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ANDERSON COOPER 360 DEGREES

Outlining Challenges of President Obama's Next 100 Days; Obama, Cheney Give 2 Different Speeches; "Normal" Hurricane Season Forecasted; AIG Chair to Step Down

Aired May 21, 2009 - 23:00   ET

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


(COMMERCIAL BREAK)

ANDERSON COOPER, CNN ANCHOR: Welcome to EXTREME CHALLENGES: THE NEXT 100 DAYS. Just like the first 100 days, President Obama has more on his agenda, more items affecting more people than most presidents handle their entire time in office.

He's facing an upsurge in violence as he tries to pull American forces out of Iraq. While in Afghanistan where he's sending more troops, the Taliban grows stronger and the Afghan government grows weaker.

And in neighboring Pakistan with more radicals per square mile than just about any place on earth, Taliban fighters do battle not far from the capital with Pakistan's nuclear arsenal potentially up for grabs.

Back home, two of the big three carmakers are reeling. And even though the economy is no longer in freefall, thousands of jobs are still vanishing every day.

Meantime, Washington beginning to do something about health care, millions of uninsured Americans in need, trillions of dollars of health care spending in the balance.

All of it on President Obama's plate and on ours in this 360 special, EXTREME CHALLENGES: THE NEXT 100 DAYS.

We begin outside the country in once exotic places now painfully familiar to Americans with love ones fighting there in Afghanistan and Iraq.

With us now, CNN's Christiane Amanpour, Michael Ware, Fareed Zakaria, host of "FAREED ZAKARIA GPS" and senior political analyst, David Gergen.

Christiane, the U.S. recently replaced the military commander in charge of Afghanistan and promising new approaches. What should we expect?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, he clearly wants to rely a little bit more on commando tactics and as Secretary of Defense Gates said, new strategy and new president, new commander. And they've got to get on with the business of trying to win this war which is not just about battling the Taliban and al Qaeda, it's about winning hearts and minds as well.

And I think one of the things that struck me so much was that the chairman of the Joint Chiefs of Staff, Admiral Mike Mullen said, that as long as American forces keep killing Afghan civilians, the United States is not going to win this war. And when I was there just recently, this is the bulk...

COOPER: You're talking about civilians being killed because we're relying heavily on air strikes and air drones strikes...

AMANPOUR: Correct, correct.

COOPER: ... and that's causing huge...

AMANPOUR: Huge.

COOPER: ... public relations problems.

AMANPOUR: Not just public relations problems, civilians deaths, turning the people off the government, off the international forces and this is going to present a big problem if it continues.

COOPER: Is that part of the reason, Fareed, that more U.S. troops are going because -- so there's not so much reliance on just strikes from the air?

FAREED ZAKARIA, HOST, CNN'S "FAREED ZAKARIA GPS": First I think what we're trying to do is a version of the surge in Iraq. The most important part of the surge militarily was to secure local populations so they felt as though they had some basic level of order and didn't have to opt for militia rule and thugs, things like that, terrorism.

So the attempt here is to see that it will work in Afghanistan; secure civilian populations, secure the cities, security the main supply routes and try to isolate the bad guys into smaller and smaller areas.

COOPER: That worked militarily in Iraq though, because with more troops, they were able to actually not only take but then hold positions where previously U.S. troops would have to just move on to another area. Can they do that in Afghanistan?

ZAKARIA: Theoretically, they could. The one big difference here is that in dealing with Afghanistan, you can get all of the Afghanistan part of this right. They have safer havens in Pakistan.

You know, the reason that the Soviets lost in Afghanistan was because we operated safe havens in Pakistan which allowed jihadists to cross the border. The same -- this is a classic case of blowback because the same tactic is being used against us.

COOPER: Are we losing right now, Michael, in Afghanistan?

MICHAEL WARE, CNN BAGHDAD CORRESPONDENT: Well, I think it's too early to say we're losing but we're not winning. And that certainly can be said for sure. And Fareed is right. You can do whatever you want in Afghanistan, but the true answer is going to lie in Pakistan.

So it's time to start looking at cutting serious deals, perhaps with some people that we don't particularly like. We saw that...

COOPER: Negotiations with the Taliban, you're saying?

WARE: With the Taliban, with some other elements. And principally, I think, in some fashion, we need to find an agreement with the dark heart of the ISI, that's the Pakistani intelligence agency, their version of the CIA.

COOPER: Which actually set up the Taliban in the first place.

WARE: Set up the Taliban. Lashkar-e-Tayyiba, they're the ones, the hardliners within that organization who still provide the support and principally the sanctuary.

So until we can find a way to put it in the ISI's interests to stop supporting these people, I don't see an end to this.

COOPER: Do you think the Pakistani government and the military is taking their own internal problems seriously enough? I mean, if most of their forces have been, you know, pointed toward India for these last several years.

DAVID GERGEN, CNN SENIOR POLITICAL CORRESPONDENT: Well, to go back to that map, one of the issues that we have, as Fareed said, look, if you go after them here in Afghanistan and they're going to come across the border into Pakistan and find safe havens and we want to get the Pakistanis to go after them, and our problem has been the Pakistanis want to pay attention to India which is over here, and one of the things that the Bush administration -- Obama administration is trying to do is to persuade the Indians, especially with the new government.

