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Outrage at AIG; Seizing Madoff's Riches; Antagonizer's Offer to U.S. Rival

Aired March 16, 2009 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, the president lashes out at big, fat bonuses and a company that's been bailed out by taxpayers. One of his top advisers says AIG is so greedy, it could win a Nobel Prize for evil. We'll speak with that adviser.

Seizing Bernard Madoff's riches. The feds are going after the luxuries the convicted swindler bought with stolen billions. We're talking homes, cars, silverware, even his piano.

And the threat from Russian bombers, within striking distance of the United States, some fear it could be a sequel to one of the most dangerous standoffs ever with Moscow, the Cuban Missile Crisis.

I'm Wolf Blitzer in CNN's command center for politics, breaking news, and extraordinary reports from around the world.


First this hour, outrage at AIG. This is how much the insurance giant took in federal bailout money from all of us to date. Look at this number, a whopping $173 billion. And now take a look at this number, how much AIG wants to give out in additional executive bonuses, $165 million.

Listen now to President Obama today venting his anger and promising to crack down.


BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: This is a corporation that finds itself in financial distress due to recklessness and greed. It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers, who are keeping the company afloat?

AIG has received substantial sums from the U.S. Treasury. And I have asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers healthy.


BLITZER: Let's go right to our White House Correspondent Dan Lothian, who's standing by.

Dan, take us behind the scenes, because the president is very, very angry right now.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: He is angry, Wolf. And, you know, privately and publicly, this administration has really been trying to build confidence in their economic turnaround plan. So you saw the outrage building among the American people, the taxpayers over the weekend. And then, on the Sunday morning talk shows, more outrage as well. And so this president decided to do some tough talk.

The big criticism now, of course, is why didn't this administration do more early on when they were making these loans to AIG?


BLITZER: The question is this, can the president, even at this late date, block that $165 million in extra bonuses for these guys?

LOTHIAN: Well, legally, it doesn't appear -- it's pretty doubtful that they can do anything legally. It's not impossible that they can do anything there, Wolf.

Two things that the administration could do or see in terms of getting that money back. First of all, AIG could voluntarily say, hey, you know what? We're going to give up these bonuses. Or the government could tap into this $30 billion that they extended to AIG. They could go in there, get some of that money, and restore that money to taxpayers. That's one of the things that they're looking at -- Wolf.

BLITZER: All right. Dan Lothian, thanks very much.

And this just coming in to THE SITUATION ROOM right now. Let's go to Zain Verjee. She's got the story.

A very angry attorney general of New York State as well.

ZAIN VERJEE, CNN ANCHOR: Right. Exactly, Wolf.

Attorney General Andrew Cuomo gave AIG chairman Ed Liddy a deadline, as you know, Wolf, of just minutes ago -- it expired at 4:00 -- to hand over a list of who exactly is supposed to receive those bonuses, $165 million in executive bonuses, and just who specifically is getting how much. The attorney general threatened to subpoena Liddy for the information.

This is the second fight, as you know, as well, Wolf, by the attorney general over bonuses. He requested the same sort of information of Merrill Lynch before the Bank of America took over. What he's arguing is that taxpayers are supporting AIG and deserve to have that information -- Wolf.

BLITZER: Zain, stay on top of this story. Thank you.

Right now there's payback for Wall Street's biggest swindler ever. Prosecutors planning to seize some of the most lavish examples of Bernard Madoff's stolen fortune. The thousands of people he cheated have been demanding that Madoff and his family know what it's like to lose everything, like so many of them did.

Let's bring in our Senior Correspondent Allan Chernoff. He's got the story for us.

All right, Allan, what's happening on this front?

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Well, Wolf, the government really wants everything that the Madoffs have. Ruth Madoff, Bernard Madoff's wife, has the bulk of the family assets in her name. Even so, legal experts say, the government should have little problem seizing it all -- the homes, the boats, even the family jewels.


CHERNOFF (voice-over): Bernard Madoff swindled investors out of their life savings. Now he's about to lose his.

In pleading guilty, Madoff gave up more than his freedom. He agreed to forfeit anything he made off the criminal enterprise. That includes his four homes in Manhattan, Montauk, Palm Beach and France, all the fine art and furniture in them, worth nearly $10 million; a $39,000 Steinway piano; a silverware set worth $65,000; and Ruth Madoff's jewelry, valued at $2.6 million. There are four cars, two Mercedes, a BMW and a Volkswagen. And $17 million at Wachovia Bank.

In all, more than $120 million in assets, most of it in Ruth Madoff's name.

