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Obama to Address Joint Session of Congress in a Week; California Wildfires Continue to Burn

Aired September 2, 2009 - 16:00   ET

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


SUZANNE MALVEAUX, HOST, THE SITUATION ROOM: Thanks, Rick. Happening now. Breaking news. The White House reveals a special weapon in the health care battle. We are told that President Obama wants to snatch back momentum so he'll do something dramatic.

And land of the rising blood red sun. Eerie colors and chaos in California. That massive wildfire grows. Wait till you hear what is now helping fire crews.

And they swallowed paper to protect secret work and feared imprisonment never to be heard from again. Two journalists freed from North Korea detail their hostage hell. For the first time you'll see the exact route, where they were caught.

Wolf Blitzer is off today. I'm Suzanne Malveaux in CNN's command center for breaking news, politics and extraordinary reports from around the world. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

MALVEAUX: Breaking news.

We are learning that President Obama is set to make a dramatic move. He's going to address the joint session of Congress on September 9. Now, that's exactly one week from today. And it appears that the president is determined to hit the reset button on the bruising debate over health care, and not wanting to give any more daylight to his critics.

Now, we're following this development from several sides.

Our CNN's Dana Bash, she is standing by.

But I want to go straight to senior White House correspondent Ed Henry.

Ed, what's the sense of what the president is going to talk about when he goes before Congress?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Suzanne, as you said, this is dramatic. This will be the president's second speech to a joint session of Congress this year alone. Back in February, it was -- that speech was all about the economy. This one, of course, will be trying to sell health care reform.

Bill Clinton used this very weapon before in September 1993. Of course, that did not work out for him. And this White House is hoping, though, that they can use this tool to really grab the nation by the lapels and get a lot more specific than the president has been before. I'm told by top aides the president has been considering this option for several weeks. He finally gave the go-ahead in the last couple of days that it's time to use this option.

There have been a series of top-level meetings here at the White House today and yesterday among staff to figure -- figure out exactly what the president is going to say.

And I'm also told that next Tuesday afternoon, the president, the day before the speech, is going to host Speaker Pelosi and Senate Majority Leader Harry Reid here at the White House Tuesday afternoon to kind of run through the final details with them.

But what we're hearing right now is that the possibility of a public option is not completely off the table, but it's becoming less and less of an option right now, because they realize the political reality, that it would be very hard to get a public option through the Senate right now -- Suzanne.

MALVEAUX: And, Ed, there's some new information about a key Republican senator who is critical to this debate. What do we know?

HENRY: Yes, very interesting.

My colleague Dana Bash and I have learned from a source, each one of us, that this White House right now is very quietly in serious conversations with Republican Senator Olympia Snowe, a key moderate. She is basically the last Republican out of those gang of six senators who have been negotiating, really the last Republican that has an open line to this White House right now.

What we're hearing that she's talking about with White House staff is sort of a scaled-back bill that would focus on insurance reforms that both sides could agree to, but would not have a full public option, instead, would have a so-called trigger. What that means in layman's terms is basically that the insurance companies would have a couple of years to make some dramatic changes.

If they do not make those changes, then a public auction -- option would be triggered. So, it would be used down the road. They would hope that this would appease liberals by saying it's not completely off the table. And the big hope is that this could bring along another moderate Republican, like maybe Susan Collins of Maine, some conservative Democrats, like Ben Nelson and Mary Landrieu in the Senate, who don't want a public option, but would sort of potentially be open to a trigger like this.

Very interesting, this is going on fast and furious behind the scenes right now -- Suzanne.

MALVEAUX: I want to bring in our own Dana Bash, a senior congressional correspondent.

You have been engaged in these -- in talks with sources. Tell us what you're hearing.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, just to confirm what -- what Ed was saying, I talked to a source familiar with discussions between Senator Snowe and her staff and the White House.

And I was told by this source that those discussions have really stepped up this week over this idea. It's interesting. This is an idea that Senator Snowe pushed maybe as long as six months ago. The concept, as Ed pointed out, would be not to have a public option unless market reforms wouldn't work out.

But she didn't push it in these bipartisan talks she's been engaged in -- is because other Republicans involved, they simply didn't like the idea. But the basic gist, from a policy perspective, Suzanne, would be to say, look, we would put reforms in place that would say, look, you can't -- insurance companies can't push back on people because they have preexisting conditions, that market reforms, they would say, that people have to have insurance.

And the idea and the hope with this idea -- with this plan would be that that would create competition, create competition that would make a government option unnecessary. But, you know, they would put in place this trigger, if down the road, that didn't -- that didn't happen. So, this is very interesting that the White House is reaching out to Senator Snowe, because, as Ed pointed out, she is perhaps one of the few Republicans who the White House thinks that they can deal with to get the bipartisan label on anything that they deal with down the road.

MALVEAUX: And, Dana, why do White House officials believe that this -- this option from Senator Snowe would be well-received, as opposed to some of the other things that have been put on the table?

BASH: More and more recently, we have heard from conservative Democrats, especially in the Senate, Senator Mary Landrieu on "STATE OF THE UNION" on -- on Sunday, and even Blanche Lincoln, the Democrat from Arkansas, told home state reporters yesterday that they simply don't like a public option.

