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ANDERSON COOPER 360 DEGREES

Extreme Challenges: The Next Four Years

Aired August 1, 2008 - 22:00   ET

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


ANDERSON COOPER, CNN ANCHOR: The war in Afghanistan, the fight against terrorism, the war in Iraq. More than 100,000 U.S. troops are still there, still fighting on the front lines. What options will the next president have?
Back home, there's the struggling economy to deal with. The housing market has collapsed. Inflation is on the rise. And there's fear we are already in a recession.

There is also, of course, the environment and global warming. The warnings continue with greater urgency about a threat facing not just the country, but the world and future generations. How should it be addressed? How can it be? Tough questions, all.

Helping us look at the road ahead tonight, former presidential adviser David Gergen and CNN world affairs analyst Fareed Zakaria -- on this special edition of 360, "Extreme Challenges: The Next Four Years."

Iraq, the -- probably the number-one foreign policy issue, certainly, of the presidency in the next four years, if not the number-one issue overall.

Whoever becomes president, they're likely to have 130,000 U.S. troops still on the ground in Iraq. In terms of strategy, what are the options?

FAREED ZAKARIA, CNN WORLD AFFAIRS ANALYST: What I think the next president is going to have to decide is, is our involvement in Iraq going to be a long-term one or not? Everything stems from that, because, if you decide we're going to be in Iraq for 30 years, not the next three years, then you have a particular plan.

You try to figure out a way in which you can get your forces down to a manageable level, maybe 40,000, 50,000, set up some kind of bases, even though we will never call them permanent bases. But, if you don't want to do that, then you have to solve the political problem of Iraq right now, soon, to get out.

COOPER: But can you make that decision about whether you want to be there for 30 years or need to be there for 30 years? Can you make that decision until you know what the security situation really is, or -- I mean, until you know what it's going to be, you can't really plan out 30 years down the road, can you?

ZAKARIA: That's very true, but, at some point or the other, you have got to decide, is this a 130,000-troop presence that is meant to in some way effect a temporary or permanent settlement that allows us to get out? Or do we envision a much longer commitment where, you know, we're going to be there, we're going to be assisting, we're going to be training the army.

It just means that you go down two very different sets of policy proposals politically. I think with the Republicans, we're pretty sure they'll say, "Let's stay the course."

COOPER: Right. John McCain has now famously said, if it takes 100 years commitment along the lines of South Korea, so be it.

ZAKARIA: But 100 years at a 130,000 troops is impossible. Five years at 130,000 troops is probably very, very difficult. So, even he would have to decide, "OK, what do I do politically to start getting this down to a manageable level?"

COOPER: But even the Democrats who were talking about pulling out -- I mean, there are some who are talking giving 60 days, 90 days, 180 days, whatever. But some of them recognize or say, look, we still have to figure out some level of commitment. We have this now huge embassy. What do we do with that? People need to guard the embassy. People need to be able to react to events.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: If the Democrats are elected, they're going to face a serious dilemma in Iraq. It's going to be one of the toughest problems they face and one of the toughest presidencies I think we have ever faced...

(CROSSTALK)

COOPER: Because of what they have said compared to what they can do?

GERGEN: Because of what they believe. What they believe. They believe we ought to start coming down. We ought to start significantly reducing the numbers, and leave behind some smaller contingent force to deal with -- if something erupts.

But the -- here's the dilemma. You have promised that you're going to get out. Iraq has been on simmer. George Bush is going to hold -- give you something that looks like it's doing better.

You know, Colin Powell has long argued this is like putting a lid on a pot. The American presence is like putting a lid on a pot. And you can keep it on simmer for a long time. Once you start taking the lid off, the pot can boil over.

So, if you're the Democrat, you come in there, you commit to coming out -- getting out. You start taking the lid off that pot. If it starts overflowing, erupting, and you suddenly become the candidate, the president who has lost the war. You have become the president who lost Iraq. And that can destroy your whole presidency.

So, how you do this is critical to the future of your entire presidency. It's not just about Iraq. It's about your political power, your political capacity to govern at home on any number of other issues, which are, in some ways -- I think Fareed and I would agree -- in some ways are far more important than Iraq. But Iraq is the immediate issue.

COOPER: Do we know? It could very well happen that -- that they pull out and the Iraqis step up to the plate, the Iraqis decide, all right we have to now manage this and either we launch into full-scale attacks against each other or we come to some sort of political reconciliation.

ZAKARIA: There's a fairly -- there's -- there's good evidence that, when we have threatened withdrawal, when we have threatened to pull back, they have stepped up to the plate.

But I think it -- it's not as simple as that. We would also have to do a major political and diplomatic offensive. We would have to start talking to the neighbors. We would have to start pushing some of these Sunni groups to make up with the Shia.

It's just going to be a very, very time-intensive and complicated process, no matter what you do, whether you stay there or whether you -- you get out.

