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Anger Over Sandy Aid; Hillary Clinton Leaves Hospital; Interview with Congressman Peter King of New York; GOP Divide Over Fiscal Cliff Deal; Wall Street Surges On News Of Fiscal Deal; 2016 And The Fiscal Cliff; Politicians Eye 2016 In Cliff Talks; Unusual Suspects In Explosive Arrest

Aired January 2, 2013 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Don, Thanks very much.

Happening now:


GOV. CHRIS CHRISTIE (R), NEW JERSEY: This was the speaker's decision, his alone. I called the speaker four times last night after 11:20, and he did not take my calls.


BLITZER: A blistering attack on the House speaker, John Boehner, from a rising star in his own party -- up next, why Republicans failed to vote on a $60 billion aid package for Sandy victims and why they are now scrambling now to try to make it right.

Also, Wall Street ends its first day of trading since the last-minute deal to avert the fiscal cliff. We are going live to Wall Street for an update, huge numbers.

The former Republican vice presidential candidate Paul Ryan says he -- quote -- "wasn't afraid to vote yes on the fiscal cliff deal." Could that be a sign for 2016?

I am Wolf Blitzer. You are in THE SITUATION ROOM.

If the GOP-led House of Representatives thought they were feeling the heat for the fiscal cliff, they did, but it may have been nothing compared to what they are feeling now. This time, the biting backlash is coming from prominent members of their own party. They are blasting last night's decision to end the 112th Congress without approving a $60 billion aid package for the thousands of victims still suffering from the super storm Sandy.

Leading the charge, a rising star in the party, and a possible 2016 presidential contender, the New Jersey governor, Chris Christie.


CHRISTIE: I am not going to get into the specifics of what I discussed with John Boehner today, but what I will tell you is, there is no reason for me at the moment to believe anything they tell me because they have been telling me stuff for weeks, and they didn't deliver -- 66 days and counting. Shame on you. Shame on Congress.


BLITZER: Our senior congressional correspondent, Dana Bash, is standing by on Capitol Hill with the latest.

There have been some dramatic moves over the past few minutes or so. The speaker clearly trying to appease some of these Republican members. What is the latest, Dana?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: The latest is within the past hour in the speaker's office, which is right down the hall behind me, he met with members of the New York and New Jersey delegations who were very angry and promised them there will be a series of votes to get people in Sandy-stricken areas the federal money, $9 billion this Friday, that will be the vote.

And then when the new Congress has its very first legislative day on January 15, $51 billion. So Republicans were very appeased and certainly happy. Listen to Peter King of New York.


REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE CHAIRMAN: That was his decision. We disagreed with it, made it clear last night. But that's in the past.

All I care about is my constituents, the constituents in New York and New Jersey were absolutely devastated. Clearly, the speaker responded and that's all I -- I take him at his word. He and the majority leader both are in full agreement.


BASH: What about the anger being voiced at the House speaker? He said that that was a lifetime ago, clearly trying to forgive and forget, but, Wolf, it's hard to forget just how frankly vicious we heard Republicans be and upset about the fact that the speaker pulled this bill.


BASH (voice-over): Anger at the House speaker is palpable.

REP. MICHAEL GRIMM (R), NEW YORK: I think it's inexcusable that we did not have this vote.

BASH: And these are Republicans.

REP. FRANK LOBIONDO (R), NEW JERSEY: Absurd. Absolutely absurd. We demand nothing less than when have given the rest of the country. An emergency and disaster means emergency and disaster.

BASH: GOP lawmakers otherwise demanding spending cuts arguing $60 billion in aid for Sandy relief is urgent.

REP. ROBERT DOLD (R), ILLINOIS: These dollars will not be squandered. I believe that they are desperately needed at a time when many Americans have lost hope. There is that opportunity for us to stand united together to provide that hope for the American public.

BASH: Republican outrage is personal and pointed at the House speaker for abruptly canceling a vote during this Congress.


BASH: So, what did happen?

House Majority Leader Eric Cantor, who took the lead on Sandy relief, had promised a vote on the aid package before the lame-duck session ended.


BASH: But GOP leadership sources tell CNN right after the toxic fiscal cliff vote, the House speaker yanked the bill.


BASH: The reason? CNN is told the speaker worried it was bad internal politics for him to allow a vote on $60 million in new federal spending after a long day of getting pummelled by his own House Republicans for not enough spending cuts in the fiscal cliff bill.

New Jersey's popular Republican governor:


BASH: Chris Christie eviscerated the House speaker.




BASH: And this meeting that just wrapped up really lasted just a short time, maybe 20 minutes tops, Wolf. It was very clear that the House speaker knew he had to clean it up and clean it up fast and he had a plan ready to go to take the votes to reassure these Republicans from areas that really were devastated by Sandy.

