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THE SITUATION ROOM

Economy Gains Jobs in March; Allawi's Brush With Death/Test Driving the new iPad; Where Stupidity Ends and Corruption Begins; French Back Tougher Sanctions for Iran; High Profile Visitor; Saudi Poetess Slams Extremists

Aired April 3, 2010 - 18:00   ET

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


WOLF BLITZER, HOST: The U.S. economy gains jobs, but not enough to satisfy anyone. This hour, the best-selling author Michael Lewis takes us inside the doomsday machine that helped crash Wall Street and drag the nation into recession. Also, the big winner in Iraq's recent election, the former and likely future prime minister, Ayad Allawi, sharing a moving personal story about the night Saddam Hussein's hit men tried to kill him.

And before you go out and buy the new iPad, you'll want to get the sneak peek I got about what it can, what it can't do. We'll have that for you. That's coming up.

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

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Today is an encouraging day. We learned that the economy actually produced a substantial number of jobs instead of losing a substantial number of jobs.

(APPLAUSE)

OBAMA: We are beginning to turn the corner. As I said, just one year ago, we were losing an average more than 700,000 each month. But the tough measures that we took, measures that were necessary even though they were sometimes unpopular, have broken this slide and are helping us to climb out of this recession.

(END VIDEO CLIP)

BLITZER: President Obama is touting the largest jump in new jobs in the United States in three years. But with so many Americans still out of work, most people agree that even a relatively good report is certainly not good enough. The Labor Department says businesses added 162,000 jobs to their payrolls in March. It's only the third month of gains since the recession began back at the end of 2007.

It is a stark contrast to January 2009, when the president took office and the nation lost more than 700,000 jobs, the biggest one- month nosedive during the economic downturn. But the unemployment rate still stands at 9.7 percent, and economists note that some 48,000 of those new jobs added last month were temporary hires by the U.S. Census Bureau, and those jobs will go away in a few months.

(BEGIN VIDEOTAPE)

Joining us now is the White House economic adviser, Austan Goolsbee. Austan, thanks for joining us.

AUSTAN GOOLSBEE, WHITE HOUSE ECONOMIC ADVISER: Sure. Any time.

BLITZER: Is the recession over?

GOOLSBEE: Well, you know, the recession -- the recovery has begun. I don't think the recession's going to be fully declared over, you know, until some time after. In some sense, that's just a label. You know, it doesn't make any difference. The fact that more than eight million people have lost their jobs since the recession began in 2007 is all you need to know of -- I thought your description was exactly perfect, Wolf. I mean, it's an encouraging report, but it's not near enough. I think the president's totally in agreement with that. We've got to do a lot more.

BLITZER: We see numbers saying that maybe as many as 15 million people are still without jobs right now. They're looking for work. It's 9.7 percent, the unemployment rate. Do you expect that number to go down significantly over the course of this year?

GOOLSBEE: Well, you know, I'm not a -- I'm not a -- I try to stay out of the forecasting game, but I don't see it coming down very substantially over the course this year, no. You know, if you -- if you talk to the private forecasters, I think we've got to get growth going. We've got to get employment growth continuing. And only after you have some sustained economic growth and payroll job creation, like what you've seen this month -- but we need even bigger and we need it sustained before the unemployment rate will come down because you have had a lot of people, millions of people, that dropped out of the labor force and don't even count as unemployed.

You know, the job -- because -- this recession was the worst since 1929, and it's going to take a long time to -- for us to recover. We've got to push in these areas the president's been indicating.

BLITZER: And because even to stay even at 9.7 percent, you have to create at least what, 100,000 jobs a month...

GOOLSBEE: Yes.

BLITZER: ... because of the people coming into the job market because of the population growth. So you're going to need 300,000, 400,000, 500,000 jobs a month to start seeing that number go down.

GOOLSBEE: You know, you got to -- you got to have sustained economic growth and sustained job creation. There's no question about that. You know, the exact numbers that you need to get the unemployment rate down depend on how many people come out from out of the labor force. But the president is completely right to say the fact that we had one encouraging job report -- and that this quarter is a way substantial improvement from when he took office, that we went from minus-750,000 to plus-160,000 is a great achievement -- but we're nowhere near a situation where we ought to be taking our foot off the gas pedal. And his targeted jobs program of, Let's go for small business credits and expansion, let's go for infrastructure, and let's go for clean energy jobs, I think remain...

BLITZER: All right...

GOOLSBEE: ... absolutely paramount. We do need that.

