Return to Transcripts main page

The Situation Room

George Allen Concedes To Jim Webb in Virginia; Democrats Position Themselves To Jump Into Driver's Seat; President Bush Talking About Partnership And Peace-Making With Democrats; Jon Tester Interview

Aired November 09, 2006 - 16:00   ET

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

WOLF BLITZER, CNN ANCHOR: Susan, thanks.
And to our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you today's top stories.

Happening now: Virginia hands Democrats the keys to the United States Senate and turns Washington upside-down. It's 4:00 p.m. in Alexandria, where Republican George Allen just threw in the towel. Now Democrat Jim Webb is about to claim victory. We're going to carry his remarks live.

It's hard to overstate the seismic shift under way on Capitol Hill. For the first time in a dozen years, Democrats will be in charge of both chambers of Congress. This hour, the critical questions: Are they ready? What will they do?

And fence mending over at the White House. President Bush reaches out to the House speaker-in-waiting, but is he welcoming Democrats with one hand and trying to slip some legislation past them with the other?

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Right now, here in the nation's capital, the structure of political power is cracking and shifting before our eyes. Less than an hour ago, Republican Senator George Allen set the transformation in motion. He conceded to his Democratic challenger, Jim Webb. Allen says he saw no good purpose in pursuing a rancorous recount.

Webb is expected to go before the cameras in only a few minutes. He's already been calling himself senator-elect, but Allen's announcement seals the deal, and it gives the Democrats the sixth pickup they need to reclaim the control of the United States Senate.

In the new Senate, Democrats will hold 51 seats, a razor-thin majority. Republicans will hold 49 seats.

President Bush is showing he recognizes the new reality here in Washington, where Democrats will be boss in both the Senate and the House. He invited House Speaker-to-be Nancy Pelosi to lunch today, along with the number-two House Democrat, Steny Hoyer. Their public message, at least for now, "Let's bury the hatchet." Our White House correspondent Suzanne Malveaux and our congressional correspondent Dana Bash are standing by, but let's go to CNN's Jeanne Meserve.

She's joining us now live with what has just happened in the Commonwealth of Virginia -- Jeanne.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, a few short months ago, it seemed inconceivable that the Democrats would take control of the Senate and that Republican Senator George Allen would lose his seat, but both those things have been happened. Within the hour, George Allen conceding to his Democratic challenger, James Webb.

(BEGIN VIDEO CLIP)

SEN. GEORGE ALLEN (R), VIRGINIA: In this season, the people of Virginia, who I always call the owners of the government, they have spoken, and I respect their decision. The Bible teaches us that there's a time and place for everything, and today I've called and congratulated Jim Webb and his team for their victory. They had the prevailing winds.

(END VIDEO CLIP)

MESERVE: The margin of victory for James Webb was exceedingly small, less than 10,000 votes. Under Virginia law, George Allen could have asked for a recount. He decided not to do that; he said it would create too much ill-will and it would cost too much money.

But there also was this reality. A vote canvass was under way in the state of Virginia. It's not done yet, but the shift in voting that it showed was very slight, and what it showed was votes going into the Webb column, not into the Allen column.

Now, George Allen, in his press conference, did say you can have a tree and a strong wind and it loses its leaves, it loses its limbs, but it can re-grow in the next season, perhaps a hint that the electorate in Virginia and in the nation has not seen the last of him, but we don't know for sure. Now we're waiting for the new senator- elect from Virginia, James Webb, to make an appearance here.

Back to you, Wolf.

BLITZER: All right, George Allen graciously conceding, Jeanne. Thanks very much.

And coming up in a few moments, we're going to be hearing from the senator-elect, Jim Webb. He'll be going before the cameras in Northern Virginia. We're going to bring you his remarks live, right here in THE SITUATION ROOM.

It's also said and done in the Montana Senate race. Republican incumbent Conrad Burns conceded today to Democrat Jon Tester. Tester claimed victory with a lead of fewer than 3,000 of the more than 400,000 votes cast; that margin is below the threshold set by Montana law that would have allowed Burns to request a recount.

Senator-elect Tester, by the way, will be joining us right here in THE SITUATION ROOM just in a little bit. We'll talk about his hard-fought victory and what comes next.

Let's go to Capitol Hill, where the Democrats have been waiting a dozen years for a moment like this, a victory like this. They're now positioning themselves to jump into the driver's seat in the Senate, as well as the House.

