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Obama Sells the Stimulus; Israeli Troops Surround Gaza City; The Senate Prepares for a Showdown as Roland Burris Plans to Claim the Illinois Senate Seat

Aired January 05, 2009 - 11:00   ET

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

TONY HARRIS, CNN ANCHOR: It is Monday, January 5th, 15 days until the inauguration. And here are the top stories we're following for you in the CNN NEWSROOM.
The Obama family starts a new life in Washington. The girls are off to school while dad begins his push on the economy, including a major speech this week.

Israel rocks Gaza with more bombs. On the ground, Israeli troops cut the territory in half and surround Gaza City.

Sympathy for the Travolta family. Your iReports for John Travolta and his wife Kelly Preston on the sudden death of their son Jett.

Good morning, everyone. I'm Tony Harris.

And you are in the CNN NEWSROOM.

President-elect Barack Obama pushing his plan to pump up the battered economy and perhaps put some money in your pocket. We are told he is planning a big speech on Thursday. The president-elect on Capitol Hill this hour to meet with lawmakers. We are learning more about his plan.

It would include about $300 billion in tax cuts for individuals and businesses, according to a transition aide. Advisers expect the overall price tag to fall between $675 billion and $775 billion. The main goal, to create three million new jobs.

We have live reports from our money and political teams on the stimulus plan and the Obama transition. Christine Romans in New York with an in-depth look at the recovery plan, and Kate Bolduan, from D.C., covering the president-elect.

Christine, let's start with you.

New details about the plan emerging this morning.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That's right, new details. And more of this plan is going to be tax cuts for workers and businesses than people had thought before. Maybe 40 percent of the overall stimulus is going to be in the form of tax relief. That means more money in your pocket, not giving it to the government in taxes every year. How it shakes out remains to be seen. Will it shake out that you'll actually pay fewer taxes in your paycheck? They'll take less out of your paycheck? Or you'll have to pay fewer taxes when you file for your taxes in April?

I don't know yet, but we were looking closely to see what that's going to look like. What it's going to mean is about $300 billion in tax cuts. A transition aide says that's about the number. A five hundred dollar individual credit, $1,000 family credit.

And then there's also a plan in here for businesses. Writing off 2008-2009 losses, increasing for small businesses, a write-off maximum of about $250,000, reduce your tax bills going back about five years, and tax credits for either not laying off people, foregoing layoffs, or even for new hiring.

So there's some money in there, tax credit money in there, tax cuts for businesses that will be pretty important, I think, for getting some Republican congressional support for this.

HARRIS: Yes.

ROMANS: But, again, I mean, what's new here, what's interesting here, Tony, is that much more of this stimulus is tax-related than just overall spending. There have been some concerns that just overall, huge, big government spending might not do everything you wanted, so there's a very big, big push here on tax cuts -- Tony.

HARRIS: And the fact that a significant portion of the tax cuts will actually go to corporations, to businesses, that's a bit surprising, particularly since so much of what we'd heard in advance is that it was mostly about infrastructure.

ROMANS: Yes, and also to working families.

HARRIS: Yes.

ROMANS: I mean, make no mistake here, people who make less than $200,000 a year, there's a tax cut here for most working families. So clearly, the idea here is to get money in people's pockets as quickly as possible so they can get out there and start spending, or so they can start shoring up their own, you know, financial situation and get moving from there.

HARRIS: Right.

ROMANS: And Tony, every source I've talked to, every expert on this says they've got to do it big, but they've got to do it right. They have to target this correctly.

They can't just throw money into the economy. It has to be done properly, it has to be an investment into working people, into job creation, into infrastructure, and it has to be the right balance. It's a very, very tricky job they have here -- Tony.

HARRIS: Big and right. OK. ROMANS: Yes.

HARRIS: Washington, good luck with that.

ROMANS: Exactly.

HARRIS: All right, Christine. Appreciate it. Thank you.

You know, a lot on President-elect Obama's to-do list. He is meeting this hour with House Speaker Nancy Pelosi on the economic recovery plan. He meets later with other key lawmakers.

Kate Bolduan live now from D.C.

And Kate, good to see you.

Can we assume the speaker is on board with the stimulus proposals from the president-elect as we know them to be at this point?

KATE BOLDUAN, CNN CORRESPONDENT: As far as the entire proposal, it's unclear if she's completely on board with every element. But we do know that they're working together on this.

Obama today, after meeting with House Speaker Nancy Pelosi, is also set to meet with Senate Majority Leader Harry Reid and take part in a bicameral, bipartisan meeting of key lawmakers. And you know the topic, the economy.

