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Israel Launches Attack in Gaza; Oahu Without Power; Retail Therapy?; Mumbai Aftermath; Santa Shooter; Tough Road Ahead for Obama; Tax Free Shopping?; Harsh Reality TV

Aired December 27, 2008 - 10:00   ET

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

T.J. HOLMES, CNN ANCHOR: "It is now time for fighting." Those words coming from the Israeli side just a short time ago as they launch attacks in Gaza. And this thing is not over yet. This morning, Palestinian medical sources say at least 155 people are dead and hundreds more are wounded.
ABBIE BOUDREAU, CNN ANCHOR: The natural light will soon be coming up in Hawaii, but hundreds of thousands, including the president-elect, are still without power at this hour.

HOLMES: Also, the retailers, what will they do now after a less than successful season? Who knows? Less than successful is putting it lightly, actually.

From the CNN Center, this is the CNN NEWSROOM on this Saturday, December 27th.

Hello to you all. I'm T.J. Holmes.

BOUDREAU: And I'm Abbie Boudreau. Betty Nguyen is off today.

It is 10:00 a.m. here in Atlanta and 7:00 a.m. in Los Angeles.

Let's get you caught up on news from around the world.

HOLMES: And breaking news right now coming to us from the Middle East. A hundred and fifty-five dead. Those words coming to us from Palestinian and Israeli officials.

This all began this morning with Israeli airstrikes on Gaza. Palestinian medical sources again saying at least 255 injured in addition to those 155 people killed, and those numbers could rise. In recent hours, the militant group Hamas has been firing back.

CNN's Paula Hancocks has been scrambling for the details for us, she's following this breaking story out of Jerusalem.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Our source on the ground in Gaza says he has not seen airstrikes of this type for years. The destruction is widespread.

Now, Israel this Saturday has been targeting Hamas installations and infrastructure across Gaza, but in very densely populated areas. And inevitably, there have been many civilian casualties.

The latest figures we have, 155, at least, have been killed, according to Palestinian medical sources. And hundreds more have been injured.

The hospitals in Gaza City and across Gaza are inundated with the injured. You can see pictures of people being driven to the hospital in any vehicle possible. There's simply not enough ambulances, there are too few doctors, and the equipment there is not sophisticated enough to cope with this kind of airstrike. Now, we have seen that Egypt has opened its border, its Rafah border in the south of Gaza, to try and allow more ambulances to go into Egypt so that many of the injured Palestinians can be treated there.

Now, we have heard from Hamas in the past hour in a press conference. They have said that, "We will not renew the calm with Israel and we will not raise the white flag." So just eight days after the truce between Israel and these Palestinian factions expired, we he are seeing tremendous violence and a severe escalation in the violence here. Hamas has said they will continue the rocket attacks, and we have seen that this Saturday. At least one Israeli has been killed, around a dozen has been wounded in the rocket attacks coming from Gaza into the surrounding areas of Israel.

Now, we know that the European Union and Russia have been calling on a halt in violence on both sides. But certainly at this point, in the short term, it looks like we are going to see some tit-for-tat retaliation.

Paula Hancocks, CNN, Jerusalem.

(END VIDEOTAPE)

HOLMES: And we are getting quite literally fighting words between the two sides. We heard from the Israeli defense minister a short time ago, Ehud Barak. He's warning that the Israeli's offensive will widen as necessary. Listen now to the latest exchange of words between the two sides.

(BEGIN VIDEO CLIP)

EHUD BARAK, ISRAELI DEFENSE MINISTER (through translator): The time has come to take action. We are not happy to have to take this action, but we are not going to flinch from it. We will not continue to put up with these attacks on our civilians and our soldiers. We will do what is necessary.

There's a time for a lull and there's a time for fighting. And now the time for fighting has come.

(END VIDEO CLIP)

HOLMES: All right. Again, that's Ehud Barak you've been listening to there, the Israeli...

(BEGIN VIDEO CLIP) SAEB ERAKAT, PALESTINIAN PRESIDENTIAL ADVISER: We are calling upon Israel to stop their attack and to adhere to the Egyptian efforts in order to maintain a mutual cease-fire. I'm not saying that we have an army or a navy or an air force in Gaza. All I'm saying is that Gaza is the most densely populated area on earth, six person per square meter. I'm afraid that if we don't begin a de-escalation process immediately, the net results of the continuation of such Israeli aggression would be a disaster.

(END VIDEO CLIP)

HOLMES: Again, as you are hearing there from both sides, neither side really giving much. And it sounds like this thing could continue. And Ehud Barak there, the Israeli defense minister, saying this will widen as they see fit, and really predicting that this will not be a short conflict.

