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CNN LATE EDITION WITH WOLF BLITZER

Interview With Andrew Card; Interview With Mowaffak Al-Rubaie

Aired May 1, 2005 - 12:00   ET

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


WOLF BLITZER, HOST: It's noon in Washington, 9:00 a.m. in Los Angeles, 5:00 p.m. in London and 8:00 p.m. in Baghdad. Wherever you're watching from around the world, thanks for joining us for "LATE EDITION."
We'll get to my interview with White House Chief of Staff Andrew Card in just a minute.

First though, let's get a quick check of what's in the news right now.

(NEWSBREAK)

Let's get on to President Bush, who has been trying to regain the upper hand in his push to reform the U.S. Social Security system. At the same time, there are serious concerns about the direction of Iraq and the overall war on terror.

Just a short while ago here in Washington, I spoke with White House Chief of Staff Andrew Card about the president's ambitious second term agenda.

(BEGIN VIDEOTAPE)

BLITZER: Andy Card, thanks very much for joining us. Welcome back to "LATE EDITION."

ANDREW CARD, WHITE HOUSE CHIEF OF STAFF: Thank you, Wolf. Good to be with you.

BLITZER: Let's talk about Iraq first of all, a subject clearly on the minds of so many people. Abu Musab al-Zarqawi, terrorist number one in Iraq right now, issued a direct warning to President Bush.

The audio tape was released this week. Listen to this.

(BEGIN VIDEO CLIP)

ABU MUSAB AL-ZARQAWI (THROUGH TRANSLATOR): We pledge to God, oh, you Bush, the dog, that you will not have tranquility, nor will you ever be content and happy, as long as we have blood flowing in our veins and beating hearts. We, God willing, are coming.

(END VIDEO CLIP) BLITZER: Strong words from Abu Musab al-Zarqawi. You have 150,000 U.S. troops in Iraq, lots of other coalition forces, plus tens of thousands of Iraqi forces are now in place. There's a new government.

Why can't you find Abu Musab al-Zarqawi?

CARD: Well, first of all, he is a desperate man. And the words that he's speaking show that he is a desperate man. He's an enemy of democracy. He's an enemy of the Iraqi people, and he's certainly not working for their benefit.

The president, on the other hand, is helping to create a climate of greater security so that Iraq can build its own democracy, and we're thrilled that the new government that's in place is just starting to form. We know that the Iraqi security forces are getting better every day and they are able to take more of the burden of security for their country. And that burden is being relaxed from the coalition partners as the Iraqi forces become more capable.

And we're very optimistic that the march to freedom is moving in the right direction. We're also quite confident that the Iraqis themselves are learning how best to secure their country. And we'll be partners in the process as long as it takes. But there is a good, solid performance on the part of people who have trained the Iraqi security forces, such that I believe that there will be a steady growth in their capability and, therefore, a reduction in the need for the coalition to have as many troops over there.

BLITZER: It seems, though, that we wake up almost every morning and we hear more car bombings, improvised explosive devices. I was just there a few weeks ago. The insurgency clearly is continuing. The question is: Is it going to continue for the indefinite future?

CARD: Well, remember, we have tremendous sacrifices being made by American service men and women, as well as service men and women in our coalition countries. But they are there to help the Iraqi people establish the capacity to secure their own country, and we are working with them to do that.

The more success that we bring to that reality, the more desperate the terrorists are. And they don't like to see the march toward democracy that is taking place in Iraq. And so every time they see a significant milestone passed, they react with violence. And that's exactly what happened this past week.

BLITZER: Is there light at the end of the tunnel in terms of finding Abu Musab al-Zarqawi, since presumably, he's responsible for a lot of this?

CARD: Well, I know that our intelligence services, the military and our coalition partners are working very, very hard to find Zarqawi, to make sure that...

BLITZER: Are you getting closer? CARD: I think we're getting closer. I think that we came very close to getting him a few weeks ago, and we'll continue to keep -- I don't think he's living a comfortable life right now. And we're on the hunt and we will find him and he will not be able to terrorize the Iraqi people and all the world the way he's intent on doing.

BLITZER: Because there were reports -- I assume that they were accurate -- that he was almost captured. You did capture some of his bodyguards, and you found his hard drive from his computer.

CARD: We're learning more about him and the terrorist network every day. You know, this war on terror is so important, and it's not just the war on terror that's being fought in Iraq. It's the war on terror being fought all around the world.

And the United States is leading that effort, but we have a growing numbers of partners in this war on terror, and I'm confident that the terrorists are finding it more and more difficult to carry out their dastardly acts.

BLITZER: There is new statistics that the State Department released on the war on terror worldwide, terrorist attacks worldwide: 2004, there were 651 attacks; 1,907 people killed. That's compared to 175 attacks the previous year in 2003, with 675 people killed. It looks like the war on terror, at least outside the United States, is escalating.

CARD: Well, actually, I think that that's an indication that we're making great progress. Remember, democracy and freedom are what the terrorists don't want to have take hold in these places around the world. So as democracy is spreading, the terrorists are acting more desperately, and they're taking these actions.

And we're going to do everything we can to route out the terrorist leadership and create a climate where terrorists don't feel that they can recruit people to carry out these horrible acts. And we're making progress.

2004 was a difficult year, but it was also an important year, because the march of freedom was started in places that haven't had a chance to practice it before.

2004 is when the Afghan people first went to the polls and were able to elect a president, a great celebration of democracy. And we know that we also saw the elections in Iraq, and that is a march toward freedom that is making more progress every single day.

So I think the terrorists are getting more desperate. We're on the hunt and we'll get them.

BLITZER: Let's talk a little bit about North Korea, because that's a subject that's clearly on the agenda today: Reports that North Korea test-launched a missile, some medium-range or even short- range missile.

What can you tell us specifically, based on the latest information you have?

CARD: I got the report this morning, so I don't know an awful lot about it. It appears that there was a test of a short-range missile by the North Koreans, and it landed in the Sea of Japan.

We're not surprised by this. The North Koreans have tested their missiles before. They've had some failures.

And we have to work together with our allies around the world, especially the Japanese, the South Koreans, the Russians and the Chinese, to demonstrate that North Korea's actions are inappropriate.

We don't want them to have any nuclear weapons. We don't want the Korean Peninsula to have any nuclear weapons on it.

And the president has said he will work in a bilateral way with those nations that are neighbors to North Korea to get their attention.

Kim Jong-Il is not a good leader. He's not a good leader for his people. His people are living in abject poverty. Many of them are in concentration camps. They do not have any exercise of democracy or freedom.

They are not allowed to contact the outside world. The outside world is not invited into North Korea.

He's not the kind of leader that instills confidence from his own people, and he's not really a comfortable leader with the rest of the world. And I think that that's a reality that we must recognize.

And we also have to work very hard with our coalition partners to make sure that there is no march toward a nuclear weapon that he would use...

BLITZER: Can he arm one of his missiles with a nuclear bomb right now? Because Lowell Jacoby, DIA, the Defense Intelligence Agency chief, said this past week in testimony before Congress that the assessment was that he can.

CARD: We don't know that he can, but there is increasing evidence of capability.

We know that North Korea for a long time has been building rockets, variants of the Scud. And we don't think that they have had much success in their testing of all of these rockets, multi-stage rockets.

By their own admission, the North Koreans have been developing at least the feed stock for nuclear weapons, and we think that was in violation of agreement -- we know that it was a violation of agreement with the United States. And it's certainly not consistent with responsible behavior in this world.

We don't want to see the proliferation of nuclear technology for weapons use, and that's something that we will work very, very hard to address.

But Kim Jong-Il is not a good leader.

BLITZER: Does he have already six nuclear bombs?

CARD: Well, the speculation is that's what he has. I don't think we know. I work on the assumption that he says he has nuclear bombs; I'll take him at his word.

But we better make sure that the world responds and says, his leadership is not the kind of leadership that fits with the realities of the world today.

BLITZER: In the coming days, the Senate Foreign Relations Committee once again will consider John Bolton, your nominee, to be the next U.S. ambassador to the United Nations.

Do you have all the Republicans on that committee on board, that they will vote to recommend that he be confirmed?

CARD: I believe that he will come out of the committee with a favorable recommendation and that he will be confirmed by the United States Senate. John Bolton...

BLITZER: Have you spoken with Senator Voinovich?

CARD: I have talked to Senator Voinovich.

BLITZER: And has he been reassured?

CARD: I will let him speak to what his intentions might be, but I've talked to Senator Voinovich, as have others in the administration...

BLITZER: Were you surprised at that last-minute sort of statement when he said he couldn't vote for confirmation?