BLITZER: Do you have doubt that John Boehner will be the speaker of the House in the new Congress that is sworn in Thursday at noon? BASH: When it comes to these Republicans in particular who were clearly very angry, I asked many of them who came the microphones right after this meeting, some of whom, at least one, Michael Grimm, had said that he was going to abstain and not vote.

This vote, by the way, will happen tomorrow. The new Congress convenes tomorrow. He said he changed his mind after this meeting, after he got a personal reassurance and promise from the speaker that he is going to make good on this money for New York and New Jersey and other areas.

There are probably a handful of Republicans here from those areas and all of them said they are going to support the speaker, and I asked them all point blank. Whether or not there will be other challenges to him, other symbolic moves to make clear that maybe there are some people who are unhappy with him, that is to be determined. We will see whether any of that happens when the vote does take place, which will happen some time after the new Congress convenes at noon tomorrow.

BLITZER: We will see what happens on that front.

Peter King, by the way, will be joining us live in a few minutes right here in THE SITUATION ROOM. We will get his latest assessment. Stand by for that.

Our own Mary Snow has been out on New York's Staten Island and she is now getting a first-hand reaction from so many of the storm victims. Mary is joining us now with this part of the story.

What are you seeing there, Mary?

MARY SNOW, CNN CORRESPONDENT: Wolf, anger is an underestimate. We're here on Staten Island. You remember, it was so hard-hit.

And you just take a look behind me to see there's so much work still to be done. Residents here are saying that this is disgraceful and they are questioning why Congress was able to pass emergency aid for victims of Hurricane Katrina within days, but just more than two months after superstorm Sandy hit, New York and New Jersey are still waiting for money.


SNOW (voice-over): Nine weeks after superstorm Sandy, 76-year-old Frank Giese (ph) relies on the Red Cross for meals. Just this week, he was able to return to his home on Staten Island.

UNIDENTIFIED MALE: Water was coming through walls, through the brick.

SNOW: Giese shows us photos of his house that needed to be gutted, and while he is grateful to be back home, he is furious with House Republicans for failing to vote on the $60 billion aid package to help Sandy victims.

(on camera): If you were on Capitol Hill today, what would you say to lawmakers?

UNIDENTIFIED MALE: You stink. All of you stink. You have no compassion, and you don't have blood in your veins. You have got ice cubes.

SNOW (voice-over): While Giese has returned home, many people on his block haven't because of the extensive damage and he worries about whether they will come back.

UNIDENTIFIED MALE: I cried for two weeks when I lost this house. If I could cry again, I would cry again. I have no use for them in Washington. I have friends on the block here that lost more than me and they are living in shelters.

SNOW: This area of Staten Island was so hard-hit that President Obama visited New Dorp Beach with city and state officials back in November. In fact, he was right down the street from Gerry McClellan's (ph) home that was destroyed here. McClellan spends his days trying to salvage what he can as he waits for the insurance money. He remembers the president's promise to never forget, but McClellan says he is a realist.

UNIDENTIFIED MALE: It's all politics. Everything is politics.

And, you know, just look out here right now. Everybody left. There is only like a couple agencies just hanging around. But in two more months, there will be nobody here and all these houses are still going to be vacant and gutted and waiting for help.


SNOW: Wolf, just to give you an idea of the damage done on Staten Island, just one of the five boroughs in New York City, I spoke to the head of Project Hospitality, a group that has been helping victims of Sandy, and she estimates that there are 9,000 people -- families, 9,000 families in this borough alone that have been displaced -- Wolf.

BLITZER: Are people getting real help or are they just getting some promises?

SNOW: They have credited FEMA.

For some of the residents we have spoken to, they said they have gotten money from FEMA and they said that was quick, but they said it's just not enough. And that one man we talked to, Frank Giese, said he received nearly $32,000 from FEMA, but he said the damage to his house is much more than that.

And he has been paying for those repairs out of his pocket, and he said some of the residents on his block don't have the money and that's why they are not back.

BLITZER: Our heart goes out to all those folks, and there are a lot of them out there.

Mary Snow, thank you. Other news we're following, divide and conquer, that's a popular strategy in war, but it's not bad in politics either. Now some conservative commentators are saying President Obama executed the same strategy in the fiscal cliff negotiations, leading to a civil war in the GOP.


ANNOUNCER: This is CNN breaking news.

BLITZER: And it's very good breaking news.

Hillary Clinton, the secretary of state of the United States, has now left the hospital. We have the video to show you. Her husband, the former president of the United States, was there, Bill Clinton, Chelsea Clinton.

There, you see the pictures coming in. You see Hillary Clinton in the sunglasses with Chelsea. They walked out. They got into that big black van. Here's the former President Bill Clinton with a big smile on his face wearing the leather jacket. He will get into that armored vehicle as well.

