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Obama's New Iraq Pullout Plan; Obama Administration Releases First Budget

Aired February 26, 2009 - 22:00   ET



We begin tonight with breaking news: the first details of President Obama's major announcement tomorrow on the wars in Iraq and Afghanistan, a new plan that could leave anti-war Democrats seriously disappointed.

The president called congressional leaders to the White House just a couple hours ago to give them details of the plan.

Ed Henry has the inside facts of what went down and what's expected to play out tomorrow.

Ed, what have we learned?


We're learning, at this closed-door meeting a couple of hours ago here at the White House with congressional leaders, President Obama revealed that he's going to be pulling all the combat troops out of Iraq by August 2010 -- this information coming from congressional officials who spoke to me and my colleague Dana Bash.

August 2010 is 19 months from the president's inaugural, so it's obviously three months beyond what he promised on the campaign trail again and again, which is that he would pull all combat troops within 16 months.

Now, the other key detail we're learning tonight is, the president also said that, once all combat forces are out, he told congressional leaders he plans to keep a range of 35,000 to 50,000 non-combat troops there on the ground to help with logistics, support and intelligence.

And I can you, White House officials tonight are -- are not confirming any of these details, but they are saying the president tomorrow will be in North Carolina at a military base talking about his plan on Iraq -- Anderson.

COOPER: So, 30,000 to 50,000 non-combat troops, does that mean that -- that they are not troops who are able to respond to emergencies, if necessary?

HENRY: Well, they could respond to emergencies, but that -- this is one of the concerns. What's interesting is, what I'm picking up tonight is that senior Democrats are not so much concerned with the timetable. They are more concerned about that number, about the potential of up to 50,000 non- combat troops on the ground.

First of all, they think it's a high number, but, secondly, as you suggest, they are wondering about the murkiness, they are telling me in private, about how exactly you define a non-combat troop.

Even if it's someone who is in a support role, if they are in the middle of a war zone, aren't they still combat troops? And they feel there may be some fuzziness there. So, they are pressing the president -- in fact, Dana Bash also hearing that some of these Democrats were grumbling directly to the president here at the White House about that very fact.

So, that's going to be very interesting to watch. Even more interesting is that John McCain, the Republican who ran against Barack Obama, his spokeswoman tonight is saying that he supports the idea of keeping 50,000 troops on the ground in Iraq after the combat forces are out.

So, you have got Republicans like McCain saying, this is not a bad idea. That may be why liberals are concerned -- Anderson.

COOPER: Interesting.

Ed, keep following that. We will check in with you.

We're going to more about Iraq with Michael Ware and David Gergen later tonight.

Right now, we want to tell you about the other major story brewing today, the battle over President Obama's new budget announced today and the eye-popping bottom line, $3.6 trillion in spending. That's a three and a six followed by 11 zeros.

Hard to wrap your mind around $1.7 trillion in red ink, money we don't have, in that budget. The new budget contains more for education, green energy, health care, including a massive down payment on health care reform.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: These must be the priorities reflected in our budget, for, in the end, a budget is more than simply numbers on a page. It is a measure of how well we are living up to our obligations to ourselves and one another. It is a test for our commitment to making America what it was always meant to be: a place where all things are possible for all people.

And that is a commitment we are making in this, my first budget, and it is a commitment I will work every day to uphold in the months and years ahead.

(END VIDEO CLIP) COOPER: Well, there are tax cuts for the middle class in the new budget, tax increases for families making more than a quarter-million dollars a year -- Republicans already on the attack over the exploding deficit and rollback of tax cuts from the Bush era -- Mr. Obama still insisting he aims to cut the deficit in half by the end of his first term.



OBAMA: While we must add to our deficits in the short term to provide immediate relief to families and get our economy moving, it is only by restoring fiscal discipline over the long run that we can produce sustained growth and shared prosperity. And that is precisely the purpose of the budget I'm submitting to Congress today.

In keeping with my commitment to make our government more open and transparent, this budget is an honest accounting of where we are and where we intend to go.

For too long, our budget has not told the whole truth about how precious tax dollars are spent. Large sums have been left off the books, including the true cost of fighting in Iraq and Afghanistan. And that kind of dishonest accounting is not how you run your family budgets at home; it's not how your government should run its budgets either.


COOPER: Well, we should point out, households cannot run deficits, but there are reasons for the government to do it to stimulate the economy. Still, the numbers are staggering.

We're going to try to walk you through them, plain English, and bring you -- bring you all sides of the budget debate tonight. We're talking, of course, about your money, your future.

Ali Velshi starts us off.

Ali, so, what does this tell us about the new priorities for President Obama.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Anderson, a budget, a government's budget, is, in fact, supposed to be a reflection what they do.

We elect our governments to do two things, to make laws that enforce them and to spend our money that is our money, that is taxpayer money. Now, this is a change in policy for this government. There is one major shift that the president is indicating, and that is defense.

There is actually a small increase in defend spending for 2010, but this government has projected out for the next 10 years. And every year after is a -- is a significant decrease, because of what Ed just told us about how the White House is planning to have combat troops out of Iraq by 2010, so long-term cuts, even though there's a small-term increase in defense spending.

