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Hamas Blasts Obama; U.S.: Hamas Holds Gaza 'Hostage'; Hunting Madoff Billions

Aired January 02, 2009 - 16:00   ET

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

SUZANNE MALVEAUX, CNN ANCHOR: Happening now, a militant leader under assault by Israel sends a disturbing message to President-elect Obama. Breaking news on a week of war in the Middle East and international outrage.
Plus, there could be fireworks in the U.S. Senate next week. It is possible that not one, but two would-be members will effectively be barred at the door.

And Michelle Obama on her husband's biggest regret, never-seen-before segments from my interview with the next first lady. The president- elect weighs in on that, too. What was missing from his life?

Wolf Blitzer's off today.

I'm Suzanne Malveaux. And you're in THE SITUATION ROOM.

In the Middle East right now, harrowing scenes of destruction and anger on the seventh day of Israel's punishing assault of Hamas militants. And breaking news. A top Hamas leader is warning Israel it could face doom if it launches a ground offensive in Gaza.

In a taped speech airing on Al-Jazeera television, that Hamas leader apparently hoped to draw President-elect Obama into the conflict, accusing him of doing nothing while hundreds of Palestinians are killed.

(BEGIN VIDEO CLIP)

KHALED MESHAAL, HAMAS LEADER (through translator): Mr. Obama, your beginning is not good. You got involved and you had a statement regarding the issue of Mumbai, but you would not get involved and say anything about the enemy's crime against Gaza. Enough of your double standards of western nations.

(END VIDEO CLIP)

MALVEAUX: Nic Robertson is standing by in Israel. We have Kate Bolduan, who is at the White House. But first, we want to go to Brianna Keilar. She is covering the Obama transition team in Chicago.

Brianna, do we have any reaction from this smackdown from Hamas directed at Barack Obama?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: No, Suzanne, we have asked the Obama transition team for a response. We haven't received it, and we're not necessarily expecting to get it, because Mr. Obama has stayed very mum on this conflict between Israel and the Palestinians, much to the criticism, of course, of those who have been speaking on behalf of Gaza's civilians.

Now, the president-elect's top adviser has said that he's keeping an eye on what's happening in Gaza, but he's also repeated that Obama team mantra that there's only one president at a time. Now, even so, I just spoke with a former staffer in the Eisenhower and Nixon administration, someone who also advised Presidents Ford and Carter, and he said that even if Obama already were president, it would be very strange for him to respond to these comments from Hamas leader Khaled Meshaal, someone, of course, that the U.S. designates to be part of a terrorist organization.

And he also said it's a different situation when you had President- elect Obama responding to the terror attacks in Mumbai because Americans were killed in that terrorist attack, and he basically had to respond. So as Obama really continues to push the envelope on that mantra of "one president at a time" when it comes to issues like the economy, domestic issues, you can obviously see here that he continues to be resistant to any appearance that he's usurping President Bush's authority on foreign policy matters -- Suzanne.

MALVEAUX: OK, Brianna. Thank you.

Now to Israel's border with Gaza, where Israeli tanks are on alert for possible orders of a ground attack.

Let's go to our Senior International Correspondent Nic Robertson.

Nic, you have interviewed this Hamas leader in the past before. What do you make of his statements today? Is this bluster, is this a direct threat in some way, and is he trying to engage Obama into this conflict?

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: You know, I think he would love to engage Obama and the United States more into the conflict. He would love to have the United States talk to him directly.

When I met him about a year and a quarter ago, that's what he wanted. He wanted to be part of those peace talks in Annapolis.

Hamas was locked out of those talks, but what Khaled Meshaal told me was that he didn't believe a new American administration would make any difference whatsoever to U.S. policy. He said it doesn't matter who you have leading the country, they're going to do the same things, they've got the same officials advising them and working for them.

So he didn't expect any difference. And that essentially is what he's saying right now, but he's throwing it right at the president-elect with his statement right now -- Suzanne.

MALVEAUX: And Nic, all eyes are on you, where you are, as well as many different areas, wondering along the border there whether or not Israeli ground forces are going to make a move, whether or not that is imminent.

What are you seeing and what are you hearing?

ROBERTSON: You know, that is the big question right now. And we are just getting more hints and more rumors that it is possible that it could come soon.

But I've got to be really honest with you. The troops are in place, but could all of this be sort of some psychological bluster to try and put more pressure on the Hamas leaders in Gaza?

We've seen their houses and homes targeted, some of them killed. They've even had phone calls before they've been bombed to warn them to get out of the houses.

So the psychological pressure is really on them right now. But again, you have to say that there is this sort of slow, steady drumbeat in the background and these little rumors that come out that you can't pin down and you can't say if they're really going to come through. But we're hearing them again just a few minutes ago.

