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The Situation Room
President Obama's Message to Iran; Dodd Accused of "Flip-Flop"; Postal Service Offers Early Retirement
Aired March 20, 2009 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
President Obama Makes TV History>
WOLF BLITZER, CNN ANCHOR: All right, Jack. Thank you.
And to our viewers, you're in THE SITUATION ROOM.
Happening now, President Obama takes his message directly to the people of Iran -- making them a promise and issuing a challenge to Iranian leaders. We're getting the reaction.
Also, a veteran Democratic senator facing fallout after admitting he was involved in that -- getting that legal loophole that made those AIG bonuses possible -- a charge he first denied.
Is the controversy making Connecticut's senator, Chris Dodd, politically vulnerable?
And the first lady breaking ground and showing off her new White House kitchen garden. Michelle Obama explains why she wants it to be more than just fruit and vegetables.
I'm Wolf Blitzer.
You're in THE SITUATION ROOM.
President Obama reaching out to Iran with a videotaped message that's part holiday greeting and part challenge to a long time adversary. And if you read between the lines, there may be some important clues about the way his administration will try to engage Tehran.
Our foreign affairs correspondent, Jill Dougherty, is joining us now live with reaction to what the president has now done.
What is it -- Jill?
JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, you know, that message from President Obama to Iran is getting a lot of applause, at least in Europe. French President Nicolas Sarkozy saying: "We've waited for years for the Americans to reengage on Iran."
But from Tehran, there's a mixed reaction.
(BEGIN VIDEOTAPE)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you and Eid- eh Shoma Mobarak.
DOUGHERTY (voice-over): The American president, speaking in Farsi, congratulates the Iranian people on their traditional Persian new year. For the Iranian government, a challenge.
OBAMA: The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations. You have that right, but it comes with real responsibilities. And that place cannot be reached through terror or arms.
DOUGHERTY: Experts say by using the term Islamic Republican, President Obama could be signaling regime change is off the table.
TRITA PARSI, NATIONAL IRANIAN AMERICAN COUNCIL: He is injecting trust and confidence in a process that is taking place in an atmosphere that is almost completely void of trust. That's a very important first step.
DOUGHERTY: The Iranian president, in his new year's address, ignores the overture. But his spokesman says the ball is in Obama's court: "If Mr. Obama takes concrete action and makes fundamental changes in U.S. foreign policy toward other nations, including Iran," he says: "the Iranian government and the people will not turn their backs on him."
At an Internet cafe in Tehran, Iranians watching the message are split. This man calls it: "A great move by the American president after years of strained relations."
But another says the bad blood between Iran and the U.S. won't be settled easily: " This is an old wound," he says. "It takes a long time to be healed."
(END VIDEOTAPE)
DOUGHERTY: And the White House says that President Obama wants to show what they call "respectful engagement" with the people of Iran.
Now, officials say this is just one example. Stay tuned, they say. There will be more. And one idea that's already being discussed is potentially sending a letter from President Obama to the supreme leader of Iran -- Wolf.
BLITZER: Anything else on the horizon in terms of U.S. relations with Iran -- Jill?
DOUGHERTY: Well, you do have that upcoming trip that Secretary Clinton will be taking to the Afghanistan conference in Europe. And that could be the possibility of having her sitting down in the same room with an Iranian representative.
BLITZER: Jill Dougherty at the State Department for us.
Thank you.
Nowruz, by the way, marks the beginning of spring for Iranians. It's also the start of their new year.
President Mahmoud Ahmadinejad and the supreme leader, Ayatollah Khameini, addressed their nation on this first day of the 12-day festival. Mr. Obama is not the first American president to mark the holiday. President Bush issued at least three statements in honor of Nowruz and the first lady, Laura Bush, hosted a White House tea for Nowruz just last March. Now Congress is also getting on board, considering a resolution honoring the holiday.
Fresh fallout for the U.S. senator involved in that AIG bonus controversy -- a scandal that could make the Connecticut Democratic Senator, Chris Dodd, who's the chairman of the Senate Banking Committee, politically vulnerable.
We've been following the public outrage over the $165 million in bonuses going to some executives over at the troubled insurance giant while it's being bailed out by U.S. taxpayers.
CNN asked Senator Dodd if he was responsible for protecting those bonuses.
On Tuesday, he responded this way.
(BEGIN VIDEO CLIP)
DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT: ...you received more money from AIG than any other senator and that you were responsible for the February 11th, 2009 date. So I just -- you know, again, I just want to get at (INAUDIBLE)...
SEN. CHRIS DODD (D), CONNECTICUT: No.
GRIFFIN: You're saying you -- you had nothing to do with that date...
DODD: Absolutely not.
GRIFFIN: And there was nothing you were doing that was aimed at...
DODD: No.
GRIFFIN: ...protecting AIG in particular?
DODD: Not at all. Not in the slightest. Absolutely.
GRIFFIN: Because when you were -- which has offices -- this particular office -- in the state of Connecticut.
DODD: Well, it does but it has offices (INAUDIBLE) but the point is when that language left the Senate -- that I wrote -- that was not included.
(END VIDEO CLIP)
BLITZER: About 24 hours later, Senator Dodd contradicted himself in a live interview here in THE SITUATION ROOM, admitting to protecting the bonuses at the request of the U.S. Treasury Department.
