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President-elect Barack Obama to Discuss the Economy in a Speech Thursday; Prosecutors Want Madoff's Bail Revoked; U.N. Draft Resolution Seeks Immediate Cease-Fire; Republicans Seeking New Party Chairman; Children Caught in the Crossfire in Israeli-Hamas Conflict; 111th Congress to be Sworn in Today

Aired January 06, 2009 - 09:00   ET

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

HEIDI COLLINS, CNN ANCHOR: All the president's men, Barack Obama looks to fill two more key posts of his presidency. Their job? Keeping you safe.
Fighting in the Middle East and the youngest casualties of war. An infant is wounded in Israel and in Gaza an Israeli missile hits an elementary school.

He is the father of the commuter revolution and whispers of his name can send stocks soaring or tumbling. So what has left Steve Jobs looking so frail? His answer raises more questions.

Good morning, everybody. I'm Heidi Collins. Tuesday, January 6th, you are in the CNN NEWSROOM.

Well, he's got a financial crisis to deal with and he's trying to finalize his Cabinet choices. President-elect Barack Obama will talk about the economy in a speech on Thursday. But right now it's his choice for a key intelligence position that has people talking.

CNN's Kate Bolduan is joining us now live from Washington with the very latest on this.

Leon Panetta, Kate?

KATE BOLDUAN, CNN CORRESPONDENT: Yes, it seems to be a bit of a rocky 2009 for the transition so far, Heidi. As you said, Barack Obama, the president-elect, is trying to tackle the financial crisis and round out his Cabinet.

Retired Admiral Dennis Blair for director of National Intelligence, but it's choice to head the nation's spy agency that's raising questions and stirring controversy.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): The president-elect ran into a rough spot Monday with the fellow Democrat over his pick of Leon Panetta, a former Clinton White House chief of staff, to be CIA director.

Dianne Feinstein, who will chair the Senate intelligence committee, issued a terse statement saying she, quote, "was not informed." She goes on to say, "My position has consistently been that I believe the agency is best served by having an intelligence professional in charge at this time."

Aside from that, though, Mr. Obama had relatively smooth goings, trying to keep his promise to hit the ground running.

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: 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.

BOLDUAN: Busy with courtesy calls and policy meetings on Capitol Hill, first with top Democrats.

REP. NANCY PELOSI (D), SPEAKER OF THE HOUSE: We pledge to work together in a bipartisan way, with great civility.

BOLDUAN: And later with Democratic and Republican leaders.

SEN. MITCH MCCONNELL (R), MINORITY LEADER: We welcome the opportunity to be included in the discussion.

BOLDUAN: Obama and his economic team are starting a full-court press to win support for his economic recovery plan. The president- elect planning an economic address Thursday to make his case to the public.

OBAMA: Right now, the most important task for us is to stabilize the patient. The economy is badly damaged. It is very sick. And so we have to take whatever steps are required to make sure that it's stabilized.

(END VIDEOTAPE)

BOLDUAN: Now the president-elect has made it a habit of saying there's only one president at a time, but he's definitely making a presidential-like entrance to Washington. Today, focusing again on the economy with another meeting of his economic team.

Now, Heidi, a Democratic official told me this morning that Obama's formal announcement of these key intelligence nominees will come likely later this week.

COLLINS: All right. We're watching this one very closely. Thanks so much, Kate Bolduan. Appreciate it.

Leon Panetta is a familiar face from the Clinton administration. He served as President Clinton's White House chief of staff from 1994 to 1997. He was also Mr. Clinton's choice to head up the Office of Management and Budget. Before joining the White House staff, Panetta was a representative from California for 16 years.

And here is a little more on Dennis Blair as well. The expected choice for director of National security. A retired admiral, Blair is a former commander of the U.S. Pacific fleet. He was also associate director of military support for the CIA and served on the National Security Council.

There is also a story in Navy circles that Blair once tried to water-ski behind a destroyer he commanded in Japan. So there's that.

The incoming Congress ready to take their seats today. But the day could be dominated by one controversial pick who will not be allowed to take the oath.

CNN's Brianna Keilar is live now on Capitol Hill this morning.

So Brianna, they won't let him take the oath, huh?

BRIANNA KEILAR, CNN CORRESPONDENT: No, they're not expected. Democrats are not expected to seat Roland Burris who, of course, is embattled Illinois governor Rod Blagojevich's pick to replace Barack Obama in the Senate.

Now Burris's paperwork was actually rejected by Senate officials yesterday but nonetheless he is coming here to Capitol Hill, he says. In fact, one of our producers caught up with him this morning and you're looking here at some -- well, this, I believe, is actually some video of him maybe this morning or we saw him yesterday as well.

