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Anderson Cooper 360 Degrees

Extreme Challenges - The Next Four Years

Aired February 07, 2008 - 23:00   ET


Nobody knows who our next president is going to be, but the challenges he or she will face are immense, perhaps unprecedented; the war in Afghanistan, the fight against terrorism, the war in Iraq.

More than 100,000 U.S. troops are still there, still fighting on the front lines. What options will the next president have?

Back home, there's the struggling economy to deal with. The housing market has collapsed, inflation is on the rise and there's fear we're already in a recession. There is also, of course, the environment and global warming.

The warnings continue with greater urgency about a threat facing not just the country but the world and future generations. How should it be addressed? How can it be? Tough questions, all.

Helping us look at the road ahead tonight, former presidential adviser David Gergen and CNN world affairs analyst, Fareed Zakaria. On this special edition of "360," "Extreme Challenges - The Next Four Years."

Iraq, probably the number one foreign policy issue of the presidency in the next four years, if not the number one issue overall. Whoever becomes president, they're likely to have 130,000 U.S. troops still on the ground in Iraq. In terms of strategy, what are the options?

FAREED ZAKARIA, CNN WORLD AFFAIRS ANALYST: What I think the next president is going to have to decide is, is our involvement in Iraq going to be a long-term one or not? Everything stems from that, because if you decide we're going to be in Iraq for 30 years, not the next three years, then you have a particular plan.

You try to figure out a way in which you can get your forces down to a manageable level, maybe 40,000, 50,000, set up some kind of bases, even though we'll never call them permanent bases. If you don't want to do that, then you have to solve the political problem of Iraq right now, soon to get out.

COOPER: Can you make that decision about whether you want to be there for 30 years or need to be there for 30 years? Can you make that decision until you know what the security situation really is or until you know what it's going to be, you can't really plan out 30 years down the road, can you? ZAKARIA: That's very true, but at some point or the other you have to decide is this a 130,000 troop presence that is meant to in some way affect a temporary or permanent settlement that allows us to get out. Or do we envision a much longer commitment where we're going to be there, we're going to be assisting, we're going to be training the army.

It just means that you go down two very different sets of policy proposals politically. And I don't think -- if you look at the Democrats, I don't know that the Democratic Party and the Democratic candidate has made up his or her mind as to where they'll be on that. I think with the Republicans, we're pretty sure they'll say, "Let's stay the course."

COOPER: Right, John McCain has now famously said if it takes 100 years commitment along the lines of South Korea, so be it.

ZAKARIA: But 100 years at a 130,000 troops is impossible. Five years at 130,000 troops is probably very, very difficult. So even he would have to decide, "Ok, what do I do politically to again this down to a manageable level?"

COOPER: Even the Democrats who were talking about pulling out -- there are some of them talking -- giving 60 days, 90 days, 180 days, whatever. But some of them recognize or say, "Look, we still have to figure out some level of commitment. We now have this huge embassy, what do we do with that? People need to guard the embassy. People need to be able to react to events."

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: If Democrats are elected, they're going to face a serious dilemma in Iraq. It's going to be one of the toughest problems they face and one of the toughest presidencies I think we've ever faced.

COOPER: Because of what they have said?

GERGEN: Because of what they believe. What they believe, they believe we ought to start coming down. We ought to start significantly reducing the numbers and leave behind some smaller contingent force to deal if something erupts.

But here's the dilemma. You've promised that you're going to get out. Iraq has been on simmer. George Bush is going to give you something that looks like it's doing better.

You know, Colin Powell has long argued this is like putting a lid on a pot. The American presence is like putting a lid on a pot. And you can keep it on simmer for a long time. Once you start taking the lid off, the pot can boil over.

So if you're a Democrat, you come in there, you commit to coming out -- getting out. You start taking the lid off that pot, and if it starts overflowing, erupting, you suddenly become the president who lost the war. You've become the president who lost Iraq. And that can destroy your whole presidency. So how you do this is critical to the future of your entire presidency. It's not just about Iraq; it's about your political power, your political capacity to govern at home on any number of issues, which are in some ways, I think Fareed now would agree, in some ways are far more important than Iraq. But Iraq is the immediate issue.

COOPER: Do we know? It could very well happen that they pull out and the Iraqis step up to the plate. The Iraqis decide, "All right we have to now manage this and either launch into full-scale attacks against each other or come to some sort of political reconciliation."

ZAKARIA: There's good evidence that when we have threatened withdrawal, when we have threatened to pull back, they have stepped up to the plate.

