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President Fired Up Pushing Health Care Reform; Potential Breakthrough on Reform in Congress; Debate Rages Over Stimulus Money

Aired July 29, 2009 - 15:59   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, attention shoppers. Could President Obama have a deal for you in aisle three? He's in a grocery store trying to sell his plans for health care reform. Who's buying?

Blue Dogs essentially play let's make a deal. Conservative House Democrats scoring some wins in negotiations over health care reform. Could this be a major breakthrough or not?

And before you or anyone you know ever gets on a tanning bed again, you'll want to know this -- what do tanning beds have in common with cigarettes and arsenic?

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

You're in THE SITUATION ROOM.

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: I've got health care. This is not for me.

(APPLAUSE)

Here in North Carolina, you know this isn't about politics. This is about people's lives. This is about people's businesses. This is about the future.

(APPLAUSE)

I want our children and our grandchildren to look back and say this is when we decided to take the politics out of it and start doing something for the future of this country.

I'm going to need your help, Raleigh. Let's go do it.

(END VIDEO CLIP)

BLITZER: It's among the most fired-up moments we've seen from President Obama since the presidential campaign. Back in front of voters today, back in battle mode. But this campaign is for health care reform.

You just heard the president at a town hall meeting earlier in the day in Raleigh, North Carolina. But this hour, President Obama becomes the shopper in chief, browsing the aisles of a grocery store for buyers to his health care ideas. The president will talk to employees over at a Kroger's store in Virginia. You're going to see some of that coming up, the Q&A, once it starts.

His efforts are bearing some fruit. There's said to be progress on health reform in the Senate and a potential breakthrough in the House of Representatives. Our congressional correspondent, Dana Bash, will have more on that in a moment. But let's go to our senior White House correspondent, Ed Henry. He's in Bristol, Virginia, at a supermarket over there where the president is getting ready to speak to some folks.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: That's right, Wolf. What's significant about this town hall is the president continues to try to tailor his sales pitch directly to people who have insurance, like the Kroger employees here at the supermarket. And the conventional wisdom back in Washington among the president's critics is that people with insurance don't want to pay higher taxes to cover the uninsured. But when you go down the frozen food aisle in the supermarket, that conventional wisdom might be turned on its head.

BLITZER: All right. The point, though, being the president is sort of refining his strategy right now. Isn't he, Ed? He senses that there's some movement, but it's by no means a done deal yet.

HENRY: No, absolutely. I mean, he's hearing about reports that maybe they're picking up some ground in the House and Senate. But clearly, they're not where they want to be just yet.

But this White House is pushing any progress it can get, and when he does this town hall meeting, what we've been hearing from these Kroger employees over the last couple days is that they're willing to step up, they're willing to sacrifice. But they want to hear the president be more specific, be more detailed, step up the sales pitch and sort of lay out, what do people have to sacrifice? What's going to be the real cost of reform?

(BEGIN VIDEOTAPE)

HENRY (voice-over): On the road again in North Carolina, the president firing back at critics of his health reform push.

OBAMA: Nobody is talking about some government takeover of health care. I'm tired of hearing that.

(APPLAUSE)

OBAMA: If you like your doctor, you keep your doctor. If you like your health care plan, you keep your health care plan. These folks need to stop scaring everybody.

HENRY: But some people are scared. At his second stop in rural Virginia, frozen food clerk Phil Younce, a McCain voter, fears health care reform is being rushed just like the stimulus.

PHIL YOUNCE, KROGER SUPERMARKET EMPLOYEE: Like the last package that he pushed through, I think it was too hurried and a lot of mistakes, a lot of things that shouldn't be.

HENRY: But Cathy Montgomery, assistant produce manager, voted for the president and is pumped up he's getting tough with Congress.

CATHY MONTGOMERY, ASST. PRODUCE MANAGER, KROGER SUPERMARKET: I like the fact that he's stepped up and he's being aggressive. I really do. I mean, I'm just -- I'm all for that.

HENRY: But like most employees at this Kroger supermarket, produce manager Steve Shipplett gets generous health benefits. Despite being an Obama voter, he's nervous those benefits may be taxed to cover the uninsured and is demanding more specifics from the president.

STEVE SHIPPLETT, PRODUCE MANAGER, KROGER SUPERMARKET: He's going to have to spit out some numbers and let the public know exactly what it's going to cost them and what they're going to have to give up.

HENRY: Shipplett says if the president steps up and sells it, then he's willing to step up himself.

SHIPPLETT: We've got to do something, and if it means me paying those taxes to get this reform through, then I'd begrudgingly do it, yes.

HENRY: And back in the frozen food aisle, this Republican is ready to do his share, too.

YOUNCE: It comes down to us, the people that are working and paying taxes. We're going to have to pay for it one way or another. I just hope we can come up with a plan that's worth paying for.

(END VIDEOTAPE)

HENRY: Now, it's important to note all of these employees of the supermarket point out that they're making less than $250,000 a year, and the president has reiterated his campaign promise that he's not going to raise taxes on people in that category. Nevertheless, these employees are again saying, look, we'll step up as long as a couple things happen -- the president really lays out the plan, more detailed than he has before, and if the rich pay their fair share as well -- Wolf.

BLITZER: Stand by for a moment. I'm going to get back to you, Ed.