(BEGIN VIDEO CLIP)
DODD: I was changing the amendment because others were insisting upon it.
(END VIDEO CLIP)
BLITZER: The fallout is following Senator Dodd back home to Connecticut.
CNN's Mary Snow is there -- was there, at least -- Mary, could this cost Senator Dodd his job?
MARY SNOW, CNN CORRESPONDENT: Well, Wolf, Republicans are certainly hoping so. That popularity has been slipping. And the five- term Democrat, in a solidly blue state, who's enjoyed blow out elections, is now facing a fight.
(BEGIN VIDEOTAPE)
DODD: No one's angrier than I am.
SNOW (voice-over): Senator Christopher Dodd going on the defense in his home state of Connecticut.
DODD: If anyone mentioned AIG or any bonuses, I would have rejected it immediately out of hand. But the argument was, this was technical.
SNOW: Some Democrats are raising new doubts about their long- term senator. We found some of them at Pepe's Pizza in New Haven.
UNIDENTIFIED FEMALE: I felt very sorry for him because (INAUDIBLE) that probably -- that would probably be the end of his political career.
UNIDENTIFIED MALE: As a Democrat, you hate to see somebody lose their seat. But I'll have to see who's running against him.
SNOW: Republicans see an opening.
ROB SIMMONS (R), FORMER U.S. REPRESENTATIVE: I think the papers and everybody else have got it right. It's a flip-flop.
SNOW: Meet former Republican Congressman Rob Simmons, who announced this week he'll challenge Dodd next year. Simmons doesn't even have a campaign office. He plans to transform this horse barn as his headquarters. But a recent Quinnipiac poll, taken before the AIG flap, shows him with a 1 point edge over Senator Dodd.
DOUG SCHWARTZ, QUINNIPIAC UNIVERSITY POLLING INSTITUTE: Dodd has to be concerned because he's under 50 percent against a former Congressman who's not that well known outside of his former district.
SNOW: Schwartz says Dodd's numbers began to slip when he moved his family to Iowa during the presidential election. We caught up with Senator Dodd in Enfield, Connecticut. He acknowledged he'd like better poll numbers, but says he thinks people will see through the political point scoring.
DODD: I have enough confidence in them that if I do my job on their behalf, which is what they're interested in -- about their jobs, their homes, their retirement, their kids' future -- then the politics will take care of itself.
(END VIDEOTAPE)
SNOW: But the politics over Dodd's Senate seat is already ramping up, as Republicans turn up the heat this week on Dodd.
Democrats say they are confident that, in the end, he will be fine -- Wolf.
BLITZER: Mary, you and your producer, Shirley Zilberstein, you were there in Connecticut.
How angry are folks there?
SNOW: You know, we talked to them not just about the Senate seat, but just the overall atmosphere. And we talked to one man who said, you know, I have my garbage picked up twice a week. He said he cannot count on any politician to really clean up this mess. And he said at this point, he has more confidence in the garbage collectors than politicians, which kind of sums up the anger level among some of the people we were talking to.
BLITZER: Pretty angry, I take it.
All right. Thanks very much, Mary Snow.
Let's go back to Jack for "The Cafferty File" -- Jack.
JACK CAFFERTY, CNN ANCHOR: Flip-flop?
There are other words you could use to describe what is being called flip-flop.
As the AIG bonus scandal continues to brew, some think it's time for Treasury Tim Geithner to either quit or be fired. If Geithner didn't know about the $165 million in AIG bonuses earlier, he should have.
He told CNN yesterday: "It's my responsibility. I was in a position where I didn't know about those sooner. I take full responsibility for that," blah, blah, blah -- end quote.
Geithner insists he found out about the full extent of the bonus problems last week -- March the 10th.
But "The New York Times" describes the bonus program as "a disaster hiding in plain sight." That's the quote. "The Times" reports that in a March 3rd Congressional hearing, Geithner was asked what could be done to stop AIG from paying $165 million in bonuses. And the Treasury secretary responded that executive pay had gotten: "out of whack," pledged to crack down on pay at companies like AIG that were getting bailout money and that were apparently planning on paying $165 million. And Tim Geithner was asked about it March 3rd.
A Treasury spokesman says although a question did come up two weeks ago, Geithner was not aware of the timing or full extent of the bonus situation until March 10th.
Then there's more.
Officials at the Treasury, the Fed and the Federal Reserve Bank of New York exchanged e-mails about the bonus program in late February. AIG revealed the bonus plan in filings last September. In November, Treasury and Fed officials negotiated the terms of these retention payments. And in December, Democrats called for the hearing on the bonuses.
President Obama continues to support Geithner with a vote of complete confidence.
Here's the question: Should Treasury Secretary Timothy Geithner be fired over the AIG bonus scandal?
Go to CNN.com/caffertyfile and post a comment on my blog.
This is one of those distractions, Wolf, that's going to be around a while, until somebody does something precipitous to make it go away.
BLITZER: Didn't you remind us yesterday, Jack, that in January, our own Mary Snow was reporting right here in THE SITUATION ROOM that these bonuses -- millions and millions of dollars -- were expected to go forward?
CAFFERTY: Yes. And apparently, like we were saying, there were e-mails that pointed to all of this that go back as far as September. March 3rd, Mr. Geithner was asked about it in Congressional hearings.
