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$75 Billion Lifeline for Homeowners; Carmakers Want Bigger Bailout; Interview With Canadian Prime Minister

Aired February 18, 2009 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, President Obama's new lifeline for homeowners drowning in debt or foreclosure. It's more ambitious and more expensive than expected. Stand by to find out what it could mean for you and your home.

Plus, two auto giants pleading again for a bigger bailout, but many taxpayers want to know if carmakers are doing enough to save themselves.

And surprising remarks by the first African-American attorney general. He says when it comes to race, America's essentially a nation of cowards.

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

The president's newest rescue plan could help as many as nine million families afford to stay in their homes, but Mr. Obama says every American is paying a price for the mortgage crisis right now.

Let's go to our White House Correspondent Dan Lothian. He has more on this announcement by the president, a very detailed plan put forward -- Dan.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. But you know, it's not a magic bullet, Wolf. The president does believe that the $75 billion will help to stabilize the housing market and keep millions of families in their homes.


LOTHIAN (voice-over): Reaching into his doctor's bag, the president pulled out some medicine that he says will help cure the ailing housing market.

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: If we act boldly and swiftly to arrest this downward spiral, then every American will benefit.

LOTHIAN: Under the housing plan, four to five million families with loans backed by Fannie Mae and Freddie Mac, where their homes are worth less than is owed, so-called under water, will be able to refinance to lower rates. The government is also putting $75 billion into helping three to four million homeowners with at-risk loans, giving mortgage lenders and servicers cash as incentives to modify those loans and lower monthly payments, and $200 billion in financial support for Fannie Mae and Freddie Mac, money already approved by Congress.

The president says this three-part effort is aimed at rewarding only responsible homeowners.

OBAMA: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.

LOTHIAN: This ambitious plan was rolled out near Phoenix, Arizona, a region hit hard by the foreclosure crisis. The median home price in Phoenix has dropped by 35 percent over the past year.

Esther Lee is a young homeowner, under water and trying to stay afloat.

ESTHER LEE, HOMEOWNER: Even if I tried to sell my house at this point, I'm upside down so much that it wouldn't be possible.

LOTHIAN: Lee hopes this new housing plan will help, even as the economy continues to crawl along on life support.

LEE: There are a lot of repercussions to going into foreclosures, and, you know, I don't want to end up with bad credit and have to work my way back up.


LOTHIAN: The housing plan was expected to be in the $50 billion range, but Treasury Secretary Timothy Geithner said that $75 billion was needed to really make this program work. Now, homeowners will get a chance to see the details of this plan when all the guidelines are laid out on March 4th -- Wolf.

BLITZER: Thanks very much.

Dan Lothian is over at the White House.

If you're suffering from bailout fatigue, today's screaming headlines about the auto industry won't help. GM and Chrysler are now asking the federal government for billions, billions of additional dollars.

Let's go to CNN's Mary Snow. She's got this part of the story -- Mary.

MARY SNOW, CNN CORRESPONDENT: Wolf, call it the auto bailout take two. GM and Chrysler have outlined their progress reports since accepting the first round of government money. Their message, things are getting worse and they want more money.


SNOW (voice-over): Two auto giants sending out an SOS. GM and Chrysler say they need more federal money, perhaps as much $21.6 billion to survive -- $5 billion for Chrysler, $16.6 billion for GM.

RICK WAGONER, CHAIRMAN & CEO, GENERAL MOTORS: Based on our analysis, we continue to believe that bankruptcy would be a highly risky and very costly process, potentially very time-consuming, that should only be undertaken as a last resort.

SNOW: Some who track the industry say the turnaround plans laid out by the automakers stop just short of declaring failure.

JEREMY ANWYL, CEO, EDMUNDS.COM: Some would argue that what they're suggesting is, in effect, a bankruptcy, and all but, you know, the legal construct. And I think that's probably true.

SNOW: For GM, restructuring plans include cutting 47,000 jobs this year -- about 20,000 of them are in the U.S. -- shutting down five more plants by 2012. It's also eliminating models. Saturn may be phased out if GM can't find a buyer. It's looking to sell its Hummer and Saab brands, and it's scaling back on Pontiac. Chrysler plans to eliminate 3,000 jobs.

Those cuts come on top of billions in bailout money given to automakers back in September. While it wasn't enough to save tens of thousands of jobs, some economists say the consequences of these companies filing for bankruptcy are far worse.