But many Democratic -- in the Democratic leadership and at the White House believe that something that is short of a public option, like what Senator Snowe is talking about, market reforms, making sure that insurance is affordable and accessible, that might be something that -- that some of these conservative Democrats in the Senate and those Blue Dog Democrats we talk with about in the House, that they could potentially go for something like this.

MALVEAUX: And, Ed, I want to go quickly back to you here.

How would he actually sell this to the Democrats?

HENRY: That's the big question, because, just yesterday, Speaker Nancy Pelosi again told reporters that she cannot pass a bill in the House without a public option, that liberals have to have a public option. What I'm told from people advising this president is that, basically, if they have to do this and they have go down this road, which seems more likely, they are going to go back to Speaker Pelosi and basically say, look, it's either sign on something that's in the middle, and we will come back later and try to finish this off next year, or get nothing at all.

And that could be a disaster for Democrats at the polls next year if it looks like they got absolutely nothing and they failed. So, they're going to try to sell it to Pelosi and the liberals by saying, look, this is better than nothing -- Suzanne.

MALVEAUX: All right, Ed Henry, Dana Bash, thank you very much. Excellent reporting.

Well, one resident simply said -- quote -- "It looked like hell." He describes one scene after the massive wildfire in California reduced one whole homes into ashes. Officials even found dogs apparently left in cages and burned to death. Disturbing scenes are playing out throughout the fire burning north of Los Angeles.

It is scorching thousands more acres, coloring the sun bloodred and the skies over L.A. an eerie gray haze kind of color.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: The station fire here has 140,000 acres burned so far. Twenty-two percent is contained. Now, that doesn't look like much, but let me tell you, it's a great improvement over the 5 percent that I just saw the last time that I was here, just two days ago.

Ninety-two structures have been destroyed. Twelve thousand five hundred structures are threatened. And then 1,800 homes have been evacuated.

(END VIDEO CLIP)

MALVEAUX: Well, good weather is giving crews a bit of a break. So what kind of work do these so-called fire strike teams have ahead? Well, our own Brian Todd talks to some.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT: Suzanne, we're here in Tujunga Canyon, one of the most active areas of this fire. You can see it burning on the hillside behind me. It has reignited down into the canyon and threatening to come up this hillside where we're standing.

Going to pan over here, and can you see some firefighters here that are trying to prevent that from happening. Here is some of what they are up against, though. It is really just tinderbox-dry here. This ground is very, very dry.

The brush down here is like just, you know, very easily broken up, very easily ignited. It is the perfect condition for a fire to spread very, very quickly.

We have spent a lot of time with strike teams that are moving around these areas, trying to protect structures, trying to protect homes. They have had a lot of success. More than 20 percent of this fire has been contained. Still, more than 140,000 acres have been burned.

We're also going to have a lot more detail and insight into what these strike teams do to prevent houses from burning, to prevent it from spreading further from areas like this canyon.

All that is coming up later in the show -- Suzanne.

(END VIDEOTAPE)

MALVEAUX: All right, thank you very much, Brian.

Well, Jack Cafferty is in New York with "The Cafferty File."

Jack, good to see you again after a couple days.

JACK CAFFERTY, CNN ANCHOR: (AUDIO GAP) fairly soon.

It's estimated between 30,000 and 90,000 people in this country could die from the swine flu this year. That's scary stuff. True, in an average year, about 36,000 people die from the regular flu, but this has the potential to be much, much worse.

Homeland Security Secretary Janet Napolitano says the best things people can do are simple things. Wash your hands often. Cough into your sleeve. President Obama says he doesn't want anybody to be alarmed, but he does want people to be prepared. This includes families and businesses making plans in case relatives or co-workers catch the virus and need to stay home.

Swine flu cases are expected to pick up again just as the school year starts, and possibly peak in mid-October. A vaccine is being tested, but it's not expected to be available until at least mid- October.

Children and young adults are expected to be at the greatest risk of this stuff. This thing has Americans' attention now -- a CNN/Opinion Research Corporation poll showing 39 percent of those surveyed are concerned that they or someone in their family are going to get swine flu, and that's double the number who felt that way in May.

The poll also shows, most Americans are confident in the government's ability to prevent a nationwide epidemic, and two-thirds say they plan to get vaccinated, but, again, the vaccine not available until probably mid-October. So far, there have been 550 deaths in the United States from H1N1, or swine flu.

A scientific panel recently said -- this is a scary number -- recently said it's possible that anywhere from 30 percent to 50 percent of the population could catch this stuff. Fifty percent of the population would be around 150 million people. That sounds like a huge number to me, but, hey, I just look this stuff up and pass it along.

Here's the question: Will the fear of getting this swine flu change your daily life this fall?

Go to CNN.com/caffertyfile and post a comment on my blog.

Fifty percent of the population...

MALVEAUX: That's huge.

CAFFERTY: ... that's a staggering number.

MALVEAUX: Yes. I'm taking vitamin cocktails, hoping I'm not going to get it, so we will see.

