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Obama Administration Takes Steps to Solve America's Economic Crisis; Grading President's First Press Conference

Aired February 10, 2009 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thanks very much, Rick.

Happening now, an historic day of emergency action to revive the economy. The president and the federal government moving onto several new fronts to try to free up colossal amounts of money. But the Obama stimulus plan now heading into treacherous new territory.

Iranians mark 30 years of hostility toward the United States, but their president is signaling some new hope for a relationship with Washington. So is Hillary Clinton, the secretary of state.

And grading President Obama's first big news conference. Was he powerful or was he predictable? James Carville and Bay Buchanan, they're standing by live.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

President Obama charging forward today with an aggressive assault on America's economic crisis. Brand new moves by the federal government could commit billions, even trillions of dollars to create jobs, thaw credit and fix the financial system. That includes today's Senate vote approving the president economic stimulus plan, but the measure now faces an even bigger hurdle.

We'll get to Capitol Hill in a moment. But first let's go to our White House correspondent Dan Lothian. He traveled with the president to Fort Myers, Florida today.

All right, what happened today, Dan?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, the president was here meeting in this town meeting when he got word that the Senate had passed the stimulus plan. The president responded by saying that this was good news. And he told the folks in the audience that this was an opportunity to create or save up to four million jobs. It would help struggling communities like Fort Myers.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Nice to see you.

UNIDENTIFIED FEMALE: Nice to meet you.

OBAMA: How are you? LOTHIAN (voice over): Mr. Obama is back on the campaign trail. But this time to win a stimulus bill, taking his message from the U.S. Capitol to the foreclosure capital.

OBAMA: We're going to do everything we can to help responsible homeowners here in Fort Myers and other hard-hit communities stay in their homes.

LOTHIAN: Unemployment rose here last year from 6 percent to 10 percent. Construction jobs from a once booming housing market have dried up, and business owners are struggling.

GLEE ANN AGIUS, GREATER FORT MYERS CHAMBER OF COMMERCE: There's a lot of people that are calling us and saying that they're just clothes up shop, that they can't afford to pay their employees anymore.

LOTHIAN: The town hall meeting was a chance to ask the president how the stimulus plan will rescue them.

UNIDENTIFIED FEMALE: Is there any provisions in your stimulus package that actually will give back to the taxpayers, individually, so that we all get stimulus checks...

OBAMA: Yes.

UNIDENTIFIED FEMALE: ... to jump-start the economy? And...

OBAMA: Yes.

UNIDENTIFIED MALE: So many of the lenders these days are unwilling to discuss any possibility of doing a loan modification program...

OBAMA: Right.

UNIDENTIFIED MALE: ... unless you're currently in default.

OBAMA: Those are some of the issues that we'll be laying out over the next couple of weeks.

LOTHIAN: The president said a sweeping plan to rescue the nation's banking sector announced by his treasury secretary will help.

HENRIETTA HUGHES, FLORIDA RESIDENT: Housing authorities...

LOTHIAN: And an emotional moment, an unemployed secretary, Henrietta Hughes, who says she's homeless as the president (INAUDIBLE).

HUGHES: We need our own kitchen and our own bathroom. Please help.

OBAMA: We're going to do everything we can to help you, but there are a lot of people like you. And we're going to do everything we can. LOTHIAN: As Mr. Obama was taking questions, word of the Senate vote arrived on a piece of paper.

OBAMA: We still got to get the House bill and the Senate bill to match up before it gets sent to my desk. So we've got a little more work to do over the next couple of days. But it's a good start.

(END VIDEOTAPE)

LOTHIAN: As the House and the Senate begin those tough negotiations, the president again called for a bipartisan effort saying, quote, "When the town is burning, we don't check party labels. Everyone needs to grab a hose." Wolf?

BLITZER: It was interesting that he was introduced by the Republican governor of Florida, Charlie Crist, who showed up and voiced his support for this economic stimulus plan.

LOTHIAN: That's right. This is a governor who does believe that this will help the state of Florida. Could bring about $10 billion into the state, perhaps as much as $200 to $300 million into the area of Fort Myers. That's why he's supporting it and is hopeful that it can bring the jobs to the state and help to turn this economy around, Wolf.

BLITZER: Dan Lothian, in Florida for us, thank you.

The Treasury secretary, Timothy Geithner, took the lead today in promising other aggressive steps to try to fight the financial crisis. He broadly sketched out an overall of the government's widely criticized financial bailout, including a plan designed to restart the flow of credit to business and consumers.

Among other things, a key lending program would be expanded from $200 billion to as much as $1 trillion.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: Working jointly with the Federal Reserve, we are prepared to commit up to a trillion dollars to support consumer and business lending. This initiative will help kick start the secondary lending markets to help bring down borrowing costs and to help get credit flowing again.

(END VIDEO CLIP)

BLITZER: Many analysts and investors are -- were disappointed that Geithner didn't offer more details. The Dow Jones Industrials closed down over 300 points, almost 400 points just a short while ago.