BLITZER: Here's some very disturbing statistics. I'll put them up for you. Unemployment rate among white people in the United States in March, 8.8 percent. It stayed the same from February, 8.8 percent.

But among African-Americans, in February, it was 15.8 percent, 16.5 percent in March. It's nearly double what it is for whites. And there are complaints, as you know, from the National Urban League, other African-American organizations, you're not doing enough to focus in on the African-American unemployment rate. What do you say in response to that?

GOOLSBEE: Well, I'd say two things. First, it's just a technical matter. The unemployment rate did rise this month among African-Americans, but be a little bit careful because the last month, there was a big drop. A lot of people think it had to do with the weather affecting the industries which are more disproportionately African-American. I think it's unacceptable and extremely high, the unemployment rate among minorities, as well as among young people. And we've had a very high increase in the unemployment rate among men.

I think the most important thing we can do, the president's identified before, is get job growth going and economic growth going. The three areas the president has identified -- small business, infrastructure and clean energy and manufacturing jobs -- would address some of those sectors that have been the hardest it, and those sectors getting hard hit have -- have really been why the unemployment rate has been as dramatic as it has been.

But this issue of targeted job creation, I think we need to look at that because in a lot of these groups it's really, really terrible.

BLITZER: You got -- you got some work to do on that front. You got work to do in all of these fronts, but specifically on that front.

I want to shift gears. There was a very blistering attack that the former Clinton labor secretary, Robert Reich, had on HuffingtonPost. And he wrote this. He said, "The Fed," referring to the Federal Reserve, "has a big problem. It acts in secret. That makes it an odd duck in a democracy. As long as it's merely setting interest rates, its secrecy and political independence can be justified. But once it departs from that role and begins putting billions of dollars of taxpayer money at risk, choosing winners and losers in the capitalist system, its legitimacy is questionable."

This is Robert Reich. This isn't Ron Paul, the Republican congressman from Texas who doesn't like the Federal Reserve. This is Robert Reich. What do you say to Professor Reich?

GOOLSBEE: Well, let me say Bob Reich is an old friend of mine and I greatly respect him. I don't think I agree with all of the critique that you're describing there from the HuffingtonPost, but I'll probably try to get on the phone and call him and talk with him.

I think what you saw the Fed -- look, if you talk to the people at the Fed, nobody wanted to be in the situation that we have just gone through, where they had to take a series of totally extraordinary actions in order -- with the, you know, assistance -- assisting the administration to try to head off a great depression.

So I think it's perfectly appropriate for us to look at and ask, What kind of financial regulatory system do we want? What kind of monetary policy system do we want? But I certainly hope we don't overcorrect in some sense and say, Well, you know, the Fed shouldn't be independent, or that kind of thing, because I think that could be potentially quite a bad move.

BLITZER: Austan Goolsbee is one of the president's economic advisers. Austan, thanks for joining us.

GOOLSBEE: Great to see you again.

(END VIDEOTAPE)

BLITZER: The former and likely future prime minister of Iraq explains how he almost was assassinated decades ago.

(BEGIN VIDEO CLIP)

AYAD ALLAWI, FORMER IRAQI PRIME MINISTER: My wife, late wife, then just woke up and turned the lights on, and I saw a huge guy wielding an axe to try and cut me into pieces.

(END VIDEO CLIP)

BLITZER: Just ahead, the story of Saddam Hussein's hit men and how they went after Ayad Allawi. Stand by to hear Allawi share the gripping details.

And U.S. relations with France front and center over at the White House this week. Did old spats weigh in on the talks between president Obama and President Nicolas Sarkozy?

And a Saudi woman uses an "American Idol" type competition to blast Muslim clerics. Did she get a prize or a punishment? Stay with us. You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Iraq's fragile democracy is being put to the test again, this time with a contested election. Depending on the outcome, the next prime minister would be the former interim prime minister, Ayad Allawi. We sat down for an exclusive interview this week, and he recalled how his break with Saddam Hussein back in the 1970s nearly cost him his life.

(BEGIN VIDEOTAPE)

You have an amazing personal story that many of our viewers around the world are not familiar with, when you broke with Saddam Hussein and he sent henchmen to try to kill you, to axe you literally, in the middle of the night, when you were living in exile in London with your wife. And I know it's a very painful moment, but if you don't mind sharing that story with our viewers, I think they would get to know you a little bit better. And this is important, given the possibility, the very real possibility, you'll be the next prime minister of Iraq.

