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High-Level Talks Between the U.S. and China; Health Care Reform Battle, Possible Silver Lining to Recession; Obama Speaks at First Meeting of the Strategic and Economic Dialogue between the United States and China

Aired July 27, 2009 - 09:00   ET

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

HEIDI COLLINS, CNN ANCHOR: Health care reform. New week, new challenges, and new doubts.

And do you know who or what to believe? We'll show you how the facts are twisted on both sides of the issue.

Then power struggle, wicked storms move in, the lights go out.

Good morning, everybody. I am Heidi Collins. Today is Monday, July 27th, and you are in the CNN NEWSROOM.

In fact, we have our crews in place this morning to bring you all kinds of developing stories. Right out of the gate this morning, our White House correspondent Suzanne Malveaux is looking at the latest health care strategy that's really ratcheting up in Washington now.

And also our Christine Romans looking after your money. She's going to explain to us why we should understand how China is keeping a very close eye on the American economy and also why you should care.

And our Cal Perry, as you see him there, he is in Beirut. He's going to be telling us about the new push for peace in the Middle East. And about the Iran factor.

We do begin, though, this morning with health care reform. President Obama's top domestic priority is facing two obstacles this morning. Time and math. Members of both parties now say an overhaul cannot pass without some Republicans getting on board. But a far different message coming from the speaker of the house.

Nancy Pelosi insists she has the votes to plow ahead.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), HOUSE SPEAKER: It's not a question of rush. It's a question of the American people who have been waiting a very long time for health insurance that gives them confidence that they had a preexisting condition or if they lose their job or change their jobs or start a business that they will have health insurance.

I take this bill to the floor, it will win. But we will move forward, this will happen.

(END VIDEO CLIP) COLLINS: Let's get the very latest now from CNN White House Suzanne Malveaux.

So Suzanne, the Senate is going to be missing the president's deadline for a vote on health care reform. Is anyone still listening to the president?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, they certainly hope that somebody is listening to the president. What a top White House aide told me this morning who I spoke with said what they're trying to do now is reassure the American people, make sure they know he's a credible player, that he's a viable player in all of this despite the fact he didn't get the deadline that he was looking for, that he has still the political capital to try to push this thing through.

One of his top aides over the weekend describing that August is going to be a very busy month and that he's still very much going to be a player. Take a listen.

(BEGIN VIDEO CLIP)

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER: We're less interested in hard deadlines than in moving the process forward. They deadlines have had a disciplining effect. Three of the five committees of jurisdiction in the Congress have passed bills, the other two were working hard on, and we want to move this process forward, even if both House -- even both the House and the Senate have voted on these bills before the break. This would still, as you know, go well into the fall.

(END VIDEO CLIP)

MALVEAUX: And Heidi, I've been told that the president is going to work very hard, including this week. He's going to get out once again, travel in the country, to push forth on this.

One of the things they're talking about, kind of a spin, if you will, they're saying, look, we've got 80 percent of this or so in agreement, it's the other 20 percent that we just haven't quite worked out, but that is really the tough part of this, Heidi.

As you know that other 20 percent a big hurdle because not just the Republicans, but also the Democrats very much split on how to handle this and what to do. And here's how one of the top Republicans in negotiations put it.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MINORITY LEADER: The House bill and the Senate Health Committee bill, they pay for it by cutting doctors, cutting hospitals, and raising taxes on small business.

Those are very difficult pay-fors, and they're having a hard time selling it to their own members. The only thing bipartisan about the measures so far is the opposition to them. (END VIDEO CLIP)

MALVEAUX: Heidi, there is one measure that is creating some bipartisan support, and that is one called the so-called Cadillac Tax or it would be a tax on health insurance companies. They're really costly plans that they supply to some high-powered executives. That perhaps a little tax (INAUDIBLE) on that.

That is something that Republicans, Democrats, and the White House all seem to be a bit open to. They have some more time to work on this, to look it over, so that's one of the things that's emerging, Heidi.

COLLINS: Yes. All right. Well, you are all over that story, of course, this morning. And then this, the president's kind of going to be taking a break from health care reform and talking about China, which is a huge issue.

Can you kind of headline it for us?

MALVEAUX: Sure. It is called the U.S.-China Strategic and Economic Dialogue, it's a big meeting, a big conference that happens the next couple of days. President Obama's going to be highlighting it this morning, and essentially, what it is is that it's somewhat of a departure from the Bush administration.

President Bush focusing on the economic relationship between the two countries. President Obama, when he first met with the President Hu Jintao, the president of China, said I want to expand out, so they're going to be talking about security issues, North Korea, which they feel China has been very good in pushing North Korea, and some other things.

So, it's beyond the economic priorities. It is really establishing a broad wide range between these two countries, Heidi.

