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THE SITUATION ROOM

Military Help Wanted; Hillary Clinton Tours Middle East

Aired March 3, 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: I'm Wolf Blitzer. You're in THE SITUATION ROOM.

President Obama, seeing economic gloom all around him, once again is warning all of us, don't expect a turnaround anytime soon.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I want to begin with some plain talk. The economy's performance in the last quarter of 2008 was the worst in over 25 years. And, frankly, the first quarter of this year holds out little promise for better returns.

(END VIDEO CLIP)

BLITZER: The president today confronting the global reach of the economic crisis, as well as an important ally in a serious jam itself.

Let's go to our senior White House correspondent, Ed Henry, who is watching the story closely.

What happened today, Ed?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, he brought in the British prime minister. You will remember, when the players were George W. Bush and Tony Blair, the focus was often about Iraq. Today, it was all about working together on the financial crisis.

(BEGIN VIDEOTAPE)

HENRY (voice-over): A meeting of the U.S. president and British prime minister used to mean talk of war and peace. But it's all about the global economic meltdown now.

OBAMA: My main message to the American people is to just recognize that we dug a very deep hole for ourselves, there were a lot of bad decisions that were made. We are cleaning up that mess. It's going to be sort of full of fits and starts in terms of getting the mess cleaned up, but it's going to get cleaned up.

HENRY: Prime Minister Gordon Brown is wounded at home and wanted a full-fledged news conference to stand beside a popular new leader. Brown got a more low-key meting in the Oval Office. And yet, unlike Tony Blair, he didn't seem to mind being considered the American president's poodle.

GORDON BROWN, BRITISH PRIME MINISTER: And I think the history books will record that what he has done in his first nearly 50 days of office has been momentous in setting the means by which we can see the economic recovery happening.

HENRY: Brown desperately needs President Obama to help Great Britain deal with the financial crisis.

BROWN: As far as the common interests that we're pursuing, look, there is the possibility in the next few months of a global new deal that will involve all the countries of the world in sorting out and cleaning up the banking system.

HENRY: The president pointedly did not make any promises about a global new deal, focusing instead on trying to reassure Americans about 12-year lows on Wall Street.

OBAMA: What I'm looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.

(END VIDEOTAPE)

HENRY: And the president added something very interesting to that, basically saying, prices are so low right now, it might be a good deal for Americans to start buying stock, if they're in it for the long term.

Fascinating, because it's hard to remember the last time a U.S. president basically suggested that Americans go out and buy stocks. Robert Gibbs, the White House press secretary, was careful to say this was not an official buy signal from the president, but perhaps it was an attempt to boost some confidence in those sagging markets, Wolf.

BLITZER: Those markets are sagging and sagging. A lot of fear they're still going to be going down.

All right, Ed, thank you very much.

More trouble today, by the way, for the battered auto industry. Tracking firm Autodata estimates U.S. car sales plunged 40 percent in February. That's to the lowest level since December 1981. Virtually every vehicle produced by America's largest carmakers suffered at least a 10 percent drop in sales from a year ago.

On Wall Street today, an up-and-down day for stock prices, ending once again in negative territory. The Dow Jones industrials closed down 37 points. That's a modest loss compared to yesterday's nearly 300-point nosedive. Stocks fluctuated as the Fed chairman and top members of the president's economic team testified before Congress.

And let's go to Capitol Hill right now. Our senior congressional correspondent, Dana Bash, is watching a really important day of this testimony before these various Senate panels -- Dana. DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. And the nation's top economic officials warned lawmakers they may have to soon spend even more than the $700 billion they have already passed to rescue the financial industry.

That is not what lawmakers wanted to hear, as they expressed the outrage they're hearing from constituents about bailouts going on right now.

(BEGIN VIDEOTAPE)

BASH (voice-over): The Fed chief, the treasury secretary, and the budget director all testifying about the country's terrible economic times, but it was the latest bailout of insurance giant AIG that ignited the most fire.

SEN. RON WYDEN (D), OREGON: At what point will the taxpayer no longer be on the hook for the massive AIG failure? What is the end game for American taxpayers?

BASH: This following the government's fourth attempt in six months to prop up AIG, $30 billion more taxpayer dollars.

SEN. JIM BUNNING (R), KENTUCKY: We're no better off now. You may think we are.

BASH: Federal Reserve Chairman Ben Bernanke defended it but said he doesn't like it.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I think if there's a single episode in this entire 18 months that has made me more angry, I can't think of one than AIG. AIG exploited a huge gap in the regulatory system. We're doing this to protect our financial system and to avoid a much more severe crisis in our global economy.

BASH: On the other side of the Capitol, the treasury secretary insisted the economic crisis will soon be helped by the president's $787 billion stimulus plan.

TIMOTHY GEITHNER, TREASURY SECRETARY: What the Recovery Act does is to get people back to work and stimulate private investment.

BASH: But the Fed chief testified he's not so sure.