AYAD ALLAWI, FORMER IRAQI PRIME MINISTER: Well, Wolf, frankly, I joined the Ba'ath Party when I was a teenager and I participate in the coup in 1968. I was just a medical student then. Then I was disenchanted with the behavior of the regime. In 1970 and 1971, I qualified as a doctor, and I had to leave because there was real disagreement with the leadership in the party with Saddam Hussein. I left to Lebanon, then went to London to do my post-graduate studies in medicine.

And there and then, of course, I left the party, the Ba'ath Party, and I was trying to form a kind of clandestine opposition group from within the establishment in Iraq. This did not appeal, of course, to Saddam Hussein, and so he sent me people to try and assassinate me in London.

On a very cold night in February 1978, I woke up suddenly, accidentally, to see a shadow by the bed. And then I saw a flickering -- a flicker around the shadow. I thought it was real, not a dream, so I kicked the shadow with my right leg. And the next thing I felt that I was struggling to stand on my feet. I couldn't. There were blood shooting out of my body. I had fractures of the skull.

My wife, late wife, then just woke up and turned the lights on, and I saw a huge guy wielding an axe to try and cut me into pieces. A severe fight followed between me and this person. He was so tough and strong that he pulled two teeth of my wife in his bare hands, and then he hit her with an axe.

I could not stand on my legs because my right knee was almost severed, cut. I had very bad fractures. And then I managed ultimately to -- to take the axe into my hands and hit him on his legs because I couldn't stand at all. And by then, I was almost cut into pieces. And he left the room. His fellow was outside waiting for him on the door of the bedroom. This was about 3:00 o'clock in the early morning, after midnight.

And I called the -- I crawled to the telephone, called the hospital and said that we are badly injured, both myself and my wife, and to call the police and get the operating theater ready. We went -- we were taken to hospital, rushed to the theater, operating theater. I stayed for almost three nights in the intensive care unit and then transferred to the ward. In that period, the -- Saddam's henchmen attacked the morgue of the hospital to see whether my body was amongst the bodies who had been killed or dead in the hospital because for three days, there was no news about me. And this was a shocking thing for the British police, for the anti-terrorist squad in England. And this is, in a nutshell, the painful story which occurred on the 4th of February, 1978.

BLITZER: And you survived and you went through extensive surgeries, rehabilitation, therapy, physical therapy for a long time. And now you are on the verge right now of becoming the prime minister of Iraq. It's an amazing story, Dr. Allawi, but I have to ask you...

ALLAWI: Thank you.

BLITZER: -- how fearful are you right now, given this history, that you will be targeted? Because you have a lot of enemies, as you know. How worried are you about your own security right now?

ALLAWI: Well, I'm -- to be very honest, I'm quite worried. That's why I couldn't bring my family to Iraq. I leave them in London. My kids are still in university. But this is a duty that we have to pay. It's our country. We have to make it good. We have to make Iraqis worthy of their country and the country worthy of its citizens.

I think we need to make it a stable country that will contribute to the stability of the region and the world. And this is something -- it's a fate, really, as far as we are concerned. We have to do our best to do this. Fear is there, but hope is there at the same time. And thanks God, the world is there, and we need to continue work until we are victorious here.

BLITZER: You're a great Iraqi patriot and a very courageous man, Dr. Allawi. Thank you so much. Good luck to you, and good luck to all the people of Iraq.

ALLAWI: Thank you, Wolf.

(END VIDEOTAPE)

BLITZER: IPad mania reaching a climax, Apple's new tablet computer is finally here. We're going to take it for a test drive to see if it lives up to all the hype.

Plus, story time with a French twist. The first lady of France drops in at a Washington, D.C., school.

(COMMERCIAL BREAK)

BLITZER: After months of hype, Apple's new iPad touch screen tablet computer has finally arrived. Sales started today amid the kind of mania Apple is famous for inspiring. So what if -- what if this latest offering revolutionizes computers?

(BEGIN VIDEOTAPE) Ed Baig writes about technology for "USA Today." He took the iPad for a test drive, and Ed is here to show us something about this new machine. That's what it is, a machine. But give our viewers a little sense of what this iPad can do.

ED BAIG, "USA TODAY": Well, anybody who has an iPhone is familiar with this form-factor, but not in this size. And the big screen makes all the difference in the world. Let me show you.

BLITZER: Yes, show our viewers the screen. We're going to come up right behind you.

BAIG: I'm going to just show a comic book. This is Marvel Comics. Look at the screen there.

BLITZER: Beautiful color.

BAIG: Beautiful color. Now let me show you something very different, the elements. We all learned the periodic table of elements in high school.

