Transcript: David Petraeus and Richard Holbrooke on CNN (29 March)

HOST JOHN KING: General Petraeus, let me start with the threshold question for you, how many troops will it take? How long will it be.

PETRAEUS: Well, as you know, John, the president and President Bush before him have set in motion orders for troops that will more than double the number that were on the ground at the beginning of the year. We'll get those on the ground. We'll take a lot of effort with infrastructure, logistics and so forth, start employing those in the months that lie ahead. They'll all be on the ground by the end of the summer and the early fall.

And along the way we'll be doing the assessments. And among those assessments, of course, will be the kinds of questions about force levels, about additional civilians and other resources as well.

KING: General McKiernan, your commander on the ground, had been up-front that he needed even more troops. Why did the president say no?

PETRAEUS: Well, he certainly hasn't said no.

What everyone has said is let's get these forces on the ground. Every request for forces and every recommendation that General McKiernan and I made through this year, this entire year, has been approved. And, as I said, we'll take that forward, do the assessments. And I think it'd be premature to get beyond that right now.

KING: Ambassador Holbrooke, before we get to your challenges in the diplomacy, I want you to take us inside the deliberations about this strategy, because as you know, many Democrats have warned this could be President Obama's Vietnam, that you're sending more troops into an area where you still have huge problems on the Pakistani side of the border -- and we'll talk about that -- with corruption and other issues on the Afghan side of the border. And we'll talk in more detail about that. But take us inside the room when it comes to the risk assessment for this president at this moment.

HOLBROOKE: First of all, John, I served in Vietnam for three and half years, and I'm aware of certain structural similarities. But there's a fundamental difference. The Viet Cong and the North Vietnamese never posed any direct threat to the United States and its homeland. The people we are fighting in Afghanistan, and the people they are sheltering in Western Pakistan pose a direct threat. Those are the men of 9/11, the people who killed Benazir Bhutto. And you can be sure that, as we sit here today, they are planning further attacks on the United States and our allies.

In terms of the deliberation itself, the president shared at least four meetings, by my count, of the full National Security Council -- very unusual, very impressive. He ran the meetings himself. I've been in meetings with presidents since Lyndon Johnson in whose White House I served. And I have never seen a president take charge of a meeting the way President Obama did continually.

In other meetings without the president present, General Jones, his national security adviser, his deputy Tom Donilon, and the senior members of the administration, including Hillary Clinton, Bob Gates and the military command, including my colleague and friend David Petraeus, all had a vigorous debate. The vice president participated heavily. And in these discussions, John, I can assure you, and through you everyone who's watching, that every single option was considered, its pros and cons. A convergence and a consensus was immediate, that we couldn't walk away from the situation, no matter how bad it was and how bad the situation we had inherited was.

Then the issue became what do we do about it? All the options were considered. On the civilian side, we focused on the agricultural sector, which has been neglected. And yet it's an agricultural sector -- country. We focused on creating jobs. On the informational side, Dave Petraeus and I agree that we don't have a strong enough counter- informational program to combat the Taliban and Al Qaida, and so on and so forth down a wide range of issues.

From this review, Dave Petraeus and I are now going to sit down and plot the most serious integration of civilian and military activities that we can -- we have had in our time. We're going to integrate the policy like it's never been done before. And, in fact, Dave and I are now planning a retreat to do just that.

KING: Well, let me -- let me talk about the challenge ahead, because no matter how right or how smart the United States is this time -- and you, obviously, in saying what you just said, Mr. Ambassador, you're criticizing what happened in the previous administration. But I don't to look backwards. For you to succeed, you need partners. And I want to play something that then-Candidate Obama told our Fareed Zakaria back in 2008 about the president of Afghanistan, Hamid Karzai -- the president of the United States, now, saying, back then, he didn't have much trust. Let's listen

I'm sorry, we don't have that sound for you. But here is what he said back in 2008. He said: I think the Karzai government has not gotten out of the bunker and helped to organize Afghanistan and government, the judiciary, police forces, in ways that would give people confidence. So there are a lot of problems there.

General, if there are a lot of problems there, have those problems been fixed? Or are you sending more U.S. troops into a country that can't organize and run itself?

PETRAEUS: Well, first of all, it's a comprehensive effort. And among the various lines of operation, if you will, are diplomatic lines that will be spearheaded by the ambassadors in both countries and with Ambassador Holbrooke, of course overseeing that. Among that effort has to be, without question, the strengthening -- the building in some cases -- of the kind of trust, cooperation, coordination that is necessary to deal with the problems that have emerged over the years.

It is no secret that the legitimacy of the Afghan government has been challenged by the corruption and some of the other issues there. President Karzai has appointed corruption committees, has made important starts, appointed some good officials, among them Minister of Interior Atmar. That now needs to be moved forward, as we run up to the elections. And then beyond, of course, it would be very important that we all work together to combat the kinds of issues that we discussed.

KING: You say it needs to be more forward. But Ambassador, I want you in on this point, because you have called corruption a cancer in Afghanistan. President Karzai's been in charge of seven years, first of an interim government, a transitional government. He's been president for four and a half years. If there is a cancer of corruption in Afghanistan, and he has been in charge for seven years, is he not part of the problem?

HOLBROOKE: There isn't any question that the government has corruption at high levels. I've said it as a private citizen, and I'm not going to repudiate anything I said as a private citizen. President Karzai called me right after the president's speech, which he which he watched live on CNN. He said it was a great speech, and he agreed with every word of it. And you will note that the president, for the first time at the presidential level, addressed corruption directly and frontally.

