CQ Transcriptwire

SPEAKERS: WOLF BLITZER, GUEST HOST

KATHLEEN SEBELIUS, SECRETARY OF HEALTH AND HUMAN SERVICES

SEN. DEBBIE STABENOW, D-MICH.

SEN. JUDD GREGG, R-N.H.

SEN. LAMAR ALEXANDER, R-TENN.

SEN. KENT CONRAD, D-N.D.

HOWARD KURTZ, CNN ANCHOR

MICHAEL MEDVED, RADIO TALK SHOW HOST

KELI GOFF, HUFFINGTONPOST.COM

MATT FREI, BBC WORLD NEWS AMERICA

SIR DAVID FROST, AL JAZEERA ENGLISH

MARY MATALIN, GOP STRATEGIST

JAMES CARVILLE, DEMOCRATIC STRATEGIST

REP. PATRICK J. MURPHY, D-PA.

[*] BLITZER: This is our “State of the Union” for this Sunday, July 12th. I’m Wolf Blitzer in for John King. President Obama wants Congress to deliver a health care reform bill for him to sign this year. But can the United States afford to implement ambitious and expensive changes with an ailing economy? And what role will the government have in any final plan?

In our exclusive Sunday interview, the health secretary, Kathleen Sebelius , outlines the administration’s case. Plus, four key U.S. senators weigh in on the health care debate and whether there’s a need for another economic stimulus package. Plus, the president in Africa, Anderson Cooper brings us an exclusive interview with the president from a castle that was the center of the African slave trade. It’s a remarkable interview with America’s first African-American president.

That’s all ahead in this hour of “State of the Union.”

You’re looking at live pictures of the White House. A beautiful Sunday here in the nation’s capitol. Up on the other end of Pennsylvania, Capitol Hill, the U.S. Congress, where they’re debating health care reform. While President Obama spent the past week overseas tending to global matters, his administration pressed ahead with its effort to revamp the U.S. health care system. The vice president Joe Biden announced a new agreement with the hospital industry to help pay for reforms, but there are still major issues to resolve, including whether to tax health care benefits in order to finance a final reform plan.

Here to outline the Obama administration’s view is the Health and Human Services Secretary Kathleen Sebelius . Madame Secretary, thanks very much for joining us.

KATHLEEN SEBELIUS, HHS SECRETARY: Great to be with you.

BLITZER: How are you going to pay for $1 trillion if not more for this health care reform over 10 years? SEBELIUS: Well, President Obama has outlined his preferred payment plans, about $660 billion in savings out of the existing system. So money that’s already in the system that’s not making us healthier and going to procedures and practices that work very well. And about $330 billion in a proposal that would cap the itemized deductions that the wealthiest Americans take. Return them to the level where they were in President Reagan’s days. The Souse and the Senate have slightly different variations, a lot of the same savings and they’re looking at different funding...

BLITZER: Because the House version that Charlie Rangel, the chairman of the Ways and Means Committee announced on Friday would tax the wealthiest Americans additional tax to help pay for the hundreds of billions of dollars that would still be needed if you make more than $300,000 a year or $400,000 a year, make more than $1 million, you’re going to be paying a lot more taxes in the years to come.

SEBELIUS: Well, the House has a version, there are a couple of different proposals being worked on in the Senate.

BLITZER: You like the House version?

SEBELIUS: I think that it’s one of the ideas that will be discussed in the long run. I prefer the president’s version, I think it makes good sense that, again, the wealthiest Americans pay --

BLITZER: But you’re open to the version of increasing taxes on richest -- the richest Americans to pay for health care for everyone else?

SEBELIUS: Well, I think the bottom line is, it’s got to be paid for. And we all have a shared responsibility that we all need to play a role. The House and Senate version also have employers included, and individuals included. And what’s been remarkable, Wolf, is the stake holders in the early ‘90s were the most vocal opponents of anything changing in the health care system are really at the table with their own suggestions of how to pay --

BLITZER: Just to be precise, you’re open to Charlie Rangel’s proposal.

SEBELIUS: Well, I think everything is on the table and discussions are underway.

BLITZER: Are you also open to taxing health care benefits that employers provide their workers?

SEBELIUS: Well I think, again, the president’s made it pretty clear from the beginning, certainly during the course of the campaign and since then that that proposal may well dismantle the current employer-based system. He has always suggested that we want to build on the current system, 180 million people have insurance provided by employers. What we don’t want to do is discourage employers from offering coverage.

BLITZER: This is what he said back when he was a candidate in September of 2008. I’m going to play this little clip.

SEBELIUS: OK.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Everyone in America, everyone, will pay lower taxes than they paid in the 1990s under Bill Clinton at a time when the economy was growing and we produced 22 million new jobs.

(END VIDEO CLIP)

BLITZER: All right, so just to be precise, you’re rejecting a proposal to tax health care benefits employees get from their employers?

SEBELIUS: Again, Wolf, the House and Senate are busily at work and I think the president continues to reemphasize that he has opposed the notion that we would tax health care benefits, continues to think that is not the best strategy to go forward. If at the end of the day that’s the chosen way, I mean, the House clearly doesn’t have it in, the health committee doesn’t have taxing benefits as part of the proposal. We’re waiting to see what Finance comes up with. But he continues to work with the Finance Committee saying this is not the preferred strategy.

BLITZER: Not the preferred, but it’s not necessarily completely being ruled out?

SEBELIUS: Well, no lines in the sand at this point. The most important thing is a health care reform bill passed this year, comprehensive reform because we can’t afford to pay what we’re paying right now. We’re paying twice as much as any nation on earth, living sicker, dying younger, and that isn’t good for any American.

BLITZER: Will the president accept health care reform that does not include a public option? In other words, public government-run health insurance companies competing with the private health insurance companies?

SEBELIUS: Again, he has said consistently and very strongly a public option is one of the strategies that will help lower costs, provide some competition for private insurers, and make sure that consumers in many parts of the country have a choice. Absent that, you won’t have cost competition and you won’t have choice.

BLITZER: So be precise, is the president going to reject any -- if the House and Senate says, you know what? We can do this with co- ops, we can do this with other ways, but there’s not going to be a public government-run health insurance system, is the president going to accept this?

SEBELIUS: I think you’re going to hear from senators in a little while about a variety of strategies to get to a public option. There isn’t one size fits all. So he, I think, the president has said we can have -- the issues are competition and choice and how you bring that into the private marketplace. There probably are a variety of strategies, all of which are on the table.

The good news is that Congress is hard at work. We’ve got Republican senators working day in and day out with Democratic senators trying to figure out how to make sure reform happens this year. And they’re working really hard.

BLITZER: When is the president going to say, you know what, enough, the House and the Senate, they have got their own version, I’m going to come up with a Barack Obama version that I want you guys to pass?

SEBELIUS: Well, everybody assumed that I had the 1,000-page plan in my purse as I traveled through the Senate for my pre-confirmation hearings.

What the president understands is that this package of legislation, this very comprehensive bill needs to be a bipartisan approach. It needs to be owned by the House and the Senate with lots of input from the administration. That’s exactly what’s going on now. Progress is happening day in and day out, people are at the table, Senator Grassley is working hard with Senator Caucus and Senator Conrad and others.

I think we’re going to have a bipartisan bill with not only votes from Republicans and Democrats, but lots of ideas from Republicans and Democrats to reform the health care system.

BLITZER: Let’s talk about the swine flu. You’re getting ready --

SEBELIUS: H1N1.

BLITZER: You’re getting ready, flu season is going to be starting in the fall here in the northern hemisphere. It’s going pretty wild right now in the southern hemisphere. Will there be a vaccine that will be ready when the flu season starts in the United States?

SEBELIUS: We are aggressively working on, first of all, testing the virus strains to get a vaccination ready. It needs to be safe so testing and clinical trials will start this month. We’ll know a lot more by the end of the summer and it needs to be effective. Will it inoculate folks against the H1N1 virus? Assuming that’s the case, by mid-October, we will have a vaccination ready. When exactly the flu season starts, we can’t predict, but we will have a vaccination ready by mid-October, assuming we have a safe, effective strain that’s been identified.

BLITZER: Because millions of people, potentially, are at risk in the United States.

SEBELIUS: Well, we have about 1 million cases of H1N1 right now.

BLITZER: Around the world?

SEBELIUS: No, in the United States right now. BLITZER: In the United States alone?

SEBELIUS: And 102 countries are seeing presentations of this disease. The good news is that it’s not terribly lethal right now. We’ve had about 170 deaths, that’s too many, but we know 36,000 people die every year with seasonal flu. So we’re watching southern hemisphere, no vaccine, H1N1 mixing with flu right now. We’ll know a lot more as we move toward the fall, but we are preparing to keep Americans safe and secure.

BLITZER: Give us a preview of the announcement you’re going to make tomorrow on the vaccine.

SEBELIUS: There’ll be another $1 billion worth of orders placed to get the bulk ingredients for an H1N1 vaccination. Congress has agreed with the president that this is the number one priority, keeping Americans safe and secure. So the science is underway, the FDA is working with the scientists at NIH to make sure that we have a safe and effective strain and then we’re getting ready to make sure that we have a vaccination program.

We did a major flu summit last week with 500 state and local officials to get -- use the summer months for planning, to make sure that we’re ready if a major vaccination program is launched in the fall to get ready to get the shots in folks’ arms.

BLITZER: Madame Secretary, thanks very much for coming in, good luck.

SEBELIUS: Thank you, great to see you.

BLITZER: Thank you. President Obama even sees a health care bill, says he wants to see a health care bill on his desk by the end of this year. Lawmakers on Capitol Hill have to agree on what goes into it. Up next, four key U.S. senators break down what needs to be done to reach a bipartisan agreement.

Also, Anderson Cooper’s exclusive interview with President Obama in Africa. It’s a remarkable interview from the exact location where millions of Africans were sold into slavery. You’re going to see it right here on “State of the Union.”

(COMMERCIAL BREAK)

BLITZER: Well, we just heard the Obama administration’s view of health care reform, now let’s turn to four U.S. senators who are playing a key role in crafting a plan. In his home state of New Hampshire, Republican Judd Gregg . And from her home state of Michigan, Democratic Senator Debbie Stabenow . Here with me in Washington, Republican Lamar Alexander of Tennessee, and Democrat Kent Conrad of North Dakota.

Senator Conrad, let me start with you. You just heard Kathleen Sebelius , the secretary of Health and Human Services say the Obama White House is open to this House proposal that Charlie Rangel, the chairman of the Ways and Means Committee has put forward to put additional taxes on the richest American families to pay for health care reform for everybody else who doesn’t have it yet. Is that a good idea?

CONRAD: Look, everything does have to be on the table. You can’t negotiate properly without that rule in place. But I don’t think the House proposal as I’ve heard it will be what’s part of the final package. I think there may be some request from those of us who at the highest levels of income this country to pay a bit more. But there will be a much broader package of revenue as well as spending reductions in order to make this package work.

BLITZER: Yeah, are you open to the House version to consider a tax on people making more than let’s say $250,000 or $300,000 or $350,000 a year at 1 percent or 2 percent additional tax on their gross income to pay for health care reform?

ALEXANDER: That’s a bad idea, Wolf. What is on the table seems to be taxes like that more state taxes to support Medicaid, more cuts in Medicare, more employer taxes. What should be on the table and more government programs. What should be on the table are more proposals like the one Senator Gregg has made or Senator Burr, Senator Coburn. There are 14 of us, Democrats and Republicans, who support the Wyden-Bennett plan, and that would give every American dollars with which to buy their own health insurance and could be done without adding a penny to the debt.

BLITZER: You want to tax benefits, health care benefits that employers provide to their employees as income?

ALEXANDER: I’m willing to stop giving tax deductions to people for Cadillac health insurance plans in order to give everybody a chance to buy their own health care insurance and not add a penny to the debt. I think that would be a good way.

BLITZER: No matter what their income.

ALEXANDER: No matter --

BLITZER: No matter what the income?

ALEXANDER: What it means is if we’ve got a Cadillac insurance plan and your employer gives you that, then some of it’s going to be taxed. That money will be used to make sure we do -- we can’t keep adding to the debt in the way we are.

BLITZER: Senator Stabenow, is that OK with you?

STABENOW: Well, Wolf, I think realistically, the one thing that is off the table is taxing employee benefits. I think we’ll see some other combination of things. But employees don’t determine what insurance companies are going to charge them for their health care for their family. And I think that’s pretty much off the table. What’s most important --

BLITZER: Senator Alexander says it should be on the table.

STABENOW: Well that may be his view. I respect that. But it is not I believe the majority opinion. But I think what’s also very important in this discussion is that over half of the cost of reforming and changing the health care system is going to come with greater efficiencies, it’s going to come with changing from quantity of tests to paying for quality, paying for health care not sick care.

BLITZER: But hundreds of billions of dollars, Senator Stabenow, are still going to be required and that money according to President Obama, he wants a deficit neutral plan, doesn’t want the taxpayers to be burdened with additional costs. That’s going to have to come from somewhere, and that’s what I hear you saying is you don’t want it to come from taxing health insurance benefits. Let me ask Senator Gregg what he thinks.

STABENOW: That’s correct.

GREGG: What do I think about that issue? Well, I think the UAW is calling the shots there, and that’s why it’s not on the table because they’ve got some very high-end health policies, and they don’t want them to, their union members to have to reduce those health policies.

But I think the bigger issue here is why are we going to increase spending and health care by $1 trillion, $2 trillion, $3 trillion? Most of which we can’t afford, add that to the debt or add it the tax burden of the American people. Why don’t we approach this horse from the other end? I think we’re approaching it from the wrong end.

When you start increasing spending like that and increasing the debt of this country, which is already excessive, why don’t we look at trying to control the rate of spending by looking at better quality delivery systems, which are more affordable? We’ve got a lot of excellent studies that tell us you can deliver a lot better health care at a lot less cost if you give people incentives to go out and buy health care intelligently, if you give the employers capacity to reward people for purchasing health care intelligently and giving up lifestyles which are basically counterproductive such as smoking.

BLITZER: Well, quickly, Senator Gregg, would you support, could you see yourself voting in favor of health care reform legislation that includes this public option, a public government-run insurance company to compete with the private insurance companies like Blue Cross and Blue Shield or United Health Care or some of these others?

GREGG: No because a public option is a slippery slope to a single payer system like Canada or England have, which inevitably leads to putting a bureaucrat between you and your doctor and inevitably leads to delays, it leads to rationing. In England, for example, you have major rationing so that people who get breast cancer in England, they only have a 78 percent survival rate. We have 92 percent. The difference is the fact that we encourage people to go out and get tested.

In England, you’ve got to go through this regime of being approved for testing and it doesn’t work that well. So we do not want to go down the road that basically undermines our fundamental health care delivery by creating a state-run government system in this country and that’s what a public plan is, it’s a stocking horse for a single payer system.

BLITZER: Because Senator Conrad, you’re not convinced that a public option would necessarily pass, that’s why you’ve come up with your own compromise version of co-ops. Having these co-ops that wouldn’t necessarily be completely public or private, it would be somewhere in the middle. You think that’s passive?

CONRAD: I do. And really just to be clear, the cooperative plan is something that we see across many business lines in the country, very successful. The “Associated Press” is a co-op, we’ve got Ace Hardware as a co-op, Land O’Lakes, a $9 billion entity is a co-op. The beauty of it is that it does provide competition for insurance companies.

CONRAD: But it is not government-run, government-controlled, it’s membership-run, membership-controlled.

BLITZER: Could you support that, Senator Alexander, the cooperatives?

ALEXANDER: Well, it all depends. I mean, Blue Cross could probably fit under his definition of a co-op. The problem with a government-run plan would be something like this. Say the president said let’s buy the rest of General Motors to keep the Ford Motor Company honest. And that wouldn’t matter unless he gave the government car some advantage.

