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THE SITUATION ROOM

Another 9/11?; Pessimism on Finding Bin Laden; More Troops to Afghanistan?; Castro Hits Iran on Holocaust Denial

Aired September 11, 2010 - 18:00   ET

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


SUZANNE MALVEAUX, CNN ANCHOR, THE SITUATION ROOM: President Obama kicks off the Democrats' fall campaign trying to convince Americans that his economic policies are working, and that Republicans would make matters worse. Is he giving voters any new incentive to keep his party in power in Congress?

Also, the Al Qaeda threat nine years after the September 11 attacks; is the terror network built by Osama bin Laden preparing to strike with nuclear weapons?

And some taxpayers are asking, can America afford a costly makeover at the White House? We'll take you behind the scenes of the project.

Welcome to our viewers around the United States and around the world. Wolf Blitzer is off, I'm Suzanne Malveaux. You're in THE SITUATION ROOM.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For all of the progress we have made, we're not there yet. And that means the people are frustrated, and that means people are angry. And since I'm the president, and Democrats have control of the House and the Senate, it's understandable that people are saying, you know, what have you done?

But between now and November, what I'm going to remind the American people of is that the policies that we have put in place have moved us in the right direction. And the policies that the Republicans are offering right now are the exact policies that got us in to this mess.

(END VIDEO CLIP)

MALVEAUX: President Obama is putting Republicans on notice that he is going to keep blaming them for America's economic troubles, right up until a November election. He's zeroed in on the economy on his Friday news conference and a series of appearances across the country this week. He saved some of his harshest attacks for the House Minority Leader John Boehner, the man poised to be the new speaker if Republicans win back control of Congress.

Wolf talked about all of that with the president's just-named choice to be the new chairman of the Council of Economic Advisors, Austan Goolsbee.

(BEGIN VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR, THE SITUATION ROOM: We are getting in this reaction from John Boehner the Republican leader in the House. The president was pretty critical of him in his speech in Cleveland. Here's what Boehner says: "If the president is serious about finally focusing on jobs, a good start would be taking the advice of his recently departed budget director and freezing all tax rates, coupled with cutting federal spending to where it was before all of the bailouts, government takeovers, and stimulus spending sprees."

He's referring to Peter Orszag, the budget director during the Obama administration, who wrote a piece in "The New York Times" this week. For the next two years, keep tax rates including for the wealthy, exactly where they are right now.

AUSTAN GOOLSBEE, COUNCIL OF ECONOMIC ADVISORS: Well, look, I think Representative Boehner's a little confused about what Peter Orszag was suggesting. And threw in on that second bid, let's go back to the final Bush budget of 2008. As if that were the -- the gold standard that we wanted to return to when, in fact, that was the -- the final culmination of exactly the policy that got us into this mess.

BLITZER: Well, wait -- I guess, to be precise, Peter Orszag was not recommending the second part of what John Boehner was saying in that statement, only the first part. But here you do have Boehner and Orszag agreeing -- keep tax rates where they are for two years.

GOOLSBEE: Well, now, hold on.

BLITZER: Increase tax rates during a time of economic crisis on anyone.

GOOLSBEE: Look, Wolf, the Orszag piece was a political piece. It wasn't about economics, in which Orszag said that he thought that it would be a compromise that if you add two years then you could get rid of those-the tax cuts for the highest income Americans. John Boehner is not for that. This is just an old Republican gimmick of take what you can get then, and then in two years, ask it to be permanent.

Ask Representative Boehner does he want to make permanent for $700 billion the Bush tax cuts for people making more than $250,000 a year. He does. He's been for it all along. He's just trying to get a nose in under the tent to do that. We cannot afford $700 billion for that purpose. Every objective analyst that has looked at it has emphasized that tax cuts for millionaires have the lowest bang for the buck of any measures that we can possibly take, and we shouldn't extend those, and the president's made that clear.

BLITZER: You are right. John Boehner doesn't want to raise taxes on anyone right now, rich people, middle class, poor people, anyone. But I want to be precise. Peter Orszag says at least for two years, keep the tax rates where they are right now. GOOLSBEE: No, Wolf, he did not say at least for two years.

BLITZER: He said for two years.

GOOLSBEE: He said do it for two years, in order to get them to give them up, after two years. I disagree with this political calculation.

And let's put it a different way. When the -- when the minority leader in that House of Representatives is taking political advice from the economists that have left the Obama administration, I guess I'm a little confused.