MARK ZANDI, MOODYSECONOMY.COM: If we don't give them money and they go into bankruptcy, it's going to cost us all in the form of a much worse economy, with a lot more -- fewer jobs and conditions that are just tough for everybody.

SNOW: Economist Mark Zandi says as many as three million more jobs could be lost if the automakers declare bankruptcy since they wouldn't be able to get financing, and it would have ripple effects on auto suppliers and the broader economy.


SNOW: The newly appointed task force on autos will be reviewing the carmakers' plans to see if the companies can be viable in the long run. The deadline is March 31st -- Wolf.

BLITZER: And so beyond the money they're asking for now, what about longer term? Is it likely they're going to be asking for even more money down the road?

SNOW: You know, we asked Mark Zandi about that, and he says that the total taxpayer bill could reach as high as $125 billion. He says even if these companies get the money they're asking for, if they make the cuts that they say they'll make, he still thinks they'll be back asking for more money.

BLITZER: Mary Snow in New York.

Thank you.

Let's check in with Jack. He has "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: President Obama has decided to send another 17,000 U.S. troops to Afghanistan. More than seven years into that war there, this will increase U.S. troop levels by 50 percent. The president says urgent attention and swift action are needed to fight a resurgent Taliban and al Qaeda.

The U.S. commander in Afghanistan, General David McKiernan, said today that these 17,000 additional troops will stay there for up to five years. Quoting now, "This is not a temporary force uplift. It will be needed to be sustained for some period of time." McKiernan had wanted an additional 30,000 troops.

American and NATO casualties, along with Taliban attacks in Afghanistan, were at record highs last year, and war-related civilian deaths there up almost 40 percent. Although President Obama hasn't made a call yet on troop cuts in Iraq, this decision will move troops to Afghanistan who had been scheduled to deploy Iraq.

The president has said he wants to limit objectives in Afghanistan. The new troops will be headed to southern and eastern regions. They'll help train the Afghan army and help provide security for the upcoming August elections.

A tough decision, one of many made by our new president these days, especially when you consider the public may not be behind escalating our military effort in Afghanistan. Recent polls show 34 percent of Americans think the U.S. should send more troops, 29 percent call for a decrease in U.S. troops, but the more telling statistic is this one -- only 18 percent of Afghans think we ought to step up our presence. So the welcome mat will not exactly be out for these new soldiers.

Here's the question: Is a prolonged military presence in Afghanistan a good idea?

Go to You can post a comment on my blog.

BLITZER: Jack Cafferty, thank you.

Here's the first African-American attorney general serving under the first African-American president of the United States. But Eric Holder is describing the U.S. as essentially a nation of cowards when it comes to race.

We'll tell you what's going on.

Plus, now that the economic stimulus package is law, is Canada ready to retaliate over a "Buy American" clause? I'm going to be speaking about that and a lot more with the prime minister of Canada, Stephen Harper.

And Senator Roland Burris has an unusual new line of defense amid growing calls for his resignation and questions about whether he committed perjury.


SEN. ROLAND BURRIS (D), ILLINOIS: I am the real Roland. If I had done the things I've been accused of, I would be too embarrassed to stand up here in front of you.



BLITZER: For anyone struggling to make mortgage payments right now, or simply to keep their home, President Obama says help is on the way.

Let's get some more now on our top story. The president today unveiling a $75 billion home foreclosure plan. In Phoenix, the president explains how it could help some nine million families stay in their homes.


OBAMA: The plan I'm announcing focuses on rescuing families who played by the rules and acted responsibly. By refinancing loans for millions of families in traditional mortgages who are under water or close to it, by modifying loans for families stuck in subprime mortgages they can't afford as a result of skyrocketing interest rates or personal misfortune, and by taking broader steps to keep mortgage rates low so that families can secure loan with affordable monthly payments.

At the same time, this plan must be viewed in a larger context. A lost home often begins with a lost job. Many businesses have laid off workers for a lack of revenue and available capital. Credit has become scarce as markets have been overwhelmed by the collapse of securities backed by failing mortgages.

In the end, the home mortgage crisis, the financial crisis, and this broader economic crisis are all interconnected. And we can't successfully address any one of them without addressing them all.

So yesterday, in Denver, I signed into law the American Recovery and Reinvestment Act, which will create or save...