This is what President Obama had promised when he was the candidate, and this is what he's delivering on.

Health care, there's going to be more spending on health care, even though, in this budget, not substantially more. There's that discussion that we had yesterday about, over 10 years, a $635 billion health care trust fund to fund greater universality of health care access and lower premiums. So, you're going to see increases in health care, as a policy matter.

Education, there are increases across the board in education, including increasing Pell Grants to $5,500 and making more affordable college education, something that is available to more people. So, you're going to see an increase in education and alternative energy -- no money specifically in this budget about alternative energy, but a projection about how the government will be spending more money on alternative energy over the course of the next several years, including introducing something called a cap-and-trade system, where companies are limited to how much pollution they can put out.

And, if you want to emit more carbon dioxide than you're allowed to, you have actually got to buy the right to do that. You have got to trade the right to do that. And the government makes money off of that -- Anderson.

COOPER: All right.

So, for the average American sitting at home right now, wherever they are, listening to this, watching us, what is this plan promising? And -- and, also -- or what is it actually going to mean to them? And, also, the president still promising to halve the deficit by the end of the term, how is he going to pay that?

VELSHI: That's a big, big promise. He is going to halve the deficit. So, it's $1.7 trillion right now. He's talking about, by 2013, the deficit, which is the shortfall between what we collect, what the government collects, and what its pay out, to $533 billion.

By the way, Anderson, that's still a problem, because, every year you have a deficit, it adds to your national debt. But there are basically four ways that the government says it's going to manage this. Now, think about this in terms of your own budget, right?

If you are -- if you can't meet your budget, you have two choices. You either increase the amount of money you bring in or decrease the amount that you spend. One of the way -- ways that the government is planning to increase the amount of money it takes in is through tax increases to couples earning more than $250,000 a year.

And President Obama said, for 95 percent of working Americans, they are not going to see any tax increase at all, but, for the wealthiest of Americans, again, something he said in his campaign, they will pay more. Corporate loopholes, he wants to some of close, so that companies end up paying more taxes, and not dodging them, particularly if they don't repatriate jobs or they don't bring money back to the United States that they have made overseas. So, there's some money to be made there for the government there, according to this administration.

Number three, they are banking on economic recovery. They are banking on the idea that this job-loss situation will bottom out fairly soon, that unemployment will bottom out in 2009, and that 2010, like Ben Bernanke said earlier this week, will start to see some recovery.

That's iffy, because, if it doesn't happen, that changes all of the assumptions that this government is working on.

And, finally, bringing down defense spending -- Anderson, we have talked a couple times this week about the fact that about a third of the budget is discretionary, which means they have some choices as to what they can do.

But half of that third, one-sixth of the budget, is defense spending. President Obama says he's pulling those combat troops out. You're going to see some very, very big savings on defense spending. And that will allow money to be used for other purposes -- Anderson.

COOPER: All right, Ali Velshi breaking it down -- thanks, Ali.

As we mentioned, the top Republicans today launched an all-out attack on the plan, some of the sharpest criticism coming from Senator Judd Gregg of New Hampshire, the man President Obama once wanted to be his own commerce secretary. We're going to bring you his response, what Judd Gregg said about it.

First, though, part of President Obama's preemptive strike at the critics.


OBAMA: No part of my budget will be free from scrutiny or untouched by reform.

We will end no-bid contracts that have wasted billions in Iraq, and end tax breaks for corporations that ship jobs overseas.

And we'll save billions of dollars by rolling back tax cuts for the wealthiest Americans, while giving a middle class tax cut to 95 percent of hard-working families.

But we'll also have to do something more. We will each and every one of us have to compromise on certain things we care about, but which we simply cannot afford right now. That's a sacrifice we're going to have to make.


COOPER: Let's dig deeper now with senior political analyst David Gergen, Ryan Mack, president of Optimum Capital Management, and David Walker, who ran the Government Accountability Office during the Clinton and G.W. Bush administrations.

Thanks for being with us.

Just a quick headline from each of you, David Gergen, starting with you.

What, for you, is the headline of this budget?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: The main headline: President proposes dramatic change of course for the United States. Subhead: popular program -- the cost of popular programs bring sticker shock.

COOPER: Good one.

David Walker, how about you?

DAVID WALKER, FORMER UNITED STATES COMPTROLLER GENERAL: Not nearly enough to be able to restructure our -- our entitlement programs and our mandatory spending. Much more has to be done there.

COOPER: And Ryan Mack?

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: We have tried the trickle-down tax cut theory. All we got was a double-sized debt and stagnant growth. Now it's time to invest in the people. We will have a long-term economic recovery.

COOPER: All right.

We're going to have more from all our panelists in just a moment.

We will also have the Republican opposition, whether the White House can get what it wants in spite of it.

As always, we want to hear what you're thinking about how the government is spending your money. Join the live chat at -- it's happening now -- I'm about to log on myself -- and Erica Hill's live Webcasts during the commercial breaks.

Also, more on our breaking news tonight -- Michael Ware and David Gergen on President Obama's new plan for Iraq and Afghanistan.

And Michael Ware takes us to a city near the U.S.-Mexico border that is more violent than any place in Iraq, or perhaps any place on Earth.


