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New Deficit Estimate Over Next Decade; 'Generational Theft' Charged; AIG Sues the Government

Aired March 20, 2009 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, a new reason for Americans to demand a reality check on corporate rescues. Bailed-out insurance giant AIG is now suing -- suing the very same government that threw it a lifeline.

Plus, President Obama personally encourages Iranian to put decades of U.S. hatred behind them. His remarkable video call for a new beginning got a quick and angry response.

And a smart idea to help save electricity could have a dangerous downside. It could leave us vulnerable to cyber terror and massive blackouts.

I'm Wolf Blitzer in CNN's command center for breaking news, politics, and extraordinary reports from around the world.


Right now, one of President Obama's toughest critics is accusing him of generational theft. Shocking new estimates today about the cost of the administration's ambitious goals. The Congressional Budget Office now projects deficits averaging almost $1 trillion every year over the next 10 years.

Here's another way of putting it. More than $9 trillion in red ink will pile up by the time today's 11-year-olds graduate college. That figure is more than $2 trillion bigger than the White House predicted only a few weeks ago.

Our White House Correspondent Dan Lothian is standing by, but let's go to our Congressional Correspondent Brianna Keilar. She's got more details on this.

Pretty startling development today, Brianna.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf. And key members of the president's own party are sending him this message: You can't do it all.


KEILAR (voice-over): South Carolina Democrat John Spratt, the man charged with pushing the president's budget through the House, says now is the time to capitalize on Mr. Obama's popularity.

REP. JOHN SPRATT (D), SOUTH CAROLINA: We're behind him, and we think the country is behind him to give him the mandate that he earned in the last election.

KEILAR: But asked if President Obama will have to pick a top priority -- universal health care, alternative energy, or education reform -- even Spratt concedes eventually something's got to give.

SPRATT: I'm sure we may reach the point where compromises or concessions like that have to be made, but you don't go into the contest saying, I may have to give up this, I may have to give up that. You try to obtain everything.

KEILAR: In the Senate, the president faces more obstacles within the ranks of his own party. Kent Conrad, chairman of the Senate Budget Committee, says Congress must make cuts.

SEN. KENT CONRAD (D), BUDGET CHAIRMAN: The president's budget is going to have to be adjusted. That doesn't mean his priorities are changed, because he's got the right priorities. But we're going to have a make a whole series of adjustments to make this add up. I'm hopeful that people will understand, when facts change, we've got to change.


BLITZER: Brianna, so what are Democratic lawmakers saying? And I know you're speaking to them. How would they revise these priorities that the president has, whether health care, energy, education, for example?

KEILAR: Wolf, of the lawmakers we spoke to today, Congressman Spratt told us his personal preference is education. That's something that is personally important to him. But Senator Conrad said to us point- blank, absolutely health care reform. Congress has to get started on that.

BLITZER: Facing some major dilemmas right now.

Thank you, Brianna.

The man who wanted President Obama's job is pouncing on these new deficit projections. Senator John McCain issued a very tough statement saying -- and let me quote -- "The Congressional Budget Office report proves that the administration has indeed engaged in a policy of generational theft." The Republican goes on to say, "This staggering deficit threatens our children's and grandchildren's future and simply cannot be sustained."

Let's go right to our White House Correspondent Dan Lothian.

Dan, what are they saying there? Because the reaction is coming in pretty quickly.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right, and reaction not from only on Capitol Hill, there are other people as well who are saying that what the president is doing right now is simply too aggressive and that these projections now, just adding more ammunition to these critics who say the president needs to slow down. (BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Almost every day, President Obama preaches responsibility.

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: And with a plan of such size comes an obligation to be vigilant with every dime that we spend.

LOTHIAN: But some critics say the growing deficit and the president's resistance to trimming back his ambitious agenda is nothing short of irresponsible.

CHRIS EDWARDS, CATO INSTITUTE: If President Obama's spending plans go through, we will hit the highest level of debt since World War II, about $60,000 for every person in the United States. It's an enormous amount of debt.

LOTHIAN: And Chris Edwards, with the conservative Cato Institute, says in the long run, the government will have to impose enormously high tax rates to reduce that debt.

EDWARDS: Well, all this debt is a cost that's being pushed on to the next generation of young Americans. It is really morally unfair, what is going on in Washington.

LOTHIAN: But the administration says the projected $1.8 trillion deficit this year shows the depth of the crisis this White House inherited and gives a sense of urgency to acting on all fronts at once.