Chelsea Clinton, Bill Clinton, Hillary Clinton, they are all going home. There you see Huma Abedin, the secretary's longtime aide. She is getting into that van as well. The secretary has been in the hospital now for about four days, as you know.

In recent weeks, she has been ill. She suffered a major flu, stomach flu. She then was dehydrated. She fell. She fainted, and as a result she had a concussion. And, then, all of a sudden over the weekend -- there she is walking out slowly with the sunglasses on, her doctors following.

The secretary had a concussion, but then we learned just over the past few days that she also had a blood clot in her head between her brain and her skull, not far from behind her right ear. She has now been on blood thinners.

But the good news is she is now leaving the hospital. I assume she is going to be cooperating at home for a while before she gets back to work.

Earlier in the day, the spokeswoman over at the State Department did say that she has actually been on the phone talking to members of her staff, slowly but surely getting back into action. She's only supposed to be the secretary of state for a few more weeks. She wanted to leave by January 20th when the president is going to be inaugurated for a second term.

Let's see what happens on that front. Let's see if she is physically able to testify before Congress on the whole Benghazi attack that killed the U.S. ambassador and three others.

But the good news is she is out of the hospital, heading home in New York. And there, once again, you see the picture of her leaving New York Presbyterian Hospital with her husband and daughter.

Let's immediately get some reaction. Peter King, the congressman from New York, is joining us. We got other subjects to talk about. I assume you are pleased she is out of the hospital and well enough to go home?

REP. PETER KING (R), NEW YORK: That's really good news. Hillary Clinton is a good friend. She's outstanding U.S. senator, great job as secretary of state.

And again, she is a strong and tough woman. So, I'm not surprised she's out, but I was surprised she ended up in the hospital at all because she is one of the most durable people I have ever met.

Really a good friend and I'm really happy for her and President Clinton and Chelsea there. Again, good people. And, you know, she deserves a little rest and relaxation, and who knows when we will see her again?

BLITZER: Yes, she was the New York senator from New York state, your home state. Before she was the secretary of state, she ran for president, as we know, for the Democratic presidential nomination.

Quickly, you still think that she needs to go up before Congress and testify on what happened in Benghazi?

KING: Yes, I think she does and I think she will be pleased to do it. I mean, I never have known Hillary Clinton to back away from a fight. I mean, sometimes we agree, sometimes we disagree, but I never have seen her back away to anyone. I've never seen her shy away, and I think she will, you know, make her case. I think she realizes it's better for her to get it over with, to get it out there.

Again, you know, if she plans to running in 2016, and even if she doesn't, I think just her legacy, she wants to have this cleared up, she'll come in and actually do a very good job.

BLITZER: Yes, with the concussion, though, also a blood clot in her head. Let's hope that she is physically able to do all of that.

KING: Yes, absolutely.

BLITZER: The most important thing is she has to cooperate --

KING: Absolutely. I wouldn't expect her to testify at all until she is absolutely in perfect health.

BLITZER: Yes, me either.

All right. Congressman, let's talk about what's going on, the victims of hurricane Sandy. You just saw Mary Snow and her report from New York. They are outraged -- you are outraged that the speaker last night decided to pull the legislation off the table and not let a vote come up and as a result you have to wait for funds to come in to help these victims. But now you have emerged from a meeting with the speaker and the majority leader, members of your own party, saying you have gotten reassurance that they're going to do the right thing. Tell us exactly what they promised you.

KING: Yes, I obviously strongly disagreed with the speaker's decision last evening. I made that clear.

But today, at the meeting, which was held at 3:00 in the speaker's office, the Speaker John Boehner and Majority Leader Eric Cantor said that this will be the first priority, that on the morning -- on Friday morning, the first vote will be a $9 billion infusion into the federal insurance fund, the flood insurance fund, a $9 billion vote on Friday morning. On January 15th, which is the first legislative day, we will vote on the remaining $51 billion, which is required, we believe for New York, New Jersey and Connecticut.

So, it will be $9 billion on January 3rd, January 4th, and that will be $51 billion on January 15th. That will be brought to the floor. There's no question about it being brought to the floor and it will be up for vote. It's up to us to get to votes, I'm confident we can do it. This is what we were promised this week, for either last night or today, it didn't happen for reasons behind us. The fact is what we asked for is what we got and I'm very pleased with that.

BLITZER: I know you're going to get a lot of Democrats who are going to support you on this $60 billion. The question has always been Republicans, whether there will be a majority of the Republican caucus, the majority of the majority as they say, to support it. In the past, speakers have been reluctant to bring up something that they wouldn't get a majority of their own party behind.

Did you get a commitment specifically from the speaker this is going to come up even if he doesn't have a majority of the Republican caucus onboard?

