Obama Aide Warned Journalist; Obama Softens Tone on Cuts' Impact; Pope's Reign Enters Final Hours; Economy Grows More than Expected
SOLEDAD O'BRIEN, CNN ANCHOR: All right. Thanks, guys. I appreciate it. "CNN NEWSROOM" with Carol Costello begins right now.</s>CAROL COSTELLO, CNN ANCHOR: Happening now in the NEWSROOM, saying good-bye.</s>POPE BENEDICT XVI, CATHOLIC CHURCH LEADER (Through Translator): It has been a joy to work and walk with you.</s>COSTELLO: The Pope's last day. The cardinals. Then the conclave. On this history-making morning, the world's 1.2 billion Catholics watch and wait for change.</s>UNIDENTIFIED MALE: I think we have challenges in the church that are pretty well known.</s>UNIDENTIFIED FEMALE: I hope there would be a lot more transparency.</s>UNIDENTIFIED FEMALE: I love my church. I just feel it has to sort of change a little bit.</s>COSTELLO: Also, Woodward versus the White House.</s>BOB WOODWARD, ASSOCIATE EDITOR, THE WASHINGTON POST: It was said very clearly, you will regret doing this.</s>COSTELLO: "The Washington Post" reporter front and center claiming threats from 1600 Pennsylvania Avenue. And casa, the combine, and the question --</s>UNIDENTIFIED MALE: Do you have a girlfriend? Are you married? Do you like girls?</s>COSTELLO: The NFL now investigating. Did this moment start it all?</s>KATIE COURIC, ABC NEWS ANCHOR: Are you gay?</s>MANTI TE'O, NOTRE DAME LINEBACKER: No. Far from it.</s>COSTELLO: You're live in the CNN NEWSROOM.</s>COSTELLO: And good morning to you, I'm Carol Costello. Thank you so much for joining me. We start with the inside-the-beltway brawl. Bob Woodward, perhaps the country's most famous investigative reporter, versus the White House over a scathing op-ed written by the man who exposed Watergate.</s>WOODWARD: They never really said, though, afterwards they've said that this is factually wrong and they -- and it was said to me in an e-mail by a top --</s>WOLF BLITZER, ANCHOR, THE SITUATION ROOM: What was -- what was said? Yes.</s>WOODWARD: It was -- it was said very clearly, you will regret doing this.</s>BLITZER: Who sent that e-mail to you?</s>WOODWARD: Well, I'm not going to say.</s>COSTELLO: Oh, but this morning we know who wrote that e-mail, it was Gene Sperling, a top economic aide to President Obama. If you are wondering what made Sperling so darn mad it was Woodward's op-ed for "The Washington Post" titled "Obama Sequester Deal Changer." Woodward criticized the president's handling of negotiations, writing, quote, "So when the president asks that a substitute for the sequester include not just spending cuts but also new revenue, he is moving the goal posts," reneging on the deal in other words. White House correspondent Brianna Keilar is live in Washington. What should we make of this, Brianna?</s>BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Well, Carol, I think the White House genuinely feels that Bob Woodward is wrong on this issue. But, of course, when you have someone like Bob Woodward with his credentials, obviously people listen to what he has to say. So I think there's very much a true disagreement over the facts of the situation here over Bob Woodward's op-ed and we've been getting response from the White House, not only have we learned from a Democrat familiar with the situation that the source that Woodward was talking to was Gene Sperling, this top economic adviser to President Obama who -- you know, his time in government dates back to the Clinton administration, prior to that, and that is his really I guess decades of sort of familiarity with Bob Woodward. But the White House is saying that Woodward flat-out misinterpreted this e-mail with Sperling who we now know it was with and that he would regret it, not in the sense that he was going to have to pay for it, if you will, for saying what he said, but that he would regret it because the White House feels that he is wrong on the issue. So a statement coming from one White House official saying, of course, no threat was intended. As Mr. Woodward noted, the e-mail from the aide was sent to apologize for voices being raised in their previous conversation. The note suggested that Mr. Woodward would regret the observation he made regarding the sequester because that observation was inaccurate, nothing more. And that official, Carol, saying that Woodward responded to that e- mail in a friendly manner in his next e-mail.</s>COSTELLO: OK. So it goes on. Brianna Keilar at the White House. Now in the midst of this spat, those forced spending cuts, one day to go, no deal, and no clearer picture of what exactly will happen if those forced cuts go into effect. At first the sky was falling. Now it seems it's more likely to rain really, really hard. Listen to how the president has softened his message.</s>BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is not a cliff. But it is a tumble downward. It's conceivable that in the first week, the first two weeks, the first three weeks, first month a lot of people may not notice the full impact of this sequester. But this is going to be a big hit on the economy.</s>COSTELLO: Of course, that's a little different from what the president has been saying in the past, so let's bring in CNN's chief national correspondent John King. So it appears the president is softening his tones on these spending cuts. What's up with that?