To accomplish his goals, the president is promising cuts, but again insisted he will only go so deep.

OBAMA: What we will not cut are investments that will lead to real growth and prosperity over the long term.


LOTHIAN: The White House continues to insist that now is not the time to apply the brakes, and they are confident that they can invest in things like education, clean energy, and health care, and still slice the deficit in half by the end of Mr. Obama's term -- Wolf.

BLITZER: What if they're wrong, Dan?

LOTHIAN: Well, that is a "what if" question that this administration really does not want to entertain. They believe that all these things, education and health care, will end up, in the end, create more jobs, will lead to a more educated workforce. All components that they believe will help to turn the economy around.

BLITZER: Dan Lothian, thank you.

It's worth a quick reminder of exactly what the deficit is. It's how much more the government spends in a year compared to how much it actually has to spend.

Think of it this way -- you have $300 in your checking account, but you write $325 worth of checks. You're overdrawn by $25. That's your deficit.

The federal debt is something a little bit different. That's the number that gets tallied in a big clock in New York. It's the running total of how much the U.S. government has overspent year after year after year. That's the federal debt, the national debt, which goes up and up and up.

Let's go to Jack Cafferty right now for "The Cafferty File."

These numbers are getting out of control, Jack.

JACK CAFFERTY, CNN ANCHOR: It's called circling the drain.

Nancy Pelosi doesn't think enforcing some of our immigration laws is a good idea. I guess we don't need the Justice Department. We can just ask Pelosi what laws she thinks we ought to enforce.

The House speaker was condemning raids by Immigration and Customs Enforcement agents at an immigration event in San Francisco last weekend. Check this out.


REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: Who in our country would not want to change a policy of kicking in doors in the middle of the night and sending a parent away from their family? It must be stopped.

What values system is that? I think it's un-American. I think it's un-American.


CAFFERTY: In case you had trouble understanding her, Nancy Pelosi was telling a largely Hispanic audience in California that enforcing America's immigration laws is un-American. This is called pandering.

Yesterday, Pelosi said she's standing by those idiotic statements, adding that we have to enforce our laws, control our borders, protect our workers, and create a path to legalization for those who aren't full documented, but repeated that does not mean kicking in doors in the middle of the night. Pelosi said what we really need is comprehensive immigration reform.

Here's the question. Nancy Pelosi says enforcing our immigration laws is "un-American." Is she right?

Go to and post a comment on my blog.

There are no words to describe this, Wolf.

BLITZER: Jack Cafferty, thanks very much. Cash and controversy. While many of you are angry over AIG's bonuses, guess what? AIG is demanding money back as well. It's suing the government for more than $300 million. And get this -- it's possibly using your money to do it.

And there are fewer bodies than beach balls on the beaches these days. Many of you opting for a very different vacation destination -- your home. And that's putting more people out of work.

And could cyber terrorists cause massive power outages by exploiting something in your home?


BLITZER: You may be angry with AIG over those bonus payments, but AIG -- get this -- is also angry. The company is now suing the federal government for the return of hundreds of millions of dollars. And get this, your money could be helping AIG sue the government.

What's going on?

Let's bring in Brian Todd. He's got some answers.

Brian, what is going on?

BRIAN TODD, CNN CORRESPONDENT: Wolf, adding to the furor over the executive bonuses and everything else regarding AIG, the company is now battling the perception that it is biting the very same government hand that's feeding it.


TODD (voice-over): For an embattled Wall Street giant already being skewered for hundreds of millions of dollars in executive bonuses, the timing couldn't be worse. AIG is actually suing the same federal government that's bailing it out, trying to claim more than $300 million in tax payments that the company says the IRS owes it.

The suit has been in the works for months, and it's over tax payments dating back years. But the paperwork was completed just a couple of weeks ago, when the controversy over AIG's executive bonuses was heating up.

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: AIG is in the spotlight now, and messaging is important. So it's unfortunate that they're putting themselves in a position where they're getting even more negative press.

TODD: AIG claims it paid too much tax on profits from aggressive deals involving its offshore companies, firms registered in places like the Cayman Islands, Ireland, France, the Netherlands, and New Zealand. After the IRS rejected the claims, saying AIG miscalculated, the firm sued.

It's not unusual, but in the bailout, AIG's getting nearly $200 billion from the feds, and the government essentially owns 80 percent of the company. That means AIG could well be using taxpayer dollars to sue the government that's bailing it out.