Ed's covering the president's upcoming town hall meeting.

While the president works away from Washington, lawmakers are working feverishly on Capitol Hill on health reform. There's said to be some progress in the Senate and talk of a potential breakthrough in the House. CNN was the first to report that story, by the way.

Let's go straight to our senior congressional correspondent, Dana Bash, for some details.

What exactly is going on, Dana?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Well, it's now official, Wolf. Both the House and the Senate, both sides of the Capitol, will now officially miss the president's original deadline to pass a health care bill by the time they leave for August recess. But in the House, after hours and hours of meetings and some hoarse voices, the Democratic leadership has at least calmed the revolt to let things go forward.

(BEGIN VIDEOTAPE)

BASH (voice-over): Conservative Democrats unhappy with their party leaders' health care plan didn't get everything they wanted, but enough.

REP. MIKE ROSS (D), ARKANSAS: We got significant concessions in two weeks of very long talks that lasted day and night.

BASH: Concessions like delaying a full House vote until the fall.

ROSS: We believe every member of Congress should have the opportunity to not only read the bill, but to spend the month of August visiting with their constituents about it.

BASH: Not all conservatives, so-called Blue Dog Democrats, are on board. But four did reach a deal with Democratic leaders and the White House chief of staff that lifts the brakes they put on committee action.

Some specifics on the deal? First, there's overall cost.

ROSS: It cuts the cost of the bill significantly by over $100 billion.

BASH: Conservative Democrats say they have trimmed the price tag of the health care bill to just under a trillion dollars. Much of that savings comes from shaving health care subsidies for low-income Americans.

Another issue, many conservative Democrats said their party's plan mandating businesses provide or help pay for health coverage would hurt small businesses. So, Democratic leaders agreed to exempt small businesses with payrolls of $500,000 or less.

And there's this -- many conservative Democrats say a government- run health care plan in their party's proposal would have an unfair advantage over private insurers because it ties payments to hospitals and doctors to Medicare rates which tend to be lower. Democratic leaders agreed to change that and allow the secretary of Health and Human Services to negotiate rates for a government-run plan. And conservative Democrats say party leaders agree to allow state-run nonprofit cooperatives to offer health coverage in addition to a government-run plan.

(END VIDEOTAPE) BASH: Now, again, not all of the so-called Blue Dog conservative Democrats have signed on to this. Many say that this is not going far enough. On the other end of the spectrum in the House, you have some progressives or liberals saying that they think this deal perhaps went too far.

But you know what? Even so, everybody -- everybody is still watching, Wolf, what is going on in the Senate. Those bipartisan negotiators, they are still meeting, they are still reporting progress. But I can tell you that one of the three Republican negotiators put out a statement today bristling at the idea that any deal is imminent in that Senate -- in those Senate talks. And he said that there are still a lot of outstanding issues that he and others have to deal with.

BLITZER: It's not over until it's over, as they say.

Dana, stand by.

Let's go back to Ed Henry. I want to get some White House reaction.

What are they saying, Ed?

HENRY: Well, Wolf, the motorcade with the president just arrived here at the supermarket. And a few moments ago, Robert Gibbs briefed reporters aboard Air Force One.

He called this a big step forward and said that reform is, in his words, one step closer to being a reality. So, clearly, as Dana noted, it was a blow that they didn't meet the deadline. The second chamber did not meet that deadline of the August recess for the full chamber to vote. But they're trying to put the best face on it and say, look, we're still making progress, we're still moving forward -- Wolf.

BLITZER: All right. Thanks very much.

We're going to be watching the president's remarks at this town hall meeting in Bristol, Virginia. We'll go back there live. I'm especially interested in the Q&A, hear what the folks have to say to the president and his response.

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

JACK CAFFERTY, CNN ANCHOR: Wolf, slapping a tax on fattening foods could help pay for health care reform, while also combating the nation's growing obesity epidemic. A new study by the nonpartisan Urban Institute says a 10 percent tax on fatty foods could raise $500 billion over the next 10 years. They liken it to the steep taxes on tobacco which helped to dramatically reduce the number of smokers in the country.

However, taxes alone won't do the job when it comes to battling obesity. The study also recommends banning advertising of fattening foods to children and better labeling of these products.

Restaurants and beverage groups already raged a multimillion- dollar media campaign against any new taxes on food or drinks. They say it's no time to add taxes to what they call the simple pleasures we all enjoy, and they argue the tax would be unfair since it would soak the poor. But the authors of the study says that as much as $180 billion of that $500 billion could be used to subsidize poor families' purchase of fruits and vegetables and to help make healthier foods available to those families.

There's no question something has to be done. At the rate we're going, the study says 40 percent of adults in this country will be obese within the next six years. And it's costing us a fortune. Obesity-related issues like diabetes and high blood pressure cost more than $200 billion a year, half of which is paid by taxpayers, whether they're fat or not.

So, here's the question: Should fattening foods be taxed like tobacco?

Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: It's causing a lot of buzz out there, and we're going to get a ton of reaction to your question, Jack.

CAFFERTY: I think so.

BLITZER: A ton. Did you get that?

CAFFERTY: I got that. It was a little play on words.

BLITZER: A ton.

CAFFERTY: I got that. I'm not as slow as I look, Wolf.

BLITZER: But you didn't react.

CAFFERTY: Well, you know, sorry.

