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STATE OF THE UNION WITH JOHN KING

Adviser Reflects on Obama's Visits to WWII Sites; Palin Criticizes Obama's Foreign, National Security Policies; Authors Evaluate U.S.-Israel Relationship

Aired June 14, 2009 - 20:00   ET

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


JOHN KING, CNN HOST: (AUDIO GAP) critical U.S. ally. We'll hear from the president's senior adviser, David Axelrod.

America's unemployment rate hit a 26-year high in May. But the numbers include some potentially positive signs as job losses appear to be slowing. Three mayors in towns where major General Motors plants are about to close are here talk about the recession's toll on America's cities.

And 20 years ago when China's government ordered this network to stop broadcasting the massive pro-democracy demonstrations in Tiananmen Square, he was reporting from the front lines in Beijing. CNN legend Bernard Shaw gets "The Last Word."

That's all ahead on this Sunday's STATE OF THE UNION.

We begin today with the president's overseas trip and the ambitious domestic agenda awaiting the president as he returns today from overseas. The trip was five days in all, the president traveling from the United States, first, to Riyadh, Saudi Arabia. Then it was on to Cairo, Egypt, where he delivered his major address to the Muslim world.

The president then moved on to Europe, Dresden, Germany. He visited a Nazi concentration camp. Final stop of the trip was here in France. The president visiting Paris, also up to Normandy for the 65th anniversary of the D-Day landing.

The troop ended in Paris, which is where this morning we find the president's senior adviser, David Axelrod.

David, I want to begin first with the moment. With a new president, we are still seeing many things for the first time. He walked the hallowed grounds of the American cemetery near Normandy. It is a remarkable place. It is a sobering place.

I'm wondering if he shared his reflections with you on being the commander-in-chief walking that ground.

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER: Well, look, I think there's an enormous sense of pride that he felt representing the United States of America. It's such an extraordinary, inspiring story of what happened on those cliffs off the beaches of Normandy.

And when you stand there and contemplate it, look at those at that cemetery, consider the valor of kids who were barely shaving and, yet, they saved -- they saved the world from the scourge of Nazism and fascism.

And so I think he felt all of that and he felt very, very proud to stand there as the president of the United States. It was particularly emotional for him because his Uncle Charlie was there who helped liberate the Buchenwald concentration camp.

And Charlie, I think, reminded him about his grandfather who served and came across those beaches in Normandy, and an uncle -- another great uncle. So, you know, it was an extraordinary day for him and one I know he'll never forget.

KING: While there in Paris he announced that Senator George Mitchell, his special envoy to the Middle East, will be going back to the region this week to talk to the Israelis, to talk to the Palestinians.

What is the goal of this trip? Because many speak of the peace process but there really is no process. The Israelis and the Palestinians have not been at the table negotiating in earnest for some time. Is that the goal, to get them back to the table in the near future?

AXELROD: Well, certainly we want to get them back talking to each other. And I think there is a recognition -- a broad recognition in the region that there needs to be progress. One of the great heartening things about the president's speech in Cairo is the enormously positive reaction it generated across the region and around the world.

And from both Israel and the Arab world, we saw positive responses. And when the president talked to leaders in the region and here in Europe, I mean, there's just such a hunger for this process to move forward.

So the hope is that Senator Mitchell can get that -- can get -- can make some progress next week on his visit.

KING: Let's focus on the president's speech in Cairo. Public reactions were overwhelmingly positive, but there was a bit of grumbling from Israelis privately and from some in the American Jewish community back here. Not so much at what the president said, but that where he said it.

I want you to listen to one line from the president's speech that raised some eyebrows, and it concerns his calling on Israel to stop building settlements. Let's listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Israelis must acknowledge that just as Israel's right to exist cannot be denied, neither can Palestine's. The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop.

(END VIDEO CLIP)

KING: The interesting thing to some, David Axelrod, is that the president said that in Cairo, Egypt, to a major Arab capital, and the speech was, of course, covered around the Arab and Muslim world. He said a similar thing in the Oval Office last week with President Mahmoud Abbas of the Palestinian Authority.

And many Israelis are asking that you know -- you should know that Netanyahu's government in Israel is so fragile that if he did that now, if he stopped the settlements now, his government might collapse. And so they ask the question, why do you keep pushing?