A former IRS commissioner says the company has that right.

SHELDON COHEN, FMR. IRS COMMISSIONER: Dollars are fungible. And once you have dollars in your coffers, you can pursue any legitimate business aim. Well, a business aim is to minimize your tax.


TODD: The IRS is not commenting on this lawsuit. An AIG spokesman tells us that the company "... is taking this action to insure that it is not required to pay more than its fair share of taxes."

This spokesman makes the point that with all the furor over AIG's bailout, Wolf, they have an obligation to try to win back some legitimate money and pay the government back, so that's why they're doing this.

BLITZER: And is this money that they want, is it coming from that division of AIG that was in the financial sector that almost brought this whole company to its knees?

TODD: We looked through the AIG complaints, about 50-some pages, and yes, some of the money they generated in these deals comes from that financial products division that almost brought the company down. But again, AIG claiming this was legitimate money earned, we simply overpaid our taxes. We've got a right to this and, hey, we've got to pay the government back, so give us some of that legitimate money.

BLITZER: A new twist in a really bizarre story to begin with.

Brian, thank you.

Which is more of a priority to you right now? Would it be economic recovery or health care reform? Both are items you surely want the president to talk about right now.

Our Senior Political Analyst Bill Schneider is joining us.

Here's the question, Bill, which comes first for the Obama administration, economic recovery or health care reform?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, the president says they are linked. They have to happen together.


SCHNEIDER (voice-over): Health care reform is expensive. Can we afford it?

OBAMA: And today, there are those who say we should defer health care reform once again, that at a time of economic crisis, we simply can't afford to fix our health care system as well.

SCHNEIDER: He says you can't have recovery without health care reform. OBAMA: The cost of our health care has weighed down our economy and our conscience long enough. So let there be no doubt, health care reform cannot wait, it must not wait, and it will not wait another year.


SCHNEIDER: Right now, only 39 percent of Americans feel very confident they can maintain their standard of living. Even fewer, 29 percent, feel very confident they can afford to pay the bills if someone in their family has a major medical emergency.

OBAMA: All it takes is one stroke of bad luck -- an accident or an illness, a divorce or a lost job -- to become one of the nearly 46 million uninsured, or the millions who have health care but really can't afford what they've got.

SCHNEIDER: Health care costs are bad for business.

OBAMA: It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas.

SCHNEIDER: Has anything changed since the Clinton administration attempted health care reform 16 years ago? More than 80 percent of Americans say they're satisfied with their health care, just like in 1993. More than 70 percent are satisfied with their health insurance coverage, just like in 1993.

The one thing people are still dissatisfied with -- costs.


SCHNEIDER: The lesson of the Clinton experience is, if people are happy with their health care and their health insurance, don't threaten to change it, just make sure they can continue to afford it. The same rule applies for health care reform as for medicine. First, do no harm -- Wolf.

BLITZER: Good advice, as usual. Bill Schneider, thank you.

If you're planning a summer vacation right now and luxury spots are out, you're not alone. We're taking a closer look at the recession's impact on travel hot spots.

And a system that's supposed to help us use electricity wisely could be the target of terrorists and leave us all in the dark.



BLITZER: If you're worried about losing your job, that fancy vacation may be the first thing to go. A drop in tourism is having a huge impact across the country.

Abbi Tatton has more on this story. The economic ramifications are great. What's going on?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, it's looking pretty bad. In terms of tourism spending, right now we're in a period that's actually lower than the period after September the 11th. That's according to the Commerce Department, who says this is across the board.

This is hotel spending, airfares, shopping while people are on holiday. All on the decline.

What that looks to a state like Hawaii, so reliant on tourism dollars, right now experiencing 70,000 fewer visitors than this time last year, this January versus this time last year. And with fewer visitors, that means fewer jobs as well. In the same time period, the unemployment in that state has doubled.

And tourism hotspots around the country are reporting the same thing. We can go to South Carolina, to the coast of South Carolina, the Myrtle Beach area. Right now, unemployment there 14.4 percent. Compare that to a national average of just over 8 percent.

Resorts, even well-known resorts, feeling the pinch as well. Just yesterday we heard that the luxury Greenbrier Resort in West Virginia that's housed presidents, royalty, over the last few decades, filing for Chapter 11 bankruptcy.