Obama's pitching his recovery plan to Congress, estimated at $775 billion. The details we've been talking about of this plan are beginning to emerge. A transition aide confirming this morning the president-elect is crafting a $300 billion tax cut for individuals and businesses.

Now, some say this is a nod to Republicans to try to win more support because they want broad bipartisan support of this. But the transition says they're guided by what works, not by any ideology or special interest.

And you mentioned it, Tony. A transition aide is also confirming that Obama is planning a speech this Thursday in Washington to lay out his economic principles to the public.

HARRIS: The president-elect, Kate, is also dealing with an unexpected vacancy, isn't he?

BOLDUAN: Yes, absolutely. That just came out yesterday. Obama is faced with a new vacancy to fill within his economic team.

Governor Bill Richardson, Obama's choice for commerce secretary, has withdrawn his nomination, citing the distraction of a federal investigation into his ties to a company that's done business with his state. Richardson maintains he's done nothing wrong.

In a statement, Obama said he deeply regrets accepting Richardson's decision, going on to say, "Although we must move quickly to move the void left by Governor Richardson's decision, I look forward to his future service to our country and in my administration."

HARRIS: Yes.

BOLDUAN: Now, Democratic strategists tell CNN Obama aides pushed for this resolution of the matter because they feared the investigation would overshadow the confirmation hearings and they don't need another ethical distraction on their hands.

HARRIS: That's right. Yes, Kate. Let me see if I can work one more in here for you.

BOLDUAN: OK.

HARRIS: While all of this is going on, the Obamas are making the move to Washington, D.C. How is that going?

BOLDUAN: Yes, welcome to Washington, welcome to the public eye.

HARRIS: Yes.

BOLDUAN: If you're not used to it already.

The family moved up here this weekend, and they're staying just steps away from the White House at the Hay-Adams Hotel.

Today, the Obama daughters had their first day at their new school. Michelle went along with them to drop them off.

HARRIS: Oh, look at the pictures.

BOLDUAN: Oh, there you go, the hug and the kiss in the hotel room. As you can see, the whole family getting ready together.

HARRIS: Too cute.

All right, Kate. Good to see you. Thank you.

BOLDUAN: Of course.

HARRIS: Two months and a day after the election, there may finally be a winner in the Minnesota Senate race. State election officials are expected to name Democrat Al Franken the winner today. Out of almost three million votes, he leads incumbent Republican Norm Coleman by 225.

The results don't mean Franken goes to the Senate tomorrow. Coleman has a week to file a lawsuit challenging the recount.

Roland Burris is heading to Washington today to claim the open Senate seat from Illinois. That is, if he can get in the Senate door.

CNN Senior Congressional Correspondent Dana Bash is at the Capitol.

Dana, great to see you.

Look, you can't have a Burris/Capitol Police sideshow. I mean, come on, this will get worked out, won't it?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: You know, that is certainly the goal, but I can tell you that we are told by one of Roland Burris's associates that he is going to try. That, as you said, he's coming to Washington later today, but tomorrow morning, at about 10:30 in the morning, he's actually going to try to get through the doors of the Senate chambers to be sworn in along with the rest of the new senators.

Now, we know, as we have been reporting, that that is something that his own Democratic leaders are going to try to stop. So this drama is going to continue, maybe even reach a bit of a climax tomorrow.

Now, yesterday, Burris had a sendoff rally with some black leaders in Chicago at a church there. And he made very clear why he is going to continue to do this, because he believes that regardless of the fact that the governor who appointed him is tainted, that it is lawful that for him to be appointed and it is lawful for him to be a United States senator.

(BEGIN VIDEO CLIP)

ROLAND BURRIS, NAMED TO ILLINOIS SENATE SEAT: In all interest of the law, that I am duly appointed constitutionally. And therefore, we should get about the business of letting me do what I'm supposed to do, and that is to represent the 13 million people of Illinois.

(END VIDEO CLIP)

BASH: Now, the Senate majority leader, Harry Reid, has been quite defiant, along with other members of the Democratic leadership, about saying, look, we are simply not going to seat Roland Burris because of the fact that Rod Blagojevich is tainted. And they have made it their mission here to fight corruption and any perception of corruption at all.

But yesterday, Tony, he said that because he -- Harry Reid says because he's an old trial lawyer, he said there's always room to negotiate. Now, that sounded like he was leaving the door open a little.

Now, I'm told that he did that because of the tone here. This is clearly very unwelcomed, this Democratic drama that's going on.

