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New Afghanistan Plan; Debating the Budget

Aired March 29, 2009 - 20:00   ET


JOHN KING, HOST: I'm John King. This is our STATE OF THE UNION report for this Sunday, March 29th.

President Obama unveils his plan to disrupt, dismantle and defeat al Qaeda and Taliban terrorists in Afghanistan and Pakistan. We'll break down the new strategy in an exclusive interview with the region's military commander and top diplomat, General David Petraeus and Ambassador Richard Holbrooke.

Mr. Obama's $3.6 trillion spending plan is now in the hands of Congress. The lawmakers and the president's own party are making changes. The two most powerful Democrats when it comes to the budget, Senator Kent Conrad and Congressman John Spratt, are right here to explain why.

And from taxes and spending to the president's new war strategy, the Senate's top Republican, Mitch McConnell, gets the "Last Word."

That's all ahead in this hour of STATE OF THE UNION.

Picture of the White House there on a Sunday morning -- afternoon out there in Washington. On Friday, President Obama announced a new strategy for the war in Afghanistan. He's sending an additional 4,000 troops to train the country's army and police force and hundreds of civilians to advise Afghanistan's government on agriculture, education and other issues.

But the president's plan also includes a new emphasis on Pakistan.

Let's talk about it with the two men who will be in charge of this effort, the top U.S. military commander in the region, General David Petraeus, and the diplomat appointed by the president, Ambassador Richard Holbrooke.

Gentlemen, welcome both of you to STATE OF THE UNION.

And General Petraeus, let me start with a threshold question for you. How many troops will it take? How long will it be?

GEN. DAVID PETRAEUS, CENTCOM COMMANDER: As you know, John, the president and President Bush before him have set in motion orders for troops that will more than double the number that were on the ground at the beginning of the year. We'll get those on the ground. We'll take a lot of effort with infrastructure, logistics and so forth, start employing those in the months that lie ahead.

They will all be on the ground by the end of the summer, the early fall. And along the way we'll do the assessments and among those assessments, of course, will be the kinds of questions about force levels, about additional civilians and other resources as well.

KING: General McKiernan, your commander on the ground, had been up front that he needed even more troops. Why did the president say no?

PETRAEUS: Well, he certainly hasn't said no. What everyone has said is, let's get these forces on the ground. Every request for forces and every recommendation that General McKiernan and I made through these years, this entire year, has been approved, and as I said, we'll take that forward and do the assessments. And I think it'd be premature to get beyond that right now.

KING: Ambassador Holbrooke, before we get to your challenges in the diplomacy, I want you to take us inside the deliberations about the strategy. Because, as you know, many Democrats have warned this could be President Obama's Vietnam, that you're sending more troops into an area where you still have huge problems on the Pakistani side of the border, and we'll talk about that, with corruption and other issues on the Afghan side of the border. And we'll talk in more detail about that.

But take us inside the room when it comes to the risk assessment for this president at this moment.

RICHARD HOLBROOKE, U.S. SPECIAL REPRESENTATIVE: First of all, John, I served in Vietnam for 3 1/2 years and I'm aware of certain structural similarities but there's a fundamental difference. The Vietcong and the North Vietnamese never posed any direct threat to the United States and its homeland.

The people we're fighting in Afghanistan and the people they are sheltering in western Pakistan pose a direct threat. Those are the men of 9/11, the people who killed Benazir Bhutto. And you can be sure that as we sit here today they are planning further attacks on the United States and our allies.

KING: Let me talk about the challenge ahead, because no matter how right or how smart the United States is this time, and you obviously in saying what you just said, Mr. Ambassador, you're criticizing what happened in the previous administration. But I don't want to look backwards.

For you so succeed you need partners. And I want to play something that then candidate Obama told our Fareed Zakaria back in 2008 about the president of Afghanistan, Hamid Karzai. The United States now saying back then he didn't have much trust.

Let's listen.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think the Karzai government has not gotten out of the bunker and helped organize Afghanistan and government, the judiciary police forces, in ways that would give people confidence. So there are a lot of problems there. (END VIDEO CLIP)

KING: General, if there are a lot of problems there, have those problems been fixed or are you sending more U.S. troops into a country that can't organize and run itself?

PETRAEUS: Well, first of all, it's a comprehensive effort. And among the various lines of operation, if you will, are diplomatic lines that will be spearheaded by the ambassadors in both countries and with Ambassador Holbrooke, of course, overseeing that.

Among that effort has to be, without question, the strengthening, the building in some cases of the kind of trust, cooperation, coordination, that is necessary to deal with the problems that have emerged over the years.

It is no secret that the legitimacy of the Afghan government has been challenged by the corruption and some of the other issues there. President Karzai has pointed corruption committees. Has made important starts and appointed some good officials, among them, Minister of the Interior Atmar.

That now needs to be moved forward as we run up to the elections and then beyond, of course, it would be very important that we all work together to combat the kinds of issues that we discussed (ph).

