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Discussing the Economy; Examining Pet Projects; Troops Remain in Iraq; How Can the US Deal with Pakistan?

Aired March 7, 2009 - 18:00   ET


WOLF BLITZER, HOST: Money for 8,000 pet programs in Congress's spending bill. Democratic senator Russ Feingold is outraged, but Republican representative Peter King is defending them. We're going to hear them both. Plus, a reality check from "The Economist's" Mark Zandi.

Also, an urgent warning on global warming. Act now or else. Former British Prime Minister Tony Blaire calls the threat clear and obvious and says action could even help the global economic crisis. He joins us this hour.

Plus, tens of thousands of U.S. troops in Iraq until 2015. A Pulitzer prize-winning author says the war may only be half over and what will be the end result? I'll ask Thomas Ricks of "The Washington Post."

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: I can promise you that this is just the beginning of a new way of doing business here in Washington because the American people have every right to expect and to demand a government that is more efficient, more accountable, and more responsible in keeping the public's trust. (END VIDEO CLIP)

BLITZER: Another attempt by President Obama this week to portray himself as commander in chief of fiscal responsibility. But Democratic Senator Russ Feingold and other reform advocates say wasteful spending and pet projects still are rampant, right here in Washington.


BLITZER: Senator, thanks very much for coming in.

FEINGOLD: Good to be on the show, Wolf.

BLITZER: We saw you and Senator McCain together, Feingold/McCain, McCain/Feingold, reunited again. This time, you're talking about a line item veto that the president would be able to use to eliminate sort of the pork, the earmarks, as they're called.

What's going on right now? Because the U.S. Supreme Court ruled that line item veto unconstitutional years ago. FEINGOLD: And don't forget Congressman Paul Ryan also of Janesville, Wisconsin, like me, he joined with me on this. The three of us believe that we can pass a form of line item veto that will not have the problems that the Supreme Court identified. And the reason is, is that the bill we put forward would say when the president identifies things he wants to cut from a bill of earmarks, both the House and the Senate would have to pass a bill saying yes, we want to do that, and then the president would have to sign it.

So it would actually be passed by Congress, signed by the president, and that gets around, I think, the problem that the Supreme Court had with the earlier line item veto that John McCain led on and that I supported. So that's something that Congressman Ryan and McCain and I have worked together to resolve the issue.

BLITZER: And this would eliminate -- give the president an opportunity to veto parts of a spending bill without necessarily vetoing the whole thing.

Is President Obama on board with you?

FEINGOLD: We had two excellent indications from the president's press secretary on this.

First of all, he said he wanted to give something like this a test drive when he was asked about it the other day, Mr. Gibbs did. And today, I understand he said if this thing comes to his desk, he's going to sign it. I'd like to see the president openly advocate for it, because he needs the ability to be able to put some pressure on members of Congress to stop putting these huge numbers of earmarks in these bills.

There's 8,500 or 9,000 earmarks in this omnibus bill alone, some $7 billion worth. And I think the president would be very grateful to have this power, and I'm hoping for his help on this issue.

BLITZER: As you know, a lot of members of Congress, senators and members of the House, they love this kind of earmark spending because it directs money to specific projects that they strongly support. Steny Hoyer, the number two Democrat in the House, told "The Washington Times," "I don't think the White House has the ability to tell us what to do. I hope all of you got that down."

Why shouldn't an equal branch of government, like the Congress, be able to direct spending, as opposed to some anonymous bureaucrat in the executive branch of government?

FEINGOLD: Well, the Congress can direct spending. They just have to go through the appropriate legislative process, which is to authorize spending, to appropriate it, to not have something that is just thrown in at the last minute.

That is the monkey business we have to get rid of. Congress can do whatever it wants, in terms of approving spending. But it should authorize it first. And that is the reason why you have earmark reform, because earmarks get around the process where Congress actually does its job of truly reviewing a piece of legislation.

And, by the way, this bill that we're proposing here is completely consistent with everything the president said as a candidate and now. He was one of the senators that helped us do earmark reform. He was one of the key guys who said, look, we should identify these projects, which we did last year. In other words, they're tied to a person's name now.

BLITZER: But you know -- you know...

FEINGOLD: And he was already very successful in making sure the stimulus package had no earmarks on it as it's defined. So, it's very consistent with the president's philosophy to continue down this road.

BLITZER: But he is going to sign this spending bill into law. And he says, maybe down the road, they will be able to change the rules of the game. You want him to veto this $400 billion bill, because of all these earmarks; is that right?

FEINGOLD: First of all, I don't think we should pass it this way.

My second choice would be to have the president veto it and say clean it up and do it over. If that doesn't happen, I think what he should do -- and I have given this -- with all respect, this advice -- he should lay down a policy, and say, OK, we had to do this. This was stuff from last year. But we -- from now on, don't send me appropriations bills with earmarks, or I will send it back to you.