The act will create or save 3.5 million jobs over the next two years, including 70,000 right here in Arizona. Right here, doing the work America needs done.

And we're also going to work to stabilize, repair and reform our financial system to get credit flowing again to families and businesses. And we will pursue the housing plan I'm outlining today.

And through this plan, we will help between seven million and nine million families restructure or refinance their mortgages so they can afford -- avoid foreclosure. And we're not just helping homeowners at risk of falling over the edge, we're preventing their neighbors from being pulled over that edge, too, as defaults in foreclosures contribute to sinking home values and failing local businesses and lost jobs. But I want to be very clear about what this plan will not do. It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. It will not help speculators...


It will not help speculators who took risky bets on a rising market and bought homes, not to live in, but to sell.


It will not help dishonest lenders who acted irresponsibly, distorting the facts...


... distorting the facts and dismissing the fine print at the expense of buyers who didn't know better. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford.


So I just want to make this clear. This plan will not save every home, but it will give millions of families resigned to financial ruin a chance to rebuild. It will prevent the worst consequences of this crisis from wrecking even greater havoc on the economy.

And by bringing down the foreclosure rate, it will help to shore up housing prices for everybody. According to estimates by the Treasury Department, this plan could stop the slide in home prices due to neighboring foreclosures by up to $6,000 per home.

So here's how my plan works.

First, we will make it possible for an estimated 4 million to 5 million currently ineligible homeowners who receive their mortgages through Fannie Mae or Freddie Mac to refinance their mortgages at a lower rate. Today, as a result of declining home values, millions of families are what's called underwater, which simply means that they owe more on their mortgages than their homes are currently worth. These families are unable to sell their homes, but they're also unable to refinance them. So in the event of a job loss or another emergency, their options are limited.

Also right now, Fannie Mae and Freddie Mac, the institutions that guarantee home loans for millions of middle class families, are generally not permitted to guarantee refinancing for mortgages valued at more than 80 percent of the home's worth. So families who are under water, or close to being under water, can't turn to these lending institutions for help. My plan changes that by removing this restriction on Fannie and Freddie so they can refinance mortgages they already own or guarantee.

(APPLAUSE) And what this will do is it will allow millions of families stuck with loans at a higher rate to refinance. And the estimated cost to taxpayers would be roughly zero. While Fannie and Freddie would receive less money in payments, this would be balanced out by a reduction in defaults and foreclosures.


BLITZER: President Obama speaking in Phoenix a little while ago.

Looking for a job? The Obama administration is looking for some qualified professionals, but applicants should be aware, a brutal vetting process is being blamed for so many administration jobs still being empty.

And these children attend the same school in Indonesia that President Obama once did. Now they're serenading Secretary of State Hillary Clinton as she delivers an important message to the world's largest majority Muslim nation.

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


BLITZER: Tomorrow, the president of the United States, Barack Obama, heads outside the country for the first time as president. He's going north to Canada.

Coming up, my exclusive interview with the prime minister of Canada, Stephen Harper. We speak about several critical issues, including a clause in the economic stimulus plan that supposedly wants only American products to be brought for reconstruction, something that's irritating folks not only in Canada, but elsewhere.

We're going to talk about that and a lot more. The exclusive interview with the prime minister of Canada coming up.

But let's check in with Zain Verjee right now. She's monitoring some other important stories incoming to THE SITUATION ROOM right now.


BLITZER: There is new word coming in that Sarah Palin has a debt to pay. Stand by to find out who she owes and why.

And the attorney general marks Black History Month by lecturing his employees about race in America.


ERIC HOLDER, ATTORNEY GENERAL: One cannot truly understand America without understanding the historical experience of black people in this nation.



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

Happening now, fixing the broken economy. A former Federal Reserve chairman says nationalizing the banks may be President Obama's best option. The chief White House economic adviser, Lawrence Summers, he's standing by live to join us here in THE SITUATION ROOM.

A frantic call for help after a pet chimp goes on the attack. Those dramatic 911 tapes, they're coming up.

And a provocative announcement from Iran. It says it's built an unmanned spy plane with a 600-mile range. That's far enough to reach Israel.

We'll have a live report.

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

President Obama's getting ready for his first foreign trip as president. Destination: Canada. It's a trip to a warm American ally, but there are some serious issues to discuss between the U.S. and Canada.

