problems, but you not only have to have great ideas for how we address our problems, you've got to also project the leadership necessary in order to be able to get them done.

BLITZER: Rick Perry?

CAIN: Rick Perry, I think he's a good governor, but here, again, I don't think that he's ready for prime time.

CAIN: Jon Huntsman?

CAIN: Jon Huntsman, nice gentleman, did a great job in Utah, but he's not getting any traction with the voters. And as a result, I just don't see him catching fire in some of these later primaries.

BLITZER: Well, I've been putting a little "yeses," "no's" after each name. It sounds like Mitt Romney is the only one that you think is ready for prime time, ready to be the next president of the United States.

CAIN: I would say that we have -- the two strongest possibilities are Mitt Romney and Newt Gingrich. I have not given up on Newt Gingrich, and a lot of other people haven't given up on Newt Gingrich. Watch the debates coming up this weekend and you may see another resurgence of Newt Gingrich.

BLITZER: At some point -- you're not ready to endorse right here on THE SITUATION ROOM right now?

CAIN: No.

BLITZER: All right. But at some point you will?

CAIN: I am going to make an unconventional endorsement. Now, please underscore "unconventional," because I've been an unconventional candidate, I've had unconventional, bold ideas, so I'm going to make an unconventional endorsement the Thursday before the South Carolina primary.

The media's going to say, well, that's not how you're supposed to do it. Well, I don't do it the way you're supposed to do it, but the voters are going to go, what a creative idea. That's what I'm going to be doing.

BLITZER: But why wait?

CAIN: The reason I want to wait is because if I go too early in the midst of the flux coming out of Iowa, the flux that's going to come out of -- what are we going to learn coming out of New Hampshire, how close they got to Mitt Romney? We're not going to learn a lot of things coming out of New Hampshire, and I don't want to discourage my base and my supporters. I want to try to keep them together, I want to keep them informed, and inspired. That's why I don't want to come out too early with this.

BLITZER: But this unconventional endorsement, where will you do it?

CAIN: I'm going to do it in South Carolina, at the Southern Republican Leadership Conference, where I will be a keynote speaker. And the reason that I want to do it as part of a speech, I want to make this unconventional endorsement part of a bigger message.

Many people have endorsed the various candidates, but I question whether or not they've been that effective. I want to make my unconventional endorsement part of a bigger message.

BLITZER: Because you know Nikki Haley, the governor of South Carolina, has endorsed Mitt Romney.

CAIN: Yes.

BLITZER: I assume you like Nikki Haley.

CAIN: Yes. I've met her. I think she's doing a great job as a governor.

And interestingly, when I met with her, I said, "What's been one of the biggest problems you've had as governor?" She said, "Dealing with the federal government." And that's been a constant theme. But yes, it will be unconventional, but I want to make it part of a bigger message.

BLITZER: Is it possible you will endorse someone who's not on the list I just gave you?

CAIN: It will be unconventional, Wolf, and that's all I can say, because some people are going to be surprised because they're going to be disappointed that I don't do it in a general way.

BLITZER: Are you thinking about jumping back into this contest?

CAIN: Wolf, you're not going to get it out of me.

BLITZER: I'm trying my best.

CAIN: OK? You're really doing a good job.

BLITZER: But is that realistic, that you might -- you haven't completely -- you've suspended your campaign, you haven't completely ended it. You can unsuspend it

CAIN: I have suspended my campaign because that's the way I had to say it because of FEC rules. And because of FEC rules, I have ended my campaign for president. I have to say that because of my next venture that I launch this week called Cain's Solutions Revolution..

BLITZER: You've got some plans. And I assume 9-9-9 is going to be in that plan.

CAIN: Of course 9-9-9 is in it.

BLITZER: Let's talk about the family, because family comes first, you say.

CAIN: Yes.

BLITZER: It's been now a little bit more than a month since you suspended your campaign after those sexual harassment allegations. What if anything has happened on that front? You don't even need that ear piece. Don't even worry about that.

