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National Debt Projections Bigger Than Expected

Aired March 20, 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 in CNN's command center for breaking news, politics and extraordinary reports from around the world.

You're in THE SITUATION ROOM.

One of president's Obama's toughest critics is accusing him of generational theft -- a shocking new estimate today about the cost of Mr. Obama's ambitious goals.

The Congressional Budget Office now projects deficits averaging almost $1 trillion every year over the next 10 years. Here's another way of putting it. More than $9 trillion in red ink will pile up by the time today's 11-year-olds graduate college. That figure is more than $2 trillion bigger than the White House projected, only a few weeks ago. Our White House correspondent Dan Lothian is standing by. But let's go to our Congressional correspondent Brianna Keilar. She has the shocking details -- Brianna?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, key members of the president's own party are sending him this message -- you can't do it all.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): South Carolina Democrat John Spratt, the man charged with pushing the president's budget through the House, says now is the time to capitalize on Mr. Obama's popularity.

REP. JOHN SPRATT, (D) SOUTH CAROLINA: We're behind him and we think the country's behind him given the mandate that he earned in the last election.

KEILAR: But asked if President Obama will have to pick a top priority, universal health care, alternative energy or education reform, even Spratt concedes eventually something's got to give.

SPRATT: I'm sure we may reach the point where compromises or concessions like that have to be made. But you don't go into the contest saying I may have to give up this, I may have to give up that. You try to retain everything.

KEILAR: In the Senate, the president faces more obstacles within the ranks of his own party. Kent Conrad chairman of the Senate Budget Committee says Congress must make cuts. SEN. KENT CONRAD, (D-ND) BUDGET COMMITTEE: The president's budget is going to have to be adjusted. That doesn't mean his priorities are changed. Because he's got the right priorities. But we're going to have to make a whole series of adjustments to make this add up. I'm hopeful that people will understand when facts change, we've got to change.

(END VIDEOTAPE)

BLITZER: All right, so Brianna, you're speaking to these Democrats. What are they saying, if they have to prioritize, education, energy, health care reform, other issues, what are the priorities?

KEILAR: Congressman Spratt said education but he said that's his personal preference. That would be his baby. He noted though he's not the one making the decision. Senator Conrad Wolf told us absolutely health care reform. He said Congress has to start tackling this. That it is imperative for the economic health of the nation -- Wolf?

BLITZER: Brianna is up on the hill. Thank you.

The man who wanted President Obama's job is pouncing on the new deficit projections. Senator John McCain issued a strong statement saying, among other things, "The Congressional Budget Office report proves that the administration has indeed engaged in a policy of generational theft." The Republican goes on to say, "This staggering deficit threatens our children's and grandchildren's future, and simply cannot be sustained."

Let's go right to our White House correspondent, Dan Lothian. Strong words from Senator McCain, Dan. How is the White House reacting to all of this?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: The White House still believes that they are on course to accomplish all these things, these goals that they have set out. And as you pointed out what Senator McCain has said, he is not the only one using those words. These projections now giving more ammunition to critics who say the president needs to slow down.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Almost every day, President Obama preaches responsibility.

BARACK OBAMA, PRESIDENT OF THE UNTIED STATES: When a plan of such size comes an obligation to be vigilant with every dime that we spend.

LOTHIAN: But some critics say the growing deficit and the president's resistance to trimming back his ambitious agenda is nothing short of irresponsible.

CHRIS EDWARDS, CATO INSTITUTE: If President Obama's spending plans go through, we will hit the highest level of debt since World War II. About $60,000 for every person in the United States. It's an enormous amount of debt.

LOTHIAN: And Chris Edwards with the CATO institute says in the long run, the government will have to impose enormously high tax rates to reduce that debt.

EDWARDS: With all this debt is a cost that is being pushed onto the next generation of young Americans. It is really morally unfair what is going on in Washington.

LOTHIAN: But the administration says the projected $1.8 trillion deficit this year shows the depth of the crisis this White House inherited. And gives a sense of urgency to acting on all fronts at once. To accomplish his goals, the president is promising cuts. But again, insisted, he will only go so deep.

OBAMA: What we will not cut are investments that will lead to real growth and prosperity over the long term.

(END VIDEOTAPE)

LOTHIAN: The White House says that now is not the time to apply the brakes. They remain confident here that they can take on health care, energy, and also education. And still cut the deficit in half by the end of Mr. Obama's term -- Wolf?

BLITZER: What if they're wrong, Dan?

LOTHIAN: That is a "what if" question that this administration doesn't want to entertain. And a senior administration official telling me that he's really confident that they can tackle all of these key initiatives. All initiatives that they believe will help turn the economy around -- Wolf?

