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The Situation Room

New Danger For Economic Stimulus Plan; Iranian Outreach to United States

Aired February 10, 2009 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: And, to our viewers, you're in THE SITUATION ROOM.

Happening now: The economic rescue plan heads into dangerous new territory. And there's no time for President Obama to celebrate a victory in the Senate.

Also this hour, the treasury secretary outlines an overhaul of the widely criticized financial bailout package, but stock prices plunge, and investors demand more detail.

And Iranians mark 30 years of hostility toward the United States. But their president and Hillary Clinton are sending some friendly signals to one another -- all that and the best political team on television. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Powerful new moves today by the federal government that could commit billions, perhaps even trillions, of additional dollars to try to fix the crumbling economy.

At the center of it all right now, the president's stimulus plan now heading into a critical new round of negotiations between the House and the Senate.

But Mr. Obama knows he can't let up on his own campaign to try to win public support for the plan.

Let's go to our White House correspondent, Dan Lothian.

He traveled with the president to Florida today.

How did it go, Dan?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, you know, the president was in the middle of the town hall meeting when the Senate passed that stimulus bill.

The president said it was -- quote -- "good news." And he told the people in the audience that quick action is needed in order to save or create up to four million jobs to help communities that are struggling, like Fort Myers.


LOTHIAN (voice-over): Mr. Obama is back on the campaign trail...

CROWD: Yes, we can! Yes, we can!

LOTHIAN: ... but this time to win a stimulus bill, taking his message from the U.S. Capitol to the foreclosure capital.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: But we're going to do everything we can to help responsible homeowners here in Fort Myers and other hard-hit communities stay in their homes.

LOTHIAN: Unemployment here rose last year from 6 percent to 10 percent. Construction jobs from a once-booming housing market have dried up. And business owners are struggling.

GLEE ANN AGIUS, GREATER FORT MYERS CHAMBER OF COMMERCE: There's a lot of people That are calling us and Saying that they're just closing up shops, that they can't afford to pay their employees anymore.

LOTHIAN: The town hall meeting was a chance to ask the president how the stimulus plan will rescue them.

UNIDENTIFIED FEMALE: Is there any provisions in your stimulus package that actually will give back to the taxpayers individually, that we'd all get stimulus checks to jump-start the economy?

OBAMA: Yes. Yes.

UNIDENTIFIED MALE: So many of the lenders these days are unwilling to discuss any possibility of doing a loan modification program unless you're currently in default.

OBAMA: Those are some of the issues that we will be laying out over the next couple weeks.

LOTHIAN: The president said a sweeping plan to rescue the nation's banking sector announced by his treasury secretary will help.

And an emotional moment, as unemployed secretary Henrietta Hughes, who says she's homeless, asked the president for assistance.

HENRIETTA HUGHES, RESIDENT OF FLORIDA: We need our own kitchen and our own bathroom. Please help.

OBAMA: We're going to do everything we can to help you. But there are a lot of people like you. And we're going to do everything we can.

LOTHIAN: As Mr. Obama was taking questions, word of the Senate vote arrived on a piece of paper.

OBAMA: We have still got to get the House bill and the Senate bill to match up before it gets sent to my desk. So, we have got a little more work to do over the next couple of days. But it's a good start.


LOTHIAN: As the House and Senate begin tough negotiations on that stimulus bill, the president again called for bipartisan effort.

And, Wolf, one other note: The day that Timothy Geithner was rolling out this plan that will help the banking industry, of course, the stock market plunged by almost 400 points. The president was asked about this in an interview with ABC News. And he responded this way, saying, Wall Street is hoping for an easy out, and there's no easy out -- Wolf.

BLITZER: Dan Lothian, thank you.

The treasury secretary, Timothy Geithner, took the lead, as we just heard, in promising other aggressive steps to fight the financial crisis.

Let's go to our senior correspondent, Allan Chernoff. He's working the story for us.

The question is, is this going to work?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, the answer is, nobody really knows, Wolf. What we do know is that we're almost in the same situation where we were five months ago, back when the Bush administration announced its first bailout plan.

We have the same kind of problem, first of all, the banks weighed down by their toxic assets, a lot of those lousy real estate loans. We also have the lending market pretty much frozen. It's very tough right now to get a consumer loan, a small business loan.

So, what is the treasury secretary to do? He's going to throw more taxpayer money at the problem.


CHERNOFF (voice-over): Treasury Secretary Tim Geithner wants bankers to lend their bailout money, which hasn't been happening.

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: When our government provides support to banks, it is not for the benefit of banks. It is for the businesses and families who depend on banks.

CHERNOFF: But how to achieve the financial stability that can promote lending? Analysts say the plan lacks specifics.

BERT ELY, BANK ANALYST, ELY & COMPANY: Where's the beef? This plan is long on rhetoric and very short on detail.

