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The Situation Room

Middle Class Tax Hike?; Finding the Next Guantanamo; Alan Greenspan: Recession Hit Bottom

Aired August 03, 2009 - 16:00   ET


SUZANNE MALVEAUX, CNN ANCHOR: Happening now, top Obama administration officials crack open the door to middle class tax hikes, and the White House tries to slam it shut. Mixed messages and a growing threat. Will President Obama's tax pledge come back to bite him?

Also, terror suspects in America's heartland. Could Guantanamo detainees wind up in Kansas or Michigan? Controversy grows as the administration struggles to figure out an end game for the notorious camp.

And the White House said to have to twist arms to get some television networks to air the president's most recent prime-time news conference, his fourth since taking office. Howard Kurtz of CNN's "RELIABLE SOURCES" is here with the inside story.

Wolf Blitzer's off today.

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


A massive deficit, a giant stimulus package, bailouts, and now a health care overhaul. How does the country pay for all of this? During the campaign, candidate Obama promised it wouldn't be with new taxes on the middle class, but two of President Obama's top economic officials now appear to be leaving the door open.

CNN White House Correspondent Dan Lothian joins us.

And Dan, obviously, there was a lot of back and forth we saw in that briefing today. What was the bottom line here?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: There really was. And the bottom line is, first of all, as you know, it's easier to tax the rich and get away with it. In fact, the polls show that most Americans don't have a problem with it. But if you go after the middle class, well, that becomes controversial.

So, today, the White House was really trying to clean things up a bit after two officials seemed to suggest that the middle class was not immune from becoming a target.

(BEGIN VIDEOTAPE) LOTHIAN (voice-over): The president's two top money men may have a good grip on all the numbers, but their words may have gone off script.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I think they allowed themselves to get into a little bit of a hypothetical back and forth.

LOTHIAN: That's the clarification made of comments made by Treasury Secretary Timothy Geithner and economic adviser Larry Summers on the Sunday morning talk shows. The two seemingly leaving the door open to a middle class tax hike in order to pay down the deficit and afford health care reform.

LAWRENCE SUMMERS, DIRECTOR, NATIONAL ECONOMIC COUNCIL: It's never a good idea to absolutely rule things out no matter what.

TIMOTHY GEITHNER, TREASURY SECRETARY: We're going to have to do what it takes. We're going to do what's necessary.

LOTHIAN: Spokesman Robert Gibbs again stressed the president's commitment to not raise taxes on Americans making less than $250,000 a year.

(on camera): So, there's no real scenario there, as the administration sees it, where middle class taxpayers might be hit with a hike? There's no scenario right now begin discussed?

GIBBS: The president's been very clear.

LOTHIAN: If someone says yes or no...


GIBBS: The president made a commitment in the campaign. He's clear about that commitment and he's going to keep it. I don't know how much more clear about the commitment I can be.

LOTHIAN (voice-over): On the campaign trail, Mr. Obama drew a line in the sand.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You will not see your taxes increased by a single dime. Not your income tax. Not your payroll tax. Not your capital gains tax. No tax.

LOTHIAN: When asked if Geithner and Summers were testing the temperature by leaving the door open, Gibbs said, "I don't know." He did say that during a meeting with his top economic advisers, the president reiterated his position on middle class taxes so there would be no confusion.


LOTHIAN: Now, Gibbs says that Geithner and Summers were not taken to the woodshed in that meeting, but on the Senate floor, Republican Senator Lamar Alexander said that he thinks that they were reprimanded, and he believes that it's misleading for this administration to say that they can do all these things, including health care reform, without hitting the middle class -- Suzanne.

MALVEAUX: All right, Dan. Thank you so much.

Well, we are counting down the second 100 days of the Obama administration, and this Thursday night we'll issue a new "National Report Card" on the president. What kind of grades is he earning?

Well, you can cast your vote right now. You go to, then get the results Thursday night at 8:00 Eastern.

The president is touting changes to the GI bill that offer expanded benefits to people who serve at least three years in the military after the 9/11 terror attacks. Eligible vets can now get tuition help, up to a full scholarship, at in-state universities, or they can transfer it to family members. The president calls it an investment in America.


OBAMA: While our discourse often produce more heat than light, especially here in Washington, they have put their very lives on the line for America. They've borne the responsibility of war. And now with this policy, we are making it clear that the United States of America must reward responsibility and not irresponsibility. Now, with this policy, we are letting those who have borne the heaviest burden lead us into the 21st century.


MALVEAUX: Republican Senator John McCain says he'll be voting against Judge Sonia Sotomayor's appointment to the Supreme Court. Just a short time ago, on the Senate floor, he said, "She has an excellent resume and an inspiring life story," but also a record he simply cannot support.


