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Israel Possibly Using Chemical Warfare; Hillary's Confirmation Hearing; Figuring Out How To Spend Remaining TARP Funds

Aired January 13, 2009 - 15:00   ET


RICK SANCHEZ, CNN ANCHOR: Yes. And you know what we're going to do, Kyra? This is going to be interesting today.
I have got professor Jeffrey Rosensweig from the Emory School, the Goizueta School with me here. What we're going to be tackling is something that's critically important to all Americans. It's your money.

So, how could it not be important? How much? Three hundred and fifty billion dollars worth. It's what we were talking about just moments ago. And, as a matter of fact, Rog, take a little bit of that shot, if you can, right there.

This is what they're figuring out what to do with next, because if our government is going to give $350 billion to bankers to use as part of the bailout, again, let me underscore this, your money, then they need to be accountable as to what they're doing with it. And then what are they going to do with the other $350 billion that they're supposed to get? And should they get it? Important questions as we begin this newscast.


SANCHEZ (voice-over): Making news right now: Barney Frank irate with the bankers that got your money, the ones you bailed out.

REP. BARNEY FRANK (D), MASSACHUSETTS: In this case, we are Reaganites. We intend to trust, but verify. And we're going to verify in advance. We're going to put some requirements in there.

SANCHEZ: They have already gone through $350 billion, but for what?

UNIDENTIFIED MALE: We don't know what the banks did with it.

SANCHEZ: And now they want another $350 billion. Should they get it?

Is Israel using a chemical against Palestinians in Gaza?

UNIDENTIFIED MALE: These burns are not usual burns, severe, very deep burns.

SANCHEZ: Using white phosphorous against civilians, even combatants, to burn them is against international law. UNIDENTIFIED MALE: It's been burning since 1:00 in the morning Nohir Homada (ph) tells our cameraman around noon. If you move it with your feet, it reignites. You can't put it out with water, only with sand. This matches the properties of white phosphorous, which ignites on contact with air.

SANCHEZ: Is Israel using white phosphorous? We examine what Palestinians say, what doctors say, what human rights groups say, and what Israeli military officials are saying in response.

UNIDENTIFIED MALE: I got an e-mail from Marc about 7:18 Eastern Standard Time last night.

SANCHEZ: The missing pilot who faked his death still in hiding, but apparently contacted a friend.

UNIDENTIFIED MALE: He had been reading CNN and (INAUDIBLE).com, and he was disturbed. And I think he just wanted to set the record straight.

SANCHEZ: How do you set the record straight after allegedly faking your own death by deliberately crashing a plane?

(on camera): Aren't you threatening the lives of hundreds, if not possibly thousands of people when you do that?


SANCHEZ: Where is he? CNN crews live from Alabama.

And Hill on the Hill. It's not the job she wanted, but it's the one she will likely get.

UNIDENTIFIED MALE: Also, welcome, Chelsea. We're delighted to have you here.

SANCHEZ: Not Bill, but Chelsea gets the spotlight.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I will just try to be a helpful sounding board to her. But I don't think I will do any more than that.

SANCHEZ: But will Bill's foreign interests cause her conflict?

You told us what you think is most important, and we got you covered, lunchtime in San Diego, 3:00 p. in Tampa/St. Pete. This is your daily national conversation.


SANCHEZ: All right, here's what we're going to do for you. We're going to split the screen.

And there you see two things that are going on, two crucial hearings on Capitol Hill. One looks like a slam dunk. Well, the other's kind of anyone's guess. This is -- here's the question in the Senate. Will Hillary Clinton be confirmed as secretary of state?

You see her there on the right. Now the camera's right smack on Barney Frank. He's the one leading this committee. By the way, judging from today's lovefest, get ready to call her Madam Secretary.

But what about Bill's dealings? Well, we have got that part of the story covered as well. Now, the question before the House harder to answer. That's where you're looking at Barney Frank asking these questions. Will Congress give the banks another $350 billion of your money? Oh, and what did they do with the first $350 billion? Here are some conditions being set today.


FRANK: Having given $350 billion to the Bush administration?, I believe it's reasonable to now make it available to the Obama administration, but with much more in the way of restriction.


SANCHEZ: All right, let's go back to this live picture. There's Barney Frank.

Let's dip into that real quick. Let's see what he is saying.


FRANK: ... got themselves into trouble in the first place and we ought to stay out of it. What's the broader economic argument for it, Mr. Coomb (ph)?

UNIDENTIFIED MALE: Mr. Chairman, I think foreclosures are contributing to problems in the housing market, and the broader economy. Foreclosures impinge on values in the community at large, even for those people still owning their homes and paying their mortgages. When there are foreclosed homes in the community, we see values go down more broadly. And the decline in values and decline in home values results in more losses for banks and other...

SANCHEZ: So, here's the question that's being asked right now. And it goes right to the point as we catch this conversation. You're looking now at live pictures of this committee trying to come up with some kind of solution to how the money has been spent, again, your money, plus, the money that will be spent.