CHERNOFF: Perhaps the toughest detail, creating incentives for private investors to buy up troubled mortgage loans from banks, so- called toxic assets. There used to be a huge market for such loans. Now it appears Washington must provide a financial cushion for potential investors.

ELY: Investors are going to want, understandably, high rates of return, or potential return, on these assets because of the risk that they pose. CHERNOFF: Secretary Geithner says he would spend $100 billion of taxpayer money in the hope of getting investors to spend $1 trillion. More taxpayer money would go to banks in need of capital, but only after they pass a stress test to make sure the money can be put to good use.

And $50 billion would be committed to helping homeowners at risk of foreclosure. The bottom line is that the remaining $350 billion of bailout money may not be enough.

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: And now he has a second $350 billion. What's the plan? What's the need? And until we have an answer to those questions, I don't know how we can take further steps.


CHERNOFF: Theory is fine, but no one can say for sure what exactly is going to happen in practice. And Congress may not want to spend more than another $350 billion for bank bailouts -- Wolf.

BLITZER: Thanks very much, Allan, for that story, huge, huge issues at stake.

Let's get to the next hurdle for the president's economic stimulus package, after its approval earlier today by the full Senate.

Our senior congressional correspondent, Dana Bash, has got that part of the story -- Dana.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Wolf, there is so much activity going on right now in the Capitol.

White House Chief of Staff Rahm Emanuel is shuttling back and forth between the Senate and the House, trying to negotiate a compromise between the Democrats there. And it might be the House that might have to do it.


BASH (voice-over): House Democrats are not happy that Democrats in the Senate cut some $100 billion in spending on priorities like education from their stimulus package.

But House Speaker Nancy Pelosi is now signaling they will likely have to live with it, for the sake of compromise.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: As President Obama cautioned the nation, that we cannot allow the perfect to be the enemy of the effective and of the necessary. And we will not.

BASH: Pelosi may not have a choice. At the very moment she was speaking, the White House chief of staff was meeting in Senate Majority Leader Harry Reid's office with centrist senators, who told CNN they made clear to the White House that the spending cuts they demanded to vote for the Senate bill are non-negotiable. SEN. BEN NELSON (D), NEBRASKA: This is a place where you never say never, but this is probably as close as you get.

UNIDENTIFIED FEMALE: Arlen Specter's office. Can you hold, please?

BASH: Republican Arlen Specter's experience tells you why he and other centrists are taking such a hard line against adding to the price tag.

SEN. ARLEN SPECTER (R-PA), JUDICIARY COMMITTEE RANKING MEMBER: The phones are overwhelming. And I was -- it's a very unpopular vote.


BASH: Specter is up for reelection next year and is getting pummeled for supporting the 800-plus-billion-dollar stimulus bill. Conservative groups are vowing to spend millions to help any Republican who will run against him.

(on camera): How concerned are you that this could be the thing that costs you your seat?

SPECTER: Well, I am very concerned about it. I had a tough 1 percent primary last time. And I know the political peril. And in light of the very severe need to take action to avoid a depression, I thought my duty required that I do just what I did.


BASH: At this very moment, Senator Arlen Specter, the Republican, is in the Democratic leader's office in the Capitol with other centrists, again, with the White House chief of staff as well.

They're trying to figure out in the words of one Democratic aide what Senator Specter and others, what their bottom line really is. But you, know, the open question right now is how long these negotiations are going to go. The White House and Democrats, they are hoping that they can do this in the next couple of days, get this bill to the president's desk -- Wolf.

BLITZER: Yes, the president's anxious to sign it by next Monday, Presidents Day, if at all possible. Thanks very much, Dana, for that.

Let's check in with Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: There's nothing like a three-day weekend coming up to put a little pressure on the Congress, get their work done.

BLITZER: A lot of members would like to leave town...


CAFFERTY: Yes. It's amazing how they can work a little quicker when that's the case. Barack Obama throws Joe Biden under the bus. That's one British newspaper headline describing the president's little dig at his number-two last night during that news conference. President Obama was asked about Biden's recent remarks that even if the White House did everything right combating the economic downturn -- quote -- "there's a 30 percent chance we're going to get it wrong" -- unquote.

The president grinned a little bit. It was brought up at the news conference. He said he didn't exactly remember what Joe was referring to -- smooth as ever. Mr. Obama went on to say that he wouldn't assign a numerical value to all of this, but, given the magnitude of the problems we're facing, no one single thing they do will solve all the problems.

Nice dodge.

But let's get back to the vice president. During the campaign, people were always wondering what would pop out of Biden's mouth next. Biden has said -- quote -- "I never make any big, big gaffes." But many would beg to differ.

Jobs, by the way, is a four-letter word. Perhaps the biggest headache came in late October, when Biden suggested that Mr. Obama would be tested by an international crisis within his first six months in office, something that the McCain camp seized on immediately. You will remember that.

And it didn't end on the campaign trail. During their first full day in office, Biden joked at a news conference about how his memory wasn't as good as Chief Justice John Roberts', who had stumbled over the president's oath of office. The president wasn't laughing, and Biden later apologized to the chief justice.