This is -- this isn't going to go anywhere until -- until somebody makes it go away.
BLITZER: Jack, thank you.
Billions -- billions of dollars in stimulus money going to efforts to upgrade the country's electric grid.
But that could -- but could that new technology leave the nation vulnerable to cyber attacks?
Also, Eliot Spitzer -- he's speaking out on TV for the first time since he was forced to step down as governor of New York. We're going to show you his take on the president, how he's dealing with the financial crisis. Eliot Spitzer's exclusive interview with our own Fareed Zakaria.
And Michelle Obama takes a shovel to the White House -- we're going to tell you why she's breaking some new ground.
Stay with us.
You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
ANNOUNCER: This is CNN breaking news.
BLITZER: All right. There's breaking news coming from the U.S. Postal Service.
Let's go right back to Zain.
She's got some details.
What's coming into THE SITUATION ROOM -- Zain?
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, Wolf, we're just learning that the U.S. Postal Service is taking some pretty drastic steps to save itself more than $100 million a year. They're going to be offering early retirement to 150,000 workers, reduce various staff positions at district levels by about 15 percent. We're also learning, too, that they plan to cut 1,400 mail processing supervisor and management positions at nearly 400 facilities around the country -- Wolf.
BLITZER: Everybody's cutting corners right now, including the Postal Service.
But 150,000 jobs could be up in the air, in terms of early retirement, is that what you're saying?
VERJEE: Absolutely. That's what they're -- that's what they're planning to do. They want to offer that number of people some buyouts.
BLITZER: And we'll learn what the terms of those buyouts will be.
Thanks very much, Zain, for that.
Seventeen billion in stimulus funds heading toward New Jersey -- we're about to meet the watchdog in charge of preventing fraud.
Let's go to our senior political correspondent, Candy Crowley -- Candy, what do you have?
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, Wolf, well, listen, what's really interesting, when we listened to the near $700 -- near $800 billion that the federal government is sending out to all of these states with stern warnings that this money must be spent wisely. Now imagine being the guy that has to watch over the money that comes in to their states.
(BEGIN VIDEOTAPE) CROWLEY: Seventeen billion dollars in federal taxpayer money is headed for New Jersey -- a place with a path from the statehouse to the slammer.
JOSEPH MALONE (R), NEW JERSEY STATE ASSEMBLY: We've seen a half a dozen state legislators go to jail in the last year for corruption and fraud and mismanagement.
CROWLEY: Yikes. Consider, too, the money will come in to New Jersey in almost 100 different streams -- including transportation money, public housing money, education money, money to resurface two miles of Route 1 in Mercer County and work on the bridge deck in New Brunswick -- different pots of cash headed to different coffers, with different federal guidelines and suggestions.
JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: A little hint -- no swimming pools in this money.
CROWLEY: Somebody needs to watch this.
Who you going to call?
Matt Boxer.
MATTHEW BOXER, NEW JERSEY STATE COMPTROLLER: It's a bit like three-dimensional chess. It's -- it is -- it is a bit of a puzzle.
CROWLEY: The guy with two versions of the stimulus bill in his office.
(on camera): Have you read it?
BOXER: Most of it. Most of it.
CROWLEY: It's real exciting stuff, right?
BOXER: It's -- it will keep you up at night, no doubt about that.
CROWLEY (voice-over): So new to the job, his office has no name plates, Boxer is the state's independent comptroller, tapped to clean up New Jersey, which makes him a natural to follow the stimulus money.
BOXER: Does it present unique challenges with eliminating all fraud?
It -- it does. It does. We're working hard to deal with that as an issue. But to believe that it will easily be conquered is -- would be naive for anybody.
CROWLEY: The state's transportation office has picked the projects it wants to fund. But, first, there were questions.
BOXER: How did you arrive at this list -- and ensuring that the -- that the projects were arrived at using merit-based appropriate criteria, so we don't end up with the swimming pools. CROWLEY: Armed with a team of auditors and former FBI investigators, Boxer is in for the duration.
BOXER: We will be overseeing the process on the front end, how the money is coming in, what it's being allotted to. And, yes, our audit authority would put cover on the back end, as well, in seeing how those funds were spent.
CROWLEY: Seventeen billion dollars is at stake -- and more.
MALONE: And I said this directly to him -- this will shape your career, Matt. Now, if there's any cloud of suspicion, if there's any fraud or abuse or any kinds of -- of malfeasance in the use of this money, you -- you'll ride this thing your entire career.
CROWLEY: Double yikes. And just last week, Boxer put on his new hat and came to Washington for a pep talk, kind of.
OBAMA: If we see money being misspent, we're going to put a stop to it. And we will call it out and we will publicize it.
CROWLEY: No pressure here.
(END VIDEOTAPE)
CROWLEY: Despite this pretty big job, Wolf, with a high lot of pressure, when I asked Boxer what his first reaction was when Governor Corzine asked him to do the job, he said he was pretty happy and he felt honored. So we thought maybe a year, a year-and-a-half, we'll go back and talk to him again.
BLITZER: Good idea.
Candy, thanks very much.
A good report.
A collision at sea between two American vessels -- we have new details of the accident and the injuries in the waters off Iran.
Plus, the former New York governor, Eliot Spitzer -- he's grading President Obama in an exclusive interview with CNN -- his first since resigning from office.
