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Beginning of Iraq War's End; More College; Curing Cancer; Plane Crash in Netherlands; President Aims to Change History

Aired February 25, 2009 - 17:00   ET



Happening now, a passenger jet on approach to one of the world's busiest airports crashes short of the runway, killing at least nine people. But more than 100 survived -- some even walking away from the shattered plane. Stand by for details.

Also, the beginning of the end of the war in Iraq -- there are new details emerging right now of President Obama's plan to bring U.S. combat forces home. It will take a bit longer and a little more complicated than first suggested.

And the first lady, Michelle Obama, opening up about life inside the White House -- where her girls are allowed to go, when their new dog is coming, the first lady's girls night, in parties (ph) and a lot more. We have the details.

I'm Wolf Blitzer.


Long before the country's economic meltdown, it was the number one issue for many voters. That would be the war in Iraq. President Obama campaigned on bringing U.S. troops home. Now, we're learning more about when that might happen and why it's easier said than done.

Let's go to our Pentagon correspondent, Barbara Starr.

She's digging for the latest information for us -- Barbara.

STARR: Wolf, we are just a few days away from the sixth anniversary of the beginning of the war in Iraq and finally some decisions about how to end it all.


STARR (voice-over): President Obama signaled what may be the beginning of the end of the war in Iraq.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And I will soon announce a way forward in Iraq that leaves Iraq to its people and responsibly ends this war.

STARR: Pentagon officials expect the president will order the majority of the 142,000 U.S. forces now in Iraq to be withdrawn within 19 months -- three months longer than Mr. Obama's campaign promise.

OBAMA: We will bring our troops home within 16 months.

STARR: But the reality -- thousands of U.S. troops will remain. And for them, combat may be far from over.

GEOFF MORRELL, PENTAGON PRESS SECRETARY: The secretary has spoken in terms of tens of thousands of forces will be required after combat brigades have been drawn down -- or drawn down and out of Iraq.

STARR: What would the remaining troops do?

Job number one -- continue to train Iraqi forces. But they would also conduct counterterrorism operations against Al Qaeda in Iraq and protect American personnel and equipment.

MORRELL: Iraq is still considered a war zone, yes.

STARR: Marines have already shipped home some equipment and commanders are looking at withdrawal routes through both Jordan and Kuwait. Nobody can yet say how many billions of dollars of equipment and supplies simply may get left behind in Iraq.


STARR: Officially, no decision has been made, but everyone expects President Obama to announce this on Friday, when he travels to Camp Lejeune (ph), North Carolina -- Wolf.

BLITZER: All right. Thanks very much.

Barbara Starr.

One quick question, Barbara, though, before I let you go. There are some new developments happening as far as the Pentagon's budget is concerned?

STARR: Absolutely, Wolf. A very unusual development today -- unprecedented.

I want to show everybody something. This is what they call a non- disclosure agreement. The secretary of Defense has made the entire Joint Chiefs of Staff sign this agreement saying that they will disclose no information about the budget.

This is extraordinary, Wolf. These are the most senior military advisers in the United States. They deal with the most classified information about the United States' national security. And the secretary of Defense says their word is not good enough. He wants their signature on the dotted line -- Wolf.

BLITZER: Wow! Fascinating. I wonder what's going on.

Thanks very much, Barbara, for that.

The president last night outlined a very, very ambitious agenda, not only in terms of turning the economy around, but getting to the bottom of such issues as education and health care and energy independence.

Let's go to Mary Snow.

She's working this part of the story for us -- I know you're speaking to a lot of people, Mary.

Can the president deliver on this extraordinary agenda he's put forward?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, we took a closer look at two of the president's challenges to the country and we put the question to the experts -- are these goals realistic?

They say, in essence, maybe.


SNOW (voice-over): The president has bold plans to reform health care, energy and education, where he laid out his most specific deadline.

OBAMA: And meet a new goal. By 2020, America will once again have the highest proportion of college graduates in the world.

SNOW: Applauded by education experts, but doable?

GROVER WHITEHURST, BROOKINGS INSTITUTION: And it seemed to me, as I looked at the numbers, that it was quite a stretch.

SNOW: How does the United States measure up?

The National Center for Public Policy in Higher Education says 34 percent of young people in the U.S. are enrolled in college, ranking seventh in the world. Korea tops the list with 53 percent enrollment.

When it comes to completing college, the U.S. falls even further. Australia ranks first, the U.S. 15th. That's a reversal from most of the post-World War II generation, when the United States led the way.

