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determined, also cuts of so-called next generation weapons systems, as well as future benefits. jon, this is happening across multiple department, not just the military. jon: yeark the pentagon obviously is bracing for pretty veer cuts. chief white house correspondent ed henry live at the white house with the latest. what's this all about, ed? >> reporter: good to see you, jon. this is a regular review the pentagon does and the bottom line is what the -- >> jon i'm sorry, the president has just emerged at the pentagon, along with the joint chiefs chairman. you're getting squashed, ed! let's listen to the president. >> good morning, everybody. the united states of america is the greatest force for freedom and security that the world has ever known. and in no small measure that's because we built the best trained, best led, best equipped military in history and as commander in chief i'm going to keep it that way. indeed all of us on this stage, every single one of us, have a profound responsibility to every soldier, sailor, airman, marine, and coast guardsman who puts their life on the line for america. we owe them a strategy with well defined goals, to only send them into harm's way when it's absolutely necessary, to give them the equipment and the support that they need to get the job done, and to care for them and their families when they come home. that is our solemn obligation. in the past three years, that's what we've done. we've continued to make historic investments in our military, our troops and their capabilities, our military families, and our veterans. and thanks to their extraordinary service we've ended our war in iraq, we've decimated al-qaeda's leadership, we've delivered justice to u usama bin laden and put that terrorist network on the path to defeat. we've made important progress in afghanistan and we've begun the transition so afghans with assume more responsibility for their own execute, we've joined partners and allies to protect the libyan people. now we're trng the page on a decade of war. three years ago we had some 180,000 troops in iraq and afghanistan. today, we've cut that number in half. and as the transition in afghanistan continues, more of our troops will continue to come home. more broadly, around the gloarks we've strengthened alliances, forged new partnerships, and served a a force for universal rights and human dignity. in short, we've succeeded in defending our nation, taking the fight to our enemies, reducing the number of americans in harm's way, and we've restored america's global leadership. that makes us safer and it makes us stronger. and that's an achievement that every american, especially those americans who are proud to wear the uniform of the united states armed forces, take great pride in. this success has brought our nation once more to a moment of transition. even as our troops continue to fight in afghanistan, the tide of war is receding, even as our forces prevail in today's mission, we have the opportunity and responsibility to look ahead to the force that we are going to need in the future. at the same time, we have to re23450u our -- renew our economic strength here at home which is the foundation of our strength around the world, and that includes putting our fiscal house in order. to that end, the budget control act passed by congress last year, with the support of republicans and democrats alike, mandates reductions in federal spending, including defense spending. i've insisted that we do that responsibly. the security of our nation and the lives of our men and women in uniform depend upon it. that's why i called for this comprehensive defense review to clarify our strategic interests in a fast changing world and to guide our defense priorities and spending over the coming decade, because the size and structure of our military and defense budgets have to be driven by a strategy, not the other way around. moreover, we have to remember the lessons of history. we can't afford to repeat the mistakes that have been made in the past. after world war ii, after vietnam, when our military was left ill-prepared for the future. as commander in chief i will not let that happen again. not on my watch. we need a smart, strategic set of priorities, the new guidance that the defense department is releasing today does just that. i want to thank secretary panetta and general dempsy for their extraordinary leadership during this process, i want to thank the service secretaries and chief, the combatant commanders and so many defense leads, military and civilian, active guard and reserve, for their contributions. many of us met repeatedly, asking tough questions, challenging our own assumptions, and making hard choices, and we come together today around an approach that will keep our nation safe and our military the finest that the world has ever known. this review also benefits from the contributions of leaders from across my national security team, from the departments of state, homeland security, and veterans affairs, as well as the intelligence community. and this is critical. because meeting the challenge of our time cannot be the work of our military alone, or the united states alone. it requires all elements of our national power, working together in concert with our allies and our partners. so i'm going to let leon and mary go into the details, but i just want to say that this effort reflects the guidance they personally gave throughout this process. yes, the tide of war is receding, but the questions that this strategy answers is what kind of military will we need long after the wars over the last decade are over. and today, we're fortunate to be moving forward from a position of strength. as i made clear in australia, we will be strengthening our presence in the asia pacific and budget reductions will not come at the expense of that critical region. we're going to continue investing in our critical partnerships and alliances, including nato, which has demonstrated time and again, most recentfully libya, that it's a force multiplier. we will stay vigilant, especially in the middle east. as we look beyond the wars in iraq and afghanistan, and the end of long termination building with large military foot prints, we'll be able to ensure our security with smaller conventional ground forces. we'll continue to get rid of outdated cold arrest era systems so we can invest in the capabilities that we need for the future, including intelligence, surveillance, and reconnaissance, counterterrorism, countering weapons of mass destruction, and the ability to operate in environments where adversaries try to deny us access. so yes, our military will be leaner, but the world must know the united states is going to maintain our military superiority with armed forces that are agile, flexible, and ready for the full range of contingencies and threats. we're also going keep face with those who serve by making sure our troops have the equipment and capabilities they need to succeed and prioritizing efforts that focus on wounded warriors, mental health and well being of our military families. and as our newest veterans rejoin civilian life we'll keep working to give our veterans the care, the benefits and job opportunities that they deserve and that they have earned. finally, although today is about our defense strategy, i want to close with a word about the defense budget that will flow from this strategy. the details will be announced in the coming weeks. some will no doubt say that the spending reductions are too big. others will say that they're too small. it will be easy to take issue with a particular change, in a particular program, but i encourage all of us to remember what president eisenhower once said, that each proposal must be weighed in the light of a broader consideration. the need to maintain balance in and among national programs. after a decade of war, and as we rebuild the source of our strength at hole and abroad, it's time to restore that balance. i think it's important for all americans to remember, over the past ten years, since 9/11, our defense budget grew at an extraordinary pace. over the next ten years, the growth in the defense budget will slow, but the fact of the matter is this. it will still groavment because we have global responsibilities that demand our leadership. in fact, the defense budget will still be larger than it was toward the end of the bush administration. and i firmly believe, and i think the american people understand, that we can keep our military strong and our nation secure with a defense budget that continues to be larger than roughly the next ten countries combined. so again, i want to thank secretary panetta, chairman dempsy, all the defense leaders on this stage and some who are absent for their leadership and their partnership throughout this process. our men and women in uniform give their very best to america, every single day. and in return, they deserve the very best from america. and i thank all of you for the commitment to the goal that we all share. keeping america strong and secure in the 21st century, and keeping our armed forces the very best in the world. and with that, i will turn this discussion over to leon and to mary, who can explain more and take your questions. so thank you very much. i understand this is the first time apartment has done this. pretty nice room! thank you guys. jon: the first time the president has made this kind of address at the pentagon. it's part press conference not so much on his part but it will be from the defense secretary and chairman of the joint chiefs of staff, general martin dempsy, the mary of whom he spoke. we're also expect to go hear from secretary of defense leon panetta about these budget cuts that his department at the pentagon has signed on to. let's listen in now, i believe that's the defense secretary taking the podium. >> let me begin by thanking president obama for coming here to the pentagon this morning, and also, in particular, to thank him for his vision and guidance and leadership as this department went through a very intensive review that we undertook to try to develop a new strategic guide thanks we're releasing today. and in my experience, this has been an unprecedented process, to have the president of the united states participate in discussions involving the