I would love to see him say that. And he could really turn this whole issue around that he's been really a great leader on, both as a candidate. And now, as president, he's already caused the largest bill in American history to be earmark-free. That was his leadership. And all I'm asking is that he continues it.

BLITZER: As you know, the president, either late this year or early next year, is going to start drawing down troop levels in Iraq, going down to between 35,000 and 50,000 troops at the end of August of next year.

Is that what you brought into when you were supporting the president as far as Iraq is concerned?

FEINGOLD: Well, it's a real big change, obviously, from the previous administration. This president has specifically endorsed a set timetable, exactly what I was the first senator to propose years ago. It's not the fastest timetable you can imagine, but it certainly is a timetable.

I do not agree, however, necessarily with keeping 50,000 troops there. I think it's just too many. I think less would be enough for the real purposes that we need, which is force protection and counterterrorism. I don't buy into this idea that we should keep 50,000 Americans over there training Iraqi troops.

I think that's unfortunate. But, overall, this is a major change in policy that the president said he would do. And I'm pleased that much of it is positive.

BLITZER: As far as Afghanistan is concerned, they're moving an additional 17,000 troops into Afghanistan, even before they have had a formal review of the strategy. You want the strategy review first and then make a decision about troop levels, but they have gone in the opposite direction.

FEINGOLD: I can't say it any better. I think it's unfortunate, given the fact that this review is under way, which will be undertaken by some distinguished people that the president have brought together, that we have got Mr. Holbrooke in the region looking around. General Petraeus is doing a review with some 300 people of his view on this.

These viewpoints should be brought together and brought to the president before we send in 17,000 more troops. I have asked many questions about this of many experts, former generals, former admirals. And all of them give me a different answer as to what the purpose of these troops are.

And nobody's really considering adequately the problem that this does enhance the feeling in Afghanistan that we may be occupying that country for too long. There's not a clear analysis of what happens in terms of pushing the Taliban into Pakistan, which may actually cause things to get worse in a place that's even more dangerous. So, it's fraught with problems. And I think the review should go before -- before we send all the troops over there.

BLITZER: What about this move by some of your colleagues in the Senate and the House to have what they call a truth and reconciliation commission, if you will, to review controversial decisions by the Bush administration, especially the Justice Department, on enhanced interrogation techniques, rendition, stuff like that?

The president was sort of lukewarm about all of this. Listen to what he said just recently.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So, I will take a look at Senator Leahy's proposal. But my general orientation is to say, let's get it right moving forward.

BLITZER: I guess he wants to look forward, rather than look back.

Are you among those who want to look back?

FEINGOLD: Oh, we do have to principally look ahead, but I think Chairman Leahy has figured out a great idea here.

Instead of getting bogged down in all kinds of hearings that will last forever, what he says is, let's have a truth commission that can tell the story. And I think it's a great idea. I think it's exactly the kind of middle road at this point that allows for potential prosecutions, if necessary, does not bog us down and get us away from our main task, but does provide some accountability.

And I had the pleasure of testifying on behalf of Senator Leahy's truth commission today. I think it's an excellent idea. BLITZER: We will leave it on that note. Senator, thanks very much for coming in.

FEINGOLD: Thanks, Wolf.

BLITZER: Senator Russ Feingold of Wisconsin.


And up ahead, that spending on pet projects under fire, but one top Republican congressman is strongly defending the practice. Peter King is here to explain why he's at odds with John McCain, a man he supported for president.

Also, is the president's agenda simply too ambitious? I'll ask a former leader who also sought some major changes for his country. We're talking about the former British Prime Minister Tony Blair. He's here this hour.

And I'll ask "The Economists" Mark Zandi about his disturbing forecast. He says potentially it could be a decade before the Dow gets back to 12,000.

President Obama says reforming health care could help.


OBAMA: By a wide margin, the biggest threat to our nation's balance sheet is the skyrocketing cost of health care. It's not even close.




REP. NANCY PELOSI (D), HOUSE SPEAKER: I do certainly agree with the president that we need to try to have fewer -- fewer earmarks, that we have transparency and accountability. And in fact, that is what we did last year.

SEN. JOHM MCCAIN (R), ARIZONA: This bill is one of the first examples among what will be many of whether this Congress and this new president are serious about fiscal responsibility. I'm not encouraged by this bill to say the least.


BLITZER: The $410 billion spending bill includes some 8,000 pet projects added by lawmakers to benefit their districts or their states. They're drawing a lot of criticism, but one lawmaker definitely is not backing down. (BEGIN VIDEOTAPE)

BLITZER: And joining us now from Capitol Hill, Republican Congressman Peter King. Congressman, you disagree totally with your friend, John McCain, over these earmarks. You support the earmarks, he opposes them. He says that these earmarks are an outrageous insult to the American people. You and some colleagues from New York, you support about $218 million in this current spending bill. Why is he wrong and you are right?