We're going to have much more on all of the latest plans, whether they'll work. That's coming up. And you're going to be hearing a lot more from President Obama as well. More of that town hall meeting. Some of the questions and answers were pretty compelling.

Now to the next hurdle for the economic stimulus package after its approval earlier today by the full U.S. Senate. Let's go to our congressional correspondent, Brianna Keilar. She's got that part of the story.

Some are saying, Brianna, the hard work on Capitol Hill is only just beginning.

BRIANNA KEILAR, CNN CORRESPONDENT: It is, Wolf, as the House and the Senate now have to hash out their differences and come to agreement on a final bill. It's clear the question now is not how do you make Democrats and Republicans happy, the question is narrowing now to how do you make these few Republicans in the Senate who bought into this economic stimulus package that passed today happy while also making House Democrats happy.

Because, remember, House Democrats, there are some things about the Senate version of this stimulus package they're not happy with. Specifically, the spending cuts when it comes to education, a big priority for them. So as we try to gauge what their response is in this process, we've heard for the first time this afternoon from House Speaker Nancy Pelosi.

She met behind closed doors with all of the -- all of the House Democrats, and then she came out and said that they are going to be fighting to put some of their priorities back in. But she also indicated a willingness to compromise.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), HOUSE SPEAKER: As President Obama cautioned the nation that you cannot allow the perfect to be the enemy of the effective and of the necessary. And we will not. The -- any one of us can write the bill that we like better. Isn't that the way it always is?

But we build a consensus. We're proud of the product that we put forth, and it has a strategic vision, a strategic mission so all the parts of it have to come together in a way that keeps the promise that we are making of bold, swift action to create jobs. We -- I think that we're in good shape with our conference.

(END VIDEO CLIP)

KEILAR: And this effort now to win over these two disparate groups, the House Democrats, the rank and file there, and these few Republicans in the Senate whose votes are so crucial in order to get this package on President Obama's desk. This effort is in full swing.

Actually, Senate Majority Leader Harry Reid met a short time ago in his office with these centrists, not only the Republicans in the Senate, but also some Democrats who negotiated this compromise that came about in the Senate, Wolf. As well, they met with Rahm Emanuel and other top White House aides. And as we speak right now, Wolf, that group of centrist senators, they are meeting behind closed doors.

BLITZER: We'll see what kind of deal they come up with. Brianna Keilar, stand by. Brianna is on Capitol Hill. ANNOUNCER: This is CNN Breaking News.

BLITZER: Chad Myers is watching a developing tornado right now. Where is it, Chad? What's going on?

CHAD MYERS, CNN METEOROLOGIST: It's been on the ground for about five minutes, Wolf. We've had pictures on it now and it's in northern Oklahoma County, southern Logan County. There's Oklahoma City. Here's the cell north of Edmond, south of Guthrie, and the pictures are in and out. KOCO has that camera.

They're flying their helicopter here shooting into the pictures there of the tornado itself. They are back on now. This is still the potential for popping in and out because of where they are, how far they are away from their tower, too.

We're going to rerack the tape a little bit later in the show. We'll show you this funnel. This tornado was right on the ground north of Oklahoma City and very close to Edmond, but really Sorghum Mill and Kelly Ave up near Oak Tree. That's about six miles south of Seward. Seward would be here. There's Logan County. And that storm is still rotating violently. Clearly, could go back on the ground at any time.

Right now it looks, though, it appears that it has lifted, but this -- and this night will be the first night of severe weather in the '09 season, Wolf. And this could be a big tornado outbreak night. We'll watch it for you all night long.

BLITZER: All right, Chad, we'll check back with you. It's pretty scary stuff.

Let's check in with Jack Cafferty right now, though, for the "Cafferty File." Have you ever been in a tornado?

JACK CAFFERTY, CNN ANCHOR: I have not been in them, but I've seen them. I worked in Kansas City for a number of years. I actually used to do the weather out there. Very scary.

BLITZER: Yes.

CAFFERTY: The sky turns green in the daylight when these squall lines come through. Time to go to the cellar and hold on to anything you can get ahold of. There's the funnel cloud it looks like.

BLITZER: Yes.

CAFFERTY: Not tightly organized, but enough to get your attention, certainly.

BLITZER: Yes.

CAFFERTY: Anyway, more political wisdom from our leaders. A California court says the state must reduce its prison population by as many as 57,000 inmates within the next three years. That's more than a third of the largest prison population in the nation. The panel of three judges ruled the state could do this by shortening sentences limiting new admissions, sending nonviolent felons to county programs, reforming parole and giving early releases for good behavior.

They say these options would not harm public safety. I'm not sure how they came to that conclusion, but, anyway. By keeping the system at more than 150,000, which is double its capacity, the panel says inmates are not receiving a level of medical and mental health care that's guaranteed by the constitution.

We have 50 million people in this country with no health insurance and we got judges wringing their hands over the quality of health care of prison inmates. California's attorney general is already vowing to appeal the ruling saying it goes against public safety that they will appeal directly to the Supreme Court, if necessary.