GERGEN: But there is a significant difference between the two parties on this.

A John McCain presidency would look very different in Iraq. It would look very much like George W. Bush and his policies. It would be a continuation of those policies. And there's no question that the Democrats just believe that Iraq is ultimately unwinnable. They would like to sort of minimize the losses and get out and deal with other issues.

But they would -- what they would try to do, as Fareed suggests, is make sure the neighborhood is fairly stable. They would do as much as they could to try to keep it stable there, but make sure this doesn't spread beyond.

But they do not want to be bogged down in Iraq.

COOPER: Are there encouraging signs? I mean, clearly, on the military side, you know, fatalities are down. It's a calmer in regions. You see parts of Baghdad, people walking around that you haven't seen before. But, on the political front, has there been real progress? Has the surge -- the so-called surge worked?

ZAKARIA: There have been incremental steps. But what I'm most struck by is that, if you look at the Sunni militias, they are maintaining their arms, their command structure. They have just stopped fighting.

You know, one of the things we need to understand is, the surge worked not because we defeated these folks in battle. It's because they switched sides.

GERGEN: Right.

ZAKARIA: They are entirely intact, and they could start fighting again.

GERGEN: The next president is going to inherit a heck of a lot of issues, of which Iraq is going to be one. It may be equally important to face some sort of hangover from this economy.

You know, if you have got a recession that sort of rolls into your first term, I can't tell you how many other than things that knocks over, how many other hopes and plans that you have got for health care reform or whatever it may be, that that could -- that could easily wreck, if you're not careful.

COOPER: The challenges for the next president are extreme.

As David and Fareed were saying, Iraq is just the starting point. Beyond Baghdad, there's the larger war on terror, Afghanistan. There's Pakistan, a country some consider to be a nuclear-armed time bomb.

We're going to tackle those issues next in this 360 special, "Extreme Challenges: The Next Four Years."

(BEGIN VIDEO CLIP, JULY 22)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: If we would have done what Senator Obama wanted to do, we would have lost, and we would have faced a wider war. And we would have had greater problems in Afghanistan and in the entire region. And Iran would have increased their influence. So, let's have no doubt about the consequences of pursuing what Senator Obama wanted to do, which was complete opposition to the surge.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, JULY 13)

ZAKARIA: If U.S. forces in Afghanistan captured Osama bin Laden, what would you do with him, and you were president?

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Well, I think that, if he was -- if he was captured alive, then we would make a decision to bring the whole weight of not only U.S. justice, but world justice down on him.

And I think that -- and I have said this before, that I am not a -- a cheerleader for the death penalty. I think it has to be reserved for only the most heinous crimes. But I certainly think plotting and engineering the death of 3,000 Americans justifies such an approach.

(END VIDEO CLIP)

COOPER: Afghanistan could become the forgotten war over, that, over the last six years, that they're a serious threat, mostly because there are too few military forces and insufficient economic aid.

What has gone wrong there? What is the biggest challenge the next president will face regarding Afghanistan?

ZAKARIA: It's a huge challenge. This is now the central front in the war on terror, without any question.

And the reason it isn't working is in part because we have done some things wrong. But, largely, this place is a mess. I mean, you're talking about the border lands between Afghanistan and Pakistan. This is hundreds and hundreds of miles of territory that has never really been settled or ruled by anyone. The British Empire was not able to pacify these areas.

COOPER: You -- you say it's the central front of the war in terror, more so than Iraq? I mean...

ZAKARIA: Oh, without any question, because...

COOPER: Why? Because al Qaeda has been, not defeated, but badly hit in Iraq?

ZAKARIA: Because al Qaeda was always small in Iraq and was largely inconsequential in the sense of its global ambitions. Al Qaeda central has always been in Waziristan, which is the -- the area between Pakistan and Afghanistan, mostly in Pakistan.

And it is here where you have also an alliance with a very powerful local force, which is the Pashtuns in Pakistan. So you have got local support. The area is kind of a no-man's land, or badlands, where the Pakistan army doesn't find it easy to go. The Afghan army doesn't find it easy to go. We don't find it easy to go.

So, you know, they're -- they're there. They're hidden. They can mobilize. They have local support. The area of Waziristan has one million men under arms.

COOPER: And the military was warning that they're stretched too thin.

GERGEN: As we bring troops out of Iraq, we send the troops to Afghanistan. So, you sort of think, whoa, how long is this going to go on, and how -- why can't we get on top of this thing?

You know what? The president has already pledged 3,000, and they think we should go far beyond that. What we have got -- what they're arguing is, look, this is becoming -- there's a resurgence of violence. The Taliban is growing stronger again. Opium growing is -- is widening. There's more land in Afghanistan under opium agriculture cultivation than there is cocoa cultivation in all of Latin America. That's how big the opium growth is there.