BERNANKE: The timing and magnitude of the macroeconomic effects of the fiscal program are subject to considerable uncertainty.

BASH: Meanwhile, the president's top economic advisers promoted and defended his new $3.6 trillion budget.

REP. JEB HENSARLING (R), TEXAS: And is it true that in eight years, that the debt would be doubled under this budget?

PETER ORSZAG, WHITE HOUSE BUDGET DIRECTOR: Yes, but, again, the debt increase is less that if we fail to act.

BASH: Republicans pounded the president for raising taxes in a recession. The treasury secretary respond no tax hikes until 2011.

GEITHNER: During this period, while we're still going through a recession, before recovery comes, we do not raise any taxes.

(END VIDEOTAPE)

BASH: And Republicans also questioned whether the Obama team is really inspiring the kind of confidence it needs to, to get the markets up and running again.

In fact, one Republican congresswoman from Florida asked the treasury secretary point blank -- actually, she really made a statement, and she said she wasn't really sure about him coming today, because she said every time that -- a statement comes from him, the stock market plummets -- Wolf.

BLITZER: It did go down modestly today, not as bad as the day before. Dana, thank you very much.

BASH: Thank you.

BLITZER: Today, President Obama overturned another Bush administration regulation, this one involving endangered wildlife and plants. The move means federal agencies will resume full scientific reviews on whether projects pose any risks to endangered species.

President Bush made those reviews optional shortly before he left office. President Obama effectively suspended the Bush era, while the Interior and Commerce Departments now review it.

Let's go back to Jack Cafferty once again. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Seven-point-three million people in this country are in jail, prison or on probation or parole as of 2007. That translates to one in every 31 adults in this country in the corrections system, very, very expensive.

The Pew Center is out with a report showing America's prison population skyrocketed over the last 25 years, increasing a whopping 274 percent. We now have the highest incarceration rate, the biggest prison population of any country in the world, and yet we're still a long way from solving the crime problem.

And with the economy getting dramatically worse, you could even look for crime to start going up. The report shows blacks are more likely than whites or Hispanics and men are five times more likely than women to be in the corrections system. Southern states have higher correctional rates than other parts of the country, with Georgia topping that list.

The Pew Center says it's choices in state policy that lead to having more or less people in prison and that Southern states choose to give out longer sentences and put more people in prison.

Also, the record prison population is getting more and more expensive for taxpayers. At the state level, spending on corrections ranks second only to Medicaid. One expert says prison costs 22 times more than community-based corrections programs and suggests that states focus on supervising people with technologies like ankle bracelets or GPS.

Here's the question. What should be done to reduce America's prison population? Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: And there's even more fear, now, Jack, as you know, that, given the horrible economic situation, crime potentially could going up and up. So, we will watch that.

CAFFERTY: Yes.

BLITZER: Not good news on any front.

Thanks, Jack, very much.

It's a shocking realization of a horrible tragedy.

(BEGIN AUDIO CLIP)

TOWER: SHUTR 25 has crashed, actually.

SOUTHERN CALIFORNIA APPROACH: You're kidding me.

TOWER: No.

(END AUDIO CLIP)

BLITZER: There's chilling new audio coming in from that military jet that crashed in San Diego in December. Military officials now say it could have been avoided.

Also, need a job? Many of you are turning to the military. But like private employers, the armed services, they're picky right now about who they take in.

And are you getting sick as the markets take you on a wild ride? President Obama has some shooting advice for you.

(COMMERCIAL BREAK)

BLITZER: America's economy is on the ropes right now. And that's actually driving a lot more people to military recruiters. But, for the armed services, the issue is still quality, not quantity.

Let's go to our Pentagon correspondent, Barbara Starr.

What's going on, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, Wolf, you remember that old saying, Uncle Sam wants you? Well, now an awful lot of young Americans want Uncle Sam.

(BEGIN VIDEOTAPE)

STARR (voice-over): With the economy in shambles and unemployment on the rise, the Pentagon is finding many young people are making their way to the recruiting office.

From 2005 to 2007, when violence in Iraq was at record levels, recruiters couldn't meet their goals, and many troops were getting out of the service as fast as they could. Now it seems everybody wants in.

VICE ADMIRAL MARK FERGUSON, CHIEF OF NAVAL PERSONNEL: We see individuals reenlisting at greater than our required levels.

STARR: Already, the Army and Marine Corps have achieved a plan troop increase months ahead of schedule. But, still, there are problems.

CURTIS GILROY, OFFICE OF THE UNDERSECRETARY OF DEFENSE: As the economy continues to dip and unemployment rises, recruiting should be somewhat less difficult. We know this. But the economy is not the only driver of our attention and our recruiting programs.

STARR: Recruiters still find parents are much less likely these days to encourage their children to join the military. These commercials are an effort to change that.

(BEGIN VIDEO CLIP, AD)

UNIDENTIFIED MALE: I found someone to pay for me to go to college.