One education expert says the country can reach that level once again, but to get there, some big changes are needed -- especially on costs.

PATRICK CALLAN, NATIONAL CENTER FOR PUBLIC POLICY, HIGHER EDUCATION: Both cost and price of higher education has gone up faster than almost anything else in the American economy for 25 years.

SNOW: Another big hurdle -- boosting high school graduation rates.

Elevating education wasn't the only ambitious goal in the recovery plan the president outlined to Congress.

OBAMA: We will launch a new effort to conquer a disease that has touched the life of nearly every American -- including me -- by seeking a cure for cancer in our time.

SNOW: Doable?

We asked bioethicist Arthur Caplan.

ARTHUR CAPLAN, YOU PENNSYLVANIA CENTER FOR BIOETHICS: So if you're 30, I think he told you something that's doable. If you're 70, I don't know that I'd put all my chips on the president's bet.

SNOW: The head of the American Society of Clinical Oncology says a great deal of progress in fighting cancer has already been made.

DR. RICHARD SCHILSKY, AMERICAN SOCIETY OF CLINICAL ONCOLOGY: And we have at least 12 million people in this country who are cancer survivors right now. And about two thirds of newly diagnosed cancer patients can be expected to live at least five years after their diagnosis. And the majority of them will be cured.


SNOW: And, Wolf, Dr. Schilsky, who you just heard there, says it could take another $300 billion in investment in research to reach that goal of curing cancer. That's a goal that President Nixon also outlined in his 1971 State of the Union address -- Wolf.

BLITZER: Mary Snow, thank you very much.

Let's go back to Jack.

He has "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: A bank that got $1.6 billion in government bailout money sponsored a series of lavish parties during a golf tournament in Los Angeles this last weekend.

Chicago-based Northern Trust Bank spent millions of dollars sponsoring the tournament and associated client events. The Web site TMZ reporting this included dinners, concerts by Sheryl Crow and Earth, Wind & Fire -- a favorite of Wolf's -- a private party at the House of Blues and gift bags from Tiffany. Also, hundreds of people were flown in and put up in luxury hotels.

A Northern Trust official confirms to CNN the bank did, indeed, sponsor these events, but not on the taxpayers' dime. He said the bank is healthy, never asked for any TARP money, but entered the program at the request of the government, adding that their normal cash flow -- the bank's and not TARP funds -- paid for all of these things.

But the bank's explanation may not be enough for some congressmen. Barney Frank is writing a letter to Northern Trust, calling on it to pay back the money it spent on these events. Frank says this behavior demonstrates what he calls "extraordinary levels of irresponsibility and arrogance."

And over in the Senate, John Kerry says he'll introduce a bill this week to end what he calls "the extravagant spending practices" of banks that get taxpayer money. Under Kerry's bill, banks wouldn't be able to host, sponsor or pay for conferences or holiday or entertainment events in the year that they get government funds.

In December, Northern Trust announced planned to cut 450 jobs this year.

So here's the question: What message does it send when a bank that got $1.6 billion in bailout money throws lavish dinner parties and concerts at a golf tournament they sponsored?

Go to, where you can post a comment on my blog.

It's my understanding, Wolf, that the government requested that Northern Trust Bank take some of this money because they wanted to spread it around so that nobody would have a sense of what banks might be actually in trouble and need this money. So they gave some to banks that actually didn't need the money at all.

BLITZER: Right. And they actually forced those banks to take the money.

CAFFERTY: Oh, yes.

BLITZER: That was Henry Paulson, the former Bush administration Treasury secretary. He says, yes, this bank, you're healthy, but I want you to take a billion dollars just to -- to reassure the community out there that some of the other banks that are in deep trouble may be not in such great trouble. I never understood that rationale at the time, but...

CAFFERTY: I didn't, either. But I'm feeling pretty good, so make me an offer.



BLITZER: Jack, thank you.

CAFFERTY: See you later.

BLITZER: First, a loud noise, then turbulence. Seconds later, a passenger jet falls from the sky. Now, survivors of the latest deadly crash are telling their stories.

Also, some American presidents have transformed the long-term direction of the country.

Will Barack Obama be one of them?

We're looking at the potential impact of his very ambitious agenda.

Plus, Pakistan cuts a deal with the Taliban inside Pakistan, putting militants in charge of one part of the country -- a very important part of the country.

Why did they do that?

I'll speak with Pakistan's foreign minister. He's here in THE SITUATION ROOM.


BLITZER: A really ambitious agenda, but here's the question -- is President Obama taking on too much?

