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The Situation Room

Inside the White House Lunch; Preview of Barack Obama's Speech; Recession Could End This Year

Aired February 24, 2009 - 17:00   ET

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

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

Happening now, President Obama is about to lay out his economic game plan to Congress, the nation and the world. We're learning new details of what's in his high stakes speech tonight to a joint session of Congress.

Also, my interviews with two leading Senators. Democrat John Kerry, he's chairman of the Foreign Relations Committee. We'll talk about Pakistan, the Taliban, Syria, Gaza and more.

Plus, Republican John Thune.

Can the president do anything to win GOP support for his economic plan?

I'll ask him.

And a hero pilot on Capitol Hill on this day. Captain "Sully" Sullenberger, the man behind the so-called "miracle on the Hudson," tells Congress why the airlines can no longer attract the best and brightest pilots.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

But first, more on the president's address to a joint session of Congress tonight.

Our chief national correspondent, the host of CNN's "STATE OF THE UNION," John King is here.

Both of us just arriving just a little while ago. We spent a good chunk of the afternoon over at the White House, having lunch with the president -- and I was just saying, John, how he seems to be confident that eventually -- eventually things are going to work out.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Incredibly confident. And we can't say exactly what the president told us. That's the deal with the lunch. But we can describe his mood. It was very upbeat, very confident.

Although, I thought it was striking, Wolf. He thought one of his jobs tonight in talking to the American people was to explain the connection to the big banks -- bailing out a big bank like a Citibank -- to the small town bank they might see in their community that is quite stable, maybe conservative in its lending practices -- that if a big guy goes down, the small guy ultimately will.

This is a speech meant to inspire confidence that ultimately the economy will rebound. The president quite level-headed about it -- it will still get worse before it gets better. But as came up in some of the conversation, there's been a lot of talk he's too talking down the economy. And he will be a little bit more upbeat tonight.

He recognizes the challenges. Striking the change in contrast we will have. After every George W. Bush speech to Congress after 9/11 was dominated by the war on terror. Iraq and Afghanistan will be mentioned tonight, but almost as an afterthought. The president will deal with those more and more in the coming days.

But this will be the economy, education, health care and energy -- the domestic challenges facing (INAUDIBLE).

BLITZER: Yes. I was struck by how almost all of it is going to be involving the economy right now, because that is the bread and butter issue facing millions and millions of Americans. And while he will get into his hopes to try to deal with energy and education and health care reform -- all critical issues -- he knows that right now, getting food on the table, for a lot of folks out there, and having a job is priority number one.

KING: Right.

BLITZER: There will be moments down the road in the not too distant future he'll make major foreign policy addresses, but not right now. This is a time to focus in on the economy.

KING: And it's quite striking. The president and two of his senior aides around the table with us. And it was a treat to have lunch with the president and to hear their perspective on things.

They believe they need to lay out the course in the long-term for the economy. And they acknowledge that even times they think they're trying to do too much at once. And they're concerned about that, but they believe they have no choice.

They believe that, number one, these challenges are pressing and need to be dealt with urgently.

And number two, politically, they also realize this is a president who is still in the honeymoon phase, still has great goodwill and support from the American people and this is the time to act.

BLITZER: And we also gained some insight into what's going on personally.

KING: Right.

BLITZER: And we'll have plenty of time in the next several hours to talk about the economy, talk about what he's planning on saying. But personally, he's getting adjusted to life in the White House.

KING: And in about an hour and 20 minutes, he'll be playing his daily game of thorns and roses.

Now, many viewers are probably saying what?

But we learned that the president -- one of the things does, he loves to have dinner with his daughters and his wife every night when he can. And they play a game.

They say what was the thorn in your day, Wolf?

And you say the bad thing that happened to you.

What was the rose in your day?

And the rose today, I think, would probably be having lunch with the president of the United States.

And so they go around the table. And we learned that after one particularly bad White House day -- and it's only been a month -- daughter Malia said, you know, wow, daddy, you have a thorny job.

BLITZER: Yes.

KING: That's one thing we learned. And we learned that the president views the helicopter and Camp David as great baubles of the presidency and he loves them and cherishes them. But that he, even now -- what are we in day 33 or day 34? -- is already frustrated by the bubble of the presidency. You can't take a walk, can't go to a sporting event because -- because of security concerns and because of the celebrity nature of being president.

BLITZER: And he reminisces that when reading a biography of Harry Truman, Harry Truman used to just walk out of the White House by himself, go for a walk and come back. And he says that can't happen in this day and age.

KING: Those days are long over.

BLITZER: All right. We're going to have a lot more on what happened today over at the White House, John.

Stand by.

You'll be back.

I want to bring in our senior political correspondent, Candy Crowley, and our senior White House correspondent, Ed Henry. Both of them are being briefed, as well.

Let's go to Ed first -- Ed, the president's difficult tightrope that he has to walk tonight is one that top White House officials have been carefully, carefully weighing.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Absolutely, Wolf. As you and John were just discussing, what White House aides say is that they've heard this criticism from former President Bill Clinton and others about maybe the president needs to be more upbeat about the economy.

