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111th Congress begins today; Erin Brockovich plans to investigate the Tennessee sludge; Roland Burris rejected from Senate; Fighting continues in Gaza

Aired January 06, 2009 - 13:00   ET

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

(BEGIN VIDEO CLIP)
KYRA PHILLIPS, HOST (voice-over): Congress 111. A far cry from civics 101. Elections brought most of these lawmakers to the Hill. But disputes are keeping two would-be senators out.

Amid all the intrigue, the incredible shrinking economy and the ballooning economic stimulus plan of the president-elect. We'll see what's in it for you.

And Erin Brockovich knows a mess when she sees one. She's getting an eyeful of the Tennessee sludge flood. And this hour she'll tell us live what she plans to do about it.

(END VIDEO CLIP)

PHILLIPS: And hello, everyone. I'm Kyra Phillips, live at the CNN world headquarters in Atlanta. You're live in the CNN NEWSROOM.

We start out talking about Congress. Just like everywhere else, your paperwork's got to be in order. Right? Well, former Illinois attorney general Roland Burris was hoping to be a bone fide, newly- sworn U.S. senator right now. Instead he's holding a rejected certificate of appointment and planning his next move, while the seat given up by the president-elect sits vacant in the 111th Congress.

Here's what Burris said into crackling microphones just after he was turned away.

(BEGIN VIDEO CLIP)

ROLAND BURRIS, ILLINOIS SENATE APPOINTEE: News and the media, my name is Roland Burris, the junior senator from the state of Illinois. I presented my credentials to the secretary of the Senate and advised that my credentials were not in order and I would not be accepted, nor will I be seated, nor will I be permitted on the floor.

And therefore, I am not seeking to have any type of confrontation. I will now consult with my attorneys, and we will determine what our next step will be.

Thank you all very much, and God bless each and every one of you. Thank you.

(END VIDEO CLIP) PHILLIPS: Well, CNN's Brianna Keilar watched the whole encounter from just a few feet away.

Brianna, it was like looking at the motorcade of the Obama girls going to school, but it was like twice as many of you trying to get that shot of Burris showing up at the Senate floor.

BRIANNA KEILAR, CNN CORRESPONDENT: And it was so much less controlled environment. You know, Mr. Burris showed up, and it was really just this unbelievable mess, just a media scrum. Reports, photographers. It was rainy and cold and wet. And it was just this really slow process as we moved towards the Capitol with all of these people behind him.

But he went inside, presented his certificate of appointment to the secretary of the Senate, which is an administrative person. And he was basically turned away, because it wasn't signed by the secretary of state from Illinois.

Now, this is kind of symbolic, because this was basically officially done yesterday. Just goes to show you that Burris is really pushing, that he wants this position, and he was just coming here to give his -- himself some more momentum there.

But then he came outside, had this press conference that you saw just a moment ago, Kyra. And then actually, his lawyer, Timothy Wright, is the one who really took questions and spoke a lot.

He said there's really a couple of possible next steps here. One is to basically file a lawsuit in a federal district court. The other one would be to work -- work this all out with Senate Democratic leaders who are the ones refusing to seat him. And Burris does have a meeting tomorrow with the top two Democrats in the Senate, Harry Reid and Dick Durbin.

But I want to give you a little taste of what happened after Burris left. This is part of the swearing-in ceremony. And this is where Burris would have wanted to be. As the names were read during the ceremony, it was as if Burris didn't even exist. Pay attention carefully, because these names are listed alphabetically. You'll see what I mean.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The clerk will read the names of the next four senators.

UNIDENTIFIED FEMALE: Mr. Biden of Delaware. Mr. Chambliss of Georgia. Mr. Cochran of Mississippi. Ms. Collins of Maine.

(END VIDEO CLIP)

KEILAR: ... Vice President Cheney who was reading those names. And Burris' name obviously would have come after Vice President-elect Joe Biden, who is holding onto his Senate seat until he is sworn into office here in a couple -- a couple of weeks, Kyra. PHILLIPS: All right. So Brianna, let me get this straight. There -- it looks like there's two options here. No. 1, there could be a lawsuit. No. 2, you're saying that Burris could try and negotiate some sort of deal with senators.

So does that mean, if he can work out some sort of negotiation, it doesn't matter if the secretary of state for the state of Illinois signs that certificate?

KEILAR: Well, if -- if he were to work out a deal with Senate Democratic leadership -- and there is some discussion of a compromise. We should talk about that.

But as long as Senate Democratic leaders could get people to get on board and to waive this rule, this standing rule of the Senate that says it needs these two signatures -- and these things can happen -- then yes, they'd be able to seat him, but they'd have to come to an agreement. Senate Democratic leaders would have to be on-board.

Now, the compromise that we're hearing about is that some Democratic leaders are on-board with the idea of Burris maybe being seated, but then not running again in 2010. Because the concern is that he won't win. He'll lose that seat, and that he's a political liability for Democrats.