So, here's the question. Is Vice President Joe Biden becoming an embarrassment for President Obama?

Go to You can post a comment on my blog.

It's not like Biden was an unknown quantity. Everybody was afraid that these very kinds of things would be happening on a fairly regular basis. And so far they were right.

BLITZER: Well, we will see. He brings some other assets to the table. He's a very smart guy.

CAFFERTY: Oh, absolutely. No, he's very qualified in many other ways, foreign policy, things like that. But he occasionally gets both feet in his mouth at the same time.

BLITZER: Once in awhile.


BLITZER: Thanks, Jack.

We're following breaking news out of Israel. Right now, election results are coming in. Potentially, we could see the first female Israeli prime minister in Israel in more than 30 years. On the other hand, Benjamin Netanyahu is saying, not so fast. We're live in Jerusalem.

And amid the worsening situation in Afghanistan, a decision to send in more U.S. troops could be made in days. And wait until you hear what President Obama said when he was asked this.


UNIDENTIFIED FEMALE: In light of the fact that you have inherited an economic crisis, where does your priority lie with health care reform?



BLITZER: Want to go right to the breaking news out of Israel.

Our senior political analyst, Bill Schneider, is in Jerusalem. He's watching the results coming in.

Bill, the results are in. They finished voting in Israel. And Tzipi Livni, the Kadima Party leader, the foreign minister, she's claiming victory. But so is Benjamin Netanyahu, the Likud Party leader.

What is going on?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, they're both claiming victory because of the crazy political system they have in Israel.

She, by a small margin, looks -- it looks like she has the largest number of votes of any of the 30 or so political parties. On the other hand, Netanyahu says he will head the next government for two reasons. One is that the right-wing parties are, in sum, larger in the number of seats they got, so it will be easier for him to form a government.

And, second, the right made the biggest gains from the last election to this one. So, he says he will form the next government.

BLITZER: So, how long is it going to take for the political dust in Israel to settle and when will we know whether Tzipi Livni or Benjamin Netanyahu emerge as the next prime minister? Because there are some pretty significant differences in their stance, respective stances, toward the Israeli/Palestinian peace process?

SCHNEIDER: There certainly are.

And it will really be up to the president of the state of Israel, Shimon Peres, who has to decide which one to ask to form the new government. He will take advice from members of parliament. And he's supposed to do that based on who will be most likely to be able to put together a coalition of 60 seats, at least 60, out of 120 seats in parliament.

It's up to the president of the state of Israel. But also one of the king-makers is the third -- the head of the third party, Mr. Lieberman, who could go either way and make a coalition with either Netanyahu or Livni. He can advise the president of Israel to choose one or the other.

BLITZER: Avigdor Lieberman, he could be the king-maker, as they say, in Israeli politics. We will watch the story together with you, Bill Schneider in Jerusalem.

Stand by for more.


ANNOUNCER: This is CNN breaking news.

BLITZER: There's also some very disturbing word coming in from the Pentagon.

Let's go there. Barbara Starr is working this part of this story for us.

It involves, Barbara, North Korea.


A senior U.S. official now confirming that in the last several days, a U.S. satellite snapped a picture of a North Korean missile launch area, and that they are seeing activity there.

What are we talking about? This is an area where a Taepodong-2 long-range ballistic missile was last launched in 2006. A few days ago, what U.S. intelligence saw was telemetry equipment on the ground there. They hadn't seen that since that launch back in 2006.

Telemetry equipment is what is assembled prior to a missile launch. It is sophisticated electronics that are put into place to monitor a missile launch once a missile is moved into place. The U.S. official says there's no direct evidence yet that North Korea has moved a missile to this area, but he emphasizes, the last time they saw this type of activity, indeed North Korea did launch a Taepodong- 2.

This is the missile, Wolf, that could potentially, if it works properly, reach Alaska. In 2006, it failed about 30 seconds after launch and crashed into the sea. But the U.S. is watching this now around the clock -- Wolf.

BLITZER: So, if they do see an actual launch, the U.S. would have to take at least some measures to deal with that; is that right?

STARR: Well, what officials are describing here is if they begin to see that the North Koreans have actually gone ahead and moved a missile into this launch area, it will raise the question about whether the U.S. wants to activate the missile defense system based in Alaska and put it on alert to be ready to shoot down a North Korean missile if they launch one, and if it began to approach the United States.

What this official says, if we see a North Korean missile, they go to the next step, they actually move the missile to this area where they have seen activity, he says that would get everybody spun up -- Wolf.

BLITZER: Certainly would, Barbara. Thank you.

As the economy tanks in Florida, people want the government, the federal government, to help.


UNIDENTIFIED FEMALE: We have got a beautiful, pristine state. So, I want to ask you, how will we get our state going again in transportation?


