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The Situation Room

President Obama Meets With America's Mayors; More Calls For Senator Roland Burris to Resign

Aired February 20, 2009 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: And, to our viewers, you're in THE SITUATION ROOM.

Happening now: President Obama puts America's mayors on notice. If they waste stimulus money, he's going to call them out.

Plus, Governor No Thanks. A Republican rejects some of that stimulus money. Others may follow his lead. And a top Democrat calls it a slap at African-Americans.

And the White House weighing in now on new calls for Senator Roland Burris of Illinois to resign. The Illinois governor has turned against him, and his aides are now jumping ship -- all that and the best political team on television.

We want to welcome our viewers in the United States, and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

President Obama today laid down the law for the nation's mayors, who came to the White House with their hands wide open for stimulus dollars. Mr. Obama says he will have zero-tolerance policy for wasteful spending. He's trying to make good on another campaign promise heading into the second month of his presidency.

Let's go to our White House correspondent, Dan Lothian. He's standing by with what happened today when the president invited all those mayors into the White House.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, the president continues moving at a rapid pace as he tries to jump-start the economy.

And what we noticed today, he's still stressing the importance of accountability and transparency.


LOTHIAN (voice-over): One month in office, and the Obama administration is patting itself on the back.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We've done more in 30 days to advance the cause of health care reform than this country has done in a decade.

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: We've won passage of the largest economic recovery effort since World War II in a month. In a month.


LOTHIAN: Speaking in the East Room to the nation's mayors, the president put them on notice. When it comes to spending stimulus money from his biggest initiative, waste, inefficiency and fraud will not be tolerated.

OBAMA: I will call them out on it and use the full power of my office and our administration to stop it.

LOTHIAN: The threat of being called out didn't appear to rattle these mayors.

MAYOR MANNY DIAZ (D), MIAMI: We get called out every day at the local level.


DIAZ: We have plenty of constituents who will be doing that before the president does.

MAYOR DOUGLAS PALMER (D), TRENTON: We welcome that kind of accountability.

LOTHIAN: As the mayors get ready to spend their share of $787 billion on shovel-ready projects, a new CNN/Opinion Research poll shows 60 percent of Americans support the stimulus and 49 percent consider it a major victory for the president.

But it's not just one big love-fest. At least two Republican governors, Sanford of South Carolina and Jindal of Louisiana, are threatening to turn down stimulus aid, calling it bad for the economy. That complicates things for local communities since the state has to hand out the money.

New Orleans Mayor Ray Nagin says his governor's rhetoric is nothing but politics.

MAYOR RAY NAGIN (D), NEW ORLEANS: I think he's been tapped as the up-and-coming Republican to potentially run for president the next time it goes around, so he has a certain vernacular and a certain way he needs to talk right now.

LOTHIAN: The president still finding Republican resistance, even when it comes to handing out federal dollars.


LOTHIAN: Now, looking ahead to next week, the president continues to keep the pedal to the metal, if you will. He addresses a joint session of Congress and unveils the federal budget and holds a fiscal responsibility summit. He's also, Wolf, planning another road trip.

BLITZER: He's going to be a very busy guy, obviously. All right, Dan, thank you.

Unlike America's mayors, some Republican governors are not eager to claim their share of the stimulus money. And the ranking African- American in the House of Representatives sees it as an insult to blacks.

Our national political correspondent, Jessica Yellin, is here watching this, what's going on.

Are GOP governors, Jessica, right now really going to reject money that potentially could help their states?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Wolf, it's hard to believe that if you were offered billions of dollars, you would even think twice about accepting it. But that's where Louisiana's governor, Bobby Jindal, is, along with five other Republican governors.

They say that the short-term funds from the stimulus will eventually try up, leaving their states with new long-term costs they simply can't afford.

Here's how Louisiana's Governor Jindal put it.


GOV. BOBBY JINDAL (R), LOUISIANA: We will have to review each program and each new dollar to make sure that we understand, what are the conditions, what are the strings, and see whether it's beneficial for Louisiana to use those dollars.


YELLIN: He's already announced that he will reject about $98 million worth of funds for unemployment insurance which he says would eventually lead to a tax on business.

But he's accepting money to increase unemployment benefits and funding for transportation improvements. The other states where governors are questioning whether they will take those funds, South Carolina, Mississippi, Idaho, Texas, and Alaska.

Wolf, some politicians in those states are accusing those governors of playing politics.

BLITZER: And earlier we spoke with the highest-ranking African- American in the House of Representatives, Congressman James Clyburn of South Carolina. And he says, if these states reject that money, it will primarily affect low-income African-Americans. And he's outraged.

YELLIN: That's right. He had extremely stinging words.

And he says that his governor is willing to accept funds that help transportation throughout the state, for example, but, as you say, are questioning stimulus funds that would go to counties that are primarily African-American.


REP. JAMES CLYBURN (D), SOUTH CAROLINA: now the governor says, I don't want to accept the money. That's why I called this an insult, that's why I said this is a slap in the face, because a majority of those counties are, in fact, inhabited by African-Americans.