I will be meeting with President Karzai tomorrow in the Hague, in advance of the secretary of state's arrival there for this big international conference. Hillary Clinton will meet with Karzai the following day, the day after tomorrow. We will talk about corruption to him as we have before.

We do think it's a cancer. President Karzai says publicly that he agrees with that. And now it's up to his government to take action. But I would stress to you, John, that there is an election coming up on August 20th, the second election in Afghanistan's history. It's a hugely important election. President -- Secretary Clinton will address that in her remarks on Tuesday. And that election will be a chance for the people to vote on these issues.

KING: General Petraeus, I want you to come with me so we can take a closer look at the source of the issue here. And Ambassador Holbrooke, I believe you can see this on a monitor you have up in New York. This is your range of territory, General. You cover all this. But the problem at the moment is right here. And I want to pull out this border region just a little bit more and bring it over to the center, and pull this out a bit, so people can see what we're looking at.

Now, you believe the problem is as much on this side as on this side. So the U.S. troops are going here into Afghanistan. But many would say you're sending the fire department here, when the fire is here, that Al Qaida and the Taliban are on this side of the border. How confident are you that sending troops here will deal with the problem here in the context of trust? We just talked about trust with President Karzai. Do you trust -- let me ask you a simple question first. Do you tell the Pakistani military the most sensitive U.S. secrets? Or can you not trust that that information will be passed on to their security services and them onto the terrorists?

PETRAEUS: Well, first, let me just say that it's very important that the fire department address the fires that have sprung up in the eastern and southern parts of Afghanistan without question.

PETRAEUS: And then it's critically important that the fire department, if you will, in Pakistan, do the same thing in the Federally Administered Tribal Areas.

And if you move this down here, in fact, I just talked to General Kayani and had an update from him on operations that are ongoing in Bajaur and Mohmand, which are part of the Federally Administered Tribal agencies, some of which you have here.

And also in Khyber. They have just launched another operation in Mohmand. Clearly there has to be the establishment of true trust there as well. We discussed that actually this morning.

There is a substantial and significant and sustained commitment that is part of this Af-Pak strategy that was announced on Friday. We've had ups and downs between our countries over the years. We've now got to get on an up and stay on an up with them. And again, working our way forward in that regard has to be critical.

KING: And when you say we need to establish true trust, again, at a time of economic recession at home, when American families are struggling, we have given Pakistan more than $12 billion in recent years in aid and we don't have true trust?

PETRAEUS: Well, we have had ups and downs. Now, it is important to point out that there has been progress in these areas. It's significant to note that for a variety -- through a variety of ways, nine of the top 20 extremist leaders in this area -- let's remember, this is where the al Qaeda and transnational extremists are that have -- that were the ones that launched the 9/11 attacks, of course, and have launched attacks more recently in the U.K., Afghanistan, Pakistan, India, and other areas.

So very important to get into this. We have established, as an example, a joint coordination center just here just across the Khyber Pass. That is the kind of building trust that is very important where we're providing the products of intelligence activities and so forth and we see the building with the frontier core, with the other elements of the Pakistani military that are active there, the kind of cooperation and coordination necessary.

I should add that it's also important that this be trilateral. And in fact, as Richard explains frequently, the intelligence services of these two countries, which have had quite a bit enmity between them, they also have to cooperate and we're going to work together, all of us, to try to foster that cooperation as well. KING: And, Ambassador, to that point, how difficult is -- already difficult and incredibly complicated and sensitive diplomacy, how much more difficult is it if you can't be sure that you share a secret, you share some sensitive information with somebody in Pakistan and there is a history of this information being passed on to the security services and then in some cases passed on to the al Qaeda and Taliban?

HOLBROOKE: Well, of course, you're absolutely right, John. It's a huge concern for General Petraeus and me. Leon Panetta made his first trip as director of central intelligence to this region. This is going to be his focus.

We have started a new trilateral process of the leaders of the two countries, Afghanistan and Pakistan, coming to the United States. They came in late February to advise us on the strategic review. Both -- Karzai also praised the president's speech, by the way.

And now we are planning a new session for early May which Leon Panetta, Secretary of Agriculture Tom Vilsack, Vice President Biden, and others will join Secretary Clinton, General Petraeus, and me, and Bob Gates to participate in.

In all of these issues, we have to break down what you just referred to and what the Pakistani foreign minister himself called the trust deficit. You're absolutely right. There is a -- the relationship between Pakistan and the United States is immensely complicated and it isn't quite where it should be.

And the new focus on Pakistan and what General Petraeus just referred to as Af-Pak, Afghanistan-Pakistan, is designed to emphasize the fact that as we move forward, we need to focus as much on Pakistan, but with one key caveat, John. As the foreign minister of Pakistan has said publicly and repeatedly, there cannot be American combat boots, combat troops on the ground in western Pakistan.

So when you talk about fighting the fire on the other side of the border, we are constrained in going after people on that side of the border, even though they are the ones, to a large extent, planning further attacks.

This is the challenge of a uniquely difficult problem. Now we're recommitted to it and General Petraeus and I are shoulder-to-shoulder in this effort.

KING: I want to go to a quick break, but before I do, on this point -- and we'll have much more discussion, but on that key point that you're not allowed -- the Pakistani government says you're not allowed to put people in here.

From time to time we know there have been Special Forces operations in this area. How much of that is for public consumption? And how much of -- do you have the freedom, if you see something right here and you can get to it before the Pakistanis can, would you do it?