AXELROD: Well, because these are agreements that the Israelis have made in the past. Palestinians have made agreements in the past that they have not observed. And the president's point in that speech is that everybody has to step up now and meet their responsibilities, because the prospect of generations more bloodshed, of generations, more suffering is something no one -- no one should accept.

And I must say that the reason the speech was well-received is because it was very candid and it was very clear, and he was very clear to the Palestinians, clear to the Israelis. He was very clear to the Arab world and he was very clear about what our responsibilities are and have been.

And I think that kind of candor clears away some of the debris that has stood in the way of progress. And our hope is that now we can take advantage of that.

One thing I would say, John, is one of the most heartening statements came from Shimon Peres, the president of Israel, who called the speech "brave and courageous" and praised the president for his leadership. I think that was an encouraging statement.

KING: But are you asking then to continue the candor? If Mr. Netanyahu's coalition would not allow him to stop settlements, would not allow him to sit down with the Palestinians and start talking about the difficult choices, land for peace, should Mr. Netanyahu then either challenge his own ministers or should he try to form a new government?

AXELROD: John, look, the president is very -- has been very clear that he understands that there are enormous difficulties, enormous difficulties for Prime Minister Netanyahu, enormous difficulties for President Abbas in this process. It's laden with difficulties and he understands the politics of it. But the stakes are so enormous, enormous for Israel, for the region.

You know, Israel is our greatest ally in the region. We have bonds. They're not just strategic, but bonds of the heart with Israel, and we care deeply about its security and we want peace to come so Israel can live in peace, in secure borders and -- but that's not going to come without people stepping up and -- and challenging the prevailing politics on both sides, and the president is urging them to do that.

KING: And how does he respond to those who say he has been on an apology tour, going around the world apologizing for the United States' actions in the past?

AXELROD: I think that they didn't pay attention to this speech or any of the speeches that he's making, because embedded in this speech was a very strong -- a strong explanation -- explication of who we are and what we're all about, about our values as a country and our history as a country.

John, the whole point that he made was there are stereotypes of the Muslim world that have been -- that have grown up because of a small group of extremists who have been -- who have been used to define the entire Muslim world. And he said by the same token, America has been stereotyped in a way that bears no resemblance to who we are. So I think he made a strong statement for our country there.

KING: David Axelrod, we're going to ask you to stand by. We need to sneak in a quick break here, but when we return, we'll talk to David about the president's crowded domestic agenda, rising unemployment, a complicated and expensive health care debate, and a confirmation of a Supreme Court justice.

Stay with us.

(COMMERCIAL BREAK)

WOLF BLITZER, CNN ANCHOR: You just heard Alaska governor Sarah Palin blast President Obama for government spending. In part two of our interview, she criticizes his foreign policy and national security agendas, then turns her fire to a late-night comedian.

(BEGIN VIDEOTAPE)

BLITZER: Let's move on to some other issues that are out there including the president's speech in Cairo to the Muslim world. What do you think of it?

GOV. SARAH PALIN (R), ALASKA: Well, I would certainly like our president to stand very, very strong and bold in his statements about our protection of Israel, that so many of us believe in and our strongest ally in the Middle East being Israel deserve our protection. And I would have liked to see a little bit more passion in that arena.

BLITZER: Are you suggesting he's not pro Israel enough? Is that what I'm hearing?

PALIN: I'm sure he is pro-Israel. I would have liked to see more passion in the talk that he gave regarding our friends in Israel, our strongest ally making sure that they know that we are here for them. We're going to stand by their side. We're going to help them.

BLITZER: You recently criticized him for showing weakness by having some Pentagon cuts in terms of missile defense that clearly affects Alaska. Is the country safer now that Barack Obama is president of the United States?

PALIN: I think it's a sign of weakness to cut defense spending right now, especially when particular projects and services like missile defense systems. There in Alaska, we're strategically located, where we could intercept a missile coming from North Korea. You see what Kim Jong-il is up to right now, having launched the six -- small missiles and now deciding by about June 16th he's saying to launch a large missile.

Alaska has the position and the equipment, if it's funded correctly, to intercept a missile and to see then that there is talk of cutting that system. I think it's nonsense. I think it's a sign of weakness. We need to be showing signs of strength with our national defense, especially when you consider, Wolf, our young men and women abroad fighting for us and our safety, our security. We need to do all that we can with our military to show that we are strong on offense, not just defense.