Now we'll show you some scenes, some new pictures we are getting right now out of the West Bank, where protests now have poured now out into the streets. You're seeing some of this video here. This is some of the newest that's come into us.

Israeli soldiers are firing teargas and rubber bullets in hopes of containing some of these protesters. Many of them you see there simply throwing rocks.

Now, one of the largest cities there in the West Bank is home to about 170,000 Palestinians. That's where some of this is going on. But no doubt, an escalating conflict we are watching in the Middle East.

Meanwhile, the White House is weighing in right now as well. I got a statement from them a short time ago talking about the escalating violence, saying, "Hamas' continued rocket attacks into Israel must cease if the violence is to stop. Hamas must end its terrorist activities if it wishes to play a role in the future of the Palestinian people. The United States urges Israel to avoid civilian casualties as it targets Hamas."

BOUDREAU: A fatal fire last night on Philadelphia's southwest side. Seven members of one family were killed when they became trapped in the blaze. Six of the victims were found huddled in the basement. Neighbors and firefighters were blocked by the flames and could not reach the victims who lived in the basement.

(BEGIN VIDEO CLIP)

LLOYD AYERS, PHILADELPHIA FIRE COMMISSIONER: It was an exit to the exterior in the rear of the home. This is how the firefighters made their entry and this is how they fought the fire back to attempt to rescue those who were inside. And the stair was actually removed from the basement to the first floor, so there was no way out for that family.

WADE LEE, FIRE VICTIM'S NEIGHBOR: I went back because my friend was left behind. And as I tried to get up the steps, I couldn't remember how the house was built. I thought that I could when I went in, but the flame was so much and the smoke was so much that I had forgotten how the structure of the house was, and I was almost lost in it. But then I found them.

And in a way, it's like he saved me and I saved him, because he grabbed me and I grabbed him. And it's like, he led me out the door at the same time I was leading him out the door.

(END VIDEO CLIP)

BOUDREAU: Four people did survive that fire.

New information in the Christmas Eve attack on a home by a man dressed as Santa Claus. Police in Covina, California, say Bruce Jeffrey Pardo had $17,000 strapped on him when he allegedly shot several people and then set the house on fire. Police say Pardo also had a ticket for a flight to Canada on Christmas. They say he was burned when he set the house on fire and then he later killed himself.

Police spoke with one caller who was in the house when the incident began. She told police she was there with her daughters, her husband, three nephews and a niece, along with her nephew's girlfriend.

Here's the chilling part. The caller tells police only half of her family got out of the house. The 911 operator then attempts to comfort the caller.

(WEATHER REPORT)

BOUDREAU: Now to that huge power outage on the Hawaiian island of Oahu. More than 800,000 people are in the dark, including President- elect Barack Obama, who's vacationing there with his family. The island's governor says a generator was being taken to the home where Obama was staying.

We get more now from our Ed Henry.

(BEGIN VIDEOTAPE)

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: Honolulu is in almost total darkness right now, affecting almost a million people. Eighty to 90 percent of the island of Oahu without power after a massive outage just after sunset on Friday, apparently caused by lightning. All of this affecting so many tourists here for the holiday season, but also affecting President-elect Barack Obama, who's here vacationing on the island of Oahu, though Mayor Mufi Hannemann told The Associated Press that he was told by police officials that Mr. Obama and his family are safe right now.

The protected press pool that travels with the president-elect waited outside the multimillion-dollar home he's renting right now, and at one point they overheard talk of a generator being brought in to power that home. Reporters eventually, though, were cleared for the evening, suggesting that all is well.

All of this started about 6:45 local time, about 11:45 Eastern Time. I was at a restaurant with family, and you can see through with windows at the restaurant lightning striking all across the island because of storms. All of a sudden, the lights went dead, fire alarms went off, people started heading out of the restaurant, into parking lots that were jammed up with people.

All the traffic lights, of course, were out. Gridlock throughout the city of Honolulu.

Now, officials are telling "The Honolulu Advertiser" that a lightning strike caused a surge in the power system and that the rest of Oahu went down about two hours later as another generator failed. This has shut down stores all along Waikiki Beach here, the busy post-holiday spending season, of course.

All and all, somewhere between 800,000 and a million people effected, according to police officials. They are saying that the power is going to be out for at least 12 hours. So that would carry it into the early part of Saturday that there would be power out again. All this affecting not just the many tourists who are here, but also President-elect Barack Obama.

Ed Henry, CNN, Honolulu.