You have got an extremely poor country, that most Afghan people live on less than $1 a day. It's one of the poorest countries in the world. And they're losing confidence in the future. And the NATO countries which have troops in there are saying -- starting to say, come home. Only in the U.S. and the U.K. do you find the populations say, yes, let's continue supporting this. COOPER: Critics of the Bush administration said, the U.S. turned their eye of Afghanistan, turned their eye toward Iraq. Whether or not that's the case, I mean, at this point -- this program is about the challenges moving forward.

GERGEN: Right.

COOPER: What does the next president do? What can the next president do? You can't just send U.S. forces into Waziristan. Armies in the past have tried that, and with disastrous results.

ZAKARIA: No, and the Pakistani army has tried that. And it hasn't worked so well.

Look, you have to tackle the politics here. These people are supported by Pashtuns on both sides of the border. You have to cut deals with -- with some of them to peel off some of the support and then really go after the remaining bad guys.

In a sense, it's Petraeus' strategy in Iraq. What Petraeus did in Iraq was, he said, I'm going to tell the Sunnis, any of you who want to deal with us and what to flip sides, I welcome. And that leaves the -- the small core of irreconcilables. And I'm going to go after those people and kill them or capture them.

We need to do something similar, but that means making deals with people who look like Islamic fundamentalists. Karzai resisted doing this for two years. Now he wants to do it in Afghanistan. Musharraf resisted doing it. Now he's trying doing it.

But the problem is, it may not work. At the end of the day, there isn't a purely military solution to this problem. You have got to use the military, but you're going to have to figure out some way to get around the politics of this area.

GERGEN: Anderson, this kind of -- there are a couple of things you have to do as an incoming president. First of all, you have to make it very clear to the public how tough the situation is, so people -- you have people -- there's a reality check. You know, the Bush administration has sort of glossed over this so far.

COOPER: And it seems like every soldier, the times I have been embedded with U.S. troops in Afghanistan, they all said the same thing, which is, they come home for their two weeks of R&R. They're on the plane. And every soldier has had the same conversation.

Someone says to them, where are you serving? They say Afghanistan. And the person says, oh, well, at least you're not in Iraq, as if Iraq -- Afghanistan is some walk in the park.

GERGEN: Exactly. Exactly. Exactly.

So, what you, as a new president, have to make sure is that, if this thing gets a lot worse, all the blame doesn't come to you, so you lose a lot of your political standing. Being president is a lot about making sure you have political capital to get the big things done. And you don't want to spend it all in Iraq or Afghanistan, if you can possibly do it.

The other thing a new president has to do, it seems to me is, going to -- as you move toward a counterinsurgency strategy, as Fareed is suggesting, which I think is right, you probably have to lower your sights about what's possible just in Iraq and Afghanistan.

We are not, and we -- we -- the new president does not want to get sucked into nation-building and trying to make Afghanistan into some beautiful jewel of democracy. What the new president wants to do is see if you can stabilize the place and make sure it's not a center of terrorism to threaten us.

ZAKARIA: Absolutely.

One more extreme problem with Afghanistan, we have outsourced a lot of this war. We have outsourced a lot of the war in Afghanistan, which I believe is the central front, to countries that have neither the capacity, nor the training, nor the will to engage in the really tough war fighting.

COOPER: Right.

GERGEN: When the new president comes in, it's very important to be very clear about what your goals are. And then you can come up with what your strategy is to fit the goal. But don't come in and just sort of start doing day-to-day kind of decision-making.

You have got to sort of reassess, what are we trying to get accomplished here? What is our endgame here? And then build a strategy to meet that, and then build the tactics behind that to -- to implement the strategy.

And it's not clear at this point what we're trying to achieve in Afghanistan. I don't even think it's clear what we're trying to achieve in Iraq.

COOPER: Dirty bombs and nuclear ambitions, Iran, North Korea, Pakistan, real concerns about nukes -- what the next president can and cannot do to try to curtail these threats -- that, of course, and also the economy ahead on this special edition of 360, "Extreme Challenges: The Next Four Years."

(COMMERCIAL BREAK)

ERICA HILL, CNN CORRESPONDENT: I'm Erica Hill.

More of "Extreme Challenges: The Next Four Years" in a moment, but, first, the 360 bulletin.

For a second day, the presidential race focuses on the race card -- Barack Obama's campaign blaming John McCain's people for crying foul after Obama said his Republican opponents were trying to scare voters. McCain says he's not the one playing racial politics.

(BEGIN VIDEO CLIP) MCCAIN: I did not bring up the issue. Senator Obama did, three times in one day. And his campaign later retracted it. So, I think it's pretty obvious that at least they acknowledge that. So he brought up the issue of race, I responded to it because I'm disappointed. And I don't want that issue to be part of this campaign. And since his campaign retracted it, I'm ready to move on.