BLITZER: Dan, thank you. It's certainly worth a quick reminder of exactly what the deficit is. It's how much more the government spends in a year compared to how much it actually has to spend. Think of it this way. You had $300 in your checking account, but you write $325 worth of checks. You're overdrawn by $25. That $25 is your deficit. The federal debt is something different. That's the number that gets tallied in a big clock in New York. It's the running total of how much the U.S. government has overspent year after year after year. That's the national debt as opposed to the annual budget deficit.

President Obama today delivered a new call to state officials to spend federal stimulus dollars wisely. He talked about spending to improve roads and bridges with three high-profile officials. California's Republican governor Arnold Schwarzenegger, Pennsylvania's Democratic governor Ed Rendell, and New York's independent mayor, Michael Bloomberg.

(BEGIN VIDEO CLIP)

OBAMA: I'm thrilled to have three of the most innovative elected officials in the country representing not only a wide range of political spectrums, but also different states, different responsibilities, all of whom are concerned about the issue of our infrastructure and how we develop the long-term prosperity that's going to be so important for America's success.

(END VIDEO CLIP)

BLITZER: All three of those White House visitors pledged to help the president get the support he needs to spend even more on those infrastructure projects. Be sure to tune in to THE SITUATION ROOM's Saturday edition. Among my guests, the Republican leadership in the House and the Senate, Senator Mitch McConnell and Representative John Boehner.

We're also going to be having a special interview with Jack Cafferty in the Saturday edition of THE SITUATION ROOM. Jack, on your new book, an excellent new book it is. I want our viewers to tune in, 6:00 p.m. eastern tomorrow to catch our interview. Because you're good and you get emotional as well.

JACK CAFFERTY, CNN ANCHOR: Well, yes, a little bit when you ask me about my late wife. But I enjoyed the discussion. And maybe people get a chance to check it out. Wolf, as the recession drags on, Americans growing less confident that they can maintain their current standard of living, especially when it comes to their long-term goals. A new CNN Opinion Research Corporation poll shows 39 percent of those surveyed say they're confident they'll be able to keep up their quality of life over the next year. Just 39 percent and that's down from 45 percent who felt that way a year ago. 50 percent of homeowners with a mortgage say they're very confident they can keep making their house payments. But again, that's down from 58 percent just a year ago.

Also down, the percentage of Americans who are confident they can pay their other bills, things like credit cards and car loans. And people are even more pessimistic when it comes to saving for long-term things. Only 24 percent of the parents say they're very confident they'll be able to pay to send their kids to college. And only 22 percent of those who are still working feel they'll be able to save enough for retirement. These are scary numbers. The U.S. used to be a place where every generation hoped for and usually got a standard of living that was better than what they're parents had. For the most part for more than 200 years that's just the way it's been in this country.

It was all part of the American dream. But as these poll numbers are suggesting, the dream may be just that, a dream for the generations coming along behind us.

So here's the question: "What do you fear losing most when it comes to your quality of life or standard of living." Go to cnn.com/caffertyfile and post a comment on my blog. It's depressing.

BLITZER: Yes, well let's hope it gets better. We can only hope. Jack, thank you.

Health care costs are hurting many businesses.

(BEGIN VIDEO CLIP)

OBAMA: It's one of the major reasons why small businesses close their doors and corporations ship jobs overseas.

(END VIDEO CLIP)

BLITZER: So what should come first for the Obama administration, health care reform or economic recovery? The nation's veterans often fought enemies at war but competing against you in the job market is an entirely different battlefield. Who might have the edge?

And AIG is suing the federal government for more than $300 million. And get this, possibly using your money to do it.

(COMMERCIAL BREAK)

BLITZER: The Obama administration is pushing a plan to make America's electric grid more efficient. But there's a potentially major drawback to the new technology making our electricity vulnerable to attack. Let's go to our homeland security correspondent, Jeanne Meserve. She's working the story. What are you finding out, Jeanne?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, as you know there's about $4.5 billion in the stimulus to speed up development of a smarter electric grid but some people are saying we're moving too fast here and here is why. They worry that cyber terrorists could exploit the smart grid to cause massive power outages.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Home meters and other electrical equipment trading data to make energy use more efficient. This smart grid is a great idea. Almost everyone agrees. But it has a potentially dangerous downside.

ED SKOUDIS, CO-FOUNDER, INGUARDIANS: The complexity of the grid itself might be turned against it in a computer attack.

MESERVE: A computer attack that could cause a massive blackout. CNN has learned that tests have shown that a hacker with a few hundred dollars and some specialized skills can penetrate some types of meters and other points in the smart grid two-way communication system. The hacker could then turn off thousands, even millions of meters under his control, or he might be able to jack electricity demand up and down so dramatically, it could destabilize the local electric grid and take out power to potentially a large metropolitan area.

Experts say such a regional blackout would almost certainly cascade to other systems, knocking them out, too. Researchers hope other smart grid innovations would prevent something like the 2003 blackout that left 50 million people in the dark. But no one knows for sure. GARRY BROWN, N.Y. PUBLIC SERVICE COMMISSION CHMN.: What really is a two-edged sword. The smart grid provides us with some reliability enhancements that we're going to know more about what's going on in the system, but the other side of that sword is that there are vulnerabilities then in terms of cyber security.