BLITZER: Here's what "The Wall Street Journal" wrote in an editorial this week. I'd like you to respond.

"Never before has government spent so much and intervened so directly in credit allocation to spur growth, yet the results have been mediocre at best. In return for adding nearly $3 trillion in federal debt in two years, we still have $14.9 million unemployed. What happen?"

That's the question "The Wall Street Journal" asks, what happen?

GOOLSBEE: What happened is we went into a recession, beginning in December of 2007, that was the worst since 1929. It's a very deep hole that we've been struggling to get out of. After 22 straight months of job loss, for the last eight months there has been private sector job creation.

What the president has emphasized repeatedly and outlined again today in his remarks in Ohio is that the only way that our recovery is sustainable is if we get the private sector to stand up. Let us not forget that when the president took these policies, it wasn't for fun, it was because the economy and the private sector were in free fall, following the policies, many of which it sounded like Representative Boehner wants us to return to. When we were following those policies, the economy collapsed, and we have been trying to rebuild it. We have come a long way. We're on the right path. We have a long way to go.

BLITZER: I can't tell you how many big business leaders who were big supporters of President Obama, on Wall Street, the banking industry, the financial sector, keep asking -- especially this week following the president's speech in Milwaukee and Cleveland, why does the president keep demonizing Wall Street?

GOOLSBEE: Well, look, the president outlined today a deliberately pro market, pro private sector agenda in which the government is going to be spending money on tax credits to encourage business to locate their research and development investments here in America, and giving them full tax write offs of all of their factory or equipment spending for the next year.

So I think if you go ask business people, they will actually find much to like about this policy. And truth be told, until the last few weeks, most Republicans would have been for that policy. So I am hopeful that there is common ground here that we can all agree that all patriotic Americans should be for growing jobs, investing in this country, and research and development and factories and equipment. That's what the president is trying to enable. And just opposing if for the sake of opposing it is not productive.

BLITZER: Austan Goolsbee, is the adviser, the economic adviser to the president.

Thanks Austan, very much.

GOOLSBEE: Great to see you again, Wolf.

(END VIDEOTAPE)

MALVEAUX: Let's look at some of those key tax proposals that the president promoted this week. He argued his case to let the Bush tax cuts expire at the end of the year for the wealthiest Americans, individuals who earned $200,000 a year or more. Couples who earn $50,000 or more. Now, that's about 2 or 3 percent of the country. He wants Congress to extend the Bush tax cuts for everyone else. The president is also proposing $200 billion in tax cuts for businesses to buy new equipment, those businesses would be able to write of 100 of their new investments through the end of 2011.

Republican Ron Paul is no fan of the president's economic policies, but did he like anything that Mr. Obama is saying about taxes and growth. Find out ahead.

And is the Tea Party Movement's influence fading? Stand by for our eye popping new polls on some of the hottest Senate races in the nation.

And one of America's most unpredictable and threatening rivals -- maybe grooming his successor. Will Kim Jong-il keep North Korea's and political and nuclear power in the family?

(COMMERCIAL BREAK)

MALVEAUX: President Obama took several new shots this week at connecting with Americans who are just scraping by in this bad economy; voters who just might throw his party out of power in Congress this November. Wolf talked with a leading critic of the president and his economic policies.

(BEGIN VIDEOTAPE)

BLITZER: Joining us now is a Republican who comes to the debate with his always unique and outspoken point of view, Congressman Ron Paul of Texas.

Congressman, thanks for coming in.

REP. RON PAUL (R), TEXAS: Thank you, Wolf.

BLITZER: When it comes to the president's economic policies, his tax policies, is there anything there that you like? PAUL: Well, I understand there will be some tax credits. That means there will be lower taxes for business people, and encourage investment, although they're short term and we don't know what would happen after a couple of years. Anything that will cut taxes I'm for. The fact that he'll be raising spending. But also because he hasn't- he doesn't plan to raise taxes on the lower income people, under $200,000 or $250,000, I think that's good. I mean, it would be horrible if he did raise the taxes the first year on all of those, so I would have to say that's a little bit of relief to know that those taxes won't go up.

BLITZER: Because you are a deficit hawk. You hate this huge national debt, the annual budget deficits. The White House says if you reduce -- if you eliminate the tax breaks for the wealthiest Americans, those families making more than $250,000 a year, by 3 percent, or 2 or 3 percent of all Americans out there, you're going to save $700 billion over the next 10 years, $700 billion. That would be good to have that reduction in the national debt, wouldn't it?