HARRIS: Yes. Yes.

BASH: And also because of the fact that, look, this is uncharted waters for the Senate Democrats and for the Senate in general, this idea that they are going to try to block somebody who was appointed by the governor. And so they wanted to leave their options open.

Now, there is going to be a meeting not tomorrow, but on Wednesday, with the Democratic majority leader, Harry Reid, and Dick Durbin, the number two, who also is a senator from Illinois. They're going to meet with Roland Burris, at least that is the plan right now. That's going to happen on Wednesday, but that leaves a whole day of drama tomorrow -- Tony.

HARRIS: Come on, Dana. Is there a real possibility here, at the same time that Congress is working on what could be a $775 billion stimulus package, that we could have this drama play out tomorrow with Burris knocking at the door and not being -- come on.

BASH: You know, it's unclear if that's going to be the exact visual of it. In fact, I'm sure it won't be, you know, because, look, Burris's associate told our Ted Barrett this morning that, look, he doesn't want to cause a scene.

HARRIS: OK.

BASH: He understands that this is going to be drama. However, look, the media spotlight is going to be on him. So whether or not he's going to try to break down the door of the U.S. Senate or not, there is going to be a scene to watch what happens when he tries to come in, because the way it's going to happen right now, he's not going to be able to get in. And it's unclear where he's going to physically going to go, because he doesn't necessarily -- he doesn't have an office.

HARRIS: Yes.

BASH: Where is he going to park himself while he tries to figure out what's going on?

HARRIS: So wherever he goes, the cameras will be there.

BASH: Well, we'll try.

HARRIS: A circus.

BASH: There aren't just rules about how to seat a senator, there are also rules about where our cameras can go. So we'll see what we can do.

HARRIS: OK. Oh man.

All right. Dana, appreciate it. Thank you.

BASH: OK.

HARRIS: You've had 41, you've got 43 for another 15 days. How about a third President Bush? The first President Bush is encouraging his son Jeb to go for it.

(BEGIN VIDEO CLIP)

GEORGE H.W. BUSH, FMR. PRESIDENT OF THE UNITED STATES: I'd like to see him run. I'd like to see him be president some day.

UNIDENTIFIED MALE: Really?

BUSH: Or maybe senator, whatever. Yes, I would. I mean, right now is probably a bad time because we've had enough Bushes in there. But no, I would.

And I think he's as qualified and as able as anyone I know in the political scene. Now, you've got to discount that. He's my son, he's my son that I love.

(END VIDEO CLIP)

HARRIS: Jeb Bush has served two terms as Florida's governor. He hinted he may run for a Senate seat in 2010.

The transition to power. One expert gives President-elect Obama some advice when it comes to the Mideast crisis.

Hear it next.

(COMMERCIAL BREAK)

HARRIS: And this just in to CNN, video from just moments ago from just outside the Hay-Adams Hotel in Washington, D.C. This is the motorcade for President-elect Barack Obama leaving the hotel, presumably for the short trip to Capitol Hill for his meeting this morning with the speaker of the House, Nancy Pelosi.

The two will be meeting to talk about the stimulus package, as we've been telling you. The size of it, the scope of it. We've learned some new details of it. Forty percent of that stimulus package going now to tax relief.

We understand that later today, the president-elect will meet with other key lawmakers in sort of a bipartisan, bicameral meeting of leaders. Again, that is scheduled for later this afternoon.

Let's get a quick market check now.

Dow stocks, as you can see here, struggling a bit to build on Friday's year opening rally. The Dow down 30 points in early trading. The Dow, as you know, rose 3 percent Friday to close above 9,000. It's been a while since it's been there. That's the first time that's happened since November 5th, exactly two months ago today.

Day 10 of Israel's assault on Gaza. Thousands of Israeli troops, backed by tanks, artillery and helicopters, pushing deep into the Palestinian territory. But Hamas still able to fire rockets into Israel.

Death toll rising. More than 500 Palestinians killed, another 2,600 wounded so far, many of them children. On the Israeli side, five dead, including a soldier killed in combat.

Diplomatic efforts to end the conflict intensifying now. An EU delegation holding talks with leaders in the region, plus France's president meeting this hour with Palestinian President Mahmoud Abbas in Ramallah.

The international community worried about the growing number of civilian casualties in Gaza. Israel's foreign minister acknowledging the concern, but stands her ground in an interview with CNN Chief International Correspondent Christine Amanpour.