Just a short while ago, I spoke with the prime minister of Canada, Stephen Harper, in an exclusive interview.


BLITZER: Prime Minister, let's talk about some of the economic issues...


BLITZER: ... the U.S. and Canada right now.

In the economic stimulus package that President Obama signed into law -- and I'll quote from an editorial in the "Los Angeles Times" -- "The final version signed Tuesday states that only U.S. steel and other materials will be used in the public works projects funded under the $787 billion measure, unless doing so would violate existing trade agreements." The editorial was entitled "Obama to Canada: Sorry."

What do you say about that? How is that going to play in Canada?

HARPER: Well, look, this is a -- as you know, these provisions in the stimulus package have been a concern worldwide. That said, the package was modified to say that the U.S. would respect its international trade obligations. Obviously, we'll be watching the implementation of that.

In Canada, we've just proceeded with our own stimulus package. It's not quite as big as the United States, because obviously our economic difficulties at this point are not nearly as deep. But nevertheless, we have a stimulus package ourselves. We didn't impose "Buy Canada" provisions. In fact, on the contrary, we actually removed duties on some important imports, partly for our own interests, and partly to stimulate trade.

I do think, Wolf, this is a huge risk to the world right now. If there is one thing that could turn a recession into a depression, it is protectionist measures across the world.

I'm very encouraged by the fact that President Obama said that he was concerned about that as well. And I'm confident with the modifications that are made, that the administration will implement this in a responsible way that won't cause protectionist actions across the globe, because that would truly plunge us into a very long and deep economic...


BLITZER: Because the devil is in the details, as they say. If you don't like the way they implement this provision, would Canada retaliate?

HARPER: Well, look, if any country doesn't respect its obligations, Canada and other countries have recourse under international trade law. That said, Wolf, I think this is a debate we would rather avoid.

What we said at the G-20 last year, in November, was that all major economies would be committed to stimulus and would be committed to avoiding protectionist measures. I -- and part of the reason we're all committed to coordinated stimulus is we want to stimulate the global economy. We're in a global economy, not just our national economies.

If we start thinking simply nationally, and we start having policies that try and restrict the benefits only within our borders, and try and implement protectionist measures as a consequence, this will not have the effect we need to have on the global economy. And that's ultimately the global economy that's pulling most of us down, particularly countries like Canada, that aren't the source of these current economic troubles.

BLITZER: As you know, another potential thorn out there in U.S.- Canadian relations involves NAFTA, the North American Free Trade Agreement. You remember what President Obama said during the campaign about reopening perhaps some of the provisions of NAFTA.

Here is what he told the CBC this week.


OBAMA: As I've said before, NAFTA, the basic framework of the agreement, has environment and labor protections as side agreements. My argument has always been that we might as well incorporate them into the full agreement so that they're fully enforceable.

(END VIDEO CLIP) BLITZER: Are you open to reopening NAFTA, if you will?

STEPHEN HARPER, CANADIAN PRIME MINISTER: Well, I think we have to be careful what we're talking about.

Obviously, we're always prepared to look at ways to make NAFTA work better. I think, quite frankly, NAFTA and the predecessor, Canada-U.S. Free Trade Agreement, have been very good for both countries. I don't think, in any way, we're each other's trading problems. We're the biggest trade relationship in the world. It has grown exponentially on both sides under this agreement. So, I think it's all very positive.

We're always willing to look at ways it can work better. But it's a fine line between looking at ways to make it work better and actually starting to open the agreement. I think, if you actually opened the agreement, I think you would get into a negotiation that -- that would never terminate.

I'm -- I don't think that's what President Obama is looking for, but, obviously, I'm looking forward to having a discussion on -- on these kinds of trade and economic matters with him.

BLITZER: The president was complimentary to Canada on how it's been dealing with its economic crisis, especially in the banking sector.

Listen to this excerpt of what he told the CBC.


OBAMA: In the midst of this enormous economic crisis, I think Canada has shown itself to be a pretty good manager of the financial system and the economy in ways that we always -- haven't always been here in the United States.


BLITZER: All right, now, we know the Canadian economy is obviously a lot smaller than the U.S. economy.

But what have you done? What advice would you have for the U.S. in how to deal with this banking sector? Correct me if I'm wrong, has the Canadian federal government been forced to bank out the -- the major Canadian banks?