MESERVE: Millions of smart meters are already deployed, and there is business and political pressure to expand smart grid further. Though the security issues have not been fully addressed. Meaning we are potentially creating a cyber vulnerable electric system.

SKOUDIS: I think we are putting the cart before the horse here to get this stuff rolled out very fast.

(END VIDEOTAPE)

MESERVE: According to one expert, the fear of God has been put into government and industry. Working with cyber security professionals, they are making progress designing safeguards for equipment and systems. But as of now there are no clear standards for smart grid cyber security and it's unclear exactly who will have the authority to set them and enforce them. Despite that gap, the technology is being deployed as we speak -- Wolf?

BLITZER: Are the fears limited, the concerns limited, Jeanne, to the electric grid?

MESERVE: No, they aren't. Because these same kinds of systems will eventually be used for drinking water, for natural gas. The experts are saying we really have to get this right, we really have to learn to do security well on these systems. They're still learning.

BLITZER: All right Jeanne, thank you.

All this week, as you know, CNN has been on the road to rescue with unprecedented worldwide coverage of the economic meltdown impacting everyone. Now new information from the census bureau shows the recession could significantly change where Americans live and how they live. CNN's Tom Foreman has been looking into the stunning figures, and their consequences. Tom?

TOM FOREMAN, CNN CORRESPONDENT: Wolf, these new numbers out of the census department are one of our first looks at how this recession could substantially change the human geography of America. For years we watched people up in the northeast, particularly in the rust belt or the heavy manufacturing part, moving down toward the south and also out toward the west. What we're seeing right now is an indication that this is slowing down considerably, primarily because these people up here are finding they can't sell their houses without taking a big loss.

Here's the problem. That's feeding another housing problem down here. Because many neighborhoods were built in anticipation of home values continuing to rise. Wolf?

BLITZER: Tom, how is that impacting the job market? FOREMAN: Well, Wolf, the immediate impact, as you can guess, is people who live in, say, the manufacturing north up here, if they cannot afford to go look for where the good jobs are, the new jobs are, they must reinvent themselves right where they are and they're (INAUDIBLEE) economies. And conversely, down here in the south, if the people don't show up who are expected to pour money into shopping and restaurants and medical care, all the things they were counting on, they also have to reinvent their economy.

This causes problems for tax revenues. It will even affect how people vote, because when we have the new census, it'll decide how many people are in each Congressional district. So this bursting of the migration bubble very likely may impede the nation's ability to overall adapt our economy and improve our situation, and it could change our politics. Wolf?

BLITZER: Is there a generational issue tied to all of this, Tom?

FOREMAN: Yes, Wolf, well, 78 million baby boomers are headed into retirement. More than 300 of them are turning 60 every hour. And that matters because the government predicts that more than half of the 30 fastest growing jobs in this country over the next decade will be in health care, or services for these older people. And if they can't move to warmer weather, you know what that means for you young folks over here, it means you better take that diploma of yours and go trade it in for a winter jacket. Because more of you are going to be staying up north than you thought -- Wolf?

BLITZER: All right Tom, thanks very much. Tom Foreman, good explanation.

President Obama is offering Iran a new beginning. But his rare video message is getting an all-too familiar response from Tehran. Stand by, you're about to hear the president of the United States in his own words speaking to Iran.

And some state lawmakers are protesting what they call a racist snub of the president.

Insurance giant AIG meanwhile bites the hand that gave it a bailout.

(COMMERCIAL BREAK)

BLITZER: Right back to Zain. She's monitoring some other important stories incoming into THE SITUATION ROOM. Zain, what do you have?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, two dozen African-American lawmakers walked out of the Georgia state capital today, angry over what they say was a racially motivated move. Republican leaders who are white delayed the passage of a resolution that would have made President Obama an honorary member of the Georgia legislative black caucus. Georgia's house speaker said the proposal needed some language changes. Supporters, including some black lawmakers, say the move is a racist snub. The FBI is taking a close look at Wall Street. The agency's deputy director told Congress today that there are now 43 criminal investigations connected to the current financial crisis. That's seven more than last month. He also noted an increase in mortgage fraud investigations and says all these cases are straining white collar crime resources.

A world renowned paleontologist is admitting that he stole dinosaur bones. Attorneys say that Nate Murphy will plead guilty to stealing fossils from federal land in Montana. He's already pleaded guilty in state court to stealing a fossil in order to sell it. Among the man's famous discoveries is a dinosaur named Leonardo. Said to be one of the best preserved dinosaurs in the world.

Take a look at this. See those orange panels that you see? They're made for a nerve-racking morning aboard the International Space Station. They're solar wings and they stretch out more than 240 feet. NASA says astronauts successfully unfolded them today, avoiding any risks or snags. The new panels are the final pair of electricity generating wings. Pretty amazing Wolf, eh?

