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Senate Bipartisan Group Compromises on Stimulus; Jimmy Carter Interview; Michael Steele Elected RNC Chair

Aired February 7, 2009 - 18:00   ET



To our viewers, you're in THE SITUATION ROOM. Growing partisanship as Democrats and Republicans square off over President Obama's agenda. This hour, Senator Bernard Sanders of Vermont, the longest serving Independent member of Congress in U.S. history.

Also, Republicans make history of their own, electing an African- American chairman for the first time. How can Michael Steele bring his part back from its resounding defeat in November? I'll ask him.

Also, you saw President Clinton's Middle East peace efforts stumble. Now he assesses President Obama's chances of success in a seemingly unsolvable conflict. My interview with the former U.S. ambassador to Israel, Martin Indyk.

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


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The only measure of my success as president, when people look back five years from now or nine years from now is going to be did I get this economy fixed?



BLITZER: President Obama appears to be under no illusion. If he and his team don't ease your economic pain, Americans will hold him responsible. So the president is doing all he can to get the economy back on track. His plan is filled with spending, tax cuts, and some objects of ridicule.

Joining us now is Senator Bernard Sanders of Vermont. He's an independent but usually aligns himself with the Democrats.

Senator, thanks very much for coming in.

SEN. BERNIE SANDERS (I), VERMONT: My pleasure, Wolf.

BLITZER: Let's talk about this plan to fix the economy. Are you confident that President Obama has what it takes to get the job done?

SANDERS: Well, let's be clear. What President Obama has done is inherited the worst financial crisis in the history of this country since the Great Depression. So there is an enormous task in front of us. I think what he has done is address what the American people, is a bold plan to begin moving this country in a very different direction in creating millions of good-paying jobs.

BLITZER: So are you with him, Senator? Are you with him on this agenda?

SANDERS: I sure am. Look, I'm going to not tell that this plan is 100 percent perfect, but I can tell you that in Vermont and all over this country, our bridges are crumbling, our roads need work, our water systems need repair.

We need to move to energy independence and away from fossil fuel. And in the process we can create millions of good-paying jobs rebuilding America. So in general, I certainly am supportive of what the president is proposing.

BLITZER: What about the second batch of that $350 billion, the so- called TARP money to help the ailing financial sector, the banks out there? Because you voted against it, as you remember.

SANDERS: I sure did, Wolf. As I more than remember, yes. I helped lead the effort against that. You're talking about two separate issues. Number one is investing in America, addressing unmet needs and creating millions of good-paying jobs. That's issue one.

Issue number two is bailing out banks who have been reckless, who have been irresponsible, and perhaps have acted illegally in pushing worthless paper and leading this country to the worst financial crisis that we have seen since the Great Depression.

How do you make sure that if we rebuild the financial sector and the American taxpayer puts a lot of money in it, we get real value from that and just not prop up a lot of crooked chief executive officers of financial institutions, that's the question to ask.

BLITZER: So I hear you saying that when it comes to the overall stimulus package, you're with the president, but you're not necessarily with him if he's going to start using that second batch -- that $350 billion, and it might even be a lot more than that, as you well know.

SANDERS: Well...


BLITZER: Senator, you're not necessarily with him on that.

SANDERS: Wolf, I've got a lot of questions that you had a handful of masters of the universe, these leaders of Wall Street who, in the past, have made for themselves hundreds millions of dollars, some of them are billionaires, and then because of their reckless activity, they have lost money.

Now they need taxpayers to bail them out. I've got a real problem with it. So how do you bring stability to the financial system in a way that does not reward these people who have been reckless if not illegal, make sure that the taxpayers of our country get value for what they're investing?

That's -- now I've got to tell you, give you just one area of concern, we are bailing out these large banks and in turn they're charging our people 25, 30 percent interest rates on their credit cards. Does that make a lot of sense for you? I don't think it does to the American people.

So I have a lot of concerns about the path that we've gone in terms of the TARP.

BLITZER: I assume you like, since it was one of your ideas, this limit on compensation for the CEOs, for the top executives of banks that are bailed out by U.S. taxpayers at half a million dollars.


BLITZER: But that only looks ahead, it doesn't -- it's not retroactive, as you well know.

SANDERS: Yes, I do well know. And I would like to also begin the claw-back process. Look...


BLITZER: Tell me what you mean by the claw-back process.

SANDERS: In other words, these guys in the past were bringing in tens of millions of dollars in bonuses, becoming extraordinarily wealthy while they were leading this country and the world into a very reckless direction and to the edge of financial abyss.

And now middle class people, people making $30,000 or $50,000 have got to bail them out. And then they still want large bonuses. So number one, Obama was right to start limiting the compensation packages for the top executives, that's absolutely right.

That's something we proposed last November. But number two, we've got a seat (ph). I mean, it seems to me to be very wrong that the middle class has put money into Wall Street and these guys are still sitting in their huge homes and sitting on bank accounts worth hundreds of millions of dollars, which they got as they led America in a very wrong direction.