It is possibly coming soon. We just don't know right now -- Suzanne.

MALVEAUX: Well, Nic, we'll be checking back with you often, and certainly keep us posted if that happens.

Hamas is urging is global protests on what it calls a day of rage against Israel, but the Bush administration is accusing Hamas of holding Gaza hostage by using it as a launching pad for rocket attacks on the Jewish state.

CNN's Kate Bolduan is at the White House.

Kate, obviously Nic just said it might be a whole bunch of bluster, or there might be a ground offensive that is imminent. What is the White House doing? Obviously they're watching these developments.

KATE BOLDUAN, CNN CORRESPONDENT: Of course, Suzanne, watching the developments. And the White House says it's working with European allies, as well as key Arab states. But the big question is, how much traction is the administration's approach having while the fighting continues?

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): A week into Israel's attacks in the Gaza Strip and Hamas rockets being fired into Israel, the Bush administration is still pushing for a long-term solution. Secretary of State Condoleezza Rice appeared for the first time in public after briefing the president.

CONDOLEEZZA RICE, SECRETARY OF STATE: I have talked with our European colleagues, and we are talking is constantly with the Israeli government to find a solution to Gaza that will be a sustainable one.

BOLDUAN: However, the top U.S. diplomat says at this point, she has no plans to head to the Middle East to broker a cease-fire and repeated the administration's conditions.

RICE: It is obvious that that cease-fire should take place as soon as possible, but we need a cease-fire that is durable and sustainable.

BOLDUAN: But with the threat of the conflict escalating with an Israeli ground assault, the White House is declining to comment on whether it would be justified.

GORDON JOHNDROE, WHITE HOUSE DEPUTY PRESS SECRETARY: You know, I don't want to speak to an operation that has not taken place, that may or may not have taken place. Those will be decisions made by the Israelis.

BOLDUAN: Decisions that Mideast expert James Phillips says the U.S. has little influence over.

JAMES PHILLIPS, HERITAGE FOUNDATION: I think it the U.S.' hands are relatively tied here. And the first priority should be, avoid making the situation worse by pushing for an abrupt end to the conflict that will leave Hamas in a position to continue threatening Israeli civilians.

(END VIDEOTAPE)

BOLDUAN: But by the U.S. not taking a stronger position, it could appear as the U.S. giving a green light to an Israeli escalation. Now, both the White House and the State Department declined to comment today on reports some diplomats are suggesting international monitors be brought into Gaza as part of any peace deal -- Suzanne.

MALVEAUX: OK.

Kate Bolduan at the White House.

Thank you, Kate.

Jack Cafferty is off today.

Right now, prosecutors are hunting for billions of dollars allegedly plundered in one of Wall Street's biggest frauds ever. We're following Bernard Madoff's long and mysterious money trail.

And just when you thought a trip to the gas station wouldn't break your budget, will drivers be slapped with a new tax?

And stand by for conflict and confusion when the new U.S. Senate convenes. There is a new warning from Republicans about the future of one disputed seat.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Where did Wall Street wizard-turned-accused-swindler Bernard Madoff stashed billions of dollars allegedly bilked from unwitting investors? Well, that's what federal prosecutors want to know, and now they're looking into remote offshore accounts.

CNN's Christine Romans is following the money trail from New York -- Christine.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Suzanne, where is the money? How much is lost? And will all of it ever be recovered?

Investigators are now probing whether Bernard Madoff may have stashed funds offshore, possibly in the Caribbean and Europe, according to published reports. Madoff's attorney Iraq Sorkin says, "We have no comment on any investigation being conducted." Previously, he's called this case a "tragedy."

Bernard Madoff is the Wall Street veteran accused of running a massive Ponzi scheme.

(BEGIN VIDEO CLIP)

ROBERT HEIM, FMR. SEC INVESTIGATOR: This is the largest Ponzi scheme and probably the largest fraud that any individual has pulled off in the history of the United States.

(END VIDEO CLIP)

ROMANS: Madoff now under House arrest in his penthouse apartment. His $10 million bail secured by multimillion-dollar properties he and his wife Ruth own. There's a Palm Beach mansion where someone stole and then returned this $10,000 lifeguard statue with a note attached calling him -- "Bernie's a swindler."

There's also this beachfront Montauk, New York, estate. These properties, in all, Madoff's personal and business assets, compiled in a list and delivered to the SEC this week, the very beginning of the process of untangling the money trail. Investigators are keeping the list under wraps for now.

Still unclear how much money is missing, where is it, and whether the promised 10 to 15 percent gains enjoyed by Madoff's clients were ever real or just paid for by new investors in the alleged Ponzi scheme. What is real and eclectic, a growing list of victims: Kevin Bacon, Kyra Sedgwick, Mort Zuckerman, Steven Spielberg, Steven Spielberg, numerous charities and foundations, and private Swiss banks.