We're also hearing of some bright spots though. "The Wall Street Journal" reporting this morning that the amusement park Dollywood in Tennessee, they're having sales -- their sales are on the uptick right now, better than last year, Wolf. The resort there, the park, explaining that to me that it's a place that people can drive to, they don't have to buy airfare, and there's also free attractions nearby, all things that are very attractive to families right now.

BLITZER: Tourism is so, so important to the economy across the board.

All right. Thanks, Abbi, very much.

It's a lot more money than any of us can ever imagine, almost a trillion dollars. That's how much President Obama's budget could reach each year over the next decade -- the deficit, that is. So the president is now out explaining how he'd cut the red ink.

And regarding those AIG bonuses, the senator who contradicted himself over the stimulus -- the bailout money and all of the bonuses, contradicted himself, in fact, right here in THE SITUATION ROOM, could be facing the political fight of his life right now.


SEN. CHRISTOPHER DODD (D), CONNECTICUT: This is a -- this may not...


BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now, President Obama reaching out. The meaning behind his videotaped message to the people of Iran and why the White House says it has yet more tricks up its sleeve.

Plus, new fallout for the U.S. senator who admits to protecting bonuses for bailed-out insurance giant AIG, how the angering is following back home.

And the president's appearance on a late-night talk show sets off a firestorm. Why a joke about his bowling skills prompted an apology.

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

Over the next decade, President Obama's budget would cause deficits of not a million, not a billion, but almost a trillion dollars each year.

Let's get some more on our top story right now. That eye-popping estimate coming from the Congressional Budget Office today. It's worse than the White House estimated only a few weeks ago, so President Obama is wasting no time explaining how he'd cut it.


OBAMA: Because of the massive deficit we inherited and the cost of this financial crisis, we are having to go through the books line by line, page by page, so that we can cut our deficit in half by the end of my first term, and reduce it by $2 trillion over the next decade. What we will not cut are investments that will lead to real growth and prosperity over the long term.

That's why our budget makes an historic commitment to comprehensive health care reform. It's why it enhances America's competitiveness by reducing our dependence on foreign oil and building on a clean energy economy. And that's why it makes a down payment on a complete and competitive education for every child in America, from the cradle up through the time that they get a career.

In short, our budget will strengthen each of our 50 states for generations to come. And that's also the purpose of the Recovery Act that I signed into law last month. It's a plan that will not only help states and painful budget cuts, but also make a meaningful difference in the lives of Americans in this country.

Because of what we did, there will be teachers in the classroom and police on the beat who otherwise wouldn't be pursuing their essential missions. Because of what we did, neighborhood health clinics are creating jobs and providing affordable care to those who need it. And because of what we did, 95 percent of hard-working families will receive a tax cut, a tax cut that they'll see in their paychecks starting on April 1st.

So, all together, we expect to create or save 3.5 million jobs, 90 percent of which are in the private sector. It's the most sweeping recovery plan in our nation's history. And with a plan of such size comes an obligation to be vigilant with every dime we spend. That will require all of us -- me, Joe, each of you -- to hold yourselves accountable. It will require a new level of transparency in how we invest taxpayer dollars. It will require a new sense of responsibility here in Washington, but also in the 50 states. And that's a standard that we sought to uphold from the very beginning.

And that's why on the very day I signed our recovery act into law, we launched a website called so that Americans can see where their tax dollars are going and make sure we're delivering results. And 46 states have launched their own websites linked to to help people keep track of how money is being spent down to the local level. Today, as part of our continuing efforts to make government more accountable, we're taking the next step in implementing the recovery act. I'm issuing a directive that will provide guidelines to federal agencies for what does and what does not constitute an acceptable use of taxpayer money.


WOLF BLITZER, CNN ANCHOR: All right, let's assess what we've just heard. Joining us, our senior political analyst Gloria Borger, our national political correspondent Jessica Yellin and Mark Zandi of Mark I'll start with you, you're the economist. The budget deficit that was projected by the Obama administration only a few weeks ago, off according to the Congressional Budget Office today by a near $2.3 trillion over the next 10 years. What's going on here?

MARK ZANDI, MOODY'S ECONOMY.COM: I think part of it is the economic assumptions underlining the president's budget. His growth projections were relatively strong against consensus views. CBOs projections are less optimistic. Just a few tenths of a percent on GDP growth in any given year can make a big difference in terms of these budget projections. I think that's the big difference.

BLITZER: Who's right, who's closer to the accurate assumption, would it be the White House or would it be the Congressional Budget Office?