development of a defense strategy. and to spend time with our service chiefs and spend time with our combatant commanders to get their view, it's truly unprecedented. this guidance that we are releasing today, which has been distributed now throughout the department, it really does represent an historic shift to the future and it recognizes that this country is at a strategic turning point, after a decade of war, and after large increase necessary defense spending. as the president mentioned, u.s. military mission in iraq has now ended, we do have continued progress in afghanistan. it's tough and it remains cheajing, but we are beginning to enable a transition to afghan security responsibility. the nato effort in libya has concluded with the fall of qaddafi, and targeted terrorism efforts have significantly weakened al-qaeda and decimated its leadership. and now as these events are occurring, congress has mandated by law that we achieve significant defense savings so clearly we are at a turning point. but even as our large scale military campaigns recede, the united states still face s complex and growing array of security challenges across the globe. and unlike past drawdowns when oftentimes the threats that the country was facing went away, the fact is that there remain a number of challenges that we have to confront. challenges that call for reshape be of america's defense pry on thes -- priority, focusing on the threat of violent extremism which is still there and needs to be dealt with, proliferation of lethal weapons andters, the destabilizing behavior of nations like iran and north korea. the rise of new power across asia. and the dramatic changes that we've seen unfold in the middle east. all of this comes at a time when america confronts a serious decifit and debt problem here at home. a problem which is itself a national security risk that is squeezing both the defense and domestic budgets even as we face these considerable pressure, including the requirement of the budget control act to reduce defense spending by what we have now as a number $487 billion over ten years, doy not believe, and i've said this before, that we have to choose between our national security and fiscal responsibility. the department of defense will play its part in helping the nation put our fiscal house in order. the president has made clear and i've made clear that the savings that we've been mandated to achieve must be driven by strategy and must be driven by rigorous analysis, not by numbers tonight. consequently, over the last few months, we've conducted an intensive review to try to guide defense priorities and spending over the coming decade. all of this in light of the strategic guidance that we've received in discussions with the president and the recommendations of this department's both senior military and civilian leadership. both of them provided those kinds of recommendations. this process has enabled us to assess risk, to set priority, and to make some very hard choices. let me be clear again. the department would need to make a strategic shift, regardless of the nation's fiscal situation. we are at that point in history. that's the reality of the world we live in. fiscal crisis has forced us to face the strategic shift that's taking place now. as difficult as it may be to achieve the mandated defense savings, this has given all of us in the department of defense the opportunity to reshape our defense strategy and floor structure to more effectively meet the challenges of the future, to deter aggression, to shape the security environment, and for decisively prevail -- and to decisively prevail in any conflict. from the beginning, i set out to ensure this strategy review would be inclusive. chairman dechsy and i met frequently with department leaders including the undersecretary, service chiefs, the service secretaries, combatant commander, our senior enlisted advisers. we also discussed this strategy and its implications obviously with the president, his national security advisers, with members of congress, and with outside experts. there are four overarching principles that have guided our deliberation, and i've said this at the very beginning, as we began this process. one, we must maintain the world's finest military. one that supports and sustains the unique global leadership role of the united states in today's world. two, we must avoid hollowing out the force. a smaller, ready and well-equipped military is much more preferable to a larger ill-prepared force that has been arbitrarily cut across the board. third, savings must be achieved in a balanced manner with everything on the table. including politically sensitive areas that will likely provoke opposition on parts of the congress, on industry, and from advocacy groups. that's the nature of making hard choices. four, we must pressure the quality of the all-volunteer force and not break faith of the men and women in uniform and their families. with these principles in mind i'll focus on some of the significant strategic choices and shifts that are being made. the united states military -- let me be very clear about this. the united states military will remain capable across the spectrum. we will continue to conduct the complex set of missions ranging from counterterrorism, ranging from countering weapons of mass destruction, to maintaining a safe, secure and effective nuclear deterrent. we will be fully prepared to protect our interests, defend our homeland and support civil authority. our goal to achieve the u.s. force for the future involves the following significant changes. first, the u.s. joint force will be smaller and it will be leaner. but its great strength will be that it will be more agile, more flexible, ready to deploy quickly, innovative and technologically advanced. that is the force for the future. second, as we move towards this new joint force, we are also rebalancing our global posture and presence, emphasizing the pacific and middle east. these are the areas where we see the greatest challenges for the future. the u.s. military will increase its institutional weight and focus on enhanced presence, power projection and deterrence in yaish pacific. this region is growing in importance to the future of the united states in terms of our economy and our national security. this means, for instance, improving capabilities that maintain our military's technological edge and freedom of action. at the same time, the united states will place a premium in maintaining our military presence and capabilities in the broader middle east. the united states and our partners must remain capable of deterring and defeating aggression, while supporting political progress and reform. third, the united states will continue to strengthen its key alliances to build partnerships and to develop innovative ways to sustain u.s. presence elsewhere in the world. the long history of close political and military cooperation with our european allies and partners will be critical to addressing the challenges of the 21st century. we will invest in the shared capabilities and responsibilities of nato, our most effective military alliance. the u.s. military's force posture in europe will of necessity continue to adapt and evolve to meet new challenges tawntds, particularly in light of the security needs pft continent relative to the emerging strategic priorities that we face elsewhere. we are committed to sustaining a presence that will meet our article v commitments, deter aggression, and the u.s. military will work closely with our allies to allow for the kinds of coalition operations that nato has undertaken in libya and afghanistan. in latin america, africa, elsewhere in the world, we will use innovative methods to sustain u.s. presence, maintaining key military to military relations and pursuing new security partnerships as needed. wherever possible, we will develop low cost and small footprint approaches to achieving our security objectives. emphasizing rotational deployments. emphasizing exercises. military exercisings with these nations. and doing other innovative approaches to maintain a presence throughout the rest of the world. for this we shift the size and composition of our ground add naval force, we must be capable of successfully confronting and defeating any aggressor and respond to the changing nature of warfare. our strategy review concluded that the united states must have the capability to fight several con flicts at the same time. we are not confronting obviously the threats of the past. we are confronting the threats of the 21st century. and that demands greater flexibility to shift and deploy forces to be able to fight and defeat any enemy, anywhere. how we defeat the enemy may very well vary across conflicts. but milk no mays take -- mistake, they will the capability to confront and defeat more than one adversary at a time. as a global force our military will never be doing only one thing. we will be responsible for a range of missions and activities across the globe, of varying scope, duration and strategic priority. this will place a premium on flexible and adaptable forces that can respond quickly and effectively to a variety of contingencies and potential adversaries. again, that's the nature of the world that we are dealing with. in addition to these forces, united states will feam size building the capacity of our partners and allies to more effectively defend their own territory, their own interests. through a better use of diplomacy, development, and security force assistance. nashes with this construct -- in accordance with this construct and the end of u.s. military commitments in iraq and the drawdown that is already underway in afghanistan, the army and marine corps will no longer need to be sized to support the kind of large scale, long term stability operations that have dominated military priorities and force generation over the past decade. lastly, as we reduce the overall defense budget, we will protect and in some cases increase our investments in special operations forces, in new technologies, like isr and unmanned systems, in spairks and in particular, in cyberspace capabilities. and also our capacity to quickly mobilize if necessary. these investments will help the military retain and continue to refine and constitutionalize the expertise and capabilities that have been gained at such