CAIN: Nothing else has happened, oddly enough, after I got out of the race for president. But relative to my family, my wife and I are doing fine. We took some time of during Christmas, and we were blessed with our fourth grandchild on New Year's Day. So 2012 is turning out to be a good start for me, and I'm looking very forward to what's going --

(CROSSTALK)

BLITZER: And those women who came forward and made those accusations, you haven't heard anything from them or their lawyers or anything like that?

CAIN: No, nothing at all. And so, Wolf, look, we knew this going on.

It wasn't that people were starting to believe that that stuff was true after I sat right here on your show and said that they're not true, and people wanted to pick apart different pieces, it was the fact that some people in the media wanted to continue to spin and spin and spin and spin, and that created the same kind of doubt that was created relative to Newt Gingrich. It's the same thing.

You create doubt, some people, not all, are going to then be reluctant and be indecisive. And because of the pain that it was causing my family, I was ready to move on.

BLITZER: No regrets?

CAIN: No regrets.

BLITZER: Mr. Cain, we'll look forward to what you have to say on January 18th, you say. Right?

CAIN: It's that Thursday before the South Carolina primary, and I want people to go to cainconnections.com to find out about the 9-9-9 revolution. CainConnections.com

BLITZER: I'm sure a lot of your fans will do that. A lot of others will as well.

Thanks very much for coming in.

CAIN: Thank you.

BLITZER: Rick Santorum wears his religion on his sleeve, but will the candidate's deep faith turn out some voters? Stand by.

(COMMERCIAL BREAK)

BLITZER: God is a key player in Rick Santorum's life. Critics say his faith might hurt him with some voters, but in one key state at play, it might carry him.

Our own Brian Todd is joining us from that state. He's in Hilton Head, South Carolina -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, Rick Santorum scored big in Iowa with the help of Evangelicals and other social conservatives. That bloc of voters is also crucial here in South Carolina, where a lot of attention is now focused on a candidate whose faith has truly shaped him politically and personally.

(BEGIN VIDEOTAPE)

TODD (voice-over): Literally minutes after stunning the political world in Iowa, Rick Santorum said, "Game on," paid tribute to his wife. Then --

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: I've survived the challenges so far by the daily grace that comes from God.

TODD: -- Santorum called his relationship with God a sacred friendship. It's a friendship forged over a lifetime.

DAN SANTORUM, RICK SANTORUM'S BROTHER: You literally had to be on your death bed not to go to church and --

TODD (on camera): Did you guys ever try to get out of it?

D. SANTORUM: We tried to get out of it, but it never worked.

TODD (voice-over): Dan Santorum, Rick's younger brother, told us that he, Rick and their older sister might have missed church twice in their lives. Growing up in a small house on the grounds of a VA hospital in Butler, Pennsylvania, where their parents worked, Rick was an altar boy at a multi-denominational chapel. Dan brought wheelchair-bound patients to services.

D. SANTORUM: A position of honor. I mean, to be up there and to be with the priest.

TODD: All the Santorums remain devoutly Catholic. The beliefs deeply imbedded in Rick have fueled his hard-line positions against abortion and gay rights. His faith has been tested, but those events might have deepened his conviction.

The Santorums' 3-year-old daughter, Bella, was born with a genetic disorder, and a former aide to Rick Santorum said after his son Gabriel died two hours after his birth in the mid-1990s, he became much more religious. "You could tell he was walking with his faith."

(on camera): How did that event change him regarding his faith?

D. SANTORUM: I don't think he changed. Rick's been -- to me, he's been the same ever since we were kids. He's a passionate guy that, you know, if he believes in something, he'll let you know.

TODD (voice-over): Ed Whelan, who worked with Santorum at a conservative research group, says his handling of those crises will bolster Santorum with conservatives.