So he might say, well, all your repairs are going to be at a very low cost, but all of the mechanics might say, we’re not going to -- we’re not going to work on the government car. That’s what you have with a government plan today with Medicaid, 40 percent of the doctors won’t serve Medicaid patients because of the low service and it’s the only option --

BLITZER: I want to ask Senator Stabenow, I’ll rephrase the question for Senator Stabenow. Could you support that does not include a public option?

STABENOW: Well, my first choice and very strong choice is a public option. And I have to say, Wolf, that what my friends are saying, Senator Gregg and Senator Alexander really are scare tactics that have been put forward by folks that don’t want to change the system because they make a lot of money off the current system right now.

The reality for families today is if there’s an insurance company bureaucrat between you and your doctor telling your doctor what they’re allowed to do because of what they’ll pay for, telling you what they’ll pay for, putting you through all kinds of bureaucracy to try to figure out if you can get care, assuming you’re not dropped if you get sick or can’t get insurance if you have a pre-existing condition.

So what we’re talking about is putting somebody on your side, being able to make sure that the insurance company, the for profit insurance company won’t provide you with a low cost insurance policy for your family that you have another choice.

BLITZER: I want to go around --

STABENOW: American choice.

BLITZER: Very quickly, all four of you, if you can give me a yes or no answer, I’m going to play a clip of what the president of the United States said in an exchange with a reporter in Italy on Friday. And I want your answer, listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Is it a pretty much a do or die by the August recess?

OBAMA: I never believe anything is a do or die. But I really want to get it done by the August recess.

(END VIDEO CLIP)

BLITZER: Will there be legislation on the president’s desk, Senator Gregg, by the August recess?

GREGG: On health care, I think that’s highly unlikely since the Finance Committee doesn’t even have a bill drafted yet. And we’re in the middle of the Sotomayor hearings for this week and then we’re going to be debating her nomination for a week before we adjourn for the August recess.

BLITZER: Let me ask the chairman. What do you think?

CONRAD: I think we’ll be through the Finance Committee by the August recess and I think that’s a realistic goal. You know, there really is plenty of time. Congress is going to be in session until Christmas Eve.

BLITZER: What do you think?

ALEXANDER: No, there’s no reason to rush. We need to get it right, not add debt, not have a Washington takeover.

BLITZER: Is the president going to be disappointed, Senator Stabenow?

STABENOW: Well, I think he’s going to be very pleased with the progress we’re making. I believe we’re going to move this through the Finance Committee. We’re going to get it done as quickly as possible. The most important thing is to get it right. The American people have waited for a long time.

BLITZER: I want all of you to stand by because we have a lot more to discuss. We’re coming back with the senators. We’re going to talk about the confirmation hearings that begin tomorrow morning for the U.S. Supreme Court nominee Sonia Sotomayor.

Also, word that the CIA withheld information about a secret counter-terrorism program from Congress on direct orders from then Vice President Dick Cheney .

Plus, we’ll bring you Anderson Cooper’s exclusive interview with President Obama recorded only hours before the president left Africa. It’s a remarkable interview done in the Gulf Coast castle. That was a prison where Africans were held before being sold into slavery. You’re going to want to see it and hear it right here on “State of the Union.”

(COMMERCIAL BREAK)

BLITZER: We’re back with four U.S. senators, Republican Judd Gregg and Democrat Debbie Stabenow . And here in Washington, Republican Lamar Alexander and Democrat Kent Conrad .

Senator Alexander, the stories in the “New York Times,” we’ve confirmed it that the former Vice President Dick Cheney over nearly eight years told the CIA on one very sensitive piece of intelligence, and we don’t know what that piece of intelligence is, do not share that information with the U.S. House of Representatives or the Senate. Is that appropriate?

ALEXANDER: Well, let’s -- we don’t know whether it was appropriate. The CIA is in the secrecy business. And what I hear from the Democratic members of Congress is they want the CIA to tell more of them what’s going on. The best way to ruin a secrecy business is to tell --

BLITZER: Even if you just tell the leaders, if you tell eight leaders, four in the House and four in the Senate, the majority leader, the minority leader, and the chairman and the ranking member of the two intelligence committees.

ALEXANDER: That is appropriate.

BLITZER: Because that’s the tradition, you tell the eight or so- called gang of eight.

ALEXANDER: But what I’m hearing from the Democratic members of the House is tell us all, tell more of us about it. If the eight leaders think what Vice President Cheney did was inappropriate, they should sit down with the new president and the new CIA director and say we’d like to know more. That’s the way to fix that problem. I have no way of knowing -- nor do or anybody else.

BLITZER: No because presumably, Senator Conrad, even these eight leaders who traditionally are informed I think of almost everything, they were told by the vice president if you believe this story, don’t even tell them about this program.

CONRAD: That’s a serious breach. Look, you can’t gloss over it. It has nothing to do with what the House is asking going forward. This is a question of whether something was not given the elected leaders of the Congress, which is required by law. That’s a serious matter.

BLITZER: If the current vice president, Senator Gregg, told the CIA, you know what, there’s a really sensitive program, I don’t want you to tell these eight leaders of the House and Senate what’s going on, would that be appropriate? GREGG: No. But let’s -- there’s no question that’s not appropriate. But the problem here is different than that in my opinion. This continued attack on the CIA and our intelligence gathering organizations is undermining the morale and capacity of those organizations to gather intelligence. The war we’re in today is a war of intelligence. The only way we’re going to stop a terrorist of using a weapon of mass destruction on us is to find out who that terrorist is and what they have before they attack us.

GREGG: The only way we’re going to get that information is through intelligence gathering.

We have to have an extraordinarily robust and strong CIA, an extraordinarily and robust intelligence gathering organization. And this national attempt by some of our colleagues on the other side of the aisle to basically undermine the capacity to protect and develop intelligence is, I think, going to harm us in the long run.

(CROSSTALK)

GREGG: Yes, this is wrong. If somebody told the CIA not to inform the appropriate members of Congress on information they should be informed on, that’s wrong, but that isn’t -- that isn’t reason to disassemble the CIA and make them a whipping child in the middle of the public opinion, which undermines the morality of the whole agency.

BLITZER: Senator Gregg, no one wants dismantle the CIA, at least no one in a serious position. But if the former vice president, Dick Cheney -- and I want to pin you down on this -- if he did tell the CIA, “Don’t share this information with the House and the Senate -- if he did say that, would he have been wrong?

GREGG: Yes, if that information was correctly -- it should have been shared. I mean, I don’t know what the information was; you don’t know what it was. And there are instances, I presume, where something is so sensitive that it can’t be released. But as a very practical matter, if it should have been shared, it should have been shared.

BLITZER: Because I went back and looked back at the legislation, at the law, of the 1947 law, Senator Stabenow, and it does leave a loophole there for the executive branch of the U.S. government not to share certain intelligence information with the legislative branch of the U.S. government.

It says that the congressional intelligence committees should be fully and currently informed of all intelligence activities, but it does say this, “to the extent consistent with due regard for the protection from unauthorized disclosure of classified information relating to sensitive intelligence, sources, and methods or other exceptionally sensitive matters.”

So, presumably, the former vice president could have determined this was such an exceptionally sensitive matter, it would fall into that loophole. STABENOW: Well, I would be extremely surprised if that was the case, Wolf. I think the person who’s been undermining the credibility of the CIA is the former vice president, by his actions, if, in fact, this is true.

This is very, very serious, and I think it goes beyond even the -- to the credibility of the CIA.

And we all want a strong, effective, credible CIA. We have to have that as part of our national security. It’s integral to our national security.

But this really goes to a larger question that we struggled with throughout the Bush presidency, which is checks and balances. You know, the presidency or even the vice president, who said he wasn’t a part of the Senate; he wasn’t part of the administration -- I’m not sure where he fell in his mind in the Constitution, but the reality is that there is a reason why there are checks and balances.

We don’t have a dictatorship. We have a Congress that is responsible to oversee and to ask questions on behalf of the people. And I think that’s what we continually saw challenged...

(CROSSTALK)

BLITZER: Go ahead, Senator Gregg.

GREGG: Well, listen, wolf, this is -- this is a big issue, not only from the standpoint of whether -- what the vice president did, but from the issue of the morale and capacity of the CIA to develop information -- and other intelligence-gathering sources.

And I sense -- and I’ve been here before and you have, too -- that we’re heading back into this Frank Church atmosphere in this Senate and in this Congress, where, basically -- where people use the CIA as a whipping boy and, instead of supporting their initiatives in overseas intelligence gathering, they become a symbol of the errors of a prior administration and it becomes taken on at a level that basically leads to legislation or to just hearings that basically fundamentally undermine the atmosphere and the morale of this agency, which is absolutely critical to us right now.

And we saw it happen before. This isn’t the first time.

BLITZER: And you may -- and you may have more ammunition, because there’s now word that the attorney general, Eric Holder, is thinking of asking for a special council to investigate the CIA’s interrogation of certain terror suspects. We’re going to get into that...

ALEXANDER: But on that point, if he does that, he needs to go all the way back to 1995 and investigate the Clinton administration renditions, which might have led to -- to interrogations in other countries at a time when he was the deputy attorney general, and ask what laws were broken; did he know about it? What precautions were taken? So that’s what happens when we begin to go back in -- we go back to 9/11. Let’s go on back and let’s ask which congressmen knew about it.

(CROSSTALK)

BLITZER: The president has said he doesn’t want to go back; he wants to look ahead.

Go ahead, Senator Stabenow.

STABENOW: Well, Wolf, I just want to emphasize, one more time, that this is not about not supporting the CIA or undermining the CIA or trying to to in any way lower morale. This is not about that.

I mean, we are strongly supportive of a professional, credible CIA. We have -- I think they have incredible challenges, as it related to information before going into the war, we have had so many different stories that have come forward about the intervention of the former vice president. We want to change that. We need them to be strong, credible, and supported.

But part of what’s happening right now is the continual information coming forward about what kind of pressure they were under under the previous administration.

(UNKNOWN): Wolf, can I...

BLITZER: Very quickly.

(UNKNOWN): ... just make this point?

Look, I’ve had close relatives in the CIA. I’ve got profound respect for what they do. Senator Gregg is entirely correct. We absolutely are in a war of intelligence. It’s critically important we’re the best at it.

But this story in the New York Times has nothing to do with an attack on the CIA. This is a question of whether the former vice president of the United States denied certain sensitive information to the intelligence leaders in Congress. That is not acceptable.

BLITZER: Well, I’m sure there’s going to be a lot more on this coming up, but I want to thank all four of the senators for joining us here on “State of the Union.” Thanks so much.

(CROSSTALK)

BLITZER: Thank you.

And President Obama is back home from an overseas trip, including a visit to Ghana. CNN’s Anderson Cooper was in the African nation and spoke with the president. We’re going to bring you some of Anderson’s exclusive interview. That’s ahead on “State of the Union.”

(COMMERCIAL BREAK) BLITZER: I’m Wolf Blitzer, and this is “State of the Union.” Here are stories breaking this Sunday morning.

A source confirms to CNN the CIA withheld information about a secret counterterrorism program from Congress on direct orders from the then-vice president, Dick Cheney . The source says the CIA director, Leon Panetta, has informed lawmakers about Cheney’s role and has stopped the program.

Efforts to contact the former vice president for reaction so far have been unsuccessful.

BLITZER: Confirmation hearings for the Supreme Court nominee Sonia Sotomayor kick off tomorrow morning. Democratic senators say they’ll push back against Republican opponents who paint her as an activist judge. If confirmed, Sotomayor would become the first Latina on the high court. You can catch all of the action right here on CNN. Our coverage begins tomorrow morning, 10:00 a.m. Eastern.

And you’re looking at a live picture of the space shuttle Endeavor. NASA will try to launch the shuttle again tonight, but only if the shuttle’s electrical system checks out and the weather cooperates. Last night’s launch was scrubbed after several lightning strikes near the launch pad. If the mission gets the thumbs up, liftoff is set for 7:13 p.m. Eastern later tonight. That and much more ahead on “State of the Union.”

After a week of international travel, President Obama and his family arrived back at the White House just after midnight. Before he left his final stop in Ghana, he sat down with Anderson Cooper for an exclusive interview. You can see, by the way, the full interview tomorrow Monday night on “A.C. 360.” But here are some of the highlights. The number one topic, as it was for most of us, the U.S economy.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR: Vice President Biden said that you’ve misread the economy. You said no, no, no, we had incomplete information, and nevertheless you said that you would not have done anything differently. Wow, that seems contradictory. How can you say that if you had known unemployment would go to 9.5 percent, wouldn’t you have asked for more money in the stimulus?

OBAMA: No, it’s not contradictory. Keep in mind that we got an $800 billion stimulus package, by far the largest stimulus package ever approved by a United States Congress.

And the stimulus package is working exactly as we had anticipated. We gave out tax cuts early so that consumers could start spending or at least pay down debts so they could at a later date start spending. We put in $144 billion to states so that they wouldn’t have to cut teachers and police officers and, you know, other social services that are vital, particularly at a time of recession. And we always anticipated that a big chunk of that money then would be spent not only in the second half of the year, but also next year. This was designed to be a two-year plan and not a six-month plan. Now, it may turn out that the enormous loss of wealth, the depth of the recession that’s occurred requires us to reevaluate and see what else we can do in combination with the --

COOPER: A second stimulus?

OBAMA: Well, there are a whole range of things, Anderson, that we’ve done. The banks have stabilized much more quickly than we had anticipated. They’re not all the way to where we’d like them to, but we’ve seen significant progress.

COOPER: Do you still see glimmers of hope?

OBAMA: If you look at both the financial sectors, the ability of the businesses to get loans, the drop off of volatility that’s taken place, the general trajectory is in the right direction.

(END VIDEOTAPE)

BLITZER: Anderson also asked the president about a story that broke last week, a possible war crime committed by an ally of the United States during the 2001 war in Afghanistan.

(BEGIN VIDEOTAPE)

COOPER: It now seems clear that the Bush administration resisted efforts to pursue investigations of an Afghan war lord who was on the CIA payroll. It’s now come out they were hundreds of Taliban prisoners under his care who got killed. Some were suffocated in a steel container. Others were shot, possibly buried in mass graves. Would you support, would you call for an investigation into possible war crimes in Afghanistan?

OBAMA: The indications that this had not been properly investigated just recently was brought to my attention. So what I’ve asked my national security team to do is to collect the facts for me that are known and we’ll probably make a decision in terms of how to approach it once we have all of the facts gathered up.

COOPER: But you wouldn’t resist categorically an investigation?

OBAMA: I think that, you know, there are responsibilities that all nations have, even in war. And if it appears that our conduct in some way supported violations of laws of war, then I think that, you know, we have to know about that.

(END VIDEOTAPE)

BLITZER: Finally the president spoke of how he was personally and deeply affected by the tour he took with his family visiting the Cape Coast castle of prison where enslaved Africans were held before being sold and shipped overseas. Anderson spoke to the president during that tour.

(BEGIN VIDEOTAPE) COOPER: You think what happened here still has resonance in America? That the slave experience still is something that should be talked about and should be remembered and should be present in every day life?

OBAMA: Well, you know, I think that the experience of slavery is like the experience of the Holocaust. I think it’s one of those things you don’t forget about. I think it’s important that the way we think about it and the way it’s taught is not one in which there’s simply a victim and a victimizer. And that’s the end of the story. I think the way it has to be thought about, the reason it’s relevant is because whether it’s what’s happening in Darfur or what’s happening in the Congo or what’s happening in too many places around the world, you know, the capacity for cruelty still exists.

(END VIDEOTAPE)

BLITZER: And don’t forget, you can see Anderson’s interview with the president tomorrow night, 10:00 p.m. Eastern only here on CNN. Also be sure to catch a special “AC 360” presentation, President Obama’s African journey. That will air Friday night 10:00 p.m. Eastern.