Are his plans economically responsible?

Let's talk about that and more with Mark Zandi.

He's the chief economist for Moody's

Mark, thanks for coming in.


BLITZER: He's got all these economic issues right now, the stimulus, the financial crisis, he wants to deal with health care, energy reform, deal with education.

Is it too much?

Is it realistic to assume he can do all this?

ZANDI: Well, it is incredibly ambitious. I mean there's some logic to it. He has a majority in the Congress. He has a lot of public support. And we need to be thinking about the long run. So it makes sense from that perspective.

But I think it would be nice to get a win here. We need to get something done -- something concrete. Hopefully, out of this ambitious agenda, we get something concretely done over the next year.

BLITZER: Well, you see -- you see him, also, at the same time, he says by the end of his first term, he's going to cut the annual budget deficit in half.

Given the very ambitious spending he wants to do, is that realistic?

ZANDI: Well, you know, that's going to be tough. I mean I think it's doable with a bit of luck and some really deft policy making. But I think it is going to be particularly difficult to get it down. You know, this year, it's going to be almost a $2 trillion budget deficit. And to get it down to $500 billion by 2013 is going to be incredibly difficult.

But it's -- certainly a lot of it will go and we need to head in that direction. And it is important to point out that the size of the budget deficit in 2013 is important, but even more important are the trend lines. If it's $700 billion or $750 and falling, that's good enough.

BLITZER: One way he says he'll be able to lower this annual deficit is to let the tax decreases that were put into place during the Bush administration for those individuals and families making more than $250,000 a year lapse. In other words, going from the current, what, 35 or 36 percent top rate up to 39 percent, which was the rate during the Bill Clinton administration.

At a time of economic distress -- recession, if you will -- is that smart?

ZANDI: Well, if, in fact, the economy is still struggling come this time next year and into the summer of 2010, then, no. It wouldn't be the right thing to do, particularly because we're investing so much to get the economy on track right now with the stimulus, with foreclosure mitigation, with financial stability. The costs are extraordinarily high.

So why would you jeopardize the economic recovery with a tax increase come early 2011 after you've spent all this money?

I think more likely what will happen is we'll get to the next year, the economy still will be soft and he'll decide to raise the tax rates on people making over $250K but phase it in over a period of time so that it's easier for them to digest.

BLITZER: We haven't reached rock bottom yet in this economic distress, have we?

ZANDI: No. Not by a long shot. You know, we've lost 3.6 million jobs sine we started losing jobs a little over a year a year ago. Judging by recent data, we're going to lose half a million to three quarters of a million jobs in February. All indications are that, you know, by the time this is all said and done, we're going to lose somewhere between six and seven million jobs. The unemployment rate will be close to 10 percent. So we've got a ways to go.

BLITZER: So give us a time frame.

When do you think we'll reach rock bottom and when will we start to see some improvement -- some light at the end of the tunnel?

ZANDI: Well, you know, I think by this time next year, with the stimulus kicking in, with the Financial Stability Plan starting to have some benefit to the financial system broadly, with foreclosure mitigation starting to kick in and forestalling some of these foreclosures and hopefully putting a bit of a floor under our housing values, I am cautiously optimistic that by this time next year, we'll see some stability.

The economy won't come roaring back after that. But by, hopefully, 2011-12 we'll kick into gear.

BLITZER: And do you believe the financial sector, the banks have basically been saved, that we no longer have to worry about the banking industry? ZANDI: No. We have to worry quite a bit about them. They need more money. They have a big hole in their capital base. That's the cushion they need to remain solvent and continue to extend credit. And it's going to require more taxpayer money.

And so we need to see more help before it's all said and done and before they're -- they're back on firm ground.

BLITZER: Mark Zandi, thanks for coming in.

ZANDI: Thank you.

BLITZER: We'll have you back.

A Boeing 737 crashes short of the runway at one of the world's busiest airports and more than 130 were on board. We have details of the casualties and the survivors.

Plus, Lyndon Johnson was one. So was Ronald Reagan.

Will Barack Obama be a transformative president?

What his agenda is telling us.

Stay with us.



BLITZER: Painfully anxious hours right now for the families and passengers aboard a Turkish airliner that crashed in a field near Amsterdam earlier today. At least nine people are dead, but Dutch authorities say they won't release the names of the victims until tomorrow. And investigators say it's still too early no know what went wrong.

CNN's Richard Quest is joining us now with more -- Richard.