ED WHELAN, ETHICS AND PUBLIC POLICY CENTER: Rick's experiences show that he genuinely walks the walk of his pro-life convictions.

TODD (on camera): Few would argue that Rick Santorum's faith will carry him far here in South Carolina, but some argue that voters here are going to want to hear more about the economy in a state where unemployment is above the national average.

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: I think Santorum is smart enough -- in fact, I know he's smart enough -- not to stress culture issues as his core agenda item.

TODD (voice-over): Analyst Stuart Rothenberg says Santorum has to be careful about wearing his religion too much on his sleeve while campaigning, something he says may not play well with Independents and other mainstream voters.

I asked Dan about that.

D. SANTORUM: He's a believer. And there's a lot of believers in the Senate and the House, and I don't think there's anything wrong with that.

(END VIDEOTAPE)

TODD: With a lot of his hopes riding on South Carolina, Rick Santorum's emphasis on faith may give him a boost going into the primary. With Michele Bachmann, one of his key rivals for the social conservative vote, now out of the race, more religious voters here may look to Santorum as their real champion -- Wolf.

BLITZER: Thanks very much, Brian.

Let's get some more on Santorum's faith. For that, we'll turn to John King. He's joining us now from Nashua, New Hampshire.

Set the scene for Santorum and what's likely to happen, at least if we believe all these polls, on Tuesday.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, a brand new WMUR poll just out, Wolf, has Santorum at 8 percent. That's way behind Mitt Romney, who is in the 40s. Ron Paul is in the second place. Santorum and Gingrich are tied.

On the issue of his faith, you don't find a lot of Evangelical voters here in New Hampshire. Remember what happened to Mike Huckabee four years ago -- wins Iowa on the support of Evangelicals, comes to New Hampshire and struggles. But Catholics are a big part of the vote here, conservative Reagan Democrat types and Republicans.

And remember, Democrats and Independents can vote in the Republican primary if they want. It's an open primary and there's no Democratic competition. So Republicans and Independents can certainly play.

Are there voters here who sometimes say they don't like candidates who talk a lot about their faith? Sure. You can find those everywhere in the country. But are there people who also say maybe they're not voting because of that, but they view Rick Santorum as authentic because he says what he means and he believes. That is the key to his support. But obviously, Wolf, just looking at the numbers, it's not as big here right now as it was in Iowa, and he's struggling in South Carolina as well.

Most of it here though is not because people think he talks too much about his faith. It's because Romney is so well-known here.

BLITZER: And Ron Paul, he has taken a day or two off from the campaign trail. I understand you just had a chance to catch up with him?

KING: I just sat down with Ron Paul after a big rally at the Nashua Airport, a lot of young people there, just like we saw in Iowa. He's a factor here in New Hampshire at 20 percent. Romney's at 44. Ron Paul is at 20 percent.

A lot of people think there's no way you're going to catch Mitt Romney. Watch the debates this weekend. It's going to be very interesting.

If you're Gingrich and you're Santorum, and you're struggling, do they try to rip away at Ron Paul's support as much Governor Romney's support? Ron Paul says he still believes he has an outside shot to win the nomination. But Wolf, interestingly, he said he thinks if Romney wins here, he'll go into South Carolina with a head of steam and will be incredibly hard to stop in this Republican nomination battle.

BLITZER: We'll be watching the interview and a lot more coming up on "JOHN KING USA." That's for our North American viewers at the top of the hour.

John, thank you.

A drop in unemployment sounds like good news, but critics say the numbers don't necessarily tell the whole story. I'll speak about that with the president's top economic adviser.

(COMMERCIAL BREAK)

BLITZER: Now back to a new spurt of jobs -- 200,000 created in December on President Obama's watch. I asked the Republican Party chairman Reince Priebus whether the president deserves credit.