MICHAEL WARE, CNN CORRESPONDENT: And it's going to be a lone war, with most of the advantages in the cartel's favor. Their gunmen outnumber these police. And they are better-armed. And the body count continues to rise.


COOPER: Drug-related homicides have more than doubled the last two years in Mexico. Cops are being beheaded, innocent bystanders getting gunned down daily. You might be surprised to learn where all the guns are coming down.

Plus, a new twist in the Michael Vick dogfighting case -- see why the former NFL star quarterback -- you see him right there -- why he won't be serving out his sentence the way you might expect -- back in a minute.


COOPER: We're talking about President Obama's new plan to spend your money, his new budget, what you get for it, and how drastically different the priorities are this year, priorities the president laid out during the campaign.

But, you know, it's one thing to -- to vote for them, or vote for change, another thing to completely pay for change, especially during a recession.

Let's dig deeper now with our panel, David Gergen, Ryan Mack, and David Walker.

David -- David Gergen -- here's what Republican Senator Judd Gregg had to say about this budget. I just want to play that for the viewers.


SEN. JUDD GREGG (R), NEW HAMPSHIRE: Where's the restraint in spending? You know, this budget doubles the debt of the federal government in five years, triples the debt of the federal government in 10 years, runs up obviously massive deficits over this period, never really gets us back to a point where we're on a glide path towards getting control over the costs that we're passing on to the next generation.


COOPER: Now, setting aside the obvious fact that the Republicans said very little about exploding the deficit when it was President Bush's budget-busting budgets, putting that aside, are their criticisms legitimate?

GERGEN: I think their concerns are very legitimate, and that -- but it's important to remember that President Obama campaigned on these reforms.

He did get the country's support. And he's now following through on the reforms. I don't think people quite understood, when they elected him, how much they would cost cumulatively. That was not clear until we really got this budget.

But what I think we see here, Anderson, is, not only is he trying to fight the recession, which is expensive -- and, by the way, I think many Americans feel that the last administration bears some blame, not all the blame, but some blame, for the recession -- but, in paying for the recession, it's very expensive.

But what's he doing? He's trying to get health care reform done, massive health care reform. That's a huge change of direction for the United States. That's very expensive. He's trying to get energy reform done, clean energy, very important for the country, but also very expensive.

And he's doing it through a significant redistribution of wealth. Over the last 20 years or so, Democrats feel we have had a redistribution of wealth upward, to the upper 1 percent or 2 percent. President Obama is saying: I'm going to pay for this by redistributing wealth downwards.

COOPER: David Gergen, you're saying, no matter what, even though, you know, people's eyes glaze over when you're talking about these huge sums of money it's hard to wrap your mind around, you're saying, bottom line, this is a -- a major change in direction for the government?

GERGEN: It's a major change of direction for the country, in the sense that, under Republican administrations and sort of the dominant Republican ideas, we -- we moved to a much more of an emphasis on the private sector, and encouraging the private sector to flourish, and that government didn't respond with a lot of social programs.

This is -- what Arthur Schlesinger Jr., the historian, would say is that the pendulum is shifting back toward a much more activist government, a significant, if not vast, expansion of government to solve our problems.

The country voted for this. I'm not sure people fully understood what it is. But I think President Obama has legitimacy in saying...

COOPER: Right.

GERGEN: ... this is what I ran on.

But I'm not sure people understood the costs.

COOPER: David Walker, this budget projects about $1.7 trillion in deficit spending. Is that the right course for the nation, given this -- this crisis?

WALKER: I think we have got to take much more dramatic action much quicker than this budget shows to be able to turn and start getting control of mandatory spending costs and, I would say, tax preferences as well. You know, we lose a lot of money on tax preferences every year, over $1 trillion.

This doesn't send a very strong signal that we're going to take dramatic and fundamental actions to try to deal with those issues. And, frankly, I don't think our foreign lenders will lend us the kind of money that's in this budget for the length of time that we're talking about.

COOPER: Ryan, the budget also does presume a certain level of growth. What if the recovery doesn't happen as quickly as the White House says it will?

MACK: Well, I think that one thing we have to factor into the equation here is confidence, confidence with the American people.

And the one thing that Barack Obama is pushing very strong is trying to be as transparent, as open as possible to make sure that he -- the people understood that, yes, the government is behind the -- he -- the government is behind the people. He's going to fight for the individuals.

He did a lot in terms of including additional spending within the budget that wasn't included before to try to make sure to say, look, we're going to lay all our cards out on the table. We're going to stop corporate loopholes and make -- ensure we're going to level the playing field. And we're going to make sure everything is as free and clear to the people, so they understand that, yes, you know what? This guy is going to really fight for us.

COOPER: David -- David Walker -- how much of what we're seeing right now in this budget proposal is actually going to end up what we're seeing down the road once this thing is -- is approved by Congress? I mean, the president says, look, it's all up -- up for negotiation, essentially.

WALKER: Well, first, it's a 10-year projection. The president should be commended for that. He's gone out 10 years. He's got a goal. I think that's great.

But, you know, he's assuming that Congress is going to go along with a lot of things that I think it's unlikely they will go along with. You know, he's talked about that he's identified $2 trillion in cuts. We don't know the details on that. There's a lot to be cut, but I don't -- I doubt he's going to get all that.