(END VIDEO CLIP)

HILL: Investigators believe they know who carried out the 2001 anthrax attacks. Bruce Ivins killed himself this week as authorities were about to indict him on murder charges that could have brought a death sentence. His lawyer says Ivins e was innocent. Officials say the longtime anthrax researcher had a history of making deadly threats.

And, in Minneapolis tonight, people returned to the place where an interstate highway bridge collapsed one year ago today, killing 13 people. The victims' names were read aloud. The crowd then fell silent at the exact time the I-35W bridge fell down, 6:05 p.m.

"Extreme Challenges: The Next Four Years" continues -- right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, JULY 23)

OBAMA: Iranians need to understand that -- that, whether it's the Bush administration, or an Obama administration, that this is a paramount concern to the United States. And I think there are opportunities for us to mobilize a much more serious regime of sanctions on Iran, but also to offer them the possibility of improved relations in the international community, if they stand down on these nuclear weapons.

(END VIDEO CLIP)

COOPER: Another big challenge for the next president of the United States, Iran. What are the -- the options on the table in terms of relating to Iran?

ZAKARIA: At this point, because of the national intelligence estimate on Iran, which said that, in the past, it appeared that Iran was susceptible to pressure, and that, when -- when they actually dismantled their program for a short period of time, because of that national intelligence estimate, the pressure to bomb Iran is off.

But the problem of Iran continues. Iran is acquiring nuclear energy, and it will have the capacity and the knowledge to make nuclear weapons. What the president can do at this point is sanctions. But sanctions aren't working. Everyone knows they're not working.

So, I think what the next president confronts is the awkward choice, which is he has to decide whether to talk to Iran and to see if, in some way, a carrot-and-stick approach -- that is, using some sticks, but also some carrots -- is going to work, or does he just keep ratcheting up the carrots, with the full knowledge, because we have got 15 years of evidence on this, that it hasn't yet worked?

COOPER: Barack Obama has talked about talking to just about any foreign leader, if the situation warrants it. Does it make much difference in terms of whether a Democrat or a Republican gets into the White House regarding Iran?

GERGEN: The larger question here is that -- to go back to the national intelligence estimate that Fareed raised, it did not say that Iran was not trying to pursue nuclear weapons. It said it suspended a piece of its action.

What we -- what appears is happening is, we know there's a fuse burning in Iran as they move toward nuclear weapons. The fuse apparently is longer than we once thought it was. But it's still burning. And it could -- and it could blow up in the next president's watch.

You do not, as president -- you want to avoid, if you possibly can as the next president, getting to the point where, suddenly, Iran is about to get a nuclear weapon. You will be in a terrible dilemma about whether to use force or not.

ZAKARIA: And, then, Anderson, remember, there's events on the ground.

The real challenge in Iran might well be that the Iranians have decided, as a matter of national interest, national pride, that they would like to have nuclear energy, perhaps nuclear weapons, perhaps the breakout capacity. Maybe they will just -- they will keep the capacity to make the weapons.

But, if that's true, then, no matter what we do -- the sticks, the carrots -- they didn't work with India. They didn't work with Israel. They didn't work with Pakistan. There are some nations that just feel, for a combination of security reasons and national pride, they just need the insurance that nuclear weapons provides.

COOPER: And...

ZAKARIA: And, if that's true, what is it going to look like in Washington? It's going to look like somebody lost Iran.

GERGEN: My sense is that we're talking here with Iran about the nuclear proliferation issue, which is a transcendent issue, long-term transcendent issue. There are nine nations in the world right now which are -- who are thought to have nuclear weapons.

And we are about to enter a period when another 10 nations could get nuclear weapons over -- in the coming years. And we could be into nuclear anarchy in coming years. And it would be extremely dangerous, extremely destabilizing. And Iran is one of the lead candidates.

COOPER: Right. GERGEN: And that is why is it extremely important...

(CROSSTALK)

COOPER: Pakistan -- Pakistan, of course, has nuclear weapons. They insist they're secure. Also, there's the -- the issue of North Korea. I mean, how does the next president deal with -- with Pakistan and with North Korea on the -- the nuclear issue?

ZAKARIA: This is precisely the challenge, because Iran is, in a sense, not an isolated challenge. It is part of this -- this package of countries. And it is part of the great issue of nuclear proliferation.

The NPT treaty, the treaty that governs all this, is breaking down. You just don't have anyone really adhering to it. And the danger is that, the more players you get, the more chances for leakage, of loose nukes, people buying this stuff.

So, we have to come up with a systemic, a kind of strategic approach that says, look, these are the new rules of the game, and we're willing to do something as well.

The original Nuclear Nonproliferation Treaty said, look, nobody else can proliferate, but, in return, the countries that have nuclear weapons will make every effort to reduce their arsenals. We have done none of that.