RICHARD QUEST, CNN CORRESPONDENT: Wolf, there were several fatalities, including three members of the crew on board the plane when it crashed just short of the runway at Schiphol.


QUEST (voice-over): The plane left Istanbul's Ataturk Airport bound for Schiphol, Amsterdam. Everything appeared normal until a few minutes before landing. On approach, the 737 crashed 500 meters short of Runway 18 Right -- breaking into three pieces upon impact.

The right engine came adrift and was found meters away from the plane. Fire exits were opened over the wing. There were no evacuation slides visible from the other doors.

An army of ambulances took injured passengers to the hospital, whilst emergency rescue teams continued inspecting the site. Concerned relatives were picked up at the airport and taken to the aircraft. Some survivors have already described what happened immediately before the crash.

MUSTAFA BAHCECIOGLU, TURKISH AIRLINES SURVIVOR (THROUGH TRANSLATOR): The plane was swinging from side to side and tried to climb, but it couldn't. And then it went smashing really hard into the ground. And then the noise it made was like a huge bang. For the first 10 seconds, it was completely silent in the aircraft. Everyone was terrified. It was deadly silent. And then what you experience is just shouting and screaming, because that's when you notice that you've broken something.

QUEST: There are many possible theories about why this plane came down, but the truth is, the cause of the crash landing remains unclear.

UNIDENTIFIED MALE: We have an extremely modern, state-of-the-art airplane being flown by a major airline with a pretty good safety record and flying into one of the most sophisticated airports in the world in very benign weather conditions, which mysteriously is one moment flying, is the next moment on the ground and crashed.

And, you know, we had this with, of course, famously, at the Hudson River in New York. Only a year ago, we had it famously with a British Airways 777 at Heathrow in circumstances that just defied belief.

And we're looking at this airplane again, thinking what on Earth could that be?

And, of course, it's just not obvious, really.

QUEST: Because the plane was not destroyed, it's likely the cockpit and data recorders will quickly be recovered. And that will help investigators discover what went wrong.


QUEST: With several well-publicized cases this year, it's tempting to be concerned, perhaps, about taking to the skies. We say it every time, Wolf, but it remains true -- flying is still the safest form of travel -- Wolf.

BLITZER: Richard Quest reporting for us.

Though the crash occurred in the Netherlands, the plane involved, a Boeing 737 800, is made in the United States. It's the latest version of the 737, which is one of the most popular commercial airliners in the history. The 737 800 is a twin engine plane and can fly up to 3,000 nautical miles. It's often described as the workhorse of short and medium haul aviation.

The interior features a single island. It typically can seat around 160 passengers plus crew. The plane's cost, by the way, $66 to $75 million apiece. This morning's crash is just the third fatal crash involving a 737 800 -- none of them in the United States.

Louisiana Governor Bobby Jindal gives the Republican response to the president's address to Congress.

But is he really the answer for the GOP?

James Carville and Tucker Eskew -- they're both standing by live to weigh in.

Also, President Obama's ambitious agenda -- from which former presidents might he be taking inspiration?

You may be surprised by the answer.

And the first lady, Michelle Obama, tells people magazine that her marriage isn't necessarily as idyllic as everyone thinks. "People's" executive editor is standing by to tell us what else the first lady is saying.

Stay with us.



BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, another down day on Wall Street. The Dow fell 80 points today, to close at 7271. At one point today, the Dow was down almost 200 points, but it rebounded somewhat.

Iran wants the world to know it's moving forward with its nuclear program. Iran tested its first nuclear power plant today.

About 70 journalists were brought in to watch.

And about 50 suspects have been arrested in overnight drug raids in California, Minnesota and Maryland. Federal authorities say this is part of the ongoing Operation Accelerator against a violent powerful drug cartel in Mexico.

I'm Wolf Blitzer.


President Obama outlining an incredibly ambitious, very expensive agenda in a speech before a joint session of the Congress last night.

Our senior political correspondent, Candy Crowley, is here to talk about this.

Beyond the dollars and the cents, what does the president's agenda tell us about this man?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: This tells you that we are looking at a president who is looking beyond his own era into the decades ahead. His plans and his policies are not just about turning the economy around, but about changing the shape of government and the direction of the country. In short, President Obama wants to be a transformational figure.

That's something he talked about during his campaign. And if you will remember, he had a surprising role model.

Take a listen.


OBAMA: I think Ronald Reagan changed the trajectory of America in a way that, you know, Richard Nixon did not and in a way that Bill Clinton did not. He put us on a fundamentally different path, because the country was ready for it. He tapped into what people were already feeling, which is we want clarity, we want optimism, we want, you know, a return to that sense of dynamism and, you know, entrepreneurship that had been missing.


