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The Situation Room

Obama Economic Team Faces Congress; President Obama: U.S. in 'Very Deep Hole'; Interview With Tony Blair

Aired March 03, 2009 - 15:59   ET


WOLF BLITZER, CNN ANCHOR: Happening now, economic gloom and anger. The president offering a grim forecast for the immediate months ahead, and his economic team gets an earful from Congress about the latest corporate bailout.

Plus, is Rush Limbaugh the Wizard of Oz? Who's really running the Republican Party? A top Democrat is trying to get new mileage out of Limbaugh's feud with the new RNC chairman.

And the pilot's last words before ejecting from a fighter jet that crashed and wiped out a family. Audio recordings just in to CNN may help explain what went horribly wrong.

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


BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: I want to begin with some plain talk. The economy's performance in the last quarter of 2008 was the worst in over 25 years. And frankly, the first quarter of this year holds out little promise for better returns.


BLITZER: President Obama's blunt assessment today of the economic pain all around him and all around the nation. Some of the most pessimistic analysts say a sustained recovery isn't likely to begin until next year. And the officials in charge of trying to clean up this mess are venting their own frustrations.

Let's go to our Senior Congressional Correspondent Dana Bash, because the top economic minds in the administration were all testifying up on Congress today.

Dana, what happened?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Well, that's right. You know, lawmakers have really been hearing from their constituents. This, as lawmakers in both parties have been hearing outrage about the billions in taxpayer dollars that are still being spent to bail out big companies, what they call reckless companies, like AIG. And in three separate hearings, Wolf, the top economic officials in this country heard that outrage directly from lawmakers.

(BEGIN VIDEOTAPE) BASH (voice-over): The Fed chief, the treasury secretary, and the budget director all testifying about the country's terrible economic times, but it was the latest bailout of insurance giant AIG that ignited the most fire.

SEN. RON WYDEN (D), OREGON: At what point will the taxpayer no longer be on the hook for the massive AIG failure? What is the end game for American taxpayers?

BASH: This following the government's fourth attempt in six months to prop up AIG, $30 billion more taxpayer dollars.

SEN. JIM BUNNING (R), KENTUCKY: We're no better off now. You may think we are.

BASH: Federal Reserve Chairman Ben Bernanke defended it but said he doesn't like it.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I think if there's a single episode in this entire 18 months that has made me more angry, I can't think of one than AIG. AIG exploited a huge gap in the regulatory system. We're doing this to protect our financial system and to avoid a much more severe crisis in our global economy.

BASH: On the other side of the Capitol, the treasury secretary insisted the economic crisis will soon be helped by the president's $787 billion stimulus plan.

TIMOTHY GEITHNER, TREASURY SECRETARY: What the Recovery Act does is to get people back to work and stimulate private investment.

BASH: But the Fed chief testified he's not so sure.

BERNANKE: The timing and magnitude of the macroeconomic effects of the fiscal program are subject to considerable uncertainty.

BASH: Meanwhile, the president's top economic advisers promoted and defended his new $3.6 trillion budget.

REP. JEB HENSERLING (R), TEXAS: And is it true that in eight years, that the debt would be doubled under this budget?

PETER ORSZAG, WHITE HOUSE BUDGET DIRECTOR: Yes, but, again, the debt increase is less that if we fail to act.

BASH: Republicans pounded the president for raising taxes in a recession. The treasury secretary respond no tax hikes until 2011.

GEITHNER: During this period, while we're still going through a recession, before recovery comes, we do not raise any taxes.


BASH: Now, Republicans also question whether or not the Obama economic team is really inspiring the confidence it needs to, to turn around the economy. In fact, one Republican congresswoman from Florida, Wolf, she told Timothy Geithner point blank she had mixed feelings about him coming to the Hill today, because she said, "It seems that every time a statement is issued by you, the stock market plummets."


BLITZER: All right, Dana. Thanks very much. We'll stay on top of this part of the story.

Meanwhile, President Obama has his work clearly cut out for him at home, but he can't ignore the global reach of the economic crisis, or an important ally who's in a jam of his own.

Let's go to our Senior White House Correspondent Ed Henry. He's got that part of the story for us.

The president received an important visitor today, Ed.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: That's right. The British prime minister, Wolf. And you'll remember that when the players were George W. Bush and Tony Blair, the conversations were dominated by talk about the alliance standing strong on the war in Iraq. Now these conversations are all about the economy.


HENRY (voice-over): A meeting of the U.S. president and British prime minister used to mean talk of war and peace, but it's all about the global economic meltdown now.