But Harry Reid said he doesn't really like that idea. And we also heard Burris say over the last day that he doesn't like the idea of having to promise that he's not going to run again in 2010.

PHILLIPS: All right, Brianna. And as we have you with us, still, maybe you can play along with me. We've been talking about the swearing-in there on the Senate floor today. Joe Biden right there -- OK, I've been told he has already been sworn in there, side-by-side with Dick Cheney, the outgoing vice president. It's in the old Senate chamber. Biden just taking his hand off the Bible, his wife there next to his side.

KEILAR: Well, and let's -- and as well, Kyra, this is actually the -- this is the ceremonial swearing-in. As you can see, Biden's wife is there with him. So it's kind of a fun moment. It's a little more -- there's a little less decorum. And it's a little bit more of a family event. This is the -- this is in the old Senate chamber. And as I said, it's a ceremonial swearing in.

The one you saw just a moment ago was the actual one. And then this is just part of the kind of pomp and circumstance, the warm and fuzzy moments that they're having today.

I don't -- you can probably hear that there's some noise behind me. It's because there's a reception going on about -- I don't know -- 40 feet from me where, you know, people are coming for lunches. They kind of move almost from, like, party to party just to celebrate what's going on. So that's what you're seeing here, with this swearing -- ceremonial swearing-in in the old Senate chamber.

PHILLIPS: Well, the party is going to be over in less than two weeks, when Joe Biden takes that vice-presidential position, Brianna, and takes on all the issues at hand right now.

Brianna Keilar there on the Hill. Brianna, thanks so much.

Well, take the oath, meet your colleagues, learn your way around, and recess until inauguration today. Brianna just gave us a first- hand look at that. It's been the plan in ordinary years, but this clearly, is not one of those.

The 111th Congress aims to pass an economic rescue plan of breath-taking proportions with lightning speed. Watching it all with great interest, of course, is President-elect Barack Obama. And that brings us to CNN's Jessica Yellin.

Jessica, what is Obama doing to speed this process along today?

JESSICA YELLIN, CNN CORRESPONDENT: Well, Kyra, so far Barack Obama is using the bully pulpit today to press for the economic stimulus plan. He has been meeting with his economic team and, as we speak, he's just held -- he gave statements to the press before some cameras.

Some of the news he made, he said that he is going to hold new accountability standards, make them apply to the stimulus package. He says there will be no pork, no earmarks in there, and he will put the entire economic stimulus plan on the Internet so regular folks can Google it and see where all the money is going.

He also forecasts that the budget deficit this year will reach $1 trillion. That's quite a big number. He says that he is not unaware that the budget deficit will be the next big economic challenge for him to tackle and that they will use all fiscal restraint they can at this time.

But as we've heard him say consistently, Kyra, the focus now is on stimulating the economy, and that means spending. Here's what he said in comments before cameras yesterday.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: The economy is badly damaged. It is very sick. And so we have to take whatever steps are required to make sure that it is stabilized.

But we also have to recognize that, if we're going to grow this economy over the long term, if we're going to create a better future for our children and our grandchildren, that we can't be fiscally irresponsible about how we do it.

(END VIDEO CLIP)

YELLIN: Now he's going to make the case again on Thursday with this big speech he's planning to talk about the economy. It's sort of probably an effort to really use the bully pulpit and convince Americans that this is the way the country is going to get back on the right track, economically. He also said finally, Kyra, in his comments today that his director of the Office of Management and Budget, a guy named Peter Orszag, is going to be tasked with figuring out how to jump-start this economy for the long term. That is a big job, and so a lot of eyes are going to be on Peter Orszag -- Kyra.

PHILLIPS: OK. Jessica, thanks so much.

Also a lot of eyes right now on Majority Leader Harry Reid, Democrat of Nevada. He's speaking right now; we're monitoring it.

As you know, he is the one that has been very forthcoming in saying, "Sorry, Roland Burris is tainted. Rod Blagojevich, governor of Illinois, is the one that tapped him to reveal -- or to fill Barack Obama's Senate seat. We are not going to let him come here, step onto the floor." And that's exactly what happened today.

So we're waiting for Harry Reid to actually make comments there on the floor. We'll take it live when it happens.

The death toll in Gaza getting larger and younger. The Israeli military is getting closer to areas where most of Gaza's people live. And today alone, 58 Palestinians were reported killed. Health officials in Gaza said just two were militants.

An Israeli soldier was killed this morning, the sixth since the ground assault began Saturday. And Palestinian rocket fire wounded an Israeli infant.

In the U.S., outrage over the death of innocent people.

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IMAD ENCHASSI, ISLAMIC SOCIETY: As Oklahomans, we watched those scenes of horror on our screen TV. The children, the widows, the innocent being killed every day, courtesy of our tax money.

And as -- as Americans, this goes against every single value that we believe in. We came here to remind our elected officials that we are humans and, as Americans, we should never write a blank check to a state without checking if human rights would be violated or not.