CROWLEY: And if that sounds familiar, it is the sort of legacy President Obama wants to leave -- changing the course of the country for decades to come.

President Reagan, though, moved the country right of center. President Obama's plans involving greater commitments for the federal government and a greater role interest private sector speak to a man, of course, Wolf, who wants to move the country center left.

BLITZER: In most of the polls -- the national polls, when you ask the American people do they describes themselves as liberals, conservatives or moderates, they -- most of them say they're either moderates or conservatives, liberals not necessarily so much. Does he face a problem if he wants to move the country left of center?

CROWLEY: We'll see. We have to remember that this is a man with enormous rhetorical skill, but more than that, he sees this as a post- Katrina population, witnesses to the failure of government. And now, this kind of economic Katrina that we have with people who are desperate for help, the kind of environment Ronald Reagan had, people who are ready for change.

BLITZER: Candy, thanks very much, Candy Crowley, reporting.

Let's talk about this and more now with Democratic strategist and CNN political contributor James Carville and Republican strategist, Tucker Eskew. He's the founding partner of Vianova Consulting Firm. Tucker, I hope I pronounced that right -- thanks for correcting me.

Let me go to James first. What do you think about what Candy was just saying, he wants to be this transformative kind of president, really shake things up?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: Let's hope so because god knows they need shaking up and I think that's his intention. There's an old saying there are no atheists in fox hole or ideologist in a financial crisis and he's going to try different things and some will work and some of it isn't going to work. He has a large segment of the American public that support him.

BLITZER: Are you surprised, Tucker, that he looks to one of your heroes Ronald Reagan as potentially a role model?

TUCKER ESKEW, REPUBLICAN STRATEGIST: No, I thought those comments last year during the campaign said a lot about the man. And look, he's a magnificent speaker. Our country wants him to succeed. Republicans want him to succeed on terms different perhaps from some of the more liberal members of his coalition. Let's face it. This is a speech which as you said does pull us left ward and yet it was bathed, just oozed with some of the most moderate and even conservative sentiments designed to make it more palatable to those in the Senate right. I thought he was effective at that, but in the long run he'll be tested by the results he achieves from this huge expansion of government.

BLITZER: We should know James sooner rather than later if this all money being spent will work or not work because the folks' bottom lines their pocketbooks will be directly affected.

CARVILLE: Well I don't know about soon. It will take a while for it to work. As I point out the most influential Republican in the United States today Mr. Rush Limbaugh said he did not want President Obama to succeed. So at the very top of the Republican Party, he's not being wished well here.

But I mean that's part of politics and I think the president understands that and he continues to try to reach out to Republicans. He lends them a hand and if they slap his hand, I think he'll continue to do that. But right now as long as they're taking their orders from Rush, it doesn't seem like there's going to be a lot of cooperation.

ESKEW: James, I know you want to poke a hornet's nest here, but the fact is, Republicans care deeply about their country. Republicans want us to succeed. He's trying some things that have been proven as failures in the past. We hope he does a better job but the history of this kind of liberal expansionism is not too promising.

CARVILLE: The talk of Rush Limbaugh, the most influential Republican in the country did say that he did not want this president to succeed.

BLITZER: James let me -- hold on. Let me interrupt for a second because what he said precisely and if you read the statement, is he said if he's going to take policies that he disagrees with, then I hope he fails. I hope he doesn't succeed. Clearly, there are several policies that President Obama's going forward with, with which not only Rush Limbaugh but Tucker Eskew and a lot of other Republicans disagree, they hope they don't succeed.

ESKEW: Last night, a great example. He appoints Joe Biden to become a budget hawk. We respect the vice president but most Republicans will see him as a budget hawk the day we finally believe that Al Gore reinvented government when he was vice president. It's just not going to happen. So we'll be holding their feet to the fire. It's part of our role. Democrats have carried out that role effectively when they were the minority. We'll do it. We'll rebuild our party on the basis of it. We've got more to do than that but we'll start there.

CARVILLE: Wolf, I'm not really listening to a Bush Republican talk about holding anybody's feet to the fire fiscally. This administration inherited a $5 trillion surplus, so I can tell you right now when it comes to fiscal responsibility, we don't need help from Mr. Limbaugh or the previous administration. I think Joe Biden's record on fiscal responsibility is better than any Republican in the United States Senate and I'm glad he's there.