OBAMA: My main message to the American people is to just recognize that we dug a very deep hole for ourselves, there were a lot of bad decisions that were made. We are cleaning up that mess. It's going to be sort of full of fits and starts in terms of getting the mess cleaned up, but it's going to get cleaned up.

HENRY: Prime Minister Gordon Brown is wounded at home and wanted a full-fledged news conference to stand beside a popular new leader. Brown got a more low-key meting in the Oval Office. And yet, unlike Tony Blair, he didn't seem to mind being considered the American president's poodle.

GORDON BROWN, BRITISH PRIME MINISTER: And I think the history books will record that what he has done in his first nearly 50 days of office has been momentous in setting the means by which we can see the economic recovery happening.

HENRY: Brown desperately needs President Obama to help Great Britain deal with the financial crisis.

BROWN: As far as the common interests that we're pursuing, look, there is the possibility in the next few months of a global new deal that will involve all the countries of the world in sorting out and cleaning up the banking system.

HENRY: The president pointedly did not make any promises about a global new deal, focusing instead on trying to reassure Americans about 12-year lows on Wall Street.

OBAMA: What I'm looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.


HENRY: Now, the president also said something else very interesting, that prices are so low right now on Wall Street, that it might be a good time to buy stocks if you're thinking about the long term. And it's fascinating, because it's hard to remember another U.S. president coming this close to actually saying go out and buy U.S. stocks.

Robert Gibbs was very careful to say the president was not sending any sort of an official buy signal, especially in the wake of the fact that Robert Gibbs has repeatedly said that this White House is not following Wall Street day after day, and that they're not worrying about those gyrations, as the president said. That would obviously be a contradictory message, but it's interesting that the president seeming to maybe cheerlead the market just a little bit there -- Wolf.

BLITZER: And we're going to be hearing at length from the president, in his own words, later this hour.

All right, Ed. Thanks very much.

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

JACK CAFFERTY, CNN ANCHOR: Wolf, President Barack Obama is saying bring it on to the nation's lobbyists. The president vows he'll fight to change health care, education and energy policy in dramatic ways, upending the way business is done in Washington.

In his weekly radio address, Mr. Obama pointed out the current system may work for the powerful, well-connected interests, but he says he works for the American people. The president thinks his budget will help millions of Americans, but only if Congress can beat back special interest groups. He says he knows the lobbyists are gearing up for a fight and "My message to them is this: So am I."

Some critic says that some of President Obama's proposals are almost radical, but he insists this is what the American people voted for last November. He says that passing the $3.6 trillion budget is not going to be easy, even with Democrats in control of Congress, precisely because of the pushback from the lobbyists and special interest groups entrenched in Washington.

The president singled out some in particular. He noted the insurance companies like AIG, banks, big student lenders, and oil and gas companies. Republicans have continued to slam the president's spending proposals, saying that almost every day brings another multibillion- dollar spending plan being "proposed or, even worse, passed." Of course, the nation didn't elect the Republican candidate last November. Remember?

Here's the question. How can President Obama defeat the lobbyists?

Go to You can post a comment on my blog -- Wolf.

BLITZER: Not an easy chore, certainly.


BLITZER: Very hard. A lot of presidents have tried; few have succeeded.

Jack, thanks very much.

If you've looked at your 401(k) lately, you might feel like you're back in 1997. Over a decade of stock gains wiped out. What should you do with your investments right now?

Plus, new fuel today for Democrat whose accuse Rush Limbaugh of pulling the strings within the Republican Party.

Plus this...


TONY BLAIR, FMR. BRITISH PRIME MINISTER: They don't get to determine the problems that are there. You get to determine or have a chance to determine the solutions.


BLITZER: The former British prime minister, Tony Blair, tells me whether President Obama is overreaching.

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


BLITZER: The world being rocked right now by a global economic slump. That's no reason to put the issue of global warming on the back burner. That's the message being pushed right now by one of the world's leading officials on that and several other issues. He's here in Washington meeting with lawmakers about climate change.


BLITZER: And joining us now from Capitol Hill, the former prime minister of Britain, Tony Blair.

Prime Minister, thanks for coming in.

BLAIR: Thanks, Wolf.

BLITZER: At the time of this extraordinary economic distress, not only hear in the United States, but around the world, why go forward right now as a priority with all of these global warming- related projects? It seems there's so many other key bread and butter issues literally on the table.