BLITZER: What does it say to you that three of President Obama's nominees had tax problems that surfaced during this confirmation process, Tom Daschle, the former Senate majority leader who has -- whose nomination has now been withdrawn as the health and human services secretary; Timothy Geithner, he's the treasury secretary, he was confirmed, as you well know; and Nancy Killefer, she was supposed to be the chief performance officer, but her nomination has been withdrawn as well?

SANDERS: Well, I -- you know, I think it's a sad state of affairs. I voted against Geithner, as it happens. Daschle, I think, had the potential to be a very good secretary of HHS, lead us in the path of health care reform, which we desperately need.

We can't keep going down that path with 46 million without any -- without insurance. And we've got to move to a national health care program, something I think Daschle understood.

BLITZER: You -- would you believe your colleague -- the fellow governor -- your former governor from Vermont, Howard Dean, the former chairman of the DNC, would be a good health and human services secretary? He is an M.D., as you know.

SANDERS: He -- well, I certainly do. And I think he knows a lot about health care. And I think he could do the job very well.

BLITZER: He's your -- and he would be your candidate? Can we go that far?

SANDERS: I wouldn't say he'd be my candidate, but I think he could do the job very well.

BLITZER: Why don't you become a Democrat? You almost always caucus with the Democrats, you vote with the Democrats...

SANDERS: Well...

BLITZER: You and Joe Lieberman are the two independents in the U.S. -- we know Joe Lieberman's story, but what about Bernie Sanders?

SANDERS: My story is that I think that to much too great a degree, both political parties are dominated by big money. I think over the years the Republican Party has become quite a right-wing party and obviously I don't have much in contact with that.

I think unfortunately the Democratic Party doesn't do enough, although they're making progress I think under President Obama, standing up for working people and the middle class.

But you know what we have right now, Wolf? We have the most unequal distribution of wealth or income of any major country on earth. The top one-tenth of one percent earn more income than the bottom 50 percent.

We're the only major country without a national health care program. We have more kids living in poverty than any other major country on earth. So I think what you're seeing here in Washington is big money, large corporations, financial institutions, energy companies, with a tremendous amount of power over the two-party system, over the whole legislative process.

And I think it's time that tens of millions of people begin to stand up and say, enough is enough, let's start making government work for everybody, not just the wealthy and the powerful.

BLITZER: Senator, thanks for coming in.

SANDERS: Thank you very much.


BLITZER: A party in the wilderness, at least politically, tries to compete with a very popular new president.


MICHAEL STEELE, RNC CHAIRMAN: It's like a political parade going. Barack Obama has hijacked the drum major. He's leading down the road and we're still in the room trying to figure out what time the parade starts.


BLITZER: The new Republican party chairman is in THE SITUATION ROOM. How does he plan to bring his party back?

Also, former President Jimmy Carter. He led Americans during some very troubled economic times. He's here with advice for President Obama.

Plus, they're the people pulling the strings inside the White House. We have the photos and the behind-the-scenes stories of what things are really like in the new West Wing.



OBAMA: Now's the time for Washington to act with the same sense of urgency that Americans all across the country feel every single day. With the stakes this high, we cannot afford to get trapped in the same old partisan gridlock.


BLITZER: President Obama appealing for bipartisanship this week as he named Republican Senator Judd Gregg to be his commerce secretary. Meantime, the Republicans have a new party boss. And he's issued a very tough-sounding challenge.


We have a special guest right now, an old friend, Michael Steele. He's the new chairman of the Republican National Committee. He's joining us in THE SITUATION ROOM.

Good to have you back, Mr. Chairman.


BLITZER: Did you ever think, in your life, you'd wind up the chairman of the Republican Party?


STEELE: No. Not at all. That's why I said that -- the first words out of my mouth was, you know, as a little boy growing up in this town, who'd have thunk it?

I mean this is such an awesome moment, to head the national party and to be able to move it in a new direction and to do some things that, quite frankly, we've gotten how to do. And that is communicate a message, build a grassroots team and go out there and engage the people of this country.

BLITZER: And you were very blunt...


BLITZER: your speech when you won -- I think on the fifth or sixth ballot.

STEELE: Yes. BLITZER: But you did manage. You had some formidable opponents running for the chairmanship.


BLITZER: I'll play a clip of what you said.

STEELE: All right.

BLITZER: We had live coverage here in THE SITUATION ROOM of your own remarks.

STEELE: All right.


STEELE: We're going to bring this party to every corner, every boardroom, every neighborhood, every community. And for those of you who wish to obstruct, get ready to get knocked over.


BLITZER: All right.

Who did you have in mind?


BLITZER: Because when I heard those words, my ears perked up.

STEELE: Well, I know they did for you. I had Democrats and Republicans in mind. Within the party, there are those who don't want to let go of status quo, don't want to let go of the opportunity to engage more broadly. It doesn't mean that we are less conservative in our values and our views. But it just means we update them and make them relevant to a new audience of voters out there, as we saw played out in this past election. And to my opponents outside the party, who want to live and, you know, play on the old playground of old ideas and name-calling and rhetoric.

I don't have time for that. I'm trying to -- to build a dialogue, create a dialogue between conservatives and liberals in this country, because that's what we are right now.

BLITZER: Because you've made it clear that you believe in what Ronald Reagan used to talk about -- a big tent...

STEELE: Absolutely.