SEN. JOHN MCCAIN (R), ARIZONA: Though she attempted to walk back from her long public record of judicial activism during her confirmation hearings, Judge Sotomayor cannot change her record. In a 1996 article in the "Suffolk University Law review," she stated, "A given judge or judges may develop a novel approach to a specific set of facts or legal framework that pushes the law in a new direction."

This is exactly this view that I disagree with.


MALVEAUX: The Senate is expected to vote on Sotomayor's nomination this week.

Terror suspects in America's heartland. Could the next Guantanamo be located in Kansas?

Well, CNN Homeland Security Correspondent Jeanne Meserve is joining us live to answer that question.

And Jeanne, tell us, what do we know about the future of these detainees?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well, Suzanne, as you know, the administration is still wrestling with a very difficult question on what to do with detainees when the prison at Guantanamo is closed. One option under consideration -- housing them and trying them under one roof.


MESERVE (voice-over): The possibility that Guantanamo detainees might be headed for the military prison at Fort Leavenworth has Kansas officials in an uproar.

REP. LYNN JENKINS (R), KANSAS: Transferring terror suspects here places a bull's-eye on this community.

UNIDENTIFIED MALE: The people here don't want them here.

MESERVE: Administration officials say Fort Leavenworth and the maximum security prison in Standish, Michigan, are being considered as possible multipurpose destinations for detainees that could contain courtrooms for both federal criminal trials and military commissions and house in one place detainees now being sorted into three groups -- those being held for trial, those being indefinitely detained, and those cleared for release but without a country to take them.

In Standish, Michigan, where the unemployment rate stands at 24 percent, the maximum security prison is slated for closure. Some local officials support using it as a detainee facility to preserve jobs, but Michigan Congressman Pete Hoekstra disagrees, saying "... turning Michigan into a terrorist penal colony" is not the way to improve the economic situation.

For now, the White House is dodging the argument.

GIBBS: Well, I don't know the degree to which they've gotten into specific siting, and certainly no final decisions of any sort have been made.


MESERVE: Housing and trying most of the detainees at one location could reduce costs and avoid the risk of moving suspects for trial. On the other hand, moving prosecutors and judges and forming a jury pool could be a challenge, but probably nowhere near the challenge of overcominging local opposition.

Suzanne, back to you.

MALVEAUX: Thank you, Jeanne.

Secretary of State Hillary Clinton says she is concerned about three American hikers believed to be detained by Iran. They were traveling in Iraq's Kurdistan region last week when they apparently crossed into the unmarked border into Iran and were surrounded by Iranian soldiers. Clinton says she is asking Swiss diplomats who represent U.S. interests in Iran to find out more.


HILLARY CLINTON, U.S. SECRETARY OF STATE: We want this matter brought to a resolution as soon as possible, and we call on the Iranian government to help us determine the whereabouts of the three missing Americans and return them as quickly as possible.


MALVEAUX: We'll have much more on the case of these three Americans believed held in Iran here in THE SITUATION ROOM.

Well, Jack Cafferty is in New York.

Jack, great to see you with "The Cafferty File." What are you following?

JACK CAFFERTY, CNN ANCHOR: Likewise, Suzanne. Good to see you.

All the places in the world to go hiking, who picks the border between Iran and Iraq? Oh, let's go hiking. I know a perfect place.

The popular Cash for Clunkers program is out of cash, and its fate now lies in the hands of the Senate. The initial pool for rebates to trade in gas-guzzlers was a billion dollars. The Obama administration says it'll end the program next week if they don't get more money.

Last week, the House voted for an additional $2 billion. The Senate has yet to take up the matter this week.

So far, the Cash for Clunkers program has led to the sale of 250,000 now vehicles. It helped bring Ford its first monthly sales increase in two years. The administration says 62 percent of the traded-in vehicles are trucks, and that people are replacing those with cars that get better gas mileage.

The former chairman of the Federal Reserve, Alan Greenspan, says car and truck building was rebounding even before Cash for Clunkers started, but he adds that the extraordinary response shows that confidence in the economy is starting to pick up now.

Meanwhile, Republicans are asking how the government will be able to handle massive health care reform if they can't manage a smaller- scale program like this. Senator Jim DeMint, one of the president's tougher critics these days, says it's an example of the "stupidity coming out of Washington right now." And Senator John McCain said he would lead a filibuster against the bill for the additional $2 billion. Other critics say the rebates are mostly helping out middle class people who would have eventually bought a new car anyway.

The question is this: Should the Senate approve another $2 billion for the Cash for Clunkers program?

Go to and post a comment on any blog.

It's a program the government came up with that's working, Suzanne. It's rare.

MALVEAUX: We'll have a chance to talk to the secretary of transportation, Ray LaHood, later this hour to talk about some of the details about that.

CAFFERTY: He was on last week. Very excited about the Cash for Clunkers program. I'm looking forward to the interview with him today.

MALVEAUX: We'll see how he feels about it today.

All right. Thanks, Jack.