COLLINS: Yes, we want China to continue liking America, certainly. And just for everybody's sake, we were looking at some live pictures of Secretary of State Hillary Clinton just a moment ago, aside from Suzanne there, because she is speaking.

Again, these are live pictures coming to us on the Ronald Reagan Building and we also have Secretary of Treasury Timothy Geither who is there and then, of course, the president -- vice premier of China and the state counselor, as well.

So, we will be keeping our eye on that. And as just a reminder, you can make sure you stay with us for the president's remarks because they are scheduled for the bottom of the hour, and of course, we will carry them live, once again, 9:30 Eastern Time.

Now the U.S. and China have an uneasy alliance of sorts when it comes to the economy. China has gobbled up staggering amounts of U.S. debt. And now Washington needs to assure Beijing that the investment is safe.

Here with a closer look, Christine Romans of the CNN Money team.

So, Christine, the financial crisis that has strained economic relations between these two countries, where do things stand right now?

CHRISTINE ROMANS, CNN CORRESPONDENT: Well, it has strained things. And this is why, because for years the United States and our leaders have been telling going to China and the Chinese officials have been coming here. We've been them really they sort of free marketplace capitalism.

And now because of the financial crisis which many say have been started by our big banks, the big multinational taking risks and not having good enough regulation, the Chinese can turn around and say look, you need to be more like us.

So you have the situation where for years we were talking about the Chinese and its currency, which many say helps their exporters, and now you have the Chinese saying what about your currency? We own a lot of your debt. We need to know you're going to take care of our investments.

COLLINS: Yes.

ROMANS: So this bigger dialogue that Suzanne mentioned, it's pretty important because you can't separate. In this day and age, you cannot separate economics out of all of the big foreign policy issues. So they're going to talk about the economic recovery, what we're doing together to get there, climate change, energy, and environment, North Korea, Afghanistan, Pakistan -- this all on the agenda for the next couple of days, Heidi.

COLLINS: Yes. Wow. I hope they have enough time to cover all that.

Explain, though, to people why we have to worry about China's unease with the U.S. dollar and the value of it.

ROMANS: Well, because look, the Chinese -- we spend more money every day than we have. And when we borrow that money from China, then when we buy Chinese made good and the money circles around and the Chinese then get the dollars and they invest the dollars into treasuries, into treasury bonds.

So they are our banker. China is a big, big banker, I think our biggest foreign lender. So China is our banker and they want to make sure that what we're doing to get out of the financial crisis isn't going to hurt their investments and it isn't going to hurt them.

Also the Chinese officials lately have been making more and more noise about diversifying in the global economy away from the dollar being the big huge global reserve currency and maybe looking at a basket of currencies or maybe even doing more international transactions in the Chinese currency.

And you know that's a big deal because just about anything of value of gold, oil, exports, anything you can think of is denominated in the dollar.

COLLINS: Yes.

ROMANS: So, that is showing you that there's a new big powerful player on the global stage and that powerful player is China.

COLLINS: Yes. All right. Well, Christine Romans, we appreciate it very much. Lots more topics to discuss on this front, I think. We will talk with you again shortly.

Meanwhile the man overseeing the nation's financial crisis says there's a silver lining to the recession. Federal Reserve chairman Ben Bernanke says Americans are now developing better money habits.

He points to increased savings and racking up less debt. He says those factors and tighter federal regulations will eventually make the economy stronger and less likely to face a similar crisis in the future.

Bernanke's comments came during a town hall meeting in Kansas City, Missouri.

So, we want to know, have you changed your spending and saving habits because of the recession? It's actually our blog question today. And of course you can post your comments at CNN.com/heidi, or give me a call. The "Hotline to Heidi" number is 877-742-5760. And we will put some of those comments on the air coming up a little bit later in the show.

We are also keeping a close eye on the Middle East where tensions are rising over Iran's nuclear ambitions. Israel suggesting it won't rule out a military strike on Iran's nuclear sites. Israel's defense minister said today his country is taking no option off the table.

Remark comes amid strong overtures from Washington, as well. Secretary of State Hillary Clinton has implicitly urged Israel to set aside thoughts of a preemptive strike and give U.S. policy time to work.

Iran has publicly bristled as Clinton recent mention of a possible defense umbrella in the region. She says it could help protect Mideast allies against Iran's nuclear program.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: What we want to do is to send a message to whoever is making these decisions. That if you're pursuing nuclear weapons for the purpose of intimidating of projecting your power, we're not going to let that happen. First, we're going to do everything we can to prevent you from ever getting a nuclear weapon, but your pursuit is futile.

(END VIDEO CLIP)

COLLINS: Meanwhile, Washington has dispatched a group of high profile envoys to Israel. Their focus, pressuring Israel to halt its settlement in the West Bank and east Jerusalem. That's land the Palestinians want for a future state and it's a major obstacle in possible talks.