BLITZER: ...Republican Party.

STEELE: Absolutely.

BLITZER: You don't want to push away those Republicans who support abortion rights for women or who might even might support gay marriage.

STEELE: Well, no, absolutely, because they're probably with us on 80 percent of the other things that are very, very important. Particularly when you look at the economy and you look at some of the other issues that we're confronting.

But it doesn't mean at our core that we're less conservative because those folks join in the fight with us. Those -- that's still a central part of who we are, you know?

But the reality of it is the world is changing. You know, it's like a political parade going by. Barack Obama has hijacked the drum major. He's leading down the road and we're still in the room trying to figure out what time the parade starts.

BLITZER: You basically lost the northeast part of the United States.

STEELE: Absolutely.

BLITZER: You mentioned that in your remarks the other day.


BLITZER: I think in New England, in the House of Representatives, there's not one Republican member of the House.

STEELE: Not one. And there were 16 eight years ago. And we're down to zero in 2009. So my challenge and my opportunity is to work with the state parties in the Northeast, to let them do what they need to do to be successful and win those elections. Case in point, we've got a special election coming up in the 20th District. Congresswoman Gillibrand is now going up to the senate...

BLITZER: In New York State.

STEELE: New York State. That's a seat that we should be able to go in and be competitive and win. I want to put -- make it a focal point right out of the box and see how we do.

BLITZER: What about Barack Obama, the president of the United States?


BLITZER: He's very popular right now.


BLITZER: He's got a lot of support -- a lot of enthusiasm out there.


BLITZER: And you're going to be challenging him, presumably, on a lot of these issues.

STEELE: Yes, absolutely. You know, Barack is just a great leader. There's no doubt about that -- you know, a good communicator.

But just...

BLITZER: Have you ever met him personally?

STEELE: Oh, yes. Oh, many times. Many times.

But the fact that he's got a 70 percent job approval doesn't mean that his -- his policies are 70 percent right. What it means is we've got to look at these things critically, just as the House Republicans did last week on this so-called stimulus bill, which I think is nothing more than a spending bill, and come to the table with some sound alternatives to (INAUDIBLE)...

BLITZER: You're taking a big risk, though. If you block it -- if you vote against it -- and you did in the House...


BLITZER: the Senate and it gets through anyhow and it works...

STEELE: It's not going to...

BLITZER:'re going to...

STEELE: But, Wolf, it's not going to work.

How does...

BLITZER: You don't know that.

STEELE: Of course.

How does it work when you're spending a third -- you're putting a third in tax cuts and two-thirds in new spending?

How does that work?

BLITZER: But if there's an economic recovery and there are jobs created...

STEELE: Are you taking into account inflation?

And, first off, the government doesn't create jobs. Let's get this notion out of our heads that the government create jobs. Not in the history of mankind has the government ever created a job.

Small business owners do, small enterprises do, not the government. When that government contract runs out, that job goes away. That's what we're talking about here. And those two to four million jobs that are projected won't happen. Trust me.

BLITZER: Listen to James Carville. He's our Democratic analyst.

STEELE: I know, I love James.

BLITZER: You know James.

STEELE: I know James.


And he said this about Rush Limbaugh.

Listen to this.



JAMES CARVILLE: It's not the Democrats or the president that are elevating Rush Limbaugh. It is the Republican office holders who have deemed him his daddy. He is the daddy of this Republican Congress right now.


STEELE: No, Rush Limbaugh is a private citizen who has shared private opinions on the airways of America through the First Amendment. He can say what he wants to say. Yes, he is a voice for Republican conservatism, for national conservatism. But I think the reality of it is the president has elevated Limbaugh.

Limbaugh expressed an opinion. As President of the United States, why do you want to address that? Are you that afraid of Rush Limbaugh, what he has to say? Or does it really matter in the day to day of what you're doing with respect to policy? Rush is laying out just like a lot of conservatives are where this administration is getting off track. And I think that's a legitimate talking point for him.

BLITZER: We're almost out of time, but what can you do, if anything, to bring some minorities into the Republican party, whether African- Americans or Hispanics?

STEELE: Well, we've got one. So we're well on our way.

BLITZER: That's not going to be enough.

STEELE: That's not enough. We had 36 at the convention. We're going to build from there. Look, we have black Republicans, Hispanic Republicans all across this country. What we need to do now is to engage in a very honest way the dialogue. That's why I said before, you know, the party up until now hadn't give a damn about black Republicans. It was an easy write-off. Not anymore. We're going to engage through media, we're going to engage politically, and other ways that are going to be afforded to us to get that vote.

BLITZER: We hope you'll be a frequent visitor here in THE SITUATION ROOM.

STEELE: I hope so, too. It's good to be back with you.

BLITZER: Congratulations.

STEELE: Thank you very much.

BLITZER: Michael Steele is the chairman of the Republican party. Appreciate it very much.


BLITZER: Local leaders come to Washington with an urgent message.


UNIDENTIFIED MALE: The time to act is now. That's why we're here. We're speaking on behalf of the cities all across the nation, asking the Senate and the Congress to support President Obama's package.


