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CNN LATE EDITION WITH WOLF BLITZER

Interview With Adnan Pachachi; Interview With John Negroponte; Interview With Farouk Al-Shara

Aired January 23, 2005 - 12:00   ET

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


WOLF BLITZER, CNN ANCHOR: It's noon in Washington, 9 a.m. in Los Angeles, 7 p.m. in Kiev, Ukraine, and 8 p.m in Baghdad. Wherever you're watching from around the world, thanks very much for joining us on "Late Edition."
We'll have my interview with the former president of the Iraqi Governing Council, Adnan Pachachi, in just a moment.

First, though, let's get a quick check of what's in the news right now.

(NEWSBREAK)

BLITZER: For Iraqis there's a double challenge: first, deadly violence from insurgents determined to try to undermine the election; second, what may be a bewildering series of choices when they actually arrive at the polls one week from today.

Joining us now on the phone for Baghdad, the former Iraqi Governing Council president and himself a candidate in next Sunday's elections, Adnan Pachachi.

Mr. Pachachi, thanks for joining us.

Are you confident these elections can take place relatively smoothly?

ADNAN PACHACHI, FORMER IRAQI GOVERNING COUNCIL PRESIDENT: I think they will. Although, of course, we have our fears because of the security situation. We had asked for a short postponement in order to ensure that the elections are more inclusive and, therefore, more acceptable. But we are candidates for this election, and we are working very hard to get the votes.

BLITZER: You are a Sunni. Do you believe that there will be a large turnout among Iraqi Sunnis who live in that so-called Sunni Triangle where most of the violence occurs?

PACHACHI: I have been urging people in this part of Iraq, and I think there has been an improvement in the possible voter turnout in these regions. But, of course, if there had been a postponement, maybe we would have had a chance to get more people in this region to take part in the elections.

Anyway, whatever happens, it is important that there should be a presence in the national assembly that will restore some sort of balance in the sort of membership of the assembly.

BLITZER: What position would you like to have after the election? The national assembly, the transitional national assembly, will pick people for various positions. What do you hope to have?

PACHACHI: Well, I'm not thinking along those lines, frankly. It is important for me that the elections to take place. This is a matter that I have worked for so hard for such a long time. And our aim, really, is to establish a secular democracy in Iraq, and we shall work very hard to achieve this aim.

I'm not thinking of myself personally, but, of course, we don't know how this thing will be -- how it will develop. We can't even predict the makeup of the national assembly. It all depends on how the thing will turn out.

We are going to, of course, cooperate with other political forces and other parties and their assembly for the formation of the new government. But I think it's too early to speculate on that now.

BLITZER: How fearful are you, Mr. Pachachi?

PACHACHI: Fearful?

BLITZER: Fearful personally, because you could be a target for these insurgents, given your support for the interim government, given your support for the elections. You're an Iraqi Sunni. How fearful are you?

PACHACHI: Well, you know, when I came to Iraq almost two years ago, I realized it won't be easy, but I felt that it was my duty, and maybe I have something to offer to the Iraqi people.

And I'm very proud that I included in the interim constitution a comprehensive bill of rights. I think this is very important, because this will be, I'm sure, included in the permanent constitution that will be written by the national assembly.

So we have to take our chances.

BLITZER: One final question: This report in the New York Times on Saturday that $300 million in cash was flown from Iraq to Beirut in order supposedly to purchase weapons for the Iraqi army, and there's some fear that $300 million may be missing right now. What do you know about this, if anything?

PACHACHI: Well, I heard about that, of course, and I made inquiries. I hope that nothing really too corrupt has been done, but, of course, one can never tell. But I know that this money was supposed to be for the purchase of weapons, which the Iraqi national forces need. But it was done in a rather unusual way, to say the least.

BLITZER: Are you fearful there is...

PACHACHI: I don't have much information. Sorry?

BLITZER: Are you fearful, though, that there is potentially widespread corruption beginning to take place in Iraq right now?

PACHACHI: No. I know there is widespread corruption, and this is one of the things that in our platform that we are going to combat this corruption. And we'll go after the heads, not the small fry.

BLITZER: Adnan Pachachi, good luck to all of the Iraqi people as they head toward the elections. Thanks very much for joining us.

PACHACHI: Thank you very much, Wolf. Pleasure to be with you again.

BLITZER: Thank you.

PACHACHI: Thank you.

BLITZER: The Bush administration is trying to tone down some expectations about the voting, saying it's just one of several steps toward establishing democracy in Iraq.

Just a short while ago, I spoke with the United States ambassador to Iraq, John Negroponte, about the upcoming elections, concerns about security and much more.

(BEGIN VIDEOTAPE)

BLITZER: Mr. Ambassador, thanks very much for joining us.

As you know, one week from today, the Iraqi elections. By all accounts, the Kurds will vote in big numbers up in the north. The Shiites will vote in big numbers throughout the country.

The question is the Sunnis. Will they show up and vote? What's your assessment?

JOHN NEGROPONTE, U.S. AMBASSADOR TO IRAQ: Well, I certainly agree with you about the turnout in the north and in the south. I think we'll have to wait and see, as far as the center of the country is concerned, particularly in a couple of the more problematic Sunni provinces.

But what I can tell you, Wolf, is that no effort is being spared to provide the kind of security conditions that will enable as many people as possible in those areas to vote.

This includes extraordinary security measures. It also includes some special voting procedures for people in some of these areas, to take into account the particularly difficult security circumstances.

BLITZER: The fact that no international observers, monitors, significant numbers by any means will be able to come into Iraq because of the security concerns, the fact that they won't be there, does that underscore how difficult this is, that the security situation simply is not at hand right now?

NEGROPONTE: Well, I think that even though international observers are not going to come in any significant numbers -- there may be a few -- you will have, of course, the international press.

But perhaps more importantly, there will be thousands of Iraqi observers, monitors, observers, poll watchers, party members, people who have been trained by the National Democratic Institute and the International Republican Institute and others in the techniques of poll-watching.

So I don't think there's going to be any difficulty in verifying whether or not the polling shall have been conducted in an honest manner.

BLITZER: This is really, though, the first time in, what, two decades that no international observers of any significant numbers have been able to monitor an election in a transitional society.

You've been a diplomat for many years. It underscores the serious problem that is Iraq today.

NEGROPONTE: Well, that may be, but it's also the first time in several decades that this country is going to have an election. I think there's a great deal of excitement about its implications for Iraq's democracy.

They're going to elect an assembly, a national assembly, which in turn will select a new government. So there will be an elected government instead of an appointed one. They're going to draft a constitution, and that is going to go to a referendum in October. And a definitive government is going to be elected by the end of this year.

So there's going to be a lot of democratic political activity in this country over the next 12 months, and I think that responds to deep-seated Iraqi aspirations.

BLITZER: We know that the interim prime minister, Iyad Allawi, would like to stay on as prime minister. Who, in your opinion, are the biggest challengers, the biggest threats to him? Who are the other leading candidates?

NEGROPONTE: Well, I don't think we can really answer that question at this stage.

First of all, we don't know which particular groups are going to win how many seats in the national assembly. There are more than 100 different slates that are competing, although admittedly there are three or four major slates. But we'll have to see the distribution of seats first.

Secondly, I'd say no one group is going to have a monolithic influence over the assembly. So I suspect when it comes to selecting a new prime minister -- and that prime minister will have to be chosen unanimously by a three-person presidency of the country -- there's going to be a lot of horse-trading.

But whatever the outcome, we are going to have to work with whatever government is chosen.

BLITZER: During Condoleezza Rice's confirmation hearings in Washington on Wednesday, Democratic Senator Joe Biden, the ranking Democrat on the Foreign Relations Committee, suggested there were really only about 4,000 Iraqi troops who are well-prepared, ready to go.

Listen to what he said during the questioning of Condoleezza Rice.

(BEGIN VIDEO CLIP)

U.S. SENATOR JOSEPH BIDEN (D-DE): Time and again, this administration has tried to leave the American people with the impression that Iraq has well over 100,000 fully trained, fully competent military police and personnel. And that is simply not true. You and I know that. We're months, probably years away from reaching our target goal.

(END VIDEO CLIP)

BLITZER: Is Senator Biden correct?

NEGROPONTE: Well, I think that 4,000, that figure of 4,000, really understates the progress that has been made in the development of the Iraqi army and police forces.

And if you look at their record in some of the difficult situations that they've been in during the past several months, such as in Najaf, in Sadr City, in Samarra, and as we've watched them take on increased responsibility for security in various places, I think that they're progressing quite well.

