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President, GOP Discuss Stimulus; Interview With Representatives Zach Wamp, Marsha Blackburn; Bailing Out the States; Blagojevich A No- Show At His Impeachment Trial; Obama Aims to Restore Relations With Middle East

Aired January 27, 2009 - 11:00   ET

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

TONY HARRIS, CNN ANCHOR: It is Tuesday, January 27th. And here are the top stories we're following for you right now in the CNN NEWSROOM.

A busy day for the president. A little arm-twisting on his stimulus plan. At the Capitol next hour, Republicans only, please.

Why are GOP leaders turning up their noses at the Obama stimulus package? I will ask a pair of Republican lawmakers live this hour.

It's getting slippery out there. A major ice storm is winding up today, targeting anyone from Texas all the way to Kentucky.

Good morning, everyone. I'm Tony Harris. And you are in the CNN NEWSROOM.

Reaching out to Republicans and pushing for passage of his $825 billion stimulus plan, President Barack Obama travels from the White House to Capitol Hill this hour. He will hear concerns from GOP leaders about the massive economic recovery package.

White House Correspondent Suzanne Malveaux joining us live.

Suzanne, good morning to you.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hey. Good morning.

HARRIS: It seems the theme from Republicans is this is about too much spending, not enough in the way of tax cuts. OK. The president, for his part, we understand, is taking a Republican from his administration to the meeting to help him make his argument.

MALVEAUX: Tony, there are a couple things that the president is doing, quite politically savvy, if I may note. His transportation secretary, Ray LaHood, is going to be accompanying with him. Of course, he is one of the two Republicans who is a part of Obama's cabinet now, and he's a former Congress from Illinois.

He's got a lot of friends on the Hill. He's good friends with Obama's chief of staff, Rahm Emanuel. They used to host these bipartisan dinners. And so he's going to be by President Obama's side, essentially trying to take some of those other Republicans along, some moderates, and convince them that, yes, this is a good idea, this $825 billion economic stimulus package. So Barack Obama obviously using what he has, the tools that he has, and the people, as well.

Another thing that he's doing, Tony, is that he really is personally involved in shaping this legislation. One case in point, you take a look at what Democrats are already considering taking out of the economic stimulus package. It is a provision, a family planning provision that would provide $200 million for contraceptives.

Now, this is something that is a hot-button issue for Republicans. They don't want it. And Barack Obama, the president, is reaching out.

He has made phone calls. Obama aides tell us that he has made phone calls to Democrats urging them to make out that provision. That, A, it's not necessary, and B, it does not actually meet the mandate, which is to focus on creating jobs as quickly as possible.

One of those people that he called is Congressman Henry Waxman of California. He's a Democrat. He also happens to be the chair of the Committee on Oversight and Government Reform. And so he is just one of many people that he said, look, let's go ahead and give the Republicans some of the things that they want, what they're interested in, so that we can see the big picture here, which is making sure that that huge stimulus package actually gets on his desk in a couple of weeks -- Tony.

HARRIS: White House Correspondent Suzanne Malveaux for us.

Suzanne, appreciate it. Thank you.

So what is President Obama likely to hear from reluctant Republicans? For details on that, let's bring in our congressional correspondent, Brianna Keilar.

Brianna, good to see you.

All right. Help me here. You know I've got a couple of Republican members of the House joining me in just a couple of minutes, so maybe you can help me do my interview prep here.

Fundamentally, Republicans here, do they believe that some kind of stimulus is needed, and is the complaint really that there is just too much spending here? And if that's the complaint, is that just a philosophical party difference?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: There is a philosophical difference, that divide between Democrats and Republicans on this, Tony. Basically, Republicans want more tax cuts. They don't like exactly the type of tax cuts that are in this plan, and they think that Democrats have put too much spending in this, whereas you heard Democrats saying this is about the long term, as well as the short term, and these spending projects are certainly important.

Now, basically, what you're going to have is, according to one Republican congressman, Mike Pence, President Obama, they're expecting he comes in, he makes some remarks, and then it's going to be basically an open mike, if you will.

The first meeting, which is going to be between President Obama and Republican members of the House, ahead of the Senate side meeting, that's a lot of members. This is going to be a pretty big meeting. This is, I think, 178 Republicans, if they all show up, along with President Obama.