He did two news conferences. One in the airport in Chicago before he caught a flight. The other is the airport in Baltimore after he landed here saying that this is a legal appointment, that he is the junior senator enter Illinois.

So here's how it goes today. He's expected to come in to the Capitol, through the entrance that the general public comes into. He is expected to be granted access to the building. And if he is turned away from the Senate floor, he didn't rule out the fact that he may try to get on to the Senate floor, we'll see, but either way, Roland Burris saying that he won't make a spectacle.

COLLINS: All right. Brianna, it is certainly going to be very interesting. We'll continue to follow that story alongside you as well.

Brianna Keilar, thanks so much for that.

And Minnesota, well, they're going to have a second senator on the floor today. They will not, I should say. Democratic challenger Al Franken has been named the winner by 225 votes but incumbent Republican Norm Coleman plans to challenge those results in court.

Franken says he's ready to take a seat in Washington. But Republican governor, Tim Pawlenty, still has to certify those results before that can happen.

No safe sanctuary in Gaza. That assessment by the United Nations relief agency after Israeli missions hit a school. At least three people seeking shelter there were killed.

Gaza City now surrounded by Israeli forces and Palestinian doctors are bracing for more casualties. They say at least 555 people have been killed in the past 11 days.

Israelis count five dead from the continued rocket attacks on southern Israel and three Israeli soldiers killed in northern Gaza by friendly fire.

The Red Cross has declared a full-blown humanitarian crisis in Gaza. The situation is especially critical in Gaza City where there is no electricity and little food and water.

CNN's Anderson Cooper is keeping watch now from his vantage point right across the border from there.

So, Anderson, rockets still coming into Israel from Gaza. Some of them landing actually pretty close to where you are?

ANDERSON COOPER, CNN HOST, "ANDERSON COOPER 360": That's right, Heidi. In fact, rocket landed deeper inside Israel than previously has occurred over the last 11 days or so. It slightly injured a small child.

But Israel says they are confident in the progress of the battle thus far. This day four of the ground operation. We're now going into night number four. A lot often happens here at night over the last several hours.

We've seen an increase, uptick in explosions and missile fire inside, into Gaza from Israeli forces. You just heard a bang there. You can see a cloud of smoke over my shoulder.

As you said, Gaza City is essentially, at this point, surrounded. In the coming days, Israel is going to have to decide whether to take this battle to the next level and actually start to move troops into Gaza City itself.

If that becomes the situation, obviously, the death toll, the intensity of the battle will grow. At this point, there are eyewitness reports of Israeli forces moving toward the southern city of Khan Yunis. Perhaps Israel trying to partition Gaza into even smaller parts.

Right now, the -- city -- the place itself essentially divided into two parts. Israel is making clear a major objective there -- of theirs is knocking out these underground tunnels that Hamas has used over the years to re-supply and to bring in arms and materiel.

Israel is making clear, not only are they targeting those tunnels but any diplomatic solution is going to have to have a long-term solution about eliminating those tunnels.

The diplomatic activity has been increasing. France's President Nicolas Sarkozy has been in the region, so has Britain's former Prime Minister Tony Blair. There's a high-level EU delegation as well.

But at this point, the battle continues to intensify and as night comes there's no doubt there's going to be more fighting, more killing in the hours ahead -- Heidi?

COLLINS: Yes. And certainly, the concern is, obviously, twofold. This humanitarian crisis that we continue to talk about and then civilian casualties. If Israel then decides to go to this next level by way of a ground war -- it's going to depend on how they handle that tactically. I mean we're talking about going door-to-door and really rooting out the people who are affiliated with Hamas.

COOPER: Yes. It's going to be a very difficult battle, and nobody has any illusions that it's not. Israel has trained for this. They have been preparing for this very battle for at least six months or more. So has Hamas on the other side.

In prior situations, we've seen Hamas booby-trap buildings, plant IEDs. They have had time to prepare. They have a whole network of tunnels and houses, say Israeli forces, that allow them to pop up in a house fire and go back into the tunnels and move from house-to-house relatively unseen.

So if Israel does decide to actually move into Gaza City, into some of these other highly populated areas, the death toll, civilian and military, will no doubt increase but at this point, Gaza City is essentially surrounded and Israel is trying to decide whether or not to take this to the next level and a lot of that may depend on diplomatic activity in the days ahead.

COLLINS: Sure. And -- Anderson, you may not know this. But I'm just curious. Are those tunnel systems used by civilians or is it strictly just for the Hamas militants?

COOPER: The -- well, the tunnels from Egypt are used to bring goods in -- commercial goods as well as rockets and material for Hamas. I mean -- food supplies, items that are sold on the black market.