</s>JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, part of it is reality, Carol. The president, you know, you saw it, he went to Virginia, he went to Minnesota. A lot of Republicans saying well, if you're trying to pressure us to changing our minds, why are you going to blue states, Mr. President? But the president failed. I'm not saying -- I'm not assigning blame to him but he failed to convince Republicans to come to the table to give him more tax increases to cut a deal before the deadline tomorrow. So the president is going to meet with the congressional leadership tomorrow but he knows now the sequester, these forced budget cuts are going to go into effect. So what is he saying? You might not notice this right away. He's softening his tone because now having failed to get a deal before the deadline he has to get one after the deadline and the only way to get that deal is to do business with the Republican leadership that -- and they are using this Woodward back and forth as part of their evidence. The Republicans saying, look, the president made a miscalculation here. Remember, Carol, at the beginning, this was the president's idea. The Republicans signed on to it so they both own it. Nobody thought it would come to this. Nobody thought it would come to this. This was a gimmick they used to get through a past crises and now they're going to pay the price for using a gimmick to essemtially punt down the road these tough choices. So the president is trying to -- after saying for days you're going to see immediate pain, this is going to be horrible, now he's saying well, maybe we actually have a couple of weeks before people see the pain. But the president is looking forward to the longer term in the second term. It's a giant question mark, if the economy stumbles again, even if the president wins this sequester fight in the short term, boy, you know, a slower recovery would hurt him in the long term as he tries to build a legacy in his second term.</s>COSTELLO: But it sure would be nice if the American people had a straight answer from someone on what exactly will happen when these spending cuts go into effect Friday midnight, like, I just think that it's appalling that we don't know.</s>KING: Well --</s>COSTELLO: We don't have any clear answer from anyone.</s>KING: Well, we're going to see cuts, there's question about that, and we're going to see how the federal agencies implement these cuts. You know, on one hand the Republicans have said, Mr. President, we'll give you the flexibility to not use the meat ax approach. The White House has said, no, we're going to share the blame, you're not going to put it all on me. But it -- the question now because of the second deadline, the March 26th deadline, that's coming up and this is how they govern now, mini crisis by mini crisis by mini crisis which is laughable actually except it's not funny. They're going to have to cut a deal anyway in the next few weeks. So what the president seems to be saying is, all right, maybe this won't be so painful, let's sit down and cut this deal and if we can do it in a couple of weeks maybe we can avoid the worst but even that, Carol, that would be another, quote-unquote, "continuing resolution," another temporary solution to what the government, the Democratic president, the Republican Congress, House anyway, need to get about eventually, which is what's our tax policy, how much of the deficit do we want to get to, are we going to cut Medicare and Social Security, are we going to have another tax increase. At some point they can't keep fighting the same fight. They have to figure it out.</s>COSTELLO: Yes. We got to run over that can that they keep kicking down the road. John King reporting live from Washington. Now on to the Vatican where the world is watching history unfold. Catholics gathered outside for something the church has not experienced since the middle ages, Pope Benedict going through the final motions before stepping down as leader of the Catholic Church. Here he is earlier this morning appearing before an assembly of the world's cardinals. The Pope met with each of them individually for just a minute or two. And it will now be up to many of these men to choose his successor. It's an almost unprecedented challenge to an ancient religion grappling with the turmoil and scandal that's dogged Benedict's reign.</s>POPE BENEDICT XVI (Through Translator): During eight years we have lived with faith, marvelous moments in the history of the church, and also times when the world is covered by dark clouds.</s>COSTELLO: There is no time frame for electing the next Pope, but here's how Benedict's leadership will end. Next hour at 10:45 Eastern Time the Pope leaves the Vatican, his home, and will fly to his summer residence at Castel Gandolfo. At 2:00 Eastern his reign officials ends and the Catholic Church faces its challenges without an official leader. We're following all the latest on this story of intrigue and uncertainty. Senior international correspondent Ben Wedeman is in Rome and in New York, Father Edward Beck, a CNN contributor, but, Ben, I want to start with you. So pull back the veil. What will everyday life be like for a Pope emeritus?