BLAIR: Well, there are lots of challenges. There's the global economic crisis, there's what's happening in the Middle East, there's security issues around the world. Of course, all of these challenges are there, but so is the challenge of global warming. And the signs haven't changed.

Indeed, it's become even more unequivocal. The climate is changing. The threat is clear and obvious.

But I think there's another reason as well. As we contemplate stimulus packages to help our economy, isn't it sensible to be investing for the future in clean technology, so that when our economies begin to grow again strongly, they're going to grow again in a sustainable way?

And around the world now there are examples of thousands -- indeed, hundreds of thousands -- of jobs being created in new clean technology. So I think this is a time to seize the opportunity. And in any event, we have no option because the climate is changing.

BLITZER: Is it wise to go ahead and effectively impose a new tax on consumers right now, an energy-related tax, this cap and trade, if you will, to try to reduce carbon emissions right now? In effect, that's going to be higher costs for consumers who use either gasoline or other electricity, forms of energy. Is that wise at a time of economic distress?

BLAIR: Well, it's not just about imposing a burden. It's actually about giving people an opportunity, too.

If, for example, you have a major energy efficiency program -- and part of that is part of the stimulus package that's being proposed here in the U.S. at the moment -- then actually people can cut their electricity bills. We were hearing from businesspeople, American power companies, businesspeople, people who are there to make a profit, but also say how by introducing energy-saving devices, the consumer could actually cut the amount of money it was paying on its energy bills.

So there are opportunities here as well. I mean, yes, of course, there are big challenges, but there are opportunities. And if you think going forward if we don't resolve this problem, and we end up with major climate change happening, it's going to impact here, and it's going to impact right around the world and, of course, impose its own cause. Indeed, we were presented with a study this morning showing how much more we would have to pay if we do not deal with these major environmental and weather change problems. BLITZER: So you say do it now, even despite all the economic issues.

Let me move on and pick your brain on Gaza, because I know you were just there, you went in following the Israeli war, in effect, with Hamas there. Explain why you believe it's important for the U.S. to go ahead and provide hundreds of millions of dollars to Palestinians in Gaza right now at a time when the whole Middle East seems so uncertain and at a time of such economic dislocation here at home.

BLAIR: I think the one thing we know about all these problems -- and global warming is an example, but actually, the Middle East peace process is an even more stark example -- is that even though they may be happening a long, long way away -- and I was in Gaza less than 48 hours ago -- their impact in terms of security and stability are not just felt in that region. It's felt right around the world, and back here as well.

So if you look at the issues we're facing, for example, in Afghanistan, the questions to do with Pakistan, or Iran, or Iraq, actually, they're all linked, in a sense, because all of them are about whether we can create a Middle East -- a wider Midle East of security and stability. And solving this Israel/Palestine question is absolutely at the heart of doing that. If we do that, we've got a better chance of stability. If we don't, we will get instability, which is what we've had.

BLITZER: Is it wise for the U.S. to be encouraging Russia to play a more essential role in preventing Iran from developing nuclear weapons, long-range missiles? In exchange, the U.S. would consider abandoning any missile defense shield base inside Europe.

BLAIR: Well, I'm less qualified to talk about what happens on the missile defense shield, but yes, it certainly is wise to encourage Russia to play a full part in making sure that we have a unified international position.


BLITZER: But does that quid pro quo work for you? In other words, the U.S. abandons the missile defense shield in Poland, in the Czech Republic, which the Bush administration wanted to go forward, if the Russians use their influence with Iran to stop Iran from developing a nuclear bonds.

BLAIR: These are decisions, for example, of our national missile defense that I think America's got to make -- the administration has got to make on its own terms, as it were. But what I am saying to you is I think a relationship between U.S. and Russia which promotes the chance of a unified position in the face of Iran's desire to acquire nuclear capability, yes, that is really, really important.

Now, what the U.S. then does about missile defense, that's a matter for you guys here. But in my view, again, looking at the Middle East, where I spend a lot of my time, the Iranian influence there used at the moment negatively the Iranian desire to acquire nuclear weapons capability. These are major, major security threats to the region. So trying to make sure we've got a united international position with Russia on side, that's certainly a very, very top priority indeed.

BLITZER: Looking in from the outside, President Obama, he's trying to do so much in his first weeks in office. Is he overreaching right now?

BLAIR: No, because I'm afraid the problem when you are a president or a prime minister is that you don't, I'm afraid, get to determine the problems that are there. You get to determine or have a chance to determine the solutions, but the problems are there, whether you like them or not. And therefore, yes, we've got a major economic crisis, but we've also got a major security threat, and we've got the long-term question of global warming.