Up next, the challenges that come with rural health care. The nearest hospital is miles and miles away And many stay away from getting even the most basic care because they can’t afford it. Much more “State of the Union” right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to STATE OF THE UNION. I’m Wolf Blitzer, sitting in for John King. Every week John likes to get outside of Washington and speak with you about the issues being debated right here in Washington. In John’s American dispatch this week, an up- close look at how many in rural America worry their unique concerns and challenges might not fit with Washington’s debate over accessible and affordable health care.

(BEGIN VIDEOTAPE)

JOHN KING, CNN ANCHOR (voice-over): Clay, West Virginia, is tucked into the remote, rolling hills of coal country. The nearest hospital is 50 miles away on these winding, rural roads. With the poverty rate approaching 30 percent, many here could barely afford the drive, yet alone the care, like Carl and Elizabeth Walls.

CARL WALLS, CLAY, WEST VIRGINIA: If life and death depended on money, I’d just have to die.

ELIZABETH WALLS, CLAY, WEST VIRGINIA: You would be dead right now.

C. WALLS: I’d have been dead right now.

KING: Carl had a massive heart attack a little more than a month ago. First, a long ambulance ride and blood thinners at a rural hospital, then an emergency Medevac to Charleston.

C. WALLS: (INAUDIBLE) with dignity with every (INAUDIBLE) that you could ask. And in spite of me not having any money, I’m treated as if I were a king, you know?

KING: Most of their life savings went to paying for back surgery and other health issues Elizabeth had a few years back. She has diabetes and is legally blind.

(on camera): Why won’t you go to the doctor?

E. WALLS: Because I can’t pay for him. And I -- you know, I could go and I get bills and I can’t pay those bills, so.

C. WALLS: We have got thousands and thousands of dollars worth of bills come in and what can you do about them?

KING: But so you’d rather not go to the doctor than to have a bill come that you can’t pay?

E. WALLS: Right.

UNIDENTIFIED FEMALE: Did you get in touch with her regarding that repeat on the mammo?

KING (voice-over): It is the dilemma Dr. Sarah Chouinard faces every day, trying to convince the uninsured not to wait for the heart attack, cancer diagnosis, or some other major problem to seek medical care.

DR. SARAH CHOUINARD, CLAY PRIMARY HEALTH CARE CENTER: We offer sliding fee payment scales. If they’re at 100 percent federal poverty level or worse, then they owe us $5 only and the rest of their care is waived. Thirty-five percent of our patients are uninsured and so we have to come up ways to deliver health care at low cost and try to figure out what to do with their health care once they are outside of these walls.

KING: The urgent focus here is preventive care because it’s the right medical approach and because Dr. Chouinard and her colleagues know many of their poor and uninsured patients will ignore suggestions to see expensive specialists.

CHOUINARD: We see a large portion of diabetics, hypertensive and hypercholesterolemic (ph) patients. Our hope is that we keep people away from needing expensive health care services. So our role in a rural setting is key. The question is, how do we keep paying for it? How do we keep giving discounted care? How do we afford to keep the doors open?

KING: A big chunk of the clinic’s budget comes from federal grants. And Dr. Chouinard says she hasn’t heard much talks during the reform debate in Washington about how to protect places like this in small town America.

CHOUINARD: It will be interesting to see what happens if they come up with universal coverage, what will our role as a federally- qualified health center be? How is our role defined after that? I worry that we have patients here who will maybe not fall into some category and somehow slip through the cracks.

KING: Carl and Elizabeth Walls share that concern. They sold two small businesses, watched the money go to health care bill, and now have thousands of dollars more because of Carl’s heart attack.

E. WALLS: You know, we have worked all of our life and tried and we can’t seem to get any programs that work for us.

KING: It’s not that the Walls or Dr. Chouinard oppose the idea of universal coverage, to the contrary, it’s just the sense that when there is talk of big change, people like them and places like this so often get left behind.

(END VIDEOTAPE)

BLITZER: John King reporting for us.

We want to say good-bye to our international audience for this hour, but, up next for our viewers here in the United States, Howard Kurtz breaks down Sarah Palin ’s love/hate relationship with the news media.

Plus, joining us at 11:00 a.m. Eastern, one hour from now, James Carville and Mary Matalin together right here on STATE OF THE UNION.

(COMMERCIAL BREAK)

BLITZER: I’m Wolf Blitzer and this is our STATE OF THE UNION for this Sunday, July 12th. John King is off today.

Stories about Michael Jackson are certain to dominate the news for weeks to come. Allegations of drug use, the future of his children, legal battles over his estate. But last week were all the negative stories washed away in a wave of positive media? Howie Kurtz says the coverage was out of control and, straight ahead in our “RELIABLE SOURCES” hour, he’ll argue that one with a panel of veteran journalists. Stand by.

Plus, a fictionalized retelling of his battle with former President Richard Nixon 32 years ago is now a hit movie, but this legendary journalist isn’t resting on his laurels. Howie sits down with Sir David Frost to talk about his past and current job with the Arab-based news channel Al-Jazeera English.

And at the top of the hour, stand by for fireworks. Republican strategist Mary Matalin and Democratic strategist James Carville, they will both be here in our studio. It’s a face-off you’ll see right here on STATE OF THE UNION.

First, let’s go Howard Kurtz and “RELIABLE SOURCES.”

Howie, you have got a full hour of hot news.

KURTZ: Good morning, Wolf. And you mentioned fireworks coming up with Matalin and Carville, you’re anchoring the Sonia Sotomayor confirmation hearings beginning tomorrow. Will it be a challenge for you to anchor days of coverage if there are no fireworks at those hearings?

BLITZER: I don’t know if there will be fireworks, but there will be interesting discussion on Tuesday, especially 19 senators, each one, Howie, will have 30 minutes uninterrupted to grill the Supreme Court nominee.

BLITZER: Can you imagine 19 30-minute interviews that she’s going to have to go through in one or two days? Some of it will, I’m sure, be fascinating.

KURTZ: You’ll need as much endurance as the nominees.

Thanks, Wolf. We’ll talk to you later.

The tsunami of coverage over bidding farewell to Michael Jackson this week -- not that the media are prepared to kiss this story goodbye anytime soon -- overwhelmed everything in its path, even a presidential trip to Russia, Africa and the Vatican. But there was also a journalistic earthquake that was heard above the din of the endless Jackson tributes.

Just as Michael Jackson became a controversial cultural icon who transcended the world of music, Sarah Palin is a polarizing presence whose caribou-hunting charisma has taken her beyond politics, hailed by some, detested by others, and prime fodder for the likes by the likes of David Letterman and “Saturday Night Live.”

(BEGIN VIDEOTAPE)

KURTZ (voice-over): The aftershocks of Palin’s surprise resignation as Alaska governor are still reverberating, in part because it’s been hard to decipher just why she’s quitting. Palin’s response? She skewered the media on Twitter and Facebook for questioning her explanation, then put on her waders and went fishing for coverage with several correspondents from the very same media establishment.

UNIDENTIFIED FEMALE: Why not just stick with it? I mean...

GOV. SARAH PALIN (R), ALASKA: Because that’s politics as usual.

UNIDENTIFIED FEMALE: ... a lot of governors face hardship.

PALIN: They do.

Well, I knew I wasn’t going to run again, so I’m going to be honest with Alaskans and say one term was enough.

ANDREA MITCHELL, MSNBC: You wouldn’t have finished the job, some would say.

PALIN: You’re not listening to me as to why I wouldn’t be able to finish...

KURTZ: The pundits are having a grand time psychoanalyzing Palin for doing something that most regard as ditzy or at least suspicious.

BOB BECKEL, FOX NEWS CONTRIBUTOR: Did you read her statement on Friday? It was one of the more incoherent -- it made Sanford sound like Shakespeare.

TUCKER CARLSON, FOX NEWS CONTRIBUTOR: Why do we assume that she wants to run for president? Why would you run for president? Maybe she wants to go into the media.

JOHN RIDLEY, JOURNALIST: At what point do you just say I’m going to raise my metaphorical middle finger to everybody, let me go out on my book tour, let me go out and maybe get a deal hosting a show, but at some point become the king maker for 2012?

MARK MCKINNON, REPUBLICAN STRATEGIST: She may be crazy like a fox, she may be crazier than an acre of snakes, but she’s going to be crazy busy on the political radar screen for a long time to come.

TINA BROWN, DAILYBEAST.COM: She sort of reminds me in a way of Princess Diana when she was unraveling. She is both obsessed with the media and keeps saying she is victimized by it.

(END VIDEOTAPE)

KURTZ: So, are the media fairly analyzing the soon-to-be former governor’s latest move, or piling on Palin once again?

Joining us now in New York, Keli Goff -- actually, we see Michael Medved in Seattle, host of “The Michael Medved Radio Show.” Now Keli Goff, in New York, analyst, blogger and author. And here in Washington, I know he’s here because I can see him, Matt Frei, anchor of “BBC World News America” on BBC America.

Matt Frei, why would Palin gripe about the media coverage yet again of her surprise announcement and then turn around and go fishing with Andrea Mitchell and the gang?

FREI: Because one of her great strengths is that she can gripe about the mainstream media. She represents the vote of resentment. It’s about emotion, it’s not about policy. She represents the part of America that feels outdone (ph) by.

KURTZ: Does she have a legitimate gripe about the way she’s been treated by journalists?

FREI: Not really. I think if you court the media, and then you complain about the media, you have a legitimate gripe, but it doesn’t really matter, quite frankly, because there are a lot of people out there listening to her, people who are still in love with her politically think that she has a legitimate point. And the more she makes that point, especially in waders while trying to catch a few salmon in Alaska, the better it sounds.

KURTZ: All right.

Michael Medved, Palin on the cover of “TIME” magazine this week, if we could put it up there. The headline, I believe, is “The Renegade.”

And my question to you is, doesn’t Palin thrive on the media coverage that, let’s face it, made her a superstar, even as she denounces that very coverage as being terribly unfair?

MEDVED: She does. I mean, to some extent, her decision is to embrace the role of celebrity and to sort of reject it, or leave the side of administrator, which she never seemed to really relish or enjoy anyway.

The one area where I think Sarah Palin has an absolutely legitimate gripe has been the media coverage and focus on her children. I cannot think, Howie, and I’ll bet you can’t either, of any other politician, not a president, not a vice president, not a candidate, whose children have been so readily focused on and trashed and ridiculed by mainstream media.

People left Amy Carter alone. They certainly left Chelsea Clinton alone. They even went relatively easy on the Bush girls. But Sarah Palin ’s children, with the coverage for the Levi Johnston statements, I mean, it’s been extraordinary. And I think it’s unprecedented, and I know she deeply resents it, and so do millions of Americans.

KURTZ: Right, although some say she put her children front and center in the campaign.

But let me move on to Keli Goff, because she’s also -- Governor Palin also on the cover of “The Weekly Standard,” if I can hold it up here, if we can get the camera back on me. Here we go.

We have a graphic, “Out of Alaska, and in an interview with the magazine, which did a lot -- the conservative magazine did a lot to boost her candidacy for VP, she says of the coverage of her explanation for stepping down, “I’m like, ‘Holy jeez, I spoke for 20 minutes.’ Like, why don’t the media understand?”

And so, does she have a point about journalists seeming to be puzzled about just why she is quitting?

GOFF: You know, Howard, I think she has about as much gripe about the media as Dan Quayle might. I mean, you misspell “potato,” the media is going to cover the fact that you misspelled “potato.”

And her speech was sort of lacking and incoherent. I think a lot of us are still a bit unclear. And I’ve read the thing multiple times. I re-watched the speech a few times. And I don’t think she can necessarily lay all the blame on us that we’re not clear on what she was saying when she didn’t seem completely clear on what she was saying.

You know, the other thing I would say is, I mentioned before on this program that I’m from Texas. And there’s actually a blog called “Texas for Palin.” And they actually have a headline on their home page right now that reads “’TIME’ Magazine Gives Sarah Palin a Fair Shake.” And it was interesting because it goes on to say how surprisingly balanced they described the “TIME” magazine cover story that you just showed.

My point is that I think it’s sort of interesting that it’s sort of playing against the narrative that she’s trying to create, which is that the media is completely out to get her. That’s not completely resonating with even the people who like her and support her.

KURTZ: Well, Matt Frei, in “The Weekly Standard” interview, Palin also says that there are rumors that pornographic pictures of her are about to hit the Internet. I never heard these rumors. She seems to really focus in on what the critics are saying, and some people have advised her not to do that.

My question to you is, most politicians resign, and unless they’re headed to the slammer, it’s a two-day story.

What explains this continued journalistic obsession with the woman from Wasilla?

FREI: I think a couple of things. I mean, she has undoubted political talent, and not just talent, but (ph) self-promotion. You know, she is --, look wed’ all now like to forget that moment in the Republican convention when she appeared on stage and she electrified the rank and file of the party, and electrified quite a few pundits who had been dissing her since. So she has undoubted political talent.

She has a sort of spectacular ordinariness about her. You know, she is a working mom, she’s got these extraordinary kids who have strayed like other children. I think for her to say pornographic pictures, look at the coverage of my children, is slightly disingenuous, but she is courting that kind of abrasive coverage because that’s part of her appeal.

KURTZ: Let me go back to Michael Medved.

I would agree with you to some extent that some of the coverage, particularly during the campaign, particularly about her as a mom, was unfair, perhaps even sexist. And all of this coverage courting unnamed McCain aides calling her a “whack job” and worse I also think is questionable. But doesn’t a politician at some point need to make peace with the media, whereas Palin seems to keep sort of nursing the grievance?

MEDVED: Well, I think the grievance is working for her.

You ask why the coverage continues. It continues because she and Mitt Romney and Mike Huckabee are now, according to polls, virtually tied, at the top of preference for -- and this is after her resignation statement.

What I found also truly extraordinary, and where she has no legitimate gripe, was the resignation statement itself. She very, very clearly wrote it herself.

What a lot of people don’t realize is that she wasn’t adlibbing. She had actually written it in advance, released it to the press, and was reading it from a teleprompter.

GOFF: Which is scary.

MEDVED: And it’s extraordinary for a major statement by a major politician to be so casually prepared. This is unprecedented. Now, a lot of people love it because it’s so different, but it’s shocking.

KURTZ: Right. I thought she was just riffing.

Keli Goff, it took some liberal bloggers to poke some holes in some things that Sarah Palin said. For example, she had said that most of the ethics complaints against her in the state of Alaska were filed by Democrats. That’s not true. She said millions of dollars were spent on legal fees defending her, and she felt badly about that. But actually, the figure was less, and these were mostly staff salaries paid to state lawyers who would have been paid anyway.

GOFF: Right. Been working anyway.

KURTZ: So, where was the mainstream media in fact-checking these things?

GOFF: Well, first of all, ironically, remember, some of them couldn’t even make it to the press conference. I’m just being a little bit glib there, but just because of how sort of last minute some of her major announcements have been, which I found rather amusing.

But no, you’re totally correct. Yet again, this goes into the argument of the so-called citizen journalists and bloggers doing some of the work that the mainstream media used to, even though the mainstream media complains that there is not really a place for some of us at the table.

But one thing I’m going to say to respectfully disagree with the gentlemen on this panel is that I actually have not found the majority of Sarah Palin ’s coverage sexist as a woman. And I’m someone who actually does not dislike her like a lot of my more liberal friends do. I find her endlessly fascinating, in fact. I think that you can’t have it both ways when it comes to coverage.

A lot of the coverage that Sarah Palin has received, we have to talk about the fact -- “Vanity Fair” mentioned it -- it’s because she’s very attractive. I mean, she’s an attractive looking woman, and that has certainly helped in some of her coverage. I don’t think you can then turn around and sort of play both sides of the fence and then say, why are you focusing on so much shallow coverage of me?

KURTZ: Right. All right. Let me jump in here, because I’ve got one more -- something I want to move on to, and that is another story that’s been kind of overshadowed this week, Nevada Senator John Ensign and his sex scandal. His former aide, Doug Hampton, whose wife had an affair with the Senator, gave an interview with Jon Ralston of KLAS TV, which he talked about, among other things, how Ensign’s family -- Ensign’s parents, actually, had paid $96,000 to Cindy Hampton, essentially to make her go away.