UNIDENTIFIED FEMALE: Go on.

(END VIDEO CLIP)

STARR: But finding enough young Americans really able to serve remains a challenge.

The Pentagon says much of today's youth is simply unqualified. Obesity, drug and alcohol problems and lack of education means only 25 percent of Americans age 17 to 24 are qualified for military service.

(END VIDEOTAPE)

STARR: And for those already in the service, so many now are signing up for repeat tours of duty that the Pentagon is eliminating some of those signing bonuses. They simply don't need them anymore -- Wolf.

BLITZER: All right, Barbara, thanks very much. It is certainly a sign of the times, what's going on right now.

President Obama says it's time for the U.S. to reboot its relationship with Russia. And he's revealing how he wrote to his counterpart in Moscow, hinting that cooperation against a potential threat from Iran may help Russia avoid a U.S. missile defense shield in its own backyard.

Listen to this.

(BEGIN VIDEO CLIP)

OBAMA: What I said in the letter was that, obviously, to the extent that we are lessening Iran's commitment to nuclear weapons, then that reduces the pressure for -- or the need for a missile defense system. In no way does that in any -- does that diminish my commitment to making sure that Poland, the Czech Republic, and other NATO members are fully enjoying the partnership, the alliance, and U.S. support with respect to their security.

(END VIDEO CLIP)

BLITZER: As she makes her introductory swing through the Middle East, the secretary of state, Hillary Clinton, is coming up against the cold, hard realities of the region, where it seems all parties are setting conditions, including right now the United States itself.

Our foreign affairs correspondent, Jill Dougherty, is traveling with the secretary, has this report from Jerusalem -- Jill.

(BEGIN VIDEOTAPE)

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Wolf, there's Iran. There's Syria. There's Gaza. There's Hamas. And that's just some of the challenges facing Secretary Clinton here in the Mideast.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): In Jerusalem, Secretary of State Hillary Clinton shook hands with the man expected to lead Israel as its next prime minister, Benjamin Netanyahu.

UNIDENTIFIED MALE: Handshake, please.

DOUGHERTY: But the Likud Party chief does not support the bedrock U.S. policy of a two-state resolution for Israelis and Palestinians. And in an interview with CNN, Clinton indicated that could be a problem.

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: That the two- state solution is the inevitable, inescapable outcome of any effort. It is hard to imagine what other positive outcome could be arrived at. And we will certainly present our views.

DOUGHERTY: Earlier, Clinton announced she is sending two envoys to Syria for talks, another sign of the thaw in relations between Washington and Damascus. Clinton calls it just the beginning of a conversation with Syria.

CLINTON: We're not jumping to any conclusions. We're not using any adjectives to describe this. It's in the course of sort of diplomatic outreach. DOUGHERTY: Tuesday was a whirlwind of meetings with Israeli officials. Wednesday, Secretary Clinton heads to the West Bank and meetings with Palestinian Authority President Mahmoud Abbas.

Abbas is in the process of trying to form a unity government that could include Hamas. Hamas refuses to recognize Israel, a step Clinton says is critical.

CLINTON: In the absence of Hamas agreeing to the principles that have been adopted by such a broad range of international actors, I don't see that we or they, anyone, could deal with Hamas.

DOUGHERTY (on camera): Secretary Clinton says she's on a listening tour here in the Middle East. And she's getting an earful. But walking through this political mine field, she's watching her words carefully, mindful that some of the key players on both sides may not be in place yet -- Wolf.

(END VIDEOTAPE)

BLITZER: Jill Dougherty, in Jerusalem for us, thank you.

By the way, the vice president, Joe Biden, he will be off on a trip of his own next week. He will be going to Brussels to meet with the North Atlantic Council. That's the main forum for NATO's 26 member states -- topping the agenda, Afghanistan and Pakistan.

Up next, brand-new developments on that F-18 crash into a house in California, in San Diego, that killed the family inside -- what the U.S. Marines are revealing right now.

Plus, it's a lost decade, and then some. A dozen years of stock market gains have now all of a sudden disappeared. What should you do with your investments right now?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: It's a crash that shocked all of us, causing an outpouring of compassion and a rash of questions.

Today, aviation officials released some chilling audio of the moments just before a U.S. military jet slammed into a densely populated neighborhood in San Diego in December.

Let's go straight to our Brian Todd. He's working this story for us.

The audio is really chilling.

BRIAN TODD, CNN CORRESPONDENT: It is, Wolf. As usual in these situations, these recordings are just riveting to listen to. In this audio, you hear a military pilot trying to make critical decisions as his jet is suffering engine problems.

(BEGIN VIDEOTAPE)

AIR TRAFFIC CONTROL: Souls on board, fuel remaining, and time, and nature of emergency?

PILOT: Yes, sir, one soul on board. I have got down to a single engine dirty, possibly a problem with the other engine, and time fuel remaining, about 20 to 30 minutes.