So it would be neat in a way to say let's deal with the global economic crisis first, then move on to the security threat, then deal with global warming. I'm afraid they're all there. And that's why, no, I think, actually, on the contrary, by taking a very bold, assertive line right from the beginning I think his leadership is giving some people hope that these problems that are major and difficult, difficult challenges to meet, will be met.

BLITZER: And add to that a redoing the nation's health care system, education, energy independence. It's a huge, huge agenda that he has.

Prime Minister, always good to speak with you. Thanks for coming in.

BLAIR: Thank you, Wolf. Thanks.


BLITZER: We're just getting word in to THE SITUATION ROOM from the U.S. Coast Guard. They're looking for those NFL players and another friend still missing at sea. New details on their search, that's coming up next.

Plus, some out-of-work Americans are about to get a break -- the bank that's lowering mortgage payments for homeowners who have lost their jobs.

We'll explain right here in THE SITUATION ROOM.


BLITZER: President Obama says there's a new sheriff in town. You might know him better as the vice president, Joe Biden.

We're going to talk about what's going on in our "Strategy Session." Stand by.

Plus, stock prices plunging to lows we haven't seen since the late 1990s. What's going on right now? How much longer should we sit it out?


STEVE SANDERS, IREPORTER: I don't really invest, except for my 401(k). And in that case, I don't really look at it.



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

Happening now, diagrams for the president's helicopter in very unauthorized hands, how someone in Iran got hold of sensitive Marine One details. That's ahead.

Plus, an ambush using guns and grenades, even a rocket. The surprising target in this deadly attack? A cricket team. What's going on?

And the first lady speaking to women in the U.S. military. She's sending a powerful message, what Michelle Obama says Americans are honor-bound to do.

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

Some Democrats want President Obama to be more of a cheerleader for the economy, but he's keeping his tone measured and the public's hopes in check.

Listen to the president speaking frankly about the dire situation right now and how the road to recovery will be long and painful.


OBAMA: I'm absolutely confident that they will work. And I'm absolutely confident that credit's going to be flowing again, that businesses are going to start seeing opportunities for investment, they're going to start hiring again. People are going to be put back to work.

What I'm looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.

Now, having said that, the banking system has been dealt a heavy blow. It has to do with many of the things that Prime Minister Brown alluded to: lax regulation, massive over-leverage, huge systemic risks taken by unregulated institutions, as well as regulated institutions.

And so there are a lot of losses that are working their way through the system. And it's not surprising that the market is hurting as a consequence. You know, in fact -- you know, I think what we're seeing is that, as people absorb the depths of the problem that existed in the banking system, as well as the international ramifications of it, that, you know, there's going to be a natural reaction.

On the other hand, what you're now seeing is -- is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it. I think that consumer confidence, as they see the American Recovery and Reinvestment Act taking root, businesses are starting to see opportunities for investment and potential hiring.

We are going to start creating jobs again. One of the things that Prime Minister Brown and I talked about is, how can we coordinate so that all the G-20 countries, all the major countries around the world, in a coordinated fashion, are stimulating their economies? How can we make sure that there are a common set of principles, in terms how we're approaching banking, so that problems that exist in emerging markets like Hungary or the Ukraine don't have these enormous ripple effects that wash back onto our shores? And we're providing them with some help in a coordinated international fashion, as well.

All of those steps, I think, are going to slowly build confidence, but it's not going to happen overnight. And -- and my main message to the American people is to just recognize that we dug a very deep hole for ourselves. There were a lot of bad decisions that were made. We are cleaning up that mess.

It's going to be sort of full of fits and starts, in terms of getting the mess cleaned up, but it's going to get cleaned up. And we are going to recovery, and we are going to emerge more prosperous, more unified, and I think more protected from systemic risk having learned these lessons than we were before.


BLITZER: The president of the United States in the Oval Office.

The financial crisis is taking many Americans on a very wild ride. Over roughly the past year-and-a-half, the Dow's dipped lower and lower. And it's taken down the balances of many Americans' bank accounts and retirement accounts.

We're seeing market activity and economic pain not seen in many, many years.

Let's go to New York. CNN's Mary Snow is picking up this part of the story.

It's a pretty sad sign of the times. What's going on, Mary?


In fact, now we're at 12-year lows. The Dow is at a level it hasn't been since April of 1997. And there's a big concern right now for many American who are hoping to retire in the near future, but who now can't. (BEGIN VIDEOTAPE)

SNOW (voice-over): Adding to worries about soaring unemployment and home foreclosures, the stock market dropping to 1997 levels, wiping out years of investment savings for people like Cory Hutchison.