(END VIDEO CLIP)

PHILLIPS: Now, that protest in Oklahoma City came before the latest Israeli strike that hit near a United Nations school that civilians were using as a shelter. An Israeli official says that militants have been firing from the school courtyard.

CNN's Paula Hancocks is covering this story for us. She's at Israel's border with Gaza. And Karl Penhaul is on Gaza's border with Egypt.

Paula, let's go ahead and start with you. What are you hearing about this latest hit on a school? PAULA HANCOCKS, CNN CORRESPONDENT: Well, Kyra, we're hearing from the U.N. aid agency in Gaza itself, saying that they believe there could be 40 casualties from this attack.

The head of the U.N. Rights and Works Agency, John King (ph), said that three artillery shells landed just outside this area. And there were about 350 people sheltering inside the building at the time.

And certainly, there have been, in other U.N.-run schools around the Gaza Strip, people sheltering, if they've had to flee from their homes for worries of being too close to Hamas target, or if the Israeli military has moved them on.

And he said that he's not going to pass judgment. He wants an independent investigation into this, but he has to deal with the consequences. And he was calling for an immediate ceasefire, saying the world knows there's going to be a ceasefire anyway, so why wait? Why wait for more people to be killed?

And as for the Israeli military side, they say that they were being fired upon from the vicinity of the school, so they returned fire -- Kyra.

PHILLIPS: Well, now, the rocket fire in southern Israel stopped completely now that Israeli troops are inside Gaza? Is that right?

HANCOCKS: Not at all, no. We understand from the Israeli ambulance services at least 37 rockets hit Israel today, and one of those hit further than a rocket has ever hit before from the Gaza Strip. It hit a place called Gedera. It's about 23 miles north of the Gaza Strip, sort of half-way between Gaza and Tel Aviv.

So these rocket attacks are not ending. Certainly, the number of them are dropping. Last week we saw about 70 a day, but at least 37 today. And the rockets are still coming. The militants seemed to have pulled back into the more populated areas.

PHILLIPS: That's where the innocent get killed. We'll continue to check in with you, Paula. Thank you.

And Karl Penhaul, you're there at the other site of this conflict. Tell us now, were the allegations that the Israeli military has been hitting Palestinians ambulances. You know, at the same time we're getting these reports that leaders of Hamas and Hamas militants are hiding within schools.

KARL PENHAUL, CNN CORRESPONDENT: Well, I was talking today to Palestinian ambulance drivers who have been ferrying some of the wounded from Gaza into Egypt for medical treatment. And two ambulance drivers said to me that five Palestinian ambulances have been hit by Israeli fire in the last 11 days.

One of those ambulance drivers said the most recent strike on an ambulance was this morning. He said another ambulance was hit yesterday, and before that, the day before that, two ambulances were hit.

We also talked to the Palestinian Red Crescent. They confirm five strikes on five ambulances in the last 11 days, and they say a total of six paramedics and patients have been killed in those attacks.

Now of course, we did try and confirm this with the Israeli Defense Forces. A spokesman for them said he was not aware that these ambulances had been hit by missile fire or by any other kind of Israeli fire.

But as you know, foreign journalists are not allowed into Gaza right now. The Israeli government is not permitting that. The Egyptian government is not permitting that. And it is very difficult to verify -- verify these claims independently, Kyra.

PHILLIPS: All right. So, Karl, we've been able to have some communication with doctors there in Gaza, telling us how bad the situation is. So right now, is the border sealed and are, you know, the wounded and the injured actually able to get into Egypt in any way, shape or form?

PENHAUL: The wounded are being brought periodically across into Egypt. This border really has never been fully opened. It is open, at best, only a matter of hours, and some days it is not open at all.

But today in a flurry of activity, in a space of about ten minutes, ambulances brought at least 16 wounded across that I counted. Doctors said all were civilians. I saw teenage boys and women. Doctors say some of those teenage boys were hit by an Israeli bomb when they were praying in a mosque. Again we haven't been able to independently verify that.

The other issue is medical aid, vital medical supplies being taken from Egypt to Gaza. Some of that is getting through, Kyra.

PHILLIPS: All right. Karl Penhaul there on Gaza's border with Egypt. Appreciate it so much, Karl. And we also heard from Paula Hancocks. She's at Israel's border with Gaza. We'll continue to hear from both of them as the fighting continues there.

Well, he's got a ton of government experience, but is he the right man for the top job at the CIA? We're going to take a closer look at Leon Panetta's resume and find out why critics, including some Democrats, are not happy with his nomination.

And slammed by a wall of sludge. Some folks in east Tennessee are turning to an environmental activist for help. We're going to have a live interview with Erin Brockovich.

Also live pictures from the Senate floor. Harry Reid, we're monitoring what he says. I wonder if he's going to say anything about Roland Burris and the fact that he wouldn't allow him to come to the Senate floor today, even though Burris says he is a senator.

(COMMERCIAL BREAK) PHILLIPS: Well, a big surprise for the spy community. President-elect Barack Obama has picked Leon Panetta, White House chief of staff in the Clinton administration, to head the CIA. But the choice is drawing criticism because of Panetta's lack of intelligence experience.