Economist and comedian Ben Stein says he turned down an invitation to invest.

(BEGIN VIDEO CLIP)

BEN STEIN, ECONOMIST: Now, mind you, I've managed to lose a great, great deal of my life savings in the last year anyway, but I did not fall for that one. I fell for plenty, but not that one.

(END VIDEO CLIP)

ROMANS: One small investor who pulled her money out last year tells me she grew suspicious because she couldn't access her account online and the paper statements were decidedly low-tech. She, like many other small investors, invested in so-called feeder funds who funneled the money bundled together to Madoff -- Suzanne.

MALVEAUX: OK. Thank you, Christine.

We're paying a lot less money at the pump than just a few months ago, but you shouldn't get used to it. A federal commission is now looking to raise gas taxes by a lot.

Let's go to our CNN's Sean Callebs.

Sean, I guess this isn't good news. How much of a hike are we looking at here?

SEAN CALLEBS, CNN CORRESPONDENT: Well, we could be looking at a significant hike, as much as 50 percent. But bottom line, this commission has to find a way to pay for construction of bridges and roads.

They could charge people more toll roads, make people pay for driving during rush hour. But the simplest, quickest fix, a bump in the fuel tax.

(BEGIN VIDEOTAPE)

CALLEBS (voice-over): Last summer's dramatic spike in gas prices has translated into conservation, people driving fewer miles. And yes, it may seem no good deed goes unpunished.

Less driving means less tax money. To make up for a shortfall, a federal commission wants to raise the fuel tax by 50 percent to build and maintain roads and bridges.

UNIDENTIFIED FEMALE: I would be willing to pay for that, yes, if it's going to improve the infrastructure for the city.

UNIDENTIFIED MALE: I'd probably say it was a bad idea, and hard to keep the taxes down and figure out some other way to come up with the infrastructure money.

CALLEBS: This was a wake-up call, August 1, 2007, a bridge spanning the Mississippi River near Minneapolis gave way, killing 13.

The recommendation for the 50 percent tax increase comes from the 15- member panel appointed by Congress to study highway financing.

ADRIAN MOORE, HIGHWAY REVENUE COMMISSION: At best, it's a Band-Aid. We have to do is shift to a more direct user-based pricing system to pay for the roads.

CALLEBS: Congress is demanding carmakers build more fuel-efficient cars, including hybrid electrics. And that means less money from fuel tax. But the nation depends on gas tax money for bridges and roads, so the government has to come up with the money from somewhere. Funds which, if spent now, would save money down the road. UNIDENTIFIED FEMALE: It's going to save you money in other areas like maintenance on your car, because if there's potholes and other things destroying your car, it's going to be worth paying double.

(END VIDEOTAPE)

CALLEBS: So if you're wondering, right now we pay about 18 cents a gallon in tax for gasoline, about 24 cents a gallon for diesel. So, a 50 percent hike would mean about a dime more for gas, as much as 15 cents more for diesel. But Suzanne, that is the second study to come out in a year. One that came out last January says, and this is even worse, that we could pay as up as 40 cents more per gallon to pay for construction and maintenance of bridges and roads -- Suzanne.

MALVEAUX: OK. Thank you, Sean.

Well, he has been handpicked by Illinois's embattled governor to replace Senator Barack Obama, but Roland Burris may not get much of a welcome on Capitol Hill next week. In fact, he may not get any welcome at all.

And Barack Obama's emotional reflections on his childhood. He calls his father a tragic figure, and that's not the only thing that he's revealing about his upbringing.

(COMMERCIAL BREAK)

MALVEAUX: President-elect Obama is back in Chicago after his Hawaiian vacation, and he's preparing to reach out to Republicans in Washington next week.

Now, at stake, his multibillion-dollar plan to jump-start the economy.

Let's bring back our Congressional Correspondent Brianna Keilar.

Brianna, what are you hearing about President-elect Obama's plans to actually reach out to members of Congress next week?

KEILAR: Suzanne, it is a go. Even though the Obama transition team is not confirming these meetings are going ahead on Monday, the top Republican in the House, John Boehner, just issued a statement a short time ago welcoming Obama to the Hill, while at the same time, repeating some Republican concerns about this proposed economic stimulus package.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): President-elect Obama has promised that saving the failing American economy won't be a one-party effort.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: And I know we will succeed if we put aside partisanship and politics and work together as one nation.

KEILAR: After a campaign built on a pledge to bring post-partisan politics to Washington, the question remains -- can he deliver? KEN VOGEL, SR. REPORTER, POLITICO: I think the stimulus plan is going to be the first real test of his ability to sort of reach across the aisle.

