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THE SITUATION ROOM

President Obama Unveils Budget Plan; Covering Those Killed in War

Aired February 26, 2009 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: What's in the budget and what reforms might really go forward this time around?

And General Motors' chief rolling up his sleeves over at the White House, as his car company lose billions and billions of dollars -- all that and the best political team on television.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

President Obama says his first budget plan makes some really hard choices about how to send taxpayers' money and accomplishes his ambitious agenda. Republicans, however, accuse him of taxing and spending his way back to an era of big government.

Let's go to our White House correspondent, Dan Lothian. He's got the latest -- Dan.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, you know, this is the budget blueprint. The full budget will come in mid to late April.

Now, the president today in rolling out his budget said that he's adding to the deficit in the short term in order to provide immediate relief for American families and get the economy moving again.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): This is the CliffsNotes version of the federal budget, a roughly 140-page summary of how the government plans to spend 3. 5 trillion taxpayer dollars.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This budget is an honest accounting of where we are and where we intend to go.

LOTHIAN: The budget includes investments in renewable energy, education, and health care -- $46 billion for education, $26 billion for energy, and $634 billion for a health care reserve fund aimed at overhauling the system. Add to all this, the president wants to cut the projected $1. 7 trillion deficit in half by the end of his term.

So how does the administration plan to make all this math add up? Budget director Peter Orszag says by closing corporate tax loopholes, winding down the war in Iraq, making government more efficient, and getting rid of tax cuts for people making more than $250,000. The administration is also planning to cut or phase out some programs some subsidies for wealthier farmers.

PETER ORSZAG, BUDGET DIRECTOR: There's not a single line in the budget that won't have someone who cares about it very strongly. And yet, if we allowed those -- all of those lines to persist and grow over time, we would wind up with a fiscal crisis.

LOTHIAN: But critics call this budget blueprint wealth redistribution.

This is how the White House responded to that...

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The president campaigned on explicitly promising that he would cut taxes for 95 percent of working Americans if he was elected president. The president believes that we have a plan that will lead to long-term economic growth.

(END VIDEOTAPE)

LOTHIAN: In the budget, the administration left room for them to go to Congress and tap up to $750 billion if needed. It's called a placeholder. But the president's budget director said that right now they have no plans to use it. It's not necessary. But they want to have it there just in case -- Wolf.

BLITZER: Dan Lothian, our man at the White House, thank you very much.

Let's go to Capitol Hill right now. Our senior congressional correspondent, Dana Bash, is getting reaction.

And it's coming in from the left, from the right, from the center, from all over Capitol Hill.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It sure is. And I think for anybody out there who's looking at Washington and wondering what the change really means, this budget is exhibit A, very different spending priorities, and really a very different view of government.

Democrats here on Capitol Hill are cheering that, Republicans, not so much.

(BEGIN VIDEOTAPE)

BASH (voice-over): The president's budget director made a personal delivery to Capitol Hill. A photo-op for the cameras, but also a reminder that Congress will decide the fate of President Obama's ambitious agenda.

Lucky for him, fellow Democrats are in charge.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: At long last, a budget that is a statement of our national values, as a federal budget should bet. BASH: Congressional Democrats are especially eager to fulfill a major campaign promise -- pay for their priorities by repealing President Bush's tax cuts for the wealthiest Americans. For example, couples making $250,000 a year and individuals making $200,000 will see their tax rate go up from 36 percent to 39.6 percent. That would get the government an estimated $310 billion.

PELOSI: It's about ending a tax cut which should not have been there in the first place that contributed enormously to our deficit.

BASH: But Republicans standing on the other side of the deep philosophical divide argue it will cripple small business owners.

REP. PAUL RYAN (R), WISCONSIN: The notion that you raise taxes on the people who are most likely to create jobs in a recession, it just boggles our mind that they would actually try and pursue this sort of an economic agenda at this very time.

BASH: Republicans are also blasting the president's budget for not doing enough to cut spending.

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: The era of big government is back, and Democrats are asking you to pay for it.

BASH: In fact, although Mr. Obama warned Congress about making tough choices to lower the deficit, his budget boosts government spending in many areas, more for transportation, housing, energy, the environment, education, and, most of all, for the president's plan to overhaul the health care system.

MAYA MACGUINEAS, COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET: They're really not controlling spending any way that you would like to see it over the long term.

(END VIDEOTAPE)

BASH: Now, the president does call for some spending cuts. He cuts back on subsidies for agribusiness and for farms. He also trims benefits for Medicare recipients who are on the wealthier side of the pay scale. And those, Wolf, are just about the only things that Republicans applauded in President Obama's budget.

BLITZER: The debate only just beginning, Dana. Thanks very much.

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

JACK CAFFERTY, CNN ANCHOR: Help me out with something there. That gentleman you had on earlier from the White House talking about the budget, didn't he...

