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President Barack Obama Sells Economic Plan to Indiana, Interview with Lawrence Summers

Aired February 9, 2009 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: President Obama gears up for his first primetime news conference. He's spending morning and night selling his economic rescue plan directly to the American people. This hour, his pitch and how the public is responding.

The Senate is debating its version of the rescue plan right now. We're closing in on a major vote on the Senate floor. It could be critical. It will be a major test for President Obama.

And a possible lifeline to struggling homeowners. Will mortgage rates plunge to 4 percent? I'll press one of the president's top economic advisers for an assessment.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

About four hours from now, President Obama will stare White House correspondents and the American people in the eyes. His first primetime news conference coming at a desperate time for the U.S. economy and for the president's plan to ease the pain. Mr. Obama gave his national call to action a road test in the heartland earlier today.

Let's go to our White House correspondent, Dan Lothian -- Dan?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Wolf, selling his stimulus plan on the road and sending a loud message to Congress, the president reached out to ordinary Americans in Elkhart, Indiana, some fighting to find work or struggling to hang on to their jobs. A community that says it's ready to put the government's money to work quickly.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): The questions were not prescreened but Mr. Obama already knew what subject would dominate his first town hall meeting as president -- the economy.

UNIDENTIFIED MALE: Send that check to our mailbox so we can take it to the bank and pay that mortgage.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What I've been pushing in this plan is to make sure that the tax cuts goes to working families.

UNIDENTIFIED FEMALE: When you allocate the money for Elkhart, Indiana, will it come directly into Elkhart? OBAMA: Some of the plan will go to the state government. There are going to be other projects having to do with transportation, for example, in which we may be working directly with local municipalities and communities.

LOTHIAN: And this question about green jobs.

UNIDENTIFIED MALE: Are there provisions in there that address green job issues?

OBAMA: Under this plan, we would double the production of alternative energy.

LOTHIAN: Elkhart County where 75 percent of the nation's RVs are made has been slammed by a bad economy. Unemployment skyrocketed last year from just under 5 percent to more than 15 percent. High fuel price, a tight credit market and vacations on hold have put people like Ed Neufeldt, who introduced the president, out of work.

ED NEUFELDT, FORMER RV WORKER: I had worked in the RV industry for 32 years. Right now with unemployment benefits, I am making ends meet. But what happens when my unemployment benefits run out?

LOTHIAN: 2,500 people snapped up tickets and packed the Concord High School gym, many wanting to know what will be done to bring back lost jobs.

UNIDENTIFIED FEMALE: A lot of local companies have gone overseas.

LOTHIAN: And administration official admits the stimulus package won't directly address the ailing RV industry. But the town's mayor says he has 17 shovel-ready infrastructure projects that will put people back to work.

MAYOR DICK MOORE, ELKHART, INDIANA: Send us the money, send it right here to Elkhart, Indiana. We'll be held accountable for it. We don't mind that at all and we'll put people to work and we'll put them to work in a hurry.

(END VIDEOTAPE)

LOTHIAN: The president says Congress needs to act quickly to help and he'll take that message on the road again on Tuesday to Ft. Myers, Florida -- Wolf?

BLITZER: Dan Lothian traveling with the president in Indiana today.

Let's go to Capitol Hill right now where we're standing by for a critical vote that could make or break the president's economic recovery plan.

Dana Bash, our senior congressional correspondent, is watching. We expect this vote to come up, like, within the next hour, hour and a half or so? DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Exactly, an hour and a half. You're exactly right. About 5:30. And that, as you said, it's going to be a key test vote for what Senate Democrats and just a few Republicans hammered out, a compromise on President Obama's stimulus bill.

But I've got to tell you, the White House and even Democrats here, they're already looking beyond this because they think that they're going to eke out the votes. They're looking already at what they're going to do about the problem that they might have between House Democrats and Senate Democrats, in particular the fact that they had to cut spending in order to get this delicate compromise and House Democrats, Wolf, many of them, are not happy about it.

(BEGIN VIDEOTAPE)

BASH (voice-over): On its face, the Senate economic stimulus compromised, about $827 billion, looks a lot like what passed the House, an $819 billion plan. But the reality is there are some major differences setting up tough negotiations.

Senate Democrats...

SEN. MAX BAUCUS (D-MT), FINANCE CHAIRMAN: This is a compromise across the aisle in the finest tradition of the Senate.

BASH: ... versus House Democrats.

REP. JAMES CLYBURN (D-SC), MAJORITY WHIP: If it stays the way it is, then it's all a little bit more challenging for us.

BASH: In the Senate, the only way Democrats could lure Republican votes to pass the plan is by slashing some $100 billion in spending. But House Democrats are balking because a big chunk of the Senate spending cuts are aimed at education. For example, the Senate sliced $40 billion in funding to the states, money for local officials to avoid cutbacks in education and other services.

The Senate also eliminated $19 billion for school construction and cut Head Start early education funding in half from $2 billion to $1 billion.

House Speaker Nancy Pelosi warned the cuts her fellow Democrats agreed to in the Senate do, quote, "violence to their goals." Other House Democratic leaders agree.

CLYBURN: Sure. Part of this compromise does violence. I don't know what's wrong with funding Head Start? And so what's wrong with funding higher education?