However, the panel of judges cites Governor Schwarzenegger's support for prison reforms. He has said this would reduce the prison population by 40,000 inmates. Perhaps more importantly, state budgets around the country are strapped for cash in these tough times.

And the court says that California would save between $800 and $900 million a year by cutting the prison population by a third. They say some of that money could then go to local groups that would work with inmates who are out on parole or probation.

So here's the question. Should the state prison inmates be released as a way of saving taxpayer dollars? The answer is no. Go to CNN.com/CaffertyFile and you can post a comment on my blog.

Judges.

BLITZER: Yes, looking to cut corners. Big crisis. All right, Jack. Thank you.

In Iran, a new chants of death to America. But President Mahmoud Ahmadinejad is striking a little bit less hostile tone toward the U.S. on an important anniversary for his country. Stand by for that.

And Secretary of State Hillary Clinton's new overture toward Iran.

Results now coming in in that crucial election in Israel that could shape the future of peace efforts in the Middle East. We'll have the latest for you on that.

And President Obama in his own words, responding to pointed questions about the economy from folks in Florida.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I've been at the same job, which is McDonald's, for 4 1/2 years because of the fact I can't find another job. Now with the fact that I've been there for as long as I've been there, do you have any plans or any idea of making one that has been there for a long time receive any better benefits than what they've already received?

(END VIDEO CLIP)

ANNOUNCER: This is CNN Breaking News.

BLITZER: Looks like a major surprise of potentially an upset in the Israeli elections. The polls are now close. Let's go to Jerusalem. We sent our senior political analyst Bill Schneider there to cover this election.

What do we know right now, Bill?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: What we know is that there are three television exit polls and all three of them report that the Tzipi Livni's Kadima Party is slightly ahead in those polls. They are notoriously unreliable, but we've got three of them. And she's leading Benjamin Netanyahu's Likud Party by two Knesset seats, two seats in all three polls.

This would be a very important breakthrough. She'd be the first woman prime minister since Golda Meir. If she becomes prime minister, she has to form a government which takes some wheeling and dealing. And also, of course, it looks like a big win because she did a lot better than she was expected to do. In all the pre-election polls, she was predicted to be running second. So this looks like a real breakthrough for her.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice over): Who will be Israel's next president? Will it be Benjamin Netanyahu, leader of the conservative Likud Party, or Tzipi Livni, who leads the centrist Kadima Party? Here's a tougher question. What difference does it make?

UNIDENTIFIED MALE: If you look at the some of the Israeli point of view, it doesn't make any difference in the sense that the peace process always fails.

SCHNEIDER: You hear that resignation from some voters.

UNIDENTIFIED MALE: I don't believe in peace. Sorry. I don't believe that we can do peace with the Palestinian people.

SCHNEIDER: But Netanyahu told CNN he believes Israelis still hope for peace.

BENJAMIN NETANYAHU, LIKUD PARTY CHAIRMAN: They will embrace peace. They just want to make sure that on the other side of the fence there's a peaceful Palestinian partner. And for that, we have to weaken the radicals and strengthen the moderates. And this will very much be my policy if I get elected.

SCHNEIDER: Some are predicting a surprise. ARI SHAVIT, HAARETZ NEWSPAPER: I believe that Netanyahu, left to himself, is determined to surprise the world by being much more moderate than he's perceived to be.

SCHNEIDER: It was Livni's Kadima Party that led Israel through two wars in Lebanon and in Gaza. Could it be that you vote left you get war, vote right you get peace? Actually, restarting the peace process may depend not so much on whether the new Israeli government is led from the left or right, but how strong and capable it is.

SHAVIT: If you get a left wing Israeli leader, he'll try to do more, but his ability to do will be less. If you get a right of center or centrist Israeli leader, his commitment would be less, but his ability will be much more.

(END VIDEOTAPE)

SCHNEIDER: We are looking at the Kadima Party headquarters where there's a very jubilant mood because of those exit polls reporting that Tzipi Livni, the leader of the centrist party, with a lot of left-wing support, may pull out a small victory here.

There's a big question. Can she govern? She'll have to form a coalition government. And in order to make a -- to restart the peace process it will have to be a very strong and stable government and that remains, Wolf, a very big question.

BLITZER: If she does have the most seats in the Knesset, Israel's parliament, she'll be in a position to try at least first to form that government. Will she succeed?

SCHNEIDER: Yes.

BLITZER: And if these exit polls are correct. We'll stand by and stay in touch with you, Bill Schneider in Jerusalem for us.

Meanwhile, the secretary of state Hillary Clinton says the United States is watching Iran's behavior. At issue right now, plans for a U.S. missile defense shield in Europe. It's been supported strongly by the Bush administration.

Let's go to our foreign affairs correspondent Jill Dougherty. She's over at the State Department working this story for us.

Some strong words today, intriguing words, I should say, from the secretary of state, Jill.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Yes, I think that's the word, Wolf. Intriguing. It really is a different focus. A shift, really, in the strategy of this administration on that missile shield program. And we're told by officials that the same message quietly, at meetings last week, remember Vice President Biden was in Munich at that security conference. He was saying the same thing.