HARRIS: Wow.

KEILAR: And so the microphone gets opened up then, and you're going to be hearing them asking questions, point blank, of President Obama. It's expected to be candid and direct, Pence said.

But, you know, you just heard Suzanne talk about that contraception money that's been taken out, sort of as a carrot to give to Republicans, or the expectation is that it will be taken out. But that really is, according to Republicans, it's $200 million, which is a lot. But they say it's not really a lot when you look at the overall package, $825 billion.

And Tony, that is just a small thing when you're talking about this huge package. When you're talking about, you know, $575 billion in spending, and the other third of this package going towards tax cuts, that is where a lot of the money is. And those fundamental differences exist about those tax cuts and about the type of spending that we're talking about. And at this point, Tony, when you talk with Democrats and Republicans, no indication that either side is really giving on those big issues.

HARRIS: All right. Brianna Keilar for us.

Brianna, I know you'll be following this for us, and we will talk to you again next hour.

OK. One GOP lawmaker says there is just too much social spending in the stimulus plan. Another says we can't spend our way out of the recession. We will talk with Republican Representatives Zach Wamp and Marsha Blackburn in just a couple of minutes.

First day on the job. The brand-new treasury secretary is already overhauling the $700 billion federal financial bailout. Timothy Geithner's plan is meant to protect you, the taxpayer.

For starters, it keeps lobbyists away from the people who are doling out bailout money. It requires regular reports to Congress showing the bailout money was handed out using objective standards. And the plan would track banks' lending practices. That would make sure they're using taxpayer money for consumer borrowing.

The Bush administration spent the first half of the bailout money without clear rules on accountability and transparency. And that made many in Congress angry.

Federal Reserve bankers open a two-day meeting today, and they are in uncharted territory. The Fed's key interest rate is essentially at zero right now. The bankers will have to use other tools to manipulate and stimulate the economy. Several options all involve pumping cheap money into the system. The hoped for result, lower interest rates that will encourage you to borrow and spend.

Live pictures now from the Capitol. The Senate Banking Committee is looking into the Bernard Madoff scandal today. For the first time, senior SEC officials who were supposed to keep an eye on any shenanigans, any funny business in brokerage houses, are explaining how they missed all the alleged fraud. Madoff, a Wall Street fixture, is accused of running a $50 billion pyramid scheme. Other SEC officials have told Congress the agency didn't have the authority it needed to detect a Madoff-style scandal.

A massive economic brainstorming session starts tomorrow in Davos, Switzerland. Business leaders and politicians from around the world attempting to tackle the worst economic crisis since the Great Depression. About 2,500 people expected to attend the annual forum at the Swiss ski resort. Noticeably absent this year, bigwigs from a number of financial firms. Plus, some companies have cut back on sponsorships and canceled parties.

(WEATHER REPORT)

HARRIS: President Obama has his first formal sit-down interview, television interview, and it's with Al Arabiya. Hear what he tells the Middle East.

(COMMERCIAL BREAK)

HARRIS: Can we come together? Can we get along?

OK. The economy and the $825 billion stimulus package in the spotlight on Capitol Hill today. Two Senate committees are taking up the legislation. And in the House, the Budget Committee is hearing the latest analysis from the Congressional Budget Office.

As we mentioned, Barack Obama, President Obama, meets next hour with Republican leaders to hear their concerns about the stimulus bill.

Right now, we want to bring in two GOP lawmakers who say the current plan is not the answer to the economic crisis. Representatives Zach Wamp and Marsha Blackburn of Tennessee with us from Capitol Hill.

And our D.C. bureau representatives, thank you both for being with us.

REP. MARSHA BLACKBURN (R), TENNESSEE: Good to be with you.

HARRIS: And Representative Blackburn, let me start with you.

You have little confidence this stimulus bill will actually create jobs. And in fairness, you're not the only one to express that view. But I have to ask you, why are you pessimistic about the ability of this bill to stimulate the economy and create jobs?

BLACKBURN: Well, I am pessimistic about this bill to create jobs. And there are some specific reasons.

Number one, let's all agree that the best economic stimulus there is, is a job.

HARRIS: Yes.

BLACKBURN: And this bill is short on the stimulus that is needed to create that.