But I would also agree that quite a bit of work remains to be done. And training and equipping and motivating the Iraqi armed forces and their police forces is really one of our highest priorities here.

BLITZER: If it's not 4,000, how many well-trained Iraqi forces are there right now?

NEGROPONTE: Well, I think that the well-trained part is very subjective. We've certainly trained more than 100,000.

Different forces have received different levels of training. For example, the regular army gets more training than some of the other forces.

And sometimes units go into combat, and then after combat they have to be reconstituted and go through some retraining.

I think training and building of a military or police institution is a very complex process. None of this happens overnight. It requires patience and effort.

But again, as I said, it's an extremely high priority for us. We're devoting a lot of effort to it.

And I think that, as Iraqi armed forces and police improve in quality and assume greater and greater responsibility for the security of their cities and for their country, this will enable our forces eventually to come home.

BLITZER: So what number would you estimate is it? How many well-trained Iraqi troops do you assess there is right now?

NEGROPONTE: Well, Ms. Rice used the figure of 120,000. We count here, General Petraeus and I, when we talk about this, we talk about the numbers of battalions that are operating, and there are some 70 battalions in the Iraqi army at the moment that are out there in various parts of the country.

So again, I would say it's considerably higher than the figure that Senator Biden put forward.

BLITZER: The current U.S. strategy is being criticized by some observers, including Senator John Kerry at that Condoleezza Rice confirmation hearing. He said this. Listen to what he said.

(BEGIN VIDEO CLIP)

U.S. SENATOR JOHN KERRY (D-MA): All of my colleagues would report to you, and I think you'll hear it from generals and others, the current policy is growing the insurgency, not diminishing it.

(END VIDEO CLIP)

BLITZER: That's by making the U.S. military very visible, out front, out in the open. Do you agree with Senator Kerry?

NEGROPONTE: Well, since I've been here -- I don't know if I would agree with that, because since I've been here, the number of attacks instigated by the insurgency, the former regime elements and so forth, has stayed at pretty much the same level over these past six months. So, to me, that would not necessarily suggest that the insurgency has increased.

I think certain activities that they've undertaken have definitely increased, such as their intimidation campaign against Iraqi officials and against their armed forces and their police.

But overall, the level of activity by the insurgency is about the same as it was when I got here six months ago.

(END VIDEOTAPE)

BLITZER: Just ahead, more of the interview with John Negroponte. A threat against the Iraqi elections: Can the insurgency derail democracy? We'll continue our conversation with the U.S. point man on the ground in Baghdad. And later, a rare and exclusive interview: We'll talk with the foreign minister of one of Iraq's key neighbors, Syria. Is Syria a source of the Iraqi insurgency?

Plus, Condoleezza Rice in the hot seat. Two U.S. senators standing by. They have very different views on the secretary of state nominee.

"Late Edition" will continue right after this.

(COMMERCIAL BREAK)

BLITZER: Our Web question of the week asks this: How did President Bush's inaugural address make you feel? More hopeful, less hopeful or no different?

You can vote right now. Go to cnn.com/lateedition. We'll have the results later in the program.

Up next, when will Saddam Hussein stand trial? More of my interview with the U.S. ambassador, John Negroponte. He has an answer to that question.

You're watching "Late Edition," the last word in Sunday talk.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition."

We return now to my interview with the United States ambassador to Iraq, John Negroponte.

(BEGIN VIDEOTAPE)

BLITZER: Abu Musab al-Zarqawi, the Jordanian-born terrorist who's leading at least a big chunk of this insurgency, on his Web site, at least according to this audiotape posted on two Islamic Web sites, says this:

"We have declared a bitter war against democracy and all those who seek to enact it. Elections are a tool used by Americans to promote this lie that is called democracy. You have to be careful of the enemy's plots that involve applying democracy in your country and confront these plots, because they only want to do so to give the rejectionists the rule of Iraq."

That's a voice claiming to be Abu Musab al-Zarqawi.

How powerful is he right now? Why can't he be captured?

NEGROPONTE: Well, as far as his message is concerned, about disrupting these elections, let me assure you that General Casey, the commanding general of the MNF, and the Iraqi ministries of defense and interior have put together a plan, a security plan to ensure that as many Iraqis as possible can vote on January 30th, election day.

So they are making every effort to respond to these kinds of threats.

The second point I'd make is that Zarqawi's threat is just another proof of how they simply -- they have no other plan or program for this country, other than to brandish threats, intimidate people and try to prevent democracy from taking hold here.

BLITZER: Why can't you find him?

NEGROPONTE: Why hasn't he been -- well, certainly a number of his lieutenants and cohorts have been captured in recent months. And that effort, of course, continues. But one simply has to persist in those kinds of efforts, and hopefully, sooner or later, he himself will be captured.

But let me stress that it's not only Zarqawi who is involved in this resistance effort. Of course, it's these former regime elements, these ruthless Saddamists, who have no other program to offer for this country except intimidation and terrorism and denying the democratic aspirations of the Iraqi people.

BLITZER: The New York Times Saturday had an intriguing article about an Iraqi-chartered plane with some $300 million in cash being flown to Beirut, supposedly to purchase weapons from some mysterious source.

Is all that true?

NEGROPONTE: Well, we're looking into those allegations.

One thing I can tell you is that no appropriated U.S. government monies are involved here.

I would also note that these allegations arise because of accusations that are being traded between two political rivals who are running for the national assembly here. So what we may be seeing, in part at least, here is just part of the wind-up of a political campaign.

But in any case, we are looking into it.

BLITZER: Do you know if that money is missing, or did it actually wind up purchasing weapons for the Iraqi army?

NEGROPONTE: As I said, as I said, we're looking into it. I cannot give you the answer at the moment, but I can assure you we're looking into it. What I do know is that there are no U.S. government monies involved.

BLITZER: One of those Iraqi politicians you referred to is Ahmed Chalabi, once a favorite among many officials here in Washington, now very, very controversial, despised by some.

Is he a good guy or a bad guy from the U.S. perspective?

NEGROPONTE: Well, I don't -- I have no comment on that. What I can say is that Mr. Chalabi is on the list, the United Shia list. He's well-placed on that list. And therefore, I think he has a very good chance of being elected to the national assembly. So it seems to me that he will be playing a role in the political future of his country for some time to come.

BLITZER: How much is the Iraqi policy, the U.S. involvement in Iraq, the military, the economic support, the aid, how much is it costing U.S. taxpayers every week?

NEGROPONTE: Well, I can tell you the -- of course, we have an $18.4 billion reconstruction program, but I am afraid I can't tell you the figure on a weekly basis. I really don't have that particular set of facts at my fingertips.

BLITZER: Well, if it's about $100 billion...

(CROSSTALK)

BLITZER: If it's $100 billion for the military involvement, that would be $1 billion or almost $2 billion a week.

NEGROPONTE: You'd just have to ask the Pentagon about that, Wolf. I just don't know those figures.

But let me just say that the whole purpose of our programs here are to enable Iraq to carry out these elections and develop its political institutions, and our reconstruction program is designed to help them put their economy on their feet. And of course, we want them to develop the capacity to defend themselves, without relying on coalition forces.

So the whole thrust of our policies is to enable the Iraqis to take on greater and greater ownership and greater responsibility for the conduct of their own affairs, so that, sooner or later, these costs to which you refer will be significantly reduced.

BLITZER: One final question: Saddam Hussein, when do you believe his trial will begin?

NEGROPONTE: Well, I think that there may be some preliminary activity, with respect to some of the other so-called high-value detainees, coming up fairly soon, perhaps in the investigative trial phase of three of the other accused.

I would expect that, from what I'm hearing from our experts, that sometime this year, the investigative portion of the trial of Saddam will begin, and that maybe the trial itself might take place sometime toward the end of this year.

BLITZER: Mr. Ambassador, you're the U.S. point man in an extremely dangerous area. You and your colleagues are very courageous indeed. Thanks very much for joining us. Good luck next week. Good luck in Iraq.

NEGROPONTE: Thank you very much, Wolf. (END VIDEOTAPE)

BLITZER: And up next, a quick check of what's making news right now, including that winter storm that's blanketing the northeast of the United States.

Then, examining the Bush doctrine: We'll talk with the U.S. Senate Foreign Relations Committee chairman, Richard Lugar, and a key Democrat on the panel, Barbara Boxer, about the ambitious foreign policy outlook in the president's inaugural speech.