(END VIDEOTAPE)

BOUDREAU: Checking your economic headlines, gas prices have hit a four and a half year low. Today, you will pay $1.64 on average for a gallon of regular unleaded. That's a 60 percent drop from the summer's record high prices.

The National Retail Federation is asking President-elect Barack Obama to include tax-free spending holidays in his economic stimulus package. The group estimates that will save shoppers about $20 billion.

HOLMES: Well, shoppers trying to save some money right about now. They are out there looking for those deals, those 50, 60, 75 percent off and things like that.

Our Susan Candiotti is with us. She's still at Macy's, I believe it is there, in New York.

Now, I don't know what the crowds are like, but I know what the crowds are looking for. They are looking for those deep discounts. But even if a lot of people go shopping and buy that deeply discounted stuff, the companies, the retailers aren't making a lot of profit on deeply discounted items.

Where in the world can we save the holiday season?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Well, retailers are trying to salvage it whatever way they can. And they are doing it by exactly what you said, offering those deep, deep discounts of up to 70 percent.

That's what they are doing at stores like Macy's here and any other store. You can look at any direction in shouting distance, everyone is offering huge discounts right now.

We have plucked out a couple of shoppers who just walked out of Macy's as an example. Now, this woman through in from Toronto, got a heck of a deal flying down here.

But you are also making out like a bandit. Let's see what you have here.

UNIDENTIFIED FEMALE: Nice Kenneth Cole bag.

CANDIOTTI: Kenneth Cole bag. And it normally costs what? You got it for what?

UNIDENTIFIED FEMALE: Two hundred and fifty dollars, for $90.

CANDIOTTI: Not bad. Not bad at all. Huge discounts. It makes us all want to go back in.

What about you? How did you do?

UNIDENTIFIED FEMALE: I also got a bag. And it was originally, I think, $180. It was for about $85, I think.

CANDIOTTI: Now, did you shop any differently because the economy is hurting the way it is this holiday season?

UNIDENTIFIED FEMALE: Well, yes. You know, as you know, we are in a lot of trouble right now. And like I was saying to you earlier, the poverty for children in New York is up to 20 percent.

So we have to remember that, you know, we try to do our best to help our new president, try to do our best to help the city, the state of New York, and try to do our best to help the season. So, you know...

CANDIOTTI: And taking advantage of the sales when the prices are the lowest?

UNIDENTIFIED FEMALE: Yes, try to do our best. As little as we can. So...

CANDIOTTI: And hope that, of course, things will look better. That is what everyone is hoping, all the retailers, because as you heard, sales down 5 to 8 percent.

Will things improve in 2009? Retailers sure hope so.

Back to you.

HOLMES: Well, we all hope so as well.

Susan Candiotti out there.

And those are hell of a deals a lot of people are getting out there.

We'll check in with you again here in a little while. Thank you so much. BOUDREAU: Beefing up protection along their borders, more on the escalating tension between India and Pakistan.

(COMMERCIAL BREAK)

BOUDREAU: A day of remembrance in Pakistan. One year ago, former prime minister Benazir Bhutto was assassinated during a campaign rally near Islamabad.

Meanwhile, the United Nations says it's working on establishing a commission to probe her death. The secretary general says discussions with Pakistan and the U.N. Security Council about structuring a panel of investigators is already under way.

Military officials in Pakistan say the country has moved troops to its border with India because of fears of a ground incursion. Officials also admitted all military personnel have been called back to active duty. Tension between the neighboring countries have been escalating since the terror attacks in Mumbai. India insists the terrorists were trained in Pakistan. Pakistan says they are not looking for a war but need to protect against threats.

HOLMES: We turn now to CNN Senior International Correspondent Nic Robertson about the situation. The situation, what do you do now with neither side appearing to want to back down?

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): What began at a 10-man terror attack is escalating into a potentially more deadly conflict. The three-day gun battles that erupted a month ago in Mumbai, India's financial capital, sewed the seeds for growing tension between Pakistan and Indian.

India claims the attackers were trained at terror camps in Pakistan and demanded those responsible be handed over. Pakistan arrested leaders of a group which denies any part in the attacks and says India has yet to provide sufficient evidence to specify their role.

In India, many people are demanding their government strike Pakistan. During the attack, India's air force was put on standby. But now Pakistan's politicians believe India is building troops along its border and say they have no choice but to respond.

WAJID SHAMSUL HASAN, HIGH COMMISSIONER: You cannot rule out the possibility (INAUDIBLE). We will also have to respond to it in a similar manner. So that's what he we have been trying to avoid. We have been telling them, we don't want war, but we know how to defend ourselves.

ROBERTSON: Both sides accuse each other of war hysteria, but neither is stepping back.