BLITZER: On that point, Bobby Jindal the governor of Louisiana, Tucker, in his Republican response to the president's address last night, he acknowledged that the Republicans slipped up badly over the past several years. I'll play a little clip of what the governor said.


GOV. BOBBY JINDAL (R), LOUISIANA: You elected Republicans to champion limited government, fiscal discipline and personal responsibility. Instead, Republicans went along with earmarks and big government spending in Washington. Republicans lost your trust.


BLITZER: He was pretty candid about that. He says they made a huge blunder.

ESKEW: First step in recovery. I think that's the right thing to do. We've got more to do than that. We've got to back our credibility on some of those issues and we've got to restore new ideas in the party. These are all true. We've got some time to do it. The election will be in four years. We'll see. I think the Obama record will be out there for everyone to judge. And it will be against the effective Republican opposition. I think Bobby Jindal laid out some good ideas yesterday. It's just the start of a process yesterday. We've got a long way to go.

BLITZER: He's your governor now, James. You're living in Louisiana in New Orleans. What do you think of his response?

CARVILLE: Of course, I didn't think very much of it, but neither did hardly anybody in the Republican commentarial, but Mr. Limbaugh was very pleased with it. So I think to that extent Governor Jindal will be happy about it. But Tucker, I'm glad to see that you thought he did fine. That puts you at odds with a lot of people in our own political party. But you know what? I didn't think he did that well. To be fair to him, President Clinton didn't have a great speech at the '88 Democratic convention and he came back sharply.

BLITZER: You've got to admit James and Tucker that following a speech like President Obama's where he got standing ovations and lots of applause and he's' about as good as it comes when he delivers a speech reading prompter like that, it's not that easy for anyone to look good in comparison to a speech, the speech that President Obama gives.

ESKEW: It's like me going up against James on your show. It's very tough, but I do the best I can.

CARVILLE: You'll do fine, Tucker. He missed some opportunities, but you know, you get started in this and look, we all make - we all have a bad night. He probably didn't have the best night he ever had but he seems to be a tough guy and he'll come back.

BLITZER: He was excellent last year during the hurricane when we all saw those news conferences. He took charge in Louisiana in Gustav. He did a really good job. That was a strength. He's much better in these one on one interviews. Reading prompters is not that easy as I can testify. All right guys. Thanks very much.

The Taliban is now effectively in charge of one strategic part of Pakistan with the country's blessing. Why? I'll ask the Pakistani foreign minister.

Plus, the first lady a cover girl again. This time, "People" magazine. We've got the pictures, the details she's revealing about life inside the White House.

Stick around. You're in THE SITUATION ROOM.


BLITZER: Secretary of State Hillary Clinton has been meeting with Pakistan's foreign minister here in Washington. They're having dinner tonight. The talks come as President Obama's vowing to turn up the pressure on the Taliban and al-Qaeda in the region.

Joining us now, the foreign minister of Pakistan. Welcome to Washington, Mr. Minister.


BLITZER: We interviewed the special U.S. representative for Pakistan and Afghanistan Richard Holbrooke, last week, he was very concerned about this agreement that you worked out with the Taliban in this border area called swath. Listen to what Ambassador Holbrooke told me.

RICHARD HOLBROOKE, AMBASSADOR TO PAKISTAN AND AFGHANISTAN: People running swath now are murderous thugs and militants and they pose a danger not only to Pakistan, but to the United States and India.

BLITZER: Why would Pakistan reach an agreement with a group he calls murderous thugs? QURESHI: First of all, he was not with the Taliban nor was al- Qaeda. The understanding that these two being the frontier governments and -- is a group of people that want justice, a no-good solution to a no-good problem.

BLITZER: You don't believe they're murderous thugs?

QURESHI: There is an element, a small pocket, there are criminals, but we have not signed, we are not going to have --

BLITZER: They are not part on any agreement, the terrorists, if you will. Your agreement is with others who are aligned with them?

QURESHI: No. Our agreement is with people who want quick justice. The ordinary folks. We will not align, not compromise the terrorists.

BLITZER: Why is the U.S. so opposed to this? They've complained to you.

QURESHI: Perhaps they did not understand the history. If we discuss why this came about and I think the concerns are much --

BLITZER: Is there any difference in U.S. policy towards Pakistan that you've seen from the Bush administration now to the Obama administration?

QURESHI: Yes. I think the present administration is willing to listen. They are very frank, they're saying do not have a -- Pakistan, the U.S., let all stick together and find a solution. A more effective way of dealing with this.

