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The Situation Room

Bush Hosts Putin; Clean Up of New Orleans; Schwarzenegger to Seek Re-election

Aired September 16, 2005 - 15:28   ET

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

WOLF BLITZER, CNN ANCHOR: The president of the United States and the president of Russia, George W. Bush, Vladimir Putin, wrapping up about a 30-minute news conference.
Mr. Bush making some important news as following. As far as Katrina, the hurricane and the recovery, the relief operation, is concerned, he said it's going to cost whatever it's going to cost. The United States government, the federal government will pick up the tab. He said that it was possible that some of that additional money -- some estimate perhaps $200 billion, maybe even more -- some of that could come as a result of cutting what he described as unnecessary spending. But he said he did not want to suggest there should be any tax increases to pay for Hurricane Katrina or for other expenditures as well. He said that would undermine economic growth.

He also promised that there would be full responsibility. Inspectors general would be watching how all of the money would be spent to make sure none of it would be spent unwisely. But that's significant news as far as the president is concerned. We'll get reaction to what Mr. Bush said.

We're also watching other stories, Arnold Schwarzenegger in particular. Will he be coming back? Coming up this hour, very, very soon, the governor of California will speak to the voters out there. His press secretary says he's running for re-election, will make the announcement. We'll bring it to you live.

Plus, violence and insurgency. More brazen attacks on the Iraqi government and the Iraqi people. We're going to take you live to Baghdad.

And a little bit later, hurricane grandmother. She lost her home and then was thrown in jail, supposedly for looting. We'll find out how a 73-year-old woman ended up in a state prison. She'll join us live.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Along the Gulf Coast, it's still "Mission Critical". The U.S. Army Corps of Engineers says it's reached what it describes as the halfway point in draining the floodwaters in New Orleans. Inundation of the city has been cut from 80 percent to 40 percent.

Taxpayers will wind up picking up the tab for rebuilding the disaster zone. President Bush spoke about it a few moments ago. He suggests that he will find unnecessary spending in the federal budget to try to offset some of the additional spending. He does say he's ruling out additional tax increases to pay for the spending. But whatever it costs, it will cost. The road to recovery will be a long one for New Orleans. But the rebuilding clearly has already begun.

Let's get some details. For that we turn to CNN's Mary Snow. She's on the scene for us. Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, that rebuilding is a monumental task from streets like this one right near downtown New Orleans -- streets that are virtual ghost town with entire homes destroyed -- to bigger structures.

We went over earlier today to the Superdome to see what has been going on there in the past two weeks. It was two weeks ago today that we saw the mass evacuation of thousands of people who had been stranded in that Superdome for four or five days. What is in there, as you can see, is still littered with filth and debris. But it's much, much clearer than it had been a couple of weeks ago. This had been a contaminated site with raw sewage in that site. There has been an effort to clean that up. As you can probably see, as well, the roof where parts of that roof had been peeled off, the sunlight still streaming through. But its future is unclear.

Another site that we visited today, the Convention Center -- this, of course, was also on TV cameras two weeks ago -- where people had been stranded, thousands of people. Inside that Convention Center, we couldn't get in, but we could get a picture of what it looked through a glass window. And as you can see, just littered with debris throughout that Convention Center.

Yesterday, Mayor Ray Nagin says that he has hopes for that center, which is really a symbol of despair, people who were desperate to get out of New Orleans. He wants to transform that into a retail center where there will be supplies for people who are gradually going to be coming back to rebuild. Right now, though, it is just completely enveloped by military personnel and cleanup crews around that site. We were told there was absolute debris covering those streets. Those streets have finally been cleared and now crews have to go inside to the inside of that structure.

Wolf.

BLITZER: Mary, what did you hear when you were over at the Superdome and the Convention Center? Do they think those structures are salvageable, they can be repaired, they can be cleaned up? Or are they both going to be doomed?

SNOW: The Superdome, the future of that building is really uncertain at this point. And there is so much destruction in that building. But the Convention Center, clearly the city believes that that can be salvaged, and also used to be part of this rebuilding effort. So that future looks a little more certain than the Superdome.

BLITZER: I suspect it will be a while before conventions start coming back to New Orleans. Mary Snow reporting for us in New Orleans. Thank you very much.