And essentially, here it is. The U.S. might rethink missile defense in Europe if Iran stops pursuing nuclear weapons. Let's hear how the secretary said it.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: If we are able to see a change in behavior on the part of the Iranians with respect to what we believe to be their pursuit of nuclear weapons, you know, then, you know, we will reconsider where we stand. But we are a long, long way from seeing such evidence of any behavior change.

(END VIDEO CLIP)

DOUGHERTY: OK. And the person you're seeing on her left is actually the Czech foreign minister. And that's important because Czech, the Czech Republic and Poland are the two places that the United States has said that it would install parts of that missile shield in.

Now Russia has been very angry about this entire plan. They have said that it is aimed not necessarily at Iran but at Moscow. And the administration right now is saying no, it is aimed exclusively at Iran. And, in fact, here's a message to Moscow. If you help us out with Iran, maybe we don't have to go ahead with that missile shield program.

You've already heard some of this, Wolf, before from President Obama saying that they have some technical questions about the system, et cetera, but it might be a spur for Russia.

BLITZER: All right, Jill. Thanks very much. As I said intriguing words from Hillary Clinton. All of this coming as some Iranians are calling for America's collapse as Iran's president, though, extends what some are saying could be seen as an olive branch to the U.S.

CNN's Reza Sayah has details. He's in Iran.

REZA SAYAH, CNN CORRESPONDENT: Wolf, on a historic day in Tehran, many were excited to see how Iranian president Mahmoud Ahmadinejad would respond to U.S. president Barack Obama's offer to improve relations.

(BEGIN VIDEOTAPE)

SAYAH (voice over): To its supporters, the Islamic revolution in Iran is as vibrant as ever despite 30 years of hostilities from Washington. Hundreds of thousands of them converged on Freedom Square to mark the anniversary.

For Behrouz Khadapul(ph), it was a moment to celebrate for this man.

UNIDENTIFIED MALE (Through translator): I am proud to be an Iranian, and I accept the revolution with my heart and soul.

SAYAH: Some chanted "Death to America," but heard President Ahmadinejad offer Washington the possibility of a new dialogue. PRES. MAHMOUD AHMADINEJAD, IRAN (Through translator): The Iranian nation is ready to hold talks, but talks in a fair atmosphere with mutual respect.

SAYAH: But he said if the United States wanted changes, they must be fundamental, not tactical.

Ahmadinejad was speaking hours after President Obama suggested a new approach to Iran was possible.

OBAMA: I think that there's the possibility, at least, of a relationship of mutual respect and progress.

SAYAH: Respect that has been largely absent since the Islamic Revolution led by Ayatollah Khomeini toppled the regime of the late Shah.

(On camera): When Imam Khomeini led the Islamic Revolution 30 years ago, one of the things he promised Iran was independence from foreign influences, specifically, the U.S. a country the leaders of this revolution called the great Satan.

(Voice over): If Ahmadinejad's tone was at times conciliatory, he also said Iran was now a superpower and he made it clear that the Islamic republic would not give up scientific achievements like its nuclear program, a position that had support among the thousands at the celebration.

UNIDENTIFIED MALE: Finally should end it. Have a peaceful nuclear process.

(END VIDEOTAPE)

SAYAH: Tehran and Washington haven't had diplomatic ties for three decades. On this anniversary, there are at least some signs that things might change. Wolf?

BLITZER: Reza Sayah in Tehran for us, Thank you.

He's the free -- leader of the free world, I should say. And he's had a party and other get-togethers over at the White House. Is that the right way for President Obama to win support?

And amid the worsening situation in Afghanistan, a decision to send in more U.S. troops could be made within days.

(COMMERCIAL BREAK)

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

Happening now -- a desperate plea for urgent action and for patients. At the same time, why President Obama is making two different requests of Congress and the American people.

Shining a spotlight on needed services. Michelle Obama, the first lady, pays a visit to a Washington health center. And separated in the chaos. Survivors of Australia's bushfires searching for family members.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

President Obama does some Q&A about the economy, but you've rarely heard a president get questions like these. As we've reported, the president was selling his economic plan in Florida today. And as he talked about Americans who are hurting, he heard an emotional story from one of them. Listen to this.

(BEGIN VIDEO CLIP)

HUGHES: First, I want to say, I respect you and I am so grateful for you.

OBAMA: Thank you.

HUGHES: I've been praying for you but...

OBAMA: I believe in prayers so I appreciate that.

HUGHES: I have an urgent need. Unemployment and homelessness. A very small vehicle for myself and I to live in. We need urgent and the housing authority have two years waiting list. And we need something more than the vehicle and the parks to go to. We need our own kitchen and our own bathroom. Please help.

OBAMA: Well, listen -- what's your name? What's your name?

HUGHES: It's Henrietta Hughes.

OBAMA: OK, Miss Hughes, well, we're going to do everything we can to help you, but there are a lot of people like you. And we're going to do everything we can. All right? But the -- I'll have my staff talk to you after this, after the town hall, all right?