BLITZER: Amazing and very dangerous, too. We're glad it worked out just right, Zain. Thanks very much.

It's a remarkable, truly remarkable diplomatic move by the President of the United States. A direct video appeal to the people of Iran urging a new beginning in its relationship with the United States. You're going to hear what the president said in the video message. He even speaks in Farsi a little bit.

Plus, they protected their country and now they can't find work. Returning veterans fight a new battle in the troubled job market.

The company that got billions from Uncle Sam, now AIG is suing for more. And it's new fuel for the bailout backlash.

(COMMERCIAL BREAK)

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

Happening now, the U.S. Postal Service now says it will cut 1,400 jobs and offer 150,000 workers early retirement. The agency has been plagued by rising costs and shrinking mail volume.

New video shows a standoff at sea between U.S. and Chinese ships earlier this month. The pentagon has said the Chinese harassed the U.S. surveillance ship in international waters by using aggressive maneuvers and following dangerously close.

Large crowds greeted Pope Benedict XVI in the African nation of Angola today. The pope urged people in the oil-rich region to remember the country's poor and continue building peace after decades of civil war.

I'm Wolf Blitzer, you're in THE SITUATION ROOM. Naroos marks the beginning of spring for Iranians and it's the start of their new year. President Mahmoud Ahmadenijad and the supreme religious leader the Ayatollah Haminai(ph) addressed their nation on this the first days of the 12-day festival. But President Obama is also talking directly to the people of Iran.

(BEGIN VIDEO CLIP)

OBAMA: Today I want to extend my very best wishes to all who are celebrating Naroos around the world. This holiday is both an ancient ritual and a moment of renewal. I hope that you enjoy this special time of year with friends and family. In particular, I would like to speak directly to the people and leaders of the Islamic Republic of Iran. Naroos is just one part of your great and celebrated culture. Over many centuries your art, your music, literature and innovation have made the world a better and more beautiful place. Here in the United States, our own communities have been enhanced by the contributions of Iranian Americans. We know that you are a great civilization and your accomplishments have earned the respect of the United States and the world.

For nearly three decades, relations between our nations have been strained. But at this holiday, we are reminded of the common humanity that binds us together. Indeed, you'll be celebrating your new year in much the same way that we Americans mark our holidays. By gathering with friends and family. Exchanging gifts and stories. And looking to the future with a renewed sense of hope.

(END VIDEO CLIP)

BLITZER: While he stresses that renewed sense of hope to everyday Iranians, to Iran's leaders the president highlights some serious differences.

(BEGIN VIDEO CLIP)

OBAMA: Within these celebrations lies the promise of a new day. The promise of opportunity for our children, security for our families, progress for our communities, and peace between nations. Those are shared hopes. Those are common dreams. So in this season of new beginnings, I would like to speak clearly to Iran's leaders. We have serious differences that have grown over time. My administration is now committed to diplomacy that addresses the full range of issues before us, and to pursuing constructive ties among the United States, Iran and the international community.

This process will not be advanced by threats. We seek instead engagement that is honest and grounded in mutual respect. You, too, have a choice. The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations. You have that right, but it comes with real responsibilities. And that place cannot be reached through terror or arms, but rather through peaceful actions that demonstrate the true greatness of the Iranian people and civilization. And the measure of that greatness is not the capacity to destroy, it is your demonstrated ability to build and create.

(END VIDEO CLIP)

BLITZER: As Iran celebrates the holiday, the president also sends out positive hopes for a new beginning between the United States and Iran.

(BEGIN VIDEO CLIP)

OBAMA: So on the occasion of your new year, I want you, the people and leaders of Iran to understand the future that we seek. It's a future with renewed exchanges among our people -- and greater opportunities for partnership and commerce. It's a future where the old divisions are overcome, where you and all of your neighbors and the wider world can live in greater security and greater peace.

I know that this won't be reached easily. There are those who insist that we be defined by our differences. But let us remember the words that were written by the poet Sadi so many years ago: "The children of Adam are limbs to each other, having been created of one essence."

With the coming of a new season, we're reminded of this precious humanity that we all share and we can once again call upon this spirit as we seek the promise of a new beginning.

Thank you and Eid-eh Shoma Mobarak.

(END VIDEO CLIP)

BLITZER: The president of the United States ending in Farsi to the people of Iran.

You may be angry at AIG over those bonus payments, but guess what?

AIG is also angry. The company is now suing the federal government for the return of hundreds of millions of dollars. And get this -- your money could be helping AIG sue the government.

What's going on?

Brian Todd is here with some explanations.

What is going on -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, after all the furor over executive bonuses, AIG has another headache. The company now battling the perception that it's biting the government hand that's feeding it.