BLITZER: Yes.

BAIG: Well, this is doing it on an iPad.

BLITZER: So you can just go in there and...

(CROSSTALK)

BAIG: ... go in there. There's hassium. You remember hassium.

BLITZER: Of course.

BAIG: There's palladium.

(CROSSTALK)

BLITZER: ... but you know what? I'm interested in how it deals with, for example, movies.

BAIG: OK.

BLITZER: You want to see a movie. You're on a plane, you're in a car, not driving, but you want to see a movie. What do you do?

BAIG: OK. Hit video.

BLITZER: Yes.

BAIG: Happen to have a few movies already loaded in here. "Star Trek."

BLITZER: Already comes up.

BAIG: We hit play, and there you go, you're watching "Star Trek." And like the iPhone, it has an accelerometer, so when you do this...

BLITZER: You see it a little bigger.

BAIG: Yes.

BLITZER: So there it is. And you can see that and you can hear it or you can plug in some headphones.

BAIG: Right. It does have a lone speaker, not stereo, but of course, you can plug in stereo speakers.

BLITZER: If you plug in the external speakers, you can have stereo.

BAIG: Absolutely.

BLITZER: What does this do differently than the other -- you know, the laptops or the iPhones or the BlackBerrys? What does this do differently?

BAIG: Everything is done with your fingers. It's all multi- touch. Now, that is like the iPhone, but of course, this is the iPhone on steroids, a lot bigger screen. It's fabulous for games. It's fabulous, you saw, for movies. Pictures look wonderful. Let me show you what pictures look like here. Just tap.

BLITZER: You got all your pictures, but you can't take pictures with this.

BAIG: You can't take pictures with it. And that is one of the flaws in version 1.0. I would expect that somewhere down the road, they'll come up with a camera, a video cam. It would have been nice to do some video chats on here.

BLITZER: You can't print with it, either.

BAIG: You can't print with it, either, at least right now. Again, I think there'll be work-arounds for these things down the road. But right now, no, you can't.

BLITZER: But the battery life is pretty good.

BAIG: Battery life is very good. Apple says about 10 hours. I actually got a little bit better than that. So the battery life is very good. Not as good as the Kindle, which can go up to two weeks, but again, this does a lot more than the Kindle.

BLITZER: Is this for everyone?

BAIG: No, certainly not. And I don't mean to get across the message that the traditional laptop is going away. Of course, it's not going away. Again, there's the physical keyboard. There's the issue of storage. You can obviously hold a lot more on a laptop. And the other thing, of course, is if you're doing more advanced computing, video editing, say, you wouldn't do that on this. BLITZER: You would do something else. But it will change. Is it fair to say it will revolutionize the way we deal with these kind of things?

BAIG: I think so. I mean, I -- the word "revolutionize" always is a little bit overhyped, but certainly, this has ground-breaking potential, and it has it in publishing and media, certainly games. This is a beautiful game machine. If I was Sony or Nintendo, I'd be worried.

BLITZER: All right. This is what some people probably aren't familiar with. This is an actual newspaper. You notice that there's paper here, things like this. It's amazing. What will this do to this?

BAIG: Well, being a newspaper guy myself, I'm hoping this sticks around for a while longer. But this certainly represents the future. Now, whether it's this device or others like it remains to be seen. But I'd like to believe that the printed newspaper isn't going away so fast.

BLITZER: Yes. Well, you know, it's been in big trouble. I suspect this is going to make this thing even bigger -- in bigger trouble.

BAIG: Absolutely.

BLITZER: Ed, thanks very much for coming in. Good demonstration.

BAIG: Thank you.

(END VIDEOTAPE)

BLITZER: Inside the Wall Street collapse, a world turned upside- down.

(BEGIN VIDEOTAPE)

MICHAEL LEWIS, AUTHOR, "THE BIG SHORT": It's crazy, for example, that a Wall Street trader can make tens of millions of dollars for himself even while he is losing billions of dollars for his firm. But that happened at several firms.

(END VIDEO CLIP)

BLITZER: That's the best-selling author Michael Lewis. I'll ask him who saw the financial implosion coming, who let it happen, and where are they now?

Plus, an unexpected voice daring to challenge Islamic hard- liners. Her outspoken poems could earn her a fortune and could cost her her life.

(COMMERCIAL BREAK) BLITZER: Tough economic times. Don't tell these guys. They made the front page of "The New York Times Business Section" this week.

Following a dismal year in 2008, these hedge fund managers each raked in a fortune last year, ranging from $825 million to $4 billion in one year. In fact, according to the industry magazine "AR", the 25 top earning managers made a record $25.3 billion in 2009.