YELLIN: Now, his governor rejects that, saying that if they accept these funds, it will eventually lead to a future tax increase on all South Carolinians, regardless of their color.

Now, it's important to note, Wolf, that state legislatures in each of these states have the power to override the governor's decisions if those governors reject the funds. So, this could be teeing up some huge political battles.

BLITZER: Yes. The congressman insists that, in South Carolina, that state legislature, he believes, will override Mark Sanford, the governor. We will see what happens.

Jessica, thanks very much.

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

JACK CAFFERTY, CNN ANCHOR: Yes, Jindal better run for president. He won't be reelected governor. I mean, Louisiana doesn't need any money, right? They got plenty of money down there.

BLITZER: They need a ton of money.

CAFFERTY: Yes, they do.

BLITZER: They're still suffering from Katrina.

CAFFERTY: Exactly.

And the city of New Orleans couldn't be rebuilt with some of these infrastructure dollars, of course not. I never heard such nonsense in all my life. Mississippi, that's another state that was trashed by Katrina, and not exactly at the top of the per capita income list. That's nonsense.

So, have you noticed, it's nearly impossible to wake up in the morning without hearing about another big-time bailout by the federal government? As President Obama signed that almost $790 billion stimulus bill, his treasury secretary, Tim Geithner, the week before unveiled a bank bailout plan. That could mean another $1 trillion spent on bailing out our nation's drowning financial institutions.

That's on top of the $700 billion financial package from last fall. The auto companies are back knocking at the door. They were in Washington this week. They want another $21.6 billion -- that's GM and Chrysler -- of your money, on top of the more than $17 billion they got last fall.

There's also the administration's $275 billion plan to help up to nine million struggling homeowners refinance or modify their mortgages, so they don't lose their homes.

And if these dizzying numbers aren't enough to give you a headache, how about the fact that the stock market keeps tanking every time the government announces a new initiative? Yesterday, the Dow closed at its lowest level in more than six years. And today it took another hit, closing down 100 points. Investors are nervous the government is not going to be able to right our economic ship, despite the trillions of dollars it's pouring in, all of which has probably left millions of Americans either pulling their hair out or reaching for the Jack Daniels.

So, we thought on this Friday evening we would ask you the following. What are the signs that you're suffering from bailout fatigue?

Go to Post a comment on my blog.

If this was the "Letterman" show, they would have the top 10 indications. But we don't have the writers or the imagination to do that.


BLITZER: You could come up with that. You're very -- you're creative. You can do this.

Jack, stand by.

It's one thing for a political enemy to want your ouster, but entirely different when a friend does.


GOV. PAT QUINN (D), ILLINOIS: I would ask my good friend Senator Roland Burris to put the interests of the people of the land of Lincoln first and foremost, ahead of his own, and step aside and resign from his office.


BLITZER: The Democratic governor of Illinois turning his back on the Democratic senator from Illinois, Roland Burris. And we have just learned a man from Burris' inner circle is flat-out walking away from the senator.

The billionaire accused in that investment fraud was found in an unlikely place. And now his father has a special message.

And what happens when she works after he gets fired? Some women are becoming the main breadwinners in this miserable economy.


BLITZER: An embattled U.S. senator might wish for some friendly support, because right now, he's getting several cold shoulders. We have just learned that Senator Roland Burris' acting chief of staff has turned his back on the embattled senator. The chief of staff has resigned.

Also, the White House weighing in on perceived inconsistencies in the stories Burris told about his getting the Senate seat.


ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Some of the stories seem to be at variance with what has happened, that the president is supportive of an investigation that would get some full story out.


BLITZER: Meanwhile, there's a new call for Senator Burris to resign. And it's ramping up the pressure on him to step aside.

Let's go to CNN's Susan Roesgen. She is joining us now from Chicago with more.

What happened, Susie?

SUSAN ROESGEN, GENERAL ASSIGNMENT CORRESPONDENT: Well, today, the governor, Wolf, came out and added his cry to the chorus.

He has said all along, Wolf, that he will not resign, and yet his enemies and even his friends now say he's got to go.


QUINN: I would ask my good friend Senator Roland Burris to put the interests of the people of the land of Lincoln first and foremost, ahead of his own, and step aside and resign from his office, because I think we should have in our state a law passed by the General Assembly and signed by this governor that will set up a clear process for dealing with the issue of vacancies when it comes to the United States Senate.


ROESGEN: Wolf, it's almost as if they're saying, here's your casket, Mr. Burris. All you got to do is step in it, and we will go ahead and have your funeral.

The governor today, in addition to calling on Burris to resign, said that he wants the state legislature here to pass a law immediately that would allow the governor to appoint a temporary replacement if Senator Burris is forced out or does resign, and then, after that, there would be a special election about four months later for the voters to decide who they want to be senator.

BLITZER: What is Senator Burris, Susie, saying about all of this?