KEILAR: Mr. Obama is coming to Capitol Hill Monday to discuss his proposal to jump-start the economy with top Democrats, but also Republicans in the House and Senate. As Democrats plan to push a stimulus package through the House in as little as two weeks, Republicans want to slow down, worried about the price tag on the plan which could hit $775 billion.

Republicans, calling for oversight of how the money is spent, are trying to hold the president-elect to his word. In a statement, Senate Republican Leader Mitch McConnell said Friday, "We believe that Obama's admonition to go through the federal budget page by page, line by line, eliminating those programs we don't need and insisting that those we do operate in a sensible, cost-effective way should apply to this."

As they push for broad support, political analyst Ken Vogel says Mr. Obama and congressional Democrats must play nice.

VOGEL: As long as Obama is appearing not to be catering to the left base of the Democratic Party, and is making at least token efforts to involve Republicans and to not alienate them, I think he'll be able to claim that is he taking a post-partisan approach.

(END VIDEOTAPE)

KEILAR: I asked a top Republican Senate aide if Republicans are satisfied with what appears to be an effort by Obama to include them in discussions about this economic stimulus package. That aide said it depends on what the meeting is, if it's just a photo-op or if it really is Democrats reaching across the aisle -- Suzanne.

MALVEAUX: He has a lot at stake in those negotiations.

Thank you so much, Brianna.

(NEWSBREAK)

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now, he has a lot to worry about: Gaza, the global financial meltdown, Iraq and Afghanistan. And now even before he's taken power, Barack Obama has protesters to worry about. Well, who are they, and what do they want?

And a shocking story of abandonment on New Year's Eve. A 22-year-old with cerebral palsy is left all night on a bus in a freezing depot. Find out how he's doing now and who's facing charges because of his plight.

And a Muslim family kicked off a flight. Was it guilt by association? They say they deserve an apology, but AirTran says it did nothing wrong.

Wolf Blitzer is off today.

I'm Suzanne Malveaux. And you're in THE SITUATION ROOM.

The Illinois State House could vote as early as next week on whether to impeach Governor Rod Blagojevich. Lawmakers moved up their special session to consider the corruption allegations against the governor.

Now, in the meantime, the governor's disputed choice to fill Barack Obama's former Senate seat may face a major confrontation on Capitol Hill in the days ahead.

CNN's Samantha Hayes is here.

And this might get a little bit messy. What do we expect next week?

SAMANTHA HAYES, CNN CORRESPONDENT: Well, Suzanne, Democrats have been looking forward to the beginning of 2009 for a while. One of their own will be in the White House soon and they have a majority in Congress. But the first thing they have to do next week is figure out how to deal with Roland Burris.

(BEGIN VIDEOTAPE)

HAYES (voice-over): If Roland Burris shows up on Capitol Hill Tuesday, the welcoming committee won't be waiting. Burris may enter the Capitol here, but once through security, he has no office, no staff, and it's possible no one will acknowledge him as the new freshman senator from Illinois. But that's not stopping him.

ROLAND BURRIS (D), FMR. ILLINOIS ATTORNEY GENERAL: We're certainly going to make contacts with the leadership of the Senate to let them know that the governor of Illinois has made a legal appointment and that I am currently the junior senator for the state of Illinois.

HAYES: Tuesday, Senate Majority Leader Harry Reid made his position clear stating, "... anyone appointed by Governor Blagojevich cannot be an effective representative of the people of Illinois and will not be seated by the Democratic Caucus." But a confrontation with Burris, who was constitutionally qualified and would be the only African- American senator, is a risky matter for Democrats.

MARTIN KADY, POLITICO.COM CONGRESSIONAL EDITOR: There have to be some back-channel negotiations that must be going on to have some sort of middle ground where they don't necessarily seat him as a full-fledged senator, but they don't sit there and have the chaos and the poor imagery of blocking this guy at the Senate door.

HAYES: Senate rules could prevent Burris from entering the floor because he is appointed, not elected. But the man in charge of enforcing those rules says a confrontation is unlikely.

TERRANCE GAINER, U.S. SENATE SERGEANT OF ARMS: I do not think he's the type of person and the Senate is not the type of institution that looks for fistfights at the door. I think we'll have this all worked out. And then if there's disagreement, we'll leave it to the courts.

HAYES: Whatever happens next week, the conflict may soon take a back seat to other news.

John Feehery, Karen Finney, Barack Obama, Michelle Obama

leave it to the courts.

HAYES: Whatever happens next week, the conflict may soon take a back seat to other news.

MARTIN KADY, CONGRESSIONAL EDITOR, POLITICO.COM: Congress, regardless of whether it's Senator Burris or not so much Senator Burris, they will have to go to work on an $800 billion economic stimulus. Then we're going to inaugurate President Obama. That's -- those events will overtake this -- this fascinating little side story here.