Let's bring in our congressional correspondent Dana Bash -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, they waited a dozen years to take control of Congress, but they waited like two or three minutes perhaps to congratulate themselves and to have a rally after George Allen, Senator George Allen, conceded informally, made the Democrats the majority party in the Senate.

The Democratic leader, along with his two top lieutenants, came out to a crowd of Senate staffers -- Democrats, of course -- waving flags. They came out to music. It was a rally for the Senate minority leader now, soon-to-be majority leader in January, to declare victory.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), SENATE MINORITY LEADER: The election's over. It's time for a change.

(APPLAUSE)

It's time for bipartisanship. It's time for open government, transparency, and it's a time for results. We believe that this country has spoken loudly and clearly. There must be a change of direction in Iraq.

(END VIDEO CLIP)

BASH: Now, he went on to tick off a few other issues, like education, the deficits in Washington, and also talking about more broadly, as you just heard, working with Republicans. Harry Reid made a point of saying that Republicans set a bad example of the way they worked with Democrats. He pledged that Democrats will not act, from his point of view, in the same way.

But in the big picture, what this all means, Wolf, is that Democrats -- yes, a few days ago, we knew that they would be able to set the agenda in the House of Representatives. They were talking about pushing through immediately issues like raising the minimum wage, like trying to repeal a tax break for student loans, things like that.

Now what we see is that is not going to be stopped in the House of Representatives. The Democrats are going to control the agenda in the Senate. They're going to be able to put whatever they want through on the Senate floor, so what they have made clear is that they are probably going to start with things like the minimum wage, probably going to try to address things like Iraq, although it is very clear in talking to Republicans that that is not going to be an easy thing for them to do.

They can hold hearings; they can have greater oversight. But it's not going to be easy. Dick Durbin put it this way. He said two years ago the Senate was 45-55, Democrat to Republican. Now it's 51- 49 in just a couple of years.

BLITZER: And as we look at this balance of power here on our wall, Dana, 51 Democrats, 49 Republicans, but let's be precise. There are 49 Republicans but only 49 Democrats. There are two independents who will caucus with the Democrats. In effect, they will be Democrats, and that's why they will have the majority, because of those two independents. I just want to be precise. Bernie Sanders of Vermont and Joe Lieberman of Connecticut.

Dana, thank you very much for that.

Over at the White House, President Bush is talking a lot about partnership and peace-making with Democrats. But is he taking new action that potentially could undermine some of those words? Our White House correspondent Suzanne Malveaux is standing by with more on that -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, we're learning from a senior administration official that, just moments ago, President Bush called Senator Harry Reid to congratulate him, to also say that he looks forward to tomorrow's breakfast.

Harry Reid, as well as Dick Durbin, have been invited to the White House to share breakfast with the president, of course, to talk about reconciliation, setting an agenda. Today, it was Nancy Pelosi, as well as Steny Hoyer, who were here for lunch with the president.

Pelosi saying she enjoyed pasta and chocolates; one of the president's counselors saying that today the president ate crow. This is clearly a sign of the times that the president is trying to put the bitter partisanship behind.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The elections are now behind us, and the congresswoman's party won. But the challenges still remain. And, therefore, we're going to work together to address those challenges in a constructive way.

We won't agree on every issue, but we do agree that we love America equally, that we're concerned about the future of this country, and that we will do our very best to address big problems.

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: I understand my responsibility of speaker of the House, of all of the House, not just the Democrats, and the responsibility to work with the administration to make progress for the American people. We've made history; now we have to make progress. (END VIDEO CLIP)

MALVEAUX: And, Wolf, of course, the big question is how long this honeymoon is really going to last. We saw the president with his cabinet, of course, talking about reconciliation, but also a very strong message to the Republicans still in charge that he wants to push forward his agenda, specifically controversial legislation like the Terrorist Surveillance Act, saying that he wants that to move forward in the next couple of weeks in the lame-duck session before Democrats get a hold of that, because it is much less likely that it's going to pass with a Democratically controlled Congress.

So the president sending a very clear message: Let's get some things done. Let's put it on the table, get it out of the way before the Democrats take charge in January -- Wolf.

BLITZER: On that surveillance legislation, that's not the only legislation he'd like to see this lame-duck Congress pass. There's also a controversial nomination he'd like to see the Senate deal with once again right now.

MALVEAUX: Well, John Bolton, of course, he is the ambassador to the U.N. He is really in his position because of a recess appointment in the Senate. Republicans and Democrats did not actually approve his nomination, so he is in that position temporarily. The president again trying to push that through.