You know, Tony, when you break out -- according to the CBO, when you break out this bill, you only have $93 billion that would be spent in '09. Now, stimulus money is to be spent immediately, and what you have is $825 billion of programmatic money, only $93 billion of which would even be slated to be spent this year, and another $225 billion in 2010.

HARRIS: Yes.

BLACKBURN: And I tell you, most of the people that I talk to, most of the economists that I talk to, say that you've got to be acting on the front end. We know that tax reductions, tax abatements, tax incentives, flow more quickly, leaving money with all of those taxpayers so that if they're on Main Street, that is the way to have an immediate impact.

HARRIS: Yes.

BLACKBURN: It impacts our small businesses. When you impact them, that is where you get your jobs growth, and that's what we need to see happen.

HARRIS: OK.

Representative Wamp, let me come to you on this one.

And then Representative Blackburn, same question for you.

So clearly, we need spending in this economy; correct? Can we agree on that?

REP. ZACH WAMP (R), TENNESSEE: We need investment, really, more than spending. And that really is what the problem is.

At the local level, you see governments at its state level cutting their budgets to get through. The family budget at home is being cut to get through hard times. Yet, in Washington, they're -- we're spending more money than you can imagine. And about 10 percent of it, as Marsha says, is going to be productive. The transportation and energy investments will create jobs.

A lot of this is just a transfer of wealth. And Japan proved that you can't borrow your way out of debt, you can't spend your way into prosperity. We're in a real mess right now, with too much government, and nobody is talking about streamlining and getting through. And we're just spending more money.

HARRIS: All right. There you go.

Representative Wamp, do you have a problem with some of the spending creating jobs in the so-called outyears?

WAMP: Well, that's what is not a stimulus. Don't call it a stimulus if it's just long-term-type investments. That's just more debt that we're not going to pay back. That actually will prolong the economic downturn instead of getting it over with.

HARRIS: Well, Representative Blackburn agrees that you'll get some spending in the -- initially, but that there is also some job creation possible in the outyears. You -- are you OK with that mix?

WAMP: Well, that's a problem with the government, is up here, they use this as an excuse to spend tons of money that we'll never repay.

HARRIS: OK.

Representative Blackburn, I think I heard you wanting to jump in.

BLACKBURN: Yes. I think what we have to look at is this -- right now, our national debt is at $10.7 trillion. It hit that on January 3rd of this year. Right now, our deficit for this year is over a trillion dollars.

And Tony, plan A, all that spending in '08, totaled over a trillion dollars. The Fed has committed $2 trillion to this -- to Plan A.

Plan B is President Obama's plan. Now, the question we have to ask is, if you add this additional trillion dollars to this year's deficit, does that leave room for a Plan C? We know that our tax reductions work. We know that you can do this without spending and maxing out the federal credit card, which is exactly what is going to happen with Plan B.

HARRIS: What if the tax reductions say to individuals, don't work? What if people take whatever the tax break is, however it's constructed, and they don't spend it? What if they save?

Aren't we in a world of hurt if you front-load this, if you change the percentages on this, so that you're more evenly split with tax cuts and spending, and people don't spend what you give them in a tax cut? Aren't we in a world of hurt?

BLACKBURN: But you have to look at the value that comes from leaving that money with the taxpayer, allowing the taxpayer to decide how they're going to utilize those resources. And when you lower marginal rates, when you do away with cap gains taxes for small businesses, when you rebate all of that sales tax that individuals spend every year, everybody in this country, allow them to deduct that line 5B from their 1040 form, what you do is to empower that consumer. Now, we know in free markets and in capitalistic markets, and -- that the way you work your way through this is to allow those systems to do what they're supposed to do, which has worked.

HARRIS: Yes.

BLACKBURN: And Tony, you know and I know and every economist will tell you, it will do that. What you do with a stimulus is short term to give that little jump-start.

HARRIS: Got you.

BLACKBURN: And when you're talking about 10 years of spending and adding trillions of dollars to this expenditure on behalf of the government, my goodness, gracious, that is not a stimulus. That is going in and changing...

HARRIS: Representative Blackburn, you are filibustering your colleague.

(LAUGHTER)

BLACKBURN: Well, let me -- I will stop and let him talk.