REP. PETER KING, (R) NEW YORK: This is a very honest disagreement between me and John McCain. I believe that responsible earmarks are an absolutely essential part of my job as a member of congress. Because if I don't earmark for my district, some faceless bureaucrat in the administration, and a democratic administration, is going to be deciding how money is spent in the third congressional district. I believe as the elected representative I have a much better feel and knowledge as to what's needed. I will defend every earmark that I've gotten from my district for the state and for the region. Now, there's no doubt there are earmarks that are wrong that are bloated and they should be exposed. There are abuses every. We have abuses in the defense department. We won't stop all defense spending. I will stand by my earmarks, I think they're essential. They're in transportation, they're in health care and they're really vital.

BLITZER: Do you agree with him or disagree with Senator McCain? He teamed up this week with Democratic Senator Russ Feingold of Wisconsin to come up with a new line item veto that would allow President Obama to go through these spending bills and veto line by line some of these earmarks. And they think they have a new way to do it that would past muster with the U.S. Supreme Court. Should the president have this line item veto?

KING: I have very serious doubts about that. I believe that we are giving the president too much power over the legislative body. If you have a president who was doing his job, yes, he may be able to spot areas of abuse. On the other hand, it gives the president extraordinary power to intimidate and in fact shake down a member of congress, saying if you don't support me on this bill, I'm going to knock out the hospital for your district or knock out the health care facility or knock out the school aid for your district. So I'm very concerned about giving the executive that much power of the legislature. And to me it really does violate the separation of power. So I have real concerns about it.

BLITZER: All right, so in other words you disagree with Senator McCain on -- even though you supported him for president, all of us remember.

KING: Absolutely.

BLITZER: Let's talk about health care for a moment. You oppose the president on his economic stimulus package. Are you ready to work with him to reform the nation's health care system?

KING: First of all I believe we have to work with the president. We have to find a way to work with him. I have great regard for the integrity of President Obama. I probably have serious differences about where he wants to go. Having said that, I believe on issues like health care and others, we have to sit down at the table and try to work with him. I believe the president might be more agreeable to that than the democratic leaders who certainly with the stimulus bill tried to ram it through just by having it done themselves. But no, in the end it may be hard for me to agree with President Obama, but let's give it a try, let's sit down and try to find some common areas, especially in New York, where we have real Medicaid issues, we do have serious health care issues. Again, I want to find a way to work with him, maybe improve his bill, find some way to find common ground. I think we make the mistake as republicans, if we try to demonize the president.

BLITZER: Do you hope he succeeds or fails? KING: I hope he succeeds in bringing the country forward, I don't want him to set up what I consider a European social democracy. But having said that, I want the economy to come back. I want us to win in Iraq, I want us to win in Afghanistan. And unlike democrats who opposed President Bush and Iraq or republicans who opposed President Clinton in Bosnia, I think as Americans, we have to make sure, do all we can to make sure that the president succeeds. Because if he succeeds, the country succeeds and that's where I have a disagreement with Rush Limbaugh and the terminology he uses.

BLITZER: What about this commission of inquiry that Senator Leahy, Senator Feingold, some other democrats in the senate, some in the house want to review some of the more controversial decisions of the Bush administration, especially interrogation techniques at Guantanamo Bay. Do you think it's important to go back and review all that right now to learn from the mistakes?

KING: Well I'm actually opposed to it. In fact if anything I think we can learn from the successes. Let's face it, I've been to Guantanamo. I think the president's making a mistake in shutting it down. The reality is, we have not been attacked in seven and a half years because of the measures that President Bush enacted. Listen, if we want to have some differences and change policies, I think we can do that behind closed doors.

Rather than letting our enemy know what our tactics and procedures were, I think Senator Leahy was wrong. Even using a term like Truth Commission, that sort of compares us to South Africa where 20,000 people were killed. The fact is, as far as I know, you have three people water boarded and that saved the lives of thousands of thousands of Americans. I think we did the right thing in doing it.

BLITZER: Are you going to run for that senate seat in New York state in 2010 against the democratic Senator Kirsten Gillibrand who took over for Hillary Clinton?

KING: I definitely would have run against Caroline Kennedy. I will very likely run against Kirsten Gillibrand. It's a question I will decide by the summer whether or not I believe I can raise the money, it will be about 35 to $40 million. I think she's very vulnerable and I would love to make that run, yes.

BLITZER: Congressman thanks for coming in.

KING: Thank you Wolf.

(END VIDEOTAPE) BLITZER: The president isn't sugarcoating his words when it comes to the economic crisis.


OBAMA: I want to begin with some plain talk. The economy's performance in the last quarter of 2008 was the worst in over 25 years. And frankly, the first quarter of this year holds out little promise for better returns.