PAUL: Well, it would be. But that would be a horrible way of doing it. That means taxes are going up $700 billion. I can think of a better thing to do, and that would be to read that article by Stiglitz this morning. He said he made an error last year when he did that report, that he said the Iraq war was going to cost us over $3 trillion. He says it is going to be much higher than $3 trillion. Why don't we stay out of these wars and save this money? That's what we need to do. We need to cut the spending. We don't have to tax people. And we can solve this problem, but nobody wants to give an inch on these overseas expenditures. The Republicans don't want to cut overseas expenditures in the war, neither does Obama. But the American people, the ones I talk to, at least, are all for it. That's where it should go. We should cut the spending overseas.

BLITZER: We had you on recently with Congressman Barney Frank. You guys have some ideas to save hundreds of billions of dollars in defense-related spending, we discussed that. The president also went after some Republicans for wanting to privatize Social Security. Listen to what he said.

(BEGIN VIDEO CLIP)

OBAMA: As long as I'm president, no one is going to take the retirement savings of a generation of Americans and hand it over to Wall Street. Not on my watch.

(END VIDEO CLIP)

BLITZER: Do you agree with the president on that?

PAUL: Well, I have to know what he is thinking about on privatizing and what others are thinking about privatizing. There are two different things.

BLITZER: Oh he doesn't want to privatize it. He wants to keep it the way it is now. PAUL: Yeah, but I want to know what privatize means. If we could turn this money over and give the individual money like a -- an investment retirement fund that they manage, that's a little bit different. But I think most people, when they think of privatizing, I'm not for this kind of privatizing, that's when the government manages accounts and gets involve in the stock market. If that's what he's thinking about -- I don't want any part of that.

But I want to privatize in retirement funds and put the responsibility on the individual. That, to me, is a lot different type of privatization. But for government bureaucrats to get involve in the stock market, I don't like that. Besides, if you truly have privatization, you can make and put your own choices. But it's when the -- the way we have it now, you can only buy government debt, that's really not a very good investment.

But I think these are academic arguments because, you know, talking about five or 10 years from now, we're facing such a serious crisis with our dollar, and our financial situation, the next two or three years, this is going to resolve -- be resolved, because we're going to have a financial crisis based on a dollar devaluation. And that, to me, is going to change all of the rules in the game. And talking about tax codes for a year or two, won't have a whole lot of meaning.

BLITZER: Very quickly. Because we got this new CNN/Time magazine poll in on the race for the Senate in Kentucky. Your son, Rand Paul, is running. Right now we have it as a dead heat among registered voters, Rand Paul, 46 percent, Jack Conway, the attorney general there, 46 percent. Are you surprised by this poll, how close it is?

PAUL: I think that's pure fiction. That's the biggest surprise of my life. If that happened, it happened within the last 12 hours. You -- I think we better check that one out. But, no, then the race will be hard fought and hard won. He'll run as if it's tied. So those are quite the accurate statistics that I've been hearing about.

BLITZER: Yes, I've heard other polls that had your son way ahead. This is among registered voters, CNN/Time/Research Opinion Corporation poll. Stay on this race and all the other races.

Always good to have you in THE SITUATION ROOM, Congressman. Thanks for coming in.

PAUL: Thank you, Wolf.

(END VIDEOTAPE)

MALVEAUX: We have some more eye-popping new numbers on very high-profile U.S. Senate races. CNN and "Time" magazine are teaming up this election season in polling voters in key states each week. Now in California Democratic Senator Barbara Boxer has a surprisingly slim lead, just four points over her GOP opponent, Carly Fiorina, the former Hewlett-Packard chief. And in the Florida Senate race, Republican and Tea Party favorite, Marco Rubio is just a couple of points ahead of the independent candidate, Governor Charlie Crist. The Democrat, Congressman Kendrick Meek trails Crist by 10 points.

He is the leader of one of the United States' greatest adversaries. But could there be new dangers if Kim Jong-Il hands leadership of North Korea over to one of his sons? Our Brian Todd is investigating.

And could even more U.S. troops soon be headed to Afghanistan? An interview with the top U.S. military official on the ground just ahead.

(COMMERCIAL BREAK)

MALVEAUX: North Korea may be about to take the first steps toward a change of leadership, but what if it remains a family affair? Our CNN's Brian Todd is looking into it.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice over): It's the biggest political gathering in North Korea in decades, the so-called Worker's Party Congress where the regime's unpredictable hermetic leader Kim Jong-Il will announce changes at the top. That may well mean he'll lay the groundwork for his third son to take his place, a transition that has many in Western intelligence worried about what comes next.