HARRIS: OK.

Representative Wamp, jump in here.

WAMP: Tony, it needs to be directed at entrepreneurship, small business, investment. Not necessarily all of this government growth. We don't need more government. We need to stimulate small business and entrepreneurship again. That's where you're going to create jobs.

I worry about all this debt even being sold on the world market. China and Japan have been buying all of our debt. That's not a good trend. They're not even in good enough shape to buy $2 trillion worth of debt, as Marsha points out.

This is unbelievable debt here. The world market may not even buy it. Then what do we do?

HARRIS: No one seems to believe -- I'm talking about economists from the right, from the left -- believe that you can't spend. You have to spend to get us out of this. And government spending has to be a huge component of this.

So in the bottom -- the bottom line on this, in your best judgment, what are you going to do with this stimulus package, how are you going to vote, as it stands today?

WAMP: Well, the truth is, Tony, we're going to vote no. But they've now got the votes to do basically whatever they want to, and so they're going to slam-dunk this, and we're going to go much further in debt.

Republicans blew it on spending, but now Democrats are like -- they're on steroids with spending. And the debt and the deficit is a huge, long-term problem that's going to make the recession longer. We're going to vote no.

HARRIS: Representative Blackburn, Representative Wamp, thank you for your time. We appreciate it.

BLACKBURN: Good to be with you. Thanks.

WAMP: Appreciate it, Tony.

HARRIS: Yes, that was fun. Thank you.

The bailouts, the handouts and the stimulus packages -- CNN's Lou Dobbs pulls them apart line by line to separate the pork from what might really fix the economy. Don't miss Lou's "Line Item Veto," a special segment starting tonight on "LOU DOBBS TONIGHT" at 7:00 Eastern.

States feeling the pinch. Several are facing budget deficits that could lead to even more layoffs.

(COMMERCIAL BREAK)

HARRIS: OK. States deep in debt like California are lobbying for a piece of the federal bailout pie to help balance the books, and they may soon get it.

CNN's Casey Wian has a look at the pros and cons.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): In December, then- President-elect Obama promised the nation's governors relief from escalating budget deficits and slumping state economies.

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: This administration does not intend to delay in getting you the help that we need.

WIAN: Now Congress is finalizing the $825 billion American Recovery and Investment Act that's expected to provide two to $300 billion to states. Most of that money will go toward infrastructure, education and Medicaid. Some of it, however, will be used to shrink budget deficits in states like California, which faces a $42 billion shortfall by 2010. It's expecting $11 billion in deficit reduction aid from federal taxpayers.

BRIAN RIEDL, HERITAGE FOUNDATION: The federal bailout is not fair because a lot of these states have spent irresponsibly and grown their budgets on average seven percent annually over the last 15 years. These states need to rein in their own budgets rather than going to the federal ATM.

WIAN: California is days away from issuing IOUs instead of tax refund checks. Officials here and in other states with massive deficits say federal bailout dollars are needed. JEAN ROSS, CALIFORNIA BUDGET PROJECT: We are a nation. California certainly is the largest state in the nation. And if our economy isn't strong, we can't buy the goods and services that are produced throughout the U.S.

WIAN: California will receive at least $63 billion in presently identifiable funding in the federal legislation, according to the Center for American Progress, a think tank founded by John Podesta, the man who ran Barack Obama's transition. But on a per capita basis, California only ranks 24th in anticipated benefits among the states.

Alaska, Rhode Island and New York are all set to receive more than $2,000 per state resident. Utah, Virginia and Colorado are expected to receive less than $1,500 per person. While every state is lobbying for a bigger piece, much of the federal money will be allocated according to predetermined factors, including population, school-age population, Medicare spending and poverty rates.

(on camera): The conservative Heritage Foundation says rewarding states that have run up big budget deficits will only encourage them to continue spending above their means in the future.

Casey Wian, CNN, Los Angeles.

(END VIDEOTAPE)

HARRIS: And you are looking at -- there we go -- live pictures now of an impeachment trial in Illinois moving forward without the man charged. Governor Rod Blagojevich keeps pleading his case in the media, instead of back home in Illinois. The process could be complete, wrapped up, and the state said it could have a decision on the fate of the governor by tomorrow.