CARD: Yes. Yes, I was surprised.

BLITZER: Why didn't anyone talk to him in advance?

CARD: I can't speak to that. I know that I did not. I spoke to him immediately after he made his statement in the committee, and I was taken by surprise. But John Bolton is a good, tough diplomat. He's been confirmed by the United States Senate four times. He's got a good track record of service as a diplomat doing an important job for the United States of America.

We need a good, tough diplomat at the United Nations. He's the one that can help bring reform to the United Nations, and the president has great confidence in his abilities to be the reformer at the U.N.

So we look forward to him representing our country in that body as they take on the difficult challenges before them.

BLITZER: So you are not going to withdraw the nomination.

CARD: I have seen no indication that John Bolton will not be confirmed. We look forward to his service in the United Nations.

BLITZER: Have you seen any indication that he will ask the president to withdraw his nomination?

CARD: I have talked to John Bolton in the last four or five days, and I've told him that he's the kind of leader that we need in the United Nations. The president has confidence in him.

(END VIDEOTAPE)

BLITZER: And just ahead, I'll ask Andrew Card about the president's Social Security reform proposals. Is the president ready to increase taxes?

Then from Social Security to the insurgent onslaught in Iraq, are U.S. and Iraqi forces losing ground? We'll talk with two key members of the United States Senate.

And later, pain at the gas pump. What can be done about it? Former Clinton Labor Secretary Robert Reich and former Republican presidential candidate Steve Forbes, they'll join us to debate.

"LATE EDITION" will continue right after this.

(COMMERCIAL BREAK)

BLITZER: Our Web question of the week asks this: Do you expect to receive Social Security benefits when you retire?

You can cast your vote. Go to cnn.com\lateedition. We'll have the results later on the program.

Straight ahead, though, more of my interview with the White House chief of staff, Andrew Card.

You're watching "LATE EDITION," the last word in Sunday talk.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My pledge to the American people is I'll continue to work hard with people in both parties and share credit.

(END VIDEO CLIP)

BLITZER: President Bush during his prime time news conference this past week. Welcome back to "LATE EDITION." We return now to my interview with the White House chief of staff, Andrew Card.

(BEGIN VIDEO CLIP) BLITZER: Let's move on to some domestic issues. Social Security: the president speaking extensively about that at his news conference this past week.

Some conservatives are now raising questions about this progressive indexing that the president put on the table at his news conference Thursday night in which Social Security recipients of even middle class, let alone rich Social Security recipients, would get severe cuts over the next 40 or 50 years from what they would be getting had the progressive indexing, as it's called, not gone into effect.

CARD: Well, Wolf, you have to understand: If nothing is done to Social Security, everyone who gets Social Security in the future will be facing significant reductions than that which was promised. If nothing is done, there will be a 26 percent reduction.

BLITZER: But everyone says there should be something done now. The question is: What should be done?

CARD: That is the question. The president has made specific proposals. And he's invited other specific proposals to come on the table. He says, "Come to the table. Let's solve the problem."

And there are two parts to this problem. The first part is fixing Social Security, the system. And he wants to fix the system and make it better.

And by fixing the system, we know that there are going to have to be some adjustment of benefits and there will also be the need to have, if you're going to make the system better, a good solid safety net. So anyone who has worked all of their life, made contributions to Social Security all their life, they will not have to retire in poverty.

BLITZER: Let's put some numbers up on the screen. Based on this proposal the president put out on the table Thursday night, if someone makes $35,000 a year right now, plans on hoping to get some retirement funds by the year 2075, which seems like a way, way down the road, right now under the current system they'd be getting $28,000 a year. Under the new system they'd be getting $20,000 a year.

If they made $58,000 a year, under the current system they'd be getting $36,000 a year at retirement, $21,000 under the new system -- a pretty significant cut. If they are making $90,000 a year, which for a lot of families as you know is middle-class income, right now they could expect $45,000. But under the new system that the president put out, they'd be getting $23,000. Is that something that's fair?

CARD: Well, you're defining Mr. Pozen's proposal. And the president has not embraced every aspect of the proposal.

BLITZER: Robert Pozen is an economist who's put this progressive indexing out on the table. CARD: Right. A Democrat who is very, very knowledgeable about our Social Security problem and different solutions, and the president has embraced many of the suggestions made by Mr. Pozen. But he wants Congress to consider the proposals among other things.

BLITZER: So what you're saying is the president just threw out the idea and let he the House and Senate now come up with specifics?

CARD: But he says that it is responsible for us to make sure that no one in future generations retires into poverty if they've worked their entire life and they've made contributions...

BLITZER: You understand why some conservatives don't like this means testing for Social Security?

CARD: Well, this is a reality that I think we should address. We want a Social Security system that will meet the needs of the 21st century. Our Social Security system, which worked so well, was designed in the 20th century. And anyone who is on retirement today or anyone who was born prior to 1950, you're going to get that which was promised under Social Security.

But for future generations, the current system will not sustain the level of benefits that have been promised. And we've got to change the system. And the president said there should be two parts two it: Fix the system; also fix retirement. That's why we'd like to see voluntary personal retirement accounts to complement Social Security.

BLITZER: I'm going to get to that in a second. But basically, the way to fix it is either you cut the benefits or you increase the taxes. Basically those are the two options.

CARD: Correct.

BLITZER: And the president says he's not going to increase taxes.

CARD: He does not want to see the tax rate go up.

BLITZER: All right. What about the cap, the $90,000? Right now, people have to pay Social Security taxes up to $90,000, their first $90,000 a year in income. Is the president -- because I'm still a little unclear about this -- ready to consider raising that cap to $100,000 or $200,000 or $300,000?

CARD: As you know, that cap grows by inflation every year. So it already does grow.

BLITZER: It's an automatic increase. That's part of the law.

CARD: And the president has said that his interest in not increasing the tax rate, the 12.4 percent tax rate on income, which is paid 6.2 percent by an employer and 6.2 percent by a worker, he does not want to see that tax...

BLITZER: That's not going to go up. What about the cap?

CARD: He has said it's all on the table. If Congress wants to consider it, he'll take a look at it. It might not be the president's preference. But he wants to see changes in our Social Security system so that we fix the system, solve the problem permanently and make the system better.

BLITZER: So that would be a tax increase, though, an increase in the cap?

CARD: I'm going to let Congress consider all of the options. The president is trying not to take options off the table. He's trying to put options on the table.

The only option that is off the table is increasing the tax rate. And he said, don't do that, because that will adversely impact our ability to compete in the 21st century as an economy.

He said that we must have a permanent solution to the Social Security problem. We thought we had a permanent solution in 1983, but we learned that it wasn't a permanent solution.

BLITZER: All right. So he's open-minded when it comes to increasing the cap.

As far as the personal savings accounts, part of the Social Security system -- most recently ABC News/Washington Post poll had 45 percent approving of private accounts, 51 percent disapproving of private accounts.

The president says he wants any plan to have this; the Democrats are saying it's a nonstarter, if you continue to insist that there be private accounts as part of Social Security.

CARD: Well, the president has called for voluntary personal retirement accounts. So no one is mandated to participate in that system.

He does want to fix the challenge of meeting responsibilities for retirement by future generations.

Knowing that we need a change in our Social Security system, it's likely to mean that the level of benefits will not be what was promised under the old system.

To make your retirement better, to fix that part of the problem, he said we should have a chance to voluntarily participate with contributions into a voluntary retirement account. I call it a VRA. People know what an IRA is; this is a VRA.

BLITZER: Why not do that outside the Social Security system?

CARD: We already have programs outside the Social Security system: IRAs, 401(k) plans. There are lots of programs outside of Social Security. This is within the Social Security system. It would allow for your investments in the Social Security system to be there to provide a level of benefits that would be there for you, and it would provide a safety net so you wouldn't fall to the floor.

But there would also be a chance to take some of that tax money that goes into the Social Security system, put it into your own account, manage it. It will grow faster than what grows in the Social Security system itself. That would be your money...

BLITZER: That's assuming that the stock market and the bonds continue to grow.

CARD: Well, even if it were invested just in Treasury bonds, it would do better than what happens in the Social Security system. So it could be a very secure investment, and it would allow for...

BLITZER: What about the...

CARD: ... a more comfortable retirement.

BLITZER: A lot of critics, though, point out, it could cost a trillion or $2 trillion to make this transition.

CARD: Well, the overall burdens of Social Security under the current law call for $11 trillion of debt. There's a burden that the U.S. is carrying.

We recognize that we want to reduce that debt over time, so we're pulling some of it forward. It's kind of like when you re-mortgage your home. You pull some debt forward and pay it down and change the out-year costs. And that's what we think.