(COMMERCIAL BREAK)
BLITZER: We're just getting in some new video from the U.S. Navy of that incident back on March 8th -- an incident involving a U.S. ship and some Chinese ships that were harassing the U.S. ship. You remember that incident, the Chinese sailors at one point stripped down to their underwear.
We're going through the video right now, listening to it, watching it. There are some curse words there that we're going to clean up. Stand by. We're going to play this video for you that we're just getting in from the U.S. Navy. We'll get to that shortly. Our Barbara Starr is reviewing it, as well, over at the Pentagon.
Meanwhile, let's check in with Zain Verjee. She's monitoring some other important stories incoming into THE SITUATION ROOM right now.
I think you're going to want to see this video -- Zain.
VERJEE: Absolutely. We'll take a look at it, Wolf.
Meanwhile, two U.S. ships have collided with each other in the waters just south of Iran, causing heavy damage and minor injuries. A Navy spokesman says a submerged submarine, the USS Hartford, hit an amphibious warship, the USS New Orleans. Fifteen sailors aboard the sub were injured but the Navy says that they returned to duty. The warship lost 25 thousand gallons of diesel in the crash.
The Navy is now investigating.
Vermont is a step closer to allowing same sex couples to legally marry. A senate committee there has approved a gay marriage bill and both the senate and the house are expected to pass it. Vermont's governor is against it, but hasn't said if he'd veto it. Right now, Massachusetts and Connecticut are the only U.S. states allowing gay marriage.
And cheers and waving crowds greeted Pope Benedict XVI as he arrived in the African nation of Angola today. Tens of thousands of people lined the route of the pope's motorcade. He urged everyone in the diamond and oil rich region to remember the country's poor. The pope also encouraged people to continue building peace after decades of fighting there. Civil war ravaged Angola between 1975 and 2002 -- Wolf.
BLITZER: Zain, thanks very much.
I want to remind our viewers not to forget THE SITUATION ROOM tomorrow. That would be our Saturday show, 6:00 p.m. Eastern, right here on CNN. And our exclusive interview with Janet Napolitano, the Homeland Security secretary. That will be included.
Also, both Republican leaders in Congress -- the Republican leaders in the House and Senate, John Boehner, Mitch McConnell, among others that will be joining us, 6:00 p.m. Eastern tomorrow in THE SITUATION ROOM.
Meanwhile, also, we're going through that video we just showed you -- the new video from the U.S. Navy that's just come into THE SITUATION ROOM of that incident on March 8th in the South China Sea, when three Chinese vessels were provoking -- were going up and harassing a U.S. ship in the area in international waters. We're going to play that for you and you're going to hear what the sailors were saying. That's coming up. Stand by. We're just going through it right now.
More fallout, meanwhile, for President Obama's special Olympics gaffe. Republican Governor Arnold Schwarzenegger and Governor Sarah Palin of Alaska -- they're both weighing in. We have their reactions and more.
Also, a stimulus initiative that could have unintended consequences that could put you at risk.
And while the president focused in on stimulating the economy, the first lady is launching a new plan to stimulate some taste buds. We'll explain right here in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: To our viewers, you're in THE SITUATION ROOM.
Happening now, the new numbers are out -- President Obama's budget will create trillions more in debt than first thought.
What changed since last month's prediction?
Also, a new twist involving the Wall Street giant that handed out millions in bonuses -- why AIG is suing the same government that bailed it out. And the company could be using your tax dollars to do it.
And the first lady's project in the back yard of the White House.
I'm Wolf Blitzer.
You're in THE SITUATION ROOM.
Late night TV has just about seen it all, but never a sitting United States president -- until now. President Obama joined Jay Leno last night for an appearance that was anything but ordinary.
Our White House correspondent, Suzanne Malveaux, shows us.
(BEGIN VIDEO CLIP, COURTESY NBC)
JAY LENO, HOST "THE TONIGHT SHOW WITH JAY LENO": The 44th president of the United States, please welcome President Barack Obama.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice-over): And in front of a crowd of fans and millions of viewers, President Obama played it mostly straight on "The Tonight Show," but did spend a lot of them talking bonuses.
OBAMA: Stunning. Stunning is the word. The immediate bonuses that went to AIG are a problem, but the larger problem is we've got to get back to an attitude where people know enough is enough and people have a sense of responsibility.
MALVEAUX: A sense of responsibility that Mr. Obama says needs to extend beyond just AIG.
OBAMA: Who in their right mind, when your company is going bust, decides we're going to be paying a whole bunch of bonuses to people?
And that, I think, speaks to a broader culture that existed on Wall Street where -- I think people just had this general attitude of entitlement.
MALVEAUX: The appearance was meant to tout his stimulus plan and ease Americans' concerns about the economy. The commander-in-chief says reform is on the way.
OBAMA: When you buy a toaster, if it explodes in your face, there's a law that says, you know, your toasters need to be safe.
LENO: Right.
OBAMA: But when you get a credit card or you get a mortgage, there is no law on the books that says that if that explodes in your face financially, somehow you're going to be protected.
MALVEAUX: Sprinkled in with the policy talk, the president's staunch defense of his Treasury secretary, Tim Geithner.
(BEGIN VIDEO CLIP)
OBAMA: This guy has not just a banking crisis, he's got the worst recession since the Great Depression. He's got an auto industry, you know, that has been on the verge of collapse. And he understands that he is -- he's on the hot seat. But I actually think that he is taking the right steps and we're going to have our economy back on the move.