So, as they come up with some kind of solution, we will continue to follow this, Barney Frank's committee, what they're going to be saying, and we're going to take this up with some of our own guests and some of our own experts here, including professor Rosensweig.

By the way, there are comments coming in now from Harry Reid that we're going to be sharing with you as well, and we will have that for you in just a little bit.

Stand by. We will continue to dip in and continue to bring you this story as it develops as well, as the story we have been telling you about involving a pilot, a pilot, who, by the way, is missing, in hiding, and now communicating.


UNIDENTIFIED MALE (through translator): If you move it with your feet, it reignites. You can't put it out with water, only with sand.


SANCHEZ: What kind of fire doesn't go out? And does it mean that Israel is using a chemical in Gaza, as some allege? That's ahead.

Also, take a look at this, from earlier today, these four men, how their fortunes have changed. Do you see them all? You will in a minute. We're talking about Howard of Australia, Blair of the British Isles, Cheney of the U.S., and George Bush, together on stage -- when we come back.


SANCHEZ: Hey, welcome back, everybody. I'm Rick Sanchez here in the world headquarters of CNN.

We have got a lot of information to tackle, but the first thing we're going to be talking about is your $350 billion, and, by the way, your next $350 billion as well that they may be getting and may be spending, the bankers, that is, as part of the bailout.

Two things going on right now.

And we're going to bring in, by the way, coincidentally, two experts on this. Brianna Keilar is our congressional correspondent. She's following this story. And there she is. She's been watching what Barney Frank's committee has to say about this, as well as professor Jeffrey Rosensweig, from -- he's an Emory economist who is good enough to join us to take us through this.

A couple of things are going on.

First of all, we have talked about the money, how people need to be held accountable. That's Barney Frank's argument throughout the day, and the idea that, if this really is the people's money, do they know what's going to happen to it?

I want you to listen to this. This is Harry Reid today talking about whether the American people trust their government and these banks with their money. It may surprise you. Here it is.


SEN. HARRY REID (D-NV), MAJORITY LEADER: I feel that the American people have a pretty good idea what we're doing. But, as time goes on, after Barack Obama becomes president, I think we will have some documents that will be more elaborative.

(END VIDEO CLIP) SANCHEZ: I guess the question, Brianna, I'm going to take it to you to begin this, is, do the American people have a pretty good idea what's being done with their money? Or do you think there's a lot of fog out there and a lot of mistrust?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: I think what you're hearing from some members of Congress could reflect what you're hearing -- what -- what we will be hearing from the American public.

And that of course is the good thing about your show, Rick. We will hearing what they think on Twitter.


KEILAR: But there is some confusion from Democrats and Republicans about exactly what's going to happen. And both of them feel very much burned by how this first $350 billion was spent in this bailout program.

So, what you're hearing now is the Obama team really trying to get out there and say, here's what we're going to do with this money. They're talking about getting credit flowing. They're talking about making sure there's more oversight, because, Rick, as you know, that main concern, and one of the things that's probably so upsetting to the American public, is,how were these companies spending this money?

And it's a big question mark.

SANCHEZ: That's where it comes down to perception. And I think that's terribly important.

Professor, let me bring you into this conversation. It's one thing to give banks money and then perceive that they're just sharing them with other banks. It's another thing to give banks money and agree or believe that somehow that money is getting to me. After all, it was my money to begin with as a taxpayer.


SANCHEZ: Is that something that is being answered by these banks in these committees, do you feel?

ROSENSWEIG: No, they're not being answered.

And what really happened to Congress is, they were under pressure, because things were very tough in September. So, people were pressuring to put together a bailout bill. They came up with the number $700 billion.

And, frankly, they were rushed through by the Bush administration. And Secretary Paulson and the Bush administration really didn't spend the money in the way they were told it would be spent. So, you're right. The people aren't happy. Even small- business owners aren't happy.

SANCHEZ: Yes. ROSENSWEIG: It's not just consumers. This money has been mostly wasted or at least not accounted for. The future must be different.

SANCHEZ: Well, they don't know what they're supposed to do with the money if someone doesn't spell it out for them.

ROSENSWEIG: Right. That's true.

SANCHEZ: Now, here is what Barney Frank is doing. I want you and Brianna to listen to this. This is Barney Frank today. He's essentially, I mean, what he's doing here is he's putting restrictions on them. He said, yes, you could get the money, if you promise to do this. Let's take a listen.


FRANK: The legislation that we intend to bring forward does not confer new powers on the administration. It does mandate that they do things within the existing powers.

That is, everything in the bill could already be done if they were ready to do it. And it reminds me of what Harry Truman said. Being president of the United States means trying to get people to do what they should have done in the first place on their own if they had any brains.

And that's what we're trying to do with the TARP. We're trying to get an administration to do what it should have done in the first place.


SANCHEZ: I'm being told -- let's just stop what we're doing right now -- I'm being told that Hillary Clinton is speaking now live. Let's take a listen.


SEN. RICHARD LUGAR (R), INDIANA: ... as rapidly as possible, within days, rather than in months or in years.