BLITZER: So you're encouraged even though the U.S. under the Obama administration is continuing to launch these strikes against targets inside Pakistan?

QURESHI: They are recognizing the old policy was not very effective. Seven years in Afghanistan, they could not achieve what they thought they will achieve. That is why they have changed their approach to a holistic approach, which is much closer.

BLITZER: Some of your colleagues inside Pakistan suggest that the introduction of another 17,000 U.S. troops into Afghanistan is a bad idea because this will simply push more of these Taliban and al- Qaeda fighters from Afghanistan into your country of Pakistan. Do you believe that?

QURESHI: First of all, we have to understand why additional troops have been sent to Afghanistan. Obviously, to improve security situations and stabilize Afghanistan and b, this year they're expecting elections and you've got to have a peaceful, secure environment to hold free and fair elections in Afghanistan.

BLITZER: So is it a good idea for the U.S. to beef up its presence there? QURESHI: I think so but it could have implications and I think that the surge might have implications for Pakistan and we should as partners sit together and see what it could be and try to address them in advance, a. B, I'm also suggesting a longer surge there should be as well.

BLITZER: The foreign minister of Pakistan speaking with me. By the way, more of the interview will be coming up Saturday, 6:00 p.m. eastern, the Saturday edition of THE SITUATION ROOM, speak a lot more about U.S. Pakistani relations.

You've probably heard about the administration's plan to put the nation's biggest banks through so-called stress tests. What exactly does that mean? We're taking a closer look.

And the first lady of the United States, as a bargain hunter. You're going to hear that and other revelations from Michelle Obama's interview with "People" magazine. The executive editor is standing by to join us live. We've got the pictures right here in THE SITUATION ROOM.


BLITZER: Check in with Jack for "The Cafferty File" -- Jack?

CAFFERTY: The question this hour: What message does it send when a bank that got $1.6 billion in bailout money throws lavish dinners, parties and concerts? You know some of these questions aren't real hard.

Karen in Tennessee: "I was told by someone in the banking business that it is very expensive to cancel an event like this, which is under contract for several years, but who cares? Northern Trust had no business accepting bailout funds under these circumstances and even if they hadn't, it was an offensive display of excess. I hope everyone contacts their state representatives to demand the monies be returned as I did two days ago."

Mike writes: "The bank was not bailed out. They didn't want the money. The treasury wanted all the major banks to take some of the bailout money so it wasn't obvious which banks really needed the money. The banks ought to be able to do what they want with their money. If the government doesn't like it, they shouldn't have given them the money in the first place."

Nelson says: "No matter how you spin it, even if the intentions were good, having bailout money puts you in the crosshairs. Right now people are mad at the banks and they're holding Wall Street responsible for this recession and no amount of spin is going to make this thing look good."

Susan says: "The message it sends is the same message big bankers have always sent, that they live in the different world than the rest of us and spend our money as they choose with total disregard for the difficulties of others, including their customers or taxpayers. We always knew they were greedy. Now we know they were greedy, stupid and without any sense of morality whatsoever." That's a little harsh.

Kevin writes: "This bank never asked for any money. Maybe Barney Frank ought to look things up before he opens his big mouth."

And Mack in Michigan: "The message it sends to me is the management of this bank graduated from the Dick Cheney school of compassion, and the Republican university of ethics."

If you didn't see your e-mail here, go to file. Look for yours there among hundreds of others -- Wolf?

BLITZER: Jack, thank you.

Millions of dollars for monitoring volcanoes. Republicans are seizing on what they characterize as wasteful stimulus spending. Is there more than meets the eye?

The First Lady, opening up to "People" magazine about her marriage, her new routines, the search for a family dog and a lot more.

People's executive editor is standing by live. We'll talk about the details.

Also, some new pictures right here in THE SITUATION ROOM.


BLITZER: Joining us now, the executive editor of our sister publication, "People" magazine, Betsy Gleick. She's just coming with a new cover story on the first lady, Michelle Obama.

You have an interview with her, Betsy. Her life in the White House. Talk a little bit about the cover, the photo that you selected for the cover of "People" magazine.

BETSY GLEICK, EXECUTIVE EDITOR, PEOPLE MAGAZINE: Well, as you can see, it's a truly beautiful sort of summery even photo. She appeared in her office, in the east wing, and this is how she was dressed. And, you know, she has a slightly new hairdo. She selected the look. And we think it's beautiful.

BLITZER: Sometimes her hair is up, sometimes it's down. Did she explain to you when she wants to have it different ways?