UNIDENTIFIED MALE: My question was about your stimulus package.

OBAMA: Yes.

UNIDENTIFIED MALE: You said we have to be patient.

OBAMA: Yes.

UNIDENTIFIED MALE: The American people are notorious for not being patient.

(LAUGHTER)

How are you going to deal with that problem?

OBAMA: Well, look, my -- first of all, I think that the American people understand, as I said before, that we didn't get into this fix overnight, we're not going to get out of it overnight. I think people understand that it is a big and very complicated problem and that we're going to have to try a bunch of different things to get the economy moving again.

Look, I -- won't lie to you. If it turns out that a few years from now people don't feel like the economy has turned around, that we're still having problems, that folks are still unemployed, that our health care system's not more efficient, then I -- you know, you guys won't applaud me next time I come down here.

You know? There -- may be a couple of diehard Obama folks out here, but...

(CHEERS)

You know, so I mean, I expect to be judged by results. And there's no -- I'm not going to make any excuses. If stuff hasn't worked and people don't feel like I've led the country in the right direction, then you'll have a new president.

All right, what's the question?

UNIDENTIFIED MALE: All right, Mr. President...

(LAUGHTER)

My name is Julio Asogueda (ph). I'm currently a student at Edison State College in my second semester. And, OK, I've been at the same job, which is McDonald's for 4 1/2 years because of the fact that I can't find another job. Now with the fact that I've been there for as long as I've been there, do you have any plans or any idea of making one that has been there for a long time receive any better benefits than what they've already received?

OBAMA: Well, I tell you what. First of all, a couple of things I'd like to say. Number one, the fact that you are working as hard as you are working at a job that I know doesn't always pay as well as some other jobs, I think that's a source of pride for you that shows that you're doing the right thing.

(CHEERING AND APPLAUSE)

OBAMA: Now, the second thing is, is that you will actually benefit from the tax breaks that we're talking about, so you'll be able to keep a little bit extra money, because we're going to offset your payroll tax. That's going to help.

I don't -- I assume that you're not getting health care through your job, and so one of the things that we want to do is reform the health care system so that you will have access to health care in your job.

But the thing that I'm really interested in is -- you say you're going to school. What are you studying?

UNIDENTIFIED MALE: I'm looking to study and major in communications, hopefully being a broadcaster or a disc jockey.

OBAMA: Well, you sound like you've got good communication skills.

UNIDENTIFIED MALE: Thank you so much.

OBAMA: So -- so part of what we want to do is we want to make it easier for you to afford going to college by giving you this refundable tax credit for your tuition, because young people like Julio, who have that much enthusiasm and that much energy, we've got to make sure that we are giving them a pathway so that they can educate themselves and go as far as their dreams take them.

Thank you very much, Fort Myers. I appreciate you.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BLITZER: President Obama's raising a glass to bipartisanship. But is it appropriate to hold the equivalent of what some are calling a White House happy hour in these tough economic times?

James Carville and Bay Buchanan, they are standing by live for our "Strategy Session."

And President Obama says he will be judged by the economy's rise or its continued fall. I will ask the Virginia governor and the new Democratic Party chairman, Tim Kaine, if President Obama has put too much on the line.

And a view of the presidency in the 2008 election as only Dolly Parton could explain it.

(BEGIN VIDEO CLIP)

DOLLY PARTON, MUSICIAN: I was out on tour when they -- everybody was campaigning, when Hillary was running. And all I thought, yes, it would be great to have a woman in the White House. And I thought, well, I don't know if it's such a good idea. Every 28 days, those terrorists better run deeper into them woods.

(LAUGHTER)

PARTON: That's all I can say, if we get a woman in there.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Welcome back

Joining us now, the Virginia governor, the Democratic Party chairman. That's his new job as well. Tim Kaine, he's joining us right now.

Governor, thanks very much for coming in.

GOV. TIM KAINE (D), VIRGINIA: Glad to be with you Wolf. BLITZER: President Obama says he's likely to be judged by what happens over the economy. And we should know fairly soon whether this economic stimulus package, the financial bailout for the banks, is going to work -- is going to work.

Are you confident that all of this is going to work and turn the economy around?

KAINE: Well, first, I mean, he -- he is likely to be judged for this. And he says: I don't want to be just measured by my good intentions or my work. I want to be measured by results.

And that's one of the reasons Americans elected him, is that we wanted better results from this administration. I do think the issue is how quickly this will work. I mean, we didn't get into this overnight. We're not going to get out of it overnight.

Unemployment, you know, nearly 1.8 million jobs lost in the last three months, that's like every job in South Carolina disappearing overnight. So, it's going to take awhile to get this back on track.

But I do believe that the three basic elements of the stimulus package, Wolf, tax cuts for working families and tax credits, so they can better afford college, that will help people pay bills, put food on the table, and -- and maybe pay some college tuition.

BLITZER: I'm -- I'm sure...

KAINE: Second...

BLITZER: I'm sure a lot of his aides who worked in the Bill Clinton administration remember '93, Bill Clinton's first year in the White House.