great cost over the last decade. and most importantly we will structure and pace the reductions in the nation's ground forces, in such a way that they can surge, regenerate, and mobilize capabilities needed for any contingency. building the reversability and the ability to quickly mobilize will be key. that means reexamining the mix of elements in the active and reserve components. it means maintaining a strong national guard and reserve. it means retaining a healthy ch -- cadre of experienced ncos and mid-grade officers and pressuring the -- preserving the health and viability of the nation's defense industrial base. the strategic guidance that we're providing is the first step in this didn't's goal to build a joint force of 2020, a force sized and shaped differently than the military of the cold war, the post-cold war force of the 1990s, or the force that was built over the past decade to engage in large scale ground wars. this strategy and vision will guide the more specific budget decisions that will be finalized and announced in the coming weeks as part of the president's budget. in some cases we will be reducing capabilities that we believe no longer with a top priority. but in other cases, we will invest in new capabilities to maintain a decisive military edge against agrowing array of threats. there's no question that we have to make some tradeoffs and that we will be taking, as a result of that, m level of additional but acceptable risk in the budget plan that we release next month. these are not easy choices. we will continue aggressive efforts to weed out waste, reduce overhead, to reform business practices, to consolidate our duplicative operations but budget reductions of this magnitude about impact the size and capabilities of our military, and as i said before, true national security cannot be achieved through a strong military alone. it requires strong diplomacy it requires strong intelligence efforts, and above all, it requires a strong economy, fiscal discipline and effective government. the capability, readiness and agility of the force will not be sustained if congress fails to do its duty and the military is forced to accept far deeper cuts. in it, the arbitrary across the bored cuts that are currently scheduled to take effect in january 2013 through the mechanism of sequester. that would force us to shed missions and commitments and capabilities that we believe are necessary to protect core u.s. national security interests, and it would result in what we think would be a demoralized and hollow force. that is not something that we intend to do. finally, i'd like to also address our men and women in uniform, and the civilian employees who support them, who i know have been watching the budget debates here in washington with concern about what it means for them and for their families. you have done everything this country has asked you to do and more. you have put your lives on the line and you have fought to make our country safer and stronger. i believe the strategic guidance honors your sacrifice and strengthens the country by building a force equipped to deal with the future. i have no higher responsibility than fighting to protect you and to protect your families. and just as you have fought and bled to protect our country, i commit to you that i will fight for you and for your families. there is no doubt that the fiscal situation this country faces is difficult. and in many ways we are at a crisis point. but i believe that in every crisis, there is opportunity. out of this crisis, we have the opportunity to end the old ways of doing business and to build a modern force for the 21st century that can win today's wars and successfully confront any enemy and respond to any threat and any challenge of the future. our responsibility, my responsibility as secretary of defense, is to protect the nation's security and to keep america safe. with this joint force, i am confident that we can effectively defend the united states of america. thank you. jon: leon panet yarks the defense secretary there at the pentagon talking about the decisions that have been made by president obama and in conjunction with the chairman of the joint chiefs of staff there, general martin dempsey, and the defense secretary, to cut -- the estimate is $450 billion from the pentagon budget over the next ten years. what does that mean? well, let's bring in a couple of experts, captain raymond brown is a u.s. navy surface warfare officer and former chief of intelligence ansist for the u.s. coast guard, also with us, rue tired lieutenant colonel mcginnis. we brought new in part because the branches you served face different futures. colonel, the speculation is the army is going to be downsized and the president and secretary of defense didn't give us hard numbers this time around, it was general broadstrokes, the expectation is the army is going to be downsized from 575,000 active duty troops now to about 490,000 over ten years, colonel mcginnis, what do you think about that? >> it's to be anticipated obviously with afghanistan dying down, we're out of iraq. there's an underlying assumption, jon, that the counterinsurgencies we fought there, as well as in africa and the rest of the world against al-qaeda and its morphed alliances is going to dwindle and we won't have to have as many ground forces. that, of course, is part of put pentagon together a strategy. you have to guess, you have to accept risks as the secretary said, so we'll have to wait and see. at the same time, he's promised us a joint force that is very capable. that to me means that we're going to work very closely with our air force and our marines and our army and our navy and we're going to deploy together, we're going to have robust capabilities, but it's going to be somewhat more limited. we're going to shift our posture, in other words, we're not going to have as many people obviously in europe, but more in asia. perhaps they didn't mention the word china, but i think that was underlining what president obama said, as well as mr. panetta, so there are a lot of issues here. i think we'll know more when we read the details which we haven't as of yet. jon: captain brown, china may be part of the reason that the expectation is that the pentagon is not going to be cutting any aircraft carriers. there was some thinking if you cut from 11 down to ten aircraft carriers you could save significant money, apparently the president and the secretary of defense don't want to do that but there is talk of a smaller marine corps. >> well, there is talk of a smaller marine corps which has performed so magnificently overseas in the last decade, but the marines do not need to be a second army, they need to return to its roots. with respect to the china question, the great wall is expanding out at sea and challenging norms of international law and national sovereignty and we do need to counteract that. although that's going to take more shifts than the united states has now -- ships than the united states has now, which is a very expensive proposition. i was chagrined, regarding ships, not to hear anything about the arctic in the presentings where there is more water now and international trade an our own international interests, both our sovereignty and rites of passage are going to be challenged over the next 10-15 years. jon: you're talking about the fact that the ice pack is making it possible, the retreating ice pack is making it possible to send ships through the arctic in a way that hasn't generally been done before, the russians have become very aggressive about trying to lock up those shipping lanes. >> absolutely correct, and the united states does not have enough ice breaking ships or enough ice-capable ships that are able to travel in ice-infested waters, not necessarily breaking it. that wasn't mentioned at all and that is a growing challenge over the next, as i said, 10-15 years. jon: lieutenant colonel mcginnis, the pentagon, ever since i can remember, always wanted to be prepared to fight two wars at the same time anywhere on the globe. this new strategy basically, as i understand it, abandon that is proposal, although you did hear the defense secretary say we will be able to defeat any enemy, anywhere. >> yeah, he's talking about a flexible joint force, and you know, the flexibility comes in, the special capabilities, even the president talked about the intelligence surveillance reconnaissance capability, some of our strike capability. we never had enough for two major theaters with all the new bells and whistles we use in today's modern battlefield, so we're going to shift those anyway. the question is whether or not we're going to have enough bombers, enough surface ships and so forth to deliver the capability we need, and the president talked about unmanned capabilities, we're going to have submarines, are we going to more u.a.v.s that are going to be engaged in the battle as they have been going after al-qaeda in afghanistan and et cetera. so all of these capabilities, we're going to shift. no, we're probably not going to have a land war with china, but we clearly need to have the capability to be able to project large numbers of forces where our vital national interests are at risk, and that's something that the president's strategy hopefully will outline. jon: again, not a lot of details there but we'll keep an eye on them and bring them to our viewers in the weeks and months ahead as these cuts are allowed. lieu ten -- lieutenant, captain, thank you both. we'll be right back. welcome idaho, where they grow america's favorite potoes. everyone knows idaho potatoes taste great. but did you know they'reood for you too? they're high in vitamins and potassium. and idaho potatoes are now certified to carry the heart checkmark from the american heart assoction for foods low in saturated fat and cholesterol. so they're good for my family, and for yours. heart smart idaho potatoes. always look for the grown in 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appointments, even questioning their legality at this point. the president himself criticized similar recess appointment business then then-president george w. bush back in 2005. in fact president obama had this to say about the recess appointment of john bolton as u.s. ambassador to the u.n., saying, quote, not in the history of the united nations representative