BRADLEY SIMON, FMR. FEDERAL PROSECUTOR: It would be a little hard to separate her money from the criminal enterprise. At the end of the day, in my view, the government's going to take every penny.

CHERNOFF: Liquidating Madoff's company could raise millions more for victims of the fraud. But the total still amounts to a tiny fraction of the $65 billion that Madoff investors thought they owned.

Victim Miriam Siegman believes Madoff must have more hidden away.

MIRIAM SIEGMAN, MADOFF VICTIM: I think there's a huge possibility that there are all kinds of accounts and there's money that has been sloughed off into other entities.

CHERNOFF: And the government says it's continuing to search for more assets to help victims recover some of the money they lost.


CHERNOFF: For good measure, the government told Madoff before his plea that it intends to seize more than $170 billion. Good luck finding that amount -- Wolf.

BLITZER: We're showing our viewers, Allan, a picture of Bert Ross (ph). I spoke with him. He lost $5 million in investments he made with Madoff. What can he and other investors like him expect to get back? CHERNOFF: His best hope, Wolf, is the $500,000 that the Securities Investor Protection Corporation does offer. So far, they have sent out checks to only 12 victims. But I spoke minutes ago with the chief executive, Stephen Harbeck, and he says that they are going to be sending more checks out this week, and he hopes that it will all be finished within the year.

It won't take more than a year, he's saying. But at least $500,000 to those victims.

BLITZER: Half a million, I guess that's something, but it's not $5 million, at least in Bert Ross (ph) case.

Allan, thank you.

Let's bring in our Internet reporter, Abbi Tatton. She's taking a look at the multimillion-dollar properties of Bernard Madoff and his family.

What are you seeing?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, $22 million worth of properties on both sides of the Atlantic. And we've been looking at it in Google Earth.

Take a look at the penthouse apartment, first of all, in this building in New York City's upper east side. The value of that, $7 million.

Then there's the weekend getaway in the Hamptons, just a few miles up the coast. This one valued, an oceanfront property, at $3 million. Plus there's a $1.5 million in contents and furniture.

Another holiday home, down to Palm Beach, in Florida. This is the most expensive. It's got its own dock, five bedrooms, $11 million.

And if two properties for your holidays is not enough, there's the more modest property in the French Riviera. Just $1 million for a condo there. But look what we found close by that the feds are also targeting, a $7 million yacht which is anchored just less than a mile away, one of fourth boats and yachts, Wolf, that Madoff is said to own. All of them named by Madoff "Bull," would you believe?

BLITZER: And that's what we know. Who knows what else is out there that we don't know?

TATTON: The list goes on and on.

BLITZER: Yes. That's a good point.

All right, Abbi. Thanks very much.

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


The White House needs to make up its mind. Sounding a lot like John McCain did during the campaign, they said that the economy is fundamentally sound over the weekend.

The president's economic adviser, Christina Romer, says the fundamentals are sound "In the sense that the American workers are sound, we have good capital stock and we have good technology." And she added that this is despite the mess that we're temporarily in, including huge job losses and a plunging GDP.

After weeks of seeing the economic glass as quite a bit more than half empty, administration officials, including President Obama himself, are suddenly out painting a more positive picture these days. The president says he's confident in the economy that if we focus on the "fundamentally sound aspects of our economy, like the many outstanding companies, workers, innovations et cetera, we will make it through this rough time."

Nonetheless, just a week ago, the OMB director, Peter Orszag said that, "Fundamentally, the economy is weak." And despite the optimism coming from the White House and Wall Street, which almost made it five up days in a row today, but wound up closing with a seven-point loss, there don't seem to be any signs that an end is near for the current recession. Fed Chairman Ben Bernanke suggests the recovery won't start until next year.

So here's our question. Is it a good idea for the Obama administration to say the economy is sound despite the worst recession since the Great Depression?

Go to and you can post a comment on my blog -- or not -- Wolf.

BLITZER: Welcome back, Jack. It's going to be another excellent week for all of us.

An important U.S. ally is pulled back from the brink after rioting and chaos in the streets. Did the Obama administration prevent disaster?

And in a nation that's armed with nuclear weapons, plus a shocking, shocking outbreak of HIV and AIDS to rival the deadly outbreak in Africa.

And stand by to find out where the virus is spreading out of control right here in the United States.

And even with all we know about the mortgage crisis and the damage it's done to our economy, believe it or not, mortgage fraud is rampant. You're going to be finding out if you have a strong chance of being a victim. That's coming up in our special coverage of "The Road to Rescue."