I'm actually going to try and take it to Miramar, if possible.

AIR TRAFFIC CONTROL: SHUTR 2-5, OK.

TODD: With one engine failed and the other about to fail, the pilot of that F-18 military jet decided to try to make it to an inland airfield. But that required him to fly over a neighborhood packed with people. There was another option.

AIR TRAFFIC CONTROL: All right. Just let me know if you want to change to North Island.

PILOT: Roger.

TODD: North Island Naval Air Station. Going there would have taken the crippled jet over water, potentially not putting people on the ground in danger.

Officials say this audio shows the pilot was offered the chance to go that way.

TOWER: SHUTR 25 has crashed, actually.

SOUTHERN CALIFORNIA APPROACH: You're kidding me.

TOWER: No.

TODD: The pilot ejected safely, but, when the jet came down, it incinerated two homes, damaged three others, and killed four people, including one man's entire immediate family.

That man, a Korean immigrant, tearfully acknowledged it was a horrible accident. His statements drew worldwide attention and donations. And, today, military officials told members of Congress that four Marine Corps officers have been relieved of duty for directing the pilot over that neighborhood, even though the pilot made that call.

And nine other military personnel have received lesser punishments.

(END VIDEOTAPE)

TODD: Investigators say the pilot should have been told to fly over San Diego Bay to avoid flying over that neighborhood. Maybe the toughest thing to hear in all of this, officials believe both the pilot and air controllers made what they called faulty decisions. They think this accident might never have happened. BLITZER: What a heartbreaking story.

TODD: That's tough to hear right now.

BLITZER: Yes, very hard.

TODD: Yes.

BLITZER: Especially for the families involved.

All right, thanks very much, Brian Todd.

Those NFL players lost at sea, there are new developments coming into THE SITUATION ROOM involving the missing boaters.

Plus, you might feel like you're back in 1997 if you have looked at your 401(k) lately, over a decade of stock gains wiped out.

And President Obama in his own words on how and when we can get out of this economic mess.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now: the U.S. Coast Guard calling off -- calling off -- the search for those three boaters, including two NFL players, lost off Florida's coast. After three days, the Coast Guard says it would have found anyone on the surface by now.

The court filing shows accused fraudster Bernard Madoff will give up the rights to his firm. Once it's liquidated, alleged victims could benefit. Madoff's lawyers are fighting to keep his expensive apartment.

And a jailed man is now charged with the 2001 murder of the Washington intern Chandra Levy. Police today issued an arrest warrant for a man convicted of attacks in the same park here in Washington, D.C., where Levy's remains were found.

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

Some Democrats want President Obama to be more of a cheerleader for the economy. But he's keeping his tone measured and the public's hopes in check.

Listen to the president speaking frankly about the very dire situation right now and how the road to recovery will be long and painful.

(BEGIN VIDEO CLIP)

OBAMA: I'm absolutely confident that they will work. And I'm absolutely confident that credit's going to be flowing again, that businesses are going to start seeing opportunities for investment, they're going to start hiring again. People are going to be put back to work.

What I'm looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.

Now, having said that, the banking system has been dealt a heavy blow. It has to do with many of the things that Prime Minister Brown alluded to: lax regulation, massive over-leverage, huge systemic risks taken by unregulated institutions, as well as regulated institutions.

And so there are a lot of losses that are working their way through the system. And it's not surprising that the market is hurting as a consequence.

In fact, you know, I think what we're seeing is -- is that, as people absorb the depths of the problem that existed in the banking system, as well as the international ramifications of it, that, you know, there's going to be a natural reaction.

On the other hand, what you're now seeing is -- is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it. I think that consumer confidence -- as they see the American Recovery and Reinvestment Act taking root, businesses are starting to see opportunities for investment and potential hiring.

We are going to start creating jobs again.

One of the things that Prime Minister Brown and I talked about is, how can we coordinate so that all the G-20 countries -- all the major countries around the world, in a coordinated fashion, are stimulating their economies?

How can we make sure that there are a common set of principles, in terms how we're approaching banking, so that problems that exist in emerging markets like Hungary or the Ukraine don't have these enormous ripple effects that wash back onto our shores and we're providing them with some help in a coordinated international fashion, as well?

All those steps, I think, are going to slowly build confidence, but it's not going to happen overnight. And -- and my main message to the American people is to just recognize that we dug a very deep hole for ourselves. There were a lot of bad decisions that were made. We cleaning up that mess.

It's going to be sort of full of fits and starts, in terms of getting the mess cleaned up, but it's going to get cleaned up. And we are going to recover and we are going to emerge more prosperous, more unified and, I think, more protected from systemic risk, having learned these lessons, than we were before. (END VIDEO CLIP)

BLITZER: The president in the Oval Office earlier.

The financial crisis certainly taking many Americans on a very wild ride. Over roughly the past year-and-a-half, the Dow has dipped lower and lower. And it's taken down the balances of so many Americans' financial accounts. We're seeing market activity and economic pain not seen in many, many years. It's certainly a sign of the times of what's going on right now.