KING: I asked the speaker that specific question, and the absolute commitment I got was this is coming up on the floor no matter what for a vote. It's going to be divided in two parts, which was the way the original bill was, and the first one will be for $18 billion, and that's -- $9 billion on Friday, and $18 billion on Monday the 15th, and after that there will be another amendment for $33 billion adding up to $60.

We vote on it separately but then they will merge. There's no doubt the $18 billion will pass overwhelmingly, the $33 billion I'm confident that will also pass. We had at least 35 to 40 votes lined up last night, Republican votes, which means more enough and we expect almost all Democrats to vote for it.

So, I have no doubt that if we do our work, we will have the votes.

BLITZER: You were furious earlier in the day over what you saw as a betrayal, a stab in the back, if you will, by your own leadership. I'm going to play a little clip of what you said on CNN earlier in the day. (BEGIN VIDEO CLIP)

KING: These people have no problem finding New York, these Republicans, when they are trying to raise money. They raise millions of dollars in New York and New Jersey. They sent Governor Christie around the country raising millions of dollars for them. I'm saying anyone from New York and New Jersey who contributes one penny to the Republican Congressional Campaign Committee should have their head examined.


BLITZER: All right. That was a few hours ago. Do you want to revise and amend those words?

KING: Yes, a lot has changed. Bottom line is that we now received what we asked for, and as far as I'm concerned what's done is done. I've always considered John Boehner a friend and I said that in the House floor today, which made it all more painful to me to say what I felt had to say. I owed it to my constituents. And I did feel New York in a number of cases was being taken advantage of.

But that's behind it. The speaker has made a commitment and that commitment will be followed through, and I know it will. And, obviously, things are back to where they are.

But I did what I had to do. I strongly believed I had to do it. We got the result we wanted and I give the speaker and majority leader credit for that and it's right now time to go forward.

BLITZER: A lot of your fellow Republicans who are going to vote against the money say, you know what, go ahead, appropriate the funds, but cut spending elsewhere to pay for those funds, $60 billion, a lot of money. That whole tax increase that was affectively approved by the Congress as part of the fiscal cliff legislation, people earning over $400,000 or $450,000 a year, and that brings additional about $60 billion in additional revenue into the IRS.

So, is it important that $60 billion help the victims of super storm Sandy be paid for, if you will, there should be spending cuts elsewhere?

KING: No, that should not be offset. Wolf, we have always in this country, when it comes to an emergency, Katrina is the main example, we've never required an offset. This is a natural disaster. This is an emergency. And the money is appropriated and it's not offset.

We have never done it before, we shouldn't do it now, and it's not going to be done now. This money is going to be appropriated as emergency spending, and it's absolutely required that it be appropriated, it's never been required to be offset before and it shouldn't be now and it won't be.


KING: Wolf, thank you very much.

BLITZER: I suspect we're going to be talking about this down the road a little bit more. We'll see if that entire $60 billion is appropriated or not, but we've got a few weeks to discuss it. In the meantime, let's hope the folks there, the victims of superstorm Sandy, they get some relief because they need it and need it badly.

KING: Wolf, it helps me to go home and, you know, look my neighbors in the eye this weekend, because many people in my neighborhood are homeless right now.

BLITZER: You were blistering in your comments this morning, and Chris Christie, the governor of New Jersey, I never heard him blast fellow Republicans as he did earlier in the day.

KING: If I could say on this, I was in a call last night, at 1:00 in the morning when I got a call from Chris Christie. So I got a preview this morning as to what Chris Christie was going to say today. He was definitely charged up. Thank God he did what he had to do and now we go forward.

BLITZER: And one final question, quickly, if you can give me an answer, did the speaker explain to you and your colleagues why he pulled it from consideration last night?

KING: Basically, he said that there was so much confusion, and there was so much fighting and discussion going on over the fiscal cliff bill, he felt to bring it up in that context would have been damaging to the Republican conference, and it was not the right time to bring it up.

Obviously, I disagreed with that, but he is the speaker and to me what counts is now it's being addressed and that's really the most important thing.

BLITZER: Peter King is the chairman of the House Homeland Security Committee, the Republican congressman from Long Island, he's got a lot of work ahead of him in the new Congress. Appreciate it very much.

KING: Wolf, thank you.

BLITZER: While some politicians were casting their vote on the fiscal cliff, they might have been thinking about votes that won't be cast for another four more years. Stay with us.


BLITZER: The dramatic last-minute House vote on a deal to avert the fiscal cliff has revealed some stunning disarray in the ranks of the GOP leadership. In the end, 85 Republicans were among the 257 lawmakers to vote for the bill. Among them, the House Budget Committee chairman, former vice presidential nominee, Paul Ryan. Also, the House Speaker John Boehner, who broke tradition to actually cast a vote. But his number two and three, the House Majority Leader Eric Cantor and the Majority Whip Kevin McCarthy both voted against the bill. All of this took place after-hours in limbo while Republicans considered to whether to even bring up the bill for a final vote.