HARPER: No, we have been in -- we have gone into the financial sector, and we have done some market transactions to improve liquidity.

But the fact of the matter is, we have the strongest banking system in the world. That's what the -- I think it was the IMF that said that. We haven't had to bail out our financial institutions. But the fact is, because we're in a global financial market, their ability to lend and to lend at competitive prices has been impacted by all of this. Look, you know, it's -- it's -- it's hard for me to give advice to the United States. I would just say the -- there are some big differences here. I look at President Obama in the last few days as trying to deal with three major issues. He's got the financial sector package. He's got the housing package. And he's got the -- the economic stimulus.

In Canada, we have a -- a strong and stable banking sector, as I said, the strongest in the world. In housing, Wolf, we have, you know, a cyclical downturn, along with everybody else, but we don't have anywhere near the subprime or structural problems that you have in the United States. That's been through, quite frankly, better and more accurate regulations, and also, I think, a more conservative financial sector.

We're doing stimulus as well, but we're also doing that from a position -- a position of financial strength. Our -- our government is in a -- has been in a surplus position up until this year. We should be able to recover to a surplus position shortly, as -- as quickly as the economy recovers.

So, we're able to do the kind of stimulus that you see in the United States without -- without deteriorating our -- our debt position in the long-term.


BLITZER: We're going to have more of our exclusive interview with the prime minister of Canada coming up tomorrow right here in THE SITUATION ROOM.

There's a powerful new call for President Obama's replacement in the state Senate to step down. This hour, Senator Roland Burris feels the heat and turns up the volume on his self-defense. But questions about perjury keep coming up.

And Bill Clinton jumps into the debate over whether President Obama was right to keep his BlackBerry.

And Michelle Obama opens the White House to celebrate Black History Month and her role in it. In fact, they're singing right now at the White House. Let's listen in briefly.



BLITZER: Today, the largest newspaper in the Illinois, "The Chicago Tribune," has an editorial that simply says -- and I'm quoting now -- "Roland Burris must resign."

There are growing calls for the Illinois senator to step down, amid perceived inconsistencies in his story about getting President Obama's old Senate seat.

Let's go to Chicago. CNN's Susan Roesgen is standing by with more -- Susie.

SUSAN ROESGEN, GENERAL ASSIGNMENT CORRESPONDENT: And, Wolf, you know, "The Washington Post" is also calling for his resignation.

It -- it's because of this changing story. First, the senator said that he didn't talk to anyone in the governor's inner circle about his appointment. Then, he said he did talk to the governor's brother three times about the appointment and about fund-raising. And then now he admits that, yes, he did offer to raise some money for the governor, but he says he did nothing wrong.


SEN. ROLAND BURRIS (D), ILLINOIS: I am the real Roland. If I had done the things I have been accused of, I would be too embarrassed to stand up here in front of you, because you all are my friends.

ROESGEN (voice-over): Senator Burris defended his reputation and political life. He insists that he did not contribute to former Governor Rod Blagojevich's campaign fund, even when the governor's brother asked him to.

BURRIS: But I did not give one single dollar to the governor.

UNIDENTIFIED MALE: Come on. Back up!


ROESGEN: Senator Burris blames the media for the controversy over what he did and who he talked to before his Senate appointment. He says we reporters have let details come out in a way he doesn't like.

BURRIS: What I will no longer do after today, now that there is an ongoing investigation, is engage the media and have facts drip out in selective sound bites.

ROESGEN: But, in the end, it wasn't a reporter. It was the Chicago business people at this luncheon who asked the one question everyone wants to know.

UNIDENTIFIED MALE: Was it wrong of you to solicit funds for Rod Blagojevich at the same time he was considering you for the Senate?

UNIDENTIFIED MALE: As I said in my statement, we will not make any responses to those type questions. I said it in my statement. And we're not making any responses to that question.


ROESGEN: And today, Wolf, Senator Dick Durbin of Illinois confirmed that the Senate Ethics Committee is investigating Senator Burris. And, also, the first member of Congress is now calling for Burris' resignation. It's Illinois Congressman Phil Hare -- Wolf.

BLITZER: Susie Roesgen, in Chicago for us, thank you. Secretary of State Hillary Clinton got a taste today of her boss' life as a child.