CNN's Cal Perry is joining us now with the very latest on this from Beirut, Lebanon.

So, Cal, talk to us about any progress that might be being made so far.

CAL PERRY, CNN INTERNATIONAL CORRESPONDENT: Well, I think it's one step forward, one step back as usual when it comes to the Middle East peace process. And what we're seeing here really is the first full court press from the Obama administration on the Middle East after a number of speeches where he said he's going to reach out to the Middle East, we're finally seeing that happen this weekend.

George Mitchell, the top U.S. envoy visiting Damascus before traveling to Israel and those meetings seemingly a huge success. We heard George Mitchell say things that we haven't heard the administration say for over eight years. He talked about how the wonderful the Syrian people were and the need for cooperation between the United States and Syria. Certainly a far cry from what we heard from the Bush administration.

We spoke to senior Syrian officials yesterday on the phone. They said the same thing, they said they were very impressed by Mitchell. They thought he was genuine. He carried a genuine message from Obama and the conversation even went towards a future meeting, potentially between Hillary Clinton and President Assad of Syria or even Barack Obama and President Assad of Syria.

Now after those meetings this weekend in Syria, Mitchell flew on to Israel and really that's where the honeymoon seemed to quickly come to an end from these meetings. He was immediately faced with, of course, the Iranian issue.

Now Israel has always said that Iran is the biggest threat to Israel if not the world. Flanking George Mitchell as the U.S. Defense Secretary Robert Gates has seemed to only reinforce what the Israelis had to say about the Iranian nuclear program.

Take a listen to what he had to say.

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: There's no question that as Minister Barack (sic) said, a nuclear-armed Iran would be profoundly destabilizing to the entire region. And a threat to -- certainly to Israel and a threat to the United States.

(END VIDEO CLIP)

PERRY: Now, Heidi, I think ironically we're seeing for the first time really a relationship between the U.S. and a former foe, Syria, going well. And at the same time U.S. now walking a fine diplomatic line with a country that has been a staunch ally, of course, for 60 years, that being Israel.

And when you look at this full court press, all you have to do is look at the way George Mitchell has traveled around this region, from Syria to Israel, and then at very sort of strange scheduling change, he then flew on to Egypt. He was supposed to do that tomorrow.

He did that today. He's back in Israel very quickly. So, as you can see, he's just on a whirlwind trip across the Middle East as the U.S. tries to move Syria away from Iran and at the same time walking a very fine line with their long time ally, Israel. Heidi?

COLLINS: Yes, well, that's just it, Cal, if you can back up for just a moment. I'd love to know why he -- you know, started in Syria, meaning George Mitchell. And Syria's always had this cloud of suspicion over them about where their moneys are going and possible funding of terrorist activities. So is that gone now?

PERRY: I don't think it's gone at all. And when you talk to U.S. military commanders on the ground, for example, in Iraq even, now they'll still tell you in these high-level briefings that they're very concerned about the flow of weapons and fighters across that Syrian border.

But I think there was a clear message sent here by Mitchell going to Syria first before he went to Israel, the U.S. is sending a message that Syria really is key to Middle East peace and when you look at where it is geographically you can tell why.

For example, the Hamas leadership which still runs Gaza resides in Damascus, so access to Hamas can be found through the Syrian leadership and of course, as I mentioned, that border with Iraq. That is key for the United States.

Obama wants to ramp down military activity in Iraq, he wants to ramp it up in Afghanistan. The only way he's going to be able to do that is if that border's secured, Heidi.

COLLINS: Yes. Understood. All right. Cal Perry, thanks so much, live from Beirut, Lebanon this morning.

Three cars, one going the wrong way. Ending in a horrific crash. Police are now looking for answers.

ROB MARCIANO, AMS METEOROLOGIST: I'm Rob Marciano, CNN Severe Weather Center. We had some thunderstorms last night across the East Coast. Humidity building for more typical summer time weather pattern. But really heating up in Pacific Northwest.

CNN NEWSROOM with Heidi Collins is coming right back.

(COMMERCIAL BREAK)

COLLINS: A car crash on a suburban parkway outside of New York City kills eight people, including four children. Police say the minivan was heading the wrong way on the parkway yesterday when it crashed into a SUV. It also hit a third car and then burst into flames.

The woman driving the minivan and four of the five children inside it were killed. Only one child survived.

(BEGIN VIDEO CLIP)

JOSEPH BECERRA, N.Y. STATE TROOPER: It was a horrific scene altogether. I've been with the state police for 24 years and I've never seen anything like this. Accident reconstructionist at the scene and hopefully we'll be able to come to some determination why this person entered the parkway going the wrong way.

