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President Obama in London to Meet Economic Powers; Hillary Clinton Upbeat About Iran; President Obama to General Motors: 60 Days or Else

Aired March 31, 2009 - 15:59   ET


WOLF BLITZER, CNN ANCHOR: Happening now, President Obama confronts a world of economic pain and protest. He's just landed in London, under tight security, for a summit strained by financial meltdowns.

Plus, a Taliban chief vowing an attack on Washington, D.C., he says, that will amaze the world. Just a day after a brazen act of terror in Pakistan, is this a new threat? Is it really serious, or is it simply bluster?

And kissing the enemy -- outrage over a key U.S. ally's embrace of a world leader accused of committing war crimes against his own people.

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


President Obama now about an hour into his overseas trip, his first since taking office. The White House promising the president will listen, as well as lead, at this, the G-20 summit meeting in London. He's clearly prepared to get an earful from some of those world leaders about the global economic crisis.

Our Senior White House Correspondent Ed Henry is in London. He's covering the president's visit there.

Ed, in a nutshell, what does the president hope to accomplish over these next eight days?

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: Well, Wolf, top White House aides say the president has two simple goals, which is to try, first of all, to spark some concerted action to spark the world economy, to get everyone on the same page, these 20 nations coming together here in London. And then secondly, to try to come up with some new regulations on the financial markets to prevent a future crisis from happening.

And those words you mentioned, this mantra from the White House of both leading and listening, is by design. It's not by accident. It's an attempt to show a break from the Bush years and suggest that with President Obama's popularity around the world, and with his fresh approach, he can actually deliver some results.

That could be very difficult, though. And that's why this is his first big test on the international stage -- Wolf. BLITZER: How much potential friction is there between the president and some of these world leaders?

HENRY: There is already friction breaking out. You've had German Chancellor Angela Merkel suggest, look, no one's going to tell me how to spend money in Germany, this idea that the U.S. was going to suggest that there be more stimulus money around the world, not just in the U.S.

Then Nicolas Sarkozy, the French president, suggesting today he may walk out of this G-20 summit in the next couple of days if there's not serious regulatory reform and what I talked about with the markets.

And then you had Gordon Brown, the British prime minister, the host here of this summit, today suggesting the U.S. bears a lot of the blame for this crisis. Take a listen.


GORDON BROWN, BRITISH PRIME MINISTER: And instead of banks being as they should be, stewards of people's money, too many of them became speculators with people's futures. And I say to you plainly, this old world of the old Washington consensus is over. And what comes in its place is up to us.


HENRY: Now, White House aides are trying to downplay any friction by saying, look, the president doesn't believe this is either/or, either you stimulate the world economy or you come up with more regulation. He thinks you need to do both, and he's confident at this point that there can be unity here. But that's going to be something to watch closely over the next few days -- Wolf.

BLITZER: Ed Henry and Suzanne Malveaux, they're going to be traveling with the president throughout these several days.

Ed, stand by.

The Obama administration took a small step, but significant, toward trying to improve relations with Iran today. The secretary of state, Hillary Clinton, announcing a brief and candid exchange. She was not directly involved in it, despite some speculation earlier she might personally make a grander gesture toward Tehran. But another very high-ranking U.S. official was very much involved in shaking hands with an Iranian official.

Our Foreign Affairs Correspondent Jill Dougherty is traveling with the secretary of state in The Hague, in the Netherlands.

A significant development. The president promised as a candidate he would reach out to the Iranians, and that's precisely what they did today in The Hague, Jill.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Exactly, Wolf. You know, we're not talking about negotiations here, but Hillary Clinton called it a cordial, unplanned encounter.


DOUGHERTY (voice-over): Would she or wouldn't she? No meeting for the secretary of state with Iran's deputy foreign minister, but at an international conference on Afghanistan, Hillary Clinton said there is a lot the U.S. and Iran can follow up on.

HILLARY CLINTON, SECRETARY OF STATE: The fact that they came today, that they intervened today, is a promising sign that there will be future cooperation.

UNIDENTIFIED MALE: The presence of foreign forces has not...

DOUGHERTY: The Iranian said foreign troops aren't helping security, but said his country is willing to cooperate on issues like drug trafficking from Afghanistan, a major concern for neighboring Tehran.

CLINTON: A lot of those illegal drugs go right through Iran. Iran has a serious and growing problem of drug addiction.

DOUGHERTY: But special representative Richard Holbrooke did have a few words with the Iranian official, and they agreed to keep in touch. The minister also was given a diplomatic note asking for their help with three Americans missing or held in Iran.

At the conference, Clinton laid out the new U.S. strategy on Afghanistan and Pakistan. She called the threat from the leader of Pakistan's Taliban to carry out a major attack on Washington, D.C., a reminder the Taliban and al Qaeda are working hand in hand.