So, a lot of people look at this as sheer hypocrisy. You know, the United States, with 9,000 warheads, is going to countries and saying, if you have one warhead, it will destabilize global peace. Of course, we have 9,000. Don't worry about that.

GERGEN: That's why you're finding a growing coalition on both sides of the aisle, here and overseas, in favor of abolishing nuclear weapons and moving toward abolition.

That same Nuclear Nonproliferation Treaty that the senate ratified some 40 years ago pledged to end, you know, get rid of all nuclear weapons. Ronald Reagan was talking about that. Henry Kissinger, you know, who is a supreme realist, is talking seriously about this.

And, so, I think there's going to be pressure during the next few years to sort of see if we can't reduce our arsenals, work with the Russians more closely on reducing theirs.

ZAKARIA: And, remember, this is not as difficult as people think it is. Sure, you need to be a major country. But nuclear technology is now 60 years old. It's -- it's the technology of black and white television and AM radios. You know, this is -- this is old stuff now.

COOPER: Right. That's frightening.

Let's turn our attention, when we come back, to -- to the situation here at home. For a lot of Americans, the concern isn't so much overseas. It is right here, losing your home, losing your job, or just sinking further into debt. So, how can the future president stop the economic pain? Can the president do much about the economy at all?

We will put that question to David Gergen and Fareed Zakaria when tonight's 360 special, "Extreme Challenges: The Next Four Years," continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The last thing we need in an economic downturn, my friends, is a raise -- is increasing your taxes. Senator Obama wants to raise capital gains tax. He wants to raise small business taxes. He wants to raise the state taxes. He wants to raise a broad variety of taxes.

And my friends, I just want to establish one fundamental fact with you. If you want a candidate, if you want a president of the United States that's going to raise your taxes, I'm not your candidate. I'm not your candidate. Senator Obama is.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Senator McCain, unfortunately, doesn't seem to see the problem. He surveyed the Bush economic record, and he's said that we had, quote unquote, made great progress with the economy.

(END VIDEO CLIP)

COOPER: David, there's a good chance that the next president is going to inherit a struggling economy. Fareed was talking about Iraq being, you know, the top priority. That may be true in terms of foreign policy. But overall, the does the economy trump it?

GERGEN: You've got to distinguish between the short-term problems the president will face on the economic front and the long- term challenges. The short-term is going to be the -- the hangover that he's going to inherit from this year, this coming year.

If we have a deep and long recession, that's going to mean the next president is going to come in and have to do some things on unemployment, and the deficits are going to be huge.

I well remember when Bill Clinton came into office. He campaigned on health care reform, welfare reform and the like. It's the first thing he had to do, because the deficits were spiraling out of the control.

You know, Bob Rubin came to him and said, "Mr. President, you know, I know you want to do things for people on Main Street, but you've got to calm the fears on Wall Street first, and you've got to go and cut spending, you have to raise taxes and the like."

The new president may well be put in a position with having to come up with a short-term economic plan for the next year or two. That's going to require a lot of time. The big thing of our time is not the terrorism. The big movement of our time is that the center of gravity in the world, geopolitically and to a large extent economically, is moving from the west to Asia. It's moving from west to east. And the new president is going to have to face that and deal with it.

COOPER: What does that movement mean for American workers, for America?

ZAKARIA: What it really means is that you have a world in which everyone is playing the game, for the first time. We've never had such a world. We've been the dominant players. We've known that 2/3 of the world really wasn't part of this global economic capitalist game. All of a sudden they're all playing, and they're playing to win.

COOPER: As president, how do you actually try to do anything long-term? I mean, if in the White House you're dealing with these day-to-day realities, and you have the politics and trying to forge some sort of consensus on things. Are we really set up to govern long-term? I mean, it seems like most of -- most of the things that we focus on are very short term.

GERGEN: I don't think we've heard from these candidates just how tough it's going to be and what the tradeoffs are going to be. And we need to hear that. You need to do that now, not once you get in the presidency.

ZAKARIA: I think they have to do it now because the central challenge that the American system faces is exactly the one you highlighted, Anderson, which is can you take short-term pain for long- term gain? Can we figure out where, if you look at all our problems, whether it's dealing with health-care expenditures, dealing with fixing Social Security, dealing with energy, all of these are going to involve some kind of short term pain.

COOPER: Which is not -- which is something that few in my generation have really been asked to do. I mean, there are -- you look back at World War II and you look at, you know, the entire change over in society and people working in factories for the war effort. People are not asked to make those kind of sacrifices.

ZAKARIA: And the political system has become one where it's very difficult for that to happen. Even 25 years ago -- David knows this better than I do -- you became famous in Congress because you reached across partisan lines, you forged a coalition and you got something done that was difficult and hard. Lots of compromises.