(END VIDEOTAPE)

HAYES: One reason Terrance Gainer, the sergeant at arms, is so confident there won't be any problems is because he knows Burris from the Illinois legislature. Gainer was the director of state police, and Burris was the attorney general around the same time.

MALVEAUX: So, Sam, we will all be looking to see what happens on Tuesday this coming week.

HAYES: We all will.

MALVEAUX: OK, thank you, Sam.

New reports today from Colorado and who's being tapped to replace Interior Secretary Nominee Ken Salazar in the U.S. Senate. Now, sources say that Governor Bill Ritter has chosen Denver public school superintendent Michael Bennet for the job.

Meantime, there is still a lot of controversy and confusion hanging over Senate seats in Minnesota and New York.

Well, we're joined by our CNN deputy political director, Paul Steinhauser.

And, first -- obviously, Paul, first tell us about Minnesota. This recount continues, but there's a -- a big thing that Republicans are bringing up now. What's going on?

PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Yes, this recount, I guess, if this was a football game, it would be going into overtime, because two things are going on today, Suzanne.

First of all, up in Minnesota, there are a bunch of improperly rejected absentee ballots that were never counted. And both campaigns are haggling over which votes to count. That count is going on today, tomorrow, this weekend, and then maybe as early as Monday or Tuesday, the canvassing board could declare a winner.

Right now, Al Franken is up by -- Al -- Al Franken, who is the Democratic challenger to Norm Coleman, he is up by about 49 votes. So, it's very close. But, then, today, one of the top Republicans in the Senate, John Cornyn of Texas, he is saying there is no way that his caucus, the Republican Caucus, is going to allow this to happen if they -- they choose Franken.

He said, "There will be no way that people on our side of the aisle will agree to seat any senator provisionally or otherwise." He wants both the canvassing board in Minnesota and the governor up there, who is a Republican, to agree on a winner before anybody gets seated.

So, this is a mess in Minnesota. It could continue for a while. And, remember, whoever loses in Minnesota could take this right back to court, and it could go on for a while longer -- Suzanne.

MALVEAUX: And, Paul, real quick about Caroline Kennedy as the New York governor's possible choice to replace Hillary Clinton in the Senate, what do you know?

STEINHAUSER: Yes, two sources are telling the Associated Press, two sources close to the governor up there, they are saying that Governor Paterson is leaning towards Caroline Kennedy, that he would name her, though the governor says it's not over yet; he has not made his decision. He says he won't name anybody until Hillary Clinton steps down, after she is confirmed, likely confirmed, as secretary of state -- Suzanne.

MALVEAUX: OK, thank you, Paul.

Well, a new surprise from Oprah Winfrey, and her new donation to an Atlanta school and why it's generating a big buzz, even for a woman who is known for generating headlines.

And is Barack Obama just like George W. Bush when it comes to Iran? Stand by for our "Strategy Session."

And the Obamas up close and personal -- she reveals his biggest regret in part of my interviews you haven't seen before.

(COMMERCIAL BREAK)

MALVEAUX: It's issue number one, the economic crisis.

Now, how does Barack Obama convince Republican critics on Capitol Hill to act with speed on his recovery plan?

Well, joining me for today's "Strategy Session" are Karen Finney -- she's communications director for the Democratic National Committee -- and Republican strategist John Feehery.

Thanks for joining us in THE SITUATION ROOM.

First of all, Barack Obama on Monday, first thing, he's going to be meeting with Democratic leaders, Republican leaders. There's a real sense here that there's going to -- there's going to be somewhat of a showdown. What does he need to do from day one to try to convince them, let's get this economic stimulus package and are you on board?

JOHN FEEHERY, REPUBLICAN STRATEGIST: He's got to tell the Democrats to slow down and include some Republicans. I mean, there's got to be some real negotiation here, not just with trying to peel off some moderates. They have got to have some real negotiations with guys like John Boehner and Mitch McConnell.

What we're hearing is that the -- this package is already, written without any Republican input. And there's a lot of, a lot, a lot of spending, tons of spending. And who knows what the spending goes to. This is a huge thing. It could be up to a trillion dollars. And there's really no Republican input.

So, this is critical for Barack Obama. It's his first big test. Is he going to be a truly different kind of leader, or is he going to do what the Democrat leaders want, which is sign this bill?

KAREN FINNEY, COMMUNICATIONS DIRECTOR, DEMOCRATIC NATIONAL COMMITTEE: Well, and I think, actually, he's off to a good start on that note, because he's going to meet with the Democratic leaders and then he is going to meet with the Republican leaders.

FEEHERY: Right.

(CROSSTALK)

FINNEY: And I think that's the right thing to do.