PETRAEUS: Well, I think the president made that clear the other day where he talked about consulting with the Pakistanis. But if it ultimately comes to it that we will, if necessary, take action.

Let me caveat that very, very carefully though. And that is that there is no intention for us to be conducting operations in there certainly on the ground, and there is every intention by the Pakistani military and their other forces to conduct those operations.

This is a very proud country. It has existing institutions. Our job is to enable those institutions, to help them develop the kinds of counterinsurgency capabilities that are needed and to help their entire government at large to conduct the kind of comprehensive effort that is necessary well beyond just the military effort, but one that then looks after displaced citizens, that tries to foster local economic development, and there was some of that in the president's speech as well.

KING: Much more to discuss with our two distinguished guests, General Petraeus and Ambassador Holbrooke. We'll be back in a minute. Among the topics, U.S. tensions with Iran. How close is that country to a nuclear weapon?

And of course, we're keeping our eye on the North Dakota where the Red River remains a flooding threat. We'll talk to Senator Kent Conrad, who is assessing the situation in his home state. STATE OF THE UNION will be right back.

(COMMERCIAL BREAK)

KING: We're discussing the many challenges here with General David Petraeus and Ambassador Richard Holbrooke discussing the many challenges here.

We were just talking, gentlemen, about the problems, the many issues you have to deal with, the tough jobs you have with the Afghanistan-Pakistan border. I want to move, a little bit this way in the neighborhood is Iran.

Admiral Mullen, the chairman of the joint chiefs, was on this program a couple of weeks ago. And I put to him the question, does he agree with international assessments that Iran now has enough fissile material to build a nuclear weapon?

Let's listen to Admiral Mullen.

(BEGIN VIDEO CLIP)

KING: Does Iran have enough to make a bomb?

ADMIRAL MIKE MULLEN (USN), CHAIRMAN, JOINT CHIEFS OF STAFF: We think they do, quite frankly. And Iran having a nuclear weapon, I've believed, for a long time, is a very, very bad outcome to for the region and the world.

(END VIDEO CLIP)

KING: Now, General, Secretary Gates, the same weekend, said, yes, they may have enough material but he doesn't think they're close to a weapon yet.

What is your assessment of the -- where they are in development of the weapon and what kind of a threat and a complication that makes your efforts in the rest of the very troubled neighborhood?

PETRAEUS: Well, Admiral Mullen clarified what it was that he was saying and he pointed out that there are additional steps required between having enough low-enriched uranium and actually having something that can be weaponized.

You have to highly enrich it. You have to actually do the physical package. You have to have delivery and so forth. The bottom line is that we think it's at least a couple of years away in that regard. It could be more. It could be a little bit less. There are certainly a lot of facts that we don't know about what goes on inside Iran.

KING: And is this -- is this regime being helpful when you deal with Afghanistan and Pakistan or are they trying to undermine what you doing over here, just as the administration -- the previous administration said repeatedly they tried to do what you were trying to solve in Iraq?

PETRAEUS: I think it's probably a mix. We have common objectives with Iran with respect to Afghanistan. They don't want to see the Taliban and the extremists elements that sought sanctuary there before return to running that country, certainly, a Sunni extremist organization, they, of course, being a Shia country.

They want to see a reduction in the flow of the illegal narcotics that has trapped many of their own citizens in addiction and so forth.

So there are common interests here, but there's also a sense, at times, we think, where they would certainly like us to bleed a bit more perhaps. They don't want to make it too easy for us. And certainly, they want to have a degree of influence, some of that legitimate, some perhaps a little less legitimate.

KING: Well, Ambassador Holbrooke, you will be in a meeting in the week ahead, I believe. I know Secretary Clinton will be there, in which Iranian diplomats will be in the room.

It is the highest-level contact in quite some time. What are your guidelines?

Where has the president said, Richard, if this comes up, you're allowed to talk about this. Let's say the Iranians come in and they're in a talkative mood and they want to talk about a lot of things. Where's your red line?

HOLBROOKE: Well, let's just see what happens in the Hague, John. I don't want to -- I don't want to forecast what's going to happen. Red lines? Well, we're not going to eradicate 30 years of bitter disagreements in one meeting.

But I want to be clear here that the United States has been asked repeatedly since January 20th how we feel about Iran participating in meetings on Afghanistan and Pakistan.

And we've given the same answer to everyone. We have no objections. Iran is a neighbor. And as David Petraeus has just said, they have -- we and they have common concerns.

In 2002 they helped stand up the Karzai government. They hate the Taliban and they need stability on their eastern frontier.

On the other hand, we have enormous differences with them on their nuclear program, on Hezbollah, Hamas and many other issues. So this is a work in progress. We also have to be mindful of the interests of our very important friends and allies in the rest of the region.

And so it's a very complicated issue. But the door is open for Iran to participate in international efforts to stabilize Afghanistan. Those must involve all the neighbors, including India, China, Russia, Turkey, Saudi Arabia, United Arab Emirates, plus our NATO allies.

So this -- we'll see how it goes.

KING: The vice president (sic) of the United States was a guest on this program two weeks ago. And he said something that caused a bit of a stir over at the White House and around town. I want you to listen.

(BEGIN VIDEO CLIP)

KING: Do you believe the president of the United States has made Americans less safe?

FORMER VICE PRESIDENT DICK CHENEY: I do. He is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.

(END VIDEO CLIP)

KING: General Petraeus, you served in the Bush administration under Vice President Cheney and President Bush. You're now serving in the Obama administration.