They insist that he has been sprinkling some of his dire talk about a crisis and a catastrophe with some upbeat talk. But they realize they have to probably go a little further tonight. So they say that will be in there.

But also, you take a step back. What senior officials are saying he's going to try to do is build on his victory over the stimulus bill to say, look, now, at a time of crisis, is a real opportunity to deal with a lot of these big ticket items -- Medicaid reform, health care reform, trying to revamp Social Security.

That as long as the nation is focused right now on doing big things, there could actually be an opportunity in this crisis. Once you deal with the short-term issues -- making sure people can feed their family, making sure more people actually have jobs, making sure you deal with the housing crisis -- that some of these long-term issues have to be dealt with, as well.

So we'll hear that. As you mentioned, as well, very little on foreign policy. The president is going to be giving foreign policy addresses in the days ahead. But tonight, it's going to be all about domestic policy -- Wolf.

BLITZER: Ed, stand by.

I want to bring Candy Crowley in.

Candy, we got a little bit of what the president's agenda is going to be tonight. But it's going to be hard for the president to make sure that everything he envisions tonight actually gets done.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: It is. But they believe they can at least make a downpayment on some of these things, particularly health care, putting money into education, doing some more things about energy. Because he believes he can weave this into the economic crisis -- that if we were -- we produce more of our energy, that that would help the economy.

If children were better educated and had the tools they needed to become educated adults, that would help the economy. Health care would lower the cost for businesses, so that they would have lower prices and be able to help more people.

So that's -- that's the gist of what he's going to put out there in sort of large terms and say here's why it is necessary to move ahead with all of these things. And he links them back into the economic crisis.

BLITZER: Want to go back to Ed Henry -- Ed, there's developments as far as the Labor secretary is concerned.

What has happened? HENRY: That's right. Even as the president lays out the agenda tonight, he's still trying to make sure his team is in place. He's got some holes in the cabinet. Hilda Solis, the Democratic congresswoman from California, just confirmed this afternoon by the United States Senate. She's going to be the Labor secretary. So that's finally done.

We're also learning from a senior administration official that it's now confirmed what we reported yesterday, that tomorrow, the president will officially nominate Gary Locke, the former governor of Washington State, a very prominent Asian-American, first Chinese- American elected governor anywhere in America. He will be the Commerce secretary -- the third pick now.

They've had a couple of problems with that. As you know, first Bill, Richardson, then Judd Gregg and now finally Gary Locke. They hope that this time they finally get it right.

Still an opening, though, of course, Health and Human Services secretary. With the president talking a lot about health care reform tonight, there is a lot of pressure on him to finally coming up with a Health secretary. And senior officials say that will be coming in the next few days, as well -- Wolf.

BLITZER: And we still suspect that the governor of Kansas could be the next Health and Human Services secretary?

HENRY: Senior officials here still insist there are other people being looked at, but that she is the leading contender at this point, Kathleen Sebelius, the governor of Kansas, to be the next Health and Human Services secretary.

BLITZER: All right, Ed.

Thank you.

Stand by.

Let's get back to Jack.

He has got The Cafferty File.

A busy day today -- Jack.

CAFFERTY: For you. It's not particularly for me. I've just been hanging out here.

Here's a sign of just how bad things are. Pay attention now. When it comes to our economy, more Americans trust our politicians than our business leaders. A new CNN/Opinion Research Corporation poll asks people how confident are they that the following institutions will make the right economic decisions?

Thirty percent say they're confident in Wall Street. Twenty-eight percent say they feel that way about bankers and financial executives. And 26 percent are confident in auto executives. Not exactly ringing endorsements for any of those three groups. Compare that, then, to a whopping 75 percent who express confidence in President Obama on economic issues, 66 percent who back Democrats in Congress to make the right calls. And even the Congressional Republicans get the support of 53 percent of the people in this poll.

In light of that, it's no surprise, then, that most people surveyed are opposed to government bailouts for banks and auto companies, while more actually favor government assistance to homeowners who can't pay their mortgages and government influence to help lower health care costs.

It's probably uncharted territory for those weasels inside the Beltway.

The fact that more Americans have confidence in government to get out of our collective financial nightmare -- well, that frightens me.

Here's the question -- what does it mean when politicians are more trusted than business leaders when it comes to matters on the economy?

Go to CNN.com/caffertyfile and you can post a comment on my blog.

BLITZER: I think that's a first. I don't remember ever a time...

CAFFERTY: Ever. Yes.

BLITZER: I think you're right.

CAFFERTY: It's ever. Maybe in the Depression. I don't know.

BLITZER: Something is going on here.

CAFFERTY: Yes.

BLITZER: All right, Jack.

Thank you.

A hero pilot warns Congress of disturbing changes in the airline industry.

(BEGIN VIDEO CLIP)

CAPTAIN CHESLEY "SULLY" SULLENBERGER: While I love my profession, I do not like what has happened to it.

(END VIDEO CLIP)

BLITZER: Captain "Sully" Sullenberger, the pilot who safely landed his plane on the Hudson River, sounding an alarm for lawmakers -- why he's very worried about safety.

Also, a deal with Pakistan puts the Taliban in charge of a key part of the country. Is it creating a safe haven for terrorists?