So this is really moving some of that future debt forward. It's a good trade, because we'll have a fixed Social Security system, and we'll have a retirement system that will better be able to meet the needs of the 21st century, through voluntarily personal retirement accounts.

BLITZER: Some final questions before I let you go, because we're almost out of time.

The Family Research Council, a conservative group, had a rally a week ago Sunday, "The Filibuster Against People of Faith," in which they were complaining about the judicial nominees the president has put forward, saying that those who oppose those nominees are opposed to faith, in effect.

The president disputed that at his news conference this past Thursday night. Listen to what the president said.

(BEGIN VIDEO CLIP)

BUSH: Faith plays an important part in my life individually. But I don't ascribe a person's opposing my nominations to an issue of faith. (END VIDEO CLIP)

BLITZER: So the president says the Family Research Council, Reverend Dobson and Senator Frist, who participated, the Senate majority leader, they were wrong when they ascribed the critics, the opponents of your judicial nominees as being opposed to faith.

CARD: What is right is that these people recognize that the nominees that the president has put forward to serve on our courts deserve an up-or-down vote.

Priscilla Owen, for example, outstanding jurist, has been given very high marks by the American Bar Association: She should have a chance to have an up-or-down vote on the floor of the Senate to serve in the court system at the federal level.

And that's something that can happen, should happen. And that's what's right.

The president has said all of his nominees deserve to be considered by the full Senate, with an honest vote, up or down, on the floor of the Senate. And that's what this debate is really about.

There is the subset of debate around Senate rules, but it's really incumbent that the Senate give the president's nominees a chance to be confirmed with an up-or-down vote.

BLITZER: But this could be something Republicans, if they once again become the minority in the Senate, could regret one of these days when they want to consider Democratic nominees for judicial positions.

CARD: Well, over the vast history of...

BLITZER: If you eliminate the filibuster.

CARD: Over the vast history of our country, nominees to the courts have been considered on up-or-down votes by the United States Senate. They have not been subject to strong filibuster expectations.

It's only been in a very short number of years of our history where filibusters have been used in considering judicial nominees. We think we should have an up-or-down vote on our judicial nominees.

BLITZER: I'll leave it right there.

Andy Card, thanks very much for joining us.

CARD: Thank you, Wolf.

BLITZER: And up next, a quick check of what's in the news right now, including the latest on North Korea's missile testing. Then, from Social Security reform to federal judges, we'll talk about the looming senate showdown with Democratic Senator Carl Levin and Republican Senator Norm Coleman. They're standing by.

"LATE EDITION" will continue right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "LATE EDITION."

Joining us now are two key members of the United States Senate. In Detroit, Carl Levin of Michigan; he's the top Democrat on the Senate Armed Services Committee. And in Minneapolis, Minnesota Republican Senator Norm Coleman; he serves on the Senate Foreign Relations Committee.

Senators, welcome to "LATE EDITION." Good to have both of you on the program.

Senator Levin, I'll start with you as the ranking member on the Armed Services Committee. What do you make of confirmation from Andrew Card, the White House chief of staff, that North Korea has test fired a short-range missile over the past day or so?

SEN. CARL LEVIN (D), MICHIGAN: Well, it's additional, very discouraging evidence that this administration's policy toward North Korea is failing.

We've had a lot of other evidence in the last four years: the fact that they have renewed their reprocessing program of plutonium, the fact that they're now enriching uranium and the fact that they apparently can now put a nuclear weapon on a missile.

But what is most significant here is that there was a self- imposed moratorium that the North Koreans imposed on themselves during the end of the Clinton years when we were talking directly to the North Koreans. That self-imposed moratorium on missile testing has now ended.

And it seems to me that this administration has got to do two things: number one, engage in multilateral talks, which of course it wants to do, including our allies and the neighbors; but we also ought do what our ally, the South Koreans, want us to do, which is also, in addition to the multilateral talks, talk directly to the North Koreans.

That's what's been missing. The president holds that up as impossible. We're not going to talk to them because we have to work with our allies.

Of course we have to work on a common strategy with our allies, but that is no excuse not to talk directly with the North Koreans.

It has led to real failure in these policies. The nuclear threat is increasing from North Korea as a result.

SEN. NORM COLEMAN (R), MINNESOTA: Wolf, I don't...

BLITZER: Senator Coleman, you're a key member of the Foreign Relation Committee. You agree with Senator Levin?

COLEMAN: I don't think finger-pointing is helpful here, Wolf.

The reality is that Madeleine Albright and Bill Clinton negotiated bilaterally with North Korea, and they lied to them.

On the one hand, we thought we solved the problem and they were picking our pocket with the other hand developing nuclear capacity. That's the reality of North Korea.

It's not that it's impossible to negotiate with them; it's that it's worthless to negotiate with them because Kim Jong-Il is a petty tyrant. He's starving his own people and you can't trust him.

Madeline Albright trusted him and set the stage for what we're dealing with now...

BLITZER: If you don't negotiate -- excuse me, for interrupting, Senator Coleman. But if you don't negotiate with them, what are you going to do: Bomb them?

COLEMAN: No, no, what we're doing -- what we're saying and it's the right course of action, that we're bringing in China. We're bringing in Japan. We're bringing in South Korea. We're talking about dealing with them in a multilateral way.

The neighborhood has a stake in this, not just the United States. And we can sit back. And if North Korea develops a nuclear weapon then maybe China, maybe Japan will. And I'm sure the Chinese are not excited about that.

So the president's course of action is the right course of action. Get the region, get the neighborhood involved, but don't depend on doing a deal with some body who you know from past experience is simply going to lie to you and you can't trust them anyway.

LEVIN: That's a false alternative, Wolf.

We can work with the neighbors and with our allies just as we did with NATO talking to the Soviet Union. But we also talk directly to the Soviet Union.

These are not inconsistent. These are policies which are not working, which have led to a greater nuclear threat. And our ally, the South Koreans, want us to talk directly with the North Koreans as well as to work multilaterally.

COLEMAN: I think it would be a sad, tragic mistake to somehow equate a Putin with King Jong-Il. One, he is...

(CROSSTALK)

COLEMAN: I said the Soviet Union. I didn't say Putin. I didn't say Putin.

LEVIN: Even the Soviet Union, Khrushchev, who are you talking about? The reality is that we're dealing with a guy who is a mad man. That's the reality and so we're working with the region.

Wolf, that's the right course of action.

BLITZER: Right. Well, let me press you on this, Senator Coleman. Maybe I'm missing something.

If negotiations with Kim Jong-Il are a waste of time, what's the difference if you do it bilaterally or multilaterally?

COLEMAN: Because China has some leeway on North Korea. They've got a relationship with them. They have some pull over there, Wolf, that we don't have.

And so if you bring enough people in who have a stake in what happens there, those in the region, you got a better chance of getting something done than if you sign a piece paper with a guy whose word you can't trust.

LEVIN: China wants us to talk directly with the North Koreans, too.

COLEMAN: They want us to be involved. They want the regional approach because they know that works.

LEVIN: And we want the regional method as well, but it's not either/or.

BLITZER: Usually when the North Koreans take a step like this, Senator Coleman, it's often a prelude to some sort of resumption of negotiations designed to bolster whatever domestic support Kim Jong-Il might need. Do you sense that might be the case now?

COLEMAN: They're like dealing with a kid. They throw their food on the floor, and then, all of a sudden, they're going to engage in some meaningful behavior.

The bottom line, Wolf, is I don't think anybody questions that the only way that you're going to get any results with North Korea is if you get China putting pressure on them, if you get Japan in the mix; you get South Korea in the mix. That's the approach we're taking.

And so what you get is they have outbursts on occasion, but then you get some more opportunity. We have to seize the opportunity, no question about that.

But again, I think it would be a tragic mistake to do finger- pointing here when the stage for North Korea as having this capacity was set during the bilateral negotiations that Madeleine Albright and Bill Clinton did with them.

BLITZER: Senator Levin, let's talk a little bit about John Bolton, the president's choice to be the next U.S. ambassador to the U.N. We heard Andrew Card say, on this program just a short while ago, that he will be confirmed. They think they'll be able to get his nomination through. Do you agree?

LEVIN: Based on the information we have, I do not agree that he either will or that he should be confirmed.

The people who worked with him at the State Department, the chief of staff of Colin Powell, a man named Wilkerson, said that he will make an abysmal ambassador to the United Nations. This is an extraordinary statement.

The head of security at the State Department under President Bush says that John Bolton is a serial abuser. So this is not Democrats just saying that John Bolton is the wrong person to go to the U.N. This is people who work closely with him in the State Department.