CLINTON: It illustrates exactly why we're doing what we're doing. Anybody who thinks we can walk away from Afghanistan and Pakistan and the border area is forgetting, oh, it happened on September 11, 2001.

DOUGHERTY: But the U.S. believes some Taliban can be reformed because they are only members out of economic desperation.

CLINTON: The Taliban actually pays a higher rate to a young man who joins the Taliban than a young man who joins the police force.


DOUGHERTY: And there are more upcoming events connected with Afghanistan. For instance, there will be a donors' conference in Japan coming up, and perhaps more opportunities for some close encounters between the United States and Iran -- Wolf.

BLITZER: You just lost your light over there. Jill Dougherty, thanks very much.

Jill is traveling with the secretary of state in the Hague.

Let's get some more information about those three Americans missing or held in Iran right now. Robert Levinson, there's a picture of Robert Levinson. He's a former FBI agent. He disappeared in Iran two years ago, reportedly while investigating a cigarette smuggling case.

Roxana Saberi is a freelance journalist who was arrested by Iranian authorities in January of this year after buying a bottle of wine.

And Esha Momeni is a graduate student at California State University who was researching the Iranian Women's Movement. She was arrested in October of last year for an alleged traffic violation. The secretary of state today submitting a letter to the Iranians asking for help in getting these three Americans free.

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

JACK CAFFERTY, CNN ANCHOR: Millions of Americans will soon start seeing a little extra in their paycheck, all part of that massive economic stimulus plan the president signed into law last month. President Obama has asked all employers to adjust their payroll systems by tomorrow so that eligible workers can start receiving the Making Work Pay tax credit in their paychecks.

If paid weekly, single people eligible for this might get between $10 and $15 per paycheck. Married couples could see $15 to $20. In total, it comes out to about $400 a year for single filers, $800 for joint filers.

The full amount will be paid to people who make less than $75,000 a year or $150,000 for couples. There are also partial credits for people who make more than that, but no more than $95,000 per person, $190,000 per couple.

The credit is also refundable, which means that even poor families who don't make enough to pay income tax will still be able to claim it. The $10 or $20 a week ain't AIG bonus money, but for a lot of people, it might just might make the difference between being able to make that mortgage payment next month or not.

Here's the question: How will the stimulus bonus affect your life?

Go to You can post a comment on my blog.

BLITZER: Jack Cafferty, thank you.

Some of America's most notorious killers did time at San Quentin. Would you want to buy a condo there? It's a $2 billion idea.

Plus, the General Motors chief financial officer tells me how close the company might be to actual bankruptcy.

And we're going to tell you where voters may be passing judgment on the president's economic policies right now.

Stick around. You're in THE SITUATION ROOM.


BLITZER: The clock is now ticking for General Motors now that President Obama has given it 60 days to come up with a better plan for its debt. His ultimatum is plastered on the front pages throughout the country. The auto giant must now scramble or face what many consider to be a worst-case scenario.


BLITZER: And joining us now from Detroit is the General Motors chief financial officer, Ray Young.

Mr. Young, thanks very much for coming in.


BLITZER: The president yesterday used the word "bankruptcy." And an editorial in today's "New York Times" entitled "The Last Best Chance for Detroit" said this: "A government-backed bankruptcy process could be used to discard G.M.'s liabilities and unwanted assets and produce a profitable, albeit smaller, car company."

How close is GM now to some sort of heavily structured bankruptcy?

YOUNG: Well, Wolf, as you know, President Obama yesterday basically gave us 60 days to try to work an out-of-court restructuring process through with the very stakeholders. And right now we're very focused on getting that done.

At the same time, he clearly indicated that at the end of 60 days, if we can't get this done, we will enter an in-court process. It's fair to say that we, at General Motors, we've been planning for contingencies. Every since January, we've had advisers and experts working with us in order to understand and plan for a contingency, which would be the case of a Chapter 11 filing, in-court process restructuring. So...

BLITZER: Because...

YOUNG: ... from our perspective...

BLITZER: Yes, go ahead. Finish your thought.

YOUNG: ... we need to get the job done. We need to get the job done.

We understand we have too much debt on the balance sheet. We're going to basically reduce this debt load either through negotiations with the various stakeholders over the next 60 days, or we'll use the in- court process in order to help us reduce the debt load and allow us to come up with a viable balance sheet for the long term.

BLITZER: Because, as you know, over the past four to six months, whenever there was talk of bankruptcy, people would say, well, who would buy a car from a company that was in formal bankruptcy? But now the government, the president of the United States, says the government is going to guarantee these warranties so people who go out and buy a new GM car, they don't have to worry about their warranties.