It's certainly interesting to hear Republicans now talking about fiscal discipline. It's better late than never. Too bad they weren't talking like that when all those Bush budgets were going through.

MALVEAUX: John?

FINNEY: Look, I think the pressure's on everybody to get something done here.

(LAUGHTER)

FEEHERY: Well, you know, if you look at lot of those Bush budgets, what the Democrats were complaining mostly about was not spending enough on certain things.

What Bush did spend a lot of money on is tax relief for the American people and a lot of spending on homeland -- homeland security stuff and the war and on the pork barrel stuff.

(CROSSTALK) FEEHERY: There was a little bit too much of that, but -- anyway.

MALVEAUX: So, but Joe Biden says, look, this legislation has to be pork-free here. How does he ensure that that is even going to happen?

FINNEY: Well, that's obviously, I mean, one of the key things that the president-elect has to make sure when he meets with the leaders in Congress, that they know that that's going to be a priority. This bill has got to stay focused on things that we know are going to help deliver some relief to the middle class and create some jobs.

And, so, I think they have got to just try hold the line on that. But, again, I think it's not just for the president-elect and the vice president-elect. It's for leaders in Congress to come to the table and get ready to get something done.

FEEHERY: You know, Pork is in the eye of the beholder. My -- my -- my important project is somebody else's pork. And, so, defining what pork is, is extraordinarily important to keeping this pork-free.

MALVEAUX: Who defines it?

FEEHERY: Well -- and that's a good question. I think that that -- that's almost the first step that they have to do.

(CROSSTALK)

FEEHERY: What is it that has long-term significance for the country, and not just for special interests scattered throughout the country?

And that is -- that's a hard one, because the congressional budget process is full of -- full of pork. It has been throughout its history.

FINNEY: Well, but, again, if you look at what the president-elect has said, he's talked about stimulus in a very focused, targeted way, in terms of middle-class tax relief, infrastructure projects.

We saw the governors come out today and say that they need some help with the infrastructure projects. That would actually create jobs. So, as long as everybody stays focused on a key -- actually key goals and doesn't start adding their ornaments to the Christmas tree, as the vice president-elect said, I think we should be able to get something done.

MALVEAUX: Let turn it to foreign policy. There's an op-ed in "The Wall Street Journal" by John Bolton, obviously the former U.S. ambassador to the U.N.

And he's criticizing -- he's actually accusing Obama of being very much like Bush when it comes to Iran and North Korea in his policy.

I want you to take a listen here. He says: "The Obama alternative? Present the Iranian regime with a clear choice by using carrots and sticks to induce Iran to give up its nuclear aspirations. What does Mr. Obama think Mr. Bush and the Europeans have been doing? Does he really think his smooth talking will achieve more than Europe's smoothest talkers who were in fact talking to us for the whole time?"

He brings up the case that President Bush has been multilateral when it comes to speaking to Iran, to North Korea, six-party talks. And he says all this talk really hasn't generated much in terms of action about what we want to see from Iran and North Korea.

(CROSSTALK)

MALVEAUX: What does Obama do that's any different?

FEEHERY: And this represents a split in the Bush administration, too. Obviously, John Bolton was the hard-liner.

You know, he puts the hard -- he puts the hard in hard-liner in the Bush administration.

MALVEAUX: Absolutely.

FEEHERY: And Condoleezza Rice and others wanted some sort of negotiation.

And I actually had the question for John Bolton, what do you expect us do? Do you expect us to start invading North Korea? Is that the next step? I mean, those are the types of things that you have to ask yourself. OK, if we're not going to do this, then what are we -- we going to do?

And I guess what he wants -- what he wants a complete shutoff of North Korea and a complete shutoff of Iran. And that's fairly difficult to do.

FINNEY: But I think the key thing here is that we're going to have a new team here on the field, having watched a lot of football yesterday.

(CROSSTALK)

FINNEY: And that's going to make a big difference, because the Bush administration at this point doesn't have the credibility that it needs to get some of these things done.

I mean, look, Iran has become more dangerous over the course of the Bush years. So, let's get our new team in there. Let's see how they deal with these challenges. And I think, just that new credibility, they will have some new tools at their disposal as they're having these conversations to try to put the needed pressure on both North Korea and Iran.

MALVEAUX: So, you think more diplomacy is important?

FEEHERY: Well, I -- I'm just analyzing what is -- what is the next step.

I do think that Obama has got -- he has said that that he is -- wants to do more negotiation, without the -- really any sticks coming along. And you need sticks to keep these -- both these regimes in place. And he's almost coming from a position of weakness, because he's -- he's leading with the diplomacy angle. He's got to also come in with some hard sticks. Otherwise, he's going to lose all credibility fairly quickly.