But I think it's not as simple as that. We would also have to do a major political and diplomat offensive. We would have to start talking to the neighbors. We would have to start pushing some of these Sunni groups to make up with the Shia. It's just going to be a very, very time intensive and complicated process, no matter what you do. Whether you stay there or whether you get out.

GERGEN: But there is a significant difference between the two parties. A John McCain presidency would look very different in Iraq. It would look very much like George W. Bush in his policies; it will be a continuation of those policies. And there's no question that the Democrats just believe that Iraq is ultimately unwinnable. They would like to minimize the losses and get out and deal with other issues.

But what they would try to do as Fareed suggests is make sure the neighborhood is fairly stable. They would do as much as they could to keep it stable there but make sure this doesn't spread beyond. But they do not want to be bogged down in Iraq and the country doesn't want to be bogged down. And after all if a Democrat wins, that person is going to have come in on a promise to get out of Iraq. They're going to get out.

COOPER: Are there encouraging signs -- clearly, on the military side, you know, fatalities are down. It's a calmer region. You see parts of Baghdad people walking around that you haven't seen before. But on the political front, has there been real progress. Has the surge worked?

ZAKARIA: There have been incremental steps. But what I'm most struck by is that if you look at the Sunni militias, they are maintaining their arms, their command structure, they've just stopped fighting.

One of the things we need to understand is the surge worked not because we defeated these folks in battle. It's because they switched sides. They are entirely intact and they could start fighting again.

GERGEN: The next president is going to inherit a heck of a lot of issues, of which Iraq is going to be one. It may be equally important to face some sort of a hangover from this economy. You got a recession that sort of rolls into your first term, I can't tell you how many -- other than things that knocks over, how many other hopes and plans that you have for health care reform or whatever it may be that that could easily wreck if you're not careful.

COOPER: The challenges for the next president are extreme as David and Fareed were saying. Iraq is just the starting point. Beyond Baghdad, there's the larger war on terror, Afghanistan, there's Pakistan, the country some consider to be a nuclear armed time bomb.

We're going to tackle those issues next in this "360" special "Extreme Challenges - The Next Four Years."


BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: We've got a whole host of global threats out there including Iraq. But we've got a big problem right now in Afghanistan. Pakistan is of great concern.

We are neglecting potentially our foreign policy with respect to Latin America. China is strengthening and if we neglect our economy by spending $200 billion every year in this war that has not made us more safe, that is undermining our long-term security.


COOPER: There's a new independent study that was just released, co-chaired by retired Marine Corps General James Jones and also former U.N. Ambassador Thomas Pickering. And they warned that Afghanistan could become the forgotten war over the last six years; that there's serious threat mostly because there are too few military forces and insufficient economic aid.

What has gone wrong there? What is the biggest challenge the next president will face regarding Afghanistan?

ZAKARIA: It's a huge challenge. This is now the central front in the war on terror, without any question. And the reason it isn't working is, in part, because we've done some things wrong. But largely, this place is a mess.

You're talking about the border lands between Afghanistan and Pakistan. This is hundreds and hundreds of miles of territory that has never really been settled or ruled by anyone. The British Empire was not able to pacify it.

COOPER: You say it's the central front of the war in terror; more so than Iraq?

ZAKARIA: Without any question.

COOPER: Because Al Qaeda has been, not defeated, but badly hit in Iraq?

ZAKARIA: Because Al Qaeda was always small in Iraq and was largely inconsequential in the sense of its global ambitions. Al Qaeda central has always been in Waziristan which is the area between Pakistan and Afghanistan; mostly in Pakistan. And it is here where you have also an alliance with a very powerful local force which is the Pashtuns in Pakistan.

So you've got local support. The area is a no-man's land or badlands where the Pakistan army doesn't find it easy to go. The Afghan army doesn't find it easy to go. We don't find it easy to go. So they're there, they're hidden. They can mobilize. They have local support. The area of Waziristan has 1 million men under arms.

COOPER: And the military was warning that they're stretched too thin.

GERGEN: They're stretched too thin. What's interesting about this commission report about Tom Pickering and General Jones is they're recommending as we bring troops out of Iraq, we send the troops to Afghanistan.

So you think, "Whoa, how long is this going to go on, why can't we get on top of this thing?" The president has already pledged 3,000 and they think we should go far beyond that. What they're arguing is look -- this is becoming there's a resurgence of violence, the Taliban is growing stronger again, opium growing is widening. There's more land in Afghanistan under opium agriculture cultivation than there is cocoa cultivation in all of Latin America. That's how big the opium growth is there.

You've got an extremely poor country that most Afghan people live on less than $1 a day, one of the poorest countries in the world and they're losing confidence in the future. The NATO countries, which have troops in there, are starting to say, come home. Only in the U.S. and the U.K do you find the population say, "Yes, let's continue supporting this."