That seems to suggest to me and to a lot of other folks out there that this train is leaving the station towards some sort of structured bankruptcy.

YOUNG: Well, it's very important what President Obama spoke yesterday about the government backing the warranties. Our biggest concern always with respect to an in-court process is how consumers viewed the guarantee on their vehicles, the warranty on their programs. With the government basically stating that they are going to back General Motors, A, in terms of the warranty and, B, even more importantly, the government indicated that General Motors will survive, ,will prosper in the future, this allows us, in effect that, if we had to go through an in-court process, it significantly reduces the risk of an unsuccessful reorganization.

BLITZER: Over the next 60 days, as this clock is ticking, does GM, do you and your other top executives need to consult with the White House on major decisions?

YOUNG: Wolf, this being a process over the past month working with the task force, they spent a lot of time learning from us, a lot of time gathering information, doing analysis. It's fair to say that over the next 60 days, we will work closely with the task force in terms of understanding both the operational restructuring that we're going to do, as well as the balance sheet restructuring, which is effectively converting the unsecured debt, as well as the VEBA, into equity. So I expect close collaboration working with the task force.

BLITZER: And would you need their permission to make major decisions?

YOUNG: Well, our loan agreement actually does specify when we formally have to consult and seek approval from the U.S. Treasury in terms of doing certain things. There's a certain monetary amount in terms of the dollar value transactions, which we need their approval if it's out of the normal course of business. But setting aside the loan agreement terms, I think from our perspective, we want to work collaboratively with the task force to make sure that the direction that we're going to affect in terms of restructuring, both operational and balance sheet, is consistent with where their findings are.

BLITZER: It sounds like there's a real partnership with the task force, the federal government, in effect, and GM right now.

A quick question on the $13.4 billion that the federal government has already lent General Motors. Where has that money gone?

YOUNG: We've used that -- those fundings in order to effectively finance our working capital requirements here in the United States. As you know, Wolf, during the first month of this year, in January, we basically had very, very little production, and hence, we did not generate revenue in order to recover payments to our suppliers, as well as our employees.

And so, effectively, we used the loans to cover our working capital needs over the first two months of the year. What has been encouraging is that in the month of March, we have been producing vehicles. And as a result, we were able to defer the $2 billion draw that we had forecasted in our February 17th submission into the future.

BLITZER: Ray Young is the chief financial officer of General Motors.

Mr. Young, good luck.

YOUNG: Thanks a lot, Wolf.


BLITZER: Here's what General Motors is up against.

For every one of its current workers, there are about 10 dependents. That would be retired and active workers and their families. These so-called legacy costs add up to about $2,000 a car.

GM has seen its market share shrink for more than 50 percent back in 1962 to 22 percent now. GM's stock, by the way, has gone from more than $90 a share back in 2000 to a low earlier this morning of just $2.76 a share.

Big threats against the United States. And now a big price on his head. Dangerous, yes, but is the Taliban commander in question able to follow through on his terror promises?

And California considers putting some prime, yet infamous, waterfront property on the block. Could San Quentin Prison one day become a vacation destination?



BLITZER: In real estate, by the way, it's a buyer's market these days, as all of you know. Nevertheless, a California lawmaker believes he's come up with a hot property for this state to shut down and sell.

Let's go to CNN's Dan Simon. He's in San Francisco watching this story for us.

Pretty choice piece of real estate out there potentially on the market, Dan.


We're talking about some vast beachfront property just outside of San Francisco. As you know, the Bay area has some of the priciest real estate in the country, and one lawmaker would like to see this parcel of land -- he'd like to see it basically leveled to make way for condos, parks and more.

Take a look.


SIMON (voice-over): A real estate deal that's almost too good to be true, the first time ever available, 432 secluded acres with pristine waterfront, providing priceless views of San Francisco Bay. The asking price? Two billion dollars.

Full disclosure, you would be buying the notorious maximum-security prison San Quentin.

JEFF DENHAM (R), CALIFORNIA STATE SENATE: Our inmates just don't need an ocean view.

SIMON: One reason why State Senator Jeff Denham wants to close the prison and sell the land to developers, who he thinks might pay as much as $2 billion.

DENHAM: Let's rebuild something for that community there. Let's reap the benefits as a state by having the money come in.

SIMON (on camera): The idea of selling San Quentin has been considered before here in Sacramento, but never picked up much steam because of the state's chronic prison overcrowding. Plus, the legislature has already approved $360 million to build a new death row at San Quentin to replace the current aging facility.

(voice-over): But some lawmakers say that is precisely the argument, to explore different uses for some, if not all, the land, and without leveling the entire prison.