(END VIDEO CLIP)
MALVEAUX: Earlier in the day, the president felt the need to defend himself over the much hyped appearance.
OBAMA: Somebody was saying that -- today, I think -- that I shouldn't be on "Leno."
(LAUGHTER)
OBAMA: That I can't -- I can't handle that and the economy at the same time.
(LAUGHTER)
MALVEAUX: It's that kind of scrutiny Obama later told Leno, it takes some getting used to.
OBAMA: It's a little bit like "American Idol" except everybody is Simon Cowell.
MALVEAUX (on camera): The White House is eager to move beyond the AIG controversy and the president's hope is that his appearance last night will help get him back on message.
Suzanne Malveaux, CNN, the White House.
(END VIDEOTAPE)
BLITZER: The president also made a remark about the Special Olympics that's causing controversy.
Here's what he said
(BEGIN VIDEO CLIP)
LENO: Are they going to put a baseball -- I imagine the bowling alley has been just burned and closed down.
OBAMA: No, no. I have been...
LENO: Oh, you're keeping them?
OBAMA: I have been practicing.
LENO: Really?
Really?
(LAUGHTER)
OBAMA: I -- I bowled a 129.
(LAUGHTER)
(APPLAUSE)
OBAMA: I have...
LENO: Oh, that's very good, yes.
(LAUGHTER)
LENO: Oh, that's very good for (INAUDIBLE)...
OBAMA: It was like the Special Olympics or something.
(LAUGHTER)
LENO: Oh, that's -- that's...
OBAMA: It was the...
LENO: ...no that's very good.
OBAMA: No, listen, I'm making progress on the bowling. Yes.
(END VIDEO CLIP)
BLITZER: Talking about his reference to the Special Olympics. The White House says the president called the head of the Special Olympics, the Kennedy cousin, Tim Shriver, to apologize. His brother- in-law, the California governor, Arnold Schwarzenegger, was meeting with the president today on other matters and had this to say outside the White House.
(BEGIN VIDEO CLIP) GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Well, I didn't see it. But heard about it. And I know because of conversations I had with the president about Special Olympics -- since I'm the international coach of Special Olympics -- I know where his heart is at. He loves Special Olympics. And he will do everything he can to help Special Olympics. And every one of us sometimes makes a mistake by something comes out of your mouth and you say, oops, I wish I wouldn't have said that.
GOV. ED RENDELL (D), PENNSYLVANIA: Not me.
SCHWARZENEGGER: No, of course not.
(LAUGHTER)
SCHWARZENEGGER: I...
(CROSSTALK)
SCHWARZENEGGER: I've had many of those.
(END VIDEO CLIP)
BLITZER: And we've also received a statement, by the way, from the former Republican vice presidential nominee, Sarah Palin, whose infant son has Down Syndrome. Governor Palin writes -- and let me quote her: "I was shocked to learn of the comment made by President Obama about Special Olympics. This was a degrading remark about our world's most precious and unique people coming from the most powerful position in the world. I hope President Obama's comments do not reflect how he truly feels about the special needs community."
Let's talk about this and more with Democratic strategist, former DNC communications director, Karen Finney, and Republican strategist, Tony Blankley, former press secretary to Newt Gingrich.
You know, you say stuff you immediately regret. And I'm sure he immediately regretted that.
KAREN FINNEY, DEMOCRATIC STRATEGIST: Yes, he absolutely did. And what I really respect is that he not only immediately regretted it, but that he put out a statement immediately and made that phone call immediately. And I think that's a good thing to see, that he knew immediately it was not the right thing to say and he took steps to correct it. And we haven't seen that in our government in a while.
BLITZER: We all do that from time to time, Tony. All of us make mistakes.
How did he handle this?
TONY BLANKLEY, REPUBLICAN STRATEGIST, FORMER GINGRICH PRESS SECRETARY: Well, look, no one likes to have a presidential gaffe. And they all do it. They are damaging. And I don't think this one was. When they reflect some pre-existing perception about a president -- so, for instance, when President Clinton said: "depending on what the definition of is is," or when my president, Reagan, said: "We start bombing Moscow in five minutes," those played into pre-existing perceptions that Reagan was, you know, quick on the trigger or -- or Clinton was a little slippery with his language. I don't think most people think of Obama as unsympathetic.
So while I'm sure he and his people don't want to have this, you know, get in the way of their message, I don't think it does any lasting damage.
BLITZER: Millions and millions of people were watching the entire performance of the president. It had the highest ratings, we've just learned, in 11 years for "The Tonight Show."
Is it a good idea for a sitting president -- and he was the first sitting president -- to go on a last night talk show like this?
FINNEY: Look, it's always a risk, and particularly last night, because there's a little comedy element that you're never quite sure how that's going to play.
But I think the idea of trying to, again, get out there and do something a little bit different and talk to the American people in a different way -- not just the traditional ways through the traditional media and the White House press corps, though it's all very important. I think that's a very smart move, because some of the folks who are watching, you know, Jay Leno, aren't the folks who are watching maybe the evening news.
BLITZER: It's -- it's always going to be a soft interview on these last night talk shows. And the risks, in terms of, you know, being grilled like as opposed to a Sunday morning talk show, for example, are minimal.