Secondly, I think you have to really question expanding health care coverage before we have demonstrated that we can significantly reduce the rate of increase in health care costs and make a big down payment on our unfunded obligations. That is a very high-risk strategy.

We tried that before, and it didn't have a very positive outcome.

COOPER: You know, I wish we had more time for this, but we have got to leave it there.

Ryan Mack, good to have you all, David Walker, David Gergen as well. Thanks very much.

We're talking about these colossal numbers, $1.7 trillion, $3.6 trillion, too big, as I said, to wrap your brain around, or so you would think. Tom Foreman has been trying to get a grip on it. You can see what he came up with in just a moment. Also, a chilling dispatch from the most dangerous city perhaps on Earth, and it's just a five-minute car ride from parts of the U.S. Why are people there getting decapitated? We will tell you.

David Gergen weighs in, also, on the situation in Iraq. So does Michael Ware.

And, later, Nadya Suleman, the mother of octuplets, and the offer she's getting -- get this -- from a video porn maker -- when 360 continues.


COOPER: Tonight, we're going to bring the big-money talk out of Washington down to size. From the president on down, all the politicians have been throwing around those mind-boggling figures.

Here's a -- here's a sample.


OBAMA: We have already identified $2 trillion.


GREGG: Two trillion dollars.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: Eleven trillion- dollar reversal.

ORSZAG: Roughly $1 trillion.

UNIDENTIFIED MALE: One-point-four trillion-dollar...

UNIDENTIFIED MALE: The Democrats have just completed a trifecta of trillions.


COOPER: Trillions, trillion, trifecta of trillions, does anyone even know what that means?

Frankly, it's time to deal with the -- the bailouts, budget and deficits in numbers we can relate, numbers that make sense. The problem is is, that may not be possible.

Here's Tom Foreman.


TOM FOREMAN, CNN CORRESPONDENT (voice-over): For Congress, spending a trillion dollars is pretty easy. Explaining that amount? Much harder.

Stacked up as ones, they said, it would reach a third of the way to the moon. As tuition, it would pay for college for every middle and high school student. And if money really were time?

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: If you started spending the day that Jesus was born, and you spent $1 million every single day, you still wouldn't have spent $1 trillion.

FOREMAN: But now we're talking about a $3.6 trillion budget and a new worry: If people can't comprehend $1 trillion, how can voters assess the value of one multitrillion-dollar plan over another? And what if all those trillions are spent, and the economy still gets worse?

Jeanne Cummings covers economics for

JEANNE CUMMINGS, LOBBYING AND MONEY CORRESPONDENT, POLITICO.COM: There are truly consequences. And, ultimately, it would be awful, if that's how our country found out what is the real meaning of all of these numbers. If some calamity came our way, we might actually have a real sense of it.

FOREMAN: By the way, Jeanne, do you understand a trillion?

CUMMINGS: No, I don't understand $1 trillion.

FOREMAN: The fundamental issue is, even when you compare $1 trillion to something you do understand, the comparison quickly becomes absurd.

(on camera): Let's say a family makes $60,000 a year. It would take more than 4,000 families to make $260 million, or roughly what Oprah makes in that same amount of time. But, to make $1 trillion, that would take almost 4,000 Oprahs.

Confused? Well, now you see the problem. But maybe something else is at work, too.

(voice-over): The famed psychiatrist Sigmund Freud wrote about denial, which Webster's defines as "refusing to admit the reality of something unpleasant." He wasn't talking about the economy, but, if he were around these days, who knows. He might be.

Tom Foreman, CNN, Washington.


COOPER: Well, we need to tell you more about President Obama's new plans for pulling combat troops out of Iraq. He briefed congressional leaders tonight. It's our breaking news.

And, if you thought pulling out meant no more troops, you're going to be disappointed. Michael Ware and David Gergen explain.

Also, inside America's most desperate schools, crumbling walls, students bringing their own toilet paper in some cases, and closets used as classrooms. Is that what our kids really deserve? What changes, if any, may be coming?

And the mother of octuplets back in the news -- now a porn company says they want to make her a millionaire.


COOPER: More on our breaking news tonight: President Obama telling congressional leaders his new strategy for Iraq. He plans to have all U.S. combat troops out of the country by August 2010 -- not all troops, though.

He will unveil more specifics tomorrow in a speech at Camp Lejeune, North Carolina, his first visit as a president to a military base.

But we also know tonight, from congressional officials, that Mr. Obama wants as many as 50,000 troops to remain in Iraq, even after the August deadline, playing what he calls a support role.

Let's talk it over with Baghdad correspondent Michael Ware and senior political analyst David Gergen.

So, Michael, troops out in 19 months, sort of out, 30,000 to 50,000 remaining. What do you think?

WARE: Well, it's sort of a -- it's a middle-ground policy, isn't it? I mean, it's less -- it's more than the 16 months he promised on the campaign trail. It's less than the 23 months that the generals had asked for.

What I would say is that, as long as this is based upon what's happening on the ground, this is a relatively sound strategy. I mean, let's think about it. This is the candidate who went into the elections promising to end the war. And we're not talking about pulling any troops out of Iraq until virtually the end of next year, only two brigades out of 14. That's roughly 10,000.