(BEGIN VIDEOTAPE)

TODD (voice-over): For an embattled Wall Street giant already being skewered for hundreds of millions of dollars in executive bonuses, the timing couldn't be worse. AIG is actually suing the same federal government that's bailing it out, trying to claim more than $300 million in tax payments that the company says the IRS owes it. The suit's been in the works for months and it's over tax payments dating back years. But the paperwork was completed just a couple of weeks ago, when the controversy over AIG's executive bonuses was heating up.

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: AIG is in the spotlight now and messaging is important. So it's unfortunate that, you know, they're putting themselves in a position where they're getting even more negative press.

TODD: AIG claims it paid too much tax on profits from aggressive deals involving its offshore companies -- firms registered in places like the Cayman Islands, Ireland, France, the Netherlands, and New Zealand. After the IRS rejected the claims, saying AIG miscalculated, the firm sued -- not unusual. But in the bailout, AIG is getting nearly $200 billion from the Feds and the government essentially owns 80 percent of the company. That means AIG could well be using taxpayer dollars to sue the government that's bailing it out.

A former IRS commissioner says the company has that right.

SHELDON COHEN, FORMER IRS COMMISSIONER: Dollars are fungible. And once you have dollars in your coffers, you can pursue any legitimate business aim. Well, a business aim is to minimize your tax.

(END VIDEOTAPE)

TODD: The IRS won't comment on this lawsuit. An AIG spokesman tells us the company is: "Taking this action to ensure that it is not required to pay more than its fair share of taxes." He makes the point that with all the furor over AIG's bailout, this is a company that needs to recoup those -- that legitimate money in order to pay the government back for some of this bailout.

Wolf, they say it's legitimate.

BLITZER: Was some of that profit made by that one division at AIG -- the financial division that got the company in such a mess to begin with?

TODD: We reviewed the documents. And, yes, some of those profits were made by that Financial Products division. They're the ones that got involved in those very risky default credit swaps -- those risky investments that nearly brought AIG down. The company says these particular gains that they overpaid taxes for were legitimate. They want some of it back.

BLITZER: All right. Brian.

Thank you.

Deficit sticker shock -- new numbers show it's $2 trillion higher than the White House projected just a few weeks ago.

So what is going on?

Plus, the president sits down with Jay Leno and our iReporters rate his performance. We're going to talk about all of that with the best political team on television.

(BEGIN VIDEO CLIP)

DAVID WHITE, IREPORTER: It's nice to see a sitting president go taking his show out on the road, talking to the American people.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: We're getting some new sticker shock right now from President Obama's proposed spending plans. The Congressional Budget Office is now projecting deficits averaging almost $1 trillion -- $1 trillion every year over the next 10 years. That's $2 trillion more than the White House predicted only a few weeks ago.

But today, the president's press secretary said this.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: None of the numbers today change the president's either objectives or his ability to achieve that deficit reduction.

(END VIDEO CLIP)

BLITZER: Let's talk about that and more with our senior political analyst, Gloria Borger; Steve Hayes of the "Weekly Standard;" and our CNN political analyst, Roland Martin.

Is Robert Gibbs right, that these CBO projections really don't really change anything from the White House prospective?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I think he's speaking for the White House. But I think they may have to change things when the rubber meets the road when it comes to Congress, because the deficit hawks in Congress -- including Democrats -- were pushing back against their budget even before these budget estimates by the CBO. So it's clear they proposed everything in their budget and they're going to have to take a little less.

BLITZER: And we're hearing this whole week, Steve, Democrats, led by Evan Bayh, Mary Landrieu of Louisiana -- these are Democrats, moderate Democrats, saying you know what, this is too much?

They've got serious reservations about the scope of this presidential ambition.

STEPHEN HAYES, SENIOR WRITER "THE WEEKLY STANDARD": Yes. I thought that was a very cavalier comment by Robert Gibbs. I mean I think, clearly, the reality is they're going to have to trim. And they're probably going to have to trim pretty significantly for precisely the reasons that Gloria said and that you mentioned. You have Congressional Democrats -- moderates in both the Senate and the House, many of whom are up for re-election in two years or a year-and-a-half, who are really worried about having to take this back and sell this to their constituents in a time of great economic peril.

BLITZER: He's going to need a unified Democratic Party, Roland, don't you think, if he's going to get that agenda -- education, health care, energy -- all that through?

ROLAND S. MARTIN, CNN POLITICAL ANALYST: Oh, of course. I mean, look, again, this is where Democrats -- you've always had these splintered factions among the Democratic Party, whether it's blue dogs, whether it's moderates, whether it's conservatives. You even have liberals who, frankly, want to see more.

But, also, this is not a shock when you have a Congressional Budget Office that differs with the White House. We've seen this in the Republican and Democratic administrations, where you have people who are at odds as it relates to how much something is going to cost.

We saw the same thing with the prescription drug bill under President George W. Bush. Congress said it was going to cost more, he said less. You see that happen all the time between the two branches of government.