ZANDI: CBO. CBO is nonpartisan and I think their projections are closer to consensus, closer to my views, I think that's probably the more accurate view of what's going to happen down the road.

BLITZER: Because Gloria as you know when they released their budget projections a few weeks ago, a lot of people were saying they were using rosy scenarios. Overly optimistic, three percent growth next year, four percent growth the year after. A lot of folks said that was simply unrealistic.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Right, and in fact they made the opposite point, they said that they weren't presenting rosy scenarios. What this makes it look like to the American public and here is the danger for the president in this, is that it makes it look like it's sort of spiraling out of control. That's why you heard the president talking about accountability. Saying he's not going to let any waste, fraud and abuse get in the way of the stimulus package or his budget or anything for that matter, because he can't afford to have the public lose faith in his ability to be in charge and take control of these things and stem that kind of waste in government.

BLITZER: The way to cut this deficit if you will, as you well know, Jessica, is either to increase taxes big time, or to cut spending big time. And both of those options are difficult.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: There's no pretty scenario here for President Obama. The problem is something that Gloria just mentioned, which is he has to retain the confidence and faith of the American people, that he knows what he's doing and is in control of this massive and spiraling out of control economy right now. The fact that the CBO has come out with such wildly different numbers only further erodes confidence that the president is being fully truthful or is fully on top of this situation. And the two issues you bring up Wolf showed that he has to make some pretty tough decisions down the line and he has not yet shown that he's willing to make those top choices. He's in a tight spot and he has to come up with some better answers.

BLITZER: How much more taxes, how high would the tax rates have to go, Mark, to do what the president says he wants to do, cut the budget deficit, the annual budget deficit in half over the next four years?

ZANDI: I think if he allowed the top tax rates to rise over time, the people who make over 250k which is what he plans to do. But use that money for deficit reduction as opposed to redistributing those funds to other uses. I think that would go a long way to reducing the budget deficit. Not enough. He still needs to focus on reigning in various kinds of spending which he hasn't really laid out for us. But just simply doing that I think would make a big difference. But unfortunately, that's not what he's got planned for.

BLITZER: He wants to continue increased spending for health care, for education, for energy independence. All of that is going to cost a lot of money Mark.

ZANDI: Yeah, I think the ideas with respect to health care are reasonable. He's saying we can't solve our long-term budget problems unless we reign in the growth in the health care costs. And so we do need to have health care reform and I think that's very laudable. But he does need to tackle some of these other entitlement programs, social security and also the growth in Medicare and Medicaid because of the aging of the baby boom population. He hasn't really given us an answer for that yet and he needs to.

BLITZER: Is he, do you have any indication, Gloria, he's about to deal with social security for example or Medicare because those really aren't on the agenda right this day.

BORGER: Well you know there are lots of folks who are telling the administration they're trying to do too much as it is, so to add social security on the immediate agenda right now, I don't think it's likely. However, they are talking about tackling entitlement programs. Their rationale for wanting to do energy and healthcare now as Mark is saying is that in the long-term, Wall Street may take a short term look at things, but in the long term they have to look at the future of the economy and they think they're going to end up saving an awful lot of money, so they want to get it all cooking now. And entitlement reform will be a part of that. Whether the public buys this argument or not really remains to be seen when you have these budget deficits that are so large.

YELLIN: And Wolf you have to also keep in mind, this budget is an initial blueprint, they can negotiate from here. So it puts them in a stronger negotiating position if they have everything in it and then they can slowly take pieces out, which they'll have to do now that the CBO has come out with those devastating numbers.

BLITZER: Jessica thank you. Gloria thank you. Stand by, we're going to get back to you. Mark Zandi, always good to have you here in THE SITUATION ROOM.

You just got laid off so what do you do now? For some people the answer is grab your pink slip and party. In our strategy session is Sara Palin taking a gamble with the stimulus dollars and will her state pay for it?

And Michelle Obama breaks some new ground into trying to get her family to eat their vegetables.


BLITZER: Imagine you just got handed a pink slip. The last thing you might feel like doing is partying, but if you live in California, you might just get a new job out of it. Let's go to CNN's Ted Rowlands, he's standing by what they're calling a pink slip party. What's happening Ted?