CAFFERTY: Just vitamin cocktails, Suzanne?

MALVEAUX: Vitamin cocktails, yes.

CAFFERTY: That's all?

MALVEAUX: We will -- we will see how that goes.

CAFFERTY: No other cocktail?

MALVEAUX: No, no, not yet.

CAFFERTY: OK.

(LAUGHTER)

CAFFERTY: All right.

(LAUGHTER)

MALVEAUX: Thanks, Jack.

Views on the economy from an interesting perspective -- what do people in President Obama's home city think about job creation and loss? Our Ali Velshi talks to people in hard-hit areas.

Also, could officials have caught the man who caused a massive financial fraud sooner? Regarding Bernard Madoff, a watchdog group has a scathing assessment of the group that is supposed to prevent what Madoff did.

And they are supposed to help protect a world-famous New York City bridge. Well, wait until you see what two guards were actually doing. They have been severely punished.

(COMMERCIAL BREAK)

MALVEAUX: It's the city that launched President Obama's political career and the city he still calls home, but amid a bruising economy, how do the people of Chicago feel?

Well, CNN chief business correspondent Ali Velshi, he has been traveling the country on the CNN Express, gauging the opinions of people like you. And he has more from Chicago.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Suzanne, residents of the South Side of Chicago often find themselves reported on because of the high crime rate in the area.

We decided we would go and talk to them to find out what it is they were concerned about when it came to the economy. Everybody there equates the crime situation with poverty and poverty with joblessness. Here's what they told me.

Has the area, do you think, been hit disproportionately by the recession, or are things tough like they have always been here?

UNIDENTIFIED FEMALE: I think they are tougher. They are tough, whenever you see the statistics go up at least 10 points for blacks in areas of unemployment. It has been that way.

UNIDENTIFIED MALE: My income is -- is stagnant. And I definitely have to make an adjustment to increases. So, a small amount is coming in. A large amount is going out.

UNIDENTIFIED MALE: I think it's improving.

UNIDENTIFIED FEMALE: And it's going to get better. I believe that.

UNIDENTIFIED FEMALE: Well, if I listen to what the reports say, it's making somewhat of an upswing. But, in terms of my personal life, it's -- it's kind of cramped. You don't feel as comfortable.

VELSHI: This area has had a lot of poverty for a long time. Do you think, if the economy comes back, like you think it might be coming back, will it help people in this area as well?

UNIDENTIFIED FEMALE: It would help everyone -- first of all, jobs. We need jobs.

UNIDENTIFIED FEMALE: You can notice it as you right the L. There's not as people -- many people on the L. going to work. So, the jobs are needed.

UNIDENTIFIED FEMALE: They need just to help the South Side, period. That's why you have got all these people out here just doing what they are doing, you know, a lot of crime, because the economy is so bad, man, I mean, people is, like, is getting hungry, you know? I mean, hungry, you know?

Speaking for me, you know, I'm not -- I'm not afraid to tell you that I have experienced the lifestyle before. But, like, you can always come out that lifestyle. But it's hard to come out when you can't find no job. VELSHI: Suzanne, there was a certain optimism amongst the residents of the South Side of Chicago about the economy. A lot of people are feeling that perhaps the worst is behind them.

But they did emphasize it was going to take a long time for this economy to fully recover.

We're headed into Wisconsin now for the next leg of our journey -- Suzanne.

MALVEAUX: Thank you, Ali.

Well, the warnings signs were there, but a new report says that the Securities and Exchange Commission never took basic steps that could have uncovered Bernard Madoff's massive Ponzi scheme.

Our CNN senior correspondent Allan Chernoff, he is joining us live with some of the details.

And, Allan, what else is in this report? What are we learning?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Suzanne, the inspector general's report says that the SEC had reliable tips all the way back to 1992, tips that Bernard Madoff may have been operating a Ponzi scheme, but the inspector general says the SEC never really followed up.

Let's quote a little bit from the report. He says, "A thorough and competent investigation or examination was never performed." And there were actually five such investigations or examination -- quote -- "At no time did the SEC ever verify Madoff's trading through an independent third party, and, in fact, never actually conducted a Ponzi scheme examination."

These were critical failures, because Bernard Madoff confessed that he never actually was trading stocks for his clients. He said so, at least since the mid-'90s. And he is now serving a 150-year term for all those violations, for operating a massive fraud that cost investors tens of billions of dollars -- Suzanne.

MALVEAUX: So, Allan, what is the SEC's response to the inspector general's report?

CHERNOFF: Well, the current SEC chair, Mary Schapiro, who took office after all this broke, concedes, this is a major black eye for the SEC. She says that the agency missed numerous chances to discover the fraud. And she says the SEC has taken steps to toughen up its investigations and to use more experienced examiners.

The SEC concedes that, indeed, in many cases, the examiners just didn't do their job properly

MALVEAUX: OK. Allan, thank you so much -- Allan Chernoff.

Well, two guards on the George Washington Bridge between New York and New Jersey were fired, after a cyclist snapped photos of them asleep on the job.

Let's go to our Abbi Tatton.