So, I ask you to comment on this, because it appears to me that the press coverage of this hearing will be favorable to the remarkable responses you have made, very fluent testimony, obviously well- prepared in touching the bases with the questions that we had.

But it's less likely to be satisfying with regard to the Clinton Foundation. And this is why I ask you to at least give some further comment, assurance, if not pledge, to be sensitive to this, and try to respond to the thoughts that I have expressed.

SEN. HILLARY RODHAM CLINTON (D-NY), SECRETARY OF STATE NOMINEE: Well, Senator Lugar, I know that you come at this issue in good faith, as I do.

And I agree that these are matters that have to be handled with the greatest of care and transparency. I think it's important to give just a little context, if I can.

You know, the purpose of the agreement was to avoid even the appearance of a conflict, because all of the independent professionals who do this for our government said there was no conflict. So, it's a kind of catch-as-catch-can problem.

When it was all submitted to the Office of Government Ethics, they said there was no inherent conflict. My husband doesn't take a salary. He has no financial interest in any of this. I don't take a salary. I have no financial interest.

So, out of that abundance of caution and a desire to avoid even the appearance, the president-elect's transition team began working with the foundation to try to craft an agreement that would avoid the appearance of a conflict, but would also ensure that the foundation can continue its work.

You know, I'm very proud of the work that the foundation did. And, when you look at why it received, for example, foreign government money, it's because early on there wasn't the support from our government, until, frankly, the leadership of President Bush and members of this Congress created PEPFAR, and there was also a tremendous financial burden on poor states to try to afford the pharmaceuticals, the antiretrovirals.

So, my husband's foundation worked with generic drug manufacturers to help improve their systems of manufacturing and get the costs down, so that it would be affordable. So, the governments of countries like Canada and Norway and Ireland and the U.N. said, well, this is the best deal ever. So, this is all pass-through money.

None of this goes to or stays in the foundation. This is used for the purchasing contracts in order to buy the drugs to keep, you know, many people alive, and particularly 1.4 million people, including many children.

So, the work of the foundation, the confidence that it has created with donors who know that it has an extremely low percentage that goes to any overhead, it has a very transparent way that it uses the money, were very persuasive to the transition team that we had to work out something to keep the foundation in business while I did what I needed to do to be as transparent as possible.

So, the kinds of concerns that were put forth were very carefully considered. And, you know, I do believe that the agreement provides the kind of transparency. Under the memorandum of understanding, foreign government pledges will be submitted to the State Department for review. I don't know who will be giving money.

That will not influence, it will not be in the atmosphere. When the disclosure occurs, obviously, it will be after the fact. So, it would be hard to make an argument that it influenced anybody, because we didn't know about it.

So, I think that, in a way, that the president-elect's transition team saw it, the agreement that has been worked out is actually in the best interests of avoiding the appearance of conflict.

Now, I hasten to say that my career in public service is hardly free of conflict, Senator. So, I have no illusions about the fact that, no matter what we do, there will be those who will raise conflicts.

But I can absolutely guarantee you that I will keep a very close look on how this is being implemented. I will certainly do everything in my power to make sure that the good work of the foundation continues without there being any untoward effects on me and my service and be very conscious of any questions that are raised.

But I think that the way that this has been hammered out is probably as close as we can get to doing something that is so unprecedented, that there is no formula for it. And we have -- we have tried to do the very best we could.

LUGAR: Well, my -- my time is concluded.

But let me just say that this situation is unprecedented, in which a first lady and her distinguished husband and a foundation come together with a State Department hearing of this sort.

Now, I am hopeful that, as we go through the history of this, that people will not say, well, Senator Lugar and Kerry were and were prescient. They saw the problems. And we will get full credit, but that will not be helpful to our foreign policy, to you, your husband, to the foundation.

And this is why I plea for you, plea to give even more consideration -- need not be a decision made today, because I appreciate the negotiations have been sizable. And you are a good negotiator. So is your husband. So are those who have worked for you, admire that.

SANCHEZ: Let's hear him out. Let's hear him out.

LUGAR: Good thing for a State Department official, and particularly a secretary of state.

But this seems to me to be so important at the outset, that this is why I have dwelled upon it, trying your patience and that of the committee, because I think it is very important. And I think you understand that.


And I -- I respect you so much, Senator. And I can, you know, certainly guarantee to you that I will remain very sensitive to this, and I will work with you and the chairman as we go forward.

LUGAR: Thank you.

SANCHEZ: All right, there you have it. And that's why we wanted to make sure you heard that out. It kind of caught us by surprise here. It's an embarrassing question to have to ask her, as a future secretary of state, because, as you heard them say, it's the first time, perhaps in the history of the United States -- I certainly couldn't think of another situation -- where you have a former first lady who's about to become the secretary of state answering for her husband, a former president of the United States, and a very normal situation he set up with a foundation, where he tries to help people around the world.

Still, that foundation has a money situation with other governments and other countries and other companies, for example, which she may have to look into before making decisions. And they're just seemingly trying to be as open and honest about it as possible.