You're going to see an aggressive push to the Justice Department to make that happen under the Republicans, because they believe it is not -- it's a no-starter, a nonstarter under Democrat control. We even heard from Senator Joe Biden who would head up that committee in charge of that, saying it's not going to go anywhere.

So you're hearing a president very aggressively saying, look, we're going to try to get this done in the next couple of weeks before the Democrats take control -- Wolf.

BLITZER: Well, we just heard from outgoing Republican Senator Lincoln Chafee, a member of the Foreign Relations Committee, that he is not going to support this confirmation of John Bolton, either, a setback for the Bush White House. Thanks very much for that. He's not changing his position, Lincoln Chafee, at least not now. Suzanne Malveaux, Dana Bash, Jeanne Meserve, they are all part of the best political team on television.

And, remember, for the latest campaign news at any time, check out our "Political Ticker," CNN.com/ticker.

Let's go to Jack Cafferty in New York. He's got "The Cafferty File." I think it's fair to say this is an earthquake, a political earthquake here in Washington, with the Democrats taking over, not only the House, but the U.S. Senate, as well.

JACK CAFFERTY, CNN ANCHOR: No question about it. And they thought, at best, it was a very long shot that the Democrats could capture the Senate. It's interesting to me, Wolf, that, if you look at the margin of victory in Montana -- which was, what, 2,500 votes -- and in Virginia, which was about 7,000 votes, that less than 10,000 people in the United States, by going to the polls, tipped the entire balance of power, the most powerful nation on Earth, from one side of the room to the other. So who says your vote doesn't matter? You bet it does.

No secret that the U.S. image abroad has been in sharp decline over the last few years. Last week in "The Cafferty File," you may recall, we talked about polls that show some of America's closest allies, including Britain, think President Bush is a greater threat to world peace than the leaders of either Iran or North Korea.

So perhaps it's no surprise the Democratic victory in the midterms is being welcomed by a lot of people around the world. The British newspaper, "The Independent," had this to say, we quote here, "Tuesday night's results marked the eclipse for the time being, perhaps forever, of that particular brand of messianic, back-to-basics Republicanism. And while individual Republicans can be called to account for scandals that cost them their seats and besmirched their party, overall blame for this defeat lies squarely with George Bush."

The French newspaper, "Le Monde," wrote this: "It's an end to the unified government in the United States. The president will now have to negotiate with Congress and pass compromises. The system of checks and balances, which is the base of the constitutional functions of the United States, will be re-imposed now, after four years of absence."

And also, all across the Middle East, people said the president paid the price for what a lot of people see as his failed policy in Iraq.

So here is the question this hour: How will the midterm election results impact America's image abroad? Send your thoughts on that to Caffertyfile@CNN.com or go to CNN.com/Caffertyfile -- Wolf.

BLITZER: All right, Jack, thank you. Jack Cafferty reporting for us.

And coming up very soon, Jon Tester, the incoming senator from Montana, we're going to be speaking with him live, right here in THE SITUATION ROOM. You're going to want to see this.

Also, George Allen concedes. Now we're only moments away from his challenger celebration of victory. Senator-elect Jim Webb is about to go in front of the cameras. We'll have live coverage of that.

Plus, election fallout. Will there be a change at the top of the Republican Party? Our own John King is standing by with some new information that he is gathering.

Also, new leaders under the dome. Which Democrats are taking over in the Senate, and what will they do? Stick around, all the news coming up. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: He's been described as a new breed of Democrat, a real tough guy out there in Montana, Jon Tester joining us live here in THE SITUATION ROOM.

Senator-elect, first of all, congratulations.

SENATOR-ELECT JON TESTER (D), MONTANA: Thank you, Wolf. I appreciate that.

BLITZER: This notion of being a new breed of Democrat, you got yourself elected beating an incumbent like Conrad Burns. What was the secret to your success?

TESTER: Oh, I think it was the grassroots effort was really the success of mine, both in the primary and the general, and it was a lot of hard work. We worked hard. We got great energy from our supporters and really, the last two weeks, had thousands of Montanans on the ground out talking about who I was and what I stood for. And I think that made the difference in the end.

BLITZER: Not only did you get yourself elected, Senator-elect, but you're going to be in the majority when you come to the United States Senate. First of all, you're a straight-shooter. Are you surprised that the Democrats are now able to reclaim the majority in the Senate?