PRANAB MUKHERJEE, INDIAN EXTERNAL AFFAIRS MINISTER: We will expect that instead of raging war hysteria, they will address this problem for peace and stability. ROBERTSON: As tensions rise, troop deployments could impact the United States and its war on terror. Pakistani officials admit they are taking troops from the fight against Taliban and al Qaeda in the tribal border region neighboring Afghanistan to move them across the country towards India. Pakistan says it's normal to shift troops during winter and remains committed to fighting terrorism, but tensions are on such a hair trigger, they have no choice.

UNIDENTIFIED MALE: Any mad man could start something which could really be beyond anybody's control. So that's what scares us.

ROBERTSON: The two nuclear-armed nation have fought three major wars in the past 60 years and have ratcheted up border tensions on many more occasions. But the origins of this standoff may be more complex.

(on camera): Pakistan's high commissioner to London says they are frustrated the United States is not doing more to help them fight the war on terrorism along the border with Afghanistan. By taking troops from that fight to defend against India, they are sending a clear message -- they need more help from the U.S. to diffuse the growing tensions.

Nic Robertson, CNN, London.

(END VIDEOTAPE)

BOUDREAU: Can you name the best iReports of the year? Actually, you can. Our Josh Levs is here to show you how.

JOSH LEVS, CNN CORRESPONDENT: Yes, that's right.

I am going to teach you the drag and drop system once you rank the best iReports. Currently in the lead is this one. It's a tornado churning toward a home.

(COMMERCIAL BREAK)

HOLMES: This weekend, Betty Nguyen and I looking back at some of the most memorable iReports of 2008. You and your stories helped us, and helped us greatly in shaping the news and telling the stories and covering them more extensively.

Don't miss our iReport special tonight, tomorrow night, 8:00 Eastern, right here on CNN.

BOUDREAU: And speaking of iReports, we are asking you to name the best ones of the year.

HOLMES: And Josh Levs here to show us how this is done and how you can participate.

Josh, good morning.

LEVS: Yes, good morning to you guys.

All right. Check it out. We're just going to zoom right in on the board.

I want to he show you guys this cool drag and drop system we've got going here. All you need to do is go to CNN.com, click on "Year End Review" at the top, and this is where you rank the best iReports.

Let's say you say, "Hey, I really like this tornado one." I'm just saying that because that's in the lead right now You just grab it over here and you put it where you think it belongs.

You can rank all the top 10 wherever you think they belong. We're going to keep an eye on your results.

Let's show you some of what we got, starting with that tornado right here. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Oh my gosh (INAUDIBLE).

UNIDENTIFIED MALE: I know.

(END VIDEO CLIP)

LEVS: That came to us from Bob Potempa in Illinois. Now, I'm going to emphasize as we see this, we always make sure before we use these things on air, he did not go to any danger in order to take that.

He was saved. Everything worked out fine. But it's still incredible video of a tornado there.

Let's go to the next one now as well. We invited people to tell us what their year was like in 30 seconds or less. Let's take a look at what we got from Chris Denny.

(BEGIN VIDEO CLIP)

CHRIS DENNY, IREPORTER: Kissed the bride, ate some cake, Martha (ph) smoked, danced all night. Honeymooned in Fiji, parents split up. I (ph) got run over by a boat. Say goodbye to Hannah (ph). Miller (ph) was born. Got laid off, started a business, relearned the budget, got our first...

(END VIDEO CLIP)

LEVS: All right. You get the idea. It was really impressive. A lot of people loving that. It was in the top five right now.

We are going to end with a tiny clip of this one, a little comedy one that we got from Michael Abbott, who was making fun of the new California law that says you can only drive with a hands-free device, no more holding your phone. So he shot a comedian doing everything else with his hands that does not involve a phone. Comedian Skyler Stone (ph) there.

Lots of you loving this. So guys, everyone has a few more days to weigh in. And maybe when they watch that special with you, T.J., tonight they will get some ideas about that.

HOLMES: They absolutely will. A lot of ideas.

A lot of good iReports in there. A lot of big news that we covered in that special. Some funny stuff, too, but a lot of hard news.

Josh, we appreciate you. Thank you so much.

LEVS: Thanks a lot.

HOLMES: Well, she is not going to be elected to the office, but she is still out there campaigning.

BOUDREAU: Caroline Kennedy discusses why she wants to become a U.S. senator. Her story in her own words straight ahead.

(COMMERCIAL BREAK)

HOLMES: And welcome back, everybody.

We are covering breaking news out of the Middle East, where there is a dire warning from the head of the Defense Ministry in Israel, saying that the time for fighting has come. Israeli airstrikes on Hamas targets that left widespread destruction in Gaza. Palestinian medical sources say at least 155 people are dead, 250 are injured.