But even in the hedge fund world, they are the exception, not the rule. Many continue to struggle along with the rest of the economy in the wake of the great recession. And how we got to this point is the subject of a new book.

(BEGIN VIDEOTAPE)

BLITZER: Joining us now, the bestselling author, Michael Lewis. His new book is entitled "The Big Short: Inside the Doomsday Machine".

Michael, thanks very much for coming in. Thanks for writing this book.

MICHAEL LEWIS, AUTHOR, "THE BIG SHORT": Well, thanks for having me, Wolf.

BLITZER: Quickly tell our viewers what the Doomsday Machine is.

LEWIS: Well, it's the - it's the subprime mortgage lending machine that - that in the end crashed Wall Street and almost all of at the same time. And - and the story that I'm telling is really about a handful of people who sort of diagnosed how the machine worked very early on and made a whole bunch of money from it.

BLITZER: They made money because - because they knew what was going on. It's a small number of people, and so many others lost millions and billions and trillions, indeed, including a lot of lower income, middle class families.

Was it a - a case of corruption or greed?

LEWIS: Well, greed is never a very satisfying explanation for what goes on in Wall Street, because it's always there. And so it's really a question of how it's channeled, and - and the financial, the rules of the road in the financial system have gotten so screwed up that it's channeled into doing both idiotic and corruption things.

I mean, it's a little hard to know where the stupidity ended and the corruption started, but there were elements of corruption and big elements of stupidity.

I'd argue that just generally, it wasn't widespread crime that led to this disaster, that it was closer to mass delusion, and that it's going to be very unsatisfying trying to criminalize the behavior. What really needs to happen is Wall Street needs to be dramatically reformed. BLITZER: You - you write an amazing story of this relatively small number of people who saw this, who understood what was going on, and they went on to make millions of dollars. And here's the question, why couldn't others see this? Why did only a small number of people see what this bust was going lead to?

LEWIS: Well, this is the question, and I think because you've essentially got the financial system as organized itself around this giant bet, and 99 percent of the system bet on the subprime mortgage bond market and a small handful of investors bet against it and - and understood what - what was happening while it was happening.

And I think the - at the bottom of it, it's a story about human perception and how people are - they see what they're paid to see. And Wall Street, the big Wall Street firms, got themselves twisted into this knot where they weren't paid to see simple facts in front of their nose.

I mean, the great - they saw (ph) the punch line to the whole crisis is that the people who - who were instrumental in disguising the risk of the subprime mortgage market, the people at the big Wall Street firms, ended up owning a lot of that risk. And so they ended up fooling themselves.

BLITZER: But some of them have now emerged still with a boatload full of money despite the fact that they were responsible for this disaster.

LEWIS: You know, this is the amazing thing. It didn't matter which side of the bet you were are on, you still got rich even when you were wrong.

And - and now, well, the problem is in some way worse. I mean, I - I would argue that the - the Wall Street firms got themselves in trouble in part because the traders were essentially playing with other people's money, and the other people being their shareholders. But now, they're playing not just with shareholder money but effectively with taxpayer money.

And that - it creates an incentive to take risks that really shouldn't be taken, and - and that's - and they're paying themselves very well for taking this risk right now, even though in effect what's happening is money is being gifted to the big Wall Street firms by the federal government.

BLITZER: Should people have gone to jail because of this?

LEWIS: I'm sure people will go to jail, but the problem - you missed the point, I think, if you think, oh, if we just put the bad people in jail, everything would be OK, because I think the vast majority of the insane behavior was perfectly illegal. I mean, that's what's frightening.

BLITZER: Perfectly legal, (INAUDIBLE).

LEWIS: (INAUDIBLE) the laws need to be - the laws need to be changed. It -

So it should be against the law for a Wall Street firm to pay ratings agencies to rate the bonds they create, and it should be - it should be against - it should be against the rules of financial to - in order - to be able to create massive amounts of insurance on securities that isn't regulated like insurance. I mean, there are lots of things that just were - the rules got twisted.

BLITZER: So - so you're basically saying we need more government intervention, more government regulation and a whole new set of laws.

LEWIS: It - it's - probably and then (ph) is more government regulation, but it's different sorts of government regulations.

I sort of think that regulators of the financial system will never be able to regulate it if the rules encourage really insane behavior as they do, because, essentially - look, these people on Wall Street make, you know, multiples of what regulators make. They end up - they end up capturing the regulators. And so the only way the system works is if the rules - if the incentives in the financial system make sense.