TESTER: Well, I mean, everybody predicted the House. And I'll be honest with you: I wasn't sure. I actually anticipated a tie in the Senate. But we were fortunate enough to get the majority seat just today, and so that's good news.

BLITZER: So you've got a lot of responsibility ahead of you as a member of the majority party in the Senate. Let me read to you what the Democratic leader in the Senate said this week, yesterday, Harry Reid: "The days of the do-nothing Congress are over. From changing course in Iraq, to raising the minimum wage, to fixing the health care crisis, to making this country energy independent, we're ready to get to work."

Are you on board with those priorities that he just outlined?

TESTER: Well, I think, yes, I think they're right on. I think that, quite frankly, as I went around the state of Montana and visited with folks over the last 18 months, health care arguably the number- one issue, energy is a huge issue. And so we need to be addressing those.

And, of course, the war in Iraq is a big issue, along with national security and fighting the war on terror. So, I mean, I think that there's a lot of stuff out there we need to do to really help regular folks make ends meet. And, you know, that, along with, you know, fiscal responsibility, those issues were right on top.

BLITZER: Senator-elect, how big of an issue was the war in Iraq in Montana? TESTER: Well, I mean, I think that, combined with all the other ones I just mentioned, people are concerned out here about the war in Iraq. Make no mistake about it. And they see what's going on and, with there being no plan and no end in sight, I think they're ready for a change, so we can get a plan, you know, to bring our troops home and really not leave that Middle East upside-down in the process.

So it's a big challenge for us. It's a big challenge for everybody in government, in the House and the Senate and the executive branch. So I look forward to the challenge, and I hope we can all work together to come up with a solution, because I think that's what's really important, if we're going to move this country forward.

BLITZER: The president was out in Montana campaigning for your opponent, Conrad Burns, the senator. Any bad blood when you come to Washington and you have that first direct encounter over at the White House?

TESTER: None whatsoever. I look forward to meeting the president. The fact is, is everybody is trying to get their person elected. I don't have a problem with that at all.

And I look forward to working with the president and everybody in the Senate and the House, too, as far as that goes, to, you know, get some policies passed that make sense for average folks, for the middle class.

BLITZER: He still has two years left in the White House, but some Democrats are already calling him a lame duck. Do you think he's a lame duck already?

TESTER: Well, I mean, you know, I don't like labeling folks. I think that the proof is going to be how we perform over the next two years and how he performs over the next two years.

And I think that -- I think we all want to move this country forward, and we all want to have things like health care that's affordable and accessible, and make this country energy independent. And I think we all know that we need a change of direction in Iraq.

And I think that, you know, the proof will be in what we get accomplished over the next couple of years. And if it ends up in a situation of gridlock, I don't think anybody wins, especially not the American people.

BLITZER: We'll look forward to seeing you here in Washington, Senator-elect. Thanks very much for coming into THE SITUATION ROOM, the first of hopefully many appearances here.

TESTER: Outstanding. Thank you, Wolf. Appreciate the opportunity.

BLITZER: Thank you. Jon Tester is the newly elected United States senator from the state of Montana, and it's a beautiful state, indeed. We're standing by to hear from another newly elected senator, Jim Webb. He's about to make a major speech, declaring victory now that his opponent, George Allen, has graciously conceded defeat. We'll bring you those remarks live. That's coming up.

Plus, the race for the White House is on, as a presidential wannabe drops his hat into the ring. We'll have details in today's "Political Radar." Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer in Washington. Zain is on assignment. Carol Costello is joining us now with a closer look at some other stories making news.

Hi, Carol.

CAROL COSTELLO, CNN ANCHOR: Hi, Wolf. And good afternoon, everyone.

You know him well. He had an unmistakable voice and a legendary presence. Longtime CBS newsman and "60 Minutes" correspondent Ed Bradley has died. He died today of leukemia at a New York hospital. During his 40 years of the news business, Bradley covered things, including the Vietnam War, the Columbine high school massacre, and patient struggles with brain cancer.

He won so many awards, including 19 Emmys. Bradley credited his parents for telling him he could do anything. Ed Bradley was just 65 years old.

If you've got a bottle of generic acetaminophen in your medicine cabinet, you'd better check it out carefully. The Perrigo Company is recalling 11 million bottles of the popular painkiller. It says it's found tiny amounts of metal in some 500-milligram caplets. Perrigo supplies the generic drug to stores, including Wal-Mart, CVS and Safeway. No injuries are reported. The recall batches are posted on the FDA Web site, FDA.gov.