So those tunnels are used for a variety of purposes. Israeli has been knocking out a large number of them but -- there's no way that they have been able to knock out all of them at this point.

COLLINS: Yes. All right. Well, we continue to follow the story with you.

Anderson Cooper, thanks so much. Live from the border there.

And just a reminder that Anderson will be broadcasting live from the Israeli-Gaza border tonight. You can catch his show on "AC 360" 10:00 p.m. Eastern.

Rough road ahead. American automakers reel, one global giant retreats. Toyota takes shocking action to stop the bleeding.

Ali Velshi with the details ahead.

(COMMERCIAL BREAK)

COLLINS: Here's a question for you and your wallet. Have we seen gas prices hit bottom? Well, today's national average up more than a penny and a half a gallon. That makes the national average for regular unleaded almost $1.69. That's the seventh consecutive day, though, of increases.

But take heart because today's prices still nearly 59 percent less than the record high back in July.

Will it be another rough day, though, on Wall Street? That's the question. No clear answers, of course, to be found in the overseas stock market.

Overnight trading in Asia was mixed. The Nikkei closed up in Japan while Hong Kong's Hang Seng index ended the day in negative territory.

In Europe, positive corporate news managed to bolster trading a bit. At last check, markets in Britain and Germany and France were all up.

Foreclosures, layoffs. A growing stack of bill wills. Tell me, have you been in the mood to buy a car?

Well, auto sales in the United States and around the world have taken a nose dive. And really no company has escaped the beating.

And CNN's chief business correspondent, Ali Velshi, has the latest now from New York.

Boy, you look at some of these numbers, Ali, and it is -- it's just shocking.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes. And -- the one piece of -- it's not good news at all but the one thing to look at is Toyota has just announced that it is going to shut down a number of its factories for 11 days...

COLLINS: Right.

VELSHI: ... in February and March to deal with the fact that there's too much output and not enough buyers. So, again, there are a lot of people who think this is just a North America automaker problem, it's really not. This is spread all over.

Let's take a look at car sales in the United States by all -- by the Japanese-based automakers, first of all. This is for December compared to a year ago December. Toyota was down 37 percent. Honda down 35 percent. And Nissan was down 31 percent.

That's the -- Japanese automakers in the U.S. Now take a look at the U.S. automakers in the United States and remember those numbers. Chrysler, of course, was the big one. Down more than half, 53 percent. But Ford and GM at 32 and 31 percent were in the same range as Nissan and Honda.

So I think that's instructive for people to know that while there have been lots of problems in the auto industry leading up to now, Heidi, the fact is 2008 was such an anomaly, it was such a departure because people were losing their jobs and they couldn't get access to credit and... COLLINS: Yes.

VELSHI: ... and the value of their homes had dropped, the value of their retirement funds have dropped. They just weren't buying cars.

COLLINS: Yes, so what does that mean for 2009? We're starting to see, hopefully anyway, a little bit of a loosening in the credit markets and...

VELSHI: Yes.

COLLINS: ... we've got stimulus packages being talked about, of course. So a little bit more income maybe to -- spend? I mean are people going to go for purchases as big as automobiles?

VELSHI: Well, four things have to happen in order for automobile purchases to increase in 2009. One is, as you mentioned, credit has to loosen up. And then the three other things are all things that make you feel wealthier. Your value of your house has to go up if you're trying to sell it, or you know, you've got to be able to feel like you're growing some equity.

The value of your retirement, your funds, your stocks have to go up. You have to feel like you've got a little extra money so that you can make that expenditure. And finally, you have to have a job. So if we continue to shed jobs, you're to see that in auto sales and in sales of everything else.

The issue here, we're going to get jobs report on Friday and it's going to be pretty bad but is it going to start to be less bad than previous months? Is December, which is the number we're getting on Friday, and January and February -- are we going to start to see some sort of recovery in jobs?

That's the answer, because people who don't have jobs or are fearful of losing their jobs...

COLLINS: Yes.

VELSHI: ... are not going to make a big ticket purchase like a car.

COLLINS: Yes, of course not. All right. Ali, well, we're going to talk to you again a little bit later on...

VELSHI: Yes.

COLLINS: ... about, I don't know, some book or something.

VELSHI: Yes, some book. Yes.

COLLINS: That's out there.

All right, Ali. We'll talk with you again.

VELSHI: See you in a minute.

COLLINS: Thanks.

COLLINS: Severe weather headquarters. That means stuff is going on. Rob Marciano is in the weather center now to talk a little bit more about some of these severe storms that are out there.

What area are we talking about today?

(WEATHER REPORT)

COLLINS: All right. Very good.

ROB MARCIANO, AMS METEOROLOGIST: Heidi, back over to you.

COLLINS: Thank you, Rob. We'll check back a little later on.