And so it's crazy. It's crazy, for example, that a Wall Street trader can make tens of millions of dollars for himself even while he is losing billions of dollars for his firm, but that happened in several firms.

BLITZER: Here's the bottom line question, I guess, from my perspective. Has Wall Street learned its lesson? Or, to phrase it another way, could this disaster happen again?

LEWIS: Well, it depends on what the - you mean by the lesson. But if the lesson is should - did they learn not to buy, you know, $50 billion of subprime-backed mortgage bonds with - with lots of leverage? Yes, they probably learned that narrow lesson.

But, more broadly, no. I mean, look, they've just - if you back away from it, it seems to me that if you're working at a Wall Street firm, you're merely - merely been encouraged by all this. You're still doing very well for yourself.

So I don't think that - I don't think - I think it's crazy to think that anybody's learned anything because they haven't - they haven't suffered any consequences for their actions.

BLITZER: That's a pretty depressing thought to - when you think about that.

LEWIS: Well, but on the other hand, it creates an environment where reform might happen.

BLITZER: Well, that would be more encouraging. I suspect a lot of people would like to make sure that they don't lose their 401(k)s. They don't see their long - their lifetime savings end up in half or even worse. LEWIS: Well, if they listen to Paul Volcker, they wouldn't. I mean, you know, the administration has some pretty radical ideas, many of them coming from Volcker, and they make a lot of sense. And it's just a question of the people being interested enough in the subject to push it down the throat of the legislature.

BLITZER: One final question, on "The Blind Side", you're the author of that book. It became a major motion picture, nominated for an Academy Award, Best Picture. It did win an Academy Award for Sandra Bullock.

How do you feel as - as the author of a book like that when you see it win all these awards on the big screen?

LEWIS: You know, when I first saw it, I probably had a quibble or two, because it was my book and, you know, they changed this and that and - but by - by about the time it got to, I don't know, say $200 million in domestic gross - gross box office, I forgot I had any objections at all, you know? It was - I felt like I had written it myself.

It's very - it's - look, it's a thrill to see a story that I thought was an important but very small story get played so big.

BLITZER: Did you get a piece of that box office or a lump sum?

LEWIS: Oh, you don't - the writer never gets any piece of the box office.

BLITZER: That's what I suspected.

LEWIS: So what you get is - what you get is recognition.

BLITZER: Yes. All right. Well, that's good enough, I guess, sometimes, although a little money wouldn't be too bad - too bad, either.

Michael Lewis, congratulations on writing "The Big Short: Inside the Doomsday Machine". It's a great read. We appreciate you joining us.

LEWIS: Thanks for having me, Wolf.

(END VIDEOTAPE)

BLITZER: He's the president of France, but that didn't stop Nicolas Sarkozy from making an unexpected pit stop at a local D.C. eatery this week.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Now, I have to point out that the French are properly famous for their cuisine, and so the fact that Nicolas went to Ben's Chili Bowl for lunch I think knows - shows his discriminating palate.

(END VIDEO CLIP)

BLITZER: Wait until you hear, though, exactly what he ordered.

And the French First Lady Carla Bruni-Sarkozy visited with students at a Washington, D.C. middle school and answered questions. You're going to find out what the kids asked her and how she responded.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: We don't want to see a nuclear arms race in the Middle East. A - a conflict in the Middle East as a consequence of Iran's actions could have a huge destabilizing effect in terms of the world economy at a time when it's just coming out of a very deep recession.

The long-term consequences of a nuclear armed Iran are unacceptable, and so Nicolas, myself and others agree that we have engaged. The door remains open if the Iranians choose to walk through it, but they understand very clearly what the terms of a diplomatic solution would be.

And, in the interim, we are going to move forcefully on a U.N. sanctions regime.

(END VIDEO CLIP)

BLITZER: President Obama's press for tougher sanctions against Iran over its nuclear program got a boost this week. The French President Nicholas Sarkozy, visiting the White House, pledged full support for stepping up punishment against Tehran.

Let's discuss what we just heard with Guillaume Debre. He's a correspondent with the French television channel TF1. Guillaume, thanks very much for coming in.

GUILLAUME DEBRE, CORRESPONDENT, TF1: Sure.

BLITZER: This is a significant development, the president of the United States saying within weeks there will be a sanctions regime imposed against Iran. Is there any daylight, any difference at all towards Iran between Sarkozy and Obama?