Joining us to break it all of this down: our CNN contributor Ryan Lizza. He's the Washington correspondent for "The New Yorker" magazine.

I quickly want to get to that. But, you know, the fact that Hillary Clinton, we had the breaking news. We saw her leaving the hospital with her husband Bill Clinton and daughter Chelsea Clinton, leaving New York Presbyterian Hospital, getting into the van there. There you see her right there in the sunglasses with Chelsea Clinton, and Bill Clinton walking around the other side, her doctor there in the white coat.

I guess that's great news that she is good enough to leave the hospital after four days inside with a blood clot in her head.

RYAN LIZZA, CNN CONTRIBUTOR: I hope so. I hope it's what it looks like, that she's actually been discharged. It seems like the State Department as far as I know, Wolf, is not confirming that yet. So they have been a little opaque through this process, I think we're just going to have to wait and see exactly what's going on here. If she's -- if there is some other reason she is seen leaving getting in the car, or if this is the news we all hope it is that she is ready to go home.

BLITZER: Well, I was going to say we see Bill Clinton smiling there, so I assume --

LIZZA: Exactly. He looked like it was good news, right? Looking awfully dashing in that jacket, I might add.

BLITZER: Yes. All right. Let's -- you know, I have been e-mailing people to find out if she was going to Westchester where they have a home, is she going someplace else, going to a hotel, going some place for some other test, who knows what's going on. But we'll watch it, we'll monitor it and see what's going on.

Let's talk politics a little bit, the fallout from the fiscal cliff legislation. Have you -- do you remember a time when there has been such a split within the top leadership of the Republicans in the House of Representatives on a specific vote?

LIZZA: Well, you know, Cantor and Boehner have a bit of a roller coaster of a relationship. So you know, Cantor became the number two in 2009. And in 2009, 2010, they sort of harmoniously worked together in opposing Obama. And the trouble really started after the 2010 elections when Republicans took over the House, and you started to see a little bit of division in the way that Boehner and Cantor wanted to lead the GOP conference.

The real breaking points or the start of the tension was when Eric Cantor in 2011 was negotiating with Vice President Biden over the fiscal issues and he learned that Boehner had been secretly meeting with Obama in a set of parallel discussions. And Cantor felt blindsided by that, and that started palace intrigue that lasted through much of 2011 where Boehner and cantor were not on the same page in resolving the budget issues and Cantor felt Boehner was going too far in the negotiations with President Obama.

And Cantor was joined by Paul Ryan, the head of the Budget Committee, and Kevin McCarthy, the number three in opposing Boehner's attempt to reach a deal with Obama. So fast-forward a few months, Wolf, into 2012, and the Boehner and Cantor relationship seems to be publicly just fine right up until the election and through the last few weeks.

Until yesterday when for the first time we see a public break and the two top Republicans in the House casting separate votes on one of the most important pieces of legislation we have seen in a long time, and as you know, Wolf, Boehner did not have to vote for that bill.

The speaker of the House generally does not vote, and they do it when they want to make a point, for instance, Nancy Pelosi voted for the health care reform bill because she wanted to make a point that she was in favor of it.

So the fact that Boehner knew Cantor was against it and voted for it tells me that he was trying to send a message to us and to his conference about the stakes involved there.

WOLF BLITZER, CNN ANCHOR: Because yesterday when Eric Cantor came out and publicly told everybody he doesn't like the Senate-passed legislation, he thought it was bad and would vote against it. That almost created the end of the entire process to avert that so-called fiscal cliff.

But in the end apparently Eric Cantor did not have the votes, the 217 votes that would be necessary to pass that kind of amendment that would effectively derailed the whole process.

So John Boehner clearly came out on front on this issue and he got a lopsided majority, bipartisan majority in the House, even though he got the minority of his own Republican caucus.

LIZZA: That's right. Look, nobody has taken more abuse in the last few days than poor John Boehner. You know, he has a tough job. You have to give him some credit for how he dealt with this yesterday. He basically went to his conference and said -- and dared them to vote for the version of the legislation that he essentially hinted would blow up the whole deal.

And when faced with that decision, his conference, the Tea Party faction, the conservatives that have really not been willing to sign off on some of the fiscal deals, they backed down. At the end of the day, they did not support the revised version of the Senate bill and allowed the clean Senate bill to come up and allow John Boehner to have a victory in passing this legislation.

So Boehner has got a very tough difficult conference and he is not a super empowered leader so you have to give him a bit of credit for how he handled the situation yesterday and finally got that piece of legislation passed the finish line.

And put an explanation point on the whole thing by voting in favor of it, and to me, at least, sending a message to his more intransitive members saying that this was the responsible thing to do.