You will hear "Merry Christmas" when you walk through the doors of Wal-Mart to do your holiday shopping this year. The retail giant telling its employees it's A-OK to use that phrase this year, instead of that politically correct thing people say, "Happy Holidays."

Last year, religious groups, including the American Family Association and the Catholic League, boycotted Wal-Mart and other retailers for excluding the word "Christmas" from their products.

In Gaza, thousands of Palestinians attended funerals today for 18 people killed by what Israel calls a missile attack that went wrong. Most of the victims were women and children. Israeli's military blames a technical failure for yesterday's misfire. It's stopped shelling in the area until investigations are over.

And there is a startling new estimate about the number of lives lost in the Iraq war. Iraq's health minister today put that number of Iraqi civilians killed at 150,000. Previous separate estimates have ranged from 45,000 to as high as 600,000. An Iraqi official says the new figure includes civilians, police, and slain kidnapping victims.

That's a look at the headlines right now -- Wolf.

BLITZER: Carol, what a sad story that is. In the next hour, we're going to be speaking with Michael Ware about that new estimate from the Iraqi health minister. Carol, thanks very much.

On our "Political Radar" this Thursday, outgoing Iowa Governor Tom Vilsack is getting a jump-start on the 2008 presidential race. He's now the first Democrat to throw his hat into the ring. The outgoing Vilsack announced today he's filing the necessary paperwork to run for president.

He may have an edge in the lead-off presidential caucuses. That would be in his home state of Iowa. But polls show him way behind other better-known Democrats weighing presidential bids. Look at the recent survey. He gets only 1 percent. One percent, but that doesn't necessarily mean much. It's still very, very early, obviously.

American voters can pat themselves on the backs. A new study estimates more than 40 percent of eligible voters showed up at the polls on Tuesday. The Center for the Study of the American Electorate says that's higher than the turnout back in 2002 in midterm elections. And when all the ballots are counted, the group says turnout may have been the highest since 1982, when more than 42 percent of eligible voters turned out.

The star of one of the most controversial ads of the 2006 campaign is speaking out.

(BEGIN VIDEO CLIP)

JOHANNA GOLDSMITH, ACTRESS: Harold, call me.

(END VIDEO CLIP)

BLITZER: The bare-shouldered blonde in that Republican attack ad on Tennessee Senate candidate Harold Ford says she isn't very political. The actress tells a Tennessee newspaper her appearance in the ad was just another job and that she didn't know who Harold Ford was. Ford lost to Republican Bob Corker in Tennessee.

And, remember, for the latest campaign news at any time, check out the "Political Ticker," CNN.com/ticker.

Coming up, we're standing by for a news conference by the Democratic senator-elect in Virginia, Jim Webb, after Republican Senator George Allen concedes. We'll carry Webb's remarks live; that's coming up.

And do President Bush and Democrats have a mandate from the voters to work together? Our Bill Schneider looks at whether fences can really be mended. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: George Allen (sic), the United States senator-elect from Virginia, about to speak to a very enthusiastic crowd. You can see the crowd gathering in Arlington, Virginia. Jim Webb -- excuse me -- Jim Webb right there in the midst of that crowd.

Momentarily, he's going to be speaking, declaring victory. He sort of declared victory already. But now that George Allen, the incumbent Republican, has conceded, Jim Webb, a former Navy secretary during the Reagan administration, a Republican-turned-Democrat, will emerge as the next United States senator from Virginia. And he is there. He's shaking hands with his supporters. You could probably make him out right in the -- sort of the left part of your screen, at the bottom part of your screen.

He's there. His family will be there as well.

This is an exciting moment, not only for Webb, but it's a very exciting moment for Democrats right now, because not only has Webb been elected the United States senator in Virginia, but, by doing so, the Democrats emerge as the majority party in the United States Senate.

The Democrats, together with those two independents, will have 51 seats in the Senate, compared to the Republicans' 49 seats. As a result, the Democrats, when the new Senate is sworn in, in January, will be in the majority. They will control the chairmanships of all of those committees. They will have a lot of power, especially when -- when aligned with the Democratic majority in the House of Representatives as well.

We're standing by to hear from Jim Webb, the next United States senator from Virginia. We will go there live when we return.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're standing by to hear from Jim Webb, the newly elected United States senator from Virginia.

There's an enthusiastic crowd that has already gathered to hear him declare victory formally, now that George Allen, the incumbent Republican, has conceded defeat.