Colin Powell has not endorsed this nomination but that the chief of staff of Colin Powell says that this would be an abysmal appointment is probably the first time I've ever heard anything like that come from within an administration that is making this type of appointment.

BLITZER: All right, Senator Coleman, go ahead and respond.

COLEMAN: Listen, every Republican secretary of state -- by the way -- except Colin Powell last 20 years has endorsed him. Larry Eagleburger, who worked with him for a long time -- and I think Senator Levin would say he was tremendous secretary of state -- says he's the right man for the job.

Wolf, the bottom line is the president makes this choice.

John Bolton has a record of success dealing in the international arena. He negotiated the treaty of Moscow. He got the U.N. to back on its odious resolution equating Israel with being a racist society. He has a record of accomplishment. He has a toughness we need to reform the U.N.

As my friend and colleague Senator Levin knows, the U.N. is in desperate need of reform right now. It's going to take a strong voice, somebody with a record of achievement. The president makes this choice.

This is a battle about ideology, Wolf, that's what this is all about. The other side can't beat him on ideology, so they're coming up with these other charges that really haven't been proven.

And in the end the president makes the choice. Condi Rice supports him. And he should and will get confirmed.

LEVIN: He doesn't just represent the president at the U.N. He represents the American people at the U.N. And you don't want someone who has this kind of a record of being an abusive bully to be representing the United States at the U.N.

We need someone who can unite people and the people who have worked closely with him say that he divides people. He is unable to listen to people. And I want to emphasize, people who have worked very closely with John Bolton have urged us not to confirm him. This is not just Democrats versus Republicans. It is much deeper than that.

BLITZER: All right. Senators, hold off.

We're going to continue this conversation. Lots more to talk about, including oil-for-food, the scandal that as occurred at the United Nations. Plus Social Security reform. We'll take a quick break. Much more to cover with the senators when we come back.

"LATE EDITION" will continue right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "LATE EDITION." We're continuing our conversation with Democratic Senator Carl Levin of Michigan and Republican Senator Norm Coleman of Minnesota.

Updating our viewers on North Korea, and its missile test earlier today, the State Department has issued this statement: "It appears that North Korea on May 1st" -- that would be today -- "conducted a launch of a short-range missile in the Sea of Japan."

The statement goes on to say: "We are continuing to look into this. We are consulting closely with governments in the region. We have long been concerned about North Korea's missile program and activities and urge North Korea to continue its moratorium on ballistic missile tests."

That statement from the State Department, similar to what Andrew Card said on this program just a little while ago.

Senator Coleman, let's get to this issue of the oil-for-food scandal at the United Nations. You've been one of the leading, if not the leading, member of the U.S. Senate pushing this issue. There is a former investigator who worked with Paul Volcker, the former commission chairman who's been investigating on behalf of the U.N., a man by the name of Robert Parton, that you want to subpoena to testify before your subcommittee.

Are you going to take that step?

COLEMAN: Well, we're moving forward on that, and I spoke to Chairman Henry Hyde on the House side, who's also pursuing this investigation. He agrees with me that we need to have the opportunity to visit with Parton.

Parton was the chief investigator for the Volcker commission, who was looking into the relationship between Kojo Annan and the company, Cotecna, and Kofi's actions regarding that. He resigned the commission. First he had to resign because his work was done. He came and said: No, I resigned on a matter of principle, the concern being that the commission report underplayed the culpability of Kofi Annan.

The bottom is that if you're going to have transparency, if you're going to have credibility, we should have an opportunity to speak to this witness to find out whether in fact he had information or he submitted a draft or a document that showed greater culpability.

I think Paul Volcker would want to do that. I think that the U.N. should be doing that. And I'm very disturbed that they are asserting some kind of immunity to make it difficult for us to do that.

BLITZER: Well, they say he's got some sort of confidentiality agreement with the United Nations that would bar him from testifying.

COLEMAN: Wolf, we would enter into a confidentiality agreement, but the one thing that we would like to discuss is: Does he have evidence, did he issue a report, did he have any tapes that show something very different from what the Volcker commission released?

Here's a guy that resigned on principle, a former FBI agent, a man of high principle, one of two people who resigned. We should have the opportunity to speak with him. We can work out all the confidentiality arrangements, but I think this undermines the credibility of the Volcker investigation.

The U.N. is already in serious trouble. This week Zimbabwe gets put on the Human Rights Commission. You've got the oil-for-food scandal. You've got the sex abuse scandals in Africa. You've got a whole range of things which, by the way, make a strong case for John Bolton being the United States ambassador to the United Nations.

BLITZER: All right. Let's move on to Social Security.

Senator Levin, I'll pick it up with you. The president came up with a new initiative the other night at his news conference, what's called "progressive indexing." The poorer people would have to -- would feel no additional burden, but middle-class and richer people would.

Are you basically open to this idea?

LEVIN: I think it's a terrible idea. I think middle-income people, people who make $20,000 or $25,000 or more should not have benefits cut.

BLITZER: Well, they won't be cut. Those people won't be cut. People who make more than $30,000 or $40,000 will have benefits cut.

LEVIN: No, it's around $20,000 or $25,000, Wolf, according to most estimates.

But in any event, take $30,000 families. I don't think families that earn $30,000 are rich. I don't think they ought to have their benefits cut. I think the idea that this president wants to try to address this issue by first talking about cutting benefits for middle- income families -- take $30,000 or more, if you want to -- it seems to me shows how they're on the wrong track in this administration.

BLITZER: So to save Social Security, Senator Levin, would you increase taxes, the rate of taxes for Social Security benefits?

LEVIN: I don't think we ought to look at tax increases on the rate. However, I think that all items, including raising that cap, should be on the table.

However, however, the one thing that can't be on the table is to dismantle Social Security by privatizing it. As long as the president insists that that's part of the package, then there is not going to be negotiations, because that's moving Social Security in the wrong direction. It dismantles Social Security, or part of it, rather than strengthening Social Security.

Democrats are more than willing to talk about strengthening it, providing we don't cut benefits for middle-income people, we don't turn this into a means-tested program and providing we don't dismantle it with those private accounts.

BLITZER: Senator Coleman, I'll let you respond.

COLEMAN: First, though, let's make clear. If you were born before 1949-1950, this discussion is not going to impact you at all. So we're not talking about anybody in the system or in short-term, entering the system. So we're looking to the future too.

The president's put the ball in our court. My colleagues on the other side of the aisle haven't offered anything, haven't offered anything.

The reality, Wolf, and you've said this in interviewing Andy Card earlier, you're either going to increase taxes -- what my colleagues on the other side of the alley are geared to do at this point in time -- or you have to change the system somewhat.

So the president, one, wants to give greater ownership to folks with personal accounts so you can get a better rate of return than the 1.5 percent you're getting right now on Social Security. And he also then wants to somehow fix the system.

And so I think he's put some ideas on the table. But you just can't stick your head in the sand and be against. Baby boomers in three years start to retire. In 12 years, we're going to pay out more from the system than is going in. We've got to do something. Let's start doing it now.

And I think he's put the ball in the court for my friends on the other side. They've got to say what they're for, not just what they're against.

BLITZER: Do you have a quick "what you're for," Senator Levin? Because we have to leave it right there.

LEVIN: We're not for making it worse by borrowing trillions of dollars over the years.

BLITZER: What do you want in order to increase the solvency of Social Security? LEVIN: Number one, we want to make sure that we do not dismantle it. Take private accounts off. Number two, we want to do what was done in 1982, which was a bipartisan solution with a number of modest changes which -- in 1982, by the way, they were really facing a crisis which was a few months off. This is a crisis which does not exist now. This is a 40 year-off problem which we can address on a bipartisan basis with a lot of modest changes. But what they're talking about, cutting benefits for middle income people, is not something Democrats are going to buy.

BLITZER: All right. Very quickly, Senator Coleman.

COLEMAN: Very quickly, two points. One, the '83 fix was supposed to last 75 years. Right now we're back at it again. The problem is still there. Second, you have yet to hear a single thing that my colleagues on the other side are for, just what they're against. That's not going to fix anything.

BLITZER: We'll leave it right there. But maybe the next time, both of you will come back and we'll get some specific additional proposals to move this subject forward.

Senator Levin, Senator Coleman, good to have both of you on "LATE EDITION."

COLEMAN: Thank you.

LEVIN: Nice being with you, Wolf.

BLITZER: And to our viewers, please don't forget our "Web Question of the Week: Do you expect to receive Social Security benefits when you retire?" You could e-mail us at cnn.com/lateedition. We'll have the results later on this program.