(BEGIN VIDEO CLIP)

BLITZER: The unemployment numbers, month by month, going into the Obama administration, the last six, seventh months of the Bush administration, dramatic. Every month, 600,000, 700,000 jobs lost, and the first few months of the Obama administration, it continued. But then it starts picking up, and then it's in the positive now for all of this past year. And as I said, the last six months, at least 100,000 new jobs every month created. That shows a pretty dramatic improvement since the president took office.

REINCE PRIEBUS, RNC CHAIRMAN: Yes. Well, what you don't see in the numbers though, Wolf -- and I can't see the chart, but I can tell you that what you don't see in the numbers -- and I think many astute observers know this -- is that you're only seeing the percentage of people that are actually looking for work that are reflected in those numbers.

What you don't see are the hundreds of thousands of people that are saying I'm not even going to look for work. So they're not even actively looking for work and they're not even tracked by the Department of Labor.

If you combine the people who are, first of all, looking for work and not finding it, and then you add on to that number the people who have said look, I can't find a job, I'm not going to look for work, and the underemployed, we have numbers that are beyond any comprehension here in this country that are going on. So, while those numbers -- I can't see it -- I'm not doubting your actual figures there, but they're only reflective of the amount of people that are actually looking for work. And let's face it, I think the idea of cheerleading for 8.5 percent unemployment in this country, even of that number, I think is just a -- it's a joke.

(END VIDEO CLIP)

BLITZER: All right. Let's talk about what's going on, get a different view from one of the president's top economic advisers. We're joined by the Chairman of the Council of Economic Advisers, Alan Krueger.

Mr. Krueger, thanks very much for coming in.

Do we know how many people are not even included in the statistics because they have simply given up looking for a job?

ALAN KRUEGER, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Oh, sure. The Bureau of Labor Statistics survey asks people exactly that question. It also includes in their broader measures people who are marginally attached, haven't made much effort in the last month, but have in the recent past.

And the data are pointing to an economy that is slowly healing. We saw that this month. We have seen that the last few months.

BLITZER: So are there millions of people that aren't included in the numbers because they say I have spent two, three, four years, five years looking for a job, I can't even find a job as a result? They are not part of the statistics, if you will?

KRUEGER: Oh, no, Wolf, they are indeed part of our statistics, and I think you asked the exact right question about job growth. What matters is that we are expanding, the economy is growing, we are providing more jobs. And when we look at the unemployment rate, which has been measured consistently over time since the 1940s, when we look at the broader measures of what they call the U6, which includes people who are marginally attached to the labor force, discouraged workers, what we see is that the economy is pointed in the right direction. We'd like to see faster -- faster growth, but I think we can be confident that in the last few months -- in fact, over the past 22 months -- every month we have had private sector job growth. So we are digging our way out of this very deep hole that was created by the recession that began at the end of 2007.

BLITZER: Yes, definitely moving in the right direction, although the critics will say not fast enough.

The 200,000 jobs that were created in December, I assume that includes some temporary jobs, seasonal jobs for Christmas, retail, things like that. Right?

KRUEGER: It does, although also be aware that the Bureau of Labor Statistics provides seasonally adjusted numbers, where every December we see an increase in seasonal hiring. So the 200,000 figure that you cited did make an adjustment for seasonality.

And then I'd also ahead that, last month, we did not see a growth in the temporary health industry. So, in December, it didn't look like the bump up that we saw was just temporary, at least in terms of the temporary health sector.

BLITZER: Here is one thing that was very disturbing to me, and I assume to you as well. Overall, the unemployment number went down to 8.5 percent. That's good. White, 7.5 percent unemployment, but African-Americans, the number actually went up to 15.8 percent.

Why are more African-Americans unemployed now even as the overall number is going down?

KRUEGER: It's an excellent question. And the numbers are volatile for the full population, and particularly for subsets of the population. So one has to be cautious with the monthly numbers.

But one thing I think we can say when we look at African-Americans, they are over-represented in state and local government employment. And state and local governments have been cutting back employment. I think that's one of the reasons why it is important that President Obama proposed additional funds for states to be able to retain teachers, to keep police and firefighters. That would help African- American, as well as I think help our school children, help our communities, help the economy overall.