KING: You say it needs to be more forward. But, Ambassador, I want you in on this point because you have called corruption a cancer in Afghanistan.

President Karzai has been in charge for seven years. The first of an interim government, a transitional government. He's been president for 4 1/2 years. If there is a cancer of corruption in Afghanistan and he has been in charge for seven years, is he not part of the problem?

HOLBROOKE: We do think it's a cancer. President Karzai says publicly that he agrees with that. And now it's up to his government to take action. But I would stress to you, John, that there is an election coming up on August 20th, the second election in Afghanistan's history.

It's a hugely important election. President -- Secretary Clinton will address that in her remarks on Tuesday. And that election will be a chance for the people to vote on these issues.

KING: General Petraeus, I want you to come with me so we can take a closer look at the source of the issue here, and Ambassador Holbrooke, I believe you can see this on a monitor you have up in New York.

This is your range of territory, General. You cover all this. But the problem at the moment is right here. And I want to pull out this border region just a little bit more and bring it over the center and pull this out a bit so people can see what we're looking at.

Now you believe the problem is as much on this side as on this side. So the U.S. troops are going here into Afghanistan but many would say you're sending the fire department here when the fire is here, that al Qaeda and the Taliban are on this side of the border.

How confident are you that sending troops here will deal with the problem here in the context of trust? We just talked about trust with President Karzai. Do you trust -- let me ask you a simple question first.

Do you tell the Pakistani military the most sensitive U.S. secrets or can you not trust that that information will be passed on to their security services and then on to the terrorists?

PETRAEUS: But first, let me just say that it's very important that the fire department address the fires that have sprung up in the eastern and southern parts of Afghanistan without question. And then it's critically important that the fire department, if you will, in Pakistan do the same thing in the federally administered tribal areas.

And if you move this down here -- in fact I just talked to General Kiyani, and had an update from him on operations that are ongoing in Bajaur and Mohmand, which are part of the federally administered tribal agencies, some of which you have here, and also in Khyber. They launched another operation in Mohmand.

Clearly, there has to be the establishment of true trust there as well. We discussed that, actually, this morning. There's a substantial and significant and sustained commitment that is part of this AfPak strategy that was announced on Friday. We've had ups and downs between our countries through the years. We've not got to get on an up and stay on an up with them, and again, working our way forward in that regard has to be critical.

KING: The Pakistani government says you're not allowed to put people in here. From time to time, we know there have been special force operations in this area.

How much of that is for public consumption and how much -- do you have the freedom -- if you see something right here and you can get it to before the Pakistanis can, would you do it?

PETRAEUS: Well, I think the president made that clear the other day where he talked about consulting with the Pakistanis. But if it ultimately comes to it, that we will, if necessary, take action, let me caveat that very, very carefully, though.

And that is that there is no intention for us to be conducting operations in there, certainly on the ground. And there is every intention by the Pakistani military and their other forces to conduct those operations.

This is a very proud country. It has existing institutions. Our job is to enable those institutions to help them develop the kinds of counterinsurgency capabilities that are needed and to help their entire government at large to conduct the kind of comprehensive effort that is necessary, well beyond just the military effort but one that then looks after displaced citizens, that tries to foster local economic development, and there is some of that in the president's speech as well.

KING: Much more to discuss with our two distinguished guests, General Petraeus and Ambassador Holbrooke. We'll be back in a minute.

Among the topics, U.S. tensions with Iran. How close is that country to a nuclear weapon? And of course, we're keeping an eye on the North Dakota where the Red River remains a flooding threat. We'll talk to Senator Kent Conrad who's assessing the situation in his home state.

STATE OF THE UNION will be right back.


KING: General David Petraeus and Ambassador Richard Holbrooke discussing the many challenges here.

We were just talking, gentlemen, the problems, the many issues you have to deal with and the tough jobs you have with the Afghanistan/Pakistan border. I want to move a little bit this way in the neighborhood is Iran.

Admiral Mullen, the chairman of the Joint Chiefs, was on this program a couple of weeks ago and I put to him the question, does he agree with international assessments that Iran now has enough fissile material to build a nuclear weapon?

Let's listen to Admiral Mullen.


KING: Does Iran have enough to make a bomb?

ADM. MIKE MULLEN, CHAIRMAN, JOINT CHIEFS OF STAFF: We think they do, quite frankly. And Iran having a nuclear weapon, I believe for a long time, is a very, very bad outcome for the region and for the world.


KING: Now, General, Secretary Gates the same week said yes, they may have enough material but he doesn't think they're close to a weapon yet.

What is your assessment of the -- where they are in development of the weapon and what kind of a threat and a complication that makes your efforts in the rest of the very troubled neighborhood?

PETRAEUS: Well, Admiral Mullen clarified what it was that he was saying. And he pointed out that there are additional steps required between having enough low-enriched uranium and actually having something that can be weaponized. You have to highly enrich it. You have to actually do the physical package yet, that delivery and so forth.