He had very ambitious goals, including health care reform. You will remember "Hillarycare."

KAINE: Absolutely.

BLITZER: And -- and it resulted in a disaster in the midterm elections in November of '94, when the Democrats lost the House and they lost the Senate.

How worried are you about that possibility?

KAINE: Yes, but let's look at the long term.

I mean, most people attribute the significant economic gains of the mid and late 1990s to the fact that actions were taken that got the economy moving again in a fiscally disciplined way. And, so, there can be some short-term pain, but you have got to do the right thing over the long haul.

I think this stimulus package does the right thing by providing relief immediately and saving jobs. But then the -- the infrastructure spending will build a greater platform for long-term economic success. We have got to do something to stop this economic slide. And we're -- we're thrilled that the package is now in conference, and are urging Congress to act promptly, so that we can get the economy moving again.

BLITZER: As you know, a lot of Republicans seem energized right now. They have been pretty much unanimous, certainly in the House, and mostly in the Senate, against the president's and the Democrats' proposals.

I want you to listen to the new chairman of the Republican National Committee, the former lieutenant governor of Maryland, Michael Steele, because he had some strong words. We spoke with him last week. Listen to this.

(BEGIN VIDEO CLIP)

MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: We're going to bring...

(CHEERING AND APPLAUSE)

STEELE: ... 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.

(END VIDEO CLIP)

BLITZER: All right, some pretty tough words, and he says he's referring not only to fellow Republicans, but to Democrats, like you, as well. How worried are you about this new chairman of the RNC?

KAINE: Well, you know, when somebody starts off by talking about who is going to get knocked over, I don't think that is what Americans want to hear. They want to hear who wants to work together.

And, so, when they hear that kind of language or when they look at the House, where zero Republicans voted for the stimulus plan, the chairman of the House Republican Caucus said, "Yes, we have learned from the Taliban; we want to be insurgent-like and disrupt the other side," that's not what they are looking for.

And that's why, Wolf, outside the beltway, the latest Gallup poll shows that 67 percent of Americans support the president's efforts to make this stimulus plan happen. So, they can be as partisan as they want and use the big, tough talk inside the beltway. Outside the beltway, what Americans want is, they want us to work together to get this economy moving again.

BLITZER: The Democratic Congressional Campaign Committee is running these new ads, going after some of these Republicans, though, who have voted against the president's economic stimulus package. And -- and -- and these are really phone calls, in -- in effect.

How -- how is this different from some of the old inside-the- beltway kind of politics? Because it seems like it's just more of the same. KAINE: Well, here's -- here's what I think is fair, is, if you are going to just vote no or stand in the way, you ought to be held accountable.

If you have better ideas, put them on the table. But I think, at this point in our history, you know, voting no, standing on the sideline and sniping is not an option. That's why what happened in the Senate, I think, was very productive.

You saw a bipartisan effort, with -- with Republican senators part of the working group. You saw Governor Crist today, the Republican governor of Florida, standing up with President Obama and saying: I have listened to what our people want, and they want, you know, these expenditures for Medicaid and unemployment. They want infrastructure spending, and they want tax cuts for American families that make less than $150,000 a year.

BLITZER: We only have a few seconds left. A quick final question. How do you combine being governor of a state -- and Virginia has got its share of problems right now -- but, at the same time, doing your work as the party chairman?

KAINE: Well, it's a challenge.

I mean, Virginia, our unemployment rate is two-and-a-half points less than the national average, but it is increasing. I'm working very closely with my legislation.

Obviously, the fact that I'm in Northern Virginia, right across from D.C., an awful lot for work anyway gives me some ability. And I will tell you, I have got fantastic staffs, both in the governor's office and at the DNC. And, as you know, that helps a lot of good work get done.

BLITZER: Governor Kaine, thanks for coming in.

KAINE: You bet, Wolf. Talk to you soon.

BLITZER: Thank you.

The Pentagon says President Obama can't afford to put off some decisions much longer -- Robert Gates, the defense secretary, speaking out about the deteriorating situation in Afghanistan. How big will the troop buildup be, and how fast will it happen?

And you can hear President Obama's response to some emotional appeals from Florida's residents in economic pain.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Mary Snow. She's monitoring some other important stories incoming into THE SITUATION ROOM right now.

Mary, what is going on?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, we will start in Kentucky.

Kentucky will be reimbursed for some of its costs to help people during last month's ice storm. Homeland Security Secretary Janet Napolitano toured the damage today, and said the federal government will pay for 75 percent of the cost of the National Guard response.

Kentucky officials say the storm caused 33 deaths, and 50,000 customers are still without power.

With the death toll steadily climbing, Australian authorities are reexamining bush -- bushfire survival strategies. The say the stay- and-defend policy, where homeowners remain to protect their property, has to be reviewed. An official says the number of deaths is expected to top 200. A chance encounter meant survival for a koala injured in the fires. A firefighter stopped to offer the animal water. Now it's recovering with animal welfare officials.