(COMMERCIAL BREAK) BLITZER: Believe it or not, right now there are fears we could be seeing something very similar to one of the most threatening confrontations in American history. That would be the Cuban Missile Crisis. And those fears are raised now that Russian officials are openly talking about landing bombers within striking distance of the United States.

Let's go straight to CNN's Brian Todd. He's got the story for us.

Wow, Brian. What's going on?

BRIAN TODD, CNN CORRESPONDENT: Well, a top Russian military official, Wolf, talking about the possibility of deploying Russian bombers very near American shores. And it's always the distances here that have people in nervous.

Now, here, we're in Washington, D.C., about 1,100 miles from Cuba. But you roll the map down to Miami, that's only about 200 miles from the center of Cuba. And another place being talked about for Russian deployment, the Venezuelan island of La Orchila is about 1,300 miles from the American coast.

Now, here's what at least one Russian military official is saying about this possibility.


TODD (voice-over): A top Russian air force general says his country's ready to flex its muscle in America's back yard, telling a Russian news agency his military may want to land strategic bombers in Cuba. "If the two chiefs of state display such a political will, we are ready to fly there."

Another Russian official said that was only a hypothetical. We got no response in Havana from the Cuban government. A U.S. official tells CNN there appears to be no hard offer from the Cubans, but another U.S. antagonist near American shores has made an offer.

HUGO CHAVEZ, VENEZUELAN PRESIDENT (through translator): Every time the Russian strategic air force needs to stop over in Venezuela as part of its strategic plans, Venezuela is available.

TODD: The Russians have already staged military exercises with Venezuela. Experts say the Russian planes which could land there or in Cuba, bombers called the Bear and Blackjack, would likely be used to spy on the American Navy. Some of them can fire cruise missiles, but analysts say the Russians already have plenty of missiles that could hit America, and this is likely not a return to the Cold War.

STEVEN PIFER, BROOKINGS INSTITUTION: What they're trying to do is remind people, and perhaps most importantly, their domestic audience in Russia, that Russia continues to have global military capabilities.

(END VIDEOTAPE) BLITZER: Now, as you know, Brian, there's some suggestion this is retaliation, if you will.

TODD: That's right. And analysts say you can't escape that.

The Russians are very upset that the United States conducts military exercises in the Black Sea, right off of its shores. They did that last summer after the invasion of Georgia, they do it about once a year.

Also, the United States is planning to deploy that missile shield in Eastern Europe, in Poland and the Czech Republic. The Russians don't like that at all. This is a way, they say, of kind of retaliating a little bit, at least diplomatically, militarily, saying, look, if you can go on our doorstep, we can certainly do that on your doorstep, and that's what we're going to do.

BLITZER: But they may have some other motives as well, the Russians, in this kind of language.

TODD: Absolutely. We've talked to analysts who say that, look, the Russian military has not been funded really properly the way the Russians want to since about the 1980s. That the 1990s really took a toll on them, as far as the military funding there.

They have got new energy money, they're able more to fund their military. And some Russian military leaders want to find enemies in places, you know, where they can find enemies to justify the military expenditures. That's what they're after.

BLITZER: A potentially tense moment right now.

TODD: That's right.

BLITZER: All right. Thanks very much, Brian, for that report.

Meanwhile, another possible threat to U.S. interests. Iran could be closer to building a nuclear bomb.

Let's go straight to our Pentagon Correspondent Barbara Starr.

Barbara, what are you learning?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, you want to think about something else that will keep you up at night? Iran's nuclear program. Potentially new evidence that they may be a lot closer to a nuclear weapon. Time could be running out for diplomacy.


STARR (voice-over): When Iranian President Mahmoud Ahmadinejad toured the nuclear enrichment plant at Natanz, U.S. and Israeli intelligence looked closely at this video for clues about Iran's nuclear program. But they may have been looking in the wrong place. An Israeli source says Iran may now have a secret enrichment facility, separate from all of these declared nuclear sites, and be even closer to making a nuclear bomb than previously believed.

Earlier this year, the International Atomic Energy Agency confirmed Iran has enough low-grade uranium to produce a single nuclear bomb within a year if it was all turned into weapons-grade material.

RICHARD CHENEY, FMR. VICE PRESIDENT OF THE UNITED STATES: Once you've got low-enriched uranium, it's relatively simple to change it to highly-enriched uranium. And that's the last step that's needed before you've got fissile material for weapons.