Lower the temperature here so we can persuade the Pakistanis to pay more attention to the people coming across and pay more attention to the other border.

I think we're going to have, in the next couple months -- as I understand it, we're on the verge of an offensive in Afghanistan. That there's going to be a three or four week effort to really bomb and go in heavily and try to get the Taliban on the run and then come in with a counterinsurgency strategy that General Petraeus is bringing to the area.

ZAKARIA: If you want to complicate this even further, Anderson, if you look at this map of Pakistan, we talk about this as almost ideological categories, the Taliban versus the Pakistani military. What's really going on here is the Pashtuns in the tribal areas view this entire incursion as the Punjabis, that is the part -- which is the largest part of Pakistan, trying to take over their part of Pakistan, which has historically been left alone.

So there is a deep ethnic rivalry there, and we're going to have to figure out how to deal with that. AMANPOUR: If you look at all polls right now, from Afghanistan, first of all, almost nobody supports the Taliban. It's one percent in the latest poll. But the majority of people say that our key concern is the economy is jobs.

COOPER: You're talking about Pakistan or Afghanistan?

AMANPOUR: In Afghanistan and also Pakistan, they need...

ZAKARIA: Well, we have, and remember, there's the ability...

AMANPOUR: Yes I know, I was there.

ZAKARIA: Christiane, I agree with this, but you're talking about Afghanistan. It's the third poorest country in the world.

AMANPOUR: It doesn't matter. We're not talking about making it Manhattan in the desert. We're talking about giving these people a better standard of living.

GERGEN: And how would you do that?

WARE: Yes.

GERGEN: How, how?

WARE: I'm not sure.

AMANPOUR: It's easy, it's easy. You build the schools, you build roads, you bring in electricity. But you haven't been doing it right.

COOPER: At the same time aren't we also trying to eliminate a large source of income...

AMANPOUR: This is the key.

COOPER: ... which is the poppy fields, which supplies 95 percent of the world's heroin?

WARE: Again, that's not going to happen. I mean, especially in the south and through much of the country, the entire social and political order is built upon opium poppies. Those crops are what fuel not just Taliban insurgents, where large sums of money are being funneled off as they tax the supply, but it also feeds and supports the warlords, the warlords who are, in fact, in the government who are the local police chiefs.

This is a fundamental part of the structure of Afghanistan.

COOPER: So, how do you...

(CROSS TALK)

ZAKARIA: The most important thing I think to remember in this situation, Anderson, is an Afghan government that has some capacity to build schools but also to take on the bad guys. That means an Afghan national army and an Afghan government with some capacity.

COOPER: We've been dealing with the Afghan army now for years.

(CROSS TALK)

AMANPOUR: You think you have been, but it's been unfocused.

ZAKARIA: But then Anderson, it's getting better -- it is getting better every month. And over the last year it's actually gotten a lot better.

COOPER: I went in with the Special Forces in 2002. They were doing that and having great success with it.

AMANPOUR: Well, yes, and then the eye was taken off the ball, Anderson. The corruption increased after 2002. The insurgency started again after 2002. The lack of progress towards justice and all the other civil and human rights that had been made started to fall off.

Why? Because the U.S. took its eye off the ball; there was a time when things were going in a good direction. And now you have to work doubly hard to get them back.

COOPER: So, you're saying essentially nation-building is required?

AMANPOUR: Yes, I am. Yes I am.

COOPER: It is that -- hasn't the Obama administration now scaled back from that?

AMANPOUR: Yes, and that's going to be their problem.

ZAKARIA: It's state-building. You're not trying to create an Afghan nation. You're trying to say that the core -- the central government needs some capacity, but the second part of this is very important, which is we have to get the Pakistani military...

WARE: Yes.

ZAKARIA: ... genuinely on our side because we've got to align their incentives. We've got to make them understand that if they want an alliance with the United States, the terms of reference are they have to get serious about terrorism.

WARE: But what's the incentive for them? I mean...

ZAKARIA: $10 billion over ten years. What if we say, you will not get more money from the United States, if you don't deliver on this?

WARE: Well, the money that's going now and has been going has always been set with conditions.

ZAKARIA: Yes. WARE: Yet that has not limited their ability to operate against U.S. interests.

GERGEN: I agree with that.

Listen, I think that all of this, all of these complications, the fact that we've been in Afghanistan, how many years now we've been trying to do this? Eight years?

ZAKARIA: Yes.

GERGEN: It's been a long time.

AMANPOUR: But that's eight years with no focus.

GERGEN: Without focus, that's true. But for the president, the patience level within his own party for this may not match the scope of the problem.

AMANPOUR: Right.

COOPER: Is withdrawal an option?

GERGEN: I think lowering the -- what is defined by success, defining it down, so to speak, is probably the option we're going to use....

COOPER: Defining down to what, protecting Americans?

GERGEN: To -- absolutely, whatever the minimum to keep us safe, so that they can...

WARE: Which we already see them doing. It's about cutting deals.

GERGEN: That's right.

WARE: And perhaps with some unpalatable interests. Because militarily we all agree it can't be won that way. And even the delivery of aid and economic infrastructure isn't going to happen without security and without sanctions.

GERGEN: I just want to emphasize from the president's point of view, he does not have unlimited time to do this.

AMANPOUR: You're right. The Congress has just given him one year.