COOPER: And what -- what does that mean, 50,000? I mean, it's -- it's combat troops? You still have 50,000, I assume, combat-ready troops in the country. What are they going to be doing?

WARE: Well, this is the great question.

And they are calling them transition troops, meaning transitioning from an American mission to an Iraqi-led. They are calling them advisers. I mean, this is the thing that we knew was coming.

How do you define a combat troop? I mean, you can have an infantry brigade of American soldiers and call them perimeter security. But they are ready to storm out the gate whenever they need to.

COOPER: But are -- would they be on patrol?

WARE: Well, no, no.

COOPER: Will they be -- no? WARE: I suspect that, under the terms of the -- the SOFA agreement and under, you know, the intentions of this administration, they're not going to be out roaming freely.

As we know, they are going to have a counterterrorism capability, but that's going to rely on knowing where the terrorist is and storming out and going and capturing or killing that person. It's not patrolling as we see now. So, this solution, in some ways, is a -- is backdooring politically.

Yes, to a degree, it -- it meets the election promises, but, also, it -- it answers some of the concerns of the generals.

COOPER: For the generals.

David Gergen, what do you think?

GERGEN: Anderson, what strikes me is that, in contrast to the way President Obama is -- is so bold and audacious on the domestic side, he's being quite cautious in foreign policy.

He was presented with three options by the Joint Chiefs for Iraq, to pull out most of the combat troops within 16 months, 19 months, or 23 months, as Michael suggested. And he chose the middle option, just as he's done in Afghanistan. Instead of going bold, he's gone with a more conservative 17,000 troops. The military wanted 30,000 in the beginning.

I think that the president is feeling his way along, and in contrast to the Democrats on the Hill, who can stand up and say pull everybody out, he, after all, at the end of the day, has to be the president who does not lose Iraq. He does not want to pull out so precipitously against the wishes of his advisers on the ground that, if he pulls the plug, the whole thing implodes on him.

So I think he's keeping those troops in there, basically a third of what we already have in there, in order to make sure that Iraq doesn't fall apart, that nobody comes in from the outside. If terrorist camps start up, he can hit those, but he can also provide security.

COOPER: And the truth is it's not as if all these troops are coming home, these numbers. You know, a lot of them may be redirected to Afghanistan. Seventeen thousand new troops already have been sent.

Michael Ware, do we -- there's no end game in Afghanistan. I mean, there's no...

WARE: None.

COOPER: There's no clear strategy right now.

WARE: If there's anywhere you really have to dig in, it may be Afghanistan. It depends upon what your goals in Afghanistan are.

As we saw in Iraq, America went in with this noble ambition to create this -- this glorious democracy that will be a beacon within the region. Well, by the time General Petraeus took over command of that war and Ambassador Crocker was the ambassador in Iraq, those goals had changed. It was simply a stable country that vaguely worked that wouldn't attack us and we can go.

We may see the same for Afghanistan. No one has won in Afghanistan. It's the graveyard of empires. Let's see how the administration goes.

GERGEN: Anderson, one more point. What the president's new budget suggests is he does want to get out of Iran and Afghanistan fairly quickly. His budget assumes that we're going to get a lot of budget savings by reducing our costs in the next few years in both those places.

COOPER: Clearly, he's also hoping European countries are going to add in more troops to Afghanistan, but so far no takers on that.

David Gergen, thank you very much, doing double duty tonight, and Michael Ware, as well, doing double duty.

In a related story, the Pentagon today lifting the ban on news coverage of America's war dead returning to Dover Air Force Base. Defense Secretary Robert Gates announced photos of flag-draped coffins will be permitted if the family of fallen service members agree.

As established in 1991, the ban was expanded under President George W. Bush. Critics said it was to hide the number of war dead in Iraq and Afghanistan.

No doubt we'll be hearing more of that in the coming weeks, but we want to talk a little bit about education crisis tonight. Take a look at this.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Because countries that out-teach us today will out-compete us tomorrow, we must make excellence the hallmark of an American education, and that's why this budget supports the historic investment in education we made as part of the recovery plan by matching new resources with new reform.


COOPER: New reform, huge problems though. Some schools can't even afford light bulbs and toilet paper. They're asking students to bring their own. Is anything in this new budget really going make it better?

And a new war on the border that Michael Ware is going to report on. It is already spilling over into our cities. Michael will take us to the front line of Mexico's drug war, which is now a national security problem for America.

And mayor's e-mail. Mayor's e-mail. Some are saying it is flat- out racist. Take a look at that, an e-mail with a watermelon patch on the White House lawn. Hear what the California mayor who sent this to his constituents is saying in his own defense.


COOPER: President Obama says fixing our economy means focusing on education. He considers it a critical challenge that the country has to meet. Well, Tuesday night in his speech to Congress Mr. Obama had a stern message to kids who aren't sticking around for graduation. Listen.


OBAMA: And dropping out of high school is no longer an option. It's not just quitting on yourself; it's quitting on your country. And this country needs and values the talents of every American.


COOPER: That's a promise, but here's the reality. Across the country schools may be shut. Many are falling apart. Districts do not have enough money to pay for teachers, or books, materials. One school turned a maintenance closet into a classroom, and it's not just happening in big cities. Just about everyone everywhere is feeling the pain.