And you could almost see as she was answering the question and as Senator Lugar was asking the questions, that they were somewhat troubled by the situation. And that's why we dipped into that, so you could see as it happens. We knew that question would be asked, but we wanted to see you and be as transparent as possible, actually hear the response and the give-and-take for yourself.

By the way, we had planned to do this during this newscast. And that's why Patricia Murphy of is there. And we're going to be joining her in a minute. She's right there across from Hillary right now and will talk to us -- Senator Clinton, I should say -- pardon me -- and will be joining us with her analysis of this in just a little bit.

Going back now to the story that we were following earlier, restrictions that need to be put, so that your $350 billion is spent.

Brianna, are you still with us?

KEILAR: I am, Rick.

SANCHEZ: What is the point that Barney Frank is trying to make and why is it salient and relevant?

KEILAR: Well, he's basically saying, yes, we trust the Obama administration. They're promising assurances there's going to be transparency, but, at the same time, we should put conditions on them.

What I should tell you about this, Rick, though, is this legislation he is proposing that does put conditions, whether it is there's more oversight or there's help for homeowners facing foreclosure, Senate Democrats have made it clear that they cannot flesh out whatever this legislation would be that would come out of the House in time for this vote that they have to have on whether to block these funds, this extra $350 billion that's been requested by President Bush, but at the request of president-elect Obama.

So, it is a bit of a moot point. Furthermore, what you have is, in the House, the folks there are more likely to block or to attempt to block these funds. But, in the Senate, where it's possible they could come really to the side of Barack Obama on this, that's really the issue. Can they get the votes? Because if the Senate says we're not blocking the funds, the House saying we are blocking the funds is a moot point. Both of them have to agree.

SANCHEZ: Well, that's interesting, professor, because it ends up being right on the lap of the future president, Barack Obama, where he might to have, you know what, I'm going to veto this or I'm going to go along with this?

ROSENSWEIG: That's right. And it's very important how he starts his administration.

People already have so little confidence in the economy, and he's our hope. You know, one thing...


SANCHEZ: And, again, I just need to underscore this. It's my $350 billion that you guys are giving to them, so they can spend.

ROSENSWEIG: Yes. And we don't even know what they're doing.

But you know what else? It's $700 billion for the fiscal policy stimulus. It was money for the car companies. And we never really heard from the car companies what they were going to do with that money. They're supposed to come back to us. So, you're right. The taxpayer is feeling a cumulative burden on them. And even talking about foreclosures, I want someone who's really hurting to be helped with this money.


ROSENSWEIG: But I think Congress needs to spend the time to say, you and myself and the camera people and the people in makeup, we're living in houses we can afford. We didn't stretch ourselves. And we're taxpayers.

Should we step in to help someone who's living in a $1 million house who can't afford it because they were greedy? So, you can see why we need to watch this, even before we say we have got to help the people who might face foreclosure.

SANCHEZ: Sounds like conditions need to be set. Professor, thank you.

ROSENSWEIG: They need to be set. It's our money.

SANCHEZ: Exactly. We thank you, by the way, for coming.

Our thanks to Brianna Keilar as well.

We have got new pictures coming in right now. These are pictures coming in from Gaza. It's a story that we're following for you regarding what's going in -- what is going on in Gaza, as far as the Israelis are concerned and the IDF. We will have that for you.

Stay with us. We will be right back.

(COMMERCIAL BREAK) SANCHEZ: I welcome you back here. It is 3:00, and a lot of moving parts are going on today.

We're following two congressional hearings that we want you to be aware of. We told you a little while ago about what's going on with Barney Frank's and the $350 billion, the one given and the one that may be given.

We're also following now, and this is the one on the right, Hillary Clinton. This is her confirmation hearing for secretary of state. It's important, not because there's any doubt whether she's going to be confirmed, but because the question will arise as to this unique situation we're following.

Her husband, as we all know, is the former president of the United States. And that in and of itself brings with it some potential conflicts of interest here, most of all having to do with his foundation.

Let's bring in Patricia Murphy from

You have been there today. You have been following these hearings. What's the news coming out of there now?

PATRICIA MURPHY, EDITOR, CITIZENJANEPOLITICS.COM: Well, the biggest news is the bit that you just had on, where the question came up about Hillary Clinton and President Bill Clinton's foundation, and the perception or the possible perception of conflicts of interest based on the role of the foundation, the donors to the foundation, and policy of the U.S. government.

That has been a real sticking point, for not just Republicans, but also Democrats. And we heard there Senator Richard Lugar raise that, and very important that he is the Republican who did that. He's the most senior Republican on this committee. He's seen a statesman, seen as being quite nonpartisan. He raised this in a very serious manner, and made her go on the record to say that she will do everything she can to avoid conflicts of interests.

He had wanted her to say that the foundation would no longer take any money from foreign governments or foreign interests. She has chosen not to do that. Bill Clinton has chosen not to do that. So, he wanted her at least to go on the record. And they have raised their very serious concerns about the role of foundations.