(CROSSTALK)

BLITZER: That's the budget director, Peter Orszag. CAFFERTY: ... say that there would be no tax increases this year, that the tax increases that everybody's up in arms about are simply allowing the tax cuts that were put in place under President Bush to expire in 2011?

BLITZER: Only for those earning more than $250,000 a year for couples and $200,000 for individuals.

CAFFERTY: But the point being, there are no tax increases. Those tax cuts are going to remain just the way they are until they expire in 2011, correct?

BLITZER: And there will be some tax increases for hedge fund guys for...

CAFFERTY: No, no, no, I'm not talking about that. I'm talking about the guy who was just in Dana's piece winding raising taxes in a recession. They're not raising taxes until these tax cuts expire in 2011.

BLITZER: Right. That's correct. You're correct.

CAFFERTY: Right?

BLITZER: Yes, you're correct.

CAFFERTY: Thank you.

The Republicans trotted out one of their hopefuls for 2012 this week, and he pretty much landed with a thud. Louisiana Governor Bobby Jindal got lousy reviews across the political spectrum after giving the Republican response to President Obama's address to Congress on Tuesday night.

The criticism even came from conservatives, who had been promoting the 36-year-old rising political star as the person to revive the GOP. Some Republicans say that Jindal came off, best, off- balance and, at worst, downright amateurish in his national debut.

They're calling for the person who wrote Jindal's cheesy response and coached him to be fired. I guess he didn't write the speech himself. And they say Jindal should not be allowed near a Teleprompter ever again.

Others point out Republicans are looking for a conservative version of President Obama. Jindal ain't it. Although some Republicans actually praised the content of the speech, others were left fuming at Jindal's swipe at government spending to monitor volcanoes.

The mayor of Vancouver, Washington, which sits in the shadow of Mount Saint, asks if Bobby Jindal has a volcano in his backyard in Louisiana and points out that Mount Saint Helens still very active, potentially very dangerous.

In all fairness to Jindal, the opposition party's response to these presidential addresses often disappears quickly from the radar screen, and these politicians are able to come back from moments like this.

But if Governor Bobby Jindal and Governor Sarah Palin of Alaska are the great hopes for the Republican Party in 2012, well, they might want to go back to the drawing board.

And my guess is, Mitt Romney's probably sleeping pretty well these nights.

Here's the question: Did Governor Bobby Jindal help or hurt himself with his Republican response to President Obama's address this week?

Go to CNN.com/caffertyfile and post a comment on my blog.

No Oscar for that deal.

BLITZER: As you know, Jack, and you and I know this well, reading Teleprompter, not as easy as it looks.

CAFFERTY: Well, yes, it is.

(LAUGHTER)

BLITZER: All right, Jack. Jack Cafferty, thank you.

President Obama essentially suggests, ask not what your country can do for you, but what you can do for your country.

(BEGIN VIDEO CLIP)

OBAMA: 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.

(END VIDEO CLIP)

BLITZER: The president explains the reasons behind his budget plan in his own words.

And should the news media be allowed to cover fallen troops as they make their final homecoming? The Pentagon making a controversial decision today.

And imagine you had $107 million and lost that much every day. That's what General Motors suffered on average last quarter. What did they ask for today when they visited the White House? We will tell you right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A sobering issue, the tough economy.

We're learning that late last year, the carmaker General Motors lost far more on average every single day than most people will ever see in their entire lifetime, the numbers staggering.

Let's bring in Brian Todd. He's taking a closer look -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Devastating numbers for GM last quarter, Wolf. Now, GM officials predict now it may take as long as two years for them to break even, this while the company slashes payrolls, closes plants, shuts down several popular brands.

They presented all of this to a White House task force today after posting a devastating bottom line.

(BEGIN VIDEOTAPE)

TODD (voice-over): A General Motors official describes his boss' meeting at the White House as a roll-up-your-sleeves session to go over the company's restructuring plan. There's good reason the meeting took several hours.

GM posted a $9.6 billion net loss in the fourth quarter of last year. That's nearly $107 million a day. That means, over a typical two-day span in that period, GM lost more than the entire New York Yankees' payroll for this year. How does that happen?

RON HARBOUR, THE HARBOUR REPORT: They have this high fixed cost level. But when the volume goes down that significantly, that cost is still there. The fixed costs will just swallow you.

TODD: That's fixed cost for production, meaning machinery, parts, maintenance, costs that stay high even with cutbacks in plants and personnel. Some experts believe so-called legacy costs are in that category and are depleting the automakers.

MARTIN REGALIA, U.S. CHAMBER OF COMMERCE: Legacy costs that they are dealing, so that they are -- with their retirees and the like, the health care costs and that sort of thing are extremely damaging.

TODD: GM's already gotten $13 billion from the government and still had trouble staying solvent enough to continue operations. It's asking for $16.5 billion more, and trying to avoid what its CEO calls a last resort.