Ali Velshi is joining us now with the "Bottom Line". He's looking at the impact of Katrina, the efforts to rebuild New Orleans. Ali, hi. What are you thinking of?

ALI VELSHI, CNN ANCHOR: Well, you know, a couple of things I'm looking at. First of all, we're looking at the damage that's been done to those areas that's been done beyond New Orleans. And obviously I'm talking about the oil and gas infrastructure. That -- I just wanted to give you a revisit of that. Since the highs that were set right as Hurricane Katrina hit, we're now looking at a real pullback on the price of crude for oil -- for October delivery. The crude oil futures, $63 now. You're seeing gas prices start to slow down.

You're also seeing that a lot of the production is coming back online. But some of it, according to the Department of the Interior, is having trouble getting to the refinery. So there is some pipeline damage. We know that some rigs and platforms were damaged. We're getting that infrastructure back on track.

Now, the other issue is that when you talk about the costs of rebuilding, the costs that the government and the insurers and all of them will pay -- that $200 billion that Mary was just talking about -- typically, what happens when you rebuild something that big, is you get a bump up in the economy when that rebuilding takes place. So a lot of people figure, all right, so you'll pay a lot of money here. It will come out of the economy, it'll soften things up for this year. But next year and years going forward you'll see all that come back, because there'll be rebuilding and reinvestment.

The problem is it doesn't go out of one pot, Wolf, as you know, and into another. So the government pays out money in -- that they collect from taxes, but others profit from the rebuilding. So it's not a balanced situation. And what we've heard the government say right now is that there's no need to increase taxes to pay for this and there's no need to cut extensively.

Now we heard President Bush say in the press conference a few minutes ago, that, yes, we may have to look at cutting some stuff back, but now is when we're going to see. When these numbers start to add up, when we talk about $100 or $200 billion, it's got to come from somewhere, Wolf. And we don't know yet where that's coming from and how much that's going to take out of the pocket of taxpayers.

BLITZER: And when the president says we'll look for ways to cut unnecessary spending, that's a lot easier said than done, because Congress has shown no appetite to cut that spending, at least so far.

VELSHI: That's right.

BLITZER: Thanks, Ali. We'll be back with you. Appreciate it very much.

Will he be back as the governor of California? Will he at least try to be back? We're expecting live remarks coming up momentarily -- the California Governor Arnold Schwarzenegger, this hour, on whether he'll be seeking a second term. We're standing by for official word. His press secretary says he'll be back.

And with so many children displaced by Hurricane Katrina, the first lady, Laura Bush, has an important message for parents and young children. Coming up, we'll tell you what else the first lady said when she visited the National Center for Missing and Exploited Children.

And over in Britain, they're fuming over fuel prices. Now many motorists are not taking it anymore. We'll tell you how they're protesting. Stay with us.

(COMMERCIAL BREAK)

BLITZER: You're looking at live pictures of a town hall meeting in San Diego. The governor of California, Arnold Schwarzenegger, about to announce he will seek a second term.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: This is great. Maybe as the next profession I'll become a talk show host. Anyway, it's nice to be here in San Diego again. I love San Diego. Love San Diego. I love San Diego. I mean, if you think about it, when I ran for governor, San Diego, and we got 80 percent of all the votes -- 80 percent of all the votes. I guess the other 20 percent never forgave me for my movie "Hercules in New York."

No, I think that we did really well here in San Diego. But I just wanted to tell you how wonderful it is to be here. And right off the top, I just want to say thank you to the people of San Diego for your great generosity. Thank you for your great generosity towards our -- people that are coming here from Louisiana and from Mississippi.

You know, we have now taken in, in California, over 10,000 people from those disaster areas. San Diego has taken in more than 1,000 alone. So there's been tremendous generosity. I want to thank you all for your great, great help on this issue here and for reaching out and helping those poor people. So a big hand to all of you in San Diego.

I am going up and down the state right now to campaign and to talk to the people about our special election, about our reforms, our initiatives, and about my goal for the future of California. That's what I want to talk to the people about.