BLITZER: President Obama says he has some answers. You're going to hear from his dramatic town hall meeting with some very anxious Americans.

Plus, some Iranians are calling for America's collapse. But is the country's president ready to extend an olive branch?

And members of Congress want to talk with the top executive of that peanut company accused of shipping tainted products. They're making an offer he can't refuse.

Stay with us. You're in THE SITUATION ROOM.


BLITZER: Secretary of State Hillary Clinton says the United States is watching Iran's behavior right now. At issue, plans for a missile defense shield in Europe supported by the Bush administration. Secretary Clinton says what happens to those plans will depend on whether or not Iran shows it's not pursuing a nuclear weapon.


HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: If we're able to see a change in behavior on the part of the Iranians with respect to what we believe to be their pursuit of nuclear weapons, you know, then, you know, we will reconsider where we stand. But we are a long, long way from seeing such evidence of any behavior change.


BLITZER: All this coming as some Iranians call for America's collapse, and as Iran's president extending what could be seen as -- at least by some as an olive branch to the U.S.

CNN's Reza Sayah is in Iran and has details -- Reza.


REZA SAYAH, CNN CORRESPONDENT: Wolf, on a historic day in Tehran, many were eager to see how Iranian President Mahmoud Ahmadinejad would respond to U.S. President Barack Obama's offer to improve relations.

(voice-over): To its supporters, the Islamic Revolution in Iran is as vibrant as ever, despite 30 years of hostility from Washington. Hundreds of thousands of them converged on Freedom Square to mark the anniversary.

For Berus Gatapor (ph), it was a moment to celebrate.

UNIDENTIFIED MALE (through translator): I am proud to be an Iranian and I accept the revolution with my heart and soul.

SAYAH: Some chanted, death to America, but heard President Ahmadinejad offered Washington the possibility of a new dialogue.

MAHMOUD AHMADINEJAD, IRANIAN PRESIDENT (through translator): The Iranian nation is ready to hold talks, but talks in a fair atmosphere with mutual respect.

SAYAH: But he said, if the United States wanted changes, they must be fundamental, not tactical. Ahmadinejad was speaking hours after President Obama suggested a new approach to Iran was possible.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think that there's the possibility at least of a relationship of mutual respect and progress.

SAYAH: Respect that has been largely absent since the Islamic Revolution led by Ayatollah Khomeini toppled the regime of the late shah.

(on camera): When imam Khomeini led the Islamic Revolution 30 years ago, one of the things he promised Iran was independence from foreign influences, specifically the U.S., a country the leaders of this revolution called the great Satan.

(voice-over): If Ahmadinejad's tone was at times conciliatory, he also said Iran was now a superpower. And he made it clear that the Islamic republic would not give up scientific achievements, like its nuclear program, a position that had support among the thousands at the celebration.

UNIDENTIFIED MALE: They should end it. They have a peaceful nuclear process.

SAYAH (on camera): Tehran and Washington haven't had diplomatic ties for three decades. On this anniversary, there are at least some signs that things might change -- Wolf.

(END VIDEOTAPE) BLITZER: Reza Sayah in Iran for us, thank you.

Meanwhile, there are some new scenes of devastation as the death toll rises from those bushfires that have wiped out towns in Australia.

And so much for reassuring words. The best political team on television considering why the treasury secretary's new plan sent stocks plunging.

And hear President Obama's response to some very emotional appeals from Florida residents in economic pain.


UNIDENTIFIED FEMALE: I have an urgent need, unemployment and homelessness, a very small vehicle for my family and I to live in. We need urgent.



BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now: reassessing the survival plan -- as the death toll climbs in Australia's bushfires, authorities reconsidering whether residents should be allowed to stay to protect their homes.

An imminent decision -- President Obama's plan for troops in Afghanistan to be announced within a matter of a few days.

And another plant halts operations, why the Peanut Corporation of America made the voluntary move in Texas -- all of this, plus the best political team on television.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

President Obama does a Q&A about the economy, but you rarely heard a president get questions like these. As we have reported, he was selling the economic plan today in Florida.

Listen to this.


UNIDENTIFIED FEMALE: In light of the fact that you've inherited an economic crisis, where does your priority lie with health care reform?

OBAMA: Well, it's a great question.

And I think it is -- there are some people who are making the argument that, well, you can't do anything about health care because the economy comes first. They don't understand that health care is the biggest component of our economy, and, when it's broken, that affects everything.

I mean, we've got a system right now where the average person has seen -- even if they've got health insurance, the average family has seen their premiums double over the last eight years. Folks are paying twice as much. Co-payments have gotten higher. Deductibles have gotten higher. And now, with people losing their jobs, they're also losing their health care.

Businesses are also less competitive because of the fact that here in the United States, we spend more than anybody else does. Any other nation on Earth, per capita, we spend more on health care, but we don't get better results and companies are paying for that. So when they're competing against -- you know, if a U.S. carmaker is competing against a foreign carmaker, they've got all these extra health care costs that they've got to deal with.