BLITZER: All right, Jack. We'll get right back to you.

If you were out of work and offered a job, would you take it if the job was temporary? The economic stimulus is creating some summer work, but some question if that's a good use of your money.

Apparently, Democrats are not going to take it anymore. Wait until you see their response to critics of the president's economics policies. Right now they're naming Republican names.

And search and destroy. Google may be the Internet's search king, but Microsoft and Yahoo! are joining forces for a fresh attack.

Google that.

(COMMERCIAL BREAK) BLITZER: The president of the United States is getting ready to address folks in Bristol, Virginia. There's a Kroger supermarket. He's going to be taking questions from a town hall meeting there in the produce department. He's got an opening statement that basically repeats what he said earlier in the day, but I'm especially interested to see what questions he's asked and his answers.

We'll go there live.

Averting a massive financial meltdown. President Obama says that's exactly what his administration has done by backing the bank bailouts, auto rescue plans, and enacting the economic stimulus package.

Here's what he told that town hall meeting in Raleigh, North Carolina, earlier today.

(BEGIN VIDEO CLIP)

OBAMA: So, it will take time to achieve a complete recovery. We're not going to rest until anyone who's looking for work can find a job.

(APPLAUSE)

But there should be little debate that the steps we took, taken together, have helped stop our economic free-fall.

(END VIDEO CLIP)

BLITZER: President Obama predicts the stimulus plan will create hundreds of thousands of jobs, but some of those positions are not necessarily permanent, and that's not necessarily sitting well with lawmakers.

CNN's Kate Bolduan has our story from Richmond, Virginia -- Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Wolf, ever wonder what kids do during the summer? Well, thanks to the stimulus package, many more are heading to work.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): Twenty-year-old Sean Branch searched eight months for a job with no success.

SEAN BRANCH, COMMUNITY OUTREACH ASSISTANT: I'd go everywhere, from big-time places to just mom-and-pop shops, and nobody's hiring.

BOLDUAN: Fifteen-year-old Kenise Terry says she needed to keep herself busy during the summer break.

(on camera): If you hadn't gotten this job, what do you think you'd be doing this summer?

KENICE TERRY, WORKING FOR RADIO STATION: Getting into trouble. BOLDUAN (voice-over): Now, for at least the summer, both are hard at work for Richmond, Virginia, businesses. Terry at a radio station, Branch at a community outreach program.

BRANCH: I'm hoping that this job can beam me into just the realm of being a businessman.

BOLDUAN: All thanks to the economic stimulus package, $1.2 billion targeted to job training for disadvantaged youth.

President Obama has promised the money would create 125,000 summer jobs.

ROBERT BOLLING, DIRECTOR, WILLIAM BYRD COMMUNITY HOUSE: It provides us another opportunity for us to help young people.

BOLDUAN: Robert Bolling helped Branch and Terry find work. His organization, the William Byrd Community House, received $439,000 from the stimulus for its summer employment program. Bolling says that money means he can put nearly 200 young people to work this summer, compared to 137 last year.

BOLLING: It is very difficult for a young person with no job skills at all to compete in a marketplace where individuals are losing work all the time.

BOLDUAN: But these are temporary jobs, which is why some, like Virginia Congressman Eric Cantor, are questioning whether summer employment is the most effective use of stimulus money.

REP. ERIC CANTOR (R), VIRGINIA: I think the American people are just frustrated seeing their taxpayer dollars wasted. And when you say that you want to see a stimulus bill work, they, the American people, expect that stimulus bill will be focused like a laser on creating jobs.

BOLDUAN (on camera): Are they wrong?

BOLLING: To say that this summer program does not work doesn't really hit the point. The point is you're training young people for the future.

BOLDUAN (voice-over): Sean Branch, at least, already views this stimulus project as a success.

BRANCH: Somebody like me, I'd never think in a million years that I would have the opportunity to just sit in a beautiful office, air-conditioned, and just file papers. I'd never think that.

(END VIDEOTAPE)

BOLDUAN: Here in Richmond, they estimate each summer job costs between $1,000 and $2,000 in stimulus spending. It's a one-time cash infusion, so come next summer, programs like this across the country will need to look elsewhere to maintain this level of funding -- Wolf.

BLITZER: Kate Bolduan in Richmond for us.

Let's bring in CNN Senior Political Analyst Gloria Borger.

Gloria, Democrats are going after Republicans, sometimes by name, who are blasting the president's economic policies. Look at this ad that the DNC is now running.

(BEGIN VIDEO CLIP)

NARRATOR: He said we should cancel the Recovery Act. He falsely claimed no projects had been awarded in Ohio. He opposed the Recovery Act, but then took credit for a project in his distribute. And he led the fight against the recovery act that is boosting Kentucky's economy.

(END VIDEO CLIP)

BLITZER: All right, Gloria. Why is the DNC doing this now?

GLORIA BORGER, CNN SR. POLITICAL ANALYST: Well, you know, it's clear that the Republican argument that this really -- the stimulus hasn't created the jolt to the economy that the president wanted is taking some hold. So, as members are getting ready to return back to their districts, particularly the leaders, they're pointing out the opposite, and they're trying to tie these leaders to the Bush administration once again.

These ads also say they're part of the folks who got us into the mess and they're refusing to get us out of it. One big caveat here, though, Wolf, is, how much is the DNC spending on these ads?