have we ever had a recess appointment, somebody who could get through a nomination in the senate and i think that means that we will have less credibility, again, from president obama back in 2005. senator work quirker, republican of tennessee is critical of the recess appointments and joins us now. nice to have you back on the program. >> jen yarks always good to be with you. jenna: senator, looking back at recess appointment necessary general, and i see that the president has made 28 recess appointments so far in his term, but if you look at president george w. bush, at the same time in his term, he made 34 recess appointments. if we look back to president reagan, he made 240 recess appointments over his two terms in office. so what makes this any different? >> well, i think that is most abusive about what has happened over the last week is what's happening with those norb appointees. they didn't even come to the senate until maybe a couple weeks ago, so there's been no hearings whatsoever on these. i think that that is incredibly abusive when, again, there's not even been a chance for the senate to take them up. you have no idea whether a conformation would have gone through or not. he just decided to send a couple of folks up and have them appointed. so i'm actually shocked at what he did with the norb. i'm not surprised, candidly, that he appointed mr. cordray, head of the consumer protection agency, i knew that obviously the senate was not going to confirm up until we had some checks and balances, the kinds of things that most people in tennessee would like to see happen, the securities and exchange commission, the federal deposit insurance corporation, the federal reserve all have boards and commissions, and what republicans and a lot of people have asked is just that we have an appropriate check and balance with this new consumer protection agency. this guy is going to have unfettered power. this one person, one person, not an agency, not a group of people, is going to have the ability to make unprecedented rules on the financial industry with no check and balance. so it is something both case we have what i would call abusive polices being put in place, and i don't think it's the kind of thing that americans believe is an appropriate check and balance. jenna: so those are your concerns. what do you actually do about these appointments now that they've been made? >> there's absolutely nothing that can be done, other than really pursuing the constitutionality of being able to do what's been done. this is really not a recess that's taking place in the senate, and you know, i think senator byrd from west virginia, who was a democrat, well known, who really looked at the process of the senate and wanted to keep the integrity there, he'd probably be rolling over in his grave at what has just happened. so i think that will be challenged. but from the standpoint of what we can do immediately, the president has acted in a way that just really sticks a stick in the eye of the senate and the congress in general, something that as you mentioned, he thought was very inappropriate just a few years ago. and unfortunately, at a time when our country really needs to be coming together to solve the big problems that rur country has, probably has poisoned the well even more. it's obviously something that he's done to rally an extremist base that he wants to come to his aid in the presidential campaign, but from the standpoint of overall polices for our country, something that probably takes us a step even further back from where we were when we left and came home for christmas recess. jenna: you point to so many dynamics, between the congress and the white house as well, between the public and government. you know the applicable based on the polls are so disillusioned with the way things are working in d.c., and just picking off that point, playing devil's advocate for a moment, why not just try it? why not just try this head this, director of the financial bureau and just kind of see how it goes? why not just let it through and just start the year anew? why do you think this is such a game changer going into 2012? >> well, i don't think the consumer protection head -- i think we thought at some point this was something the president was going to try to do. again, i talked with the white house on multiple occasions about, again, just trying to keep a check and balance. i think most people understand that congress has no ability to be able -- to bill the appropriations that go to this particular agency, but -- >> jenna: well, you -- judge napolitano -- >> you cannot -- >> i can't -- most people don't understand or haven't been made aware that where the funding for this agency comes is from the federal reserve. the federal reserve prints money and invests it and it creates income out of thin air. jenna: but when you cut the salary, though, for this man as the director, can you cut the -- >> you can't touch it. it's untouchable. the money comes directly from the federal reserve, which prints money and invests it, it creates income. that's called seniorage, that goes to pay for this consumer protection agency, so congress has zero, zero role in this. there's also the definitions called abusive. jenna: we're going to have to -- >> i mean, this -- >> jenna: unfortunately we're going to have to threeive there. it's interesting, you mentioned both republican and democratic administrations have done this before, but we'll see how this plays out in the new year. it's interesting to hear what you have to say about the funding, not many of us knew about that. senator corker, thank you for joining us, we appreciate it. jon: wish i could print money and hire people with it! jenna: that would be nice. the first direction that money would go, right here, right? >> jon: you'd never want to work for me, trust me! >> first new hampshire, then south carolina, and it could get down and dirty in dixie. the latest on the gop2012 presidential debate. that's next. i come in peace... i come in peace. but you go in pieces. 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[ female announcer ] we all go. why not enjoy the go with charmin ultra strong? jon fox news is your election headquarters and with the dramatic shakeup in the wake of the iowa caucuses, the battle now heads to new hampshire. and then south carolina. texas governor rick perry is looking to make a big comeback in the first southern primary, after his fifth place showing on tuesday. a lot of people thought he might drop out. he is no. analysts say mitt romney, though, faces an uphill climb with evangelical voters in south carolina. that leaves newt gingrich and rick santorum to compete for the role of the antiromney challenger. joining us now with more inside information, political reporting for the state newspaper in south carolina, gena smith. gene yarks i know are you a south carolina native and political reporting. it's got to be an exciting time in that state right now. >> absolute levment we're starting to see the tv ads start, we're starting to hear the candidates every day. very exciting. we're wait wg eager and baited breath. jon: i know mitt romney has a new ad that focuses on jobs, especially on that big boeing plant that the company has built in south carolina and been told by the federal government, national labor relations board it can't open. >> yeah, this is one of the new ad that is we're seeing. it fits in very well are our governor, nicky haley, what she has said. south carolina is very much an antiunion state, very much right to work, so that message is throwing red meat to conservatives here in south carolina. romney has done well in the polls here. there still is a very strong sentiment of anybody but romney. so santorum, gingrich, and perry all have a chance here in south carolina to claim that title of being the antiromney candidate. jon: a lot of people thought the texas governor would pack it in after he came in fifth place in iowa and then came that tweet about this time yesterday from his campaign staff where he said on to south carolina. he's kind of betting all the mashbies -- marbles i guess in your state but that's really something of a gift for mitt romney, isn't it? >> it really is. perry, when he first came on the scene in august and announced his canada's agree in south carolina, he was at the top of the polls, but then the debates really killed him with south carolinians, he stumbled, fumbled and has consistently polled in single digits since then. it looked like he was going to get out, and he was convince to take his final stand in south carolina. perry seems to be someone custom-made for south carolina, a southern governor, wears his faith on his sleeve, talks about the issues sha south carolina cares about, the economy, talks about union, is very tough on illegal immigration, but you're right, it can be a blessing to romney, because perry is going to have to fight with santorum, who is getting that great bounce out of iowa, along good beginning -- along with gingrich to claim that antiromney title. it will be interesting to see what they try here in south carolina to clench the deal. jon: and that commercial i mentioned from hith romney at the top, talking about jobs, has to resonate in a state where unemployment stands around, what, 10 percent right now? >> right. right at 10 percent. we're very different from iowa in the sense that the economy is still by far the biggest issue. and romney has done a good job of talking about the economic problems in the country and south carolina. that is going to resonate very well here, much more so i think than in iowa. jon: gina smith is a political reporter with the state newspaper in south carolina. i'm sure we'll be talking to you again as that primary gets closer. gina, thank you. >> thank you. jenna: we are your election headquarters. we have brand new polls showing a dramatic shift. how things are shaping up in the republican presidential candidates' standings on a national level, who's on top after the iowa caucuses, plus, this dramatic rescue, coming up. love to walk outside. osteo bi-fl has really helped my kne. osteo bi-flex has been incredible for me, and i swear by it. 