I spoke about him with Victor Cha, who dealt with King Jong-Il's regime as a member of President Bush's National Security Council.

VICTOR CHA, CNTR, STRATEGIC & INT'L. STUDIES: His third son, who is only in his 20s, is the designated successor, but clearly does not have the -- have the party credentials behind him nor the leadership credentials that either his father or grandfather had.

TODD (on camera): Given that, could there be some real upheaval there, could there be a military coup? Could military leaders step into the breach here?

CHA: It's a very difficult question to answer, the internal politics of North Korea. On the one hand, objectively speaking, this looks like a situation that would be rife for some sort of elite-elite actions, elite-elite coups between the military or the party. On the other hand, people have been predicting the collapse of North Korea for 25 years now, and it still hasn't happened.

TODD (voice over): Still analysts ask, whether older entrenched military leaders will accept orders from someone who's not even 30. The best we can get from analysts, that like Kim's older sons, he's been pampered, went to boarding school in Switzerland. They say he likely wouldn't change North Korea's ambitions to develop nuclear weapons, but they say other details about him are a tightly held secret, even inside North Korea. UNIDENTIFIED MALE: I'm sure that the Korean people knew nothing absolutely nothing about young Mr. Kim until the propaganda apparatus started recently to sing his praises. I suspect that a lot of people in the elite didn't really know much about him.

TODD: And there may be not much time to find out. The father, Kim Jong-Il is believed to be still suffering the effects of a stroke he reportedly had two years ago. Analysts say one of his biggest mistakes as a leader was waiting until after that to start paving the way for his son. Analysts tell us by waiting, Kim Jong-Il didn't give his son enough time to build his own power base with the most powerful elements in North Korea, the Communist Party, the military, the security services.

(On camera): Kim Jong-Il, himself, had almost 20 years to build that power before his own father died. Now analysts say he may have to have his brother in law, Jang Song-Taek take over temporary leadership in the short-term to help the son build himself up. Brian Todd, CNN, Washington.

(END VIDEOTAPE)

MALVEAUX: Just how dangerous is Al Qaeda after September 11? We are digging deeper.

And we haven't seen much of him in years. Ahead, we'll talk with one reporter just back from a rare face-to-face interview with former Cuban president, Fidel Castro.

(COMMERCIAL BREAK)

MALVEAUX: "The Roots of Terror", a new HBO documentary takes us to the places where Al Qaeda was born. Wolf Blitzer talked to the man behind it.

(BEGIN VIDEOTAPE)

BLITZER: And Lawrence Wright is joining us right now.

Lawrence, an amazing book, "The Looming Tower", an amazing documentary later tonight.

How powerful is Al Qaeda right now?

LAWRENCE WRIGHT, "MY TRIP TO AL-QAEDA: Al Qaeda is central, the organization that planned and carried out 9/11 is much reduced from the pre-9/11 days. The CIA says 300 people, the Egyptian intelligence told me 200, in either case it is much smaller.

But the idea of Al Qaeda has propagated and taken root in other forms. And, so we have allegiances in different countries, and wannabes, all of which will dangerous. But I don't think they can carry out another 9/11.

BLITZER: They couldn't get their hands on some sort of nuclear device and kill thousands and thousands of people? Because that's an enormous fear that people have out there.

WRIGHT: I think the chances of that are really remote, Wolf. I mean, it's conceivable. It's in the realm of possibility, but what's much more likely is that one of these attempts like the Times Square bomber or the -- or the Zazi guy who wanted to blow up the subways in New York, one of those guys will get lucky. It will probably be an individual or a small group. It will be devastating but won't be 9/11.

BLITZER: Bin Laden, do you believe he's somewhere hiding together with Ayman Al Zawahiri, his number two. Or are they separate? You've done a lot of research in this.

WRIGHT: You know, I think they're probably together. Bin Laden is not sick the way the CIA had imagined. I don't think he has kidney disease. He does have health problems. And Zawahiri is a doctor. That's one of the reasons that they're close together.

On the other hand, Zawahiri has been much more active in getting out tapes and videos, than bin Laden, which suggests that bin Laden is much more in the deep freeze. I wouldn't be surprised if they were somewhere that is really not even where we're looking for them. In the tribal areas, they could be in Yemen, for instance. Some place where we are just not paying attention.