BLITZER: How much?

BORGER: They say it's a significant six-figure buy. We don't know what it is. When you talk to Republicans, they say it's tiny so it won't have much impact.

BLITZER: Are some Republicans who voted against the economic stimulus package now touting some of the benefits to their districts and states?

BORGER: I would be shocked about that, wouldn't you, Wolf?

One of the people they point out in this ad is Eric Cantor, a leader in the House, and the ad mentions that he's taking credit for something in the stimulus package. That would be high-speed rail.

Of course, he voted against the stimulus package. He got money for it. His spokesman said, "We support enthusiastically high-speed rail, but the merit of this one project doesn't excuse thousands of others in the stimulus that have not created jobs."

BLITZER: It's going to get ugly out there. All right. Thanks very much. It already is.

Have the last 100 days of the Obama administration been days of change or days of frustration? Let your voice be heard.

Beginning Sunday, you can cast your vote at CNN.com/reportcard. Then get the results from CNN's "National Report Card," Thursday night, August 6th, at 8:00 p.m. Eastern. We're going to be covering the first 200 days of the Obama administration with CNN's "National Report Card."

President Obama delivering a status report on the economy today. He gives his take on how the economy is shaping up and tells Americans just what his recovery plan is doing for them.

And an Olympic champ bouncing back a day after suffering a stunning loss in the pool.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: Some say he has national political ambitions. We're talking about the Louisiana governor, Bobby Jindal. What problems does he have with the president's health care and economic plans?

The Republican governor of Louisiana is here in THE SITUATION ROOM.

And to pass health care reform, should President Obama turn to the president who couldn't? One writer urging the president to call on Bill Clinton. Our strategists getting ready to debate the wisdom of that.

(COMMERCIAL BREAK)

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

Happening now, she made the 911 call that led to the arrest of the Harvard Professor Henry Louis Gates. Now, for the first time, Lucia Whalen is speaking out about the incident and its controversial aftermath.

Gripping details about Bernard Madoff's Ponzi scheme. A lawyer for the Madoff victims now says the disgraced financier is talking from his prison cells and spilling the beans about just how he stole all those billions of dollars from investors.

And a new warning about the dangers of tanning beds. Experts say the cancer risk is serious, just as bad as cigarettes. We'll have an in-depth report on this alarming new study.

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

Could we be seeing the beginning of the end of the recession? President Obama says possibly. This comes as the government puts out the so-called Beige Book that says while the economy remains weak, it's becoming less severe.

Listen to President Obama's thoughts on the economic recovery. (BEGIN VIDEO CLIP)

OBAMA: We have stopped the free-fall. The market's up and the financial system is no longer on the verge of collapse.

(APPLAUSE)

That's true. So, there's no doubt that things have gotten better. We may be seeing the beginning of the end of the recession.

(END VIDEO CLIP)

BLITZER: All right. Let's bring in our chief business correspondent, Ali Velshi.

Ali, simple question. Is the president right?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes, probably.

Look, the markets are up substantially. The market was down. The Dow, which a lot of people look at, was down in the 6000 range. Now it's above 9000.

But you just talked about the Beige Book. This comes out about every eight weeks from the Federal Reserve. And it's -- the reason they call it the Beige Book is because its real name is the summary of commentary on economic conditions. It basically tells you what's going on out there.

Let me give you some of a snapshot of what's happening in America right now. According to the Beige Book, auto sales, new car sales are moderate. Used car sales are strong. So, people are buying cars. There has been a continued decline in tourism in the United States, Wolf.

Real estate, commercial real estate is weak. Residential real estate is week, although we have seen numbers that indicate that home prices are stabilizing on a nationwide basis. Still, very different in different parts of the country.

Here's some things to worry about. Livestock prices, according to the Federal Reserve, are now below operating costs. The number of rigs in the Gulf has -- is cut in half from when the recession began. And coal prices -- a lot of people depend on coal for jobs -- is -- are down by 50 percent.

The biggest issue, Wolf -- you and I have talked about this many times -- is the jobs issue, the employment issue. Wages continue to fall, according to the Federal Reserve. And the fact is, we still haven't seen an uptick in jobs.

We still continue to lose jobs, hundreds of thousands of them, on a monthly basis. So, the president's right in saying markets are up, the financial system is stronger, and we may be coming to the end of a recession. But it's not rosy all across the board -- Wolf.

BLITZER: This is a long recession. December 2007 is...

VELSHI: The longest we have had, yes.

BLITZER: ... when it started.

Let me pick your brain on another subject that...

VELSHI: Yes.

BLITZER: ... perked me up earlier, when I heard that Microsoft and Yahoo!, they're now teaming up to go after Google?

VELSHI: Well, here's the thing. Google is so far the leader in search that Microsoft is -- is basically a nonentity. So, Microsoft and Google, you know, they were going to get together and join forces as a company over a year ago. That didn't happen.

So, they're joining forces to -- to coordinate their search capabilities. But let me show you some numbers here. Google, in the United States, is responsible for 65 percent of the searches done on the Internet. Yahoo!, which is the -- the -- the number two, but by a long shot, is responsible for 20 percent. Microsoft makes up 8 percent.