We will keep you posted on the latest developments in the story right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

(BUSINESS REPORT)

HARRIS: Day two of the impeachment trial for Illinois Governor Rod Blagojevich under way. Blagojevich is a no-show. In his first primetime interview with CNN's Larry King yesterday, he talked about why he is boycotting and why he thinks the trial is fixed.

(BEGIN VIDEO CLIP)

LARRY KING, HOST, "LARRY KING LIVE": If you can show yourself that all this is wrong...

GOV. ROD BLAGOJEVICH (D), ILLINOIS: Yes.

KING: ... my gosh, why wouldn't you show it?

BLAGOJEVICH: That's why...

KING: I'd go nuts.

BLAGOJEVICH: That's why I implore the state Senate to allow me to bring in witnesses and evidence, including all of those tapes. Have sworn testimony. Not conversations that are not sworn, but sworn testimony, and let people come in and testify as to whether or not I did anything wrong.

And why don't we start this during this impeachment trial, sooner rather than later? The impeachment trial is a real opportunity to clear my name.

(END VIDEO CLIP)

HARRIS: OK. Live now to CNN's Susan Roesgen in Springfield, Illinois.

Susan, good to see you.

We know the senators may hear some of the wiretaps. Do we know which ones they may actually hear?

SUSAN ROESGEN, CNN CORRESPONDENT: We do, Tony, and I hate to tell you, it's not going to be the portion that allegedly involves the governor talking about the possibility of selling Barack Obama's Senate seat. That part of the tape is too important to the federal prosecutor, and his criminal case, to let anybody hear that portion right now. Instead, the federal prosecutor chose a little bit of a tape, just a snippet, Tony, just an excerpt that apparently involves a horse racing bill that was on the governor's desk, and there are allegations that the governor wanted some cash before he signed that bill.

Now, that's a little bit of what the senators might hear here today in this impeachment trial. But Governor Blagojevich, last night, as you heard on "LARRY KING LIVE," he is still on the defensive. And he says he wants people to hear all of the tapes, every single second of those conversations, because he says otherwise it will just be taken out of context.

(BEGIN VIDEO CLIP)

BLAGOJEVICH: If they would allow all those tapes to be heard, that would be excellent. Now, President Nixon had issues with tapes. He was all about blocking all those tapes from being heard, listened to.

My approach is just the opposite. Bring those tapes to the impeachment trial, let's hear them all. Let's hear every conversation, hear the full context of them, and let's see whether or not we did right or wrong.

(END VIDEO CLIP)

ROESGEN: Now, right now, behind me in the state Senate chambers, Tony, they are actually talking to an FBI agent. They're asking him about the rules involving wiretapping, and they're finding out when this wiretapping first started.

It turns out that the FBI started bugging the governor's conversations first in his Chicago office, and his Chicago campaign office back in October, and then they decided that there was so much going on, they would bug his home phone, as well. And apparently, they were still listening to his conversations right up until the day they arrested him.

And Tony, you know, he is still not going to come here to Springfield. We don't expect to see him, because he's still in New York, still making the rounds of television news shows. In fact, he has 11 different national television interviews today, including one with our own Campbell Brown later tonight -- Tony.

HARRIS: Susan, one more quick question here, just based on what you just said. Without the evidence that's linked to the federal case against the Illinois governor, do we have a sense of how strong the case is against him?

ROESGEN: Oh, yes, Tony. When the House impeached him, most of the reasons that they listed in the draft report of why they decided to impeach him really didn't have anything to do with the governor's case. It had to do with lots of different spending and what they thought was unethical or possibly illegal things that the governor had done that didn't even include what the government has been looking at him for.

HARRIS: Got you.

OK. Susan Roesgen from Springfield, Illinois, for us.

Susan, good to see you. Thank you.

You know, you can hear more from Illinois Governor Rod Blagojevich in a live interview with CNN's Campbell Brown tonight on "NO BIAS, NO BULL," at 8:00 Eastern Time.

(WEATHER REPORT)

HARRIS: The ups and downs of the global economy, as only CNN's Richard Quest can deliver it.

(BEGIN VIDEO CLIP)

RICHARD QUEST, CNN CORRESPONDENT (voice-over): And like today's economic numbers, everything is headed downwards.