BLITZER: In the Senate, Gloria, as you know, on some of these votes, he'll need 51 votes in the Senate, but on others, he'll need 60. There are 58 Democrats right now in the Senate. But at least eight or 10 of them are moderate Democrats -- even conservative Democrats.

BORGER: Yes. And some of them are pretty serious people who run things like the Budget Committee. So he's -- he's going to have some problems here.

Look, the difference between the Congressional Budget Office and the White House projections are these growth projections. Clearly, the White House said it wasn't going to present these so-called rosy scenarios. But they said, for example, that the economy is going to be back to growth by the year 2010.

Lots of economists, of all stripes, believe that that's too rosy.

The truth of the matter is it's very hard to project right now. You know, they're kind of walking blindfolded into a lot of this economic mess. And so these numbers are -- are very hard to hold anyone to at this particular point.

BLITZER: And just to be fair, Steve, these are just guesses, really. These are just projections over the next 10 years.

BORGER: Right.

BLITZER: I've seen these projections over many years here in Washington. And you go back and you do -- you review what the projections were, they're always wrong. HAYES: Sometimes wildly off. Yes. And I think Roland's point actually is a good one. I mean it's good to put this in context. You do often have disagreements between the Congressional Budget Office and the Office of Management and Budget, representing the White House.

But I would say, though, it's important to note that the Congressional Budget Office is a nonpartisan office operating under what is now Democratic leadership in the -- in the Congress.

BLITZER: And Peter Orszag, who's now the budget director at the White House, Roland, used to head the Congressional Budget Office not that long ago. So he's very familiar with what they say as opposed to what -- to what the White House projections are.

I want to play this little iReport, because we asked our viewers to review the president's performance on "The Jay Leno Show" last night.

Here's an iReport we got from David White. He's a frequent iReporter from Washington, D.C. And he says he's an Obama voter.

(BEGIN VIDEO CLIP)

WHITE: It's nice to see a sitting president going, taking his show out on the road, talking to the American people, letting them know what it is that needs to be done and getting it done. Great show.

(END VIDEO CLIP)

BLITZER: Was it a great show last night, Roland?

MARTIN: Look, I think -- look, I'm a golfer. You know, the president is a lefty like I am and I wish his golf game was better. Mine is definitely better than his.

Look, this is like a guy playing 17 holes of golf. He double bogeys the last hole and you forget how he played the rest of the game.

The comment regarding the Special Olympics, that's all that folks are talking about. And so, in many ways, that overshadows anything else that took place last night.

And so I think he's probably kicking himself. He stepped on his own story.

BLITZER: I'm sure he is. He says himself, he apologizes. He deeply regrets that reference.

BORGER: He does. But, you know, Wolf, this was part of a plan that they have to take the president outside of Washington, to get beyond the Beltway -- the chattering classes. He did the two town hall meetings. He did ESPN. He did "The Jay Leno Show." He's -- he's going to do "60 Minutes." And then he's going to face the tough questions from the media next Tuesday night. So you know, this is part of a plan they've got to go out beyond here, talk directly to the American people. Because they are counting that his personal popularity, which remains high, is going to help him pass what he wants to pass in the Congress.

HAYES: That's a risky strategy, though. And I think, you know, when you -- when you have a mistake like the one he had last night, where he made this joke in very, very poor taste, I think that it helps to cancel the goodwill he might have generated throughout the rest of the appearance.

BLITZER: All right...

HAYES: And I think maybe it makes people really question, hey, this is not funny...

BORGER: He did a good job, though...

HAYES: Why is making a joke about this?

BORGER: He did a good job during the whole appearance. I was very skeptical about whether, in this tough economic times, you know, he should go on Jay Leno. But I thought he really explained his economic plans pretty well...

BLITZER: We're going to leave it there, guys...

BORGER: ...and pretty seriously.

BLITZER: Hold your...

(CROSSTALK)

BLITZER: Hold your thoughts.

MARTIN: He did a great job, but that...

BLITZER: We're out of time, guys.

MARTIN: Yes.

BLITZER: But you know what?

We'll be back next week.

Have a great weekend.

Thank you.

And don't forget, Tuesday President Obama will be holding that prime time White House news conference.

If you were a reporter in that room, what would you ask the president of the United States?

You can submit your video questions to iReport.com/situationroom. Be sure to watch us next week to see if your video makes it on the air here in THE SITUATION ROOM. 8:00 p.m. Eastern Tuesday night -- the presidential news conference at the White House.

New video of a tense confrontation at sea between an American Naval ship and Chinese vessels. The Pentagon calls it harassment. You can watch what happened and you'll decide for yourself. The video just coming in.

And Jeanne Moos is handing out grades -- awards for AIG and the week that was.

Guess what award one member of Congress got?

(BEGIN VIDEO CLIP)

EDWARD LIDDY, CEO, AIG: I take offense, sir, at the use of the word...