BASH: Jim Clyburn insists House Democrats will fight to put back money, he says, is targeted to low-income Americans. The big problem is that any changes by House Democrats may jeopardize support from the Senate Republicans President Obama needs to pass his economic plan.

SEN. SUSAN COLLINS (R), MAINE: If the bill comes back from the conference committee with a lot of wasteful spending reinserted or if it comes back in excess of $800 billion, it will not have my support.

(END VIDEOTAPE)

BASH: Last week when President Obama spoke with House Democrats, he urged them not to, quote, "make the perfect the enemy of the absolutely necessary." And Wolf, talking to House Democratic leadership aides today, it was clear to them that he was targeting those comments at them, making clear that they really are probably going to have to give up on some of their spending priorities like education, like health care, in order to get President Obama this stimulus plan that he says he wants really by the weekend.

But, you know, in talking to all sides of this, again, what's most interesting, is that they're all Democrats, finding that compromise is not going to be easy for President Obama.

BLITZER: And the senator, Ted Kennedy, we know, obviously, as you know, Dana, how ill he's been with brain cancer. Will he be on the floor today for this critical vote that's coming up?

BASH: We do expect him to be here, yes. In fact, when the Senate Democrats thought the vote was going to happen on Friday, they got him here. He's been in Florida. And they got him back to Washington and he has been here and they do expect him to be here in the Senate to help them with this vote because it is going to be very, very close.

BLITZER: Every one of those votes is critical. Dana, we'll watch with you. Thanks very much.

Let's check in with Jack Cafferty right now. He has the "The Cafferty File" -- Jack?

JACK CAFFERTY, CNN ANCHOR: Wolf, just in case President Obama doesn't have enough worries with the economy and the stimulus package and all of those things, one of his top diplomats is out now warning that the war in Afghanistan is going to be, quote, "much tougher than Iraq," unquote.

Richard Holbrook, special representative to Afghanistan and Pakistan, insists that there's no magic formula and that Afghanistan will be a long, difficult struggle. Holbrook knows a thing or two about struggle. He's got a long resume. Among other things, it includes negotiating an end of the war in Bosnia.

The president has made it clear Afghanistan will be a top priority. His administration now deciding whether to surge, if you will, another 30,000 troops into that country which would almost double the current U.S. troop strength.

Speaking at the same meeting as Holbrook, General David Petraeus said that there's been nothing easy about Afghanistan. He described the country and its many needs ranging from ground troops to intelligence, surveillance, special ops, you name it. There are high expectations over Petraeus can mirror the same progress in Afghanistan that he made in Iraq. The U.S. also calling on the international community to step up its role in that war-torn nation. Although Afghan president Hamid Karzai acknowledges that there are security problems. He says they've had success in areas like roads and health care. Mr. Karzai insists that his country's not a narco state nor is it a failed state. It's probably worth noting he's up for re-election this summer. They say stuff like that when they're running for office.

Meanwhile, a new poll of the Afghan people shows that support for Karzai's government, the United States and NATO all plummeting. So President Obama has his work cut out for him there as well.

Here's the question: What does it mean when on top diplomat says the war in Afghanistan will be "much tougher than Iraq?" Go to CNN.com/CaffertyFile. You can post comment on my blog. Ain't nobody won a war in that country ever...

BLITZER: No.

CAFFERTY: ... in the history of the human race ever.

BLITZER: He's got Iraq, he's got Afghanistan, he's got the Middle East -- that's just foreign policy. Dealing with Russia and China and then forget about the domestic stuff. Tough job.

CAFFERTY: Who would want that job? It's a tough job.

BLITZER: Thanks very much, Jack.

CAFFERTY: Yes.

BLITZER: Once an economic rescue plan is passed, how soon might you see a job or more cash in your pocket? I'll ask one of the president's top economic advisers, Lawrence Summers. He's standing by live.

And a new call to investigate alleged wrongdoing within the Bush administration. A top Democrat says he's seeking the truth. Republicans calling it politics as usual.

And is a federal agency defying President Obama? By raiding shops that sell medical marijuana?

Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: I want to go right to the White House right now. The president's top economic adviser, Larry Summers, is standing by to join us.

Larry, thanks very much for coming in. It's a tough call, obviously, right now for these members of Congress. But if the president gets his way and gets this package proved, he signs it into law, how soon before -- the American public starts to feel results, the creation of jobs? LAWRENCE SUMMERS, DIRECTOR, W.H. NATL. ECONOMIC COUNCIL: You'll see the effects begin almost immediately. Layoffs that otherwise would have happened in cities in towns to cops and teachers won't happen. You'll see withholding schedules adjusted so that people have more money in their paychecks. You'll see orders go out to new roads, new bridges, new computers for hospitals. You'll start to see better maintenance of schools.

So things will happen very, very quickly.

BLITZER: So, so but...

SUMMERS: The effect will build, the effect will build over time. And Wolf, this is one thing people do have to recognize -- the president inherited a very, very difficult situation, a $1 trillion deficit, an economy that, frankly, was in freefall. And so while there will be clear impacts of this package that one will see almost immediately, we've inherited an economy that was programmed for substantial decline before the president got here.