BLANKLEY: Well, there are risks everywhere. But, you know, I think the more interesting question is, is he over exposing himself?
And I've been talking with some -- some professionals -- people who have dealt with this before, as I have. And our instinct is he is. And I think he has smart people around him and they judge, for some reason, that he's not over exposing himself.
And my suspicion is -- I don't know this -- my suspicion is there's always a difference between your personal approval and your job approval. And by getting out there and bringing up his personal approval, maybe that's sort of going to protect him as the difficulties of the job tend to pull down.
BLITZER: And he's going on "60 Minutes" Sunday night...
BLANKLEY: Yes. (INAUDIBLE)...
BLITZER: And he'll have a prime time White House news conference Tuesday night.
FINNEY: Right.
BLITZER: We see him almost every single day.
FINNEY: But, again, I think this is part of him changing the tone and the style of politics. He's the guy. The buck stops with him. He said that this week. So he's trying to let the American people hear directly from him and take responsibility, both positive and negative, for what's going on. I think that's going to be a good thing in the long run. And I think people appreciate the opportunity to hear directly from the president, not just always, you know, hiding behind your aides.
BLANKLEY: I mean most professionals -- communications professionals in town -- think he's over exposing. We'll see if he and his people are smarter than most of the town.
BLITZER: Because...
FINNEY: And their polls as opposed to his.
BLITZER: As I said earlier, these are unprecedented times in terms of the economy...
FINNEY: Yes, right.
BLITZER: ...of the United States.
BLANKLEY: And I know -- you know, in the Reagan White House, we calculated how often he could do an Oval Office (INAUDIBLE), how often he should -- he should be out there. And it worked pretty well.
Now, maybe times have changed.
FINNEY: But, Tony...
BLANKLEY: But there are some...
FINNEY: ...stuff has changed.
BLANKLEY: ...there are some tested principles that seemed to have worked until now, at least.
BLITZER: Do you -- you sense that this decision today -- well, it's not a decision, this assessment by the Congressional Budget Office that the budget deficit is going to be so much bigger than the White House projected only a few weeks ago, is going to further undermine the White House's credibility?
FINNEY: Well, hopefully, it wont. I mean, I think -- you know, we know that if we would have continued on the path that Bush put us on, we would have had a $2 trillion more in debt. So, again, if you look at what the president's plan does, it does work to cut the deficit. But it also works to do some of the things we need to do. And, again, we're in unprecedented times. So we're having to do things in a different way.
BLITZER: Well, the assumption that the CBO has that the deficit is not about to be cut... (CROSSTALK)
BLITZER: But it's going to be going up.
FINNEY: Well, that's not true.
BLANKLEY: This is an old process. The Office of Management & Budget -- the president's budgeteers -- often come in with rosier estimates than the Congressional Budget Office.
BLITZER: It happens all the time.
BLANKLEY: It happens whichever party is in power and the different branches. You always have this. The CBO numbers historically have been more reliable than the OMB numbers.
BLITZER: Because they're non-partisan.
BLANKLEY: Yes.
BLITZER: These are Democrats and Republicans and other experts.
BLANKLEY: Yes. And the White House numbers tend to be driven by whichever party is in power and they tend to be rosier, which means they expect recovery quicker, they expect costs to come down faster. And I think most budget analysts in town would bet on CBO over OMB, not to get too jargony.
BLITZER: All right, guys, we're going to leave it right there.
BLANKLEY: Thank you.
BLITZER: Thanks for coming in.
Tuesday, President Obama will be holding that prime time news conference.
If you were a reporter in that room, what would you ask him?
Submit your video questions to ireport.com/situationroom, then you can watch next week to see if your video makes air. Don't forget to watch that prime time news conference right here on CNN, 8:00 p.m. Eastern Tuesday night.
Dramatic new video of a confrontation between Chinese and U.S. ships -- it's just coming into THE SITUATION ROOM.
Will it shed light on a controversial international incident?
Plus, the first lady's kitchen garden -- she's speaking about why she's growing fruit and vegetables on the White House lawn.
(COMMERCIAL BREAK)
BLITZER: All right. We've got that U.S. Navy video this just coming in to THE SITUATION ROOM of that dangerous stand-off at sea between U.S. and Chinese vessels earlier in the month.
Let's bring in our Pentagon correspondent, Barbara Starr -- remind our viewers, Barbara, set the stage of what we're about to see.
What happened there?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, Wolf, you just said it -- a very dangerous confrontation at sea earlier this month between the Chinese and the United States. A number of Chinese fishing vessels -- pardon me, merchant vessels, came very, very close to a U.S. Navy research ship that was said to be operating in international waters.
Now, these Chinese patrol vessels came within 25 feet of the USNS Impeccable. That is a ship that is manned by a U.S. civilian crew. They got out the fire hoses because the Chinese were basically putting the long hooks out into the water, trying to snag the cables of The Impeccable, possibly trying to disable that U.S. ship.
Fire hoses were used against the Chinese crew. And the Navy then reported, in fact, that: "The Chinese crew members disrobed to their underwear" when they were hosed down by the U.S. crew.
You see some of the video here. Very unusual pictures -- Wolf.
BLITZER: All right. I'm going to play some of this video that the Navy has now made available to us, Barbara.