SANCHEZ: Well, but let's get through a couple of things. The first thing is, this is not going to hold up her confirmation, or is it?

MURPHY: no. No, it will not, certainly.

Up to this point, this has been a very, very smooth hearing. She got really quite laudatory comments from both Democrats and Republicans. Republicans have said that she is extremely qualified, that she certainly brings to the table kind of a perception of the United States' role in the world that they can more than live with. Democrats are thrilled with the fact that she's coming aboard. But this is the sticking point that is still out there. And it is something to be watched for Hillary Clinton as she goes forward as secretary of state, yes.

SANCHEZ: Well, what we heard her say just moments ago -- and those of you who are just now joining us, if -- if you were with us about, oh, 10 minutes ago, we watched this live here on CNN, where she was asked by Senator Dick Lugar the money question about, listen, how are you going to handle this situation, this potential conflict of interests, between you and your husband?

And what she seemed to be saying is, trust me, I'm going to handle this on a case by case basis. I've dealt with this kind of situation in the past. I know it's unique, but you've just got to trust us.

MURPHY: Yes. It's clearly an unprecedented situation. But she really held her own there and she didn't really budge. He had said -- you know, again, he wanted the foundation to stop receiving foreign money. That's because he doesn't want there to be even a perception that a foreign government is trying to curry favor with the United States government by going through the back door of the Clinton Foundation. They have refused to do that and they're really holding the line on that. They're disclosing who the donors are, but they're not foreswearing any foreign donations.

SANCHEZ: Great stuff.

Good job.

Good work.

Patricia Murphy,, right there, at that hearing, watching it as it's gone on throughout the day.

Thanks again.

MURPHY: Thank you.


UNIDENTIFIED MALE: This resulted from some sort of bomb. These burns are not the usual burns. These are severe. These are very deep.


SANCHEZ: Very deep burns, very nasty injuries -- possibly from a very nasty weapon Israel is now being accused of using in Gaza. This is something that may be tough to watch. It burns flesh to the bone.

What is white phosphorous?

When we come back.

(COMMERCIAL BREAK) SANCHEZ: And we welcome you back.

We've been getting a lot of comments today from some of the stories that we've been following now for you -- many of them, as you've seen, taking place live on the air.

Switching gears here -- not that we're not going to stop covering these hearings that are taking place. But there's also an important story that's taking place in Gaza.

It's about accusations that Israel may be using weapons that international law says they shouldn't use -- at least not the way they're accused of using them.

This is called white phosphorous.

This report is being filed by CNN's Ben Wedeman.


BEN WEDEMAN, CNN JERUSALEM CORRESPONDENT (voice-over): Is Israel firing white phosphorous into Gaza?

Human Rights Watch says yes and is backed up by munitions experts. And this, say Palestinian doctors, is the result.

Dr. Nafiz Abu Sha'aban says he's been treating burns for 27 years, but says he's never seen anything like these. He says most of the severe burn patients have been sent to Egypt. But because of the fighting, this man, Adil (ph), can't get out.

DR. NAFIZ ABU SHA'ABAN, SHIFA HOSPITAL BURN UNIT: And he was brought to us last night with severe burns on the back, the face, both lower limbs. It's about 47 percent total burned surface area. This resulted from some sort of bombs which might -- bombs which contain phosphorous, as we said before, because his burns are not thank the usual burns. These are severe. These are very deep burns, with strange heat (ph).

WEDEMAN: White phosphorous is known to burn flesh down to the bone. It's designed to provide illumination or a smokescreen in battle. Under an international protocol ratified by Israel in 1995, such incendiary weapons are allowed when "not specifically designed to cause burn injury to persons."

MARK ELLIS, INTERNATIONAL BAR ASSOCIATION: There's not a, per se, prohibition against using white phosphorous in conflict. But there are significant restrictions as to when it's used and how it's to be used. For instance, it is illegal to use white phosphorous against any personnel -- not only civilians, but even legal combatants. So it cannot be directed at personnel. So you're limited to having it directed at military targets.

WEDEMAN: International law says incendiary weapons cannot be used where there is a concentration of civilians -- and Gaza is one of the most densely-populated places on earth. This house north of Gaza City was hit by something Sunday. "It's been burning since 1:00 in the morning," Munir Hammada tells our cameraman around noon. "If you move it with your feet, it reignites. You can't put it out with water, only with sand."

This matches the properties of white phosphorous, which ignites on contact with air.

Last week, an Israeli official told CNN, "I can tell you with certainty that white phosphorous is absolutely not being used."

Now Israeli officials have this response to questions on its use.

MAJ. AVITAL LEIBOVITCH, ISRAELI ARMY SPOKESWOMAN: Any munition that Israel is using is with accordance to the international law. Israel does not specify types of munition nor types of operations that it's conducting.

WEDEMAN (on camera): The precise extent to which Israel is using white phosphorous is unclear. But the use of such a controversial weapon in the crowded and confined conditions of Gaza is bound to raise questions -- questions Israel is, for now, hesitant to answer.