I'll ask the Senate Foreign Relations Committee chairman, John Kerry. He's just back from the region.

And a hint of optimism plus a dose of reality -- the Federal Reserve chairman lays out the economic crisis on the line.

What can we expect and when can we expect this recession to end?

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. We're getting excerpts from the president's address before a joint session of Congress tonight.

Let's go back to our senior White House correspondent, Ed Henry.

What are we getting -- Ed?

HENRY: Well, Wolf, it's interesting, because, as you know, these excerpts in any administration are always very carefully picked by the administration to make sure they lay out what they want, to be very positive, to sort of set the table for the speech. So this excerpt that they're putting out is on the optimism question that we were just talking about.

At one point, the president in the speech will say: "While our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want everyone American to know this -- we will rebuild, we will recover and the United States of America will emerge stronger than before."

The president goes on: "The weight of this crisis will not determine the destiny of this nation. The answers to our problems don't lie beyond our reach. They exist in our laboratories and universities, in our fields and our factories, in the imaginations of our entrepreneurs and the pride of the hardest working people on earth. Those qualities that have made America the greatest force of progress and prosperity in human history, we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face and take the responsibility for our future once more."

So hitting the themes we've heard from the president before, but coming into a little sharper focus about saying he's confident America will emerge stronger. But also using that word responsibility when he talked in his inaugural address about ushering in a new era of responsibility -- that the government will be here to help, but that there will be some sort of personal sacrifice and responsibility from people around the country -- businesses, institutions -- to help pull this through -- Wolf. BLITZER: I almost hear, Ed, an echo of Franklin Roosevelt, if you will, in those kinds of remarks -- it's a tough time, but we can get through this.

HENRY: And what is interesting, you're absolutely right -- is that this comes, obviously, after we've heard former President Bill Clinton and others make that very suggestion, that while it was important in recent weeks and while he was selling the stimulus package for the president to come out and lay it out and say, look, soberly, this is a crisis. It could become a catastrophe. And in the estimation of senior White House officials, level with the American people. Because they believe that former President Bush took too long to tell the American people just how bad the economy was getting.

So that they say that they're trying to be straight with the American people. They're trying to level with them.

But then you have heard Bill Clinton and others saying yes, but you need a little bit of optimism at the end of it -- a little Reaganesque, if you will, as well, not just FDR.

And that may be what we hear more of tonight -- Wolf.

BLITZER: Is it your sense that this fine line we've been talking about, about reassuring the American people, that this is, after all, the United States of America and we will get the job done -- he doesn't want to be overly optimistic or Pollyannaish, because if things continue to deteriorate in the short- to middle-term, he'll look like -- he'll look like he wasn't leveling with the American people.

HENRY: You put your finger on exactly why this is a very delicate balancing act for this president. If you're too optimistic, you're accused of putting out rosy scenarios for the American people. If you're too pessimistic, your critics say you're talking down the economy -- that there's a psychology that's dealt with for the economy, as well, and that once you keep saying it's bad, it's ugly, it's going to get worse, then the markets react in a negative way and think, look, if the president thinks it's awful, it must be really awful.

So it is a very delicate balancing act. One thing that you should know -- what senior officials are saying about how they're approaching this speech is they believe that despite all the difficulties, that this president has accomplished a lot in the first five weeks here. And they believe he's going in with a bit of a head of steam -- Wolf.

BLITZER: Ed, stand by.

I want to bring in a special guest right now.

Republican Senator John Thune of South Dakota is joining us.

Senator, thanks very much for coming in.

SEN. JOHN THUNE (R), SOUTH DAKOTA: Good afternoon, Wolf. BLITZER: And I want to read to you what -- Ed Henry just gave us the excerpt -- the bottom line, if you will, of what we'll hear from the president tonight.

He says: "We will rebuild. We will recover. And the United States of America will emerge stronger than before."

Are you confident, as the president is?

THUNE: It's a great country, Wolf. The American people are very resilient.

And what we've got to do is put the right policies in place so that we can rebuild and recover.

But I think that's a good tone to sound in his remarks. And I think the American people want to hear optimism. There's been a little bit too much sort of talking down the economy. And I think that the American people are anxious to hear a note of optimism from the president.

So I think that would be welcomed not only by those of us who will be in the chamber tonight, but by the American people across the country.

BLITZER: What specifically, Senator, do you want to hear from the president tonight that would make you reconsider your opposition, for example, to the economic stimulus package?

THUNE: I think the main thing that Republicans will want to hear, one, is that the president, the next time around, is going to work in a meaningful bipartisan way to try and get Republicans involved earlier on in the process -- give them some ownership in some of these big issues we're dealing with.

And, secondly, I think there some are things that Republicans would like to find common ground on. There are, clearly, when it comes to reforming the budget process, entitlements -- all the things that are going to cost us into the future, a balanced approach to balancing the budget, doing something about health care reform in the long run.

There are lots of big issues. And energy policy is another example of that, where I think that the Republicans are anxious to work in a constructive way with the president. But it's going to be really important that he reach out to Republicans and not just -- not just in rhetoric, but that be translated to Democrats here on Capitol Hill, who at least with the stimulus, decided to write the thing their way without any Republican input or support.