Let's go to Mary Snow.

She's in New York taking a look at this story, because people are looking at their 401(k)s right now and they're thinking, what, 1997?

MARY SNOW, CNN CORRESPONDENT: To be exact, Wolf, the Dow is now at the level it was in April of 1997. And there's a big concern for many Americans who were hoping to retire in the near future, but who can't now.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Adding to worries about soaring unemployment and home foreclosures, the stock market dropping to 1997 levels -- wiping out years of investment savings for people like Corey Hutchison.

CORY HUTCHISON, INVESTOR: Damaged would be pretty accurate. I've taken a very serious hit on all the investments. All the money that I've put in has seriously depreciated.

SNOW: Hutchison estimates he's lost 60 percent of his 401(k) investments. But the 30-year-old software consultant, who's expecting a second child, says he'll keep putting money into his 401(k).

HUTCHISON: I'm fortunate that I'm young enough that this hurts, but I've got a long time to recover from it.

SNOW: But many others aren't as calm. It's estimated Americans pulled $35 billion out of stock funds last month. And it's turned financial adviser Pran Tiku into more of a therapist these days for his 250 clients.

PRAN TIKU, PEAK FINANCIAL MANAGEMENT: And I think that's a major part of our role right now is to hold hands with and make sure that they understand that there is a long-term and we will, at the end of the day, come out of this.

SNOW: To come out of it, though, will take years -- years many older Americans were hoping to spend in retirement. But financial adviser Ryan Mack says dwindled 401(k)s are forcing people to change life plans.

RYAN MACK, OPTIMUM CAPITAL MANAGEMENT: And we're getting far too many calls from individuals who are saying, Ryan, I've lost half the value of my 401(k) and I should be retired right now.

SNOW: Corey Hutchison says he tries to help out some of his older relatives who've lost money. And one personal finance columnist says Corey's situation is not uncommon.

TERRY SAVAGE, PERSONAL FINANCE COLUMNIST: It may very well be can adult children provide support for their parents, as the retirement assets they expected to have simply have disappeared.

(END VIDEO TAPE)

SNOW: So how long will it take to recoup the losses?

There's no simple equation. We asked financial advisers who told us that one bright spot is that sharp declines are often followed by sharp recoveries. But some say it could take about three years to make up for most of the lost ground. But that's once the market turns around. And there are a lot of ifs in that equation -- Wolf.

BLITZER: Especially once the key question -- once the market starts to turn around.

And who knows what the answer is to that?

No one.

All right. Thanks very much, Mary Snow.

The GOP chairman backs down and apologizes to Rush Limbaugh.

Does that mean the talk radio talk host really is the head of the Republican Party?

And the House majority leader sounding a defiant note when it comes to those pet projects known as earmarks. He says the White House can't tell him or Congress what to do.

What's going on?

We'll discuss that and more right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP FROM "THE TONIGHT SHOW WITH JAY LENO," COURTESY NBC)

JAY LENO, HOST: The stock market went down 299 points today. Ooh, man. You know, I don't want to say things are bad. I don't want to be one of those negative people, you know...

UNIDENTIFIED MALE: Right.

LENO: But did you see who rang the closing bell today?

Take a look. This is pretty bad here. You know, it doesn't look good. You know, it doesn't look good. You know, this is good. Oh, no. Oh.

(END VIDEO CLIP)

BLITZER: That was actually last night. Jay Leno -- he's a very funny guy.

Let's bring in our senior political analyst, Gloria Borger; our CNN political contributor, Steve Hayes, of "The Weekly Standard;" and our political analyst, Roland Martin. They're all part of the best political team on television.

It's pretty sad, what's going on. And it doesn't look, in the short-term, if you believe the president, it's going to get much better.

Listen to what he said Gloria, today.

(BEGIN VIDEO CLIP)

OBAMA: I want to begin with some plain talk. The economy's performance in the last quarter of 2008 was the worst in over 25 years. And frankly, the first quarter of this year holds out little promise for better returns.

(END VIDEO CLIP)

BLITZER: And if there's another 6 percent reduction in the GDP in the first three months of this year, that does not bode well.

GLORIA BORGER, SENIOR POLITICAL ANALYST: No, it really doesn't bode well. And I think, you know, the president, right now, is trying to sort of set the picture here for the American public, to say, look, things are not good right now and they're not going to get any better in the short-term, because he's got to ask the American public for patience, as well as the support for his grand plans to get out of this mess.

So it's a fine line the president's walking here -- Wolf.

BLITZER: And he certainly has to walk that fine line, Steve...

BORGER: Yes.

BLITZER: ...because, on the one hand, he wants to be honest with the American people. On the other hand, he wants to encourage them that there's some light at the end of this tunnel.