BLITZER: How worried should we be if there is a further economic dislocation in Europe that will dramatically affect us here in the United States as well?

KRUEGER: Certainly one of the risks the world economy faces is what's going on in Europe. The world economy is still in a fragile position. That's why I think it's very important that we take the steps that we can to help strengthen our recovery, to help ensure that our recovery continues.

Most importantly, I would say, is continuing the payroll tax cut. Congress, as you know, voted to extend the payroll tax cut for just two more months to give it more time to figure out how to do it for the rest of the year. Also to continue the extended unemployment benefits, which the nonpartisan Congressional Budget Office concluded has the biggest bang for the buck in terms of strengthening economic growth and helping job creation.

BLITZER: Alan Krueger, the chairman of the Council of Economic Advisers.

Thanks very much. Good luck over there.

KRUEGER: My pleasure. Thank you, Wolf.

BLITZER: Mom jeans and sweat vests. Jeanne Moos brings us up to date on the latest in campaign trail fashion.

(COMMERCIAL BREAK)

BLITZER: As the 2012 presidential race kicks into high gear, CNN's Jeanne Moos reminds us that it's not always about what the candidates say. Sometimes it's about what they wear.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): It's not exactly primary concern, but when a normally buttoned up candidate starts wearing jeans --

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We have -- hold on. Hold on. No applause allowed.

MOOS: -- he risks evoking the dreaded m-word.

UNIDENTIFIED FEMALE: Introducing mom jeans.

MOOS: And lately there's been some tittering on Twitter that, while trying to appear as a man of the people, Mitt Romney stumbled into wearing mom jeans. The co-creator of "The Daily Show" went to so far as to tweet, "I think Mitt Romney wears Lady Wrangler jeans."

ROMNEY: There's a family affair.

MOOS: But Romney's mom jeans look like tights compared to the ones President Obama once wore.

UNIDENTIFIED MALE: And these look frumpy.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm a little frumpy. For those of you who want your president to, you know, look great in his tight jeans, I'm sorry, I'm not the guy.

MOOS: And apparently neither is Mitt Romney, though he was no slouch when it came to sprucing up CNN's very own Wolf Blitzer. ROMNEY: You've got something on your coat, maybe -- right on the front there. You see that?

MOOS: Primary season has brought out another dubious fashion trend.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: All of a sudden the sweater vest was, like, fear of the vest.

MOOS: That's presidential candidate Rick Santorum answering questions from Laura Ingraham --

LAURA INGRAHAM, RADIO TALK SHOW HOST: Is it geek chic?

MOOS: -- about his penchant for sweater vests.

This is the one that set things off.

SANTORUM: The Internet lights up with, "What's this with the sweater vest?"

MOOS: Now Rick's sweater vest has a Facebook page and a Twitter account with the sweater vest tweeting gems like, "Rick Santorum is such a fiscal conservative, he doesn't buy sleeves."

Santorum told "The New York Times" he buys most of his sweater vests at discounter Joseph A. Bank. There's even a "sleeve slow me down" montage online.

(MUSIC)

MOOS (on camera): Mom jeans, sweater vests. What's next, a gay rancher jacket?

After Texas Governor Rick Perry released this ad --

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: -- know that there's something wrong in this country when gays can serve openly in the military but our kids can't openly celebrate Christmas.

MOOS (voice-over): -- he was parodied, and his jacket ended up in a "Brokeback Mountain" juxtaposition with Perry's outerwear compared to a gay cowboy's.

Whether it's jackets or sweater vests or mom jeans, at least even the most titillating fashion faux pas are bipartisan.

Jeanne Moos, CNN --

NARRATOR: And lose the Barack O'Mama jeans.

MOOS: -- New York.

(END VIDEOTAPE)

BLITZER: That's it for me. Thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

The news continues next on CNN.