MARCIANO: Sounds good.

COLLINS: A new health revelation from Apple's Steve Jobs just raises more questions. Dr. Sanjay Gupta has some answers in a moment.

(COMMERCIAL BREAK)

ANNOUNCER: Covering the angles, uncovering the details, see for yourself in the CNN NEWSROOM.

COLLINS: It's all Apple all the time at the annual Macworld conference now under way in San Francisco. But the buzz isn't actually about a new product. It's about the health of founder and boss Steve Jobs now publicly confronting questions about his health.

To talk more about it today, CNN's chief medical correspondent Dr. Sanjay Gupta has been following Jobs' condition.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Yes.

COLLINS: So we understand that he apparently has some sort of hormone imbalance, that's what he says.

GUPTA: That's right.

COLLINS: What exactly does that mean?

GUPTA: Well, you know, a lot of people have hormonal imbalances for various reasons. A larger question, I think, for him and for his doctors, more importantly, is what is causing this hormonal imbalance.

COLLINS: Yes.

GUPTA: Typically, people think of hormonal balance as they think of weight gain. People gain weight when they have some sort of hormonal imbalance. He said specifically, I have the statement here, well, hormonal imbalance has been robbing him of proteins needed to be healthy. So not a lot of information coming in there. What we do know is he's had this history of pancreatic cancer. And we do there are certain hormones such as glucagon, which is a hormone produced by the pancreas which can do several things that cane make you lose weight.

It can speed up your metabolism. It can make you lose weight as a result of that. We don't know specifically. And we haven't talked to his doctors about this because several things that can cause that problem to start occurring. Cancer, for example, is one of them. Again, he has this history of cancer.

Take a look at the images, by the way, there.

COLLINS: Yes, it's really...

GUPTA: On the left is current.

COLLINS: It's startling.

GUPTA: And on the right -- yes, he really has lost a lot of weight. I think those pictures say a thousand words as far as that.

What possibly could be causing this as far as why the hormonal imbalance occurs. It could be something relative benign but it could be cancer which you always have to think about when somebody has a history of cancer.

COLLINS: Sure.

GUPTA: Diabetes, liver problems, gastrointestinal problems. We don't know. But he has clearly lost a lot of weight there, Heidi.

COLLINS: Yes. No question. So -- what is the next step? I mean -- part of me just feels like it's really none of our business but...

GUPTA: Yes.

COLLINS: ... as a physician, you know, you have to take that next step to make sure everything is OK.

GUPTA: Yes, a lot of people, obviously, asking about him because of the position that he is in.

COLLINS: Sure.

GUPTA: I think that, you know, anybody who's had this history of pancreatic cancer who comes back with significant weight loss you have to worry about cancer again. So I'm sure his doctors are looking into that specifically to figure out is this some sort of recurrence or they're trying to figure out, is there something else going on here altogether.

He says he's doing, he's doing fine. I guess, you know, we won't get any updates unless he provides any updates.

COLLINS: Yes.

GUPTA: But I think the -- doctors are going to have to sort of zero in on what might be the problem.

Pancreatic cancer, I should say, can oftentimes be a terrible problem. But there are different types. Adenocarcinoma, for example, as far as names, was one of the worst. He had an islet-cell neuroendocrine tumor, which the name is not that important, but while it has a high chance of recurrence is not nearly as deadly as...

COLLINS: OK.

GUPTA: ... some of the other pancreatic cancers.

COLLINS: OK. Well, so then, again, not to speculate, but if there was a recurrence he could go through the same treatment he went through last time and be in remission yet again?

GUPTA: Yes. If he chose to get this treated he would probably get the same sort of treatment again.

COLLINS: OK. All right. Dr. Sanjay Gupta, thanks so much.

GUPTA: Thank you.

COLLINS: Autopsy results for Jett Travolta, the son of actors John Travolta and Kelly Preston, concluded the teenager died of a seizure and found no signs of any head trauma.

An attorney for the Travolta family says Jett was found unconscious in a bathroom while on vacation with the family in the Bahamas. He was pronounced dead at the hospital.

The family says the teenager suffered from a developmental disability since he was 2 years old. His body will be taken to Florida to be buried.

New allegations against Wall Street financier, Bernard Madoff. What prosecutors say he is doing now to hide the wealth.

(COMMERCIAL BREAK)

COLLINS: It's about that time. The opening bell just about to ring on Wall Street today. And investors are hoping for a rebound from Monday's modest dip. I guess it could have been worse.

Susan Lisovicz is at the New York Stock Exchange now with a look at the day ahead.