STEPHEN HAYES, SENIOR WRITER "THE WEEKLY STANDARD": Yes, I think Gloria is right, it's a fine line. And he has to be very careful not to be perceived as talking down the economy. And you've had people -- people who are sympathetic to what he's trying to do, from President Clinton to a Yale economist Robert Schuyler, say, look, the more you talk about the potential of a Great Depression, the more likely it becomes that that's a self-fulfilling prophecy.

So it's -- it's a very delicate balance and I think he's got to be careful.

BLITZER: Well, he hasn't spoken about a great depression, as far as I can tell, Roland. He has said this is the worst economic crisis we've faced since the Great Depression.

ROLAND S. MARTIN, CNN POLITICAL ANALYST: Wow! I mean I'm trying to figure out why some folks have a problem with a president actually telling the truth.

BORGER: Right.

MARTIN: Now, look, I understand this whole notion of a fine line. But look, when you're being honest with the American people, this is where we are.

But, also, last week, in his speech, he talked about the stimulus package, he talked about the long-term we are going to get out of this.

And so he has been doing both of those things. But I appreciate a president, frankly, who is being straight with the American people and telling us what we need to hear versus what we want to hear.

BORGER: But what we heard in his joint address to Congress, though, was a note of optimism, which a lot of people think he needs to strike, which is essentially saying, look, we've been in bad places before in this country and we're going to climb out of it...

HAYES: Yes, and...

BORGER: So he's trying to do it.

HAYES: Wolf, too, I think...

MARTIN: Absolutely.

HAYES: ...it seems that there are people at the White House who recognize that he's got to do both. And he's probably got to sound a little more optimistic.

It was interesting, after -- within two hours of the remarks that you played that he made at the Department of Transportation, he had these brief remarks with the British prime minister in which he sounded a much, much more optimistic note and talked -- I think he said confidence four times in a brief comment about the economy and the recovering of the markets.

BLITZER: Yes, that's a good point, Steve.

Roland, should he have...

MARTIN: But that was a...

BLITZER: Hold on, Roland. Hold on.

MARTIN: Sure. BLITZER: Should he have said in those comments in the Oval Office with the British prime minister there, should he have said if you're young enough, this may be a good time to start buying stocks right now, if you have the stomach to hold onto them?

MARTIN: Absolutely. And what he said is what, frankly, what my financial adviser and other people who advise folks for their money are saying. And they are saying the people who are older, they're the ones who are being hurt the most, frankly, because they don't have the terms of a period of time. They have more years behind of them than in front of them.

So what he is saying is hey, folks, you look at some of the stocks now, you know, down -- you know, AIG, look at where they're at. Citibank, look at where they're at. He's saying, hey, this is a great time to buy stocks cheap for the long-term. And so if financial people are saying that...

BLITZER: Yes. I don't think he was referring to AIG or Citi -- Citigroup...

MARTIN: He's saying it.

BLITZER: I'm sure he wasn't referring to AIG or Citigroup.

BORGER: And I...

BLITZER: He might have been referring to some other stocks.

MARTIN: I'll say this, Wolf.

BLITZER: Yes?

MARTIN: Wolf, I remember this...

BORGER: I don't think you're -- I don't...

MARTIN: I remember when IBM's stock was in the toilet. People bought then. When it came back up, they were extremely happy.

BORGER: I don't think the president should be our financial analyst, honestly. You know, I think that if the president wants to tell us we have to sacrifice, that's fine. But being our financial analyst, I think we ought to leave that to others.

BLITZER: Yes. I think Gloria makes a good point. Suze Orman is a good person to ask those kinds of questions to.

BORGER: Yes.

BLITZER: The president of the United States -- maybe he should stay away from that.

But let me point out what Steny Hoyer, the number two Democrat in the House of Representatives, Steve, said today about these earmarks. He defends them. And he says -- the president, you know, wants to eliminate them in the next -- not this spending bill, but the next spending bill.

Hoyer says this in "The Washington Times: "I don't think the White House has the ability to tell us what to do. I hope you all got that down."

Wow! That's a pretty defiant statement from Steny Hoyer.

HAYES: Yes, pretty tough. Look, if I'm advising President Obama at this point, I love this fight. I would love to take on Democrats in Congress and Republicans who have requested earmarks and say, look, you're wasting people's money. I campaigned on a moratorium on earmarks.

I intend to carry it out. I'm going to veto this bill until you clean it up.

I think that's the kind of thing -- especially in this economic environment...

BORGER: Right.

HAYES: ...that would get people enthusiastic about him and say, OK, he really does want to eliminate waste.

BLITZER: Is that a fight, Roland...

HAYES: It's something kind of (INAUDIBLE).

MARTIN: Wolf.

BLITZER: Is that a fight the president could win?

MARTIN: Well, he can win it. But let's just be honest here, talking about truthful. This is the most useless conversation every year.

Here's what I want. I want the American people who don't like earmarks -- I want them to protest in their Congressional districts that they're going to send the money back.