(BEGIN VIDEOTAPE)

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: I spoke exclusively to the Israeli foreign minister, Tzipi Livni, yesterday, and she has acknowledged that fact and says that it will put pressure on Israel as the diplomatic activity continues, but they're not yet ready to end these activities right now.

AMANPOUR: Many people are calling for a cease-fire. Will you accept a cease-fire?

TZIPI LIVNI, FOREIGN MINISTER OF ISRAEL: There is one thing that frustrates me, the idea of saying something like Israel and Hamas need to stop. A cease-fire between Israel and Hamas, it's not a saying. I'm not willing to put Israel and Hamas in the same paragraph or even use the same wording, because as I said before, we are expressing our right of self-defense. Israel is a state which is a member of the international community, while Hamas is a terrorist organization.

Israel acts against Hamas because it targets Israel. So they know what to do in order to stop it.

AMANPOUR: We're hearing periodic artillery fire from close by going out from Israel into the Gaza Strip. We also know that the French president, Nicolas Sarkozy, is due here in the region, first to talk to the Israeli defense minister, and then to go on and talk to the prime minister, as well as the leaders of the Palestinian Authority. Tony Blair, the former British prime minister, is also discussing ways of ending this.

And what we're hearing from the Israelis is that they're not interested in just an immediate cease-fire, but what they want is an eventual ability to close down the weapons smuggling from Egypt into the Gaza Strip.

(END VIDEOTAPE)

HARRIS: President Bush standing firmly with the Israelis, but the question now, how will Barack Obama handle the crisis when he becomes president?

Our Fareed Zakaria talked strategy with Richard Haass, president of the Council on Foreign Relations.

(BEGIN VIDEOTAPE)

FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": What does this say about the Bush administration's strategy toward the Israeli- Palestinian conflict? Because we, after all, the United States, pushed for elections in Gaza. Then, when Hamas won those elections, we decided that we were going to strangle them in some way. We acquiesced, supported Israel's decision to impose an economic blockade, and now this is where we are.

It certainly doesn't seem like the strategy is working.

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: Clearly, it's not worked. But that said, it's not necessarily a disaster for President Obama. And that's really the more important question. There's very little -- indeed, there's nothing the Bush administration can do at this point.

But what you've got is a situation where Hamas is clearly going to be weakened. It won't be destroyed, it can't be eliminated, but it will be weakened.

And the real question is then whether thee United States steps in, because there may be an opportunity here. Because we're seeing a shifting of the balance of power potentially with this weakening.

So the real question is, do we take advantage of it, or do we simply allow a vacuum to linger, in which case Hamas would one day revive? And that would be the worst of all cases. But if President Obama is willing to take a diplomatic initiative, economic initiative, and a security initiative, there's actually a chance to turn what -- your situation, which clearly has been something of a shambles, into something positive.

ZAKARIA: So what should he do? What are those initiatives?

HAASS: I'd say two things above all. One is on the security side. I think we should look at the idea of some type of an international force in Gaza.

We don't want an Israeli occupation, we don't want the reestablishment of Hamas' primacy. Why not ultimately think about some version of an Arab League or Islamic Conference Force to provide security in Gaza to make sure that smuggling stops once and for all?

And secondly, we need to give the moderates and the Palestinian world an argument. We need to give them evidence to say what Hamas is doing doesn't pay off, doesn't lead to a Palestinian state, but moderation does. And the only way that will happen is if the United States and Israel make it happen.

So what we have here is potentially some military progress. But what we really need to see now is complementing military progress with a larger security approach and with a diplomatic approach. Israel cannot succeed by military means alone, but it might set a context in which imaginative foreign policy can prosper.

(END VIDEOTAPE)

HARRIS: All right. President-elect Barack Obama on Capitol Hill this hour talking about the economy with House Speaker Nancy Pelosi.

Have a listen. (BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Hey, guys. How are you? Good to see you.

UNIDENTIFIED MALE: Good morning.

OBAMA: Good morning. How are you?

I guess this angle's better, huh? This must be, apparently.

Well, let me just say how thrilled I am to be here sitting with the speaker. Obviously, the inauguration stand is being built in the background, but the reason we're here today is because the people's business can't wait.

We've got an extraordinary economic challenge ahead of us. We're expecting a sobering job report at the end of the week.

The speaker and her staff have been extraordinarily helpful in working with our team so that we can shape an economic recovery and reinvestment plan that starts putting people back to work. And, you know, I can't think of a better partner in doing what is necessary to get this economy back on track than Speaker Nancy Pelosi, who has just been an extraordinary advocate for working people all her life.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: Thank you very much, Mr. President-elect. It is a great honor and a personal privilege to welcome you to the speaker's office.