There he is, Jim Webb, the former Navy secretary. He's going to be speaking shortly. We will go there live as soon as he does -- as he starts speaking.

Webb, being the newly elected senator-elect, will succeed Republican incumbent George Allen -- that concession speech, as I said, coming just over an hour ago. And, significantly, it pushes the Democratic Party over the top, giving them enough seats to control the Senate, as well as the House of Representatives.

Democrats will have the barest of majorities in the next Senate, 51 seats. Republicans will hold 49 seats. In the House, Democrats will run the show with a majority of at least 229 seats. Republicans will have at least 196 seats. There are 10 House races right now that are still undecided, could go either way.

So, how will the new equation work? And can Democrats work with President Bush?

Let's bring in our senior political analyst, Bill Schneider -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, there are two ways of looking at what the voters have created. You could say they voted for divided government, or government of national unity.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): President Bush seems to want a government of national unity to succeed.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's in the national interests of the United States that a unity government, based upon a constitution that is advanced and modern, succeed.

SCHNEIDER: Except that he was not talking about the United States; he was talking about Iraq, where warring sects have to figure out how to work together -- same as here.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: Democrats are ready to lead, prepared to govern, and absolutely willing to work in a bipartisan way.

SCHNEIDER: Can it happen? There is reason for hope. The Democratic majorities in the House and Senate include a lot of newly elected moderates, like Heath Shuler of North Carolina, a former Washington Redskins quarterback who was courted by the Republicans, and Brad Ellsworth, an Indiana County sheriff who signed a pledge not to raise taxes.

In the Senate, there is Bob Casey of Pennsylvania, Jon Tester of Montana, and Jim Webb of Virginia, who used to be a Republican, and was President Reagan's Navy secretary. And Joe Lieberman will still be around.

How accommodating will Republicans be? Moderate Republicans have diminished in number. Representatives Jim Leach and Nancy Johnson of Connecticut were defeated. So were two moderate Republican senators, Lincoln Chafee of Rhode Island and Mike DeWine of Ohio.

Will Republicans move further to the right? Not if they got the message of the election. Republicans lost because they abandoned the center. Independents voted Democratic by the biggest margin ever recorded.

The election also provides an alternative model of a Republican who moved to the center, and thrived. GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: We fight over our causes, but, in the end, we find common ground. This is the California way. The voters have endorsed it. I embrace it.

(END VIDEOTAPE)

SCHNEIDER: If unity government is going to work in Iraq, the various parties will have to disarm their militias. Some steps toward ending the political arms race might be a good idea in this country, too -- Wolf.

BLITZER: Give us a little sense, Bill, because you have been covering this kind of political story here in Washington for a long time, the seismic nature of this power shift that we're seeing happen right now between the executive and the legislative branches of government.

SCHNEIDER: This is a very big shift, Wolf. We haven't seen it since 1994. And it was very dramatic then. And it hadn't happened then for 40 years. Now it's 12 years later. So, you can say that it isn't even once a decade we get big shifts like this.

BLITZER: Bill Schneider, thank you very much.

And we're standing by. We will be hearing directly from Jim Webb, the newly elected senator from the state of Virginia. He's at that rally right now. We will go there live as soon as he starts speaking.

Also: the new leaders under the dome. We're going to take a closer look at which Democrats will run the Senate and what's on their agenda.

Actually, let's go to Virginia right now. Jim Webb has just started speaking.

(JOINED IN PROGRESS)

JIM WEBB (D), VIRGINIA SENATOR-ELECT: Happy birthday to all our Marines.

There are a lot of them in harm's way today. We're going to remember them tomorrow.

(APPLAUSE)

WEBB: And the day after that is Veterans Day. And we remember all of those who have served our country and who are serving it, wherever they are. We all have them in our hearts and in our prayers.

(CHEERING AND APPLAUSE)

WEBB: I did receive a telephone call from George Allen a few hours ago. We had a good discussion. I want to report to you that he was very gracious, and that he offered to assist us in this transition period. I thanked him for his many years of service to the people of Virginia. And we actually have agreed that we're going to sit down and have lunch next week.

(APPLAUSE)

WEBB: And I also asked him to help me with something I think is very important, ladies and gentlemen. And that is that, as we move forward with all of these issues that concern us as Americans, I think it's really vital that we all do our best to stop the politics of divisiveness, character assassination, distraction.

(APPLAUSE)

WEBB: In fact, we know that Secretary of Defense Rumsfeld has decided to move on.