COOPER: Critics of the Bush administration said the U.S. turned their eye of Afghanistan; turned their eye toward Iraq. Whether or not that's the case, at this point, this program is about the challenges moving forward.

What does the next president do? What can the next president do? You can't just send U.S. forces into Waziristan. Armies in the past have tried that and with disastrous results.

ZAKARIA: No, and the Pakistani army has tried that and it hasn't work so well. Look, you have to tackle the politics here. These people are supported by Pashtuns on both sides of the border. You have to cut deals with some of them to peel off some of the support and really go after the remaining bad guys.

In a sense, it's Petraeus' strategy in Iraq. What Petraeus did in Iraq was he said, "I'm going to tell the Sunnis, 'Any of you who want to deal with us and what to flip sides, I welcome.'" That leaves the small core of irreconcilables. And I'm going to go after those people and kill them or capture them. We need to do something similar, but that means making deals with people who look like fundamentalists. Karzai resisted doing this for two years, now he wants to do it in Afghanistan. Musharraf resisted doing it, now he's trying doing it.

The problem is, it may not work. At the end of the day, there isn't a purely military solution to this problem. You've got to use the military but you're going to have to figure out some way to get around the politics of this area.

GERGEN: Anderson, this time I agree. There is a couple you have to do as an incoming president. First of all, you have to make it very clear to the public how tough the situation is. So there's a reality check. The Bush administration has sort of glossed over this.

COOPER: And essentially, every soldier on the times I've been embedded with troops in Afghanistan, they all said the same thing which is they come home for their two weeks of R&R, they're on the plane and every soldier has had the same conversation. Someone says where are you serving? They say Afghanistan, and the person says, "Oh, well, at least you're not in Iraq," as if Afghanistan is a walk in the park.

GERGEN: Exactly. What you as a new president have to make sure is, that if this thing gets a lot worse, all the blame doesn't come to you, so you lose on your political stand.

Being president, it's a lot about making sure you have political capital to get the big things done and you don't want to spend it all in Iraq or Afghanistan if you can possibly do it.

The other thing the president has to do, it seems to me is, as you move toward a counterinsurgency strategy as Fareed is suggesting which I think is right, you probably have to lower your sights about what's possible just in Iraq and Afghanistan.

We are not, and the new president does not want to get sucked into nation-building and trying to make Afghanistan into some beautiful jewel of democracy. What the new president wants to do is see if you can stabilize the place and make sure it's not a center of terrorism to threaten us.

ZAKARIA: Absolutely. One more extreme problem with Afghanistan, we have outsourced a lot of this war. We've outsourced a lot of the war in Afghanistan, which I believe is the central front, to countries that have neither the capacity nor the training nor the will to engage in the really tough war fighting.

GERGEN: When the new president comes in, it's very important to be very clear about what your goals are. And then you can come up with what your strategy is, to fit the goal. But don't come in and just sort of start doing day-to-day kind of decision making.

You have to reassess what are we trying to get accomplished here? What is our endgame here? And then build a strategy to meet that. And then build the tactics behind that to implement the strategy. And it's not clear at this point what we're trying to achieve in Afghanistan. I don't even think it's clear what we're trying to achieve in Iraq.

COOPER: Dirty bombs and nuclear ambitions, Iran, North Korea, Pakistan; real concerns about nukes. What the next president can and can't do to try to curtail these threats - that, of course, and also the economy ahead on this special edition of "360 - Extreme Challenges - The Next Four Years."


TOM FOREMAN, CNN CORRESPONDENT: I'm Tom Foreman. We'll return to "Extreme Challenges - The Next Four Years" in just a moment.

But first - this "360" bulletin.

Mitt Romney gave up his quest for the White House today. Speaking at a convention of conservative political activities, Governor Romney announced he's suspending his campaign in the interest of Republican Party unity in this time of war. He did not endorse any of his rivals for the GOP nomination. Congress has finished work on an economic stimulus package that includes tax rebates of $300 a person and even more for married couples with children. This evening, the house approved a more generous Senate version of the bill which also makes millions of social security recipients and disabled veterans eligible for the rebates.

A fiery, bloody end to a nearly 12-hour police stand-off in Los Angeles; officers shot and killed a gunman responsible for the death of four other people including a SWAT officer. The fire started toward the end of the standoff. Some of the bodies were badly burned.

I'm Tom Foreman. Those are the headlines. "Extreme Challenges - The Next Four Years" continues in a moment.


COOPER: Another big challenge for the next president of the United States, Iran. What are the options on the table in terms of relating to Iran?