Hamas has fired back at Israel with rockets. Israel's government warns that it may now widen its offensive.

BOUDREAU: Back in the states, seven members of one family are dead after a fire last night in Philadelphia. Authorities suspect a kerosene heater may be to blame. Firefighters say the home was not equipped with any smoke alarms.

A ninth body has been recovered from the rubble of a burned-out home in suburban Los Angeles. That's where a man dressed as Santa Claus opened fire at a Christmas Eve party before setting fire to the home.

It happened in Covina, at the parents of the man's ex-wife. Police now say Bruce Jeffrey Pardo was planning to flee to Canada.

Our Thelma Gutierrez has more on the emergency calls to police.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): Their frantic screams for help coming from the inside of this home. These are the transcripts of the 911 call.

"He's shooting. He's shooting."

Two dozen people are at a Christmas party when a man dressed as Santa Claus goes on a rampage. The panicked caller tells the 911 operator she knows the shooter.

"His name is the Bruce Pardo. He's my ex-brother-in-law. He's still shooting. He's knocking out the lights. He came in through the entrance of the door in a Santa Claus suit. I didn't see them when he shot."

Police say 45-year-old Bruce Pardo went to the Christmas party dressed as Santa, because he knew it was an annual family tradition. When an 8-year-old girl opens the door, Pardo pulls out a semiautomatic weapon and shoots her. The caller tells the operator, "My daughter's been shot in the face. She was shot in the face, and she's bleeding."

Police say Pardo then begins shooting at everyone in sight. Some hide under furniture. Others jump from windows to escape. Then he pulls out a canister of racing fuel disguised as a holiday package.

KIM RANEY, POLICE CHIEF, COVINA POLICE DEPARTMENT: The package he had appears to be a homemade pressurized device.

GUTIERREZ: The two-story home belonging to Pardo's former in- laws is engulfed in flames. The bodies of nine people are burned so badly they have to be identified using dental records. Pardo is also severely burned.

RANEY: He suffered third-degree burns on both arms. It appears that the Santa Claus suit that he was wearing did melt onto his body.

GUTIERREZ: Pardo flees to his brother's house, but investigators discover he had an elaborate escape plan.

RANEY: Pardo did have $17,000 in cash, Saran Wrapped to his legs or concealed inside of a girdle that he was wearing. He also had a plane ticket for a flight on an early morning flight Thursday, Christmas morning, from LAX to Canada.

GUTIERREZ: He hadn't counted on suffering third-degree burns himself. Unable to escape, Pardo fatally shoots himself in the head.

Thelma Gutierrez, CNN, Covina, California.

(END VIDEOTAPE)

HOLMES: A 6-year-old girl is dead after an accident at the Miami International Airport. Police say the girl was riding on top of one of those luggage carts. It was being pushed by a family member.

Well, it got away and rolled into traffic. Police say the girl fell off the cart and was hit by a taxi. No charges have been filed in this incident.

Meanwhile, New York police say they will not charge the 76-year-old man who crashed his car into a building where kids were celebrating Hanukkah. Police say it was an accident, but they are still searching for the cause of it. Fourteen people were hurt in Thursday's crash. At least four of them, including two children, were hurt seriously.

BOUDREAU: Snow and ice that have blanketed parts of the country are starting to melt. That's not entirely a good thing.

In the Chicago area, freezing rain caused some of the worst driving conditions in decades and countless accidents yesterday morning. But a sudden warm-up has officials worried now about possible flash flooding.

Seattle is also beginning to melt. The rare Christmas snow turning into a sloppy mess.

Elsewhere in Washington it's a different story, though. Spokane, which we saw record snow on Christmas Day, is also expecting another four inches.

Winter has made yet another travel mess. Travel plans are a total mess out there. Thick fog and poor visibility had shut down Chicago's Midway Airport late yesterday. A lot of those passengers are still waiting to get out.

Here is Jonathan Choe with affiliate CLTV.

(BEGIN VIDEOTAPE)

JONATHAN CHOE, REPORTER, CLTV: Take a look at these long lines at Midway Airport. Many of these passengers couldn't get a flight out Friday night because the entire airport was closed due to bad weather, frustrating passengers who are hoping to get another flight out today.

(voice-over): The lines are long and there are no assurances your flight is on time.

UNIDENTIFIED FEMALE: When I called about it early this morning, they said that they could get me home on Tuesday.

CHOE (on camera): Wait a second. So your flight got canceled again after being canceled on Friday?

