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The Situation Room

Newt Gingrich Wells Up In Tears; Santorum Gets Key Endorsements; Ron Paul's Foreign Policy Positions Under Scrutiny; Iran Missile Test To Raise Tensions; Large Scale Protests Across Syria; Mitt Romney Ahead in Polls in Iowa; Controversial Memo Rocks Pakistan After Bin Laden; 21st Century Debtors' Prison

Aired December 30, 2011 - 17:00   ET

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

WOLF BLITZER, HOST, CNN'S THE SITUATION ROOM: Happening now, Newt Gingrich wells up in tears, just days before the very first votes are cast in the Republican battle for the White House. Just ahead, could his softer side help turn around plummeting poll numbers with the final push for Iowa not underway?

Plus, Ron Paul decides to skip town amid a stunning last minute surge to front-runner status. Why his decision to ring in the New Year at home may not ring true with some Iowa voters.

And, a chilling reality for more and more Americans struggling to pay their debts. Your unpaid bills could land you in jail.

We want to welcome our viewers in the United States and around the world. Breaking news and political headlines straight ahead. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

We're at the new CNN election headquarters gearing up for Iowa. Game time in the Republican race to take back the White House. And with just four days to go, emotions are running high, literally.

Voters saw a side of Newt Gingrich they rarely see when he got choked up a number of times talking about his late mother. Let's bring in our political reporter Joe Johns. He has the very latest. Joe?

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN POLITICAL CORRESPONDENT (voice-over): It's not exactly what you would expect from one of the toughest talking guys in American politics, but there he was. Former house speaker Newt Gingrich, on the stage at Java Joe's in Des Moines, choked up and not able to hold back the tears after a question about his mother from Gingrich's long time buddy and pollster, Frank Lunts.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: See, you got me emotional. I'm dealing with, you know, the real problems of real people in my family. And so, it is not a theory. It's in fact, you know, my mother.

JOHNS: It was by far the biggest and most memorable moment yet in the campaign's struggle to try to humanize Gingrich, who can rubbed some voters the wrong way especially women and evangelical voters. By the way, he was appearing before an audience of mothers, the moderator said, and even afterward at a book signing, he still appeared choked up.

UNIDENTIFIED MALE: Did I catch you of guard?

GINGRICH: About my mother? Yes. But it does in the Basilica on Christmas eve, something about Christmas carols that just triggers by mother.

JOHNS: People in the Gingrich inner circle will tell you these are not crocodile tears. His childhood had rough patches. His late mother was treated for bipolar disorder. When asked how she survived, Newt Gingrich's boyhood year, she replied, I almost didn't.

His mother was also known for speaking her mind, as she did in this interview talking about Hillary Clinton.

KATHLEEN GINGRICH, NEWT GINGRICH'S MOTHER: She does it. It's the only thing he said about her.

JOHNS: Now, Newt Gingrich's unguarded moment created by his mother's memory during Iowa's closing arguments may be remembered for how it affected the speaker's chances in the Iowa caucuses.

Crying hasn't always helped a candidate's chances and it hasn't always hurt. When Geraldine Ferraro lost her composure, she got tagged as a weak running mate for Walter Mondale. When Edmund Muskie tear-up it was the end of his run president.

But when Hillary Rodham Clinton started crying four years ago, before the New Hampshire primary, it was seen as softening her image and giving her a big boost.

HILLARY CLINTON (R), SECRETARY OF STATE: This is very personal for me. It's not just political, it's not just public. I see what's happening. We have to reverse it.

CHERI JACOBUS, REPUBLICAN STRATEGIST, COLUMNIST: In a rough and tumble presidential politics, candidate sometimes are not able to really show who they really are on the inside. Sometimes, that makes them seem weak. When they show e emotion, particularly if it's rare, it does catch voters by surprise and it humanizes them.

(END VIDEO TAPE)

JOHNS: He's been said to cry in private sometimes, but I covered Newt Gingrich for years in congress, and I can honestly tell you I've never seen him cry publicly until today at Java Joe's in Des Moines -- Wolf, back to you.

BLITZER: Yes. Joe Johns reporting for us from Iowa in contrast the current speaker, John B Boehner, we've seen him cry on several occasions.

President Obama isn't planning to just let Republicans have their day on Tuesday. An Obama campaign official now tells CNN, the president will speak to his Iowa supporters in a web chat as the GOP caucus results come in. In 2008, then candidate Obama clinched a surprising eight-point win in the Iowa caucuses, which put him on the road to winning his party's nomination.

Texas congressman Ron Paul is surging through Iowa right now, hoping to fuel his dramatic campaign momentum, but he may be rolling the dice with a surprising new front-runner status.