TED ROWLANDS, CNN CORRESPONDENT: Wolf, we're at Barcelona, a restaurant in Pasadena, California and that's what it is. A pink slip party. Everybody here has lost a job recently. There are a few recruiters also, but for the most part 90 percent of those folks have lost a job. And they're getting together and the idea here is if you're out there on the job search, don't do it alone, get a network of people who are in the same boat and learn from what they're finding out. Each person has a different story. Helen here was working at Nordstrom for a while, she used to be a paralegal, she's looking for work. As you go down the line, everybody's got a different story. Edwin is the organizer of this and the idea Edwin is that while job seekers are all trying to get a job themselves, on the side they can help others in the same boat.

UNIDENTIFIED MALE: Right. When they're at home and they see job postings that don't fit them but fit the people that they meet, pay it forward and forward off that job posting to the people that you meet at pink slip mixers.

ROWLANDS: Rod here has been out of work for a while. He used to work for Virgin and was in the airline industry. You're looking for work, does this type of thing work? You've met a lot of people, has it panned out yet?

UNIDENTIFIED MALE: Well you know the great thing about pink slip mixers Ted is that even if you don't find a job today, you end up speaking with people and handing to them, contacts, information. And so that's what we call pay it forward, I'm helping somebody else help myself.

ROWLANDS: Sherry, a project manager. You've been to a couple of these, have you gotten any leads off of this?

UNIDENTIFIED FEMALE: I have. It's been great. They've made some great suggestions. I'm trying to transition into a creative industry. They're telling me what to look for in the fashion industry or the entertainment industry.

ROWLANDS: The entire thing is being twittered as well. These parties, there is a lot of social networking on the different social networking sites. Again, the bottom line is as each one of these people is out looking for a job if maybe they find a position that doesn't work for them, maybe they'll remember a person they met at one of these parties and hand off that information. Anything will help in this tough job environment. Wolf?

BLITZER: You've got to establish those contacts one way or another. Thanks very much Ted for that.

Here in the Washington, D.C. area there are thousands of job openings right now with the U.S. Defense Department and people are actually lining up to try to get those jobs. Let's go to our pentagon correspondent Barbara Starr. I take it Barbara these are civilian jobs.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Absolutely right Wolf. Earlier this week, we went to a job fair. A lot of folks lining up in very modest circumstances looking for those magic words, you're hired.


STARR (voice-over): A cold day and a long line at this Washington, D.C. job fair. Thousands waiting for hours outside the football stadium. When the gates finally open, it's a rush up the escalator to meet with about 50 potential employers. One of the biggest opportunities here may be finding a civilian job with the pentagon.

AZITA SASS, JOB SEEKER: I thought that would be a good opportunity.

STARR: Azita's background is in purchasing and logistics. We met up with he while she was talking to the navy about a job. But the army and marines are here as well.

JOE MAYER, U.S. NAVY: We have some positions right now we're trying to fill in the Washington, D.C. area for highly qualified individuals.

STARR: In fact, the Defense Department now has about 10,000 civilian job openings. Defense Secretary Robert Gates says the department has a real economic impact.

ROBERT GATES, DEFENSE SECRETARY: It's not irrelevant the defense department employs almost 3 million people.

STARR: Michelle Davis laid off from a publishing job also seeks employment opportunities in government.

MICHELLE DAVIS, JOB SEEKER: The deal of it is you're not hearing about layoffs with the government jobs.

STARR: Azita is continuing her job search hoping the federal government finally may come through.

SASS: It's hard all over the United States but I think in Washington, D.C. there is a better chance to find a career here because there are a lot of employers, government jobs, consulting companies. And I'm optimistic.


BLITZER: Barbara, how bad is unemployment for the veterans?

STARR: Well you know Wolf we've got some new numbers today. The kids coming back after serving in Iraq and Afghanistan are really suffering from a rising unemployment rate. Look at these numbers, Wolf. For last month, February of 09, an 11.2 percent unemployment rate for veterans. That compares to just the month before, 8.9 percent. This time last year, 7.0 percent. The overall unemployment rate just over 8 percent. So compared to the 11 you can see the people who are really hurting in this economy, the veterans just back from the war. Wolf?

BLITZER: We've got to help those guys. Thanks very much. The veterans need help, the men and women of the U.S. military.

President Obama seems to be everywhere, at town hall meetings, on late night TV. Is that what he needs to do to get his message out there or would you rather have him tone it down?

And Senator Chris Dodd, he contradicted himself over those AIG bonuses right here in THE SITUATION ROOM. Now some folks in his home state of Connecticut say his senate seat could be on the line.