Some of that criticism from a top Democrat in the Senate. Incoming intelligence committee chairwoman Dianne Feinstein says that President-elect Obama did not consult her on his decision. And the California Democrat says, quote, "My position has consistently been that I believe the agency is best served by having an intelligence professional in charge at this time."

So while he's not an intelligence expert, Leon Panetta is no lightweight in political circles. He's been a very strong manager with a wealth of experience in government.

CNN's Brian Todd joins us now from Washington.

And let's talk about that quote from Dianne Feinstein, Brian, and that criticism. You know, what are the people in the intelligence community saying?

BRIAN TODD, CNN CORRESPONDENT: Well, Kyra, there seems to be a bit of a split in the intelligence community. We spoke today with three former top CIA officers.

And two of them said that, look, the real rap on him is going to be, and is, that it's the experience rap, that he does not have intelligence experience, that he's coming in to the agency at a time when there are two wars going on overseas, that America -- that some of these conflicts and some of the operations overseas, the counter terror operations, are very complicated.

Bob Grenier, the former head of the CIA's counterterrorism center, told me a short time ago today that, look, when you've got complicated anti-terror operations going on in Afghanistan, when you're trying to work with Pakistan in the war on terror, these are very, very difficult situations in which to fight the war on terror.

He's coming in without kind of a fundamental knowledge and background in how to do that. That's going to be a detriment.

But Bob Grenier does say that, look, he's a smart guy. He's a very good navigator of the bureaucracy in Washington, a quick study. He could compensate for that. But both Bob Grenier and another former officer say that initially, when he gets to the head of the CIA in those first days or weeks, it's going to be difficult for him.

PHILLIPS: And you know, Panetta has been critical of interrogation techniques, as has Barack Obama, and also critical of intelligence when it came to the war in Iraq.

But a lot of critics saying, "Hey, look, the Bush administration kind of picked what intelligence it wanted to use when it came to the war in Iraq, and the CIA had nothing to do with it." So do -- is someone from the outside really necessary, versus someone from the inside?

TODD: Well, there are people who say someone from the outside is necessary for this main reason. There are people who said that they have to have a clean break from the George Tenet/George Bush era at the CIA, where you had so many controversial things happen: the prewar intelligence flap, the harsh interrogations, rendition, wireless -- you know, wireless tapping and warrantless wiretaps essentially, that you have to have someone who is not tainted by any of that.

Leon Panetta himself wrote an editorial against harsh interrogation techniques in the "Washington Monthly" last year. I'll read a quote from it. Quote, "We either believe in the dignity of the individual, the rule of law, and the prohibition of cruel and unusual punishment, or we don't. There is no middle ground. We cannot and must not use torture under any circumstances. We are better than that."

Now that -- you know, now when you read that, you see that his appointment may be a very clear signal that the Obama administration intends to make a clean break with some of those very controversial methods used at CIA.

Now, there are those who know the intelligence game and say, "Look, you can break with some of it. You can't necessarily break with all of it and have an effective agency." That's the tightrope that Leon Panetta is going to have to walk.

PHILLIPS: All right. Brian Todd, I know you've been working this all day. I thank you so much for coming on and Q&A'ing with us.

I also want to let you know that Brian Todd is working on a piece on Panetta for "THE SITUATION ROOM" with Wolf Blitzer at 4 p.m. You can see more from Brian then.

And the pros and cons of Leon Panetta's nomination. Well, in our next hour in the NEWSROOM, we're going to hear from two men with CIA experience. Former presidential candidate and congressman Bob Barr. Also, TIME.com's intelligence columnist, Robert Baird. Both of them actually used to work for the CIA.

And banks are drawing the line on where they dangle that plastic carrot that attracts so many of us. What does that mean for your bottom line? We'll explain.

(COMMERCIAL BREAK)

PHILLIPS: Well, the Senate likely to defer the vote on seating Roland Burris as the senator of Illinois. Harry Reid, majority leader, speaking about it right now.

SEN. HARRY REID (D-NV), MAJORITY LEADER: They then had a gracious meeting with the secretary of the secretary of the Senate, Nancy Erickson, and Senate parliamentarian, Alan Frumin, who informed them that Mr. Burris was not in possession of the necessary credentials from the state of Illinois.

A court case in Illinois is pending to determine whether the secretary of state, Jesse White, is obligated to sign the certification. We're awaiting that court decision.

If Mr. Burris takes possession of valid credentials, the Senate will proceed in a manner that is respectful to Mr. Burris, while ensuring that there is no cloud of doubt over the appointment to fill this seat.

I also understand that Mr. Burris will likely give testimony to the Illinois state assembly impeachment proceedings even in the next few days. These proceedings pending against Governor Blagojevich. And we await that proceeding as senators, as well.

With Minnesota, Mr. President, I know a little bit about close elections. I'm only going to talk about two of them, because I've had a number of them.