So, a Microsoft/Yahoo! combination is still not half as big as Google is. The issue is, for the consumer, not much of a big deal here. This is more a financial matter. Microsoft and Yahoo! together can command better advertising dollars by -- by coordinating their efforts.

BLITZER: Ali, thanks very much.

Let's go right to the governor of Louisiana, Bobby Jindal. He's joining us from the capital in Baton Rouge.

Governor, thanks, as usual, for coming in.

GOV. BOBBY JINDAL (R), LOUISIANA: Wolf, thank you so much for having me back in THE SITUATION ROOM.

BLITZER: Is the economy recovering right now? Do you see the end of this longest recession?

JINDAL: I would say a couple things.

Louisiana continues to outperform the national economy. Our banks are in relatively good shape. We have got the -- one of the lowest unemployment rates in the South, one of the 10 lowest unemployment rates in the country.

You know, national studies have said we have got one of five real estate markets where the housing prices actually went up, not down, this past year. They went up 3 percent. They went down 10 percent across the country. So, we have continued to fare better than -- than much of the rest of the country. We have done it in part -- we have cut taxes, revamped ethics, revamped work force training programs. I agree with what Ali said, though, that, really, you know, the economists will figure out when these recessions start and end.

To the average American, it's really when we start seeing more jobs, when we start wages climb. I'm proud. We have announced economic development wins totaling 32,000 new announced jobs in Louisiana, $4.3 billion in private capital investment.

BLITZER: So...

JINDAL: We are going to continue to outperform the national economy.

But I think, for the country, until we see hiring starting, until we see unemployment rates come back down, I think that's when your average person thinks the recession is really beginning to end.

BLITZER: Are you ready to give the president of the United States some credit for turning -- helping to turn this economy around?

JINDAL: Look, I love what he says. And I -- I do have a lot of skepticism about, in D.C., the fact they think that we can spend our way into prosperity, borrow our way into prosperity. Now they want to tax our way into prosperity.

It was auto bailouts. It was TARP. It was the stimulus. Now it's the health care plan. But -- but, Wolf, let's give credit where credit is due. When he talks about health care reform, when he talked to the national...

(CROSSTALK)

BLITZER: I want to get to health care in a moment, Governor.

JINDAL: Sure. Sure.

BLITZER: Excuse me for interrupting.

Let's stay on the stimulus for a second. Louisiana -- we just checked -- they were getting, your state, $3.3 billion, part of the economic recovery, the stimulus money. Already, they have made, what, they say, $2.2 billion available. They have paid out almost a half-a- million -- a half-a-billion dollars, $480 million.

I assume, even though you -- you hated the stimulus package, you're taking the money, and it's helping.

JINDAL: Well, a couple of things.

One, we -- we looked at it line by line. We said, we're not taking some of the unemployment money. We're not taking some of the dish (ph) money. We're not taking some of the TMA money, because we thought they would have increased obligations on our state.

BLITZER: Of the $3.3 billion, how much aren't you taking?

JINDAL: I think the unemployment was over $100 million. I don't have the other numbers off the top of my head.

But the bottom line is this. I think they could have done more to stimulate the economy if they had been aggressive, if it had truly been temporary and targeted, as the president said, if it had been more aggressive on the tax cut side, if it had been more aggressive in speeding up infrastructure spending that was going to happen another way, like the investment in our roads. I think...

BLITZER: But the $3.2 billion that you're taking, you're -- you're happy with? You're happy? That money is going to help your state and the people of Louisiana?

JINDAL: Well, I think they could have done more to help our state to get the economy growing.

Here's what I worry about, Wolf. That added to the deficit. That's a deficit my children and grandchildren are going to have to pay back. It's not free money. That means interest rates, inflation rates will eventually go up, the currency will go down. And, so, what I worry about is, in the short term, for the sake of short-term spending, are we creating longer-term problems for our people?

I think it would have been better if had been more focused, more targeted, temporary, as the president described his original intent behind the stimulus.

BLITZER: Let's talk about health care reform, a subject close to everyone's heart.

Listen to what President Obama says.

(BEGIN VIDEO CLIP)

OBAMA: Because the truth is, we have a system today that works well for the insurance industry, but it doesn't always work well for you.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BLITZER: All right, he was referring to the fact that there are millions of Americans who do have health insurance right now who are very scared, if they ever need it, it won't be there for them.

How worried are you about this point the president is making?

JINDAL: Oh, I think he's right.

I think several things he says on health care is right. Look, we need to reform the insurance market, so it's truly portable, so it's required to cover people when they get sick, so that you can take it across state lines, across jobs. It doesn't make sense to have insurance if it's not there when you truly need it.

It needs to cover preexisting conditions. I like what the president has to say when he talks about choice and competition, a plan that is fully paid for, doesn't add to the deficit, that uses electronic patient records, that you don't have to give up your insurance if you like it. You won't be forced into a government-run plan.

My concern is, that's not what the House bill does. Again, I agree with a lot of what he says. I thought he did a great job talking to the country last week. but you look at the House Democratic plan, you look at a plan that adds to the deficit nearly a quarter-of-a-trillion dollars, increases taxes during one of the worst recessions we have seen -- I don't know why anybody would want to raise taxes now -- but, third, and most importantly, introduces this concept of a government-run plan.

Studies indicate as many as 100 million Americans may leave their private insurance for this government-run plan. And let's be clear.