BLITZER: So if the president gets what he wants and it looks like he will, at least right now, when do you see economic growth returning as opposed to economic loss? And when do you see job increases per month as opposed to huge job losses in January, almost 600,000 jobs were lost?

In other words, when -- what month of this year would you tell us things are going to start to turn around?

SUMMERS: There's one thing I'm certain of -- that day will come much sooner with the president's program than it will come without the president's program. But I'm not going to hold out for you the prospect that it is imminent. Perhaps it will be towards the end of the year. Perhaps it will be early next year. Perhaps, if confidence takes hold quickly, it will be somewhat sooner.

But the situation that we've inherited is a very, very difficult one. And so the first step for policy has to be containing the damage, limiting the downturn, laying a foundation from which growth can resume. That's why the economic recovery program is so important.

That's why it has to be complemented with a financial recovery program as well. Because, you know, a weak economy hurts the financial system. A weak financial system hurts the economy. And so you've got to intervene in both ways. And that's what the president is going to do.

BLITZER: The housing market, clearly, one of the major causes of this economic downturn. There are some calling, as you know, for government-backed 4 percent, mortgage rates for homeowners out there. Are you onboard?

SUMMERS: Well, the president's going to be proposing a very comprehensive housing strategy that's going to have as its focus preventing foreclosures. It's going to have at its focus easing refinancings, promoting affordability of housing. And then I think it's frankly long overdue and offer some real prospects of containing the damage in the housing sector.

BLITZER: When does he do that? When does he going to do that?

SUMMERS: I think we've got to be very skeptical of any government-administered price. Some of the suggestions that have been made would involve literally the issue of some trillions of dollars of new federal debt. And that's probably a step further than is responsible for us to go to. But no question, within the next two weeks the president will be laying out his approach to housing.

BLITZER: Is it true what we saw on the front page of "The New York Times" today and "The Wall Street Journal" that the Treasury secretary is going to announce that some of these bad loans, at least, you know, that these banks have to endure, you're going to now make them available to private investors out there so the government isn't saddled with that. Potentially, these private investors could turn the bad loans around and make some money out of it?

SUMMERS: Wolf, you know me pretty well. I let others make announcements of their policies. So I'm not going to try to preview Secretary Geithner's announcement tomorrow. But I can tell you that the approach that the administration's been taking in this area is an approach where government capital is a last resort.

And wherever possible, we want to catalyze the private sector -- private sector to take responsible for a situation that, in many ways, was created in the private sector.

BLITZER: We...

SUMMERS: If government is going to be putting money at risk wherever possible, we want to make sure that somebody in the private sector is willing to take the same risk the taxpayers are being asked to take.

BLITZER: We -- Vice President Joe Biden last week thought that possibly -- even if the president gets what he wants, there's a 30 percent chance it won't work. You -- what keeps you up at night the most worrying about the U.S. economy?

SUMMERS: We are facing -- we've inherited a gathering storm, a falling economy makes a weak financial system, makes a falling economy, disinflationary and deflationary forces throughout the economy. The possibility it will become uncontained. And if it does become uncontained, the pace of decline could even accelerate so making sure that we do enough, that we do it fast enough, that we do it in a way that wins the confidence of the American people by emphasizing that everybody can watch by keeping track of everything we do on a Web site.

Those are the things that cause me to focus and that I'm thinking about late at night.

BLITZER: Larry Summer, thanks very much for joining us.

SUMMERS: Good to be with you, Wolf. BLITZER: He and his crew are getting receptions reserved for heroes. The captain and the flight crew of the U.S. Airways flight that came down on the Hudson River. You're going to see how New York honored them today.

And a luxury hotel virtually reduced to ashes. We'll have the latest on what happened. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Mary Snow's monitoring some other important stories incoming to THE SITUATION ROOM right now.

Mary, what's going on?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, we'll start off in baseball news. Baseball star Alex Rodriguez admits he used performance-enhancing drugs. In an interview with ESPN he says he used them from 2001 to 2003 while he was with the Texas Rangers.

He tells ESPN, quote, "Back then, it was a different culture, I was young, I was stupid," end quote. The New York Yankees' admission comes after "Sports Illustrated" reported he tested positive for steroids six years ago.

Next hour, we'll have part of that interview.

A new luxury hotel goes up in flames in Beijing. The 44-story tower caught fire after being showered with sparks with fireworks during a Chinese lantern festival. Unoccupied at the time, the hotel was due to open later this year and was to be Mandarin Oriental's flagship property in China. There are no reports of injuries.

New York City mayor Michael Bloomberg pays tribute to hero pilot Chesley Sullenberger and his crew. Giving them keys to the city, he calls them five-wheel American heroes. Sullenberger credited the flotilla of boat that is came to the rescue so quickly after he brought the plane down in the Hudson. All 155 people onboard survived.

(BEGIN VIDEO CLIP)

CAPT. CHESLEY "SULLY" SULLENBERGER, U.S. AIRWAYS PILOT: We are so thankful for the quick rescue by the first responders. Of course, from the cockpit vantage point, I could not see the flames but I knew from the sounds that the engines were making and the vibration I felt and from the smell of the birds going through the system, that I knew that we had damaged both engines severely.