BLITZER: Let's get right to our strategy session. Joining us, our CNN political contributor, the democratic strategist Paul Begala and republican strategist, Ron Christie, a former special assistant to President Bush. Guys thanks very much for coming in. We asked our viewers out there to send us their video i-Reports. We got this one from Egberto Willies who lives in Houston, he considers himself a liberal, he contributed money to President Obama's campaign. Listen to this.


EGBERTO WILLIES, FROM HOUSTON: The president used this week's town halls, culminated with "The Tonight Show" to achieve what I believe are three specific goals. One, listen to the average citizen's problems and tie them directly to his specific budgetary policies. Two, inoculate himself from missteps by stating categorically that he will make mistakes, acknowledge them and move on. Three, present himself as a generally likable guy.


BLITZER: All right. Is this smart for the president to be as visible as he is doing the speeches, the news conferences, "The Tonight Show," the town hall meetings? Is he overexposed?

UNIDENTIFIED MALE: I don't know, Egberto Willies is a genius, look at the speech -- put the shot back up. You see the t-shirt? Look what he's wearing Wolf.


PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Do you see the tie here, Texas going to beat Duke tomorrow night, you watch it. But yes, here's why and I think actually Mr. Willies is right. This president's really good at this and I think one of his greatest gifts is his ability to explain. I watched the whole tape, because I was watching basketball, but I watched the tape today of the president on the Jay Leno Show. And it was so impressive, he explained how AIG happened better than any of the propeller head economists that I've seen even on our network. That job of explainer in chief is very important. He's got to hunt where the ducks are at. Sometimes they're on Jay Leno, usually they're in THE SITUATION ROOM but you know you want to also get some other audiences too.

BLITZER: What do you think?

RON CHRISTIE, REPUBLICAN STRATEGIST: Well I think he runs the risk of being overexposed. I understand that he wants to get out and communicate with the people, but he's on "The Tonight Show", he's on the cover of GQ. When you go to the supermarket he's in all the tabloids. I think people want an escape from politics. I think when you have a politician who's always on television, always in the magazines, people want a break and they say, for goodness sakes, we want to talk about the longhorns. Even the coach of Duke said the president should stick to the economy rather than filling out NCAA brackets. I just think he --

BEGALA: He needs to stick with basketball because Rick Barnes and the longhorns are going to beat him Saturday night.

CHRISTIE: I just think he runs the risk of being a little bit overexposed Wolf.

BLITZER: But do you think that it's not presidential, is that what -- some people are saying it's just too much.

CHRISTIE: It is too much. I mean I think people want a little bit of a distance from their president. Obviously, they want to hear from the president when there are very important issues of the day, obviously the economy is one of those. But when he's talking about bowling and he's talking about his sports brackets, I think people are saying it just diminishes a little --

BLITZER: But at the same time he is really good at the town hall meeting, the interview with Jay Leno. He's very smooth when it comes to that kind of stuff.

BEGALA: Yes and it was a very substantive interview. Yes, Jay asked him about the dog and whether he was playing basketball -- and so do we, the real press does that as well.

BLITZER: How much of that conversation last night was substance?

BEGALA: 90 percent was substance. He talked about clean energy and how America needs to be competitive. He talked about cars, something Leno knows a lot about. How we got to move to hybrids and hydrogen and plug in vehicles. He talked a lot about AIG and the economic crisis. He's very good at this. And I will say, you know, some of this is --

BLITZER: We're going to hear a lot of this in the next hour, but there's no doubt there was almost a record audience on "The Tonight Show" last night. Millions and millions of people tuned in. Not the regular Jay Leno viewers. This was an opportunity for the president to reach out.

CHRISTIE: Well here's one thing that I think that he did well by going on the show, there's so many different people who watch the political shows. There are so many people who watch the cable outlets. He had an opportunity to reach a different demographic, a different audience perhaps that wasn't used to seeing the president of the United States. And I think he connected with some people that he might not have otherwise reached.

BLITZER: These are unprecedented times, at least in modern times and the president's supposedly got to do a lot in order to get the kind of excitement going that he'll need if he wants his agenda to go forward.

BEGALA: What he's trying to push through, even a congress controlled by his own party, is almost without precedent in our lifetimes. The economic recovery, health care, education, energy, it's a big agenda.