BLITZER: What's the biggest misperception, misconception that Americans have about Islamic fundamentalism, Islamic terrorism.

UNIDENTIFIED MALE: I suppose to me the biggest misconception is these are Islamic extremists. These are not main stream Muslims and with all of the heated rhetoric that's flying around in this country and others right now about Islam.

One would get to thinking pretty soon it's Islam at war with America, which is not at all true. The real truth of this is Al Qaeda is at war with Islam and we're getting the spillover.

BLITZER: Well, Wright's documentary is entitled "My Trip to al Qaeda." It airs on our sister network HBO later tonight. Lawrence, thanks very much.

UNIDENTIFIED MALE: I've enjoyed it, Wolf, thanks.

SUSAN MALVEAUX, CNN ANCHOR: It is nine years to the day after the September 11 terror attacks and Osama Bin Laden is still on the run.

According to new poll numbers, most Americans believe it will remain that way. More than two-thirds of people polled by CNN in the Opinion Research Corporation say that the U.S. will not be able to capture or kill the al Qaeda leader.

But the survey also finds that nearly three-quarters of those questioned believe the country is as safe or safer from terrorism than it was before the September 11 attacks. President Obama is urging Americans to remember and honor the victims of 9/11. He's using the anniversary to emphasize that people should not view Islam as the enemy.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: The other reason it's important for us to remember that is because we've got millions of Muslim-Americans -- our fellow citizens, in this country.

They're going to school with our kids. They're our neighbors. They're our friends. They're our co-workers and, you know, when we start acting as if their religion is somehow offensive, what are we saying to them?

If you could build a church on the site, you could build a synagogue on a site, if you could build a Hindu temple on a site, then you should be able to build a mosque on the site.

(END VIDEO CLIP)

MALVEAUX: Is the U.S. military looking to add more troops to the war zone in Afghanistan? We'll ask a top American commander Lieutenant General William Conwell.

Also an extraordinary interview yields an equally extraordinary headline. Details of what Fidel Castro told an American journalist about the Iranian president, Mahmoud Ahmadinejad.

Who spends millions on a renovation project during these tough economic times? The White House. We'll have details of the work and the price tag.

(COMMERCIAL BREAK)

MALVEAUX: Is the U.S. looking to boost troop strength in Afghanistan? Wolf Blitzer talks about that and more with a top American commander.

(BEGIN VIDEOTAPE)

BLITZER: And joining us from Kabul, Lieutenant General William Caldwell, United States Army, he's the commander of the NATO Training Mission in Afghanistan.

General Caldwell, thanks for joining us. There's a story brewing right now and I wonder if you could clarify a report that General Petraeus is asking the Pentagon for 2,000 more troops to help in training and combat in Afghanistan beyond the approximately 100,000 who are there or on their way. Is that report true?

LT. GENERAL WILLIAM CALDWELL, U.S. ARMY: Well, Wolf, you know, as we're continuing to professionalize and grow the Afghan National Security force here both the police and army, there is going to be requirement for some more trainers as we continue to take them from what was a very much a war fighting force to a more specialized force. As we develop things like transportation units, medical units and logistics units and all those kind of assets. So, yes, there will be an increasing number of trainers that will be required in support of the NATO Training Mission over the next coming year.

BLITZER: You've been back in Afghanistan now for about a year. What is your understanding of what the July, 2011 date means for the start of U.S. military withdraw from Afghanistan? Because there's some confusion what that July, 2011 date means.

CALDWELL: Well, what the president has recently said and you know, our secretary of defense has said too, it's the beginning of a process.

Based on the conditions on the ground, they're going to make an assessment of how many more fighting forces or combat formations are still required to remain here inside of Afghanistan to help their security forces.

BLITZER: So the start of a withdrawal will depend on what the situation on the ground really is. I want you to listen to what the commandant of the U.S. Marine Corps General James Conway said because it's causing some heart burn over at the White House. Listen to this.

(BEGIN VIDEO CLIP)

GENERAL JAMES CONWAY, COMMANDANT, U.S. MARINE CORPS: We know the president was talking to several audiences at the same time when he made his comments on July 2011.

In some ways, we think right now it's giving our enemy sustenance. We think that he may be saying to himself, in fact, we've intercepted communications that say, hey, we only have to hold out for so long.

(END VIDEO CLIP)

BLITZER: He seems to be saying this is a mistake because it's giving, in his words, sustenance to the enemy over there thinking, you know, just hold on. The U.S. is about to get out. Explain how you reacted when you heard General Conway's comments.