Randi Kaye takes us up close.


RANDI KAYE, CNN CORRESPONDENT (voice-over): It used to be kids just brought their lunch to school, but school districts around the country are in such dire straits that in Detroit one school, citing budgetary constraints, asked students to bring light bulbs, trash bags, paper towels, even toilet paper. This in the same city where automakers got billions in bailout money.

UNIDENTIFIED MALE: Seems like the school should have it, you know, and, you know, we tried to do the best to comply with what they asked for.

KAYE: The slumping economy has robbed states of precious tax dollars that help fund education.

Help is on the way. It's not clear yet when, but the stimulus package should pump about $100 billion into public education. That is more than double the annual funding under the Bush administration. Before the stimulus passed, President Obama made one last pitch

OBAMA: I visited a school down in South Carolina that was built in the 1850s. It's right next to a railroad, and when the train runs by the whole building shakes, and the teacher has to stop teaching for a while. The -- the auditorium is completely broken down. They can't use it.

KAYE: In Miami the school budget was cut $300 million. Some students learn in trailers, on the playground. ALBERTO CARVAHLO, SUPERINTENDENT, MIAMI-DADE SCHOOL DISTRICT: The condition of American public education is entering a desperate state.

KAYE: Outside Cleveland, Ohio, one superintendent wrote then Treasury Secretary Henry Paulson to ask for $100 million. Todd Hoadley never heard from Paulson but was told his district doesn't qualify, because it is not a financial sector business.

Hoadley's already cut $2.3 million from his budget. Twelve- hundred students are crammed into a building made for 800, so tight maintenance closets are used as classrooms.

TODD HOADLEY, SUPERINTENDENT, OLMSTEAD FALLS CITY SCHOOL DISTRICT: We use the stage in the gymnasium for an art class with phys ed going right on the other side of the curtain, both going on simultaneously.

KAYE: At this school in Yonkers, New York, concrete is falling off the 87-year-old building.

UNIDENTIFIED MALE: This building needs to be replaced, definitely.

KAYE: The building is sagging. Windows don't even close.

(on camera) When this Yonkers school couldn't get the money to repair its roof, officials put up scaffolding and plastic to protect students. It was all they could afford to make sure the roof didn't collapse. The superintendent just doesn't have the money for a new one.

(voice-over) That may change once stimulus funds arrive. It's allocated based on how many school-aged children states have, but it comes with restrictions. Funds cannot be used to build new athletic fields or on anything that isn't directly related to academics.

Restrictions or not, California will take it. Maybe then this San Diego calculus teacher won't have to sell ad space on his exams to cover the cost of printing them, like he did last fall.

TOM FARBER, CALCULUS TEACHER: I would never have done this five years ago or ten years ago. I wouldn't have even thought of it, because there was never a necessity.

KAYE: These are desperate times.

Randi Kaye, CNN, New York.


COOPER: Imagine trying to learn in a place like that.

At the top of the hour, a 360 special, "Black in America." A lot has changed since CNN first aired "Black in America" last July. We got a big response, and the question became, what now? Tonight Soledad O'Brien and I host a provocative hour, looking at the impact the election of President Obama has had and the challenges that still face the black community. Here's a preview.


UNIDENTIFIED MALE: If the president of the United States of America can find a way to spend time with his children, it's not just because he has a home office. It's because he...

UNIDENTIFIED FEMALE: He has a grandmother.

UNIDENTIFIED MALE: But he spends time with his children. And in many cases...

UNIDENTIFIED MALE: But he's the president of the United States. I'm talking about someone who works in a factory.

UNIDENTIFIED MALE: And therein lies my point. And therein lies my point. He's busy. The rest of us have a job. So we find a way to get things done. I find that there are too many of us making too many excuses as to why somebody else should be responsible for raising our children.


COOPER: It's an interesting hour. That happens at the top of the hour tonight at 11 p.m.

In other news tonight, Michael Ware's report from a vicious drug war killing hundreds of people, including plenty of innocent bystanders, and it is right across America's southern border. It's already spilling over into the United States.

Also, the new twist in the Michael Vick dog-fighting case. Why he is getting out of prison early.

Take a look at this. A watermelon patch outside the White House. Would you believe a town mayor in California sent this out openly in an e-mail? Hear what he's got to say for himself when 360 continues.


COOPER: Just ahead the Mexican drug war could be coming to your town. The bloody battle is spilling across the U.S. border in many ways. And Michael Ware's "360 Dispatch" is coming up.

First, Erica Hill joins us with a "360 Bulletin" -- Erica.

ERICA HILL, CNN ANCHOR: Anderson, former NFL star Michael Vick will finish his 23-month federal prison sentence at home. He's eligible for release in July and was originally supposed to go from jail to a halfway house, but overcrowding means instead he'll be under house arrest.

Vick, of course, pleaded guilty to a dog-fighting conspiracy. He also admitted he participated in killing dogs.

In New York today, Bank of America's CEO, Ken Lewis, answering questions at the state's attorney general's office about the $3.6 billion in bonuses paid by Merrill Lynch before the two companies combined. Lewis, by the way, came to New York on a corporate jet. Additional legal action against the bank is anticipated.