More "Late Edition" straight ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The best hope for peace in our world is the expansion of freedom in all the world.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: President Bush outlining his global vision in his inaugural speech this past week, a vision that's being described by some as idealistic and ambitious, but also being described as unrealistic.

Welcome back to "Late Edition."

Joining us now to talk about that and more, the chairman of the United States Senate Foreign Relations Committee, Richard Lugar of Indiana, and one of the committee's top Democrats, Barbara Boxer of California.

Senators, good to have both of you back on "Late Edition."

Mr. Chairman, I'll begin with you. Were you satisfied that you, as the chairman of the Foreign Relations Committee, gave your members enough time to question Condoleezza Rice this past week during her confirmation hearings, given the numerous issues out there and all the questions that have to be asked?

SEN. RICHARD LUGAR (R), INDIANA: Yes, I think there was adequate time. We indicated that all of two days, Tuesday and Wednesday, might be available. I think most members came to the conclusion that the 12 hours of questioning of Condi Rice gave really adequate opportunities.

And as I've indicated during my time, I said the hearing may be verging out of control, but we really want to make certain that members who have vital questions have opportunities to raise them.

And then finally we came to a vote, which I think reflected accurately the feelings of the committee. BLITZER: Do you ever get frustrated, though, as the chairman, that so many of the members wind up making speeches, making statements, as opposed to asking questions?

LUGAR: Well, I don't allow frustration to enter into it. There is a sense always in these hearings -- and this one was especially important, really the first public event after the election campaign. It was an opportunity for some members, perhaps, to vent some very strong feelings that they still have.

Condoleezza Rice may have been in the chair, but some may have seen President George Bush sitting there, so there was a face-to-face confrontation, some important questions.

On the other hand, there were opportunities, and all 18 members participated fully in the conference. So that is unusual, too, and it shows the gravity and the importance of it.

BLITZER: Senator Boxer, the final vote in the committee, as you know, 16 to 2 in favor of the confirmation. But then some members, some Democrats, Robert Byrd of West Virginia, asked for more debate on the Senate floor, thereby postponing her final confirmation -- everybody knows it's a done deal -- but postponing her confirmation for a few more days.

Listen to what the White House chief of staff, Andrew Card, told me about that decision by some Democrats.

(BEGIN VIDEO CLIP)

ANDREW CARD, WHITE HOUSE CHIEF OF STAFF: I don't even view this as partisan politics. I view this as very petty politics. And it's literally a handful, or maybe even only two senators, who are being obstructionists. And I just think it's very small of them when we all know that Dr. Rice will be a great secretary of state.

(END VIDEO CLIP)

BLITZER: You and Senator Kerry, Senator Boxer, were the only two Democrats, the only two members on the Foreign Relations Committee to reject her nomination.

Any regrets, looking back, on the way it all unfolded?

SEN. BARBARA BOXER (D), CALIFORNIA: Not at all.

And I just want to respond to Andy Card. And I don't know how Senator Lugar feels, but as I've said before when asked about this, no White House really enjoys dealing with the Senate or the House. They would really rather, frankly, just be able to do whatever they wanted.

And I was questioned by one reporter at the inaugural -- I was at the inaugural. And she said, "Well, why are you delaying this vote? The White House wants a vote today." And I said, "Well, you know, the White House doesn't run the United States Senate, and the United States Senate doesn't run the White House. We do have this check and balances."

And I think it's very important, when you have a secretary of state nomination in a time of war -- and as I laid out, and I will lay out again on the Senate floor, one who I do not believe has been candid with the American people, who's gone on shows like yours and made statements that I don't think were true, or they were half-true, didn't tell the whole story, didn't level with the American people -- I would not be worth my weight as a United States senator from the biggest state in the union if I didn't bring up those questions.

I'm only doing my job, even though Andy Card would like me to go away. I'm not going to go away.

BLITZER: Here's one exchange, Senator Boxer, that you had with Condoleezza Rice that's causing all sorts of, shall we say, controversy. Listen to this.

(BEGIN VIDEO CLIP)

BOXER: I personally believe -- this is my personal view -- that your loyalty to the mission you were given, to sell this war, overwhelmed your respect for the truth.

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: I have to say that I have never, ever lost respect for the truth in the service of anything. It is not my nature. It is not my character.

And I would hope that we can have this conversation and discuss what happened before and what went on before and what I said without impugning my credibility or my integrity.

(END VIDEO CLIP)

BLITZER: Senator Boxer, were you accusing her of deliberately lying to the American people in the buildup to the war?

BOXER: I gave Dr. Rice many opportunities to address specific issues. I had the quotes on the boards there, and I showed her what she said.

For example, she said the aluminum tubes that were being sought by Saddam Hussein could only be used -- could only be used -- for nuclear weapons. And it is very clear that that wasn't so, and she should have known that at the time.

And she refused to answer it. Instead, she said I was impugning her integrity.

You know, it's a very good debating technique. I mean, I've been in this debating business for a while now. And when you really don't know what to say about a specific, you just attack the person who is asking the questions.

You know, I also asked her questions about her statements that Saddam Hussein trained al Qaeda operatives. And I showed her that the State Department had a little map out there about a month after 9/11 that said there was absolutely not a trace of al Qaeda in Saddam Hussein-controlled Iraq.

Now, we're all glad Saddam is gone. You know, he's a dictator, and as far as I'm concerned he can rot. That's not the point. The point is we went into a war based on these statements that she made, and she could have addressed that.

She didn't address it. She turned and attacked me. It's fine; I don't care. But she has not corrected the record, and I worry about somebody who had a chance to correct the record who didn't do so.

BLITZER: Let me let Senator Lugar -- you were there. You watched all this unfold. Do you believe that Condoleezza Rice deliberately misled the American people in her zeal for the war, as the accusation is, in advance of the war?

LUGAR: No, I don't believe that she did. I think she did the best that she could. I think, as Dr. Rice pointed out later in the testimony, things didn't work out quite as everybody anticipated. The intelligence didn't turn out to be very good or, in some cases, was inaccurate.

BLITZER: You're talking about the no weapons of mass destruction.

LUGAR: Yes. And leaders finally have to act upon the best intelligence or their own intuition. So some mistakes were made. Now, the batting average, by and large, was very favorable.

But it's fair enough to try to probe what happened. I think the import of the hearings, however, was to try to take a look at the future. And some other members raised some valid questions about Latin America, for example, or economics in the world.

BLITZER: Senator Biden, who is the ranking Democrat on your committee, was also quite critical of Dr. Rice. Listen to what he said.

(BEGIN VIDEO CLIP)

BIDEN: ... you're never wrong. And it's almost like, "If I acknowledge any weakness, if I acknowledge any misjudgments on the part of me or the president or anybody on the team, it's a sign of weakness."

(END VIDEO CLIP)

BLITZER: Because she was pretty steadfast, as you well saw during those many hours of the hearing, in defending her position, defending the administration's position, which, of course, is what she's supposed to do. But after all is said and done, when there is a mistake, you have to acknowledge a mistake.

LUGAR: Well, she did.

Now, one of the very large parts of the hearing came about talking about this reconstruction team now in the State Department. Comes back to both the president and Dr. Rice once thought nation- building was probably not what we should be into. We ought to fight wars, get them over, let the people handle their affairs.

We are into nation-building in a big way. The president's inaugural address, in talking about universal freedom, talks about all sorts of possibilities for this country, not just warlike ones but peaceful ones. And Dr. Rice admitted there had been a sea change. It's been 180. Now, this is very, very big.

BLITZER: So you're obviously convinced she's well-qualified to be the next secretary of state.

LUGAR: Yes, I am. And I'm hopeful that we will have a good debate, nine hours on Tuesday...

BLITZER: On the floor of the Senate.

LUGAR: ... on the floor of the Senate, equally divided between Republicans and Democrats, and a vote, then, mid-morning on Wednesday, and that there will be a very strong vote. Because this is America's face to the world. Aside from the president of the United States, she bears the responsibility of saying to others what our foreign policy is.

BLITZER: Senator Boxer...

BOXER: Wolf, if I could make...

BLITZER: ... Senator Biden says...

BOXER: Yes.

BLITZER: ... Senator Biden says that -- he's the ranking Democrat on your committee -- he'll finally vote for her, probably will vote for the confirmation. He voted for the confirmation, as you know, in the Foreign Relations Committee.

BOXER: Yes.