Are the American people less safe because of this new president, as Vice President Cheney says?

PETRAEUS: Well, I wouldn't necessarily agree with that, John. I think that, in fact, there is a good debate going on about the importance of values in all that we do. I think that, if one violates the values that we hold so dear, that we...

KING: You mean torture?

PETRAEUS: ... we jeopardize -- well, in fact, I put out a memorandum to the soldiers in the Multinational Force-Iraq, when I was the commander, because of concern that we may not be taking some of these seriously enough.

As you know, the field manual came out, from the Army, that is used by all of the different services that completely, clearly outlaws torture. So we think for the military, in particular, that can't -- that's a line that can't be crossed.

(CROSSTALK)

KING: So was the line crossed in the Bush administration?

Was the line crossed? Did you do things which you fundamentally thought were wrong and immoral?

PETRAEUS: We certainly did not. Now, there were some incidents that did, and we learned some very hard lessons from Abu Ghraib and other cases. And we believe that we took corrective measures in the wake of that. And that is very, very important.

But it is hugely significant to us to live the values that we hold so dear and that we have fought so hard to protect over the years.

KING: I want to talk through a timeline of Iraq. The American people came to know General David Petraeus as the general who turned around -- and many would accept that statement -- a flawed strategy in Iraq.

I want to go through a timeline. Then-state senator Barack Obama, way back in 2002, said he thought the Iraq war was a fundamental mistake and he opposed it.

And then, as a senator of the United States and a candidate for president, he spoke out quite passionately against the surge strategy. Let's listen.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: The responsible course of action for the United States, for Iraq and for our troops is to oppose this reckless escalation and to pursue a new policy.

(END VIDEO CLIP)

KING: As president of the United States, shortly after taking office, he was unveiling new Iraq strategy. He called you "brilliant," General Petraeus, and he said this. It sounds a little different.

(BEGIN VIDEO CLIP)

OBAMA: Under tough circumstances, the men and women of the United States military had served with honor and succeeded beyond any expectation.

(END VIDEO CLIP)

KING: And then recently, in a 60 minutes interview, he, almost under his breath, said something to the effect of who knew Iraq would be the least of his problems as president of the United States.

He has never publicly -- President Obama has never publicly said, you know what, I was wrong; the surge was the right strategy. Has he told you that?

PETRAEUS: Well, we haven't actually talked about the surge. What we talked about is looking forward. And I think it's very important, actually, at points like this, to take the rearview mirrors off the bus, as we say, and look -- look ahead. That has been the focus.

I think you know that, on the day after the inauguration, the first full day in office, the president sat down with the commander from Iraq by video teleconference, myself in the situation room, the chairman, the secretary of defense, the other members of the national security team and discussed Iraq.

And that's what launched the review of the Iraq policy that eventually culminated in the address at Camp Lejeune, something that General Odierno, Ambassador Crocker and I support, something to which we had substantial input, and we think quite a pragmatic and proper, prudent way forward.

KING: Ambassador Holbrooke, you were a fierce critic of the Bush approach in Iraq. In the political debate about it here in Washington, though, many Democrats will tell you privately, you know what, I was wrong; the surge worked because of David Petraeus and that, you know, President Bush, in the end, and John McCain and Joe Lieberman were right.

Why is that such a hard thing for Democrats to say?

HOLBROOKE: I -- I'm not going to partisanize the discussion here. But I do want to say something about Dave Petraeus, whom I did not know until about three months ago and then fate and destiny put us together as counterparts.

I think the nation owes General Petraeus a debt of gratitude for what he's achieved in Iraq. And I am confident, absolutely confident, having known the entire United States military chain of command from General Westmoreland in Vietnam on, that we now have the best team we possibly could have on the ground, from Admiral Mullen to General Petraeus to the command in Afghanistan.

And I'm proud to work with them. And we all ought to acknowledge what has been achieved.

Now, in regard to the previous comment that you played, by the former vice president of the United States, I need to say -- and I hope I can do this in a spirit of bipartisanship and nonbipartisanship, that I don't have a clue what he's talking about.

We are treating Afghanistan and Pakistan as a single theater. We are going to address it in an integrated way. We are going to give it more resources. And that is where the people planning the next attack on the United States or on our European allies are certainly doing it. So I just do not understand what his comments were referenced to.

KING: All right. We will leave it there. Ambassador Holbrooke being very diplomatic. We'll catch you next campaign season. We'll see if that stays the same.

(LAUGHTER) Ambassador Holbrooke, General Petraeus, on a serious note, you both have very difficult work in the days and weeks ahead and we certainly, as Americans, we wish you very well in that work.

Good luck to both of you. And thanks for coming in this morning.

Mr Obama's War? Waiting for the US Strategy on Afghanistan and Pakistan

Related Post: Afghanistan - Former Taliban Ready for Talks with US

So what is the Obama Administration's new approach to American intervention in Afghanistan and Pakistan?

Really. What is it?

Administration officials had set up the media this week for a dramatic re-launch of the US strategy, based on a series of reports for the President. The latest study, headed by Obama campaign advisor and former CIA officer Bruce Riedel, was on Obama's desk on Monday. US envoy Richard Holbrooke was holding forth for the media and briefing NATO members; less publicly, CIA Director Leon Panetta was visiting Pakistan. The President was telling 60 Minutes on Sunday night, "What we're looking for is a comprehensive strategy. And there's gotta be an exit strategy."