And so it has been really great, this format, because I love this town hall meeting where I can meet the people, talk to the people directly and be able to listen to the people, learn from the people and they can ask me questions. So this is more like a question and answer session, but you can ask anything. It's basically for me to speak to California. This is what this is all about.

And, of course, I do want to say to you what a great honor it is for me to be your governor. It is such a great honor and it's the best job that I've ever had, the most exciting job that I've ever had. To get up every morning and to fix problems here in California and to help people have a better life, it is extraordinary.

One day you get up and you're trying to build more roads. The next day you try to build more schools. Or just yesterday we had an obesity summit where I signed legislation so that we ban all the junk food and all the sodas from our public schools. So it is so much fun to do all of this and it's exciting for me to do that.

But now, of course, it is very important to remember why have you sent me to Sacramento? You've sent me to Sacramento two years ago because our politicians have taken our state down almost into bankruptcy. Two years ago if you think about it, what they've done, $22 billion debt, the highest cost of doing business here in this state.

Businesses were leaving the state because they couldn't handle any more. Workers' compensation was the poison of our economy, and we were having the worst of the worst credit rating. I mean, worse than some of the Third World nations. I mean, it was absolutely disastrous. And people were leaving -- losing jobs left and right.

And now what we have done is, with the help of you, we have turned the economy around again. And I've always said that we have a three-step plan. It is about recovery, about reform and about rebuilding. Those are the three Rs -- recovery, reform, rebuild.

So the first year, we have recovered. We have brought the economy in California back. Now we have created 400,000 new jobs since I came into office. We fixed workers' compensation and reformed the workers' compensation system. And businesses are moving back to California, creating more opportunities, creating more jobs.

And our revenues went up by $6 billion. And because of that, we were able to balance the budget and I kept the promise. We did not raise taxes. And the important thing is we were able to pay down some of our debt. No new borrowing. And we balanced the budget.

And we were able to give money to education -- as you've heard earlier, $3 billion increase in education funding, a total of $50 billion.

And we were able at the same time to give money to transportation. Proposition 42 -- for the first time ever, fully fund proposition 42 to $1.3 billion so we can build more freeways, more highways, so you don't get stuck in traffic all the time. Because you shouldn't be struck in traffic, you should be home with your families, with your children.

So those are all the kind of things we have accomplished already.

But now in order to move on, in order to really rebuild California and to build for the future, we need reform. Why? Because we still have a broken system. The system is still broken because remember, the only thing that changed during the recall was the governor. The only thing that changed was me, but everything else is still the same.

We still have the same government employees, union bosses up there. We still have the same special interests. We still have the same legislators, all the powerful groups, corporate America. All of those people are lobbying at the Capitol and they are controlling the legislators, so nothing is getting done.

Unless we fix the broken system that is not fixed yet -- as I said to you, when I was sworn in, in Sacramento, there's a massive weight we must lift off our state. Alone I cannot lift it, but together we can. Together we can perform miracles.

All of the things I have just counted out that we've accomplished was because of you. You the people of California have helped me every step of the way. That's why we were successful.

Even with workers' compensation reform it was you that gathered the 1.2 million signatures. It was you that helped me so I could put the 1.2 million signatures in front of the opposition that was fighting us on workers' compensation reform and say, here are the signatures. We can go the initiative route. And then they finally made an agreement and we reformed workers' compensation. So the people were part of it every step of the way.

But now I need you again to reform the system because in order to rebuild California, we must reform because we are still spending too much money. For every dollar we take in, we are spending $1.10. Education system is going downhill. We're spending $50 billion. We're spending a record amount of money for education. When are we ever seeing a record amount of results? Never. We haven't seen it yet. So here we are throwing more and more money at education. We need to reform the systems. And redistricting. All of those things need to be reformed in order to rebuild.

Because remember that right now we have 37 million people in California. And we are not building. We are bursting on the seams. We don't have enough electricity. We don't have enough water. We don't have enough of our roads. We need more hospitals. We need more of everything.

Now we have an increase of population of 500,000 people a year. That means 5 million more people in 10 years. If we cannot provide for the people already now, with 37 million, how can we provide 42 million? All the experts even say it can go up to 45 million. How can we do that? We need to build and create an infrastructure for transportation for our ports. We need to build more freeways, more hospitals, more emergency rooms, more schools. We need to create more nurses, more teachers, more police officers, more firefighters. We need to build and we have more energy and we have to get more water. We have to take care of all of those things.