UNIDENTIFIED FEMALE: Yes.

CHOE (voice-over): Fog and high winds shut down Midway Airport Friday night, forcing hundreds of passengers to sleep on cots.

UNIDENTIFIED MALE: This is Chicago. It happens. But it's frustrating, don't get me wrong. But I'm just choosing not to be frustrated.

CHOE: And it's also about delays and cancellations over at O'Hare.

UNIDENTIFIED FEMALE: Don't know what the delays are because the airlines don't quite know. They are working very hard to try to get people back on flights.

CHOE (on camera): Midway Airport is open, but an aviation spokesperson says they are still at the mercy of the weather.

From Midway Airport, Jonathan Choe, CLTV News.

(END VIDEOTAPE)

(WEATHER REPORT)

HOLMES: And severe weather being blamed for a power outage as well on the Hawaii island of Oahu. More than 800,000 people are in the dark.

Lightning is suspected of causing that outage. Power company officials expect to restore power within a couple of hours.

President-elect Obama, of course, is vacationing there with his family. The island's governor says a generator was delivered to the home where Obama is staying.

Well, as we know, Hawaii, often the place where a lot of people go to get away from their worries, to escape some of their troubles. Well, Obama has done that at least for the past couple of weeks there in Hawaii, but he's going to have one particular issue still on his plate when he gets back, the scandal with Governor Rod Blagojevich of Illinois.

Our Senior White House Correspondent Ed Henry now reports that the whole Blagojevich scandal is threatening now to cast a shadow over the incoming administration.

(BEGIN VIDEOTAPE)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Thank you. You guys have a wonderful new year.

HENRY (voice-over): His daily visit to the workout room at a Marine base dubbed "Semper Fit" is about the only activity making President- elect Barack Obama sweat in Hawaii. But the question in the days ahead is whether the scandal engulfing Illinois Governor Rod Blagojevich will take a bite out of Mr. Obama's Honolulu honeymoon.

ROBERT BENNETT, ATTORNEY: It is like Count Dracula. The count needs fresh blood every day, and if he doesn't get his daily dose of blood, he withers away. And that is what a scandal is. It needs fresh blood every day.

HENRY: The latest wound? CNN has confirmed Blagojevich's attorney has written to the Illinois state panel considering impeachment, urging lawmakers to issue subpoenas to incoming White House aides Rahm Emanuel and Valerie Jarrett for testimony about the governor's alleged attempts to auction Obama's Senate seat.

Power lawyer Bob Bennett says this is a typical defense tactic that probably will not work. Prosecutor Patrick Fitzgerald is likely to squash the subpoenas to prevent interference with his criminal problem, though the drip, drip of scandal can be politically damaging.

BENNETT: It certainly can take the president and -- and his people off-message. And it certainly prevents them from dealing with the issues they want to deal with in the timeline they want to deal with them. HENRY: But Bennett, who represented then President Clinton in his impeachment drama, notes, the current president-elect seems well- served, having Clinton vets on his staff, from Emanuel to incoming White House counsel Greg Craig, who led the internal investigation the transition team is hoping will the turn the page for the president- elect.

STEVE ELMENDORF, DEMOCRATIC STRATEGIST: I think he and the people around him have nothing to hide. And they have done this perfectly. They have answered every question. They have put out all the information. And they have a U.S. attorney who said at the beginning, in his first press conference, that Barack Obama was not open to any sort of a deal.

HENRY: Bennett, author of a book on how to deal with political scandal, says the transition team was particularly shrewd about making the president-elect available for an interview with the prosecutor, suggesting he has nothing to hide.

BENNETT: I think it was a very smart thing for the president- elect to do.

HENRY (on camera): A sharp contrast from previous Bennett clients, like Bill Clinton, who did not always seem forthcoming, which only brought more attention to the scandal.

Ed Henry, CNN, Honolulu.

(END VIDEOTAPE)

BOUDREAU: Caroline Kennedy is stepping up her efforts to be named Hillary Clinton's successor in the Senate. The 51-year-old daughter of President John F. Kennedy has conducted her first interviews after asking the governor of New York to consider her for that spot.

(BEGIN VIDEO CLIP)

CAROLINE KENNEDY, JOHN F. KENNEDY'S DAUGHTER: People have a lot of opinions about our family, people in our family. You know, good opinions, bad opinions. That's something that I have grown up with.

But, you know, I can tell you that in our family, and my family, in particular, I think, you know, there was a sense that, you know, we have to work twice as hard because, you know, people have this perception that, you know -- and we are fortunate. But I think it's a question of, what do you do with that opportunity?