CORY HUTCHISON, INVESTOR: Damaged would be pretty accurate. I have taken a very serious hit on all the investments. All the money that I have put in has seriously depreciated.

SNOW: Hutchison estimates he's lost 60 percent of his 401(k) investments. But the 30-year-old software consultant who is expecting a second child says he will keep putting money into his 401(k).

HUTCHISON: I'm fortunate enough that I'm young enough that this hit hurts, but I have got a long time to recover from it.

SNOW: But many others aren't as calm. It's estimated Americans pulled $35 billion out of stock funds last month. And it's turned financial adviser Pran Tiku into more of a therapist these days for his 250 clients.

PRAN TIKU, PRESIDENT, PEAK FINANCIAL MANAGEMENT: I think that's a major part of our role right now, is to hold hands and make sure that they understand that there is a long-term and we will at the end of the day come out of this.

SNOW: To come out of it, though, will take years, years many older Americans were hoping to spend in retirement. But financial adviser Ryan Mack says dwindled 401(k)s are forcing people to change life plans.

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: We're getting too many calls from individuals who are saying, Ryan, I have lost half the value of my 401(k), and I should be retired right now.

SNOW: Cory Hutchison says he tries to help out some of his older relatives who have lost money. And one personal finance columnist says Cory's situation is not uncommon.

TERRY SAVAGE, FINANCIAL COLUMNIST, "THE CHICAGO SUN-TIMES": It may very well be, can adult children provide support for their parents, as the retirement assets they expected to have simply have disappeared?


SNOW: The big question, of course, is, how long will it take to make up for these losses? We put that question to financial advisers we spoke with today, who say, judging from the past, once the market does turn around, it could three years.

But that is if there's a sharp upturn, like the kind following the recession between 2000 and 2003. But that's a general view. It all depends, of course, on how that money is invested -- Wolf.

BLITZER: That's huge, huge if.

All right, thanks, Mary. Thanks very much.

There's a heated battle under way to be the leading voice of the Republican Party. And to hear top Democrats tell it, Rush Limbaugh is winning. The conservative radio talk show host is getting more attention today from the party he's been known to trash.

Plus, we just received recordings that offer some new clues about a fighter pilot's choices before a deadly crash into a residential neighborhood. Did he do the right thing?

And diagrams for the commander in chief's helicopter, Marine One, in the hands of Iran right now. Has the president's security been compromised? We will tell you with what we know -- right here in THE SITUATION ROOM.


BLITZER: It's the crash that shocked a lot of us, causing an outpouring of compassion around the country and a rash of questions.

Just a short while ago, aviation officials released some chilling audio of the moments just before a U.S. military jet slammed into a densely populated -- populated neighborhood in San Diego back in December.

Let's bring in Brian Todd. He's got the audiotapes. He's got the information -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, in this audio, you hear a military pilot trying to make some critical decisions as his jet is suffering some catastrophic engine problems.


AIR TRAFFIC CONTROL: Souls on board, fuel remaining, and time, and nature of emergency?

PILOT: Yes, sir, one soul on board. I have got down to a single engine dirty, possibly a problem with the other engine, and time fuel remaining, about 20 to 30 minutes.

AIR TRAFFIC CONTROL: Do you want the visual straight into runway 3-6?

PILOT: I'm actually going to try and take it to Miramar, if possible.

AIR TRAFFIC CONTROL: SHUTR 2-5, OK. Just let me know what you want to do and how about a head-in of 0-1-0 for either airport right now?

PILOT: Roger that. Thank you. And I'm coordinating with some people on the ground to try and figure out what we're doing.


And SHUTR 2-5, did you want a lower altitude?

PILOT: Not at this time, no.

AIR TRAFFIC CONTROL: Just let me know if you want to change to North Island. I'm going to keep you on that heading that's going to run you right by North Island. And it's going to be the shortcut to Miramar, so just let me know what you need.

PILOT: Roger.


TODD: Now, officials say that audio helps clear up at least one question in this December 8 mishap. They say the pilot was offered the chance to land at a base that would have taken the crippled jet over water. You heard that segment at the end there.

But, as you always just heard, the pilot decided to go for an inland airfield that required him to fly over an area packed with people and homes. Thirteen Marine Corps personnel have been punished for errors that contributed to this crash.