Tomorrow, we will swear in a new Congress. We'll be -- hit the ground running on the initiatives that -- some of which you described to address some of the pain being felt by the American people. And then two weeks from tomorrow, we will inaugurate a new president of the United States.

As the president-elect indicated, the construction is under way right now. And at that time, we will be able to have signed into law legislation which will improve the lives of the American people.

It's a very, very exciting time. We pledge to work together in a bipartisan way with great civility, with great fiscal discipline, and I know the debate will be spirited. We welcome it.

And I congratulate the president-elect on his success, on the appointment of his cabinet, on the transition, and look forward to his inauguration.

OBAMA: Thank you.

(CROSSTALK)

OBAMA: Are we taking questions here, Robert Gibbs?

PELOSI: They're leaving now.

OBAMA: I don't think we're taking questions, guys, but I'm going to have a news avail later in the day. So...

(END VIDEO CLIP)

HARRIS: OK. There you have it. House Speaker Nancy Pelosi and the president-elect, Barack Obama, certainly not making any news. Seemingly getting reacquainted in their meeting this morning.

Let's bring in our senior Congressional correspondent, Dana Bash.

Dana, that's -- I suppose we perhaps thought there might be more there, but it is what it is. And there you have it.

BASH: Right, that's about as much as we're going to get in terms of when the cameras are in there. When the cameras are off, that's when the real work starts. That's what happens with all meetings like this.

HARRIS: Yes.

BASH: But this is the first meeting that Barack Obama is going to have on Capitol Hill today, the first of three. There you see him meeting with the House speaker on the Democratic side. Later in the day, he's going to come over to the Senate and meet with the Senate majority leader, Harry Reid. And then he's going to also meet with Republicans, with the Republican leaders from the House and the Senate.

And look, this is the number one issue. We were talking earlier in the hour about the drama over Roland Burris, but if you talk about something that Barack Obama must do in order to show change that he says he wants is actually going to come and that he has power with members of his own party controlling Congress, it is on this issue of the economy.

But look, the reality is -- and it certainly was not shown in that very little clip there with Nancy Pelosi -- that even though he's got members of his own party running Congress, it's still not going to be entirely easy. And it's primarily because of the fact that the goal in talking to Democratic sources here on Capitol Hill, for instance, is to not just pass this huge economic stimulus -- and again, we're talking about roughly about $700 billion here -- not just to pass it with Democratic support, but to also pass it with Republican support, and that is going to take a lot of negotiation.

And that is a big reason why Barack Obama isn't just meeting with his Democratic counterparts, he's meeting with Republicans. And they have said that they have serious reservations about some of the ways that Barack Obama says he wants to stimulate the economy, primarily the fact that he wants to give a couple hundred billion dollars to states to build things like schools and highways and things like that.

Republicans say no, we shouldn't give the money, we should give it as a loan, not a grant. So that is just one aspect to the kind of thing that Barack Obama is going to be talking about with members of Congress throughout the day in his meetings here -- Tony.

HARRIS: All right. Our Senior Congressional Correspondent Dana Bash for us.

Dana, appreciate it. Thank you.

BASH: Thank you.

HARRIS: In about 30 minutes, maybe less, we're going to take you live to the Mideast for the latest on the fighting and diplomatic efforts to end the fighting in Gaza.

But next, your personal finance editor, Gerri Willis, wants to help reduce your debt. Her top tips are next.

(COMMERCIAL BREAK)

HARRIS: President Bush has been speaking with the Sudanese president. Shortly after that meeting, he talked about the situation in Gaza. We will hear from the president and his remarks on the situation in Gaza in just a couple of minutes.

And the first day at a new school for the soon-to-be first daughters. Malia and Sasha Obama started classes at the prestigious Sidwell Friends school this morning. The Obama transition office released pictures of the girls along with their parents as they got ready for their first day. Malia is in the fifth grade at the middle school. Sasha is a second-grader at the elementary school.

He is just two weeks away from moving into the White House, but today President-elect Barack Obama is on Capitol Hill. He is meeting with lawmakers to push his economic recovery plan. A transition aide says the plan will include $300 billion in tax cuts for individuals and businesses. The overall price tag expected to fall between $675 billion and $775 billion.

Oil and gas prices climbing up. A barrel of crude holding above $46 a barrel this morning, the market reflecting unrest in oil-rich Nigeria and OPEC's production cuts. It all means you woke up to higher prices at the pump. According to the triple-A, you will pay an average $1.67 for a gallon.