ZAKARIA: At this point, because of the national intelligence estimate on Iran, which said that in the past it appeared that Iran was susceptible to pressure and that when they actually dismantled that program for a short period of time. Because of that national intelligence estimate, the pressure to bomb Iran is off. But the problem of Iran continues.

Iran is acquiring nuclear energy and it will have the capacity and the knowledge to make nuclear weapons. What the president can do at this point is sanctions. But sanctions aren't working; everyone knows they're not working.

So I think what the next president confronts is the awkward choice which is he has to decide whether to talk to Iran and to see if in some way a carrot-and-stick approach, that is using some sticks but also some carrots is going to work, or does he just keep rationing up the carrots with the full knowledge, because we've got 15 years of evidence on this, that it hasn't yet worked.

COOPER: Barack Obama has talked about talking to just about any foreign leader if the situation warrants it. Does it make much difference in terms of whether a Democrat or Republican gets into the White House regarding Iran?

GERGEN: I think it does. The Bush administration's view, and I think one that's supported widely by Republicans is, first they give up their nuclear ambitions and then we will talk.

The Democratic view is we'll sit down and talk about everything, including your nuclear ambitions and if you agree in the midst of talks to give up your nuclear ambitions and agree to give up terrorism, then we will recognize you as a country and we wont' push to topple your regime, we'll take you off our list of axis of evil and that sort of thing.

In other words, to go to Fareed's point, we would have both carrot -- we would have more sticks and more carrots under the Democratic approach but I think the Democrats would try to launch a diplomatic offensive. And that would be something you'd want to do from day one.

The larger question here is, that to go back to the national intelligence estimate that Fareed raised, it did not say that Iran was not trying to pursue nuclear weapons. It said it suspended a piece of its action. What appears is happening is we know there's a fuse burning in Iran as they move toward nuclear weapons. The fuse apparently is longer than we once thought it was, but it's still burning and it could blow up in the next president's watch.

You do not, as president, you want to avoid, if you possibly can as the next president, getting to the point where suddenly Iran is about to get a nuclear weapon. You'll be in a terrible dilemma about whether to use force or not.

ZAKARIA: And then, Anderson, remember there's events on the ground. The real challenge in Iran might well be that the Iranians have decided as a matter of national interest, national pride, that they would like to have nuclear energy; perhaps nuclear weapons, perhaps the break-out capacity. Maybe they'll keep the capacity to make the weapons.

If that's true, then no matter what we do -- the sticks, the carrots -- they didn't work with India, they didn't work with Israel, they didn't work with Pakistan. There are some nations that just feel for a combination of security reasons and national pride they just need the insurance that nuclear weapons provides.

If that's true, what is it going to look like in Washington? It's going to look like somebody lost Iran. GERGEN: My sense is we're talking here about Iran, about the nuclear proliferation issue which is transcendent issue; long-term transcendent issue. There are nine nations in the world right now who are thought to have nuclear weapons.

And we are about to enter a period when another ten nations could get nuclear weapons over the coming years. And we could be into nuclear anarchy in the coming years and it will be extremely dangerous, extremely destabilizing. And Iran is one of the lead candidates.

COOPER: Pakistan has nuclear weapons. They insist they're secure. Also there's the issue of North Korea. How does the next president deal with Pakistan and with North Korea on the nuclear issue?

ZAKARIA: This is precisely the challenge because Iran is, in a sense, not an isolated challenge. It is part of this package of countries and it is part of the great issue of nuclear proliferation.

The NPT (ph) treaty, the treaty that governs all this is breaking down. You just don't have anyone really adhering to it and the danger is that the more players you get, the more chances for leakage, of loose nukes, people buying this stuff. So we have to come up with a systemic -- a strategic approach that says these are the new rules of the game and we're willing to do something as well.

The original nuclear nonproliferation treaty said nobody else can proliferate. But in return, the countries that have nuclear weapons will make every effort to reduce their arsenals. We've done none of that.

A lot of people look at this as sheer hypocrisy. The United States with 9,000 warheads is going to countries and saying if you have one warhead, it will destabilize global peace. We have 9,000, don't worry about that.

GERGEN: That's why you're finding a growing coalition on both sides of the aisle here and overseas in favor of abolishing nuclear weapons and moving toward abolition.

That same nuclear nonproliferation treaty that the senate ratified some 40 years ago pledged to end -- get rid of all nuclear weapons. Ronald Reagan was talking about that. Henry Kissinger, who is the supreme realist, is talking seriously about this. So I think there's going to be pressure during the next few years to see if we can't reduce our arsenals, work with the Russians more closely on reducing theirs.