Paul is about to take off for his home state of Texas to spend the New Year's holiday weekend with his wife, while many of his rivals will stay in Iowa, hoping to seize on any last minute openings he may giving them - they may be getting in Iowa.

Monday though, Ron Paul will be back in Iowa with some new fire power, his son, the Kentucky tea party favorite, the senator from Kentucky, Rand Paul. Ron Paul may be at the front of the Republican presidential pack right now, but there's growing concern among some conservatives when it comes to his controversial foreign policy initiatives.

Our senior congressional correspondent, Dana Bash, is joining us with details. Dana, the latest example of really tough editorial in a major New Hampshire newspaper.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right, Wolf. His editorial was written by the publisher of the conservative New Hampshire union leader and it is simply scathing. Let me give you an example of what he said.

He's talking about the fact Paul wants to try terror suspects in civilian courts. Quote, "this is nothing short of nuts. What is needed to competently fight a war, and al Qaeda is needed a war with us, is the ability to gather information. Telling the enemy that it is right to remain silent is absurd."

Now Wolf, you've interviewed several of Ron Paul's rivals this week, who have ripped him for his views on this and other things when comes to foreign policy, but it's not just his rivals. Many in the GOP establishment call him reckless for wanting to bring troops home from overseas and when it comes to hot spots like Iran, they cringe when they hear him say things like this yesterday in Iowa.

(BEGIN VIDEO CLIP)

RON PAUL (R), PRESIDENTIAL CANDIDATE: I don't like these sanctions. You're just looking for trouble if you put sanctions on a country. What if they put a blockade on us in the Gulf of Mexico and said you can't even import certain goods and services, we'd consider that an act of war.

(END VIDEO CLIP)

BASH: Now, Paul of course says also suggested Iran doesn't represent a threat to Israel, even with potential nuclear weapons still. Wolf, I talked to Iowa's GOP chairman, who of course is neutral in these caucuses. He told me he's hearing anecdotally that some Democrats are going to cross over and caucus for Ron Paul because of his isolation's views -- Wolf.

BLITZER: Yes. He says he's not interventionist. He's not an isolationist. I've interviewed Ron Paul on many occasions. He's trying to make that point.

Dana, you know, there was something that happened about a year, a year and a half ago. Ron Paul came into THE SITUATION ROOM with a very liberal democratic congressman, Barney Frank. And they were teaming up at that time to cut a trillion dollars in defense spending over the next ten years. Ron Paul and Barney Frank. Let me play to you some of the comments that they made in THE SITUATION ROOM.

(BEGIN VIDEO CLIP)

PAUL: The two of us have talked about this over the years, but actually, Barney was motivated to come to me and ask me about this, setting up a commission to do this study and set out a program, and it's not going to happen tomorrow. It's a ten-year program. He asked me if I'd be interested in doing a little bit more work. And I obviously agreed to do that. I think it's a great idea because that's what I've been arguing for a long time and I'm always looking for an opportunity to bring progressive Democrats together with some conservative libertarian types because there are places where we can agree and I think this is a very important place to start.

REP. BARNEY FRANK (D), MASSACHUSETTS: Was a degree of interventionism in the American foreign policy, the notion of we must be the superpower. And we obtained to be in everywhere. Then Ron Paul and both think, it makes no sense. We are committed to defending America's legitimate strategic interests, but we have got a military establishment that has been -- it's not their fault. It's the fault of political leadership, projected into a worldwide situation far beyond our legitimate military needs.

(END VIDEO CLIP)

BLITZER: I wonder how that's going to play. Barney Frank teaming up with Ron Paul. Conservative Republicans, hard liners on defense. They were trying to pass legislation that would cut a trillion dollars in Pentagon spending over the next decade.

Dana, do have any reaction from that kind of stuff?

BASH: Well, for anybody else, that would be a big problem, but for Ron problem, I don't think so much. Because this is a big thing that he talks about on the campaign trail right now, saving a trillion dollars by bringing back troops back from overseas. It is a central part of his fetch on the stop. He argues there's no reason in his words to subsidize foreign country's defense systems and allow them to use their extra money to provide social services to their citizens that Americans don't have.

People like John Bolton, the President Bush's former ambassador to the U.N., calls Paul's foreign policy bad example worse than President Obama's. And Michele Bachmann, of course right here on this program with you, Wolf, yesterday, called Ron Paul ice foreign policy dangerous.

But I can tell you that Paul's campaign chairman insists that their internal polling finds that more that 70 percent of republican voters in Iowa and New Hampshire are more likely to support someone like him because he wants to bring troops home and in his words, not act like the world's policeman.

BLITZER: Dana Bash, thanks very, very much.

Winning this Tuesday's caucus, some believe could come down to one critical voting black, Christian evangelical. According to our latest CNNtime opinion research corporation poll, Born Agains are helping Rick Santorum surge in Iowa, backing him with 22 percent support over his rivals. He's a candidate closely identifies with their core conservative values.