GLEICK: No. We didn't talk about her hair at all.

BLITZER: But it is a beautiful look, as you point out.

GLEICK: Right.

BLITZER: There's another picture I want to put up there, her about to eat. This is a tasting, if you will, at the White House. Is that right?

GLEICK: Right. This was as she was getting ready for the governor's dinner on Sunday night. She was doing some tasting in the kitchen. She also brought in some culinary students to sort of see the White House kitchen and do the tasting with her. And she's putting her own mark on everything she does there.

BLITZER: Because she has, her taste, as far as food is concerned, talk a little bit about that.

GLEICK: Well, she talks about how the White House chefs make a mean waffle and grits. And they like to have that occasionally in the morning. And she specifically asked for this dinner on Sunday night, that they prepare scallops, because that's one of the president's favorite foods. And huckleberry cobbler, that sort of thing.

BLITZER: The chef is really amazing at the White House. I know you have her in the picture wearing the hat. I was privileged this week to have lunch over there myself. So I tasted some of that delicious food. And I can testify, it's really, really good. We have another picture at the dinner for the governors. It was Sunday night. And she looks fabulous in this gown. She's walking with her husband, who looks dashing in his tuxedo.

GLEICK: Right. Yes. I mean, she is clearly trying to bring in some fresh style to the White House. She said to us, she's not a fashionista, but she enjoys clothing, and she knows that people are looking at what she's wearing, and people see her as a role model in all sorts of ways.

BLITZER: First and foremost in their lives, their two daughters, Sasha and Malia. I know the president he's thrilled he only works a few feet away from where he lives and he can spend a lot more quality time with the girls.

GLEICK: Right. Mrs. Obama talked to "People" magazine about how their family life is better than it's ever been. She and the president get up at 5:30 in the morning. They work out together, almost every single morning. She says he cannot miss a workout. They have breakfast together. Most days if he's not traveling, he comes upstairs for dinner and to tuck the girls in. It sounds really nice.

BLITZER: We do have the impression of a perfect marriage that they have. Is it as perfect as all of us think it is?

GLEICK: We asked her that. She said their marriage is very, very strong. But she wants everybody to know, it's not perfect. They work at their marriage just like everybody else.

BLITZER: You also got the latest on the search for a dog for the two little girls. What is the latest?

GLEICK: Well, the latest is that they do have their eye, one of the breeds that they really, really like is a Portuguese water hound. They want a dog that's not too big or not too small. Also the dog is coming in April.

BLITZER: The dog is coming what?

GLEICK: In April.

BLITZER: In April?


BLITZER: They're already thinking of names you write in the magazine as well.

GLEICK: That's right. She says that the girls have some names that they like and the names are Frank and Moose. And Mrs. Obama just said, you know, work with me. She thinks these names are hilarious, and she hopes they can do better than Frank or Moose.

BLITZER: It's the cover story in "People" magazine. Michelle Obama, our life in the White House. Betsy thanks for coming in.


BLITZER: Let's check in with Lou Dobbs coming up an hour from now. You're working on a story involving free speech.

LOU DOBBS, CNN ANCHOR: Absolutely. I've got to understand, how many times a week do you have lunch at the White House? I'm trying to --

BLITZER: I just had it once.

DOBBS: Wolf --

BLITZER: Just yesterday.

DOBBS: Good man. Good man. Free speech firestorm as you say, Wolf, set off by the United Nations. This time the United Nations is set to vote on an anti-blasphemy resolution. Supporters say the resolution will support religious freedom. But opponents say it will intimidate and threaten and there's a lot of evidence to support that. The whole idea is now drawing fierce criticism from those who say the United Nations is trying to shred the first amendment of this nation's constitution. And muzzle free speech, especially in criticism of Islam. We'll have that story tonight exclusively on "LOU DOBBS TONIGHT."

Is the United Nations embarking on a campaign against freedom of speech? That could have dangerous, even deadly consequences? That's among the questions we'll be answering tonight. 7:00 p.m. eastern on CNN.

I'll be joined by noted author, critic and "Vanity Fair" columnist Christopher Hitchens. He has passionate thoughts on this issue. All that, and a great deal more. Please join us at 7:00 p.m. eastern on "LOU DOBBS TONIGHT." Wolf, back to you.

BLITZER: We'll see you in one hour, Lou. Thank you.

To our viewers, you're in THE SITUATION ROOM. Happening now, President Obama tries to speak stimulus money to places it's need most. Trying to make good on last night's promise that America will recover.