Octuplet mom Nadya Suleman has been offered $1 million and a year of family health insurance to star in a porn movie. The single unemployed mother of 14 is also facing foreclosure on her Southern California home.

Also in California, a local mayor doing damage control tonight after e-mailing this doctored White House photo under the heading, "No Easter Egg Hunt This Year." Los Alamitos Mayor Dean Grose apologized, claiming he was unaware of any racial stereotypes associated with watermelons, Anderson.

COOPER: That's unbelievable. There's no -- I mean, how can you -- that's just stunning.

HILL: Apparently, he had no idea.

COOPER: Let us know what you think about it. Log on to the for the live chat. Let us know.

Next on 360, the bloody war along the U.S.-Mexico border.


WARE: A long war with much of the advantages in the cartel's favor. Their gunmen outnumber the police and they're better armed, and the body count continues to rise.


COOPER: Michael Ware takes us inside the battle zone as murderous drug cartels bring their brutality not just to towns like Juarez but also to the United States. A first-hand account you've got to see.

Also ahead tonight, on a much lighter note, a second chance to beat Kelly Ripa at a pop quiz. See if I won the rematch this morning while I was subbing for Regis Philbin. It's our "Shot" tonight.

And at the top of the hour, 360 special. "Black in America," the impact President Obama is having on the country and the black community.


COOPER: Well, tonight a trip to one of the most dangerous cities on earth, not Iraq or Afghanistan or Darfur. We're talking about a place just across the border from El Paso, Texas.

Mexico is on the -- well, some say it's on the brink of civil war. Drug cartels ruling large areas across the border, are in control of areas, intimidating police, mayors. Thousands have been killed. The government seems helpless sometimes against the violence, and the danger is spreading here into the U.S.

Mexican gangs are turning Phoenix into a kidnap or kidnap-for- ransom capital. Texas Governor Rick Perry is begging Washington to send 1,000 troops to the border, and the State Department is urging students on spring break to be careful.

Also this week the U.S. attorney general announced a massive drug raid and roundup.


ERIC HOLDER, ATTORNEY GENERAL: More than 750 people have been arrested in the United States and also in Mexico. More than $59 million in illegal drug proceeds and large amounts of narcotics and weapons have been seized in the United States by law enforcement authorities.


COOPER: The Justice Department says more than -- the drug cartels operate in more than 230 cities in the United States.

There's going to be more weapons, more drug and death. Tonight Michael ware brings you to the front lines in this surging battle. It's in the city of Juarez. The city is under siege in many ways, only a few miles from America.

But first I want to warn you: some of the images you're going to see are difficult to watch, but the story, we think, is difficult. Here's Michael's "360 Dispatch."


WARE (voice-over): This is how American Jose Molinar knew his wife was dead. He saw these television pictures of her bullet-riddled car broadcast from just across the boarder in Juarez City, Mexico, minutes from his Texas home.

JOSE MOLINAR, WIFE MURDERED: As soon as the image came up, I saw her truck, and I knew what had happened right then and there.

WARE: His wife, Maricella (ph), a U.S. resident and mother of two, was gunned down, doing a last-minute favor, giving a Juarez government lawyer a ride to go shopping.

MOLINAR: Wrong place, wrong time. That's the only way I can describe that.

WARE: Maricella (ph) died close to the border crossing, just yards from U.S. soil. It was her passenger who was the gunman's target. He was shot multiple times. She was killed by a single shot to the chest. This is the cartel war in Mexico, a conflict raging on America's doorstep, a conflict in which Juarez police officers like this one, under attack from a drug gang, are fighting for their lives, while the drug cartels are battling throughout the city for control of a lucrative drug route into the United States.

Sixteen hundred people killed in this city last year. That's three times more than the most murderous city in America, and 50 of them were police officers. This year, in just two months, 400 more already murdered.

We saw the most recent victims laying in the city's morgue, overflowing with bodies, many unidentified cartel members destined for mass graves. They'd been brutally killed by rivals: beheaded, tortured, strafed with bullets.

But now the cartels are renewing a favorite tactic: intimidating government leaders. This time they're doing it by killing cops one by one.

MAYOR JOSE REYES FERRIZ, CIUDAD JUAREZ, MEXICO: They started killing police officers, and not while they were doing police work but when they were coming out of their homes and -- and getting into the cars to go to the police station.

WARE: This sign says it all: a cartel vowing to kill one person every 48 hours until this man, the chief of police, stands down. At first he refused to go until, on one of the days when we were there, and he finally had enough, after the cartel had killed eight of his officers in less than a week.

In the hours following his resignation, we rode on patrol with police officers out on the streets, the entire force on high alert, the cartel war grinding on.

(on camera) And it's going to be a long war with most of the advantages in the cartels' favor. Their gunmen outnumber these police, and they're better armed. And the body count continues to rise.

(voice-over) Now the mayor's family is being targeted, a cartel threatening to behead them wherever they are. Police in the U.S. suspect the cartel is planning to cross into Texas to get to the family where they're hiding.

Meanwhile, over the past year, the Mexican army has moved into Juarez. Over 2,000 soldiers sent as part of a huge operation that has 45,000 troops combating the cartels across Mexico.