BLITZER: It seems like the Republican leadership in Washington, Senator, is obviously very much opposed to what the president is trying to do, as reflected in the economic stimulus package. But if you go outside of Washington and speak with some of the Republican governors, like Charlie Crist of Florida or Arnold Schwarzenegger of California, or go speak with some Republican mayors out there, they're ready to take the money and they're ready to move on and try to get people back to work.

Do you see the split between Washington Republicans and outside the Beltway Republicans?

THUNE: It's a mixed bag. As you know, there are a number of Republican governors who said this is too much, we don't want all the strings attached. I think the concern that those governors have, Wolf, is that this thing becomes a liability well into the future.

Most of us believe that a lot of these programs, once funded, will be continued. And if they are, the Congressional Budget Office says that this stimulus bill is not going to cost $1 trillion, but $3 trillion. And I think the governors are worried about, down the road, having to raise taxes.

But you correctly point out that there are some governors who are -- who are willing to accept the stimulus money. I think it's reflective of the entrepreneurship in the Republican Party. We're a lot of people who have different ideas. Some have decided to embrace this. Others have decided that this doesn't make the best sense for them in their states.

And I think most Republicans, in Congress, at least -- and what we heard from the American people was that we don't want to see this level of borrowing.

Now the public opinion polls that you're referring to, I think if you asked people a question about whether or not they supported an economic recovery plan that would create jobs, most of them are going to say yes.

If you tell them that we're going to borrow the money from the Chinese and hand the bill to our children and grandchildren and it's going to be trillions of dollars over time, you would get a different response.

BLITZER: I want you top listen to this quote from a rising star in the Republican Party, Governor Jon Huntsman of Utah. He's a Republican. He told "The Washington Times" this. This is the quote: "I don't even know the Congressional leadership. I have not met them. I don't listen or read whatever it is they say, because it is inconsequential completely."

It seems to be a critique not only of the Democratic leadership, but even the Republican Congressional leadership, that they're out of touch with the American people.

Those are pretty tough words from Republican Governor Huntsman.

THUNE: I think it's very popular to bash Washington and to bash Congress. It's a very easy thing to do.

But I do think what Governor Huntsman is getting at is that the parties need to put good ideas on the table. And the Republican Party, we can't just be the party that says no to the Democrats and their ideas and no to the president. We have to come up with better policy alternatives, better ideas. And on that point, I don't disagree with them.

But I do think that right now, they've got a lot of governors who have aspirations beyond their current jobs who are making statements like that, because they realize it's very popular with the American people to bash Washington and to bash Congress.

BLITZER: Thanks very much, Senator Thune, for joining us.

THUNE: Thanks, Wolf.

BLITZER: And coming up, I'll speak live with Senator John Kerry. He's just back from Gaza. He's back from Syria. While he was in Gaza, he was handed a letter to deliver to President Obama from Hamas. Stand by. My interview with the chairman of the Foreign Relations Committee coming up.

Plus, the federal Reserve chairman weighs in on when he thinks the recession will end.

Stay with us.

Lots of news happening today, right here in THE SITUATION ROOM.

(COMMERCIAL)

BLITZER: When are we going to see some light at the end of this economic tunnel?

The Federal Reserve chairman, Ben Bernanke, testified today before the Senate Banking Committee.

Let's bring in our senior correspondent, Allan Chernoff.

Is he giving us an assessment of when things will begin to turn around?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: He is. And, as you know, Wolf, the big thing that's been worrying the financial markets has been this issue of will the banks be nationalized?

Well, the Fed chairman said he does not intend to do that. What he wants to achieve is to get the financial system simply working again -- where capital can flow from lenders to borrowers.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Federal Reserve Chairman Ben Bernanke offered a ray of hope for the economy.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: There's a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery.

CHERNOFF: That's if the government can restore financial stability by getting the lending markets functioning normally again. To do that, Bernanke said, the government needs to restore confidence in the nation's banks -- not necessarily by nationalizing them, but by supporting them, with extra capital, if necessary.

BERNANKE: I don't see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank when it just isn't necessary.

CHERNOFF: Already, the government has injected about $315 billion into the nation's financial institutions. Beginning Wednesday, the nation's biggest banks will face a stress test -- a test of a bank's financial strength, to determine if it can survive a deep and severe recession.

Bernanke said any major bank that appears vulnerable will be able to get additional financing. The point, he argued, is to make credit easily available for qualified borrowers -- even if it means spending billions more in tax payer money.

BERNANKE: A lot of this goes against American values of self- reliance and responsibility. And I'm very, very aware of that.

(END VIDEO TAPE)

CHERNOFF: The Fed chief also offered a forecast for the economy that is quite a bit more optimistic than what many private forecasters are predicting. He's saying the economy may contract by as much as 1.25 percent. Consider that during the fourth quarter, the economy contracted 3.8 percent.

Still, the Fed chief concedes it could take as much as three years for the economy to completely recover -- Wolf.

BLITZER: Well, the markets were reassured today.

The Dow Jones going up, what, about 236 points?

CHERNOFF: Yes. We didn't even gain back what he lost yesterday.

BLITZER: But at least it went up today.

CHERNOFF: At least it went up. A nice change.