BLITZER: The mayor of Los Angeles, Antonio Villaraigosa, among those warning of dire consequences if the stimulus plan doesn't pass. So what's at stake for his city? And can President Obama succeed where his predecessors have all failed? Achieving peace in the Middle East. A former U.S. ambassador to Israel is here to discuss. Stay with us. You're in THE SITUATION ROOM.



OBAMA: So I urge members of Congress to act without delay. No plan is perfect and all of us together, Democrats and Republicans, should work to make it stronger. But let's not make the perfect the enemy of the essential. Let's show people all over our country, who are looking for leadership, who are desperate for leadership right now that in difficult times, we're equal to the task. Let's give America's families the support they need to weather this crisis.


BLITZER: The president urging Democrats and Republicans to put aside their differences and pass an economic plan to fix the economy. It's a theme echoed by some powerful allies. Take a look at this. You may spot the mayor of your city. A pack of about 20 mayors came to Washington Wednesday to urge lawmakers to act. They first met with senior advisers over at the White House. Los Angeles Mayor Antonio Villaraigosa was at that meeting.


Mr. Mayor, thanks very much for coming in to THE SITUATION ROOM.

MAYOR ANTONIO VILLARAIGOSA (D), LOS ANGELES: It's good to be in the room with you, Wolf.

BLITZER: How did it go? What was the sense? Because it doesn't look, as we speak right now, that the president has the necessary 60 votes in the U.S. Senate to get this passed the way he wants it.

VILLARAIGOSA: Well, a week ago, President Obama said the worst case scenario for the nation would be double-digit inflation -- unemployment. In Los Angeles, we're already over 10 percent unemployment. In cities across the country, the unemployment rate is higher than the national average. So what we've said, it's time for the Senate and the Congress to act. We can't keep on with the partisan bickering that we've seen over the last few days.

There was an election. President Obama won. The people want change. They want to get back to work and they want to get the economy moving again.

BLITZER: But as you know, there's opposition, not only from Republicans, but some Democrats who are concerned, that you know what? It's almost a trillion dollars, we better do it right, because it's a lot of money that's at stake.

VILLARAIGOSA: We do have to do it right. And one way to do it right is to invest in cities and counties.

Think about this -- 90 percent of the GNP is generated in municipal areas across the country. Eighty-two percent of the population lives in those areas, and 86 percent of the unemployment is there. So focusing money on infrastructure projects that will get people back to work is what the mayors are here in Washington about.

BLITZER: And you want the money from the federal government, once approved, assuming it is approved, to go directly to the city of Los Angeles, not go through the state of California. Is that right?

VILLARAIGOSA: Well, we want most of the money to go directly. We know that some money has to go to states, and certainly we want to work with the states. But when a lot of the money is just off the top, 50 percent off the top, going to the states and not the cities, it's going to delay that money getting to the neighborhoods and the cities of America.

BLITZER: Is that a snub, though, at the Republican governor of California, Governor Schwarzenegger, when you say, you know what, you've got to give the money directly to the cities as opposed to going through the state, which would be the governor?

VILLARAIGOSA: Absolutely not. What we're doing is advocating for a formula that focuses on getting people back to work. And people live in cities across -- metropolitan areas across the country.

We want to get the stimulus for those infrastructure projects. As I mentioned earlier, the last time I was on your show, in L.A. we've passed a $40 billion initiative for transportation; a $7 billion initiative for schools; a $3 billion initiative for community college facilities. So we're not coming with a handout. We want to leverage that money to get people back to work, to develop and nurture the green economy, and get people moving in the direction that I think people want when they voted for President Barack Obama.

BLITZER: We're only in his third week as president of the United States. Has he lived up to your personal expectations so far?

VILLARAIGOSA: Absolutely. Look, the expectations were set so high, the bar higher than anybody in recent memory.

The fact of the matter is, he's working to create bipartisan consensus. He's working with both sides of the aisle. He's working diligently, I think, to vindicate what the people of America want, and that's change. They want a president who's going to focus on the economy and get people back to work, and that's what he's doing, day and night.

BLITZER: How much time before Los Angeles goes well beyond 10 percent unemployment and the situation is the catastrophe that the president is warning about?

VILLARAIGOSA: Well, just a couple of months ago, we were at 8 percent, and we're moving in the wrong direction. That's why we're here. There's urgency.

BLITZER: How much time do you have?

VILLARAIGOSA: A couple of months. We could be at 12 percent.

The unemployment rate is going in the upward direction. Our foreclosure rate was four times higher in 2008 than it was in 2007. The time to act is now. That's why we're here. We're speaking on behalf of the cities all across the nation, asking the Senate and the Congress to support President Obama's package.

BLITZER: One political question -- do you want to be governor of California?

VILLARAIGOSA: I'm running for reelection in the city of Los Angeles.

BLITZER: I know, but would you like to be governor of California when that seat comes up?

VILLARAIGOSA: It would be an honor to be governor, but I'm focused on running for mayor.

BLITZER: I'll take that as a possible yes.

Mayor, thanks very much.



BLITZER: It's a crisis that's vexed presidents for decades.


OBAMA: Words matter in this situation, because one of the ways we're going to win this struggle is through the battle of hearts and minds.