RICK WAGONER, CHAIRMAN & CEO, GENERAL MOTORS: We continue to believe that bankruptcy would be a highly risky and very costly process.

TODD: Airlines have filed for bankruptcy and survived. But experts say if car companies declare bankruptcy, customers would mistakenly believe they would lose financing and warranty service if they were to buy. Sales could plummet even further just on the false perception.

In this climate of bailout burnout, should GM just be allowed to fail? Industry expert Ron Harbour, who the White House consultant on the auto bailout, says a quick destruction of GM would be devastating.

HARBOUR: The ripple effect through the entire industry would be traumatic. You would shut down Toyota the next day. You would shut down Honda, because there are so many common suppliers and people that support them.

(END VIDEOTAPE)

TODD: Harbour says all car companies foreign and domestic are linked by that supply sector of this industry. Many of them get the same parts from the same suppliers.

And he says there's another reason GM should not be allowed to fail. Harbour believes it would cost the government more for social payments, like unemployment benefits, for example, than the government is paying to bail them out right now. And, at least, now, Wolf, the government has a chance down the line to recoup some of that money.

BLITZER: The more you study about this, the more you realize no easy answers at all.

TODD: No.

BLITZER: Brian, thanks very much.

On Wall Street, investors looked at the fine print of the president's budget plan, including the Medicare cuts, and health care stocks tumbled. The blueprint settles -- sets the stage, that is, for an overhaul of the health care system.

Let's bring in our national political correspondent, Jessica Yellin. She's got a closer look -- Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Wolf, a top Democratic senator says he expects to have health care reform done by Memorial Day. Now, that's optimistic. But one reason Democrats are so energized is that, for the first time, many groups that opposed health care reform last time around are pushing for it now.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): Sound familiar? A Democratic president is vowing to overhaul the health care system.

OBAMA: We can no longer afford to put health care reform on hold.

YELLIN: The administration's budget director tells CNN he's optimistic it will get done this year.

PETER ORSZAG, DIRECTOR OF OFFICE OF MANAGEMENT AND BUDGET: We're going to try to avoid the mistakes of the past and not lay down a fully detailed plan, but rather work constructively with Congress.

YELLIN: It may not be a pipe dream. Remember those Harry and Louise ads which killed President Clinton's ambitious health reform plans?

(BEGIN VIDEO CLIP, AD) UNIDENTIFIED FEMALE: Another $1 billion bureaucracy.

(END VIDEO CLIP)

YELLIN: Well, the same business and insurance groups that fought the Clinton health care effort are pushing Congress to pass reform now. Can you imagine an insurance industry spokesman saying this in the '90s?

ROBERT ZIRKELBACH, AMERICA'S HEALTH INSURANCE PLANS: Rising health care costs are putting a burden on individuals, small businesses and families across the country. The most expensive thing we could do is nothing at all.

YELLIN: The president has started laying the groundwork for reform. His stimulus package provided the first steps with billions for electronic health records, research on efficiency, and community health centers.

The budget calls for creating a $634 billion health care fund over the next 10 years and would pay for it in part by raising taxes on the wealthy, beginning in the year 2011, saving on Medicare with more competitive pricing on insurance plans, and reducing the costs of prescription drugs in part by encouraging more use of generics.

Not everyone likes this road map to reform.

BOEHNER: The question is, how do we get to that goal? And when you look at the president's plan, it puts the government in charge of delivering this.

(END VIDEOTAPE)

YELLIN: Now, Wolf, several groups of senators have already been meeting on a weekly basis to hash out what health care legislation would look like.

Senator Ted Kennedy, who will lead the effort in the Senate, is back next week. And that's also when the White House holds a health care reform summit. So, we should learn more then -- Wolf.

BLITZER: A lot on this guy's agenda. There's no doubt about that.

Jessica, thank you.

Nearly 46 million Americans, almost a fifth of the population, under the age of 65 had no health insurance in 2007. That's the latest government data available. The number of uninsured increased by almost eight million since 2000.

The number of uninsured children in 2007 was more -- was more -- than eight million. President Obama, though, signed legislation this month that's expected to provide access to health care for nearly four million more kids. And the number of underinsured adults with very high out-of-pocket expenses relative to their incomes, that rose to more than 25 million.

Something happened here in the nation's capital that moves Washington, D.C., one step closer to actually getting a vote in Congress.

Nancy Pelosi, Harry Reid, and some other prominent lawmakers voice concern about Iraq. It involves something President Obama might do regarding troop levels there.

And do you wish you had a say in how Facebook works? Guess what? Now you have a chance. We will tell you about all that, and more, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Now everyone has a say in how Facebook is run. After users revolted, at least many of them, last week over a change in Facebook's terms of service, the site is now inviting the public to a town hall where they can help write the rules.

Let's go to our Internet reporter, Abbi Tatton. She is all over this story.

Abbi, what is happening?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, this is like a Facebook bill of rights, where the users are voting on what goes in it.

