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THE SITUATION ROOM

Unprecedented Request for Power; High-Profile Prime-Time News Conference; Cashing in on 'Toxic' Buyouts

Aired March 24, 2009 - 15:59   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, the Obama administration wants powers never before seen. The treasury secretary and the Federal Reserve chief argue it's absolutely right now to contain economic damage should a financial company collapse. Republicans, though, say it's an outright power grab.

President Obama readies for something rarely seen from a president at this point. He'll be hit with some tough questions and harsh reactions as millions of you watch.

And North Korea tries to show Kim Jong-il is alive and well, and possible plans for a missile launch presents a potential crisis. Could it help Pyongyang develop a long-range missile that could hit the U.S.?

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

The Obama administration says the financial crisis, like no other, requires special powers never given to the government. So it's asking Congress essentially to turn the existing model of financial regulation on its head. The treasury secretary, Timothy Geithner, and the Federal Reserve chairman, Ben Bernanke, put the request to Congress today. Republicans, though, quickly blasting it.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), MINORITY LEADER: This is an unprecedented grab of power. And before that occurs, there ought to be a real debate about whether we should give that authority to the treasury secretary.

(END VIDEO CLIP)

BLITZER: Let's go straight to our Senior Congressional Correspondent Dana Bash on Capitol Hill.

Dana, this is a dramatic day, yet another dramatic day, as we get ready for a prime-time presidential news conference.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: It is. And the issue really is that every time the Fed chief and the treasury secretary have come here and faced withering criticism about those bailouts, they've responded that they really had limited tools in trying to avoid some of the controversies we're now talking about.

So, today, they came up with a new idea that they say will address it.

(BEGIN VIDEOTAPE)

BASH (voice-over): The treasury secretary is trying to channel AIG anger into a new solution -- give him unprecedented power.

TIMOTHY GEITHNER, TREASURY SECRETARY: AIG highlights very broad failures of our financial system. We came into this crisis without the authority and the tools necessary to contain the damage to the American economy.

BASH: Timothy Geithner wants Congress to grant him the same power over non-banking financial institutions like AIG that the FDIC has over banks. The ability to take control of a failing company and do what it takes to reduce risks. Fed Chairman Ben Bernanke backed the idea, saying he would have had better tools to handle AIG's crisis and its controversial bonuses.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: But this bonus issue would not have arisen because all the contracts could have been adjusted.

BASH: In fact, Bernanke said when he learned of AIG's bonuses, he wanted to sue, but was stopped by fed lawyers.

BERNANKE: Connecticut law provides for substantial punitive damages if the suit would fail.

BASH: Bernanke and Geithner's new proposal was clearly intended to deflect outrage, but it didn't always work, like when this Democrat demanded a full list of companies taking taxpayer dollars that paid bonuses.

REP. BRAD SHERMAN (D), CALIFORNIA: Are you going to give us the chart or are you going to hide the ball?

GEITHNER: I'm not going to hide the ball.

SHERMAN: Are you going to give us the chart?

GEITHNER: I will reflect on the suggestion you made and see if that is a reasonable...

SHERMAN: In other words, you won't commit to telling the American people how many folks at Goldman Sachs or AIG are going to make a million dollars this year?

GEITHNER: Congressman, I will think carefully about your proposal.

(END VIDEOTAPE)

BLITZER: All right, Dana. Let's talk a little bit about other Democrats, what they are saying about this request for increased power for the Treasury and the Federal Reserve. BASH: Well, the leaders, the leadership in the House and the Senate Democrats, they've been generally supportive of this idea. But I've got to tell you that rank and file, they're a bit more cautious, because they think that they have been burned by jumping too fast to support ideas in the former Treasury Department, in the Bush administration, and also even in the Obama administration. So they are taking it a little bit slow, but there is going to be a hearing the day after tomorrow to really dissect this pretty big idea, this new proposal.

BLITZER: They're going to want to be ahead of the curve in case they get the rug pulled out from under them.

All right, Dana. Thanks very much.

What President Obama will do tonight, virtually no other does this early in his term. The administration certainly hoping the prime-time news conference will be must-see TV. It's part of the administration's all-out press that puts the president on your television, in your newspapers, possibly in your own city.

Let's go straight to our White House Correspondent Dan Lothian to set the stage.

Dan, tell us what the thinking is.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. Well, this is, of course, the second prime-time press conference for the president. The focus, of course, will be on the economy.

Now, I want to, in the spirit of Robert Gibbs, who likes to use sports metaphors, this administration last week was really getting sacked every day. Well, this week, they've really been trying to make up some yardage, move forward, move the ball forward. And tonight the president hopes to score with the American people.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): The president on offense, ready to face the public in prime time.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: He wants to talk directly to them about what he's seeing and what he's working on every day, what's being put in place to strengthen our economy.