New signs the worst of the recession may be fading. But have we bottomed out? Former Federal Reserve chairman Alan Greenspan is speaking out about the country's worst economic crisis since the Great Depression.

Also, a nightmare that lasted almost two decades finally ends for the family of the pilot shot down at the beginning of the Gulf War.

And should the government spend billions more for the so-called Cash for Clunkers program? Well, that's Jack's question this hour.



MALVEAUX: Wall Street rallies, encouraging economic indicators, a housing market that appears to be improving. They're all generating buzz that the recession may be sizzling and the economy's turning around.

Well, if it is, why? Even former Federal Reserve chairman Alan Greenspan sounds optimistic.


ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: I'm pretty sure we've already seen the bottom. In fact, if you look at the weekly production figures of various different industries, it's clear that we've turned perhaps in the middle of last month, the middle of July.


MALVEAUX: Joining me now is CNN Chief Business Correspondent Ali Velshi.

And Ali, tell us, what is Greenspan talking about here?

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Well, he's talking about different industries, Suzanne. And look, it's not across the board, but there are turns in industries.

Look at that stock market. We've seen gains there. We've seen housing prices stabilize. We're still seeing jobs being lost.

But there's a general consensus that things are improving, and it's important to understand why so that we can keep on doing whatever's been working and not do the things that aren't working. So, let's take a little snapshot back under this economy and what's happened so we can understand who or what gets the credit for a recovering economy.

Go back to December of 2007, when this recession began. Businesses and consumers started pulling back on their spending. As you pull back, that means there's less work for people to do, they get laid off, those people then don't spend, and that's how it multiplies.

Accelerate from December 2007 to the fall of 2008. That's when we saw the collapse of Lehman Brothers, AIG. We saw a complete credit freeze.

The recession suddenly went from what one economist told me was a garden variety recession to a jungle variety recession. That's when we saw those various bailouts. We saw TARP. But in addition to that, we also saw the Federal Reserve putting trillions of dollars into the economy to make credit available.

All right. Fast forward from last fall to this spring. And now you start to see the effect of all that money that the government put into the system.

Now we're back to a normal or garden variety recession. The business cycle is doing what it does. Prices continue to drop for homes, for loans, for things like that, and it becomes inexpensive for people to start to buy things. And now you're seeing an economy by about March or so that's starting to bottom out, perhaps.

You're definitely seeing markets bottoming out, and that's where we are now. You're seeing the effect of an economy and a market that's been bottoming out for a couple months.

We might start to see this turnaround, as Alan Greenspan says, this summer. Maybe it's started, maybe it's happening in the next month or so -- Suzanne.

MALVEAUX: So, Ali, can the Obama administration, can they take credit for the uptick?

VELSHI: You know, a number of economists I spoke to said probably not yet. They may be able to take credit if this economy recovers in a very robust way in the next year or so, but largely what's happened so far is more of an effect of these various bailouts that we saw in the fall of 2008, getting this recession back to a normal garden variety recession. And recessions in the end do actually conclude and start to turn around.

So, it may be a little early for the Obama administration to be taking credit for this. This isn't the effect of stimulus that was passed in the spring -- Suzanne.

MALVEAUX: OK, Ali. It sounds like things are turning around a little bit. That's good news.


MALVEAUX: OK, thanks.

A nightmare that lasted almost two decades for the family of a missing American fighter pilot has finally ended with the positive identifications of the remains of Captain Scott Speicher, shot down over Iraq on the first night of the Gulf War.

CNN Pentagon Correspondent Chris Lawrence is joining us.

And Chris, what is the latest about this story?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Suzanne, the family tells us they expect to get a classified briefing from the military either today or tomorrow, but this discovery only answers some of their questions, not all of them.


LAWRENCE (voice-over): Captain Scott Speicher's children were toddlers the day he disappeared. Now his remains are coming home to college students.

A nearly 20-year mystery. Was he captured? Tortured? All this time the answer was buried in the Iraqi sands and solved by a single tip.

MIRIAM NOVELLY, HIGH SCHOOL CLASSMATE: It's a bittersweet ending. I mean, it's great that we have finally accomplished an ending, but it is bittersweet.

LAWRENCE: Last month, an Iraqi citizen told American troops about the crash site. When the Marines arrived, another Iraqi said he was there when Bedouins found Captain Speicher already dead and buried his body. Searching the site, U.S. troops found multiple skeletal fragments and bones. And when military investigators compared Captain Speicher's dental records with the recovered jawbone, it was him.

SEN. BILL NELSON (D), FLORIDA: The whole family is just so grateful that the Navy stayed on this.

LAWRENCE: But the military made mistakes, starting hours after Speicher was shot down when the Pentagon declared him dead.

DICK CHENEY, FORMER SECRETARY OF DEFENSE: The total U.S. losses are one aircraft and one individual.