BLITZER: Can President Obama succeed where so many have failed and forge real peace in the Middle East? I'll ask a former ambassador to Israel. Plus, advice to the new president on raising kids in the White House from someone who knows, former President Jimmy Carter. He's here in THE SITUATION ROOM.



OBAMA: What I want to do is make sure that I'm constantly talking about al Qaeda and other affiliated organizations, because we, I believe, can win over moderate Muslims to recognize that that kind of destruction and nihilism ultimately leads to a dead end and that we should be working together to make sure everybody's got a better life.


BLITZER: From day one, President Obama has made an effort to reach out to Arabs and Muslims. And right out of the gate, he also made it clear that the Middle East is very, very high on his agenda.

Joining us now is Martin Indyk, a former assistant secretary of state. He twice served as the U.S. ambassador to Israel. His important new book about American peace efforts in the region is entitled, "Innocent Abroad."

Martin, thanks very much for coming in.

MARTIN INDYK, AUTHOR, "INNOCENT ABROAD": Thank you for having me, Wolf. Great to be here.

BLITZER: What is the most important thing that most people don't know about the Middle East that President Obama needs to know and needs to know right now?

INDYK: He needs to know that the Middle East is not the "Middle West." And that as much as we Americans feel that we want to heal the problems of that region, that in order to do that, we have to lose our innocence and achieve some of the cynicism and guile that they have in that region if we want to affect it more to our purposes.

Peace-making is an immensely complicated task that Barack Obama has now set his administration on doing. But in order to achieve that, he's going to have to lower his profile -- lower his expectations, adopt, I think, a more modest approach, and doing what I think he understands instinctively, which is to show respect for the differences in culture, to listen before talking, and to take account of -- try to take account of all of the crosscurrents and undercurrents in the region which have tripped up previous presidents so badly.

BLITZER: Did you mean that he has to lower his profile -- maybe that was...

INDYK: No, no, it was lower his expectations.

BLITZER: Lower his expectations. All right. I just want to be precise on that. I want to get to the Arab-Israeli peace process in a second. But I want you to react to what the former vice president, Dick Cheney, said about the threat of terrorism out there, perhaps being enhanced during an Obama administration.

Listen to this.


DICK CHENEY, FORMER VICE PRESIDENT OF THE UNITED STATES: I think there's a high probability of such an attempt. Whether or not they can pull it off depends whether or not we keep in place policies that have allowed us to defeat all further attempts since 9/11 to launch mass casualty attacks against the United States.


BLITZER: He says he's worried about the policies that the Obama administration is enacting as opposed to what occurred during the Bush administration.

INDYK: Look, I think it's certainly important to keep up the fight against al Qaeda. And I think that President Obama has made it clear that he intends to do that.

But one thing that the Bush administration was very slow in doing, it took them seven years to come around to understanding the importance of trying to deal with the Palestinian situation, that that is the hot button issue in the Arab and Muslim world, and it created a tide of anti-American anger that al Qaeda and Osama bin Laden were able to ride on.

Now Barack Hussein Obama, who has this unique narrative and ability to speak to the Arab world and Muslim world, has the ability to take away that anger by focusing on the Palestinian issue, appointing George Mitchell to work that issue, he is showing that he cares about that hot button issue.

And that will do much to take away the kind of emotional support that al Qaeda has been able to draw. I think that becomes a very important tool in the war on al Qaeda.

BLITZER: I was intrigued by this sentence in the book, "Innocent Abroad": "Allowing the Russians to play an active role in a resurrected Arab-Israeli peace process can help to consolidate a constructive Russian approach to the region."

Do you believe -- I assume you believe Russia is part of the solution rather than part of the problem.

INDYK: Well, we have to test that proposition. We need Russia to be part of the solution, particularly because the problems of the region have grown far more complicated now.

With Iran pursuing a nuclear program that could put it across the threshold of a nuclear weapons capability in one to two years, that means that if Obama is to succeed in heading off that nuclear program, he has got to have the Russians onboard.

And one of the ways of doing it is to make it clear to the Russians that we want them to be partners in establishing a new, more peaceful order in the Middle East. And they don't have as much as influence as he will have on the Israelis or Arabs when it comes to resolving the conflict.

Nevertheless, making them partners, acknowledging their role can help them play a constructive role in the broader Middle East.

BLITZER: Martin Indyk's book is entitled "Innocent Abroad: An Intimate Account of American Peace Diplomacy in the Middle East." Martin, thanks very much for coming in.

INDYK: Thank you, Wolf.


BLITZER: And Jimmy Carter has some advice for President Obama.


BLITZER: Any advice in terms of mistakes you may have made?

JIMMY CARTER: Well, don't let two nations go to war and cut off all their oil supplies for the whole world.


BLITZER: In my one-on-one interview, the former president tells what he learned from the huge economic crisis during his own term.

Plus, very young and now they're pulling the strings in the White House. Can they turn the president's policies into reality? We're going to show you some of the stunning photos from the real West Wing. Stay with us. You're in THE SITUATION ROOM.



OBAMA: We know that even if we do everything that we should, this crisis was years in the making and will take more than weeks or months to turn things around. But make no mistake. A failure to act and act now will turn crisis into a catastrophe and guarantee a longer recession, a less robust recovery, and a more uncertain future.