Hey there, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Heidi. Well, we're looking for a slightly higher open for stocks in about a minute or so. This is ahead, though, of a slew of economic reports, Heidi, at the top of the hour. We'll get the latest read on factory orders and also on the service sector, which is the biggest part of the economy. Both are expected to show declines. Also slated for release today, pending home sales data from November and then this afternoon, investors will get a look at the minutes from the Federal Reserve's most recent policy-making meeting which was a doozy.

The Central Bank, remember, lowering its key benchmark lending rates with target range of zero to a quarter percent in December to combat this very deep recession and, of course, this bear market.

The crisis in the labor market always of concern. It continues to be a problem. Cigna, a health benefits company, says it's cutting 1100 jobs and Logitech International, which makes mice for computers, withdrawing its earnings forecast.

COLLINS: Aw!

LISOVICZ: I know what you're saying.

COLLINS: I'm sorry.

(LAUGHTER)

COLLINS: I swear, I'm listening.

LISOVICZ: It's a dog day morning, isn't it, Heidi?

Logitech saying it would cut 15 percent of its salary work force. That's about 500 jobs. And while you're talking about the "ahhh" is Colby. Colby is that little Sandy pup there. He is a Seeing Eye dog celebrating the Seeing Eye's 80th anniversary to provide specially bred and trained dogs to guide people who are blind.

(CROSSTALK)

COLLINS: Yes, Morristown, New Jersey, I think, right?

LISOVICZ: That is exactly right. That's exactly right, Heidi. And Seeing-Eye exists through the contribution of everyone, whether it's corporations or individuals, foundations, it does great work. And if you've ever seen people who are visually-impaired or blind, they can lead a somewhat normal or even active life with the help of dogs like Colby. So there is Colby ringing the opening bell. Let's hope that it's not a dog day afternoon, though, for stocks.

COLLINS: Yes. Maybe that's what we need to focus on more often during our segment, Susan, is who is ringing the bell and just not worry about all the other stuff.

LISOVICZ: We've had some very interesting characters.

COLLINS: We have.

LISOVICZ: And species, I might add as well.

COLLINS: All right, Susan, we'll check in later. Thank you.

LISOVICZ: You're welcome.

COLLINS: Even while confined to an apartment on New York's Upper East Side, prosecutor's say disgraced financier Bernard Madoff is still up to no good. They want a judge to revoke his $10 million bail while they continue to build their securities fraud case. CNN's senior correspondent Allan Chernoff has the story.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SENIOR BUSINESS CORRESPONDENT (voice-over): Bernard Madoff escorted out of his Manhattan apartment Monday afternoon to hear a prosecutor in court charge the alleged Ponzi scheme operator with mailing expensive jewels to family members, as well as a couple in Florida.

One of the items, the prosecutor said, was worth $1 million, and he added the case against Madoff is strong and getting stronger. A judge will decide by Friday if Madoff has violated terms of his bail and must go to jail.

UNIDENTIFIED MALE: The committee will come to order.

CHERNOFF: At the same time in Washington, a House committee was asking how the Securities and Exchange Commission could have missed Madoff's alleged scam.

REP. PAUL KANJORSKI (D), PENNSYLVANIA: We now know that our securities regulators have not only missed opportunities to protect investors.

CHERNOFF: The SEC received detailed warnings from an experienced financial analyst that Madoff was running a fraud. The SEC repeatedly investigated but concluded the staff found no evidence of fraud.

REP. CAROLYN MALONEY (D), NEW YORK: Why in the world didn't anyone respond to his allegations? What happened to his report? And did the SEC investigate his allegations.

DAVID KOTZ, SEC INSPECTOR GENERAL: That's exactly what I intend to find out.

CHERNOFF: The SEC found only that Bernard Madoff had failed to register as an investment adviser. As soon as he did, the SEC closed the case, saying violations were not so serious as to warrant an enforcement action.

KOTZ: It is crucial for the commission, the Congress and the investing public that answers be given to the very serious questions regarding the SEC's efforts relating Mr. Madoff.

CHERNOFF: Answers can't come quickly enough for Madoff investors who appear to have lost billions. The head of the Securities Investor Protection Corporation says more than $830 million in liquid assets have been uncovered at the Madoff firm, which could be distributed to investors. (on camera): The trustee in the Madoff case has sent out more than 8,000 claim forms to investors believed to be victims. Meanwhile, members of Congress on both sides of the aisle said the Madoff scandal makes it more urgent than ever to reform our financial regulatory system, something President-elect Obama favors. Allan Chernoff, CNN, New York.

(END VIDEOTAPE)

COLLINS: Israel tightens its grip on Gaza. Commanders say they have killed 130 Hamas fighters since Saturday, and now have Gaza City surrounded. More intense fighting is reported in northern Gaza. Three Israeli soldiers were killed by friendly fire when a tank shell hit their building and exploded. Israeli leaders say they want to stop the rocket attacks from Gaza. Today, a Hamas rocket went farther than ever into southern Israel, hitting a town about 23 miles from the border.

