Obama's Trillion-Dollar Problem; Access Denied to Would-be Obama Replacement
WOLF BLITZER, HOST: The surgeon general of the United States could have renewed visibility if President-elect Barack Obama CNN's chief medical correspondent, Sanjay Gupta to the post. We have been reporting he's been approached. We're also getting some buzz right now that Time Warner's former chairman and CEO, Richard Parsons, could potentially be heading up the commerce department. Lou Dobbs is watching these appointment possibilities for us. What do you think, Lou?</s>LOU DOBBS, CNN ANCHOR: First of all, I think great for them. Sanjay Gupta, as you know, Wolf, a terrific colleague and friend. He's also a terrific doctor. I think -- it has a broad range of interest. I actually think, frankly, we probably should fight to try to keep from losing him. But he would be definitely an asset for the Obama administration. Now, Dick Parsons, we've already lost him. He's no longer our CEO, so we can be more supportive of his -- if he -- of his appointment as commerce secretary. Dick is an accomplished executive, former chairman, CEO of dime savings, co-chair of the president's commission on social security. And CEO of Time Warner here. He's a man of immense accomplishment, I think has some of the best judgment I've ever encountered in a business executive, a man I really respect. I think he'd be outstanding as commerce secretary.</s>BLITZER: I echo everything you just said. Our parent company, Time Warner. Lou, thanks very much. See you in one hour.</s>DOBBS: You got a deal, Wolf.</s>BLITZER: And happening now: The president-elect puts lawmakers on notice about something he won't tolerate. This hour, Mr. Obama's $1 trillion headache, as he works to try to jump-start the economy. Plus, as you just heard, one of CNN's own approached for a possible job in the new administration. New questions about the Obama selection process, though, and what's driving some of his choices. The best political team on television is standing by. And the deadliest strike yet in the Gaza ground war, schools in the crossfire. We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM. Right now, president-elect Barack Obama is facing a harsh reality, that his economic recovery package will saddle the nation with a mountain, a mountain of new debt. He met today with his economic team. But exactly two weeks before his inauguration, political and global conflicts are competing for his attention, distractions from the enormous problems he was elected to fix. Let's go to our chief -- excuse me -- our national political correspondent, Jessica Yellin. She's looking at all of this for us. Jessica, this is quite a mess out there.</s>JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: It is a real mess for Barack Obama, Wolf. And right now, he would like to stay focused on one theme. That is economic recovery. But with so much erupting all around him, that's a lot easier said than done.</s>BARACK OBAMA (D-IL), PRESIDENT-ELECT: We got everybody?</s>YELLIN (voice-over): The president-elect's advisers predict a record high $1 trillion deficit this year. And that's before spending $775 billion on their proposed stimulus plan.</s>OBAMA: What I have said is I'm going to be willing to make some very difficult choices in how we get a handle on this deficit.</s>YELLIN: So Mr. Obama is promising that stimulus money will go to America's needs, not politicians' pet projects.</s>OBAMA: What I'm saying is we're not having earmarks in the recovery package, period.</s>YELLIN: But economic recovery isn't the only issue confronting the incoming president. There are the distractions not of his making -- violence in Gaza.</s>OBAMA: I am deeply concerned about the conflict that's taking place there.</s>YELLIN: And those his team created, like failing to inform the head of the Senate Intelligence Committee that he'd selected Leon Panetta to run the CIA before news leaked to the press. Even his vice president tells CNN that was a mistake.</s>OBAMA: I haven't made a formal announcement about my intelligence team. That may be him calling now.</s>YELLIN: We know who is not calling -- New Mexico Governor Bill Richardson.</s>GOV.  BILL RICHARDSON (D), NEW MEXICO: It was my idea to withdraw.</s>YELLIN: Obama's vetting team missed or overlooked a few red flags on the one-time commerce nominee. For now, the president-elect seems to have put some distance between himself and the investigation into Illinois Governor Rod Blagojevich. But there's this: the bizarre spectacle of Obama's would-be Senate replacement rejected by his own party. Today, no comment from the president-elect, who can only hope the problem goes away before he is asked to get involved.</s>YELLIN: And, these days, Barack Obama is truly intent on steering the conversation back to the economy, no matter what else is in front of him. Part of the transition to power, it seems, would be accepting, Wolf, that, in the White House, diversions are routine.</s>BLITZER: Yes. I think that's going to be very evident to the president-elect in two weeks, two weeks from today. Thanks very much, Jessica, for that. The Senate Republican leader, meanwhile, is raising a new red flag today about just how big president-elect Barack Obama's budget requests may be. Senator Mitch McConnell is one of the leading voices warning Democrats to consider carefully all the ramifications of a massive recovery package.</s>SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: We shouldn't be rushed into voting for a bill that, by any estimate, will be bigger than all 50 state budgets combined, especially when many of the jobs it promises won't even materialize for another year. If we're serious about protecting the taxpayer, these projects will be awarded through a fair and open process and allowed to compete with other priorities in the budget.