LOTHIAN: In just two days, the Obama administration has ramped up its domestic and international agenda: toughening its Mexico border policy with a $700 million commitment and deployment of hundreds of border agents; rolling out a plan to rid banks of toxic assets; announcing three of four key senior positions at Treasury, including Timothy Geithner's deputy; and asking Congress for new regulatory powers to prevent another meltdown like what happened at AIG.

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: I hope it doesn't take too long to convince Congress. And in the absence of that capacity, you end up with the situation that we've been in, a systemic -- or an institution that poses systemic risks to the system. But a lack of capacity to shut it down.

LOTHIAN: The economy is a global concern, so the president sent a message to 31 newspapers around the world, writing in an op-ed that, "The United States is ready to lead, and we call upon our partners to join us with a sense of urgency and common purpose."

OBAMA: I would love to visit Australia.

LOTHIAN: One of those partners, the prime minister of Australia, visited the White House. Tackling the global economic crisis dominated their meeting.

OBAMA: Our own success in rebounding from this crisis is going to be tied up with what happens around the world.

(END VIDEOTAPE)

LOTHIAN: So the administration essentially saying that it's much harder to fix the economic crisis here at home, when the rest of the world is dealing with their tough economies as well. And this is a theme that the president will carry to the G-20 meeting next month -- Wolf.

BLITZER: I guess it's in part designed to build confidence among the American people because they still very much like President Obama. They don't necessarily have as much confidence, let's say, in his treasury secretary.

Is that in part why he's going out tonight?

LOTHIAN: It is. And senior administration officials say that they realize that a lot of Americans are frustrated.

They see the AIG bonus scandal and they see a lot of the other disruptions, what they feel taking away from the focus, from this White House. So the president really wants to come out tonight and build confidence, tell the American people that, yes, you have to be patient, but what we are doing here will eventually work, will eventually make your life better.

BLITZER: Dan Lothian will be busy.

Thank you.

As we said, what happens tonight is not uncommon for presidents, but it certainly is rare for a president to hold a prime-time news conference this early in his term. President Nixon was the first to have a solo prime-time Q&A. That was back in March of 1969. President Reagan had the most prime-time solo news conferences, 31. As for more recent administrations, President Clinton held four prime- time Q&As, President George W. Bush also had four.

President Obama will be hit with tough questions about the economy, his treasury secretary, other issues that you certainly care about. You can watch the entire news conference right here, tonight, on CNN. Our coverage begins at 7:45 p.m. Eastern. We're also learning today more about the government's plans to partner with investors to buy those so-called toxic assets. This public/private enterprise would put tens of billions of taxpayer dollars on the line.

Our Senior Correspondent Allan Chernoff is here with more on this part of the story.

It's a complicated story, but the ramifications for everyone out there are enormous.

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Absolutely. Essential that this program does work, and there is huge profit potential here.

What's happening now is that the government is saying to major investment firms, please take these toxic assets from the banks. And it's doing more than just asking them. It's providing very attractive incentives.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): The banking industry's toxins may be an investor's treasure. Private investors stand to cash in from the latest bank rescue program because the government is offering sweet incentives to get investors to buy risky mortgages and other loans, so-called toxic assets that have been preventing banks from lending new money. Investment firms like BlackRock, Legg Mason and PIMCO, all planning to participate, are anticipating big profits.

BILL GROSS, CO-CHIEF INVESTMENT OFFICER, PIMCO: The total return and the total yield would be in the double digits. We would expect something like 13, 14, 15 percent.

CHERNOFF: The U.S. government may profit, too, but it's taking on most of the risk. Here's how the program works.

A loan that a bank values at $100 on its books could be auctioned at $84. The FDIC will provide $72 of guaranteed financing. The Treasury will kick in $6, leaving the private investor to put up just $6 of his own money.

The private investor and the government then share in the potential profit if the loan remains good. But if the loans go bad, the profit investor stands to lose just his $6 investment, while the government could lose far more.

SHERMAN: It is simply outrageous to think that the taxpayer is supposed to take 94 percent of the risk, but the hedge funds are going to get half the profit. And it seems like their objective is, how can we rig the market for these toxic assets owned by the big banks?

(END VIDEOTAPE)

CHERNOFF: Many people agree. In fact, one-third of those responding to a CNNMoney.com poll. But here's why the government is saying we are going to do it. The government believes the private sector has to help out in getting these assets off the books of the banks, and they are willing to say, look, we, Uncle Sam, all of us taxpayers, we will take on the bulk of the risk in order to get the participation of the private sector.

Wolf, they're willing to say, guys, come on in, earn your profit.

BLITZER: It's such a sweetheart deal for these private investors out there, isn't it?