(CHEERING AND APPLAUSE)

WEBB: But I would like to also, today, call on our president to publicly denounce the campaign tactics that have divided us, rather than brought us together.

(CHEERING AND APPLAUSE)

WEBB: This was a brutal campaign, and, in -- in many ways, an unnecessarily brutal campaign. And I think it's hurting the country.

And, as you know, I made two promises to myself when I started this campaign. The first was that I was not going to trade anything I believed in order to get a vote and a dollar. And we did that.

(CHEERING AND APPLAUSE)

WEBB: I'm walking into the United States Senate with the independence to represent the people who have no voice in the corridors of power. And I intend to do that.

(CHEERING AND APPLAUSE)

WEBB: The second promise that I made was that, as much as humanly possible, we were not going to run a negative campaign.

And I thank all of you for helping me to make sure that we did that.

(CHEERING AND APPLAUSE)

WEBB: There were a lot of misperceptions about why I got into this race.

I was watching, on election night, some of the analysts. And -- and one of the frequent things that was being said about this campaign was that I came to the Democratic Party purely on issues regarding the Iraq war. Nothing could be further from the truth. I think I, and a lot of people like me, had aligned themselves with the Republican Party on national security issues, but were always concerned about issues of economic fairness and social justice.

So, it was a natural...

(CHEERING AND APPLAUSE)

WEBB: This was a very natural fit for not only myself, but for a lot of people who came forward and supported this campaign who, in the past, may not have been inclined to.

We have a much, much stronger Democratic Party as a result of this. We have a situation in Virginia where Mark Warner began a journey. Tim Kaine has added onto it. We are going to add onto it even more.

(CHEERING AND APPLAUSE)

WEBB: We're going to work hard to bring a sense of responsibility in our foreign policy that will, in my view, result soon in a diplomatic solution in Iraq.

(CHEERING AND APPLAUSE)

WEBB: We're going to work very hard on issues of economic fairness in a country that has become divided too much by class in the age of the internationalization of corporate America, where we have a situation where corporate profits in this country are at an all-time high, while wages and salaries are at an all-time low.

And I, for one, look forward to joining Senator Schumer in voting very soon to increase the minimum wage.

(CHEERING AND APPLAUSE)

BLITZER: On that note, we will continue to monitor Jim Webb's celebration, his victory speech -- Jim Webb, elected United States senator from the state of Virginia, after George Allen conceded just a little while ago.

Not only is he the new senator from Virginia, but, by being elected, that senator, the Democrats emerge as the majority party in the next United States Senate. That means they're going to have a lot of power. They will be the chairman of the various committees -- Biden, presumably, chairman of the Foreign Relations Committee -- Carl Levin, the Armed Services Committee.

It's going to be a whole new Capitol Hill on the Senate and the House.

When we come back, we will take a look at what is likely to emerge in a Democratic-controlled Senate.

Much more of our coverage -- you're here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There's a whole lot of shaking going on under the Capitol dome, now that Democrats are set to take control of the Senate, as well as the House. And that means musical chairs in the all-important committee rooms.

Let's go to Capitol Hill, our congressional correspondent, Andrea Koppel, with more on this very part of the story -- Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, there are about 20 Senate committees. And, for the last four years, they have been in Republican hands.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): Democrats and the White House have been at odds for years.

SEN. CARL LEVIN (D), MICHIGAN: I don't think the president has come to grips with reality.

SEN. ROBERT BYRD (D), WEST VIRGINIA: I believe that that record is dismal.

SEN. PATRICK LEAHY (D), VERMONT: Sir, the president has acted as a divider, not a uniter.

KOPPEL: But, come January, Democrats will be able to do more than just criticize. With the majority in the Senate, they will chair all committees and control the agenda.

That puts the gavel back into the hands of senior Democrats like Joe Biden, who will be at the helm of Senate Foreign Relations. That doesn't bode well for John Bolton, the U.S. ambassador to the United Nations, whose nomination was opposed by Biden and Senate Democrats last year.

SEN. JOSEPH BIDEN (D), DELAWARE: Your boss, the president and the -- and the vice president, I don't think they, in this -- quote -- "year of diplomacy," really think diplomacy is all that consequential.

KOPPEL: Today, the White House resubmitted Bolton's nomination to the Senate. Biden's response? John Bolton is going nowhere.

Iraq will top the agenda of Senator Carl Levin, poised to lead the Senate Armed Services Committee.

LEVIN: We have got to begin a phased reduction in American forces by the end of this year.