BLITZER: Mr. Obama says we need long-term results. What does that mean for Americans struggling right now? An economic reality check, that's coming up next.

And pressing the reset button. The threat that has the U.S. reaching out to Russia. And what America might have to give up in exchange. Stay with us, you're in THE SITUATION ROOM.



OBAMA: What I'm looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day. And if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.


BLITZER: The president may try to take the day-to-day fluctuations of the stock market in stride, but that's easier said than done for a lot of Americans as the Dow Jones Industrials plunged well below 7,000 this past week, a level not seen since the late 1990s.

Joining us now is Mark Zandi of Moody's Mark, thanks very much for coming in.

MARK ZANDI: Thanks for having me.

BLITZER: I want to get to the stock market in a moment, but the jobs numbers, another 651,000 jobs lost last month alone. What, 4 million jobs lost over the last year or so. How much longer is this slide going to continue?

ZANDI: You know, I think these kind of job losses will continue for at least the next three, perhaps six months -- that it will take that long before some of these policy responses really engage and begin to help our economy.

And, unfortunately, we're feeling the fallout from the financial panic and crisis that hit late last year. And until those policies kick in, I'm afraid we're going to experience these kind of losses. BLITZER: So maybe over the next six months another million -- 1.2 million jobs lost, is that what your fear is?

ZANDI: Yes. Well, we're down 4.4 million since we started losing jobs a little over a year ago. I think we could easily lose a couple more million in the next three to six months.

BLITZER: Eight percent or so, the unemployment rate right now.

How high is number that likely to go?

ZANDI: Well, I think 10 percent -- I think that now seems likely. And that probably won't happen until -- all the way into the spring and summer of 2010. So all indications are that the job market is in for a rough ride.

BLITZER: You think -- and correct me if I'm wrong -- that the country is going to need another stimulus package, beyond this one that was just passed, in order to do more to turn this economy around?

ZANDI: Yes, I'm afraid so. You know, the $800 billion package that was signed into law -- you know, it was a good package -- a reasonably good-sized package, pretty well designed. I think it will be helpful. We'll see that later in the year. But if I were constructing it, I would have made it larger. And I think ultimately we will have to come up with another stimulus plan.

BLITZER: Where is all this money coming from? ZANDI: We're borrowing it. Fortunately, global investors are willing to lend it to us at low interest rates. The 10-year Treasury yield is 3 percent and that's a low rate. So we have a window to borrow, because, frankly, no one else is borrowing. There's no private borrowing. And global investors don't know where else to put their money.

We're the cause of this mess, but we're still the AAA credit on the planet. Nowhere else better to go when you're in trouble than into the United States. And we're beneficiaries of that.

But having said all that, if we don't start making some real concrete progress in reducing our deficits in the long run -- after we get on the other side of this crisis -- then we're going to have a problem.

BLITZER: The Dow Jones, back in October of 2007, was over 14000. Now it's well below 7000. People are wondering when it's going to bounce back. And you think it could take a long, long time.

ZANDI: Well, to get back to 14000 is going to take a long, long time -- probably a decade. I mean it -- if I were -- if you're doing prudent planning, you probably should expect annualized stock returns of somewhere between six, seven percent per annum. Now, that's not going to happen now, in '09. But over a 10 year period, I think that's a reasonably good forecast. That's what pension funds use when they do their planning.

And if you assume seven percent every year for 10 years, you get back to 14000 from where the stock market is today. BLITZER: Is it your fear that the markets have not yet hit rock bottom -- that this number right now, under 7000, it could go down to 6000 or 5000 or even lower?

ZANDI: It's possible. But you know, I don't think so. I think that the market -- the stock market investors are expecting a lot of very bad news. You know, these numbers I'm giving you with respect to employment and jobs and all that is -- is already baked into the cake. Investors already know this and expect this. So we're expecting a lot of very bad news.

The other thing to consider is that 7000 -- you know, we're back to levels we haven't seen since the mid-1990s. But our economy and the entire global economy is measurably larger than it was 10 years ago. And, yes, it is going to shrink in this recession and downturn. But I think the market is -- is oversold, over done.

Now, that doesn't mean it can't go lower in the next week, the next month, the next quarter. But I do think we're going to be able to draw a line through this period, ultimately, and say that this was the bottom.

BLITZER: Is the president taking on too much by trying to reform health care right now instead of simply focusing in like a laser beam solely on the economy? ZANDI: Well, you have to give him credit for being ambitious. And he's absolutely right, if we're going to address our long-term fiscal situation, we have to reign in the growth in health care costs. If we don't do that, nothing else is really going to matter. We're going to break the budget and we're going to have huge deficits ad infinitum into the future.

So I think it is appropriate to focus on it. Having said that, it's going to be incredibly difficult to solve this problem in a short period of time. And this country really needs a win. We need a win. We need to focus on something that we can say we succeeded.