Just posted this afternoon on the Web site, proposed Facebook principles, things like users, the people who upload the content, own that content, not Facebook. There's also a new terms of service posted up there.

And all of it is open to comment, to debate and discussion, and ultimately open to a vote by the Facebook community. The CEO and founder of Facebook, Mark Zuckerberg, wrote on the site that this is an unprecedented step in letting the Facebook community participate in the way the site is run.

All of this comes after this rather embarrassing episode for Facebook last week, when users discovered a new set of rules on the site that seemed to suggest that the content they were posting was owned by Facebook forever.

Tens of thousands of people protested that on the Web site and Facebook had to relent and remove those rules. Now a new set of proposals, and the comments are coming in thick and fast, people still focusing on what Facebook should be able to do with their content, with their photos and videos that they upload -- Wolf.

BLITZER: A lot of people interested in this. Thanks very much, Abbi, for that.

President Obama reminds everyone that his budget blueprint isn't written in stone.

(BEGIN VIDEO CLIP)

OBAMA: This is just the beginning of the cuts we're going to make. No part of my budget will be free from scrutiny or untouched by reform.

(END VIDEO CLIP)

BLITZER: Stand by for the president in his own words, explaining what's in his spending plan and what was cut out.

Plus, why Americans once again will see war dead in a way they haven't been able to do so for years.

And even one of America's most famous photographers may be feeling the pinch of recession. She's turning to what some are likening to a high-end pawnshop. We will tell you -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now: a monumental vote for the District of Columbia. The Senate OKs legislation to give full voting rights to D.C. in the House. That's where the bill goes next. It's expected to pass.

Chilling new video -- surveillance tape apparently shows gunmen in a Mumbai hotel only moments before the massacre that left more than 160 people dead in India's financial capital.

And final edition -- Colorado's oldest newspaper, "The Rocky Mountain News," will print no more after Friday. The cash-strapped 150-year-old paper failed to find a buyer -- all of this, plus the best political team on television.

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

We have heard about President Obama's budget at length from all sides today, left, right, center. But what about from the president himself?

Here's what he had to say about his $3.6 trillion spending plan as it was unveiled this morning. Here's the president in his own words.

(BEGIN VIDEO CLIP)

OBAMA: This is just the beginning of the cuts we're going to make. 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.

Now, I know this will not always sit well with the special interests and their lobbyists here in Washington who think our budget and tax system is just fine as it is. No wonder; it works for them.

I don't think that we can continue on our current course. I work for the American people, and I'm determined to bring the change that the people voted for last November. And that means cutting what we don't need to pay for what we do.

Now, what I won't do, and as I mentioned at the joint session speech a couple of days ago, what I won't do is sacrifice investments that will make America stronger, more competitive and more prosperous in the 21st century -- investments that have been neglected for too long. These investments must be America's priorities. And that's what they will be when I sign this budget into law.

Because our future depends on our ability to break free from oil that's controlled by foreign dictators. We need to make clean, renewable energy the profitable kind of energy.

That's why we'll be working with Congress on legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy. And to support this effort, we'll invest $15 billion a year for 10 years to develop technologies like wind power and solar power and to build more efficient cars and trucks right here in America.

It's investment that will put people back to work, make our nation more secure and help us meet our obligation as good stewards of the earth we all inhabit.

Because of crushing health care costs and the fact that they drag down our economy, bankrupt our families and represent the fastest growing part of our budget, we must make it a priority to give every single American quality, affordable health care.

That's why this budget builds on what we have already done over the last month to expand coverage for millions more children, to computerize health records to cut waste and reduce medical errors -- which save, by the way, not only tax dollars but lives.

With this budget, we are making an historic commitment to comprehensive health care reform. It's a step that will not only make families healthier and companies more competitive, but over the long term, it will also help us bring down our deficit.

And because countries that out teach us today will out compete us tomorrow, we must make excellence the hallmark of an American education. 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. We want to create incentives for better teacher performance and pathways for advancement. We want to reward success in the classroom.

(END VIDEO CLIP)

BLITZER: The president outlining his budget blueprint earlier in the day. Meanwhile, the Pentagon is reversing a very controversial policy banning the news media from showing coffins of service members arriving at Delaware's Dover Air Force Base. President Obama asked the Defense secretary, Robert Gates, to review the rules.

(BEGIN VIDEO CLIP)

ROBERT GATES, U.S. SECRETARY OF DEFENSE: After receiving input from a number of sources, including all the military services and organizations representing military families, I have decided that the decision regarding the media coverage of the dignified transfer process at Dover should be made by those most directly affected -- on an individual basis by the families of the fallen. We ought not presume to make that decision in their place.

(END VIDEO CLIP)

BLITZER: CNN's Susan Roesgen is joining us now with more on this controversial story -- and you're speaking to families, Susie, on both sides of this debate.