KOPPEL: While Vermont's Patrick Leahy, who has accused the president of trying to pack the courts with conservative judges, will chair the Judiciary Committee.

LEAHY: When the Senate debates them and withholds consent, he stubbornly renominates them over and over again. KOPPEL: Meanwhile, the Democrat with the most seniority, West Virginia's Robert Byrd, will head the powerful Appropriations Committee, which control congressional purse strings. He's railed against the Bush White House for misplaced spending priorities.

BYRD: This administration has ignored urgent matters, such as the crisis in health care for our elderly. This administration has been slow to provide adequate funding for Homeland Security.

(END VIDEOTAPE)

KOPPEL: And, speaking of Homeland Security, a senior Democratic leadership aide tells CNN that, despite some grumbling among Democrats, the newly reelected senator from Connecticut, Joe Lieberman, an independent, will chair the committee of Homeland Security and Government Reform -- Wolf.

BLITZER: Andrea, thank you very much -- Andrea Koppel on Capitol Hill.

Let's go to Jack Cafferty. He has got "The Cafferty File."

Just think about that for a second, though, Jack. If Joe Lieberman wanted to play with his former friends in the Democratic Party, and have a little fun, at least for a day or two, he could pretend that maybe he would caucus with the Republicans. And you know what? The balance of the power in the Senate would go to the Republicans, as opposed to the Democrats. He's not going to do that, but, if he wanted to have a little fun, he probably could.

CAFFERTY: Depends, I suppose, on your definition of what fun is.

(LAUGHTER)

CAFFERTY: Did the Democrats really seize the Senate, or were they elected in the Senate? I'm curious.

The question is: How will the midterm election results impact America's image abroad?

Kathleen of Glendora, California: "The image of the U.S. will approve abroad, now that democracy is on the march in our country. Our image has to improve. There's nowhere to go but up."

Shirley in Hayden, Idaho, writes: "The results of the midterm elections might be the next best thing to impeachment, in terms of showing the world a majority of Americans do not support a one-party dictatorship. The elections are a reinforcement that democracy works."

Duane in Hawaii: "As a Brit now living in the U.S., I can tell you, the Europeans will continue to see massive U.S. social inequality as the barometer of U.S. politics. As the rich get richer and the poor get poorer, the U.S. image abroad will remain negative. Has anything really changed in Congress this week?" Kyle in Powder Springs, Georgia: "The election results have already helped to repair the U.S.' international reputation a little bit. However, most of the world is waiting to see Bush himself replaced."

John in Akron, Ohio: "One of the worst aspects of the current administration is what it has done to our reputation abroad. The elections will help, but how scary that some of these margins were so razor-thin? How long before the country really wakes up?"

And Linda in Sacramento: "I like President Bush better now. All he needed was a good 'thumping.' He just forgot who he was working for" -- Wolf.

BLITZER: Jack, see you in a few minutes. Thank you.

And, up next, the people have spoken. How much sway did grassroots Internet groups actually have in shaping the voters' verdicts? We're going to find out. That's coming up next.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Much has been made this year about the Internet's role in fund-raising for political campaigns. With midterm elections largely wrapped up, just how influential were the so-called netroots in helping Democrats gain control of Capitol Hill?

Let's bring in our Internet reporter, Jacki Schechner -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, ActBlue.com, the portal for liberal fund-raising online, boasts that it has raised more than $17 million for Democratic candidates since 2004.

In this election cycle, three of the four top political action committees on ActBlue.com were blogs or bloggers. The only one that wasn't was Senator Barbara Boxer's political action committee.

Now, top blogs like Daily Kos, mydd, and Swing State Project band together to create a PAC called Netroots Candidates. And, together, they raised more than $1.5 million for dozens of candidates.

Of the top 10 that they supported in the House and the Senate, so far, their record is five wins, two losses, and three races still yet undecided.

And one of their most notable losses, the largest one, would be Ned Lamont. He lost out to Senator Joe Lieberman for the seat in Connecticut.

Some of their top wins would be Jim Webb for the Senate seat in Virginia and Jon Tester for the Senate seat in Montana. Both had big netroots support.

Now, this morning, liberals are celebrating online, saying that the netroots support and fund-raising is only to -- going to go more stronger and more important down the line.

And the right had even started to take notice, trying to fund- raise in the last three months before the election. They raised about $300,000, but, really, only went two for 21 in the candidates they chose to support -- Wolf.

BLITZER: All right, good work, Jacki. Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com