BLITZER: Which studies are you talking about?

JINDAL: Well, the Lewin estimates -- the Lewin study estimates it could be as many as 100 million. The Urban Institute has done their own study, tens of millions. There are a range of studies.

But it really comes down to this fundamental point. Why do we think we need a government-run plan to make the insurance market...

BLITZER: Well...

JINDAL: ... to fix the insurance market? Yes, we need to fix the insurance market. I'm not saying -- I'm not defending the status quo. But we don't argue for government-run factories, or government- run stores, or government-run TV stations, for other marketplaces.

Why do we believe we need a government-run plan to make health care work? I think that it is very, very doable to get a bipartisan reform agreement on fixing the problems in health care.

BLITZER: Yes.

JINDAL: But the Democrats have to decide, do they want a government-run plan...

BLITZER: All right.

JINDAL: Do you want take a step towards a single-payer system, or do they really want to focus on reducing costs and making health care more accessible and more affordable?

BLITZER: On the -- on the Lewin -- on the Lewin study, that's part of a group owned by you United Healthcare, so, a lot of folks are thinking that's not necessarily an objective observer of the scene, since United Healthcare has a huge stake in trying to avoid some sort of government competition for the private insurance industry.

JINDAL: Well, Wolf, whether you look at the Urban study or you look at the Lewin Institute, the bottom line, though, is, we have seen what happens when the government tries to run health care. We have seen what happens when the government tries to run banks or car companies.

The bottom line is, look at in Medicare and Medicaid. The government routinely underpays providers, shifts costs to the private sector. You're going to have a taxpayer-subsidized system that has government subsidies.

And the problem with that is, they will be able to underprice the private sector, shift those costs temporarily, drive out that competition. There are things we can do, like allowing people to pool their purchasing power, so they can actually avoid health care coverage.

There are things we can do, like going after the cost of defensive medicine. One study says it could add up to $100 billion to the cost of health care. Let's go after those frivolous lawsuits. We don't hear any mention of that in this plan.

Really, you know, I want to...

BLITZER: All right.

JINDAL: ... give Senator Kennedy credit. He, at least, a couple of weeks ago, in "Newsweek," said his ultimate goal originally had been a single-payer government-run health care system.

I think the Democrats can get a bipartisan deal, as long as they're willing -- they have a fundamental choice. Do they want to drive down costs or do they want a government-run health care plan?

BLITZER: Well, we will see what happens.

Governor, thanks very much for coming in.

JINDAL: Thank you, Wolf.

BLITZER: Governor Jindal is the governor of Louisiana.

President Obama wants to certainly pass health care reform. Should he seek help from Bill Clinton, who couldn't? One writer says, yes. What might Republicans and Democrats think? Our political strategists will weigh in.

And Homeland Security, the secretary on what you can do to help keep the nation safe. You're going to hear what Janet Napolitano has to say.

(BEGIN VIDEO CLIP)

JANET NAPOLITANO, U.S. HOMELAND SECURITY SECRETARY: Many of the construction workers... (END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: President Obama is in Bristol, Virginia, at a Kroger supermarket, listening to some folks. They're asking questions of him right now.

Let's listen in to this question.

(JOINED IN PROGRESS)

OBAMA: You know, the federal employees benefit plan is -- the way it basically works is, is that you have sort of a menu of options. You can choose the plan that you think is best and then, you know, you pay your premium.

Now, as a member of Congress, you know, I was making more than a lot of people are, so I didn't need a subsidy. We would have to provide some help for people so that they could afford the premiums. But the idea that you've got a big pool that gives you then leverage, and the insurance companies have to compete for you, that makes sense.

I also think one of the choices that you should be able to choose from is what's called a public option. Now, this has gotten a lot of people riled up, because they say, "A-ha, see, this is government- run."

When you hear people talking about us wanting to create a government-run health system, all they're really talking about is what we were -- what we've proposed is, to have an option that is non-for- profit, it's set up by the government, and can keep administrative costs low, and can keep insurance companies honest, because if you've got -- if the insurance companies started jacking up their rates real high, then you could go into the public option, and that -- and, you know, those private insurers would start losing a lot of people, so they'd have to compete for you.

I think that's a good idea. Some people disagree with me on this. But in terms of quality of care, yes, I would actually sign up.

Now, I have got to admit -- just in the interests of full disclosure -- as president, I have got this doctor who follows me everywhere, seriously, and an ambulance. And so, you know, I don't want to pretend like I don't have super-duper care. But I don't think that lasts after I leave.

So -- all right. It's a guy's turn now. The gentleman right here?

QUESTION: Hello, Mr. President.

OBAMA: How are you, sir?

QUESTION: Good. I would like to welcome you to Bristol, the birthplace of country music and the fastest half-mile track. OBAMA: Fantastic. There you go.

QUESTION: It's an honor to have you.

(CHEERING AND APPLAUSE)

OBAMA: I think the last time I was here, wasn't Jimmie Johnson here? I'm trying to remember. I think -- I mean, he came backstage to talk to me. But, anyways, so -- I know a little bit about racing.

Go ahead. Oops. Is it still working?

UNIDENTIFIED FEMALE: Testing.

OBAMA: There you go.