BLITZER: Yes. All right. That's good.

CHERNOFF: We'll take it.

BLITZER: They're reassured to a certain degree. We'll see what happens tomorrow and the day after.

Allan, thanks.

Let's bring in our Democratic strategist and CNN political contributor, Paul Begala, and Republican strategist and CNN contributor, Alex Castellanos.

Guys, thanks very much for coming in.

Is it likely that we're going to see a change, Paul, right after the president's address to a joint session of Congress tonight in terms of the mood of the American public?

In other words, can he reassure everyone that, yes, there will be light at the end of this tunnel?

PAUL BEGALA, CNN CONTRIBUTOR: You know, frankly, Wolf, I think it's asking too much out of one speech. I mean I went back and looked and I love -- you know, I'm an old White House speechwriter myself.

Bill Clinton -- a great speaker; Ronald Reagan -- a great speaker. One speech usually doesn't move public opinion, even for those very talented speakers.

Now, Barack Obama -- as good a speaker as we've ever had in the White House. But, no. I think it's going to actually take moving things on the ground. I think what he's going to seek to do instead is to build support for his agenda -- education, health care, energy reform -- those types of issues that have taken a bit of a back seat to the public discussion of the current economic crisis.

I think he wants to build a case for supporting education, health care, energy. And I think that's probably more important to him than turning around the current mood of the country.

BLITZER: He does have, Alex, according to all the major national public opinion polls that have been done in the past few days, very high job approval numbers right now. Between 60 and 70 percent approve of the job he's doing.

So while he's being criticized by, certainly, a lot of Republicans in Washington and others around the country, it seems the overwhelming majority of the American public is with him right now.

ALEX CASTELLANOS, REPUBLICAN CONSULTANT, CNN POLITICAL CONTRIBUTOR: And there's good reason for that. He's not only a very gifted communicator. I think Republican or Democrat, you don't question his sincerity and his commitment to trying to do something about this problem.

He's brought an openness to government. I mean what he did, bringing in the Republicans and Democrats yesterday to the White House, I thought, was something Washington needed. And the Republicans, I think, have to give him credit for that.

But I think Paul is right. He's going to be judged on the merits, on the substance. But we're not going to hear a lot of that tonight, about the intricacies of the stimulus plan. And he's not going to open up the sausage and let us see it.

He's going to, instead of talking about substance, he's going to talk about the needs of the country and the ends, the -- some great optimism that we're going to get to one of these days.

So it's going to be a bit like a magician. He's going to distract us from the substance with some -- I think, some very soaring rhetoric about the future and what this country can be. He's been too pessimistic lately. You're going to hear optimism tonight. BLITZER: Some are suggesting, Paul, it might be like FDR's fireside chats -- that he's going to try to explain to the American public what's going on.

BEGALA: Right. In fact, I think he's going to do two things.

First, he's got to explain and then he's got persuade right?

He's got to explain to folks why it is. It's a hard sell. Why it is we had to send hundreds of billions of money to banks that screwed up. Why that matters to me. Why if my neighbor loses her house, why do I need to care about that when her mortgage is foreclosed on? Well, it actually costs me $20,000, an average house if the house next door forecloses.

So to explain first that we're all it together and persuade his prescription, rather than the prescription of the party opposite is the right way to do it. So I think he's got to do those two things tonight.

CASTELLANOS: But you know Wolf, I don't think he's going to get into the details. We're not going to hear a lot about how the stimulus works because it's broken window economics. There's old economic theory that says, you know, if I throw a brick through your wind oh, I'm actually creating a job. Because you have to hire somebody to fix it. And, well, actually, you are having to take that money from some place else you might have spend it and create a job there. At the end of the day we haven't really added anything to the economy. This democratic plan is just broken window economics. We're all going to break each other's windows and somehow pretend that's going to make us more prosperous. He's going to talk about big picture and then try to move us into the future.

BLITZER: But he is going to talk about not only the economy, but also his vision for health care reform, which is a major priority that he is making it clear to anyone who meets with him he's not backing away from that. Energy reform, he's got a lot on his plate right now. Is there a -- is there a potential problem, Paul, that he's trying to tackle too much at the same time?

BEGALA: Yes. But he has no choice. You had lunch with the president today. I'm not hanging out having lunch with him. I have sources who work for him. They are quite passionate about the long- term agenda, in addition to the immediate stuff we've got to do. The house is on fire, frankly, an arson set by some of Alex's friends in the Republican Party. We've got to put the fire out and then build a new house. That is education, health care, energy. He's passionate about those issues.

And those are longer term issues. At the same time, we have 17,000 new troops being deployed to Afghanistan. That war is heating up. The war in Iraq continues. God bless those people over there. He's still got two hot wars to fight. He has no choice. He has to do all these things at once.

BLITZER: It's a tough act that he's going to try his best at tonight. We'll see how he does. All right. Guys, thanks very much.

The man who safely landed a passenger jet on the Hudson River has a beef.

CAPT. CHESLEY SULLENBERGER III, US AIRWAYS 1549: My pay has been cut 40 percent. My pension like most airline pensions, has been terminated.