And, Abbi, you have got the evidence to prove it.

ABBI TATTON, CNN INTERNET REPORTER: Right.

This is 10:00 a.m. Monday morning this week. Take a look at this photo, a guard in the booth, clearly a tiring morning, his chin resting in front of him. And there's another one. This is a rush hour from a Wednesday in August, clearly another busy morning for these guards.

These photos were posted to the New Jersey local news Web site Cliffview Pilot by a bicyclist who says he was repeatedly seeing these guards asleep on the job, so he took along his camera because he decided he wanted to do something about it.

This is the bridge that's a major artery in and out of New York City, and also a landmark that has been long cited as a potential terrorist target. The Port Authority that operates the bridge says two guards have now been fired, and they are encouraging members of the public to keep sending in reports or photos if they see something out of the ordinary.

MALVEAUX: Are there other agencies that are actually asking people to -- to make these kinds of reports?

TATTON: It was just this summer when we were talking about here in Washington, D.C., on Metro. It was this YouTube video that appeared on Metro which seemed to show a Metrorail operator asleep at the switch. He was actually texting, which isn't much better. He was suspended.

And Metrorail was telling the public send in your reports then as well. So, sleeping on the job, texting on the job never the best idea, but now that everybody has a digital camera...

MALVEAUX: They are going to get caught.

(LAUGHTER)

TATTON: Absolutely.

MALVEAUX: OK. Thank you, Abbi.

Well, a disgraced former congressman freed from prison, but where is James Traficant now?

Plus, a story that has parents everywhere seething. What would you do if a complete stranger slapped your 2-year-old?

(COMMERCIAL BREAK)

MALVEAUX: Fredricka Whitfield is monitoring the stories that are coming into THE SITUATION ROOM right now. And, Fred, what are you following?

FREDRICKA WHITFIELD, CNN CORRESPONDENT: Hello to you, Suzanne.

Well, the world's largest drug-maker, Pfizer, is paying the biggest health fraud settlement in Justice Department history, the price tag, $2.3 billion. That's over allegations the drugmaker marketed prescription drugs for medical conditions different than their approved use.

And ever thought about disciplining someone else's child? Well, someone allegedly did that at a Wal-Mart store outside Atlanta. And, according to authorities, a 61-year-old man slapped a 2-year-old girl several times in the face. Police say Roger Stephens told the girl's mother he would quiet the crying child if she couldn't. Stephens is jailed without bond on several charges, including felony cruelty to children.

And it looks like Diane Sawyer will get to sleep in soon. Beginning in January, the "Good Morning America" anchor will replace ABC "World News" anchor Charlie Gibson, who announced his retirement today. Gibson, who is 66 years old, has anchored the nightly broadcast since 2006. Sawyer now becomes the second woman to solo anchor a broadcast evening newscast, after Katie Couric -- Suzanne.

MALVEAUX: Hey, that's good news for her. It's good news for all of us, huh, Fred?

WHITFIELD: Good news for all of us. I like.

(LAUGHTER)

MALVEAUX: Good sign.

WHITFIELD: It's the kind of news I want to hear.

MALVEAUX: All right, thanks, Fred.

(LAUGHTER)

MALVEAUX: Well, a month of raucous town hall meetings on health care reform, have they changed the minds of Americans about the need for change? A new look at public opinion that might surprise you.

Plus, stunning statements from the elderly white supremacist charged in the Holocaust Museum shooting, as he speaks out for the first time.

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now: a second war raging in Afghanistan against drugs, a monumental effort to crack down on 90 percent of the world's opium production. We will take you to the front lines. Also, the chilling history of a man accused of a horrific crime -- long before he allegedly kidnapped Jaycee Dugard, Phillip Garrido was a predator. Now his first wife is breaking her silence. She calls him a monster.

Plus, they sparked outrage by taking billions of government bailout dollars, while handing out lavish bonuses -- now disturbing new signs that some rich executives are getting even richer.

Wolf Blitzer is off today. I'm Suzanne Malveaux. And you're in THE SITUATION ROOM.

The clock winds down on this make-or-break period in the debate over health care. Lawmakers prepare to return to Washington from a somewhat rocky recess. But have those rough town hall meetings changed your thoughts about the need for health reform?

Our Dana Bash, Gloria Borger, and Ed Henry are standing by, but I want to begin with CNN national political correspondent Jessica Yellin -- Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Suzanne, our new poll numbers show that there is still plenty of support for health care report out there in America, reform of some sort.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): You have heard the noise around health care reform.

(SHOUTING)

YELLIN: How much of a difference has it made? The latest CNN/Opinion Research poll shows it has not killed Americans' appetite for some kind of reform.

According to our polling, 53 percent of Americans want Congress to continue working on the bills they started before recess. Compare that to 25 percent who want Congress to start from scratch, and 20 percent who want no reform at all.

As for the president's reform plans, 48 percent like them. That's down only two points since early August,before the town halls began, but it's no longer a majority. Most of those polled say the town halls had no effect on their views about health care reform at all.

Now, it's not all good news for the White House. Most say they would feel more secure with the current system than with the president's plan. And the numbers are worse among seniors.