And then coming up later, former Republican presidential candidate Steve Forbes and former Clinton Labor Secretary Robert Reich. They'll join us to discuss the U.S. economy and more. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Two years ago today, President Bush declared major combat in Iraq over. A look back now at the war from the beginning.

(BEGIN VIDEOTAPE)

BUSH: My fellow citizens, at this hour, American and coalition forces are in the early stages of military operations to disarm Iraq, to free its people and to defend the world from grave danger.

BLITZER: From the flames and fire at the start of "shock and awe," to the fall of Baghdad, open warfare on Iraq lasted a month and a half.

(UNKNOWN): The scenes of free Iraqis celebrating in the streets riding American tanks tearing down the statues of Saddam Hussein in the center of Baghdad are breathtaking.

BLITZER: Afterwards, the president's triumphant message delivered two years ago today from the deck of the U.S.S. Abraham Lincoln was clear.

BUSH: American is grateful for a job well done.

BLITZER: But along with early successes came setbacks: looting at the start of the war, the growth of a deadly insurgency and the inability to find weapons of mass destruction. Then, nine months later...

(UNKNOWN): Ladies and gentlemen, we got him.

BLITZER: The capture of the ace of spades, Saddam Hussein himself. Fast forward to January 2005. Democratic elections in Iraq, but they've come at a high cost for the United States. Over these past two years, more than 1,500 U.S. troops have sacrificed their lives for Iraqi freedom. Thousands of others have been injured. And U.S. taxpayers have shelled out more than $200 billion. And the war is still not over.

BUSH: It's not easy to go from a tyranny to a democracy. We didn't pass sovereignty but about ten months ago, and since that time a lot of progress has been made.

(END VIDEOTAPE)

BLITZER: And just ahead we'll get an update on that progress in Iraq from the Iraqi national security adviser, Mowaffak Al-Rubaie. Stay with us.

(COMMERCIAL BREAK)

BLITZER: This is "LATE EDITION," the last word in Sunday talk.

(BEGIN VIDEO CLIP)

BUSH: We will work with the Iraqis to secure their future.

(END VIDEO CLIP)

BLITZER: A new government is formed in Iraq. But will it be able to control the deadly insurgency? We'll ask Iraq's national security adviser, Mowaffak Al-Rubaie.

(BEGIN VIDEO CLIP)

ADEL AL-JUBEIR, SAUDI FOREIGN POLICY ADVISER: It will not make a difference if Saudi Arabia ships an extra million or 2 million barrels of crude oil to the United States.

(END VIDEO CLIP)

BLITZER: Politics and the pump: A prince and a president meet. Will gas prices finally go down? Saudi foreign policy adviser Adel Al-Jubeir weighs in on oil issues, the war on terror and democracy in the middle east.

(BEGIN VIDEO CLIP)

BUSH: Social Security is too important for politics as usual.

(END VIDEO CLIP)

BLITZER: Persuading the people: What's America's verdict on the president's Social Security plan? Former Clinton Labor Secretary Robert Reich and former Republican presidential candidate Steve Forbes face off on the issues that affect your pocketbook.

ANNOUNCER: Live from CNN in Washington, this is "LATE EDITION" with Wolf Blitzer.

BLITZER: Welcome back. We'll get to my interview with the Iraqi national security adviser, Mowaffak Al-Rubaie, just in a minute.

First off, let's get a quick check of what's making news right now.

(NEWS BREAK)

BLITZER: Hopes were very high that Iraq's national elections three months ago would severely cripple, if not end, a stubborn insurgency. And while there were fewer attacks in the weeks immediately after the election, deadly violence is once again surging.

Just a little while ago, I spoke with Iraq's national security adviser, Mowaffak Al-Rubaie, about his country's critical security problem, the new Iraqi government, and more.

(BEGIN VIDEO CLIP)

BLITZER: Mowaffak Al-Rubaie, thanks very much for joining us on "LATE EDITION." Let's get to the immediate issue at hand: the violence, the insurgency continuing. Only in the past few days, by our count, at least 75 Iraqis have been killed. What's going on?

MOWAFFAK Al-RUBAIE, IRAQI NATIONAL SECURITY ADVISER: Well, this is expected. I think the more success and the more victory and the more we achieve our objectives in the political process, the more we expect these terrorists to commit more crimes against our people. I think we have gone a long way.

Over the last year we have achieved a lot in the way of political as well as building our Iraqi security forces: the new Iraqi army, the Iraqi national guard and the Iraqi police. And in general, the Iraqi security forces are taking more responsibilities now. They are much more confident in their ability. They have the logistical support from the Multi-National Forces in Iraq. And they have the right training. They have the on-job training, if you like. They have the right equipment. We certainly need more.

But I can tell you we are quite confident and this government is quite determined to use -- we have already a comprehensive plan to combat terrorism. And this government is so determined to get this violence to end, hopefully, by the end of the year.

BLITZER: By the end of this year. But we heard testimony -- we heard a statement this week from the chairman of the U.S. military's Joint Chiefs of Staff General Richard Myers, who suggested that the level of the insurgency is about now what it was a year ago. It really has not gone down. And other experts are suggesting it's actually intensified and become more robust.

You're the national security adviser: What do you say about the intensity, the level of the insurgency? Is it getting worse or is it getting better?

AL-RUBAIE: I think we are on the winning course. There's no doubt about it. The level of violence is not measured only by the number of explosions every day or the number of casualties. There are other parameters we're measuring.

The insurgency is quite demoralized after the election. I have to admit that the lull after the election, which took the new government to happen, has taken much longer than we wished and we would like it to happen. They have taken this as probably an opportunity for them to increase the violence.

I believe this transitional Iraqi government of Dr. Jaafari is so determined. And they have a comprehensive plan to combat terrorism. With the help of the Multi-National Forces, I believe we will stay on course in the political process.

BLITZER: And you say that by the end of this year, that insurgency will have been broken?

AL-RUBAIE: There is no shadow of doubt in my mind, that by the end of the year, we would have achieved a lot. Probably the back of the insurgency has already been broken.

The terrorism is not an Iraqi phenomenon, as you know, Wolf. It's a Middle Eastern, it's a global phenomenon, this terrorism. And I don't expect the terrorism to go away and to be completely eradicated by the end of the year.

But I'm sure that a lot of these terrorist acts will end by the end of the year, and we will have the first constitutionally elected government by the beginning of next year. And we will hope that Iraq, all sectors, all communities in Iraq will be in this government, in this new government, and an elected government.

BLITZER: When do you believe...

Al-RUBAIE: And remember, this is...

BLITZER: When do you believe, Mr. Al-Rubaie, that U.S. military forces and other coalition forces will be able to start leaving Iraq in significant numbers?

AL-RUBAIE: I know for sure that Iraqi security forces are taking charge in some of the areas in Baghdad. And they are taking the brunt of this terrorist attacks. And they are engaged more, and they're taking the forefront, and they're taking the lead in this fight against terrorism.

And I believe the Multi-National Forces -- I would be very surprised if they don't think very seriously of starting pulling out probably by the end of the first half of next year.

BLITZER: By the middle of 2006, is that right?

AL-RUBAIE: I believe that during the course of next year, the Multi-National Force will consider, some of them will consider going back home.

BLITZER: How many of the 150,000, 140,000 U.S. troops do you think will be able to go home by the middle of next year?

AL-RUBAIE: I think it's very difficult to predict in this detail. It depends on the way this terror or fighting against terrorism will go. It depends on the speed of the training and recruitment of our Iraqi security forces. It depends on the training, armament and providing the right equipment for our security.

After all, this is not a classical war, Wolf. This is an intelligence-led war. I know Dr. Jaafari, the new prime minister, is very, very interested to start the process of coordinating between the different intelligence organizations in this country. And we will rely on our people, because after all, this is our first elected government. This is the government of Iraqi people.

The Iraqi people have to take part in the, in fighting terrorism. And I think Dr. Jaafari is thinking very seriously of coordinating between different intelligence organizations, as well as letting ordinary Iraqi citizens taking part in this fight, in the process of fighting terrorism.

BLITZER: As you know, the new government was formed. There are some vacancies. We'll put up on the screen the nature of the new Iraqi government. There are 18 Shiites, 10 Kurds, five Sunnis, one Christian. As far as vacancies are concerned, there still are seven vacancies in the cabinet; several of those, four of those, reserved for Sunnis.

There has been criticism that there are not enough Sunnis in the new government, especially by Sunni Iraqis.

This is what one member of the assembly said: "This is not a national government. It is a government of the winners. I am here to say that the Sunni Arab members have been marginalized, and the Sunni Arab political forces should be aware of that." Mishan Al-Jaburi said that.