REP. JARED HUFFMAN (D), CALIFORNIA ASSEMBLY: It doesn't make sense anymore in the year 2009 to continue to invest in expanding this prison facility on the most prime piece of real estate in northern California.

STEPHEN ROULAC, REAL ESTATE CONSULTANT: We would see a performing arts center prospectively here, possibly a museum. There should be a transit center.

SIMON: But the state would need a new prison in its place. Not always easy.

BOB SLEPPY, CALIFORNIA DEPT. OF CORRECTIONS: I've been building prisons for 25 years, and I can tell you, it's a very difficult thing to do. Communities seldom welcome a new prison.


SIMON: Well, the California Senate Public Safety Committee took up this issue today. Ad it was clear, there's not a whole lot of support to really push this proposal forward.

Bottom line here, supporters think you really ought to think twice about this, about whether leveling San Quentin and putting up condos and parks and other real estate development could provide a huge economic stimulus to northern California.

Of course, Wolf, California could really use some.

Back to you.

BLITZER: It's worked when they shut down some of those military bases in California and elsewhere. They've developed it by private developers coming in.

And a nice view. Nice waterfront property, as you say. Build a new prison in some remote area where the view is crummy and let them develop it, if you will. Sounds like a pretty good idea to me, but I have no say in that.

Thanks very much, Dan.

Dan Simon reporting.

One part world leader, one part rock star. As President Obama begins his overseas debut at the G-20 summit in London, how is his performance being received both abroad and here at home?

And it's a special election day in upstate New York. CNN's Mary Snow, CNN's John King and the Magic Wall, they are all here to help us measure what that race might say about the U.S. state of mind and the prospects for the Democrats and Barack Obama in the years to come.


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

Happening now, Sudan's president indicted for war crimes tied to Darfur atrocities, yet embraced warmly right now by some U.S. allies at an Arab summit. Some question the message the image is sending to the rest of the world.

And a new administration and a new shot at opening doors to Cuba. Senators moving to lift the ban on U.S. travel to the forbidden island nation.

And another popular snack recalled because of a salmonella contamination. Better check that package of pistachios.

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

President Obama is launching his first official trip to Europe, hoping to put a better face on U.S. relations with the world. Many Americans are watching very closely, and with great expectations.

Let's turn to our senior political analyst, Bill Schneider.

How do Americans, Bill, expect this new president to be received on this first trip around the world, in effect?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, Americans believe their president has star power.

(BEGIN VIDEOTAPE) SCHNEIDER (voice-over): Star power -- some presidents have it when they travel overseas. Some don't. Do Americans think their new president has star power? You bet. Nearly three-quarters of the public believe leaders of other countries have respect for President Obama.

That's a lot higher than the number who felt President George W. Bush was respected in the world when he first got elected. Controversy seemed to follow President Bush wherever he went.

Will President Obama face controversy at the G-20 summit? Yes. The president faces the same situation internationally as he does at home. His policies are less popular than he is. Two-thirds of Americans approve of the way President Obama is handling his job.

But Americans are divided over the federal government's response to the economic situation. President Obama is likely to face criticism overseas on two fronts. One is fiscal discipline. The leaders of France and Germany are resisting pressure from the Obama administration to boost public spending even more. "Excessive national debt is a threat to global stability," they argued in a joint letter to the European Union.

The president is also likely to face demands for stronger financial regulation.

GORDON BROWN, BRITISH PRIME MINISTER: We must reshape the global financial system for new times, so that, with early warnings and proper precautions, we can prevent crises like this happening again.

SCHNEIDER: Some foreign leaders blame the United States for the free- wheeling financial practices that brought on the current crisis. France's leader has threatened to walk out of the summit if it does not produce new rules that crack down on reckless financial behavior, the kind of behavior identified with Wall Street.


SCHNEIDER: President Obama may face pushback from foreign leaders who see the financial crisis as an opening to challenge U.S. dominance over the world economy. To Americans, the president of the United States is a star, and they don't want to see a star get pushed around -- Wolf.

BLITZER: Bill Schneider, looking at the numbers for us, thank you.

The president's economic policies may be a powerful influence on a vote underway in Upstate New York right now. It's a special election to fill the House seat left open when a Democratic congresswoman replaced Hillary Clinton in the United States Senate.

Mary Snow is standing by in Hudson, New York.

Mary, this is one of those special -- special elections that could tell us potentially a lot about the mood of the country early on in this new administration. MARY SNOW, CNN CORRESPONDENT: It could, Wolf.

And, for Democrats, the question is, are the president's policies resonating with the public? And, for Republicans, they hope to turn the tide.


SNOW (voice-over): These voters may be casting ballots for candidates largely unknown outside this mostly rural district of Upstate New York. But the race is seen as an early test of President Obama's efforts to jump-start the economy.