DEBRE: Less and less. There were a year ago when - when President Obama wanted to talk and they wanted to try a dialogue with Iran. The French have always said, enough is enough. Time is up. We need to go on sanctions.

And now, it seems that the gap between the position of - of Washington and Paris is diminishing, and now they're on board, both of them, to try to impose sanctions at the U.N. They're trying to convince Russia, which is less hard than it seems that the Chinese, who are still reluctant to -

BLITZER: The Chinese are still a huge question, although the Russians seem to be moving from the U.S. and French perspective in the right direction.

Talk a little bit about the relationship between these two presidents.

DEBRE: Well, it's funny because it has evolved over time. They met four years ago. When Sarkozy came, Obama was still a Senator.

The character, the personality are very different. Sarkozy is hyper, he's hyper dynamic. He always moves - moves. He's frantic. Obama is very calm, almost aloof.

And Sarkozy tried very hard to be his friend, to be his ally, to show signs that he was very close to Obama, and for a few months, he felt, you know, ostracized, in a way. He felt like Obama was not giving him what he wanted, which was closeness, friendship.

It's now starting to move again towards a relationship where the two leaders are closer, and they're closer on many issue. Never ever in the past 50 years France has been so aligned with - with the United States. It's striking.

BLITZER: And this is significant in France right now as well, that Sarkozy is seen as having a strong relationship with President Obama.

DEBRE: Yes. He needs to play it up on - on the - the internal domestic politics, basically because he's having a tough time right now. He lost a hugely, big regional election and needs to basically show that he is dealing with Obama, which is hugely popular in France, and that's new too. George Bush, as you know, was not popular.

Obama is extremely popular, so he needs to play up the relationship with Obama for - of core domestic politics or domestic consumption (ph).

BLITZER: They had a meeting in the Oval Office, then they had this sort of statement and brief news conference, I guess you could call it that, one question from an American journalist, one question from a French journalist in the East Room. And now they're about to sit down for a private dinner in the residence at the White House.

This isn't a state dinner, but it's a private dinner.

DEBRE: The Elysee Palace, the French government is extremely ecstatic about that. They're bragging about this double date, if you will, between Carla Bruni, you know, Nicolas Sarkozy and the Obamas. No leaders has ever had that.

Of course the Elysee Palace is saying - they're playing it up. They're extremely ecstatic.

It's important for Obama - they wanted cameras, they wanted pictures. There wouldn't be any, only the White House will take pictures. It's a little bit of a bummer for the French - French press, but still, it's - it's sort of a coup for - for Sarkozy.

BLITZER: I assume the White House will release some still photos.

There is a still photo we got earlier in the day, when the President Sarkozy and his wife, Carla Bruni, they went to lunch, at the recommendation of the president, at a popular place here in Washington, a place called Ben's Chili Bowl. And they both had some delicious food.

Let's listen to the president describe it.

(BEGIN VIDEO CLIP)

OBAMA: Now, I have to point out that the French are properly famous for their cuisine, and so the fact that Nicolas went to Ben's Chili Bowl for lunch I think knows - shows his discriminating palate.

My understanding is he had a half smoke, so he - he was sampling the local wares, and we appreciate that very much.

(END VIDEO CLIP)

BLITZER: I think he had two of them and, more surprisingly, Carla Bruni had two half smoked hot dogs at Ben's Chili Bowl. That's not exactly French cuisine.

DEBRE: Not exactly. We're stunned because we didn't know about it. The French press didn't know about it. They - Yes, they went there.

You know, Sarkozy doesn't drink wine, which is quite amazing for a Frenchman. And he had that - I'm not sure - I don't know if it's - if he liked it or not. He hasn't shared that with us yet, and we'll of course ask him, but it was a bit of a stunner, and - but it's a good P.R. move for him to have done.

BLITZER: A little American cuisine, while he's in America.

Thanks very much for coming in.

DEBRE: Sure.

BLITZER: Meanwhile, Sarkozy's wife visited one of the top performing public middle schools here in Washington, D.C.

The French First Lady Carla Bruni-Sarkozy visited the Kipp D.C. Academy where she read from the classic French children's series, "Madeline", to a first grade class and took questions from the sixth grade class as well.

The first question, what are her favorite museums in France.

(BEGIN VIDEOTAPE)

CARLA BRUNI-SARKOZY, FRENCH FIRST LADY: Favorite museum? It's probably the Louvre.

There are many beautiful museums in Paris, but the Louvre is so fantastic. And you get in by a pyramid - pyramid?

UNIDENTIFIED FEMALE: Yes.