UNIDENTIFIED MALE: The Pentagon has identified a United States Navy pilot as apparently the first U.S. serviceman missing in action in the Persian Gulf War. LAWRENCE: Some in the military thought Speicher had ejected and might still be alive. In 1994, they proposed a secret mission to survey the crash site. But according to senior defense officials in the room, Chairman of the Joint Chiefs, General John Shalikashvili, scrubbed the plan and said, "I do not want to have to write the parents and tell them their son or daughter died looking for old bones."

In 2001, the Pentagon changed his status to missing in action. And there were accusations he was being held captive by Saddam Hussein. After the invasion of Iraq, some probably found Speicher's initials scratched into the wall of an Iraqi prison. And investigators even excavated a grave site in Baghdad but it was not him. Now the vigils can end. But one fact remains.

NELSON: We walked away from a downed pilot. It was done by mistakenly declaring him dead and then they didn't go and search for him. And that was a mistake. And that is very important, that we never repeat that mistake again.


LAWRENCE: The Speicher family says they appreciate all the Navy and Marines who never gave up and kept searching all those years, but they've still got to be wondering at some point, is there any chance that he survived that crash even for a little while -- Suzanne.

MALVEAUX: Sure. Thanks, Chris.

And also, want to let you know that our CNN's John Zarrella, he's in Florida. He's getting reaction from the pilot's family. We're going to bring more of that to you later in THE SITUATION ROOM.

As a candidate, he vowed not to raise taxes on the middle class. Now as president, he's facing some tough choices. What if Mr. Obama is forced to break his promise?

Well, we're going to talk about the potential fallout in our "Strategy Session."

Plus, the House Republican leader sends a video message to the president about health care reform. He calls it a lighthearted attempt to make a serious point.



MALVEAUX: Well, President Obama has got a fair amount of TV prime time in his first six months, and it's starting to grade on the big networks. How is this president getting so much more face time than his predecessors? Network executives say his number one guy in the White House is bringing extra pressure to bear.

And the rolling hills of Idaho. They are ground central for what's being dubbed congressional Democrats' Blue Dog dilemma. (COMMERCIAL BREAK)


Happening now, more Cash for Clunkers is in the hopper in the House, but it could hit the skids in the Senate. We'll ask Transportation Secretary Ray LaHood about the prospects for the wildly popular car by that program.

Michael Jackson's mother secures custody of the King of Pop's children. She now wants a say in what happens to his estate.

And if you thought alligators were Florida's creepiest predator, well, think again. They're on the lookout in the Sunshine State for giant pythons.

I'm Suzanne Malveaux, and you're in THE SITUATION ROOM.

Health care reform is an especially thorny issue for the so- called Blue Dog Democrats, fiscal conservatives, some of whom represent various conservative districts.

CNN Chief National Correspondent John King headed West for an up- close look at the Blue Dog dilemma.


JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: In the contentious health care debate of recent weeks, you've heard from voices familiar and some maybe not so familiar -- Democratic leaders in the House and Senate, Republican leaders in the House and Senate, and, of course, President Obama and his key advisers. But if you're listening closely, it's likely you've also heard the term "Blue Dog Democrats."

Now, individually, most are not so influential. But together, their more conservative voices are proving pivotal in the debate over how to pay for health care changes and whether a new govern-run insurance program is such a good idea.

So, what's a Blue Dog? Let's take a closer look.

These are the states represented by at least one member in a congressional delegation who calls himself a Blue Dog. And you see them. And let's, again, take a peek in here.

There are 52 members of the Blue Dog Coalition. They represent those 29 states we just showed you. Thirty-two of these members -- and this is important -- represent districts won by Republican John McCain in 2008.

So, in our American dispatch this week, we wanted to take a closer look. Look out here, western Idaho, this blue congressional district, the first congressional district. We wanted to look up close at the Blue Dogs, who have to balance their party's call for major health care reforms with a constituency that doesn't like big spending and doesn't trust big government. (voice-over): Western Idaho is, in a word, spectacular -- rolling hills filled with golden grain, breathtaking forests, shimmering lakes. And tiny towns like St. Marie's, built around the mines and mills, and a anchored by places where everyone is on a first name basis and everyone thinks the business and the government should put a premium on a bottom line.

GWEN WOTRING, OWNER, BUD'S DRIVE INN: It's different to be a liberal in this neck of the woods.

KING: Gwen Wotring is a proud Democrat, but she knows from the lively conversations in her restaurant that she's in the minority, especially in the recent debate over what to do about health care.

WOTRING: I come from British parents. They taught me that socialized government is not the bad thing that everybody imports it to be. I think that the government needs to take over health care.

KING: St. Marie's is in Benewah County, a timber region where John McCain won by a nearly two to one margin last November. Cheryl Halverson is the county Democratic chairwoman and says what sells in New York or San Francisco will likely fall flat here.

CHERYL HALVERSON, DEMOCRATIC CHAIRWOMAN: We're westerners. And westerners are more independent. This is a hunting and fishing place. People don't want to give up their guns. So we tend to be more self- reliant or think that everyone should be more fiscally conservative.