The bottom line is that we think it's at least a couple of years away in that regard. It could be more, could be a little bit less. There are certainly a lot of facts that we don't know. KING: Ambassador Holbrooke, you will be in a meeting in the week ahead, I believe I know Secretary Clinton will be there, in which Iranian diplomats will be in the room. It is the highest level contact in quite sometime.

What are your guidelines? Where has the president said, Richard, if this comes up, you're allowed to talk about this and where is the red line that you're not -- let's say the Iranians come in there in a talkative move, and they want to talk about a lot of things, were is your red line?

HOLBROOKE: Well, let's just see what happens in The Hague, John. I don't want to -- I don't want to forecast what's going to happen. Red lines? Well, we're not going to eradicate 30 years of bitter disagreements in one meeting.

But I want to be here clear that the United States has been asked repeatedly since January 20th how we feel about Iran participating in meetings on Afghanistan and Pakistan and we've given the same answer to everyone. We have no objections.

Iran is a neighbor, and as Dave Petraeus has just said, they have -- we and they have common concerns.

KING: The vice president of the United States was a guest on this program two weeks ago and he said something that caused a bit of a stir over at the White House and around town.

I want you to listen.


KING: Do you believe the president of the United States has made Americans less safe?

RICHARD CHENEY, FORMER VICE PRESIDENT: I do. He's making some choices that in my mind will in fact raise the risk to the American people of another attack.


KING: General Petraeus, you served in the Bush administration, under Vice President Cheney and President Bush. You're now serving in the Obama administration. Are the American people less safe because of this new president, as Vice President Cheney says?

PETRAEUS: Well, I wouldn't necessarily agree with that, John. I think that that, in fact, there is a good debate going on about the importance of values in all that we do. I think that if one violates the values that we hold so dear, that we...

KING: You mean torture?

PETRAEUS: ... jeopardize -- well, in fact, I put out a memorandum to the soldiers in the Multinational Force-Iraq when I was the commander because of concern that we may not be taking some of these seriously enough.

As you know, the field manual came out from the army that is used by all the different services that completely, clearly outlaws torture. So we think for the military in particular, that that can't -- that's a line that can't be crossed.


KING: So was the line crossed in the Bush administration? Was the line crossed? Did you do things which you fundamentally thought were wrong and immoral?

PETRAEUS: We certainly did not. We -- now there were some incidents that did and we learned some very hard lessons from Abu Ghraib and other cases. And we believe that we took corrective measures in the wake of that. And that is very, very important. But it is hugely significant to us to live the values that we hold so dear and that we have fought so hard to protect over the years.

KING: I want to walk through a time line of Iraq. The American people came to know General David Petraeus as the general who turned around, and many would accept that statement, a flawed strategy in Iraq.

I want to go through a time line. Then state senator Barack Obama way back in 2002 said he thought the Iraq war was a fundamental mistake and he opposed it. And then as a senator of the United States and a candidate for president he spoke out quite passionately against the surge strategy.

Let's listen.


OBAMA: The responsible course of action for the United States, for Iraq and for our troops is to oppose this reckless escalation and to pursue a new policy.


KING: As president of the United States, shortly after taking office, he was in veiling his new Iraq strategy. He called you brilliant, General Petraeus, and he said this, it sounds a little different.


OBAMA: Under tough circumstances, the men and women of the United States military have served with honor and succeed beyond any expectation.


KING: And then recently in a "60 Minutes" interview, he almost under his breath said something to the effect of who knew Iraq would be the least of his problems as president of the United States. He has never publicly, President Obama has never publicly said, you know what, I was wrong, the surge was the right strategy. Has he told you that?

PETRAEUS: Well, we haven't actually talked about the surge. What we talked about is looking forward. And I think it's very important, actually, at points like this to take the rear-view mirrors off the bus as we say and look ahead. That has been the focus.

I think you know that on the day after the inauguration, the first full day in office, the president sat down with the commander from Iraq by video teleconference, myself in "THE SITUATION ROOM," the chairman, the secretary of defense, the other members of the national security team, and discussed Iraq.

And that's what launched the review of the Iraq policy that eventually culminated in the address of Camp Lejuene, something that General Odierno, Ambassador Crocker and I support, something to which we had substantial input and we think quite a pragmatic and proper, prudent way forward.

KING: Ambassador Holbrooke, you were a fierce critic of the Bush approach in Iraq. In the political debate about here in Washington, though, many Democrats will tell you privately, you know what, I'm wrong, the surge worked because of David Petraeus, and that, you know, President Bush in the end and John McCain and Joe Lieberman were right.

Why is that such a hard thing for Democrats to say?

HOLBROOKE: I'm not going to partisanize the discussion here. But I do want to say something about Dave Petraeus, whom I did not know until about three months ago and then fate and destiny put us together as counterparts.

I think the nation owes General Petraeus a debt of gratitude for what he's achieved in Iraq. And I am confident, absolutely confident, having known the entire United States military chain of command, from General Westmoreland in Vietnam on, that we now have the best team we could possibly have on the ground from Admiral Mullen to General Petraeus to the command in Afghanistan.