(END VIDEO CLIP)

SNOW: Sullenberger and the rest of the crew will be on CNN's "LARRY KING LIVE" tomorrow night at 9:00 Eastern.

And the Securities and Exchange Commission says it's reached an agreement with disgraced money manager Bernard Madoff. The SEC says the deal could eventually force Madoff to pay a civil fine and return money raised from investors. The agreement states that Madoff cannot contest allegations of civil fraud and that possible penalties will be decided at a later time. The deal will not affect a continuing criminal investigation of Madoff accused in $50 billion fraud scheme. Wolf?

BLITZER: All right, Mary, thanks very much.

President Obama says America needs an economic stimulus package and it needs it right away, even if it isn't perfect.

(BEGIN VIDEO CLIP)

OBAMA: We can't posture and bicker and resort to the same failed ideas that got us into this mess in the first place. That was what this election was all about.

(END VIDEO CLIP)

BLITZER: Stand by to hear the president's cold, hard assessment of the economic rescue plan for yourself.

And on the eve of elections in Israel, voters are asking, where's Barack Obama in Israel? Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now, new poll numbers on your support for President Obama and the economic plan he's pushing. We have the numbers for you.

And selling the economic plan appears to be becoming a family affair. You're about to hear from the first lady, Michelle Obama. She spoke out today.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Looking at live pictures of the floor of the U.S. Senate right now. They're getting ready for a vote. It will be a key vote on the life or death of the president's economic stimulus package. We'll have live coverage coming up. Stand by.

They're still debating right now but that vote coming up within the next hour. That's the schedule.

It's some of the gloomiest language the president's ever used to talk about the economy. Today President Obama warning that if something isn't done and isn't done immediately to fix the economy, the nation could slide into a permanent, a permanent economic nightmare.

Listen closely to the president in Elkhart, Indiana.

(BEGIN VIDEO CLIP)

OBAMA: The situation we face could not be more serious. We have inherited an economic crisis as deep and as dire as any since the Great Depression. Economists from across the spectrum have warned that if we don't act immediately, millions of more jobs will be lost.

The national unemployment rates will approach double digits, not just here in Elkhart, all across the country. More people will lose their homes and their health care. And our nation will sink into a crisis that at some point we may be unable to reverse.

So we can't afford to wait. We can't wait and see and hope for the best. We can't posture and bicker and resort to the same failed ideas that got us into this mess in the first place.

(APPLAUSE)

That was what this election was all about. The American people rejected those ideas because they had to work.

(APPLAUSE)

You didn't send us to Washington because you were hoping for more of the same; you sent us there to -- to change things, the expectation that we would act quickly and boldly to carry out change, and that's exactly what I intend to do as president of the United States of America.

(APPLAUSE)

That's why I put forth a recovery and reinvestment plan that is now before Congress. At its core is a very simple idea: to put Americans back to work doing the work America needs to be done.

Ed -- Ed said it better than anybody could. He said, look, folks in Elkhart, they want to work. Nobody's looking for a handout. Everybody just wants to be able to get a job that supports a family.

And we've got the most productive workers on Earth.

(APPLAUSE)

We've got the best workers right here in Elkhart, who are willing to put in hard time and do whatever it takes to make sure a company succeeds, but they have got to have a chance.

The plan that we've put forward will save or create 3 million to 4 million jobs over the next two years, but not just any jobs, jobs that meet the needs we've neglected for far too long, jobs that lay the groundwork for long-term economic growth, jobs fixing our schools and computerizing our medical records to save costs and save lives, jobs repairing our roads and our bridges and our levees, jobs investing in renewable energy to help us move towards energy independence.

(APPLAUSE)

The plan also calls for immediate tax relief for 95 percent of American workers, so that you, who are being pinched, even if you still have a job, with rising costs while your wages and incomes are flat-lined, you'll actually have a little bit of extra money at the end of the month to buy the necessities for you and your children.

Now, I know that some of you might be thinking, "Well, all that sounds good. But when are we going to see any of this here in Elkhart? What does all this mean to my family, to my community?"

And those are exactly the kinds of questions you should be asking your president and your government, and today I want to provide some answers. And I want to be as specific as I can.

Number one, this plan will provide for extended unemployment insurance, health care, and other assistance for workers...

(APPLAUSE)

... other assistance for workers and families who've lost their jobs in this recession. So if you've lost your job, for example, under existing law, you can get COBRA -- some of you have heard of COBRA -- but the only problem is, it's so expensive, it doesn't do you any good.

(APPLAUSE)

So what we've said is -- what we've said is, we will help subsidize people so they can keep -- at least keep their health insurance while they're out there looking for a new job. This plan will also -- and what this means is, from the perspective of unemployment insurance, you will have an additional $100 per month in unemployment benefits that will go to more than 450,000 Indiana workers, extended unemployment benefits for another 89,000 folks who've been laid off and can't find work, and job training assistance to help more than 51,000 people here get back on their feet.

OBAMA: Now, that's not just our moral...

(APPLAUSE)

That's not just our moral responsibility to lend a helping hand to our fellow Americans at a time of emergency. It makes good economic sense. If you don't have money, you can't spend it. And if you don't spend it, our economy will continue to decline.

Now, for that same reason, the plan includes badly needed tax relief for middle-class workers and families.