BLITZER: Because it's the president's right to pick who he wants to be the secretary of state. You have to admit, she's well-qualified in terms of her personal story as well as her experience in academia and government.

BOXER: Yes. And I said that right upfront. Her personal story is inspiring. She's articulate, intelligent and qualified.

Let me say again, you know, Martin Luther King had a really important statement he once made. He said, "Our lives begin to end when we stop talking about things that matter." And the things that matter to my people in California -- because we've lost 25 percent of those who died in Iraq -- things that matter include this war.

And, yes, we're going to look forward; of course we are. But when you have someone -- and I have her quotes directly, that she made on your show, Wolf, that she made on other TV shows, because, although she was an adviser to the president, she didn't hesitate to go out and sell this war to the American people.

She said things that were flat-out not true. When she said only one agency thought the aluminum tubes could not be used for nuclear weapons, that wasn't true. The fact is it was three or four.

BLITZER: What did you think of her explanation of her comment, Senator Boxer, her comment on this program, when she said before the war she didn't want the, quote, "smoking gun to turn out to be a mushroom cloud," the implication being that the Iraqis were moving toward some sort of nuclear program which they had apparently abandoned throughout the '90s after it had been discovered after the first Gulf War?

What did you think of her explanation for that comment, which she made on "Late Edition"?

BOXER: Well, I think that she frightened every American, and that was the point.

And here's what's really interesting -- and she had no response to this at all. Later she went on -- it was the Gwen Ifill, the NewsHour on PBS, and she was asked, "Did you exaggerate this?" And she said, "Look, nobody ever said that Saddam would have a nuclear weapon within a year." She said that.

Well, turns out nine months before, President Bush said he would. And then later, a year after she made that comment that no one ever said he'd have a nuclear weapon in a year, she said it again: "He'd have a nuclear weapon within a year." This is not good.

And her comments on torture, she said that, oh, well, she felt it was important to uphold the Geneva Conventions, and yet she tried to get out an anti-torture provision in the intelligence bill just a couple of weeks ago.

I'm troubled by this nomination. Yes, she's qualified, but I worry about the candor side of it.

BLITZER: All right, let's take a quick break, and we'll continue this conversation. We'll talk about the president's ambitious agenda in his inaugural address. More with Senators Lugar and Boxer.

And later, debating Social Security reform: Are changes ahead in the way you prepare for your retirement?

"Late Edition" will continue after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition." We're continuing our discussion with Republican Senator Richard Lugar of Indiana and Democratic Senator Barbara Boxer of California.

On the Don Imus show, the vice president said this week, referring to Iran and its nuclear programs, he said this: "If, in fact, the Israelis became convinced the Iranians had a significant nuclear capability, the Israelis might well decide to act first and let the rest of the world worry about cleaning up the diplomatic mess afterwards."

How concerned are you, if you are at all, Senator Lugar, that the Israelis might preemptively strike Iran's nuclear facilities?

LUGAR: I believe that's very unlikely for the same reason that preemptive discussion regarding any country has revealed the fact that Iran probably has the nuclear situation in several locations, not all of them known to us or perhaps to the Israelis, unless intelligence has been much more pervasive.

So, as a result, the effect of an Osirak-type reaction, the type of attack Israel had on Iraq earlier, when they took everything out for a period of time, is unlikely to occur in Iran. And the retaliation by the Iranians, given our predicament in Iraq, could be very serious.

BLITZER: Senator Boxer, I want you to respond to a comment, a theme in effect of the president's inaugural address. And I'll play a little excerpt for you that sets the stage for that. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: We are led by events and common sense to one conclusion: The survival of liberty in our land increasingly depends on the success of liberty in other lands.

(END VIDEO CLIP)

BLITZER: Senator Boxer, what do you think of that whole thrust of the president's inaugural address?

BOXER: Well, first, let me give the president a compliment. I heard that speech. I was right there. And he was very confident, and he delivered it, I think -- it was the best speech he ever delivered.

But I have to say, I didn't get his point. For him to say that the survival of our liberty depends on anyone else, I just don't buy that. This is the greatest country in the world.

We have a constitution. We have a free people. We have a very vibrant political system, and it doesn't always turn out the way I want, but the fact is, for him to imply that our freedom depends on what happens elsewhere, I just don't buy it. This country has made it through all kinds of challenges, and we have never once lost our freedom.

Now, I think the president's speech -- and I'm very interested to hear what Senator Lugar thinks about it. And by the way, Senator Lugar and I are very good friends. And he is, by far, in my opinion, one of the best chairman I've ever had, if not the best. He's so fair.

But the fact is there was very little about what the policy implications of all these grandiose words meant. And you had to have Daddy Bush, President Bush's dad, who I really like very much, getting out there, saying, don't worry, be happy, we're not going to really change this.

I found it a very odd speech, in the sense that I was baffled as to what he's talking about. And then you get Dick Cheney talking about some kind of attack on Iran by Israel. It's all very troubling to me, and I'm confused about it.

But I don't think that our country's greatness relies on the actions of anyone else.

BLITZER: Unfortunately we have to leave it right there, because we're out of time.

BOXER: Sorry.

BLITZER: Senator Boxer, thanks very much for joining us.

Mr. Chairman, thanks to you, as well.

We'll take a quick break. We'll be right back. More "Late Edition" right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition." We'll have my exclusive interview with the foreign minister of Syria. That's coming up shortly.

First, though, let's get a quick check of what's in the news right now.

(NEWSBREAK)

BLITZER: Fresh claims this past week from Secretary of State- nominee Condoleezza Rice that Iraqi insurgents are operating from neighboring Syria.

It's not often we get to hear directly from the Syrian government, but just a short while ago, I spoke directly to Syria's foreign minister, Farouk Al-Shara. He joined me from Damascus.

(BEGIN VIDEOTAPE)

BLITZER: Foreign Minister, thank you very much for joining us. Welcome to CNN's "Late Edition."

Let's get right to an immediate issue of concern: the allegation that insurgents in Iraq are coming into Iraq from your country, Syria. Is that true?

FAROUK AL-SHARA, SYRIA'S FOREIGN MINISTER: Well, let me first say that there is a lot of exaggeration on the insurgency issue.

We cannot ignore that Iraq has 25 million to 28 million people. Insurgents, if they are accounted, then they would be in hundreds, in few hundreds, not even in thousands.

And if they cross any bordering state to Iraq, it is against the will of the government of Syria. At least I speak for the Syrian government. We never facilitated...

BLITZER: Are you cooperating in any way with the insurgents?

AL-SHARA: Not at all. We are not friendly even with them because this is not the right way to help the Iraqis.

BLITZER: Let me read to you what the Iraqi national security adviser, Mouwafak al-Rabii, said the other day. He said this, he said: "There are tens of thousands of high-ranking Baathists in Damascus. There are people from the former Iraqi intelligence agencies, from the special forces and Republican Guards. These people are very active in raising funds, in providing logistical help to the terrorists in Iraq, in planning and in command and control and leadership. Can anyone believe that the Syrian intelligence service does not know about this? The Syrians," he says, "are turning a blind eye to these activities."

That's the accusation from the Iraqi national security adviser.

AL-SHARA: Well, let me first say that I happened to meet Mr. Rabii, Mouwafak Rabii. I respect the man. But I don't know what conditions or under what conditions is he talking about this.

He knows that the insurgents are in hundreds, not in thousands, even. And he knows that Syria doesn't help insurgents. On the contrary, we are helping the Iraqis to be united, to go to the elections, to accept the political process and not, of course, to accept the occupation. This is what...

BLITZER: When you say "not to accept the occupation," what do you mean by that?

AL-SHARA: Not to accept the occupation -- in other words, we were against the war on Iraq.

And now we are not talking about the past. We are talking about the difficulties that all of us are facing in Iraq, in the forefront the Americans are facing in Iraq.

And the second thing I would like to mention here is that the insurgents, if they are crossing the Syrian border, they are crossing the Syrian border against the will of the Syrian government, no doubt about this. If you mention Iraqi...

BLITZER: Dr. Condoleezza Rice, in her testimony this week before the Senate Foreign Relations Committee -- she's about to become the U.S. secretary of state, as you know -- said this, and I want you to listen precisely to her words about Syria.

AL-SHARA: Yes.

(BEGIN VIDEO CLIP) RICE: It is incumbent on Syria to respond finally to the entreaties of the United States and others about their ties to terrorism, about the harmful activities that are taking place from Syrian territory into Iraq.