"This is not going to be won quickly," says Mexican government spokesman Enrique Torres. "While we know the monster is big, we don't have any idea just how big it is."

And though the U.S. this year is giving Mexico about $400 million to combat the cartels, officials on both sides of the border privately agree. The war, as it's fought, now cannot be won, which is something Jose Molinar's wife probably knew before she was gunned down.

(on camera) This drug war in Juarez robbed you of your mother. I mean, how do you carry that?

ALBA PRIETO, MOTHER MURDERED: Day by day, just I always think she's at work.

WARE (voice-over): And the unwinnable war that killed her mother rages on.


COOPER: It's amazing, also, I mean, not just the violence there but how it's spilling over into the United States. The Justice Department saying the cartels are operating in 230 American cities.

WARE: Absolutely. I mean, first there's the distribution networks. I mean, by and large the Mexican cartels have taken over from the Colombian cartels in terms of the power.

Then, once they ship the drugs to America, they have to distribute it. Now they do that cutting deals with American gangs, but obviously they need people in place. This spread throughout the United States to distribute. Then there's their intelligence- gathering. They have informants across the U.S. border.

And indeed, an American official confirmed to me what many in El Paso, Texas, were saying: the cartels will cross over into America, kidnap who they want, and take them back to Mexico and murder them.

But let's not forget, this whole war is fueled, first by America's demand for illicit drugs; and, secondly, it's being fought with American weapons that have been smuggled back over the border.

COOPER: Just incredible. Michael Ware, appreciate it. Thanks for going down there.

Actually got a piece this weekend on "60 Minutes" on Sunday night all about this, Mexico's war on drugs.

At the top of the hour, a 360 special, "Black in America." Millions watched the documentary. Tonight, we'll look at what has changed since then. See how some remarkable people are inspiring big dreams.

And next, a lighter story, my chance at redemption. Another pop quiz with Kelly Ripa. See how I did this morning with Donald Trump asking the questions.


DONALD TRUMP, REAL ESTATE MOGUL: Of the three things, what have I never used: a public bathroom, a wallet, an ATM?



COOPER: All right, Erica. Time for "The Shot." Now remember last month when you made fun of me relentlessly for my pathetic quiz show performance on "Live with Regis and Kelly"?

HILL: I wouldn't say relentlessly.

COOPER: You made fun of me. And I hurt.

HILL: Well, I pointed out the obvious.

COOPER: Today I was ready for the rematch. Take a look.


ANNOUNCER: Here are Kelly Ripa and Anderson Cooper.

COOPER (voice-over): I always love working with Kelly Ripa, but today I was a little bit nervous and with good reason. The last time I filled in for Regis Philbin, Kelly crushed me in what historians remember as the Game Show Massacre.

UNIDENTIFIED MALE: Time to play the germ game.

COOPER: This was just a couple weeks ago. A doctor gave Kelly and me a quiz on all things germ-related. I thought I would ace it. Instead, humiliation.

UNIDENTIFIED MALE: And Kelly is absolutely right there.

COOPER (on camera): What?

(voice-over) It was painful, embarrassing.

UNIDENTIFIED MALE: Kelly is killing him.

COOPER: And for one question I thought the fix was in.

UNIDENTIFIED MALE: Of your personal items, most germs can be found on: A, mascara; B, face powder; C, lipstick; D, hair brush.

COOPER (on camera): What?

(voice-over) I got that wrong, too. Got most of them wrong, in fact. So this morning the rematch was on, and the host was Donald Trump. Naturally, the subject was Donald Trump.

TRUMP: Of the three things, what have I never used: a public bathroom, a wallet, an ATM?

COOPER: I was sure it was public bathroom, but guess what?

TRUMP: Kelly, you're right.

COOPER: Kelly wins. Not off to a good start, but then the tide turned. TRUMP: It was widely reported that, in the year 2000, I actually considered running for what, which is really I didn't but that's OK. Mayor of New York, governor of New York, president of the United States.

COOPER (on camera): I got this one.

TRUMP: Anderson, you're right.


(voice-over) Then I started to have some misses.

TRUMP: Anderson, you're wrong. Kelly you're 100 percent correct.

COOPER: For the last one, though, I aced it.

(on camera) I'm going say 100.

TRUMP: Anderson, you're right. It's 100 bucks, 100.

COOPER (voice-over): A tie, but that wouldn't last. At the end of the show, the final question sealed my fate. It was who did Trump perform a musical number with at the 2006 Emmy Awards? Kelly said it was Megan Mullally and I thought it was Rosie O'Donnell. Boy, was I wrong.

(on camera) Oh, stupid me. Stupid, stupid me.

(voice-over) Stupid, stupid me. Kelly, all I can say is I'm ready for round three.


HILL: Round three, huh?


HILL: The big question, what will the subject be?

COOPER: We shall see. I'm filling in tomorrow, but I don't think...

HILL: I'll be watching and setting my TiVo.


All right. You can see all the most recent "Shots" at

Up next, a special 360 hour, a look at all the changes, for better or worse, since CNN aired its ground-breaking report, "Black in America." Millions watched it. Now see the rest of the story.