SUSAN ROESGEN, CNN GULF COAST CORRESPONDENT: It's true, Wolf. And, you know, I think the secretary was in a tight spot. He tried to please both groups. But he might not pleased either in this decision that would partially lift the ban that's been in place nearly 20 years.

(BEGIN VIDEOTAPE)

ROESGEN (voice-over): This was a live news broadcast in 1989. The U.S. had invaded Panama to remove military leader Manuel Noriega and the first President Bush was holding a news conference. But when he was done speaking, the mood changed.

UNIDENTIFIED MALE: Yes. The president is in excellent health.

ROESGEN: The president appeared to be smiling at the same time viewers were seeing the first invasion casualties being brought to Dover Air Force Base in Delaware. The Defense Department won't confirm it, but it's been widely accepted that this is what led to the ban.

And in the next military conflict, the first Gulf War, the Pentagon banned anymore media coverage of coffins at Dover.

But now, some families say it's time to lift that ban.

KAREN MEREDITH, SOLDIER'S MOTHER: His Hawaiian shirt over full body armor. That's the kind of soldier he was.

ROESGEN: Lieutenant Ken Ballard left for Iraq on Mother's Day, 2003. He came home in a casket on Memorial Day, 2004.

MEREDITH: I wanted the nation to grieve with me -- to grieve the loss of my only child. And if we don't see those images, then we don't know that these young men and women are dying. And to me, it's an honor to have an honors guard at Dover when they bring these young men and women back.

ROESGEN: But others say that honor should be private. Vince Rangel, a former Army Ranger captain in Vietnam, says he still thinks about the soldiers who were killed in his platoon.

VINCE RANGEL, FORMER ARMY RANGER CAPTAIN: When they come off the plane, these are anonymous caskets.

And, you know, what is the greater good of that?

I would rather that they take that attention and give it everything it deserves at the grave site, in the communities where you can get all the information, so people can understand these people as human beings, not just as a flag-draped casket that comes off a plane.

ROESGEN: Two different views of how to give the dead the dignity they deserve.

(END VIDEOTAPE)

ROESGEN: Now, here's something to think about, Wolf, though. When the secretary says each family will decide whether or not cameras will be there, well, in our society, with so many divorces, what would happen if, say, the father wanted cameras there and the mother did not?

Who's going to make that choice?

So there's still a lot of different aspects of this to be worked out -- Wolf.

BLITZER: That's a good point.

Susie, thanks very much for bringing us this story.

Republicans aghast at President Obama's $3.6 trillion budget.

(BEGIN VIDEO CLIP)

BOEHNER: The president's beginning to make President Bush look like a piker when it comes to spending.

(END VIDEO CLIP)

BLITZER: They call the spending plan the return of big government.

But is it really?

Plus, how many troops will be left behind after the main withdrawal from Iraq?

An emerging divide between President Obama and some top Congressional Democrats. We'll explain what's going on right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're bringing in the best political team on television right now. We've got lots to talk about.

Joining us, our senior political correspondent, Candy Crowley; our CNN political contributor, Steve Hayes, of "The Weekly Standard;" and our chief national correspondent, John King. He's the host of "STATE OF THE UNION," which airs every Sunday morning here on CNN.

I'm going to play what the president said a little bit and what John Boehner, the Republican leader in the House, said in response.

(BEGIN VIDEO CLIP)

OBAMA: Just as a family has to make hard choices about where to spend and where to save, so do we as a government. And there are times where you can afford to redecorate your house and there are times when you need to focus on rebuilding its foundation.

(END VIDEO CLIP)

BOEHNER: And if you begin to look what's happened over the last month and what's being proposed in his budget, the president's beginning to make President Bush look like a piker when it comes to spending.

(END VIDEO CLIP)

BLITZER: He also says that the era of big government is back.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well and he's not wrong here. I mean if you look at this, this is -- President Obama has said he's going to bring change and he is certainly looking at redistributing wealth.

I mean, who pays for all of these programs that he wants to institute in the health care, more in educational programs, energy, alternative energy projects?

People making $250,000 and over. In several ways their taxes are higher.

And who gets a tax cut?

The middle class. It's what he promised. It shouldn't come as a surprise. But it's what's happened. BLITZER: And it shouldn't come as a surprise. And he did receive a mandate from the American public -- a decisive majority across the country. He's only doing now what he said he would do.

STEPHEN HAYES, SENIOR WRITER "THE WEEKLY STANDARD": Yes, I think to a certain extent that's true, although I think Republicans would argue that cap and trade is, in effect, a tax on everybody. And it's going to be hitting their pocketbooks...

BLITZER: But didn't he promise he would do that during the campaign?

HAYES: He said he would do a version of it, I think. But this is -- this is something that I think Republicans are likely to continue to criticize him for.