BLITZER: In recent days there's been a huge brouhaha over David Letterman's jokes involving your family and your daughter. He says he made a mistake. He says, yes, it was probably in bad taste. He shouldn't have done it. Are you willing to forgive and forget?

PALIN: I will always forgive whomever is asking for forgiveness. It goes beyond, though, David Letterman's crude, sexist, perverted joke about a 14-year-old girl being, quote, unquote, "knocked up by Alex Rodriguez." I think he's like 30-some years old.

I think that that's pretty perverted. But it goes beyond that. Not just that joke but this insinuation that it's OK, it's acceptable to talk like that and then that it's acceptable for the media to not provide the American public, the listeners, the readers, the full context of that joke.

Letterman says now hey, I wasn't talking about her 14-year-old. David, my 14-year-old was there with me at the game. She was the only one there with me. It wasn't my older daughter who's in college and taking care of her young family. It was my 14-year-old.

So, for the American public to not be given the full context of what that joke was all about, I think that's quite unfortunate. And also it is that sad commentary on what Americans are fed in terms of full news.

BLITZER: Because he says -- he says now he was talking about your 18-year-old daughter, not the 14-year-old daughter.

PALIN: Yes. Weak, convenient excuse. No. And you know what, regardless of which daughter it was, inappropriate. I think it contributes to some low self-esteem of many of the young girls' country. Very unfortunate.

I'm so glad to see women standing up and saying enough is enough. You can't talk about a 14-year-old being statutory raped is what this is because a 14-year-old would not consent to being "knocked up," quote, unquote, by a 30-year-old gentleman. (INAUDIBLE) I think degrading. I think it contributes to so many problems. It's unacceptable. And I'm very, very glad to hear you say that even David Letterman has recognized that it was inappropriate.

BLITZER: Yes. All right. Let's move on, talk a little bit about politics. A subject close to your heart. 2012. Before there's 2012, there's 2010. Are you definitely going to seek re-election?

PALIN: I'm not definitely going to do anything yet. What I'm trying to get done for Alaska right now is to get that Alaska gas line built. We need those energy sources flowing through North America. That's what my focus is. That and raising my family, doing those good things that we need done up there in Alaska. That's my focus.

BLITZER: So no decision yet on either 2010 or let alone 2012, is that right?

PALIN: No decision that I'd want to announce today.

BLITZER: All right. But you'll let us know when you're ready to make that announcement. Is that right?

PALIN: I'll let you know, Wolf.

BLITZER: Hey, Governor, thanks very much for joining us. Good luck out there.

PALIN: Thank you so much. I appreciate you.

(END VIDEOTAPE)

BLITZER: President Obama wants the Israeli prime minister, Benjamin Netanyahu, to stop building Jewish settlements in the Palestinian territories. But is that demanding too much from Israel? I'll talk about that and more with the author of a brand new book who says the U.S. needs a reality check on the Middle East.

And is government spending affecting the rising price of oil? You're going to hear what the White House budget director Peter Orzag has to say about. He's coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: America will align our policies with those who pursue peace. And we will say in public what we say in private. To Israelis and Palestinians and Arabs. We cannot impose peace, but privately, many Muslims recognize that Israel will not go away. Likewise, many Israelis recognize the need for a Palestinian state. It is time for us to act on what everyone knows to be true.

(END VIDEO CLIP)

BLITZER: Is the United States heading for a collision course with one of its closest allies? President Obama has made it very clear what he expects from Israel in order to get peace efforts up and running.

Joining us now, a veteran Middle East analyst, David Makovsky. He's the co-author of a brand-new book entitled "Myths, Illusions and Peace." It's written with Dennis Ross, an architect of past U.S. peace efforts. He's back in the Obama administration right now serving as a special envoy on Iran and other issues.

That's why, David, you're out promoting the book for yourself. He's not doing it.

DAVID MAKOVSKY, CO-AUTHOR, "MYTHS, ILLUSIONS, AND PEACE": That's right. He's Casper the friendly ghost. He's invisible.

BLITZER: He's got to do what he's doing in the government.

MAKOVSKY: Right.

BLITZER: Here's the key question a lot of people are asking right now. Is President Obama on a collision course with the Israeli prime minister, Benjamin Netanyahu?