Let’s roll some of that interview.

(BEGIN VIDEO CLIP)

JON RALSTON, KLAS: Do you believe that you need to be made financially whole because John Ensign destroyed your ability to make a living? Don’t you believe that?

DOUG HAMPTON, WIFE HAD AFFAIR WITH SEN. ENSIGN: Yes, there’s no question about that. His personal pursuit of Cindy spilled over into, “Hey, I’m really sorry that you guys have to leave the organization. This isn’t working.”

He was still in pursuit of Cindy. This was -- he needed me out of the organization.

KURTZ: Matt Frei, I’m running a little short on time, but here’s my question. Extraordinary. A Senator’s family pays $96,000 in what some regard as hush money to the former mistress, and it doesn’t make the front page of the major papers, it wasn’t on the “CBS evening News,” it wasn’t on the “NBC Nightly News.”

What does it take for a story like that to break through?

FREI: Michael Jackson dying and Sarah Palin speaking in Alaska. That’s the point.

I mean, we have all this time top spend on news coverage -- you know, around-the-clock cable news -- and we seem to be spending more time on fewer stories across the board. That’s what it seems.

But the other point is this, that you’ve got -- I mean, it is an extraordinary story because you have Mark Sanford , you have John Ensign . I mean, it’s like a swarm of locusts defeating one presidential hopeful after another in the Republican Party. And what should be happening in the same week that we talk about this? Obama sees the pope. And you wonder, is the pope going to kiss Obama’s ring or is it the other way around?

KURTZ: I’m going to come back to that.

But Michael Medved, there was even a handwritten letter from Senator Ensign to Cindy Hampton saying, “I used you for my own pleasure, not letting thoughts of you, your husband, your kids come into my mind.” And yet, it just seems like maybe this was overshadowed, as Matt says.

MEDVED: Well, it was overshadowed to a great extent by Mark Sanford . He set a very, very high bar for weirdness and for self- revelatory embarrassment and self-immolation. And the fact that Senator Ensign at least had the good sense not to do a tearful press conference, where he confessed to everything, I think that largely saved him.

KURTZ: Just briefly, Keli, in a week when Roland Burris announced that he was not going to run after he got involved in the Blago scandal, the senator from Illinois, we’re just suffering from scandal fatigue in the media.

GOFF: I think sex scandal fatigue, tax scandal fatigue, I think unless Chris Hansen from “Dateline NBC” catches a senator on camera in an underage sting operation at this point, the bar has just been moved and no one is going to follow...

(CROSSTALK)

KURTZ: All right. One other thing I want to slip in here, and that was a photo ran in “The New York Post,” was trumpeted by Drudge, President Obama in Africa, appearing to ogle a 16-year-old Brazilian girl. Everybody chattered and gossiped about this, but let’s roll the video and see what actually happened.

There you see the president looking down and not particularly looking at this particular young lady. At is amazing to me, because I think -- we’re going to see it again. Let’s play it five more times.

All right. Amazing to me that the photo was misleading and actually, he’s not really looking at her at all.

GOFF: Not for Sarkozy, though.

KURTZ: Sarkozy, another story. President Sarkozy definitely checking her out.

All right.

When we come back, wall to wall. The Michael Jackson coverage dominated this week with the big memorial service in L.A.. Did the media really need to give such an overwhelmingly positive farewell to this troubled entertainer?

And later, a special interview with David Frost on his role at Al Jazeera English and seeing his famous showdown with Richard Nixon on the silver screen.

(COMMERCIAL BREAK)

KURTZ: I made clear last week that I found the television coverage of Michael Jackson’s death to be totally out of control and driven by an unabashed lust for ratings. So it may surprise you to learn that I thought Tuesday’s memorial service in L.A. was a major cultural event, with lots of big-name stars and poignant moments, and worthy of media attention. But not eight or 10 hours of wall-to-wall cable coverage, as if there was nothing else going on anywhere in the world.

And it was a little jarring, to say the least, to see the big three anchors narrating the event at the Staples Center. Every network, it seems, needed to bid a proper farewell to the controversial entertainer, and the tone overwhelmingly positive.

(BEGIN VIDEOTAPE)

CHARLES GIBSON, ABC NEWS: The Michael Jackson memorial service to be held at the Staples Center out in Los Angeles. This has been -- and it’s a funny thing to say about a memorial service -- a hot ticket.

BRIAN WILLIAMS, NBC NEWS: I don’t know if images will soften those who hold a negative image, those who find all this abhorrent.

CAMPBELL BROWN, CNN: Michael Jackson was an international superstar, perhaps unrivaled in terms of the interest in his life.

KURTZ (voice-over): But even when someone of Jackson’s international fame, how much is too much? And did news organization simply lose sight of the darker side of a man who repeatedly had to deny allegations of child molestation?

COURTNEY HAZLETT, MSNBC: Right now it’s appropriate to give him his due, which is he’s a pop culture icon, the likes of which I don’t think any of us will see again in our lifetime.

BILL O’REILLY, FOX NEWS: “Talking Points” is just about fed up with all the adulation. It is basically grandstanding and pathetic in the extreme. A cowardly media will exploit any event for ratings. Remember, the same people extolling Jackson today were the ones giving his child molestation trial gavel-to-gavel attention.

(END VIDEOTAPE)

KURTZ: Michael Medved, O’Reilly was a rare dissenting voice there.

What did you make of the tone of the day of tributes on Tuesday?

MEDVED: It totally -- I couldn’t agree with you more. I think it was way over the top. It just vaulted over the top.

And one of the things that was very striking to me is you kept hearing Michael Jackson described as the greatest entertainer of all time. Now, my question would be, a month ago, before he died, when he was very tenuous and people weren’t sure would this comeback come across, would anyone -- if you asked the quest, who is the world’s greatest entertainer, who’s the greatest entertainer of all time, how many people would have said Michael Jackson a month ago? I suspect very few.

And there are so many unanswered questions that people in the media never asked. His memorial service was, in many ways, a celebration of African-American identity with Jesse Jackson and Al Sharpton involved, and the children of Dr. King. No one asked the question about the fact that this guy went through 13 plastic surgeries to make himself look more white, he had two white wives, his only wives were white, and three white children. And it’s a much more tormented, complex, serious issue than simply, couldn’t he dance wonderfully?

KURTZ: Keli Goff, I mean, to be fair, I mean, there were touching speeches by Jackson’s friends and family that kind of made him here real, I think, to me, at least, after 10 days of media gushing. But, you know, Michael raises some important points here.

Should the media go along with kind of painting the guy as a saint? GOFF: Well, I just find this really amusing, though. Michael and Bill O’Reilly. It’s interesting to me how white people seem to be the ones most outraged about black people celebrating Michael Jackson is an African-American. I just find that kind of ironic.

KURTZ: But, I’m not talking about the celebration, to be clear. I’m talking about the media coverage. I mean, the people who loved Michael Jackson should see glowing things, but shouldn’t we retain some skepticism?

GOFF: Sure. I mean, I’m skeptical by nature.

But look, the Pew Research Center just did a study about perceptions of the media coverage of the Jackson story. And what they found is there’s quite frankly a difference in perspective based on race.

I mean, one of the things that they found is that while two out of three Americans thought the coverage was overboard, more than half of African-American did not. While 22 percent of white Americans said that they followed it closely, almost 80 percent of African-Americans did.

I think it’s more than just talking about celebrating him as an artist. I think for a lot of African-Americans, myself included, you know, now that we have a black president, I think it’s easier for some people who aren’t black to forget that not that long ago, as a matter of policy, networks like MTV did not play black artists. It’s hard to remember that not too long ago, when I was a kid, major cosmetic houses still did not give contracts to black models.

GOFF: Will Smith becoming the biggest box office star in the world by first being a hip-hop artist aired on MTV, Queen Latifah and Rihanna having cosmetic contracts, would not have happened were it not for “Thriller,” which makes him perhaps not the best entertainer, but the most culturally significant, probably, in our history.

KURTZ: With all of that, Matt Frei, this was an all-day affair on CNN, the other cable networks. Katie was there. Brian was there. Charlie was there.

Did Michael Jackson, for whatever he’s accomplished in his career, warrant the equivalent of a state funeral?

FREI: Probably not. But I think what’s going on here, Howard, is several things.

One is, yes, he was a great entertainer. But two, what you saw here, not just in this country, not just in Britain, but, you know, in the Middle East, in Asia, was a kind of nostalgia for that kind of celebrity.

This is the era of DIY celebrity. We can all post of our children’s clips on YouTube. We can become instantly famous for two seconds.

So here is a guy who was genuinely famous, a bit like Lady Di, when she died, which I think the funeral was watched by 400 million people or something across the planet, if not more. So, this was celebrity for its own sake, and that’s one of those rare moments when we all come together.

And let me tell you, I was in Pakistan when he died. And I got back to my hotel at 6:00 in the morning. It was the call to prayer Friday morning. Every single channel on my hotel television, including Oruzgan television and Baluchi (ph) television, had Michael Jackson’s death on it.

You know, this is a part of the world that you don’t normally associate with Jackson mania. So he is, in that sense, a global figure. It’s about us as much as it is about him.

KURTZ: Right.

Well, let me also ask you very briefly about ABC paying $200,000 for a reality show pilot from last year involving Joe Jackson, the father, and then happening to get an interview with Joe Jackson, the father. ABC says it doesn’t pay for interviews, but what do you make of the confluence of events?

FREI: Well, I mean, it seems like an extraordinary confluence of events.

KURTZ: All right.

By the way, I mentioned last week that TMZ -- I originally said TMZ had broken the story of Jackson’s death. “The Enterprise Report” Web site came after TMZ. I had the order backwards last week.

But let me play for you another guy who was in the news this week. His name is Barack Obama . He gave a bunch of network interviews after his trip to Russia and to Africa and to the Vatican. And look what he got asked about.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (voice-over): Shifting gears, I asked the president if he’s surprised by the outpouring of emotion back in the U.S. over Michael Jackson.

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: I think we saw it when Elvis died.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: I asked him what he believes the entertainer’s legacy will be.

OBAMA: I don’t think there’s any doubt he was one of the greatest entertainers of our generation, but perhaps any generation.

(END VIDEO CLIP)

KURTZ: I’ve got less than a minute.

Michael Medved, so, has this what it has come to -- enough about you, Mr. President, what did you think of Michael Jackson?

MEDVED: Well, I do think the president was trying to put it into a reasonable context. But it’s truly bizarre.

You see, again, when you use the term “state funeral,” that is exactly the problem here. Michael Jackson was as much a tabloid figure as an artistic figure, and we lost sight of that fact during the coverage.

KURTZ: Keli Goff, a brief comment on the president being asked about M.J.

GOFF: Well, look, Howard, if you Google “Too much Michael Jackson coverage,” you get 12 million hits. So that means there are 12 million stories about people thinking there are too many Michael Jackson stories. I think that says a mouthful.

KURTZ: On that note, we will call it quits.

Keli Goff, Michael Medved, Matt Frei, thanks very much for joining us.

Coming up in the second half of RELIABLE SOURCES, dining for dollars. The publisher of “The Washington Post,” my newspaper, has apologized for plans to host off-the-record dinners sponsored by corporate interests, but other news organizations have gotten into this game. Are pay-to-play events kosher under any circumstances?

And later, David Frost on the dramatic license needed to turn his famous Nixon interviews into an Oscar contender.

Plus, the newspaper headline about Marion Barry that we can’t repeat on the air.

(COMMERCIAL BREAK)

BLITZER: I’m Wolf Blitzer, in for John King, and this is STATE OF THE UNION. Here are the stories breaking this Sunday morning.

Four U.S. Marines have been killed in Afghanistan’s dangerous Helmand Province. Military officials say the Marines died yesterday in two separate bombings. A fifth U.S. service member died in the United States for wounds suffered in an attack last month.

The health and human services secretary, Kathleen Sebelius , says all options are on the table for funding a massive health care reform bill before Congress, and that could include a tax increase for the wealthiest Americans. She appeared on STATE OF THE UNION earlier this morning. The Obama administration wants a health care bill this year.

And a source confirms to CNN the CIA withheld information about a secret counterterrorism program from Congress on direct orders from then Vice President Dick Cheney . The source says CIA Director Leon Panetta has informed lawmakers about Cheney’s role and has stopped the program. Efforts to contact Cheney for reaction so far unsuccessful

That and more coming up on STATE OF THE UNION.

But first, let’s go back to Howard Kurtz and RELIABLE SOURCES -- Howie.

KURTZ: Thanks, Wolf.

The publisher of “The Washington Post” apologized this week for planning a series of off-the-record dinners at her home. The gatherings would have included administration officials, members of Congress, and The Post’s own journalists underwritten by corporate interests for at least $25,000 a pop.

Here’s what Katharine Weymouth told her readers after deep-sixing the idea.

“Our mistake was to suggest that we would hold and participate in an off-the-record dinner with journalists and power brokers paid for by a sponsor. We will not organize such events. As publisher, it is my job to ensure that we adhere to standards that are consistent with our integrity as a news organization. Last week, I let you, and the organization, down.”

(BEGIN VIDEOTAPE)

KURTZ (voice-over): But it turns out other major news organizations are also in the business of holding corporate-sponsored gatherings and conferences. The Atlantic’s owner, David Bradley, holds off-the-record dinners that, according to an ad, are designed “to introduce CEOs of hosting organizations to target influencers.” Corporate sponsors have included Microsoft, Citigroup, AstraZeneca and Allstate.

(END VIDEOTAPE)

KURTZ: So, are such gatherings unethical?

Joining us now here in the studio, Steve Roberts, former “New York Times” reporter, now professor of Media and Public Affairs at The George Washington University. And in Los Angeles, Kara Swisher, co- executor of the Web site “All Things Digital,” part of the Dow Jones Company.

Steve Roberts, The Post ombudsman, Andy Alexander, out with a tough column this morning saying that this incident was an ethical lapse of monumental proportions, and not only did the top editor and publisher know about it, but the two managing editors and the deputy managing editor knew at least about some details.

How badly is The Washington Post’s reputation damaged by this?

STEVE ROBERTS, PROFESSOR, MEDIA AND PUBLIC AFFAIRS, THE GEORGE WASHINGTON UNIVERSITY: Badly, because, look, if you read this initial flyer, it talked all about, be one of the precious few to be in on altering the legislation. I mean, they were so explicitly selling access and influence.

ROBERTS: You know, Katharine Weymouth’s grandmother, Kay Graham, when she was publisher of The Post, used to hold gatherings like this all the time. They were very useful to everybody. But now what Katharine Weymouth was doing was selling seats at her grandmother’s table, and that is way over the line.

KURTZ: The ombudsman did say it seemed like it was selling access.

By the way, The Post editor, Marcus Brauchli, and The Atlantic’s editor, James Bennet, declined to appear on this program. And by the way, the president of The Post Company, Steve Hills, according to the ombudsman, refused to be interviewed about this, which I find amazing.

Kara Swisher, did Katharine Weymouth’s apology and swift cancellation of these dinners help repair some of the damage here?

KARA SWISHER, CO-EXECUTOR, “ALL THINGS DIGITAL”: Well, she had to apologize, essentially. I mean, I think it was a marketing flyer that went out before they finally approved it. But, you know, they’ve gone a little far with having it at the House, having it off the record, making it small, not allowing it to be covered as if it was a news event. They did a lot of things along the way, and I don’t think they should ever have contemplated such a small event.

KURTZ: Right.

SWISHER: These things have to be -- you know, this these things have to be public, they have to be posted, they have to be available to the public. And, you know, everything is corporate-sponsored. The ads in “The Washington Post are corporate-sponsored.

KURTZ: Sure.

SWISHER: It’s just a question of how much access you give people, the general public, I think.