The contest, pitting Democrat and venture capitalist Scott Murphy against longtime Republican state lawmaker Jim Tedisco, has gotten widespread attention. And so have the voters here, who say they have been bombarded.

LIBBY HOLMES, NEW YORK VOTER: Oh, the vice president called in last night. I thought that was nice of him. And we had a call on the answering machine from Pat Boone supporting Jim Tedisco.

SNOW: Yes, that's Pat Boone of 1950s pop song fame getting involved. Republican National Committee Chairman Michael Steele targeted this race as a priority for the GOP this year. GOP candidate Tedisco made the president's economic stimulus bill his big issue, blasting it as wasteful.

JIM TEDISCO (R), NEW YORK CONGRESSIONAL CANDIDATE: Are we going to send a leader to Washington, or are we going to send another rubber stamp for Nancy Pelosi?

SNOW: Democratic candidate Murphy has chided his opponent for delaying for weeks commenting on whether or not he supports the stimulus package. Murphy says the bill is needed to create jobs. President Obama has endorsed him and has e-mailed Democrats in the district to do the same.

SCOTT MURPHY (D), NEW YORK CONGRESSIONAL CANDIDATE: So, the message that President Obama talked about last fall, there's still a lot of resonance there.

SNOW: Despite all the national attention, some in the town of Hudson say they're tired of the politics.

ED CROSS, NEW YORK VOTER: We have lost factories. You know, people are running around with empty pockets. And it's getting very, very rough.


SNOW: And, Wolf, when you talk to people here in Hudson, they say they don't really know that their vote is so much a gauge on national politics.

But, like so many other places around the country, their big concern, of course, lost jobs. And here in Hudson, two factories within the past couple of months have closed down, and that has cost hundreds of jobs -- Wolf.

BLITZER: All right, Mary Snow, stand by. We're going to get back to you once we know some results up there.

Let's check in with our chief national correspondent, John King, the host of CNN's "STATE OF THE UNION."

John, you're -- you got the magic map. We have got an election that is under way right now. And you can take us inside, give us a little perspective, because some are suggesting this could be an indication of President Obama and the Democratic majority's hold on Congress, what the -- what the Congress thinks.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: As Mary (AUDIO GAP) Wolf, both national parties investing heavily, so a lot of (AUDIO GAP)

I will make this quick point before we go up into New York. If you are watching to see what races this year will make the biggest difference, I would watch the governor's race in New Jersey and the governor's race in Virginia. Those are in November, two big statewide contests. They will tell you a lot more about the state of the mind of the country, how the president is doing.

BLITZER: But we have to wait until November for those.

KING: We have to wait for November.

So, for now, we have this race. And it's a nice race. Let me switch over to House races here. This is the district in play right here. It's the 20th District. It starts in the northern New York suburbs, runs up past Albany, and almost up to the Canadian border. You see the line up here.

Kirsten Gillibrand, now a senator, carried it quite handily in 2008, 62 percent of the vote. But this is a very interesting place. I'm going to outline the district on the map here. And I will tell you why I'm doing this in a just a minute. But we will outline the district in the map, and we will come out of the Telestrator.

We're going to come back down here. And what we want to do is come back to our presidential contest and now bring this district over. This is the presidential race in this district. Barack Obama carried the district by about three points.

But let's go back in time, Wolf. You would say maybe that favors the Democrats. But look at all the red up in here. Obama carried this territory this time. This is George W. Bush in 2004. President Bush carried the district in 2004. In fact, President Bush carried the district as well in 2000.

What does that tell you? Let's look at the numbers. President Obama gets 51 percent in 2008. In '04, it was George W. Bush with 54 percent, and, in the 2000 campaign, George W. Bush with 51 percent, the same 51 percent here. What does that tell you? It's a very competitive district. Either party could win the race tonight. Whoever does win will claim this big national momentum.

If the margin is more than five or six points, the party probably has bragging rights. If it's a pretty close race, it's reflective of a pretty close district.

BLITZER: Because, when Gillibrand was elected, she beat a longtime Republican who had held that seat for many, many years.

KING: That's right. She beat a Republican incumbent who had some problems. He was getting some very bad headlines, very bad newspaper stories, tabloid-type newspaper stories. So, that was a big win for the Democrats in the state of New York.

But especially Republicans, Wolf, you know very well, if we come outside of the map and come down a little bit, Republicans, especially in the Northeast, this used to be Republican territory. The suburban rural areas of New York, New Jersey, up into New England, you used to be able to find those moderate Republicans.

You know them well. Mr. Sweeney represented that district. Jack Kemp represented the Buffalo area, where you are from. Those Republicans are almost an extinct breed up here. So, Republicans are hoping they can win this race and say, look, we're on the comeback trail.