(BEGIN VIDEO CLIP)

MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: Stop bureaucrats from getting between seniors and their doctor.

(END VIDEO CLIP)

YELLIN: According to CNN's polling, a majority of senior citizens, 60 percent, oppose the president's reform proposals. There is real concern that Medicare recipients will be worse off if the current reforms pass. Perhaps the best sign for the Democrats is this message seems to be penetrating.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Without real reform, the burdens on America's families and businesses will continue to multiply.

YELLIN: Sixty-five percent say problems with the current health care system will eventually affect most Americans, and almost all Americans believe some reform is necessary.

(END VIDEOTAPE)

YELLIN: Now, here's something else to note. CBS News recently released a poll showing that a majority of Americans are confused about what's in the health care bills. Well, when we polled, we asked the question slightly differently. We asked if people understand the major points in President Obama's proposals, and a majority say yes, they do understand.

So, the difference here is folks may be confused about the details of the bill, Suzanne, but they get the general thrust of the debate on health care.

MALVEAUX: I think that's how we all feel about it at this point, trying to work out the details here.

Gloria, I want to start off with you.

One thing that the polls were showing is that most Americans, they support this idea of this public option, but they also believe that the president wants the government to take over the health care system.

Well, how does that -- how do you make sense of that?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, in fact, 53 percent believe that Obama wants to take over the health care system, and 42 percent say no. And I think what this shows is that the Republican PR about President Obama being big government, big deficit, big spender, has really taken hold over the congressional recess. People believe that he wants big government.

YELLIN: But the one irony, if I can point it out, is that a majority of Americans in the same poll say they, too, favor a public option, so it does seem like there's a little bit of confusion about what the public option means.

BASH: I also think it's money, and it's spending, and it's how much it costs, because this is added on to, as we've talked about before, money for nearly $1 trillion for the stimulus, nearly $1 trillion for a bank bailout. So, it's about government spending, I think, maybe as much or even more than a government option.

BORGER: And so, people feel -- as you were pointing out, 65 percent feel, that they are going to be affected by it. They say we need reforms, but they are just a little worried about what it's going to cost and how it's going to affect them, because they feel that they have -- a majority feel they have access to health care, and they think their health care is quality.

MALVEAUX: I want to bring in Ed Henry real quickly here.

Ed, one of the things that we found in this survey was about 25 percent or so surveyed said that Congress should start from scratch.

Is that what the president is going to do in effect in the weeks to come?

HENRY: Well, it's interesting, because there's another poll number in here that says, "What should Congress do with these health care bills?" Twenty-five percent say pass it with few changes; 28 percent, pass it with major changes. Twenty-five percent, as you say, start from scratch. Only 20 percent though say stop working on health care.

What does that all mean, all those numbers? Only 20 percent is saying stop working, no more. Seventy-eight percent are saying we want something, either, you know, something that's already on the table, something with major changes. But the bottom line, 78 percent are saying we want something.

As Jessica was pointing out, the White House is banking on the idea that maybe they will want something rather than nothing, although the president has to be more specific. What is that something? Because they are not sold on what he has put out there yet, so that's why between now and next Wednesday night on Capitol Hill, he's got to get a lot more specific and figure out, here's what I'm going to finally present to the American people.

MALVEAUX: And Jessica, is that the public option or others?

YELLIN: Well, the president, I believe, and the White House are working on other ideas, what could be -- what they could get behind. It doesn't necessarily have to include a public option, I think, but I do expect the president will have much more detail in the coming weeks. We will know what president Obama stands for.

MALVEAUX: And Dana, what's interesting is we're seeing in the poll 60 percent of younger people approve of Obama's health care plan, where 60 percent of seniors do not.

What is this generational gap? How does he deal with that?

BASH: It's a huge problem for the president. I was just talking to a senior aide to one of the Blue Dog conservative Democrats in the House today, saying that every single day, this Democrat goes out and talks to people, and they hear more and more about fear from senior citizens that -- not just the so-called death panels, but more specifically their Medicare benefits are going to be cut. Because the reality is part of the way the House and Senate, the way that they are moving towards paying for some of these reforms, is by cutting things like Medicare Advantage.

So, that is a big concern, and it is obviously a big problem, because we're heading into a mid-term election where everybody relies on senior citizens to vote because, you know, they tend to do that.

BORGER: And that's part of the president's job when he speaks to a joint session of Congress on September 9th. Part of his job is to reassure people, to reassure senior citizens in particular, that the coverage they have got in Medicare in particular is not going to go away. It's just going to become more cost-effective.

BASH: Potentially get better.

BORGER: Right, potentially get better and reassure younger people who aren't so worried that it's going to be there for them when they get older.

YELLIN: On the other hand, because the debate has become so polarized in this way, if the president has very few cuts to Medicare, if it's a much less costly bill than the one we're discussing, the response, they are hoping, will be so positive, there will be such a sense of relief, that this senior vote will bounce back.

(CROSSTALK)

MALVEAUX: And Ed, real quick, does the president still want bipartisanship?