ROESGEN: He is sticking to his pledge, as far as we know, publicly, at least, to not talk to reporters. He said he didn't like those speculative sound bites. He didn't like stuff coming out in drips and drops, so nothing today.

BLITZER: We will watch this story, see what happens, Susie Roesgen in Chicago.

Fresh actions against the billionaire financier Robert Allen Stanford. Today, regulators in Antigua and Barbados took control of two of his financial institutions, this after the FBI found Stanford yesterday and notified him of serious allegations. Where Stanford was actually found has a lot of people talking.

CNN's Jeanne Meserve has more.


JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, Fredericksburg played a prominent role during Colonial times and the Civil War, but recent events give the phrase "rich history" a new meaning.

(voice-over): Jet-setting billionaire Robert Allen Stanford seen on Sky News cavorting at a cricket match, but quaint Fredericksburg, Virginia, is where the FBI found him and served papers alleging he engaged in a $9.2 billion fraud scheme. His girlfriend's mother lives here.

At a Fredericksburg espresso shop, shocked locals speculated about why Stanford chose to hide out in this community, midway between Washington and Richmond.

LINDA WESTERMANN, LOCAL RESIDENT; You're near a lot of transportation. You know, you can hop a flight from three different airports -- or four different airports, actually. You're on a major artery.

MESERVE: Brothers Graham and Kenyan Coble found the case a sad commentary.

KENYAN COBLE, LOCAL RESIDENT: It's another story about another crook who has -- from what I understand, has walked off with a lot of people's money. That's disturbing. That's really sad.

GRAHAM COBLE, LOCAL RESIDENT: Kind of a sign of the times, though. There's more of these kind of people all the time. We're just now finding them. That's all.

MESERVE: The Securities and Exchange Commission alleges that Stanford sold certificates of deposit, promising improbable and unsubstantiated high interest rates. The news prompted a run on Stanford's banks in Antigua and Venezuela. And regulars in both countries have now seized control. Stanford is surrendering his passport to the Department of Justice, but he wasn't arrest. There are no criminal charges against him. In Texas, his father, 81-year-old James Stanford, described his son as ambitious and highly aggressive, but said he knew nothing about any wrongful business dealings.

JAMES STANFORD, FATHER OF ROBERT ALLEN STANFORD: If I could tell him anything, Allen, call me and just do the right thing, whatever it is.

MESERVE (on camera): Where is Stanford now? If his girlfriend's relatives know, they are not saying -- Wolf.


BLITZER: Jeanne Meserve, thank you.

Federal law enforcement officials continue to stress that Stanford is in no way hiding and that they will be able to contact him if and when necessary, saying -- I'm quoting now -- they don't "need to know where he is every minute."

More details also emerging about the huge bonuses that Merrill Lynch employees received as the company was about to be taken over by Bank of America.

Our senior correspondent, Allan Chernoff, is joining us now.

Those bonuses were pretty large, Allan.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Three-point-six billion dollars of them, Wolf.

You will recall the outrage over those bonuses. They were awarded as Merrill Lynch was losing $15 billion last quarter, just before Bank of America closed on its takeover of the giant brokerage firm. Taxpayers do have a stake in this, because Bank of America has gotten $45 billion of government bailout money and promises from the Treasury to protect it from further losses.

New York Attorney General Andrew Cuomo believes the bonus payments were hidden from investors, and he is investigating to see if that may have been a violation of New York State securities laws.

Bank of America's chief executive, Ken Lewis, has said he had no authority over the Merrill bonuses. But CNN has learned that indeed Bank of America had some role. As part of the takeover deal, Bank of America set a cap of about $5 billion on Merrill Lynch bonuses.

Bank of America confirms that. Former Merrill Lynch chief executive John Thain was questioned yesterday at the attorney general's office. He confirmed to investigators that B-of-A's Ken Lewis was well aware Merrill executives would be getting billions in bonuses, according to people familiar with the inquiry.

Here's what Bank of America's chief told Congress nine days ago about the Merrill Lynch bonuses.


KEN LEWIS, CEO, BANK OF AMERICA: My personal involvement was very limited, but let me give you my general understanding of what happened.

First of all, I do know that we urged the Merrill Lynch executives that were involved in this compensation issue to reduce the bonuses substantially, particularly at the top. I will remind you, though, that they were a public company until the 1st of this year. They had a separate board, separate compensation committee. And we did have -- we had no authority to tell them what to do, just urge them what to do.


CHERNOFF: Bank of America says, beyond setting the ceiling of about $5 billion, it really had no legal right to tell Merrill what to do.

The company's chief executive, Ken Lewis, has received a subpoena and is to be questioned within the next two weeks at the New York State attorney's office.

BLITZER: Yes, Andrew Cuomo, he's pretty aggressive on this front.

And we will watch. Allan, thanks very much.

The economic crisis is not only shifting the financial ground; it's also shifting some traditional gender roles in some families. We will explain. Mary Snow standing by.