I lost one by 524 votes. State-wide election for the United States Senate. That was traumatic to lose that race to Paul Laxalt, one of historic senators from Nevada, but of course -- from this country because of his very close personal relationship with President Reagan. Paul Laxalt -- Paul Laxalt and I are close, personal friends, but I lost that vote by 524.

Now Mr. President, we went through a recount. I didn't file any lawsuits. There were no challenges. As hard as it was -- and it was hard -- because that's really the first thing I'd ever lost. I lost a race. All over the country, Democrats were winning these Senate seats, and I lost in Nevada. But I had to give up because I had no chance of winning.

I won the second by 428 votes. One reason that John Ensign and I are soul mates is because, listen, our politics are so different, but our friendship is as good as it gets.

That was a tough election, a bitter election that John Ensign and I went through. We had the recount in Nevada. It was ongoing. John Ensign made a decision it was a waste of time: "I can't win the election." Before the recount was completed, John Ensign called me -- I was having dinner with my wife -- and said, "You're going to be the next senator."

I thought when he made that phone call, "Gee, this is some kind of a good guy." I didn't handle my loss nearly as well as he did, and I remembered that.

So anyway, John Ensign filed no challenges, didn't complete the recount. No lawsuits. And John Ensign is now a member of the United States Senate. And I have -- I'm fortunate to have a number of good friends. He's a friend, and I think if you ask him, he would say the same.

So I say to my friend, Norm Coleman, watch what I've said and watch what has taken place in the past. The Senate race in Minnesota was very close. Very, very close. One of the closest in history. A bipartisan state canvassing board and Minnesota's election officials did an exemplary job of handling the recount.

PHILLIPS: Bottom line, it looks like Harry Reid is saying, OK, step forward, be a gentleman, concede. He's talking about the Minnesota race there between Norm Coleman and Al Franken. It was close. Norm Coleman not conceding right now. Al Franken had that vote. There had been talk about a recount, about lawsuits.

And Harry Reid throwing in some of his personal experience, saying, "Look, I went through the same thing, too. And my running mate and I now are both members of the Senate. We didn't argue. We didn't have lawsuits. We diplomatically got out of that."

Then also, you heard him make the comment, too, about Roland Burris. The bottom line there: he wants to see a signature on that certificate from the state of Illinois there, Jesse White, the secretary of state, along with Rod Blagojevich's signature. Other than that, doesn't look like there's going to be any negotiating to allow him to take his seat there on the Senate floor.

All right. We're going to move on and talk about some developing news now in the business world.

KYRA PHILLIPS, CNN ANCHOR: Susan Lisovicz, what do you have for us there on the floor of the New York Stock Exchange?

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Hey Kyra. Well, before we talk about Wall Street, let's talk about some news coming out of Houston specifically. An appeals court upholding former Enron CEO Jeffrey Skilling's conviction for the energy company's collapse, but also saying that he can be resentenced because the judge in his case applied guidelines that were erroneous.

Jeff Skilling was convicted on 19 counts of fraud, conspiracy, insider trading and lying to auditors for his role in Enron, in what was once the nation's seventh largest company. He received a 24-year sentence. We'll see if that sentence changes.

Meantime, it's a virtual econorama here today, Kyra. We have a trio of economic reports. Pending home sales down 4 percent in November. that was worse than expected. It's obviously a reflection of future home activity, homes under contract. We also got factory orders that declined more than 4.5 percent. That was also worse than expected.

But in the services sector, which is the biggest part of the economy, the contraction was slower than expected. So that's good news there. In less than an hour, we will get some insight into the Fed's historic decision on interest rates. And I'm going to toss back to you right now, Kyra.

PHILLIPS: Appreciate it, Susan. I'm going to get straight to Barack Obama making comments now at his D.C. Transition office on Gaza and also Leon Panetta. OBAMA: When the American people spoke last November, they were demanding change, change in policies that helped deliver the worst economic crisis that we've seen since the Great Depression. But they are also looking for a change in the way that Washington does business. They were demanding that we restore a sense of responsibility and prudence to how we'd run our government.

One of the measures of irresponsibility that we've seen is the enormous federal debt that has accumulated, the number that has doubled in recent years. As we just discussed, my budget team filled me in on -- Peter Orszag now forecasts that at the current course and speed, a trillion-dollar deficit will be here even before we start the next budget. We're already looking at a trillion-dollar budget deficit or close to a trillion-dollar budget deficit, and thatpotentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point.

So, the reason I raise this is that we are going to have to stop talking about budget reform. We're going to have to totally embrace it. It is an absolute necessity. And it has to begin with the economic recovery and the investment plan that Congress will soon be considering. We're going to be investing an extraordinary amount of money to jump-start our economy, save or create three million new jobs, mostly in the private sector, and lay a solid foundation for future growth.

But we are not going to be able to expect the American people to support this critical effort unless we take extraordinary steps to ensure that the investments are made wisely and managed well. And that's why my recovery and reinvestment plan will set a new, higher standard of accountability, transparency and oversight.