STARR: So far, no one is offering proof of a secret facility, but if there is one, no one can predict what nuclear capability Iran may already have on hand. The Israeli source says Israel is preparing military operations just in case.


BLITZER: Barbara, does all of this put Israel at odds with the Obama administration, as far as diplomacy is concerned?

STARR: Well, you know, Wolf, officially, the answer is no. In fact, the official answer is that Israel and the U.S. have been on the same page for at least six months about the status of Iran's nuclear program. But make no mistake, Israel's concerns are rising every day, and they are making it very clear to Washington if they feel they need to take military action to stop Iran from getting a nuclear bomb, they will do it -- Wolf.

BLITZER: Do the Israelis have any hard evidence, any additional intelligence or proof, that the U.S. presumably doesn't have?

STARR: Well, we don't know the answer to that. That's the really honest truth.

Clearly, this prospect of a secret facility is being raised. What we do know is that it would be relatively easy for Iran to have a secret facility and basically make it just look like an industrial building hidden in plain sight. That's the kind of intelligence that the U.S. would like to see before it signs up to any military action -- Wolf.

BLITZER: Barbara Starr is working the story. Enormous ramifications, indeed. And it could be a source of great tension in the months to come.

Barbara, thanks very much.

They were vehicles and supplies meant to help American troops, and they have now been destroyed, bombed, and fired on, possibly by vowed enemies of the United States.

And is the thrill gone in terms of the economy, jobs and issues that you care about? Guess where many more of you now disapprove of President Obama's performance.




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

Happening now, a major concession from the government of Pakistan after the U.S. administration puts on the pressure. The government of Pakistan reinstating the fire chief justice and bringing order back to the country, at least for now.

President Obama wants to create five million green jobs. Wind turbines in California are just the beginning.

And a new report shows the rate of HIV/AIDS in Washington, D.C., is as bad as it is in some parts of Africa. The district's HIV rate has increased 22 percent from three years ago.

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

Time now for CNN's coverage of "The Road to Rescue." It's part of our deep commitment to show you how the United States is working to dig out of this economic crisis.

Today, President Obama says small business owners are struggling in this recession. So he announced he's throwing them a lifeline.


OBAMA: As part of my financial stability plan, the Treasury Department will begin purchasing up to $15 billion of SBA loans through the Troubled Asset Relief Program, or TARP. We will immediately unfreeze the secondary market for SBA loans and increase the liquidity of community banks.

I have also proposed, as part of my budget, that we reduce to zero the capital gains tax for investments in small or startup businesses, expanding and making permanent one of the tax cuts in the recovery plan.


BLITZER: The president says small businesses are among the biggest drivers of the economy. Here are some reasons why.

In terms of workers, a small business typically has 500 or under. How many small businesses are out there? About 99.7 percent of all companies are considered small businesses. In terms of paychecks, small businesses pay 45 percent of total U.S. private payroll.

And then there are the jobs. Small businesses have generated up to 80 percent of new jobs every year in the last 10 years.

Mary Snow is taking a closer look at the struggles that these businesses are facing. Mary, what are you finding out?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, we met one bookstore owner here in New York who says this is the day he has been waiting for. He contacted the Small Business Administration this morning, even before the president made his announcement.


SNOW (voice-over): With one eye of selling blocks, Peter Soter keeps his other eye on the president's plan to help small businesses. Soter says it could the last hope for keeping his five-year-old bookstore open. He's recently thought about closing it.

PETER SOTER, OWNER, MORNINGSIDE BOOKSHOP: There is a possibility that we say, forget it. I have got two young kids, and start out. But I really -- it scares the -- scares me. I really don't want to start all over again.

SNOW: Soter says two banks in recent months have turned him away for lobes. He says he contacted the Small Business Administration for help in December, and has been sitting tight, looking towards the president to help boost lending.

In recent months, he's laid off one employee, is now down to eight, including him and his wife. He's cut back on inventory, relied on credit cards, even borrowed money from friends.

SOTER: And friends have been very kind. But you can only do that for so long, before it becomes, you're not borrowing from friends, or you're abusing a friendship, you know? And, really, I just don't want to do that.

SNOW: Soter wants to apply for a $100,000 loan from the Small Business Administration and says it's hard to watch massive government bailouts and think of millions ending up paid out in bonuses to AIG employees.

SOTER: It's killing me. It's killing me. It hurts me, because I'm not looking for a lot of money here to make a business work that has -- you know, employs people, that is a good member of the community, that is important. You know, bookstores are good things.


SNOW: Now, the administration says the Small Business Administration backed $20 billion in loans this year. So far this year, it's on track to back half that amount -- Wolf.