REP. STEPHEN LYNCH (D), MASSACHUSETTS: Well, offense was intended, so you take it rightfully, sir. Look, I'm an attorney -- a contract attorney. You might want to try that with somebody else.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: New video you won't want to miss.

Remember those Chinese sailors that harassed a U.S. Naval ship in the South China Sea?

In a bizarre twist, they stripped down to their underwear. We've got the video.

(COMMERCIAL BREAK)

BLITZER: We're getting some gripping new pictures -- new video of that dangerous standoff at sea earlier this month between an American Naval vessel and Chinese vessels.

Let's go to our Internet reporter, Abbi Tatton -- Abbi, I want you to show our viewers the video that the U.S. Navy has released.

ABBI TATTON, CNN INTERNET REPORTER: Well, Wolf, it's right here. The Pentagon called this: "One of the most aggressive actions we've seen in some time."

And now we've got the pictures. Take a look.

Five Chinese vessels in the South China Sea drawing alongside a U.S. surveillance ship.

And take a listen to the U.S. crew as they approach.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Chinese aggression from aboard the USNS Impeccable. Details at 11:00.

UNIDENTIFIED MALE: Hey, (INAUDIBLE)?

UNIDENTIFIED MALE: He's waving.

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED MALE: He's waving his flag.

UNIDENTIFIED MALE

(INAUDIBLE) naked.

UNIDENTIFIED MALE

And he won't be standing on the deck if he does, he'll be -- he'll be gargling sea water.

(END VIDEO CLIP)

TATTON: Wolf, you can hear from that video the crew trying to figure out what it is the Chinese crew were doing on those vessels.

The Pentagon said later in a statement that they were trying to use poles to snag the U.S. surveillance ship's acoustic equipment in the water.

The Pentagon also said in that statement that in another incident, the Chinese vessels contacted the USNS Impeccable over the radio and demanded that they leave the area, calling their actions illegal. But the Pentagon says these were international waters. These were routine actions going on there.

No response from the Chinese foreign ministry -- Wolf.

BLITZER: It ended OK, but it was really tense. Could have been a disastrous ending, as well.

All right. Abbi, thank you.

The government reports that unemployment among U.S. military veterans of the wars in Iraq and Afghanistan is rising -- up more than a full percent from January to February this year and more than 4 percent from a year ago.

Our Pentagon correspondent, Chris Lawrence, takes a closer look at what the vets can do about it -- Chris?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Wolf, veterans bring qualities like honesty and the ability to learn quickly. But they've got to find creative ways to sell their military skills to private companies.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Shake a lot of hands, pass out a lot of resumes and ask a lot of questions.

LAWRENCE (voice-over): Some of these veterans are just back from Iraq or Afghanistan. And the job market's completely different from the one they left a year to 15 months ago. Now, infantry officers like Jason Carpenter are competing with thousands of experienced out of work civilians.

JASON CARPENTER, ARMY NATIONAL GUARD: I hope they look at just, you know -- you know, as an officer in the military, you know, I bring a lot of, you know, hard work, dedication.

LAWRENCE: Some employers say that's not enough. They've downsized to the point where they have to hire a worker who can jump in on day one. The company may want to hire vets, but can't afford to train them.

MYRON FORD, ARMY NATIONAL GUARD: I have heard in the past that some of the jobs that's in the military -- some of them do not translate or cross over to the civilian workforce.

LAWRENCE: For example, a veterans advice Web site says an infantryman's skills translate to a civilian service sales representative -- not exactly a perfect match.

One career adviser recommends vets immediately stop talking like they're still in the service.

VINCE PATTON, MILITARY.COM: Because the military is sort of a culture all in itself. And with that, you learn acronyms and all kinds of different abbreviations that are used and short words or different catchy phrases.

LAWRENCE: Veterans should immerse themselves in terms like "acquisition cost" or whatever the language of the business they're applying to.

(END VIDEOTAPE)

LAWRENCE: Some veterans may not even realize how they can cross over. I started plugging in jobs on Military.com's skills translator. It turns out, a crewman on an Army Avenger has a good chance of finding work in the civilian world as a machine tool operator -- Wolf.

BLITZER: Chris Lawrence, thanks very much.

Let's hope the best for those vets.

Let's go back to Jack for "The Cafferty File" -- Jack.

CAFFERTY: The question this hour, Wolf -- and it fits in with the report we just saw: What do you fear most about losing when it comes to your quality of your life? And jobs are the most prominently mentioned thing.

Matt writes: "I work for a large paper mill that has, since the first of the year, laid off 20 percent of the workforce. We're constantly under the threat of losing our jobs. I'm 51, 11 years from retirement. And if I lose my job, there's no one that will hire me with my experience that pays anywhere near what I make now. I've got to be afraid to buy anything except gas and groceries. It's hard to sleep at night."

Jim in Chicago: "Jack, what I fear most is losing my self- respect in trying to cope with such a major setback this late in my life."