KING: For only the third time in 40 years, the local congressman is a Democrat. Walt Minnick, one of those who adds the words "blue dog" to his party affiliation.

WOTRING: It means someone who thinks realistically and pragmatically about spending. I think blue dog Democrats see their constituents more realistically than the real strong liberals.

KING: To visit a place like this is to see the blue dog dilemma up close.

DON GRIESEL, ST. MARIE'S, IDAHO: You know, years ago I voted for Reagan, even though I thought he was too liberal.

KING: Don Griesel applauds Minnick and fellow blue dogs for complaining the president's health care ideas cost too much and give government too much power. But he won't reward the Democrat with his vote, because Griesel wants the House back in Republican hands.

GRIESEL: if he doesn't change his party, there's no way I can vote Democrat, because like right now, they have control of the House and all and that's what's killing America.

KING: And across the table, psychologist and proud liberal, Patricia Bauer, has reservations of a different sorts.

PATRICIA BAUER, PSYCHOLOGIST: I'm concerned about them being too conservative. I am happy that he's watching the numbers, because I think we need to do that. But I'm concerned that fiscally responsible becomes a nay vote for health care.

KING: University of Idaho political science professor Bryan McQuide says it is a near impossible balancing act, blue dog label or not. BRYAN MCQUIDE, ASSISTANT PROFESSOR, UNIVERSITY OF IDAHO: The district is very Republican. Much of the district is solid red in terms of the blue and red America. Obama is going to be an issue, especially if there's more and more liberal proposals coming out.

KING: When Wotring disagrees when her congressman fights plans for a government health care option.

WOTRING: I employ 25 people here, most of whom do not have insurance.

KING: Because you can't afford to give it to them?

WOTRING: I can't afford to give it to them.

KING: Disagrees, but Wotring understands the blue dog rationale.

WOTRING: Loggers and fellows that work in the timber industry that are pretty right wing and the way he thinks is pretty typical of most moderate, be it, Republicans or Democrats in this area. He needs to do that because that's what his constituents want.


MALVEAUX: As lawmakers head home for the August recess, they will be getting an earful from constituents fired up over health care reform.

Look at what Democratic Congressman Lloyd Doggett Texas was faced with.


CROWD: Just say no! Just say no! Just say no! Just say no! Just say no! Just say no! Just say no!


MALVEAUX: CNN senior political analyst Gloria Borger is here.

Obviously, those pictures really quite amazing...


MALVEAUX: ... to see the kind of pressure that some of these lawmakers are under. What do you think is the impact of having this -- this August recess, this whole month for the White House, for lobbyists...

BORGER: Right.

MALVEAUX: ... to really push forward on health care reform? BORGER: You know, the other week, I met with Rahm Emanuel, with the -- the White House chief of staff, with a bunch of reporters, and we asked him that question. He said, well, there's both peril and opportunity in having this bill out there for the month of August.

I know what the peril is. I'm not quite sure what the opportunity is for the White House. But the peril really is that it gives the opposition, as you just saw in that clip, the opportunity to mobilize their forces.

So, take a listen to what House -- House Minority Leader John Boehner left as a present for Democrats, a little bit of an ad he's going to be running.


UNIDENTIFIED MALE: I'm not a doctor, but I play one on TV. If your child had a cough, she would get just what the doctor orders.

OBAMA: "You know what? I make a lot more money if I take this kid's tonsils out."

UNIDENTIFIED MALE: I'm not a doctor, but I play one on TV.

OBAMA: If there's a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that's going to make you well?

UNIDENTIFIED MALE: I'm not a doctor, but I play one on TV.

OBAMA: Maybe you're better off not having the surgery, but taking...


BORGER: You know, it's -- it's clear that this ad is trying to make the case that the government's going to dispense your medical care, and again, making the case that Republicans are making that the Obama plan, such as it is, is a risky experiment.

MALVEAUX: And I -- I imagine the White House taking a look at that, that news -- the -- the latest ad there, scratching their heads, wondering, where do we go next? In watching and -- and talking to Rahm Emanuel, how is the White House strategy changing in its approach?

BORGER: Well, it's -- and you can -- you can see it. It's clear that their approach has changed, because, when the president first started talking about health care reform, it was all about money. It was all about the fact that it was going to help reduce the deficit.

That really didn't have any resonance out there with the American people. So, now they're -- they're down to a plan B. And the plan B is take on the insurance lobby. That's always easy to do. And -- but it's different for White House, because, of course, they have been courting insurance groups. And the real sticking point is that the White House supports a public plan, the insurance industry does not, along with lots of those conservative Democrats that John King was talking about in his piece.

MALVEAUX: So, we're going to see a lot more ads, I imagine, a lot more folks out there making the point.