BLITZER: Is there any immediate help for these small-business owners, Mary?

SNOW: Well, one of the programs announced today that will have a direct impact is backing up loans of about $35,000 to struggling small-business owners. These are intended to, you know, make payroll, also just to pay bills. So, that would directly help them right away. BLITZER: Mary Snow, thanks very much.

Meanwhile, desperate times call for unprecedented coverage. As we mentioned, this week we're covering the money meltdown that's changing your life, as only CNN can. We're calling it "The Road to Rescue: The CNN Survival Guide." Who will fix this economy? Where are the jobs? And when will this recession end?

Listen to the Federal Reserve chairman, Ben Bernanke, answer that question.


BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: But we do have a plan. We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time.


BLITZER: All right, let's bring in Poppy Harlow of

You heard the Federal Reserve chairman, Poppy, say that the system will be stabilized. Here's the question. When will we actually see some signs of that?

POPPY HARLOW, CNN CORRESPONDENT: You know, there are some things you want to look out for, Wolf, because we're in a deep recession. The road to recovery is going to be long. You heard the Fed chief saying that on "60 Minutes" last night.

But he has said, time and time again, you have to look at the financial sector. The banks have to get on solid ground before we are on the road to recovery.

And that means more than just one or two months of profit, like we heard from Citigroup and Bank of America last week. That means quarter after quarter of sustained profitability at these banks and let the American people know that the big banks are not going to fail. That's where they need the confidence.

Bernanke -- very interesting -- he said: I care about Wall Street for one reason, and one reason only. Because what happens on Wall Street matters to Main Street lending. In one word, that is why. Wall Street is critical to lending, not only to businesses large and small, but to individuals for home loans and everything in between.

They need to be able to lend -- to get loans from these banks. And, also, investors lends to businesses by investing in these businesses, Wolf, in the stock market. So, when investors feel confidence, then the businesses can get the loans that they need. Those are two critical signs -- Wolf.

BLITZER: Well, what else would indicate the economy, Poppy, is rebounding? HARLOW: You know what? Housing. Anyone could guess that, because it's at the crux of this crisis. We need to see a stabilization of at least of home prices, so they are not falling month after month after month, so we don't see more and more and more foreclosures.

If people feel confident in their home, they're going to feel confident in their life. That's going to make a big difference.

And then jobs -- the reason you see jobs down the road here a little bit is because, in the industry, we call this a lagging indicator. What we see is unemployment will peak near the end of a recession, or even a year or two after a recession ends. So, you should know, folks if the job picture gets worse and worse, keep in mind, the economy and the stock market may be recovering, even though the job picture looks grim, Wolf.

That's a big thing that not everyone knows, but it's critical to understanding how all this plays out.

BLITZER: Are we seeing any other positive signs? Are we seeing any positive signs in some other areas?

HARLOW: We -- we are.

We want to bring you the good news, too. Take a look here at the retail sales numbers, folks, a little decline in February. What's key? Better than expected. And the January reading, retail sales were up nearly 2 percent. Americans are spending money again, little by little. It's the American way to shop.

Even though it's fallen off a bit lately, two-thirds of our GDP relies on consumer spending. That's some good news. And, also, there's a little good news in the jobs picture, Wolf, a leveling off at least of those jobless claims -- send it back to you, Wolf.

BLITZER: All right, Poppy, thank you.

You might think the U.S. military would be a rather safe haven from the crumbling civilian job market. But even some service men and women are living in dread of layoffs.

Let's go to our Pentagon correspondent, Chris Lawrence. He's got the story for us.

This is a -- a special problem for the U.S. Navy, isn't it?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Exactly, Wolf, because, even as more sailors want to stay in the Navy, Congress is ordering the service to cut its numbers. So, the Navy has instituted these really tough new reenlistment requirements. And that could end thousands of careers.


LAWRENCE (voice-over): This could be the last time Amanda Siren packs her sea bag.

AIRMAN AMANDA SIREN, U.S. NAVY: And when they told me that I couldn't reenlist, it was like a kick in the face.

LAWRENCE: Siren works on aircraft weapons, but too many other sailors do the same thing. The single mom is coming to the end of her first tour, and her family tells her how bad the economy is.

SIREN: They want me to stay in the Navy, so I don't get laid off as a civilian, but the Navy is laying me off as well.

LAWRENCE: She's one of many sailors facing the military's rough new reality.

CPO WILLIAM HARDING, U.S. NAVY: In this sense, it's a corporation.