FINNEY: Well, but I think he comes in with a whole new set of credibility that the United States hasn't had for some time.

MALVEAUX: OK. We will have to leave it there. Karen and John, thank you so much.

Barack Obama and the effect of his father's absence.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I start -- started to open myself up to -- to understanding who he was. But then he was gone. And I never saw him again. That was the last time I saw him.

(END VIDEO CLIP)

MALVEAUX: Ahead, Barack Obama reflects on how his father's absence shaped his relationship with his daughters.

And could Los Angeles skyscrapers withstand a massive earthquake?

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MALVEAUX: President-elect Obama is known for being cool, unflappable, reserved. But, in an interview, he opened up about what it was like to grow up, the son of a beloved mom, and a father who lived half-a- world away.

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MALVEAUX: You said before the best in you has come from your mother, Ann. Tell us a little bit about her.

What was she like?

B. OBAMA: Oh, she was just -- she was spectacular. She was an only child. You know, she had traveled a lot growing up. You know, she was born in Wichita, Kansas. My grandparents were from small towns in Kansas.

I think because she was an only child, she was a voracious reader and really ended up having this amazing imagination and always, I think, was looking to the larger world beyond where she was living. And that's partly how she came to marry my father, how she came to marry my stepfather and we ended up moving to Indonesia.

By the time she was an adult, she was somebody who was fascinated by different kinds of people and different cultures. She became an anthropologist and worked specializing in micro lending -- you know, providing assistance to -- to women in villages all across Asia and Africa. And was, you know, one of the kindest, sweetest, most generous people I knew and really taught me compassion and empathy in a way that I still think carries over to the work I do today.

MALVEAUX: If I can turn it just a little more personally, just give me a sense of what she was like as a mother, as a mom, the two of you together.

B. OBAMA: Well, I mean she was just a -- she was a really loving, sweet person. She was somebody who had very clear ideas about what was right and what was wrong. She had no patience for bigotry. She had no patience for intolerance. She had no patience for closed- mindedness. She had no patience for lies.

She was somebody who carried around what I consider to be the best of American values -- you know, honesty, kindness, hard work, decency.

MALVEAUX: You lived apart for some time. She was overseas when she was studying in Indonesia.

Did you have a sense of longing for her as a child?

B. OBAMA: You know, I'm sure that, as important as she was in my world, that the times when I was still going to school in Hawaii and living with my grandparents while she was still back in Indonesia -- I'm sure that there were times where that had a deep impact on me.

When you're a kid, you don't necessarily recognize that immediately. But one of the things that I always knew was that I was the center of her world. And, you know, I have always believed that if kids know they're loved, if they know that in their parents' eyes, they are special, that can make up for a lot of instability and a lot of -- a lot of change. And that's what she was always able to transmit to me -- never doubting how I was the center of her world and my sister was the center of her world.

And I think we both grew up feeling that fierce love that she had for us.

MALVEAUX: Your father was largely absent.

How did that impact you?

B. OBAMA: Well, you know, I think it had a profound impact, although more as an object lesson of -- of what it's like growing up without a father in the house. You know, he -- my father had a reputation as being this larger than life figure -- charismatic and very smart and very engaging. And all those things were true. He was part of that first generation of Africans who moved West to get an education and then intended to go back to develop their country.

And he -- he made a great impression on people. But he also was a tragic figure, not only because he didn't stay with my mother and me, but, you know, he generally had trouble providing stability for his other children and his -- his subsequent wives.

And he -- he was somebody who was incredibly brilliant, but also, because of the tensions of leaping from a small African village to Harvard and being part of this modern world, he never resolved those tensions. He'd be -- he fought, when he got back to Kenya, against tribalism and nepotism, but ultimately was consumed by it, black- balled from the government, ended up having a serious drinking problem, was in a severe car accident, ended up dying a tragic and bitter man.

And so when I think about his impact on me, I mean, there are some superficial things. He went to take me, when I was 10 years old, to see a jazz concert. And I became a real jazz buff after that -- or he gave me my first basketball.

And it was only later that I realized that that had been the case and might have been part of the reason I became so obsessed with playing basketball.

But for the most part, what I understood from him was an absence. And I vowed that when I became a father that one of the most important things I could do is be a presence in my children's lives.

MALVEAUX: That visit when you were 10 years old, at that time, was there anything in your 10-year-old mind that you thought maybe I can do to keep him to stay?

B. OBAMA: No, I don't think that's how 10-year-olds think. If you've got this person who suddenly shows up and says I'm your father and I'm going to tell you what to do and you don't have any sense of who this person is and you don't necessarily have a deep bond of trust with them, I don't think your reaction is how do I get them to stay. I think the reaction may be, you know, what's this guy doing here and who does he think he is?