WARE: That's the problem.

GERGEN: The Congress is essentially telling him, you've got a year to show a real progress. He can't make it.

AMANPOUR: It's a joke. This is not mature policy-making. Of course not.

WARE: It's foreign policy dictated by domestic interest, and that's the problem because those interests are from their own counter.

AMANPOUR: Look, America has gone in with peace accord, with peace enforcement and with nation-building in other places and it's worked.

The notion that they're not going to give that the opportunity to work in Afghanistan which is one of the most important places there, given that terrorism has a fertile bed in which to grow, is beyond the beyond.

COOPER: We've got to take a break. When we come back, a lot of issues to talk about, success or failure in the countries we spoke about could determine in large part America's image abroad. As we said, there are other global hot spots to deal with.

We'll have more on that when our panel continues on EXTREME CHALLENGES: THE NEXT 100 DAYS.

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COOPER: We're back talking about the extreme challenges facing President Obama in his next 100 days. Some of them unique to his administration, others have troubled American presidents as far back as Harry Truman. Israel for one.

President Obama entered office firmly committed to his two-state solution, Israel and Palestine side by side. His Israeli counterpart, on the other hand, does not share that commitment nor does Hamas which controls Gaza.

Then there's Iran's nuclear program which poses a dire threat to Israel. Listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have said from the outset that when it comes to my policies towards Israel and the Middle East, that Israel's security is paramount. And I repeated that to Prime Minister Netanyahu.

It is in U.S. national security interests to assure that Israel's security as an independent Jewish state is maintained.

(END VIDEO CLIP)

COOPER: President Obama with the new Israeli Prime Minister Benjamin Netanyahu at the White House.

Back with our panel: David Gergen, Fareed Zakaria and Christiane Amanpour and Michael Ware.

Fareed, what is U.S. policy -- how much difference is there between President Obama's policy and where Israel is right now?

ZAKARIA: There's a big difference in the sense that first of all, I don't think President Obama wants the agenda to be entirely about Iran.

I think he wants to approach the Israeli/Palestinian issue centrally. He's appointed a very high-level negotiator. Clearly he hopes to get some movement there because clearly he believes that that could be a kind of key that unlocks U.S. relations with the Islamic world, the Arab world more broadly.

Prime Minister Netanyahu, on the other hand, wants to speak about Iran, Iran, Iran and the threat from Iran. So they see things differently.

I also think that there is a broader structural difference. I think as you put it, Iran does pose a security threat to Israel. We can debate how extreme it is.

Iran does not pose an immediate security threat to American security. It poses a threat to American interests in the region. Maybe it's making a play for dominance which would displace the United States.

But it's a second-order problem.

AMANPOUR: It seemed that Prime Minister Netanyahu got his agenda to be successful at least in the public iterations of the two leaders because what President Obama didn't get him to say was the two-state solution or to stop the settlements.

He, in fact, did say that what we're going to do is give a limit to our diplomacy on Iran. That's the first time we've heard President Obama say that.

COOPER: Israel is concerned that too long of a negotiation with Iran would just allow Iran essentially to stall while they build up a nuclear program.

GERGEN: Exactly. Well, Israel feels that they have to base their security on the worst-case scenario. In other words, how soon could Iran possibly get nuclear capability and they think that's sometime next year.

So, for them, this is the looming deadline, and it puts a lot of pressure on President Obama in terms of time frame because he does not want Israel to act on its own against Iran.

AMANPOUR: Do you see this map?

GERGEN: Yes.

AMANPOUR: Iran. Every major issue that the United States has right now involves Iran. There's Afghanistan, Pakistan, Iraq, there's the Persian Gulf, there's the Arab Sunni neighbors. And it was -- many, many analysts have said and President Obama essentially had a referendum on this in his election, "I am going to reach out and try diplomacy to engage adversaries."

The American people didn't oppose that. They voted him into office. And many, many people say that unless you really do engage with Iran, not just on one issue, a very important issue, but on a whole new set of strategic relationships and objectives, it's going to be very difficult to either secure Israel or Afghanistan, Pakistan, Iraq.

COOPER: What about Iraq? I mean, is the United States going to be able to withdraw on the timetable that they have now put forward?

WARE: Well, in many ways, they have very little choice. I mean, the deal is signed and sealed.

COOPER: But you already hear from some American commanders on the ground talking about extending it in some cities.

WARE: Yes, Mosul is something that they're looking at there. But even there, you're seeing this ever-increasingly concentrated Iraqi government which is evolving around the orbit of the prime minister, Nouri al-Maliki, who day by day is consolidating further and further power.

He is not budging. Even in Mosul, which is the last holdout, urban holdout of Al Qaeda, despite at least two major offenses to wipe them out from that city, he is saying no. June 30 is the day. There's no room for negotiation on this.

COOPER: Can they provide for the security themselves? The Iraqi forces?

AMANPOUR: No.

WARE: No. But there're so many interests afoot here that there are certain things that the Iraqi factions are prepared to tolerate on the security front to make gains in other areas principally politically and elsewhere.

COOPER: So, a certain number of deaths, a certain number of suicide bombings?

WARE: It's a high gamble but don't forget, not only are they common enemies like, say, al Qaeda, but there's enemies within the government. Don't forget, this is a deeply factionalized government.