LAWRENCE: But William Harding earned the high rank of chief in under 12 years, and says the cuts clear a path for advancement.

HARDING: If you thought that this was the days that you could just sit back, take a seat in the Navy, not today. You have to perform.

LAWRENCE: The Navy has already dropped bonuses for overmanned jobs, but Amanda Siren would still do another tour, if she could.

SIREN: The money has nothing to do with it. I want to serve my country, and I can't.


BLITZER: Chris, what does the Navy say about these cuts?

LAWRENCE: Well, Wolf, they tell me they're dealing with their highest retention rate in 10 years. Sailors just do not want to go into the private sector right now. But Congress has mandated a smaller Navy. So, officials tell me they are basing these cuts mostly on performance, about 3,000 sailors this year, another 3,000 to follow.

BLITZER: What about other branches, Chris, of -- of the military, are they getting hit as well?

LAWRENCE: Actually, Wolf, quite the opposite.

Congress is adding troops to both the Army and the Marines to fight those wars in Iraq and Afghanistan. Now, some of these Navy personnel may have the skills to cross over, but a lot of them just don't.

BLITZER: Chris Lawrence on the scene for us -- thanks, Chris, for that report.

Jack Cafferty says, it's now or never. I'm going to be speaking with Jack about his brand-new book on saving the American dream and ways he saved his own life.

And the Obama White House taking a tough shot at Dick Cheney over his interview with our own John King, and Rush Limbaugh is in the conversation as well.


BLITZER: You hear Jack Cafferty calls them as he sees them every day right here in THE SITUATION ROOM.

And he's keeping it very real in his brand-new book entitled "Now or Never: Getting Down to the Business of Saving -- Saving Our American Dream."

Congratulations, Jack, on this excellent new book. And I want to talk about it, because it's a great book. I loved reading every single page of it, because it is pure Jack Cafferty.

Let me read to you a quote from the book: "Now that President Obama's in the White House, he must sustain the same tone that got him to the White House.

All right, what do you mean by that?

JACK CAFFERTY, CNN ANCHOR: Well, I think he captured the American imagination during the campaign partly because of George W. Bush and the guy Dick Cheney you have been talking about on this program all day, setting a table that -- that he understood the -- the hunger for change in America.

And he -- and he said the right things and he toppled the Clinton machine in the primaries. And he beat McCain in the general election. And he turned some red states blue. And now he's got the job. And I -- and for him to be successful, he has to, I think, continue to communicate that same sense of -- of earnestness and legitimacy and honesty, something which was in real short supply the last eight years, to all of us.

If he does that, then I think he has a chance of being maybe one of our most successful presidents ever.

BLITZER: His job approval number is still very high, is in the 60s, as you know.

But he's made some mistakes so far, and you're blunt in not only praising him, but, when necessary, criticizing him.

CAFFERTY: Well, you can't do that job without making some mistakes. I think they -- you know, they dropped the ball on vetting some of these Cabinet nominees.

It's embarrassing that, you know, the Tom Daschles of the world show up in the public spotlight, at his behest, and -- and have been riding around in a limousine for a couple of years, and supposedly don't understand that that's income and they have to pay taxes on it. You know, that kind of stuff is sort of inexcusable. On the other hand, it must be just overwhelming. I have no idea what it must be like to take over the reins of this country, particularly with two wars going on and a recession, et cetera. So, yes, you have got to give him a little room. But he needs to be careful, you know? Do your home work, dot the I's, cross the T's.

BLITZER: I love the personal stuff in the book. I love the whole book.

But I'm going to want to read you one -- one sentence here, because it goes beyond what you wrote in your first bestseller, "It's Getting Ugly Out There."

"I just wanted to walk through my career and do the drinking, do the marriage, and do the drinking, do the parenting, and do the drinking."

You have been off the booze for a while now, haven't you?

CAFFERTY: Twenty years and counting. It was 20 years in January of 2009. And I'm -- and I'm proud of that.

And if I -- if I hadn't stopped, I wouldn't be sitting here talking to you. I -- I wouldn't be anywhere probably.

But what happens with an addiction like alcohol is, you try to finesse it. And you can for a while. You know, you finesse the booze with the marriage and the kids and the job. But, eventually, the hunger for the chemical becomes the dominant force.

And it occurs to you at some point that you're jerking everybody around, including yourself, and you can no longer finesse this stuff. I mean, every day is predicated on: How soon can I start drinking? How much can I get drink? How much can I get away with? Can I lie my way out of it with my wife? Can I keep my bosses from finding out? On and on and on.