This spinning, however, does not add up to a new approach. For Afghanistan, there is still no detail on US troop levels, American non-military programmes, the contributions from Washington's allies. And for Pakistan, which Obama's people are now putting as Number One Crisis, there is no sense of how the expansion of missile strikes and covert operations matches up to a political approach, either towards the "sanctuaries" in the Northwest Frontier Provinces or towards the central Government in Islamabad.

What we have gotten instead from the US is vacuous cheerleading posing as "analysis". Jim Hoagland on The Washington Post wrote a love letter to "Gen. David Petraeus and diplomat Richard Holbrooke [who] are as smart as they come". Even worse, commentators like Jackson Diehl of The Washington Post and David Brooks of The New York Times have been treated to a Grand Tour of US bases in Afghanistan so they can parrot the words of American military commanders, "Over time this will work -- it has worked over and over again through history" (Diehl) and "When you put more boots on the ground, you not only augment your army’s firing power, you give it the capacity to experiment". (Brooks)

This puffery should be set aside for the leaked ideas coming out in British newspapers. The outgoing US ambassador in Afghanistan, William Wood, tells The Observer that "America would be prepared to discuss the establishment of a political party, or even election candidates representing the Taliban, as part of a political strategy that would sit alongside reinforced military efforts". The Times writes of an American approach linking economic aid, a build-up of Afghan security forces and police, and a crack-down on heroin production.

Most striking, sources tell The Guardian, "The US and its European allies are ­preparing to plant a high-profile figure in the heart of the Kabul government in a direct challenge to the Afghan president." Expecting that President Hamid Karzai will win re-election in August, despite its best efforts to build up a rival candidate, the US will insist on a "Chief Executive" or "Prime Minister".

The US strategy on Afghanistan and Pakistan --- really, what is it?

Transcript: President Obama's Interview with New York Times

Related Post: Mr Obama’s War - Playing for Time in Afghanistan

The text of President Obama's 35-minute interview with The New York Times aboard Air Force One on Saturday:

Q. You said it’s going to take a long time to get out of this economic crisis. Can you assure the American people that the economy will be growing by the summer, the fall or the end of the year?

A. I don’t think that anybody has that kind of crystal ball. We are going through a wrenching process of de-leveraging in the financial sectors – not just here in the United States, but all around the world – that have profound consequences for Main Street. What started off as problems with the banks, led to a contraction of lending, which led in turn to both declining demand on the part of consumers, but also declining demand on the part of business. So it is going to take some time to work itself through.

Our job is to do a couple of key things. Number one, to put in place key investments that will cushion the blow. Our recovery plan had provisions for unemployment insurance, for food stamps, what we just saw today, grants and assistance to states so layoffs aren’t compounded. The second thing we’ve got to do is we’re going to have to strengthen the financial system. We’ve taken some significant steps already to do that – just for example this week, opening up a trillion-dollar credit line. But there’s going to be more work to be done there because there are some banks that are still limping along and we’ve got to strengthen their capital bases and get them lending again.

We’ve got to be able to distinguish in the marketplace between those banks that have real problems and those banks that are actually on pretty solid footing. We’ve still got the auto situation that we’re going to have to address. And finally, we’ve got to make the investments for long-term economic growth around energy, education and health care. I’m not trying to filibuster, it was a big question.

Our belief and expectation is that we will get all the pillars in place for recovery this year. Those are the things we have control over and we have confidence that working with Congress we can get the pillars of recovery in place. How long it will take before recovery actually translates into stronger job markets and so forth is going to depend on a whole range of factors, including our ability to get other countries to coordinate and take similar actions because part of what you’re seeing now is weaknesses in Europe that are actually greater than some of the weaknesses here, bouncing back and having an impact on our markets.

Q. Can you envision allowing a major institution to fail? Can you say with certainty that you won’t need to ask Congress for any more money beyond the $250 billion placeholder in your budget.

A. I am absolutely committed to making sure that our financial system is stable. And so I think people can be assured that we’ll do whatever is required to keep that from happening. For example, that would mean preventing institutions that could cause systemic risks to the system being just left on their own. We’re going to make sure that the financial system is stabilized and in terms of the resources that are involved. We think the $250 billion placeholder is a pretty good estimate. We have no reason to revise that estimate that’s in the budget. One of the benefits I think of this budget was we tried to surface as honestly and as forthrightly as possible, all the costs of this crisis, all the costs of the war in Iraq and Afghanistan, all the potential costs of things like fixing the AMT, which historically have been left off the budget. Something that I don’t think people recognize is that had we used the same gimmicks that had been used previously, we could have driven down our budget projections over the next 10 years, down to point where debt was only 1.3 or 1.5 percent of G.D.P. We could have made ourselves look really good, but I felt very strongly that part of what got us in trouble in the first place, both in the private sector and the public sector, was a failure to do honest accounting about what risks are out there, about what costs are out there and factoring those in, and that’s something that we’ve tried to change.

Q. Have you figured out how you would draw the lines against endless rescues?

A. Part of the function of the stress test that is being conducted by Treasury right now is to make a determination using some worst-case scenario – what that would mean for a bank’s balance sheet. And I think that what you should see emerging there is an awful lot of banks that are in decent shape considering the circumstances. They’ve been managed well. They didn’t take undue risks. Obviously, they’re being hit like every business is being hit by the recession, but they can recover, and if they do need help, it’s going to be short-term help. There may be a handful of institutions that have more serious problems. And what we want to do is to cauterize the wound.

Q. And they’ll have to fail, the ones that had more serious problems?

A. No, no, no, no. But what we’ll have to do is, we’ll probably have to take more significant action to deal with those institutions.