Also, an update on that controversy over a newspaper cartoon that some say likened President Obama to a chimpanzee. "The New York Post" sort of apologizes, taking a swipe at its critics in the process.

And news that Iran may be closer than anyone thought to a nuclear weapon. What should President Obama do about it?

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


BLITZER: The thousands of Americans who have lost their jobs in the current recession know how painful it can be just to adjust to life without a paycheck. It can be even tougher when your marriage and your home life are literally turned upside-down.

Let's go to New York. CNN's Mary Snow is watching this story for us -- Mary.

MARY SNOW, CNN CORRESPONDENT: Wolf, an economist at the Center For American Progress has crunched the numbers. Since the recession began in December of 2007, men have lost 80 percent of the jobs that have been cut, meaning the dynamics are changing for millions of American families.




SHELTON: We will see you.


SNOW (voice-over): The economic crisis has shifted the ground for Susan and Michael Shelton.

SHELTON: My role is now, in addition to looking for a job, I'm a -- I'm a house dad. My wife is now -- instead of being the house mom, she's now the -- the breadwinner.

I guess we should go ahead and feed the dogs.

SNOW: Michael Shelton lost his job as a sales manager in January.

UNIDENTIFIED FEMALE: How was your day?

SCHWAB SHELTON: It was good.

SNOW: Susan, who used to work part-time, now works two jobs.

SCHWAB SHELTON: I will be, you know, out of the house six to seven days every week. So, that is very different, and -- and getting home much later.

SNOW: Michael is now running their home in Los Olivos, California, taking care of their two children and dogs.

SHELTON: All the things that, to be perfectly honest, I used to take for granted is now, you know, my responsibility. So, easing into that is -- is proving challenging for me.

SNOW: Michael scours job postings, hoping to find work soon.

DR. ELIZABETH WILSON, PHYSICIAN: Look, that's it. We're almost there.

SNOW: But ask another family in the same situation, and Adam Ostrow can tell you, be prepared for the long haul.

ADAM OSTROW, UNEMPLOYED: It feels a little bit like I'm swimming very much upstream.

SNOW: Adam has been out of work for a year, an early casualty of the credit crunch in New York's financial industry. His primary job now is to take care of sons Isaac (ph) and William (ph).

And, Elizabeth, who is a physician, is the sole breadwinner, changing life as they knew it.

WILSON: I went in November once to pick up Isaac (ph) from school, and the teacher didn't know who I was.

SNOW: The family is now moving to Massachusetts, where Elizabeth could get a new job, and it will be more affordable to live.

What has happened to the Ostrow and Shelton family, says one economist, is likely to be happening to millions more.

HEATHER BOUSHEY, SENIOR ECONOMIST, CENTER FOR AMERICAN PROGRESS: You have seen more and more men lose their jobs. And you have seen some women lose their jobs, but not as many as men. And you have also seen that, once those men get out of work, they have had a very difficult time getting back into the -- the labor market.

SNOW: One reason men are harder-hit, male-dominated industries, like construction and manufacturing, have had big job losses because of the collapse in the housing bubble.


SNOW: And economists point out that, with more families depending on a woman's salary, they're also living on less money, since women on average lag behind men when it comes to pay -- Wolf.

BLITZER: Mary, thank you.

President Obama insists he won't let $787 billion in stimulus money go to waste.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We cannot tolerate business as usual, not in Washington, not in our state capitals, not in America's cities and towns.


BLITZER: Stand by to hear the president in his own words issue a warning to America's mayors.

Protesters say they wanted an apology for a cartoon they see as racist, and they say they still don't have that apology -- what "The New York Post" did today, what they said today. Stand by.

And Bill Clinton wants President Obama to stop talking economic doom and gloom. But putting on a happy face could also be risky.

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


BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now: the closing bell held in New Orleans today, still another dive for the Dow, amid growing concerns about banks. It fell 100 points today, to 7366.

And investors in the largest Ponzi scheme ever -- ever learning today that Bernard Madoff didn't invest any of the money they gave him. As of now, the court-appointed trustee says that nearly $1 billion of some of the $49 billion has been recovered. Victims could each get back as much as $500,000 -- all of this coming up, plus the best political team on television.

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

President Obama tells America's mayors he knows their cities are hurting and that help from the stimulus package can't come soon enough.

But he's also warning them that he and the American people won't stand for any wasteful spending.

Listen to President Obama's remarks earlier today over at the White House.


OBAMA: We're remaking our cities with the largest new investment in our nation's infrastructure since Eisenhower built an Interstate Highway System in the 1950s. Ray LaHood is going to be busy, because we're putting 400,000 men and women to work rebuilding our crumbling roads and our bridges, repairing our faulty dams and levees, replacing our aging water and sewer pipes, and rolling out broadband lines to nearly every community in America.

We are going to unleash...


OBAMA: We're going to unleash the potential of all our regions by connecting them with world-class transit systems and high-speed rail, making our metropolitan areas more livable and sustainable in the process.