And I'm proud to work with them and we all ought to acknowledge what has been achieved.

Now in regard to the previous comment you've played by the former vice president of the United States. I need to say, and I hope I can do this in the spirit of bipartisanship and nonpartisanship, that I don't have a clue what he's talking about.

We are treating Afghanistan and Pakistan as a single theater. We are going to address it in an integrated way. We are going to give it more resources. And that is where the people planning the next attack on the United States or our European allies are certainly doing it. So I just do not understand what his comments were reference to.

KING: All right, we will leave it there.

Ambassador Holbrooke, being very diplomatic. We'll catch you next campaign season. We'll see if that stays the same.

Ambassador Holbrooke, General Petraeus, on a serious note, you both have very difficult work in the days and weeks ahead. And we certainly, as Americans, wish you very well in that work. Good luck to both of you and thanks for coming in this morning.

You hear the details of the president's new strategy in Afghanistan. But are the conditions on the ground ripe to make it work? And will other countries around the world give this new president any help?

We'll get insights from our chief international correspondent Christiane Amanpour after this quick break.

STATE OF THE UNION will be right back.


DON LEMON, CNN ANCHOR: I'm Don Lemon at the CNN world headquarters in Atlanta. More "STATE OF THE UNION WITH JOHN KING" in just a moment.

Want to give you some headlines. First, we're following breaking news tonight. A White House source tells CNN that GM CEO Rick Wagoner will step down as part of a massive restructuring plan for struggling U.S. automakers.

The source tells us the Obama administration asked Wagoner to resign. The president announces his auto industry rescue plan on tomorrow.

New details tonight about today's shooting rampage at an Alzheimer's facility in Carthage, North Carolina. At least eight people are dead and four others are wounded. The gunman was also wounded. Seven patients ranging in age from 78 to 98 were killed. A nurse also died.

Police say the 45-year-old gunman was not a patient nor an employee, nor did he appear to have a connection with any of the patients.

I'm Don Lemon. I'll see you back here at 10:00 p.m. Eastern. 10:00 p.m. Easter. We'll have more of the breaking news stories.

Now want to get you back to "STATE OF THE UNION WITH JOHN KING."

KING: On Tuesday, President Barack Obama makes his first trip to Europe as president. Afghanistan is expected to be high on the topic list during his meetings with world leaders.

The country also will be the focus of a United Nations conference at The Hague being attended by Secretary of State Hillary Clinton as well as representatives from Iran.

Let's turn to our chief international correspondent Christiane Amanpour who's just returned from Afghanistan.

Christiane, you heard General Petraeus and Ambassador Holbrooke lay out the new strategy. I want to get your insights and let's start on the Afghan side. They acknowledge huge problems with corruption in the Karzai government. Is the situation now ripe enough that more troops and more advisers, civilians, can turn around the fundamental problems there?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, it's important to recognize the fundamental problems and what they are and exactly what war is being fought there.

Yes, corruption is endemic as one Afghan official told me. It used to be corruption, now it's outright looting. That's on the one hand. On the other hand, it's also important to understand the nature of the Taliban/al Qaeda threat.

While it is very severe in certain pockets of Afghanistan, it is by no means what some officials and others are saying it is, which is a nationwide insurgency. American offices in Afghanistan admitted to me that they used the word insurgent in all their reports to describe any kind of hostile shooting.

So while the Taliban and al Qaeda is a big threat, the majority of it is criminal, tribal. It's related to the drug traffic and all the rest of it. This really does need to be understood. The other thing is that the United States is not unpopular in Afghanistan except because of two things.

One is the civilian casualties that are becoming a huge problem caused by the air raids which are meant to be directed at the al Qaeda and other militants but cause huge civilian casualties. American officials there admitting this is a big, big problem for them now in terms of losing support and the other major issue is that people in Afghanistan believe that the promises the U.S. and the rest of the world made have not been fulfilled.

And that is the promises on the civilian side. So all this civilian surge that the president is talking about really needs to be implemented because many officials there, American military commanders told me that Taliban with a small "t" as they call it, in other words, the people who are shooting and putting IEDs, are often doing it mostly just for the sake of a bit of money in their pocket.

People need to see an economic incentive for them there unless the economy and some kind of economic incentive is put down, they go to the Taliban side, John.

KING: And across the border in Pakistan, is there any reason to believe, and this strategy cannot succeed without the help of Pakistan, that the Pakistani security services are now ready to crack down more so on the Taliban and al Qaeda elements on their side of the border undermining what's happening in Afghanistan?

AMANPOUR: Well, it depends who you to talk to. I spoke to the top head of the Pakistani military not long ago when he was here in the United States. And they say, yes, they are on side. But the truth of the matter is that there are also others suggesting that some of the intelligence services still are playing the game of holding their cards and perhaps seeing the Taliban in Afghanistan will one day benefit them. It's hard to see how given how the hot beds are flashing in Pakistan right now. Just a few weeks ago when the Pakistani government made an agreement in the Swat area with the Taliban, we predicted that it was going to lead to much more. And so it happened in Peshawar, the capital of that area, over the weekend with this huge suicide bombing.