BLITZER: Let's see what happens tomorrow after the new Congress is sworn in. I assume he will remain speaker of the House, but we'll wait and see.

LIZZA: I think he is, yes.

BLITZER: I think he will as well. All right, Ryan, thanks very, very much.

Meanwhile, Wall Street is surging into the New Year on the news of the last-minute fiscal deal. The Dow is closing up more than 300 points in the first day of trading for 2013.

Let's go straight to CNN's Alison Kosik who is over at the New York Stock Exchange with the latest numbers. Big day on Wall Street, Alison?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Big day, the major average is, Wolf, taking place because of the deal to avert the fiscal cliff, but you know what the question is? How long will this good feeling last?

One trader that I talked with said he thinks we will see the market move higher for the first couple months of this year, but then reality will eventually set in by March when we come up on the next round of deadlines that Congress has set for itself.

Because it will have to deal with the triple whammy of spending cuts and the budget and the debt ceiling and the trader tells me until then the market and investors, they should enjoy the ride. After that another analyst tells me the lesson for investors is buyer beware.

BLITZER: Keep in perspective, Alison, as I like to do that, 13,400 number right now where the Dow Jones closed right now, 13,400, remember in 2008 during the collapse and shortly after when the president took office.

It was under 7,000 the Dow Jones Industrial, and the lowest point was around 6,500. It's now more than double, 13,400 so if you take a look at the last four years, Wall Street has clearly been pretty happy with what they are seeing.

KOSIK: Yes, I mean, but the economy doesn't necessarily reflect what is going on in the market. I mean, even with the fiscal cliff deal, you know, one analyst saying we may not go into a recession, but this analyst says the cliff deal could wind up knocking off 1 percent of economic growth this year because what the deal doesn't do is address the longer term deficit issues of the country.

Look at the third quarter GDP that came out. We are at 3.1 percent. It's the best that we have seen in a while, but if you knock off 1 percent that would barely keep up with inflation, plus as we get closer to the next showdown on Capitol Hill, which could be in March.

That could eat away at consumer confidence and business confidence, that can slow hiring, that could slow spending and then you throw in these predictions that some analysts have that if these negotiations in March get chaotic, they could lead to another U.S. downgrade.

So you know, the uncertainties surrounding the debt ceiling and the spending cuts, they could wind up being a big drag on economic growth despite all the gains that we're seeing in the stock market -- Wolf.

BLITZER: At least happy on this, but as you've correctly point out, who knows what is going to happen tomorrow or the day after. Thanks very much.

KOSIK: Sure.

BLITZER: Remember the vote on the troubled asset relief program otherwise known as TARP that costs some Republicans dearly when they wanted to run for president. Now some of the 2016 contenders were determined not to make that same mistake on the fiscal cliff. Stand by.


BLITZER: There may have been some clear winners and losers in the dramatic race to deal with the fiscal cliff, and who they are could reveal some clues about 2016. Our national political correspondent Jim Acosta has been looking at this story for us. Good to have you back after a few days off. Tell us what you're seeing.

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT: Well, a lot of people were watching this, Wolf, much of Washington was peering just over the edge of the fiscal cliff. A select few politicians may have been eyeing the horizon and how their votes just might affect their chances in 2016.


ACOSTA (voice-over): He was on the GOP ticket in 2012 and is a potential contender in 2016. But Paul Ryan, the chairman of the House Budget Committee was nearly invisible in the run up to the fiscal cliff. Ryan finally voted yes and slipped down to the capital chatting briefly with CNN off camera.

UNIDENTIFIED FEMALE: Why did you vote yes?

REPRESENTATIVE PAUL RYAN (D), CHAIRMAN, HOUSE BUDGET COMMITTEE: If you want a bill to pass, you should vote for it.

UNIDENTIFIED MALE: Why did you want it to pass?

RYAN: I am not afraid of anything. I think it needed to pass.

ACOSTA: One reason for his performance, conservative activists are outraged by what happened. Taxes are going up mostly on wealthier Americans while the automatic spending cuts were delayed. AMY KREMER, TEA PARTY EXPRESS: I think there will be consequences because, you know, people have been understanding and tolerant, but at the end of the day, how long can we continue down this path of spend and spend and spend some more?

ACOSTA: So it's no surprise Tea Party activist are touting other possible 2016 candidates like Florida Senator Marco Rubio who stirred up even more presidential speculation by tweeting his opposition saying, "How can Barack Obama call his proposal a deficit reduction package? If it uses tax increases to fund more spending and it increases the debt." Tea Party favorite Rand Paul also voted no with gusty.

SENATOR RAND PAUL (R), KENTUCKY: You may not get any more revenue and you may not get any more economic growth, but you can say I stuck it to the rich people.