HENRY: Well, look, he keeps saying that he wants it, but the comments coming from his aides like Robert Gibbs in the last couple of days, beating up on Republicans like Mike Enzi, who really attacked the president in a Republican radio address over the weekend, suggest that both sides really realize that they are unlikely to have bipartisanship.

Instead, what I expect to see from the president next week as well is really reducing the price tag. As Dana was talking about, all this government spending, basically most of the billings have been around $1 trillion. What I'm hearing now is we're going to see a price tag much closer to $500 billion.

Still a lot of money, make no doubt about it. Five hundred billion dollars is a lot, but a lot smaller than $1 trillion.

MALVEAUX: OK. Thank you very much, Ed, Gloria, Dana, and Jessica. Thanks.

Well, you can keep up with the public perception, the public criticisms, all of the elements of this debate with CNN.com/healthcare. There you'll find the answers to your questions. .

Well, he is only the second member of the House since the Civil War to be forced out for unethical conduct. Now after seven years in prison, Ohio's James Traficant is free.

So what's next?

Also, praise for Attorney General Eric Holder and his investigation of CIA interrogation techniques from a surprising source -- former attorney general Alberto Gonzales.

Also, reporting from some of the most dangerous corners of the world. How do reporters get their story while protecting their own lives? Critical tricks of the trade revealed.

(COMMERCIAL BREAK)

MALVEAUX: He was a powerful nine-term congressman until he was ousted after his conviction on bribery and racketeering charges. Now, after seven years in prison, Ohio Democrat James Traficant is free.

CNN Deputy Political Director Paul Steinhauser has those details -- Paul.

PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Suzanne, James Traficant was convicted of bribery and racketeering and expelled from Congress in 2002. Before that, the nine-term representative from Youngstown, Ohio, was known for steering a lot of federal money to his economically depressed district.

(BEGIN VIDEO CLIP)

REP. JAMES TRAFICANT (D), OHIO: I cut my hair with a weed wacker. I'm just a son of a truck driver.

Forget this Congress business. I'm just a regular guy. And you know what? Look at my white-bottom pants, my boots, and my skinny ties, and I certainly haven't changed.

(END VIDEO CLIP)

MALVEAUX: That was Paul Steinhauser on Traficant's release.

For the first time, we are hearing from the elderly white supremacist accused of killing a guard at the U.S. Holocaust Memorial Museum in Washington. James von Brunn making some very surprising statements in his first court appearance today.

Our CNN's Kate Bolduan, she is here with the very latest.

And Kate, what did he actually say?

KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Suzanne.

Well, inside federal court this morning, James von Brunn, against the judge's and his attorney's advice, spoke out, saying -- and we'll show you right here his quote. He says -- this is actually a different quote that he had. We'll talk about that one a little bit later. But one of the quotes that he did say -- he said that, "I'm a United states citizen. And as a U.S. naval officer, I swore to protect my country. I take my vows very seriously."

Now, this is the first time, von Brunn appeared in court since being charged with the June shooting at the Holocaust Memorial Museum. Now, Suzanne, the 89-year-old World War II veteran, he did not explain those comments any further though

MALVEAUX: And tell us what happened in the court proceedings today.

BOLDUAN: Now, in the court today, the federal judge ordered a psychiatric evaluation of von Brunn to take place within 30 days. Now, it was either an exam or a delay that von Brunn seemed to not want, and he told the court, "Your Constitution guarantees me a speedy and fair trial," and you see it right there.

Now, he was also denied bail. Von Brunn faces charges that include first-degree murder. He is eligible for the death penalty if he is convicted -- Suzanne.

MALVEAUX: And we know that cameras are not allowed in the courtroom.

BOLDUAN: Right.

MALVEAUX: There was a sketch artist that was there. We see some of those sketches. But can you give us a sense of the tone and what it was like, his demeanor and that kind of thing?

BOLDUAN: We're all really interested, because it's the first time we've seen or heard him publicly since that shooting. Von Brunn appeared in the court before the judge today in a wheelchair, and we have some courtroom sketches that you can see, that you see him right there in the wheelchair.

Now, von Brunn, he's a known white supremacist. He had been hospitalized for months, having been shot in the face by security guards after allegedly opening fire at the museum and killing security guard Stephen Johns.

Now, I'm told by CNN producer Paul Corson (ph), who was in the courtroom this morning, that von Brunn had no visible wounds, and he actually spoke quite clearly, he said. Von Brunn's attorney did say in court that von Brunn had a hard time hearing. He said he attributed that to wounds that he had sustained possibly during this incident at the Holocaust Museum.

MALVEAUX: Sure. OK. Thank you, Kate.

BOLDUAN: Of course.

MALVEAUX: Well, will Ted Kennedy help Democrats in the health care battle, even in death? Well, wait until you hear what Senate Majority Leader Harry Reid says about the impact of Kennedy's passing. And Democrats say attention, Dick Cheney. You are wrong. And they have a new line of attack to respond to Cheney's criticisms of President Obama.

(COMMERCIAL BREAK)

MALVEAUX: In our "Strategy Session," praise from an unlikely source for Attorney General Eric Holder's decision to investigate CIA interrogation techniques.