(APPLAUSE)

Folks all across the country are under siege. We need to give you more of the money you've earned so that you can spend it and pay your bills. Under our plan, families -- working families will get $1,000, providing relief for nearly 2. 5 million workers and their families here in Indiana. The plan also will provide a partially refundable $2,500-per-student tax credit to help 76,000 Hoosier families send their kids to college.

(APPLAUSE)

This will benefit your household budgets in the short run and will benefit America in the long run. But providing tax relief and college assistance and helping folks who've lost their jobs, that's not enough. A real recovery plan helps create more jobs and put people back to work.

And that's why, between the investments our plan makes and the tax relief for small businesses it provides, we'll create or save nearly 80,000 badly needed jobs for Indiana right here over the next couple of years.

Now, you may have heard some of the critics of our plan say it would create mostly government jobs. That is not true: 90 percent -- more than 90 percent of the jobs created under this recovery act will be in the private sector, more than 90 percent.

But it's not just...

(APPLAUSE)

It's not just the jobs that will benefit Indiana and the rest of America; it's the work people will be doing, rebuilding our roads, our bridges, our dams, our levees, roads like U.S. 31 here in Indiana that Hoosiers can count on...

(APPLAUSE)

... that connect small towns and rural communities to opportunities for economic growth. And I know that a new overpass downtown would make a big difference for businesses and families right here in Elkhart.

We'll also -- we'll also put people to work rebuilding our schools. This school is a terrific school, but I know there's work to be done here. We should do it so that all our children can have the world-class classrooms, the labs, the libraries that we -- they need in order to compete in today's global economy.

(APPLAUSE)

We should be investing in clean alternative sources of energy. We should be investing in the electric grid we need to transport this new energy from coast to coast, so if you build a windmill here in Indiana and it generates energy, that energy can get to Chicago and can get to St. Louis and can get to other places all across the country.

(APPLAUSE)

We can help make Indiana an energy-producing state, not just an energy-consuming state.

(APPLAUSE)

The plan calls for weatherizing homes across Indiana, installing state-of-the-art equipment that help you control your energy costs, building new high-speed broadband lines reaching schools and small businesses in rural Indiana so they can connect and compete with their counterparts in any city of any country in the world.

(APPLAUSE)

Those -- those are the kinds of projects that we're looking at that put people to work, that allow us to train people for jobs that pay a living wage, and that end up being a gift that keeps on giving, because not only are we creating jobs now, but we're creating the infrastructure for the jobs of the future.

Now -- now, let me be clear. I'm not going to tell you that this bill is perfect. It's coming out of Washington; it's going through Congress.

(LAUGHTER)

You know, look, it's not perfect, but it is the right size, it is the right scope, broadly speaking it has the right priorities to create jobs that will jump-start our economy and transform this economy for the 21st century.

OBAMA: I -- I can't -- I can't tell you with 100 percent certainty that every single item in this plan will work exactly as we hoped. But what I can tell you is, I can say with complete confidence that endless delay or paralysis in Washington in the face of this crisis will only bring deepening disaster. I can tell you that doing nothing is not an option.

(APPLAUSE)

So we've had a good debate. Now it's time to act. That's why I'm calling on Congress to pass this bill immediately. Folks here in Elkhart and all across America need help right now. They can't afford to keep waiting for folks in Washington to get this done.

Even with this plan, the road ahead won't be easy. This crisis has been a long time in the making; we're not going to turn it around overnight. Recovery will likely be measured in years, not weeks or months.

But we also know that our economy will be stronger for generations to come if we commit ourselves to the work that needs to be done, commit ourselves today to the work that needs to be done.

And being here in Elkhart, I am more confident than ever that we will get where we need to be, because I know people are struggling, but I also know that folks here are good workers and good neighbors who step up, who help each other out, who make sacrifices when times are tough.

(APPLAUSE)

I know that all folks here are asking for is a chance to work hard and to have that work translate into a decent life for you and your family. So I know you're going to be doing your part; I think it's about time the government did its part, too.

(APPLAUSE)

That's what this recovery plan's all about.

(END VIDEO CLIP)

BLITZER: The president speaking just a little while ago in Elkhart, Indiana. We will have full analysis of what he had to say and the prospects for success. That's coming up.

Meanwhile, one Democrat wants to dredge up some of the darker moments for the Bush administration -- a controversial call to investigate past problems within the Justice Department and whether any crimes were actually committed.

And, in our "Strategy Session": powerful new criticism of the cuts in the economic rescue plan and a charge that President Obama is to blame.

And, later, our new snapshot of public support for President Obama. We have new poll numbers. Is his popularity rubbing off on the stimulus package?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A top Democrat is proposing today a controversial investigation of alleged wrongdoing by the Bush administration.

The Senate Judiciary Committee chairman, Patrick Leahy, says he wants to learn the truth about what happened in the Justice Department over the past eight years.

Let's go to Elaine Quijano. She's working this story for us.

All right, explain what is going on, Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, Senator Leahy is talking about forming what he is calling a truth and conciliation commission.

Basically, as he explains it, this would be a panel of people tasked with looking into some controversial actions involving the Bush administration's Justice Department, things like warrantless wiretapping, political hirings and firings, and also questions about authorizing torture.