And we're not just talking about political factions that you'll see warring in Congress or on the Hill. We're talking about people with militias; we're talking about armed forces.

COOPER: So, what happens when U.S. troops?

ZAKARIA: I think the likely scenario -- first of all, Michael is exactly right. We have to be out. There's an agreement with the government of Iraq. You know, we have to be down to zero by June. So it's going to happen, with maybe a few exceptions, Mosul being perhaps the principal one.

I think what's going to happen is there will be a resumption of some violence. There will be flare-ups, but you will not have the resumption of the civil war between the Sunnis and Shia.

WARE: Yes.

ZAKARIA: That is the bet that the U.S. government is making. That is the bet that Prime Minister Maliki is making that the Sunnis, while disgruntled, feel disempowered, will not return to a full-scale civil war and thus you will be able to get by with some substantial withdrawal.

AMANPOUR: Yes, it's been the highest number of Iraqis killed, you know, many, many years just this year alone.

WARE: There was a spike. However, I think Fareed is right. There is a delicate scenario now in place that bodes some hope for the future.

However, it is so precarious. The Mehdi army is still in place. The commanders are in sanctuary in Iran and in Syria. The foot soldiers are still there. The weapons are at home, they're not on the streets. The same with the Sunnis; they have not been integrated into the Iraqi government as promised. And in some areas they're not being paid by the Iraqi government.

GERGEN: Look at it from the president's point of view and what he faces. His ultimate challenge is going to be can he pull out and not have Iraq fall apart in some fashion? Because if that happens, he's going to be the president who lost Iraq and that would be devastating for him politically.

COOPER: Has America's role, image in the world changed already?

AMANPOUR: Yes. The page has been turned. The first 100 days especially the first trip overseas did that. And now the second 100 days, in fact the rest of the administration is going to be determined by the policies.

And President Obama was elected with a huge mandate to take on some very bold new initiatives.

ZAKARIA: What we've been talking about have been the crises, the failures, the hot spots, the places you've got to send troops. But there's actually a much broader agenda in foreign policy. At the end of the day, some of these areas are peripheral parts of the world.

A strategic relationship with China; we need China to continue to buy U.S. debt every day. The strategic relationship with Russia. How do you integrate India into this new international order? Those are issues that are going to require presidential attention.

If the president isn't personally engaged with China, you are not going to have any breakthroughs on energy, on environment.

COOPER: You're totally stressing me out. It gets worse and worse.

GERGEN: It's just tough, it's just tough. COOPER: It's incredible, I mean, a number of things on his plate. It's truly extraordinary.

WARE: Yes.

ZAKARIA: And in addition to all the domestic problems, you have to be extraordinary.

COOPER: We're going to have more on that up next.

Two simple words that dwarf all the other extreme challenges facing President Obama; two words that will almost certainly define his presidency -- the economy. We'll be right back.

(COMMERCIAL BREAK)

COOPER: Right now you've heard all the catchphrases: green shoots, glimmers of hope, signs of improvement. You probably also know someone who is out of work or worried about losing a job. It is a mixed picture out there to be sure, and the Obama administration seems to be taking care not to seem too high on the economy or too down. Listen.

(BEGIN VIDEO CLIP)

OBAMA: Now is not the time for small plans. It's not a time to pause or to be passive or to wait around for our problems to somehow fix themselves. Now is the time to put a new foundation for growth in place, to rebuild our economy, to retrain our work force and re-equip the American people.

(END VIDEO CLIP)

COOPER: Well, his challenge maintaining the sense of the worst is over while dealing with the fact of high unemployment possibly for years.

For more: joining me is Fareed Zakaria and David Gergen, CNN's Candy Crowley and Ali Velshi. Ali, have we reached the bottom? Have we seen the bottom?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, it depends how you want to look at a bottom. We may have reached a bottom when it comes to markets. We've seen a real upswing since about the beginning of March.

But in terms of housing prices, no; there's nobody who doesn't expects housing prices to go lower. In terms of jobs, we expect the unemployment rate to go higher and we expect to lose more jobs.

But in terms of the actual recession, the aggregate slowing of growth and negative growth, we probably are very close to a bottom in that, probably sometime this summer, or late summer perhaps at the latest, some are saying by the end of 2009.

It's not like a light switch that turns on and all of a sudden things are good.

COOPER: In terms of the economy, what is the biggest struggle -- the biggest challenge for the president?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Holding on to his popularity. I mean, what, really, I mean, what is...

COOPER: Politically.

CROWLEY: I mean, what is fueling this guy at the moment is the fact that people have taken a leap of faith. And with that leap of faith that he's going to fix things has come some fairly good consumer buying which as we all know fuels the economy.

So, as long as people continue to have confidence that this president is beginning to move things around, then I think he is -- everybody -- you know, he's on board and he's headed in the right direction.

ZAKARIA: I think that the president gets fairly substantially good grades for the crisis management of the economy. The credit has unfrozen. The financial system is in much better shape. He didn't under react, but he also didn't overreact.

Remember, there were a lot of calls for nationalization, and wholesale takeover of the banks. He steered a middle course which has proved, at least so far, to be quite effective. The great challenge I think outside of the political one economically is what will this recovery look like?