So, at some point, it just becomes an exhausting exercise. You just can't do this anymore. And I reached that point. And I stopped, thank god, and haven't had a -- even wine at church for 20 years-plus.

BLITZER: Thank God for that.


BLITZER: Here's what you write about parenting. And you have got some great kids.

"I'm no Dr. Spock and would be the last person to tell anyone how to raise children. But I'm old school. Kids want boundaries. They want limits."

CAFFERTY: I think that's true. And I -- I always made it kind of clear to the girls that, look, there are -- you know, on the big issues, there are certain expectations. You will go to school, because you don't have anything else to do when you're a kid, except play and go to school. So, go to school, do your best, respect your teachers.

You will go to college. That's not an option, et cetera. You will obey the law. You won't, you know, do certain kinds of things. On the smaller stuff, you can give them some latitude. But I think, on the bigger stuff -- and I didn't have that a kid. My -- my childhood was a mass of inconsistency and an absence of a lot of the boundaries.

So, I tried to put some structure into the girls' lives, and -- and probably overdid it at times. But they have all turned out great. And I am so very proud of the four of them. I dedicated the book to the four of them. And I'm -- you know, I'm extremely proud of them.

BLITZER: And they are so extremely proud of you, Jack.

And I want to recall, because you write about it in the epilogue, that very sad day back in September, a day all of us will remember with sadness.

You write this: "Change comes in many forms. There is good change. And there is the kind of change that blindsided me on September 5, 2008, and tore my world apart. In an instant, the most important person in my life was gone, seemingly healthy one minute, dead from cardiac arrest following surgery less than 24 hours later. I was crushed."

And we're talking about your wonderful wife. It was so sad, for all of us, but I know how painful it was for you, Jack.

CAFFERTY: I was -- I was very lucky to have an extraordinary marriage the second time around, 34 years-plus with this woman.

And she's the reason that I quit drinking. And she is most of the reason that these kids turned out the way they did. And -- and she was my best friend and -- and all of the things that go with it. And I can't talk very long about it, because -- because I will get myself messed up here.

But I miss her every day, in -- in every way that you can miss someone. And -- but I'm -- I am blessed to have a wonderful, wonderful second marriage. I mean, she was one in a million.

BLITZER: She certainly was.

And that's only the beginning. We're only touching on this book, "Now or Never: Getting Down to the Business of Saving Our American Dream."

Jack, on behalf of all of our viewers out there, thanks for writing this book.

CAFFERTY: Well, and thank you for taking a few minutes to talk with me about it. I hope people who read it will enjoy it.

You said you enjoyed it. And I'm happy.


BLITZER: Loved it, every page.

Jack, stand by. We have got "The Cafferty File" coming up.


BLITZER: Apparently, the White House press secretary is not going to let Dick Cheney talk badly about the president. Wait until you hear Robert Gibbs going after the former vice president, after Cheney went after President Obama.

And in terms of the economy, jobs and other issues you care about, guess where more of you disapprove of President Obama's performance?


BLITZER: Let's get right to our CNN political contributor, the Democratic strategist Donna Brazile, and Republican strategist John Feehery.

Turn around, guys, and take a look. We did a whole bunch of polls, and, on almost all of them, President Obama does very, very well, whether the economy or taxes or whatever. But, in two areas, he doesn't do so well.

How is Obama handling problems facing auto companies? Forty-six percent approve. Forty-nine percent disapprove. And how is he doing handling problems facing banks? Forty-seven percent approve. Fifty- two percent disapprove.

He's got a problem in these two very sensitive areas: banks and cars.

DONNA BRAZILE, CNN POLITICAL ANALYST: It's called bailout fatigue.

The American people, the taxpayers are tired of bailing out companies that are not helping the average American. So, they're sitting back saying, wow, we're bailing out the banks to loan us money. We're giving them our taxpayer -- tax -- tax money for them to loan us money.

That's why the American people are -- are not happy right now at all with of this bailout...

BLITZER: Is it simply a populist momentum that's out there?


I think, also, the president has done -- has done not a very good job of explaining why we need to bail these -- these entities out. And I think either you're going to be part of the mob, or you're going to be leading the mob. Right now, he's part of the mob. He's throwing the same populist rhetoric out there that a lot of people are feeling. But that's not explaining why we keep giving people the money, these -- these banks and these auto companies the money.

He's got to go out and explain, in crystal -- crystal-clear ways, why this is important, why is it important for America's future, and why we don't like to do it, but we have to do it. And I don't think he's done a good job explaining it.