Now, Senator Leahy insists that this would not be about prosecuting or even embarrassing people, but instead about getting to the bottom of what really happened.

(BEGIN VIDEO CLIP)

SEN. PATRICK LEAHY (D-VT), JUDICIARY COMMITTEE CHAIRMAN: I'm doing this not to humiliate people or punish people, but to get the truth out, so we don't make the mistakes again.

(END VIDEO CLIP)

QUIJANO: Now, important to note that both Attorney General Eric Holder, as well as President Obama himself, have signaled that they really don't want to dwell too much on past controversies and -- quote -- "criminalize" policy differences.

As for Republicans, Wolf, Arlen Specter, the top Republican on the Senate Judiciary Committee, has no comment so far on the idea of a commission. His counterpart in the House, Republican Congressman Lamar Smith, the top Republican on the House Judiciary Committee, is saying, look, Congress really needs to focus on the future and not waste taxpayer dollars by finger-pointing -- Wolf.

BLITZER: Elaine, thanks very much.

Let's go to Jerusalem right now. Israelis are getting ready to vote. They have elections scheduled tomorrow. And it could have, potentially, a huge impact on U.S. policy towards the Arab-Israeli conflict.

Our senior political analyst, Bill Schneider, is in Jerusalem right now. He's working the story for us.

The polls show this is going to be a pretty fascinating race tomorrow, Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: It certainly will be.

And as Israelis prepare to vote for their next leader, Wolf, you hear one question all the time: Where's our Obama?

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): ... to Israeli voters and you hear longing for an Israeli Obama.

UNIDENTIFIED FEMALE: I think, like, now, in the United States, you have Obama, which managed to carry away the people and give hope and faith. I think that's something that -- that we need in Israel.

SCHNEIDER: Israeli candidates get the message. Look at the young people dancing at a rally for Tzipi Livni. Her slogan? "Believe me."

Can any candidate be Israel's Obama? Not so easily. Two candidates, Ehud Barak and Benjamin Netanyahu, have already been prime ministers. They both got thrown out by the voters. Livni and her party are in power now.

UNIDENTIFIED MALE: She's been the foreign minister. She's been around.

SCHNEIDER: The far-right contender, Avigdor Lieberman, is creating a big stir in the Israeli campaign. Lieberman is more Israel's Ross Perot than Israel's Barack Obama.

UNIDENTIFIED MALE: It's a sort of protest vote against Israeli politics and against Israeli politicians.

SCHNEIDER: Israelis use the Hebrew word mavrik to describe Obama. But it doesn't mean maverick, exactly.

UNIDENTIFIED MALE: Mavrik means brilliant, brilliant not only in the smart sense of the word, but in the cool sense of the word.

SCHNEIDER: Do Israelis feel confident that President Obama will be a true friend to Israel? Here's what Labor candidate and former Prime Minister Ehud Barak told us?

EHUD BARAK, LABOR PARTY LEADER: My experience with all presidents since President Ford is that every -- each and every president becomes even more friendly with Israel than we could expect.

(END VIDEOTAPE)

SCHNEIDER: The mood here in Israel is one of disillusion, disillusion with the peace process, disillusion with their leaders. Who can inspire them and be their Obama? Well, the best answer right now is President Obama -- Wolf.

BLITZER: Bill Schneider will be with us tomorrow and Wednesday to assess what happens in these Israeli elections tomorrow.

Thanks, Bill, very much.

President Obama hits the heartland and the airwaves. Are all his campaign-like appeals a sign of strength or weakness? Alex Castellanos and Jamal Simmons, they're standing by live for "Strategy Session."

Plus, a former CEO hopes to fill Arnold Schwarzenegger's shoes. Is she better equipped to turn California's economy around?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Powerful new criticism of President Obama's economic rescue plan coming from the Nobel Prize-winning economist Paul Krugman. Did too much get cut out, or is compromise the right thing to do?

Let's discuss in our "Strategy Session."

Joining us now, the Democratic strategist Jamal Simmons, and CNN contributor, the Republican strategist Alex Castellanos.

You know, here's what Krugman writes in "The New York Times" today, among other things: "What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses? A proud centrist. And how did this happen? I blame President Obama's belief that he can transcend the partisan divide, a belief that warped his economic strategy."

Pretty strong words coming from Paul Krugman.

JAMAL SIMMONS, ADVISER, DEMOCRATIC NATIONAL COMMITTEE: They are.

And Paul Krugman's a very well-respected and seemingly very good economist. I'm not sure he's ever passed one single bill in the United States Senate. So...

(LAUGHTER)

SIMMONS: And if you take a look at it that way, President Obama's got a real challenge, which is that he's got to get a bill not only through the House, where the Democrats have a commanding majority, but also through -- also through the Senate, where he needs 60 votes, and then he's going to need some Republicans to go along to get cloture. So, this looks like the best bill he can get to get through the Senate and get some money immediately into the economy.

BLITZER: In the Senate, he not only needed some Republicans to get above that magic number of 60, but he also needed those moderate or conservative Democrats who could have bolted as well.

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: He's caught between the rock and the hard place on this one.

He's got Democrats who would want him to spend more on the left, and Republicans who are saying, hey, this is crazy.