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[ male announcer ] osteo bi-flex. the #1 doctor and pharmacist recommended brand. jenna: candidates are rolling across new hampshire rounding up support for next week's vote. we started in iowa at the beginning of the week, we are in new hampshire already, pretty soon south carolina. i'm jenna lee? i'm jon scott. with five days left before the first presidential primary, the candidates are courting voters in the granite set. underdogs are snapping at the heels hoping to move from the back of the back to the front. carl cameron is live in portsmouth, new hampshire, what is going on there today. >> reporter: funny you should talk about underdogs, we are here outside of portsmouth, jon huntsman will have a little event in a short while with a business roundtable. i had a chance to speak to him when he was watching in. he referred to himself as the underdog. he is the candidate that has camped out here longer than anybody else e. hopes to be the rick santorum of new hampshire insofar as rick santorum campaigned hard in iowa and surged at the last moment into great prom nance by coming in second. that would be huntsman dream. the race here is dominated by mitt romney. mitt romney is 20 points ahead-plus in most of the polls. he's poised to do something unprecedented, win the iowa caucuses and the new hampshire primary back-to-back. because of that he is under tremendous fire. all of his rivals are pointing all of their artillery directly at him. newt gingrich and rick santorum the biggest threats against mr. romney here in new hampshire went at him. listen to this. >> as governor he appointed liberal judges to appease the democrats, as governor he raised taxes, as governor he put planned parenthood in romney care by name, and as governor planned romney care has tax paid abortions. there is a very big difference in our two sets of values. i don't believe a massachusetts moderate is in a very good position to debate barack obama. >> i believe you need to nominate someone who presents a very clear contrast. i've never been for government-run healthcare. never. unlike the other two folks who are running here who have supported individual mandates, have supported top down government healthcare, i never have. in fact i've been the leader of just the opposite. >> reporter: romney is under fire and already looking to sort of defend himself down the road with ad campaigns and the proromney super pack putng ads all over the air wave in florida and south carolina. mccain has made something of his career in the u.s. senate going against pork barrel ear-mark spending. today mr. mccain pointed out that when mr. santorum was in the u.s. senate he was somebody who requested and got earmarks for his state of pennsylvania. years ago when santorum was in the senate earmarks were nowhere as radioactive as they are now. john mccain has always been a consistent critic of them. the pennsylvania senator is trailing in the polls here. romney has a huge, huge lead. what all the candidates are doing today and will continue to do tomorrow into this weekend is test out now combat rhetoric. there are going to be two back-to-back debates this weekend, one on saturday and one on sunday. that did not happen in the new hampshire process in the past either. because of that they all know they'll have to look each other in the eye, face-to-face, elbow to elbow and repeat some of these charges for the new hampshire television and national debate audience. jon: a couple of big debates coming up. carl cameron, thank you. jenna: for more on the next phase of the race and will ar what it will take to advance the candidates going forward, dana perino is here. let's go big picture of what we're seeing here in the race. what message coming from the republican party do you really think is resonating with americans right now? >> well, at this point if you're a republican-leaning voter the only thing that is really resonating is the anti-obama message. that works for a little while. but i'm surprised that there doesn't seem to be any republican candidate, nor even the president of the united states who has given a big picture, this is where i want to take the country, kind of very inspiring speech. i can understand the knit picking about earmarks but that is not going to solve our problems. jenna: why do you think we haven't seen that yet? >> it's a mystery to me. what is key to running a big national campaign is you have to be able to run on your record, that is what these people are doing, but you have to have hired the best people, have a great organization, but the third key component is to have a strong, positive agenda that you tell american people about over and over and over again. we don't -- you couldn't tell me right now, what is it exactly that romney wants to do for the country? make things better is not specific enough. jenna: do you think they know? do you think they really know what their plan is for the country? >> yeah i think so. yes and in fact if you look like somebody like jon huntsman who is going to try to make a strong stand in new hampshire his policy is actually quite good and has got even a lot of attention. his messaging is just not on the same level with how good his policy is. in fact, one of the things that happened in one of the debates, i thought it was just a slip up, when governor huntsman said america is screwed. okay that is not presidential language, but on live tv you can sometimes say something you wish you didn't say. but today in new hampshire releasing an ad that actually says that. and i think that is just strikes the wrong note with people. if you want to be the leader of the united states of america you should act like it. jenna: if you were advising anyone in the campaign, and you don't have to choose who, what would be the first thing you'd tell them to do at this point in the race. now we're really moving quickly towards the nomination. >> let me take santorum for example, he has a very short but open window to make a very strong case for why he would be a great leader for the country, why he would beat president obama and why he would be a better candidate than the others. i would hire some great speech writers, work together, i would not do any tv for about a day then i'd give a really major good speech on sunday so that -- even on saturday so it's in the sunday papers, or on monday that sets him up well going into the new hampshire voters. jenna: take a break from tv appearances, if we take a look at what happened this week you saw all the candidates all over the place, national press, local press, on twitter, it's a lot of exposure, and it seems like -- there is exposure in every race. i wonder what you think about it this year on the topics that we have to deal with, whether or not you would encourage, get all the interviews that you can get, or take a step back? >> this is something that i'm kind of glad i'm not on the inside this time. i think it's a very hard balance to strike. you need to be able to pace yourself. you don't want to be the only one not on on prime time television. you don't want to be the one not setting the agenda in the morning. i think at this point the candidates will have to take a little bit of a step back and let their surrogates speak for hem. somebody like mitt romney has a good surrogate like chris christie. newt gingrich doesn't have anyone out there speaking for him, the same is true for sapbt r-frplt yesterday rick santorum raised one million dollars in a day, that is a lot of money in one day. will it be enough to help see him through? i don't know. i think they need some reinforcements to be able to cover the 24-7 news cycle. jenna: it will be interesting to see what surrogates could step forward. >> if you look at what john mccain did for mitt romney i thought that was pretty interesting. usually you don't go after a fellow former senator that way, it's sort of like a commenting thing. john mccain either must feel very strongly that rick santorum should not get it or he feels strongly that mitt romney should. jenna he's built a strong base of support from current legislators, which is helpful but maybe not helpful enough. jenna: we'll see. dana see you at 5:00 eastern time. jon. jon: the expectations for mitt romney are sky high in new hampshire. he has a strong organization there, and high school spent a lohas spent a lot of money. rick santorum who seemed to have stayed under the radar in iowa may now be the focus of other attacks from other candidates. speaking of ads, newt gingrich who was slammed by a wave of them in iowa is coming out swinging in new hampshire. he's aiming at mitt romney. >> romney's economic plan timid, parts of it virtual identical to obama's failed policy. timid won't create jobs and tim it certainly won't defeat barack obama. newt gingrich's bold leadership balanced the budget, reformed welfare. jon: larry sabato is the director of of the center of politics at the university of virginia. he joins us with his crystal ball. you say mitt romney is a clear winner in iowa despite that eight-vote margin because what, he carries a lot of momentum going into new hampshire? >> unfortunately it's all about media and momentum, jon. it's because of this redic redic ridiculously compressed schedule. go back to 1976, 35 days between iowa and new hampshire. in 1980, 36 days between iowa and new hampshire. you actually have a chance to develop a campaign. you don't have to throw everything you've got against the wall in a few days' time and hopes something sticks. this is really a shame. the process is being rushed. i was listening to dana perino, she is actually right, one reason why no big themes are being developed is because there isn't time. jon: yeah. mitt romney has the endorsement of the former governor in new hampshire, john senunu, he's also got the current senator, kelly ayotte. how much will that help him when it comes to the new hampshire voters? >> well nobody knows new hampshire politics the way john senunu does and probably no one has a better network than his extended family in new hampshire, so i think that is a big plus for him, maybe bigger actually than john mccain's endorsement. what he's mainly got is tons of money, good organization. he's been campaigning there for five years, and that's why he's in the 40s, and everybody else is in single digits or the teens. so the expectations game for romney is, he has to win big. his major opponent is the expectations game. it isn't any of the people running against