Is that a fair criticism of this government, that it is not representative of all of Iraq?

AL-RUBAIE: I beg to disagree on that. I think this is a national unity government. I can tell you one thing: Dr. Jaafari is working day and night to fill these vacancies. And in the next few days, we will have a new appointment. And be rest assured that there are going to be more Sunni Arabs in this government, and there has to be a meaningful representation of the Sunni Arabs. You can't appoint any Sunni Arab and say that he represents the Sunni Arabs.

The problem with our Sunni Arab citizens, they don't have strong political parties. And the lack of these strong political parties is a problem. And also, they've not taken or they were prevented and blocked and stopped from taking part in the last election. That's why we have few of the members of the Transitional National Assembly in the assembly, and we don't have a true representation or proportionate representation of the Sunni Arabs in the national assembly. We hope that the government, and I'm sure the prime minister is going to fill some of these vacancies with the Arab Sunnis, to address this imbalance.

BLITZER: One final question, Mr. Al-Rubaie. The whole nature of weapons of mass destruction in Iraq: None was found of any significant quantity, if any quantity.

The Charles Duelfer report came out with its final Iraq Survey Group assessment this past week, and it suggested it was unlikely that an official transfer of WMD material from Iraq to Syria took place.

However, the Iraq Survey Group was unable to rule out unofficial movement of limited WMD-related materials to Syria.

What is your conclusion about the weapons of mass destruction, the missing weapons of mass destruction under Saddam Hussein? What happened to the WMD in Iraq?

AL-RUBAIE: Well, the proof of pudding is in eating. Saddam has used the weapons of mass destruction against the Kurds in Halabja and against the Shia down south in the marshes. So he has used these weapons of mass destruction.

The other thing is that Saddam Hussein himself was a weapon of mass destruction. The mass graves in the south and the mass graves in the Kurdish area and in Kurdistan, these are proof that this is one of the most brutal, one of the most ruthless beasts ever, not in the Middle East, but in the whole world. Now...

BLITZER: Well, let me interrupt, with respect, for a second, Mr. Al-Rubaie.

Do you accept the argument that in the '90s, in the late '90s, mid-'90s, that the Iraqi government under Saddam Hussein effectively destroyed all those weapons of mass destruction or they were destroyed by U.N. weapons inspectors?

AL-RUBAIE: I don't agree on that. I think there is mounting evidence, indirect evidence, that on the eve of the war, there was, if not an actual weapon of mass destruction, there were plans; there were documents; there were samples of these weapons of mass destruction. And there were reliable reports that a lot of lorries, weapons and documents had crossed the borders. BLITZER: To which borders those lorries, those trucks, where were they going?

AL-RUBAIE: Well, they were loaded. And the reliable reports have pointed, as you have mentioned in the report and in your question, heading toward the west.

BLITZER: Does that mean toward Syria?

AL-RUBAIE: We don't have compelling evidence toward that, certainly these truckloads were heading towards the western border.

BLITZER: So basically -- and I'll wrap it up with this question -- what you're suggesting is that even though no weapons of mass destruction have yet been found in the two years since the overthrow of Saddam Hussein's regime, you still believe they will be found at some point?

AL-RUBAIE: I believe, Wolf, this is all splitting hairs, and I think this is all hypothetical or digging in the past.

I believe the most important thing is what happened on the 9th of April, 2003. We have overthrown one of the most ruthless dictators in the world. And the achievement now, we have freed 27 million people. Iraqis now, they are free, and there is a wonderful democratic process in this country.

The standard of living in this country is much higher than before.

People are living in freedom, and they are enjoying this new Iraq, Wolf.

BLITZER: Mowaffak Al-Rubaie, the national security adviser for the new Iraq, the new Iraqi government.

Mr. Al-Rubaie, thank you very much for spending a few moments with us on "LATE EDITION."

(BEGIN VIDEOTAPE)

BLITZER: And coming up, from record-high oil prices here in the United States to tracking down terrorists around the world, how Saudi Arabia is factoring into all of this. We'll talk about that with the country's foreign policy adviser, Adel Al-Jubeir.

Then, pump prices spiralling up. What should the U.S. government be doing to help American consumers.

"LATE EDITION" will continue right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: We will protect consumers. There will be no price-gouging at gas pumps in America.

(END VIDEO CLIP)

BLITZER: Welcome back to "LATE EDITION." President Bush addressing America's climbing gas prices in his Thursday night press conference.

We're joined now by Saudi Arabia's foreign policy adviser, Adel Al-Jubeir.

Adel Al-Jubeir, thanks very much for joining us.

You were down there in Crawford, Texas, earlier in the week when President Bush met with Crown Prince Abdullah.

What, if anything, was resolved, in terms of U.S.-Saudi cooperation, to bring down the price of oil in the short term?

AL-JUBEIR: It wasn't about resolving anything, Wolf. It was about clarifying matters.

The United States wanted to know what Saudi Arabia's production capacity was, what Saudi Arabia's plans for future production were, in the years out. Saudi Arabia wanted to know what the situation was with the shortage in American refineries. And I believe that the crown prince had a wonderful discussion with the president on this issue, as well as many other issues of mutual concern.

He also had a very detailed discussion about the future of the oil markets with the vice president the day before.

BLITZER: So, is there nothing that the U.S. and Saudi Arabia, working together, can do in the short term to bring down the price per barrel? Right now it's hovering around $50 a barrel, as you know.

AL-JUBEIR: There are a number of steps that one can do. We in Saudi Arabia have increased our production and are currently producing slightly over 9.5 million barrels of oil a day. We have indicated to our customers that our production capacity is up to 11 million barrels. And we are willing to produce the extra 1.5 million barrels, should our customers want to purchase those additional barrels.

We have had that option on the table for the past nine or ten months, but we haven't seen many buyers. We don't believe that, as we speak, there is a shortage in crude oil. We believe that there is a shortage in terms of the infrastructure of crude, whether it's shipping, refining, storage, whether it's...

BLITZER: Demand has really gone up for oil, given the markets of China and India, as well as the West.

AL-JUBEIR: Correct.

That is another factor that's putting upward pressure on crude oil. BLITZER: And this has been a bonanza for the Saudi oil industry and other oil industries, major oil exporters. They're making a ton of money right now.

AL-JUBEIR: Well, yes, we are, but we also lose a lot of money when there is a surplus, and prices crash, as they had in the mid-'80s and as they did in the mid-1990s.

BLITZER: Well, do you think prices are going to be going down any time soon?

AL-JUBEIR: We hope so, because we're working very hard to increase our production capacity to reassure the markets that there is sufficient crude available. We are building refineries in Saudi Arabia, as well as in other places in the world, to make sure that there is enough gasoline for consumers, so that prices come down.

We have no interest in high oil prices. It hurts us in the long run, and it hurts consumers in the short run.

BLITZER: There is concern -- and you've heard this expressed, I'm sure -- that all the money that Saudi Arabia is taking in now with the extra exporting of oil at these $50-per-barrel prices -- it was not long ago when it was $20 a barrel, $25 a barrel -- that all this money is coming in, and that some of this money may wind up in the hands of terrorists.

AL-JUBEIR: I think that that's a ridiculous charge to make, Wolf. Saudi Arabia is a victim of terrorism. We have been very diligent in fighting terrorists.

BLITZER: But there are Saudis, not necessarily in the government, but Saudis who are not necessarily opponents of these terrorist groups, as you know.

AL-JUBEIR: When we find them, we punish them. We jail them. We freeze their assets, which we have been doing over the past number of years. Saudi Arabia has been very vigorous in going after terrorists, those who support them and those who condone their actions. The Saudi government has a major reform plan in progress that includes opening up our economy, creating jobs, investing in our infrastructure. And that's where the income from oil is going to go.

BLITZER: For example, the schoolbooks, the textbooks in Saudi Arabia now, have there been the changes that we've been hearing about, calling the West, the United States evil and all of that, has that all gone away, or is that still in the textbooks in these schools?

AL-JUBEIR: I believe that the -- when we looked at our textbooks a number of years back, we discovered that five percent of the materials in those textbooks was objectionable, should not be in them, and 10 percent of them was questionable. I believe the five percent was removed, the 10 percent was worked on. We continue to reassess and reevaluate our textbooks as well as our teaching methods.

We have a multi-year program in place, to ensure, to make sure that we bring our educational system and our curriculums up to speed, and bring them up to world standards. And I have no doubt that we will succeed in doing so.

BLITZER: Based on what you know -- and you're very well plugged in -- is there any progress at all being made in the hunt for Osama bin Laden?