BLITZER: President Obama warning that urgent action is need on the economy. Can we turn to the past for lessons on how to protect our future? Former President Jimmy Carter has some thoughts on that.


BLITZER: Let's talk about some of the major issues facing the country right now. Nothing apparently more important than the economy.


BLITZER: It's pretty bad right. The president of the United States has suggested it's the worst economic crisis since the Great Depression. A lot of people believe that. And I mentioned that point to the former Vice President Dick Cheney, when I recently interviewed him in an exit interview. And he said, not so fast. Now listen to what he said.

CARTER: All right.

DICK CHENEY, FORMER VICE PRESIDENT: I think, certainly, if you look at some earlier periods in our history, I remember back in the late '70s, when we had a high rate of inflation, stagflation, in effect, and high rate of unemployment.

BLITZER: All right, you were president in the late '70s. He's referring to the bad economic situation then. Is this -- was it that bad then, as it is right now? CARTER: No, not at all. There was not a crisis. There was a very bad international situation, because Iraq invaded Iran. And the world lost all the oil that had been coming out of both those countries. So inflation was rampant. And it was bad, but it wasn't any crisis like this, with very high unemployment, and the prospects and the future very bad. And also with the banks failing and major corporations going under and untold numbers of unemployed. And I think by the end of this year, we'll probably see the unemployment rate go up...

BLITZER: Because I remember interest rates were really high at the end of your term too.

CARTER: They were. They were.

BLITZER: And inflation was a real serious concern.

CARTER: It was. It was that way all over the world, as a matter of fact. Inflation was very high. But it was not a good economic situation. But I remember, as a child, the adverse effects of the Great Depression. And that was terrible. Unemployment rate got up to 25% or more. In Georgia, it was 35%. But now, this is the worst by far since the Great Depression.

BLITZER: You think much worse than what you experienced in the late '70s?


BLITZER: So what advice do you have for the new president as far as the economy is concerned? Knowing the experience you had in the '70s, what do you think he needs to do first and foremost right now?

CARTER: Well, I think the first thing, generically speaking, is to tell the Americans the truth as best he understands it. Don't mislead us any way. Let us all share in the sacrifices that have to be made. Let us get prepared maybe for an even higher unemployment rate by the end of this year. And stick to his guns on what he comes up as a best approach to a stimulus package.

Don't let the Republicans deter him. Don't back down too much. Stick with it and take advantage of the fact that the American people have turned to the Democrats to brings out of this mess.

BLITZER: He's got a significant majority in both houses of Congress. Is there anything you did that you want him to avoid doing? Any advice in terms of mistakes you may have made?

CARTER: Well, don't let two nations go to war and cut off all their oil supplies for the whole world.

BLITZER: It wasn't as if the United States could have stopped that?

CARTER: I know that. I know, but that was something - that was the main thing that happened. But there was 20% inflation rate in Japan, all over Europe and so forth back in those days. And it was primarily because there was a tremendous drop in the supply of oil and oil prices went high. In fact, oil prices went higher in real terms, that is, real solid dollars, even than they did this past year.

BLITZER: The -- a lot of us remember, you know, you were for -- you were ahead of the curve when it came to conservation. You wanted to become energy independent. Take a look at that picture behind you. Look over there. We remember that address to the nation, wearing the sweater, urging people to lower the thermostat.

CARTER: Well, when I became president, we were importing 9 million barrels of oil per day. We reduced it to 4.5 million barrels per day. Now it's 14 million barrels per day that we're importing. So we made great strides during that time that I was...

So I assume you feel vindicated by your strategy at that point. But what happened? What went wrong? Because the U.S. is more dependent on imported foreign oil now more than ever.

CARTER: Well, when Ronald Reagan came into office, he basically threw in the wastebasket everything that we had done on energy conservation and said, Americans don't have to worry any more about oil shortages. We've got plenty of it. Let's don't conserve.

And so that was one thing that stepped us back. So we've come now from the 4.5 million barrels per day up to 14 million barrels per day, depending exclusively on foreign oil. And that's the main thing that's happened.

But some of the things that we put into the law, like mandatory efficiency of houses, new houses being built, mandatory efficiency of electric motors, refrigerators, stoves. They stayed intact. But we also -- President Ford and I had worked together, similarly, to make sure that automobile efficiencies were high. When I became president, the average mileage of an automobile was 12 miles per gallon.

BLITZER: I remember.

CARTER: And we ordained it to be 27 1/2 miles per gallon in eight years. But when Reagan came in office, he undid that. And he let it float again.

BLITZER: What was it like just before the inauguration when you went back into the Oval Office and we saw those five presidents, future presidents, current president, three former presidents. What was it like, given some of the criticism that you had leveled against President Bush over the past eight years, was there an awkward moment or anything? CARTER: No. We were very careful during that meeting and also during the luncheon not to bring up things that had happened in the last eight years.

BLITZER: Did he say anything to you about that?

CARTER: No, he was very much laid back, very much at ease, very much a genial host. We talked about some things that applied to all presidents. One of the things that Obama was very interested in was how did Amy get along in the White House, because she was 9 years old, the same age as his eldest daughter. And that was the subject of some conversation.