Our foreign affairs correspondent, Jill Dougherty, is traveling with the secretary of state in Indonesia.


JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT (voice-over): Arriving in Jakarta, Indonesia...


DOUGHERTY: ... Secretary of State Hillary Clinton was serenaded by children from Besuki public school, the same Jakarta school where President Barack Obama studied in the fourth and fifth grades, when his family was living here.

A short time later, at the foreign ministry, Secretary Clinton was invoking the president's name again.

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: And I bring greetings from President Obama, who has himself said and written about the important (INAUDIBLE) time here in Indonesia as a young boy.

DOUGHERTY: Indonesia is the world's largely Muslim nation. And the Obama administration is reaching out directly to the Muslim world.

H. CLINTON: Islam, democracy and modernity not only can coexist, but thrive, together.

DOUGHERTY: A small group of protesters hit the streets in Jakarta, claiming the United States is trying to exploit Indonesia, in order to divide and conquer Muslims. But others said they were hopeful the new outreach could lead to something.

UNIDENTIFIED MALE (through translator): It's the right step in solving the problems of the Middle East and it's also a gesture to the heartland Muslim countries that the Obama administration can embrace Muslims.

DOUGHERTY: Secretary Clinton said the U.S. wants a comprehensive partnership with Indonesia on everything from climate change, to trade, to fighting terrorism.

She announced that the Peace Corps, forced out of the country in 1965, will be returning. And so will the Fulbright exchange program.

(on camera): The Obama name seems to be opening doors and maybe some minds here in Indonesia. The foreign minister said, President Obama has a very strong constituency here, of course, he added, without the right to vote.

Jill Dougherty, CNN, Jakarta.

(END VIDEOTAPE) BLITZER: The nation's first African-American attorney general lets loose some harsh words about the U.S.


ERIC HOLDER, ATTORNEY GENERAL DESIGNATE: Though this nation has probably thought of itself as an ethnic melting pot, in things racial, we have always been and we, I believe, continue to be, in too many ways, essentially, a nation of cowards.


BLITZER: Do you agree with the attorney general, Eric Holder?

And just try and walk a mile in this shoe. President Obama gets some fancy foot -- footwear from a very famous man.


BLITZER: What a difference a few weeks make. In the days after the election, then president-elect Barack Obama announced nominations seemingly every day. No so these days.

Our senior political analyst, Bill Schneider, is standing by.

Bill, as we all know, the Obama team got off to a very fast start, but it's slowed down a bit in more recent days. What happened?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: What happened? Everything slowed down.


SCHNEIDER (voice-over): The Obama team promised to hit the ground running. And they did, naming political appointees at a record pace -- at first. Then, suddenly, near the end of last year, the announcements slowed down.

Michael Feldman was a White House official during the Clinton transition of '92-'93.

MICHAEL FELDMAN, FOUNDING PARTNER, THE GLOVER PARK GROUP: To some extent, they're trying to build a plane and fly it at the same time, so there's no analog for what this administration's going through.

SCHNEIDER: So far, the Obama administration has announced 56 names for nearly 500 high-level appointments. Twenty-nine have been confirmed by the Senate. That's actually a faster pace than the last two presidents.

But some key positions remain unfilled. Three Cabinet chairs are still vacant. The Obama administration is waiting to unveil a new health care initiative, but there's no health and human services secretary. Secretary of State Hillary Clinton went to China to discuss new policies on global warming, but only out of 14 appointees at the Environmental Protection Agency has been confirmed.

Also vacant, FEMA director, with tornado season upon us, after a disastrous ice storm shut down much of Kentucky. One reason things are stalled, the vetting process has gotten tougher.

FELDMAN: There's also the political media industrial complex that is scrutinizing every appointee and everybody's record as they move through the process.

SCHNEIDER: All this takes place at a time of economic crisis, when federal spending and regulation are expanding.

FELDMAN: And this administration has set a very high bar. And, to their credit, they're filling these positions, and they're doing so at an unprecedented level of scrutiny, and at a time when things are moving much more quickly.


SCHNEIDER: In an interview with CNN, New York University Professor Paul Light, an expert on transition, described what he called a -- quote -- "brutal vetting process." Potential appointees have to answer a 63-item questionnaire about their record. Even e- mails are scrutinized. Yikes.

BLITZER: Yes. It's -- it's discouraging a lot of good folks, presumably, as well, from even applying for those kinds of jobs.