Today, the energy, it's actually not getting things done, sticking true to your principles, saying, "I didn't give in." Look at what happened to the immigration bill, a perfect old-fashioned compromise that, for all these people, solved the problem. It got chewed up by the two wings of each party.

GERGEN: And the next president has got to sort of either take us up and get us to change what we're doing or the country is in serious danger of going into a downhill slide. And our standard of living and our standing in the world and all sorts of things. That's why this next presidency is so critical. There's so many big, tough calls to be made.

ZAKARIA: Let me give you one example of what David is talking about. For 100 years, the place in North America where they made the most cars was Michigan. Over the last three years that has shifted to Ontario, Canada. Why? It's because car makers realize that, if you have a job in Michigan, it costs them, the company, $6,500 in health care costs. You move that job to Canada, because of Canada's health care system, they only have to pay $800.

So it's a new world.

COOPER: Yes.

ZAKARIA: And companies have these choices. And these are American companies making these choices. So we've got to figure out how do we offer a smart, competitive economy to the world so that we can thrive?

COOPER: And the issue of health care, which Fareed just brought up, is our next topic. Beyond the campaign promises, is it possible to have universal health care in America? It's what the Democrats said they want. That's coming up as we continue the 360 special, "Extreme Challenges: The Next Four Years."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN: There are those who are convinced that the solution is to move closer to a nationalized health care system. They urge universal coverage with all the tax increases, new mandates and government regulation that come along with that idea. Again, this will accomplish only one thing: we will replace the inefficiency, irrationality and uncontrolled costs of the current system with the inefficiency, irrationality and uncontrolled costs of a government monopoly. That's what we will do.

(END VIDEO CLIP)

COOPER: Health care is obviously an issue which tops all the lists that people say should be a major priority for this next administration. More uninsured Americans than ever, and yet it would require tremendous political capital expenditure by a president to get anything done on it. Is it necessary? Is it -- must they do it?

GERGEN: It's vital that we reform the health-care system. The health-care system is broken. How easy is it to fix? Well, every president since Franklin Roosevelt has looked at this. Many have tried. No one has succeeded. Most recently, the Clintons did not succeed in the '90s. But we have a health-care system right now that it's not just a question -- the health care system is unraveling in many ways. We have this private insurance. People can't afford it. It's only about 2/3 of the people who are under 65 are covered by the private health care insurance system. Some are covered by Medicaid, if they're poor, and then, as you say, 50 million are not insured. So we do have to deal, and we can. It's reasonably straightforward. Although getting from here to there politically to cover them is very hard.

COOPER: So this is really a key issue where the politics of it affects everything?

GERGEN: Illinois, California, Wisconsin, Pennsylvania, this has failed in all those states in recent months. And it -- it's failed continuously in Washington.

But, Anderson, again, what the candidates are talking about is only a piece of the problem. They're talking about the easy piece. The easy piece is getting people insured. The hard piece is how do you control the cost? It's not clear that the money is being well spent.

So -- an these costs, as they go up and up and up, are going to become particularly dramatic now with the retirement of the Baby Boomers, and they go into Medicare. And this is going to drive the cost of Medicare through the roof.

That -- that starts happening on the watch of this next president. The first wave of Baby Boomers start retiring in 2011, under the next president. So the president has to deal with health care, has to get these costs under control. But it's a complex problem. It's not just about insuring people; it's not just about Medicare. You've got to reform the whole system and get the cost structure under much, much better control.

ZAKARIA: If you were not to reform the system, you're looking at budget deficits that are three, four, five times larger, that are essentially, literally, unsustainable.

COOPER: I was just reading the CEO of Starbucks was saying that his health-care costs for his employees is more than they spend on coffee.

GERGEN: Absolutely. And he's got a very enlightened -- Howard Schultz is a very enlightened CEO, but he's got these huge costs.

ZAKARIA: And -- and you have the reality that any kind of real reform on the cost side involves rationing. Let's be honest, how else will you get the cost down? You give people insurance, and you say, "But you can't get MRIs every month," or whatever it is. And that is politically very, very difficult.

COOPER: And so the next president, obviously, there's all these things on this president's desk. How do you get the ball rolling on health care? Hillary Clinton tried it before, failed you know, hugely. ZAKARIA: On health care I think you have to take exactly the opposite approach that Hillary Clinton took. You have to make it very bipartisan, very open, very inclusive.

I would get a blue-ribbon panel with very senior Republicans and Democrats on it, unimpeachable economists on it, and have them produce a plan, have Congress agree that they're going to accept the recommendations of that plan. You cannot do this out of the White House. It won't work.

GERGEN: The problem with the Hillary care plan way back when was it was an attempt to have to win with 51 percent of the vote as opposed to 65 percent. And it eventually went down, because there was a withering attack from the Republicans.