QUESTION: Thank you. I have been fortunate to work for a company for 36 years that does have health care, but the last two contracts that my union has negotiated, we settle health care business first. If there's anything left, we get a little raise. If we don't, we don't.

What do you propose to -- or how can you think we could force other companies to be as responsible? When I go to the emergency room, I don't have to pay three times the cost, because other companies are carrying the same burden that Kroger is carrying, and the -- all the cost is not passed on to us.

OBAMA: Right. Well, you make a terrific point. OK, so -- so let me -- let me talk about this just for a second.

One of the reasons that a lot of Americans aren't sure whether we should reform the health care system is they have got health insurance right now and they're thinking, "You know what? As long as I have got it, I just don't want to see any changes to it."

What they don't realize is that the costs are going up for their employers at such a high rate that they are not getting raises, higher wages or higher incomes because that money is all going into health care.

Now, you -- if -- if you're collectively bargaining as a member of a union, then you realize that, because you're in the negotiations, and the employer puts it in front of you and says, "Look, what can I do? Our health care costs just went up 20 percent. Here's my margins. Here's my profit. I just don't have enough money to give bigger raises." And so -- but a lot of people don't realize that.

This is one of the reasons, by the way, that wages and incomes have been flat for everybody except the top wealthiest Americans over the last 10 years. Even before this recession hit, people were not getting raises; they weren't getting higher wages and incomes partly because a lot of it was being gobbled up by health care.

So if we can control health care costs, that will free up more money for higher wages, higher salaries, but you're right that part of controlling costs is making sure that we're not paying for other folks who don't have health insurance, because their employers aren't doing the right thing.

Now, that's very important.

(CHEERING AND APPLAUSE)

OBAMA: I...

(APPLAUSE)

BLITZER: All right, the president of the United States answering a question about his health care reform initiative. We're going to continue to monitor what he's saying in Bristol, Virginia.

We will go back there as necessary. He certainly is telling Americans they have reason to be optimistic right now. He's giving a take on how the economy is doing, as well, and tells Americans how the recovery plan will help them through some tough times.

And the unlikeliest of love stories -- a prisoner behind bars for a crime he didn't commit now commits to the woman who stood beside him through the worst of times.

(COMMERCIAL BREAK)

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

Joining us, the Democratic strategist Mo Elleithee, and Republican strategist and CNN political contributor Alex Castellanos.

The Federal Reserve, in their so-called Beige Book, they're saying, Alex, things are beginning, slowly, but surely, to turn around, and we may see some light at the end of this very long recession.

Question to you: How much should the Obama administration get credit for this?

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: Well, I think they -- they should get a credit for anything that goes well, and they should -- if they're willing to take the blame for everything that doesn't. So far, they have been very busy pointing backwards at, you know, it's Bush's fault for everything that doesn't work, and they get the credit for all they do.

Look, I think they want to be very careful here about not raising expectations too much. You know, this is a long car trip with the kids. You don't want to tell them, you know, "We're almost there yet," when we have still got four hours to go. That's going to make the president look inexperienced and naive. He doesn't really have any, for example, real business men or women in the top levels of his administration.

So, he does not want to appear naive and raise false expectations.

BLITZER: Here's -- here's what the president, Mo, said earlier. Listen to this.

(BEGIN VIDEO CLIP)

OBAMA: We are going to have to tighten our belt, but we can't do it in the middle of the stimulus. We can't do it in the middle -- while -- while -- just as the economy is coming out of the recession. No economist would recommend that.

(END VIDEO CLIP)

BLITZER: All right. If, on the other hand, this is a false light at the end of the tunnel, and the economy deteriorates in the coming six months or a year, unemployment goes up, the markets collapse, he's going to take a big hit politically. The Democrats will as well.

MO ELLEITHEE, DEMOCRATIC STRATEGIST: Look, I actually -- I agree with Alex. You don't want to -- you don't want to raise expectations falsely at this point. You don't want to raise them too high.

But I do think that there are certain indicators right now that show we are at least beginning to move in the right direction. And I think that's what the president is saying. I don't think he's saying to everyone, hey, you know, let's celebrate. You know, we're there.

I think he's saying, look, we're doing some things right. We're getting us moving in that right direction. The stimulus is beginning to have an impact. We're beginning to see new projects and new jobs created across the country. Let's keep doing that in order to get...

(CROSSTALK)

BLITZER: If he turns it around and the -- by the middle of next year, in time for the midterm elections, that will be a bonanza, politically, for the Democrats.

CASTELLANOS: Three words for the Democrats and the president, 11 percent unemployment. That is still out there. A lot of people think, you know, we haven't seen the end...

(CROSSTALK)

CASTELLANOS: ... situation.

BLITZER: Right now, it's 9.5 percent. But it could go up.

CASTELLANOS: If it keeps climbing, if it hits 10 percent, 10.5 percent, 11.5 percent, you know, that's a political liability. You don't want to be the -- the guy who -- I think wasn't it George Bush who said -- what was it in Iraq?

(CROSSTALK)

BLITZER: Mission accomplished.

CASTELLANOS: Yes, mission accomplished.

BLITZER: He didn't say it, but there was a banner...

(CROSSTALK)

CASTELLANOS: There was a banner there that said mission accomplished. I think it recall something like that. We don't want a mission accomplished for the economy...

(CROSSTALK)

BLITZER: Yes. That's why the president has to be very cautious right now.