</s>BLITZER: Another new development, as Barack Obama counts down to his inauguration, transition sources saying CNN's own Dr. Sanjay Gupta, our chief medical correspondent, has been approached about the job of becoming the nation's surgeon general. One source says the Obama team is impressed with Dr. Gupta's communications skills, his work as a neurosurgeon, and his past work as a special adviser to Hillary Clinton. When she was the first lady at the time, he was a White House fellow. CNN has made sure Dr. Gupta, by the way, does not report on anything connected to the new administration since learning he was approached about the post. We're going to have much more on this story. John King is standing by. That's coming up this hour right here in THE SITUATION ROOM. Meanwhile, blood continues to flow in the Middle East. And it appears a top al Qaeda terrorist is blaming Barack Obama. An audio message just released reportedly from Ayman Al-Zawahri says Israel's actions at Hamas -- and I'm quoting now -- "are a gift from Obama." The message, posted on an Islamist Web site, even goes further as to tell Muslims in the region that president-elect Obama -- and I'm quoting now -- "is killing your brothers and sisters." No response from Obama's transition team. Meanwhile, two United Nations schools in Gaza hit today. CNN's Paula Hancocks is along the border between Israel and Gaza -- Paula.</s>PAULA HANCOCKS, CNN CORRESPONDENT: Wolf, dozens of Palestinians have been killed by Israeli artillery shells near a second U.N. school in Gaza. Israel insists it was returning fire, and there were Hamas operatives among the dead. As the sun sets over Gaza, a thick haze of smoke drifts across the whole strip. Day 11 of Israel's onslaught, ambulance sirens in Gaza have become background noise to the constant explosions. Within hours, two U.N.-run schools, both being used as shelters for hundreds of people, were hit. The U.N. in Gaza says three artillery shells landed near a school in Jabalia, killing dozens.</s>JOHN GING, DIRECTOR OF OPERATIONS IN GAZA, UNITED NATIONS RELIEF AND WORKS AGENCY: We're demanding full accountability in accordance with international law and the duty of care that the parties to the conflict are obliged to adhere to. We don't care to pass judgment. We have to deal with the consequences.</s>HANCOCKS: The Israeli military says it returned fire after mortar shells were fired from the school. Many Palestinians are caught in the middle. This man asks Israel, "How can you let your army destroy everything, the young, the old, men, women, while everyone else is just watching us?" The Red Cross in Gaza is calling it a full-blown humanitarian crisis. Israel's military believes it killed 130 Hamas militants since the ground operation began Saturday night. It has also lost six soldiers in that time. As troops advance on the outskirts of Gaza City, militants continue rocket fire into Israel, hitting farther than ever before. The town of Gedera, 36 kilometers, or 23 miles, north of the border, suffered its first hit. This policeman says: "We knew it would come. We just didn't know when." E.U. diplomats are meeting and talking and calling for an immediate cease-fire.</s>MARK REGEV, ISRAELI FOREIGN MINISTRY SPOKESPERSON: Any future arrangement has to prevent Hamas from continuing to re-arm, to get stronger and longer-range rockets. A vital ingredient is a total, total ban on any weapons entering the Gaza Strip.</s>HANCOCKS (on camera): Talk of a cease-fire has certainly not yet reached Gaza, both sides showing no signs of letting up, even as the civilian death toll increases -- Wolf.</s>BLITZER: Paula, thank you very much. And, just a little while ago, the office of the Israeli prime minister, Ehud Olmert, announced that Israel has now agreed to accept to set up a humanitarian corridor that would allow vital supplies to reach the people of Gaza. Let's go back to Jack Cafferty. He's got "The Cafferty File" -- Jack.</s>JACK CAFFERTY, CNN ANCHOR: It's very sad. Thanks, Wolf. Well, go figure this. Gas prices are actually down since President Bush took office eight years ago, true story. According to the Energy Information Administration, the average price per gallon last week was $1.59. And, when adjusted for inflation, that is 9 percent less than when President Bush took office, and considerably less than last summer, when you will recall gas was like $4 a gallon. Gasoline prices are starting to creep up a few cents now. Oil prices have been rising in response to the fighting in Gaza. And there are predictions that, after declining for five straight months, gasoline could cost around $2 a gallon by springtime. Meanwhile, consumers are only too happy to spend less at the pump, people now spending $25 a week on gas, instead of $75. And that translates to a savings of about $1 billion a day for American motorists, according to AAA. They say high gas prices contributed to the recession and that lower gas prices can help turn things around by leaving people with more cash in their pockets to spend on something besides fuel. The downside, of course, is that lower gas prices take the emphasis off developing alternative energy sources and ultimately breaking our dependence on imported oil. So, it's a double-edged sword, if you will. Here's the question. Are lower gas prices an asset or a liability for the United States? Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.</s>BLITZER: Jack, thank you. Access denied. The man who says he will replace Barack Obama in the Senate is turned away from taking a seat. Is a major battle next or will there be a deal? Also, might the president-elect be thinking twice about his apparent pick to head the CIA? You're going to find out why Leon Panetta may be giving him some headaches right now. And president-elect Barack Obama is possibly doing something to please both Democrats and Republicans. But can he really pull it off? We will explain right here in THE SITUATION ROOM.