And so, hopefully, he can pick a couple of other battles that he knows he can win and actually win them.

BLITZER: Let's see if he can do that.

Mark Zandi of Moody's

Mark, thanks for coming in.

ZANDI: Thank you.


BLITZER: The Secretary of State says the time to push forward with Middle East peace is now.


HILLARY CLINTON, SECRETARY OF STATE: Time is of the essence. We cannot afford more setbacks and delays or regrets about what might have been had different decisions been made. And now it's not the time for recriminations. It is time to look ahead.


BLITZER: Hillary Clinton travels to the region. The Middle East envoy Tony Blair is just back. He explains why what happens in the Middle East can impact your security both here in the United States and around the world.

And a Pulitzer prize-winning author's eye-popping words. He calls Iraq the worst foreign policy decision in U.S. history. And get this, he says a Saddam Hussein-like figure could take over in Iraq. Thomas Ricks is here to explain. Stay with us. You're in THE SITUATION ROOM.


OBAMA: Throughout our history, there's been a tension between those who sought to conserve our natural resources for the benefit of future generations and those who have sought to profit from these resources. But I'm here to tell you, this is a false choice. With smart, sustainable policies, we can grow our economy today and preserve the environment for ourselves, our children, and our grandchildren. That is what we must do.


BLITZER: Even as the world is rocked by a global economic crisis, President Obama makes it clear the issue of global warming cannot be put on the back burner. That message also being pushed by one of the world's leaders on that and other issues.


BLITZER: And joining us now from Capitol Hill, the former prime minister of Britain, Tony Blair.

Prime Minister, thanks for coming in.

BLAIR: Thanks, Wolf.

BLITZER: At the time of this extraordinary economic distress, not only hear in the United States, but around the world, why go forward right now as a priority with all of these global warming- related projects? It seems there's so many other key bread and butter issues literally on the table.

BLAIR: Well, there are lots of challenges. There's the global economic crisis, there's what's happening in the Middle East, there's security issues around the world. Of course, all of these challenges are there, but so is the challenge of global warming. And the signs haven't changed.

Indeed, it's become even more unequivocal. The climate is changing. The threat is clear and obvious.

But I think there's another reason as well. As we contemplate stimulus packages to help our economy, isn't it sensible to be investing for the future in clean technology, so that when our economies begin to grow again strongly, they're going to grow again in a sustainable way?

And around the world now there are examples of thousands -- indeed, hundreds of thousands -- of jobs being created in new clean technology. So I think this is a time to seize the opportunity. And in any event, we have no option because the climate is changing.

BLITZER: Is it wise to go ahead and effectively impose a new tax on consumers right now, an energy-related tax, this cap and trade, if you will, to try to reduce carbon emissions right now? In effect, that's going to be higher costs for consumers who use either gasoline or other electricity, forms of energy. Is that wise at a time of economic distress?

BLAIR: Well, it's not just about imposing a burden. It's actually about giving people an opportunity, too.

If, for example, you have a major energy efficiency program -- and part of that is part of the stimulus package that's being proposed here in the U.S. at the moment -- then actually people can cut their electricity bills. We were hearing from businesspeople, American power companies, businesspeople, people who are there to make a profit, but also say how by introducing energy-saving devices, the consumer could actually cut the amount of money it was paying on its energy bills.

So there are opportunities here as well. I mean, yes, of course, there are big challenges, but there are opportunities. And if you think going forward if we don't resolve this problem, and we end up with major climate change happening, it's going to impact here, and it's going to impact right around the world and, of course, impose its own cause. Indeed, we were presented with a study this morning showing how much more we would have to pay if we do not deal with these major environmental and weather change problems. BLITZER: So you say do it now, even despite all the economic issues.

Let me move on and pick your brain on Gaza, because I know you were just there, you went in following the Israeli war, in effect, with Hamas there. Explain why you believe it's important for the U.S. to go ahead and provide hundreds of millions of dollars to Palestinians in Gaza right now at a time when the whole Middle East seems so uncertain and at a time of such economic dislocation here at home.

BLAIR: I think the one thing we know about all these problems -- and global warming is an example, but actually, the Middle East peace process is an even more stark example -- is that even though they may be happening a long, long way away -- and I was in Gaza less than 48 hours ago -- their impact in terms of security and stability are not just felt in that region. It's felt right around the world, and back here as well.

So if you look at the issues we're facing, for example, in Afghanistan, the questions to do with Pakistan, or Iran, or Iraq, actually, they're all linked, in a sense, because all of them are about whether we can create a Middle East -- a wider Middle East of security and stability. And solving this Israel/Palestine question is absolutely at the heart of doing that. If we do that, we've got a better chance of stability. If we don't, we will get instability, which is what we've had.