(END VIDEO CLIP)

COLLINS: The three people in the SUV were also killed. Police say it was the second wrong way crash on the parkway that day.

Rob Marciano joining us now. Nice to see you again. I didn't know we were on together before, sorry about that.

MARCIANO: That was a little sneak attack. Some Monday morning things. Hope you had a great weekend, Heidi.

COLLINS: Yes.

(WEATHER REPORT)

COLLINS: All right. We will keep our eye on that and we'll check back in with you later on. Thank you, Rob.

MARCIANO: All right. See you. You got it.

COLLINS: Making a comeback to raise awareness about cancer. Cycling strong man rides again. Our Dr. Sanjay Gupta is at the finish line with Lance Armstrong at the Tour de France.

(COMMERCIAL BREAK)

ANNOUNCER: Covering the angles, uncovering the details, see for yourself in the CNN NEWSROOM.

COLLINS: Lance Armstrong didn't win this year at the Tour de France, but the seven-time winner showed the world that he's still got it. Armstrong came in third, impressive considering he was making a comeback after nearly four years in retirement to raise cancer awareness.

CNN's chief medical correspondent Sanjay Gupta talked with Armstrong in Paris right after the finish.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: To tell you it's been a remarkable 22 days for Lance Armstrong right here in France, Tour de France started in Monaco, ended right here in Paris. Fans, cancer survivors from all over the world really cheering on the seven-time Tour de France winner. Now I sit on the board of Live Strong, and I can tell you after a four-year hiatus, that was a big decision for him. I caught up with him just a few hours after he took third place at the Tour de France to talk about some of the challenges, to talk about some of the criticisms that have been waged against him and how he responds to those and to simply ask him why he decided to get involved in all of this again.

(BEGIN VIDEOTAPE)

GUPTA: Coming in first, is that something that you thought about? I mean, did you care? You're right it's not about the bike, but do you care if you come in first or not?

LANCE ARMSTRONG, THIRD PLACE, TOUR DE FRANCE: Well, I wanted to come in first. But sometimes in sports there's somebody that's better. And I was that guy for seven years. And I never understood what it felt like to get second or third.

I'm 38 now and you race guys that are 24, 25, or 26, and their paths are strong, they have acceleration, they have all of the things that you had at that age. And you get third. That's what's the great thing about the tour is that the best man always wins.

GUPTA: How was this race different for you in terms of how you trained, what you ate? Was there differences compared to five years ago?

ARMSTRONG: Well, I used a lot of the same training, the same idea with diets. I mean, the only difference, I guess, is that I'm now 38 years old. So a 38-year-old man does not wake up every day like a 28-year-old. But I can't complain, I mean, I think I rode well.

GUPTA: Why come back after four years? What inspired that?

ARMSTRONG: Obviously, I have to have a love for the bike, I have to have a love for the tour, otherwise it's too hard. It's just way too damn hard to go out and do this. But my passion for fighting cancer and fighting and not just in Texas or the United States, but around the world.

GUPTA: When you look at you, the man, Lance, and the issue of cancer, do you think people separate that? Do you think they understand why you're riding and why you came back?

ARMSTRONG: Yes, I think so. You know, these days it's easy to get feedback. When people have a comment or have an issue, they let you know. And most of them are regarding cancer. So that tells me that the people understand. They've been effected themselves, with their loved one. And they understand it, and they say keep going, you know, pedal hard for them tomorrow, pedal hard for my mom or for my neighbor or co-worker.

GUPTA: One of the things you -- you talked a lot about during the whole tour was surprise test for doping. They just come surprise you.

ARMSTRONG: They're not surprises any more.

GUPTA: They're not surprises. Forty, I think over 40 tests.

ARMSTRONG: I think over 50 -- they're 50 now.

GUPTA: What do you say to the critics? What do you say to skeptics now? End of the tour?

ARMSTRONG: Look, I've done this a long time, and I've been at the highest level now since 1992 until 2009, I've been tested more than anybody else. If I can take four years off and come back at the age of 38 with more control than anybody else on planet earth and get third in the hardest sporting event in the world, I think we've answered the questions.

(END VIDEOTAPE)

GUPTA: Couple of things worth pointing out. Lance's heart and lungs are different than most people. He pumps about nine gallons per minute as compared to five gallons for a normal healthy 20-year-old. Also with every breath he takes, he gets about twice as much oxygen as normal, as well, which could be advantageous certainly from racing on a competition like this.

I asked Lance what's next, he said he's going to Dublin at the end of August. They have a global cancer summit to continue discussions on some of those very same issues he talked about with me today. Back to you.

COLLINS: All right. Sanjay, thanks for that.