We are going to ban all earmarks, the process by which individual members insert pet projects without review. We will create an economic recovery oversight board made up of key administration officials and independent advisors to identify problems early and make sure we're doing all that we can to solve it. We will put information about where money is being spent online so that the American people know exactly where their precious tax dollars are going and whether we are hitting our marks.

But we're not going to be able to stop there. We're going to have to bring significant reform not just to our recovery and reinvestment plan, but to the overall budget process to address both the deficit of dollars and the deficit of trust. We'll have to make tough choices, and we're going to have to break old habits. We'll have to eliminate outmoded programs and make the ones that we do need work better.

That's the challenge that I've handed to Peter and Rob Neighbors and the rest of my budget team. That's the challenge that the American people have handed me. They know we're at a perilous crossroad and that tinkering in the margins will not do. I'm going to have more to say about this subject tomorrow, but today I wanted to lay out an early marker with those that I've entrusted to make the changes the American people voted for. We are going to bring a long-overdue sense of responsibility and accountability to Washington. We are going to stop talking about government reform and we're actually going to start executing. That's the charge that I've given the members of the administration, and that's the charge that was given to me by the American people. And we are ready for the challenge. So with that, I'm going to take some questions. I'm going to start with you, (INAUDIBLE).

QUESTION: Thank you, Mr. President-elect. Do you think that you'll be submitting a budget larger than $3.1 billion that President Bush submitted for fiscal '09? And also, what are you doing to address concerns from other Democrats about deficit spending and increasing the deficit (INAUDIBLE)?

OBAMA: Well, you know, I don't want to get into particular budget numbers because we're obviously still in the process of reviewing what the existing budget looks like, where we can obtain some savings, what programs we can potentially eliminate. We will be submitting that budget later after we've submitted the recovery and reinvestment plan. I can give you a set of general principles, though.

We know that we're going to have to spend money to jumpstart the economy. I spoke about that yesterday. We know that even if we did nothing, that we have close to a trillion-dollar deficit, even if we were on the current path that we're on. And we know that we have to then implement a set of fiscal measures that deal with medium and long term so that we have a sustainab aable path of economic growth.

So, what I've assigned Peter to do, and rob and others, is to work with my economic team. They are part of the team that is putting together the accountability and oversight measures into the recovery act. But they also have this broader charge which is, how do we get a fix on this budget so that as the economy recovers, we start stabilizing the economy and getting our budget under control?

It's not just Democrat or Republican colleagues on the Hill that are concerned about this. I'm concerned about this. So, what I've said is, I'm going to be willing to make some very difficult choices in how we get a handle on this deficit. That's what the American people are looking for. And what we intend to do this year, next year and all the years that I'm in office is to demonstrate our seriousness, not gimmicks, not by punting to future administrations the tough choices, but by making some of those tough choices while I'm in office.

Chuck (ph).

QUESTION: You mentioned on the earmarks, you said there will be none that get in there without review. Some people would argue even the so-called bridge to nowhere got reviewed -- some level of review at the committee level.

OBAMA: No, no, no. What I'm sayingis -- let me repeat what I said here, Chuck (ph). We will ban all earmarks in the recovery package. and I describe earmarks as the process by which individual members insert pet projects without review. So, what I'm saying is, we're not having earmarks in the recovery package, period. I was describing what earmarks are.

QUESTION: So, you're not suggesting there's some level of review that might --

OBAMA: I'm saying there are no earmark in the recovery package. That is the position that I take.

QUESTION: First, could I ask one --

OBAMA: Chuck, did you have a follow-up?

QUESTION: Well, if I may, I was just wondering if $200,000 sounds about the right level at which the tax credit would be based. I know that's been thrown out there. I don't know if (INAUDIBLE).

OBAMA: You know, look. I think you can get some guidance from what I said during the campaign, but I don't want to be locked in to a particular number, Chuck, just because we're still formulating the details of the plan.

QUESTION: Some are questioning Leon Panetta's lack of intelligence -- lack of training on intelligence matters. Sorry about that. I know this tricky for you, since you haven't announced him yet, but what does he bring to the table?

OBAMA: Well, as you noted, I haven't made a formal announcement about my intelligence team. (CELLPHONE RINGING) That may be him calling now.

(LAUGHTER)

OBAMA: Finding out where it's at. I have the utmost respect for Leon Panetta. I think that he is one of the finest public servants that we have. He brings extraordinary management skills, great political savvy, an impeccable record of integrity. As chief of staff to the president, he's somebody who obviously was fully versed in international affairs, crisis matters, and had to evaluate intelligence consistently on a day-to-day basis.

Having said all that, I have not made an announcement. When we make the announcement I think what people see is we are putting together a top-notch intelligence team that's not only going to assure that I get the best possible intelligence unvarnished, that the intelligence community is no longer geared towards telling the president what they think the president wants to hear, but instead are going to be delivering the information that the president needs to make critical decisions to keep the American people safe.