Diplomats huddle at the United Nations now debating an end to the Mid-East fighting. A draft resolution is on the table but, so far, no deal. CNN's Richard Roth takes us behind the scenes.

(BEGIN VIDEOTAPE)

RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT (voice-over): A whirlwind of crucial face-to-face diplomacy at the U.N. But agreement on a Security Council resolution to potentially end the Gaza conflict is elusive. Arab ministers huddled with U.N. Secretary General Ban Ki-Moon seeking his help. The U.N. leader is impatient with all involved in the conflict.

BAN KI-MOON, U.N. SECRETARY GENERAL: It is regrettable that the whole Security Council has not been heeded by the party's concern. Now, Security Council should live up to its responsibilities under the United Nations charter.

ROTH: Arab ministers want a resolution that demands an immediate cease-fire.

UNIDENTIFIED MALE: This cease-fire is very important, and an issue ready to be achieved.

ROTH: But the United States wants a more durable cease-fire and predicting Hamas noncompliance appears in no rush to vote for a resolution.

ALEJANDRO WOLFF, U.S. DEPUTY AMBASSADOR TO THE U.N.: We need to make sure that this is worked out in a manner that will be adhered to. Its premature to talk about any council action.

ROTH: The U.S. has stressed the need for a balanced resolution with more respect for Israeli's concern for self-defense. That's not what the Arabs want to hear.

AMR MOUSSA, ARAB LEAGUE SECRETARY-GENERAL: It is our term to insist on a balance of the resolution, and we'll insist on that. It cannot be to address one party, the Arab party, without seriously and decisively addressing Israel as the occupying power with a lot of obligation.

ROTH: The United States ambassador met with Arab negotiators. He said the U.S. is watching the impact of the fighting on TV but can't agree to a quick vote.

ZALMAY KHALILZAD, U.S. AMBASSADOR TO THE U.N.: I didn't want them to have any false expectations about how those practical arrangements in which one could have confidence that could bring about a durable solution.

ROTH: It's left to other powers to bridge the differences.

JEAN-MAURICE RIPERT, FRENCH U.N. AMBASSADOR: For the moment, we are building confidence. We are trying to build confidence among the members.

ROTH (on camera): The arrival of Mahmoud Abbas at the U.N. is one hour of diplomat an opportunity for the Palestinian president to reassert his authority over a divided Palestinian people, that is, if he can deliver a cease-fire. Ironically, it's the United States, the supporter of Mr. Abbas, that may stand in the way of any resolution calling for an end to the violence. Richard Roth, CNN, United Nations.

(END VIDEOTAPE)

COLLINS: And keep in mind now, Gaza encompasses less than 40 miles. Most of its border is with Israel. We want to talk a little bit more about strategy now, and bring in CNN's Pentagon correspondent Barbara Starr.

So Barbara, we are talking about 32 miles of border here. There you are, Barbara. Sorry, we're having a little trouble with your shot there.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Oh, goodness, sorry about that. Well, I'll keep talking until you lose me. You know, the issue for Israeli now is can they make life so painful for Hamas that Hamas will finally come to the negotiating table.

(BEGIN VIDEOTAPE)

STARR (voice-over): Israeli's withering assault against Hamas in Gaza does not stop. More than 500 Palestinians have been killed. Israeli insists most of the dead are Hamas terrorists. Palestinian medical sources say at least 100 of the dead are women and children. Israel says while nearly 2,500 Palestinian civilians have been wounded, it's trying to protect civilians, but the war is necessary.

MARK REGEV, ISRAELI GOVERNMENT SPOKESMAN: We want an end to those deadly rockets coming in from Gaza launched by Hamas. We want our people protected.

STARR: But is this raging conflict giving Israel what it wants? LT. COL. JOHN NAGL, U.S. ARMY (RET.): Our military power is never enough when you're fighting an irregular war.

STARR: Retired Lieutenant Colonel John Nagl, a protegee of General David Petraeus helped write the U.S. army's book on fighting insurgents. Nagl says the lesson of Iraq that eventually you have to talk to at least some of your enemies is a lesson Israel cannot ignore.

NAGL: Israel is going to have to find some way to work with the majority of the Palestinian people in Gaza.

STARR: Nagl says Israel learned from its failed 2006 war in southern Lebanon which relied heavily on air attacks to try to quash Hezbollah.

NAGL: They've done that far more effectively this time than they did in 2006. They are starting to block off the different sectors of Gaza. They are making it harder for Hamas to move forces and move reinforcements and weapons from one part of Gaza to another.