And I know Krugman's won the -- Krugman's won the Nobel Prize. But so did Al Gore. It can't be that hard.

(LAUGHTER)

CASTELLANOS: And if economists were that good, they would all be rich. And they're not.

So, let's take this all with a grain of salt here. What the Democrats are telling the country now is, they're having a debate. We're going to take a bill pile of money and set it on fire. We're going to borrow it, make a big pile, and set it on fire.

And the argument now is, the pile of money isn't big enough. So, while the Democrats are having this internal debate, the message they're sending the country is big spending.

(CROSSTALK)

BLITZER: By the way, we're all looking forward to Alex, when we go to celebrate your winning the Nobel Prize...

CASTELLANOS: Right.

BLITZER: ... one of these days, obviously something you're looking...

(CROSSTALK)

BLITZER: ... you're looking forward to.

(LAUGHTER)

BLITZER: But I guess here's the question. Take a look at our brand-new CNN/Opinion Research Corporation poll. How is President Obama handling his job as president?

Seventy-six percent approve of the job he's doing right now. So, the question is, why couldn't we translate that huge popularity into getting the economic stimulus package he really wants? And -- because only slightly more than 50 percent are actually supporting the economic stimulus package as approved in the Senate.

SIMMONS: Wolf, the truth is...

BLITZER: Or about to be approved in the Senate.

SIMMONS: The truth is, they haven't had the greatest two weeks over at the White House.

But I think what they have figured out in the last week is that they can re-marshal their plans from the campaign. They can put the president back out -- he's the best salesman that they have -- put him back out in front of the American people -- we will see tonight him on the -- in the press conference -- as well marshaling the forces of the rest of the Democratic Party, and getting them focused on getting this passed.

The Republicans have been really good the last couple of weeks in their message discipline. They can find one or two things, add up to maybe 1 percent of the stimulus bill, and really hammer home on it. Democrats are now learning they have got to beat it back.

BLITZER: I have heard so many Republicans say to me, you know why they're doing better in terms of discipline and getting their message out? They're no longer burdened by having a president of their party who's very unpopular in the White House.

CASTELLANOS: We spent too much. And we spent too much during the Bush years. And it cost us our moral authority, I think, to talk about things like this.

Of course, now the Democratic argument is, Republicans were horrible. They spent way too much. We're going to spend even more. So, it's not working.

Obama's problem here -- let's not give Republicans too much credit for being too smart and being on message and all of that, even though I hope it's true.

SIMMONS: I didn't say it was smart. I just said it was on message. (LAUGHTER)

CASTELLANOS: Even if -- even if it's true, what if it's the product?

You know, Obama is popular, but too -- I think something like 60 percent of Americans say this package has too much spending and not enough tax cuts.

BLITZER: They seem to be...

(CROSSTALK)

CASTELLANOS: Only 14 percent say the opposite.

BLITZER: Republicans, Jamal, seem to be reenergized by some of the stuff that has been in the House version and in the Senate version that they can latch onto and say, look at what these Democrats are going to do to the country.

SIMMONS: Yes, but here's the problem.

It's sort of like they took the old Nancy Reagan slogan, just say no, and they're just going to apply that what Barack Obama is sending up to Capitol Hill.

CASTELLANOS: No. No.

SIMMONS: Barack Obama has extended himself.

See, here you go: No.

(LAUGHTER)

SIMMONS: Barack Obama has extended himself time and time again to Republicans. He has tried to reach out to them.

In the Senate, he's taking out -- he's allowing them to take out $100 billion out of that bill that House Democrats want. And he's going to push the House Democrats to get it done.

BLITZER: Quick question on Meg Whitman...

CASTELLANOS: Yes.

BLITZER: ... the former CEO of eBay, announcing she's going to run for the Republican gubernatorial election out in California to succeed Arnold Schwarzenegger.

What do you think?

CASTELLANOS: I had the pleasure of getting to know Meg during the Romney campaign.

Incredibly talented businesswoman. The word that comes to mind is excellence. Everything she does, she does incredibly well, knows the business world, but is also new economy. She knows what is next in the economy. And California would do well with her.

SIMMONS: Well, she's going to have a tough race. She's got another multimillionaire who's going to be in that race with her on the Republican side in the primary.

She's generally well-regarded in the Valley, I'm hearing from some of my friends out there. But it's always tough for these new candidates to get into the race, when you have got people like Governor Jerry Brown and people like Gavin Newsom who are going to be running in that race on the Democratic side.

(CROSSTALK)

BLITZER: ... the former governor, the current attorney general.

SIMMONS: Current attorney general.

BLITZER: Maybe the mayor of Los Angeles, Antonio Villaraigosa, as well.

Guys, thanks very much for coming in.

It wasn't exactly a grand entrance, the president hitting a little bit of a snag while boarding Marine one. We will tell you what happened.

Also, the first lady, Michelle Obama, giving federal workers a pep talk today. You will hear from her. That's coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Several raids days apart -- federal agents seizing hundreds of pounds of marijuana. But some argue that pot was actually medicine for the sick, medical marijuana, something President Obama promised during his campaign would be left alone.