But, again, unless the margin is very big, I would remember these numbers. It's a very competitive district. So, if somebody wins by two or three points, they ran a good race. It doesn't necessarily mean anything nationally.

BLITZER: I remember, when Gillibrand was running in that district, she was bragging about her guns and all of that.

KING: Right.

BLITZER: And that's -- I'm from Upstate New York.

KING: Yes.

BLITZER: So, I'm very familiar with that part of the country, although it is, as you point out, changing a lot since -- when I was growing up as a kid.

KING: But not liberal.

BLITZER: All right.

KING: The gun point is a key point to make.

BLITZER: The guns are an issue for a lot of folks.


KING: That's right.

BLITZER: Thanks very much, John. Senator Ted Kennedy, he is fighting the fight today for an issue that is a matter of life and death, the cancer-stricken Democrat in the spotlight, along with an Obama Cabinet nominee.

Plus, she has a unique perspective on Middle East threats and the prospect for peace. The American who went on to be royalty in Jordan, Queen Noor, she is standing by live.

And it's being likened to an April Fools time bomb that could explode in some computers. Are you in danger online?


BLITZER: President Obama's choice to be health secretary in the hot seat today -- the Kansas governor, Kathleen Sebelius, squaring off with senators at her confirmation hearing.

She's seeking the job the former Democratic leader in the Senate, Tom Daschle, walked away from because of the controversy over his unpaid taxes.

Let's go to our senior congressional correspondent, Dana Bash.

Dana, this is very important that this job get filled pretty quickly, a lot on the -- a lot at stake, including health care.


You know, if she is confirmed -- and most people here believe she will be -- Kathleen Sebelius will definitely have a major role in one of President Obama's top priorities. And, Wolf, that is health care.

And it's the reason why Ted Kennedy made a rare appearance before his committee in order to preside over her confirmation hearing.


BASH (voice-over): Cameras captured a vibrant-looking Ted Kennedy greet the president's nominee for Health and Human Services, but his slight shake an instant reminder of his brain cancer, a personal battle he says gives him better understanding of his fight for health care reform.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: Over the past 10 months, I have seen our health care system up close. I have benefited from the best of medicine. But we have too many uninsured Americans.

BASH: Governor Kathleen Sebelius promised health care reform would be her mission.

GOV. KATHLEEN SEBELIUS (D-KS), HEALTH AND HUMAN SERVICES SECRETARY NOMINEE: Americans spend more on health care than on housing or food. General Motors spends more on health care than they do on steel. Action is not a choice. It's a necessity.

BASH: The most contentious questioning came from the president's former rival.

SEN. JOHN MCCAIN (R), ARIZONA: You do not support a creation of a government-run health insurance plan?

SEBELIUS: Senator, I...

MCCAIN: These are pretty straightforward questions, Governor, I would think.

BASH: John McCain pressed Sebelius on a major partisan flash point, the president's call to give people the choice of government-run health insurance. Eventually, she said she agrees.

SEBELIUS: If the question is, do I support a public option side by side with private insurers in a health insurance exchange, yes, I do.

BASH: Conservative groups have been up in arms about Sebelius' support for abortion rights. But GOP questioning on that issue was mild.

Senator Tom Coburn, a doctor, asked Sebelius to notify him if the president overturns the so-called conscience clause, which allows health care providers to opt out of services they consider immoral.

SEN. TOM COBURN (R), OKLAHOMA: As a pro-life obstetrician, I feel I have a constitutional right to have those protections as I practice medicine.


BASH: Now, there is a big controversy brewing here in the Senate about whether Democrats will try to push through health care reform using rules that will prevent a Republican filibuster.

And, Wolf, GOP senators implored Sebelius, who, of course, is a Democrat from the very Republican state of Kansas, to urge the president not to allow that to happen. In fact, one GOP senator said it would be a declaration of war against Republicans -- Wolf.

BLITZER: Dana is on the Hill.

Thank you.

Will a malicious computer worm damage millions of computers on April Fools' Day? That's tomorrow. It's called the -- the Conficker worm. And it's no joke.

Our Internet reporter, Abbi Tatton, is taking a closer look at what is going on.

What is this worm supposedly going to do tomorrow?

ABBI TATTON, CNN INTERNET REPORTER: Well, Wolf, what it's been doing the last couple of months is basically just sitting there, sitting there on about five or maybe 10 million P.C.s, waiting for instructions. Now, if your P.C. gets the latest security updates, you are probably fine. But this Conficker worm for the last two of three months has been spreading quietly in areas of weaker security, getting on to computer networks, getting on to P.C.s that don't have the latest updates.

And once it's there, it's going to block you from getting onto the tools, getting on to the sites. They are actually going to help you get rid of it. And that's one of the ways you know that you have got it.