Also, out of the hospital, but not back to work just yet. For French president Nicolas Sarkozy, he collapsed while jogging over the weekend. Doctors say his heart and everything else checks out OK. They blame it on heat and too much work.

The prescription, a few days of rest. Sarkozy canceled all of his official business for the day.

On Wall Street, two weeks of gains has sent both the Dow and S&P 500 up more than 10 percent. But this is the busiest week yet for earnings. And there's a full plate of economic reports to go with them.

Susan Lisovicz at the New York Stock Exchange now to break it down for us.

Hi there, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Good morning, Heidi. What a summer scorcher we've had. You mentioned the Dow and S&P 500, also the NASDAQ, 12 back to back rallies, so we'll see what this week has to bring. You mentioned it's a busy week for earnings, nearly 150 companies in the S&P 500 are reporting this week. The market's two-week rally on the back of largely better than expected numbers, but there are disappointments today and stocks are set for a flat open.

Honeywell's quarterly profit dropped nearly 40 percent due to problems in the auto and construction sectors, and Honeywell says it doesn't expect an economic recovery this year.

Health insurer Aetna meanwhile says earnings fell nearly 30 percent, and as the opening bell rings, that company cut its profit forecast for the second time in two months. And Dow component Verizon says quarterly profits fell more than 20 percent. The nation's largest wireless company has been working hard to cut costs, but it can't do it fast enough to keep pace with falling revenue.

Ben Bernanke, however, says there's a silver lining to this recession. People are adopting good habits, like saving more. Speaking at a town hall forum in Kansas City for PBS, the chairman of the Federal Reserve says the recovery will be gradual, but economic activity will pick up this year.

The Fed chief has been increasingly taking his message to the people. Earlier this year, he did a lengthy interview with "60 Minutes" and last week wrote an op-ed piece in the "Wall Street Journal."

We're not seeing any improvement in the first few seconds of trading. The Dow, NASDAQ, S&P, showing a little bit of resistance. In half an hour, Heidi, we'll get the latest read on the housing market. We're expecting new home sales to rise more than 2 percent. And we'll be following it closely. Back to you.

COLLINS: OK. Yes, that's always an interesting number to get.

All right, Susan, thanks so much. We'll check back later on.

Republicans are digging in their heels on health care reform and some Democrats are dragging theirs with President Obama's deadline fast approaching. What's the next move for the White House?

(COMMERCIAL BREAK)

COLLINS: Happening right now in Washington, high-level talks between the U.S. and China. In fact, we expect to hear from President Obama any minute now. You're looking at some live pictures coming to us. This is the Chinese state counselor, actually. This is the first U.S.-China Strategic and Economic Dialogue. The biggest issues between the two countries, major differences on trade and the growing U.S. budget deficit. Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner are also there at the meeting.

Now, as far as my schedule that I'm looking at, we do expect that President Barack Obama will be the next speaker. As I'm told we were just listening in a little bit there to the Chinese state counselor. So, we will keep our eye on this for you, and just as soon as the president comes to those microphones, which may be any second, we, of course, will bring that to you.

I was listening just for a moment to the state counselor who was talking about how important the relations between these two countries, meaning the United States and China are, discussing how large their economies are and how large...

(BEGIN VIDEO CLIP)

UNIDENTIFIED ANNOUNCER: Ladies and gentlemen, the president of the United States.

(END VIDEO CLIP)

COLLINS: So, obviously, that is one of the major issues in continuing a relationship, especially considering the amount of treasury bonds that this country owns in American dollars. So, we will go ahead and listen in to President Barack Obama now. Once again, at the U.S.-China Strategic and Economic Dialogue meeting coming our way from the Ronald Reagan building right there in Washington.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you. Thank you. Good morning. Good morning. It is a great honor to welcome you to the first meeting of the Strategic and Economic Dialogue between the United States and China. This is an essential step in advancing a positive, constructive, and comprehensive relationship between our countries. I'm pleased that President Hu shares my commitment to a sustained dialogue to enhance our shared interests.

President Hu and I both felt that it was important to get our relationship off to a good start. Of course, as a new President and also as a basketball fan, I have learned from the words of Yao Ming, who said, "No matter whether you are new or an old team member, you need time to adjust to one another." Well, through the constructive meetings that we have already had, and through this dialogue, I am confident that we will meet Yao's standard.

I want to acknowledge the remarkable American and Chinese leaders who will co-chair this effort. Hillary Clinton and Tim Geithner are two of my closest advisors, and they have both obtained extraordinary experience working with China. I know that they will have extremely capable and committed Chinese counterparts in State Councilor Dai and Vice Premier Wang.

Thank you very much for being here.

I'm also looking forward to the confirmation of an outstanding U.S. Ambassador to China, Governor Jon Huntsman, who was here today.