All right, that is the latest on gas prices. The staggering U.S. auto industry could be in for another blow today. Its December sales report is due this afternoon. Analysts predict another sharp decline that could wrap the industry's worst year since 1974.

Outlook for 2009, experts say don't expect things to turn around until the second half. Here is one car that the recession can't drive away. Ferrari dealers say they're rolling off the lot. The uber- luxury autos seem to have no shortage of buyers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The high-end auto sector is still doing very well. We have sold some vehicles to some of the athletes in the community. We have entertainers in our owner base. But, you know, the primary Ferrari buyer, just as any high-end commodity good, is the well-to-do businessman. (END VIDEO CLIP)

HARRIS: All right, you've got to have some deep pockets to enjoy these babies. Bare-bones models start at $100,000.

And very quickly now, we mentioned a moment ago that President Bush was meeting with the Sudanese president. After that meeting, the president took some questions on the situation in Gaza. Have a listen.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I understand Israel's desire to protect itself, and that the situation now taking place in Gaza was caused by Hamas. Instead of caring about the people of Gaza, Hamas decided to use Gaza to launch rockets to kill innocent Israelis.

And Israel has obviously decided to protect herself and her people. The United States is concerned about the humanitarian crisis. We care about the people of Gaza, and therefore have provided millions of dollars of fresh aid to the United Nations to help.

And finally, all of us, of course, would like to see violence stop. But not at the expense of an agreement that does not prevent the crisis from happening again. I know people are saying, let's have a cease-fire. And those are noble ambitions. But any cease-fire must have the conditions in it so that Hamas does not use Gaza as a place from which to launch rockets.

There are many hopeful signs in the Middle East. Democracy is taking hold in parts of the world in the Middle East. But Hamas reminds us that there are people who are willing to kill innocent people to stop the advance of free societies. And the challenge for those of us who long for peace, Mr. Vice President, is to recognize the realities of the world, recognize we're in the midst of an ideological conflict, and work with the agents of peace.

I am still hopeful that someday there will be a Palestinian state living side-by-side with Israel in peace. I believe that the Palestinian authority under president Abbas has the capacity and the foresight and the vision necessary to see that become a reality. In the meantime, all of us are going to have to deal with Hamas, those who threaten peace, those who undermine the existence of a peaceful Palestinian state.

(END VIDEO CLIP)

HARRIS: There you have it. President Bush, his latest statement just a short time ago on the situation in Gaza. The president saying there that he hopes that one day there will be peace in this region. But clearly, as evidenced by the fighting that goes on now for a tenth day, that day is not today.

Investors caught up in the Bernard Madoff alleged Ponzi scheme have been asking themselves how the SEC could have overlooked a massive scandal for so long. Today, lawmakers are trying to find the answers to that very question. Susan Lisovicz is up at the New York Stock Exchange with more.

Hey, Susan, happy new year. Good to see you.

SUSAN LISOVICZ, CNN CHIEF BUSINESS CORRESPONDENT: Happy new year, Tony. You know, the number we keep hearing associated with the Bernie Madoff Ponzi scheme is $50 billion. That's shocking. But so is the fact that the SEC heard rumblings about Madoff's activities for years. Today the House Financial Services Committee holds a hearing on not only the scheme itself but the need for regulatory reform of a government agency.

Somehow, Madoff's plot flew under the radar for years. Despite eight examinations by the commission, which even then found some of his business practices highly unusual. The SEC will have to fight to maintain its clout as its regulatory failures will be put on full display today, including the fact that many of the Wall Street investment banks it oversaw during the course of 2008 nearly disintegrated -- Tony.

HARRIS: Wow. Susan, here's the thing that is so troubling, baffling. I can't get it with this case. Apparently the regulators were looking in all the right places, they just weren't finding anything.

LISOVICZ: No question about it. You know, one of Madoff's competitors had said for years that Madoff's business was the world's biggest Ponzi scheme. And SEC Chairman Christopher Cox says that, quote, "credible and specific allegations," end quote, regarding Madoff's practices were brought to the attention of the SEC repeatedly over the last decade.

Despite numerous probes, the commission wasn't able to come up with any sign of alleged fraud. In one situation, the SEC looked at questionable customer statements made over four days in January of '05, but found them to indeed match the investment strategy that Madoff described. In any case, there should be a lot of very direct and uncomfortable questions going on.