Here's some advice is that Tina Brown, the editor of The Daily Beast, a very smart woman, writes on her Web site: "If Obama has lost his customary ability to synthesize, perhaps he should turn for help to that great ol' explainer William Jefferson Clinton. Wouldn't Bubba do a better job than the professional Obama at -- the professor -- professorial," I should say, "Obama at sweet-talking, arm-wrestling, hugging, and head locking members of -- such obstructive Blue Dogs."

Is that good advice for President Obama, to bring in President Clinton and say, help me?

ELLEITHEE: Well, I think even President Obama said, back during his campaign in the early days of his administration, that he was going to lean on -- on former President Clinton and a whole host of other smart people...

(CROSSTALK)

BLITZER: I don't think he has that much since -- over the past...

(CROSSTALK)

ELLEITHEE: I -- I -- I'm not privy to all the president's conversations.

I do know that he has met with President Clinton. They have spoken. And I presume health care was one of the issues they have talked about, because President Obama made it very clear during the campaign this was going to be one of his key policy initiatives and that he wanted to learn from what happened during the Clinton administration.

I think President Obama has done a fantastic job of bringing people together on this issue, of -- of -- of engaging people, bringing in advice from all walks of life, from, you know, Blue Dogs, to -- to across the aisle.

So, I think, if he keeps doing that, we will get a solution.

BLITZER: Should he be getting some more advice, asking Bill Clinton for help?

CASTELLANOS: Bill Clinton is back. But it's not a legislative story, and it's not a consensus-building story. It's just the opposite.

This is the weakness in the Obama administration. They have gone so far left that they have empowered the old Clinton wing, the new Democrats, the Blue Dogs, who are afraid this president is spending too much, taxing too much, growing government too much, and he's going to get a lot of them killed in 2010 in the election.

So, what are we seeing? Tina Brown saying, where is Bill Clinton? And what we're seeing is that big San Andreas Fault in the Democratic Party, new Democrats and Clinton, left-leaning Obama. This is why they fought so hard in the campaign. It's beginning again. We're going to see more of this in 2010.

BLITZER: Alex and Mo, guys, thanks for coming in.

ELLEITHEE: Thank you.

BLITZER: On our "Political Ticker": Should U.S. senators be worried about contracting swine flu? Four young Senate pages working there for the summer are showing signs of swine flu-like symptoms. They have been quarantined while they recover, that according to the Senate sergeant at arms.

As a precaution against the virus, officials recently placed hand sanitizers throughout the U.S. Capitol. Good idea.

President Obama and Harvard University Professor Henry Louis Gates and the Cambridge Police Sergeant James Crowley are set to meet at the White House tomorrow. They will talk about Gates' arrest. Apparently, they will have a beer as well. What beer should they drink?

A Massachusetts congressman suggests Sam Adams. Congressman Richard Neal says they should patronize the largest American-owned brewing company, and urges them not to drink Anheuser-Busch or MillerCoors, the congressman citing foreign ownership.

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

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

JACK CAFFERTY, CNN ANCHOR: They must be running short of issues down there, right, when he's worried about...

BLITZER: No shortage of issues, but they always like to have a little...

CAFFERTY: ... what beer they drink?

BLITZER: They have a little fun in Washington, Jack.

CAFFERTY: Yes. Yes -- at our expense, usually.

The question this hour is, should fattening foods be taxed, like tobacco? A nonpartisan group did a study, said they could save -- generate $500 billion in -- in revenue to pay for health care reform over 10 years if they slapped a 10 percent tax on fatty foods.

Rudy in New York writes: "Why can't the government get the companies that sell this junk to act more responsibly? Fast-food fat promoters lure customers into buying their caloric-laden goods from the time that consumers are children. Here, why not have a mondo- sized order of fries with that double cheeseburger with mayonnaise? Oh, and don't forget your gallon-sized soft drink. Don't tax those who don't know any better. Tax those who are making a lucrative profit from other people's handicaps."

Seth says: "They ought to absolutely be taxed. If people are going to destroy their own health by consuming junk food, they should be taxed, in order to help pay for their own massive health care bills later in life."

Max says: "No, and here is why. Taxing something never solves a problem. It creates more problems. Jack, if you want a Twinkie, you're going to buy a Twinkie. Being obese is a choice, period. We don't need the government playing parent."

David says: "Not the food, the people. Overweight people should pay more for health insurance. The only way Americans make the changes is -- that they should make is through their wallet."

Melissa writes: "If you would like to make life harder for poor people, sure, tax away. I'm sure they're willing to pay up. The simple reality is, most fattening foods are cheaper then their healthier counterparts. Just visit any food pantry, and see what's on the shelves. It's highly-processed, high-fat, high-sodium foods that are cheap to make."

Jason in New York says: "Absolutely. Talk about a win-win tax. Promotes health, helps pay for health reform. Perfect."

And Samir in Florida says: "Why even bother living? Go ahead. Tax my donuts and fries. Let's tax your celery and bananas, because the increase in demand will eventually cause a shortage of natural foods, and then we will have to stimulate the farmers."

(LAUGHTER)

CAFFERTY: If you didn't see your e-mail here, go to my blog at CNN.com/caffertyfile. Look for yours there, among hundreds of others -- Wolf.

BLITZER: Jack, thank you.

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