And, finally, Medicare and Medicare -- or Medicare and Medicaid are draining state budgets and federal budgets in a way that's unsustainable over the long term.

So health care has to be part of the solution.

Now, in the recovery package, there are a couple of things that we do immediately. Number one, we're providing some help to Governor Crist and the state, because now they are getting more Medicaid claims. And we've got to make sure that they can just meet the basic needs of citizens here in Florida.

Number two, is what we have in this bill is a mechanism so that we will subsidize people to keep their health care even if they lose their job.


BLITZER: Meanwhile, the president was also asked about something every single American uses.


UNIDENTIFIED FEMALE: We've got a beautiful, pristine state.

So I want to ask you, how will we get our state going again in transportation?

I'm very worried about our dependence on foreign oil and I don't want to drill in the Gulf. I want some commuter rail and I want to improve our transportation.

Thank you.


Well, the -- we have targeted billions of dollars at infrastructure spending. And states all across the country are going what Florida's going through. There was a study done by the American Association of Engineers -- that might not be the exact title -- but engineers from all across the country. We got a D in infrastructure all across the country.

You know, we saw what happened in Minneapolis, where a bridge collapsed and resulted in tragedy. And not only do we need to rebuild our roads and our bridges, our ports, our levees, our dams, but we also have to plan for the future.

This is the same example of turning crisis into opportunity. This should be a wake-up call for us.

You go to Shanghai, China, right now, and they've got high-speed rail that puts our railroads to shame. They've got ports that are state-of-the-art. Their airports are -- you know, compared to the airports that we -- you go through Beijing airport and you compare that to Miami airport.

Now, look, the -- this is America. We are -- we always had the best infrastructure. We were always willing to invest in the future. You know somebody -- Governor Crist mentioned Abraham Lincoln. He -- in the middle of the Civil War, in the midst of all this danger and peril, what did he do? He helped move the intercontinental railroad. He helped to start land grant colleges. He understood that even when you're in the middle of crisis, you've got to keep your eye on the future.

So transportation is not just fixing our old transportation systems, but it's also imagining new transportation systems.


BLITZER: As the president talked about Americans who are hurting, he also heard an emotional story from one of them.


HENRIETTA HUGHES: Thank you very much.

I first want to say thank you. And I'm so grateful for you.


Thank you.

HUGHES: I've been praying for you. But now I have...


I believe in prayer, so I appreciate that.

HUGHES: I have an urgent...


HUGHES: ...need. Unemployment and homelessness, a very small vehicle for my family and I to live in. We need urgent. And the housing authority has two years' waiting lists. And we need something more than the vehicle and the parks to go to. We need our own kitchen and our own bathroom.

Please help.


Well, I -- listen, I -- what's your name? What's your name?

HUGHES: It's Henrietta Hughes.


OK, Ms. Hughes, well, we're going to do everything we can to help you.


OBAMA: But there are a lot of people like you.

And we're going to do everything we can, all right?

But the -- I'll have my staff talk to you after this -- after the town hall.


BLITZER: Then there was this breathless supporter, who was clearly wild about the president.


OBAMA: All right.

What -- what -- what's the question?


Mr. President...


OSEGUEDA: My name is Julio Osegueda. I'm currently a student at Edison State College in my second semester. And, OK, I've been at the same job, which is McDonald's, for four-and-a-half years because of the fact that I can't find another job. Now with the fact that I've been there for as long as I've been there, do you have any plan or any idea of making one that has been there for a long time receive any better benefits than what they've already received?


Well, I tell you what. First of all, a couple things I'd like to say. Number one, the fact that you are working as hard as you're working at a job that I know doesn't always pay as well as some other jobs, I think that's a source of pride for you. That shows that -- that you're doing the right thing.


OBAMA: Now, the second thing is, is that you will actually benefit from the tax breaks that we're talking about, so you'll be able to keep a little bit of extra money, because we're going to offset your payroll tax. That's going to help.

I don't -- I assume that you're not getting health care through your job. And so one of the things that we want to do is reform the health care system so that you will have access to health care in your job.

But the thing that I'm really interested in is -- you say you're going to school.

What are you studying?

OSEGUEDA: I'm looking to study and major in communications, hopefully being a broadcaster or a disc jockey.


Well, you sound like you've got good communications skills.

OSEGUEDA: Thank you so much.


So -- so part of -- part of what we want to do is we want to make it easier for you to afford going to college by giving you this refundable tax credit for your tuition. Because young people like Julio, who have that much enthusiasm and that much energy, we've got to make sure that we are giving them a pathway so that they can educate themselves and go as far as their dreams take them.

Thank you very much, Fort Myers.

I appreciate you.



BLITZER: The Treasury secretary announces some drastic action to get banks lending again.


TIMOTHY GEITHNER, TREASURY SECRETARY: Our plan will help restart the flow of credit. It will help clean up and strengthen our banks. And it will provide critical aid for homeowners and for small businesses.