BLITZER: Is it wise for the U.S. to be encouraging Russia to play a more essential role in preventing Iran from developing nuclear weapons, long-range missiles? In exchange, the U.S. would consider abandoning any missile defense shield base inside Europe.

BLAIR: Well, I'm less qualified to talk about what happens on the missile defense shield, but yes, it certainly is wise to encourage Russia to play a full part in making sure that we have a unified international position.


BLITZER: But does that quid pro quo work for you? In other words, the U.S. abandons the missile defense shield in Poland, in the Czech Republic, which the Bush administration wanted to go forward, if the Russians use their influence with Iran to stop Iran from developing a nuclear bonds.

BLAIR: These are decisions, for example, of our national missile defense that I think America's got to make -- the administration has got to make on its own terms, as it were. But what I am saying to you is I think a relationship between U.S. and Russia which promotes the chance of a unified position in the face of Iran's desire to acquire nuclear capability, yes, that is really, really important.

Now, what the U.S. then does about missile defense, that's a matter for you guys here. But in my view, again, looking at the Middle East, where I spend a lot of my time, the Iranian influence there used at the moment negatively the Iranian desire to acquire nuclear weapons capability. These are major, major security threats to the region. So trying to make sure we've got a united international position with Russia on side, that's certainly a very, very top priority indeed.

BLITZER: Looking in from the outside, President Obama, he's trying to do so much in his first weeks in office. Is he overreaching right now?

BLAIR: No, because I'm afraid the problem when you are a president or a prime minister is that you don't, I'm afraid, get to determine the problems that are there. You get to determine or have a chance to determine the solutions, but the problems are there, whether you like them or not. And therefore, yes, we've got a major economic crisis, but we've also got a major security threat, and we've got the long- term question of global warming.

So it would be neat in a way to say let's deal with the global economic crisis first, then move on to the security threat, then deal with global warming. I'm afraid they're all there. And that's why, no, I think, actually, on the contrary, by taking a very bold, assertive line right from the beginning I think his leadership is giving some people hope that these problems that are major and difficult, difficult challenges to meet, will be met.

BLITZER: And add to that a redoing the nation's health care system, education, energy independence. It's a huge, huge agenda that he has.

Prime Minister, always good to speak with you. Thanks for coming in.

BLAIR: Thank you, Wolf. Thanks.


BLITZER: In Iraq, thousands of Americans have died, hundreds of billions of dollars have been spent. But one expert now warning Iraq could end up as it was.


UNIDENTIFIED MALE: It's probably not going to be a democracy, it's probably not going to be that stable. The best-case scenario is probably a strong man, probably like Saddam Hussein.


BLITZER: A Saddam Hussein-like figure possibly taking over in Iraq? The Pulitzer prize-winning author Thomas Ricks is here to explain that shocking thought.

Plus, you're going to find out what CNN's Fareed Zakaria says is the most dangerous country in the world right now. He's here to explain. And why all of us should be very worried. Stay with us.



OBAMA: As commander in chief, I will do whatever it takes to defend the American people, which is why we've increased funding for the best military in the history of the world. We'll make new investments in 21st century capabilities to meet new strategic challenges. And we will always give our men and women in uniform the equipment and the support that they need to get the job done.


BLITZER: One expert and longtime observer thinks the key job for American troops is far from done. That would be the war in Iraq. (BEGIN VIDEOTAPE)

BLITZER: And joining us now is Thomas Ricks. He's author of the brand-new best seller "The Gamble." He's a "Washington Post" reporter, also a senior fellow at the Center for New American Security.

Tom, thanks very much for coming in.

THOMAS RICKS: You're welcome.

BLITZER: This is a really powerful book. Your last book got you the Pulitzer Prize, among other things. Let's talk about the war in Iraq. We're not hearing a lot about it. There's an assumption that things are going in the right direction and it's all but over. You don't believe that, do you?

RICKS: Well, I think the message of my book, "Fiasco," the last book, was that Iraq was in terrible shape, much worse than you thought. The message of this book, I think that is Iraq is not in as good as shape people think. The war's not over. I think we'll be fighting there for a long time to come.

BLITZER: Your suggestion is that it may only be half over.

RICKS: Yeah. And in fact, General Odierno, the American commander in Iraq, says at the end of the book that he would like to see 35,000 troops there in the year 2015, which would mean that Obama's war will be longer than Bush's war.

BLITZER: In the end, is Iraq going to be a stable democracy, a close ally of the United States? Or is it going to be a close ally of its neighbor, Iran?

RICKS: It almost certainly is going to be closer to Tehran than to Washington. It's probably not going a democracy. It's probably not going to be that stable. The best case scenario is probably a strong man, someone like Saddam Hussein.

BLITZER: Someone like Saddam Hussein.

RICKS: Somewhat like him, yeah.

BLITZER: So what does mean? Are we going to go back to the future, in effect, is that what you're saying?