MAKOVSKY: I don't think it's inevitable. We'll hear with Mr. Netanyahu's speech this weekend. I think we all understand that the effort should be to try to find what is doable in terms of the solution. We can't solve all the problems. But this is a football game. We can't throw a Hail Mary and just believe we can solve everything.

We should try to throw a screen pass and bring the ball down the field as much as we can. And I think of the big issues, Jerusalem, refugees, security, and land. I think actually on territory, the sides are not that far apart.

BLITZER: Will we hear the prime minister of Israel do what the president of the United States is appealing to do, freeze all settlement activity on the West Bank?

MAKOVSKY: I think what we'll hear from him, I hope, is two things. One that the end is a two-state solution, a demilitarized Palestinian state, which is...

BLITZER: But so far he's refused to say he supports an independent Palestinian state.

MAKOVSKY: That is correct. But...

BLITZER: You think he'll support that?

MAKOVSKY: I do think so, because he says that Israel supports the road map which is U.S. diplomatic plan which is a Palestinian state.

BLITZER: So you think he will say that?

MAKOVSKY: I think he will say the goal is a demilitarized Palestinian state which is the American position as well. And the second issue on settlements, without splitting hairs, I think he could say what is Israel's position. They will not expand settlements in a way that would prejudge those territory negotiations or take more land from the Palestinians.

The word freeze brings up all sorts of ideas. Can someone add a balcony to their house?

(CROSSTALK)

BLITZER: Secretary of State Hillary Clinton says no, there can't be any of that. No natural growth as it's called.

MAKOVSKY: The term natural growth is also something I expect that Prime Minister Netanyahu will try to explain. But I think the goal is to articulate if Israel's position is no geographic expansion that he needs to say that. And I hope we'll hear that on Sunday.

BLITZER: We'll soon find out. The whole notion of Israel's concern, as far as Iran is concerned, the nuclear program in Iran, how much time is there for Israel to make up its mind whether it's going to try to destroy those Iranian nuclear facilities?

MAKOVSKY: I think by the end of the year Israel will certainly have a better sense of how is the U.S. engagement with Iran going? This is what Israel is waiting for. It says great. You find a diplomatic solution out. Israel's the first one to endorse it.

The skepticism, though, is can a diplomatic solution be found? Dennis Ross is the negotiator is trying to bring that solution about. But we'll have to see if he's successful. I do not see Israel preempting American negotiations with Iran.

What Israel wants to know, if it fails, what is America going to do? And if America does not have a credible program to stop the Iranian nuclear program, then I think your question is accurate then I think...

BLITZER: Do you think the Israelis have a plan that's in the works right now, contingency plan...

MAKOVSKY: Yes.

BLITZER: ... that they would go ahead and -- could they do it? Do they have the ability to destroy those facilities?

MAKOVSKY: Well, there have been a lot of questions about that. They published it. They have done a lot of contingency plans. We've seen Israeli air force exercises off the coast of Greece, I think about the same distance to Iran. There are questions, can they hit the whole facility or part of the facility to set the program back for years?

Let's be clear, a military solution is not the preferable approach. The preferable approach is if you can have a political solution. The question, though, is, is a political solution possible? And if it isn't possible, what are the alternatives? And then I think Israel will end up -- will do this if there are no other alternatives. But I think this has got to be a last resort, not a first resort.

BLITZER: The book is entitled "Myths, Illusions and Peace: Finding a New Director for America in the Middle East." Dennis Ross and David Makovsky are the authors.

David, thanks for coming in.

MAKOVSKY: Thank you, Wolf, for having me.

BLITZER: Is President Obama open to increasing taxes to help pay for its health insurance plan?

(BEGIN VIDEO CLIP)

PETER ORSZAG, WHITE HOUSE BUDGET DIRECTOR: Ideas like that are floating around on Capitol Hill. We're going to have to wait and see how the whole legislative process plays out.

(END VIDEO CLIP)

BLITZER: As the president starts a new push for health care reform, I'll speak with the White House budget director Peter Orszag. And a key Republican says the president's plan would put the U.S. on a slippery slope toward a European-style health care system. We'll speak about that and more with Judd Gregg of New Hampshire.

(COMMERCIAL BREAK)

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