But the point is that our commitment is to make sure that any actions we take to maintain stability in the system, begin to loosen up credit and lending once again so that businesses and consumers can borrow. And if they can, then you’re going to start seeing businesses invest once again and you’re going to see people hired once again, but it’s going to take some time.

Q. The first six weeks have given people a glimpse of your spending priorities. Are you a socialist as some people have suggested?

A. You know, let’s take a look at the budget – the answer would be no.

Q. Is there anything wrong with saying yes?

A. Let’s just take a look at what we’ve done. We’ve essentially said that, number one, we’re going to reduce non-defense discretionary spending to the lowest levels in decades. So that part of the budget that doesn’t include entitlements and doesn’t include defense – that we have the most control over – we’re actually setting on a downward trajectory in terms of percentage of G.D.P. So we’re making more tough choices in terms of eliminating programs and cutting back on spending than any administration has done in a very long time. We’re making some very tough choices.

What we have done is in a couple of critical areas that we have put off action for a very long time, decided that now is the time to ask. One is on health care. As you heard in the health care summit yesterday, there is uniform belief that the status quo is broken and if we don’t do anything, we will be in a much worse place, both fiscally as well as in terms of what’s happening to families and businesses than if we did something.

The second area is on energy, which we’ve been talking about for decades. Now, in each of those cases, what we’ve said is, on our watch, we’re going to solve problems that have weakened this economy for a generation. And it’s going to be hard and it’s going to require some costs. But if you look on the revenue side what we’re proposing, what we’re looking at is essentially to go back to the tax rates that existed during the 1990s when, as I recall, rich people were doing very well. In fact everybody was doing very well. We have proposed a cap and trade system, which could create some additional costs, but the vast majority of that we want to give back in the form of tax breaks to the 95 percent of working families.

So if you look at our budget, what you have is a very disciplined, fiscally responsible budget, along with an effort to deal with some very serious problems that have been put off for a very long time. And that I think is exactly what I proposed during the campaign. We are following through on every commitment that we’ve made, and that’s what I think is ultimately going to get our economy back on track.

Q. So to people who suggested that you are more liberal than you suggested on the campaign, you say, what?

A. I think it would be hard to argue, Jeff. We have delivered on every promise that we’ve made so far. We said that we would end the war in Iraq and we’ve put forward a responsible plan.

Q. In terms of spending.

A. Oh, in terms of spending. Well, if you look at spending, what we said during the campaign was, is that we were going to raise taxes on the top five percent. That’s what our budget does. We said that we’d give a tax cut to 95 percent of working Americans. That’s exactly what we have done. That’s the right thing to do. It provides relief to families that basically saw no growth in wages and incomes over the last decade. It asks for a little bit more for people like myself who benefited greatly over the last decade and took a disproportionate share of a growing economy. I actually don’t think that anybody who examines our budget can come away with the conclusion that somehow this is a – that this is in any way different than what we proposed during the campaign.

But more to the point, it is what’s needed in order to put this economy on a more stable footing. One of the problems that we’ve had is that we have put off big problems again and again and again and again. And as I’ve said in my speech to the joint session of Congress, at some point there is a day of reckoning. Well, that day of reckoning has come.

What I’m refusing to do and what I’ve instructed my staff that we will not do is to try to kick the can down the road, to try to paper over problems, try to use gimmicks on budgets, try to pretend that health care is not an issue, to continue with a situation where we are exporting – importing – more and more oil from the middle east, continuing with a situation in which average working families are seeing their wages flat line. At some point, we’ve got to take on these problems.

Q. Is there one word name for your philosophy? If you’re not a socialist, are you a liberal? Are you progressive? One word?

A. No, I’m not going to engage in that.

Q. Mr. President, we need to turn it to foreign policy. I know we have a review going on right now about Afghanistan policy, but right now can you tell us, are we winning in Afghanistan?

A. No. I think that we are – we are doing an extraordinary job, or let me say it this way: Our troops are doing an extraordinary job in a very difficult situation. But you’ve seen conditions deteriorate over the last couple of years. The Taliban is bolder than it was. I think the – in the southern regions of the country, you’re seeing them attack in ways that we have not seen previously. The national government still has not gained the confidence of the Afghan people. And so its going to be critical for us to not only, get through these national elections to stabilize the security situation, but we’ve got to recast our policy so that our military, diplomatic and development goals are all aligned to ensure that al Qaeda and extremists that would do us harm don’t have the kinds of safe havens that allow them to operate.

At the heart of a new Afghanistan policy is going to be a smarter Pakistan policy. As long as you’ve got safe havens in these border regions that the Pakistani government can’t control or reach, in effective ways, we’re going to continue to see vulnerability on the afghan side of the border. And so it’s very important for us to reach out to the Pakistani government, and work with them more effectively.

Q. Do you see a time when you might be willing to reach out to more moderate elements of the Taliban, to try to peel them away, towards reconciliation?

A. I don’t want to pre-judge the review that’s currently taking place. If you talk to General Petraeus, I think he would argue that part of the success in Iraq involved reaching out to people that we would consider to be Islamic fundamentalists, but who were willing to work with us because they had been completely alienated by the tactics of Al Qaeda in Iraq.

There may be some comparable opportunities in Afghanistan and the Pakistani region. But the situation in Afghanistan is, if anything, more complex. You have a less governed region, a history of fierce independence among tribes. Those tribes are multiple and sometimes operate at cross purposes, so figuring all that out is going to be a much more of a challenge.