RICKS: It might mean that we'll have to have troops around to keep an eye on the Iraqi government that we create, yeah. But that's not the worst-case scenario, that's the best. Worst-case is that the country breaks up, has a civil war, or it becomes a regional war.

BLITZER: And that's realistic?

RICKS: Those are quite possible actually. I think if you pulled U.S. troops out tomorrow morning, that's -- you'd see that begin to happen.

BLITZER: But what happens if the Obama timetable works? By the end of August 2010, there are only between 35,000 to 50,000 troops, and that by the end of 2011, there are zero U.S. troops left. Do you believe that's doable?

RICKS: I don't think that's going to happen. In fact, I don't think people understand what is meant by that. Obama's going to change the name of the mission. He's going to say it's a non combat mission, but that doesn't end the war anymore than hanging mission accomplished ended the war.

I was over at White House last Friday after the speech that the president gave at Camp Lejeune. And I said to a military official, will American troops be fighting and dying in Iraq after August 2010? He said, yes, they will.

BLITZER: In significant numbers, you think?

RICKS: The numbers will get down. I think they'll get down maybe to 50,000 by sometime at the end of 2010, but I think we'll then find that the Iraqis say you can't leave us now. You created the situation. You need to keep troops around here.

BLITZER: But there is an agreement between the U.S. government and the Iraqi government, worked out in the final days of the Bush administration, that by the end of 2011, there are no U.S. troops left in Iraq.

RICKS: I think that agreement was much more about getting Iraq through 2009 then it was about 2011. By 2011, you'll have a new Iraqi government in place. And they actually, I think the Americans assume they will invite us to stay longer.

BLITZER: You write in "The Gamble,," you write this, "The events for which the Iraq War will be remembered probably have not yet happened." Explain what you mean.

RICKS: Well, there's actually a quote from Ambassador Ryan Crocker, who was our top diplomat there the last couple of years. Crocker said it to me twice. So in my last interview with him I said to him, look, that's going to be the last line in the book if you still believe it. Absolutely, he said. We don't know how this thing ends. And how this ends over the next several years will determine how we remember it. If a new, tough version of Saddam Hussein takes office, we're going to think about this war very differently than if Iraq becomes a democracy.

BLITZER: You think that this war, the decision to go to war in Iraq back in 2003 was a horrible blunder.

RICKS: I think it was the worst foreign policy decision in American history.

BLITZER: Explain.

RICKS: It was the wrong war. It took our eyes off the ball. We should have been focused on al Qaeda and Afghanistan. It has cost us a lot and it's gotten us very little. The biggest winner in this war so far is Iran. And we have committed much more than we understand. Just because Americans got bored with this war doesn't mean it ends. We have a lot more that we're going to spend in blood, tears, and treasure on this war than I think any American's really grasped right now.

BLITZER: And you know about another war that's going on right now as well, the war in Afghanistan right now. Only this week, Congressman John Murtha said the situation in Afghanistan is so challenging, he estimated it could take 600,000 troops to fully end the violence in that country. Is he on target there?

RICKS: Well, he also knows we don't have 600,000 troops available. He's not on target, but there is a grain of truth in this. If you're going to pacify Afghanistan, though, it's going to have to come from Afghan troops, Afghan police. The purpose of having our troops there is probably to keep an eye on these people. Right now, it's not just the Taliban that's the enemy in Afghanistan, it's also Afghan police who shake down truck drivers five times in 100 miles. You can't run an economy like that.

BLITZER: Is it winnable in Afghanistan?

RICKS: No, it's not winnable, but what you can do is try to keep the lid on militarily until a political solution committee merge. But that's going to take a lot of time.

BLITZER: The book is entitled "The Gamble: General David Petraeus and the American Military Adventure in Iraq 2006-2008.:" The author, Thomas Ricks. Thanks very much.

RICKS: You're welcome.


BLITZER: The message, be very, very concerned about what's happening in two countries where terror extremists live.


CLINTON: It's becoming obvious that Pakistan faces very serious internal threats and that Afghanistan faces continuing external threats that emanate out of Pakistan.


BLITZER: And CNN's Fareed Zakaria goes one step further. He calls Pakistan, and I'm quoting now, a Frankenstein's monster that's growing with a cancer of Islamic terrorism. He's here to explain.

And on a very, very different note, the Obama children are so excited by a new gift. They want to play with it out in the cold. That's one of our hot shots. It's coming up later.



OBAMA: The truth is is that the situation in Afghanistan had deteriorated. The safehavens for al Qaeda remain in the frontier regions of Pakistan.


BLITZER: The latest blow to Pakistan, stability. This week's blood ambush of a visiting Sri Lankan cricket team. Six police officers and a driver were killed. Fareed Zakaria is the host of "Fareed Zakaria GPS," which airs Sundays right here on CNN. I asked him if terrorism could cause nuclear armed Pakistan to simply fall apart.