So this is something that's really got to be taken care of as well, John.

KING: High stakes for the president of the United States and this new strategy. Appreciate the insights from our chief international correspondent, Christiane Amanpour.

Christiane, thanks so much.

Coming up, they're the two most powerful Democrats in Congress on the budget. And both are worried President Obama wants to spend a bit too much. Senator Kent Conrad, Congressman John Spratt tell us when they think the economy will rebound and the impact of the president's ambitious agenda when we come back.


KING: President Obama went to Capitol Hill this past week to sell his budge to skeptical lawmakers. Most telling about the trip, his meetings were with fellow Democrats. The president insists his proposal to spend on health care and energy reforms are vital to the country's economic recovery.

But Republicans say it's a return of tax and spend liberalism. Even some Democrats say the Obama agenda cost more than the country can afford right now.

Navigating those tough policy and political choices is the task of two powerful Democrats who lead the budget committees, Senator Kent Conrad of North Dakota and Congressman John Spratt of South Carolina.

I began the conversation earlier today by asking Senator Conrad about the floods in his home state.

Senator Conrad, you are home because of this crisis in your state. There seems to be cautious optimism this morning. Take a minute to give us the latest.

SEN. KENT CONRAD (D), CHAIRMAN, BUDGET COMMITTEE: Well, John, this is a heroic effort. Tens of thousands of volunteers in all-out fight to contain this river that is now at the highest level ever in recorded history. And it went down a little bit overnight. But we expect a second crest.

And there is a tremendous volume of water out there. That's still heading toward the river. So we're cautiously optimistic but we also understand this fight is far from over.

KING: All right, Senator, we will keep tracking that throughout the day and keep in touch with you. But I want to move now to the monumental task both of you gentleman face, and that is getting the budget through the Congress. I want to have the conversation this morning not as three guys who work in Washington but as three guys who, like other Americans sitting around their kitchen table maybe watching this morning, having a hard time making the numbers add up.

And families are saying, can we afford that summer vacation? Maybe we need a new car, can we afford it? So when I look at your budget proposals, I want you to help me through this in the context.

And let start with you, Chairman Spratt, is that many would say, look, we know you in Congress don't like these financial bailouts. Nobody likes spending billions of dollars that go to the big banks. But the president, in his budget, said I'm probably going to need $250 billion down the road. So I'm going to be honest. I'm going to put it in my budget.

You have decided in your budget to take that out. Now some say that's a gimmick so that you get a lower deficit number than the president but you know you're going to have to spend that money.

REP. JOHN SPRATT (D), CHAIRMAN, BUDGET COMMITTEE: Well, we don't know it and we're essentially saying, come make the case of the burden of persuasion is upon. Nobody likes funding these things. We'd like to see more definition than we've got from the last packages. So this is our way of exercising a little leverage over it.

If it's needed, we'll be there to support it. But let's not create a presumption it is needed and see if we can't make the most of what's in circulation already.

KING: Let's talk about a bigger challenge. The president says we must reform health care and we must do it this year. He had about $650 billion in a reserve fund in his budget. You have both decided that yes, you want to deal how -- both of you budget say we will deal with health care. But it leaves the decision about financing it down the road.

Your leader, Senator Conrad, Senator Reid, said this past week, you know, with the cap and trade, and some energy taxes we'll get about $650 billion and that's about what we need as a down payment on health care reform?

Are you willing to pay for health care reform through higher energy taxes?

CONRAD: Well, that's an option, but look, what we have done is provide for a deficit neutral reserve fund. The administration said all along they want to do major health care reform and we agree with them entirely. They're exactly right.

And they have said they would pay for it over a period of time. And that's what we've provided for. We've given maximum opportunity for the committees of jurisdiction, maximum flexibility to write major health care reform and to pay for it.

SPRATT: Could I add to that? KING: Please.

SPRATT: We've perfected a health care trust fund, reserve fund. It is paid for by identified items in the president's budget, not necessarily items we accept during (INAUDIBLE). We don't get that level of specificity. But he provides $634 billion, half of which are savings in existing Medicare and Medicaid program. The other half of which come from limiting the itemization of all deductibles.

KING: Mortgage deduction and charitable deductions fro more affluent Americans.

SPRATT: That is true.

KING: Are you prepared to do that?

SPRATT: Well, we didn't put it in our budget resolution. So we think it's an open debate. And a lot of people are not prepared to go that far.

KING: And both of you made your names in the Congress' deficit hops. Among the Democrats years ago who were willing to stand up to your own party and say, look, we're spending too much money. We have to balance the budget.

I want to get a sense from each of you is how much do you feel you may be having to compromise your hard-fought principles to be loyal to this president who has a very, very ambitious agenda.