KURTZ: And interestingly, Steve Roberts, “The Atlantic,” which has been holding these off-the-record dinners for years with corporate sponsorship, David Bradley who owns the magazine and company, put out a letter this week defending it, even though he brings -- it seems very similar. He brings together administration officials, members of Congress, his own journalists, but he says that “Having opposing views and some outside reporters have worked well to keep conversations at the level of debate, not advancing any one party’s interests.”

But is that what it’s about?

ROBERTS: Well, to some extent. Look, there are some differences here.

First of all, “The Atlantic” is not “The Washington Post.” “The Washington Post’ is central to the whole relationship of the media and government here in Washington.

KURTZ: And loves to blow the whistle on...

(CROSSTALK)

ROBERTS: Exactly. And they should. That’s their job. We depend on them to do that.

Secondly, you have got to ask, what are these corporations buying? Clearly, The Post was offering them influence and access. “The Atlantic” is offering something different. It’s more visibility, it’s prestige. It’s a bit closer to buying an ad on a Sunday TV show and being...

(CROSSTALK)

KURTZ: But how is it more visibility if the sessions are off the record? I always questions what journalistic aim is being accomplished if it’s just a bunch of people in a room.

ROBERTS: Look, we all know that off the record can be very useful. I’ve spent many years as a correspondent, and I’ve had off- the-record conversations all the time which informed my coverage and my analysis.

If you’re allowed to do that, there -- on the record, you do get a lot of canned speeches and a lot of talking points. But the question is, do your readers and viewers benefit from the relationship? That has got to be the bottom line.

KURTZ: Right. Well, I can tell you since I work there that this whole affair has really roiled The Post newsroom.

SWISHER: I imagine.

KURTZ: Kara Swisher, you have conferences at “All Things Digital” with corporate sponsors.

SWISHER: Right.

KURTZ: Tell me about the guidelines you follow. And do these sponsors have any influence over the events that are put on?

SWISHER: No. No, in fact, at all.

I mean, what we do is we have an event that has corporate sponsors. They don’t get to have anything to do with anything editorially. This is an editorial conference, just as if we were putting together interviews in “The Wall Street Journal” or elsewhere. It’s all open to the press. We can’t let as many press as we want to get in, but it’s available to lots of press. It’s on the record.

We put everything on our Web site. The whole thing right now is up, the entire conference, for anyone in the world to see.

It’s all -- we put it up and stream it so you can watch it yourself. We are thinking of doing it real time next year.

So we do everything we can to possibly keep it as open as possible, despite the fact that it’s an elite conference that people pay for to go to. And the second thing that is really important, that’s critically important, is the sponsors get no control over anything that’s on the stage.

KURTZ: But don’t they also get some access to pretty important people? I mean, you have golf events, you have wine tastings.

SWISHER: Yes. Well, sure.

KURTZ: And there must be a reason that corporations are willing to pony up money to be part of this.

SWISHER: Of course. It’s like a conference that everybody -- lots of people have conferences. It’s a question if they have any control over the editorial portion of it. Now, these are gatherings, obviously, that people meet each other and stuff like that, but we’re not promising access. We’re not saying you get to meet Bill Gates if you come here.

We don’t promise that. That’s ridiculous. We don’t do that.

ROBERTS: The context here, of course, is the enormous problems every news organization is facing in terms of money. The search for new revenue streams to support CNN, to support “The “Washington Post,” to support “The Wall Street Journal” is the biggest single question facing the mainstream media. And so it’s understandable that people are looking for new revenue streams.

I hope they are, because, otherwise, they’re going to collapse. But as Kara says, the key is transparency. The key is, do your readers and your viewers benefit? The key is, do you do it all openly?

The one thing I would say in compliment to Katharine Weymouth, she admitted her mistake. I teach ethics at GW. One of the things I tell my students, you’re always going to make a mistake. You have got to admit it as quickly and as openly as possible.

KURTZ: You know, another part of the Dow Jones Company, “The Wall Street Journal” did some similar gatherings. And at one point the participants went to the White House for an off-the-record briefing with Larry Summers, the economic adviser, so that I have more of a problem with. But let me close by asking you, Kara Swisher, when you’re inviting the likes of the chief executive of NBC or Yahoo! to your conference, obviously you want them to show up. Is there any unspoken pressure that you feel to be nicer to them as a result?

SWISHER: No. Not at all. Not in any way. Not at all.

They don’t get to ask what questions they are. They don’t get to have any control over any part of it.

It’s just like doing an interview as if you were doing it with “The Wall Street Journal.” We don’t have rules or they can’t ask for things.

They try to. They certainly try to.

KURTZ: They try to.

SWISHER: Of course they do. “What are you going to ask? What are you going to ask?” And, you know, the most general thing is I’m going to ask about digital issues and television to Jeff Zucker. I mean, that kind of thing. But -- and he should know that anyway.

KURTZ: All right. I’ve got to wrap it up.

SWISHER: And no, they have no control. And in fact, we had to sponsor Carly Fiorina, that was a very ugly interview, and they had been a sponsor. And it was not a good interview for her.

KURTZ: So I gather. All right.

Kara Swisher and Steve Roberts, thanks for kicking it around with us this morning.

Up next, an Arab network finally getting some exposure here in the nation’s capital. We’ll talk with it’s biggest name, British journalist David Frost, about why he’s putting his prestige on the line for Al Jazeera English.

(COMMERCIAL BREAK)

KURTZ: You probably can’t name a single anchor or correspondent for Al Jazeera English, but there’s one household name at the English language spin-off of the Arab network, and that’s David Frost. There’s a reason you may not have thought of Frost. The colorful British journalist was one of the first hires four years ago at Al Jazeera English which is seen in more than 100 countries around the world, but not in the states.

At the beginning of this month, several large cable systems here in Washington picked up the channel, and it’s slated for air in about 20 American cities in the coming months. What better time then to sit down with the man who became famous by landing those interviews with Richard Nixon some 32 years ago?

I spoke to him earlier here in Washington.

(BEGIN VIDEOTAPE)

KURTZ: David Frost, welcome.

DAVID FROST: Great to be with you, Howard.

KURTZ: Thank you so much for coming.

Why has it taken Al Jazeera English so long to gain a foothold in the American market?

FROST: Well, I think it was to do partially with politics. The people were a bit concerned. I mean, there was a period of amazing wild rumors about Al Jazeera Arabic and they were misplaced about beheadings and things like that. But there was a whole sort of rumor mill going, and that...

KURTZ: Well, you say rumor mill, but can you understand why some U.S. executives might be wary of a channel whose parent company used to air those Osama bin Laden videos and put on other materials supplied by terrorists?

FROST: Well, they -- everybody -- every company, the BBC and everybody took -- delighted at those Osama bin Laden tapes.

(CROSSTALK)

KURTZ: Right. But Al Jazeera seemed to have a special pipeline

FROST: Well, you see, they dropped them through the letter box. They seem to be dropping them through our letter boxes now. But, I mean, once they decided to use them -- and there are lots they didn’t use. But, I mean, once they decided to use them, so did the BBC, so did ITV, so did CBS, NBC, ABC.

Everyone wanted them. And they just happened to be the lucky recipients, as it were.

But the thing was there was -- there were rumors about Al Jazeera Arabic, although there was a lot of -- it was the first place that a lot of Arabs saw Israelis speak and things like that. So it was -- it was an impressive channel, but it’s different than -- I don’t know what it’s saying, because I don’t speak Arabic. But then...

(CROSSTALK) FROST: ... Al Jazeera English came along and it -- immediately people see it. They realize that it’s independent, that it’s international, that it’s for the south as well as the north. And you can see it’s not about Osama bin Laden any more than any other network is. You know, so instantly reassuring.

KURTZ: And you gave Al Jazeera English instant credibility by signing up.

Was that a difficult decision? Some people are saying you sold out.

FROST: No, it wasn’t a difficult decision, although it wasn’t an immediate decision in the sense I checked with friends in Whitehall and friends in Washington who said -- it almost seems absurd now to even mention this, because it’s -- no one suggests it anymore. But at that time, one had to check that they had no links with al Qaeda and things like that. And they got a clean bill of health in Washington and a clean bill of health in Whitehall.

That’s official Washington, maybe not Rumsfeld’s Washington. But...

KURTZ: Well, since you mentioned Donald Rumsfeld, do you think the shift from the Bush administration to the Obama administration has changed the climate here to the point where at least some cable and satellite executives feel comfortable putting on a channel like Al Jazeera English?

FROST: I mean, I’m sure it’s helped. I’m sure it’s helped.

At the same time, I mean, as I say, when people watch the channel, what it’s really attractive for is showing parts of the world that we don’t show enough of. I mean, Britain and America are very much the same. We don’t do enough about South America. We don’t do enough about South Asia. We don’t do enough, certainly, about Africa and so on and so on.

And those are the things that people find refreshing, in addition to the news that you must have from the mass news sources.

Do you get any input on your program from the management at Al Jazeera?

FROST: No. No. We are -- I mean I knew that -- they assured me from the beginning that they -- that there was total editorial freedom, and there has been complete, total, no interference, whatever. If we want to do anything from Israel, we do it from Israel. Absolutely across the board, a most delightful creative experience.

KURTZ: All right.

Now, you usually interview world leaders on your program, but not long ago you sat down with Yoko Ono.

FROST: Oh, yes.

KURTZ: And I want to play a clip. And you started by playing some footage -- I guess it’s 40 years ago...

FROST: Forty years ago. That’s what...

(CROSSTALK)

KURTZ: ... John Lennon and Yoko Ono.

Let’s take a look.

FROST: All right.

(BEGIN VIDEO CLIP)

YOKO ONO, JOHN LENNON’S WIFE: OK.

FROST: “To David, a box of smiles.”

JOHN LENNON, MUSICIAN: We give him a lot of gear. He throws it away actually.

(LAUGHTER)

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

FROST: The press gave you a hard time at various times -- not now, but the -- but back -- I mean back in 1970, they said -- some fans said and so on, that you were responsible for breaking up the Beatles.

But that’s not true, is it?

ONO: Well, I don’t think so.

FROST: No. It wasn’t.

YOKO ONO: No, not at all.

FROST: No.

YOKO ONO: But I was a good scapegoat, I suppose.

(END VIDEO CLIP)

KURTZ: So how did that interview come about?

FROST: Well, the first part of it -- actually, it was a fantastic memory. He -- John Lennon (INAUDIBLE) said it was a box, and said on it, “To David, a box of smile, with love from John and Yoko.

And you opened the box and there was simply in it was a mirror. So you smiled at the idea and you had your box of smiles, you know?

KURTZ: In a more recent interview, is Yoko a friend or acquaintance of yours now?

FROST: Yes. I haven’t seen her for two or three years. But she was awarded two things last week. And one major award was (INAUDIBLE) in Venice, whichever way one pronounces it. And one in London and so on. And so it was very interesting to come back.

And in addition to being -- as you can see there, they are very -- really forthcoming in a way that she -- and, of course, at the same time, she is -- she looks remarkably good. I mean, she’s now over 70 and she doesn’t look over 70.

KURTZ: Well, you look remarkably good, too.

(LAUGHTER)

KURTZ: You famously conducted that series of interviews with Richard Nixon in 1977.

FROST: Yes.

KURTZ: In fact, the last time we talked, it was in front of the Watergate. Now, there’s a “Frost/Nixon” movie...

FROST: Yes.

KURTZ: ... produced by Ron Howard. And I want to play a clip from that.

Frank Langella, of course, in the Nixon role, and Michael Sheen play a young David Frost.

FROST: That’s right.

(BEGIN VIDEO CLIP, “FROST/NIXON”)

FRANK LANGELLA, ACTOR: Look, when you’re in office, you’ve got to do a lot of things sometimes that are not always in the strictest sense of the law legal. But you do them because they’re in the greater interest of the nation.

MICHAEL SHEEN, ACTOR: Wait. Just so I understand correctly, are you really saying that in certain situations, the president can decide whether it’s in the best interest of the nation and then do something illegal?

LANGELLA: I’m saying that when the president does it, that means it’s not illegal.

(END VIDEO CLIP, “FROST/NIXON”)

KURTZ: Was that film an accurate depiction of what happened?

FROST: Yes. Yes. I mean, the overall film had 20 minutes of fiction dotted about. None of it particularly important, but I mean...

KURTZ: There were scenes that were invented?

FROST: Yes.

KURTZ: For cinematic reasons?

FROST: Yes. For cinematic -- for instance, there’s a memorable phone call from Richard Nixon to me the night before Watergate. And that never happened. But it’s a fabulous study of Nixon’s persona, and terrific.

KURTZ: You -- a lot of people wanted to interview Nixon. You got the interview. You paid the former president $600,000 for the interview.

FROST: That’s right.

KURTZ: That would be more than $2 million today. I think if you did that today, if the circumstances were today, you’d be criticized far more intensively than you were at the time.

FROST: I don’t think so, because there’s a curious point I’ll come to in a minute. But in terms of the Nixon interviews, the -- I mean, NBC News was offering $400,000, or whatever. And questions about checkbook journalism happened during the 18 months between when we signed and when we did it. And I would answer to it that was all and they were quite happy.

But they really sort of came to an end when the first interview when out and everybody said this is history...

KURTZ: That you were not rolling over for Nixon.

FROST: Yes, exactly. And this is history and this is valuable and -- and so that controversy sort of faded away.

The other thing that interests me about this, which has nothing to do with me, but it is -- what I was thinking when -- I was not in any way involved in this, but Monica Lewinsky -- and I think it was ABC News, but it could be any network -- put her on. And they said that she could not be paid for this interview.

KURTZ: Right.

FROST: But they, the network, were allowed to triple their advertising fees.

That’s illogical, isn’t it?

KURTZ: Well, but the question is, is it a matter of journalistic integrity not to directly pay the source, the subject of a news interview? And that’s why...

(CROSSTALK) KURTZ: That shows that the standards have changed. ABC could not have gotten away even if it wanted to with paying Monica Lewinsky. The British station, I believe, paid her.

FROST: Yes. But it was a deal. I just don’t see why -- this has nothing to do with Nixon here.

KURTZ: Exactly.

FROST: But it is just -- I don’t see why the...

(CROSSTALK)

FROST: ... if the network can cash in, why can’t the source of the material?

KURTZ: Right. I’ve got 15 seconds.

FROST: Right.

KURTZ: Those Nixon interviews...

FROST: Fourteen.

KURTZ: OK. You’ve had this illustrious career, but will that remain the most famous thing you’ve ever done?

FROST: I think it’s probably must be one of the real landmarks, yes. It must be partially because of its scale, as well as its -- thank God -- success as well. But, you know, 28.75 hours. I don’t know who else in the world there is to talk to for 28.75 hours except, perhaps, my wife.

(LAUGHTER)

KURTZ: All right.

Sir David, thanks very much for stopping by and talking with us.

FROST: A pleasure.

(END VIDEOTAPE)

KURTZ: After the break, echoes of Vietnam, how Robert McNamara’s death reminds us that it took journalists several years to challenge that ill-fated war.

(COMMERCIAL BREAK)

KURTZ: It took nearly three decades for Robert McNamara to admit he was wrong about the Vietnam War. It took the press several bloody years to turn against that conflict.

McNamara’s death this week was a painful reminder that both fell short.

(BEGIN VIDEOTAPE)

KURTZ (voice-over): McNamara was one of JFK’s whiz kids celebrated by journalists for their cerebral approach to government. And when LBJ, after the ‘64 election, sent huge numbers of American troops to shore up South Vietnam against the North, it was McNamara’s Pentagon that managed the conflict, even as both men initially denied there would be a major escalation.

UNIDENTIFIED MALE: We wish to emphasize we seek no wider war. Our response will depend upon the action of the aggressors. In this case, the North Vietnamese.

KURTZ: The press was differential toward government leaders in those Cold War days, especially when they were taking on the communists. But as more American journalists went to Saigon, they saw that McNamara’s war was going badly despite the upbeat talk from military briefers on what became known as the “Five O’clock Follies.”