BLITZER: But Wall Street certainly wasn't reassured -- stocks plunging today.

So what does it really mean?

Gloria Borger, Jeff Toobin and Marcus Mabry -- they're standing by to discuss that and more.

And President Obama's balancing act -- how to stoke urgency without creating panic.


BLITZER: It was his first presidential prime time news conference last night. A lot to discuss from last night, as well as what has happened today.

Joining us now, our CNN Center political analyst, Gloria Borger; our senior political analyst, Jeff Toobin; and Marcus Mabry of "The New York Times" -- Gloria, it's a delicate tightrope he has to walk -- on the one hand stress hour dire the economic situation is right now, but at the same time, not creating further panic, if you will.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Yes. It's very delicate for him. It's like being a cheerleader on the one hand and sort of being Chicken Little at the same time. And I think that what the president has to do when he's telling you that a crisis could turn into a catastrophe -- which seems to be a phrase he's using over and over again -- is to get the American public to understand that the stimulus package has to get passed quickly. That's his job as president.

But on the other hand, he doesn't want a panic out there in the country. And I think, in fact, what you saw on Wall Street today was a negative reaction to something else -- his bailout plan so his bank bailout plan.

So it's -- his bank bailout plan. So it's a very, very tightrope he's on.

BLITZER: Very difficult.

Is he threading the needle right now, Jeff?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: You know, I don't -- I don't think it's that difficult, frankly. I think you can only emphasize how bad things are, period. I don't think he has to have any false optimism.

BLITZER: But the public -- the investors, they need some confidence that this is going to work out.

TOOBIN: Well, I think he's going to say, look, you've got to do my plan or things are going to be -- continue to be bad. I really don't think there is any risk of being too pessimistic here, because things are really bad and he's, you know, just being honest.

BLITZER: I guess the risk is, Marcus, that bankers out there -- they think it's going to be gloomy and get worse before it gets worse. So they're not going to go out and start lending money to folks who might need it and might be qualified.

MARCUS MABRY, "NEW YORK TIMES": Well, that's the fundamental problem. The whole plan of a bank bailout, as it was announced today by Secretary Geithner, is to get banks to start lending again, because the economy will not grow out of this recession without bank lending starting up.

What we saw on Wall Street -- and many economists are telling us it may have been an overly negative reaction -- was a reaction to the missing details, such as when will this plan be implemented?

There wasn't even an implementation date given. That may change once they actually see more details coming out over the coming days and months.

BLITZER: You would have thought that they would have had all those details ready to roll out right away. Look at the -- how the Dow Jones Industrial Average, Jeff, went sliding today. The speech was given around 11:00 a.m. Eastern. And then it went down, down and down, closing 382 points down.

TOOBIN: I think this was a disastrous day by Geithner. I don't understand what they were thinking about unleashing this half-baked plan.

Here you have -- everybody knows the biggest problem is the banks have all these assets that they need to get rid of somehow. And he came up with this plan. He says well, private investors are going to buy them.


At what price?

How is the pricing going to be set?

BORGER: Right.

TOOBIN: All those details were gone. And that's why I think the market reacted so badly.

BLITZER: Is he, also, Gloria, burdened by the tax problem that he has?

He was confirmed by the Senate for Treasury secretary. But some suggest he has this cloud hanging over him because he is in charge of the IRS and he screwed up.

BORGER: Right. You know, but I don't think -- I think that is a problem for him and it will always be there. But I -- I think the real problem for him is -- is how they unveiled this package today. I agree with Jeff on this.

But, you know, the reason they decided they had to do it this way is they made a political calculation here. And the political calculation is they could not go back to Congress and ask for any more money -- period.

So what they had to do was come up with a complex way -- and, again, it's so complex, we don't even know how it's going to work to form some kind of private equity and public fund financing of this bank and find a way to remove the toxic assets from the bank and -- from banks.

And I think it's so complicated right now, nobody can figure out how it's going to work.

BLITZER: And that's...

BORGER: And the one thing people don't want is uncertainty.

BLITZER: And that's just one part of the story right now. The other part, Marcus, is that they've got to find a way to reconcile what the Senate has now passed with what the House passed.

And here's the question -- can they do it in a way that those three moderate Republicans, who supported the -- the stimulus package in the Senate, will still be there once Nancy Pelosi and the House Democrats have their say?

MABRY: Well, it's interesting, Wolf. I think, actually -- and this is a return, of course, to the stimulus package question -- which is parallel tracked with the bank bailout issue, but two separate issues. We're talking about together probably $3 trillion in government assets we'll be talking about before this is all over.

This is the most serious crisis since the Great Depression in our country. I think Barack Obama's greatest challenge is going to be keeping Democrats on board so that they can actually keep in the things that the three Republican senators want so that a reconciled bill can actually pass for the stimulus.

I think he's probably going to be able to do that by emphasizing to his own party what is at stake.