(END VIDEOTAPE)

COLLINS: All right. That was our Pentagon correspondent Barbara Starr. And also we want to let you know, Anderson Cooper also broadcasting live from the Israeli-Gaza border. You can see him again tonight, 10:00 Eastern on "AC 360."

Severe weather on the way for much of the United States. Meteorologist Rob Marciano shows us who is getting hit with what in just a moment.

(COMMERCIAL BREAK)

COLLINS: CNN meteorologist Rob Marciano heading over to the wall there to talk a little bit more about some of these areas that are being hit pretty hard by snow and sleet and rain and all of that good stuff.

(WEATHER REPORT)

MARCIANO: Quick check, if you don't want to fly to Paris, we're going to show you this video, Heidi, because --

COLLINS: Wait, wait, wait -- who said we don't want to fly to Paris?

MARCIANO: Well, if you don't have time.

COLLINS: Oh, OK.

MARCIANO: Check that out. Snow on the ground there. Eiffel Tower and everything.

COLLINS: It's beautiful. MARCIANO: Parisians, you know -- that's a romantic city and a little snow there on the ground, maybe get you in the mood, I suppose. Not unheard of, but certainly rare to see at least sticking on the sidewalks there. So we are in full winter swing here amidst first week of January.

COLLINS: Wow. Those are gorgeous pictures. Love that.

MARCIANO: That's nice.

COLLINS: All right. Thank you, Rob.

MARCIANO: You got it.

COLLINS: We'll check back later.

MARCIANO: All right.

COLLINS: New research is heating up the global warming issue once again. The data suggests a split on whether the planet is truly in peril. Our Penesse Ferray (ph) has a story from New York.

(BEGIN VIDEOTAPE)

PENESSE FERRAY, CNN CORRESPONDENT (voice-over): A confusing picture of our world's climate. Three independent research groups found that 2008 was ninth or tenth warmest year since 1850 when record-keeping began, but it also was the coolest year since the turn of the 21st century. New data from the University of Illinois says ice levels are roughly the same as those seen 29 years ago. But after decades of ice melt in the arctic, that may be of little comfort. The increase is because of the formation of thin ice, which melts easily once the winter is over. Even so, one climatologist skeptical of global warming feels the entire debate is muddled with selective data.

JOSEPH D'ALEO, CLIMATOLOGIST: We are too short sided or certainly those who believe in it are not looking at the big picture, which needs to include other factors, the natural cycles and the ocean and the sun that are the real drivers.

FERRAY: NASA scientists report that more than two trillion tons of land ice in Greenland, the Arctic and Antarctic have melted since 2003. Some farmers fear future regulations on greenhouse gas emissions could include what could amount to a cow tax. The United Nations calculates livestock are responsible for 18 percent of greenhouse gas emissions worldwide.

PAT MICHAELS, CATO INSTITUTE: Extremism and the pursuit of climate policy is certainly no virtue. And what's really going on is we have rather a moderate increase in temperature. So why would one jump off the bridge and take money away from people?

FERRAY: The environmental protection agency says methane, a greenhouse gas associated with livestock is not being considered for regulation at this point.

Penesse Ferray (ph), CNN, New York.

(END VIDEOTAPE)

COLLINS: Republicans were beaten in November, but are looking to make a comeback in the next election. First, though, some soul searching.

(COMMERCIAL BREAK)

COLLINS: Two weeks ago now until the inauguration. President- elect Barack Obama trying to get the rest of his team in place. He's expected to name Leon Panetta as his choice for CIA director, and for many of us a surprising pick since Panetta has no experience in the Intelligence committee. Panetta served as White House chief-of-staff in the Clinton administration.

Retired Admiral Dennis Blair is the expected choice for director of National Intelligence. Blair is a former commander of the U.S. Pacific fleet. He served in the National Security Council, and was a military liaison with the CIA.

Two months after the election, Republican Party leaders are looking out what went wrong and what they need to do to regain with the American voter. Our senior political analyst Bill Schneider breaks it down.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Republicans got beat bad in '06 and worse in '08. Now is the time for all good men to come to the aid of their party. Six of them are doing just that. They are competing for the votes of Republican National Committee members who will choose a new party chairman at the end of the month.

It's a miniature presidential campaign complete with debate. All six agreed there's nothing wrong with what the party stands for.

MICHAEL STEELE, CHAIRMAN, GOPAC: We need to stay committed to those values that draw us together and keep us strong as a party.

SCHNEIDER: So where do they think the Republican Party went wrong? It abandoned its conservative principles.

SAUL ANUZIS, MICHIGAN REPUBLICAN PARTY CHAIRMAN: And I think until we actually start articulating those principles and stop being hypocritical ourselves, that we as a party will not be victorious.