And, today, military officials told members of Congress that four Marine Corps officers have been relieved of duty for their part in directing the pilot over that neighborhood.

Now, you may remember that the pilot ejected safely in that crash, but when the jet came down, it incinerated two homes, damaging three others, killing four people, including one man's entire immediate family. That man, a Korean immigrant, tearfully acknowledged it was a horrible accident that took his wife, two young daughters, and mother-in-law.

That drew worldwide attention and donations. Meanwhile, Wolf, the investigation into what happened, this continues. We're told that the Marine Corps is scheduled to hold a news conference next hour. We will of course be watching that.

BLITZER: All right. And we will have you back with more on this very compelling sad story, Brian. Thanks very much.

It looks as though Republican Party chairman Michael Steele and conservative radio talk show host Rush Limbaugh have made up. And that's giving the Democratic Party chairman even more reason to claim Limbaugh is indeed the man behind the curtain running the GOP, you know, like the sort of Wizard of Oz.

Let's go to our senior political analyst, Bill Schneider.

Bill, there's quite a squabble going on over who's leading the Republican Party right now.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Yes, there is, and Democrats are trying to play a part in it. (BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): They say nature abhors a vacuum. So does politics. When a party is out of power, there's often a vacuum of leadership at the top.

After Bill Clinton took office, the Republicans faced a leadership vacuum. Newt Gingrich rushed in to fill it. During the George W. Bush years, Democrats looked to both Clintons and Al Gore to fill the vacuum.


MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: I'm the de facto leader of the Republican Party.


SCHNEIDER: But when party chairman Michael Steele criticized radio host Rush Limbaugh, Limbaugh struck back.


RUSH LIMBAUGH, RADIO TALK SHOW HOST: Why are you running the Republican Party?


SCHNEIDER: Steele quickly issued a statement, strategy: "I truly apologize. I respect Rush Limbaugh. He's a national conservative leader. And in no way do I want to diminish his voice."

Now Steele's Democratic counterpart has jumped into the fray.

GOV. TIM KAINE (D-VA), CHAIRMAN, DEMOCRATIC NATIONAL COMMITTEE: Then the fact that he backtracked immediately kind of leaves me wondering, OK, so, is Rush Limbaugh the guy who is really in charge of the party, kind of the Wizard of Oz?

SCHNEIDER: Steele is not the first Republican to criticize Rush Limbaugh and then apologize. Just land month, Republican Congressman Phil Gingrey of Georgia went on air.


REP. PHIL GINGREY (R), GEORGIA: I want to express to you and all your listeners my very sincere regret for those comments I made yesterday to "Politico."


SCHNEIDER: Democrats see an opening to depict the Republican Party as the party of Rush Limbaugh.

KAINE: My father-in-law, former Republican governor of Virginia, he just is beside himself, as he sees his own party get hijacked by the no-solutions, stand-in-the-way-and-be-divisive crowd.


SCHNEIDER: Democrats are, shall we say, rushing to fill the political vacuum at the top of the Republican Party.

And, you know, Wolf, we have heard of at least one Democrat in Virginia who's daring his Republican opponent to denounce Mr. Limbaugh.

BLITZER: Rushing, indeed.

All right, thanks very much, Bill Schneider.

Rush Limbaugh, by the way, is heard by as many as 20 million listeners a week on more than 600 radio stations nationwide. He signed a $400 million contract last year to continue his radio show through 2016. After more than 20 years of national syndicated, Limbaugh remains the most popular talk radio personality. He's kept his audience, even though talk radio's popularity has slipped somewhat because of the Internet.

Is the embattled Illinois Senator Roland Burris considering a run in 2010? Fellow Illinois Senator Dick Durbin and Governor Pat Quinn, both Democrats, both recently called on Burris to resign. But an official campaign Web site would suggest otherwise.

Let's go to our Internet reporter, Abbi Tatton.

Abbi, what's going on?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, take a look at the Web site.

There's not much on it at this point. First of all, the accomplishment page right here, nothing on it right now. Also, the endorsements for Senator Roland Burris, also blank. And the events page -- you get the picture at this point.

But the support Roland Burris for 2010 Web site is up and running and accepting contributions at this stage, even if its pages are bare and though a spokesman for the senator says the senator hasn't made any definitive plans at this point.

But the discussion about what Burris should do is also going on, on Facebook, where you have got more than three dozen groups that have been set up in the last couple of weeks: "Roland Burris, Resign"; Save Roland Burris." It's the Roland Burris Web sites calling on the senator to step down that have seen more of the recent activity -- Wolf.