AL-JUBEIR: I believe so. I believe that the ability of Al Qaida to recruit people is severely diminished. We see it in Saudi Arabia. We see it in other places.

I believe their ability to plan large-scale, spectacular attacks is diminished.

I believe that their ability to communicate across borders is severely diminished.

Their ability to raise funds has been severely diminished.

BLITZER: Why can't the U.S., the Saudis, the rest of the world find Osama bin Laden?

AL-JUBEIR: I wish I had the answer. We are looking. He is enemy number one on everybody's list.

BLITZER: He is a Saudi. How popular is he in Saudi Arabia?

AL-JUBEIR: Well, he was stripped of his citizenship in the early 1990s. I don't believe he has much popularity in Saudi Arabia. Nobody can condone the killing of the innocent. That's just outrageous. No decent human being is going to accept this.

I believe that the evidence of his actions, the killing of innocent people, whether it's in New York or in Riyadh or in other places, unacceptable. So I don't believe he has much popularity.

Our religious scholars are speaking out against him, condemning his actions and those of his cohorts. And...

BLITZER: We keep hearing reports from Saudi dissidents and others suggesting that he still is a pretty popular figure, at least with certain elements of Saudi society.

AL-JUBEIR: Of course. What would you expect dissidents to say?

You can talk to radicals in Europe and they'll tell you that their agenda is very popular with the masses when, in fact, it's not.

If Osama bin Laden or Al Qaida in Saudi Arabia were popular, we would see an increase in recruitment, not a decrease. We would see an increase in their ability to do damage, not a decrease.

And I believe that, as Ronald Reagan used to say, "Facts are stubborn things."

We are winning the war on terrorism. It will take time though. BLITZER: One issue that was very much on the agenda when Crown Prince Abdullah met with President Bush was the Israeli-Palestinian peace process.

Saudi Arabia has played a role at least in the past. Are the Saudis, is your government, ready to provide a significant sum of money to the Palestinians to develop Gaza, for example, following the scheduled Israeli withdrawal in August?

AL-JUBEIR: We have been one of the largest donors of humanitarian assistance to the Palestinian Authority. I believe we will continue to be.

We will do whatever is required in order to help the Palestinians.

There was a donor conference several years ago where a number of countries made pledges. I believe Saudi Arabia was one of the few countries to actually come through with its pledges. We expect other countries who have made...

BLITZER: Is there a bottom-line figure that you're thinking about providing the Palestinians now to help them make this adjustment?

AL-JUBEIR: There really isn't because there can't be. We have to see what the projects are that they require, what are the size of the aid packages that they require, who else is going to contribute, who else is going to fulfill obligations that they have made in the past but have not fulfilled.

And then we ask part of the international community step in and help the Palestinians.

It is very important to reconstruct the Palestinian areas, very important to create jobs for the Palestinians if we want stability and if we want to see progress in the peace process.

BLITZER: There are, obviously, negotiations under way between the Israelis and Palestinians, the Israeli government, the new government of the Palestinian Authority.

There are other Arab states that have peace treaties with Israel -- Egypt and Jordan. Others have less agreements. Do you foresee the day when Saudi Arabia could have full diplomatic relations with Israel?

AL-JUBEIR: Yes, and we've made it very clear when the conference put forth its peace plan, which was adopted as the Arab Peace Initiative at the Beirut Summit in April of 2002, it was very clear: Israeli withdrawal from the territories occupied in '67, establishment of a Palestinian state, a settlement of the refugee problem, the settlement of the question of Jerusalem, in exchange for full and normal relations between Israel and all Arab countries, including Saudi Arabia.

That offer has been on the table for years now.

BLITZER: Let's hope that there's some movement toward that direction. And thanks very much, Adel Al Jubeir, for joining us..

AL-JUBEIR: My pleasure, thank you.

BLITZER: Appreciate it.

Up next, we'll get a quick check of what's in the news right now, including an arrest in connection with the killing of an aid worker in Iraq.

Then, will President Bush's Social Security proposal put your retirement worries to rest? Former Clinton Labor Secretary Robert Reich and former Republican Presidential candidate Steve Forbes will square off.

More "LATE EDITION" right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: So I propose a Social Security system in the future where benefits for low-income workers will grow faster than benefits for people who are better off. By providing more generous benefits for low-income retirees, we'll make this commitment.

(END VIDEO CLIP)

BLITZER: President Bush keeping up pressure on the Congress for Social Security reforms, not giving up on his proposal for private accounts for younger workers.

Welcome back to "LATE EDITION."

Joining us now, two guests with different views on Social Security reform, the economy and other issues: in Berkeley, California, the former Clinton labor secretary, Robert Reich; and in New York, the CEO of Forbes Incorporated, the former Republican presidential candidate, Steve Forbes.

Gentlemen, welcome back to "LATE EDITION." I'll start with you, Steve Forbes. What do you make of this presidential initiative he threw on the table, what's called "progressive indexing," cuts in future benefits for Social Security recipients depending on their income?

STEVE FORBES, CEO, FORBES INC.: Well, Wolf, I'll be blunt. I take my cue from Patrick Daniel Moynihan, the great Democratic senator, late senator, who said if you start mean-testing Social Security, you're going to turn it into a welfare system and undermine broad political support for it. It is not necessary to cut future benefits if you make the right reforms.

I'm glad the president is sticking with personal accounts. But I think it was a mistake to be blunt, to have these benefit cuts, put them on the table. Maybe they thought that was the way, what they had to do to get support for other reforms.

But I think it was a mistake. It's unnecessary. We can get good reforms that guarantee benefits for everyone in the future.

BLITZER: Bob Reich, do you agree?

ROBERT REICH, FORMER LABOR SECRETARY: Well, first of all, let me commend the president. If somebody's going to have to sacrifice in the future, if you do agree with the Social Security actuary that there are going to have to be big cuts out there in 36 years in Social Security, better that those cuts occur on people who can afford them rather than on the poor.

So I think the president is taking a progressive approach on that. But the problem, and here I agree with Steve Forbes...

BLITZER: Let me interrupt, Bob Reich. Let me interrupt for a second. When you say wealthier Americans, significant cuts over these next decades would affect people making $30,000, $40,000, $60,000 a year at current income levels, those aren't very wealthy Americans.

REICH: Well, you took the words out of my mouth, Wolf.

In fact, I was going to say, my next point was, if you -- the president is cutting way down into the middle class. And that's the problem with the proposal. And I agree with Steve Forbes. We shouldn't do this all on the benefits side.

A much better way would be to take the cap off of the proportion of income subjected to Social Security, which is now on $90,000. If you earn more than $90,000, the next dollar is not subjected to Social Security taxes whatsoever.

Better to do that than to cut so deeply into benefits. In fact, anybody right now with a current income of $25,000 in current dollars is going to see cuts, according to the president's plan, way out there.

BLITZER: All right. Steve Forbes, listen to what Andy Card said on that specific proposal, that the White House is not ruling out raising the cap, right now at $90,000. Americans pay Social Security withholding taxes up to their first $90,000 in income -- the idea of raising that cap from $90,000 to beyond. Listen to what and Andy Card said on this program.

(BEGIN VIDEO CLIP)

CARD: He has said it's all on the table. If Congress wants to consider it, he'll take a look at it.

(END VIDEO CLIP)

BLITZER: What about that? Do you think that's a good idea? FORBES: That is a wimp policy. Raising taxes will not strengthen the economy. You're going to hurt small businesses. You're going to hurt job creation. We've tried raising taxes in the past, in the late '70s, early '80s. It does not work long-term.

There are positive ways to reform Social Security, especially with people in their 20s and 30s with accounts structured, strengthen the economy, give them more benefits. They own those accounts instead of the politicians. The real question, Wolf, is: How do we fund future benefits for Social Security? Do you set aside reserves to do it? That's what we should do with these personal accounts for younger people.

Again, raising taxes, wrong thing to do. I'm just shaking my head at the White House that they've thrown all this away this soon. And I hope, Wolf, they don't make that mistake when it comes to tax reform or we're going to get nothing real there as well.

BLITZER: All right.

Bob Reich, your proposal to raise the cap on withholding taxes for Social Security were to go up, how high would you make it go?

REICH: Well, initially, I think anybody earning over $90,000, I'd have kind of a 2 or 3 percent surcharge on incomes over $90,000. That's one way of doing it. Another way of doing it is to go up to $120,000 now and index it. That's not going to go to solve the entire problem. And there might be other things that we need to done. The retirement age may have to be raised again. After all, people are living much longer.