CNN's Thelma Gutierrez is following the story in California -- Thelma.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT: Wolf, the use of marijuana for medicinal reasons is legal in California. But the DEA keeps raiding shops that sell it. Supporters of medicinal marijuana are now accusing the federal agency of deliberating defying the wishes of the Obama administration.

OBAMA: Using medical marijuana in the same way, with the same controls as other drugs prescribed by doctors, I think that's entirely appropriate.

GUTIERREZ (voice-over): A YouTube post shows a campaigning Barack Obama calling DEA raids on medical marijuana shops a waste of taxpayer money.

OBAMA: What I'm not going to be doing is using Justice Department resources to try to circumvent state laws on this issue.

GUTIERREZ: But just this week, on the day that Attorney General Eric Holder spent his first day in office, federal agents raided four medical marijuana shops in the Los Angeles area, seizing 500 pounds of pot and food products laced with the drug.

STEPHEN GUTWILLIG, DIRECTOR, DRUG POLICY ALLIANCE NETWORK: It is not the role of the federal government.

GUTIERREZ: Stephen Gutwillig is director of the Drug Policy Alliance Network, which lobbies for drug law reform.

GUTWILLIG: The raids represent potentially a thumbing of the nose at Eric Holder and President Obama, who's made it particularly clear in the last year on the campaign trail that he doesn't think that there is -- it is a good use of federal resources.

GUTIERREZ: In a dozen states, including California, marijuana for medicinal purposes is legal. You can buy it from a licensed dispensary like this.

The problem is, while it may be legal at the state level, marijuana in any form, in any quantity, and for any reason, violates federal law.

Since 1996, when medical marijuana became legal in California, dispensaries have been raided by federal agents. Critics argue, the government is targeting legitimate businesses that are treating patients suffering from everything from glaucoma to cancer.

GUTWILLIG: Ultimately, it is the responsibility of President Obama, Attorney General Holder, and the Obama administration to make clear to the DEA what the new rules of the road are going to be.

GUTIERREZ (on camera): The White House says the president believes that federal resources should not be used to circumvent state laws. Advocates of medical marijuana say, they hope the raids will end when President Obama names a new DEA chief to replace holdover Michele Leonhart.

But a DEA spokeswoman told me that, until the federal law is changed, the raids will continue, that -- quote -- "Dispensaries show that they're nothing more than storefronts for drug trafficking preying on our communities to make a profit." And that's according to the DEA -- Wolf.

(END VIDEOTAPE)

BLITZER: Thelma Gutierrez, in L.A., thank you.

On our "Political Ticker" today: President Obama still seems to be getting the hang of boarding Marine one. He slightly bumped his head on the doorway to the chopper this morning when he turned to wave goodbye. There's no evidence he was hurt.

George W. Bush, by the way, had a similar close encounter between his head and the presidential helicopter soon after he took office.

Remember, for the latest political news any time, you can always check out CNNPolitics.com.

Let's go back to Jack for "The Cafferty File" -- Jack.

CAFFERTY: Remember Gerald Ford?

BLITZER: I remember that. He slipped.

CAFFERTY: Every -- every other day, he was...

BLITZER: Stuff happens.

CAFFERTY: ... bumping into things and falling down. Obama's doing all right.

The question is, what does it mean when one of our top diplomats says the war in Afghanistan is going to be -- quoting here -- "much tougher than Iraq"?

Shirley in Virginia: "No question about it, Jack. Afghanistan will be much tougher than Iraq. I believe that if we had kept our eye on the ball and not let the GOP take us off to Iraq, after eight years, it would have been much easier for President Obama to go in and finish the job. Given the terrain and the non-cooperative government, we have a fight on our hands, but at least it is the right fight."

Bruce in Saint Paul: "Afghanistan could make Vietnam seem like a rousing success story by comparison. The Russians rumbled in there in tanks, crept out with their tail between their legs. The only real problems in the Afghanistan are the terrain, the climate, the culture, the poverty, the drug trade, Pakistan, and the cost. It may be the right war. It doesn't mean it's going to be easy."

Michelle in Nevada: "Time to pull out of both wars, negotiate diplomatically with the powers that be in the region. There are a lot of people in that area who know far better than we do how to achieve workable solutions. No one ever wins an occupation. Let's bring our citizens home."

James in New Jersey: "These same top diplomats said only a few short years ago that Iraq was an unwinnable quagmire. Now, I'm not saying Baghdad is as safe as Greenwich, Connecticut, but the surge has had success. Let's try it in Afghanistan before we decide to abandon all our goals in the region. We owe the Afghanis that much, at least."

And Robert says: "Iraq bent our military. Afghanistan might break it. What should a third- or fourth-tour Iraq war veteran think when he's sent into a much-different landlocked Muslim country, where supply routes are easily attacked and tribal allegiances count for more than nationalism, and our goal is even more murky and amorphous than the one we went into Iraq with?"

If you didn't see your e-mail here, it's because we didn't deem it worthy. You can...

(LAUGHTER)

CAFFERTY: You can go to my blog at CNN.com/caffertyfile and look for it there. We post hundreds of these each hour to each individual question. So, go search it out -- Wolf.

BLITZER: Jack, thanks very much.

And, to our viewers, you're in THE SITUATION ROOM.

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