Here's the problem, Wolf. Somebody in one district says, oh, I don't like earmarks, except when it comes to us. It's a not in my backyard sort of philosophy.

And so when people get all excited about it, people love earmarks. They don't want to own up to it.

HAYES: No, that's just not true.

BORGER: Well...

MARTIN: They don't want to send the money back.

BORGER: But this is what the president...

MARTIN: Show me the protests then. BORGER: This is what...

MARTIN: Show it to me.

BORGER: But this is what the president campaigned on. This is what he bragged about in his stimulus package. He said the stimulus package doesn't have any earmarks. It's an easy fight for him to have with Congressional Democrats right now, to say, look, guys, we're in a tough economic situation, OK?

And we can't spend this money on needless things. We've got to spend it on getting this economy going right now, so let's get rid of these earmarks.

MARTIN: All I ask...

BORGER: It's a fight the president has clearly chosen...

HAYES: And I think you can...

BORGER: ...not to have, but he could have it.

MARTIN: Send them back.

HAYES: I think you can measure...

MARTIN: Send them back.

HAYES: ...measure opposition to things by more than just protests. But since you asked for an example of protests, there's a group called Americans for Prosperity that's been out there rallying people. And they have, in fact, had protests over earmarks.

BLITZER: All right.

HAYES: So, go take a look at that.

(CROSSTALK)

BORGER: Maybe the governors who are going so send back...

MARTIN: OK. Send the money back.

BLITZER: All right.

BORGER: Maybe the governors who are going to send back the stimulus money should also send back the earmark money.

How about that?

BLITZER: He's got the veto pen. If he wants to use it...

MARTIN: And they won't do it. They won't do it.

BLITZER: ...he can. We'll see if he does use the veto pen anytime soon. Guys, thanks very much.

It's the latest video to go viral on the Internet -- sleepwalking -- making that -- sleep running, should we say, involving a dog. CNN's Jeanne Moos is getting ready to take a Moost Unusual look. Stand by for that.

Plus, your answers to this hour's question -- what should be done to reduce America's prison population?

That's Jack's question. He's standing by with your e-mail.

(COMMERCIAL BREAK)

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Coming up on "LOU DOBBS TONIGHT" at the top of the hour, we're reporting on assertions by the president and British Prime Minister Gordon Brown that globalization isn't the problem, it's the answer to our economic crisis. President Obama dismissing all that stock market turmoil, saying it's like a tracking poll in politics.

Also, Treasury Secretary Geithner trying to avoid talking about the hidden taxes in the Obama administration's new budget. We'll tell you all about those taxes. You're not going to like what you hear.

And a collision between science and ethics that could transform humankind -- it may soon be possible for parents to determine the physical and mental characteristics of their children. We'll have a special report. And among my guests tonight, the attorney general of the State of Arizona, Terry Goddard. He's on the front line of the war against violent Mexican drug cartels -- a war that spread into the United States. Join us for all that and more at the top of the hour on "LOU DOBBS TONIGHT."

THE SITUATION ROOM continues right after this.

(COMMERCIAL BREAK)

BLITZER: Is embattled Illinois Senator Roland Burris considering a run in 2010?

Fellow Illinois Senator Dick Durbin and the governor, Pat Quinn -- they're both Democrats just like he is -- both recently called on Burris to resign. But an official campaign Web site would suggest otherwise.

Let's go to our Internet reporter, Abbi Tatton.

She's taking a look at this Web site.

What do we see -- Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Well, Wolf, there's not a lot on it at the moment. And you can take a look at the accomplishments section of this Roland Burris 2010 Web site. There's nothing there. The endorsements of this 2010 Senate bid -- that's also blank. The events section -- you get the picture, right?

The 2010 Roland Burris for Senate Web site is up and running and it's asking for contributions for this bid. But apart from that, the pages are pretty bare.

A spokesman says the senator hasn't made any definitive plans and the pages actually haven't been updated since before the call for his resignation.

The questions raised and being discussed, though, on the Web site Facebook, where you've got more than three dozen groups set up, all suggesting about what Roland Burris should do next.

Roland Burris resign is one. Save Roland Burris is the next one you see, though a lot of the recent activity on these groups has been on the ones that suggest he should step down -- Wolf.

BLITZER: Well, maybe he'll get a contribution from Rod Blagojevich. He, as we reported yesterday, got a six figure deal for a book. But maybe -- you never know. Maybe he'll make him a little political contribution.

Abbi, thanks very much.

Let's go back to Jack.

He has The Cafferty File -- Jack.

CAFFERTY: So Blagojevich is going to write a book...

BLITZER: Yes.

CAFFERTY: ...and Burris may run for, what, I guess it's not re- election, right?

He would run for election to the Senate in 2010?

BLITZER: Right. That is correct. That is correct.

CAFFERTY: Yes. Illinois should be ashamed of itself.

The question this hour is what should be done to reduce America's prison population?