I know, Mr. Chairman Spratt, you said just last week, we'll try to get it all done this first year, but I'm not sure we can.

SPRATT: Wait, he's only been in office as president a few months. And for the most part, what we're looking at, these horrendous deficits, is something that is carried over from a previous administration.

KING: But they get bigger under his.

SPRATT: They do indeed.

KING: And I want to put a picture up on the screen as we continue the conservation. Senator Judd Gregg, your friend, Senator Conrad, had an event last week in which he noted that the projected deficits under President Obama would be more than the 43 presidents in 232 years before him.

Is that a legacy you want the Democratic Party to inherit?

CONRAD: Well, we've already inherited it. Unfortunately, we inherited it from the previous administration a doubling of the debt, a tripling of foreign holdings of U.S. debt, and an economy in shambles.

And so when that happens, obviously, deficits and debt go up dramatically in the short term. The great challenge here is to put us on a more sustainable path. And, look, in fairness to the Obama administration, they made their estimates of the revenue available to us three months ago.

In the intervening period, those deficits have eroded and, as a result, we have had to make changes in the president's proposal to get the deficit on a track that will reduce it by two-thirds over the next five years.

So you ask initially, have we compromised with the president and have we compromised our principles being concerned about debt? Absolutely not. The president said to us, look, we've got to reduce our dependence on foreign energy, absolutely critical.

We have got to focus on excellence in education. We've got to have major health care reform because that's the 800-pound gorilla. That's the thing that can swamp the boat fiscally for the United States. So those provisions are in this budget as well as reducing the deficit by two-thirds over five years, getting us back on a better course.

KING: Gentlemen, I'm sorry, we're out of time this morning. We'll invite you both back, it's a very important issue but we did want to take some time to deal with the flood as well.

Senator Conrad, good luck to you and the people of North Dakota as you deal with this crisis. We hope everything turns out for the best.

CONRAD: Thank you.

KING: Chairman Spratt, thank you so much for joining us.

SPRATT: Thank you.

KING: Up next, he's the most powerful Republican in Congress so what does Senate minority leader, Mitch McConnell, think of the president's spending plan, his new Afghanistan strategy and his promise to make Washington a new bipartisan city.

Mitch McConnell gets the "Last Word" when we return.


KING: Twenty-four news makers, analysts and reporters, including the president of the United States, rounded the Sunday morning talk shows today. But only one gets the "Last Word." That honor today goes to the most powerful Republican in the Congress, the Senate minority leader, Mitch McConnell of Kentucky.

Senator, thanks for joining us on STATE OF THE UNION.

SEN. MITCH MCCONNELL (R), MINORITY LEADER: Good to be with you, John.

KING: I want to start about the big debate about the economy...


KING: ... and the president's budget. The treasury secretary, Tim Geithner, was out this morning on one of the Sunday programs and he was responding to the criticism that this administration is spending too much and trying to do too much too fast.

Let's listen to Secretary Geithner.


TIMOTHY GEITHNER, TREASURY SECRETARY: The big mistake governments make in financial crises is to sit back, hope it's going to work itself out. Put the brakes on too quickly, not act aggressively enough. And we can't afford to make that mistake.


KING: Can we not afford to do what this administration wants to do?

MCCONNELL: I think we cannot afford to do what they want us to do. We ought to be concentrating on the financial system which, of course, the secretary of the treasury is trying to do and fix housing. That's exactly what we ought to be doing.

But what we ought not to be doing is passing the budget that they propose that we pass in the Senate and the House next week that doubles the national debt in the next five years and triples it in the next 10. And massive tax increase, an energy tax of up to $3,100 per person, an effort we believe to nationalize health care, that has nothing to do with the economic dilemma which we confront at the moment.

That needs to be dealt with and Republicans are very much in favor of dealing with that. What we're not in favor of is going on this spending spree over the next five to ten years and sending the bill to our grandchildren.

KING: You don't like some of the policy proposals and the spending. But the president in his budget proposal was relatively honest. He said I need about $650 billion in the short term for health care. And here's how we're going to get it. We're going to save some money in Medicaid and we're going to limit the mortgage deductions and limit the mortgage deductions for affluent Americans and limit the charitable contribution deductions for affluent Americans.

Both the House and the Senate budget resolutions leave that rather murky. They say yes, we want to do health care but we'll figure out how we're going to pay for it down the road.

If they get their way and you don't have the votes, how are they going to pay for health care?

MCCONNELL: Well, they're going to have raise taxes and I think they intent -- the majority leader was quite candid a couple of days ago. He thought the energy tax would pay for at least the first tranche of health care.

There's no question what they have in mind. These budgets may be a little bit vague but I think once they get to conference between the House and Senate, they may well fill in the blanks and we'll find out exactly what they have in mind.

In addition, as sort of Washington insider word, reconciliation, which basically means a way to jam the minority in the Senate, is also something they're seriously contemplating which would make it absolutely clear that all of their plans they intend to carry out on a purely partisan basis.