BLITZER: See, the difference between him -- correct me if I'm wrong, John. You and I both covered the Clinton administration -- is Bill Clinton didn't have the majority. He didn't have that kind of support. He didn't have the mandate that Barack Obama and the Democrats had to go forward and make these kinds of sweeping changes.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: And having watched Bill Clinton go off the rails early in his administration, first with some social policies, but then being unable to sell his health care plan. And then watching President Bush, who dedicated enormous political capital to a Social Security reform program that many Democrats didn't like. But the president, to his credit, you know, put a lot of capital into that -- President Bush did.

Well, the Obama administration has made a calculation -- we are going to front load the agenda. We're going to try to do a lot early while we still have those high approval ratings. And so they are.

As Candy said, significant changes in health care policy. Significant changes in energy policy, climate change -- all wrapped in this mantra you will get from the administration that this is all part of the economy and we need to move fast.

BLITZER: And it's very early in the process. There isn't -- the formal budget hasn't even been proposed. That's a few weeks down the road.

Here's the question. You covered Capitol Hill for a long time.

When the dust settles, will it pass basically as envisaged today.

CROWLEY: Basically. Well, 80 percent -- I could go with 80 percent of it, because, you know, what happens is when it gets down to these lines, if you're a farm state Democrat and suddenly your farm people are calling you going, wait a second, wait a second, why are these subsidies going out, you're going to be in there fighting to bring down the cuts in farm subsidies.

So it doesn't -- it doesn't fit easily...

BLITZER: He'll need...

CROWLEY: ...across party lines (INAUDIBLE)...

BLITZER: He'll need a few Republicans in the Senate. He's got the Democrats -- the majority in the House, decisively. He'll need two, three, four Republicans in the Senate.

Will he get them?

HAYES: Well, as long as he remains as popular as he is and as long as he's able to communicate the way that he's done, I think pretty effectively thus far, I expect they will support him.

BLITZER: All right. He's also causing a little bit of a stir out there with his suggestion yes, over the course of 16 to 19 months, he'll reduce the U.S. -- eliminate the combat force level in Iraq. But he's still going to keep maybe 40,000 or 50,000 or even 60,000 troops in Iraq.

Listen to Nancy Pelosi, the speaker of the House, a fellow Democrat.

(BEGIN VIDEO CLIP)

PELOSI: And I don't know what the justification is for 50,000 -- the presence of 50,000 troops in Iraq. I would think a third of that -- maybe 20,000, a little more than a third -- 15,000 or 20,000. But again, I don't know what purpose he has in keeping them there.

(END VIDEO CLIP)

BLITZER: She was speaking on MSNBC.

Harry Reid said that's a little higher number than I expected. And Chuck Schumer said 50,000 is more than I would have thought.

Here's the question, John -- how much of a problem does he have with his fellow Democrats as far as troop levels in Iraq are concerned?

KING: He will have a problem in the sense that you will have comments like that, rhetorical resistance. But he is the commander-in- chief now. And just as Democrats could not stop George W. Bush when they didn't like things he was doing in Iraq and elsewhere in the world, they will be unable to stop Barack Obama.

Tomorrow will be very interesting -- his first visit as president to a military base...

BLITZER: He goes to Camp Lejeune.

KING: ...Camp Lejeune tomorrow. That is where many of those troops -- the Marines go off to Iraq. And President Obama is going to say I have listened to my commanders and they say we can end this war, but not as quickly as I had hoped. It's going to take a little longer and we're going to have to leave a little bit bigger force than I had initially envisioned.

He will say he's doing the rational, measured approach. He will get some flack on the left. And you know what, Wolf, politically, that's not a bad thing for a new Democratic president who's getting flak from the right on the budget, to get a little flak from the left on the war.

BLITZER: He's getting some -- a vote of confidence from John McCain.

CROWLEY: Absolutely. And the thing is with Nancy Pelosi's question, he -- why is he leaving 50,000, maybe 60 troops on the ground?

Because that's what his folds on the ground -- that's what his military commanders told him they needed because it's still fragile. And that's what they have convinced him of at this point.

BLITZER: All right. Hold your thought, because we've got to end it right there. But we'll continue this conversation.

Guys, thanks very much.

Pawning some valuable art -- the rich are resorting to some drastic measures in these tough times. Now even a world famous photographer, Annie Leibovitz.

And the vice president, Joe Biden, gets nagged on the worldwide web of bloopers.

Guess what?

Jeanne Moos is about to take a "Moost Unusual" look.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Lou and see what's coming up right at the top of the hour -- Lou, what are you working on?

LOU DOBBS, CNN ANCHOR: Wolf, thank you very much.

Coming up tonight on "LOU DOBBS TONIGHT," we'll, of course, have all of the day's news -- a lot of developments in Washington, D.C.

The American way of life, our constitution and our individual rights tonight are literally under assault. President Obama today unveiling a massive new borrow, tax and spend budget.

And the administration also forecasting the federal deficit will soar to the highest level since World War II as a percentage of the total economy.