CHERNOFF: It is, potentially, but this is the capitalist system. If you're taking the risk, you then deserve some of the profit.

BLITZER: But what they could have done -- and I'm going to speak to one of the president's top economic advisers about this. What they could have done is said, you know what? You're taking such a small risk, you're not going to get half of the profits. You'll get 25 percent of the profits. They could have split the profits a little bit differently than the way they decided to split it.

CHERNOFF: You're right. And that's an indication of how nervous the government is. They want to be sure that the big investors step in and say we want to play.

BLITZER: A lot of potential gain, limited risk for all of them. A lot of potential gain, limited potential pain, we should say.

Allan, thanks very much.

It appears to be getting ugly. A powerful lawmaker blasts a U.S. Supreme Court justice, reportedly calling him a homophobe. Why is the openly gay Congressman Barney Frank saying that about the Supreme Court Justice Antonin Scalia?

Possible plans for a missile launch could present the Obama administration with a potential crisis. Could it help North Korea develop a long-range missile that could hit the U.S.?

And NASA wants help naming a new room over at the International Space Station. Comedy Central's Stephen Colbert is on a campaign to see his name in space.

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, "THE COLBERT REPORT": You know what name would look fantastic on the side of that module? Colbert!

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Let's check in with Jack Cafferty. He has "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The economy, Wolf, will no doubt be issue one when President Obama holds his second prime-time news conference tonight. It's only been six weeks since the first one, but he's been a busy fellow in that time.

He signed the big stimulus bill, put out his $3.6 trillion budget, began facing outrage over the AIG bonuses. And now his plans to bring troops home from Iraq in 19 months, put 17,000 more troops in Afghanistan. And the list goes on and on.

With his approval ratings holding very high, one Democratic pollster told NBC News the American public is rooting for the president. They want him to succeed. But against that, they want answers.

So what do they want answered?

Expect more on AIG tonight, including maybe what the president thinks about the House's legislation to tax bonuses at 90 percent, which, by the way, is going to go nowhere. Also on the economy, the president will likely face questions on the latest Treasury plan to help buy as much as a trillion dollars in toxic assets from banks to help get credit flowing again, a plan that Wall Street certainly seemed to like -- witness the 500-point jump yesterday in the Dow. And as the president gets ready for his big overseas trip next week, including stops in London, Prague and Istanbul, he might be asked about international issues which have been largely put on the back burner due to the economic meltdown at home.

So here's the question: What would you like to ask President Obama tonight if you were sitting in that news conference?

You can go to cnn.com/caffertyfile and post a comment on my blog.

BLITZER: We were flooded with -- you're going to get a lot of suggestions. We asked iReporters out there to send us video questions, and we've got a ton of them. We're going to be playing them throughout these hour as well.

CAFFERTY: It's going to be a big audience for that tonight.

BLITZER: Yes, huge. Huge.

All right. Thanks, Jack.

A Chicago couple is conducting an economic experiment. They are trying to make all of their purchases from black-owned businesses. Here's the question: Can they do it? Here's another question: Should they do it?

CNN's Susan Roesgen has details.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: I also need some shrimp.

SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): Maggie Anderson (ph) better have all the items on her list before she leaves the supermarket, because if she doesn't, it's a long way back. Anderson has to drive 20 minutes from her home to the only grocery where she'll shop, the one that has a black owner. She'll also drive out of her way to eat at a black-owned restaurant, get clothes cleaned at a black-owned dry cleaners, and keep her money in a black-owned bank.

Maggie (ph) and her husband John have made a public pledge to try to buy only from black-owned businesses for one year. They call it the Empowerment Experiment, empowering black communities by supporting their businesses. Critics call it an experiment in racism.

JOHN ANDERSON, BUYING BLACK: We're not advocating that anybody make purchases along racial lines. OK? That's not what we're advocating. What we are advocating, though, is that African-American do have a higher sense of duty to support black businesses that are investing in the community.

KARRIEM BEYAH, STORE OWNER: How did it go yesterday at the church?

UNIDENTIFIED FEMALE: Very good.

ROESGEN: Traditionally, black-owned businesses often struggle more than white-owned businesses. The grocery store owner says he sells only the best products, but he still has trouble persuading shoppers from the neighborhood, black and white, to get past the stereotype that black-owned stores are second rate.

BEYAH: If we are so diverse and we're so equal (AUDIO GAP) there's an African-American grocery store. An African-American grocery store is a very nice grocery store. It's a very fresh grocery store. You know, where is our business? If they do not seek out the business and shop at the business, then we're not able to sustain the business.

UNIDENTIFIED FEMALE: You see a bunch of farmer's (ph) best in there, the grocer.