Casey in Sebastopol, California writes: "How about legalizing marijuana?" We got a ton of these e-mails -- "Creating truly green jobs, taxing the hell out of it and letting all those pot smokers out of jail. Not only do you reduce prison populations, you create a massive industry to boost the economy and you do it without endangering the public, since the only crime associated with pot smokers has to do with trafficking in an illegal substance. And, by the way, you'd also go far in reducing the force that drives the huge criminal activities on our Mexican border" -- something Lou Dobbs was talking about coming up in his show later.

Don in Las Vegas writes: "Go back to hanging people. Ever since we quit hanging criminals for crime, crime went up. Steal a horse, you swung on a rope. Rape a woman, you were hanged. No real punishment and you're merely operating a housing community for criminals."

Griff says: "If you make them bigger, they won't look like they're so overcrowded."

I. says: "Start chain gangs, deport illegals, secure the ports and borders. Make these criminals earn their keep by working behind bars or on chain gangs. What about tent cities like Sheriff Arpaio has in Arizona, where all the inmates are forced to wear pink clothing?"

Gustavo writes: "End the war on drugs. We need to reflect on whether preventing someone from getting high is worth all the trouble it entails."

Bruce writes: "Throw non-violent offenders out of jail. Find other punishments for them, like making them deal with FEMA or the IRS."

And Zach writes from Jackson, Wyoming: "Give everybody ankle bracelets and let them stay at Bernie Madoff's place."

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

BLITZER: All right, Jack.

Thanks very much.

We'll take a quick break. When we come back, Jeanne Moos and a Moost Unusual dog.

(COMMERCIAL BREAK)

BLITZER: You've certainly heard of people talking in their sleep, sometimes walking in their sleep -- but a dog running in its sleep?

CNN's Jeanne Moss has a Moost Unusual look at a Moost Unusual canine that's becoming an Internet sensation.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Let sleeping dogs lie?

No way. Not one that sleep walks and then breaks into a sleep run. Run, girl, run.

(VIDEO CLIP)

MOOS: You're about to become an Internet hit.

(VIDEO CLIP)

MOOS: That even woke up this kid. "PETCO doesn't make helmets," posted one wag.

Sure, there are countless sleeping dog videos featuring dreaming dogs twitching...

(VIDEO CLIP)

MOOS: ...some set to music...

(VIDEO CLIP)

MOOS: ...some seem to be having nightmares or giving us nightmares. But none have achieved Biz Kid's Internet stardom. She even barks in her sleep.

(VIDEO CLIP)

MOOS: "Your dog is possessed," posted someone. "Put some holy water in his dish." Her dish, actually. And the dog that's dreaming of a nice cool drink seems to be this one.

(VIDEO CLIP)

MOOS: But Biz Kid's disturbed sleep has left some folks disturbed. "Your dog is having a seizure. Go to the vet." We did.

(on camera): Should we be alarmed by this?

DR. BOAZ LEVITIN, VETERINARY NEUROLOGIST: Not -- not really.

MOOS (voice-over): Here at NYC Veterinary Specialists, the vet neurologist admits Biz Kid's simulated sleepwalking is extreme.

(on camera): Is it the most you've seen or you've seen worse?

LEVITIN: That's the most I've seen.

MOOS (voice-over): But if it's only happening during sleep, the doctor suspects they're not seizures and could be treated with a Valium-like drug if the owner were worried about the dog hurting herself.

Cats can also look pretty demented while sleeping. But in the case of Shadow here, the lethargy was caused by her owner. He put the cat in his homemade marijuana bong to calm her, he told police, when they came to his house to arrest him on a pot possession warrant.

UNIDENTIFIED MALE: It appeared there was something moving in -- in the box.

MOOS: Shadow will be put up for adoption.

Meanwhile, this guy has adopted Biz Kid's position.

(on camera): I bet I know what this guy's dreaming of -- Internet fame.

(voice-over): And he'll go to the wall to get it.

(VIDEO CLIP)

MOOS: OK, it may be a stretch. But one person theorized, Biz Kid was dreaming that he was chasing a naked mailman covered in bacon.

(VIDEO CLIP)

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: A most unusual canine. A most unusual report.

Thank you, Jeanne, for that.

Remember, THE SITUATION ROOM -- we're on Saturdays, as well, 6:00 p.m. Eastern -- our SITUATION ROOM Saturday edition. Don't forget every Saturday, 6:00 p.m. Eastern.

Until tomorrow, thanks very much for joining us.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou?

DOBBS: Wolf, thank you.

Tonight, President Obama and Prime Minister Gordon Brown say globalization is not the problem, it's the solution to our economic crisis. The president dismissing all of the stock market turmoil. President Obama says it's like a tracking poll in politics. We'll have that story.

And tonight, Treasury Secretary Geithner trying to avoid talking about the hidden taxes in the Obama administration's budget. We'll be telling you all about those taxes.