Ben Wedeman, CNN, Jerusalem.


SANCHEZ: It sort of makes you ask a lot of questions.

Let's do this. Let's go over to our Twitter board, if we can. I think maybe this question is being posed by Nevinews puts it in perspective: "It's not the question of using white phosphorous, it's the question of using it in a dense, civilian populated area."

Which is, by the way, pretty true to fact of the way it's written international law.

Jim Clancy joining us now.

What do you make of this and what have you learned?

JIM CLANCY, CNN INTERNATIONAL: Well, it's a big controversy. You know, in anything like this, you always want to refer to an expert. And I an expert that's there in Israel right now, trying to get into Gaza. He works for Human Rights -- Fred Abrahams. And he tells me, no, it's not illegal, but it's wrong to use it in a civilian area.

It's a spectacular picture. A Howitzer puts this up. There's an air burst, Rick. And then 116 of these wafers goes down.

Even if the guy covers it up with sand, as we saw in Ben Wedeman's report, if they uncover that, it makes renewed contact with the air, it goes off...

SANCHEZ: So it's a chemical. So when we...

CLANCY: But it's not a chemical weapon.

SANCHEZ: It's not a chemical weapon, but it's a chemical.

CLANCY: Right.

SANCHEZ: It's a dangerous chemical.

CLANCY: It's a very dangerous...

SANCHEZ: One that...

CLANCY: ...very horrible injuries.

SANCHEZ: One that international law says you probably shouldn't use in a manner in which it affects either combatants or civilians in any way. In other words, you can use it in a place where you want to change an area or...

CLANCY: Well, they say...

SANCHEZ: ...for military strategy, but don't use it on people?

CLANCY: Yes. They say they're using it as an obscurant, which means that it's going to cover their fighters, cover their tanks as they move into some of these areas. Howitzer fire it overhead, the smoke comes down, the phosphorus comes down, moves everybody out of the way. They get out of the way and then there's smoke to cover their troops' movement.

SANCHEZ: What kind of impact could this have, though, if it continues to be reported, to the point where it is now and you have somebody like Humans Watch saying...

CLANCY: Well, you know...

SANCHEZ: ...Human Watch -- human rights groups saying look, there's a problem here, I think they're doing it -- even though Israel is saying, no, we're not.

CLANCY: Human rights investigators and the international media are not getting into Gaza right now. So it's not going to be that big of a problem. And, you know, a few points...

SANCHEZ: Well, is that a problem?

If you are going to deny...

CLANCY: Well, sure it is.

SANCHEZ: ...something and you're not going to...

CLANCY: Sure it is.

SANCHEZ: ...allow reporters to go in there and cover it, you're going to faced with these types of questions. CLANCY: You know, my friend, Fred Abrahams, pointed something else out. He said, you know, that's the most spectacular story -- white phosphorous. The one we should all be looking at -- and he said both Israel and Egypt bear some responsibility here -- where are the civilians going to get out to?

If this noose keeps tightening in Gaza, where do they go?

How do they get out?

There's no egress routes for any of them.

They're trapped in there.

SANCHEZ: Yes. It's a very difficult situation.

By the way, before I let you go, do you think this will be over before Barack Obama takes office?

Because it's going to be difficult for Israel...


SANCHEZ: start this new administration with this going on.

CLANCY: As I look at it -- come on, we're talking about a week, right?


CLANCY: Rick, they're not out in a week. They have declared they will be out. Israel will likely come forward and say, you know, we want to get this truce done. If they can point a finger at Hamas, yes, they would, you know, have a pass to stay. But I think they'll try to say, we're on our way out. But it's going to not get done by the time Barack Obama stands up there and takes the oath of office.

SANCHEZ: Jim Clancy.

We thank you for stopping by, as usual.

CLANCY: Thank you.

SANCHEZ: All right.

When we come back, we're going to tell you what's going on with Hillary Clinton. Her confirmation continues. In fact, these are some live pictures. She's talking, in many ways, about the very same things that you and I, Jim, have been talking about.

As secretary of State, she's the one who's going to have to handle some of these delicate matters, like this white phosphorous situation, like the situation in the Middle East. And she's now being asked about what happens with Cuba -- if, indeed, that changes with Fidel Castro's death.

We're on it.

We'll be right back.


SANCHEZ: And we welcome you back.

As you see, Mike Brooks is going to be joining us now. He's going to be talking to us in just a little bit about this remarkable mystery about this missing pilot who police say faked his own death by crashing his plane. We'll have that for you in just a little bit.

But first, let's get back to the Hillary Clinton confirmation hearing. This is extremely important, as well. Hillary Clinton there answering some questions -- questions when it comes to foreign policy.

And while we watch her respond, we invite you to let us know what you believe Hillary Clinton or how she will serve as secretary of State and whether she is in any way conflicted by her husband.