ROESGEN: Three months into their one-year experiment, the Andersons admit they have not been able to buy everything they need from black-owned businesses. Not even close. The biggest monthly checks for the mortgage and utilities still go to anonymous, faceless corporations. But the goal is the same.

ANDERSON: At the end of the day, this is just about people in the African-American community getting their representative share of the American dream.

ROESGEN: Susan Roesgen, CNN, Chicago.

(END VIDEOTAPE)

BLITZER: Presidential comparisons. How is President Obama doing at this point in his term compared to the two presidents right before him? You may be surprised at what we found.

And North Korea could soon launch a missile and a potential crisis for the United States and the rest of the world. There are fears that Pyongyang could develop a long-range missile that could even hit the United States.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: NASA has asked the public, by the way, to help name a new section of the space station. But did Stephen Colbert hijack the online poll?

(BEGIN VIDEO CLIP)

COLBERT: You are officially mobilized to get that module named after me.

(END VIDEO CLIP)

BLITZER: Our Internet Reporter Abbi Tatton is following this story.

Here's the question, Abbi: Did he succeed?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, they appear to have won the popular vote at least. NASA had wanted a name for this new section of the International Space Station that would reflect the spirit of cooperation and exploration. Well, the people have spoken and they've chosen Colbert.

Two hundred and thirty thousand votes were recorded on an online poll that NASA has been running for the last few weeks, beating out the competition. So if this vote stands, the names of the various sections of the International Space Station will look something like this...

There is Unity, Harmony, Destiny and Colbert. But this isn't settled just yet.

NASA says they reserve the right to make the final decision on what this new module will be named. They're going to be making that decision next month.

And fans of Stephen Colbert have been disappointed before. You might remember a couple of years ago, they voted en masse to rename a bridge in Hungary after Stephen Colbert. The Hungarian government weighed in and said because Colbert was neither a Hungarian speaker nor dead, he was not eligible.

Wolf, there could be a lot of disappointed people.

BLITZER: Harmony and Colbert. Something good about that.

All right. Thanks very much.

Many of you have questions like these for the Obama administration. Listen to this.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: I was wondering how you plan on solving the problem of too much debt, borrowing and consumption with more debt, borrowing and consumption, essentially trying to reinflate our bubble economy?

(END VIDEO CLIP)

BLITZER: Just one of our CNN iReporters. We're going to put that question and more to a top White House economic adviser.

(COMMERCIAL BREAK)

BLITZER: There appears to be a shocking new revelation regarding that plane that fell out of the sky into a cemetery in Montana, killing 14 people. It involves safety warnings about the plane only days before.

Let's go straight to CNN's Ted Rowlands. He's joining us in Los Angeles with details.

What are we learning, Ted?

TED ROWLANDS, CNN CORRESPONDENT: Well, Wolf, it may be shocking, and it may have absolutely nothing to do with the crash at all.

The NTSB on the ground in Montana -- we just talked to a representative there -- they are aware of this. Basically, what has happened is, about two weeks before this crash, the FAA issued an air- worthiness directive about this plane.

This is the plane that was involved in the accident that killed 14 people and seven children. It is made by a Swiss company. It's the Pilatus aircraft model PC-12.

And, basically, what the directive says is that there were reports of a problem with the plane that created an issue for the controls with some operators. The directive was to go into effect on March 30. And what that directive means is that these planes have to come in, be looked at, be fixed, if necessary, and cleared.

Now, the NTSB is working on the cause of this plane. They are aware of this directive. And they say it will be an integral part, obviously, of their investigation. Could be a clue as to what maybe happened. But, again, we caution people, it's not directly related yet, by any stretch of the imagination, but curious, indeed.

BLITZER: All right, we will watch this, together with you, Ted. What a sad story, it was, 14 people dead, a lot of them children.

As President Obama nears 100 days in office, we're looking at how many of you think he's doing well, how many of you think he's not necessarily doing all that great.

Let's bring in our senior political analyst, Bill Schneider.

Bill, how is President Obama's job rating holding up? WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Very well, Wolf, which may be why the president is holding a prime-time news conference tonight.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Have the controversies over bailouts and bonuses affected President Obama's popularity? Not so as you would notice. Our poll of polls shows President Obama's job rating at 63 percent, up a little since earlier in the month.

Mr. Obama is doing better than his predecessors after two months in office, better than George W. Bush or his father or Bill Clinton, a little better, even, than Ronald Reagan after two months.

But Mr. Obama's personal popularity does not necessarily apply to his policies. The president is facing a populist revolt. Half the country says they are angry over the AIG bonus payments.

Here's how AIG's chief executive defended them.

EDWARD LIDDY, CEO, AMERICAN INTERNATIONAL GROUP: I'm trying desperately to prevent an uncontrolled collapse of that business. This is the only way to improve AIG's ability to pay taxpayers back quickly and completely.