By 1968, newspaper reporters had grown openly skeptical. Television reports were bringing the jungle war into our living rooms. And finally, Walter Cronkite went to Vietnam and declared that the effort was likely to end in a stalemate.

WALTER CRONKITE, JOURNALIST: To say that we are closer to victory today is to believe in the face of the evidence the optimists who have been wrong in the past.

KURTZ: Only much later did we learn that McNamara privately doubted, almost from the start, that more troops and more bombings could turn the tide. It took seven years after McNamara stepped down and two more presidents for the U.S. to pull the plug on a war that claimed more than 58,000 American lives and produced a victory for Ho Chi Minh’s side.

The best and the brightest, as David Halberstam called them, ultimately failed, and the skeptical journalists so resented by Lyndon Johnson and Richard Nixon were right.

(END VIDEOTAPE)

KURTZ: McNamara lived to see the media fall short again when most journalists failed to aggressively challenge George W. Bush over his false rationale for invading Iraq. History will judge that failure as harshly as it judged the chief architect of the Vietnam War.

Robert McNamara was 93.

Still to come, raunchy journalism. Did a Washington weekly obliterate any semblance of good taste in the latest Marion Barry sex scandal?

(COMMERCIAL BREAK)

KURTZ: It’s not easy to go too far in chronicling the rather tabloid career of Marion Barry. But the “Washington CityPaper” may have pulled it off.

(BEGIN VIDEOTAPE)

KURTZ (voice-over): The former mayor, you may recall, was busted for using cocaine back in 1990, lured by a woman not his wife who was immortalized on an FBI videotape when Barry barked, “Bitch set me up.”

Now Barry is a D.C. councilman who was arrested last week for stalking an ex-girlfriend who he happened to hire under a $60,000 city contract. The charges were dropped, but the “CityPaper” got hold of a voicemail that Donna Watts-Brighthaupt had left Barry, complaining that he booted her from his hotel room at the Democratic convention last summer because she wouldn’t give him oral sex.

(END VIDEOTAPE)

KURTZ: I can’t read the raunchy phrase on the air -- you see wee put some tape over it here, if we can get a close-up -- but the headline said -- quoting the ex-girlfriend -- “You put me out in Denver because I wouldn’t (blank) your (blank).”

Well, the alternative weekly was flooded with angry calls. Its Web server crashed. And some Barry supporters said it was a racist cover that never would have been published about a white politician. “CityPaper” editor Erik Wemple told me that’s nonsense, that the headline captured the truth about Barry, and sometimes the truth is vulgar.

That doesn’t mean newspapers have to be, but it’s a surefire way of getting attention.

Now back to more STATE OF THE UNION with Wolf Blitzer.

BLITZER: Welcome back.

Now the sound of Sunday, where we fill you in on all of what’s been happening on the Sunday talk shows.

The leading topic today, health care reform. Here on STATE OF THE UNION, I asked the president’s health secretary, Kathleen Sebelius , ,what she thought of a proposal by House Democrats for a surtax on the wealthiest Americans to help pay for reforms.

(BEGIN VIDEO CLIP)

BLITZER: Just to be precise, you’re open to Charlie Rangel’s proposal.

SEBELIUS: Well, I think everything is on the table.

(END VIDEO CLIP)

BLITZER: Republicans were quick to shoot down that surtax proposal.

(BEGIN VIDEO CLIP)

SEN. JON KYL (R-AZ), WHIP: At least 55 percent of the income that would be generated by this surtax directly hits the entrepreneurs who run these small businesses. It would be a job-killer. It would be exactly the wrong thing to do any time, but especially when we’re in the middle of a recession.

(END VIDEO CLIP)

BLITZER: But many Democratic senators are ruling out another proposal that would tax employee’s health benefits.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D-NY), FINANCE COMMITTEE: I think what we’ve learned over the last week that on both sides of the aisle, people do not want to tax the benefits, Democrats and Republicans.

And given what the House has done, given that a majority of Democrats are against taxing benefits, no, I don’t think that’s going to happen.

(END VIDEO CLIP)

BLITZER: The other big story in the Sunday conversation, the revelation that shortly after the 9/11 attacks, the then-vice president, Dick Cheney , ordered the CIA to withhold information from Congress about a secret intelligence program.

Democrats and even some Republicans were critical of the former vice president. And Republican Senator Judd Gregg said that both parties shared at least some of the blame.

(BEGIN VIDEO CLIP)

GREGG: This national attempt by some of our colleagues on the other side of the aisle to basically undermine the capacity to protect and develop intelligence is, I think, going to harm us in the long run.

Now, yes, this is wrong. But if somebody told the CIA not to inform the appropriate members of Congress on information they should be the informed of, that’s wrong.

(END VIDEO CLIP)

BLITZER: As you can see, we’ve been watching all of the other Sunday shows so you don’t necessarily have to. Joining us here in Washington, two political pros that you’ll only see together right here on STATE OF THE UNION. The Democratic strategist and CNN political contributor, James Carville, and the Republican strategist and CNN contributor Mary Matalin.

Guys, thanks very much for coming in.

MATALIN: Morning, Wolf.

BLITZER: Your former boss, the former vice president of the United States, you saw that front page New York Times. Let me put it up and show our viewers. “Cheney is linked to concealment of CIA project,” “Congress was in dark.” Panetta, the current CIA director is said to have oversight panels of direct orders.

How big of a problem, potentially, is this for the former vice president?

MATALIN: It’s a big problem for the administration.

BLITZER: The Obama administration.

MATALIN: This is very suspect timing. The president’s agenda is almost in shambles. His numbers are dropping. Isn’t it coincidental they gin up a Cheney story. What The New York Times is saying in that story is they’re accusing the vice president of telling -- of ordering the CIA to not tell the Congress about a program that didn’t exist.

It wasn’t operational, it was never operational. Further, there’s a reason -- which he had every right to do, even if it was operational. There’s a reason that executive branch withholds information, which they’re entitled to do, because when it leaks it renders said programs ineffective or inoperative.

And right now Barack Obama is threatening his first veto on the same issue. What is the -- how many people get to know what at what level? Because the more people that know, the more it leaks, and -- as did our surveillance program, our finance tracking program, and then the enemy knows what it is.

I’m not saying in any way or suggesting that that story is true. But, again, the timing of it is highly suspect, accusing the vice president of ordering something stopped that didn’t exist while the administration is fighting with the CIA.

BLITZER: The timing of the story is related directly to Leon Panetta apparently telling Congress, you know what, there was this very secret program, we don’t know what it was. But the then-vice president told the CIA, don’t share this information even with the leadership of the House and Senate.

CARVILLE: And I think the word is “fully operational.” It might have been 98 percent operational, I mean, Washington, that’s a great kind of a statement.

I think what is going to happen here is that every week something like this comes up, I don’t think that Leon Panetta, he has been a pretty fiercely independent guy, I don’t think he would be part of any kind of “conspiracy” to sort of try to save the president’s agenda or anything like that, but I do think that Eric Holder and people are now giving some serious consideration and to look into this.

And does anybody think this is going to be the last one or that we know almost certainly there is going to be more revelations? It might be perfectly legitimate what they did, but there are enough questions being raised where it’s going to be very hard to take this thing away...

BLITZER: And, Mary, the chair of the Senate Intelligence Committee, Dianne Feinstein , is obviously very, very concerned. Listen to what she said today.

(BEGIN VIDEO CLIP)

SEN. DIANNE FEINSTEIN (D-CA), CHAIRMAN, INTELLIGENCE COMMITTEE: I think you weaken your case when you go outside of the law. And I think that if the intelligence committees had been briefed, they could have watched the program, they could have asked for regular reports on the program, they could have made judgments about the program as it went along.

That was not case because we were kept in the dark. That’s something that should never, ever happen again.

(END VIDEO CLIP)

MATALIN: She doesn’t know. No one knows. No one knows what program they’re talking about. No one knows what “not operational” means. But it was within the law -- it is within the law -- it exists within the law, as you noted in the earlier hour, for the executive branch to withhold anything they want, which I’m going to predict right here and now that this president is going to do at some point in time.

The larger story and the more damaging story and why I think the Obama administration is walking into a buzz saw here is what Eric Holder is suggesting he is going to do in this week’s Newsweek, to backwards prosecute and investigate these people -- these intelligence gatherers will have such... BLITZER: Those who were involved in the interrogation techniques -- the harsh interrogation techniques. I want to play for you what John Cornyn said earlier today. He is the Republican Senator from Texas. James, listen to this because this is exactly on the point that Mary was just making.

(BEGIN VIDEO CLIP)

SEN. JOHN CORNYN (R), TEXAS: This is a terrible trend and I hope that this attorney general listens to the president who says we need to look forward, not backward. This is high-risk stuff because if we chill the ability or the willingness of our intelligence operatives and others to get information that’s necessary to protect America, there could be disastrous consequences.

(END VIDEO CLIP)

BLITZER: And take a look at this cover of the new issue of Newsweek magazine. You can see it right here. I’ll show our viewers. “Holder versus Bush.” “Torture and the attorney general’s moment of truth.”

You know, it’s a problem right now for the president of the United States who says he doesn’t want to look back, whereas he wants to look forward. But if Eric Holder says there should be a special counsel named to investigate these interrogation techniques, that’s clearly looking backwards.

CARVILLE: It’s not going away. And there is going to be more -- does anybody think that these stories are going to stop coming out? Of course they’re not going to stop coming out. And if Eric Holder says, look -- and I don’t know how this is going to come out. But I don’t think that the president -- I don’t think the president’s chief of staff, all the people in the White House really want to deal with this.

But if the attorney general says, you know, I took an oath to uphold the laws of the United States, in my view, this is a potential violation of that law, I cannot not do this, I don’t -- that seems to be a position that he’s moving toward.

Perhaps there’s some kind of a middle ground here where we can find out what happened and, you know, the president has the power to pardon people , any number of things can happen. But I don’t -- the momentum of this thing is starting, you can just feel it starting to move.

If this is the last story we see, probably this thing will just -- will recede a little bit. But if there are two, three more stories on top of this, as most people think is quite likely, the momentum of this thing is going to continue the build.

BLITZER: Because as you know, there has been discussion of having separate investigations of the Justice Department lawyers who authorized the harsh interrogation techniques, what some call torture, and now this investigation of either CIA employees who were involved in the interrogation, or because I’m told that most of them, if not all of those who actually interrogated these three suspects engaged in the waterboarding and other techniques, were contract employees. They weren’t CIA officers. They were contractors from outside who were brought in to actually do the interrogation.

MATALIN: They’re -- nobody was off books. The attorney general, the president, the entire administration takes an oath to protect and defend. Protecting and defending in the case of this enemy, this asymmetrical war that we’re in is intelligence. It’s the key. And they are undermining our ability to gather intelligence by going backwards and investigating and prosecuting the intelligence-gathers, the lawyers who render the opinion.

It is politicization and criminalization of political (INAUDIBLE), and every time -- I come back to the timing. Every time they get in trouble, which the president’s poll numbers are slipping and his health care and global warming initiatives are under assault, they dredge up a Darth Vader story so they can say that they’re...

(CROSSTALK)

BLITZER: I guess the question is this, James. At a time when the president is trying to get health care reform passed, got an economic stimulus package that may or may not be working the way he thought it would, enormous international headaches whether in two wars, Iran, North Korea, all sorts of other issues, is this what you want to see the administration...

CARVILLE: I don’t think -- I don’t think the administration wants to deal with this, all right? But these stories keep coming out. Apparently there are any number of people that think that laws might have been broken. You can’t suspend, you’re supposed to protect and defend the Constitution.

If you’re the attorney general, he pleads that laws were broken, they’ve got to do something. But I don’t think that -- President Obama or people say, gee, we want to deal with these stories right now. They got -- they don’t need anything else. They came in and got a pretty full plate here.

But these stories keep coming and people -- and there are going to be more stories coming. And we don’t know the extent of them. What I’m saying is, is that in all likelihood, this is going to continue.

CARVILLE: There’s going to have to be a way to deal with this and whether it’s the attorney general or they are going to appoint a special prosecutor or they’re going to get a federal judge or commission or something like this, but this stuff is not going to go away.

BLITZER: Mary, hypothetical question. If the current Vice President Joe Biden said you know what, there’s a very sensitive intelligence program that is under way right now. I’m going to go to the CIA and tell Panetta and company, don’t share this information with the top eight leaders of the House and the Senate Democrats and Republicans because it can’t go out. Would it be OK for Joe Biden to make that unilateral decision?

MATALIN: It is within the part of the law for him to be able to do it. He would have to be very, very selective and I don’t think politically you would want to withhold it from the top eight. But it depends on what it is. And in this case, we don’t know what it is. We know that it wasn’t operational. The reason that these stories keep happening, they are not just happening, Wolf. They’re being manufactured for political reasons. This whole Panetta range of stories, panoply of stories, was a cover for Nancy Pelosi .

BLITZER: It’s a very serious charge you’re making against Leon Panetta, the CIA director, that you’re saying he is involved in a political operation against the Republicans.

MATALIN: It’s a very serious charge he made against the vice president. I am saying that the House intelligence fans or proponents with Nancy Pelosi started saying, misquoted or misrepresented Leon Panetta’s views by saying he said CIA mislead Congress.

Then they walked that back and said, no, they won’t mislead Congress and then in the middle of that, the story just comes out that, accusing the vice president of not telling Congress, ordering the CIA not to tell Congress about a program that did not exist, was not operational.

BLITZER: Wrap it up, James.

CARVILLE: I just got to come back and say, the story said it wasn’t fully operation. I don’t know about 99 percent operational and I don’t think Leon would do anything that would hurt his country. I think he’s an utterly honorable man. I have spoken and by the way and received a fee and all disclosure on a couple occasions at the college out in Monterey Bay. BLITZER: The Panetta Institute.

CARVILLE: At the Panetta institute. I don’t think that he --

BLITZER: That was before he became CIA director.

CARVILLE: Before he became CIA director, yes.

MATALIN: Nor would the vice president, the former vice president do anything other than what was in the best interest of this country. So, if you’re suggesting that Leon wouldn’t and somebody else would, I hope that wasn’t your suggestion.

CARVILLE: We have an investigation and we’ll find out. Maybe everybody is right.

MATALIN: Meanwhile, while we’re investigating, Wolf, the CIA is saying I am not gathering intelligence, I’m not doing anything, I don’t want to put my family through this. I don’t want to be prosecuted. You can indict a ham sandwich in this town and if they feel that’s what’s going to happen to them, their efforts to gather intelligence from our security is going to be greatly chilled.

BLITZER: But you admit, they should do it lawfully and legally.

MATALIN: I’m 100 percent, 110 percent confident the vice president and the former administration did everything within the confines of the law.

BLITZER: Guys, go away, we have much more to talk about with James and Mary. Senator John McCain just said whether or not he would endorse his former running mate Sarah Palin in 2012. We’re going to tell you what he had to say. Much more with Mary and James on “State of the Union” right after this. (COMMERCIAL BREAK)

BLITZER: Let’s get back to our CNN contributors James Carville and Mary Matalin. I want to talk about the Governor Sarah Palin in a few minutes, but let’s talk about health care reform right now and listen to what Kent Conrad said to us here on “State of the Union” earlier, very significant statement.

(BEGIN VIDEO CLIP)

CONRAD: Everything does have to be on the table. You can’t negotiate properly without that rule in place, but I don’t think the House proposal, as I’ve heard it, will be what’s part of the final package.

(END VIDEO CLIP)

BLITZER: That House proposal that Charlie Rangel, the Democratic chairman of the Ways and Means Committee wants is additional taxes on the richest Americans, people making more than $250,000 or $300,000 a year to pay for health care reform so that 30 million or 40 million others might be able to get it.

CARVILLE: You know, a lot of things are going to be on the table. But something to remember here is that they’re closer to this than we’ve ever been in American history.

BLITZER: Health care reform.