Look, my 41 Republican senators represent 50 percent of Americans. We expect to be a part of the process.

KING: Now, reconciliation, to explain it to folks at home that might not get Washington speak, that means they could pass it with a majority.


KING: Fifty-one votes and it's through. Normal Senate procedure you need 60 votes to cut off debate.

I assume you think they're going to do that. You lost three Republicans on the stimulus bill. You lost three of your Republicans on the stimulus bill. If the vote were today on the president's budget as it now stands, would you lose any Republicans?

MCCONNELL: I don't think so. And I think the big fear is going to be losing Democrats. It's no accident that the vice president was up talking to Senate Democrats on Tuesday. The president was up talking to Senate Democrats on Wednesday, talking to Democrats about the budget, trying to hold them in line.

I think they have serious concerns on their side about this budget which is completely disconnected to an unrelated to the current economic crisis in which we are facing.

KING: Back in 1994 it was the Harry and Louise ads. And Republicans said, you know, Bill Clinton said it was a new Democrat but he's gone off to the left here, including this big health care plan.

Is that where we're heading in the next cycle? And Republicans already decided it's big government, big spending with, not what you voted for?

MCCONNELL: Well, it depends on what the president does. If he does what we fear he's going to do, this is going to be an explosion of government. This is the -- this administration is going to be the fartherest (sic) to the left of any government of -- administration certainly of my lifetime.

And I'm not sure that's what people voted for. I mean they were angry with President Bush, they were not happy with the economy. All of that we understand. Whether they intended to see American kind of turned into a western European country as a result of an explosion of spending and debt and regulation is another matter.

KING: I want to move to the world stage. The president unveils his new Afghanistan strategy the other day. He's sending in more troops. It's going to cost more money. And yet we had General Petraeus and Ambassador Holbrooke, the two top military and civilian -- the diplomatic leaders of this policy.

And they say they believe this is -- can be a successful strategy, and yet they acknowledge, when it comes to corruption in Afghanistan and their worries that the Pakistani security forces can't keep a secret, that they might pass it on to the Taliban and al Qaeda, both men admitted they have concerns. Let's listen.


HOLBROOKE: We have to break down what you just referred to. And what the Pakistani foreign minister himself called the trust deficit, you're absolutely right. There is a - the relationship between Pakistan and the United States is immensely complicated and it isn't quite where it should be.

PETRAEUS: Among that effort has to be, without question, the strengthening, the building in some cases of the kind of trust, cooperation, coordination that is necessary to deal with the problems that have emerged over the years.


KING: It sounds pretty horrible, Senator, when you're sending in more troops, committing billions of dollars in more U.S. money and you're not sure you can trust either the government of Pakistan or the government of Afghanistan.

Is there a better choice or is this the best card the president has?

MCCONNELL: There is no other choice. And I want to commend the administration, the surge in Iraq worked. I wish they could bring themselves to say that. And I think the surge in Afghanistan is likely to work as well, under the brilliant leadership of General Petraeus who was on your show, obviously, earlier today.

The administration is essentially adopting the policies of the Bush administration in both Iraq and Afghanistan. And I want to commend them for it. I want to commend them for it because we know for sure that post-9/11 we did not have another attack in the homeland here in the United States. That was no accident. It was not blind luck.

It was because we were on offense going after the terrorists where they are. There are significant numbers of them in Afghanistan and in Pakistan. And I think the president is adopting a policy that gives us a chance to succeed.

Are we going to be able to turn Afghanistan into a western-style democracy? No. But can we stabilize the country and protect America from another attack here on the homeland? I think so. And I think the policies the president are pursuing are likely to be supported by virtually all Republicans.

KING: If that is the case, do you disagree with former vice president Cheney who in that very seat two weeks ago on this program said he believes the policies of this president are making the American people less safe?

MCCONNELL: Well, I think we're going to find out. You know? We'll find out. I do think closing Guantanamo, having an arbitrary date to close Guantanamo, is a dangerous decision. Where are you going to put them? I mean we've already voted in the Senate, 94-3, against bringing them to the United States.

Guantanamo is a perfect place for these hardened terrorists that we have captured. So that's something I disagree with the administration on. I do think, though, that staying on offense in Afghanistan is a smart thing to do. It's the kind of thing President Bush would have done. I applaud the president for his flexibility in doing that.

KING: I want to close by getting back to the spirit that was supposed to dominate this town. This was a president who said he was going to change the way Washington works and he was going to be bipartisan. He thought both President Bush and President Clinton failed in that regard.

I want to -- I want you to listen to your own words earlier this year just as the Obama administration was coming to power.


MCCONNELL: For the first time in a while, America has a president who isn't viewed by most people as an overly polarizing figure. Americans are intrigued by President Obama's promise of post-partisanship.


KING: Has that promise been kept? And as you answer, when was the last time your phone rang and at the other end of the line was President Obama saying, you know, Mitch, I think we might disagree about this but...