SCHNEIDER: Do people believe that? No. Populism pits us vs. them, us, the people, them, the big shots, in this case, Wall Street.

Fifty-four percent of Americans are satisfied with the way President Obama handled the AIG controversy. He's one of us. But the same number are dissatisfied with the way Treasury Secretary Geithner handled the matter. Geithner comes from Wall Street. He may be one of them.

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: To get through a crisis like this, you have to do things that try to get the financial system to work, right? And that requires doing things that are deeply politically unpopular.

SCHNEIDER: How does the public feel about President Obama's new plan to rescue the financial system? Are they mostly relieved, because it could free up credit, or mostly resentful, because it could benefit irresponsible executives? More resentful than relieved.

(END VIDEOTAPE)

SCHNEIDER: The policies are suspect, the president not so much. So, the best way for the president to sell his policies is to invest his own personal popularity, hence, a prime-time news conference -- Wolf.

BLITZER: Good explanation, Bill. Thank you.

The Obama administration wants new powers never before seen, the treasury secretary and the Federal Reserve chairman arguing it's absolutely necessary right now to contain economic damage, should a financial company other than a bank collapse. Republicans say it's an outright power grab.

Let's bring in a top White House economic adviser, Austan Goolsbee.

Austan, thanks very much for coming in.

AUSTAN GOOLSBEE, WHITE HOUSE ECONOMIC ADVISER: Wolf, great to see you again.

BLITZER: Here's how John Boehner, the Republican leader in the House, described it.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: This is an unprecedented grab of power. And, before that occurs, there ought to be a real debate about whether we should give that authority to the treasury secretary.

(END VIDEO CLIP)

BLITZER: I assume you agree there's got to be a long debate on a significant development like this; is that right?

GOOLSBEE: Well, I don't agree with what Mr. Boehner said.

I think that the -- one of the roots of the situation we're in now with AIG, with a bunch of these weird hybrid entities, is that the normal resolution authority, which just means how do you deal with something when it goes so badly that it has failed, that exists for banks -- we do that all the time for banks and we know how to do it -- needs to be extended to the 21st century.

That's why you saw Chairman Bernanke down there, saying the same thing. We have got to work on that.

(CROSSTALK)

GOOLSBEE: To characterize that as a power grab is almost -- is -- is really off base, I think.

BLITZER: But even some Democrats are concerned.

Brad Sherman, the Democratic congressman from California, he says the taxpayers are taking all the risks, virtually all the risks, yet, these private entities, whether they are hedge funds, investment banks, or whatever, they are going to split the profit 50/50.

Is that fair?

GOOLSBEE: Well, we're talking about two different things here.

One is the toxic asset program to try to get that off the balance sheets of the banks that we announced yesterday. There, we can have a debate about the details of the program. I would argue that getting a public-private partnership, so that the government doesn't have to foot all of the money and that both sides have some skin in the game is an important way to do it.

(CROSSTALK)

BLITZER: Should you change that 50/50 split, let's say 75/25, since the taxpayers are taking so much more of a risk than these private companies?

GOOLSBEE: Well, look, I don't think -- I think to both -- you want to have both sides in the game. You want to have a partnership.

I think the way Secretary Geithner outlined the plan is the reasonable way to do it. It fits in with the rest of the package. It isn't solely about financial rescue. We have got stimulus, housing, credit facilities, small-business lending, and some others.

On the resolution authority that Congressman Boehner is objecting to, this is really a fundamentally different matter. This is, what happens when the equivalent of a bank, which is now a hybrid financial institution, like an insurance company, with a hedge fund strapped onto it, like AIG, what happens when they fail? Do you have the authority to resolve things?

BLITZER: All right.

GOOLSBEE: And we have to have it.

BLITZER: Let's go -- let's take advantage of your being here in THE SITUATION ROOM, go through some other quick issues right now.

GOOLSBEE: Sure.

BLITZER: The chairman of the Senate Budget Committee -- we're just getting this in -- Kent Conrad, says he wants to cut hundreds of billions of dollars from your proposed budget.

Is that acceptable?

GOOLSBEE: Well, you know, we will have to see what -- what he -- he has.

The president laid out the simple and fundamental proposition that we must make the investments in health care, in clean energy, and in the education system that will form the foundation of our future prosperity and get us away from bubble and bust. He believes we can do that while cutting the deficit in half.

And he's open to working with Congress in any way to satisfy those principles.

BLITZER: All right.

And Kent Conrad is a Democrat, the chairman of the Senate Budget Committee. Austan Goolsbee, take a look at this. You can't see it, but I'm holding up a U.S. dollar bill in my hand.