BLITZER: What about Sara Palin, the governor of Alaska, now joining some other republican governors like Mark Sanford of South Carolina and saying you know what, there's stuff that you want to give us in this economic stimulus package, thanks but no thanks because we don't want to incur the long-term financial responsibilities.

CHRISTIE: I think it was a responsible decision made by Governor Palin and Bobby Jindal and others. She took nearly a billion dollars, if you're talking about the overall bill, you're talking about a billion dollars, she took nearly 70 percent of that. She had a question of if we take all of this federal money, are we going to expand the size of the Alaskan government such that when the stimulus money runs out that Alaskans are going to have to incur those costs. And I think there are a lot of governors around the country saying obviously there's a need for T.A.R.P. and timely and temporary funding, but if this is not temporary and is going to be a burden on our state, it's money perhaps --

BLITZER: Politically, does it help her? BEGALA: No, because I think she's hurting her state for her own political posturing. Here's what she cut. I looked it up. The largest piece she cut out of labor and job training, so it's a bad time to be unemployed in Alaska. A big chunk, 9 million, out of health care, it's a bad time to be sick. $7 million out of public safety. So maybe it's a good time to be a crook. If you get laid off or if you get sick, you can turn to a life of crime because she's cutting public safety as well. I don't think that good -- bad policy --

BLITZER: Very quickly, the Republican Party, assuming she wants a run for the nomination in 2012, does it help her or hurt her?

CHRISTIE: Well I think for those who are fiscal conservatives and those who are looking to make sure to keep the costs down it's going to help her. But again Paul, if you look at the (INAUDIBLE) program from the Clinton administration, that's a program that states said would be a limited amount from the federal government, states are still incurring that. I think there are a lot of governors who say we don't need to expand the size of government in a recession.

BLITZER: We have to leave it there guys. Thank you.

Tuesday by the way, the president will be holding a prime time news conference, that's the second since becoming president. If you were a reporter in that room over at the White House, what would you ask him? Submit your video questions to Then you can watch THE SITUATION ROOM next week to see if your video makes it on the air.

There's a watchdog on the loose in New Jersey trying to make sure federal stimulus money is spent the right way. He's following your tax dollars.

Plus, President Obama reaches out to Iran in a unique way, but his video message isn't getting the reaction he probably wanted.

And an idea for improving the way we use electricity could have some dangerous consequences and leave big chunks of the nation in the dark.


BLITZER: Let's check in with Jack Cafferty for the Cafferty file. Jack?

JACK CAFFERTY: Question this hour, Nancy Pelosi says enforcing our immigration laws is un-American. She objects to the practice of kicking down doors in the middle of the night and arresting illegal aliens. Is she right? Bruce in St. Paul writes, "Did she say what time might be ok to enforce our laws if not the middle of the night? Would 11 o'clock be too late or 7:00 a.m. perhaps too early? Does she think other types of criminals should not be apprehended if they are in the bosom of their family? Honestly, I don't know what her point is, is there an intelligence test that you have to fail in order to be in congress?" Natalie writes, "I used to think she was a really great politician now I realize that's all she is a stupid politician. I really think we need to work to oust her just as hard as we worked to get Obama elected. She is so me, me, me. She really is hurting Obama." Jay in Texas, "I agree with Nancy Pelosi that police kicking in doors in the middle of the night, and terrorizing families sounds like the tactics of a fascist government and that it is most certainly "un-American." Ben in Boston, "Mexico is part of North America. Probably the enforcement looks un-American by those born south of the Rio Grande, but for me it looks as American as apple pie for a country governed by the rule of law. By the way, does Mexico enforce its immigration laws?" You bet your fern they do.

Brandon in New York, "Pelosi was speaking up against the practice of raiding homes in the middle of the night and separating illegal immigrant parents from their children who were born here. That practice really is un-American. And if the law encourages it, then the law is un-American. I don't like Pelosi, but I agree with her on this one." And Larry in New Jersey writes, "Exactly what country does Nancy Pelosi believe she's in?" If you didn't see your e-mail here you can go to my blog, look for yours there among hundreds of others.

BLITZER: All right Jack thank you.

And to our viewers you're in THE SITUATION ROOM. Happening now, President Obama takes his message directly to the people of Iran, making them a promise and issuing a challenge to Iranian leaders. We're getting new reaction.

Also, a veteran democratic senator facing fallout after admitting he was involved in getting that legal loophole that made those AIG bonuses possible, a charge he first denied. Is the controversy making Connecticut's senator Chris Dodd politically vulnerable?