Thanks very much, Bill Schneider.

The attorney general of the United States, Eric Holder, had some strong words to say about race in this country, this being Black History Month.

Let's talk about that and more in our "Strategy Session."

Joining us now, the Democratic strategist Jamal Simmons and conservative commentator Terry Jeffrey. He's the editor in chief of the Cybercast News Service.

Let me play the sound bite from Eric Holder earlier today, speaking to employees over at the Justice Department.


HOLDER: Though this nation has probably thought of itself as an ethnic melting pot, in things racial, we have always been and we, I believe, continue to be, in too many ways, essentially, a nation of cowards.

Though race-related issues continue to occupy a significant portion of our political discussion, and though there remain many unresolved racial issues in this nation, we, average Americans, simply do not talk enough with each other about things racial.

(END VIDEO CLIP) BLITZER: All right, what do you think, Jamal? Fair point?


He's making the point that, as Americans, we don't talk enough about -- about race relations. If we think about where we were as a country maybe even 100 years ago, with people like WEB Du Bois, who wrote the problem of America is a problem with the color line. That would be the problem of the 20th century.

Remember when Barack Obama gave that speech in Philadelphia last April? And one of the reasons why people responded so well to that speech was because he took the issue of race head on and talked about how we are all implicated in some ways in our -- in this racial story. And the fact that he had such an adult conversation about race in the public eye, people respond to it very well, partially because you don't hear it that often.

BLITZER: What do you think, Terry?

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: You know, with all due respect, I think General Holder's exactly wrong.

I think, you know, if you look at American history, it's quite clear we had a huge problem with race in this country. The first nine decades our national existence, we had legalized slavery. We got rid of it. One hundred years after that, we had legalized segregation. We got rid of it.

Wolf, only 45 years after Martin Luther King's March on Washington, when he gave that "I Have a Dream" speech on the steps of Lincoln Memorial, at the other end of the Mall, the first African- American president took the oath of office, because the American people elected him.

The story of our country is triumph over racism. It's about racial justice.

BLITZER: But I think what he was trying to say, if you listen to the entire excerpt, he was trying to say, we don't talk enough about it one on one with individuals.

If you and Jamal were to go out to dinner, you would talk about politics, you would talk about all sorts of things, but you might want to avoid sensitive issues like race relations.

JEFFREY: But wouldn't that be a bore?

BLITZER: I think that's the point.


BLITZER: It might be a bore, but I think that's the point he was trying to make, right?


JEFFREY: Let's talk about things we enjoy...


SIMMONS: I think that is the point he was trying to make.

And the one time race really only got -- it really became a part of the last presidential campaign twice, once when Barack Obama had to talk about it in regards to his former pastor, and the second time when the Bush administration said that he was playing the race card and because he said he's a skinny kid from Chicago with a funny name, and people may try to scare you about that.

So, we have not had a lot of discussion about it. We didn't even have it when we elected Barack Obama.

BLITZER: But that, in part, Barack Obama's decision.

Unlike Al Sharpton, for example, when he ran for president...

SIMMONS: Absolutely.

BLITZER: ... or Jesse Jackson, he tried to avoid those discussions about his race.

JEFFREY: Well, it's a good thing.

I mean, we don't need to talk about it all the time. Look, when there is real racial injustice, it needs to be dealt with and solved. Otherwise, we don't need to have a national obsession with race. The whole point of Martin Luther King's "I Have a Dream" speech is, we ought to have a colorblind society, which means we're not sitting around obsessing about the color of people's skin all the time.


BLITZER: If his goal was to be provocative, Eric Holder, I think he did have a provocative -- a provocative statement that will generate some discussion.


SIMMONS: And I will agree with Terry that the election of Barack Obama was a triumph over race.

But to argue that we no longer have anything else to talk about, I the, is making it...


BLITZER: You will agree there are still racial problems out there?

JEFFREY: Yes, there are. And you're never going to have a society that's without racists. There's always going to be some somewhere, because human beings are imperfect.

But I think America is a model for a nation that is multiethnic, and people have equal justice under law, and, basically, we get along.

SIMMONS: Hear, hear.

BLITZER: All right, guys.


BLITZER: Let's -- let's hope that -- that happens.


BLITZER: Thanks, guys, very much.