Let's bring in Lisa Sylvester. She's got more on this part of the story -- Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Hi Wolf.

Well Rick Santorum, he picked up the endorsements of two key evangelical leaders in recent days. The head of the influential group family leader and the Iowa family policy center and his poll numbers are now on the rise and some would call it the evangelical effect.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Evangelical Christians make up 26 percent of the nation's population.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: Put them on your outside of your coat. So when you go to the grocery store, to church, people can see who you're for and you can engage in the very thing that caucus goers do right now, which is talking about your candidates.

SYLVESTER: But in the Iowa caucuses, evangelicals wield much more clout. Bob Vander Plaats is the president of one of the most important Christian group in the state.

BOB VANDER PLAATS, PRESIDENT, THE FAMILY LEADER: Well, the reason I think there's such a power player in Iowa is they're very concerned about the issues and since Iowa goes first in the country in selecting the next president of the United States, what they want to be able to identify is with the core values, the characters, the integrity of the candidate.

SYLVESTER: Those conservative values, opposing abortion and gay marriage and protecting the family and freedom of religious expression. In 1987, tele evangelist Pat Robertson came out of nowhere to place second in Iowa. Evangelicals have since been a mainstay in Iowa politics.

PAT ROBERTSON, FORMER PRESIDENTIAL CANDIDATE: By God's grace, little children can once again pray in the public schools of America.

SYLVESTER: This year's slate of GOP candidates are vying for the Christian vote. Newt Gingrich now on his third marriage signed a personal fidelity pledge. Michele Bachmann and Rick Santorum heavily courted evangelical leaders and Rick Perry even preached from the pulpit at the point of Grace church in Des Moines.

RICK PERRY (R), PRESIDENTIAL CANDIDATE: I stand before you today as a flawed man. I'm a sinner who has been saved by the Grace of God.

SYLVESTER: Why do evangelicals have so much influence in Iowa? Because they represent an overwhelming number of caucus goers. In 2008, 119,000 Iowans participated in the GOP caucuses. A full 60 percent of them identified as evangelical Christians. They helped propel Mike Huckabee, former Arkansas governor and also a former Baptist preacher, to win in the hawk eye state.

MIKE HUCHABEE, FORMER ARKANSAS' GOVERNOR: I love Iowa a whole lot.

SYLVESTER: Drake University political professor Dennis Goldford says for years, evangelicals sat on the political sideline, but issues like prayer in schools led to a new activism.

DENNIS GOLDFORD, PROFESSOR, DRAKE UNIVERSITY: Was the belief by the late 1970s that much of modern society in particularly with regard to the federal government and the federal courts were assaulting or challenging the traditional ways of life that conservative evangelicals had enjoyed.

(END VIDEOTAPE)

SYLVESTER: This year, evangelicals have a pick of several candidates. Santorum, Perry, Bachmann, Gingrich, even Ron Paul, but there is some concern among evangelicals that could split their vote and it could throw a victory to Mitt Romney.

Now, Romney is of course a Mormon. Many evangelicals in Iowa of oppose him. They said it's not because of his religion though. They insist it's because of his past liberal stance on issues like abortion -- Wolf.

BLITZER: Lisa, good report. Thanks very much.

Just note to our viewers, we're counting down to the Iowa caucuses with some special CNN programming.

First, please be sure to join me Saturday night, 6:00 p.m. Eastern for a special edition of THE SITUATION ROOM. You can hear my interviews with all seven republican presidential candidates. Then at 8:00 p.m. Eastern Sunday night, our special countdown to Iowa, final 48 hours and it all leads to the first votes cast in the 2012 presidential election, "The Iowa caucuses."

We'll have special coverage beginning Tuesday night, 7:00 p.m. Eastern, only here on CNN. Republican presidential front-runner Mitt Romney calls in the big guns hoping to seal the deal in Iowa, just ahead. Why the New Jersey governor, Chris Christie, is now threatening to quote "go Jersey style" and Iran flexing its military muscle.

Up next, why the United States is gearing up for a potentially tense weekend off the Iranian coast?

(COMMERCIAL BREAK)

BLITZER: The tension between United States and Iran over the strategically vital Strait of Hormuz will be ratcheted up a notch this weekend. Iran is planning to test fire missiles in the area. This comes after its threat to shut down the narrow Strait through which much of the world's oil is shift. Our Pentagon correspondent, Barbara Starr, is joining us now with more. Lots at stake here, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Lots at stake, Wolf, and the U.S. military will be watching around the clock over this coming weekend. Let me start by showing everyone some video that the Iranian military has put on a state TV Web site saying this is a photo that their planes took of a U.S. aircraft carrier in the North Caribbean Sea during these naval exercises by Iran.