(END VIDEO CLIP)

BOUDREAU: Kennedy says she's always considered political office, but was finally moved to action after working on Barack Obama's presidential campaign.

HOLMES: Well, right now we have a lot of big-name stores looking to Washington for some help.

BOUDREAU: Is another bailout possible?

(COMMERCIAL BREAK)

HOLMES: We continue to follow our breaking news here on CNN.

You are seeing a live look this morning, a live picture in Gaza, where there's a lot of activity at this hospital after we have confirmed now 170 people, at least, have been killed. That word coming to us from Palestinian and Israeli officials after Israeli airstrikes on at least 50 Hamas targets in Gaza.

Hamas has retaliated, been firing rockets into Israel. We know of at least one Israeli that has been killed in this. But an escalation of the conflict between the two sides, a conflict that both sides are saying does not appear to be coming to an end anytime soon.

Again, airstrikes have killed at least 170, according to Palestinian and Israeli officials. And again, the fighting is expected to continue.

BOUDREAU: Slumping holiday sales? What slumping sales? While many retailers reported an abysmal Christmas shopping season, Amazon.com says it was the best ever. On its top day, it sold more than six million items. That's about 73 items a second.

And it's down, down, down. The average price of regular unleaded gasoline has dropped another half a cent. It's now $1.64.

The National Retail Federation is asking President-elect Barack Obama to include three tax-free shopping holidays in his economic stimulus package. The group estimates that will save shoppers about $20 billion.

CNN's Joe Johns has more.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN SENIOR CORRESPONDENT (voice-over): If super sales aren't enough to pry open wallet wallets and purses in the weeks ahead, the nation's retailers have a plan to make it easier to splurge. They're asking President-elect Obama for a tax holiday -- or, rather, three tax holidays, each lasting 10 days, in March, July and October. Thirty days where what you see is what you pay, no sales taxes of any kind on just about anything with a price tag.

The National Retail Federation says, without action, "The current economic weakness could worsen, creating a more rapid downward spiral beyond what economists are predicting for 2009." Still, the Retail Federation says the savings to consumers over the 30 tax-free days could be $20 billion, or $175 a family.

(on camera): Do these things really work? Do they make that much of a difference?

ERIC BEDER, RETAIL SALES ANALYST, BREAN MURRAY CARRET: They make a little bit of difference. Historically, they move savings from one period to the other. But, usually, it just robs Peter to pay Paul. The real piece is going to be the full economic stimulus. That's how they drive the consumer, give them confidence that they can shop once more and really have them out in the stores again.

JOHNS: But if shoppers aren't paying taxes, what happens to state budgets? The retailers are asking the federal government to make up for all the lost state and local tax revenue by dipping into the federal treasury.

And retailers aren't the only ones asking the new president and the new Congress for help. The nation's homebuilders want Congress to pony up $250 billion in tax credits for homebuyers, up to $22,000 a buyer, nearly three times what Congress approved this summer. The homebuilders' plan is also wrapped up in a shiny pitch called Fix Housing First.

Christmas may be over, but the wish lists for the new administration are only getting longer.

Joe Johns, CNN, Washington.

(END VIDEOTAPE)

BOUDREAU: A cunning thief strikes as store employees watch. And you will be sure to laugh.

(COMMERCIAL BREAK)

HOLMES: All right. Reality shows are all the rage these days. We've had -- Paris Hilton has her own reality show. Flavor Flav, he has a reality show. So why not this guy? It was only a matter of time before we saw this.

BOUDREAU: Yes.

Well, one (INAUDIBLE). All of it caught on tape. And the co-star of these unwitting players, a sheriff who wears his controversy like a badge.

Details from CNN's Brooke Anderson.

(BEGIN VIDEOTAPE)

BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT: He calls himself America's toughest sheriff. His critics claim he is unethical and out of control. Now, Sheriff Joe Arpaio is unapologetically going Hollywood in a new reality show.

SHERIFF JOE ARPAIO, MARICOPA COUNTY, ARIZONA: This is a very dangerous assignment to go after fugitives. You never know what's going to happen when these guys are wanted.

ANDERSON (voice-over): Joe Arpaio of Maricopa County, Arizona, one of the most controversial sheriffs in the country.

ARPAIO: I am not going to brag, but there isn't anybody in the world who doesn't know who this sheriff is.

ANDERSON: His inmates live outdoors in tents, regardless of extreme temperatures. And they are forced to wear pink underwear.

ARPAIO: They were stealing the white underwear, smuggling the underwear out of the jail. So you know what? Give them pink.

The other reason is they hate pink. Why would you give the 10,000 inmates a color they like?