Now, the Obama administration also accused of trying to destroy your Second Amendment rights to own and bear arms -- all to appease the government of Mexico, in this case. And Democrats and left-wing activist groups trying to take away your First Amendment rights, as well. The so-called fairness doctrine -- I call it the censorship doctrine. We'll tell you what's happening. Lawmakers -- some of them, at least -- fighting back for your rights. One of those lawmakers is Senator Jim DeMint. He'll join us.

Please join us for all of that, all the day's news and much more, coming up at the top of the hour -- Wolf, back to you.

BLITZER: See you in a few moments, Lou. Thank you.

The photographer, Annie Leibovitz, is famous for her iconic portraits of celebrities. Now she's reportedly strapped for cash and is turning to a pawnshop of sorts to raise money.

Let's go to CNN's Deborah Feyerick.

She's in New York working this story -- all right, Deb, tell us what's going on.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, you know times are tight when even rich people need to pawn a few paintings or sculptures to get a little extra cash.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): The fashion world was buzzing over news reports famed fashion photog Annie Leibovitz took out a multi-million dollar loan using the rights to some of her legendary pictures as collateral.

(on camera): What is the value of the photographs?

IAN PECK, CO-OWNER, ART CAPITAL GROUP: Photographs can be extremely valuable. And historically, that wasn't always the case.

FEYERICK: Ian Peck is co-owner of the Art Capital Group in Manhattan. It looks like a gallery, operates like a bank and runs a bit like a pawnshop for the wealthy -- who own lots of valuable things like art and property, but find themselves short of cash.

PECK: Most of our clients are looking for large sums of cash, in the millions. So these aren't destitute people to begin with.

FEYERICK: Peck says confidentiality is critical. He would not confirm Leibovitz as a client or talk about her photos. And he bristles at the word pawnshop.

PECK: We're a financial institution like any bank. And we provide loans that are, you know, way in excess of what your corner pawnshop would be doing.

UNIDENTIFIED MALE: $380,000. $400,000. Now the telephone bidder at $400,000.

FEYERICK: With art prices falling, more and more people are choosing not to sell their masterpieces, but to take out loans using their valuables as collateral.

(on camera): If somebody comes to you and says this is the work I've got, can you help me...

PECK: Right.

FEYERICK: ...give me some money, we'll give you that as collateral?

PECK: Right. We would look at these works and we would get comfortable with the value, get comfortable with the ownership, etc. And then we would say this would be acceptable.

FEYERICK (voice-over): Last year, Peck's company made $80 million in loans. This year, he expects to lend as much as $120 million. Though he won't name names, he says he has hundreds of clients who have pawned thousands of works of art.

And if they default?

PECK: Thank you.

Whatever the proceeds are from those sales would go to pay back the loan. Anything above that amount would go back to the owner.

(END VIDEOTAPE)

FEYERICK: Now, Art Capital Group will loan up to 50 percent of the appraised value of the artwork, then charge annual interest rates between 6 percent and 16 percent. People pawning their valuables are not just those having money problems. Some people simply want extra cash to make investments or buy real estate or even start a business -- Wolf.

BLITZER: All right. Times are tough for a lot of folks out there.

Thanks very much, Deb, for that.

Let's go back to Jack.

He's got "The Cafferty File" -- Jack.

CAFFERTY: Wolf, the question this hour is did Governor Bobby Jindal help or hurt himself with his Republican response to President Obama's address earlier this week?

Ralph in Texas: "He hurt himself and his party. Jindal came across like Barney Fife in a tie. And for him to scold federal funding for volcano monitoring and research is foolish. Would he scold similar funding for proactive research on California earthquakes, Texas tornadoes or maybe Louisiana hurricanes like Katrina, that knocked out the City of New Orleans?"

Rob in Brooklyn: "You mean Mr. Rogers? The man is a male Sarah Palin... Dumb, clueless and hopefully in the future of the GOP. First of all, if you're going to make a rebuttal after the kind of speech Mr. Obama just gave, you better be on top of your game. He sure wasn't. And what was that walking down the hallway all about? It was all so poorly thought out, the whole thing -- very forgettable and an absolute joy to watch."

Ron writes: "He sure didn't help himself. But back in 1988, the keynote speaker at the Democratic National Convention gave a long rambling speech that was widely panned. A lot of pundits said that he killed any national political ambitions he might have had that night. The speaker was Bill Clinton."

Katie in Massachusetts: "He can't bring the dead back to life and right now, the Republican Party is dead. And that's where they'll stay unless they change their brand to mean anything other than rich, white, Christian people who say yes to guns and no to birth control and won't help anyone less fortunate. Good luck to them. They have a long way to go."

Tony writes: "I'm a Democrat and even I felt sorry for the guy."

Ruthie writes: "He like a cross between Mr. Rogers and Elmo. It was a painful 15 minutes. He was completely pointless. He needs a new speechwriter."