The only U.S. aircraft carrier out there right now is the John Stennis. Every reason to believe that's what this picture is showing. This weekend, as you say, Iran will conduct missile exercises on its southern coast near the North Arabian Sea. We know very little about exactly what Iran is up to, but we do know something.

So, let's walk through what the U.S military does know. First and foremost, this exercise, these naval exercises are being conducted by the regular Iran navy, a much more stable organization than the revolutionary guard corps navy which is much more militant and often engages in very destabilizing activities.

The Iran navy did post a notice to airman that it would be conducting these missile exercises. So, both ships and aircraft know to stay out of the way. But the concern remains very clear. The concern is miscalculation, miscalculation by the Iranian navy, by other navies operating or aircraft in these waters. It's the tight space.

Things can go wrong. So, there will be a lot of watching to see exactly what Iran is up to and whether they stay in their territorial waters for these missile firings over the weekend as they have promised -- Wolf.

BLITZER: We're watching closely together with you, Barbara. Thanks very much. So, why is the Strait of Hormuz so important to the United States? For starters of course, oil. Chad Myers is joining us now with more on this vital waterway. Chad, there's enormous amount at stake here.

CHAD MYERS, AMS METEOROLOGIST: Certainly and the distance between Oman, the tip right here, and the south coast of Iran, about 32 miles. Now, we're talking about the distance between, Wolf, for you, Niagara on the Lake and Toronto. We're talking about the width of Lake Ontario. That's all we have to move all of these ships through this Strait. So, as we come through here, the line you see, the yellow line is the board between the UAE, Oman, and then up to Iran.

This is the disputed area because they're kind of close. We have islands so close. There is your 32-mile distance as the ships come in this way and go out this way. Now, right around this point, not such a big deal because I'll show you, go to the shipping lanes, they're in the Oman waters.

Shipping lanes here, six miles across, two miles going this way, two miles going out and a two-mile median so the ships don't bump into each other. But as we go a little bit farther up the gulf, then all of a sudden, this water down here is very shallow. Ships can't go through the waters here of the UAE or Oman. They come across and they're right in the Iranian waters.

So, as you see this, this is only eight miles right here from where the closest ship would be to the south coast of Iran, and that's the condition and that's the area there that is so dangerous for these ships when you're looking at only an eight-mile distance to land, and clearly, with this line, even with the disputed area, right in clearly Iranian waters. Now, it's a place where all ships should be able to go, but it's their water.

BLITZER: It's going to be a tense weekend, I suspect, because of these exercises. Chad, thanks very much.

MYERS: You're welcome.

BLITZER: So, could the Arab spring protest be creating new sanctuaries for al Qaeda? We're going to tell you one country where counterterrorism experts now fear a new fighting force could be training.

And no rest for the candidates in Iowa with only days until the state's caucuses. Republican presidential hopefuls are campaigning like there's no tomorrow. Stick around. You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Violence raging in Syria despite the presence of Arab league observers. Lisa Sylvester is monitoring that and some of the other top stories in the SITUATION ROOM right now. What's going on, Lisa?

SYLVESTER: Hi, Wolf. Well, opposition activists say at least 35 people have been killed today, but that's not stopping a major show of defiance in Syria. Activists used social media to urge tens of thousands of antigovernment protesters to fill public squares even if it meant crawling under sniper fire to get there. They're calling today's rallies the "Crawl to Freedom Square." And is Libya the next al Qaeda sanctuary? A source tells CNN that al Qaeda leader, Ayman al-Zawahiri has personally dispatched a trusted jihadist to build a fighting force in Libya. Zawahiri has reportedly assembled a force of 200 fighters near the Egyptian border. It said to be committed to al Qaeda's mission of attacking U.S. interest.

And officials aren't taking any chances with a volcano in Alaska. They have issued a heightened state of alert after a possible eruption. The U.S. Geological Survey said a drifting ash cloud appears to be the result of a lone explosion, but more eruptions could produce huge ash plumes. The volcano, almost 1,000 miles southwest of anchorage, is one of 130 known to exist in Alaska.

And President Obama broke away from his vacation in Hawaii to pay his respects at the U.S. S. Arizona memorial at Pearl Harbor. Accompanied by his wife, Michelle, the president laid a wreath inside the memorial.

He also scattered white, yellow, and purple flower petals in the water above the sunken ship. Every president since Franklin Roosevelt has visited the site commemorating more than 2,300 lives lost in the Japanese attack -- Wolf.

BLITZER: Nice gesture on his part. Thanks very, very much.

Much of President Obama's life is an open book, but we have some family photos that have never been seen. They're in a brand-new exhibit, and we're going live to Hawaii with that. Stand by.