We're in new terrain here. It is quite conceivable that we have a recovery that Ali will be completely right, but that we won't go back to three percent - three and a half percent growth which is the United States has been used to for the last 20 years, but more like one percent, and one a half percent growth.

Why? Because we're laden with debt as a country. The consumer is maxed out. States, local governments are maxed out. The federal government is maxed out. It's going to be running budget deficits in the 10 percent to 15 percent of GDP range, highest since World War II. So that's not an environment of strong growth.

GERGEN: I agree with that. I think Fareed's captured it exactly. And for the president, it's both a political and an economic challenge because in past recessions, there's usually been a driver to get the economy again, a driving force.

It's usually been consumers. And consumers come back into the market, they start buying again. The wheels start turning. Jobs start appearing again. Housing prices go up. Everything else starts to work out.

Here we've got consumers who are in retreat. You know, the housing values have gone way down. They've lost their 401(k). So what are they doing? They're saving as much money as they can to rebuild. I think most Americans had assumed we would get back to normal.

VELSHI: Right.

GERGEN: We would get back to where we were within a couple of years. And what we're talking about, what Fareed is talking about...

COOPER: The game has changed.

CROWLEY: See that's the problem, and there is still -- I think there is still that assumption...

GERGEN: Yes, yes.

CROWLEY: That we're going to get back to the normal life style and when people look and say, ok, we spent how many trillions of dollars.

GERGEN: Yes.

VELSI: Someone has to pay for that.

CROWLEY: And now we've got this? Somebody is going to have to pay for it.

VELSHI: And our lifestyle is going to be different.

COOPER: And what about that fear that we have just spent ourselves into a hole? I mean, we have this huge deficit.

VELSHI: Well, I have to say, I think that it's only a good thing that everybody is finally fearful about this. Because the reality of being in too much debt has been with us for some time, we're just now in a lot too much debt. And the good news is Americans now have heard that enough and they're getting annoyed about it.

Maybe not in the right ways and in certain places, but the reality is, it's a political thing that has to be dealt with now and sometime during this administration. They are going to aggressively have to deal with social security and Medicare and our growing deficits (ph) ahead.

COOPER: It's an interesting thought though, that you raise that we're not going to go back to what we consider normal. So, what does the new normal look like?

VELSHI: I often say that instead of buying the TV and paying for it over two years, our new economy may be about saving for two years and buying the TV.

Ultimately you'll get the TV but you'll actually have to work for it, and save for it and make a decision that it's the right thing to do. If you extend that to everything you buy including cars and refrigerators and travel and houses, it just means a slower rate of growth that Fareed is talking about.

We'll still ultimately get what we need, but we just may have shaved some excess out of the system.

ZAKARIA: Americans are used to growth. We -- I mean, we pride ourselves on the idea that, you know, the Europeans believe in this kind of slower, stable growth.

VELSHI: That's not what we're going to do. You don't believe it at all?

ZAKARIA: We believe in turbocharged convertibles.

VELSHI: You don't think that's actually going to happen?

GERGEN: I worry a lot that we're going to have a shrunken dream coming out of this and that we're going to find America -- I agree with Fareed. I think the president deserves a lot of credit for helping to lift this sense of crisis in the country.

We clearly are not in a crisis mode anymore, but people do have a belief that they're going to be able to rebuild their economic situation. They're going to be able to find a good job. And it's a long, slow, painful recovery, a joyless recovery, in effect, in which jobs are not coming.

I think that's going to -- I think psychologically that's going to be a real blow.

VELSHI: Anderson, that's not what I'm saying...

CROWLEY: But the fact is you can't shrink dreams. That's not what this country is built on.

VELSHI: Right.

CROWLEY: You breed resentment, though.

VELSHI: Rather than a shrunken dream, what if it is the new realization that we don't need everything we thought we needed to move on? Maybe we can be a bit of a post-consumer society.

You started by saying when does the recession end? I think what David is saying, it's not going to feel like it ends for most people.

COOPER: We'll end it on that. Up next, a self-imposed challenge for President Obama -- fixing health care. Can this president succeed where so many others have not?

(COMMERCIAL BREAK)

ERICA HILL, CNN CORRESPONDENT: I'm Erica Hill. EXTREME CHALLENGES: THE NEXT 100 DAYS continues in a moment. But first, this "360 News and Business Bulletin."

Two speeches, two very different views. President Obama standing firm on his stance to close Gitmo despite opposition from Republicans and Democrats on Capitol Hill. In a speech today in Washington, he said it is in the nation's best interests. Meantime, across town, former vice President Dick Cheney also spoke, arguing President Bush was right and President Obama is wrong when it comes to national security.

Forecasters predict this year's Atlantic hurricane season will be, quote, "near normal with four to seven hurricanes likely. In contrast the 2008 season saw eight hurricanes causing about $54 billion in damages. The Atlantic hurricane season begins June 1st and runs through the end of November.

AIG chairman and CEO Edward Liddy plans to step down as soon as his replacement can be found. Liddy took over the troubled insurance company in September.

Those are your headlines at this hour. More of EXTREME CHALLENGES: THE NEXT 100 DAYS just ahead.

(COMMERCIAL BREAK)

COOPER: Well, say what you will about Sisyphus, the ancient Greek condemned to forever push a boulder up a hill, he had it easy, it wasn't health care reform. That boulder crushed Bill Clinton and has stymied every president for the last 60 years.