(END VIDEO CLIP)

BLITZER: Once again, would you like to respond to what Dr. Rice said?

AL-SHARA: You know, again, I would like to say that I'll be very happy to get acquainted with Condoleezza Rice. She perhaps would be a very good secretary of state. I happened to know Secretary Powell before.

I hope that she will know the truth about Syria, the actual, factual figures and numbers about Syria. We don't encourage insurgents. We don't encourage terrorism.

On the contrary, on the 9/11 attacks, we were very angry. We condemned the attacks immediately. President Bashar Assad did so on the same day. I did so on the same day, sending a message of condolences and of anger against the terrorists.

And Syria has experienced combating terrorism for a long time, since the late '70s and early '80s.

BLITZER: Here is a specific charge that some U.S. officials are making, that a former leader in the Saddam Hussein regime, Izzat Ibrahim Al-Douri, who was vice chairman of the Revolutionary Command Council, he's the so-called king of clubs, still missing, still at large, that he, the accusation has been, has been going across the border between Syria and Iraq throughout the course of this insurgency.

Has he been a welcome guest in Damascus?

AL-SHARA: No, he has not. I mean, all the Iraqi previous regime members are not welcome in Syria, and from the beginning -- and the Americans know this. And the previous regime knows this as well.

But we have many Iraqis. I mean, many Iraqis are fleeing their country in order to be safe in Syria. Many Christian Iraqis have fled Iraq in order to be safe in Syria. They find in Syria a safe haven.

We cannot expel them just because they are Iraqis. They have nothing to do with terrorism. And if some press reports or some government officials here and there say that these are insurgents, I mean, this is wrong.

BLITZER: Do you support the Iraqi elections scheduled for one week from today?

AL-SHARA: Yes, of course we do. We support the political process. We support the elections. The date of the elections is up to the Iraqis to decide, not up to any other body. And we said in Sharm el-Sheikh and in Amman, when we had the G-8 with the neighboring countries meeting, that Syria supported the political process.

It should cover all Iraq. It doesn't exclude anybody, doesn't exclude any area. And that's why we are worried, because lack of security in Iraq might be an impediment or an obstacle in the way of people going to cast their votes.

BLITZER: The president was inaugurated for a second time, the president of the United States, George W. Bush. Made a very tough speech, his inaugural address. Among other things, he offered this assessment. I want you to listen to this one sentence from the president's inaugural address this past week.

AL-SHARA: OK.

(BEGIN VIDEO CLIP)

BUSH: Democratic reformers facing repression, prison or exile can know, America sees you for who you are, the future leaders of your free country.

(END VIDEO CLIP)

BLITZER: Now, that was widely interpreted as suggesting that political prisoners, whether in Syria or other countries, will some day be the future leaders of those countries.

I wonder if you want to respond to what the president had to say.

AL-SHARA: Well, let me say first that the tone of President Bush is a religious tone. And I'm not taking it as a political message.

And second, Syria was not mentioned in the message or in the President Bush's speech or address. Why do you try to indulge Syria in it?

BLITZER: Well, many U.S. officials repeatedly are saying that Syria is a source of serious problems for the U.S., in part because of the Iraq situation, also in part because it supports or cooperates with groups the U.S. considers to be terrorist organizations, like Hezbollah or Hamas.

AL-SHARA: You know, we met many American officers recently, a lot of congressmen. None of them said that Syria is a problem. They like Syria. They wanted to pursue dialogue with the Syrian government. They admired the Syrian people. And this image, distorted, just because of hidden agenda, for reasons that we cannot understand.

BLITZER: The other charge, the other concern expressed by U.S. officials is Syrian troops in Lebanon. How many Syrian troops are in Lebanon?

AL-SHARA: Not so many now. There used to be over 40 six years ago...

BLITZER: Over 40,000.

AL-SHARA: ... when President Bashar -- 40,000 troops. But after President Bashar Assad became the Syrian president, he reduced the number to around 15,000 to 16,000 only.

BLITZER: How long will the Syrian troops remain in Lebanon?

AL-SHARA: Not for good, certainly. There is a (UNINTELLIGIBLE) accord that we are committed to implement, strongly committed to implement.

BLITZER: So, what's your assessment? How many more years?

AL-SHARA: Well, it might take only a couple of years.

BLITZER: A couple of years, all right.

Let's move on, talk about the possibility of...

AL-SHARA: Yes. I mean, I would like...

BLITZER: ... reviving peace negotiations with Israel. Is Syria ready, at this point...

AL-SHARA: I would like to tell you that...

BLITZER: Excuse me for interrupting you, but is Syria ready, at this point, Mr. Minister, to resume negotiations, peace negotiations, with Israel?

AL-SHARA: But let me first answer the first part of your question. We are in Lebanon to help the Lebanese. When the Lebanese don't like this help, we wouldn't wait there for a further day.

And as far as your second question, or the part of your question, the second part of your question, we hope that the American administration would work for a comprehensive peaceful settlement in the Middle East. This is -- we have been calling for it for almost for the last 10 years, since the Madrid peace conference.

We would like to see that all tracks (ph) -- Palestinian, Syrian and Lebanese -- are revived because a comprehensive peace is in the interest of all parties. It is in the interest of all peoples of the Middle East and, above all, it is in the interest of the United States policy in the Middle East and in the world at large.

BLITZER: Well, it looks like the Israeli-Palestinian peace negotiations are about to get going again, under the leadership of Mahmoud Abbas, Abu Mazen, the new Palestinian Authority president, and the Israeli prime minister, Ariel Sharon.

Can there be simultaneous negotiations between your government, the Syrian government, and the Israeli government? AL-SHARA: First, we welcome the resumption of peace talks between the Palestinians and the Israelis. We welcome the understanding that has been already perhaps achieved among the Palestinians themselves, to unite, in order to go together to the negotiations.

National unity among the Palestinians is an important element in this. The Israelis shouldn't be afraid of it. On the contrary, they should encourage it.

And also, Abu Mazen is doing a good job in this regard.

BLITZER: So do you support, does Syria support, a two-state solution, a new state of Palestine living alongside in peace, living alongside Israel?

AL-SHARA: Yes, we supported Resolution 1515, which speaks about two states living side by side.

BLITZER: What will it take for Syria to resume negotiations with the Israeli government? Where does that stand right now? Because lately there has been some talk that there is a possibility of these negotiations getting back on the ground, some positive signals coming from Damascus.

AL-SHARA: Yes, I can tell you for sure that Syria is ready to resume negotiations. President Bashar Assad has extended a hand of peace to resume negotiations. And we are still hoping that the Israelis will respond positively to our request.

BLITZER: What will it take for Syria to establish a full peace treaty, full diplomatic relations with Israel? What kind of concessions would you demand, would you seek from the Israeli government in exchange for that?

AL-SHARA: Well, we have been saying that for so many years, I mean, for a decade or more, that total peace for total withdrawal.

BLITZER: So if Israel were to withdraw fully from the Golan Heights, Syria would establish full peace with Israel?

AL-SHARA: That's right. This is the equation.

BLITZER: Do you have any hope that's going to happen?

AL-SHARA: I hope so. I think there is now a narrow window of opportunity. I hope it would get wider in the course of time.

We encouraged the Palestinians to go ahead. We encouraged the comprehensiveness of the solution. It means the Syrians, the Lebanese. And in this case, the 1559 (ph), as the Lebanese government says, it will be implemented without a lot of trouble, without any intimidation.

BLITZER: Foreign Minister, it was very kind of you to spend some time with us here on "Late Edition." We appreciate it very much. Thanks for joining us.

AL-SHARA: Thank you.

(END VIDEOTAPE)

BLITZER: The Syrian foreign minister, Farouk Al-Shara, speaking from Damascus just a little while ago.

Up next, the former U.S. labor secretary Robert Reich and the former U.S. presidential candidate Steve Forbes on what to expect from the U.S. economy as President Bush begins his second four years in office.

"Late Edition" will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: By making every citizen an agent of his or her own destiny, we will give our fellow Americans greater freedom from want and fear and make our society more prosperous and just and equal.

(END VIDEO CLIP)

BLITZER: President Bush in his inaugural address, signaling his plans for what he likes to call an ownership society.

Helping us sort out what may lie ahead for the U.S. and the world economy, two experts with different views: in Berkeley, California, the former Clinton labor secretary, Robert Reich. And in New York, Steve Forbes, the president and CEO of Forbes, Inc., himself a former Republican presidential candidate.

Thanks to both of you for joining us here on "Late Edition."