CARVILLE: Yes, they’re closer to it. I think we’re going to have a report out, Senator Dodd’s committee, is going to report out a bill on Tuesday. The House has that. There’s this great sort of thing out here that this thing is going down, it’s going down, it’s going down. Maybe it’s not.

And I think that secretary of health, Secretary Sebelius is correct. I think that Senator Conrad is correct and my sense is this probably won’t end up, but there’s going to be a lot of proposals. Remember you have to have a House version, you’ve got to have a Senate version and then you have to have a committee to do that and you have to revote that. So it’s a long ways away, but right now they’re closer than anybody’s ever been.

And I guarantee you one thing, I know these guys. There’s not going to be any vacations this summer. And I think the president is going to do a lot of things. I think there is going to be a lot of things.

BLITZER: The president can’t get it done now, with 60 Democrats in the Senate and a lop sided Democratic majority in the House, they’ll probably never get done, right?

MATALIN: Yes, close doesn’t count in hand grenades and health care reform. I mean, close to what, getting what done?

If you take a step back, where we -- why health care is stalled as is the global warming initiative goes, this is not happening in a vacuum. The mishandling of the stimulus and even before that excellent recruitment in the past two cycles of conservative Democrats now some 70 in the House, some 15 in the Senate, they’re the ones, Republicans are joining us with them to stop what is an unprecedented cost and unprecedented direction of the government.

So, get done, close to getting what done, I don’t know. There’s plenty of things that could be done. We could just take the segment and target these initiatives, a segment that’s not insured, insure them, put in some market base reform, but don’t do what we’ve done for the only other public option which is Medicaid which is 12 times the cost of what it was estimated to be at this. We don’t have the money. That’s not going to happen.

BLITZER: Because some people, including some Democrats, are beginning to say, you know what, we’ve seen this movie before, Hillary care back in ‘93.

CARVILLE: Everybody is assuming that this thing is not going to pass. It may not. But that assumption may be to the benefit of this administration. There is more movement here. Look, and this thing is not going to stop. This is going to be some pretty high drama here in the next couple of months.

CARVILLE: And there’s going to be -- there is a lot of events that they’ve got planned, there’s a lot of things they’re going to do.

I promise you, these guys are working 16 hours a day. They’ve got this. They’ve moved the energy bill out of the House. I mean, it’s not happening overnight, you know, but it -- these things and process, let’s see which way they go.

I know a lot of people are sort of glad the president is back from his trip. I mean, he has sort come back -- there’s a lot to do, a lot of Democrats -- this is true, a lot of democrats are always nervous, I don’t deny that.

But the Republican Party is doing a good job of blowing itself up...

(CROSSTALK)

BLITZER: And Mary makes a good point, there are 60 or 70 of these so-called Blue Dog...

CARVILLE: Right.

BLITZER: ... very conservative Democrats who very often will align themselves, at least some of them, with the Republicans.

CARVILLE: But they can be -- this is making -- this is legislative process here. This is coming out -- this is coming out of the -- Senator Dodd’s committee. There’s a lot to be done. It’s a long way off, but they’ve moved it further than anybody else has so far. And who knows?

BLITZER: Let’s talk about Governor Palin for a few moments. She was interviewed by CNN, Drew Griffin, earlier in the week up in Alaska. And she said this when asked, you know, why she decided to resign later this month as governor.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R), ALASKA: I’m certainly not a quitter, I’m a fighter, and that’s why I’m doing this, to go out there and fight for what is right without the constraints that have been surrounding me in these final months.

I can’t see me being totally out of public service because that is within me and it is the way that I’m wired. (END VIDEO CLIP)

BLITZER: Does she really have a national political future as a potential Republican presidential nominee?

MATALIN: She has a national political future, absolutely. She has a present national political cause...

(CROSSTALK)

BLITZER: I mean, she is very popular with a lot of Republicans. But could you see the day when she is the Republican presidential nominee?

MATALIN: The presumption here was that this was a 2012 move. What she has said repeatedly and no one wants to accept is that she wasn’t getting her job done there because of all of these frivolous things and she had to prioritize her family. Who amongst us has not had to quit jobs we loved or take jobs we don’t like because we have -- we cannot afford the cost of government service.

Does she have a big voice? Do people listen to her? Do the polls say this didn’t hurt her? Yes. I’ve never seen -- never, ever, ever seen such a political “Lord of the Flies” for nothing of her own initiation, it was a political stoning, it was the worst thing that I’ve ever seen in 30 years of politics, the way she has been treated.

I think she has handled herself admirably and she has a resident audience out there who is going to listen to her. What she does with that, we shouldn’t presume that it is going to be 2012. No one can do anything or have any strategy for 2012 until 2010.

(CROSSTALK)

BLITZER: She’s still a very young woman, she’s only 45 years old.

CARVILLE: Look, I just -- Fred Barnes -- “Beetle” Barnes of The Weekly Standard, says she’s done for president. I hope that Fred is wrong. Peggy Noonan wrote this -- I don’t know, it’s really savage...

(CROSSTALK)

BLITZER: Former Reagan speechwriter.

CARVILLE: Former Reagan speechwriter, all of the conservatives, it seems to me, are sort of ganging up on Sarah Palin .

I think every Democrat sort of wants her out there. I mean, if she wants to come and do fundraisers in these states, that’s fine. You’re right, the Republicans have responded very well to her. And I don’t know of a Democratic operative that doesn’t wish her well...

(CROSSTALK)

BLITZER: Listen to John McCain earlier today, because he was asked whether he would endorse Sarah Palin in 2012.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: Ronald Reagan didn’t endorse George Herbert Walker Bush, his own vice president, until the year of the election. I mean, it’s just way too early. But I’m confident she would make a fine president. The question is, is what’s the whole political scenario?

(END VIDEO CLIP)

MATALIN: Exactly smart and exactly right. Our old friend, departed Bob Teeter, said, you can’t have a strategy until you can have a strategy. Anybody that has a 2012 strategy before we see the outcome of the 2010 midterms and what happens with these ill-fated legislative overreaches of this president is crazy. There’s not a 2012 strategy right now.

Does he describe federalism better than most Republicans? Yes. Does she have a good record on energy? Yes. I mean, she’ll be a big voice. I don’t know anybody who would pick any 2012 nominee at this point. It would be goofy.

BLITZER: You know, and as far as her running in 2012, a lot of Democrats say, yes, bring it on, we hope she runs. But you know what, we’ve heard that before, sometimes be careful what your wish for.

(CROSSTALK)

CARVILLE: I guess -- I know this, as somebody on CNN, I really wish for it. I think she’s utterly compelling. I did a class at Tulane on the 2008 election, and we probably talked about her as much or more than the presidential candidates because she is compelling.

I find it interesting that the most brutal attacks on her come from conservatives. I think most -- (INAUDIBLE) people have to take the chance of it. We might be wrong, but I think most Democrats that I talk to wish her well.

BLITZER: We’ll be seeing a lot from her, hearing a lot from her, reading a lot about her, reading from her, as well. She has got a book coming out, right? She is going to surely be doing speaking engagements. And she’s probably going to be doing television.

MATALIN: She is probably going to be supporting and advocating and raising the specter of these kind of conservatives who can beat the kind of recruits that you put in...

(CROSSTALK)

CARVILLE: Governor, don’t pay attention to Beetle Barnes or Peggy Noonan.

MATALIN: That’s right.

CARVILLE: Get out there and come on CNN, we’d love to have you here.

MATALIN: Come on out.

BLITZER: Sure she will. All right. Guys, thanks very much, James and Mary. You see them together only here on STATE OF THE UNION.

We have much more conversation with the best political team on television. Coming up, straight ahead, we’ll get the view from outside Washington as John King talks jobs and health care over lunch over at Howard’s Cafe in San Francisco.

(COMMERCIAL BREAK)

BLITZER: Welcome back. I’m Wolf Blitzer. And this is STATE OF THE UNION. John King is off today, but he did find some time earlier in the week to sit down, to enjoy some coffee and a meal and to listen to what’s on your mind as Washington debates the price of health care reform and whether the economy needs more stimulus spending.

John sat down for a meal over at Howard’s Cafe in San Francisco and the conversation focused on the harsh realities of living through a tough job market.

(BEGIN VIDEOTAPE)

JOHN KING, CNN ANCHOR: The unemployment rate here was 11.5 percent here last month. Higher than the national average. Why?

BRIAN LEE, SAN FRANCISCO: I have been unemployed for about four months now. And in my industry, which I’m an Oracle database administrator, it’s mostly about downsizing and consolidating the resources in a company. So, in terms of my company, we got bought out by another company because they’re trying to consolidate their assets. And then, of course, the ensuing layoffs happen and I happened to be one of those.

KING: And what’s the job market like right now?

LEE: It’s pretty rough.

LEE: I’ve been searching pretty actively now for the last four months. I’ve had maybe about five interviews with a couple call backs. None of them were anything that I would really want.

KING: Do you ever remember it this bad?

CHRIS GRUNDSTROM, SAN FRANCISCO: I understand a lot is going on and a lot being shipped off shore, you know, manufacturing jobs and the like.

KING: Now, is it when you think about whose fault that is. Is that something you blame the governor or you blame the president or is it just one of these tides in the economy?

UNIDENTIFIED FEMALE: I think it’s the entire world’s fault. I think our economy is based strongly around the consumption of goods that we don’t really need.

KING: Do the politicians share any of the blame? One of the criticisms is that they passed a big stimulus bill but that the money is not making it into job creation maybe as fast as it could.

LEE: Well, the stimulus package just got recently released so I think it’s going to take a little more time before we can actually see the effects of it. So I’m knocking on wood, I’m hoping that it will trickle down to me, but as of yet, no.

KING: If you have health insurance, raise your hand. Nobody at the table has health insurance.

UNIDENTIFIED FEMALE: I have Healthy San Francisco, I never used it, which is a government-run health program.

GRUNDSTROM: Actually, I have it right now because I’m on disability.

KING: On disability again.

GRUNDSTROM: It’s minimum, but if I need something, I could probably get it.

LEE: Can’t afford it being unemployed and, you know, especially with health care costs these days. I think it would be like $300 or $400 a month.

KING: So, again it comes back to an issue of trust when Congress, Speaker Pelosi from this area say we’re going to pass major health care reform. We’re going to get universal or near universal coverage.

UNIDENTIFIED FEMALE: Then do it. Stop talking about it and just do it. You can do it. Every other country in the Western world does it. We’re the wealthiest nation yet millions of people who don’t have insurance and it’s so sad.

KING: How do we pay for that?

GRUNDSTROM: With all the influences, political influences in the world now, it’s nearly impossible to even come out with something even partly workable. There are just too many political interests.

LEE: I feel like at the bottom they’re trying to squeeze blood out of a turnip. We just don’t have that much to give, especially, I barely have enough to live on. So where am I going to get the money for health care and social services? I can barely support myself.

KING: Do you think the federal government can afford health care reform right now?

UNIDENTIFIED FEMALE: I heard a statistic the other day that 60 percent of bankruptcies are caused because of medical bills. My mother personally has held onto a job that she doesn’t even like just because she has health insurance. And I think that for the nation’s psyche, it’s horrible.

And if you’re going to try to do something like that, taxes, once again, are going to have to be raised and they’re going to have to be raised a significant amount and I don’t think people are going to be very happy about it.

(END VIDEOTAPE)

KING: Our John King at a diner out in San Francisco where it’s pretty tough like this across so many parts of this country.

Up next, what can the Supreme Court nominee Sonia Sotomayor expect during this week’s senate confirmation hearings. Three of the best political team on television, they are here getting ready.

(COMMERCIAL BREAK)

BLITZER: I’m Wolf Blitzer and this is “State of the Union.” John King is off today. Here are some stories breaking this Sunday morning. Four U.S. marines have been killed in Afghanistan’s dangerous Helmand Province. Military officials say the marines died yesterday in two separate bombings. A fifth service member died in the U.S. from wounds suffered in an attack last month.

A source confirms to CNN the CIA withheld information about a secret counterterrorism program from Congress on direct orders from the then Vice President Dick Cheney . The source says CIA Director Leon Panetta has informed lawmakers about Cheney’s role and has stopped the program. Efforts to contact Cheney for reaction have been unsuccessful, at least so far.

Confirmation hearings for the supreme court nominee Sonia Sotomayor kick off tomorrow morning here in Washington. Democratic supporters say they’ll push back against Republican opponents who paint her as an activist judge. If confirmed, Sotomayor would become the first Latina on the high court. You can catch all action right here. Our special coverage begins at 10:00 a.m. Eastern tomorrow morning. All of that and more coming up on “State of the Union.”

You’re looking at live pictures of the U.S. Capitol, a beautiful Sunday here in the nation’s capital. Tomorrow, the hearings will begin, the confirmation hearings for Sonia Sotomayor. History will unfold. Welcome back to “State of the Union.”

Let’s talk about that and more with our senior legal analyst Jeff Toobin, our senior White House correspondent Ed Henry and our senior political correspondent Candy Crowley. They’ll all be here with me tomorrow getting ready to assess what’s going on on these hearings. Here are some poll numbers, Jeff. Let me start with you. We asked in a CNN/Opinion Research Corporation poll, should the Senate confirm Sotomayor to the Supreme Court? Forty-seven percent said yes, 40 percent said no, 13 percent were unsure.

Then we broke it down, Democrats, Independents and Republicans, 68 percent of Democrats said yes, 42 percent of Independents said yes and 26 percent of Republicans said yes. Looks pretty close there. I don’t know how close it is going to be in the Senate barring a bombshell.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: It certainly, with all respect to the poll, I don’t think it matters very much. The key number here is 60, there are 60 Democrats in the Senate. The last time a nominee of the president’s, a president’s nominee lost when his party controlled the Senate was Abe Fortas in 1968. That is a long time ago. Barring some disaster, it seems virtually certain she will get confirmed.

BLITZER: And even though I don’t even know if any Democrats were even thinking of not voting for her and it’s unlikely that the Republicans will try to filibuster, give on the fact that the Democrats now have 60 votes.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: It does seem unlikely to filibuster for a big reason, which is that this could backfire on the Republicans if they push it too far. Coming out of the last election, they did not do well with Latino voters. If all of the sudden they start filibustering or even just in the confirmation hearings appear that they’re beating up on grilling too hard a Latina nominee, the first one to the high court, it could very much boomerang on the Republicans. So that’s why the democrats are not sort of taking it for granted, if you will, but they think they have this one in the bag and the Republicans are pretty much admitting it.

BLITZER: But Jeff Sessions , who is the top Republican on the Judiciary Committee, like all the other Republicans say, you know what, she may get confirmed, but it’s our responsibility to ask some serious, tough questions.

Listen to what he said earlier today.

(BEGIN VIDEO CLIP)

SESSIONS: In her -- a number of her speeches, for example, she has advocated a view that suggests that your personal experiences, even prejudices -- she uses that word -- it’s expected that they would influence the decision you make, which is a blow, I think, at the very ideal of American justice.

(END VIDEO CLIP)

BLITZER: The whole notion of, as the president said, he wants a justice who is empathetic, who’s got the empathy for average folks...

(CROSSTALK)

CROWLEY: Or who at least understands average folks’ life. Listen, I think there’s three things at play here. The first, as you saw in that poll, that Republicans are resistant to this nomination, so Republicans on Capitol Hill feel a need to ask these questions. And some genuinely are very skeptical of her approach to this.

But Republicans will tell you privately that they don’t plan to filibuster. And they also -- I don’t think you are going to see a lot of nasty. I think you’ll see a lot of, you know, judicial discussion about what the role of the justice is. You’ll hear a lot about activist judges, which is why it will be good Jeffrey’s here, because I think we’re going to hear a lot of legal stuff...

(LAUGHTER)

... and not a lot of that, you know...

BLITZER: And, Jeff, hold your thought for a second, because I’ll play this other clip of what Jeff Sessions said. Because I think Candy’s absolutely right. We’re going to hear a lot of discussion of the philosophy of -- of Supreme Court justices.