BLITZER: And Captain Sullenberger says deep pay cuts impact more than just airline workers. The hero pilot's dire prediction is still ahead.

Plus, a corner of the world posing a great threat. Senator John Kerry just back from the Middle East and South Asia. He's here to talk about what he learned. We'll talk to him live. That's coming up.

(COMMERCIAL BREAK)

BLITZER: Captain Chesley Sully Sullenberger who crash landed has plane on the Hudson River makes some frightening predictions about air travel. He testified before Congress today. Let's bring in our homeland security correspondent Jeanne Meserve.

Jeanne, what did he say?

JEANNE MESERVE, CNN CORRESPONDENT: Well Wolf, Congress might have expected to have a love fest with the crew of flight 1549, but, instead, they got an urgent warning about aviation security.

(BEGIN VIDEOTAPE)

MESERVE: They stood, they clapped, they gushed.

REP. JAMES OBERSTAR (D), MINNESOTA: Captain Sullenberger, I think you have jet fuel in your veins.

MESERVE: But Sullenberger was there to sound an alarm.

SULLENBERGER: I am worried the airline piloting profession will not be able to continue to attract the best and the brightest.

MESERVE: Sullenberger and his co-pilot Jeffrey Skiles had 70 years and 40,000 hours of flying between them. Their experience and training were key to the survival of everyone on board flight 1549. But an economic tailspin in their industry caused by 9/11, fluctuating fuel prices, bankruptcies and mergers, has sent pay and benefits tumbling. Sullenberger's salary has dropped 40 percent, Skiles' 50 percent. Both work second jobs to support their families.

REP. JOHN HALL (D), NEW YORK: I just don't -- it seems -- I am just shocked.

MESERVE: Sullenberger and Skiles say because of low pay, it is hard to recruit and retain experienced pilots. JEFFREY SKILES, FIRST OFFICER, US AIRWAYS 1549: Newly hired pilots at our affiliate carriers have as little as 300 flying hours when they start work. When I was hired, it required 3,000 hours to even be considered for an interview.

MESERVE: If there is another crash like this one, experience could be the difference between life and death.

SULLENBERGER: In aviation, the bottom line is that the single most important piece of safety equipment is an experienced, well- trained pilot.

MESERVE: The Federal Aviation Administration says the problem is even broader.

MARGARET GILLIGAN, FEDERAL AVIATION ADMINISTRATION: We certainly share the concern about where the professionals for the next generation are going to come from. Not just in the piloting ranks but in the mechanic ranks in the engineering ranks.

MESERVE: The airline industry took issue with the testimony saying there is a surplus of well-trained pilots and insisting safety will not be compromised.

(END VIDEOTAPE)

MESERVE: For the first time, we heard from Patrick Harten, the air traffic controller who handled flight 1549. When the captain told Harten he was taking the plane into the Hudson, Harten thought he'd be the last foreign talk to anyone on that plane alive. But today he talked to the crew and got a big thank you.

BLITZER: As he should. Thank you Jeanne Meserve.

Let's get back to our top story. We're only a few hours away from the president's address before a joint session of the United States Congress. His first since the election. Joining us now, Democratic Senator John Kerry. The new chairman of the Foreign Relations Committee. He's just back from the Middle East. Thanks for coming in.

SEN. JOHN KERRY (D), FOREIGN RELATIONS COMMITTEE: Happy to be with you. Thank you.

BLITZER: It's going to be very brief what he has to say on foreign policy, national security tonight. Almost all of the speech is going to deal with domestic economic issues, education reform, health care reform, energy reform. As chairman of the Foreign Relations Committee, do you see this as a wasted opportunity?

KERRY: No. Not at all. This is exactly what I would expect him to do. You know, our security is first and more most going to be defined by our economic strength. We need to get our act back together. And I'm just back from the Middle East with meetings with leaders in many of those countries. Everybody is feeling the impact of what is happening. So we need to do this for everywhere. BLITZER: Tell us about that letter that you were -- you were asked to deliver from Hamas to President Obama. Hamas being an organization the U.S. government considers to be a terrorist organization. There's no direct contact between Hamas and U.S. officials. But you went to Gaza. I believe you were the highest ranking U.S. official in Gaza in quite awhile.

KERRY: Well, I did go to Gaza, Wolf, and I'm glad I went to Gaza. It was a very, very important visit in terms of seeing firsthand what the reconstruction costs are going to be, what the humanitarian situation is. And I don't think the United States of America could stand by or should stand by and be oblivious to the plight of folks who are living under the most difficult of circumstances. That doesn't mean there's a change in our policy. There is not. I didn't, obviously, meet with anyone directly involved with Hamas. I went there with the United Nations relief works agency, and I met with a couple of businessmen who were distinctly -- in fact, they were Fatah, not Hamas.

But in the course of my being there, a letter was left there indirectly to third parties. And the head of the United Nations gave me the letter. I wasn't even aware of what it was until we got out- there. I directly turned it over to the diplomatic channels which were appropriate. They'll handle it appropriately.

BLITZER: It's an awful situation as we know in Gaza right now. And I know you were one of the eyewitnesses. Is it your sense based on what you saw the Israelis were justified in that incursion and those strikes or they went too far?