And with Mitt Romney's first big test, the 2002 Winter Olympic games. How did he do? What does it say about the kind of president he might make? Stay with us.

(COMMERCIAL BREAK)

BLITZER: The Republican presidential frontrunner, Mitt Romney, pulls out the big guns in his final push for Iowa. The always colorful conservative New Jersey governor, Chris Christie, joined him on the campaign trail today with a serious warning for voters.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE, (R) NEW JERSEY: And so listen, I want to tell you something. I want to tell you something really clearly. I'm in a good mood this morning. I'm feeling happy and upbeat. I love being with Mitt and Ann, but let me tell you. You people disappoint me on Tuesday --

(LAUGHTER)

CHRISTIE: You don't do what you're supposed to do on Tuesday for Mitt Romney, I will be back, jersey style, people. I will be back.

(END VIDEO CLIP) BLITZER: Now, maybe not so serious, after all, Jersey style. Romney who is now topping another new Iowa poll is also making stops in New Hampshire today and tomorrow morning before returning to the state. What's going on on Romney's front? Let's go to Iowa right now for some more analysis.

Joining us are CNN political director, Mark Preston, and our CNN political editor, Paul Steinhauser. Paul, first to you. What accounts for Mitt Romney's surge in all of these polls? He's doing well.

PAUL STEINHAUSER, CNN POLITICAL EDITOR: Well, let's break down the poll that came out today, Wolf. You've been talking about it, NBC/Marist have likely caucus goers here in Iowa. Take a look at this question they ask. Who, of all these candidates out here, is not acceptable as the nominee?

Well, look who's topping that list there, Ron Paul, 41 percent. Newt Gingrich, not far behind. That may be one reason why we're seeing Newt Gingrich, his overall numbers, slipping here in Iowa. Look at the bottom there. Only one in five say Mitt Romney not acceptable, and that may be one of the reasons why he remains right at the top of the list here in Iowa. Go to the second poll as well, and this is interesting.

Look at this one, Wolf.

Likely Tea Party supporters. They break it down just by people who say they're supporters of the Tea Party movement, and there's no real clear front-runner here. Rick Santorum at 20 percent; Paul at 17; Romney, 17, Gingrich, 16; Perry, 15; Bachmann, 10.

The Tea Party voters here in the state, Wolf, who are pretty influential, they seem divided. That is one reason why it seems Mitt Romney is kind of opening up a lead here and starting to take charge, because the Tea Party cannot coalesce around one conservative candidate -- Wolf.

BLITZER: Yes. When I was there in Iowa this week, some of his own supporters there were saying that they are very, very positive. They think he could actually win Tuesday night based on what they're seeing on the ground.

Mark, you're there as well. Most of these candidates aren't taking the next four days until Tuesday night for granted, are they?

MARK PRESTON, CNN POLITICAL DIRECTOR: No, and they're not. And the reason being is, if you look at this NBC poll, which tracked with our own CNN poll just a few days ago, let's take a quick look at these numbers.

It shows that 46 percent of likely caucus-goers could change their mind. What does that mean? It means these candidates are on a campaign trial today. No fewer than 18 events between six of the candidates, Wolf, here in Iowa. You saw Mitt Romney leave the state today, head up to New Hampshire to do an event. Does another one tomorrow morning, then he comes back to Iowa.

But as you just showed, Chris Christie was here in Iowa with Mitt Romney today, a very powerful surrogate. And, in fact, Chris Christie, in just an hour or so, will be doing another event without Mitt Romney.

It all comes down to this one simple fact: it's all about a ground game, and that's what the candidates are trying to do right now -- Wolf.

BLITZER: Good points, indeed.

All right. Mark and Paul, they're on the scene for us in Iowa.

One of Mitt Romney's more impressive accomplishments involves his role in reviving the 2002 Salt Lake City Olympic games. The events was reeling from a corruption scandal and budget woes before Mitt Romney took the reins. His performance at the winter games served as an audition for public office.

CNN's Casey Wian has a closer look.

(BEGIN VIDEOTAPE)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The experience I've had in the private sector and at the Olympics is desperately needed by a nation that needs to understand how to get its economy going again.

CASEY WIAN, CNN CORRESPONDENT (voice-over): In 1999, Mitt Romney took over management of the 2002 Winter Olympics, leading its turnaround from a bribery scandal and financial crisis.

We spoke to Romney's critics and colleagues from the troubled days before the games.

FRASER BULLOCK, 2002 OLYMPICS EXECUTIVE: Not only did we have a $400 million budget deficit, but given the scandal, nobody wanted to be associated with the games anymore.

STEPHEN PACE, SALT LAKE ACTIVIST: What this brothel needed was a new piano player, and so that was when Mitt Romney got hired.

UNIDENTIFIED FEMALE: Any good manager could have done it.