I think what you're also going to see is a team that is committed to breaking with some of the past practices and concerns that have, I think, tarnished the image of the agencies, the intelligence agencies, as well as U.S. foreign policy. Last point I will make, though, on this is that there are outstanding intelligence professionals in the CIA, in DNI and others, and I have the utmost regard for the work that they have done. And we are committed to making sure that this is a team effort that's not looking backwards but is looking forward to figure out how we can serve the American people best. OK?

QUESTION: Thank you, Mr. President-elect. You're being put under a lot of pressure internationally to get more involved in the situation in Gaza. I understand you say there is only one president at a time, but what do you have to say to the Israelis and Palestinians who are fighting and dying in Gaza?

OBAMA: As I said before, when it comes to foreign policy, I think you need to adhere to one president at a time (INAUDIBLE). In domestic policy, Democrats, Republicans, we can have arguments back and for the about what tax policies are going to be. When it comes to international affairs, other countries are looking to see who speaks for America.

Right now, President George Bush as president of the United States speaks on behalf of the U.S. government and the American people when it comes to international affairs. Obviously, I am deeply concerned about the conflict that's taking place there. I am being fully briefed and monitored, monitoring the situation on a day-to-day basis. The loss of civilian life in Gaza and in Israel is a source of deep concern for me.

And after January 20th I am going to have plenty to say about the issue, and I am not backing away at all from what I said during the campaign, that I -- starting at the beginning of our administration, we are going to engage effectively and consistently in trying to resolve the conflicts that exist in the Middle East.

That's something that I'm committed to. I think it's not only right for the people in that region, but most importantly, it's right for the national security of the American people and the stability that is so important to this country.

So, on January 20th, you will be hearing directly from me on my opinions on this issue. Until then, my job is to monitor the situation and put together the best possible national security team so that we hit the ground running once we are responsible for national security issues.

UNIDENTIFIED MALE: Thank you, guys.

PHILLIPS: Barack Obama making comments on Gaza, also Leon Panetta, his pick for the CIA there in some unkuld remarks in the D.C. transition office. As you know, on the 20th he will be sworn in as the next president of the United States.

Real quickly, someone we just want to honor for a minute as that was going on (INAUDIBLE). That's Rusty Dornan over there. She has been with CNN almost 20 years, and she's done some pretty amazing things, from flying strike fighters to covering floods and hurricanes, and you name it, Rusty has done it. And they just had a huge sendoff for her, a cake. And she has absolutely no idea she's on live television, but I'm doing this because there is not one person in this newsroom that doesn't love or respect Rusty. So, we wish her well as she moves on in a beautiful new marriage and life outside of CNN.

Well, she's taken on big business to help out the little guy. Now Erin Brockovich has a new cause, and she'll join us live to talk about it.

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PHILLIPS: Well, just imagine a mountain of sludge six feet deep, nearly 400 acres wide bearing down on your house, devastating your community. That's what people living here in the path of a coal ash spill in east Tennessee are dealing with after a power plant retaing wall collapsed. The Tennessee Valley Authority and the EPA are testing the air quality and the water, and right now they say they meet acceptable standards.

But residents are worried. The sludge is a toxic brew containing arsenic and heavy metal that could contaminate their drinking water. Enter Erin Brockovich. You know her name very well from the movie about her life starring Julia Roberts. Now she is an environmental activist poised to champion the cause of Tennessee residents in that spill zone. Erin, good to see you.

ERIN BROCKOVICH, ENVIRONMENTAL ACTIVIST: Hi. Thanks for having me. How are you?

PHILLIPS: Good. Now, tell me why you've decided to take this on and meet with citizens there.

BROCKOVICH: You know, I've just been getting many, many e-mails from concerned citizens from all over the area that have asked me to come out and assist in any way that I can. They find themselves in a fearful situation. They're not certain that they're being told the truth. They're getting inconsistent stories.

So, after getting enough requests, I finally decided that I would go out and have a community meeting, go to the town and the site myself and see what we could do to assist and answer all the questions that so many of them have.

PHILLIPS: Well, let me ask you this: What -- through your investigation of the story thus far -- obviously there's got to be something of concern to you to even take you to the area. So, what are your concerns right now? Where do you think they might have a case here?

BROCKOVICH: Well, my concern is obviously what the community's concern is. They're very concerned that as this sludge with all these heavy metals dries, and spring comes, and the winds kick up, that airborne contaminants could affect them. You know, many of them have asthma. I've had many e-mails from people in the community who have children with muscular dystrophy, asthma, autoimmune problems.

They're very concerned about the future health impacts, and they don't feel that they're getting those answers met. Also, you know, I get many e-mails from people, and some of them are employees. Some of them are whistleblowers. And they're providing us with some information that lends its hand to concern about some of the contaminants, some things that we should be testing for that they're not testing for.

PHILLIPS: Could you give me some examples? Could you just give me a little tease?

BROCKOVICH: It's not necessarily a tease. I mean, there has been some identification of thalium (ph) there, which we're looking into. And I don't go out there solely alone. I will be with toxicologists and engineers and experts.