SCHNEIDER: Who's to blame? They had few kind words for President Bush.

ANUZIS: I think that big government conservatism was an oxymoron.

SCHNEIDER: They agreed what the party has is a failure to communicate. CHIP SALTSMAN, FORMER TENNESSEE REPUBLICAN PARTY CHAIRMAN: We have done a very poor job in communicating any message from the Republican Party.

SCHNEIDER: What can the party do better? Look to technology -- Twitter, Facebook.

KEN BLACKWELL, OHIO SECRETARY OF STATE: I have 4,000 friends on Facebook. That's probably more than these two guys put together.

SALZMAN: Yes, I do Twitter. I have probably just under 3,000.

SCHNEIDER: Blog.

STEELE: I've even gone and seen some of the neatest, hippest things to do on the Web.

SCHNEIDER: Above all, communicate.

MARK PRESTON, CNN POLITICAL EDITOR: If they stick to the core beliefs and if they are able to explain it in really plain terms and reach out to people beyond the core group that has made up the Republican Party, then that's where they're going to survive and that's where they're going to thrive.

SCHNEIDER (on camera): In the presidential election, Republicans lost badly among Latinos, Asian-Americans, Jewish voters, African- Americans, young voters and women. When confronted with that fact, the candidates for party chairman agreed, those groups share our values. The Republican Party has not done a good job reaching out to them.

Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

COLLINS: The battle over Blagojevich's choice. The possible showdown on Capitol Hill just a few moments away. Roland Burris in Washington to be sworn in, but Senate Democrats say he has no seat.

(COMMERCIAL BREAK)

COLLINS: Children caught in the crossfire. Vulnerable on both sides of the Middle East conflict. CNN senior international correspondent Nic Robertson has their story.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice- over): In Gaza, children are dying. These latest victims killed, according to their father, by an Israeli tank shell, that hit their house as Israel presses its ground offensive.

In Gaza's main hospital, foreign doctors say that since the ground incursion began, almost one-third of casualties have been children. VOICE OF DR. ERIK FOSSE, AL-SHIFA HOSPITAL: The injured patients are mainly civilians. A lot of children. And they have dreadful injuries with multiple fractures to the stomach, the chest, and the head.

ROBERTSON: Hamas is using the images of innocent suffering to rally support. This boy is asked how he is doing. He replies, "I'm saluting my country and my people." His doctor tells him, you guys in the neighborhood are the first in the jihad in fighting, capturing and killing. But away from the spotlight, children are showing their fears. This girl's friend killed in an attack on a Hamas house.

UNIDENTIFIED FEMALE: She could be my sister, you know? She is my friend, maybe my sister would die someday so I'm really afraid.

ROBERTSON: Palestinian Psychiatrist Dr. Eyad El Sararaj treats children in Gaza.

DR. EYAD EL SARARAJ, PSYCHIATRIST: Today's children are experiencing a serious form of trauma, and I fear for the future.

ROBERTSON: It's a future he says he's seen before, with past Palestinian uprisings into Fatah.

EL SARARAJ: The children (INAUDIBLE) were throwing stones at the Israeli soldiers, and because of the trauma which they were subjected to, ten years later, the children became suicide bombers.

ROBERTSON: On the Israeli side of the border where Hamas rockets land every day, it's hard to find anyone on the streets, let alone children.

(on camera): Hi. How are you?

(voice-over): The few we do find are close to their homes, they are subdued.

(on camera): How did you meet? I mean, when you hear the noise of the warning, the siren, what are you thinking?

UNIDENTIFIED BOY: (SPEAKING FOREIGN LANGUAGE)

UNIDENTIFIED BOY: Fear.

ROBERTSON: Fear?

(voice-over): Playgrounds have their own bunkers, and sirens warn of Hamas rocket attacks, but despite the precautions, in the past eight years many children have been injured.

(on camera): The threat of Hamas rockets has been taken so seriously in the south of Israel, but almost all schools like this one that within rocket range of Gaza have locked their gates, told the children to stay at home. According to Israeli government, 300,000 students are affected. (voice-over): Israeli Psychiatrist Gabby Schrieber tells me Israeli children get excellent help, structured support, unlike, he fears, children in Gaza.

DR. GABY SCHRIEBER, PSYCHIATRIST, BARZILAI HOSPITAL: Where is hope for them? And how can they structure their future in their mind? Then they can become extremist, et cetera.

ROBERTSON: If they don't get sort of a better hope for the future?

SCHRIEBER: Yes.

ROBERTSON: It's a rare note of agreement from both sides in this conflict that is sowing the seeds for future violence. Nic Robertson, CNN, Sderot, Israel.

(END VIDEOTAPE)