WIAN: One of Romney's first steps, telling his board of directors no more fancy, catered lunches.

ROMNEY: We're going to be insisting on being tight with our money.

WIAN: Instead, he offered pizza at $1 a slice.

BULLOCK: It sent a message to the organization that we watch every penny. WIAN: Fraser Bullock worked for Romney at the investment firm Bain & Company and reluctantly followed him to the Olympics.

BULLOCK: We had so many issues going on to begin with because we were being investigated by the Justice Department, we had a deficit. The organizing committee was very discouraged with the scandal and everything. But then I remember the team coming together, led by Mitt.

WIAN: Romney recruited new sponsors and persuaded others to stay. He promised openness and fiscal discipline.

BULLOCK: Finding the must-haves versus the nice-to-haves in the budget, and being able to sort through that, cut the unnecessary things, is the thing that is in dire need, our country needs today, and Mitt is very good at that.

WIAN: Romney can also be good at disarming opponents such as Stephen Pace, a strident critic of Salt Lake City's Olympic effort.

PACE: I showed up at I think first meeting he had wearing this T- shirt that said, "Slalom & Gomorrah," and so he called me up on the phone and said he'd trade me an Olympic shirt for a "Slalom & Gomorrah" shirt, and I said, "Sure, Mitt."

WIAN (on camera): By the time the Salt Lake City games ended, Romney's organization had turned a $400 million shortfall into a $100 million surplus. Some of that money is still being used today to operate and maintain facilities like this ski jump, where future Olympians train.

(voice-over): Sydney Fonnesbeck is a former Salt Lake City councilwoman.

SYDNEY FONNESBECK, FMR. SALT LAKE CITY COUNCILWOMAN: He came in and did a good job of what needed to be done. The games ended up being successful, but the problem with Mitt is he wanted to take credit for all of it.

WIAN: Fonnesbeck helped bring the Olympics to Salt Lake City and remains a supporter of Romney's ousted predecessors who were cleared of criminal wrongdoing in the bribery scandal. She says Romney used the games mostly to promote himself.

FONNESBECK: He could have not put himself on the Olympic pins. He could have been a little more honest about why he was there. And I think then, as far as I was concerned, he would have been my hero, too.

WIAN: In August, 2001, six months before the Olympics, Bullock remembers telling Romney this --

BULLOCK: "Mitt, I think we're going to pull it off."

WIAN: Then came 9/11.

BULLOCK: It just changed everything. And we had a good security plan, but it needed to be ratcheted up several levels.

Then I remember in opening ceremonies, as the flag from the twin towers is being brought in, and there's Mitt and President Bush and the president of the IOC standing at attention as that flag is brought in, carried by athletes, escorted by members of the port authority, and thinking this is a remarkable healing moment for the entire world.

WIAN: And the beginning of a national political career for Mitt Romney.

Casey Wian, CNN, Salt Lake City.

(END VIDEOTAPE)

BLITZER: A mysterious memo pleaded with the U.S. to help Pakistan avoid a coup. Now the diplomat who some suspect as being involved in that memo could be accused of treason. We're about to speak with his wife here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Turning now to Pakistan and an intensifying scandal pitting the country's civilians leaders -- at least many of them -- against the powerful military in Pakistan in the wake of Osama bin Laden's death and the U.S. drone strikes in Pakistan. Pakistan's supreme court has just authorized an investigation into a memo allegedly approved by Pakistan's then ambassador to the United States, Husain Haqqani, asking the United States for help, averting a possible military takeover. News of the memo surfaced in an October newspaper column accusing the ambassador and, indirectly, Pakistani president, President Asif Ali Zardari, of being behind it.

Haqqani is a former Boston University professor, a frequent guest in THE SITUATION ROOM. Many of our viewers will remember him. He denies the allegations, but resigned his post.

He returned to Pakistan from Washington and is now prevented from leaving the country. He potentially could face treason charges, and that could result in a death sentence.

Joining us now from Washington is the wife of the former Pakistani ambassador to the United States, Farah Ispahani. She's a member of Pakistan's parliament, also a former CNN producer and a friend of all of ours.

Farah, thanks very much.

What's the latest with your husband, the former ambassador? What's happening to him right now?

FARAH ISPAHANI, WIFE OF FMR. PAKISTANI AMB. TO U.S.: Wolf, we're very concerned, his friends, his family, all of those who support democracy in Pakistan and human rights. My husband, who you knew, has always been a patriotic Pakistani, and who worked very hard in his years in Washington as ambassador to work to secure and improve Pakistan and the United States relationship, in which he was incredibly committed to.

He was a professor, an academic, a think tank person, an author. This is not a man who is -- can be guilty of treason.

And he resigned, by the way, Wolf, so to make sure that he was not in a position to in any way interfere with an investigation. But he went back to Pakistan of his own accord, he offered his resignation.