PHILLIPS: Apologize about that. We lost our connection there with Erin Brockovich. We're not going to be able to get her back. We ran out of time there. Apologize.

But I will tell you that you can look for her on in the NEWSROOM on Thursday. She's going to join Rick Sanchez, 3 p.m. Eastern time. She's going to tell us what she actually saw in Tennessee and what her next move might be.

Now, while she was just telling us about information that she was getting that leads her to believe that this could be a tremendous problem in Tennessee, just for the sake of fairness here, Leslie Simms, the on scene coordinator for the EPA, says that so far he has found no unsafe levels of toxins in municipal supplies of water and private wells.

However, tests on the ash on the river banks and the roadsides there do show elevated levels of arsenic. So, we'll make sure to follow up on this story and show both sides.

Good credit, getting it, keeping it, it's a lot harder these days. We're going have some tips to keep you on solid financial ground.

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PHILLIPS: If that lines of credit have shriveled up, American consumers are now dealing with the changing world of plastic. What's the new normal? And how is that going to affect your life, your job, your business?

Well, for that, we go to our own financial guru, Ali Velshi, live on his radio show right now. That was kind of fun yesterday. I'm glad we're doing this. Can we do this every day?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: We can do this every day. I'm love talking to you. We've been talking about getting your house in order today. Because, you know, my book is about investing and becoming an investor. But you can't become an investor until you cleared up a lot of your credit problems.

And that's the issue that we're discussing today. I'm speaking to people who are asking me how to fix their credit and how to put the credit aside so that they can start to become investors. PHILLIPS: All right, tell me how to give me my money back. Give me some tips. What -- you want to start with chapter one and go to the end?

VELSHI: Chapter one is why, why -- how we got to where we are. That's a little bit of history. Chapter two is where the meat is onward.

What it is, it tells you to get your credit in order, because if you're paying more than 10 percent on a credit card, well, the average return on the stock market over time is 10 or 12 percent. And that involves some risk.

Whereas if you have credit cards, there's no risk in paying that off. And basically, you get your 10 percent or more back. So, that's number one.

Number two, keep some money aside for emergencies. Emergencies are coming to haunt us now, because people are losing jobs. So, you want to keep that aside.

Then, Kyra, after you've done that, most people have a 401(k). The company gives them a bit of a match. Invest your money. Start saving it.

Do you know, Kyra, that most of the return that you get on an investment is based on the fact that you diversify and regularly invest, not on which stock you pick or when you buy and when you sell.

The actual act of setting up an investment and contributing to it regularly is more important to your ultimate success than what you buy.

PHILLIPS: We've been getting flooded with emails about Barack Obama's plan, economic plan. And you did that last night in, in -- on Anderson Cooper's show. You had some -- you had a great breakdown with the number of bullet points.

VELSHI: Right.

PHILLIPS: Before we head into the second hour, could you just let our viewers know who may think that they've been consumed by other news today, just -- OK.

VELSHI: Sure. I'll give you, I'll give you the headline. The plan is going to be about $750 billion. About 40 percent of it is going to be in tax cuts. Some of those will go to businesses, some will go to individuals who earn up to a certain level. We don't know what the level is yet, but you'll get $500 per individual and $1,000 per household.

That's 40 percent of the $750 billion. That's $300 billion. The other $450 billion will be what we think of as an infrastructure type of stimulus plan. It will be bridges and roads and refitting buildings to be more energy effective and energy efficient, making hospital records, automating them and updating labs and classrooms and things like that.

The typical infrastructure rebuilding type of activities. So, it's a two-part plan. It's not going to be ready by inauguration day, which is what we thought. And this tax bonus that you get, the 500 bucks, that wasn't anticipated. That's new. I don't love that, because I don't think that's going to help people out the way they need help. But that's what our stimulus program is starting to look at.

PHILLIPS: All right. Well, I love you. And I'm going to help you out. We'll bring the book up one more time here so I can help your kids go to college. And "Gimme My Money Back: Your Guide to Beating the Financial Crisis."

Our dear Ali Velshi. All right, so, tell everybody all the ways they can get your book.

VELSHI: Anywhere you want. It's online at all the normal places. Amazon, Borders, Barnes & Noble and in bookstores.

PHILLIPS: Fabulous.

VELSHI: Can we do this the rest of the week?

PHILLIPS: Yes. Let's do this the rest of the week. And then, what I can do, I'll take 30 seconds and talk about your book.

VELSHI: Perfect.

PHILLIPS: OK. Great. See you tomorrow.

VELSHI: All right. Kyra Phillips.

PHILLIPS: Landrieu and Snow. Two names making headlines as the new Congress convenes.

In our next hour in the NEWSROOM, we're going to speak live with the Senators Mary Landrieu and Olympia Snow, the first women to hold the top two posts on a Senate committee.

And Israel using its fire power to bring hamas to heel. The militants still firing rockets. Caught in the middle? Civilians, children, dying by the hour. How long can it go on?

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