H. CLINTON: ...intercepted and defended against as a kind of a joint responsibility between the private shippers who have to do more, frankly, for their own -- the security of their own vessels, but also various navies that are, you know, coming together -- including China and India, who are willing to patrol the waters.

There is also some talk about going ashore. This is a problem Thomas Jefferson dealt with along the Barbary Coast. You know, it's just kind of going to prove that the more things change, the more they stay the same. You know, there are some who are advocating going onshore on Somalia. We have to give a lot of thought to this. And there is an enormous number of bad options that have to be sorted through.

So I am not yet at all able to give you the new administration's policy, because we're sorting it out ourselves.

SEN. RUSS FEINGOLD (D), WISCONSIN: I can tell you're eager and very ready to take this up.

H. CLINTON: Yes, indeed.

FEINGOLD: So I look forward to working with you.

Let me switch to something completely different.

There is widespread recognition of the need to build a more robust and effective diplomatic development corps. And as a part of that effort, it, of course, makes sense to consider ways to address challenges faced by the lesbian, gay, bisexual and transsexual employees, particularly related to domestic partner benefits and State Department policies that make it difficult for the partners of foreign service officers to travel and live in overseas posts.

What would you do as secretary of State to address these concerns? Will you support changes to existing personnel policies in order to ensure that all LGBT staff at State and U.S. AID receive equal benefits and support?

H. CLINTON: Senator, this issue was brought to my attention during the transition. I've asked to have more briefing on it, because I think that we should take a hard look at the existing policy. As I understand it -- but don't hold me to it, because I don't have the -- the full briefing material. But my understanding is other nations have moved to extend that partnership benefit. And we will come back to you to inform you of decisions we make going forward.

FEINGOLD: Thank you, Senator.

Thank you, Mr. Chairman.

SEN. JOHN KERRY (D), MASSACHUSETTS: Thank you very much.

Thanks, Senator.

SANCHEZ: And there you go. We'll continue to follow it for you.

There you see John Kerry. He was the one who, earlier in the day, introduced Hillary Clinton and made some comments, as well, about Chelsea Clinton, who, I don't know if you've noticed, but has been -- for at least part of the day -- sitting right there behind her mother. Noticeably absent, Bill Clinton. He's not in the room.

This man is missing. Police say he crashed his plane to fake his death. He is a financial manager. And we now have an e-mail that he allegedly sent from his hiding place.

That's next.


SANCHEZ: Let's see some of the answers coming in now. We asked the question a little while ago about Hillary Clinton -- is she in any way conflicted?

You may have seen us when we were typing it there on the Twitter board.

Let's go ahead, Johnny, and get a shot of that, if we possibly can.

We've got a lot much comments coming in. Most of them have not been generally negative toward the Clintons. This one seems to at least hint about some problems with them: "Keeping in mind any conflicts, B. Clinton did have with Hillary were of a personal nature and his own creation."

That's going after the male side of the equation on that one.

Let's do this now. Something else that we want you to take note of. A week before President Bush leaves office, here he is with Vice President Cheney and some of the world leaders who backed him, while many others around the world, if not most, didn't. Former British prime minister, Tony Blair, was there. Former Australian prime minister, John Howard, was there. This was just hours ago, at Freedom Awards.

So what do we have here?

Think about this -- four world leaders who invested themselves in the Iraq War -- Mr. Bush, now with a 27 percent approval rating; Vice President Cheney, whose numbers are even lower, are getting presidential Medals of Freedom to Blair and Howard, who also paid heavy prices. Tony Blair left office with extremely low British support. And Howard, seen here, the prime minister of Australia, was defeated as a result. Eight years, four men and a world of difference.


UNIDENTIFIED MALE: He had been reading CNN and And he was disturbed and I think he just wanted to set the record straight.


SANCHEZ: Set the record straight -- the only person who may have heard from this pilot who's missing -- in hiding. The mystery of pilot Marcus Schrenker, when we come back with Mike Brooks.

Stay with us.


SANCHEZ: And we welcome you back.

I'm Rick Sanchez.

This has to be one of the most fascinating, if not mysterious, stories that we have covered here in a long, long time. It's the story of a pilot who may think may have faked his own death by crashing a plane.

Let's go through the pictures as we begin.

First, the pictures out of Florida. This is in a swamp. This is the area where the plane crashed. Now, when police got there, they noticed that the door -- the pilot's door was wide open. And there was no blood, even though the pilot had radioed in saying that he was bleeding profusely and that his windshield had broken and that he was going down.

Did he get out by parachuting and trying to make it look like he died on the plane?

This is what he looks like, by the way. We now have pictures that have been coming in. He is an investment manager with lots of money who apparently was handling lots of other people's money, as well.

Here's the maps that we've put together to show you what he said he was going to do and what actually ended up happening.

First, what he said he was going to do. He was going to fly from Anderson, Indiana all the way to Destin, Florida.

A routine flight -- no problem, right?

This is what happened instead. You see there -- the plane crashed just before Destin, Florida in a swamp. And there you have where he has been spotted now. The pilot spotted in Alabama.

Mike Brooks is looking at this situation.