BLITZER: Abbi, thanks very much.

President Obama is warning wasteful spenders, there's someone in the White House they should be afraid of.


OBAMA: To you, he's Mr. Vice President. But, around the White House, we call him the sheriff, because if you're misusing taxpayer money, you will have to answer to him.


BLITZER: The president is billing his vice president as a powerful enforcer. Here's the question. Are there similarities to Dick Cheney? Our "Strategy Session" is standing by.

And a bloody attack on a cricket team -- how Pakistan handled what it's calling a planned act of terror.

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



OBAMA: We also need to ensure that tax dollars are not wasted on projects that don't deliver results. And that's why, as part of his duty, Joe will keep an eye how precious tax dollars are being spent.

To you, he's Mr. Vice President. But, around the White House, we call him the sheriff, because if you're misusing taxpayer money, you will have to answer to him.


BLITZER: Let's talk about the new sheriff in town.

Democratic strategist CNN political contributor Donna Brazile is joining us and Republican strategist John Feehery.

He seems to be getting a lot of jobs out there, the new sheriff.

DONNA BRAZILE, CNN POLITICAL ANALYST: Well, I'm sure that's better than going to a bunch of funerals.

Look, Vice President Biden is someone who brings a lot of expertise and a lot of talent when it comes to knowing his way around Washington, D.C. So, I think this is a great role for the vice president to oversee how this money is being spent, to make sure that we're spending the taxpayers' money wisely. It's a good role for him.

BLITZER: Is it a good role for the vice president?

JOHN FEEHERY, REPUBLICAN STRATEGIST: When he was a senator, he's got a zero rating from the Citizens Against Government Waste.

He's going to be like Andy Devine was in that old movie "The Man Who Shot Liberty Valance." He's to be kind of a joke when it comes to cutting spending and being someone who's going to stop spending, bad spending. He likes to spend. He did it when he was in the Senate. And he's going to do it as vice president. BLITZER: Because, you know, he's got a real problem not just with some Republicans, but plenty of Democrats, including the leadership, who want to consider these earmarks, these so-called earmarks, some call it pork barrel spending.

The president, he will sign this current spending bill, but he says no more after this. And a lot of Democrats, including Steny Hoyer now, the number two in the House, they're saying, you know what? Congress should have a say in determining where this money goes.

BRAZILE: And Congress will continue to fight for their right to at least direct some of this spending.

But Joe Biden is going to have to sit down with his former colleagues in the -- the Senate and, of course, those in the House and say, look, we're -- we're dealing with a new budget this time. And this budget needs to be a little more lean and mean and get to the people who need it.

BLITZER: Who's going to win that fight between President Obama on the one hand and Democrats in Congress on the other hand, who want to continue those earmarks?

FEEHERY: Democrats in Congress, no doubt about it.

He has already said he's not going to veto this first bill. And then, when he said, we're going to have the health care bill is going to be drafted by the Congress, I think the Congress is going to win every one of these fights.

BRAZILE: But the biggest earmarker this year is a Republican, Mr. Cochran from Mississippi. So, the Republicans shouldn't just blame this on Democrats. These earmarks are very bipartisan.

BLITZER: Well, will President Obama win this battle, or will the legislature, will the Congress win this battle?

BRAZILE: I don't think he's going to change the appetite of Congress overnight. But I do believe that the president will begin to put his -- his gloves down, and tell the Democrats, as well as Republicans, no more earmarks.

BLITZER: Who's winning the battle between Rush Limbaugh and Michael Steele, the chairman of the RNC?


FEEHERY: Well, right now, it looks like Michael Steele.

Listen, Michael Steele should have said; I'm not going to apologize. I'm the spokesman of the Republican Party. Rush Limbaugh is a good talk show radio host. He excited a lot of people. But if -- building a permanent Republican majority, that's not going to be Rush Limbaugh. He's a guy who is going to entertain you, but he's not going to build a party that is going to win in the future.

BLITZER: They were eyeball to eyeball. And Michael Steele clearly blinked.

BRAZILE: Well, that's unfortunate, because he is the chair of the party. And his job to help grow and expand the party.

Rush Limbaugh is a great cheerleader for those who are already in the party. But Michael Steele has to go out there and really rebuild the Republican Party from scratch.

BLITZER: Now, how does he do that right now, given the fact that he sort of underscored the power of Rush Limbaugh, in the face of this little confrontation they had?

FEEHERY: Well, he does -- goes -- is, he goes out in the country and he tries to find the best ideas for what people actually want from their government. And he rebuilds the party. As Donna said, we have...