In the meantime, we're monitoring the markets and, well, no happy returns on this first full trading week of the new year. The Dow right now is off 62 points or about three-quarters of a percent. The Nasdaq, meanwhile, is down half a percent. The broader S&P 500 is down about a third of a percent.

Quiet day but a busy week this week, Tony, including the jobs report at the end of the week. So, a lot of information that will be hurled at investors.

HARRIS: We will need you to guide us through that. Susan, good to see you. Thank you.

LISOVICZ: Happy to. No problem.

HARRIS: Opening late and heavily overpriced, the U.S. has a new presence in Iraq.

(COMMERCIAL BREAK)

HARRIS: A grand opening in the heart of the so-called green zone in Baghdad. The U.S. officially opened its new embassy today. Foreign affairs correspondent Jill Dougherty joining us live from Baghdad. Jill, quite a price tag on this embassy.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Indeed. It is, actually, a little late, about a year and a half, and also over budget, as you mentioned. The original price tag was $592 million, but according to Congressional reports, citing State Department documents, that could go up by another $144 million.

So, extremely expensive. And also huge. This is the largest U.S. embassy in the world. It has high security, it's surrounded by all sorts of high walls, razor wire, guard posts, et cetera. And, yet, it is open. And the diplomats who are going to be living and working there say it is symbolic. It's an important moment.

We had a chance to speak with Ambassador Ryan Crocker, and he said there is a reason that the U.S. has such a large facility in Iraq.

(BEGIN VIDEO CLIP)

RYAN CROCKER, U.S. AMBASSADOR TO IRAQ: And as our military presence ramps down, many other aspects of our relationship are going to ramp up. That's the point of the strategic framework agreement.

Those committees are forming. They'll be meeting in the coming weeks to focus on how we in Iraq move ahead in the whole range of relations -- economic, commercial, educational, scientific, financial, you name it. So we will need a large presence here for sometime.

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DOUGHERTY: And, you know, over the past week, there have been a number of very important events, some symbolic but some legal. In fact, the turning over of the green zone happened on the 1st of January. Also the strategic framework agreement goes into effect, the status of forces agreement that governs how U.S. troops are going to be working in serving in this country.

So a lot of big changes, and leading up in another month to provincial elections. So, there's a lot happening right now. And the hope is, there will be continuing progress.

HARRIS: Hey, Jill, forgive me here. I'm a little astonished. We were just showing pictures a moment ago, a sort of a flyover of a number of buildings. Do all of those buildings make up the new embassy? It looks like a complex.

DOUGHERTY: Oh, it is. Yes, there are, I think it's 27 buildings total. It's 104 acres. It's very, very big. As I said, the biggest in the world. HARRIS: OK. All right. Jill Dougherty for us in Baghdad. Jill, appreciate it. Thank you.

The death of John Travolta's 16-year-old son has the CNN iReporters reaching out. You will hear their condolences. That's next.

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HARRIS: An autopsy is expected to be performed today on the body of Jett Travolta. The 16-year-old son of actor John Travolta died Friday while on vacation with his family in the Bahamas. The boy had Kawasaki disease, which can in serious cases weaken the arteries and cause an aneurysm or heart attack.

The Travolta family says Jett had frequent seizures and struck his head in the bathtub. A family lawyer says Travolta desperately tried to revive his son and was so distraught, he had to be physically pried from the body.

The death of a child, many of you have been through that awful experience, and you're sharing your stories with us. Let's take a trip now to CNN.com's iReport desk and check in for a few moments with Tyson Wheatley, helping us from the operation down there. And Tyson, as I mentioned, a lot of people are sending in iReports expressing their condolences to the family.

TYSON WHEATLEY, PRODUCER, CNN.COM: That's right, Tony. And actually, we're hearing from a lot of parents today, dozens of parents this morning today, actually, who say they, too, have lost a child. And I just wanted to share a couple with you today.

HARRIS: OK.

WHEATLEY: And the first one is from Peter Abate, and he's from Wilmington, North Carolina. And, you know, Peter and his wife, they lost their 23-year-old daughter, Jessica, to lung cancer in 2007. And this was especially shocking to them because Jessica did not have -- was not a smoker.

And when Peter heard the news of Travolta's family loss, they cried together and then Peter felt compelled to share this video. And I'm just going to play just a short piece of it about -- hearing from Peter about how he says, this is how he deals with profound sorrow.

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PETER ABATE, FATHER OF DECEASED DAUGHTER: It's almost sometimes as if that part of your life wasn't real. You'll have memories of your child, and they're all good. But they all make you cry. They make you cry because you miss your child so much. And I'd like to send my deepest condolences to John and Kelly and all the Travolta family. I'm very sorry that happened.