GOOLSBEE: OK.

BLITZER: The Chinese suggesting today, this dollar, U.S. dollar, should be replaced as international currency, because they are beginning to have concerns that you are printing, the U.S. government is simply printing too many of these dollars and will lose its value as an international currency.

What's your reaction?

GOOLSBEE: It strikes me as probably unlikely.

Different people have in the past argued for world currencies or new -- new currencies before. I believe the U.S. at this point is the safest place to invest in the world. And it's likely to remain that the dollar is a critical currency in the years ahead.

BLITZER: So, you -- you don't like some new international currency that some Chinese are proposing?

GOOLSBEE: Well, look...

BLITZER: I assume that's right, right?

GOOLSBEE: I haven't seen the details of what they are proposing.

I mean, the dollar is the dollar. If people don't want to buy it, they don't buy it. But I think you have seen sort of a flight to the dollar in -- in times of trouble.

BLITZER: All right, here's a question that one of our I- Reporters submitted, and we will get your reaction. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I was wondering how you plan on solving the problem of too much debt, borrowing and consumption with more debt, borrowing and consumption, essentially trying to reinflate our bubble economy.

(END VIDEO CLIP)

BLITZER: All right. Go ahead.

GOOLSBEE: Well, look, he's got two interesting issues in there.

I don't agree that the strategy President Obama is taking is trying to reinflate the bubble or use debt and consumer indebtedness to get things going.

The president is trying to do exactly the opposite, that, based on bubble, bust, bubble, bust, as we have faced in recent years, is not the way to do it, that what we need to do is make fundamental investments in the economy. And those are health care, cost reductions, the clean energy economy that we're going to invest in, and the education system for our kids, that we can do those things in a fiscally responsible manner, cutting the deficit in half.

But there's no question that this president inherited the worst economic crisis in many generations, and it's going to take a while to get out of this whole, because this problem didn't get created in a short period of time.

BLITZER: We want to thank our I-Reporter, Sam Zinel (ph) of Indianapolis, for that -- that I-Report. By the way, he voted for Congressman Bob Barr.

Also want to thank Austan Goolsbee for spending a few moments.

We will see you back here in THE SITUATION ROOM. Austan, thanks very much.

GOOLSBEE: Any time, Wolf.

BLITZER: Tomorrow, the National Urban League releases its report on the state of black America. We want to hear from you. What's your assessment of the state of black America today?

Submit your video comments to ireport.com/situationroom. Then watch tomorrow for my interview tomorrow with Marc Morial, the president of the National Urban League.

New images of North Korea's suspected missile program -- we're going to tell you what U.S. commanders think is happening.

And flying Air Force One means listening to the president's favorite music. We are going to share the playlist with you.

And the U.S. Supreme Court tackling a stinging documentary about Hillary Clinton -- is it really just an attack ad?

(COMMERCIAL BREAK)

BLITZER: In North Korea, new pictures of President Kim Jong Il go public, presumably to counter all those rumors swirling out there around why lately he's gone largely unseen.

Meanwhile, Congress today has been getting a look at some new images that could shed new light on the communist North's missile -- missile threat.

Let's go to our Pentagon correspondent Barbara Starr.

Barbara, what are U.S. commanders saying?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, here at the highest levels of the Pentagon, they do believe North Korea is about to undertake a game-changer.

(BEGIN VIDEOTAPE) STARR (voice-over): North Korean state TV broadcasts what it said were recent photos of leader Kim Jong Il, trying to show him alive and well. And, in a few days, Pyongyang may show the world, its missile program is also in good health.

North Korea says, as soon as next week, it will launch a satellite on top of a missile from this site. The latest imagery shows continuing preparations at the launchpad.

GENERAL WALTER "SKIP" SHARP, COMMANDER, U.S. FORCES KOREA: Kim Jong Il is in control. He will resort to many different types of provocations to try to ensure regime survival within North Korea.

STARR: A launch presents a potential crisis for the Obama administration. The U.S. calculates a North Korean missile could be over Japan within seven to eight minutes of launch. That means the U.S. will have as little as five minutes to decide whether to attempt to shoot it down.

Pyongyang warned against any attempt to stop it.

ADMIRAL TIMOTHY KEATING, U.S. PACIFIC COMMANDER: We have concerns with missile activities in North Korea, as Skip mentioned earlier, but I think we -- I know we're ready to defend our territory and our allies.

STARR: Experts say any launch would give the North Koreans valuable military experience in developing long-range missiles that could hit the U.S.

(END VIDEOTAPE)

BLITZER: Barbara, what about the intelligence assessment right now on that missile test, the preparations, what do they look like?

STARR: Well, right now, Wolf, U.S. analysts say that they are not yet seeing the missile on the launch pad, but they are seeing just about everything else, electronic equipment, fueling equipment, cranes being moved around.