And Jim writes: "He came across as another clueless, anti- science George Bush wannabe -- and we're still paying the price for the last one."

If you didn't see your e-mail here, go to my blog at CNN.com/caffertyfile and look for yours there, among hundreds of others.

I didn't read all the e-mails, but I didn't see any that said he did a good job.

BLITZER: Jack, thank you.

You know, we'll do this again tomorrow.

The vice president, Joe Biden, is the latest politician to stumble over the Internet.

(BEGIN VIDEO CLIP FROM "THE EARLY SHOW," COURTESY CBS)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: You know, I should have it in front of me. And I don't. I'm actually embarrassed.

QUESTION: All right. I'm going to call your office and get it later.

BIDEN: It is Recovery.gov.

(END VIDEO CLIP)

BLITZER: Jeanne Moos takes a closer look into why some politicians seem to be caught in the worldwide web.

(COMMERCIAL BREAK)

BLITZER: As you know, Jeanne Moos finds that when it comes to be in the text savvy, are a blooper reel -- blooper reels, I should say, waiting to happen.

Here's her "Moost Unusual" report.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): There's a new entry enshrined into the Internet blooper Hall of Fame.

(BEGIN VIDEO CLIP FROM "THE EARLY SHOW," COURTESY CBS)

BIDEN: Do you know the Web site number?

(END VIDEO CLIP)

MOOS: It escaped Joe Biden's lips when asked on CBS about the government's new Web site for tracking stimulus spending...

(BEGIN VIDEO CLIP FROM "THE EARLY SHOW," COURTESY CBS)

UNIDENTIFIED FEMALE: By the way, do you know the Web site?

BIDEN: You know, I'm embarrassed.

Do you know the Web site number?

I -- you know, I...

(END VIDEO CLIP)

MOOS: The number?

The number?

What's he think the Web is, a phone book?

By not saying Web address, Vice President Biden committed his second faux pas. Previously he called Recovery.gov...

BIDEN: Recovery.com.

MOOS: So now the vice president enters the pantheon of politicians caught in a worldwide web, joining the President Bush.

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: And the Google. Internets.

MOOS: Joining former Senator Ted Stevens, describing the Internet.

TED STEVENS, FORMER SENATOR: It's a series of tubes. MOOS: Joe Biden's minor goof may give those on the right the right to laugh.

(BEGIN VIDEO CLIP FROM RUSHLIMBAUGH.COM/YOUTUBE)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: What is the Web site number?

(END VIDEO CLIP)

MOOS: But in his rush to poke fun, Rush Limbaugh called gov org.

(BEGIN VIDEO CLIP FROM RUSHLIMBAUGH.COM/YOUTUBE)

LIMBAUGH: It's Recovery.org -- Recovery. -- have you gone to Recovery.org?

(END VIDEO CLIP)

MOOS: These days, politicians are leaping onto the Web. Texas Congressman John Culberson was acting like a tour guide, running around the Capitol before the president's big speech...

REP. JOHN CULBERSON (R), TEXAS: Hi, officer.

I'm Congressman Culberson.

I'm broadcasting on my Internet Web site.

Now, who's coming through this door?

Oh, the president will come, actually, from the Senate side, I guess, won't he, officer?

MOOS: None of your business, Congressman. He trained his camera on the press.

CULBERSON: Yes, I'm actually broadcasting on (INAUDIBLE).com but I'm also sending tweets from both my BlackBerry and I'll be Twittering throughout the State of the Union address.

MOOS: All the Congressional Twittering has Steven Colbert making up tweets -- for instance, from 91-year-old Senator Robert Byrd...

(BEGIN VIDEO CLIP, COURTESY COMEDY CENTRAL)

STEPHEN COLBERT, HOST "THE COLBERT REPORT: What is this hello, hello, Klondike, 8453, dot, dot, dot, dash, dash, dash, dot, dot, dot?

When he panics, he reverts to Morse code.

(END VIDEO CLIP)

MOOS: Not Senator John McCain. Remember how he once called himself computer illiterate?

No more.

Even John McCain has a new BlackBerry and is sending out tweets -- which puts him ahead of me. Here's an actual McCain tweet: "Tomorrow, I am going to tweet the top 10 porkiest projects."

(voice-over): Maybe I don't want to join this conversation. Twitter, tweeter, I tweet, therefore I am. But if you don't want to enter the Twittosphere, your days are numbered.

BIDEN: Do you know the Web site number?

MOOS: Jeanne Moos, CNN...

BIDEN: The Web site number...

MOOS: ...New York.

(END VIDEOTAPE)

BLITZER: We just got a picture in from the White House. The president of the United States meeting today with the Chicago Bulls. There they are, over at the White House. Their record, by the way, 26 wins, 32 losses.

I'm Wolf Blitzer in THE SITUATION ROOM. See you tomorrow.

Let's go to Lou in New York -- Lou?