And so it was only during the course of that month -- by the end of that month that I think I started to open myself up to -- to understanding who he was. But then he was gone and I never saw him again. That was the last time I saw him.

He would write to me occasionally. He wrote me letters and would -- we would talk on the phone intermittently. But -- but it was not until I traveled to Kenya and heard from relatives of who he had been and the story that he had lived that, I think, that I fully was able to understand him and, obviously, in some ways, understand myself.

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MALVEAUX: You heard from the president-elect. Just ahead, we will hear from his wife.

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MICHELLE OBAMA, WIFE OF PRESIDENT-ELECT BARACK OBAMA: Although his traditions were pretty solid, it was just with a small group of people.

So, I think he -- you know, he has said that, you know, what he would want for his own children would be the kind of traditions and stability that was more reminiscent of how I grew up.

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MALVEAUX: Michelle Obama offers her own take on what her husband missed as a child and how it affects him to this day.

And allegations of misconduct are flying, after an airline gave a Muslim family the boot from a flight from Washington.

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MALVEAUX: You heard Barack Obama tell me what it was like to barely see his father during his childhood.

Well, Michelle Obama also talked to me about the emotional impact that had on her husband. And we're showing that to you today for the first time.

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MALVEAUX: He writes about in his book this sense of longing and missing for stability -- stability, his father being absent, his mother living overseas.

Do you think that he was seeking that, as a -- a part of that stability to be a part of your family?

M. OBAMA: You know, I think he has -- has admitted that, that, you know, as -- as much as he loved his mother and loved his family and loved sort of the unconventional upbringing that he had, I think, when he thought about the life that he would want for his kids, I think he -- he longed for the stability that he saw in my family, you know, sort of the mom and dad at dinner table.

He used to always tease me that my upbringing was like "Ozzie & Harriet," "Leave It to Beaver," because, probably, compared to his life, you know, having a father in the home who went to work every day, You know, had the big brother who was a jock, I mean, it was probably pretty all-American, in -- in the black community, because we didn't have much money.

Our table was smaller. It was in a little bitty apartment, but, you know, we had consistent traditions and rituals and routines in our family that he embraced. The fact that we all got together on Thanksgiving, you know, the fact that our Christmases were big, with lots of family and cousins, I think that was something, coming from a smaller family, that he missed, although his traditions were pretty solid. It was just with a small group of people.

So, I think he -- you know, he has said that, you know, what he would want for his own children would be the kind of traditions and stability that was more reminiscent of how I grew up. But, at the same time, you know, obviously, he has taken very unconventional paths in terms of his career. And there's a part of me that has had to relieve some of that stability and embrace, you know, all the newness that comes with marrying Barack Obama.

MALVEAUX: Can you tell me Barack's relationship with his father? Did his absence affect him in any way?

M. OBAMA: You know, I -- yes. He's written a book about it.

I didn't know his father, because, obviously, had he died way before I knew him. But I think he's like any kid that grows up wondering, who was this absent person in my life and what impact did that absence have on me?

I think he pondered those questions, like many kids who find that they -- they don't grow up with a parent. But, at the same time, I did know his mother. You know, I did have an opportunity to get to know her, and love her, like many people would if they got to know her.

She was one of the sweetest, most gentle, open-hearted people that you -- you would want to know. And that very much filled up the space. But there were still questions in his mind: Who was this man, and what was he like, and what aspects of me are a part of him?

MALVEAUX: Does he still have those questions? Is there a sense of curiosity?

M. OBAMA: No, I think -- I think that's the good thing about writing a bestselling book.

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M. OBAMA: I think he's explored them pretty, you know, in-depth, you know, met his family, has traveled, developed relationships with his family in Kenya.

And I think, in many ways, he's gotten the answers that he longed for by embracing that part of him. And he's written about it in -- in such an eloquent way. I don't see any residual, you know, sort of questions. But, you know, one never knows. How do you -- how do you measure absence? It's -- it's really hard. It's a tough thing to do.

MALVEAUX: And, obviously, you talked about his mother, Ann.

M. OBAMA: Mm-hmm.

MALVEAUX: He says the best parts of him came from his mother.

And one of his greatest regrets was that he wasn't at her bedside when she passed.

M. OBAMA: Yes. Yes.

MALVEAUX: Were you with him when he got the news?

M. OBAMA: Oh, yes, yes. I mean that was hard for all of us, because, you know, with cancer, you never know.

It's always, you know: She's better. She's not. I'm not sure.

I think it was sudden to the point where, I think, in his mind, he had hoped that he would have more time. But that's not, you know, how life ends often. It's not so predictable. So, yes, it hit him very hard.

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MALVEAUX: You can see more of my interview with the Obamas this weekend at 8:00 p.m. Eastern on CNN.

Well, you're in THE SITUATION ROOM.