Because we know education is the single best bet we can make to change the odds of our children and our cities, we are making the largest investment in education in our nation's history. It will prevent harmful education cuts and save jobs of tens of thousands of teachers -- 14,000 just in New York City. And it will make a historic investment in early childhood education and upgrade classrooms and libraries and labs across America, so that millions of our children are prepared to compete in the 21st century.

Because we know that spiraling health care costs are crushing families and businesses alike and straining budgets across government, we're taking the most meaningful steps in years to modernize our health care system. We're going to computerize America's medical records, while maintaining rigorous privacy standards, saving billions of dollars and countless lives. We'll focus on prevention and keeping millions of Americans from having to set into the doctor's office in the first place. Taken together with the earlier enactment this month of long delayed laws to extend health care to millions of more children of working families, we've done more in 30 days to advance the cause of health care reform than this country has done in a decade.


OBAMA: And because we know we can't power America's future on energy that's controlled by foreign dictators, we're making an investment that, within three years, will double the renewable energy output it's taken us 35 years to reach.


OBAMA: We'll provide tax credits and loan guarantees to companies that create this energy, allowing them to expand rather than lay people off. We'll fund the Energy Efficiency and Conservation Block Grant you conceived, saving our cities and our consumers money.


OBAMA: We'll build a bigger, better, smarter electricity grid that delivers clean energy from communities that produce it to the cities that need it.

So these are the steps we're taking to help you turn this crisis into opportunity and bring our cities into the future.

Now, Washington can't solve all the problems facing our cities. And I know you don't expect us to. So I want to be clear about this -- we cannot tolerate business as usual -- not in Washington, not in our state capitals, not in America's cities and towns. We will use the new tools that the Recovery Act gives us to watch the taxpayers' money with more rigor and transparency than ever. If a...


OBAMA: If a federal agency proposes a project that will waste that money, I will not hesitate to call them out on it and put a stop to it. I want everybody here to be on notice that if a local government does the same, I will call them out on it and use the full power of my office and our administration to stop it.

We have asked for the unprecedented trust of the American people to deal boldly with the greatest economic crisis we've seen in decades and the privilege of investing unprecedented amounts of their hard- earned money to address this crisis. And with that comes unprecedented obligations to spend that money wisely -- free from politics and free from personal agendas. On this, I will not compromise or tolerate any shortcuts.

The American people are looking to us -- each of you, as well as myself and Joe and others in our administration -- for leadership. And it's up to us to reward their faith.

(END VIDEO CLIP) BLITZER: The president speaking earlier.

Meanwhile, a terror detainee who alleges he was tortured under the U.S. rendition program will be transferred to Britain. It's a controversial development. And some say it raises all sorts of concerns.

We asked Brian Todd to take a look at this story.

What's going on -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, this is a case that is a microcosm of America's dilemma with Guantanamo. The British government has announced that a detainee who has been there for more than four years, a British resident named Binyam Mohamed, is being released into their custody. I just spoke with his attorney, U.S. Air Force Yvonne Bradley, who says Mohamed should be in Britain within a few days.

Now, the British government had to medically clear him for travel because he's been on a hunger strike recently at Guantanamo. And his attorney says after he was picked up in Pakistan in 2002, he disappeared for about 18 or 19 months. He says he was flown to Morocco under the so-called rendition program undertaken by U.S. intelligence. She says he was brutally tortured there, forced to confess to things that she says he did not do.

U.S. officials have consistently denied torturing Mohamed or any other detainee. U.S. officials accused him of plotting to blow up an apartment, plotting to attack subway trains, plotting to use cyanide gas and planning to explode a dirty bomb. His attorneys have always denied that. And last year, the allegations were withdrawn in a U.S. federal court proceeding -- wolf.

BLITZER: So what happens to him once he's back in Britain?

TODD: Well, his attorney says he wants to get British citizenship. The British say they're going to review his case. They're not going to commit to keeping him there permanently. They are going to -- he is going to be released to them. It's not clear yet what is going to happen. Likely, there are indications that he is going to be monitored for a while in Britain, but he will not be rearrested. He's going to be a free man, but may be under some surveillance.

BLITZER: We'll watch and see what happens.

All right. Brian, thank you.

President Obama also taking the same position as the Bush administration when it comes to U.S. detainees in Afghanistan. In a two sentence court filing, the Justice Department says it stands by its previous argument that detainees at the Bagram Air Field cannot challenge their detention in U.S. courts.

Candidate Obama said he would do everything possible to stop Iran from getting nuclear weapons. (BEGIN VIDEO CLIP)

OBAMA: I have said I will do everything in my power to prevent Iran from obtaining nuclear weapons. I think it would be a game changer. It would not be acceptable.


BLITZER: But now comes word Tehran is actually closer to a nuclear weapon than anyone thought.

What should the president do now?

Plus, Bill Clinton's advice to the new president -- stop all that talk of doom and gloom. The best political team on television is here to discuss.

Stay with us.