But Wolf, remember, this is a problem, potentially, 36 years from now. If I were president, I would not be talking about Social Security. I would be talking about Medicare. That's a much, much bigger problem. And that's what we as a nation ought to be focusing on right now.

BLITZER: The poll numbers are not encouraging, Steve Forbes, for the president when it comes to these private accounts. He has been on the road for almost 60 days, trying to generate support for these personal savings accounts. Take a look at these numbers. We'll put them up on the screen.

Do you support or oppose private accounts? Right now, support, 45 percent; that's down from 56 percent in mid-March. Fifty-one percent say they oppose it; that's up from 41 percent. It looks like the president's campaign to get support for these private accounts, which you support, has gone nowhere or has been counterproductive.

FORBES: Well, I think it's all gotten caught up in this perception, very real, all too real now, that this is simply a disguise for major benefit cuts. I think the president made a mistake, the White House made a mistake by not putting a specific proposal at the beginning where people would see that these accounts would work for younger people, that people above the age of 50 would not have their benefits tampered with. So they made a very real, strategic error. So given the mishmash out there that nobody knows exactly what he is proposing, it's no surprise that people are shying away from it. Younger people, when they understand it, will support it. Raising taxes...

BLITZER: We're going to take a quick -- hold on one second.

REICH: I have to make sure that the record is very clear on this. Even the president and even White House is now saying and agreeing that the solvency of Social Security over the long term is not affected by privatization, by these private accounts. That's not the issue.

The issue is, if you are concerned about solvency, the question is, do you do it on the benefits side as the president wants to do? And by the way, he is giving the Democrats a huge, huge saying going into mid-term elections: We are not going to cut middle-class Social Security benefits...

BLITZER: Hold on one second. We're going to take a quick break. But Bob Reich, I want to press you on this point. If you had money to set aside for when you are getting ready to retire 10, 20, 30 years down the road, would you want to get 1 percent? Or would you want to take your chances and let the markets, the stocks, the bonds, give you 3, 4, 5 percent or more?

REICH: Well, I'd probably want to do both, Wolf. I'd want to have my private account...

BLITZER: Well, that's what the president is suggesting: Do both.

REICH: No, no, no, no, no. That's not what the president is talking about. That's not it at all. Social Security is designed as a cushion against the vagaries and the casino-like tendencies of the stock market. And a lot of people rely entirely on Social Security.

BLITZER: All right. We'll pick up that thought when we come back. Much more to talk about. Social Security, the economy, a lot more with Steve Forbes and Bob Reich, when we come back.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're debating Social Security reform, the economy with former Clinton Labor Secretary Robert Reich and former Republican presidential candidate Steve Forbes.

Steve Forbes, the Democrats almost to a man and woman are saying if the president insists on keeping these private accounts on the table, they're not going to negotiate with the Republicans at all. It looks like a stalemate could be in the works.

FORBES: I hope so because doing something bad or half-baked, I would rather have nothing done and take it to the American people in 2006. The idea again that they buy into the idea that they have to slash benefits, they have to raise taxes to solve the problem is preposterous. The money is there to help pay people over the age of 50. That's not at issue.

The question is: How do we fund Social Security for younger people? Personal accounts: You don't even have to go in the stock market. Just put it in bank CDs or government treasuries, and you'll get a far higher return than you could get with Social Security.

Look at the federal thrift plan. There are positive ways to do this thing. And the White House has bought into this, you know...

BLITZER: But the White House says, as Bob Reich just said and the White House agrees, that the private accounts are not going to necessarily solve the solvency problem, the long-term solvency problem of Social Security.

FORBES: Well, history shows that they're wrong. I'm surprised the president hasn't just cited Galveston, Texas. There, several thousand government workers pulled out of Social Security in the early 1980s, put the money in non-stocks such as guaranteed interest contracts from sound insurers, bank CDs and the like. And those beneficiaries today are getting 50 percent to 200 percent more in benefits than they would have with Social Security.

So long-term, this thing works especially for people in their 20s and 30s. I don't know why they have gone for this root-canal mentality.

BLITZER: Bob Reich, you heard Steve Forbes say that fixing Social Security is relatively simple: Just let these private accounts bloom.

REICH: Well, it's certainly not simple. And again, the issue is over. The president and the White House, they have conceded that private accounts are not going to solve the solvency problem of Social Security.

You have only to look at the mathematics. I mean, you take trillions of dollars out of Social Security, you're not going to improve the Social Security trust fund. You take $5 trillion out of Social Security and you eliminate Social Security or virtually eliminate it for the rich and almost eliminate it for the middle class, you lose the cushion that Social Security was intended to provide in the 1930s...

FORBES: Social Security can provide the cushion for people above the age of 50. In the next 10 years, Social Security's taking in more than $2 trillion than it pays out. That money today is just going to be spent by politicians on their pet projects.

If we have those personal accounts today, that $2 trillion will be invested in the economy, making the economy stronger. And that's how you ultimately pay future benefits, with a strong economy. Otherwise, we go the way of Europe, with high taxes, huge problems, high unemployment. We don't need to do that in America.

REICH: You know, Steve, I respectfully, respectfully -- and we need more respectful conversations in America -- I respectfully disagree. There is not going to be a huge Social Security crisis. This thing can be mended quite easily. Private accounts don't do it. We have other much, much larger fish to fry in this country like Medicare. And I...

FORBES: Well, Bob, the Social Security return's 1 percent. A bank CD will give you 3 percent or 4 percent. The math is on my side on that one.

REICH: And not the transition cost, Steve.

BLITZER: All right, we'll leave it right there. A very good discussion, a respectful discussion by our two guests. We always have a good discussion with Bob Reich and Steve Forbes.

I want to thank both of you for joining us on "LATE EDITION."

Up next, the results of our "Web Question of the Week": Do you expect to receive Social Security benefits when you retire? We'll have the results. Plus, "LATE EDITION's" Sunday morning talk show round-up. If you missed the other Sunday morning shows, we'll tell you what you missed.

(COMMERCIAL BREAK)

BLITZER: And now in case you missed it, let's check some of the highlights from the other Sunday morning talk shows.

On NBC's "Meet the Press," two key U.S. senators with very different views on President Bush's embattled U.N. ambassador nominee.

(BEGIN VIDEO CLIP)

U.S. SENATOR GEORGE ALLEN (R-VA): The United Nations needs reform, and John Bolton is an outstanding individual based on his record of performance and also will be the one who, I think, will ultimately, with his reforms, bring credibility to the United Nations.

U.S. SENATOR CHRISTOPHER DODD (D-CT): Sending someone up to reform the United Nations who has the reputation factually of having tied the skewer and cooked the books when it comes to intelligence data is not going to be able, in my view, to convince our allies or others around the world to support us on key positions.

(END VIDEO CLIP)

BLITZER: On CBS's "Face the Nation," a Republican senator and potential 2008 presidential contender, Chuck Hagel, said when President Bush declared major combat operations over in Iraq two years ago, he spoke too soon.

(BEGIN VIDEO CLIP)

U.S. SENATOR CHUCK HAGEL (R-NE): I think they sound not a like a wise and mature statement, one that was far too premature. Probably on no basis was there any solid judgment to make that statement. I think the president realizes that. I think his administration does. (END VIDEO CLIP)

BLITZER: The president made that statement exactly two years ago today.

On "Fox News Sunday," the top Democrat on the Senate Judiciary Committee denied that he and his colleagues were unfairly blocking the president's judicial nominees.

(BEGIN VIDEO CLIP)

U.S. SENATOR PATRICK LEAHY (D-VT): We put through 208 of President Bush's nominees. We've held back 10. That's a 95 percent success rate. That's more than just about any president.

(END VIDEO CLIP)

BLITZER: And on ABC's "This Week," Superbowl champion quarterback Tom Brady didn't rule out a career in politics after a life on the gridiron.

(BEGIN VIDEO CLIP)

TOM BRADY, NEW ENGLAND PATRIOTS: Really, the things that I feel that are fulfilling for me are beyond throwing a football. It's making an influence in people's lives. And if that's politics, that's politics.

(END VIDEO CLIP)

BLITZER: Some highlights from the other Sunday talk shows here on "LATE EDITION," the last word in Sunday talk.

Our "LATE EDITION" Web question asks this: "Do you expect to receive social security benefits when you retire?"

Here is how you voted so far: 75 percent of you said yes; 25 percent said no. Remember, this is not a scientific poll.

And that's your "LATE EDITION" for Sunday, May 1st. Please be sure to join me again next Sunday and every Sunday at noon Eastern for the last word in Sunday talk.

I'm here Monday through Friday, noon and 5:00 p.m. Eastern.

Thanks very much for watching.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


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