They're both members of an elite club, but has President Obama given Bill Clinton the green light to contact him on his super-secret new BlackBerry?

And, later, Iran is bragging about a potential weapon and how it could reach Israel or even beyond.

And we will hear from Michelle Obama, the first lady, opening up the White House for a celebration very close to her heart. It's Black History Month right now in the United States.


BLITZER: President Obama has some big shoes to fill. Well, let's say one big shoe. It's the size 23 sneaker of the Phoenix Suns center Shaquille O'Neal. The personally autographed shoe was waiting for the president when he landed in Phoenix today. Shaq couldn't be there himself, so the Phoenix mayor's young son presented the gift.

The basketball fan in chief was all smiles, comparing the supersized sneaker to his own, much smaller footwear.

On our "Political Ticker" right now: Alaska officials reportedly have determined that the governor, Sarah Palin, must pay thousands -- thousands -- of dollars of back taxes on expense money she charged the state while living at her Wasilla home.

The payments were a very touchy issue during the vice presidential bid, since Sarah Palin ran as a budget watchdog. "The Anchorage Daily News" quotes a Palin spokeswoman as saying, the exact amount of taxes the governor owes is a private matter.

The governor's office won't say if Palin will continue to receive an allowance for meals and incidentals while staying at her home, instead of the governor's mansion.

New evidence that President Obama is very selective about who gets to contact him on his BlackBerry. CNN's Larry King asked a certain former president and husband of a certain secretary of state if he's in electronic contact with the president. (BEGIN VIDEO CLIP, "LARRY KING LIVE")

LARRY KING, HOST, "LARRY KING LIVE": We keep hearing about -- we're going to touch other bases here -- Obama's BlackBerry, and he got a special BlackBerry now that doesn't have to be recorded into the White House.

Do you have the number?


The fact that he got one that is secure and sort of off-the-books is good, because every president needs some way of communicating with people who know you personally and are outside the loop. People that grew up with you and care about you, but don't have to pretend because you're president, are very important.

So, I'm glad he's got some way of letting the people he cares about communicate directly with him.


BLITZER: President Clinton speaking to CNN's Larry King last night.

Remember, for the latest political news any time, check out

Let's check in with Jack Cafferty again for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: What was that line from Palin's office? The amount of taxes she owes is a private matter?

BLITZER: That's what they said, her spokeswoman.

CAFFERTY: It's tax money. That's my money and your money. And she's a public official. Where do they get off with that kind of nonsense?

BLITZER: That was the -- that was the statement coming in from her spokeswoman.


CAFFERTY: Yes, well, there's -- there's a word for what that statement is. The initials are B. and the other one is -- well, the question is, is a prolonged American military presence in Afghanistan a good idea?

Matthew in New York: "A prolonged military presence in any area is never a good idea. I wouldn't want the Afghan army in my country for one day, let alone months or years. I know we have to try and sort that region out and clean up the mess that we made, but let's keep it brief." Wesley in Atlanta: "Of course we need more troops in Afghanistan. The Bush administration took their eye off the situation there and invaded Iraq. And now that the situation there is a lot better" -- in Iraq -- "it's time to finish the job in the right war" -- in Afghanistan.

Ryan says: "If we just push the Taliban back into Pakistan, and Pakistan can't or won't put the same pressure on them, then what's the point? I thought we declared a war on terror anywhere on the planet -- except where the terrorists are, I guess."

Michael in Toronto says: "If Obama says it's a good idea, then it must be a good idea. 'The One' should never be questioned. I'm glad 'The One' doesn't play a role in Canadian foreign policy. Canada is getting out of Afghanistan next year."

Patrick in Austin, Texas: "The U.N. should be leading that effort, not the U.S. We ought to have some forces there, but we should not carry the burden of rebuilding this country. If they want to be free, they ought to fight for it, like we did."

Lawrence in Illinois: "Bring them home" -- the troops. "Why do we feel we need to meddle in everyone's business? We are not wanted there either, just like we were not wanted in Iraq."

And Sly in Alpena, Michigan, says: "Let us not forget 9/11 and who was responsible for it."

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

Maybe we will do a question tomorrow about whether Sarah Palin's office ought to tell the world how much she owes in back taxes.

BLITZER: I think you will.

CAFFERTY: I believe I will.


OK, Jack, thank you.

To our viewers, you're in THE SITUATION ROOM.