Q. In a post-9/11 world, when it comes to employing American power in that world, including at home and abroad, and the balance between securities and civil liberties, what do you think now that you’ve been in office, that President Bush, if anything, got right, in figuring out that balance?

A. I think that I would distinguish between some of the steps that were taken immediately after 9/11 and where we were by the time I took office. I think the C.I.A., for example, and some of the controversial programs that have been a focus of a lot of attention, took steps to correct certain policies and procedures after those first couple of years. I think that Admiral Hayden and Mike McConnell at D.N.I. were capable public servants who really had America’s security interests in mind when they acted, and I think were mindful of American values and ideals.

Q. Are we closer to that balance right now?

A. I think we’ve still got work to do in dealing with those initial steps. Guantanamo being Exhibit A. As a consequence of a series of early decisions, we now have people in Guantanamo who have not been tried, have not had an opportunity to answer charges, many of whom are dangerous, some of whom are very difficult to try, will be – some of whom will be difficult to try because of the manner in which evidence was obtained.

So there’s a clean-up operation that has to take place, and that’s complicated. As I said when I announced my decision to close Guantanamo, for us to have tried to have done that in less than a year would have been completely unrealistic. And even doing it within a year is requiring an enormous amount of attention and focus on the part of our ...

Q. Is it within the realm of possibility that some of these Guantanamo detainees might have actually been released into the United States, the Uighurs, or somebody like that?

A. I don’t want to, again, prejudge the reviews. We are being very deliberate, very careful to make sure that we get this right. There are still going to be some balancing – there is still going to be some balancing that has to be done and some competing interests that are going to have to be addressed. But what I’m confident about is moving forward we can create a national security operation and set of procedures that keep us safe and secure and are also true to our traditions. That I’m increasingly confident of.

Q. Leon Panetta has said that we’re going to continue renditions, provided we’re not sending people to countries that torture. Why continue them at all?

A. Well, I think that you’re giving a slightly more definitive response than Director Panetta provided, but what I’ll say is this: We are now conducting a review of the rendition policy, there could be situations, and I emphasize – could be – because we haven’t made a determination yet, where let’s say we have a well-known Al Qaeda operative, that doesn’t surface very often, appears in a third country, with whom we don’t have an extradition relationship, or would not be willing to prosecute him, but we think is a very dangerous person. I think we will have to think about how do we deal with that scenario in a way that comports with international law and abides by my very clear edict that we don’t torture, and that we ultimately provide anybody that we’re detaining an opportunity through habeas corpus. to answer to charges.

How all that sorts itself out is extremely complicated because it’s not just domestic law its also international law, our relationship with various other entities. And so, again, it will take this year to be able to get all of these procedures in place and on the right footing.

Q: Turning to other matters, when it comes to race relations, do you agree that we’re a nation of cowards?

A: I think it’s fair to say that if I had been advising my attorney general, we would have used different language. I think the point that he was making is that we’re oftentimes uncomfortable with talking about race until there’s some sort of racial flare-up or conflict, and that we could probably be more constructive in facing up to the painful legacy of slavery and Jim Crow and discrimination.

But what I would add to that is the fact that we’ve made enormous progress and we shouldn’t lose sight of that. And I’m not somebody who believes that constantly talking about race somehow solves racial tensions. I think what solves racial tensions is fixing the economy, putting people to work, making sure that people have heath care, ensuring that every kid is learning out here. I think if we do that, then we’ll probably have more fruitful conversations.

Q: Speaking of the economy, what advice would you give ordinary Americans who are struggling through these times? You’ve asked people for their patience. What should people do now?

A: Well, obviously, you’ve got 300 million Americans so I don’t think you can generalize across the board. I think that people would feel confident that every time we’ve had an economic challenge like the one that we’re having – although this is one of the bigger ones – that we’ve gotten through it, that the pillars of recovery will be in place this year.

Q: What should the unemployed in particular ...

A: Well, hold on a second. There are still groceries to be bought and kids to send to school and cars in need of repair and young families that need to find homes. And so what I would say to people is, obviously, be prudent. I think that ordinary families should have learned from the last few years and recent history that if something sounds too good to be true – whether it’s stock market returns or appreciating housing prices – that sometimes they are too good to be true, and that what we should be looking for is steady growth, steady accumulations of savings, steady and prudent investing. And that I think is what you’re going to see emerging after we’ve gotten through the worst of this crisis.

What I don’t think people should do is suddenly stuff money in their mattresses and pull back completely from spending. I don’t think that people should be fearful about our future. I don’t think that people should suddenly mistrust all of our financial institutions because the overwhelming majority of them actually have managed things reasonably well. But I think that coming out of this crisis what you’re going to see is, you know, a return to the fundamentals – hard work, investing for reasonable returns over time, saving steadily for your kids’ college education and for your retirement. All of us, thinking about our purchases and making sure that we’re taking care of the necessities before we go after the luxuries. And I think that’s true not only for individual families but I think that’s going to be true for government as well. And if we take those steps, if we return to the fundamentals, if we go back to that ad that used to run, where they say, you know, ‘we earn money the old fashioned way’ -- or what is it?

(Cross talk)

A: ‘We make money the old fashioned way, we earn it.’ If we go back to that philosophy and we finally tackle some problems we’ve been putting off, like health care, like energy, like education, then I think we’re going to come out of this stronger.

Q: Sir, we’re landing here, but what are you reading these days? What kind of newspapers do you read, do you read the clips, do you read actual papers, do you watch television?

A: Other than The New York Times?