(on camera): The issue is, once we are at the bottom, how do we get back up again?

(END VIDEO CLIP)

HARRIS: Richard Quest in the next hour of the CNN NEWSROOM.

(COMMERCIAL BREAK) HARRIS: CNN iReporters not afraid to weigh in on touchy subjects. Let's cue up the machine here. Let's get down to CNN.com's iReport desk and check in at "Tyson's Corner" there with our producer there, intrepid -- whoa, where are you? New digs?

TYSON WHEATLEY, CNN PRODUCER: Yes. Hey, Tony, I'm in .com/live control room actually today. They're doing some construction near my desk. So...

HARRIS: Oh, that's because you're sponsored now, so you get to have fancy stuff around you and all that. It looks great. Can't wait for the new digs. You look good down there.

WHEATLEY: Hey, thanks a lot.

HARRIS: Yes.

WHEATLEY: So today we're talking about something really kind of interesting. You know, it's actually -- it's been in the news for about a month or two, really, this whole controversy behind Facebook and the breast-feeding controversy. And basically, Facebook did a massive sweep of content that violated their site's policy on nudity.

Now, some of those images were from breastfeeding mothers, who then argued that that content was, among other things, educational and should be left on the site. Well, this incident has been drawing a huge response on ireport.com, and including this video from Sal Steel, who supports Facebook's right to remove those images.

(BEGIN VIDEO CLIP)

SAL STEELS, IREPORTER: This is not about the traditional way that most women in the U.S. breast-feed in public, the issue that wouldn't have been an issue 40 years ago. This is about a group of women that want to take their breast out in public, put their baby up to the nipple, start breast-feeding, exposing the areola with no cover, take a photograph, put it up on their Facebook profile.

This is not about taking the right to publicly breast-feed away from women, although there is a way to do this with some sense of decency and respect for others. Don't use natural as a reason for posting these pictures. No shirt, no shoes, no service. Facebook reserves the right to monitor its content.

(END VIDEO CLIP)

WHEATLEY: OK. So Tony, we wanted to open this up a little bit further and really ask a larger question about breast-feeding. And that is, simply, is breast-feeding OK in public?

Again, another huge response on ireport.com. And I only have time to share one with you, and this is from a Colorado mom named Marci Johnson, who says, if you don't like it, don't look.

(BEGIN VIDEO CLIP) MARCI JOHNSON, IREPORTER: OK. the people who still have an issue with breast-feeding in public just astound me, because I don't understand what the big deal is. It's not like we're walking around and we're flashing you and saying, hey, look at these. It's not Mardi Gras.

This is a purpose. There is a purpose for doing this.

It's not, you know, to be disgusting. It's not to be vile or, you know, just to expose ourselves. It's called breast-feeding. That's what you're supposed to do.

You don't like it, don't look at it. Most people put a cover over themselves. But to be honest, I've been in a situation where I don't have a cover and my child needs to be breast-fed. So the fact that people have issues or they get offended, I just -- I'm at the point where I'm just like, get over it.

(END VIDEO CLIP)

WHEATLEY: All right, Tony. We've got to move on to another story that people are really talking about.

HARRIS: Well, that was a talker, yes. OK. I know you've got to move on.

WHEATLEY: Well, this one, too.

This is -- you know, obviously, yesterday, Illinois Governor Rod Blagojevich was making the rounds. He was on "The View," he did "LARRY KING LIVE." And you know what? While he was doing that, guess what? His neighbors were sending iReports.

HARRIS: Oh boy.

WHEATLEY: Check out these photos.

Mary Kensick-Winters, she lives a few blocks away from the governor's mansion. Her house is the one there with the banner that spells out "Blago, Resign Now." Mary tells us she thinks the governor is "positively delusional," and says he should have resigned weeks ago, sparing the good folks of Illinois "from becoming a national laughing stock," and in a time that should have been the state's finest hour.

So, you know, that brings us to today's assignment, which is -- actually, this is your chance to ask a question to Blagojevich. The governor is going to be sitting down with Campbell Brown tonight. I think that's 8:00 p.m. on CNN.

HARRIS: That's right. That's right.

WHEATLEY: And your questions can be part of the interview. So it's not too late. Fire up your Webcam and put your video on question.