BLITZER: Welcome back.

Let's bring in our senior political analyst, Gloria Borger; our CNN political contributor, Steve Hayes of "The Weekly Standard;" and our CNN political analyst, Roland Martin. They're all part of the best political team on television.

All right, the international -- the major international watchdog agency says Iran apparently is closer to a nuclear weapon than previously thought.

This is what the president told me back on October 31st, just before he won the election.

Listen to this.


OBAMA: I've said I will do everything in my power to prevent Iran from obtaining nuclear weapons. I think it would be a game changer. It would not be acceptable. It would be a threat to our strongest ally in the region, Israel. But it would also potentially trigger a nuclear arms race in the region.

And we have to both apply much tougher diplomacy, but -- and sanctions, potentially, if they do not move in a better direction. We have to give them some inducements to walk away from their nuclear program. And we should never take a military option off the table.


BLITZER: All right. That was a pretty strong statement from then candidate, now President Barack Obama. GLORIA BORGER, SENIOR POLITICAL ANALYST: Yes. Well, President Obama has been practicing outreach. And in lots of different ways, they've been re-buffed by Iran. So, obviously, if they have the capacity now to make a nuclear weapon, this is going to be the first real test. And, you know, it's also complicated by the fact that you're probably going to have a very conservative, hard-line government in Israel right now. And, you know, that makes it even tougher for the administration to say we're practicing outreach along with the rest of the international community.

BLITZER: We should never take a military option off the table -- now, they always say that. But she's referring to the fact that Benjamin Netanyahu has now been charged with trying to put the next Israeli government together.

STEPHEN HAYES, SENIOR WRITER "THE WEEKLY STANDARD": It's clearly going to be an important foreign test, working with the Netanyahu government, however the coalition is formed, trying -- which Netanyahu said -- I believe it was yesterday -- that Iran is the greatest threat that faces the existence of Israel. So you have these two things sort of at odds.

Domestically, he could also face a problem, because I think the U.S. military -- or strong portions of the U.S. military and the intelligence communities see Iran as it is, which is a grave threat -- and rather than as they want it to be, which I think is what the (INAUDIBLE).

BLITZER: And as worried as the Israelis are, Roland, there's also no doubt that the Saudis, the United Arab Emirates, the other friendly countries in the Persian Gulf, they're pretty worried about that possibility, as well.

ROLAND S. MARTIN, CNN POLITICAL ANALYST: This is why the war in Iraq was a horrible decision, because you further empowered Iran by taking out Saddam Hussein. This is also going to show why it's important for us to now reach out to Moammar Gadhafi, reaching out to Jordan, Syria, all the other countries, so they can begin to apply pressure to Iran to say, look, if you go down this path, you don't endanger just yourself, you endanger all of these countries, as well.

And so this is going to probably be the biggest test of diplomacy for President Obama, as well as his foreign policy team.

BLITZER: And we're just hearing -- getting word from our State Department producer, Elise Labott, that a top State Department official in the Middle East has now been authorized to go ahead and reach out and reestablish a direct dialog with Syria. So that's a new development. MARTIN: Don't be surprised if (INAUDIBLE) two...

BLITZER: That's just coming in right now.

MARTIN: They're not separate. I mean the bottom line is, you have to be able to talk to those partners, because they have to use their influence with Iran, as well. HAYES: But we should -- we should have our eyes open about what we're doing here. I mean these are two states that are classified as state sponsors of terror. We have Iran, that we've know has been harboring senior Al Qaeda leadership, was designated the week before President Obama took office by the Treasury administration for its work with Al Qaeda. We should know, you can -- we can debate whether...

BORGER: Well...

HAYES: ...that's good or bad, but we should know what they're doing. And they're harboring senior Al Qaeda terrorists.

BORGER: And we should also work with the rest of the international community...

MARTIN: Absolutely.

BORGER: ...if we're reaching out to Syria, if we're reaching out to Iran, if we're rebuffed...

BLITZER: All right...

BORGER: Work with others.

BLITZER: Let me make a turn to the former president, Bill Clinton. He was on "Good Morning America" this morning.

And he said this.


BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: The last thing that you want to do when you take office in a time like this is give people a lot of inane happy talk and false promises about how quickly we can get out of this. Now, the only thing I'd like him to do, I just would like him to end by saying that he is hopeful and completely convinced we're going to come through this.


BLITZER: All right. He was speaking about some advice he was offering the president of the United States -- don't be so doom and gloom. Now, he gave the president, in fairness, very high marks for almost everything, except that point -- Steve.

HAYES: Yes, I think he's right, actually. I think happy talk at this point would be counterproductive. But I also think he's right that you can't continue to talk down the economy. People out there -- consumers -- U.S. citizens are getting bad news every single day by watching TV, by reading their newspapers. For the president to sort of bring this up in every speech and dwell on it in the way that I think he's been doing, I think he risks talking down the economy.

MARTIN: If General Motors says we're going to lay off 47,000 people, if folks are broke, they're not having health care, California has a $42 billion budget gap, dwelling?