And I want to alert our viewers, some of the language may be -- if you'll forgive the pun -- a little salty. But these are sailors, by and large.
So listen to this. We've tried to clean it up a little bit, but I want you to listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: (INAUDIBLE).
Did you see any of that?
(CROSSTALK)
UNIDENTIFIED MALE: All I've taken today is video.
UNIDENTIFIED MALE: (INAUDIBLE) but the one guy's peeling off (INAUDIBLE) hand off the starboard (INAUDIBLE). Go back there with that guy.
UNIDENTIFIED MALE: Lou and Wilson, man the hoses, while the Chinese irritate us to tears.
UNIDENTIFIED MALE: (INAUDIBLE) background here.
UNIDENTIFIED MALE: Here he comes for now the swipe at the array cable. UNIDENTIFIED MALE: (INAUDIBLE) is off the starboard bow right now.
UNIDENTIFIED MALE: Damn right.
UNIDENTIFIED MALE: If anything happens and someone finds a camera, Bobby is a good man. Leave him alone and don't cut his hair.
UNIDENTIFIED MALE: That's right. I want to -- I want to video his (EXPLETIVE LANGUAGE) hitting the cable so when I see him in Hong Kong, I can punch him in the face.
UNIDENTIFIED MALE: All right. He went through that (INAUDIBLE).
UNIDENTIFIED MALE: He's waving. He's waving his flag.
(CROSSTALK)
UNIDENTIFIED MALE: (INAUDIBLE) naked.
UNIDENTIFIED MALE: And he won't be standing on the deck if he does, he'll be -- he'll be gargling sea water.
UNIDENTIFIED MALE: (INAUDIBLE).
UNIDENTIFIED MALE: Maybe he's trying to get his net.
(CROSSTALK)
UNIDENTIFIED MALE: He's got some kind of a pole.
UNIDENTIFIED MALE: Maybe he's trying to get his net.
UNIDENTIFIED MALE: Maybe (INAUDIBLE) their net and they're going to...
UNIDENTIFIED MALE: Maybe he's trying to...
(END VIDEO CLIP)
BLITZER: All right. So there you have it. We've got some more video, as well.
Abbi Tatton is reviewing some other video that's just coming in. It's a -- it was a very tense situation, by all accounts -- Abbi.
ABBI TATTON, CNN INTERNET REPORTER: It really was, Wolf. And you can see the people taping this trying to figure out what's going on -- trying to figure out in this one how to use the video camera, as well, as they see these ships approaching.
Take a listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I've got video there. UNIDENTIFIED MALE: Where the hell is your zoom?
(CROSSTALK)
UNIDENTIFIED MALE: Where's your zoom?
(CROSSTALK)
UNIDENTIFIED MALE: It's right on the top.
(CROSSTALK)
UNIDENTIFIED MALE: OK.
(END VIDEO CLIP)
TATTON: As these videos goes on, Wolf. And you can see from the other video that we just showed, the vessels come a lot closer to that. We've got about a half dozen of these. We'll look through the rest of what's coming out from the U.S. Navy and come back to you in the 6:00 p.m.
BLITZER: Thanks very much, in the next hour.
I want to go back to Barbara Starr at the Pentagon.
Help us better explain what we just saw -- Barbara.
STARR: Well, Wolf, what the USNS Impeccable is, is an ocean surveillance ship. Let's be clear -- it was in international waters and it was hunting Chinese submarines. And the Chinese didn't like it. So they came out and behaved in what the U.S. says is a very aggressive manner.
You heard some language on those tapes about cables. The Chinese were trying to hook the cables -- the arrays that the U.S. ship had trailing in the water to listen for Chinese subs.
What is so dangerous in circumstances like this is when ships get into these confrontations, it can go very wrong. Things happen. Ships crash into each other. You can begin to have ships -- crews shooting at each other in certain circumstances. This is what the Navy tries -- the U.S. Navy tries to avoid by all costs.
You see a lot of open water there. If things had gone wrong, it would have been a long time before help would have come.
BLITZER: And when you say a surveillance ship, that USNS ship, that's really is a spy ship, right?
STARR: Absolutely. Let's be very clear, that is what it was doing.
BLITZER: And the Chinese hate it, even though the U.S. has every right to -- to be in that part of international waters. The Chinese insist it's not international waters, but everybody else insists it is international waters.
STARR: Exactly, right, Wolf.
BLITZER: Thanks very much, Barbara, for that.
While the president focuses in on stimulating the U.S. economy, the first lady is out on the White House lawn, launching a plan to stimulate taste buds and good health.
(COMMERCIAL BREAK)
BLITZER: All right. Let's get right back to Jack for the Cafferty File -- Jack.
CAFFERTY: Wolf, the question this hour is: Should Treasury Secretary Timothy Geithner be fired over the AIG bonus scandal?
Bert writes: "I'm a Democrat. I stand behind our president. But besides vetting his appointments, is there a common sense test they have to pass? It seems like every other head in our new administration is screwed on backwards -- so many balls being dropped, so many errors."
Ralph in Orlando, Florida: "I am for keeping Geithner. I doubt we'll get anyone better. And changing people at this point will likely do more harm than good. The people who are calling for his head are the same conservatives who got us into this mess, so to hell with them."
Thema writes: "If Geithner means what he says -- I take full responsibility, literally -- then he ought to resign or be fired. People use that phrase so much without meaning what they say."