BLITZER: What did you tell him?

CARTER: I told him to let her act just like a normal child. Amy had brought kids from her school classroom home on Friday nights to - sometimes they stayed up all Friday night watching different movies. In the White House, they have a nice theater. And the First Family can order any movie they want, as you know. So they had popcorn and Coca-colas and so forth. And that there's a nice pool there that Gerald Ford had installed. And in the basement, a good bowling alley that Harry Truman moved over. So there's plenty to do for young people, teenage kids and even younger in the White House.

BLITZER: I know he wants to spend a lot of time with his two young daughters.

CARTER: I hope he will.

BLITZER: Did you have a chance to spend a lot of time with Amy when you were president of the United States?

CARTER: Absolutely. I generally went to work very early in the morning, like 5:00 I would get up. And I would do all my work, if possible, by 5:00 in the afternoon. And then I would jog for a long -- I was an avid almost a fanatic runner back then, but I had almost every evening off from my duties. And I would spend them with my family. We had a fairly large family there at the White House. And we would sit around the table and talk about politics and so forth.

BLITZER: So it is possible for this new president to spend good quality family time with his whole family, even though he has the enormous responsibility of being president?

CARTER: Even during the work week. And of course, the weekends, when the situation clears up a little bit, I think going to Camp David was a delightful interlude.


BLITZER: The movers and the shakers on the Obama team. These are the new players in the real West Wing. And we're going to take you behind the scenes with stories and some extraordinary photos.

And our photo of the week. In London, enough snow fell for a giant snowball. It's one of our hot shots, pictures worth a thousand words.



OBAMA: You know, listen. You want to be president when times are tough, because, you know, I didn't do all this just to occupy this fancy office. I did - I came here to change things.


BLITZER: The president's not the only one who came to Washington to change things. And now we're going to take you inside the real West Wing with some stunning behind the scenes photos of the new administration.

And speaking of stunning, this interview was taped just before Tom Daschle's sudden withdrawal as a cabinet nominee.


And joining us now, Maureen Orth. She's a special correspondent for "Vanity Fair" magazine. And you've got a new cover. It's a pretty nice cover about the new president of the United States. Maureen, thanks very much for coming in.


BLITZER: These pictures by Annie Liebowitz, the photographer, are really great pictures because it says a lot about the president, the First Lady. Let's talk about this picture first. This is when they got out of the limo and they were walking down Pennsylvania Avenue.

ORTH: Right.

BLITZER: Who could forget that moment?

ORTH: That's true. They both got out and the crowd went wild. And Annie was in a truck following a little bit ahead of them. And she shot that actually from the street in Pennsylvania Avenue.

I think it was several blocks before they got to the White House.

BLITZER: Yeah, look at those huge smiles.

ORTH: Yeah.

BLITZER: They were obviously holding hands and very excited.

ORTH: Yeah, total energy. That was such an energetic day, all the way around.

BLITZER: And then she did a group shot of the incoming cabinet. At least, most of them. Take a look at all of these pictures. If you go all the way on the left here, Tom Daschle, who's nomination...

ORTH: Right.

BLITZER: ...was a little bit of a trouble, as we speak right now.

ORTH: Yes.

BLITZER: But you go through all the cabinet. How difficult was it to get all these people together in one room?

ORTH: Can you imagine? We were getting these people in some of the busiest days of their whole lives. And we actually shot several different days. We shot several people together. We stuck some people in. And we - and what Annie does is that she has a backdrop and then has this wonderful assistant, Katherine McLeod, who works at "Vanity Fair," who's about 6 feet tall and stands just like the person that would be standing next to them.

BLITZER: Oh, so in other words, not all these people were there together?

ORTH: No, we could not get - we only got Hillary Clinton the day after the inauguration, right after her confirmation hearing. And we were despairing we were going to get the last one, but we got her.

BLITZER: And I love the picture of Susan Rice in the middle.

ORTH: Oh, yes.

BLITZER: U.S. Ambassador at the United Nations.

ORTH: She's a tough cookie. She was so funny. When we were taking her picture, she said to Annie, if you don't make me look good, I'm coming after you. BLITZER: And you got to -- I know Susan Rice rather well. All right, let's go to what you call the brain trust...

ORTH: Yeah.

BLITZER: ...the next picture. There they are. You see David Axelrod and Peter Ross, Rahm Emanuel, new White House chief of staff, and Valerie Jarrod (ph).

ORTH: They are the people that are the closest part of the inner circle. And obviously, David Axelrod, who was the chief strategist of that nearly flawless campaign. And then Ross (ph), who was his senate chief of staff, who's referred to sometimes as the 101st senator. And then of course, we have Rahm Emanuel, the chief of staff, and then Valerie Jarrett, who is really best friend. So these...

BLITZER: Best friends with both of the Obamas.

ORTH: Well, both of the Obamas, right.

BLITZER: All right, let's go to the next picture, the economy team. And you see Larry Summers...

ORTH: Right.

BLITZER: ...he new White House chief economic adviser out there. And you see sitting down, Timothy Geithner...

ORTH: Yeah.

BLITZER: ...who's the new secretary of the treasury.