No. It's called reality.

BORGER: Well...

MARTIN: And so I'm glad to have a president who says this is the reality.

BORGER: Well, he also has to convince the American public that this is now the time to act. And he's had a lot of large legislative issues before the Congress.

HAYES: Well, sure...

BORGER: And he's going to have more.

HAYES: Nobody's saying that he shouldn't talk about it. I'm just saying that there's a risk, as President Clinton said, there's a risk in spending too much time dwelling on the negative when they're getting it from everywhere else.

MARTIN: How do you dwell on the negotiate when folks are broke?


MARTIN: It's called reality.

BORGER: Can I just say one thing?


BORGER: I just love the idea that former President Clinton is out there making news while his wife, the secretary of State, is out in Asia. I mean he's been in the news every single day.

BLITZER: Yes. Guys, hold your thoughts.


BLITZER: Hold your thoughts because we've got to run.

BORGER: Just a thought. Just a thought.

BLITZER: We'll leave it on Gloria's...


MARTIN: An exclamation point.

BLITZER: ...Gloria's small point.

"The New York Post" is issuing something of an apology for a controversial cartoon it ran that some people find racially insulting directly to President Obama. But others say it's a non-apology.

Our national correspondent, Susan Candiotti, is joining us now with the latest -- Susan?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Wolf, I think it's fair to say this protest led by Reverend Al Sharpton and joined by movie director Spike Lee is only partially accepting what it's calling a partial apology from "The New York Post."


CANDIOTTI (voice-over)

Critics of "The New York Post" say the cartoon evoked historically racist images -- appearing to compare President Obama to a raging chimpanzee who had been shot by police.

Today, the paper apologized -- well, sort of.

In a statement, "The Post" said the cartoon was meant to mock what it called

"an ineptly written stimulus bill" and

"To those who were offended by the image, we apologize."

But it also said some of its critics

"see the incident as an opportunity for payback," adding

"To them, no apology is due."

Critics said that's not enough.


Clearly, they don't know the difference between offensive art and satire. And the apology is good, but now let's get to policy.


As an artist, you have a right to say what you want. But when the chips fall, you've got to stand up and own up to what you did.

CANDIOTTI (on camera)

So is this really a non-apology?


It was very sullen and insolent and sort of blaming everyone else rather than taking responsibility -- very much like a 13-year-old.

CANDIOTTI (voice-over)

Typically unflappable New Yorkers appeared torn.

UNIDENTIFIED MALE It's really kind of a non-apology. And I think that having published it was absolutely inexcusable and a colossal exercise of poor judgment.


It's sufficient. I mean, I think it apologizes to anybody that was offended, and yet I think it upholds, in a way, their right to publish freedom of -- freedom of the press.



And the coalition plans to continue this protest nationwide -- wolf, back to you.

BLITZER: Thank you, Susan, for that.

It's where the funny stuff is serious business.



What is "The Onion?"

JOE RANDAZZO, EDITOR, "THE ONION": Well, "The Onion" is -- I mean it's America's finest news source. That's our -- that's our slogan and that's what we believe.


BLITZER: We look in on "The Onion" and find out that they've been looking in on us.

And guess which '70s group is coming to the White House?




BLITZER: Earth, Wind & Fire on our Political Ticker. The R&B group from the '70s -- it was hot in the '70s, as all of us remember, likely will be on fire Sunday night.

That's when they're performing, guess where?

At the White House. President Obama has invited the group to perform during his dinner with the nation's governors -- Jack Cafferty, Haley Barbour is going to go crazy when he sees these guys perform.

What do you think? CAFFERTY: This is great stuff. You've got Earth Wind & Fire going to rock the White House. You've got Michelle Obama out visiting schools and government agencies, talking to people, saying hello, I'm new in town, nice to meet you. How refreshing.

That's not the tone I recall from the previous administration.

The question this hour, what are the signs you're suffering from bailout fatigue?

Anthony in New Jersey: "That's a great question. I'll let you know right after I drink a shot, have a Xanax and tell my kids instead of going to Disney, they're going to watch it."

Bruce writes: "If you give your son his allowance, ask him how much of it's going to go for infrastructure. Or if you think Alan Greenspan made an interesting observation, you just might be suffering from bailout fatigue."

Kelvin writes: "Fatigue? What fatigue? Are you kidding? I have PMS every day and I'm not even a woman. Do they have medicine for that?"

Bill says: "I started watching more CNN and tend to agree with Cafferty."

J.D. In New Hampshire: "Bailout fatigue is when I make a check out directly to a rich CEO, bypass the Internal Revenue Service, all the time wondering how I'm going to buy my groceries."

John says: "When you start watching Fox News and believing what they say."

Adrian: "When you find yourself wondering, whatever happened to Paris Hilton?"

Kevin: "I went to the store. They were out of Jack Daniels."

Marilyn: "For sheer escapism, you actually watch "The Real Housewives of Orange County" in reruns."