ZAKARIA: And remember this is not as difficult as people think it is. Sure you need to be a major country but nuclear technology is now 60 years old. It's the technology of black and white television and AM radios. This is old stuff now.

COOPER: Right, it's frightening. Let's turn our attention, when we come back, to the situation here at home. For a lot of Americans, the concern isn't so much overseas, it is right here; losing your home, losing your job or just sinking further into debt.

How can the future president stop the economic pain? Can the president do much about the economy at all? We'll put that question to David Gergen and Fareed Zakaria when tonight's 360 special, "Extreme Challenges - The Next Four Years" continues.


MIKE HUCKABEE, (R) PRESIDENTIAL CANDIDATE: All over our economy with unemployment up to 5 percent across the nation, that means there are a lot of families today that don't have a paycheck. If you don't have a pay check, it's hard to put groceries on the table and it's hard to pay the rent.

I think what Americans are looking for is somebody to be honest with them and straight with them. And tell them that no, it's not better and it's not going to get better unless we have some serious leadership in Washington that says that we're going to have to start having policies that touch the people, not just at the top but the people at the bottom and they feel like they're invisible to a lot of people in government today.



COOPER: David, there's a good chance that the next president will inherit, at the very least, a struggling economy. Fareed was talking about Iraq being the top priority. That may be true in terms of foreign policy, but overall, does the economy trump it?

GERGEN: You have this thing between the short-term problems that the president will face the economic front and the long-term challenges. The short-term is going to be the hangover that he's going to inherit from this year, this coming year.

If we have a deep and long recession, that's going to mean the next president is going to come in and have to do some things on unemployment, there's -- and the deficits are going to be huge. We're talking about the deficits shooting up to the $300 billion or $350 billion level this year. They were going down and now they're going back up.

I well remember when Bill Clinton came into office; he campaigned on health care reform, welfare reform and the like. But the first thing he had to do because the deficits were spiraling out of control. Bob Ruben came to him and said, "Mr. President, I know you want to do things for people on Main Street, but you have to calm the fears on Wall Street first. And you have to cut spending and raise taxes and the like.

And the new president may well be put in the position of having to come up with a short-term economic plan for the next year or two. And that's going to require a lot of time.

The big thing of our time, it's a big movement of our time is that the center of gravity in the world, geopolitically and to a large extent economically is moving from the West to Asia; Moving from west to east. And the new president is going to have to face that and deal with it.

COOPER: And what does that movement mean for American workers?

ZAKARIA: I think what it really means is that you have a world in which everyone is playing the game for the first time. We've never had such a world. We've been the dominant players. We've known that 2/3 of the world really wasn't part of this global economic capitalist game. All of a sudden they're all playing and they're playing to win.

COOPER: As president, how do you do actually try to do anything long-term? If in the White House you're dealing with these day-to-day realities and you have the politics and trying to form a consensus on things, are we really set up to govern long-term? It seems like most of the things that we focus on are very short term.

GERGEN: And the problem recently has been we've been in this frenzy of primaries where everybody is scrapping to get a little bit ahead. At some point, two nominees are going to emerge. And at that point they've got to step back from their campaigns and figure out what is it I'm trying to accomplish as president and use the next three, four or five months as a fertile time to really begin to develop a serious agenda.

I don't think we've heard from these candidates just how tough it's going to be and what the tradeoffs are going to be. We need to hear that. You need to do that now not once you get in the presidency.

ZAKARIA: And I think they have to do it now because the central challenge that the American system faces is exactly the one you highlighted, Anderson, which is can you take short-term pain for long- term gain? Can we figure out ways -- if you look at all our problems, whether it's dealing with health care expenditures, fixing social security, dealing with energy, all of these are going to involve some kind of short-term pain.

COOPER: Which is something that few in my generation have really been asked to do. I mean, you look back at World War II and you look at the entire change-over of society and people working in factories for the war effort, people are not asked to make those kind of sacrifices.

ZAKARIA: And the political system has become one where it's very difficult for that to happen. Even 25 years ago, David knows this better than I do, you became famous in congress because you reached across partisan lines, you forged a coalition and you got something done. That was difficult and had lots of compromises.

Today, the energy is in not getting things done, sticking true to your principles, saying, "I didn't give in." Look at what happened to the immigration bill; a perfect old-fashioned compromise that solved the problem broadly speaking. It got chewed up by the two wings of each party.

GERGEN: Right, and the next president has either take us up and get us to change what we're doing or the country is in serious danger of going into a downhill slide; and our standard of living and our standing in the world and all sorts of things. That's why this next presidency is so critical. There are so many big, tough calls to be made.