And Pakistan's foreign minister is hailing what he calls a new beginning in relations with the U.S. President Obama's envoy, Richard Holbrooke, is visiting the region, gathering information, as the administration redesigns policy in both Afghanistan and Pakistan.

Militants hiding in Pakistan's northwest are blamed for a surge in violence in both countries -- Wolf.

BLITZER: Mary, stand by. We will be getting back to you. Thank you.

New signs of urgency within the Obama administration about sending more U.S. troops to Afghanistan -- the defense secretary, Robert Gates, saying, critical decisions will have to be made over the next few days.

Let's go to our Pentagon correspondent, Chris Lawrence. He is working the story for us.

He spoke out earlier today. What's the bottom line, Chris?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: The bottom line is this, Wolf.

The defense secretary says, in the next few days, President Obama will probably make a decision on deploying more troops to Afghanistan.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Aim! Fire!

LAWRENCE (voice-over): General David Petraeus says Afghanistan is heading into a downward spiral. But, before committing more troops, President Obama is conducting a broad strategic review, including military options and the risks involved. Defense Secretary Robert Gates is defending the president's approach.

ROBERT GATES, U.S. SECRETARY OF DEFENSE: This is the first time that this president has been asked to deploy large numbers of troops overseas. And it seems to me a thoughtful and deliberative approach to that decision is entirely appropriate.

LAWRENCE: But Secretary Gates indicated the need for some troops is urgent.

GATES: Some decisions have to be made before the strategic review is completed.

LAWRENCE: Gates says, even if the president decides to send just one brigade, they would have to be notified quickly.

Senior Pentagon officials say thousands of ground combat Marines and an aviation unit could be the first to go. And it could take roughly two months to be on the ground. Violence is spiking in Afghanistan. A Taliban bombing killed two NATO soldiers on Tuesday, just 48 hours after two U.S. soldiers were killed defusing another bomb.

The U.S. commander has asked for roughly 30,000 more troops. But Gates seemed to open the possibility of not sending all of them.

GATES: So, if his mission changes, then the number of troops or the capabilities that he would need would change, one way or the other, as well.

LAWRENCE: Senior Pentagon officials say, there's been discussion of sending two additional Army brigades. If President Obama adds all the requested troops, the U.S. force will be roughly one-third the size of the Soviet Union's army during its Afghan effort.

GATES: I worry a lot about the size of the foreign military footprint in Afghanistan.

(END VIDEOTAPE)

LAWRENCE: Now, the U.S. military has a nearby air base in Kyrgyzstan. But that nation recently told American officials they have got to close it down. That means losing a strategic supply route into Afghanistan.

But Secretary Gates said, in his mind, it's not a done deal, and suggested the U.S. could pay more to Kyrgyzstan to keep it open -- Wolf.

BLITZER: Thanks very much, Chris Lawrence, at the -- at the Pentagon.

We're going to be updating you on the breaking news coming out of Israel right now, the election that is about to determine the next prime minister of Israel. There could be an upset in the making. We are going to go back to Jerusalem shortly. Stand by for that.

Also, the breaking news out of Oklahoma, where tornadoes are sweeping across the state.

And, later, more from Dolly Parton -- she's unplugged, like you have never heard her before. (BEGIN VIDEO CLIP)

(APPLAUSE)

PARTON: Somebody said to me, well, you know what? You have just got such a big mouth and you just know how to talk to people. Did you ever think about running for president?

I says, I think we have had enough boobs in the White House.

(LAUGHTER)

PARTON: And...

(LAUGHTER)

PARTON: But, hopefully, Obama ain't going to be one of them.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

BLITZER: We want to go right back to Chad Myers. There's more information coming in right now on the tornadoes hitting the Midwest.

What's the latest, Chad?

CHAD MYERS, CNN METEOROLOGIST: From Oklahoma City down through Dallas tonight, watches and warnings already going on.

Stillwater, you are under a warning right now, big storm headed your way. This storm had a tornado earlier. Another storm in Oklahoma City going on right now. And we have video from the first storm that went through. This was Northwest Expressway. And, then, this is just about the (INAUDIBLE) mall area.

And we do know that the damage happened from here. It happened right over Lake Hefner and on up into the Edmond area. This is the first video out of the area from KWTV. You see power lines, trees down, part of this mall damaged, and quite a few roofs taken off homes as well.

The police are literally just getting to the scene, because this only happened minutes ago. I-35 was shut down at Danforth (ph), because the tornado went right over the interstate there. And that's the same storm that is headed up into the Stillwater area right now.

Wolf, there are many more storms to the south still headed to Oklahoma City, more heading to Dallas, Texas, as well tonight. This is going to be a very, very busy night, watch boxes spread all the way from Missouri all the way down almost to Austin. Going to be a lot of tornadoes tonight.

This is going to be the first tornado outbreak of '09. And it could be a big one.

BLITZER: We will watch it with you.

MYERS: OK. You bet.

BLITZER: Chad, thanks very much. We will get back to you.