Chris in Savannah, Georgia: "Whenever I hear the word crisis or catastrophe, I grab my wallet."

Mitchell in Arkansas: "When you're standing in line with 20 other formerly wealthy Republicans at the hardware store asking, 'How much for some of your rope?'"

And John writes: "You're probably suffering from bailout fatigue if you sit bolt upright in your bed tonight and say, 'I'm Wolf Blitzer and you're in THE SITUATION ROOM, happening now, North Dakota bails out California and New York buys Florida."

If you didn't see your e-mail here, go to my blog at There are hundreds of them posted and we got a lot of very clever, funny stuff. BLITZER: OK.

CAFFERTY: I wish I had time to read more.

BLITZER: I'm going to go read some of them

Jack, thanks.

CAFFERTY: Yes, they're good.

BLITZER: Have a great weekend.

CAFFERTY: You, too.

BLITZER: See you Monday.

The satirical newspaper "The Onion" now has a television broadcast and guess who they're modeling some of it after?


WILL GRAHAM, CNN EXECUTIVE PRODUCER: Well, we really do look at you guys as an inspiration for our graphics, our kind of swooshy sound effects, our over the top bombastic music.


BLITZER: We're going to take you behind-the-scenes over at "The Onion".


BLITZER: The satirical newspaper "The Onion" very funny. Now it's getting a television program, as well.

Here's the question -- where do they get their inspiration?

Kate Bolduan has been digging into this story.

What are you finding out -- Kate?

KATE BOLDUAN, CNN CORRESPONDENT: This is a very interesting story, Wolf.

They come up with hundreds of original headlines per week and whittle it down to just about a dozen that they see fit to print. Here are some of them. "Headlights Going Around Senate."

Now, I have to tell you, we sat in on one of "The Onion's" editorial meetings and it seems no one and nothing is safe from "The Onion's" reach.


BOLDUAN (voice-over): "U.N. Acquires Nuclear Weapon," "Cheney Dunk Tank Raises $800 Billion for Nation" -- it's all in the headlines at "The Onion".

RANDAZZO: "Camp David Counselor Accused of Molesting Several World Leaders." I know it breaks like a bunch of different kind of rules.

BOLDUAN: But don't be fooled -- these people take funny very seriously.

RANDAZZO: I'm just not sure how funny it's going to be.

BOLDUAN: Editor Joe Randazzo is one of the brains behind the dry, sometimes outrageous humor.

RANDAZZO: "The Raccoons in the Rock Band?"

I don't know.



BOLDUAN: This publication is all satire and wildly popular.

(on camera): What is oniony?

What is "The Onion?"

RANDAZZO: Well, "The Onion" is -- I mean it's America's finest news source. That's our -- that's our slogan and that's what we believe. Everything that we do is the final word on everything that is.

BOLDUAN (voice-over): Founded 20 years ago by students from the University of Wisconsin, "The Onion" is now based in New York, distributed weekly in 11 cities, reaching an estimated 2.5 million readers. It's also online -- expanding to include The Onion News Network in 2007.


UNIDENTIFIED FEMALE: We now continue our coverage of the terrible aftermath of Barack Obama's victory, which has left Obama supporters across the nation with nothing to talk about.


BOLDUAN: Be honest. Is it based off THE SITUATION ROOM?

GRAHAM: Well, we really do look at you guys as an inspiration for our graphics, our kind of swooshy sound effects, our over the top bombastic music.

CAROL KOLB, CNN HEAD WRITER: Just the intenseness that we bring to every single news story.

BOLDUAN: Clearly, the joke is not only on the news, but on the news media, as well.

GRAHAM: Because the news itself is sort of so ridiculous, no offense.

BOLDUAN (on camera): None taken.

GRAHAM: And over the top. We're always, you know, looking at ideas and saying, you know, that's funny, but it's almost too real. It's something you might actually see.

KOLB: Yes. It takes a lot to top you guys.

BOLDUAN (voice-over): So what's the secret?

Why do these humble writers think their satirical style has taken on?

RANDAZZO: There's a kind of like cutting through the bull crap to satire that I think people have come to really respect and want more of.

BOLDUAN: I take offense to those comments.

RANDAZZO: You should. You're one of the -- one of the people ruining -- ruining the world so.


BOLDUAN: Ouch. "The Onion" says their political and election coverage has been especially popular over the past year. So, Wolf, I asked them, do they have any concern that with President Bush out of office, that maybe President Obama won't be so, shall we say, helpful?

They say, just wait. Give them time. They're just getting warmed up.

BLITZER: We'll read and we'll watch and we'll laugh.

BOLDUAN: Exactly.

BLITZER: Thanks very much, Kate, for that.

Don't forget, tomorrow, here in THE SITUATION ROOM, 6:00 p.m. Eastern, our Saturday edition -- a full hour of coverage.

I'm Wolf Blitzer in THE SITUATION ROOM.

Let's go to "LOU DOBBS TONIGHT."