I'll begin with you, Robert Reich. And I'll play for you a soundbyte of what the president said on the need to reform Social Security right now. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: By the time today's workers who are in their mid 20s begin to retire, the system will be bankrupt.

So if you're 20 years old, in your mid 20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now. And that's what we're here to talk about, a system that will be bankrupt.

(END VIDEO CLIP)

BLITZER: Robert Reich, what about that? Is this a crisis right now that must be dealt with right now, the top priority domestically in the U.S.? ROBERT REICH, FORMER LABOR SECRETARY: Not at all, Wolf. It ain't broke, and don't fix it.

In fact, even the Congressional Budget Office, an arm of the Republican Congress, has estimated that Social Security will not be in trouble until 2054. That's almost 50 years from now.

And if we have economic growth that averages about the same economic growth we've had per year since the Civil War, we're not going to have a problem with Social Security any time in the 21st century.

This is not a crisis. And indeed, not only is it not a crisis, but Bush's plan to privatize would divert about $2 trillion over the next 10 years out of Social Security. I mean, you're not going to fix a system, even if you think it's broken, by taking money out of it.

BLITZER: Well, let's let Steve Forbes respond.

Is this a crisis right now?

STEVE FORBES, FORMER PRESIDENTIAL CANDIDATE: I think the president gets credit for facing up to the fact that Social Security will be paying out more than it takes in in the next 10 or 12 years. 2018, 2019, the system's going to start paying out more money. So why not fix it now when it's relatively easy?

And as for private accounts, personalized accounts, that means the money's invested in the economy, and that guarantees a stronger economy in the future.

All you have to do, Wolf, is look at Europe, where they allowed their welfare system to go out of control, and you see they have much lower growth rates than what we should have in the future.

So fix it now before it becomes a huge problem 10 or 12 years from now.

BLITZER: Robert Reich, in 1998, your former boss, the president of the United States, at that time Bill Clinton, also spoke about Social Security, his words, as a looming fiscal crisis.

Listen precisely to what he said in '98.

(BEGIN VIDEO CLIP)

WILLIAM CLINTON, FORMER PRESIDENT OF THE UNITED STATES: If you don't do anything, one of two things will happen: Either it will go broke, and you won't ever get it. Or, if we wait too long to fix it, the burden on society of taking care of our generation's Social Security obligations will lower your income and lower your ability to take care of your children to a degree that most of us, who are your parents, think would be horribly wrong and unfair to you and unfair to the future prospects of the United States.

(END VIDEO CLIP) BLITZER: Was Bill Clinton wrong in '98 when he spoke of this crisis developing in Social Security?

REICH: Well, Wolf, I can't tell you exactly what Bill Clinton was talking about then. He may have been projecting the surpluses, the budget surpluses that were mounting in the federal budget accounts, and he was worried about the possibility the Republicans would take all those surpluses and distribute them back to taxpayers, as George Bush did. And remember, that was a time when Clinton said, "Save Social Security first."

But if you actually look at the numbers, if you look at the projections -- and, Wolf, I was a trustee of the Social Security trust fund when I was secretary of labor -- I can tell you, there is not a problem.

In fact, the projections are based on such conservative assumptions about economic growth that, if you just relax those assumptions and say we're going to have approximately the same economic growth over the next 100 years as we've had over the last 100, there ain't a problem.

Don't fix a problem that doesn't exist.

BLITZER: Robert Reich, you probably won't be surprised to hear Senator Ted Kennedy is on the same page with Robert Reich when it comes to this issue, whether or not there is a crisis right now.

Listen to what Senator Kennedy recently said.

(BEGIN VIDEO CLIP)

U.S. SENATOR TED KENNEDY (D-MA): We have an administration that falsely hypes almost every issue as a crisis. They did it on Iraq, and they are doing it now on Social Security. They exploit the politics of fear and division.

(END VIDEO CLIP)

BLITZER: All right. So once again, Steve Forbes, tell our viewers why you believe this is a crisis that must be addressed right now.

FORBES: Well, Bill Clinton had it right in 1998, and I love how Secretary Reich kind of danced around that one.

But in 2018, 2019, the system's going to start paying out more benefits than it's taking in. Right now we have a surplus precisely because my generation, the baby boomers, are still working.

But as we reach retirement age, the system is going to be in trouble. So why not fix it now?

And if you go to private accounts, give people a choice if they want to go private accounts, then that means they'll have even more benefits when they retire. So why not go with a plus-plus solution instead of waiting for the crisis to happen?

To assume we're going to have good growth rates when you see in Europe what happens in government spending increases, when you have Social Security systems get out of control because of demographics, you get lower growth rates. If we want good growth rates, fix the system now.

REICH: (UNINTELLIGIBLE) if I can...

BLITZER: Steve Forbes -- hold on one second. I'm going get to you, Robert Reich, in a moment.

But, Steve Forbes, the AARP, the American Association of Retired People, in their January bulletin just out now says this: "Don't mess with success. There's nothing wrong with Social Security that a few changes can't fix."

Is the AARP wrong?

FORBES: I think so. Because every 10 or 20 years we need a fix for Social Security -- 1978, early 1980s. And when they say what that little fix is, what they mean is higher taxes.

And when you put higher taxes on the economy, that means eventually you get lower growth, which is precisely what happened in Europe. And we don't need to have that happen in America.

BLITZER: You wanted to weigh in, Robert Reich. How would you fix Social Security? What would you do, if anything, to change the current system?

REICH: Look, first of all, I just want to make sure that those who are listening and heard Steve Forbes -- and I have greatest respect for Steve Forbes -- I want to make sure people understand these numbers without their eyes glazing over.

Steve Forbes said in 2018 or 2019 the system is going to run out of money. But remember...

FORBES: I didn't say that. It's going to start to pay out more than it takes in.

REICH: But, Steve, it's not going to start to pay out more than it takes in.

Remember, right now, the Social Security system has a surplus, a big surplus. But the government is using that surplus to reduce the total deficit. The deficit of $413 billion last year would be much larger if you included all of those -- if you took away all of the surplus.

So it's perfectly logical that by 2018 to 2019, when the government, because it used those surpluses on fighting the war in Iraq and everything else, starts to have to deal with the Social Security issue -- but that's only because the government has been using those surpluses to do something else. But let me just say our...

FORBES: The politicians...

BLITZER: Go ahead, Steve Forbes, respond to that.

FORBES: I was going to say, politicians can't help it. It's like bears with a pot of honey. They're going to go into it. And that's why you need private accounts so politicians can't put their mitts on the money.

REICH: But the point is that private accounts are going to cost $2 trillion over the next 10 years. You're diverting money out of Social Security to set up private accounts.

FORBES: No...

REICH: Social Security is a pay-as-you-go system. And if you divert $2 trillion over the next 10 years out of Social Security, you're not going to fix Social Security, you're making it worse.

FORBES: The $2 trillion comes from the public markets. You borrow it, and it's paid off in the years after that, like a mortgage.

And the fact of the matter is, the unfunded liabilities of Social Security today are in excess of $10 trillion, almost two to three times the national debt.

We've got a problem, Bob. Let's solve it now.

REICH: Look, we already owe foreigners about 25 percent of our whole national income. We are living far beyond our means. The deficit is completely out of control. This is pie in the sky.

And I'll tell you something...

FORBES: The deficit is going down, Bob.

REICH: ... Republicans who -- you know, Republicans want to be re-elected. Republican House members and senators who are up for re- election, they want to be re-elected in midterm elections of 2006. This is the third rail of American politics. They touch Social Security, they're out of here.

FORBES: Well, the fact of the matter is Republicans get credit for facing up to the problem instead of sweeping it under the rug, as the Washington politicians have done for the last 20, 25 years.

REICH: Steve, I'll tell you, Medicare...

BLITZER: Stand by, gentlemen, because there's a lot more to talk about. We have more time, but we also have to take a quick commercial break.

We'll have much more with Robert Reich and Steve Forbes. We'll also be looking for your phone calls on this important issue. Call us right now.

"Late Edition" will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're talking about Social Security reform with the former Clinton labor secretary, Robert Reich, and the president and CEO of Forbes, Inc., Steve Forbes.

We have a caller in Georgia who wants to ask a question.

Go ahead, Georgia.

CALLER: Hello. How are you?

BLITZER: Good.

CALLER: My question is, would Social Security be in such a crisis, supposedly, had there not been such major tax cuts in the last couple of years?

BLITZER: What about that, Steve Forbes?