ZAKARIA: Let me give you one example of what David is talking about. For 100 years, the place in North America where they made the most cars was Michigan. Over the last three years that's shifted to Ontario, Canada.

Why? It's because car makers realize that if you have a job in Michigan, it costs them, the car makers, $6,500 in health care costs. You move that job to Canada because of Canada's health care system, they only have to pay $800.

It's a new world. And companies have these choices and these are American companies making these choices. So we have to figure out how do we offer a smart, competitive economy to the world so that we can thrive?

COOPER: And the issue of health care which Fareed just brought up is our next topic. Beyond the campaign promises, is it possible to have universal health care in America some of the Democrats say they want?

That's coming up as we continue our "360" special, "Extreme Challenges - The Next Four Years."


HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: I think we as Democrats have to be willing to fight for universal health care. What I have concluded, when I was looking at this, because I got the same kinds of advice, which was it's controversial, you'll run into all of this buzz saw, and I said been there, done that. But if you don't start by saying you're going to achieve universal health care, you will be nibbled to death.



COOPER: Health care is obviously an issue which tops all the lists of what people say should be a major priority for this next administration, more uninsured Americans than ever. And yet it would require a tremendous political capital expenditure by a president to get anything done on it. Is it necessary? Is it -- must they do it?

GERGEN: It's vital that we reform the health care system. The health care system is broken. How easy is it to fix? Well, every president since Franklin Roosevelt has looked at this. Many have tried, no one has succeeded. Most recently, the Clintons did not succeed in the '90s.

We have a health care system right now that it's not just a question -- the health care system is unraveling in many ways. We've had this private insurance, people can't afford it. The employers increasingly cannot afford it. It's only about 2/3 of the people who are under 65 are covered by the private health care insurance system.

Some are covered by Medicaid if they're poor and up to around 50 million are not insured. So we do have to deal, and we can. It's reasonably straightforward. Although getting from here to there politically to cover them is very hard.

Look what happened the last few months. California's Schwarzenegger thought he could get this done. He had a legislature that was very cooperative in trying to get statewide insurance for everybody and it went down.

COOPER: So this is really a key issue where the politics of it affect everything?

GERGEN: Oh, yes. Illinois, California, Wisconsin, Pennsylvania, this has failed in all of the states here in recent months. And it's failed continuously in Washington.

Anderson, again, what the candidates are talking about is only a piece of the problem. They're talking about the easy piece. The easy piece is getting people insured. The hard piece is how to control the cost. It's not clear that the money is being well spent. And these costs, as they go up and up and up, are going to become particularly dramatic now with the retirement of the baby boomers.

They go into Medicare and this is going to drive the cost of Medicare through the roof. That starts happening on the watch of this next president. The first wave of baby boomers start retiring in 2011 on the third year of the next president.

So the president has to deal with health care; has to get these costs under control. But it's a complex problem. It's not just about insuring people. It's not just about Medicare. You've got to reform the whole system and get the cost structure under much, much better control.

ZAKARIA: In a way, this is the most extreme challenge on the domestic front because it is the cost of health care, and particularly Medicare, that would truly bankrupt the United States.

We are looking at budget deficits now that are $300 billion, $400 billion. If you are not to reform the system, you're looking at budget deficits three, four, five times larger than that that are essentially, literally unsustainable.

COOPER: I was just reading the CEO of Starbucks is saying that his health care costs for his employees is more than they spend on coffee.

GERGEN: And he's very enlightened CEO. ZAKARIA: And you have the reality that any kind of real reform on the cost side involves rationing. Let's be honest, how else will you get the cost down? You give people insurance and you say you can't get MRIs every month or whatever it is. And that is politically very, very --

COOPER: That's for the next president. Obviously there's all these things on the president's desk. How do you get the ball rolling on health care? Hillary Clinton tried it before and failed hugely.

ZAKARIA: On health care, you have to take exactly the opposite approach that Hillary Clinton took. You have to make it very bipartisan, very open, very inclusive. If you don't have some kind of a bipartisan panel, if I were Hillary Clinton or whoever it is, I would get a blue ribbon panel with very senior Republicans and Democrats on it, unimpeachable economists on it and have them produce a plan, have congress agree that they're going to accept the recommendations of the panel. You cannot do this out of the White House. It won't work.

GERGEN: The problem with the Hillary care plan way back or the Clinton plan was, it was attempted, an attempt to win with 51 percent of the vote as opposed to 65 percent. And it eventually went down because it was weathering attack from the Republicans, you've got to get -- there are a lot of Republicans over there that won't go with anything that Hillary Clinton or Barack Obama wants to propose on health care reform. But you've got to go for those Republicans who do and will if you're a Democrat.