BLITZER: So, if you're unlucky enough to get this worm tomorrow, what will happen?

TATTON: Well, nobody really knows what's going to be happening tomorrow.

Researchers say that something will activate, but they're not really sure what. They do say, don't panic. It could just be some kind of update. But, down the road, this worm could be told to collect your information. Nobody really knows who is behind this. Microsoft has put up $250,000 for information, if anyone knows who designed this.

BLITZER: Wow. OK. Thanks very much, Abbi Tatton.

His name conjures associations with war crimes and atrocities in his own home country. So, why are some of America's allies embracing the indicted president of Sudan?

And she's the queen of Jordan. Now she's a voice for peace. I will go one on one with Queen Noor of Jordan. That's coming up.


BLITZER: Let's get right to our "Strategy Session."

Joining us, Democratic strategist, former Democratic National Committee communications director Karen Finney, and Danny Diaz, Republican strategist, former communications director for the RNC.

A lot of communications directors.



BLITZER: Guys, thanks for coming in.

How big of a deal is this race in Upstate New York today? What will it say, if anything, about the mood of the country vis-a-vis the president, Democrats, and Republicans?


I think it's important, frankly, for both sides. And I think it's going to tell us a little bit about the mood of the country, maybe a little bit about what we can expect in 2010, in terms of the rest of New York State. It's the kind of race that's got implications nationally, because there are some questions about, you know, President Obama and support for his economic strategy, but also in the state of New York, where Kirsten Gillibrand still enjoys pretty strong support in that district.

And she's also campaigned for him. So, it tells us a little bit about the upstate strategy for Democrats in the state.

BLITZER: Is this a referendum, in effect, on President Obama?

DIAZ: No, this is not a national referendum.

This is about two candidates on the ballot running in a special election. And that's what it's about, which one of the two candidates better captures the imagination of the voter.

At the end of the day, this is a unique district, in that there's a lot of urban flight in the southern portion of the district. It's a changing district. It's a district where Gillibrand, Spitzer, Schumer, Clinton, they have all done very well and won this district. So, it's going to be a challenge for the Republicans.

FINNEY: I will tell you, the other thing that will be interesting, though, to see is that Tedisco has kind of run the classic Republican campaign, about $2 million in attack ads, whereas Murphy, I think, has tried to run sort of a more positive campaign, talking about jobs, talking about the economy.

So, it will also be interesting to see how the voters respond to those two strategies.

BLITZER: Because the president of the United States has -- he's gotten involved in trying to help the Democratic candidate, and a whole bunch of high-profile Republicans have gotten involved as well.

DIAZ: Don't get me wrong, it's one we would love to have.


DIAZ: But, at the end of the day, I don't know that the two House races in Louisiana, the Senate race in Georgia subsequent to Election Day, any of those were national referendums. I don't believe this is either.

BLITZER: And the mood of the country is clearly affected by all the bailouts, the billions and billions of dollars in bailouts that have been going in the compensation packages.

There's now a move in the House to limit compensation for all employees, potentially, of companies that are bailed out by U.S. taxpayers.

What do you think about that?

FINNEY: Right.

Well, you know, if we would have been talking about this before the AIG news came to light, I think you would have seen taxpayers probably a little more wary of it. And now they are probably a little more accepting of the idea. I think there's a real concern among the American people that our tax dollars get spent appropriately. And I think the mood of the country is, overwhelmingly, we want to make sure those dollars are spent appropriately.

BLITZER: Is this an area where Democrats and Republicans agree?

FINNEY: I think you have to walk the line between political reality and economic reality.

We're erring too far on the side of political reality. Our companies, our corporations need to compete in a global marketplace. Who is going to run this? Where is the oversight coming from? Today, on Capitol Hill, they testified that Treasury is not helping enough with oversight of TARP funds.

So, at the end of the day, we're putting forward these policies, but who is enacting them?

FINNEY: Well, I think that one of the things we're going to see, there's no question things are going to change. And we know that's part of the subject of the discussion that we will see at the G-20 this week in terms of a new regulatory framework.

So, I think we're going to certainly see changes in the way compensation structures, maybe -- you know, how far we go, still yet to be seen. But I think the American people are looking for some changes.

BLITZER: I think the American people would like to see less government involved. But, at the same time, when they see some of these huge bonuses and when they see some of the compensation packages of companies being bailed out by your money and my money, our taxpayer dollars...

FINNEY: That's right.

BLITZER: ... they get pretty angry...


DIAZ: At the end of the day, this is the result $170 million going to, you know, AIG. So, I think there's some skepticism, particularly when you couple it with the fact that the announcement came from Barney Frank, who gave a thumbs-up to Freddie Mac and Fannie Mae.