him. jon: and he's already pivoting to the general election or though it would seem. larry sabato from the university of virginia center for politics. larry, thank you. >> thanks, jon. jenna: a few big things coming up now. are we going to go to break or kodak? okay. james rosen on a big story for us today, this is about kodak, a pioneer of photography. the "wall street journal" is now saying the company is preparing to file for chapter 11. well their path forward really seems unclear at this time. james rosen is with us from washington with more. >> reporter: good afternoon. for more than a century eastma tph-rbs kodak was a success story. the prime mover in the luke ka tiflucrative business of producing. they are reportedly succumbing to the great transition to digital technology and preparing to child for bankruptcy protection. the shares fell to 47-cents after the "wall street journal" reported the imminent khaerpt 11 filing. the bankruptcy supervision would better position the firm to sell off some 1100 patents for digital imaging software it's been developing and slash their enormous pension and healthcare costs for retirees. they did not return our request for comment but the company has been struggling now for two decades. we found a photograph showing a rochester newspaper headline from 1997 when kodak cut 10,000 jobs. another 12,000 jobs would be cut within the next eight years. in all it's a heart-breaking moment for the company founded by george eastman131 years ago, so innovative and successful it has been called the apple or google of its day. the company over the last five decade has slowly become a business to business company and hopes for the future rest on the commercial printing business. meantime the new york stock exchange this week warned the companies its shares will be dropped from the exchange's listing if the shares remain below a dollar through june. a heart-breaking moment, jenna, it brings to mind that old paul simon song, mom momma, don't take my cod codachrome away. jenna: james, thank you so much. jon: you have to keep up in business, right? it looks like a crazy scene straight out of a movie but this is not hollywood, it's fresno. how a driver landed his car, yes, on top of a house. plus, brand-new poll numbers reveal the latest position of the republican candidates on a national level. scott mass must an rasmussen is here with fresh polling informer us. rick is at the web wall. >> reporter: we are poulg at home and giving ahh chance to weigh in on who you would like to see win the republican nomination. go to the "happening now" home page and scroll down here. this is the you decide poll today. who do you want to see get the gop nomination. so far your votes have ron paul with a commanding lead over the rest of the pack. now is your chance to go online and let you know what you think. we'll have more "happening now" after a quick break, don't go away. okay, team! after age 40, we can start losing muscle -- 8% every 10 years. wow. wow. but you can help fight muscle loss with exercise and ensure muscle health. i've got revigor. what's revigor? 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[ female announcer ] if you can't afford your medication, astra zeneca may be able to help. jenna: new information on a few stories we are watching for you today all caught on tape. upstate new york, firefighters say a gas explosion leveling a home there and setting two others on fire. luckily no injuries reported. quite a blaze as you can see. fresno, california, not the parking job a driver had in mind, jon. police say a effect ended up on top of a house after a driver lost control hitting a tree stump before going airborne. there is probably more to that story. now to sicly, italy, mount etna erupting for the first time. italian airliners sometimes have to altar their routes. you can see it right there, spectacular nature today. jon: brand-new numbers just in from a rasmussen poll conducted yesterday, one day after the iowa caucuses. they show a dramatic shift in how the republican candidates are doing on a national level. mitt romney is now at 29%, up from 17% five weeks ago. rick santorum in second-place with 21%, he's up from 4. newt gingrich is in third with 16%, that is down from 38. he's followed by pau by ron paul at 12% up from 8. jon huntsman and rick perry are at the bottom with 4% each. compare all that to the rear clear politics average of polls conducted in the weeks before iowa it showed romney and gingrich nearly tied followed by paul and perry. let's talk with independent pollster scott rasmussen, president of rasmussen reports.com. does it suggest that first of all iowa still matters in a big way because a lot of national perceptions, especially about someone like rick santorum have been shaped by the iowa results? >> absolutely. what this tells us is that rick santorum is the latest to be given the chance to serve as the, i'm not mitt romney candidate. he's battling out now with newt gingrich to really claim that roll before things move on down to new hampshire and south carolina. the other hear part of this that is consistent with all the polling in this race, very, very fluid. only one out of three republican primary voters says they are absolutely sure of their choice. most say, hey, there is still time to change my mind. jon: you asked which republican candidate would be the strongest opponent against president obama in the general election. mitt romney comes in even stronger than his preferred candidate numbers at 44% there. >> that's right. yeah, this is one of the strengths of the romney campaign. it's worth noting that about 3 weeks ago when newt gingrich was still leading the polls and doing well in iowa 49% of republicans nationally said they thought gingrich was the strongest candidate only 24% thought romney was. we've heard an awful lot about the elect built argument. it clearly helped mitt romney in iowa and it's helping him nationally. jon: you asked which republican presidential candidate would be the weakest opponent against barack obama in the general election. ron paul comes in there with 36% as the weakest candidate. that is not going to do his supporters aren't going to like that. >> no -- jon: go ahead, scott. >> ron paul has always been seen as the weaker candidate. they are looking to change the status quo, and i think some republicans are in danger of being so dismissive of ron paul and his supporters they might turn them away in november. jon: well, and you have mitt romney at the top of the heap in south carolina, for instance, and then these other people may be splitting that anti-romney vote. you asked people regardless of who you want to win, who do you think will win the republican nomination? 65% say it's mitt romney, and that sort of suggests that kind of inevitability to his nomination that he's been trying to project. >> it sure does. that message has got even through. i tend to look at this field right now, kind of way a lot of people look at the nfl playoffs when their favorite team isn't in it any more. they want to win but they don't have anybody they are in love with. right now mitt romney is seen as the most likely winner and the strongest general election candidate, that is helping him out tremendously. jon: again the poll questions, the poll results taken since the iowa results became public. >> all done last night. jon: scott rasmussen, rasmussen reports, thank you scott. jenna: thank you. jenna: new evidence that world pressure might be taking its toll on iran. that is not keeping teheran from making new threats. why iranian leaders may be very worried and what this all means to us. you have two men and their sons clinging to hope in the middle of nowhere. their incredible rescue at sea caught on tape. when you have tough pain, do you want fast relief? try bayer advanced aspirin. it's not the bayer aspirin you know. it's different. first, it's been re-engineered with micro-particles. second, it enters the bloodstream fast, and rushes relief to the site of your tough pain. the best part? it's proven to relieve pain twice as fast as before. bayer advanced aspirin. test how fast it works f you. love it, or get your money back. jon: an amazing rescue at sea, rick folbaum has the video from the news desk. >> reporter: this happened off the coast of sidney, australia. we have the video you can see. these are two dads and their sons right here waving as the police come in to rescue them, clinging to a portable refrigerator in the ocean there. they had intended to go off on a fun fishing trip in their 40-foot cruise both of. that didn't happen. they got five miles off the coast and the men noticed black smoke coming from the boat. they all jumped overboard into the water. thankfully that water cooler was there, that's what they were clinging to when the water police arrived and got them to safety, as you can see they dropped down that raft and got them safely to shore, and i'm sure, jon, this will be a fishing story that those fathers and their sons will be able to tell for an awfully longtime. back to you. jon: good for them and good for the rescuers. rick, thanks. jenna: we are going to stay with international news now the stress apparently starting to show as world leaders step up pressure against iran. iran's central bank scrambling to stop the plunge of their currency after moves from our country earlier this week. the european union is considering other sanctions agreeing in principle to an iranian oil embargo. those two things together apparently are having major affects inside iran . jim walsh is an international security person with mit, one of our favorite guests on this topic. thank you for being with us. >> good to be with you, jen a. jenna: we probably talked last year about sanctions, oil embargo having to do with iran and pressure mounting. i'm sure that is something our viewers are very familiar with at this point. what makes january this year different than january last year? is there something that is different about 2012 when we're talking about iran. >> yes i think there is something, and part of it is there are two issues here, jenna, part of it is politics, part of it is economics. on the political front europe has really become much more tightly organized in trying to apply pressure to iran and this month's developments with talk of an oil embargo is part of