They say there's every reason to believe North Korea will live up to this promise it's made to launch a missile, perhaps next week.

BLITZER: All right, so what happens if it is, as they insist, simply a commercial satellite? Can or should the U.S. shoot it down, because a lot of people fear that could ratchet up tensions big-time?

STARR: Exactly right. This will be the dilemma for the White House.

To explain, you know, a satellite on top of a missile or a warhead on top of a missile, if it's a satellite, it's a commercial venture by the North Koreans' declaration. The U.S. does not shoot down other countries' commercial satellites. But it's the same technology as a warhead on top of a missile.

So, the U.S. doesn't want to North Korea to make progress. The question is, what will the Obama administration do? -- Wolf.

BLITZER: A real dilemma there.

All right, thanks, Barbara.

President Obama preparing for his prime-time news conference tonight. What would you ask him? Our I-Reporters are weighing in.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What can you say to us to put our minds at ease, as we face the uncertainty of our futures?

(END VIDEO CLIP)

BLITZER: Is the president taking too much of the limelight away from his economic team?

Ed Rollins and Karen Finney, they are here to comment in our "Strategy Session."

And, later, a critical portrayal of Hillary Clinton on film, it gets a viewing by the U.S. Supreme Court.

(COMMERCIAL BREAK)

BLITZER: President Obama getting ready for his second prime-time news conference at the White House later tonight. Our coverage will begin 7:45 p.m. Eastern.

Here's question: Is he overshadowing his team with so many public appearances?

Let's discuss in our "Strategy Session."

Joining us, the Democratic strategist Karen Finney, and CNN contributor the Republican strategist Ed Rollins.

All right, guys, we have an I-Report from Adriana Maxwell of Marietta, Georgia. She says she was an Obama voter. Listen to this.

KAREN FINNEY, FORMER COMMUNICATIONS DIRECTOR, DEMOCRATIC NATIONAL COMMITTEE: OK.

(BEGIN VIDEO CLIP)

ADRIANA MAXWELL, RESIDENT OF GEORGIA: Is there a concern perhaps that you are overpowering these individuals, that you perhaps, by continuously stepping out in front of the camera and being the one to answer all the questions, that you are failing to delegate the proper authority to your other Cabinet members?

(END VIDEO CLIP)

BLITZER: All right, what do you think? Because that's a fair question. FINNEY: Well, sure, although it's interesting. You know, today, you had Secretary Napolitano talking about our new program on the Mexico border. You have got Secretary Clinton going down to Mexico. So, they are sort of dealing with that problem. You had Secretary Geithner on the Hill today. He will be back on Thursday.

And, tonight, I think the president is really trying to speak directly to the American people and answer questions. I think he's bringing kind of a different style to the White House. He sees himself as accountable to answering the questions that people have.

BLITZER: Because a lot of folks say he's going to the Ronald Reagan presidential playbook on a lot of these issues.

You worked in that White House for Ronald Reagan. You see a similarity in the strategy that he's accepted?

ED ROLLINS, CNN SENIOR POLITICAL CONTRIBUTOR: Sure.

No one -- no one overshadows a president. And as important as this -- as this crisis, you need to know that he's the one making the decisions. And, so, I would argue, you know, there's always a chance of being overexposed, but not yet.

And I think, to a certain extent, at this point in time, he has to be the one out there. It's his policy. The rest are -- are implementers of his policy. But people have to see that he's in charge.

BLITZER: Yes. As one Democrat said to me the other day, he said these are -- these are unprecedented economic times, and you need to take bold action, and that's bold strategic action.

(CROSSTALK)

BLITZER: All right, here's another I-Report we got in from W.J. O'Reilly in Brooklyn, New York, who says -- I don't know if W.J. is a man or a woman, but we will soon find out -- whether or not -- but says he voted for Obama.

(BEGIN VIDEO CLIP)

W.J. O'REILLY, RESIDENT OF BROOKLYN, NEW YORK: President Obama, I'm one of the baby boomers.

And we have given our all to make this country as great as it is. And now we're approaching our retirement years. So much has been taken away, so much certainty.

I want to ask you, what can you say to us to put our minds at ease, as we face the uncertainty of our futures?

(END VIDEO CLIP)

BLITZER: Yes, that's a question I hear all the time...

FINNEY: That's right.

BLITZER: ... from people in their 50s, early 60s. They are getting ready, they are thinking about retirement, and -- and they're not sure if they are going to be able.

FINNEY: Right.

Well, I mean, it's interesting, because, again, I think part of what President Obama is trying to do is instill confidence, you know, in his leadership. That's part of why he's doing this prime-time press conference tonight. That's part of, you know, reassuring baby boomers and -- and younger generations alike.