(APPLAUSE)

Jon has deep experience living and working in Asia, and, unlike me, he speaks fluent Mandarin Chinese. He also happens to be a Republican who co-chaired Senator McCain's campaign. And I think that demonstrates Jon's commitment to serving his country, and the broad, bipartisan support for positive and productive relations between the United States and China.

So thank you, Jon, for your willingness to serve.

Today, we meet in a building that speaks to the history of the last century. It houses a national memorial to President Woodrow Wilson, a man who held office when the twentieth century was still young, and America's leadership in the world was emerging. It is named for Ronald Reagan, a man who came of age during two World Wars, and whose presidency helped usher in a new era of history. And it holds a piece of the Berlin Wall, a decades-long symbol of division that was finally torn down, unleashing a rising tide of globalization that continues to shape our world.

One hundred years ago, in the early days of the twentieth century, it was clear that there were momentous choices to be made -- choices about the borders of nations and the rights of human beings. But in Woodrow Wilson's day, no one could have foreseen the arc of history that led to a wall coming down in Berlin, nor could they have imagined the conflict and upheaval that characterized the years in between. For people everywhere, from Boston to Beijing, the 20th century was a time of great progress, but that progress also came with a great price.

Today, we look out on the horizon of a new century. And as we launch this dialogue, it is important for us to reflect upon the questions that will shape the 21st century. Will growth be stalled by events like our current financial crisis, or will we cooperate to create balanced and sustainable growth, lifting more people out of poverty and creating a broader prosperity around the world?

Will the need for energy breed competition and climate change, or will we build partnerships to produce clean power and to protect our planet? Will nuclear weapons spread unchecked, or will we forge a new consensus to use this power for only peaceful purposes? Will extremists be able to stir conflict and division, or will we unite on behalf of our shared security? Will nations and peoples define themselves solely by their differences, or can we find the common ground necessary to meet our common challenges, and to respect the dignity of every human being?

We can't predict with certainty what the future will bring. But we can be certain about the issues that will define our times. And we also know this: the relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world. That reality must underpin our partnership. That is the responsibility that together we bear.

As we look to the future, we can learn from our past, for history shows us that both our nations benefit from engagement that is grounded in mutual interests and mutual respect. During my time in office, we will mark the 40th anniversary of President Nixon's trip to China. At that time, the world was much different than it is today. America had fought three wars in East Asia in just thirty years, and the Cold War was in a stalemate. China's economy was cut off from the world, and a huge percentage of the Chinese people lived in extreme poverty. Back then, our dialogue was guided by a narrow focus on our shared rivalry with the Soviet Union. Today, we have a comprehensive relationship that reflects the deepening ties among our people. Our countries have now shared relations for longer than we were estranged. Our people interact in so many ways. And I believe that we are poised to make steady progress on some of the most important issues of our times.

My confidence is rooted in the fact that the United States and China share mutual interests. If we advance those interests through cooperation, our people will benefit, and the world will be better off, because our ability to partner with each other is a prerequisite for progress on many of the most pressing global challenges.

Let me name some of those challenges.

First, we can cooperate to advance our mutual interest in a lasting economic recovery. The current crisis has made it clear that the choices made within our borders reverberate across the global economy. And this is true not just of New York and Seattle, but Shanghai and Shenzhen as well. That is why we must remain committed to strong bilateral and multilateral coordination. That is the example we have set by acting aggressively to restore growth, to prevent a deeper recession and to save jobs for our people.

Going forward, we can deepen this cooperation. We can promote financial stability through greater transparency and regulatory reform. We can pursue trade that is free and fair, and seek to conclude an ambitious and balanced Doha Round agreement. We can update international institutions so that growing economies like China play a greater role that matches their greater responsibility. And as Americans save more and Chinese are able to spend more, we can put growth on a more sustainable foundation, because just as China has benefited from substantial investment and profitable exports, China can also be an enormous market for American goods.

Second, we can cooperate to advance our mutual interest in a clean, secure, and prosperous energy future. The United States and China are the two largest consumers of energy in the world. We are also the two largest emitters of greenhouse gases in the world. Let's be frank: neither of us profits from a growing dependence on foreign oil, nor can we spare our people from the ravages of climate change unless we cooperate. Common sense calls upon us to act in concert.

Both of our countries are taking steps to transform our energy economies. Together we can chart a low carbon recovery. We can expand joint efforts at research and development to promote the clean and efficient use of energy. And we can work together to forge a global response at the Climate Change Conference in Copenhagen and beyond. And the best way to foster the innovation that can increase our security and prosperity is to keep our markets open to new ideas, new exchanges, and new sources of energy.