Joan writes: "No. The guy is working 15 hours a day trying to clean up the Bush mess."
Jess in Ohio says: "He ought to resign. He knew about this. He can play dumb as long as he wants. He ought to realize, though, the longer he continues to play dumb, the more proof gets published about these retention bonuses and when Treasury knew about them."
Ben in California: "Add Chris Dodd to that list. Obama's trying to do the right thing, but these clowns just add fuel to the GOP talk show crowd. Obama needs to go very hard on AIG -- no bonuses at all.
If he can make an example out of AIG, the other institutions will think hard before trying to milk the taxpayers for more money. Enough is enough."
Jay writes: "If people were fired for being stupid, the unemployment rate would be 90 percent."
And Chris says: "Isn't Geithner too big to fail?"
If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there among hundreds of others -- Wolf.
BLITZER: He's actually not that tall Jack. He's not that big of a guy.
CAFFERTY: Who's not that tall?
BLITZER: Geithner.
CAFFERTY: He's not?
BLITZER: Because Chris says, isn't he too big to fail?
I'm just saying...
CAFFERTY: Well, I think that was like a figurative...
BLITZER: I know. I know.
CAFFERTY: Is he taller than you?
BLITZER: No.
CAFFERTY: He's not?
BLITZER: No.
So what are you saying?
CAFFERTY: Well, he's...
BLITZER: So he must be really short, is that what you're saying?
CAFFERTY: So he's pretty short.
(LAUGHTER)
BLITZER: You're very tall, Jack.
Stand by.
The first lady, Michelle Obama, breaking ground at a new White House kitchen garden. She explains why she's doing it.
(COMMERCIAL BREAK)
BLITZER: While her husband pushes hundreds and hundreds of billions of dollars in new projects designed to improve the nation's economic health, the first lady is breaking ground on a very low cost project designed to improve her family's health and perhaps encourage other Americans to do the same thing.
Let's go back to Zain.
She has details -- Zain?
VERJEE: Wolf, you're going to be very happy about this, because it's all about less pizzas and hamburgers and more about fresh fruits and vegetables.
(BEGIN VIDEOTAPE)
MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: Get up. Get some shovels. Come on. Let's go. Let's go.
VERJEE (voice-over): The first lady and a group of fifth graders breaking a sweat and breaking new ground right in her backyard.
M. OBAMA: The whole point of this garden for us is that I want to make sure that our family, as well as the staff and all the people who come to the White House and eat our food get access to really fresh vegetables and fruits. Because what I've found with my girls, who are 10 and 7, is that they like vegetables more if they taste good.
VERJEE: Michelle Obama wants to teach kids in America about eating healthier foods at a time when obesity and eating fast foods are major problems.
M. OBAMA: How many people know anything about gardening?
You have to take care of it everyday.
Do you hear that, Sam?
VERJEE: Beets are out because President Obama doesn't like them. But arugula is in.
M. OBAMA: Then sometime in June, right, right around the time that school is over, hopefully, we'll have lots of great vegetables and fruits.
VERJEE: Mrs. Obama says that Sasha and Malia -- and even the president -- will look after the organic kitchen garden on the White House South Lawn and pull weeds, too.
M. OBAMA: No one has planted a garden like this since Roosevelt.
VERJEE: The first lady consulted California's chef Alice Waters, who's a leader in the movement for eating healthy, locally grown foods.
M. OBAMA: Let's hear it for vegetables. Yes.
VERJEE: The school kids will plant and harvest the vegetables, berries and herbs.
M. OBAMA: And we're all excited. Everyone at the White House is thrilled about this. And they are particularly thrilled about the fact that you guys are going to be helping us.
(END VIDEOTAPE)
VERJEE: They're going to be planting things, as well, like mint, lettuce and berries -- Wolf. They'll even be a beehive for honey.
And how much is all this costing taxpayers, Wolf?
About $200.
I think that's OK. It's a strong, good message.
BLITZER: It's very healthy and very good.
VERJEE: Do you eat healthy?
BLITZER: She -- I eat very healthy. I know you do, as well, is that right, Zain?
VERJEE: No, I love pizzas and hamburgers. So I -- I'm going to have to transition to arugula and broccoli now.
BLITZER: I'm going to go have fruit and vegetable right after this show.
Thank you, Zain.
To our viewers, you're in THE SITUATION ROOM.
Happening now, a new reason for Americans to demand a reality check on corporate rescues -- bailed out insurance giant AIG is suing the very same government that threw it a lifeline.
President Obama personally encourages Iranians to put decades of U.S. hatred behind them. His remarkable video call for a new beginning got a quick and angry response.
And a smart idea to help save electricity could have some dangerous down sides. It could leave us to vulnerable to cyber terror and massive blackouts.
I'm Wolf Blitzer in CNN's command center for breaking news, politics and extraordinary reports from around the world.
You're in THE SITUATION ROOM.
One of president's Obama's toughest critics is accusing him of generational theft -- a shocking new estimate today about the cost of Mr. Obama's ambitious goals.
The Congressional Budget Office now projects deficits averaging almost $1 trillion every year over the next 10 years. Here's another way of putting it -- more than $9 trillion will pile up by the time today's 11-year-olds graduate college. That figure is more than $2 trillion bigger than the White House projected only a few weeks ago.