So, I think there's quite a bit of skepticism on our side of the aisle.

FINNEY: I think where this is coming from, though, is that the American people, you know, are suffering. And people are making real sacrifices. And when you hear about those AIG bonuses and purchasing of new jets, that doesn't sound like the industry is making the sacrifices that they need to make. So, that's what they're interested in.

BLITZER: We will leave it there, guys. Thanks for coming in.

DIAZ: Thanks.

FINNEY: Thanks.

BLITZER: Tomorrow, by the way, the president will be meeting with the Russian president, Dmitry Medvedev. What do you want President Obama to tell the Russians? Submit your video comments to Watch tomorrow's show to see if your video makes our air.

Democrats angry at Rush Limbaugh -- they are taking their criticism of the conservative radio talk show host on the road. We will tell you what's going on.

Also, a Taliban chief's direct threat to attack Washington, D.C., and -- quote -- "amaze the world."

And President Obama lands in the midst of adoring crowds in London, as well as some angry protesters. It's a huge security challenge. We will update you on what we know.


BLITZER: On our "Political Ticker" today: the new chairman of the Democratic Party apparently at odds with President Obama on a controversial issue.

The Virginia governor, Tim Kaine, has signed a bill banning the use of state funds for embryonic stem cell research. This comes just weeks after the president signed an executive order lifting limits on federal funding for research in embryonic stem cells.

A traveling billboard blasting Rush Limbaugh is making its debut in West Palm Beach, Florida. That's where the conservative radio host lives. He actually lives in Palm Beach, not in West Palm Beach. The Democratic National Committee paid for the billboard that criticizes Limbaugh for saying he wants the president of the United States to fail.

Remember ,for the latest political news any time, you can always check out

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

Jack, you did very well on "The Daily Show With Jon Stewart" last night.

JACK CAFFERTY, CNN ANCHOR: You were up that late, watching "The Daily Show"?

BLITZER: Well, why not...


BLITZER: ... if you're going to be on, if you're going to be on?



CAFFERTY: Well, thank you. I'm glad you enjoyed it.

The question this hour is, how will the stimulus bonus affect your life?

Deborah writes from Blue Springs, Missouri: "Ten or twenty dollars extra per week will go straight into the bank, so that I can begin to put my financial cushion back into place."

Terence in Piscataway, New Jersey: "Let me ask you if this stimulus tax break is going to be a life-saver for you. I doubt it. So, why ask such a stupid question? You know this tax break doesn't mean a hill of beans to anybody getting it. I can find more money picking up coins off the street."

Fiona in Chicago: "I think it's great Mr. Obama is taking these measures. Unfortunately, there's no provision being made for freelance workers. I think it's unfair that those of us who have had to resort to all freelance work are now falling through the cracks of this stimulus benefit."

A former government employee writes: "It won't. And the way the trend has continued, many people may feel the same way as me. It doesn't matter that a stimulus is added to your paycheck if you don't have a job."

Matt in Kansas says: "It sounds like what we will be receiving amounts to roughly what we spend on diapers, Vaseline, and baby wipes for our two 1-year-old sons. Every little bit helps when you work in the not- for-profit sector and your salary has been frozen for the past three years."

Monica says, "This increase will not affect me at all, since my payroll deduction for health insurance is increasing as of April 1."

That would be tomorrow.

Camden in Naples, Florida, writes: "Well, $400 for this single means I can't do much, but it's better than nothing. Fifteen dollars a week doesn't even cover four Lean Cuisine meals."

And Marcel in Atlanta writes: "During these tough times, every penny counts. Twenty dollars buys two days worth of groceries, or almost a tank of gas. I'm thankful for the help when we need it the most."

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

Did you see the beginning of "The Daily Show" last night?

BLITZER: I did, something about my beard.

CAFFERTY: Your name was mentioned.

BLITZER: I noticed he mentioned my beard. Is that right?

CAFFERTY: He -- he asked a rhetorical question of whether that beard was real or simply coconut that was stuck...


CAFFERTY: ... stuck to your face.


BLITZER: All right.

CAFFERTY: I -- he didn't bring it up with me, which is just as well.

BLITZER: Just as well.


BLITZER: It's real.



BLITZER: Thank you, Jack.


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

Happening now: An attack that will amaze the world, that's the blood- curdling vow from a terror leader linked to deadly assaults in Pakistan. But, this time, he's vowing to strike at the most sensitive sites right here in Washington, D.C.

And there's very tight security in London right now, where President Obama has arrived for the economic summit. Thousands of protesters are already in place. How far will they go?

And he's been indicted for war crimes tied to the slaughter in Darfur. So, why did Sudan's president get hugs and kisses from some of America's friends at an Arab summit?

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