FORBES: Not at all. The tax cuts of the last couple of years have made the American economy strong. We have the strongest economy in the developed world today, growing at 3.5, 4 percent. It's starting to reduce the budget deficit.

With a strong economy, you can meet future obligations. That's why we need reform. Make the economy strong, we'll be able to meet our future obligations.

BLITZER: You agree with that, Robert Reich?

REICH: Well, if the economy is so strong, then we certainly don't need to worry about Social Security 54 years from now.

Let me just add that if you want to really reform Social Security, in terms of putting more savings in people's pockets, there's a very simple way to do that. And that is exempt the first $10,000 of income from Social Security payroll taxes and lift the cap, which is now $90,000. You don't have to pay any Social Security if you're earning at least -- on earnings over $90,000. Well, lift that cap to make up the difference.

BLITZER: What about that, Steve Forbes?

FORBES: I believe in allowing people on the first $10,000, if they wish, to put it in private accounts, personal accounts, so they have more in their retirement.

But we should have learned that tax increases slow economic growth. Just look at what happened to us when taxes went up. The economy slowed. Look at Europe. They have very real high Social Security taxes and income taxes, and their economies are sluggish. They've created about 1/100th in the private sector, 1 percent of the jobs we have in the last 30 years.

REICH: But...

FORBES: High taxes don't work.

REICH: But budget deficits slow economic growth even further.

FORBES: No, they don't.

REICH: And we are facing...

FORBES: In the 1980s...

REICH: ... and we are facing huge deficits.

FORBES: ... we had budget deficits and great economic growth, Bob. You know that.

REICH: Yes, but we also had a recession at the beginning of 1990, 1991. And that recession was directly related to that extraordinary deficit that we accumulated in the 1980s, Steve. You know that.

FORBES: That's horse manure, Robert. In 1989, the deficit, when you combine state and local spending with federal spending, had just about in balance.

What put us in recession then was the S&L crisis, mistakes by the Federal Reserve and the slashback in defense spending.

By 1991, the economy was growing again, not enough to save the first George Bush, but the '90s were a good decade.

REICH: Look, supply-side economics doesn't work. The Federal Reserve Board is right now increasing...

FORBES: In the 1980s...

REICH: Wait a minute, wait, wait, wait, wait.

FORBES: ... the U.S. economy grew more than the whole size of the West German economy. Of course it works.

REICH: Wait. The Federal Reserve Board is now raising interest rates because they're worried about inflation. They're worried about inflation partly because the budget deficit is out of control. You know that. I know that. And...

FORBES: The budget deficit's going down, Bob.

REICH: ... we're deep in debt...

FORBES: Look at the numbers.

REICH: We're deep in debt to rest of the world, Steve. Now, come on. BLITZER: Let me...

FORBES: The budget deficit's going down.

BLITZER: Let me weigh in with this question, because a lot of people are asking. There might be a simple way to fix Social Security, and it results from the life expectancies of Americans.

We'll put some numbers up on the screen. In 1950, the life expectancy for men in the United States was 66 years; for women, 71 years.

Since then, the last time we had statistics, 2002, men now have a life expectancy in the United States of 75; women, 80.

Retirement age still the same as what it was in 1930s when Franklin Roosevelt created Social Security, 65.

Would you support, Robert Reich, increasing retirement age from 65, let's say, to 66, 67, 68, given the fact that over these decades men and women live longer in this country?

REICH: Well, Wolf, the retirement age is already scheduled to increase. That was the result of the Greenspan commission agreement in the 1980s. It was already scheduled to increase to 66, 67, and maybe 68. So that's not really at debate.

Again, if you thought that Social Security in 2054 or beyond was really in trouble, what I would do, honestly, is raise the cap and subject more income to Social Security payroll taxes, particularly people who are very rich.

I'm concerned -- maybe Steve Forbes isn't -- I'm concerned about the extraordinary gap we're seeing in this country between people at the top and everybody else. People at the top, the top 1 percent now own more of the country than the bottom 80 percent put together.

BLITZER: Steve Forbes, since men and women live longer now than they did in the '30s in the United States, would you support raising the retirement age?

FORBES: Well, as Bob said, it's already happening.

But I think the nice thing about personal accounts is you choose your retirement age, just as with a 401(k) or these private IRA-type of plans. You can start taking it out at 59.5. You pick your retirement age, not the Washington politicians.

That's what we want to give people a real chance to do, is make their own choices, instead of being dictated to by Washington, D.C.

BLITZER: Should there be not only gender factors in terms of benefits, but also racial factors in terms of benefits, since black men and women don't live as long in this country as white men and women?

The chairman of the House Ways and Means Committee, Bill Thomas, is suggesting that this come under consideration right now.

Robert Reich, first to you.

REICH: I think that's crazy. You know, what we ought to do, again, is leave well enough alone, leave the Social Security system alone.

Now, everybody is talking about -- the Republicans are talking about privatizing. Steve Forbes still hasn't told me exactly where that $2 trillion over the next 10 years -- and it's going to be a couple more trillion dollars after that -- is going to come from to set up these private accounts.

You're going to have to reduce Social Security benefits for people in the future.

FORBES: No, no.

REICH: And even in the commission's report, even in the Moynihan commission report that the president is now pointing to, that's exactly what is recommended in that commission report.

There's no point in doing that. This is absolutely pie-in-the- sky craziness, to worry about Social Security.

You want to worry about something? Worry about Medicare. That really is heading toward bust. And we ought to have a Medicare commission, we ought to do something about that, not Social Security.

FORBES: Well, Bob's ostrich approach is not going to work. Bill Clinton recognized that in the late 1990s, that the sooner you deal with the problem, the better.

And in 2018 or so, the system's going to start paying out more than it takes in, period. So why not deal with it now?

And on the racial side, what the chairman of the Ways and Means Committee brought up, this is the virtue of having personal accounts, is that if you do die prematurely, the politicians now in Washington take the money. Under private accounts, if you die prematurely, you can pass it on to your spouse, to your children, to your grandchildren. You have something to show for your life's work, instead of having it disappear, which is what happens today.

BLITZER: All right. I'm going to give Robert Reich the last word.

Isn't that a nice benefit of this partial privatization, you could at least pass that money down to your loved ones?

REICH: You're not going to pass it down to your loved ones, because under privatization 20 to 30 percent of your savings are going to go to Wall Street managers, who are going to be so-called "managing" your money. That's why Wall Street is so excited about privatization.

FORBES: Oh.

BLITZER: In your private account, do you spend 20 to 30 percent, do you give that to Wall Street managers, Robert Reich?

REICH: No, but 20 to 30 percent overall, in terms of the management of the entire privatization program, that is going to go to Wall Street.

And, Wolf, even if Wall Street trims its sails and it's 10 percent, that's 10 percent less than you're going to get.

And nobody -- and Steve Forbes has still not answered the question: Where are we going to get all of this money, the $2 trillion that's required over the next 10 years, to privatize? And we have a huge budget deficit.

Look, it's not going to happen, and I hope we bury it soon.

BLITZER: All right.

FORBES: But...

BLITZER: Go ahead, Steve.

FORBES: Anyone who pays 20 or 30 percent to manage their money shouldn't be in the private sector or the public sector. You're paying way too much.

BLITZER: Right. If you're paying more than 1 or 2 percent to Wall Street managers -- and I suspect, Steve Forbes, you're paying a lot less than that; and, Robert Reich, you're not paying that much either -- you're paying way too much to these Wall Street guys to manage your money.

Right?

REICH: No. In terms of the total -- look it, we're talking about the total amount of money that would be privatized, we're talking about a huge windfall for Wall Street.

Why do you think that the president is now interested in this? It's ideological?

BLITZER: All right.

REICH: That's certainly one major reason, because Social Security is one of the keystones of the entire New Deal. They want to get rid of it. I understand that.

And the other is because Wall Street would love to get its hands on a lot of this management money.

BLITZER: We'll leave it right there, because we're out of time. But a good discussion by both of you.

Thanks very much, Steve Forbes, Robert Reich. FORBES: Thank you.

REICH: Thanks very much. Bye-bye.

BLITZER: The Social Security debate is not going to go away any time soon.

Just ahead, is Arnold Schwarzenegger eyeing a White House run in 2008? CNN's Carlos Watson previews his interview with the California governor, when "Late Edition" continues.

(COMMERCIAL BREAK)

BLITZER: NBC is reporting that Johnny Carson, Johnny Carson is dead. The late show -- the late talk show host apparently has died, according to NBC News. We are just now beginning to get details.