Joining us to talk about that and more, Democratic strategist and former Hillary Clinton campaign spokesman, Mo Elleithee, whose company has health care clients, and Republican strategist Ron Bonjean, a former spokesman for House Speaker Dennis Hastert.

Thanks for joining us here in THE SITUATION ROOM.

I want to start off first -- obviously, this from the former attorney general, Alberto Gonzales, about Eric Holder's decision on these interrogation investigations. I want you to take a listen.

(BEGIN AUDIO CLIP)

ALBERTO GONZALES, FMR. ATTORNEY GENERAL: As chief prosecutor of the United States, he should make the decision on his own, based on the facts, and then inform the White House that this was what he had decided to do.

(END AUDIO CLIP)

MALVEAUX: I want to start off with you. I mean, is this surprising? What do you make of this comment?

RON BONJEAN, FMR. SPOKESMAN FOR DENNIS HASTERT: Well, it's a little surprising. Only three weeks ago, Alberto Gonzales said to the Associated Press that he wasn't in favor of Eric Holder conducting this investigation. And frankly, if I were the attorney general, I wouldn't want to have Alberto Gonzales sharing a foxhole with me right now. I'd rather have former congressman James Traficant in there than him, because he has gone through such scrutiny, and he had to resign from his position because members of Congress called on him to step down over the firings of the U.S. attorneys.

MALVEAUX: So, do you think he's being sincere or do you think he's flip-flopping because of his audience?

BONJEAN: I think he's flip-flopping. I think it's revenge politics.

I don't think he's very sincere. We're not sure what positions he has, but, you know, what the clear thing is that we have to look forward, like Obama says, and not backward. And quit talking about investigating the past and start focusing our efforts on keeping our troops safe in the field, keeping Americans safe at home, and focus on the real issue, which is Afghanistan. MALVEAUX: Mo, what do you think this says about the Bush White House? You had Cheney, just a couple of days ago, the former vice president, coming out and saying that he thought that the Holder decision, they were just playing politics essentially under President Obama, but now he seems in direct opposition to what Gonzales, his own former attorney general, is saying.

MO ELLEITHEE, FMR. CAMPAIGN SPOKESMAN FOR HILLARY CLINTON: Yes, there clearly isn't a whole lot of unity coming out of the former Bush White House officials. And I don't know that I ever thought I would say this, but I actually agree with Alberto Gonzales on this one.

It is a little ironic given the fact that he was so often criticized for politicizing the role of attorney general, coordinating too closely with the White House, that he would now take this position that it ought to be an independent counsel. But I think he's right. I think Attorney General Holder's done this the right way, and it is truly independent, focused on those people that overstepped the bounds.

MALVEAUX: Any idea on his motives from either one of you, a possible job at the Justice Department? Or what do you make of it?

ELLEITHEE: I think he probably knows that's unlikely.

BONJEAN: Yes, that's pretty unlikely. I don't think he -- I think he's still looking around.

MALVEAUX: I want to go to this new Democratic national ad here that's going after Cheney for criticisms of the Obama administration. I want you to hear this.

It's talking about enhanced interrogation techniques were absolutely essential. McCain says, "I think the interrogations were in violation of the Geneva Conventions and the convention against torture."

I understand we actually have some sound of this. I want you to listen to it.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, FMR. VICE PRESIDENT OF THE UNITED STATES: The enhanced interrogation techniques were absolutely essential.

SEN. JOHN MCCAIN (R), ARIZONA: I think the interrogations were in violation of the Geneva Conventions and the conventions against torture.

(END VIDEO CLIP)

MALVEAUX: What are the implications of this ad?

BONJEAN: Yes, this is bad politics for President Obama. And frankly, it's taking them down a road they just don't want to go. It's creating a huge problem for them that they are going to have to deal with as this investigation goes further.

You know, if a terrorist attack happens, God forbid, in the United States, this could end up being part of the reason why. We just don't know, but right now we're fighting -- we're fighting a war in Iraq and Afghanistan. We should be concentrating our efforts there, not looking backwards.

MALVEAUX: Mo?

ELLEITHEE: Well, look, given the lack of organized message coming out of the Republican Party, Dick Cheney continues to sort of be one of the leaders of the party, and continues to be one of the more active voices out there delivering some sort of consistent message. I think it makes sense that the DNC would focus on him. The fact that he's out there still delivering this tired old message that was so thoroughly rejected by the American public in 2008, I think it's a nice little reminder about what was at stake.

BONJEAN: I think it's wasted money. I think they are wasting their money. They're not going to move any voters in their -- in the Democrats' direction over this type of ad, and it's bad politics for President Obama to keep pursuing it.

MALVEAUX: Real quick here, "The Reno Gazette-Journal," Senate Majority Leader Harry Reid was asked about Senator Kennedy's death, how it affects things in the Senate. He says, "I think Kennedy will be a help. He's an inspiration for us. That was the issue of his life, and he didn't get it done," talking about health care reform.

Do you think it's an appropriate comment, and do you think it's accurate?