KERRY: Wolf, that's not a judgment that I'm capable of making on the basis of an afternoon and a visit like I had. Obviously, war is tough. And you know and you and I both know in the fog of war, a lot of different things happen. I'm not going to make those judgments.

I also think that's not where we need to spend our time right now. What we need to focus on is how we get out of this mess we're in the Middle East and begin to move a peace process forward. And I think the conference that is taking place at Sharm el Sheikh next week, Secretary Clinton will be there, George Mitchell, Senator Mitchell will be there. Ministers in countries who will be represented from all throughout the region. This is an opportunity to begin to deal with Gaza, to begin to pressure others to hopefully bring together some kind of a reconciliation government and ultimately, we will deal with the elected president of the Palestinian authority, President Mahmoud Abbas. What we need to do is, however, begin to move the peace process itself back to center stage.

BLITZER: I want to press you on that point because, in addition to going to Gaza, which is rare for a U.S. official, you also went to Syria. And you met with the leader of Bashar Al Assad in Damascus. This at a time when there are indications the Obama administration wants after years to re-establish a dialogue with Syria. Were you encouraged by what you heard from the Syrian president?

KERRY: Yes. I was very encouraged by what I heard. BLITZER: Tell us what he said to you?

KERRY: Well, we discussed almost every issue in the region. We discussed Iran. We discussed Iraq. I particularly think there are opportunities for mutual relationship with respect to Iraq. We discussed Hezbollah. We discussed Lebanon, Lebanese elections, the need for Syria to keep its hands off of that election except to guarantee that they are open and fair. We discussed Hezbollah and the rearming of Hezbollah in the south of Lebanon. We discussed the presence of Hamas in Damascus. We discussed foreign fighter bases. There isn't any issue we didn't talk about.

BLITZER: Did he say he's ready for a peace treaty with Israel?

KERRY: He absolutely would like to move forward in discussion. He is prepared, I believe, to enter into legitimate talks with the United States, with Israel, with others. Not just on the issue of Israel/Syria peace but also on these other issues that I talked about. So I'm convinced this is a moment of opportunity.

As in any conversation with anyone anywhere in the world, you don't just take the words you hear at face value. You look at the way to find an opportunity to put -- to test the suggestions that people make. I heard at least three or four things that we could fought the test, and I believe that begins with a meeting in Sharm el Sheikh where, hopefully, the world will come together and use the reconstruction of Gaza as an opportunity to begin to jump-start several other processes.

BLITZER: Senator Kerry. Good to have you back. Thanks very much for coming in.

KERRY: Great to be with you, Wolf. I apologize for the delay.

BLITZER: No problem. Senator Kerry is the new chairman of the Foreign Relation Committee. He succeeds former Senator Joe Biden who is now the vice president of the United States.

A deadly spike in violence in a hugely popular vacation spot. Now a warning to would-be American tourists.

Plus, a presidential helicopter that cost a fortune. While some lawmakers say military spending right now simply out of control. Is it a collision course?

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

(COMMERCIAL BREAK)

BLITZER: As spring travel season approaches, there are warnings out about a popular vacation spot because of a deadly spike in violence. Let's bring in Brian Todd. He's looking at the State Department advisories.

What's going on, Brian? BRIAN TODD, CNN CORRESPONDENT: We all recognize Mexico's image as a popular tourist and spring break destination. But it's images like this that have made the news recently. One American college in the southwest is warning its students not to go to Mexico during spring break this year and it's directly related to gangland violence that one U.S. law enforcement official tells us has reached epidemic proportions.

(BEGIN VIDEOTAPE)

TODD: Running gun battles in broad daylight, even at shopping centers. Bodies left in the open with threatening notes. Hallmarks of horrific turf battles between rival drug cartels and between drug gangs and Mexican authorities, violence that left more than 5,000 people dead last year. There's no let-up this year. From the State Department to private travel security experts, there are new warnings for Americans.

MAYER NUDELL, TRAVEL SECURITY EXPERT: I would say that anybody that's going for recreational purposes to Mexico would be advised to stay away from the border towns for now.

TODD: An updated State Department alert warns travelers of a major spike in violence in border cities like Tijuana, Nogales, Ciudad Juarez, Chihuaha City, Nuevo Laredo and Matamoros. A University of Arizona official tells us for the first time the school is warning students not to go to Mexico for spring break. Arizona State is considering a similar warning. Officials say it's not just the level of violence that's alarming but the sophistication of those perpetrating it.

CHIEF DAVID DENLINGER, ARIZONA DEPT. OF PUBLIC SAFETY: These are flat-out organized crime groups like we think of any other organized crime. They aren't a small gang on the corner. These are large organizations.

TODD: Drug cartels that officials say often dress in police uniforms on both sides of the border, to carry out hits and kidnappings. Americans can be targets, but often find themselves simply in the wrong place at the wrong time. More than 200 Americans have been reported killed in Mexico since 2004. And dozens remain missing.

The advice, if you do go?

NUDELL: Avoid the ATMs. Get their money before they go. And avoid that one potential pitfall.

(END VIDEOTAPE)

TODD: Now, staying in tourist areas is also advised. But in at least two cities, as we mentioned, gun battles have taken place in broad daylight at shopping centers. Wolf?