BLITZER: He can't do that without Rush Limbaugh supporting him.

FEEHERY: Oh, sure he can.

I mean, Haley Barbour did it. I mean, Rush is a part of this about exciting the base. But, once again, it's not just about exciting the base. If we excited the base, we will get about 20 percent of the vote. We need to get 51 percent of the vote. And Michael Steele has got to do it by going after the best ideas, guys like Paul Ryan, who are the idea-makers, and really kind of evangelize on ideas that are actually transform this government and make it a better government and a smaller government for the American people.

BRAZILE: It's a game of addition, not subtraction. So, he needs Rush Limbaugh on one hand. On the other hand, he has to grow the party.

And, look, God bless him, because Rush Limbaugh has a lot of airtime, as you well know, Wolf.

BLITZER: Is it wise for the Democrats, from the president on down, to be sort of highlighting the importance of Rush Limbaugh among the Republicans?

BRAZILE: Oh, yes. He entertains Democrats, as well as Republicans.

Look, while they're enjoying this circular firing squad, why not give them ammunition?

FEEHERY: You know, we should be talking about the economy and how the stock market is sinking because of Barack Obama's policies. At least, that's what Jim Cramer thinks.

BRAZILE: Oh, my...


FEEHERY: But now we're talking -- but now we're talking about Rush Limbaugh. So, this whole fight is not good for our party. The focus should be on what the White House is doing, not on what Rush Limbaugh is doing.

BRAZILE: Let me tell you, as an investor, the stock market has been taken for a long time. Trust me.


BRAZILE: My wallets are empty.

FEEHERY: Well, I understand.

BRAZILE: Trust me.

FEEHERY: It's gone 2,000 points since the president...

BRAZILE: I'm holding the rest of my money close to my chest now.

FEEHERY: I buy in gold.



BLITZER: Getting advice from the stock experts.


BLITZER: All right, guys, thanks very much.

Design to upgrade a presidential helicopter falling into -- guess what -- Iranian hands, does it put President Obama in any danger? We're talking about Marine One.

Plus, Mr. Obama recruiting Russia for some backdoor diplomacy to try reduce a nuclear and missile threat.

And we're going to tell you why Oklahoma -- Oklahoma rocks.


BLITZER: In Oklahoma, and the group Flaming Lips has won.




BLITZER: The song "Do You Realize?" has now been named Oklahoma's official state rock song. More than 21,000 people chose from a list of 10 songs written or performed by Oklahomans. "Do You Realize?" beat out Elvis Presley's "Heartbreak Hotel," which was written by a former Oklahoma teacher.

Did not know that. Remember, for the latest political news any time, you can always check out

Let's go back to Jack for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Yes, one of the best country and western tunes ever recorded was a duet that David Frizzell and Shelly West did a few years ago called "You're the Reason God Made Oklahoma." It's a great tune. They should have made that the state song.

Question: How can President Obama defeat the lobbyists?

Tom in Boston: "I don't know if he can defeat them, but he certainly can greatly diminish their influence. To do so, he must absolutely never let anyone in his administration take a dime from any of them for any reason."

Good luck with that.

Shirley: "Let's have some real light on the subject. Name the lobbyists, name the cause they are lobbying for, and name `the legislators they are lobbying and make sure all of that information is available to the public."

Nancy in Chicago: "Defeat lobbyists? This is the man who hailed the economic 'steal-from-us' package as the savior of our economy. He served every special interest project they could think of cramming into that package, before ramming it through Congress. Who needs lobbyists when you have a president like that?"

Richard in Kansas: "President Obama should pay attention to the only lobbyists that matter, the ones who elected him to get these things done. Do that, and the special interests will find themselves marginalized."

D.J. in Columbus, Ohio: "The president must be careful. If he defeats the lobbyists, he may very well be putting people out of work. The lobbyists, believe it or not, do work on the behalf of American workers. For example, I work for FedEx. I want my lobbyist, my advocate, fighting against any proposed legislation that could adversely affect my employer and/or industry, thereby jeopardizing the security of my job. It is a catch-22 indeed."

And Mead writes: "Jack, it's not a matter of how Obama can defeat the lobbyists; it's a matter of whether he can defeat them. And he can't. Lobbyists have been in D.C. long before Barack Obama got there. They are far more entrenched than he ever was or will ever be, and they will be a force in national politics long after the Barack Obama Presidential Library is built."

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

BLITZER: Thank you, Jack.

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