ELLEITHEE: Well, I think it was absolutely appropriate that Senator Kennedy is an inspiration to everyone, an inspiration in this health care debate. I think while his passing certainly was tragic and sad for so many people, if it does help remind people why -- what the cause of his life was and why it's so important to get health care passed, then I think that is a good thing.

MALVEAUX: Ron?

BONJEAN: I don't know how much an impact his death will have on the passage of health care reform. You know, the two groups on Capitol Hill Obama has to focus on is moderate Democrats and Nancy Pelosi, and the two groups that he has to focus on outside the beltway are seniors and Independents. They have to figure out the details of this plan. His speech next Wednesday is going to be critical in a high wire act.

MALVEAUX: Absolutely. OK.

Thank you very much, Ron, Mo.

Well, one resigned from office, the other admitted lying and cheating on his wife, but refuses to leave. What do Sarah Palin and South Carolina Governor Mark Sanford have in common? Wait until you hear what he says.

After capture, imprisonment and release, two American journalists break their silence about their hostage hell. Their details are chilling. We'll show you the exact route where they got caught.

And imagine selling your own kidney for thousands of dollars. We have unique details of what's become a profitable organ trafficking industry.

(COMMERCIAL BREAK)

MALVEAUX: On our "Political Ticker," President Obama plans to mark the September 11th terror attacks of 2001. The White House says he'll visit the Pentagon and the memorial honoring the 184 people killed when hijacked American Airlines Flight 77 slammed into the building. The president will speak as part of the event.

Embattled South Carolina Governor Mark Sanford says he knows how Sarah Palin feels. Like the former Alaska governor, he is facing an ethics investigation, but his stem from travels that came to light after he revealed he had a mistress in Argentina. Palin was cleared of most of the allegations that she faced, but she cited them as part of the reason for her resignation.

Sanford is ignoring growing calls for his resignation, saying that he's going to do what God wants him to do.

And you can add Caroline Kennedy to the all-star list of speakers lined for the upcoming AFL-CIO convention. She will be addressing the four-day gathering in Pittsburgh. That's along with President Obama, Labor Secretary Hilda Solis, and Pennsylvania's two senators, Democrat Tom Casey and Arlen Specter. The convention starts September 13th.

And former Boston Red Sox pitcher Curt Schilling says he's been contacted about running for Ted Kennedy's Senate seat in January's special election. Schilling says he probably won't run because, "I've got a lot on my plate," but he also is not ruling it out. Schilling is a Republican who campaigned for John McCain in last year's presidential race.

And remember, for the latest political news any time, check out CNNPolitics.com.

Well, Jack joins us again with "The Cafferty File."

Hey, Jack.

CAFFERTY: Did I hear you say that clown down in South Carolina, Mark Sanford, is going to do what God wants him to do?

MALVEAUX: That's what he says.

CAFFERTY: Yes.

MALVEAUX: He says God wants him to stay.

CAFFERTY: God and the rest of us want him to go away. I spoke with God a while ago. He said we need him to go away.

The question this hour, will the fear of getting swine flu change your daily life this fall?

Robin says, "I'm a registered nurse. My husband is a police officer. He tested positive for H1N1 last Thursday."

"My 2-year-old, 5-month-old and I are still well thanks to excellent personal hygiene. I kept my husband in our bedroom, used protective personal equipment every time I went in to care for him -- eight cans of Lysol, 20 bottles of hand sanitizer, and lots of chicken soup -- and we're all well."

"Wash your hands, cover your cough. We can survive this. We just have to pay attention."

Jim in New Orleans, "It sure has changed my daily life. I'm a primary care physician, and my daily life consists of a waiting room full of coughing, sick people."

Kate in Milton, New York, "To some extent, yes. I'm a substitute teacher. The more teachers who get sick, the more I'll be called in to work."

"If too many kids get sick, they will close the schools and I'll be out of work. You better believe I'll be getting the shots as soon as I can."

Ed in Rhode Island says, "Absolutely. When the public starts getting their swine flu injections in mid-October, the pandemic will begin, just as it did in 1976. I'm not afraid of the flu. I'm afraid of the vaccine."

Neil in Ohio, "I go to Xavier University in Cincinnati, Ohio. There are at least 110 current cases, individuals who are believed to be infected and have been asked to go home or are quarantined in university-developed isolation areas."

"Major university social events have been cancelled for a week since the major breakout. But other than that, my personal daily life hasn't changed and will not. Everyone here is reported to have mild to moderate symptoms, and those have already recovered say they feel final."

Finally, Ellen says, "Each and every year the flu comes around. People catch it and they may or may not die as a result. The only difference between this flu and other flu viruses is the attention this is getting from the media. I refuse to live in fear of a media event."

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

You mentioned Sarah Palin, too. Want to read a great piece? Pick up the October "Vanity Fair." Levi Johnston, is it, Suzanne?

MALVEAUX: Yes, that's right. We'll be talking about that.

CAFFERTY: Oh, yes. It's an unbelievable piece. I've read it, and he refutes almost everything she said for the last year and a half or so.

MALVEAUX: We'll be talking about that in the show, so, yes, we'll cover it all.

Thanks, Jack.

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