Seventy-nine years old, a legend, Johnny Carson, who retired, what, some 10 years ago, as the host of The Tonight Show. Johnny Carson, according to NBC news where he worked for so many years, is dead.

We're watching this story. We'll get more information for you as it becomes available. Right now, Johnny Carson, according to NBC News, the Associated Press, citing NBC News, says that Johnny Carson is dead. We'll watch that story.

One Republican Party superstar making the rounds here in the United States capital this inauguration week was California's governor, Arnold Schwarzenegger. The movie star-turned politician recently spoke to our Carlos Watson, the host of CNN's "Off Topic." That interview, by the way, airs tonight, 10 p.m. eastern.

Carlos Watson joining us now live with a preview.

What did you learn about Arnold Schwarzenegger, Carlos?

CARLOS WATSON, CNN CORRESPONDENT: Wolf, a lot. I mean, we know that he's succeeded on some of life's biggest stages: a 13-time Mr. Universe; he's done exceptionally well in business; also in acting, despite an unusual last name and a heavy accent; and now, a governor.

And what I learned is that Arnold is a guy who believes that the impossible is possible if you first succeed at what you're doing. So, first he succeeded at body building; that opened up opportunities for entertainment. He succeed there; that opened up opportunities for business. Did well there and became governor.

And I think, similarly, he believes -- and we had a very revealing conversation about a possible constitutional amendment that would allow some foreign-born persons, like himself, to run for president -- he believes that if he does an amazing job as governor of California, anything is possible, including potentially a change in the Constitution.

BLITZER: I think you have an excerpt from the interview that we want to air for our viewers. Let's play that right now.

(BEGIN VIDEOTAPE)

WATSON: Did people tell you, "Oh, Around, that's great, you're going to do well"?

SCHWARZENEGGER: I don't think that there people there discouraging per se. But I think that there was definitely no one around that believed in me, in my visions and my ideas.

And my parents would just never understand it. And they would just say, "Well, why didn't you get into soccer?" and I'd say, "I'm a soccer player, but I like weight-lifting better now. I want to be the youngest world champion in body building." "Body building? Why body building? What are all those pictures on your wall here of these naked men all oiled up with little posing trunks? What's going on?"

(LAUGHTER)

(END VIDEOTAPE)

WATSON: Wolf, as you can...

BLITZER: Carlos, does he really believe that there will be a constitutional amendment?

I know Senator Orrin Hatch of Utah has introduced legislation that would allow American citizens not born in the United States to run for the presidency. But does he believe that's realistic?

WATSON: He certainly didn't say so. But here's what he did say that I thought was revealing, Wolf: He said that his heroes were people like Nelson Mandela, a guy who was in jail for 27 years, who had no reason to believe that, A, he would ever get out and, B, become president of a country; a guy like Mikhail Gorbachev, who rose through the Soviet system only to ultimately oversee it's demise.

And so I think he's a guy who believes that for someone who started off in a small Austrian town, whose mother didn't even believe in him, as you heard that clip, that literally, if you excel at what you're doing, anything is possible.

And so, no. I'm sure today if you asked him, on the facts, does he think one is likely or even probable, he would say absolutely not.

But he believes that if he has a blockbuster year as governor of California -- redistricting, pension reform, the economy, even prescription drugs for seniors,importing them from Canada -- I think he thinks that people may take a fresh look at him.

Carlos Watson's special airs tonight, "Off Topic." Carlos Watson with Arnold Schwarzenegger, other guests, airs tonight 10 p.m. eastern here on CNN.

BLITZER: And we're just getting more information now on the death of Johnny Carson, the former host of "The Tonight Show." He hosted that program for some three decades, until retiring in 1992.

Family members are now telling the Associated Press, confirming that he has died. Johnny Carson, at the age of 79, dead.

We'll take a quick break. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: We're now getting more on the death of Johnny Carson, just announced, at the age of 79.

A family member telling the Associated Press, "Mr. Carson passed away peacefully early Sunday morning. He was surrounded by his family, whose loss will be immeasurable. There will be no memorial service."

The statement did not give any further details, including the time of death or the location.

Johnny Carson, 79 years old, has died.

More now from Sibila Vargas on the life and times of Johnny Carson.

(BEGIN VIDEOTAPE)

SIBILA VARGAS, CNN CORRESPONDENT: For three full decades, he was the reigning king of late-night. His cool and understated attitude and his impeccable comic timing entertained audiences of all ages, through both the good and bad times.

Johnny Carson was a master at his craft, and he always showed a great respect for the thing that made him a household name.

(BEGIN VIDEO CLIP)

JOHNNY CARSON: I'm sticking up for television, because I think it's a marvelous, marvelous medium, and I'm optimistic about it.

Of course, as you probably know, an optimist in the entertainment business is an accordion player with a beeper.

(LAUGHTER)

(END VIDEO CLIP)

VARGAS: Johnny Carson was born October 23, 1925, in Corning, Iowa. He moved to Norfolk, Nebraska, as a boy, where he bought his first mail-order magic set and began his career as an entertainer.

He was known as "The Great Carsoni" and later performed in the Navy and, after graduating from the University of Nebraska, went on to work at Omaha radio stations.

His first televised show, "Carson's Cellar," debuted in 1952 and led to a job as a staff writer on Red Skelton's variety show. In 1954, Carson got his big break, when Skelton was knocked unconscious an hour before air time and Carson was asked to step in.

His natural ease in front of the camera led to a contract with CBS. After a short stint as an emcee of "Earn Your Vacation," Carson got his own half-hour comedy show, called "The Johnny Carson Show."

Carson moved to ABC for the daytime game show "Who Do You Trust?", where in '58 he was joined by his sidekick Ed McMahon.

In that same year, he was asked to sit in for Jack Paar on "The Tonight Show."

(BEGIN VIDEO CLIPS)

ED MCMAHON: I sit next to the quickest, the brightest, most well-read, most entertaining, most brilliant man. If television was ever invented for somebody, it was invented for him.

(UNKNOWN): I don't know of a person in comedy or television who didn't sort of grow up with Johnny Carson as a role model. And I think it's something everybody -- it's one of the reasons people leave home and come to New York or go to California to get into comedy or show business.

(END VIDEO CLIPS)

(BEGIN VIDEO CLIP)

CARSON: I can only tell you that it has been an honor and a privilege to come into your homes all these years and entertain you.

(END VIDEO CLIP)

VARGAS: Carson did come into the homes of his many fans throughout the years, but his constant need for privacy prevented the world from glimpsing into his home life.

He was married four times, first to Joan, then Joanne, and Joanna, and in 1987 to Alex Maas. He had three children from his first marriage, Chris, Corey and Ricky. Ricky was tragically killed in 1991 in a car accident.

Though his personal life was often rocky, his career seemed to go quickly and effortlessly.

(BEGIN VIDEO CLIP)

CARSON: I could never have imagined I would walk through that curtain almost 5,000 times in 30 years.

(END VIDEO CLIP)

VARGAS: Carson may have hosted just under 5,000 episodes of "The Tonight Show," but he continued to pursue opportunities outside of late-night. He founded his own production company and created shows like "TV Bloopers and Practical Jokes." He hosted the Academy Awards five times and took home four Emmy awards. He was also the recipient of the Communications Award and the Kennedy Center honor.

Perhaps more important than anything else to Carson is that he loved entertaining, as much as we loved being entertained by him.

(BEGIN VIDEO CLIP)

CARSON: I am one of the lucky people in the world. I've found something I have always wanted to do, and I have enjoyed every single minute of it.

(END VIDEO CLIP)

(END VIDEOTAPE)

BLITZER: That report from CNN's Sibila Vargas.

Johnny Carson, 79 years old, has died, according to NBC, where he worked for so many years as the king of late-night talk in the United States, 30 years, until his retirement in 1992.

A family statement saying, "Mr. Carson passed away peacefully early Sunday morning. He was surrounded by his family, whose loss will be immeasurable," the statement says. "There will be no memorial service."

No other details were provided, including the time of the death, the location or the cause of death.

Only within the past few days, it was widely reported here in the United States that he was still writing jokes, jokes that other comedians were delivering, especially David Letterman on CBS.

Johnny Carson, "The Tonight Show" host, has died. We'll continue to watch this story for you, for our viewers. We're all out of time now. Much more on Johnny Carson coming up.

We'll say goodbye from here. I'm Wolf Blitzer in Washington.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


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