ACOSTA: But those Republicans voting yes may have caught a break. After Congress missed the fiscal cliff deadline of December 31st, taxes technically went up on all Americans so when the deal was approved on the 1st, well, listen to anti-tax activist, Grover Norquist.

GROVER NORQUIST, PRESIDENT, "AMERICANS FOR TAX REFORM": So we're not raising taxes. We're actually cutting taxes.

ANDERSON COOPER, HOST, CNN'S "AC 360": Because the Bush tax cuts have expired yesterday?


UNIDENTIFIED FEMALE: What did you say? I'm sorry.

UNIDENTIFIED MALE: I hope so. I think so.

ACOSTA: What about the Democrats? Vice President Joe Biden is very much back in the conversation for 2016 after a shout-out from the president.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I want to thank all the leaders of the House and Senate, in particular I want to thank the work that was done by my extraordinary Vice President Joe Biden.

ACOSTA: But there is one problem. The fiscal mess that is so big even deficit hawk Allan Simpson did the "Gangnam Style" to call attention to it isn't going anywhere.

MAYA MACGUINEAS, FIX THE DEBT: Let me just say that if this is a problem that we have not dealt with before the next presidential election, 2016, nobody should want to have that job because the country will be in such bad shape.


ACOSTA: So the fiscal cliff was just a preview of coming attractions, votes on the debt ceiling and the spending cuts and the fiscal cliff are just around the corner and they too could make or break some political careers in the process.

BLITZER: And as you know, some of these politicians looking ahead, even a few years, decisions they make now they fully appreciate could have a huge impact.

ACOSTA: They don't want to have a vote now that they have to explain later, and that explains a lot of what happened over this process -- Wolf.

BLITZER: It certainly does. All right, thanks very much, Jim Acosta. Good to have you back.

Hillary Clinton is certainly no stranger to critics, but those that question whether she used her health as an excuse to dodge questions about Benghazi are now facing their own scrutiny. She is now out of the hospital. Let's see what's going on.

There is the former president with her. We don't know where she was heading, but standby, we're getting more information.


BLITZER: Let's get to our "Strategy Session" right now, joining us two CNN contributors, the Democratic strategist, Hilary Rosen, and from Macon, Georgia, Erick Erickson, editor-in-chief of

Erick, if you are looking ahead and you are a Republican to 2016, did Marco Rubio who voted against the fiscal cliff legislation, did he do the right thing in voting against it or did Paul Ryan do the right thing in voting in favor of the legislation?

ERICK ERICKSON, CNN CONTRIBUTOR: I think time will actually tell, but my guess is that Marco Rubio and Rand Paul, I think he is going to run in 2016 as well probably will get ahead of Paul Ryan on this.

I don't think one vote really signifies much, but with Paul Ryan now he has got a larger record than either Marco Rubio or Rand Paul and he is one of less than a dozen Republicans that voted every bailout in Congress since he's been in Congress, and that will weigh on him along with his vote.

BLITZER: Do these votes, Hilary, you are a good political strategist, if you will, do these votes that they make now really have a huge impact down the road?

HILARY ROSEN, CNN CONTRIBUTOR: Well, I think they do have an impact, but I don't think that that necessarily gets the GOP very far. What we have seen, you know, in pass primaries is that the most ideological candidate has not succeeded out of the GOP primaries and has not been elected president.

So I think to the extent that Marco Rubio was positioning himself to be the unreasonable guy, the one who, you know, says no all the time, I certainly don't think that helps him. BLITZER: What did you think, Eric, of that blistering Republican criticism of the speaker, John Boehner, earlier in the day because he did not put the Sandy relief legislation on the table last night?

ERICKSON: Well, you know, it looks like it worked from Chris Christi and Peter King and others. It looks like the votes are going to be scheduled now. I think it overshadowed a point about the Sandy relief. I think every Republican is in favor of Sandy relief. They are not in favor of using the Sandy relief measure as a vehicle to fund things in Alaska and Mississippi and Missouri and Michigan.

BLITZER: You also heard Peter King tell me a little while ago, Erick, he doesn't think that the $60 billion should be offset by spending cuts elsewhere, that they should just appropriate the money to help the victims of the Superstorm Sandy. Do you agree with him on that?

ERICKSON: Republicans have been through this argument before and they lose it every time. Remember the earthquake and stuff in Virginia, I guess a year or two ago when Eric Cantor had suggested offsets, and Republicans don't offset anything, and Democrats want to raise taxes to pay for it.

BLITZER: What do you think about all of this, Hilary?

ROSEN: Look, I think that, you know, New York and New Jersey deserve exactly what we have done for other states around the country, and Peter King and Chris Christi are right to take on Boehner. I heard Sean Hannity earlier say that John Boehner -- you know, this is his last day as speaker because his caucus is going to get so frustrated.