Or if you're a Republican, the issue -- I don't think Republicans are going to try to go for universal health care coverage but they still have to reform the system.

ZAKARIA: Here is the problem. This has to be a two-step reform that happens simultaneously. If you expand coverage but don't control costs, you're actually going to -- all those estimates I gave you will be off. We'll be talking about deficits 20 times more.

GERGEN: It's like what we did with prescription drugs, we just added a huge cost but we didn't control it. And so now we have all these extra burdens. So you have to find a way to keep the costs under control.

That's what the candidates are not talking about because it involves sacrifices, it involves hard tradeoffs and somebody is going to get hurt.

COOPER: Another issue that may involve sacrifice for the next president is the environment. The planet is in peril. But will the U.S. take a lead role in stopping global warming? Should they?

That's ahead as our special "Extreme Challenges - The Next Four Years" continues.

(BEGIN VIDEO CLIP) JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: I disagree with the Bush administration in not being more active in addressing the issue of climate change, whether it be through cap and trade, through tax incentives for R&D for green technologies and many other measures I think need to be taken.

We are feeling here in California pollution from China. It is a global issue and we have to address it globally and I would not agree to any global agreement without India and China.



COOPER: Climate change and the environment, global warming. We've heard John McCain talk about it a lot on the campaign trail. Certainly the Democrats talk about it. Whoever becomes president, there is pressure for them to deal with it in some way. The question is how much can they really do?

GERGERN: This is another transcendent issue and it's very hard to do, because it involves both having a comprehensive energy plan and program, and also having something which helps us solve the environment at the same time.

I was there in the early 1970s in the White House when we first had OPEC raise its head and we had the 1973 war and I wrote some of those early speeches calling for energy independence; very effective speeches. At that time we were 30 percent dependent. Now we're 60 percent dependent.

COOPER: Don't take it personally.

GERGEN: I don't take it personally. So the issue now is not only are we addicted to this foreign oil as President Bush rightly says, but the number of -- the amount of emissions going into the air are such that most scientists believe it is too late to worry about whether we're going to damage the environment. That is done. That's baked in.

The real issue now is whether we're going to avoid an environmental catastrophe for the world. And a growing number of scientists argue that in order to head that off, action has to be taken within the next five to ten years on a serious basis. And that means you have to start getting carbon emissions stabilize and start going down. That requires very serious action and it's expensive.

COOPER: Some of what the scientists are talking about is, and I've talked to a bunch of them is, they're talking about a major societal shift in terms of shutting down all coal plants not only in the United States but also in China. That doesn't seem realistic.

GERGEN: That's not going to happen.

COOPER: That's not going to happen. ZAKARIA: What you have to do is I think you have to move towards clean coal and we're probably five years away. But if we were to make massive investments in those technologies, maybe we would be able to do that sooner.

The really difficult challenge here is that we're dealing with something that has now gone global. We're talking about this new world in which everyone is playing, in which Asia is rising.

Well, it's happening everywhere. So if you look at the Kyoto Accords, they've mandated all these savings. Between now and 2012, which is when the Kyoto Treaty expires, India and China are going to build 850 coal-fired power plants. The total emissions of those 850 coal-fired power plants is five times the total savings of the Kyoto Accords.

So whatever we do out here in the west, it doesn't make any difference as long as India and China keep growing the way they are. So the only solution is that we have to come together and we have to make it worthwhile for the Indians and Chinese to burn clean coal, to move to alternate fuels. That means some kind of subsidies for the Indians and Chinese. Now, you try selling the American taxpayer on that idea.

GERGEN: That isn't going to happen either.

ZAKARIA: But David, you agree with me, that's the only solution because the Indians and Chinese are not going to sit there and say, "Sure, we're going to sacrifice growth for environmental issues when we're among the poorest countries in the world."

GERGEN: If the world wants it subsidized, there's no way. You would get impeached as president if you went up to Detroit and ask auto workers, "You know, what I would like to do is I'd like to raise the taxes so we can send them over to India and China."

ZAKARIA: What are you going to do if you don't subsidize clean coal in India and China? They're going to burn dirty coal because it's cheaper to do so.

COOPER: There is a small growing environmental movement in China but it's going to be years, decades, generations perhaps before there's a real -- I mean, it's taken us, the United States a long time to come to the decision that something probably needs to be done. If we're on a society like China, we probably wouldn't even reach that --

ZAKARIA: And what they say is, "Look, 85 percent of the carbon emissions in the atmosphere right now were produced by western countries. You clean it up. Why should we pay for your sins?"