My goodness. This guy is in hiding. It looks like what police say he did may very well be true.

What's he trying to prove and what do we know?

MIKE BROOKS, CNN LAW ENFORCEMENT ANALYST, FORMER D.C. POLICE DETECTIVE: A good question. You know, he just -- he just vanished. But military jets that intercepted his plane after he called for a May Day, they think he set the auto pilot at about 2,000 feet. The military jets came up, the door was open, the cockpit empty. They saw it crash into this swampy area.

Now, is he acting alone?

His friend said -- in that e-mail, he said: "By the time you read this, I'll be gone."

His friend thinks suicide. I think long gone...

SANCHEZ: But wait...

BROOKS: ...because if he was going to do it, Rick, why not take one of his acrobatic planes?

Because you saw...


BROOKS: You saw a video of him. He has two planes. This was one of two.

Why not take it and crash it as -- and make it look like an accident?

SANCHEZ: Forget -- putting aside for just a moment the fact that he could have really endangered many people's lives by crashing his plane...

BROOKS: Oh, absolutely.

SANCHEZ: ...police are going to be after this guy.

Shouldn't they be able to nail this pretty soon?

I mean, they know where he was spotted last.

How hard is it to find him?

BROOKS: Well, one thing -- was he acting alone?

Does he have an accomplice?

Does he have any cash?

All his assets are frozen.

Did he put some cash with that motorcycle in that storage area...

SANCHEZ: If he has a lot...

BROOKS: last him for a while?

SANCHEZ: If he has a lot of cash, he can do just about anything.

BROOKS: Absolutely. But I -- but you've got the U.S. Marshals on his tail right now. You've got...

SANCHEZ: So he won't be able to leave the country.

BROOKS: That's...

SANCHEZ: You can't -- you can't fly out of here.

BROOKS: Highly improbable. Highly improbable.

SANCHEZ: There's already a big BOLO out there.

BROOKS: Most likely.

SANCHEZ: But can he...

BROOKS: Oh, absolutely. Within (INAUDIBLE) states. And he's got two federal charges -- two state charges for fraud pending against him right now. If the Marshals lock him up, they'll hold him on a federal holding charge of unlawful flight to avoid prosecution. And he can come back and change -- and face FAA federal aviation regulation violations...


BROOKS: ...and the NTSB.

SANCHEZ: Not a suicide, he's in hiding, your take.

BROOKS: I -- that's what it sounds like.

SANCHEZ: All right. We'll leave it at that. We'll keep following on this story.

BROOKS: Oh, yes. To be continued.

SANCHEZ: My thanks to you, Mike Brooks.

By the way, when we come back, Jon Stewart on Blagojevich, Chelsea Handler does some political manhandling.

We'll be right back.


SANCHEZ: We take note of the things you may not have had a chance to do because you were working today. So here now, today's Fix.


CHELSEA HANDLER, HOST "CHELSEA LATELY": Sarah Palin is firing back. In a new documentary, she complains that the media was exploiting her and capitalizing on her fame and still is. I did see that Tina Fay was named Entertainer of the Year and Katie Couric's ratings have risen. And she says it's all very annoying because it's all because of her.

UNIDENTIFIED MALE: I like how she's proud of herself because she's on the top 10 hot -- hottest grandmas, is that what it is?


UNIDENTIFIED MALE: Who's making this list?

I mean is there a market for this?

You know, guys are like, oh, did you see the new "Maxim" with Betty White on the cover, you know?



GOV. ROD BLAGOJEVICH (D), ILLINOIS: This action today and the causes of the impeachment are because I've done things to fight for families.



STEWART: And the best part about Blagojevich -- he's sure it's working.


STEWART: It's like he thinks he's invisible -- like his hair is some kind of alien tech cloaking device.



STEPHEN COLBERT, HOST THE COLBERT REPORT": Last month, unemployment hit 7.2 percent, capping the biggest one year job loss since 1945. Now nobody is sure quite what to do here, not even Barack Obama.



SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I think we can fix it.


COLBERT: He thinks we can?

What happened to yes, we can?


COLBERT: Oh, I guess he inspired a nation with the motto "change we can believe in if we catch a break or two -- no promises."


COLBERT: Poor guy.


COLBERT: He almost made it to his inauguration before he was crushed.


SANCHEZ: And, by the way, plenty of conspiracy theorists out there already. There is a nation talking -- adither about what's going on with this mystery flight and this missing pilot.

Let's go to our Twitter board as we finish out. This is Petra. She's watching our show. And she says: "I bet you this pilot is involved in some type of Ponzi scheme. All the snakes are coming out since the markets have crashed."

And there you have it.

Let's go now to "THE SITUATION ROOM".

Wolf Blitzer is standing by with more -- Wolf, what you got?

WOLF BLITZER, CNN ANCHOR: Thanks very much, Rick.

Happening now, Barack Obama stares skeptical Democrats in the eye one week before he becomes president.

Will the cajoling and arm twisting pay off for him and for America's troubled economy?