MCCONNELL: Oh we've got plenty of conversations. But I must say I'm disappointed after two months the president has not governed in the middle as I had hoped he would. But it's not too late. He's only been in office a couple of months.

Still, before him are the opportunities to deal with us on a truly bipartisan basis, given the debt that he would run up if we passed his budget, a likely place to go would be entitlement reform, the Social Security, Medicare and Medicaid are all unsustainable in the out years.

We all know they need to be fixed. Senator Conrad who was on your program earlier, and Senator Gregg have a proposal for a base-closing type procedure that could give us a chance to do something about our long-term debt, these massive unfunded liabilities that we have down the road.

So I haven't given up on the president. I've been disappointed in the first two months.

KING: All right. Senator Mitch McConnell, the "Last Word' here today. And we will have you back many times. Thank you, sir, for joining us.

And up next, we'll take you to St. Louis, Missouri, where mass transit cuts are leaving many of the area's residents stranded.


KING: In a tough economy, state, cities and counties across the country from coast to coast face tough budget choices. Among the cuts that are being made, mass transit funding.

These dots on the map tell you if it's yellow there have been service cuts, if it's green there have been fare increases. The purple is service cuts and fare increases and the lighter pink, which you see over here, means job losses as well.

It's a big issue. Cities and counties figuring out how to get people to and from work, slashing services, eliminating routes. It hurts everyone, but especially those who can't drive on their own.


KING (voice-over): Stuart Falk is first up the lift. Wife, Dianne, next. Strapped in for a 45-minute, three-day-a-week commute.

UNIDENTIFIED MALE: All right. Eight dollars, thank you.


KING: That takes them to the gym and the community theater group. It is their lifeline, and it is being eliminated, effective Monday.

S. FALK: To be in prison. That's what it's going to feel like. It's going to feel like being punished for something we didn't do, being held back from the things we love, and at no fault of our own. It's going to be suffocating.

JEAN MCPHERSON, STUDENT: A lot of people are going to be in a bad situation.

KING: For 20-year-old Jean McPherson, Monday morning means horrible choices as she juggles work, an infant, and going back to school to get her high school diploma.

MCPHERSON: I'm not going to be able to get to my destination. So I might have end to up losing my job or not being able to take my daughter to day care.

KING: Money is short, so is her patience.

MCPHERSON: So I'm trying to get a car, but a lot of people in St. Louis, you know, they can't afford it, especially with the recession that we're in. You can't afford a car, so that's why you use public transportation.

KING: Metro faces a more than $50 million budget gap, two dozen bus routes are being eliminated, others shortened or put on less frequent schedules. Light rail is also being cut back, leaving riders in the working class community surrounding St. Louis like Darron Berryl, asking, why me?

DARRON BERRYL, COMMUTER: Most definitely the little guy does get screwed in the deal.

KING (on camera): So how will you get around losing this bus route, which is the direct route?

BERRYL: I really don't know yet. I mean, I really haven't come up with a plan.

KING (voice-over): The funding gap has local roots. St. Louis County voters rejected a modest tax hike to help the metro system. Local officials like County Executive Charlie Dooley thought it would pass, but say voters suddenly got stingy just before the November election as the stock market tumbled and Washington bailed out big financial firms.

CHARLIE DOOLEY, ST. LOUIS COUNTY EXECUTIVE: This entire community is going to be impacted and I don't think we realized it at the time that we had this vote. It's about jobs. It's always about jobs. And if you don't have public transportation, how do you create jobs, how do you attract businesses to move to St. Louis to improve our workforce?

KING: To Dooley, the metro shortfall is a perfect use of some of the $150 billion in transportation spending called for in the Obama stimulus plan.

DOOLEY: We asked about it, they told us we can't do it.

KING: Mass transit slice can be used to buy new buses or to build new rail lines, but it cannot be used for operational expenses, like keeping existing routes in service.

DOOLEY: No, I don't think that's right. Of course that's not right. I mean, at the end of the day, it's about creating jobs and opportunity. That's what public transportation is.

UNIDENTIFIED MALE: It comes down to money.

KING: Sixteen years experience protects John Crossland (ph) from the 500 jobs metro is slashing along with its services.

(On camera): That has got to be tough.


KING: In a bad economy to be.

UNIDENTIFIED MALE: Yes, it does. That is tough.

KING (voice over): The Falks, confined to wheelchairs is because of multiple sclerosis, say they worry about those jobs.

DIANNE FALK, SUBURBAN ST. LOUIS RESIDENT: And that doesn't seem like what Obama wants.

KING: As much as losing their link to the city and the activities that ease their struggles.

S. FALK: It shouldn't be this way. I never realized before how delicate our lives were.


KING: Tough time for a remarkable couple and others just like them.

Remember, we'll be here again next Sunday and every Sunday at 9:00 a.m. Eastern for the first and the last word in Sunday talk. Until then, I'm John King in Washington. Have a great weekend.

"LARRY KING WEEKEND" begins right now.