CALDWELL: Well, Wolf, the thing I would tell you is that our secretary of defense has been very clear. We are going to be here for many years and if the Taliban or some other insurgent element thinks that July 11 means there's not going to be a U.S. president, they're sadly mistaken.

So what it is, is just what the secretary of defense and the president said, it's the beginning of a process. They're going to take a look at that point what the conditions are on the ground and how many war fighting forces are still required to be here.

BLITZER: I interviewed Peter Galbraith, the former U.N. special envoy to Afghanistan last week and he had some strong words. Listen to what he said to me and then we'll discuss two points he makes. Listen to this.

(BEGIN VIDEO CLIP)

PETER GALBRAITH, FORMER U.N. SPECIAL REPRESENTATIVE TO AFGHANISTAN: It's really immoral to be sending troops to fight in a mission that they can't succeed at because, again, you don't have that credible partner.

So what I would say is to reduce -- to change the mission to something that is achievable, namely protecting the non-Pashtun parts of the country where the Taliban is not present and Kabul. And that you could do with 10,000 troops instead of 100,000.

(END VIDEO CLIP)

BLITZER: Do you believe, General Caldwell, that the U.S. troops, the NATO troops in Afghanistan have a credible partner in Afghanistan.

CALDWELL: Wolf, I do and each and every day, I deal with the ministers of defense and the ministers of interior. They're my partners and I am in constant dialogue with them and I feel they're very much a credible partner.

We share the same goals and aspirations. They very much want to see their forces able to take over the responsibility for the security and the future of this government and what the people are going to do here in Afghanistan.

So I'm comfortable with where we are and what we're doing. I see them committed to this mission. I see them dialoguing on a daily basis on what they can do better on what they're doing and looking for us to provide support for enable them to take the lead and be responsible.

BLITZER: Galbraith also says - he's a former United States ambassador that it's not really achievable to defeat the Taliban, have a much more modest objective in Afghanistan and reduce the U.S. troop presence down to 10,000 troops. What do you say to that?

CALDWELL: What I say is one of the things we have to do, we have to enable the Afghan security force here, the police, the army, the air force to be able to take the responsibility and the lead for the security here in their country.

That is the major objective that we're going after right now, especially in the mission that we have responsibility for. We want to help grow and professionalize them so they become enduring and self- sustaining and no longer require coalition support.

We, in fact, have seen a tremendous amount of progress in these last ten, 11 months here that we've been in the country. So, Wolf, progress is taking place. It's going to take time. It's not going to happen overnight. But I think what most people have to understand is there is a change that has occurred here in this country and there is a difference starting to be made. BLITZER: Because a lot of Americans are getting the impression, General Caldwell, the situation is deteriorating, corruption in Afghanistan seems to be on the rise and the Taliban seems to be gaining strength.

U.S. casualties, NATO casualties are higher than ever right now in Afghanistan. So when you talk about progress, we're getting a different impression watching the war from this side.

CALDWELL: Well, Wolf, I would say that I think most people tried to make sure they understood, additional coalition forces came in to the country that, in fact, they would be more engaged and there would be an increase in casualties for a period time through this early fall and in to the early wintertime frame.

Where we would see an increase as, in fact, more engagements occur. So, that was not unexpected at all, but rather it was something people had anticipated and knew what would occur as additional engagements occurred.

BLITZER: Lieutenant General William Caldwell is the commanding general of the NATO training mission in Afghanistan. Thanks very much, General. Good luck, be careful over there. We'll see you when we come back here to Washington.

CALDWELL: All right, thanks very much, Wolf.

(END VIDEOTAPE)

MALVEAUX: An extraordinary message from Cuba's Fidel Castro. Why he's telling Iran's leader to stop slandering the Jews. Plus, an extreme home makeover. Details of what's happening at the White House.

(COMMERCIAL BREAK)

MALVEAUX: An extraordinary report out of Cuba where Fidel Castro is quoted as saying Iran's leader should stop slandering the Jews.

It's the headline of a remarkable interview by an American journalist seen here with Castro in these images from the state run web site "Cuba Debate. Wolf Blitzer talked to the reporter.

(BEGIN VIDEOTAPE)

BLITZER: Jeffrey Goldberg is here in the "Situation Room."

Jeffrey, all of a sudden, you're invited to go interview Fidel Castro. How did that happen?