Now Obama says he wants to deal with it and deal with it by the end of this summer. Joining our panel is CNN's Dr. Sanjay Gupta.

Sanjay, you discussed this with the president. What are his main goals in terms of health care? What is absolutely nonnegotiable for him?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: I think he wants to build on the existing system. I think he doesn't want to completely toss away the system that exists now and create something brand new. I think there's lots of things about the system that he wants to maintain in some way, but he also recognizes that access is sort of going to be very important.

What I think is interesting, Anderson, is that if you sort of divide the issues into costs and access, I think that he believes lowering costs ultimately through a bunch of different strategies will ultimately improve access. So it's costs first and then access.

COOPER: It's interesting, David, though, in terms of getting this done, the president's kind of leaving the details up to Congress. Is that -- he's done that in the past in the last 100 days or so. Is that a smart way to go about this?

GERGEN: So far it's been very smart. When Bill Clinton proposed his own form of health care working with Hillary Clinton and putting it to Congress, the Congress basically after a big, big debate, he couldn't get it out of committee. He couldn't get it out of either the Senate or the House committee which were controlled by Democrats.

So, in that sense, he's going to get this bill out of committee this summer, out of both the Senate and the House, because he's worked it this way. So he's got the best chance, in my judgment, of any president in 60 years to get that rock up the Hill.

COOPER: He is framing it as part of the economic recovery, that health care has to be changed, reformed, in order to help our economy. But there's a lot of costs. I mean, he's proposing huge spending on health care.

GERGEN: It's -- I don't know. Sanjay may have a better number, but people generally say it's about $1.2 trillion over ten years, maybe higher. There's no plan right now on the table to definitely get us from here to paying for it. And if it adds significantly to the deficits, that is actually going to wash back into the economy and eventually cause problems with interest rates and inflation. So he's got to get this paid for.

And he's got some very tough challenge doing that. He's got a very tough challenge figuring out whether he wants to shove something through with just Democratic votes or whether he's going to go for something more bipartisan which would also probably be watered down from what the Democrats really want.

VELSHI: There are issues with how you pay for it because -- as David said -- this is going to include higher premiums or higher tax rates for folks.

But the issue here, and maybe Sanjay can speak to this better than I can, there are many different ways you can pay for health care. We don't need new science on that. We don't need new studies on that. This is becoming a political issue.

GERGEN: We need more political will.

VELSHI: The issue is political will.

COOPER: Sanjay.

GUPTA: One thing that's worth pointing out, there are all sorts of different proposals on the table already starting to be put out there including taxing employer-based health care which is going to be a looming battle because if you start taxing employer-based health care, it changes dynamics of the system.

What is interesting as well, Anderson, if you listen to what the president is saying very closely with regards to prevention, with regards to health I.T., with regards to this idea of creating more of a Medicare system for those who can't afford it, all those things are going to cost money certainly in the short run. But his argument is that eventually they're going to start paying for themselves.

COOPER: Sanjay, we keep hearing a lot about the public option. And some Republicans are saying, look, socialized medicine. What is the public option, and where does it stand?

GUPTA: Well, people define the public option in different ways, but this idea of subsidizing health care for those who can't afford it. Again, you know, President Obama's been very clear in that people who have health care insurance, whether it's employer-based or some other form of health care insurance, if you want to keep it, keep it. For people who can't afford it, there would be this Medicare-type option for it.

Here's the controversy. And here's the problem. On appearances, it makes a lot of sense. People who can't afford it, you get the subsidies. What critics will charge is that, look, this starts to give an unfavorable advantage to government-run health care systems to the point where private health cares or private insurance, I should say, might start to be unfairly sort of unable to compete. And as a result, to sort of get in this backdoor towards a completely publicly financed health care system. That's what the critics charge and that's a big battle.

COOPER: So, is there more -- I mean is Congress different this time? Is there more political will in Congress to do it themselves?

GERGEN: There's more political will in American industry which is an important factor here. And that is because the health care costs have been so high for corporations. They're looking for a way to get out from under. And there's a significant coalition of private companies now that are supporting health care reform along with the providers. I think...

COOPER: We've just saw recently health care industry leaders at the White House promising to reduce costs significantly. I suppose they're doing that because they're afraid Congress is going to mandate some sort of costs.

GERGEN: That's exactly right, they're afraid of the mandate, and they also feel if they're constructive up front, they can avoid some of the worst aspects of things they really disagree with.

COOPER: So, you think they can get it done?

GERGEN: I think they've got the best chance of getting it done of any president -- every Democrat since Harry Truman has tried this, every single one has failed. I think that Barack Obama has the best chance of anyone.

COOPER: We're going to have more coming up.

Back next with a challenge many presidents look forward to even though it often ends up hurting or embarrassing them, picking a Supreme Court Justice. That and all the hot-button issues before the court ahead on EXTREME CHALLENGES: THE NEXT 100 DAYS.

(COMMERCIAL BREAK)

COOPER: Justice David Souter's departure from the Supreme Court is both a challenge and opportunity for President Obama as it would be for any president. Adding interest is the fact that this president is both a student and a one-time teacher of constitutional law. Listen.