We have to build for the future of California. And the only way we can do that is if we have the money to do that. And we will never have the money, if we continuously as a state spend more money than we take in. As I said, $1.10 for every dollar we take in, we are spending. So therefore, we can never put money aside to build. And we need to build. I as governor have a great vision for California. We need to build this infrastructure. We are not living up to our potential. We can make our state again the greatest state in the country. And, of course, the greatest place in the world.

We can make it again the Golden State. But we need to work together. For you, it is important to understand. You sent me to Sacramento to fix a broken system. Let us continue working together so we can fix it.

Now here are --

(APPLAUSE)

SCHWARZENEGGER: Here are the three initiatives. Number one is 74. Proposition 74 says that a teacher has to work for five years successfully, so that that teacher can get tenure and a job for life.

Now the reason --

(APPLAUSE)

SCHWARZENEGGER: Right now, after two years, a teacher can get tenure and a job for life. There's no job in the world where you can get a job guarantee for life, after two years of proving yourself. And in the meantime, here we have teachers, which is the most important profession. Think about it. If our children are the future, then the teachers are definitely the architect of the future. There is no more important profession than to teach and to help our kids with intelligence, with the knowledge, to create that mind, so they can take on challenges in the future. The only way we can do it is by really producing the best teachers possible.

They have this term in education, I don't know if you heard about it, the dance of the lemons. That's what they call it. The lemons are the teachers that are failing our students. That's what they are called. The lemons. And the schools kick them around from school to school to school. When they fail in this school, they can't throw them out and get rid of a teacher because you can't do that, so they go and they push them to another school. And there they pollute education of the kids there. And then they kick them to another school. So they call it the dance of the lemons. They dance the teachers from school to school to school. And I say let's dance them right out the door.

(APPLAUSE)

SCHWARZENEGGER: So vote yes on Proposition 74. Next is 76. We talked about it already. Let the state live within its means, which basically means that we control spending, pay down the debt, and balance the budget without raising taxes. That's what we want. That's what I promised you.

(APPLAUSE)

SCHWARZENEGGER: And Proposition 77 is redistricting. As you know that the last time the redistricting was done, it was done by politicians. Now you can imagine when politicians do the redistricting, are they going to be protecting you, or are they going to protect themselves and their incumbents? Of course that's what they did. Protecting themselves and protecting the incumbents. Not you. So they drew the district lines in a very interesting way. Sometimes districts are 200 miles long and only a few hundred yards wide, because they were picking the voters. They were choosing the voters rather than the voters picking the politicians.

They want to choose the voters. So they've turned the whole system upside down. They built this little castle so no one can get in, so therefore, there's no competition. Therefore, there's a lack of performance in Sacramento, because the system is fixed. Before you go to the polls, you know already who is going to win. Out of 153 congressional and legislative seats the last time, out of 153 legislative and congressional seats, none of them changed party. Think about that for a second. None of them changed party, because the system is rigged.

That is the problem. So what we are saying with Proposition 77 is, let a panel of retired judges pick and draw the districts -- a panel of retired judges that has no vested interest in the outcome. They will draw the districts. And then we will present the districts the way they are drawn to the people of California and let them vote.

You see, we want the people to be part of it on every step of the way, because this way we guarantee that the people will be represented, not the politicians. This is the way we want to do it. This is true reform. And then we will have districts where the Democrats and the Republicans have to compete.

Of course there are politicians now that are saying how could you do this, Arnold, to me. I helped you with the campaign when you ran for governor, now all of a sudden you are doing this to me.

BLITZER: He's getting passionate. Arnold Schwarzenegger speaking about issues very important in California. He's expected momentarily to formally announce he's going to be seeking a second term next November. A year from next month, he'll be up for re-election. We're going to go back there and listen to his remarks.

First, though, we'll take a quick break. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: We'll go back to Arnold Schwarzenegger momentarily. But it's almost time for the markets to close and the closing bell.

Let's check in with CNN's Ali Velshi in New York. He's got more. Ali?

(MARKET REPORT)

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