Michael in Florida writes: "I'm a public schoolteacher. What I fear losing the most is the future that's awaiting my students. My school is closing due to budget cuts. Class sizes elsewhere are increasing. Hundreds of teachers in my district are out of a job. Only a fool believes that students aren't the ultimate loser in this."

Janet in New Jersey: "I'm recently divorced after 38 years of marriage. Currently, I'm employed, but I worry that if I should lose my job at age 60, I won't be able to get another one. Also, being alone now, I'm afraid I won't have enough savings to live on for the next, hopefully, 20 plus years of my life. The 401(k) plan I have been saving into is now a joke."

And Pete in Alexandria writes this: "As painful as this type of adjustment is, I think it will have a positive overall benefit. America has become way too entitled over the last 25 years. It lost the edge that made us a world leader. It's become all about stuff and me, me, me. What do I fear most? An artificial economy where the propping up of ridiculous institutions that are clearly failed takes priority. It's going to kill the entrepreneurial spirit and innovation that comes from taking the credit and the blame for trying something new and building something great."

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.

Have yourself a tidy little weekend, Mr. Blitzer.

I'll see you Monday.

BLITZER: See you Monday, Jack.

Thanks very much.

Leave it to Jeanne Moos -- she takes on AIG, the political circus on Capitol Hill this week.

(COMMERCIAL BREAK)

BLITZER: Jeanne Moos has a "Moost Unusual" look at AIG's week on Capitol Hill.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): With cameras snapping like jaws, AIG's CEO walked into the lion's den. But the den was schizophrenic. Sometimes lion...

LYNCH: This is so outrageous.

MOOS: ...sometimes lamb.

UNIDENTIFIED MALE: But you are one of the good guys.

UNIDENTIFIED MALE: It's arrogance.

UNIDENTIFIED MALE: Thank you for working for $1 a year.

UNIDENTIFIED MALE: You'll get a...

UNIDENTIFIED MALE: Is this an evidence of cooking the books?

UNIDENTIFIED MALE: Thank you, Mr. Liddy, for your rather thankless service.

UNIDENTIFIED MALE:

LYNCH: Do you have anything to say for yourself?

LIDDY: Yes, sir, I do.

MOOS: The award for tough guy goes to Massachusetts Democrat Steven Lynch, who didn't give an inch, though CEO Liddy only took over to rescue AIG after the shenanigans.

LIDDY: I take offense, sir, at the use of the word...

LYNCH: Well, offense was intended, so you take it rightfully, sir. Look, I'm an attorney -- a contract attorney. You might want to try that with somebody else.

MOOS: Which brings us to the most waved document -- the detested AIG bonus agreement. CEO Liddy kept saying the bad apples were, for the most part, gone from AIG, leaving the good ones.

LIDDY: You would be proud of them.

UNIDENTIFIED MALE: Not right now I'm not.

MOOS: There were plenty of folksy expressions at the hearing.

UNIDENTIFIED MALE: Pin the donkey on AIG.

MOOS: And lots of comparisons.

UNIDENTIFIED MALE: It's like snake oil salesmen selling you jars of snake oil. And they don't even have the oil in the jars.

MOOS: New York Democratic Congressman Gary Ackerman takes the cake when it comes to butter.

REP. GARY ACKERMAN (D), NEW YORK: ACKERMAN: There's a great company called I can't believe it's not butter. You know, at least they have the decency to tell you it's not butter.

MOOS: Only Fabio could have said it better.

(BEGIN VIDEO CLIP, COURTESY YOUTUBE/UNILEVER)

UNIDENTIFIED MALE: I can't believe it's not butter.

(END VIDEO CLIP)

MOOS: And we couldn't believe how Congressman Ackerman kept spreading the butter analogy.

ACKERMAN: I can't believe it's not waterboarding.

I can't believe it's not insurance.

MOOS: The award for multitasking goes to House Committee members busy BlackBerrying during the hearing.

The prize for most memorable new name for AIG?

UNIDENTIFIED MALE: Arrogance, incompetence and greed.

MOOS: The award for most feeble protest goes to the group Code Pink, though they did manage to get yelled at.

UNIDENTIFIED MALE: Signs down.

MOOS: AIG's CEO even chatted with the protesters peaceably. But later, the committee chairman ordered their signs removed, leading Congressman Barney Frank to quip...

REP. BARNEY FRANK (D), MASSACHUSETTS: It's a good thing no one was wearing a t-shirt with a slogan.

MOOS: Little did he know more than t-shirts would have had to have been removed. Which brings us to the most disturbing camera angle of the day.

UNIDENTIFIED MALE: The committee will stand in recess.

MOOS: Now, that's a bonus even an AIG exec could live without.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: See you on Saturday's SITUATION ROOM, 6:00 p.m. Eastern.

That's it for me.

I'm Wolf Blitzer. Up next, "LOU DOBBS TONIGHT."

Lisa Sylvester is sitting in for Lou -- Lisa.