BORGER: We -- we -- we are. We are, although I spoke with Karen Ignagni, who is the chief lobbyist for the insurance industry. She says they're going to continue to run their high-road ad, which says that they're for reform, but they're going to get their people out there at town hall meetings to question the Obama plan.

MALVEAUX: All right. Gloria, thank you so much.


MALVEAUX: Interesting stuff.

Do television executives see President Obama as not good enough for prime time? Howard Kurtz of CNN's "RELIABLE SOURCES" looks at the pressure it took to get some of the networks to carry the president's news conference.

Also, John McCain speaks out about the resignation of his former running mate. What does he think of Sarah Palin stepping down as Alaska governor?

Plus, growing concern over three American hikers believed to be detained by Iran. What can the U.S. do to get them released?


MALVEAUX: Prime-time presidential news conferences used to be rare, but not so in the Obama era.

Since taking the oath of office in January, President Obama has held four nighttime news conferences. That's how many former President George W. Bush held during his entire eight years in office. Former President Bill Clinton also had a total of four. President George H.W. Bush held only two during his four-year term.

"Washington Post" media reporter Howard Kurtz, also of CNN's "RELIABLE SOURCES," writes in today's edition that the networks complain they were pressured by White House Chief of Staff Rahm Emanuel into giving up costly airtime for President Obama's most recent newser.

Joining me now is Howard Kurtz.

Obviously, Rahm's involved in a lot of things, but he was also very much involved in this as well. Tell us what you know.

HOWARD KURTZ, CNN CONTRIBUTOR: Well, there's always a dance between the White House and the networks over government up this lucrative air time. But Rahm Emanuel called -- he went over the heads of the journalists, over the heads of the network bosses, and called Bob Iger, the chief executive of Disney, which owns ABC. He called Jeff Immelt, who runs General Electric, which owns NBC, and Les Moonves, who runs the CBS Corporation.

They were initially reluctant to give up that time, because they lose a lot of advertising money. And some CNN executives also pushed back. Originally, this thing was going to start at 9:00. That's when the "Black in America" series two was going to start.

MALVEAUX: Right. Right.

KURTZ: It ended up getting moved back to 8:00, mostly because of an NBC special.

MALVEAUX: And is -- is Obama, and -- is the president going to the well too often here? Is he asking too much of these networks? What do you think?

KURTZ: Well, everybody knows that the ratings are down from when this was a novelty at the beginning of the term. Twenty-four million viewers last time, 50 percent less than the first time Obama held a prime-time news conference.

And, look, we see the president constantly on TV, with Jay Leno. He's on ESPN. He's "60 Minutes" twice, day in the life at NBC, a health care town meeting with ABC. There is a sense, I think, even among some of Obama's supporters, that maybe they're using that weapon too often. He's the best salesman, but, if he's on every day, almost every hour, it seems, maybe that's a bit too much.

MALVEAUX: Why don't the networks just say no?

KURTZ: Well, I think they might just say no in the future.

They have made very clear that they are frustrated, some of the executives have, to the White House that there isn't a real negotiation process. They're kind of presented with a date and a time. Forty million dollars is my estimate of how much ABC, CBS, NBC have lost in advertising revenue during these four news conferences.

If -- if the White House keeps up this pace, a couple of these networks might follow the -- the lead of the FOX broadcast network, and say, not this time, Mr. President.

MALVEAUX: Is there any concern, though, from the networks that they're not going to get the same kind of access to the president if they don't air these prime-time news conferences; they don't get that exclusive the next go-around or the big profile inside of the White House building...


KURTZ: I don't know that the administration would be that heavy- handled, but it's got to be a concern when there's so much competition to get this president, who is generally seen as good for ratings, on the air. You want your anchor to be there when he's doing the rounds, making the rounds.

And maybe they just don't want to risk it. At the same time, it is costing them a lot of money.

MALVEAUX: And what was that figure you mentioned before? How much is it costing?

KURTZ: Well, it's about $3 million to $5 million per show per hour every time you do one of these preemptions. So, just doing the math -- I didn't major in math, but I'm coming up with at least $40 million in revenue in a very tough environment right now for the media that the networks have foregone.

MALVEAUX: All right, well, we will see next time the White House decides to have a prime-time news conference, what happens.

KURTZ: We will see what happens.

MALVEAUX: OK. We have got 200 days coming up on Thursday. So, we will see.

Thank you, Howard.

In the "Strategy Session": Is it the Obama White House "Read my lips" moment?


GIBBS: I'm reiterating the president's clear commitment in the clearest terms possible that he's not raising taxes on those who make less than $250,000 a year.


MALVEAUX: But can President Obama deliver on reform and not raise taxes?

And Transportation Secretary Ray LaHood, he is here in THE SITUATION ROOM to explain why the cash for clunkers plan must go on.


MALVEAUX: Now that Sarah Palin is out of the immediate political limelight, the man who chose her as his running mate in last year's presidential election has broken his silence and is coming out in support of the former Alaska governor.