BRUNI-SARKOZY: And in the Louvre, you have so many paintings, but you have the very famous painting from Leonardo Da Vinci called La Joconde. You know this lady? It's a portrait of a very beautiful, quiet lady. But she always looks at you.

No matter where you are in the room, you can move around the room and, for some strange reason, no one could ever figure out why or how, but she always looks. She's just like this. And, if you go there, she still looks at you, for - like very strange reasons.

So I hope that you kids can come to Paris one day, and then I'll bring you to the Louvre and show you La Joconde.

UNIDENTIFIED FEMALE: That will be great. I'll chaperone.

BRUNI-SARKOZY: Yes. And we'll go to the restaurant. And we'll shop (ph).

UNIDENTIFIED FEMALE: What's your favorite store to shop in Paris?

BRUNI-SARKOZY: My favorite store. Well, maybe my favorite store would be maybe like a grocery store.

You want me to tell you what my son, who's 7 years old's, favorite store is? I think you'd be more interested in that. Well, there is a - how do you call in English when in between classes, then there is a minute of rest? In France they call it recreation.

UNIDENTIFIED FEMALE: Recess.

BRUNI-SARKOZY: Recess. OK, so my son's favorite store is called The Great Recess. La Grande Recre. And it's a toy store full of, you know, everything from balloons, you know, games for little children, games for children of your age, and games for children of our age.

(END VIDEOTAPE)

BLITZER: The painting, by the way, she was referring to, La Joconde, is known to most Americans as Mona Lisa. There she is.

She's an unexpected voice gifted with words and daring to challenge Islamic hard liners. Her outspoken poems could earn her a fortune but also could cost her her life.

And images of this Holy Week marked by many faiths in our "Hot Shots".

(COMMERCIAL BREAK)

BLITZER: In the Middle East, a Saudi woman is breaking with tradition in more ways than one. She's the front runner in a high stakes poetry contest. It's bringing her fame, a following, and a forum for ideas, but it's also bringing her some death threats.

Here's CNN's Schams Elwazer.

(BEGIN VIDEOTAPE)

SCHAMS ELWAZER, CNN CORRESPONDENT (voice-over): It's American idol for traditional Arabic poetry, and, for one Saudi housewife, there's much more at stake than the $1.3 million prize money.

Black clad, with only her eyes showing, contestant Hissa Hilal launched a scathing attack during this live primetime platform, "The Million's Poet Show", against extremist Muslim clerics and their religious decrees, known as fatwas.

HISSA HILAL, SAUDI POET (through translator): I have seen evil sparking from the eyes of fatwas.

ELWAZER: To give you an idea of what's behind her passionate poetry, one recent fatwa, issued by a Saudi Arabian cleric, says those who call for the mingling of men and women should be considered infidels, their acts punishable by death.

Hillal is angered by such fatwas, and she's angry at the way they seem to be accepted by default because of a lack of public will to speak out against them.

HILAL (through translator): Vicious and savage, that's how they think. Angry, barbaric and blind.

ELWAZER (on-camera): Hilal's gesture is an extremely rare show of defiance, especially by a Saudi woman, and while her passionate message is winning her supporters, it's also attracting the attention of some dangerous enemies.

ELWAZER (voice-over): Some radical websites have issued death threats against her, something not entirely unexpected.

HILAL (through translator): "I wrote a strong poem and I expected a strong reaction" she says, "but I didn't expect it to be this strong, to this extent."

ELWAZER: The response has outraged the show's judges, who applaud Hilal's courage, saying female poets have played an important role throughout Arab history.

Schams Elwazer, CNN, Abu Dhabi.

(END VIDEOTAPE)

BLITZER: A Passover Seder at the White House. That, and more compelling images. That's coming up next.

(COMMERCIAL BREAK)

BLITZER: For millions of people around the world, this week marked a time for religious celebration. Here's a look at our "Hot Shots".

In the West Bank, Orthodox Christians dipped themselves in the Jordan River during a baptism ceremony. At another ceremony in India, a Hindu holy man swung his head after emerging from the Ganges River.

In the Philippines, a man reenacted the suffering of Jesus in the middle of the road. And in a photo released by the White House - look at this - President Obama marked the Jewish holiday of Passover by having a Seder with family and friends.

Some of this week's "Hot Shots", pictures worth a thousand words.

I'm Wolf Blitzer. Join us weekdays in THE SITUATION ROOM from 5:00 to 7:00 Eastern, and every Saturday at 6:00 P.M. Eastern on CNN, and at this time every weekend on CNN International.

The news continues next on CNN.