(END VIDEO CLIP) WHEATLEY: Now, Tony, one of the themes we're hearing from parents today is that losing a child is obviously an unimaginable loss. It's also something you cannot relate to unless it happens to you.

And we've heard actually from a mother this morning from Columbus, Georgia. And she has a -- we've got some pictures here. She has a son. This is Christian, and this is from Danyell Ballard. And she lost her 11-year-old son, Christian, to cystic fibrosis back in September.

His mom told us he was extremely brave, even as his health was deteriorating. And yesterday actually would have been Christian's 12th birthday. Danyell belongs to an online support group for moms who have lost children. And there she says she can talk about how it feels and share stories about her child any time of the day. And she says that really helps her.

Now, she said she didn't have any advice specifically for the Travolta family because it's different for every family. But to parents who have lost a child, she says just take it day by day and make sure you take the time to truly grieve.

HARRIS: Oh, boy. That's good advice. So difficult to hear, though. Hey, Tyson, I'm just curious. I know that my guess would be there would be more people who are watching us who would perhaps want to offer up their thoughts, condolences to the Travolta family. Are we keep the pipeline open for folks to do that?

WHEATLEY: Yes. I mean, obviously we are. You know, one of the things we heard from Danyell is that actually going through this experience and talking about her loss is actually helpful to her. So, if you feel compelled to share your own story or you just want to read about other people's and share your condolences, please do so. Go to ireport.com.

HARRIS: All right, Tyson. Appreciate it. Thank you, sir.

WHEATLEY: Take care, Tony.

HARRIS: IReporters are also showing us what's happening in their back yard reflecting on the crisis in the Middle East.

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HARRIS: A tense day of bloodshed in the Israeli/Palestinian crisis. This hour, French President Nicolas Sarkozy scheduled to meet with Palestinian President Mahmoud Abbas in the West Bank city of Ramallah.

Mr. Sarkozy has also been meeting in Egypt with President Hosni Mubarak. The French president failed earlier to secure a two-day truce. It is not clear what help he will get from Abbas. The Palestinian president lost control of that territory to Hamas back in June of 2007. A senior Hamas official says his group has no intention of stopping its rocket fire toward Israel. Israeli ground forces pushing deep in the Palestinian territory.

Let's get to our Ben Wedeman now. On the Israel/Gaza border.

And Ben, if you would, describe what you are seeing.

BEN WEDEMAN, CNN CORRESPONDENT: Yes, Tony.

Since the sun went down about two hours ago, we have been seeing what appears to be an intensification of the Israeli bombardment of fighting within Gaza itself. In fact, we are seeing in the area Beit Lahia, which is in the northern end of the Gaza Strip. That there certainly is more bombardment in that area.

We saw one very big orange flash that seemed to start a fire that went off for quite some time. We're also seeing orange flashes coming from just over the horizon. That's from the area of Gaza City itself.

Until now, Tony, the Israeli offensive has been really focused on those areas outside the cities, the refugee camps, the towns and the villages. They say their objective when they went in, the first stage, at least, when they started the ground offensive was to take control of those areas they said from which the rockets were being fired.

But what we've seen today, Tony, was that from the Geballia refugee camp, which is one of those crowded urban areas, we saw several Qassam rockets being fired out. In fact, several of them landed just a few miles, may be a mile and a half from where we are in the Israeli town of Sderot.

No word of casualty or damages in that strike. So despite the fact that this Israeli offensive is continuing and doesn't seem very able to stop the rocket fire from coming out of Gaza -- Tony.

HARRIS: And Ben, strategically, is the idea for the IDF to sort of divide Gaza, some reports into two perhaps into three, to make it easier to control those smaller sections of the strip?

WEDEMAN: Yes, Tony. I have it from eyewitnesses that Israeli tanks have reached the Mediterranean just south of Gaza City.

The objective there is to stop the transport of fighters, Hamas fighters of ammunition of weaponry around the Gaza Strip to really just isolate individual pockets, but there's another consequence to that. And that is that it's very hard to move the aid around. Very hard for people to go by ambulances to the hospital -- Tony.

HARRIS: All right. CNN'S Ben Wedeman for us. Ben, appreciate it. Thank you.

Barack Obama silent about the violence in the Middle East. Could his caution prove costly? We will take a closer look in the next hour of the CNN NEWSROOM. (COMMERCIAL BREAK)