Is she a legitimate threat to Democrats?

Well, joining me for today's "Strategy Session" are Democratic strategist Mo Elleithee and Republican strategist Trent Duffy.

Nice to have you guys both here. Good to see you again.


MALVEAUX: Worked with both of you extensively over the years.



MALVEAUX: Let's take a look, Senator John McCain over the weekend telling our own John King on "STATE OF THE UNION" exclusively his reaction to Sarah Palin stepping down.


MCCAIN: Sarah, I think, made clearly the best decision. I think she will continue to contribute. I think she will continue to be a force.

And I just also continue to -- to kind of be saddened by the fact that there are still such vicious attacks on her and her family.


MALVEAUX: Trent, I'm going to start with you.


Do you believe that Palin is a viable player in the political -- in the Republican Party?

DUFFY: Absolutely she is, because she's got a following. She's very well-spoken. A lot of people do really like Sarah Palin. And she's got a great grounds for a comeback, if you will, because she has tremendous interest from the American people.

Whether you like her or dislike her, there's a lot of interest in Sarah Palin. So, she has a very good foundation on which to build whatever she wishes to build.

MALVEAUX: Is the -- are the Democrats equally interested in Palin? A powerful Palin, is she a real threat to the Democrats, if she is that?

MO ELLEITHEE, DEMOCRATIC STRATEGIST: I think she clearly is a force in politics. I agree with Trent, that she does have a following.

You know, I think one of the challenges that the Republican Party has is that Republican leaders like Sarah Palin, like Rush Limbaugh, are -- are stealing all the headlines, because they're the only ones articulating any sort of a coherent message.

Now, I think it's the wrong message. I think it's a message that the American people are rejecting and one the Democrats would be happy to go against. But until they find -- the new leadership finds a new coherent message, they are going to keep being in the spotlight.

MALVEAUX: Trent, do you agree that she doesn't have a coherent message yet? Doe she need to -- what does she need to do?

DUFFY: Well, I think what she needs to do is to go back and -- and decide what she wants to do. I don't think any of us know. I don't know if she knows, honestly.

But as I said earlier, she's got the grounds for a foundation because she has a following, she does have a voice, and she has legitimate interest.

I disagree a little bit with Mo. If you look at the messaging from a national perspective over the past, you know, four to six weeks, it shows that, on the generic ballot, the Republicans are actually sort of pulling even. So, I don't disagree that there are some lightning rods on -- on conservative talk radio, but I think the Republican Party is finding its voice.

MALVEAUX: Mo, a lot of people -- well, a lot of her speech, rather, was all about the media and how she's been treated unfairly. Do you think she has a legitimate beef there?

ELLEITHEE: Look, I think there were times maybe during the campaign, early on, the focus on her family, that the media and -- and political opponents may have gone a little gone far.

I do think, however...

MALVEAUX: So, you -- you agree with her?


ELLEITHEE: Well, I think -- I think a focus on a family is always a very tricky thing and something that -- that we all should -- should be careful about. I don't think we should be focusing on one's family.

I do think, however, the focus on her qualifications, the focus on her readiness to lead, the focus on her policy positions were very much in bounds, and what I think most of the campaign focused on.

MALVEAUX: Do -- do you think that there's going to be a change in the way that people approach her now? I mean...

DUFFY: I doubt it. I mean, I doubt it. I think that she's going to continue to undergo that kind of intense scrutiny. And that, I think, could play to her advantage, because Americans love the underdog.

MALVEAUX: Well, one of the things that we want to take a -- a listen to, President Obama, who was clearly the underdog for much of the campaign, made a campaign promise...

DUFFY: Which part?


MALVEAUX: Well -- well, that's true. I covered all of it. (LAUGHTER)

MALVEAUX: Only at the end, he was -- emerged.

DUFFY: Oh. Oh, I see.


MALVEAUX: But he -- he made a -- a pledge about taxes and the middle class, and he was very adamant about it. Obviously, there's a lot of discussion about that now. I want you to -- to listen to what he said on the trail.


OBAMA: Under my plan, tax rates will actually be less than they were under Ronald Reagan.


OBAMA: If you make less than $250,000 a year, you will not see your taxes increase one single dime.

If you make less than $250,000 a year, you will not see one -- your taxes increase one single dime, not your payroll taxes, not your income taxes, not your capital gains taxes, nothing.

If you make under $250,000, you will not see your taxes increase by a single dime, not your income tax, not your payroll tax, not your capital gains tax, no tax.



MALVEAUX: Mo, do you get the point?



MALVEAUX: There is a point that he's making here.

Now, could this be, however -- George H.W. Bush, you know, no new taxes, read my lips came back to burn him. Is he putting himself in a box here? What are the political implications if he cannot deliver on that pledge and has to raise taxes?