(BEGIN VIDEO CLIP)

OBAMA: We'll seek somebody who is dedicated to the rule of law, who honors our constitutional traditions, who respects the integrity of the judicial process, and the appropriate limits of the judicial role. I will seek somebody who shares my respect for constitutional values on which this nation was founded and who brings a thoughtful understanding of how to apply them in our time.

(END VIDEO CLIP)

COOPER: Well, as for who he'll pick and what issues the Supreme Court will deal with, we'll bring in senior legal analyst, Jeffrey Toobin, who's written a great book on the Supreme Court called "The Nine" along with David Gergen and Joe Johns.

What do we know, Jeff, about the kind of justice the president would like to pick?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: I think there's a big threshold decision that the president has to make. He has spoken often of wanting to get away from the Court of Appeals' route to the Supreme Court. This Supreme Court is the first Supreme Court in the history of the country where all nine justices are former federal appeals court judges.

Part of him certainly wants to pick a governor, a senator, a cabinet member, someone who has experience with people's real-life problems.

COOPER: But it's not real-life experiences.

TOOBIN: Exactly and that's something he's talked about a lot. I did an interview with Greg Craig, the White House counsel, where he said very clearly the president does not think you have to be a Court of Appeals judge to be in the Supreme Court.

Now whether that means he'll actually pick a non-judge remains to be seen, but certainly Jennifer Granholm's been to the White House. Jennifer Granholm is the governor of Michigan, Janet Napolitano, the Secretary of Homeland Security. She's obviously under consideration. I think that is a real possibility.

COOPER: And is it a litmus test on abortion?

TOOBIN: Not in so many words but in reality I think there is. President Obama is not going to pick someone for the Supreme Court who he believes or anyone believes is going to overturn Roe v. Wade. Whether there are other cases that are quite as precise a litmus test, I don't think. But, in fact, if not in name, there is a litmus test.

COOPER: Joe, how tough is this nomination process going to get? Are Republicans going to fight this no matter who it is?

JOE JOHNS, CNN CORRESPONDENT: That's the whole test. If you just watch what's going on right now particularly on the Web, there are Web ads you look closely, some from the conservatives, some from the Republicans; those web ads look just a little bit like "Nightmare on Elm Street."

COOPER: The warning of what's to come.

JOHNS: The Supreme Court looks like a haunted house; there's lightning strikes and so on. So there are people who would really like to see this become a big battle, particularly because while the Republicans know they can't win on a nomination, they can't get the person they want, they can at least raise some of the key issues. The issues that they think are important to sort of galvanize their support out there.

Things like gay marriage, for example, executive power, some other issues that they really want these Republican senators to focus on. So they're holding their feet to the fire, insisting that they stand up for principles. And the question, of course, is whether those Republican senators are actually going to do it.

COOPER: David, the president is obviously a constitutional scholar in his former life. What lessons do you think he's learned from past choices that presidents have made?

GERGEN: Everything we know about this man is think big. Think audaciously. And just as he's trying to reshape the landscape here at home and he's trying to transform the world, I think he's going to -- I think he will see this as an opportunity to begin transforming the judicial system in this country.

And for him, unlike all the things we've been talking about today, in this program, this is the real opportunity.

COOPER: So where's the big challenge for him in this selection?

GERGEN: I think the big challenge for him is to come up with a person of true excellence who will withstand these kind of attacks. What you don't want to choose is someone who's got chinks in the armor that the Republicans can actually score points. If you come up with a person everybody says, basically, you may not like this person's views, but it's a person of true excellence, I think that person is likely to sail through.

TOOBIN: The one thing that I might disagree with you a little about there is if you look at Obama's record on legal issues, he is no big bomb thrower. I mean, he is someone who has been very moderate in his views. He is someone who is not, I think, looking to go back to the big liberals like Thurgood Marshall or William Brown (ph).

GERGEN: I don't think he'll be looking for a Scalia of the left. I agree with that. But what I do think he has the opportunity to do is to recast the court with a new majority that would be firmly on the progressive side. Because this is a man who thinks he's probably going to be in the White House for eight years. And he's going to have a number of selections. And he can move it away.

COOPER: And in the next court, what issues do you see playing out in a big way?

TOOBIN: I think race is going to be a very big issue. This court, the current court, is really looking to get rid of all racial preferences, to say that affirmative action basically is unconstitutional in all circumstances, in school integration, in college admissions, in employment settings.

And Barack Obama is on record saying I think there is a place for race consciousness in some places. So Souter has been on that side, so his replacement probably won't mean much.

GERGEN: Do you think over time, given the government's growing intervention in the private markets, we're going to have a renewal of constitutional issues about the proper role of government and commerce and that sort of thing?

TOOBIN: You know, that was the great fight in the court right after the new deal.

GERGEN: Right.

TOOBIN: That the nine old men struck down a bunch of the new deal initiatives.

GERGEN: Right.

TOOBIN: You know, I think John Roberts and Samuel Alito are the kind of conservatives where they're not going to pick that fight. They're big government conservatives. They think the government has a lot of power so I don't think this initiative -- group of initiatives that the president brought are going to bring the big constitutional fight. I think it is going to be more social issues.

Next, President Obama's promise to change the way Washington governs as EXTREME CHALLENGES continues

(COMMERCIAL BREAK)

COOPER: President Obama's final extreme challenge is both ongoing and entirely self imposed. He promised to change Washington; more transparency, more accountability, a new way of doing business. Listen.