BLITZER: The other story that I wanted to talk about with you is, yesterday, our own John King interviewed the former Vice President Dick Cheney, who basically suggested, and didn't mince any words at all, that, because of the steps that President Obama has taken, the U.S. national security, American security, is now weaker.

And he also didn't like a lot of his economic policies, to which Robert Gibbs, the White House press secretary, responded like this today.


ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Well, I guess Rush Limbaugh was busy.


GIBBS: So, they trotted out the next most popular member of the Republican cabal.


BLITZER: All right, a pretty strong reaction from Robert Gates.

BRAZILE: Well, I thought the vice president spent the entire hour hammering away at the Obama administration for their shortcomings in reversing the economic mess that was left by his administration.

So, I thought the vice president was quite disingenuous in not laying out the facts. John talks about the president's not laying out the facts on the bailout. Well, the vice president had an opportunity to lay out the facts on the economy, on prewar intelligence, and he forgot the facts at home.

BLITZER: Were you surprised that the vice president was that harsh on President Obama, in terms of the national security of the country?

FEEHERY: Not at all.

By the way, congratulations to CNN for getting that interview. That was a big deal.

Second of all, I think the vice president really did do the good job of explaining why, in his view -- and it's his personal view, having been inside -- why this -- this could be problematic. And I think that even the Obama administration is thinking, OK, we have got to be careful what we do with these guys in Gitmo. Where do we send them? We don't want -- want them coming back in the fight and hurting us.

Last thing, Robert Gibbs is too partisan as the press secretary. He needs to understand his role as...


BLITZER: Is he too partisan right now?

FEEHERY: I think. And I think it hurts the president.

BRAZILE: I don't think he's being partisan.

Look, he's -- he was presented with a question about the vice president's performance and his comments. And I thought he was being a little bit more funny, but he wasn't being partisan.

BLITZER: The vice president yesterday also said he loves Rush Limbaugh. We will hear a little bit more of that interview in the next hour.

Guys, thanks very much.

Chilling new details of the way terror suspects are treated -- the Red Cross allegedly documenting examples. And, to most of us, it sure sounds like torture.

And a nuclear nation on the brink of upheaval, or worse -- is the U.S. responsible for calming this crisis?


BLITZER: Let's check in with Jack Cafferty once again for "The Cafferty File" -- Jack.

CAFFERTY: Wolf, the question at this hour, is it a good idea for the Obama to say the economy is sound, despite the worst recession since the Great Depression?

Doug in Toronto says: "I believe that calling the state of the economy sound is the first sensible thing this administration has said. Psychology plays a huge part in how consumers and investors operate in bleak economic times. When you've heard nothing but negative spin from politicians and the mainstream media for months, a little optimism is refreshing, to say the least."

Jean in Texas writes: "Jack, let's get it right: President Obama said there are aspects of the economy that are fundamentally strong. He did not paint a broad brush, as has been implied by most all of the media that I have listened to."

Joy in Ohio says: "Obama has to walk a high-wire. He needs to stress we have a while to go before a full recovery. But he needs to also give us hope. People will spend more if they feel confident, if they think the light at the end of the tunnel isn't too far off."

Ray in Nashville says: "Obama has been telling us straight-up the economy is bad. In the past week, we have seen a small spark of life, and he is reacting to it. McCain was saying it when the economy was in a tailspin."

Anthony in New Jersey: "Business, Jack, is 90 percent confidence, 10 percent optimism. Apparently, President Obama learned this lesson a little late, after the market plummeted during his initial forays of a doomsday scenario. He's simply imputing the necessary positive forecasts to force financiers to reinvest in America. Unlike Bush, Obama has a learning curve."

And Don in Michigan says: "Oh, man, when Mr. Obama was being conservative in his talks about our messed-up economy, people said he was too downbeat. Now he is too upbeat? I know I watch a lot of CNN -- kudos to all of you -- but I sure get sick of all the negative stuff. Come on, Jack, you can do better than this. I watch you every day. I know you can."

No, this is about as good as it gets.


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

BLITZER: Thank you, Jack.

And, to our viewers, you're in THE SITUATION ROOM.

Happening now: from furious protests to celebrations. Under U.S. pressure, a nuclear-armed ally makes a major compromise and pulls back from the brink of disaster.

From the unemployment line to fixing windmills -- could green power jobs help pull America out of a recession? We will take you to the top of a mountain on the road to rescue.

And what set hundreds of "Top Model" wannabes fleeing and fighting for their lives? A reality show tryout gets a lot more reality than anyone bargained for.

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