And the next thing that you see is that he has -- this case is brought up in the supreme court of Pakistan. Wolf, that's the court of last resort. That is not where you start.

It may be a trial court if they had wanted. Maybe -- and why not -- parliament, which is where we already have a national security committee set up, bipartisan, with members from everybody, form every single political party. Wolf, his --

BLITZER: Farah, let me interrupt for a moment, because I just want to make it clear. He flatly denies any involvement in this mysterious memo that's caused all of this. Is that right?

ISPAHANI: Wolf, not only does he flatly deny it, you know that General Jim Jones filed an affidavit in the Pakistani supreme court saying that he did not believe that Ambassador Haqqani had anything to do with it, and it was that -- so, you know, when you have someone at the level of General Jim Jones, and then Admiral Mike Mullen has later said that he did not think the memo was credible, these are two very senior and very credible American voices.

BLITZER: And I just want to tell our viewers, Jim Jones is the former national security adviser to President Obama. Admiral Mullen was the chairman of the Joint Chiefs of Staff.

Is he -- for all practical purposes, Farah, is he under house arrest right now? Can he move freely around the country? We know he can't leave.

ISPAHANI: He cannot leave the country and he is surrounded by an impressible amount of security. And he has received very serious death threats, as has his lawyer.

And also, I had some issues while I was still in Pakistan, and all the citizens of Pakistan who -- the journalists who have written in about Haqqani's favor, there have been threats to their children, there have been threats of acid being thrown in their faces. The members of civil society who signed the petition for Ambassador Haqqani, they have also been threatened, and in very serious ways.

Basically, Wolf, I will tell you how I see it. It starts Benazir Bhutto started the last attempt to take Pakistan back, to bring democracy and a real rule of law back, to bring back the importance of human rights to Pakistan. She was killed by those forces who want to always control the narrative in Pakistan.

Then, last year, one year ago, Governor Salman Tacir (ph) was murdered for standing up ostensibly for a poor Christian woman. Then a minorities minister, Shabaz Patiq (ph), a Christian, was murdered soon after that. And I see what's being done to my husband as part of the silencing of every single intellectual, liberal, democratic voice.

We will find out, Wolf, history will show that this was a setup. A memo that the two very credible Americans who had contact with it have said was not credible on the basis of a gentleman who shall remain nameless, but whose credibility is very questionable.

BLITZER: Farah, good luck. I just want to say good luck to you. Good luck to your husband, the ambassador, the former ambassador, a man I've known personally for many years. And I know he worked tirelessly to promote Pakistan's interests and to strengthen Pakistan's relations with the United States.

I'll leave you with this thought, and I'll say it on the air. Just before Benazir Bhutto went back to Pakistan to run for office, I told her, "Don't go. It's too dangerous." We know what happened to her.

I'll say the same thing to you. For the time being, I'm sure your husband wants you to stay here in the United States as well. It's a dangerous situation.

Let's hope for the best in Pakistan.

Farah, thanks very much. Good luck to you.

ISPAHANI: Thank you, Wolf. Thank you.

BLITZER: Collection agencies have a fairly notorious reputation, but while relentless phone calls are one thing, jail is quite another. A new tactic is infuriating civil liberties groups.

And Ann Dunham apparently wasn't afraid of the unknown. Now we're learning more about the mother of President Barack Obama and what pulled her away from her son when he was a boy.

(COMMERCIAL BREAK)

BLITZER: Debtors' prisons have been outlawed in this country since the 19th century, but that doesn't mean it's impossible to end up in jail when you owe money.

Our Mary Snow's joining us now with one man's story.

What happened here, Mary?

MARY SNOW, CNN CORRESPONDENT: Wolf, it started out by falling behind on bills, and it ultimately led to being arrested at his house. Now, in this case and others, people say they know they owe debt, but the complaint is they didn't know there was a warrant for their arrest.

(BEGIN VIDEOTAPE)

SNOW (voice-over): For 57-year-old James Davis of Kansas, using a credit card to buy this computer and some furniture is haunting him in ways he never imagined. In 2008, when the economy went south, Davis lost his job and fell behind on bills. The creditor took him to court. Davis admits he didn't show up, and a bench warrant was issued.

But he says he thought he rectified the situation by reaching a pay plan agreement until he was arrested in January.

JAMES DAVIS, SUING DEBT COLLECTOR: I was confused, of course I was humiliated, somewhat mentally distraught, I guess you could say.

SNOW: Davis spent several hours in jail before getting out on $250 bond. But he's now suing for unfair debt collection practices. The creditor refutes that in a legal response to the suit, writing, "The bench warrant was not issued for failure to make payments on the payment plan, but was issued for civil contempt for disobeying court orders."