JEFFREY GOLDBERG, THE ATLANTIC: Apparently, he reads "The Atlantic" and he read an article I wrote recently that we talked about Iran and Israel coming in conflict. He's apparently deeply concerned about this conflict and wanted me to come down to Havana to talk to him about it.

BLITZER: You were on vacation at Martha's Vineyard. You got a call saying Fidel Castro wants you to come to Havana.

GOLDBERG: Right, I know went one socialist island paradise to another socialist island paradise. Of course, I'll come down, who wouldn't want to meet Fidel Castro.

BLITZER: He's 84 years old. He's been sick for many years. How did he impress you physically and mentally?

GOLDBERG: Physically frail, he walks with the aid of a couple of guys to the left and right of him, but he can walk on his own, short steps.

Mentally, very acute, not only that, the interesting thing is that he's actually sort of jocular. You wouldn't think this, but Fidel Castro has a sense of humor or at least he does now in his post leadership phase.

He seems sort of lighter than you would think he would be, but that's because he is retired, in fact. His brother is running --

BLITZER: But he seemed mentally very alert.

GOLDBERG: Mentally very alert.

BLITZER: On top of the issues?

GOLDBERG: Extremely on top of the issues. I mean, I wouldn't be surprised if he spent half the day watching CNN. He's following events on the internet. He has visitors all the time.

He's trying to emerge a little bit from his lengthy elements and become a player again, more like a senior statesman. Julies (White) from the Council of Foreign Relations says this is his new mode.

He wants to be a senior statesman and sort of comment on the world and be a bridge builder and a peacekeeper, that sort of thing.

BLITZER: Now he's had a very good relationship with Ahmadinejad of Iran. But he basically wanted you to send a message to Iran and Ahmadinejad? Tell us about that.

GOLDBERG: Right. Well, he wanted -- he had two messages. He wanted Netanyahu, the prime minister of Israel to know that the military solution isn't the solution for Israel. We've heard that message before.

BLITZER: As far as Israel using military forces to back the Iranian nuclear facilities.

GOLDBERG: Right, we've heard that before. What was interesting to me is he seems personally offended by Ahmadinejad's denial of the holocaust, which is, of course, as you know a central pillar of the way Ahmadinejad talks about this conflict.

And he said very, very extreme -- in a very straightforward way that the Jews had been a persecuted people for 2.000 years. That no one should talk about them like this.

That in order to solve this problem -- one of the ways to solve this problem would be for Iran to say to itself, look, you know, these Jews are worried about the fronts that we made for good reason.

Don't deny that the feelings that the Jews have about the prejudice coming out of Iran.

BLITZER: But he went one step further in your interview. You did three days -- you spent hours and hours with him.

GOLDBERG: Hours.

BLITZER: He went one step further and he flatly said Israel does have a right to exist.

GOLDBERG: That was also a very surprising thing because Cuba broke relations with Israel in 1973 after the Yom Kippur war. I asked him, you know, when he was talking about the role of anti-Semitism history.

I asked him, I said, do you believe Israel has a right to exist? He said, absolutely, without a doubt. So he described his problem with Israel as a political problem, not a religious or cultural problem.

He said -- I said why don't you re-establish relations with Israel? And he said in essence, well, it takes a long time and basically I'm retired in any case.

But he was sympathetic to the idea of Israel as a Jewish state. I was a little surprised at that too.

BLITZER: When you said to him, if you said these things directly to Ahmadinejad when they meet face-to-face, tell our viewers what he said to you.

GOLDBERG: He -- he said essentially that the Iranian leadership should stop talking this way about the Jews and be more sensitive. I said why don't you say this to Ahmadinejad himself? He said, well, you -- you tell him for me.

So I wrote it up in "The Atlantic." I'm not running to Teheran any time soon to tell Ahmadinejad this, but Castro had a specific message he wanted delivered.

And I found that very, very interesting, considering especially three months ago, we thought this guy was on his deathbed.

BLITZER: And so bigger picture, what does it say about Fidel Castro right now the fact that, a) he invited you, spent days talking to you, had these messages, the statesman like messages he wanted to convey.

GOLDBERG: Well, I mean, I think his health is back. He can play a useful role for Cuba. His brother is obviously very obsessed with Cuba's continuing political and economic crisis.

And Fidel is going to be out there, I think, we'll see in the coming months talking more to foreign leaders about not only Cuban issues but world issues. Cuba has been too small for them in some way. So he -- he's back on stage.

BLITZER: If he's watching us right now --

GOLDBERG: He could very well be.

BLITZER: I'd love to follow up.