(BEGIN VIDEOTAPE) FAREED ZAKARIA, CNN: There's no question, Wolf, that Pakistan is probably the most dangerous country in the world right now. Dangerous not in the sense that it is threatening to use its formal military against anyone, but threatening in that it is unstable, it is weak, it has within it this cancer of Islamic terrorism, which is growing so great that it has turned into a kind of Frankenstein's monster. It threatens Afghanistan, India, Pakistan itself, and of course, the United States and the West in general. It's a very tough situation out there.

BLITZER: Because the nightmare scenario, as you know, and a lot of our viewers know, Fareed, is that that nuclear arsenal gets in the hands of these terrorists. How secure, based on everything you know and you've studied this very closely, is the control over those nuclear weapons?

ZAKARIA: You know, I was, Wolf, in a meeting with General Kayani (ph), the head of the Pakistani army just a couple of days ago, in which one of us asked him precisely that question. And he gave me the same answer that General Musharraf has given me when he was the head of the army and president of Pakistan, which was, these are very secure, we have it under control, there's very little danger.

I have to say that in general, the sense one gets of the Pakistani army is that it is professional, it is disciplined. The problem is the country is falling apart around them. And so it's not a question of whether the military and its commanders and controllers are in shape. I don't think there's a danger of some kind of colonel taking over the arsenal.

But what if the whole country collapses into a sudden degree of chaos? What happens then? And do people start freelancing at that point, as they did in the final days of the Soviet collapse, which is why we have the whole problem of loose nukes in the former Soviet Union.

BLITZER: The Pakistani's claim that the continuation of these drone strikes on Taliban or al Qaeda suspected targets inside Pakistan merely undermines the legitimacy of a pro-Western government in Islamabad, in Pakistan. Do they have a point? Should the administration rethink these attacks inside Pakistan and simply allow the Pakistanis to try to get the job done?

ZAKARIA: I think there's something to what you're saying, Wolf. That is, the key here is public support, public support for the war against Islamic terrorism. If their sense of the United States is that we are bombing indiscriminately, there's a lot of collateral damage.

Remember, our intelligence is not that good. The idea that we are hitting, you know, solid, legitimate al Qaeda targets in every case has simply not been born out by the evidence.

So I think if we have absolutely incontrovertible evidence, go for it. But otherwise as you say, I would much prefer to let the Pakistanis do it, strengthen their capacity. Because at the end of the day, they have to win this war. One day, we are going to have to go home. And they are going to have to find a way to kill this cancer of militancy. I think, by the way, Wolf, that these attacks will be -- will produce a backlash in Pakistan. As you pointed out, cricket is a kind of religion. And the terrorists have kind of insulted or humiliated Pakistan in its own eyes and in the eyes of the world. And I think this is one more area where al Qaeda always overplays its hand. And it produces a backlash against it. It happened in Iraq. It's possible it will start happening in Pakistan.

Let's see what happens. Fareed, thanks very much.

ZAKARIA: Pleasure, Wolf.


BLITZER: And don't forget, "Fareed Zakaria GPS" airs every Sunday at 1:00 p.m. Eastern right here on CNN. If you haven't seen it, you should. 1:00 p.m. Eastern, "Fareed Zakaria GPS."

Another lobbyist makes the rounds up on Capitol Hill. That would be the actor, Brad Pitt. Why the Oscar nominee huddled this week with House Speaker Nancy Pelosi.

Plus, having fun over at the White House. The First Kids and the First Lady enjoy a new swing set outside the Oval Office. That's just one of our hot shots, pictures worth 1,000 words.


BLITZER: Here's a look at some of this week's hot shots. In California, Manny Ramirez hugged coach Joe Torre after agreeing to stay on the with the Dodgers. In Cuba, citizens looked at the newspapers after two officials resigned from the government. In Nevada, a golden eagle survived after crashing through the window of a semi truck. And here in Washington, the Obama family minus the president tried out the new swing set installed on the White House lawn. Some of the week's hot shots, pictures worth 1,000 words.

There's a new woman in Brad Pitt's life. That would be the House Speaker Nancy Pelosi. She met with the actor on Capitol Hill on Thursday. They discussed his project to help hurricane Katrina survivors rebuild affordable homes. Pitt not only made the rounds on Capitol Hill, he also visited the White House and met briefly with President Obama, as well as the Energy Secretary Steven Chu. Pitt rubbed elbows with the political elite without Angelina Jolie, who was also in Washington, by the way. She was busy shooting a movie.

I'm Wolf Blitzer here in THE SITUATION ROOM. Remember, join us weekdays from 4:00 to 7:00 p.m. Eastern and every Saturday at 6:00 p.m. right here on CNN at this time. Weekends on CNN International as well.

The news continues right now on CNN.