BLITZER: Brian, thanks very much. Mexico's a very popular destination for vacations. Not just for spring breakers. The tourism board says 23 million people visited Mexico last year. Americans accounted for more than 18 million of those tourists. Which according to the travel survey makes Mexico the third most popular destination for people in the United States. One of the reasons for the attraction, the value of the U.S. dollar, which buys nearly 15 pesos. Tourists bring in billions and billions of dollars to Mexico each year, making up about 5 percent of the country's budget.

The big day for a hero pilot isn't over yet. Where will you be seeing Captain Sullenberger as he makes a very important appearance tonight?

Plus, not even the president is immune to the recession. The big purchase Mr. Obama's putting on hold, that's coming up.

Jack Cafferty standing by as well.

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

(COMMERCIAL BREAK)

BLITZER: Michael Jackson's financial troubles have been reported one extensively in recent years. He's auctioning off nearly all of his possessions at his Neverland Ranch. It's a bizarre and eclectic collection of more than 2,000 items. Our internet reporter Abbi Tatton has more on this story.

Abbi, what is he auctioning off?

ABBI TATTON, CNN INTERNET REPORTER: This is like a Neverland fire sale. All the auction items are being posted online. Everything from the Neverland Ranch, over 2,000 items. That's everything from a golden throne to the actual gates of the ranch.

Right now we're flicking through the auction catalog section of arcade games. There's more than 100 games. This often bizarre collection of personal memorabilia is being auctioned off by Julia Auctions in Beverly Hills in April. It's posted online. Amongst the items, original art from Macaulay Culkin signed on the back in sharpie. An E.T.-like picture of Michael Jackson walking along with children. The signature glove. It goes on and on and on. The auctioneer says they're going through room after room, filling 75 semi trucks with memorabilia. The pop star has not lived at Neverland Ranch since 2005. It narrowly avoided foreclosure last year. But the proceeds from this auction expected to fetch up to $3 million. Wolf?

BLITZER: Wow. OK. Thanks very much, Abbi.

Let's go to Jack Cafferty. You like to follow a story about a story like that, don't you Jack?

JACK CAFFERTY, CNN CORRESPONDENT: I have nothing to say about Michael Jackson at this time. Well, maybe -- no, I'm not going to do that. What does it mean when politicians are more trusted than business leaders when it comes to economic matters?

David in Granville, Ohio, "Who would you rather see as the CEO of Citibank, the moron who currently holds the job or Barack Obama? It's no wonder we trust the Obama administration far more than the greedy and insensitive out-of-touch idiots who currently run the financial show. Obama has three major qualities, extreme intelligence, an incredible confident calm and huge quantities of luck. Of these, the third one may turn out to be the most important."

Marie in Salt Lake City, "That's funny. However, I'm not surprised. It's plain to we the people, the banks on Wall Street cannot be trusted. They're crooks who get away with stealing. Look at Bernie Madoff sitting in his posh New York penthouse apartment. The man's a criminal. He ought to be in a New York City jail. But no. There are two systems of justice in our nation, one for the regular people, one for the rich. Why are we not in the streets demanding that these crooks be put in jail?"

Davonne in Easton, Pennsylvania, "It's quite obvious the big guys on Wall Street have stabbed us taxpayers in the back. We give them billions of dollars. They turn around reward themselves with millions of what we just gave them. They spend millions to decorate their offices, they buy private jets, while demanding they be allowed to keep their bonuses. We look to Capitol Hill as they are the only ones who can help us, the little guys."

Chris in Buffalo, New York, "It means the powerful in Washington have us exactly where they want us."

Greg in Ontario, "Jack, the time to worry is when politicians are trusted more than the media." That ain't ever going to happen.

If you didn't see your e-mail here, you can go to my blog at CNN.com/Cafferty file. Look for yours there, among hundreds of others.

Can you think of anything that Michael Jackson owned that you would want to bid on?

BLITZER: I haven't looked --

CAFFERTY: You might want to look at that catalog.

BLITZER: Do you want to buy any --

CAFFERTY: No.

BLITZER: Let's talk about your question for a second. The notion that it's hard to believe that politicians are trusted more than corporate executives, financial experts. You know, as --

CAFFERTY: Bankers. I mean, the whole respected image of the solid banker at the corner who will loan you money to buy a house or a car, you know, you got on tough times, he'll advance you. Gone. It's never been this way before. Where the financial community is held in such low esteem. At least in my memory.

BLITZER: If they say used car salesmen --

CAFFERTY: And lawyers.

BLITZER: And journalists.

CAFFERTY: Well, and journalists.

BLITZER: Jack Cafferty, don't go too far away.

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

Happening now, President Obama only three hours away from trying to reassure Americans that the economy can eventually be fixed. We're counting down to his big speech to Congress, and to the nation. Indeed, to the world.

Also this hour, the presidential helicopter costs a fortune. Some lawmakers say military spending right now out of control. This hour, the train wreck that may be ahead.

And desperation in New York. People ling up as far as the eye can see. Hoping upon hope to simply get a job.

All of that, and the best political team on television.

We want to welcome our viewers in the United States and around the world.

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