BLITZER: And I think you meant the most serious economic crisis since the Great Depression...

MABRY: Absolutely.

BLITZER: ...not necessarily bigger than World War II or something like that.


MABRY: Absolutely. TOOBIN: World War II, a very big crisis.

BLITZER: Very big.

MABRY: We only think economics.

TOOBIN: A very big crisis.

BLITZER: All right, guys, thanks very much.

Let's check in with Lou to see what's coming up at the top of the hour -- Lou, what are you working on?


Tonight, much more on the president's final push selling his borrowing and spending legislation, as lawmakers struggle to reconcile major differences over that stimulus legislation. One leading opponent of the proposal, Congressman Connie Mack, among our guests tonight. He says the bill is full of pork no matter what the president says.

Also, Treasury Secretary Tim Geithner launching a sweeping new plan to help banks and increase lending. But Geithner fails to deliver on Wall Street or any promises to help homeowners. We'll have the story.

And a blunt warning about the future of our health care system amid rising concerns that this stimulus legislation would give bureaucrats veto power over your doctor.

And Betsy McCoy, founder and chair of the Committee to Reduce Infection Deaths, is among our guests.

I'll also be talking with three of our favorite radio talk show hosts.

Please join us at the top of the hour for all of that, all the day's news and a lot more -- Wolf, back to you.

BLITZER: Lou, see you in a few moments.

Thank you.

It's this hour's question to you -- is Vice President Joe Biden becoming an embarrassment for President Obama?

That's Jack's question. The Cafferty File and your e-mail, coming up.

Plus, the first family narrows its dog search down to two breeds, including one prone to problems.


UNIDENTIFIED FEMALE: She used to get in my sink and pull the drain out of the sink because food gets stuck in it. She'd get in the sink.

JEANNE MOOS, CNN CORRESPONDENT: So the White House drain could be susceptible?




BLITZER: Let's check in with Jack Cafferty.

He's got The Cafferty File -- Jack.

CAFFERTY: You want to stay tuned. If you don't like this segment, there's a dog coming up in a few minutes.

BLITZER: It's a real dog.


BLITZER: A Labra...

CAFFERTY: A real dog.

BLITZER: A Labradoodle.

CAFFERTY: Buck. Yes, a Labradoodle -- part Labrador, part poodle.

BLITZER: I'm going to (INAUDIBLE)...

CAFFERTY: He looks a little like you, actually.

BLITZER: I'm going to pet the dog.

CAFFERTY: The viewers will see the resemblance when he comes out.



CAFFERTY: All right.

The question this hour -- is Vice President Joe Biden becoming an embarrassment for President Obama?

Levon in Redondo Beach say: "Vice President Biden is not at all an embarrassment. The man speaks his mind. You, Jack, of all people, ought to appreciate that."

Touche, Levon.

Toni in Delaware: "An embarrassment? How soon we forget who we were stuck with for the last eight years -- one Dick Cheney. Obama should start worrying about Biden when he starts shooting people." Rod in Allentown, Pennsylvania: "Jack, is this a trick question? Biden is a blithering fool and would be an embarrassment to anyone -- the first of a number of miscalculations already by the great one in the White House."

Tom in Las Vegas: "No way. People know Joe as a guy who hops around with his foot in his mouth once in a while. But he's a survivor, a patriot, a humanitarian and a dedicated public servant -- not an embarrassment."

Terri in Chandler, Arizona: "There's so much bad news, I think Joe is a bit refreshing. His comments bring us all a little laughter. Actually, I think he should speak out more. Think about it -- a little Joe speak every day would be uplifting."

Colleen in North Carolina says: "Obama should have picked Hillary."

Stanley says: "I've a suggestion, Mr. Cafferty. How about they give him one of those earphones like you and Mr. Blitzer wear when you're on the air?"

That's these little things here.

"I think it would help guide him if someone would be on the other end telling him what to do."

And Conor in Chicago says: "I'll still take him over Palin any day."

If you didn't see your e-mail here, you can go to my blog at and look for yours there among hundreds of others.

And stay tuned for the dog.

BLITZER: Yes, we're going to have it right now.

But first, we've got this. I don't want anybody to leave yet.

At this year's Westminster Dog Show here in New York, the real winner may not necessarily be the show winner.

CNN's Jeanne Moss has this Moost Unusual look.


MOOS (voice-over): At the Dog Show, there were fluffier dogs, more wrinkled dogs, way bigger dogs.

(on camera): I can see him on the Oval Office rug.


MOOS: I can see him as the Oval Office rug.

(voice-over): But there's something about this dog that licks all the rest.

(on camera): It will be the first first family to get licked to death.

(voice-over): This is the year's "it" dog.


UNIDENTIFIED MALE: He knows he's hip.

MOOS: A Portuguese Water Dog.




UNIDENTIFIED FEMALE: He has such a human face. It looks so human.

MOOS (voice-over): It comes in various colors and even in what they call a lion trim.