I hope, with the baby boomers -- I know, from my own parents, what they're pleased to see is that there is a -- a short-term plan for the economy, as well as a long-term plan. They are as worried about me and, you know, children that I might have as they are about themselves.

ROLLINS: A lot of baby boomers, and a lot of even young people, are not going to live the same life that they thought they were. People who have done all the right things, saved, got ready for retirement, what have you, a lot of that wealth has been wiped out, through no fault of their own.

And all that I can say is, this is a great country. We have always come back. You may have to work a little bit longer and you may have to change your plans somewhat, but we will be back.

BLITZER: Does this effectively mean that those, mostly Republicans, some Democrats, who wanted to have a certain privatization of Social Security, that that has simply gone away, at least in the near term?

ROLLINS: All I can -- all I can say is, thank goodness that did not happen.

(LAUGHTER)

FINNEY: That's not happening, yes.

ROLLINS: I was opposed to it when it happened -- when they were trying to push it. And the president would have been a lot -- President Bush would have been a lot smarter to have pushed for permanent on the tax cuts. It would have been better for his legacy. But -- but privatization would have been a disaster.

(CROSSTALK)

BLITZER: What about all the criticism that you are hearing, especially from the right, that this is a slippery slope, and what we're seeing here is a European socialism, almost, emerging in the United States?

FINNEY: I don't think we're going to see that. I think that's -- look, that's the job of -- of the Republican Party, is to criticize the party in power. I don't think we're going to see that. But, again, we're in unprecedented times, and they require unprecedented measures.

I find it ironic that, today, the Republicans are criticizing the plan that Secretary Geithner and the president talked about as being, you know, too much or an overreach, when I think, if we hadn't moved to do that and in the weeks leading up to this week, they were saying there wasn't enough happening.

So, again, I think you have to hear that with a -- with a note of the political in it, and I don't think that we're at risk at that at all.

BLITZER: Because a lot of people, as you know, in the polls, they blame the government for having created this economic disaster.

ROLLINS: Well, the government didn't make it better. They didn't create it, but they didn't make it better.

And I think, at this time, a key thing here is not what the president does, as much as what the Congress does. And the Congress often waits too long to try and correct things. And then they go way overboard. And I think that's the -- the details that are going to come out are going to be the serious thing.

Could the federal government go in and take over a company like AIG? Absolutely not. It could be a disaster. Could they put money in, as they did? Can they try and make it better? Sure.

But FDIC is not a good comparison. That's where the government has guaranteed an insurance program that, if you put money in a bank, they guarantee it. They have a right to go in and change that banking practice. But to take over big corporate companies, it would -- couldn't -- couldn't happen.

BLITZER: Ed, Karen, thanks, guys.

ROLLINS: Thank you very much.

FINNEY: Good to be with you.

BLITZER: The Obama administration is out with some dramatic new measures to keep what's happening in Mexico from spilling over into the United States.

And guess who will be riding on Air Force One, not physically, but musically? We will tell you.

(COMMERCIAL BREAK)

BLITZER: Let's go right to Jack Cafferty for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Following up on the segment a minute ago, what would you like to ask President Obama if you were going to be present at tonight's news conference?

Ben in Indianapolis says: "How will health care workers' salaries be affected by the proposed change in health care policy? There are many doctors I work with who worry about losing substantial income, while also being taxed more for being in a higher income bracket. I still have yet to meet a poor doctor, but couldn't this drive some of the best and brightest away from the field, if they're worried about their potential income?"

Rick in Ohio writes: "I understand the focus is now on repairing an incredibly difficult situation, but at what point, Mr. President, will you and your team shift gears and focus on prevention? Specifically, what kinds of measures and regulations will be your priorities?"

Chris in Buffalo, New York: "I would like to ask the president: Did you read the economic stimulus bill that you signed? And, if so, then why were you shocked that AIG was just following the law when they paid out those bonuses?"

Judy writes: "I would ask: When will U.S. citizens be able to buy products that are made in America, instead of China? I would also like to know when companies doing business outside the United States will stop getting tax breaks."

Tom in Florida: "I would like to ask President Obama when he intends to enforce the immigration laws. Our last administration did a poor job of protecting our borders."

Mary in Santee, California: "How can the president, in good conscience, saddle my children, grandchildren, and great-grandchildren with a debt that they will never get out from under?"

And Tina in Texas writes: "I would not ask him anything, but I would thank him for caring for us in the middle and lower class. We need help, unlike the mega-rich."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. Look for yours there, among hundreds of others.

BLITZER: All excellent questions. We're going to have more I- Report questions like that as well, Jack.

Thank...

CAFFERTY: Can't wait.

BLITZER: Thank you.

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