that. often there's reports about this and then the document turns out to be weaker than the press release, so people shouldn't get too overwhelmed by this without more details. but the fact that the europeans would even talk an oil embargo even if it was only partially applied, that shows a level of political solidarity that we haven't seen on the iranian front on a longtime. economically this will have an impact in iran. at the end of the day we have to be grown ups here, iran has oil, countries want to buy oil, iran will sell the oil. it will find a buyer probably in asia for its oil. it adds to the burdens and costs and doubts and anxieties about iran that is reflected in the facts that you revealed about the cost for borrowing from the central bank, those have an impact at the margin. jenna: do you think there is a chance we could see the sanctions working, when they come down in paper they are actually stronger than we might think in other times? and two, do you think there is more of a likelihood of actual military intervention whether it's from israel or from the united states this year. >> let me start with the second, these are both important questions, jenna, on the risk of attack i've been a doubter on this. i have bets with friends that i won't discuss on air about the likelihood of an attack. i double this bet every year i've had it since we whether we'll have an attack and i've bet against it and won. i will say this this year feels a little different. there are american officials at the highest levels of government that have expressed concern that there might be a strike by israel against iran this year. i think a lot more people are a lot more worried about it now than they have been for a longtime. jenna: it's interesting and concerning for a few other reasons, jim. you've been able to be inside this country, you've been inside of iran, you've been able to talk to officials, you've also been inside north korea we don't talk about this very much, we've seen a whole regime change in north korea. i'm wondering if something happens with iran, we know that north korea and iran have some sort of relationship, could we fear or should we be concerned about some sort of retaliation from north korea, venezuela or some of these other parts of the world that maybe we don't always talk about when we talk about iran? >> well that is good, it's a good question to ask, to think out of the box about these relationships. i think in this particular case if iran is attacked it's much more likely to turn to hezbollah or it's patrons in the region to exact revenge or revenge in afghanistan or elsewhere in the region. you're right, jenna north korea and iran have cooperated in the past, there is some evidence of missile kaoplgs but right now north corey ace going through a political transition. kim jong-il is dead and they are very inwardly focused. you talked about what is different this year than last year, this is different this year, north korea is different and more dangerous. there is so much going on in north korea right now with managing that transition they will be completely tied up with that and are not going to be come phra indicating their own life which is already complex by doing something with iran. jenna: interesting to go through that transition with nuclear weapons versus not having them in iran which we obviously think that is the case right now but may not be the case at the end of the year. jim so much more to talk about on this topic. we look forward to having you back again. >> thank you. jon: we spend a lot of time on this program talking about the federal budget and federal deficits, there is another ticking budget time bomb out there, state governments bound to pay pension plans even though they don't have the money. how you could be affected. plus new concerns over fracking, why one of the federal government's top scientists is now saying much more research is needed on this gas drilling technique. blam call imperial structured settlements. the experts at imperial can convert your long-term payout into a lump sum of cash today. jon: happening now some new concerns that aren't getting a lot of publicity. your taxes could be going up depending on where you live because of underfunded state pension plans. some states are constitutionally bound to pay what they have promised even when they don't have the money. that could mean higher taxes for everybody. jim angle, live in washington, d.c. for that. jim? >> reporter: hello, jon. well the nation's governors and their taxpayers have a big problem on their hand. two to $3 trillion in promised pension benefits and health care benefits to state workers that the states can not pay for and that's led to confrontations in states all over the country. listen. >> this is a huge mess and depending own what state and how responsible they have been, the odds are very strong that many taxpayers are going to see their taxes go up, very, very high to pay pension promises that were made long ago. >> reporter: in fact some 40 states have enacted pension reforms of one sort or another and many cities. rhode island's pension system is so underfunded, the governor there, an independent, is contemplating cutting benefits by as much as 50%. democratic governor, jerry brown also fays huge shortfalls in california and made a number of changes there as well. many republican governors asked unionized state workers to contribute more to their benefits including scott walker of wisconsin now faces a recall election. >> who pays for the expanse of government? who historically in this country state by state pays for the excessive expanse of government? it is fundamentally the middle class taxpayers in our states and in our country. what we did is fundamentally about standing up and respecting those middle class taxpayers. >> reporter: now for states or cities the options are limited. they either adjust the pension and health care benefits which unions have resisted or increase taxes to cover the benefits which taxpayers will resist or cut other services. more and more governors and mayors of both parties will face that very dilemma maflt the city of detroit, for instance, has just announced it will be forced to close its police stations to the public from 4:00 p.m. until 8:00 a.m., 16 hours a day to reduce personnel in an effort to save $250,000 over the next 18 months. jon? jon: it is not just there in washington, d.c. where we have the budget problems? >> reporter: no, i'm afraid not. jon: jim angle. thanks, jim. jenna: we discussed on new pressure on iran from the international community and one part of this conversation we're looking at is the effect of all this in the oil market. british's defense secretary says any attempt to block the strait of hormuz woulding illegal and unsuccessful. this is during a visit to the pentagon. he says u.s. and british warships in the persian gulf will make sure the key oil route is kept open for trade. this is important because analysts warn the price of crude could double to more than $200 a barrel if the straight is closed. that has a major effect on gas prices and everything else. phil flynn from the chicago mercantile exchange and fox business contributor. if the strait of hormuz was involved in any sort of conflict do you think we would see oil prices double to $200 a barrel? >> double might be a little bit heavy, jenna but we would see a major spike in prices, maybe 10 or $20 a barrel overnight. the only reason why i would question it could get to 200 because i don't think the world would stand for it. i don't think iran really has the capability to strut shut down the strait of hormuz. the warning from the u.k. government and the u.s. made it very clear they will try to make sure that gets reopened there are already plans in place if it does happen the world's strategic petroleum reserves will be release thed that should put downward pressure on prices. so after an initial spike, probably right back down. jenna: would be interesting to think about what would happen in around that. there are so many different factors. taking a look at our gas prices, this year compared to last year and they're up a little bit. i think 3.30 is about the average for a gallon of gasoline in this country and last year it was a lot lower, around $3. >> it's terrible. jenna: what do you see ahead for the year? >> i was hopeful we would see gasoline prices go back down but with iran and threats of labor union strikes in the e.u. and crisis, perhaps not. to be honest last year it was terrible year for consumers, jenna. as a percentage of income we paid more for gasoline last year than we ever had before. a lot of that had to do with the shutdown of libya and we weren't making as much money. my hope was this year even if oil prices went up, gasoline prices would come back down. we'll see a lot of new sources of oil come to the market. whether it be libya back online. more production out of iraq as well as unconventional resources we're producing here at home. that should have been downward pressure on oil. but if you put iran in the mix, the situation in the europe with the credit crisis, they have to shut down refineries that could tighten supply and keep prices higher than i would like to see. jenna: some suggest that would be not be worth it any conflict with iran would be because the effect on world economy would be huge. you've dealt with this issue of iran for a while now. i'm curious what you think the tradeoff is? do you think it is worth the potential damage for the economy to confront iran once and for all, whatever that means or you think maybe the opposite is true? >> to be honest with you, jenna, if iran would make a move to shut down the strait of hormuz that would be the end of the iranian regime. i doubt that would happen. that would give us a excuse to go in there and wipe out their nuclear program. that would be it. i tell you this i think the situation in iran is bluster and blow. they knew they would get hit with the sanctions next year. they know people will not be in the market for their oil next year. i think they're trying to get the price high so they can make a little bit of money before the world stops buying their oil. jenna: will be interesting to watch, phil. thank you so much. always nice to have you. >> thanks, jenna. it is great to be here. jon: he endured an unthinkable tragedy