Third, we can cooperate to advance our mutual interests in stopping the spread of nuclear weapons. Make no mistake: the more nations acquire these weapons, the more likely it is that they will be used. Neither America nor China has an interest in a terrorist acquiring a bomb, or a nuclear arms race breaking out in East Asia. That is why we must continue our collaboration to achieve the denuclearization of the Korean peninsula, and make it clear to North Korea that the path to security and respect can be traveled if they meet their obligations. And that is why we must also be united in preventing Iran from acquiring a nuclear weapon, and urging the Islamic Republic to live up to its international obligations.

This is not about singling out any one nation; it is about the responsibility of all nations. Together, we must cooperate to secure all vulnerable nuclear materials around the world, which will be a focus of our Global Nuclear Summit next year. And together, we must strengthen the Nuclear Non-Proliferation Treaty by renewing its basic bargain: countries with nuclear weapons will move toward disarmament; countries without nuclear weapons will not acquire them; and all countries can access peaceful nuclear energy. A balance of terror cannot hold. In the 21st century, a strong and global regime is the only basis for security from the world's deadliest weapons.

And fourth, we can cooperate to advance our mutual interests in confronting transnational threats. The most pressing dangers we face no longer come from competition among great powers, they come from extremists who murder innocents; from traffickers and pirates who pursue their own profits at the expense of others; from disease that know no borders; and from suffering and civil wars that breed instability and terror. These are the threats of the 21st century. And that is why the pursuit of power among nations must no longer be seen as a zero-sum game. Progress including security must be shared.

Through increased ties between our militaries, we can diminish causes for dispute while providing a framework for cooperation. Through continued intelligence-sharing, we can disrupt terrorist plots and dismantle terrorist networks. Through early warning and coordination, we can check the spread of disease. And through determined diplomacy, we must meet our responsibility to seek the peaceful resolution of conflict, and that can begin with a renewed push to end the suffering in Darfur, and to promote a comprehensive peace in Sudan.

All of these issues are rooted in the fact that no one nation can meet the challenges of the 21st century on its own, nor effectively advance its interests in isolation. It is this fundamental truth that compels us to cooperate. I have no illusions that the United States and China will agree on every issue, nor choose to see the world in the same way. This was already noted by our previous speaker. But that only makes dialogue more important, so that we can know each other better, and communicate our concerns with candor.

For instance, the United States respects the progress that China has made by lifting hundreds of millions of people out of poverty. Just as we respect China's ancient and remarkable culture -- it's remarkable achievements, we also strongly believe that the religion and culture of all peoples must be respected and protected, and that all people should be free to speak their minds. And that includes ethnic and religious minorities in China, as surely as it includes minorities within the United States. Support for human rights and human dignity is ingrained in America. Our nation is made up of immigrants from every part of the world. We have protected our unity and struggled to perfect our union by extending basic rights to all our people. Those rights include the freedom to speak your mind; to worship your God; and to choose your leaders. These are not things that we seek to impose, this is who we are. It guides our openness to one another, and to the world.

China has its own distinct story that shapes its own worldview. And Americans know the richness of China's history because it has helped to shape the world and it help us shape America. We know the talent of the Chinese people because they have helped to create this great country. My own cabinet contains two Chinese Americans. And we know that despite our differences, America is enriched through deeper ties with a country of 1.3 billion people that is at once ancient and dynamic, ties that can be forged through increased exchanges among our people, and constructive bilateral relations between our governments. That is how we will narrow our divisions.

Let's be honest. We know that some are wary of the future. Some in China think that America will try to contain China's ambitions; some in America think that there is something to fear in a rising China. I take a different view. And I believe President Hu takes a different view as well. I believe in a future where China is a strong, prosperous and successful member of the community of nations; a future when our nations are partners out of necessity, but also out of opportunity. This future is not fixed, but it is a destination that can be reached if we pursue a sustained dialogue like the one that you will commence today, and act on what we hear and what we learn.

Thousands of years ago, the great philosopher Mencius said: "A trail through the mountains, if used, becomes a path in a short time, but, if unused, becomes blocked by grass in an equally short time." Our task is to forge a path to the future that we seek for our children, to prevent mistrust or the inevitable differences of the moment from allowing that trail to be blocked by grass; to always be mindful of the journey that we are undertaking together.

This Dialogue will help determine the ultimate destination of that journey. It represents a commitment to shape our young century through sustained cooperation, not confrontation. I look forward to carrying this effort forward through my first visit to China, where I hope to come to know better your leaders, your people, and your majestic country. Together, I am confident that we can move steadily in the direction of progress, and meet our responsibility to our people, and to the future that we will all share.

Thank you very much.

(APPLAUSE)

COLLINS: All right. President Barack Obama as you see there. President Barack Obama as you see there, speaking at the U.S.-China Strategic and Economic Dialogue Meeting. Now complete. He had several things to say. Mainly talking about the mutual interests of the two countries, China and the U.S. The lasting economic recovery, and also clean and prosperous energy future, stopping the spread of nuclear weapons, and also confronting transnational threats -- meaning extremists or any type of disease that threatens people at China and the United States.