(BEGIN VIDEO CLIP)

OBAMA: To my Republican friends, I want them to realize that me reaching out to them has been genuine. I can't sort of define bipartisanship as simply being willing to accept certain theories of theirs that we tried for eight years and didn't work and the American people voted to change. But there are a whole host of areas where we can work together.

(END VIDEO CLIP)

COOPER: Well, so how's he doing? Let's bring back the panel along with Candy Crowley. Candy, has he really reached out to the Republicans?

CROWLEY: Depends on who you talk to. Listen, bipartisanship is the most fungible word I think in Washington because, in fact, no matter what he says, bipartisanship tends to be if you agree with me, that makes you bipartisan on both sides. It is difficult.

I mean, yes, there are plenty of issues where they will work together. Where Republicans will agree with him on immigration, on any number of issues but the fact of the matter is on the issues that have come so far, there's not been bipartisanship largely because the Republicans didn't agree with the stimulus bill, they don't an agree with the budget so there's not been that kind of thing.

But there has been, by the way, on foreign policy. You've John McCain out there supporting the Afghanistan efforts that the president's made. You see him out there supporting his plan for Iraq. So there's been some but on key issues, you cannot expect Republicans are going to go, "Yes, I love the stimulus bill."

COOPER: Joe, so much talk of change in the election. Has President Obama changed the way Washington does business or have we seen signs of change?

JOHNS: We have seen signs of attempt to change. That's what we have seen. We have seen an attempt to bring Republicans into a higher ranking position which blew up. We have seen the Governor of Utah being put into the ambassadorship to China. The president is making the right sounds and noises but Washington changes very slowly.

You know, when I was in college in political science classes, we had a whole class called "System Maintenance" and the whole idea was that the American political system is set up not to change, to resist change, so that it's very stable. And that's what's happening here. The president has a long row to hoe if he's going to change the way Washington works fundamentally.

GERGEN: I think in terms of the way Washington works, the process, there hasn't been not much change but in the larger scheme of things, there's been a historic shift of power to Washington; away from Wall Street, away from New York and away from other commercial centers.

This government has more influence and authority over the economy than any government I think we have seen in our lifetimes and it's going to grow.

COOPER: Which strikes fear in the hearts of many Republicans and many people are concerned about Washington assuming so much power.

TOOBIN: Imagine a secretary of the Treasury who didn't work at Goldman Sachs; that's a change right there. There's a whole string of them.

I think there's a tone difference, too. I was so struck by President Obama's speech at Notre Dame where on abortion, which is this issue that is so polarizing. He really went out of his way to say, "Look, let's listen to each other. Let's try to find common ground on that." He didn't play to his base. He didn't pander to his opponents. He really talked about trying to get people together. Whether that will work, I don't know. COOPER: Beyond speeches, in terms of how he governs, what have we learned in the first 100 days that we can apply to this next 100 days?

CROWLEY: Well, we have learned, first of all, what we knew on the campaign trail which is that he is very deliberative. He does reach out and say tell me what you think of this from a number of people. But we also know that he is going to play his political capital and play it very hard.

When he wants it, he goes up there and whether it's Nancy Pelosi or Mitch McConnell, he'll roll over them to get what he needs and we saw that on the stimulus bill. He gave up some a little bit but by and large he got everything he wanted. And by and large that's because he has the public...

COOPER: He also sort of leaves to Congress some of the heavy lifting on a lot of these policies.

JOHNS: Exactly. That's what he does. He'll give you a broad outline and throw it to Congress and say, "Go get it. Show me how you want it done. Come to some agreement and we'll go from there." I think that's what he's doing on health care and variety of other big ticket items. And that's an interesting concept. It is not overmanagement; it's micromanagement.

CROWLEY: I don't believe for a minute that this White House said that. They're telling them what he wants. He might not be doing it.

GERGEN: He's far more strategic than most of the presidents we have had. Most strategic president we've had since Reagan. That is someone who has their eye on the horizon.

COOPER: so in terms of the next 100 days, in terms of governance, what are the challenges?

JOHNS: Don't get distracted. That's one of the things it looks like this administration is trying to do.

Some people say part of the reason why they really haven't waded into the issue of "don't ask don't tell" is because they don't want to launch the country off on a very divisive fight where Republicans understand they can score some real points.

The point is to try to stay on the big things it seems to me over there and deal with the things not as big sometime down the road.

GERGEN: Domestically, get the economy back on track as rapidly as possible but this summer, have both health care and climate change bills teed up for passage in the fall. Certainly, health care in both chambers and climate change in the House and get a Supreme Court nominee done. I think that's...

TOOBIN: Also the point to me. I'm not going to be the nominee. I wish I were.

GERGEN: You said that in the election. You said he wanted someone with real world experience.

TOOBIN: Outside the box. I don't have any real life experience.

(CROSS TALK)

GERGEN: Clearly. That would be...

TOOBIN: I can hope.

GERGEN: He's got a very, very full set of challenges the next 100 days and well beyond.

COOPER: We'll leave it there. That's our report.

Thanks to all our panelists throughout the hour. Thanks to all of you for watching. Be sure to keep watching because the challenges are not going away and new ones never stop coming.

We all need to know how well the president's handling them now more than ever. I'll see you next time.