but now a doctor who lost his wife and daughters in that horrific home invasion take as step toward once again finding happiness. we'll explain next. to the 5:00 . the two trains and a bus rider. the "i'll sleep when it's done" academic. for 80 years, we've been inspired by you. and we've been honored to walk with you to help you get where you want to be ♪ because your moment is now. let nothing stand in your way. learn more at keller.edu. jenna: now some new information and stories we're keeping an eye on across the country and around the world from inside our control room. first we'll go out to the philippines. a landslide there killing at least 25 people and burying dozens more this after tearing through a gold mining site. the calamity happening when most folks were asleep. so very little warning there. meantime back to the united states now. if you're a football fan you probably saw this last night. the orange bowl blowout. the west virgina mountaineers routing clemson tigers. it wasn't much of a game. the college bowl record. we have clemson fans on our team. jon: we have to be careful there. jenna: it is tough. in connecticut happiness for the doctor who has been through so much. this is dr. women petit. his wife and two daughters were murdered in the brutal home invasion. dr. william petit is engaged to a woman that volunteered for events at the petit family foundation. congratulations to him as he tries to move on past this tragedy. jon: well, there's some new information in the controversy over fracking. the drilling technique used to get oil and natural gas buried deep in the earth in layers. a top scientist for the cdc is now saying much more research is needed to determine its possible impact on the environment and people. alicia acuna live from an oil field in commerce city, colorado. alicia? >> reporter: hi, jon. yes, this comes on the heels of colorado's announcement it has imposed the toughest regulations on tracking in the country which might sound like a major crackdown on industry but this happened with oil and gas interests regulators as well as environmentalists all coming to the table and all at the behest of colorado's governor. >> if both the industry and the conservation committee made great compromises. i think no one is really happy. >> reporter: the new rule calls for drillers to publicly disclose the chemicals in the fluid they send into the ground in order to access oil and gas trapped in shale beneath the surface. the industry is pleased because it still protects trade secrets. >> by doing this we can insure oil and gas development is conducted in colorado in a sustainable and responsible way. >> reporter: regulators who now get more information. >> i think is a great place to be. >> reporter: because it requireses transparency, environmentalists. >> i would like to thank the governor because this is his vision. >> reporter: with fracking liquid is pumped into shale rock at high pressure causing fractures through which oil and natural gas can flow back out. this recent technological breakthrough made vast energy reserves available for extraction for the first time ever. >> probably one of the most important energy developments that's occurred essentially since the first oil well has been drilled. >> reporter: the hitch has been public fear over what is being pumped into the ground and if it affects groundwater. >> the regulation is good from the standpoint of the population. the people understanding what's actually being done in having some confidence that the regulators also understand what's being done. >> reporter: colorado's governor, john hickenlooper has been given a lot of credit for all this happening in part because of his background. he is a geologist who went on to become a successful denver businessman, the mayor and one of the country's most popular democratic governors. back to you. jon: alicia acuna in commerce city, colorado. thank you. jenna: once one of the world's most powerful drug runners now humbled before a u.s. court. the final chapter in the life of a brutal mexican cartel leader who inspired a hollywood movie. we'll tell you more about that. also the secretary of the defense announcing big changes scaling down the u.s. military but will america still be able to confront our enemies around the world? 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[ major nutrition ] ensure. nutrition in charge! what ? customers didn't like it. so why do banks do it ? hello ? hello ?! if youbank doesn't let you talk to a real perso24/7, you need an ally. hello ? ally bank. no nonsense. just people sense. jenna: the final chapter for a mexican drug kingpin who's reign of murder and mayhem inspired a hollywood movie. the u.s. government chasing this guy for nearly two decades. now there is another chapter to the story. rick, do you have that? >> reporter: that's right, jenna. that is long time to avoid capture but benjamin felix was able to do it. he ran a massive drug cartel in mexico one that smuggled hundreds upon hundreds of tons of cocaine and pot into the united states. felix's cartel so big at one point it was inspiration for the movie, "traffic". which you have ever seen it does excellent exposure of the way mexican drug gangs move drugs into the u.s. in recent years his cartel has faced a lot more competition but it is not as powerful as it used to be. he pleaded guilty to raketeering and conspiracy for money laundering. the 58-year-old will spend no more than 25 years behind bars and turn over $100 million in profits he made over the years. other charges that could have put him away for 140 years were for some reason dismissed. back to you. >> interesting. rick, thank you. jon: well just in, new marching orders for the pentagon. defense secretary leon panetta outlining a new strategy just an hour or so ago for america's armed forces calling for major cuts and shifting resources to help balance a shrinking budget. talk about the plans with van hipp, former deputy assistant secretary of the army and chairman of american defense international. so under the plans, again that the defense secretary around the president didn't give a lot of specifics but we understand part of the plan is to take the army down from 570,000 active duty personnel to about 490,000. your thoughts of that, about that? >> jon, that is one of the things that concerns me most. every new secretary of defense, be they republican or democrat i think historically always mean well and talk to these think tank experts who never served a day in the military who tell them we can win a war basically with air power and special forces that we don't need that grunt on the ground but history tells us every time we need the grunt on the ground to win the war, to finish the job. that's what we saw in iraq. that's why the surge worked. because we got that grunt on the ground to finish the job. so that, the cut in the army, taking the army below 500,000 concerns me most. other thing that really concerns me, they talked today about the $489 billion in defense cuts over 10 years. this is what president obama had talked about for some time. they didn't talk about the $500 billion with the sequester that will be imposed on january 2013 if congress doesn't act this year. let me tell you the significance of that. right now with what the obama administration is doing, it means that we can no longer fight two military regional conflicts simultaneously. with these $489 billion in cuts we could probably fight one war. if congress doesn't act on the sequester and we don't restore those cuts i don't see how we can fight one war successfully. jon: the president promised in his opening remarks in the pentagon we would be able to take whatever challenges lie ahead. let me get your reaction on the other side. >> yes, our military will be leaner but the world must know the united states is going to maintain our military superiority with armed forces that are agile, flexible, and ready for the full range of contingencies and threats. jon: the full range of contingencies and threats. do you agree? >> jon, two points here. number one i do think the president and secretary panetta's increased engagement in the asia-pacific region makes a great deal of sense. with increased cyber threat coming out of china, biological threats coming out of that part of the world we need to work more with allies like australia and singapore. they're right. however there seems to be disconnect between secretary panetta and president obama. let me tell you what i'm talking about. secretary panetta talked about those $500 billion in cuts, mandatory cuts and urged congress to act. he talked about that. of the president obama says he only has one major item legislatively on his agenda this year. that is the payroll extension tax cuts. president obama needs to listen to secretary panetta and add the $500 billion in mandatory cuts that are coming so that we can be able to fight at least one war and win here for the united states. jon: right. one of the criticisms, we just have a short time to address this, when we were fighting in iraq and afghanistan at the same time, one of the criticisms that our forces were making multiple tours and having their deployments extended. it seems kind of an odd time to be shrinking the size of the force? >> jon, that is very good point, particularly national guard and reserve forces and active duty, four and five combat tours. i'm all for cutting fat out of the pentagon budget but we are no longer cutting fat. we're cutting muscle and bone out of our defense budget. i think it is important in the election year to remember why we have a pentagon and a defense department. if you go back look at our constitution. i would argue the number one responsibility and role of the fed federal government is to provide for the national security. jon: that's right. >> of the american people. jon: van hipp, former secretary of the army. thank you. >> thank you. jon: "happening now" will be right back [ male announcer ] say goodbye to "ho-hum," and hello to "whoa, yum." use campbell's cream of chicken soup to make easy enchiladas, cheesy chicken & rice, and other chicken dishes that are oh...so...whoa. campbell's. it's amazing what soup can do. jon: you got me in so much trouble just now, and you don't even know it. jenna: what'd i do? 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