HARRIS: Way to go. Good stuff, as always. Tyson, appreciate it. Thank you.

WHEATLEY: Take care, Tony.

HARRIS: President Barack Obama reaches out to other countries, telling Muslims the U.S. is not their enemy.

(COMMERCIAL BREAK)

HARRIS: Getting right to it. President Obama's newly appointed Mideast envoy, George Mitchell, arrived in Cairo a short time ago. He is hopscotching from Egypt to Israel, to the West Bank. Jordan, Turkey and Saudi Arabia on his eight-day mission.

This comes amid new violence in Gaza overnight. A Palestinian and an Israeli soldier were killed in the first attacks since last week's cease-fire.

Mitchell is on orders from President Obama to start his peace mission by listening, not dictating. The president discussing the Middle East in his first formal interviews since taking office. He spoke to an Arab television network.

(BEGIN VIDEO CLIP)

OBAMA: I think the most important thing is for the United States to get engaged right away. And George Mitchell is somebody of enormous stature. He is one of the few people who have international experience brokering peace deals. And so what I've told him is, start by listening, because all too often the United States starts by dictating, in the past, on some of these issues, and we don't always know all the factors that are involved. So let's listen.

He's going to be speaking to all the major parties involved, and he will then report back to me. From there, we will formulate a specific response.

Ultimately, we cannot tell either the Israelis or the Palestinians what's best for them. They're going to have to make some decisions. But I do believe that the moment is ripe for both sides to realize that the path that they are on is one that is not going to result in prosperity and security for their people. And that instead, it's time to return to the negotiating table.

It's going to be difficult, it's going to take time. I don't want to prejudge many of these issues, and I want to make sure that expectations are not raised so that we think this is going to be resolved in a few months. But if we start steady progress on these issues, I'm absolutely confident that the United States, working in tandem with the European Union, with Russia, with all the Arab states in the region, I'm absolutely certain that we can make significant progress.

(END VIDEO CLIP)

HARRIS: President Obama is promising to travel to a Muslim country within his first 100 days in office. He is determined to mend this country's relationship with the Muslim world.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My job is to communicate the fact that the United States has a stake in the well- being of the Muslim world, that the language we use has to be language of respect. You know, I have Muslim members of my family. I have lived in Muslim countries.

UNIDENTIFIED MALE: The largest one.

OBAMA: In the largest one, Indonesia. And so what I want to communicate is the fact that in all my travels throughout the Muslim world, what I've come to understand is, is that, regardless of your faith -- and America is a country of Muslims, Jews, Christians, nonbelievers -- regardless of your faith, people all have certain common hopes and common dreams. And my job is to communicate to the American people that the Muslim world is filled with extraordinary people who simply want to live their lives and see their children live better lives.

My job to the Muslim world is to communicate that the Americans are not your enemy. We sometimes make mistakes, we have not been perfect, but if you look at the track record -- as you say, America was not born as a colonial power, and that the same respect and partnership that America had with the Muslim world as recently as 20 or 30 years ago, there's no reason why we can't restore that.

(END VIDEO CLIP)

HARRIS: The president's comments generating immediate reaction. Here is an exchange between our Anderson Cooper and Reza Aslan, author of "No God but God."

(BEGIN VIDEO CLIP)

ANDERSON COOPER, HOST, "AC 360": Reza, do you think he will continue to use the term "war on terror"?

REZA ASLAN, AUTHOR, "NO GOD BUT GOD": I hope not. Look, I think one thing that he says at the end of this interview is that language matters, words matter, and that thus far, the words that have been used to describe the conflict with al Qaeda and the larger jihadist movement have been religiously polarizing language, they've offended a great many Muslims. And it's almost as though what he's describing is a sea change, not just in the way that he's going to approach the conflict with radical militant forces in the Muslim world, but in the way that he's going to approach the Arab and Muslim world in general, talking about listening and respecting and being interested not just in America's interests in the region, but also in the interests of the poor and downtrodden.

These are words that are going to resonate throughout the region. This was an amazing speech.

(END VIDEO CLIP) HARRIS: During his interview, President Obama made it clear Israel is, and will continue to be, a strong ally of the United States.

In the next hour of CNN NEWSROOM, the anatomy of a failing bank.

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