</s>BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, certainly when he's in Castel Gandolfo, Carol, it will be quite pleasant. That's 135 acres on the hills south of Rome. In an area on an estate that really is full of history. It's a place where there's an ancient Roman amphitheater. There's an underground tunnel where Pope -- rather emperors, Roman emperors, used to walk in the summer to get out of the shade. The farm itself provides almost all the food necessary for the Pope within the grounds of Castel Gandolfo. However, I did speak with the director of the pontifical villas, who knows the Pope well, he said that the Pope is a reserved man, a studious man who likes his books and is probably not going to be taking full advantage of the great outdoors -- Carol.</s>COSTELLO: Probably not. How about protection? Will the Pope be treated like a former president? Will he receive security for life?</s>WEDEMAN: He will be -- he will have security, in fact, we did ask the head of the pontifical villas about that, and he said that no one will be allowed into the grounds of Castel Gandolfo, for example, where he will be for the next two to three months. There will be the usual security around him. However, he lives a simple life. He is a man who's, as I said, very bookish. Doesn't have a lot of demands in terms of the food he eats or the -- basically the care he needs. Now when he moves back within the grounds of the Vatican and moves into this convent that's currently being fixed up, he will have a staff. He will have his personal secretary who will help him. He will have a group of nuns who will also be there to help him, to serve him, to provide him with his needs. But fairly simple lifestyle is what he's been living all along, and we don't expect him to really go over the top after retirement -- Carol.</s>COSTELLO: All right. Ben Wedeman, thanks so much. As Ben said, in less than two hours the Pope will take a helicopter to Castel Gandolfo and there he will live temporarily in that sumptuous villa. A look more about that villa. It once served a first century Roman emperor and it's decked out with landscaped gardens and</s>FATHER EDWARD BECK, CNN CONTRIBUTOR: Good morning, Carol.</s>COSTELLO: Thank you for being here. So once the Pope goes to this villa, do you think he'll be watching what's happening in the Vatican? Will he be watching television?</s>BECK: I'm sure he's going to be watching and be concerned. This is a church that he said he loves. His reason for resigning is his love of the church. He's made that very clear. And he said he's going to be praying every day for those who will be electing a new Pope. So he'll probably not get any more information than we are getting, however, I really believe that he will respect the secrecy that the conclave has. But I'm sure that he will be watching and as curious as the rest of us as to who that final selection will be.</s>COSTELLO: Yes. So 115 cardinals will essentially be locked in a room. They'll have no communication with the outside world while they make their decision about who's the next Pope. But before Pope Benedict left the Vatican how much influence did he exert over the choice for a new Pope, if any?</s>BECK: Well, remember, his major influence is the fact that he has appointed the majority of cardinals who will be voting, so many of them will be in the same stream of consciousness, the same theology, the same thought pattern as Benedict. At least theologically perhaps. So that is probably the greatest influence he will have. Also you have to wonder if there is a Pope, a former Pope emeritus who is still alive. Do those voting want to keep something in mind of not disrespecting that Pope or seeming to go against his choices or his direction? That remains to be seen. But it's a question I would have because we haven't had this obviously in 600 years where there's been a resignation, so we'll have to see how that plays out, how much influence just the fact that Benedict is alive will play out in this.</s>COSTELLO: It will be fascinating to watch. Father Beck, thank you so much for your insight this morning.</s>BECK: You're welcome.</s>COSTELLO: As Pope Benedict says good-byes to Catholics around the world he'll also walk away from social media. The Vatican says the will send his final tweet today and his twitter account will go dark. It's up to the next Pope to decide if he'll tweet, too. The Pope currently has nearly 1.6 million Twitter followers. Stay with CNN all morning long as we have live coverage on the Pope's final day. In about 30 minutes, some fascinating information about the conclave gathering to choose the new Pope, everything from how the smoke signals started to the longest it's ever taken to choose a new Pope. It's not a daylong thing. And at this morning at 10:00 Eastern a CNN special report. We'll have live team coverage as the Pope leaves the Vatican and travels to Castel Gandolfo and then officially resigns. On the other news now, the Dow closed within 90 points of its all-time high on Wednesday, but will a lackluster GDP report drive it further from that market milestone? We'll head to Wall Street next for some answers.