GOLDBERG: Spend some time with him myself. Jeffrey Goldberg, more of this coming up on the atlantic.com and then in the magazine itself.

GOLDBERG: Yes.

BLITZER: We'll be reading.

GOLDBERG: Thank you very much.

(END VIDEOTAPE)

MALVEAUX: Two children in flood-ravaged Pakistan cradled their newborn twin siblings, just one of our hot shots ahead.

(COMMERCIAL BREAK)

MALVEAUX: Here's a look at hot shots. In Pakistan, children displaced by the floods cradled their new twin siblings. According to the U.N., the floods have left 10 million people without homes.

In England, judges taste a meal prepared by Army military chefs as part of a field catering competition.

In Sydney, Australia, a French daredevil stands atop of a giant forklift in front of the Sydney Opera House.

In Taiwan, newlyweds kissed during a mass wedding ceremony organized by the government.

Hot shots, pictures worth 1,000 words.

Well, there's a makeover in the works at 1600 Pennsylvania Avenue and it's costing taxpayers hundreds of millions of dollars. During these hard economic times, should the White House be renovated?

I had a chance to go behind the scenes on a project that's raising some eyebrows.

(BEGIN VIDEOTAPE)

T.J. HOLMES, CNN CORRESPONDENT: It sounds like they're building another wing to the White House, but we appreciate -- MALVEAUX: You can't imagine, T.J. It's going to happen for the next two years.

All of the banging, the jackhammering, the dust, the confusion, the noise, of all places to do construction is happening right here, the front lawn of the White House.

(voice-over): It's a four-year renovation project, estimated costs, $376 million. The basic problem pipes up to 100 years old, which are running into the White House causing disastrous and dangerous conditions.

UNIDENTIFIED MALE: This part of the White House hasn't been upgraded since some of it was built in 1902, and then upgraded some parts of it in 1934. We have electrical lines, water lines that haven't been upgraded since and basically, we're digging underground to fix them up.

MALVEAUX (on camera): So tell me about the problems that the White House is having. It's hard to believe, yes, sometimes the lights go out. Sometimes the pipes have leaked. Have there been these kinds of problems here?

BOB PECK, GENERAL SERVICES ADMINISTRATION: There have. Electrical outages at the White House, telephones have gone down.

MALVEAUX: And what happens, does the president call and say, my toilet is not flushing, the lights are going out.

PECK: The residence itself hasn't had those kind of issues. But the west wing where the president does his business has had those issues.

MALVEAUX (voice-over): Bob Peck of the General Services Administration is overseeing the massive makeover of the east and west wings, which include the oval office, the situation room, and the offices of the secret service and the first lady.

(on camera): So tell us what's actually happening here.

PECK: We're digging trenches, burying new cable, burying new water pipes.

MALVEAUX (voice-over): Congress approved funding of the project in 2008 after a Bush administration report revealed some systems in the White House were periodically failing.

(on camera): This project is going to cost some $376 million to the taxpayers. Some would say, really? Why would you spend that kind of money on a makeover for the White House when there are so many folks who are not doing that well.

PECK: We're well aware it's underground work, but, you know it doesn't do a whole lot of good to have a -- a building that's sort of the image of the free world standing up there and not functioning well.

And to be honest when you're digging underground and doing this kind of utility work, particularly, in a White House environment, it's - it's a costly project.

MALVEAUX: Five hundred workers have security clearance to work on the 4-acre project.

(on camera): In the briefing room, things have been known to get pretty boisterous and heated, but it is nothing compared to the noise right outside in this construction zone.

(voice-over): And it's right outside the Obama family residence.

(on camera): Have you ever gotten a call, look, you know what, this is too much noise. We're trying to sleep here. We're trying to think.

PECK: Well, you know, we have a very understanding first family, but we have a first family with some young kids who need to get their sleep?

MALVEAUX (voice-over): So construction is normally limited to daylight hours. But despite the opened nature of the project, it still attracts some suspicion.

(on camera): There are lots of conspiracies. They're saying, come on. Could this really be electrical or it a secret tunnel that they're digging?

PECK: You know, all I'm telling you is you can imagine, it's a very secure infrastructure project. That's as much as I can say.

(END VIDEOTAPE)

MALVEAUX: I'm Suzanne Malveaux. Join us weekdays in the "Situation Room" from 5:00 to 7:00 p.m. Eastern and every Saturday at 6:00 p.m. on CNN and at this time every weekend on CNN International. The news continues next on CNN.