GERGEN: The problem in part here, Fareed is actually right, most of this has come from western nations. But China is now surpassing the United States in carbon emissions. So a lot of the new emissions are going to be coming from Asia.

I must say, this is one area where the candidates on both sides, John McCain and Hillary Clinton and Barack Obama are all in favor of doing something about climate change. McCain is actually very, very forthright on this issue.

What they haven't talked about is how expensive this is going to be. How much of a sacrifice it's going to be and how do you persuade people to do it?

COOPER: There is an opportunity in the United States because many people do see this now as a national security issue; of not being dependent on foreign oil.

ZAKARIA: I think we can do a lot to put our house in order. The problem is the planet doesn't care where the carbon emissions come from. So we have to figure out how to get other people's houses in order as well.

GERGEN: You can only persuade the Americans. This is what John McCain is saying, we will only sign an agreement in the United States if China and India also sign an agreement. Everybody does this together.

If China and India resist, it's going to be very hard politics in the United States Congress to get a serious environmental bill as it really reduces carbon because they'll say, the congress is going to say they didn't sign up with the Kyoto 95 to nothing in the senate against Kyoto because China and India weren't included in part.

That was one of the reasons it was rejected. It's yet another one of these issues which is extremely complex; extremely difficult politically. And yet the world's fate heavily depends on progress in this area in the first term of the next president because this agreement expires during the first term, it expires in 2012.

You've got to get a replacement, you've got to get some sort of replacement there. And most people I've talked to think politically you can't get it done with U.S., China and India. But the next president has got to try and spend a lot of time.

That's why you can't get sucked in and spend all your time on Iraq and Afghanistan and not deal with these other issues.

COOPER: We're going to have some final thoughts from David Gergen, Fareed Zakaria next.


TOM FOREMAN: I'm Tom Foreman. We will return to "Extreme Challenges - The Next Four Years" in just a moment.

But first this "360" bulletin.

CIA director Michael Hayden says neither he nor justice department attorneys think waterboarding or simulated drowning is legal under current U.S. laws. Hayden tells lawmakers it's just short of five years since the CIA used the interrogation technique. That said, the director says he might yet consider it to prevent a catastrophic loss of American lives.

It is one of the biggest mob busts in recent memory. U.S. and Italian authorities today arrested dozens of people in a takedown of New York's Gambino crime family. 54 of the arrests were in New York and its northern suburbs as well as New Jersey and Long Island.

And the space shuttle "Atlantis" is on its way to the international space station. It is carrying a $2 billion science laboratory nicknamed "Columbus." The shuttle arrives at the space station on Saturday and the astronauts will begin the installation.

Those are the headlines. "Extreme Challenges - The Next Four Years" continues in a moment.


COOPER: Given all that the president is going to face, what kind of a person needs to be sitting in that seat in the Oval Office?

GERGEN: We're going to need an extraordinary leadership over the next four years. The problems facing the next president in my judgment are the toughest that have faced any president since Franklin Roosevelt was inaugurated in March of 1933.

The problems then were more obvious. These are more below the surface but they're very complex. Many of them are very global in nature and we're going to need a very special leader to succeed here.

We need someone who is -- he has to have integrity, judgment, those are obvious. But we're going to need someone with political courage to face this and very importantly, Anderson, I think far more than what we've had in recent years, we're going to need a consensus builder.

Someone who is able to work with parties across the aisle in Washington but also able to work with other nations and bring them along and build bridges and build coalitions because these issues are going to require a lot of political courage in other nations as well, not just the United States.

I also would argue we're going to need a citizenry that's generous and is willing to make some sacrifices and face up to the harsh realities. We're going through a tough time.

COOPER: Do you agree with that Fareed?

ZAKARIA: I think that the system in Washington pulls you towards the urgent. What you need is a leader who understands what's important and that the two are different. We need to get out of the eighth century in Baghdad, adjudicating claims between Shias and Sunnis and move to the 21st century, to China, to India, to Brazil, to where the future is being made and to figure out what are the challenges for America to prosper and thrive in the future.

We can't keep getting dragged back into every small crisis in hell hole because a bomb goes off somewhere. We've got to look ahead and ask how do we shape this world and how do we help Americans thrive and succeed in it.

COOPER: Fascinating discussion. Fareed Zakaria thank you. David Gergen thanks.

The next president will face obviously enormous challenges including the ones we have spoken about tonight. And no matter who is elected, the choices for what is best for the nation are going to be extraordinarily difficult.

There really are no easy answers. But we do hope we made some of the questions at least, a little clearer this evening.

I'm Anderson Cooper. Thanks for watching.