Outside of this case, Illinois Attorney General Lisa Madigan says there are others where people in debt are not aware that creditors are taking them to court and wind up arrested for meeting a court date. It's a chain reaction that begins when they fail to pay their bills.

LISA MADIGAN, ILLINOIS ATTORNEY GENERAL: In Illinois, and unfortunately, my understanding is, in other states in this country there are people who are being put into prison right now because they're poor, essentially.

SNOW: Madigan says there are no hard numbers, and these kinds of cases aren't tracked nationwide. But she worries about complaints she's receiving.

MADIGAN: A lot of it stems from what's known as debt buying. So there are debt buyers out there who are purchasing debt and then, again, they using terribly aggressive and illegal tactics to collect it.

SNOW: But a trade group representing debt collectors says going to court to collect debt is a last resort. And a spokesman disputes the claim that people are going to jail for their debt.

MARK SCHIFFMAN, ACA INTERNATIONAL: Debtors prisons are illegal in the United States, and so we're not seeing a return to debtors' prisons. What we are seeing is that somebody who owes a debt, and after many, many attempts to try to collect that debt, the creditor or collector has taken the consumer to court.

SNOW: James Davis has a warning for others who have unpaid bills.

DAVIS: If you have proper notice from a creditor, and they are attempting to take you to court over that debt, to pay very, very close to attention to it.

(END VIDEOTAPE)

SNOW: And Wolf, in response to complaints, the Federal Trade Commission says it's been encouraging states to make sure that consumers are given notice that they are supposed to be appearing in court -- Wolf.

BLITZER: Mary, thank you. Interesting stuff.

Up next, never-before-seen photos of President Obama's mother. We're going live to Hawaii.

(COMMERCIAL BREAK)

BLITZER: The story of Barack Obama's early years is well known. His mother, Ann Dunham, raised him for much of his childhood. But her time and work in Indonesia has always been something of a mystery until now.

Brianna Keilar is joining us from Honolulu. She's got more.

What's going on, Brianna?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Wolf, obviously, the late Ann Dunham is most often referred to as the president's mother, or as a white woman from Kansas, but her story is really not at all that simple. Her adult years very much defined by the almost 20 years that she spent in Indonesia, and now an exhibit here in Honolulu is detailing her anthropological work.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): Ann Dunham was a woman who liked to use her hands.

MICHAEL SCHUSTER, CURATOR: She came to Hawaii when she was 17, and when she was studying art at 18, she made this weaving. She was already pregnant with Barack Obama.

KEILAR: Several years later, she and the 6-year-old future president followed her second husband to his home country of Indonesia, where she gave birth to Obama's half-sister, Maya Soetoro. There, she took her anthropology studies into the field. Her work is now on display for the first time at Honolulu's East-West Center.

Curator Michael Schuster came up with the idea for the exhibit.

SCHUSTER: I was very lucky that there were all these field photographs and her field notes had been preserved by a good friend of Ann's.

KEILAR: On display, some of her possessions kept by her daughter or by friends: jewelry, clay figures, and one of Dunham's favorite things, puppets. They are everyday ordinary Indonesian items, nothing extremely valuable.

SCHUSTER: Ann Dunham was a great collect of textiles.

KEILAR: The exhibit includes a small number from her extensive collection and her rudimentary attempt at the traditional method of batik, fabric dying. But perhaps the most interesting part of the display are the photos of Dunham, many never displayed before. SCHUSTER: She would go into these iron foundries. They're very, very hot, you know, and sparks are flying everywhere, and she's spending hours researching.

KEILAR: Dunham went to hundreds of islands studying metalworkers, writing a lengthy dissertation for her Ph.D. An economic anthropologist, at one point she worked for a bank helping get small loans for villagers.

SCHUSTER: If she had $50 she could buy maybe a sewing machine and enough material to start a business, or a small cooking stove could make the difference with $20 and enough food. And that was what she was involved with.

(END VIDEOTAPE)

KEILAR: Now, this exhibit focuses almost entirely on Dunham, very little on President Obama. And that work, Wolf, that she did getting loans for villagers, it was considered groundbreaking. In fact, Indonesia now on the forefront of microfinance, as it's called.

BLITZER: Fascinating report, Brianna. Thanks very much.

We're counting down to the Iowa caucuses with special CNN programming. Please be sure to join me Saturday night, 6:00 p.m. Eastern, for a special edition of THE SITUATION ROOM. You can hear my interviews with all seven Republican presidential candidates.

Then, at 8:00 p.m. Sunday night, it's our "Countdown to Iowa," final 48 hours. And it all leads to the first votes cast in the 2012 presidential election.

The Iowa caucuses -- we'll have special coverage Tuesday night, beginning 7:00 p.m. Eastern.

Thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

The news continues next on CNN.