Domino here would actually match the White House. President Obama has said his family has narrowed the White House dog search to two -- the Portuguese Water Dog and the Labradoodle, which is what you get when you breed a Labrador and a poodle. But at Westminster...

(on camera): What do you think of the Labradoodle?

UNIDENTIFIED MALE: I don't like them.

UNIDENTIFIED FEMALE: It's a little designer dog cross breed.

DAVID FREI, WESTMINSTER SPOKESMAN: Well, the Labradoodle is not a recognized breed by the AKC yet.

MOOS: But lovers of the Portuguese Water Dog have a secret for the White House.

UNIDENTIFIED FEMALE: I just think they're just not ready for a dog like this.

UNIDENTIFIED FEMALE: If they get -- if they get bored, they get very destructive.

UNIDENTIFIED FEMALE: They could raise havoc in there.

MOOS: Don't get them wrong -- they love these lovable dogs -- very active, very intelligent.

UNIDENTIFIED FEMALE: I had one that could open any cooler and get food out of it.

If it had a zipper, she'd eat the zipper off of it.

UNIDENTIFIED FEMALE: He steals all the magnets off my refrigerator.

MOOS: Ah, but what a magnetic personality it could bring to the White House.

UNIDENTIFIED MALE: A sense of comedy.

UNIDENTIFIED FEMALE: And a sense of comedy.

UNIDENTIFIED MALE: A lot of comedy.

MOOS (on camera): Comedy -- we could use comedy in the White House, the way things are now.

(voice-over): Senator Ted Kennedy has a pair of Portuguese Water Dogs. Experts say they need an alpha human to keep them out of trouble.

UNIDENTIFIED FEMALE: She used to get in my sink and pull the drain out of the sink because food gets stuck in there.

UNIDENTIFIED FEMALE: They'll eat your house.

MOOS (on camera): Eat your house?


MOOS (voice-over): Even if it's the White House?

On the plus side...

UNIDENTIFIED FEMALE: Loves to lick your toes.

MOOS: Now that's a stimulus plan we can all support.


MOOS: Jeanne Moos...



UNIDENTIFIED FEMALE: Best looking ears.

MOOS: New York.


BLITZER: All right, here's a little footnote. That Labradoodle didn't really get a fair shake in Jeanne Moos' report. So we thought we'd give you a chance to meet one in person. And you are about to do so.

This is buckey tomato right here. She lives right here he lives right here -- he lives right here in Manhattan, a lovely little Labradoodle. Turn around and show our viewers what you can do. This is Linda Roth, our producer, who loves little doggies.


BLITZER: And that's a beautiful little dog.

ROTH: Thanks.

Good boy.

BLITZER: I had a dog growing up. Ah, Buckey tomato. We're just going to call him buckey. He's enjoying life and that's it. A great personality.

The dog's got a little Facebook of its own, right?

ROTH: A Facebook page, yes.

BLITZER: A Facebook page...

ROTH: Buckey tomato.

BLITZER: Buckey tomato.


BLITZER: Good dog.

That's it.

When we come back, a man casts his vote as Israel moves toward a new government and a new leader -- just one of our Hot Shots -- pictures worth a thousand words.

Buckey, come over here.

Buckey, come to daddy.



BLITZER: Here's a look at some of the Hot Shots coming in from our friends over at the Associated Press -- pictures likely to be in your newspapers tomorrow.

In Washington, lights are seen from the windows of the White House the morning after President Obama's first prime time news conference.

In Israel, a man casts a ballot in the general election to pick the country's next prime minister.

In Baghdad, a U.S. soldier salutes during a handover ceremony.

And in Australia, a fireman takes a break from the massive wildfires to share his water with an injured koala. Some of this hour's Hot Shots -- pictures worth a thousand words.

On our Political Ticker today, the country music star Dolly Parton brought her flashy style to an unlikely place today -- the National Press Club in Washington, D.C. And she had some intriguing things to say about the presidency and the 2008 election.

Listen to this.


DOLLY PARTON, ENTERTAINER: I was out on tour when everybody was campaigning, when Hillary was running. And all I thought, yes, it would be great to have a woman in the White House. And I thought, well, I don't know if that's such a good idea. Every 28 days, those terrorists better run deeper into them woods is all I can say, if we get a woman in there. But...


PARTON: But somebody said to me well, you know what, you've just got such a big mouth and you just know how to talk to people.

Did you ever think about running for president?

And I said I think we've had enough boobs in the White House and...


PARTON: But hopefully Obama isn't going to be one of them.


BLITZER: Dolly Parton over at the National Press Club in Washington earlier today, causing a little bit of a stir.

We want you to check out our political podcast. To get the best political team to go, you can subscribe at Good idea.

Until tomorrow, I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.

DOBBS: Wolf, tonight, President Obama launching an offensive a final offensive to sell that stimulus legislation. As lawmakers struggle to reconcile major differences.