ZAKARIA: Here's the problem. This has to be a two-step reform, and it happens simultaneously. If you expand coverage but don't control costs, you're actually going to -- all those estimates I gave you will be off. We'll be talking about deficits 20 times.

GERGEN: It's like what we did with prescription drugs. We just added a cost without -- we added a huge cost, but we didn't control it. And so now we've this extra burden. So you've got to find a way to keep the costs under control. And that's what the candidates are not talking about, because it involves sacrifice. It involves hard tradeoffs. And somebody's going to get hurt.

COOPER: Another issue that may involve sacrifice is -- for the next president is the environment. The planet is in peril. But will the U.S. take a lead role in stopping global warming. Should they? That's ahead as our special, "Extreme Challenges: The Next Four Years," continues.

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ERICA HILL, CNN ANCHOR: I'm Erica Hill. We'll have more of "Extreme Challenges: The Next Four Years" in just a moment. First, though, this "360 Bulletin."

Barack Obama shifting ground on offshore oil drilling. He has stood with other Democrats who refuse to lift a congressional ban on new drilling off the U.S. coastline, but now Obama says he could support a new proposal in Congress to allow some additional drilling but only as part of the larger package that would also put billions of dollars into renewable energy.

In a new CNN/Opinion Research poll, just over half of Americans say gas prices will never come down, although the national average has actually fallen 21 cents a gallon in just the last two weeks. In our poll, three quarters of Americans say rising gas prices have caused hardship for them.

Another lead fizzling in the so-called fake Rockefeller kidnapping case. Boston police now say they do not believe reports that Clark Rockefeller and his daughter, Reigh, were seen in the Turks and Caicos Island. They disappeared on Sunday. The girl's mother now has a message on YouTube, asking her ex-husband to bring their daughter home.

And the first photos of Angelina Jolie and Brad Pitt's newborn twins are about to hit the newsstands. "People" magazine and Britain's "Hello" magazine paid a record price for the exclusive photos: $14 million.

The 360 special, "Extreme Challenges: The Next Four Years," continues after this break.

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OBAMA: I've supported investments already in alternative energy, and Senator McCain has opposed them. As president, I'm going to invest in renewable energies like wind power and solar power and biofuels. That's how America is going to free itself from dependence on foreign oil.

MCCAIN: We stand warned by serious and credible scientists across the world that time is short and the dangers are great. The most relevant question now is whether our own government is equal to the challenge.

(END VIDEO CLIP)

COOPER: Climate change, the environment, global warming. We heard -- we've hard John McCain talk about it a lot on the campaign trail and, certainly, we've heard Democrats talk about it. Whoever becomes president, there is pressure for them to deal with it in some way. The question is how much can they really do?

GERGEN: This is another transcendent issue that -- and it's very hard to do, because it involves both having a comprehensive energy plan and program and also having something which helps to solve the environment at the same time.

I was there in the early 1970s in the White House when we first had OPEC raise its head and we had the 1973 war. And I wrote some of those early speeches calling for energy independence. Very effective speeches. At that time we were 30 percent dependent. Wrote a lot of those speeches. Now we're 60 percent dependent.

COOPER: Don't take it personally.

GERGEN: But it -- so the issue now is, not only are we addicted to this foreign oil, as President Bush rightly says, but the number of -- the amount of emissions going into the air are such that most scientists believe it is too late to worry about whether we're going to damage the environment. That is done. That's baked in. The real issue now is whether we're going to avoid an environmental catastrophe for the world.

And a growing number of scientists know that -- argue that, in order to head that off, action has to be taken within the next 5 to 10 years on a serious basis. And that means you have to start getting carbon emissions stabilized and then start going down. That requires very serious action, and it's expensive.

COOPER: But some -- some of what the scientists are talking about, and I've talked to a bunch of them, I mean, they're talking about a major societal shift in terms of shutting down all coal plants, not only in the United States and China. That just doesn't seem realistic.

That's not going to happen.

ZAKARIA: But what you have to do is, I think, you have to move towards clean coal. And we're probably five years away, but if we were to make massive investments in those technologies, maybe we would be able to do that sooner.

The really difficult challenge here is that we're dealing with something that has now gone global. You know, we were talking about this new world in which everyone is playing, in which Asia is rising. Well, it's happening everywhere.

So if you look at the Kyoto accords, they mandate all these savings. Well, between now and 2012, which is when the Kyoto treaty expires, India and China are going to build 850 coal-fired power plants. The total emissions of those 850 coal-fired power plants is five times the total savings of the Kyoto accords.

So whatever we do out here in the west, it doesn't make any difference as long as India and China keep growing the way they are. So the only solution is that we have to come together. And we have to make it worthwhile for the Indians and Chinese to burn clean coal, to move to alternate fuels. That means some kind of subsidies for the Indians and Chinese. Now you try selling the American taxpayer on the idea.

GERGEN: That ain't going to happen either.