Dolly Parton, she is hitting a little bit of a -- a rough note out there, the singer making some comments about President Obama and the chance of a female president. You are going to hear exactly what Dolly Parton had to say.

And the first lady, Michelle Obama, makes another special outing to a Washington health center. You're going to find out what she's saying in her own words.

And it's a mummy mystery some 3,000 years in the making. It's apparently it's been solved.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On our "Political Ticker" right now, a short while from now, Congressman John Dingell will be honored by former President Bill Clinton, the speaker, Nancy Pelosi, and other members of Congress. He's about to become officially the longest-serving member of the House. The Michigan Democrat was first elected back in 1955. Tomorrow, he will begin serving his 19,420th day in Congress.

Congratulations to Congressman Dingell.

The country music star Dolly Parton brought her flashy style to an unlikely place today. That would be the National Press Club in Washington. And she had some rather unusual things to say about the presidency and the 2008 election.

Take a listen to this.

(BEGIN VIDEO CLIP)

PARTON: I was out on tour when they -- everybody was campaigning, when Hillary was running. And all I thought, yes, it would be great to have a woman in the White House. And I thought, well, I don't know if it's such a good idea. Every 28 days, those terrorists better run deeper into them woods.

(LAUGHTER)

PARTON: That's all I can say, if we get a woman in there.

But...

(LAUGHTER)

PARTON: But somebody said to me, well, you know what? You have just got such a big mouth and you just know how to talk to people. Did you ever think about running for president?

I says, I think we have had enough boobs in the White House.

(LAUGHTER)

PARTON: And...

(LAUGHTER)

PARTON: But, hopefully, Obama ain't going to be one of them.

(END VIDEO CLIP)

BLITZER: Dolly Parton -- from Dolly Parton to Jack Cafferty and "The Cafferty File."

Can you beat that, Jack?

JACK CAFFERTY, CNN ANCHOR: She's one of a kind.

BLITZER: She is.

CAFFERTY: My favorite Dolly Parton line is that she said one time, do you have any idea how much money I have to spend in order to look this cheap?

(LAUGHTER)

CAFFERTY: The question this hour is, should state prison inmates in California be released as a way of saving taxpayer dollars?

Dave in Brooklyn writes: "This is a joke, right? Is there some maximum I.Q. standard that you must not exceed, like 12, in order to be a judge? Instead of letting felons loose on the population, why don't we hire a few of the unemployed honest people out here to build more prisons? Sounds shovel-ready to me."

Susan in Oregon says: "No other country in the world has the rate of incarcerations the U.S. does. Three strikes in California have led to life sentences for shoplifting. The state of California is bankrupt. Do you want to tell me this system is working?"

Rose in Arizona: "Releasing prisoners to save tax money is absurd. What will these people do when they get out and can't find a job? I would bet they would repeat their crimes that put the taxpayers at risk in the beginning. How stupid is that?"

Stacy in Virginia: "Are you kidding me? Maybe I am a practical person here, and I see a ready-made work force ready to go for some of the grunt work and rebuild this country. Instead of paying higher-- priced contractors for some of this work, why not get nonviolent offenders off their collective rumps? In exchange for a shorter sentence, they go to work, get some job skills, and everybody wins."

Ralph in Minnesota: "Jack, I believe some of those inmates ought to be released. I know several people who have been in prison, mostly for drug offenses. These aren't bad people, but people who have made some poor decisions. Sticking them in an overcrowded facility will do them more harm than good and cost us taxpayers a fortune in the process."

David says: "Jack, I live in California. I have family members in prison. I think this is the worst ruling in the history of jurisprudence."

And A., also in California: "Release them where the judges live."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. Look for yours there, among hundreds of others -- Wolf.

BLITZER: All right, Jack, thank you.

ANNOUNCER: This is CNN breaking news.

BLITZER: We want to go right back to Jerusalem, get an update on the breaking news coming out of Israel. It looks like there's going to be a new prime minister of that country. And it could be a woman.

All right, what do we know right now?

Bill Schneider, you are on the scene.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: What we know, Wolf, is that the exit polls from three different television networks all project at the moment that the Kadima Party, led by a woman, Tzipi Livni, the current foreign minister of Israel, her party is about two seats ahead.

There's 120 seats in the Israeli parliament, or Knesset. Her party has about 29, according to the exit polls, which is about two seats ahead of Benjamin Netanyahu's Likud Party. He was expected to be the winner. It looks like she may be slightly ahead. That doesn't guarantee that she will form the new government, because the president of the country, Shimon Peres, has to ask someone to form a government who he believes can get the majority -- that is 60 votes -- in parliament.

She has about 30. Netanyahu has a little fewer than that. But he could ask either one of them could form -- to form a government. He's -- it's possible he will ask her. She will try to do it. She will have to put together a coalition with at least 60 votes.

But that's the way this system works. If she can't do it, Netanyahu could be the prime minister. And get this. She could end up forming a government that includes Netanyahu and his party as part of her government.

BLITZER: We're going to stay on top of this story.

Bill, thanks very much.

And, to our viewers, you are in THE SITUATION ROOM.