ORTH: And then that's Peter Orszag, who's the secretary of --

BLITZER: He's the budget director.

ORTH: Budget director. And then...

BLITZER: Christine Romer.

ORTH: Romer, who is the chairman of the Council of Economic Advisers. And you know, Larry Summers told me that this was an amazing moment, once in a generation for economic policy makers. And they had to take advantage of this post-inaugural period. And then Orszag said, you know, we've really got to make government cool again.

BLITZER: When Annie took the picture, all four of them were together?

ORTH: Absolutely.

BLITZER: We got all of them together?

ORTH: Oh, absolutely, yeah.

BLITZER: She didn't have to cut and paste or anything like that?

ORTH: No, no.

BLITZER: All right, let's go to the - what you call the green team.

ORTH: Yeah.

BLITZER: The guy in the middle, the former senator, Ken Salazar...

ORTH: Yeah.

BLITZER: ...who's going to be secretary of the interior.

ORTH: Right.

BLITZER: These are the people who want to make America green.

ORTH: They're amazing. This is -- on the left here is...

BLITZER: Stephen Chu.

ORTH: ...whose a Nobel prize winner from Berkeley. And he says he really wants to change people's minds about energy use. And then you have Carol Browner, who was the head of EPA. She's now the climate czar. And then if you can rember, for eight years, we've sort of been told there wasn't a climate problem. And now you have (INAUDIBLE).

BLITZER: Lisa Jackson.

ORTH: Lisa Jackson on the end, who says that we have got to make all these issues, grassroots issues.

BLITZER: She's going to be the EPA administrator.

ORTH: Yeah. And they want a green America. They really do.

BLITZER: I want to show you the next one. I'd like to call this the youth of America over here. You've got some of the young people... ORTH: Right.

BLITZER: he news tracking team on the left, the campaign advance team on the right. These are the kids who put it all together.

ORTH: Yeah, these guys, nobody's over 25 years old. And they stay from 3:00 a.m. to 3:00 a.m. just calling all the newspapers and the TVs and the blogs and everything. And so there can be a rapid response to whatever is going on. And then these are the kids that are organizing the press and keeping everybody going and on the trail. I mean, these kids just have flat-out worked their hearts out.

BLITZER: And then we got some more. Look at this. This is -- on the left over here, you see what we call the logistics team, including Reggie Love.

ORTH: Right.

BLITZER: He's the personal aide to the president. Wherever the president is, Reggie is. ORTH: And then, of course, the president says that Reggie's a lot cooler than he is. And then there's Alyssa, Master Monaco, who is the scheduling person. And then...

BLITZER: Marvin Nickleson.

ORTH: And then Marvin Nickleson, who's also the trips organizer. So they had to do this amazing logistics for two years for the campaign.

BLITZER: And finally, the communications team. There they are. Everybody by now is familiar with Robert Gibbs...

ORTH: Right.

BLITZER: Who's all the way to the right with his arm on the podium.

ORTH: Right. And there's the young speech writer, John Favrois right down in the bottom, who is the major speech writer. And then you have Ellen Moran, who is the head...

BLITZER: The Communications director.

ORTH: The head of the communications team. And then you have...

BLITZER: Dan Pfeifer.

ORTH: Dan Pfeifer, who's also -- who told me that change was always the mantra. No matter what, that's what... BLITZER: All right, so button this up for us.

ORTH: Yeah.

BLITZER: You take a look at all these people...

ORTH: Right.

BLITZER: The inner, inner circle...

ORTH: Right.

BLITZER: ...if this new White House.

ORTH: Right.

BLITZER: What goes through your mind, looking ahead, over the next four years, maybe eight years?

ORTH: They came to play. They really want to change things. I wonder how much you can change this sort of glacial society of Washington, but they think they've been elected to make change. And they're taking this terrible economic time we're in and all these problems as a challenge. Not something to bring them down, but something to really reverse course and go ahead. So we'll see what happens if they can fulfill these promises. But they're ready to rumble.

BLITZER: Actually, I'm sure they are. It's going to be pretty exciting. Maureen, thanks for coming in.

ORTH: You're welcome.

BLITZER: And please thanks Annie Liebovitz for those great pictures.

ORTH: Oh, aren't they - yeah, I will. Thank you.


BLITZER: A surprise visit. The president and the First Lady stopped by a Washington school and takes questions from some excited kids. Just one of our pictures of the week.


BLITZER: Here's a look at some of the week's hot shots from our friends over at the Associated Press. Outside Baghdad, the Iraqi flag is raised as authority begins to shift at a security station.

In Pennsylvania, Punxsutawney Phil predicted six more weeks of winter after seeing his shadow. In London, enough snow fell for these guys to roll a giant snowball along the Thames. And in Washington, the president and the First Lady stopped by an elementary school and took questions from the kids. Some of the week's hot shots, pictures worth a thousand words.

Thanks very much for joining us. I'm Wolf Blitzer. Please join us weekdays in THE SITUATION ROOM from 4:00 to 7:00 p.m. Eastern and every Saturday at 6:00 p.m. Eastern right here on CNN and at 9:00 p.m. Eastern on CNN International.

BLITZER: The news continues next right here on CNN.