ZAKARIA: But, David, you agree that that's the only solution. Because the Indians and Chinese aren't going to sit there and say, "Sure, we're going to -- we're going to sacrifice growth for environmental issues when we're among the poorest countries in the world."

GERGEN: The world wants to subsidize -- there's no way. You would get impeached as the president if you went up to Detroit and asked the auto workers, "You know what I'd like to do? I'd like to raise your taxes so we can send them over to India and China."

ZAKARIA: What are you going to do? If you don't subsidize clean coal in China and India. They're going to burn dirty coal, because it's cheaper.

COOPER: There is a small growing environmental movement in China, I think, but it's going to be years before...

ZAKARIA: Emphasize "small."

COOPER: Yes, it's going to be years, decades, generations perhaps before there's a real -- I mean, it's taken us, the United States a long time to come to the decision that something probably needs to be done. A growing society like China probably won't reach that decision for a long time.

ZAKARIA: Look, 85 percent of the carbon emissions in the atmosphere right now were produced by western countries. You clean it up. Why should we pay for your sins?

GERGEN: The problem, in part here, is Fareed is absolutely right. Most of this has come from western nations, but China is now surpassing the United States in carbon emissions. So a lot of the new emissions are going to be coming from Asia.

I must say, this is one area where the candidates on both sides, John McCain and Barack Obama, are all in favor of doing something about climate change. McCain is actually very, very forthright on this issue. What they haven't talked about is how expensive this is going to be, how much of a sacrifice it's going to be and how do you persuade people to do it?

COOPER: Although there is an opportunity in the United States, because many people do see this now as a national security issue. Not being dependent on foreign oil.

ZAKARIA: I think we can do a lot to put our house in order. The problem is the planet doesn't care where the carbon emissions come from. And so we've got to figure out how to get other people's houses in order, as well.

GERGEN: You can only persuade the Americans. That's what John McCain is saying. We will only sign an agreement in the United States if China and India signs an agreement. Everybody does this together. If China and India resist, it's going to get very -- be very hard politics in the United States Congress to get a serious environmental bill passed that really reduces carbon.

Because they'll say, Congress is going to say that they didn't sign up with Kyoto, in part, and they said 95-0 in the Senate against Kyoto, because China and India weren't included. In part, that was one of the reasons it was rejected.

So this is yet another one of these issues which is extremely complex, extremely difficult politically. And yet the world's fate heavily depends on progress in this area in the first term of the next president. Because as Fareed says, this agreement expires during the first term. It expires in 2012. And you've got to get a replacement. You've got to get some sort of replacement there.

And most of the people I talk to think politically you can't get it done with U.S., China and India. But the next president has got to try and spend a lot of time. That's why you can't get sucked in and spend all your time on Iraq and Afghanistan and not deal with these other issues.

COOPER: Given all that the president is going to face, what kind of a person needs to be sitting in that seat, in the Oval Office? GERGEN: We're going to need an extraordinary -- we're going to need extraordinary leadership over the next four years.

The problems facing the next president, in my judgment, are the toughest that have faced any president since Franklin Roosevelt was inaugurated in March of 1933. The problems then were more obvious. These are more below the surface, but they're very complex. They're very global. Many of them are very global in nature. And we're going to need a very special leader to succeed here.

We need someone who is -- yes, has integrity, yes, has judgment. Those are obvious. But we're going to need someone with courage, political courage to face this. And very importantly, Anderson, I think far more than what we've had in recent years, we're going to need a consensus builder, someone who is able to work with parties across the aisle in Washington but also able to work with other nations and bring them along and build bridges and build coalitions. Because these issues are going to require a lot of political courage in other nations as well, not just the United States.

And I also would argue we're going to need our citizenry that's generous and is willing to -- to make some sacrifices and face up to the harsh realities. We're going through a tough time.

COOPER: Do you agree with that, Fareed?

ZAKARIA: I think that the system in Washington pulls you towards the urgent. What you need is a leader who understands what's important and that the two are different. We need to get out of the 8th century in Baghdad, adjudicating claims between Shias and Sunnis, and move to the 21st century, to China, to India, to Brazil, to where the future is being made, and to figure out what are the challenges for America to prosper and thrive in the future?

We can't keep getting dragged back into every small crisis and hell hole because a bomb goes off somewhere. We've got to look ahead and ask how do we reshape this world and how do we help Americans thrive and succeed in it?

COOPER: Fascinating discussion. Fareed Zakaria, thank you. David Gergen, thanks a lot. Really interesting.

The next president will face, obviously, enormous challenges, including the ones we've spoken about tonight. And no matter who is elected, the choices for what is best for the nation are going to be extraordinarily difficult. There really are no easy answers, but we do hope we've made some of the questions, at least, a little clearer this evening.

I'm Anderson Cooper. Thanks for watching.

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