So there you have it. Secretary of State Hillary Clinton was there as well, and spoke, and secretary of the Treasury Timothy Geithner. We're going to take a quick break. We'll be back in just a moment right here in the CNN NEWSROOM.

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COLLINS: Time now for a quick check on stories happening right now. Firefighters battling this raging five-alarm fire at a home furnishing store at Bremerton near Seattle. The fire chief says no one was inside the 20,000 feet building when the fire started. The flame spread so quickly, though, it became a five-alarm fire in just two hours.

An American who joined al Qaeda and then plotted to kill former President Bush is due back in court today for re-sentencing. Ahmed Omar Abu Ali was convicted in a federal court in Virginia back in 2005. But last year, an Appeals Court ordered his re-sentencing arguing that his 30-year sentence was too lenient.

Astronauts onboard the space shuttle "Endeavor" wrapping up the mission today with the fifth and final space walk. They are installing television cameras in the new section of the International Space Station. They'll also be rearranging some power cables and connections. "Endeavor" is scheduled to leave the space station tomorrow.

By Now, David Goldman's story is well known. In 2004, his wife took their son on vacation out of the U.S. and never came back. Now the Brazilian family raising the boy is telling their side of the story exclusively to CNN.

(COMMERCIAL BREAK)

COLLINS: The economy. It's issue number one for you and for us. On Wall Street, earnings and churnings. Investors are ready to pounce on new company reports and economic numbers. Christine Romans is tracking the stimulus money. Is your cash being spent wisely? Everybody wants to know that.

And health care reform. A new week, new challenges and new doubts. In fact, we begin with health care reform. President Obama's top domestic priority is facing two big obstacles this morning -- time and math. Members of both parties now saying overhaul cannot pass without some Republicans getting on board.

Let's get the very latest now from CNN White House correspondent Suzanne Malveaux.

So Suzanne, the Senate obviously is going to miss the president's deadline for a vote before the recess. You have to wonder, what are they listening to from the president these days?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You know, it's a very good question. What do they actually taking from the president. What kind of role is he going to play? Well, White House aides I spoke with this morning are saying, look, he is still a relevant player. He is still viable, a part of this debate.

And they want to emphasize, despite the fact that they missed this deadline, he did not get the deadline that he wanted, that he still has some political capital, some clout in all of this. He's going to be out front and center in the weeks to come and the days to come. He's going to be addressing the AARP tomorrow. And the bottom line here is they want them to know -- they want Democrats and Republicans to know that he is still going to be very much engage in the weeks to come on this debate.

Take a listen to his top advisor.

(BEGIN VIDEO CLIP)

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER: We're less interested in hard deadlines and moving the process forward. The deadlines have had a disciplining effect. Three of the five committees of jurisdiction in the Congress have passed bills and the other two were working hard on it. We want to move this process forward. Even if both the House and the Senate had voted on this bills before the break, this would still go, as you know, well into the fall.

(END VIDEO CLIP)

MALVEAUX: And Heidi, one of the things here, David Axelrod, Robert Gibbs and other advisers are emphasizing is that 80 percent of this they say they have an agreement. It's the other 20 percent that they don't. But as we know, Heidi, that's the tough part. The other 20 percent, we know that republicans as well as democrats are very much split over this issue and that this is going to be very tough in the weeks ahead. The president very much prepared for it but republicans are warning him that do not expect, do not necessarily expect that you're going to see a bill by the end of the year. Take a listen.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MINORITY LEADER: The House bill and the Senate Health Committee bill, they pay for it by cutting doctors, cutting hospitals, and raising taxes on small business. Those are very difficult, painful pay force and they are having a hard time selling it to their own members. The only thing bipartisan about the measures so far is the opposition to them.

(END VIDEO CLIP)

MALVEAUX: Heidi, there is a by partisan measure that seems to be gaining some sort of traction among both republicans, democrats and the White House and that is this idea that they are talking about are the Cadillac tax. It is really a tax on the health insurance companies on these high profile Cadillac gold-plated type of plans that they offer to top execs. That is one idea that's being bounced around. Critics say that tax are just going to be passed on to the consumers but it is something that seems to be gaining some traction right now. They got more time to mull it over and more time to fight over it, Heidi. So we'll see how that goes.

COLLINS: Yes, and all this as obviously other issues, other stories are going on too. We just heard from the president live at the U.S. and China economic dialogue meeting there, talking about the debt and talking about how the two countries try to work together.

All right. Well, Suzanne Malveaux, you're on top of it all. We appreciate it so much.