But things like the stock market rallying today and things like the country getting a bipartisan vote for the first time, those really ought to be the things that the GOP caucus looks for when they elect their leadership.

It makes no sense to me that they -- that Republicans think that they are going to succeed by either driving the country over the fiscal cliff, by again denying people disaster relief that deserve it and to pay taxes to be sure that the government is going to be there for them.

You have got this division in the GOP caucus between kind of this radical increasingly out of touch, and we're going to see another test coming up again on whether they come up with gun control, and measures the country wants, and it makes no sense that the GOP is just going further and further and further away from mainstream.

BLITZER: Erick, do you want Boehner to continue on as speaker?

ERICKSON: You know, I -- I would love for somebody to replace him, but who? There is nobody out there. He is going to stay on and I would rather him than Eric Cantor between them. You know, to Hilary's point, I think the Democrats will get a turn with what Republicans went through on the debt ceiling increase.

As more and more Democrats start saying that entitlements are not hurting the country fiscally, when all the studies and the CBO say yes, they are. It's going to be interesting to watch how the Democrats if they can get their act together better than the Republicans on this side.

ROSEN: That will be tough votes for Democrats to take, spending cuts on entitlements, no question.

BLITZER: We got to go, but Erick, did you just say you think Boehner will be a better speaker than Eric Cantor?


ERICKSON: I absolutely think Boehner is better speaker than Eric Cantor. I don't trust Eric Cantor as far as I can throw him.


ERICKSON: Because go back to 2008 in the TARP vote, for Eric Cantor to stand and hold a press conference and say that the reason Republicans didn't vote for TARP initially was because Nancy Pelosi said not nice words about him. That was a little bit too opportunistic. He's been more and more opportunistic the past few years undermining John Boehner including rallying Republicans to vote for the fiscal cliff measure and at the last minute he himself turning against it.

BLITZER: Interesting stuff. All right, guys, thanks very much. We will continue this conversation.

ERICKSON: Thank you.

BLITZER: Other news we are following, New York Police probably don't make many arrests for possessions of explosive in Greenwich Village, but that makes the latest plot they interrupted all the more bizarre.


BLITZER: Police have a couple in custody accused of possession of an explosive with intent to use. CNN's Susan Candiotti reports.


SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): It's not the kind of activity you would expect in an apartment in a posh section of Manhattan, but when police raided the home of Aaron Green and Morgan Glee meaning Greenwich Village, they found explosive material called HMTD and chemicals used to make it, along with two shotguns and a flare gun and high capacity magazines.

RAY KELLY, NEW YORK POLICE COMMISSIONER: The HMTD is extremely dangerous, and that's why the building was evacuated and surrounding buildings as well were certainly put on notice because of the ability of this to just go off at any given time.

CANDIOTTI: As shocking the suspects come from successful families. Erin Green's father is a successful business owner and Morgan Gleveman's dad is well known doctor who owns the building where the two lived rent free.

Gleveman's mom is a high-end realtor. Green's lawyer declined to comment. A law enforcement source says the two met in rehab and that her family believes Green was the instigator.

(on camera): What appears to have been going on in that apartment?

KELLY: Well, we are still trying to determine precisely what was going on, but obviously the biggest cause for concern was the explosive.

CANDIOTTI (voice-over): HMTD is a signature al Qaeda bomb-making material. It was used successfully in the 2005 London subway bombing attack. Convicted New York City subway plotter (inaudible) tried to use it, but had trouble making it.

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: It's a highly unstable bomb-making element and it's so unstable terrorists steer away from it because it's hard to handle and can easily go off.

CANDIOTTI (on camera): Police were turned on to the suspects by a tip. The alleged bomb makers here in Washington Square Park invited a couple over to their apartment nearby to use the showers, and that's when suspect Aaron Green allegedly showed off the weapons and even blew up a small amount of explosives right there in the apartment.

(voice-over): Law enforcement sources say the incident happened six weeks ago and authorities suspect the tipster might have been moved to call the police after the Newtown shooting.

(on camera): Did they have a beef against somebody or any writings? What are you trying to find out about them?

KELLY: Well, we're trying to identify precisely what you said. Was there a target? Was there a cause that they were adhering to, and what was the objective or the goal of having all of this information and this weaponry?


CANDIOTTI: And so again, the couple has not been charged in any kind of terror plot and for now New York Police are trying to figure out how far the investigation will take them, but it sure is raising a lot of eye brow.

Aaron Green has made a first court appearance and has not entered a plea and will appear in court later this week and the young woman in the case is still in the hospital after giving birth to a baby girl, so she has not made a first court appearance yet either. Wolf, back to you.

BLITZER: All right, we'll stay on top of the story together with you. Susan, thank you.

Up next, the pretty surprising choice of words the House Speaker, John Boehner, used with the Senate Majority Leader Harry Reid. (COMMERCIAL BREAK)