UNIDENTIFIED MALE: Deputies at the front door. He is coming your way. Stand by.

ANDERSON: Now, Arpaio and his officers are taking their unusual tactics to television for the new reality series, "Smile... You're Under Arrest." The team works with actors, staging elaborate scenarios to entice wanted criminals out of hiding.

UNIDENTIFIED MALE: And I want you to model my jail outfit.

ANDERSON: With promises of modeling and acting opportunities, unsuspecting felons with outstanding warrants, including DUIs, drug charges and missed court dates, show up only to be arrested.

UNIDENTIFIED MALE: Now I've got a little bit of a surprise.

ARPAIO: It's kind of fun to show how stupid they are and, as I say, the looks on their face.

ANDERSON: But not everyone agrees the show or Arpaio's participation is fun.

UNIDENTIFIED FEMALE: This is so wrong.

PACO FABIAN, COMM. DIR. "AMERICA'S VOICE": It's going to celebrate a sheriff that is, frankly, scaring this community, a sheriff that has seen violent crime increase significantly in his county, a sheriff that is racially profiling the Latino community. And I doubt that the show is going to reflect that.

ANDERSON: Paco Fabian of pro-immigrant organization America's Voice asserts Arpaio leads unfair immigration sweeps, an allegation Arpaio flatly denies.

ARPAIO: We are the only ones cracking down on the state human smuggling law.

ANDERSON: Arpaio is proud of his efforts off and on screen, stating his team made hundreds of arrests as a result of these reality show stings.

UNIDENTIFIED MALE: You're under arrest -- for real.

ANDERSON (on camera): Fabian, of America's Voice, told me his organization is considering putting some pressure on the advertisers of this new reality show. "Smile... You're Under Arrest" premiers on the Fox Reality Channel this weekend.

Brooke Anderson, CNN, Hollywood.

(END VIDEOTAPE)

HOLMES: All right.

Well, coming up next hour, an American teenager and his mission to save the women of Darfur. We'll tell you how he is helping to stop the violence with a modern kitchen appliance.

BOUDREAU: Then at noon Eastern, our legal guys weigh in on the biggest court cases of '08.

(COMMERCIAL BREAK)

BOUDREAU: A shady character bursts into a store and dashes off with a stolen treat. So what dirty, rotten scoundrel would do that? The answer on store surveillance tap.

HOLMES: Yes, this is one of those videos you have just got to see. This is from John Hollenhorst of our CNN affiliate in Salt Lake City, KSL.

(BEGIN VIDEOTAPE)

JOHN HOLLENHORST, REPORTER, KSL (voice-over): At Smith's Food and Drug in Murray, a popular place these days, is the manager's office where they have the surveillance video.

UNIDENTIFIED FEMALE: You had to see it to believe it, but it happened. So, it's crazy.

HOLLENHORST: A suspicious character entered through the front door.

UNIDENTIFIED MALE: I've never seen him shop before. A brand-new customer. Didn't even have his fresh value card.

HOLLENHORST: What happened next is already becoming legend.

UNIDENTIFIED FEMALE: How likely is that for a dog to walk into a store, go down a pet aisle, get his bone and walk out?

HOLLENHORST: Let's reconstruct the crime a step at a time.

Entering at the checkout aisle, he approached a young girl.

UNIDENTIFIED MALE: He just kind of sniffed the customer up and then he headed down the aisle.

HOLLENHORST: At that point had he a decision to make -- left, no dog food; right, dog food. He turned right and went straight to aisle 16.

UNIDENTIFIED MALE: The dog food aisle. He knew where he was headed.

HOLLENHORST (on camera): There are so many fun Christmas presents he could have picked. I mean, look at this. This one even lights up. But he seemed to know exactly what he was after.

(voice-over): He grabbed a rawhide bone like this and headed down the aisle only to be confronted by the manager.

UNIDENTIFIED MALE: I looked at him, I said, "Drop it." I decided I wanted to keep all my fingers, so I didn't try to take it from him. And he looked at me and I looked at him, and he ran for the door and away he went. Right out the front door.

UNIDENTIFIED MALE: Look at that dog go.

HOLLENHORST: Expert Marshall Tanner (ph) says the culprit's sense of smell is 100,000 times better than the typical crook.

UNIDENTIFIED MALE: He smelled the rawhide bone, grabbed it, and walked out of the store, thereby being a shoplifting dog.

HOLLENHORST: At last word, he was still at large, presumably enjoying his Christmas gift.

UNIDENTIFIED MALE: He's enjoying the heck out of it.

HOLLENHORST: John Hollenhorst, Eyewitness News, Murray.

(END VIDEOTAPE)