ELLEITHEE: Well, I think the message hasn't changed, clearly. The White House signaled very, very strongly today that his commitment to -- to not raising taxes on the middle class is as firm as it ever has been.

And, you know, in the first month of his administration, he gave 95 percent of the American people a tax cut. So, he's delivering on that promise. I do think, though, he's been incredibly diligent at looking for cost-saving measures. He's looking for ways to save the American people money through health care reform and -- and other reforms, military spending, as well. And that will offset some of these changes.

Look, the Congress has got a lot on their plate, and they are going to have to find a way to balance the books on this. But he can do it, I think.

MALVEAUX: Trent, is the president putting himself in a box here? Is he backing himself in a corner? I mean, no politician wants to make an absolute at this point.

DUFFY: Well, he hasn't made an absolute. He said for those only making, you know, less than $250,000.

But he himself, Suzanne, I think you have noticed some changes in his own statements about this issue. Even at his press conference, when asked about how to pay for health care, he said he didn't want something that was primarily funded by the middle class or completely funded by the middle class.

And you and I well both know that's sort of White House speak for opening the door. And when you have your NEC, your national economic adviser, and your treasury secretary go on Sunday television say, yes, we're open to middle-class tax increases, that's a little bit off- message.


ELLEITHEE: ... briefing today was very...




MALVEAUX: Yes, there was a lot of back and forth. But I have got to -- I have got let it end there.


MALVEAUX: OK. Thank you, Trent, Mo. Appreciate it.


DUFFY: All right.

MALVEAUX: Well, it is a first for the Army. A new ad campaign is unlike anything we have ever seen before. So, who is it targeting?

Plus, NASCAR runs into a detour on the road to the White House.

(BEGIN VIDEO CLIP) OBAMA: Thank you. Everybody, please have a seat.




MALVEAUX: On our "Political Ticker": no NASCAR at the White House today. President Obama was scheduled to honor a group of drivers, including Sprint Cup champion Jimmie Johnson. But they're racing today, after a one-day rain delay, so the event has been rescheduled.

Look for Johnson's number 48 Chevrolet to pull up at the White House August 19.

Problems are apparently cropping up in Michelle Obama's White House garden. According to reports, soil tests reveal elevated levels of lead, believed to be the result of sludge used to fertilize the lawn during the Clinton administration. Although higher than normal, the lead level is still well within federal safety standards.

But the sludge means the garden cannot be classified as organic, a label the White House says it was never seeking.

The National Rifle Association says former Alaska Governor Sarah Palin gave her first speech since leaving office at an NRA dinner in Anchorage over the weekend. The news media were not invited, but the NRA says on its blog that Palin gave what it called a stirring speech on Second Amendment rights.

She also received an NRA award and lifetime memberships in several local gun clubs.

And, remember, for the latest political news any time, check out

Jack joins us again with "The Cafferty File."

Hey, Jack.

CAFFERTY: Suzanne, the question this hour: should the Senate approve another $2 billion for the cash for clunkers program?

Ruie writes from Brownstown, Michigan -- or Browns -- Brownstown, I guess it is: "Jack, definitely. Living here in Michigan, I can see with my own eyes the renewed excitement of a light at the end of the tunnel. And that's just with one week of this program. What I don't understand is these Southern Republicans who are threatening to block it. After all -- unfortunately, for Michigan -- it covered foreign makes of cars that are made down South. Why wouldn't they be for stimulating the economy in their own backyard? Or could it be they would slit their own throats now to thwart any progress? Got to keep Americans down, getting ready for 2010." Jimmy in San Francisco: "It's crazy that they are even considering spending another $2 billion we don't have. The money is spent. They program is over."

Nancy in Nebraska says: "Compared to other things the government wastes money on, this is a drop in the bucket and actually does some good. The Republicans never saw a tax break for business they didn't like. The only reason they don't like this one is, they didn't think it up."

Mellie in Phoenix says: "Absolutely not. This bill highlights how America has become wasteful and thoughtless. Everything, even perfectly good working cars, are now disposable and sent to the scrap metal yard, so that people can take on more debt and buy something they probably don't need. Not only that -- many of these cars being destroyed could easily be resold to others, or at least the parts could be resold."

And Russell in Alaska writes: "This program is the only widely popular programs out of Washington in years. It cuts dependence on foreign oil, helps the environment, boosts the economy, and, unlike most government programs, it actually gives the average American a break. The fact that these blowhards" -- talking about the senators -- "are even considering filibustering it is ridiculous."

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

MALVEAUX: OK, Jack, thank you.


Happening now: Iran is stonewalling about the fate of three American hikers apparently seized when they strayed across the border -- how a tough diplomatic standoff may go from bad to worse.

Suddenly, car sales are up, but the cash for clunkers program is running out of cash. Should Congress keep the money flowing? We will hear from dealers, car-buyers, and the transportation secretary.

Plus, giant snakes weighing up to 200 pounds strangling and eating