Q: Other than The New York Times. Do you read Web sites? What Web sites do you look at?

A: I read most of the big national papers.

Q. Do you read them in clips or do you read them in the paper?

A. No, I read the paper. I like the feel of a newspaper. I read most of the weekly newsmagazines. I may not read them from cover to cover but I’ll thumb through them. You know, I spend most of my time these days reading a lot of briefings.

Q: And television? Do you watch? Web sites?

A: I don’t watch much television, I confess.

Q: And Web sites?

Q: No blogs?

A: I rarely read blogs.

Q: No reality shows with your girls?

A: No. They watch them, but I don’t join them. I watch basketball. That’s what I watch.

Q: Have you gotten a new appreciation at all, or maybe a little sympathy for what your predecessors went through in terms of a president can’t control all the events?

A: Oh, absolutely. Look, I actually appreciated that before I took office. I always felt that a president is accountable for making the best decisions, but that there are going to be a lot of unexpected twists and turns along the way. And as I said recently, this is still a human enterprise and these are big, tough, complicated problems. Somebody noted to me that by the time something reaches my desk, that means it’s really hard. Because if it were easy, somebody else would have made the decision and somebody else would have solved it. So typically, if something’s in my folder, it means that you’ve got some very big, difficult, sticky, contradictory issues to be wrestled with.

Q: Has anybody said to you, No, sir, you can’t do that? Has there been a moment in these last six weeks where you tried to do something and somebody said, Sorry, sir, it doesn’t work that way?

A: Well, I mean, I think what we were talking about earlier in terms of Guantanamo. People didn’t have to tell me, No you can’t do that. It was simply, Well, sir, here are the challenges that we face in terms of making a decision about that. In the entire banking sector – we spend every day, myself, Rahm Emanuel, Tim Geithner, Larry Summers, Christina Romer, every single day, we will spend at least an hour of my time just talking through how we are approaching the financial markets.

And part of the reason we don’t spend a lot of time looking at blogs is because if you haven’t looked at it very carefully then you may be under the impression that somehow there’s a clean answer one way or another – well, you just nationalize all the banks, or you just leave them alone and they’ll be fine, or this or that or the other. The truth is this is a very complex set of problems and bad decisions can result in huge taxpayer expenditures and poor results.

And so what I expect from my team is to constantly be guided by evidence, facts, talking through all the best arguments, drawing from all the best perspectives, and then talking the best course of action possible given the fact that there are some big uncertainties and that sometimes what people may want may actually be contradictory. So, for example, lately, people have been concerned – understandably – about the decline in the market. Well, the reason the market’s declining is because the economy’s declining and it’s generating a lot of bad news, not surprisingly. And so what I’m focused on is fixing the underlying economy. That’s ultimately what’s going to fix the markets, but in the interim you’ve got some folks who would love to see us artificially prop up the market by just putting in more taxpayer money which in the short term could make bank balance sheets look better, you know, make creditors and bondholders and shareholders of these financial institutions feel better and you could get a little blip. But we’d be in the exact same spot as we were six, eight, 10 months from now. So what I’ve got to do is make sure that we’re focused on the underlying economy and if we do that right, if we do that well, and I’m confident that we will, then after some very tough times, and after a lot of hardship on the part of some of the people that I hear from every day who’ve lost their jobs or don’t have health insurance or what have you, that we’re going to get this economy moving again. And I think over the long term we’re going to be much better off.

Q. Are you sleeping sir or is it hard to sleep?

A. Ohhhhh, I always sleep because when I’m not sleeping I’m working.

Q. You never feel burdened by it, though? You’ve come into – there are so many problems that the country faces. Do you feel the weight of that now as president?

A. As I said feel as if I’ve got a great team and we are making the best decisions under the circumstances. Do I wish that I had the luxury of maybe dealing with one monumental problem at a time during the course of the year? Of course and in fact, you know, you’ve been hearing sort of our opposition lately saying, ‘Well, he’s trying to do this and that and the other, and he shouldn’t – ‘Look, I wish I had the luxury of just dealing with a modest recession or just dealing with health care or just dealing with energy or just dealing with Iraq or just dealing with Afghanistan. I don’t have that luxury and I don’t think the American people do either. We’ve got to use this moment to solve some big problems once and for all so that the next generation is not saddled with even worse problems than we have right now. All right? Thanks.

******

At 2:30 p.m., President Obama called The New York Times, saying he wanted to clarify a point from the interview. Here is a transcript of that brief call:

President Obama: Just one thing I was thinking about as I was getting on the copter. It was hard for me to believe that you were entirely serious about that socialist question. I did think it might be useful to point out that it wasn’t under me that we started buying a bunch of shares of banks. It wasn’t on my watch. And it wasn’t on my watch that we passed a massive new entitlement – the prescription drug plan without a source of funding. And so I think it’s important just to note when you start hearing folks through these words around that we’ve actually been operating in a way that has been entirely consistent with free-market principles and that some of the same folks who are throwing the word socialist around can’t say the same.

Q. So who’s watch are we talking about here?

A. Well, I just think it’s clear by the time we got here, there already had been an enormous infusion of taxpayer money into the financial system. And the thing I constantly try to emphasize to people if that coming in, the market was doing fine, nobody would be happier than me to stay out of it. I have more than enough to do without having to worry the financial system. The fact that we’ve had to take these extraordinary measures and intervene is not an indication of my ideological preference, but an indication of the degree to which lax regulation and extravagant risk taking has precipitated a crisis.

I think that covers it.