(BEGIN VIDEO CLIP)

SESSIONS: I am really flabbergasted by the depth and consistency of her philosophical critique of the ideal of impartial justice. I think that’s a real expression of hers.

(END VIDEO CLIP) BLITZER: All right, Jeff, explain what he’s talking about.

TOOBIN: Well, there are a lot of code words involved. Whenever you hear people talk about privacy, they’re going to be talking about abortion. When they talk about impartiality, they’re going to be talking about affirmative action.

And there is a real split on the court about whether it is permissible for a university, for an employer to use race as one factor in giving out a government benefit. We saw it last month with the New Haven firefighters case where they said, no, it was not permissible in that circumstance.

Chief Justice Roberts clearly is making it a signal attempt of his -- of his tenure to get rid of racial preferences. Sonia Sotomayor believes in racial preferences. I think that discussion about whether fostering diversity is something that the government should allow and the court should permit is going to be a big part of this.

BLITZER: And her big supporter, Chuck Schumer, from her home state of New York -- he’s pretty optimistic. Listen.

(LAUGHTER)

(BEGIN VIDEO CLIP)

SCHUMER: I believe she’ll be approved, and I think there’s a very good chance she’s going to get as many, if not more votes than Judge Roberts got, which was 78. She has wowed people.

(END VIDEO CLIP)

TOOBIN: He can’t help but be...

(LAUGHTER)

BLITZER: He’s not exactly the most objective. But go ahead.

TOOBIN: He’s a good salesman, obviously; he -- for whatever he’s pushing on any given day. And in this case, he’s got a product that’s very likely to sell. So he’s pushing that.

And this is going to be very likely a “W” that President Obama can put in the column. And then he needs to move on to the economy, health care, all those other subjects where it’s not going so well.

TOOBIN: If you get less than 78 votes, you know what they call you -- but you get more than 50? They call you “Justice.”

(LAUGHTER)

It doesn’t matter how many votes you get.

BLITZER: And if there’s no filibuster. You need 60, plus the vice president, Joe Biden. I assume he would vote to confirm here, to break a tie.

HENRY: Clarence Thomas got 52. He has the same vote as Justice Alito.

(CROSSTALK)

BLITZER: This a life-time appointment, so there’s no doubt that -- the significance. And, you know, a lot of people, though, are saying the Republicans, what they’re doing now, is not necessarily setting the stage to try to defeat her; they’re looking to the next Obama nominee that could come down the road.

CROWLEY: Sure, because, on both those issues, she doesn’t change the balance of the court, at this point. And so this is not one of these “let’s take this to the mat because a lot of things change, if we do upset the current balance by four.”

So, you know, the fact of the matter is, I don’t know anybody on Capitol Hill that I’ve talked to that doesn’t believe that she’s going to get confirmed. And I think you’re right about setting the stage. The next one begins -- you begin to look at those numbers pretty closely.

BLITZER: Guys, stand by. I want to just remind our viewers, 10:00 a.m. Eastern, tomorrow morning, we’ll be here. We’ll be covering this hearing. The history of this next Supreme Court justice will take place. You’ll see it all unfold throughout these coming days, right here on CNN. Stay with us for that, 10:00 a.m. Eastern tomorrow.

Much more with Jeff, Ed and Candy. We’ll talk about the CIA. What’s going on right now -- and the former vice president, Dick Cheney . Lots more, right here on “State of the Union.”

(COMMERCIAL BREAK)

BLITZER: The Justice Department has just reacted officially to this front page story in today’s Washington Post, the front page story, “Probe of Alleged Torture Weighed: White House has resisted inquiry suggesting that Eric Holder, the attorney general, may recommend that a prosecutor be named, a special counsel to investigate the CIA’s interrogation of terrorist suspects.”

Here’s the statement that the Justice Department just put out. “As the attorney general has stated on numerous occasions, the Department of Justice will follow the facts and the law with respect to any matter. We have made no decisions on investigations or prosecutions, including whether to appoint a prosecutor to conduct further inquiry.”

As the attorney general has made clear, it would be unfair to prosecute any official who acted in good faith based on legal guidance from the Justice Department.

All right, let’s parse these words, significant words. Jeff Toobin, what does it mean? TOOBIN: Well, it means that they are thinking about prosecuting Dick Cheney , Alberto Gonzales, John Yoo, the people who were giving the directions about how to conduct the war on terror.

Now, they’re a long way from prosecuting anybody, but, you know, Barack Obama said during the campaign he wants an independent Justice Department. He’s about, perhaps, to discover what that means. They may create a problem for him by getting involved.

(CROSSTALK)

BLITZER: Because the way understand what’s going on is that, yes, there was a Justice Department legal memorandum authorizing these harsh interrogation techniques of suspected Al Qaida suspects, but -- and the CIA and the contract employees who have engaged in these interrogation techniques, they did have that legal authorization from the Justice Department.

BLITZER: But what’s under investigation, apparently now is that they went beyond what was even legally authorized by the then-Bush Justice Department in going further in using these techniques.

HENRY: Right, and were they acting in good faith, as you said in the statement, or did they go beyond that line? But then also as Jeff says, were the architects of this entire policy, the people behind the legal memos saying it was legal when maybe they knew very well it was not but they wanted to push this forward, should they be prosecuted?

The big picture here though is when you read that “Washington Post” story closely, it sounds like people close to Eric Holder putting out a little trial. This is how Washington works a lot, where they say, he’s leaning this way, White House, attention to this story, because they need to show they’re independent.

If Justice Department officials in private start telling the White House, people like Rahm Emanuel , we’re thinking about launching watching this probe, and the White House says, whoa, don’t do that, that would be really bad politically because the president wants to look forward, not back. That will blow up and all of a sudden it’s not independent. It will look like collusion. So it looks like a signal is being sent by the Justice Department to the White House that they’re thinking about doing this, and I think and the bottom line, the president -- his public comments are suggesting he doesn’t want this because it’s going to look like he’s looking back instead of forward, people like Vice President Cheney could be prosecuted. This could blow up into a big, big political story.

BLITZER: And it also sets the stage that after this president is done, let’s say there’s a Republican administration, they could say, you know what, we’re going to start investigating all the decisions that were made, controversial decisions made by the Obama administration.

CROWLEY: Absolutely, and that’s what Republicans are arguing at the moment. Wait a second, wait a second, it was a legal document. Now again, we don’t know exactly what’s going on here. Does Eric Holder, has the Justice Department found evidence that they did go beyond?

BLITZER: The water boarding, for example, was authorized. Did they go beyond water boarding and do some other things?

CROWLEY: Whatever goes beyond water boarding. So I do think the larger picture is -- I think President Obama has not just hinted that he doesn’t want it, I mean he’s come out and said, you know, we can’t be looking in the past. I don’t really think we ought to be doing that sort of thing, and honestly if there’s anything that would suck up the oxygen in this town, it’s an investigation of Dick Cheney .

HENRY: Politically, the president has a lot of pressure from liberals in his own party saying you’ve got to find out what’s going on.

BLITZER: He’s got a lot going on right now and I think officials in the White House are saying, you know what, let’s try to deal with health care and some other issues, national security issues as well. We’ll see.

But the chairman of the Judiciary Committee, Jeff, Patrick Leahy, he went pretty far in suggesting that in fact the then Vice President Dick Cheney told the CIA don’t brief the leadership of the House and Senate on a sensitive, classified, counter-terrorism intelligence program, that was unacceptable. Listen to this.

(BEGIN VIDEO CLIP)

SEN. PATRICK LEAHY (D), VERMONT: If, as the “New York Times” says, we have the vice president of the United States telling people to break the law, that’s a pretty serious matter. Either he did or he didn’t. If he did, that’s something we ought to know because I’ve been here with six administrations. Usually if something is done wrong by one and it’s exposed in the next one, it tends to behave themselves.

(END VIDEO CLIP)

TOOBIN: We’ve got to keep our scoops straight. “The Washington Post” was about the CIA’s possible misconduct. The “New York Times” was talking about Dick Cheney not instructing administration officials, perhaps, to mislead Congress. That is something that is a part of every Washington scandal, whether it’s Iran Contra or Watergate, misleading Congress, and it’s hard not to investigate it if there’s good evidence that it took place.

BLITZER: We’ve got to leave it there, guys. Thanks very much. Just to remind our viewers, tomorrow morning, 10:00 a.m. Eastern, the confirmation hearings of Sonia Sotomayor. You’ll see it live here on CNN.

In juts a few moments, we’ll get the latest on the health care debate from the Health and Human Services Secretary Kathleen Sebelius . But straight ahead, a look at the real world reality of American health care reform from a caregiver on the front lines. “State of the Union” continues after this.

(COMMERCIAL BREAK)

BLITZER: One of the constant refrains in the health care reform is this, one size doesn’t fit all, meaning the challenges in a big city like New York are very different from those in a Native American reservation in the West, or as we saw up close in our “State of the Union” travels, the tiny, struggling coal towns of rural West Virginia.

(BEGIN VIDEOTAPE)

NURSE GLORIA TERRY, TUG RIVER CLINIC: Women whose husbands have worked in coal mines and some of the older coal miners who are still here retired, they come here to get care. What I’m going to do is have you lay your glasses there. Most of them have breathing problems and they have other problems like diabetes, hypertension. Are you having drug allergies? The lady that I saw today, she has some health issues, diabetes or hypertension. Anytime you have either disease, it’s going to affect their eyes. I want you to just watch that light for me. And we realize that you lose your eyes very young. They’re not going to be replaced. You can replace your leg, you can replace your arm, you can even replace your heart. But most of the time, it’s very difficult to replace your eyes.

Hey, good girl, I’m glad you made it. You see the geography of how the roads are. It’s not like living in Roanoke, Virginia where you can just walk down the street or take a cab or bus to a doctor’s office. We have rural roads. This is rural care. My father was a coal miner and my husband was a coal miner. My father worked in the coal mines for 41 years before he retired. My husband worked in the coal mines for 20-some years.

We raised our kids and sent them to college while he worked in the coal mines. And I’m proud of it. We have cared for lots of coal miners. A lot of them have insurance if they’re working in the coal mines that has a good insurance plan.

But if they don’t, then we see them, anyway. I’d like to have a whole lot more money here, because we could do more of what we’ve been doing. I think this clinic came here in 1976. There are not a lot of primary clinics that have retained their status for that long, and I’m proud of us for that.

(END VIDEOTAPE)

BLITZER: We’d like to welcome our international viewers to our “State of the Union” report this Sunday, July 12th. I’m Wolf Blitzer in for John King.

President Obama wants Congress to deliver a health care reform bill for him to sign this year. But a key question remains, can the United States afford to implement ambitious and expensive changes with an ailing economy? The Health Secretary Kathleen Sebelius is here to lay out the Obama administration’s case.

The grilling begins tomorrow for Judge Sonia Sotomayor. What can the Supreme Court nominee expect from the Senate Judiciary Committee, and then the full Senate? Four key senators are here to preview her confirmation hearings, weigh in on the health care debate and talk about whether there’s a need for a second economic stimulus.

BLITZER: And he’s pushing a new plan to try to get gays and lesbians to be able to serve openly in the United States military. Democratic Congressman Patrick Murphy of Pennsylvania.

(AUDIO GAP) to deliver a health care reform bill for him to sign this year. But a key question remains, can the United States afford to implement ambitious and expensive changes within an ailing economy?

The health secretary, Kathleen Sebelius , is here to lay out the Obama administration’s case.

The grilling begins tomorrow for Judge Sonia Sotomayor. What can the Supreme Court nominee expect from the Senate Judiciary Committee, and then the full Senate? Four key senators are here to preview her confirmation hearings, weigh in on the health care reform debate, and talk about whether there’s a need for another economic stimulus package.

And he’s pushing a new plan to try to get gays and lesbians to be able to serve openly in the United States military. Democratic Congressman Patrick Murphy of Pennsylvania gets “The Last Word.”

That’s all ahead in this hour of STATE OF THE UNION.

A beautiful Sunday here in the nation’s capital, up on the other end of Pennsylvania, Capitol Hill, the U.S. Congress, where they’re debating health care reform. While President Obama spent the past week overseas tending to global matters, his administration pressed ahead with its effort to revamp the U.S. health care system.

The vice president, Joe Biden, announced a new agreement with the hospital industry to help pay for reforms, but there are still major issues to resolve, including whether to tax health care benefits in order to finance a final reform plan. Here to outline the Obama administration’s view is the health and human services secretary, Kathleen Sebelius .

BLITZER: Madam Secretary, thanks very much for joining us.

SEBELIUS: Great to be with you.

BLITZER: How are you going to pay for $1 trillion, if not more, for this health care reform over 10 years?

SEBELIUS: Well, President Obama has outlined his preferred payment plans, about $660 billion in savings out of the existing system. So money that’s already in the system that’s not making us healthier and going to procedures and practices that work very well.

And about $330 billion in a proposal that would cap the itemized deductions that the wealthiest Americans take. Return them to the level where they were in President Reagan’s days. The House and the Senate have slightly different variations, a lot of the same savings and they’re looking at different funding...

BLITZER: Because the House version that Charlie Rangel, the chairman of the Ways and Means Committee, announced on Friday would tax the wealthiest Americans, additional tax to help pay for the hundreds of billions of dollars that would still be needed; if you make more than $300,000 a year or $400,000 a year, and make more than $1 million, you’re going to be paying a lot more taxes in the years to come.

SEBELIUS: Well, the House has a version, there are a couple of different proposals being worked on in the Senate. BLITZER: You like the House version?

SEBELIUS: I think that it’s one of the ideas that will be discussed in the long run. I prefer the president’s version, I think it makes good sense that, again, the wealthiest Americans pay...

BLITZER: But you’re open to the version of increasing taxes on richest -- the richest Americans to pay for health care for everyone else?

SEBELIUS: Well, I think the bottom line is, it has got to be paid for. And we all have a shared responsibility that we all need to play a role. The House and Senate version also have employers included, and individuals included.

And what has been remarkable, Wolf, is the stakeholders who, in the early ‘90s, were the most vocal opponents of anything changing in the health care system are really at the table with their own suggestions of how to pay for...

BLITZER: Well, just to be precise, you’re open to Charlie Rangel’s proposal.

SEBELIUS: Well, I think everything is on the table and discussions are under way.

BLITZER: Are you also open to taxing health care benefits that employers provide their workers?

SEBELIUS: Well, I think, again, the president has made it pretty clear from the beginning, certainly during the course of the campaign and since then that that proposal may well dismantle the current employer-based system.

He has always suggested that we want to build on the current system, 180 million people have insurance provided by employers. What we don’t want to do is discourage employers from offering coverage.

BLITZER: But this is what he said back when he was a candidate in September of 2008. I’m going to play this little clip. SEBELIUS: OK.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES, THEN-CANDIDATE: Everyone in America, everyone, will pay lower taxes than they paid in the 1990s under Bill Clinton at a time when the economy was growing and we produced 22 million new jobs.

(END VIDEO CLIP)

BLITZER: All right, so just to be precise, you’re rejecting a proposal to tax health care benefits that employees get from their employers?

SEBELIUS: Again, Wolf, the House and Senate are busily at work and I think the president continues to reemphasize that he has opposed the notion that we would tax health care benefits, continues to think that is not the best strategy to go forward.

If at the end of the day that’s the chosen way, I mean, the House clearly doesn’t have it in, the HELP Committee doesn’t have taxing benefits as part of the proposal. We’re waiting to see what Finance comes up with. But he continues to work with the Finance Committee saying this is not the preferred strategy.

BLITZER: Not the preferred, but it’s not necessarily completely being ruled out?

SEBELIUS: Well, no lines in the sand at this point. The most important thing is a health care reform bill passed this year, comprehensive reform because we can’t afford to pay what we’re paying right now. We’re paying twice as much as any nation on earth, living sicker, dying younger, and that isn’t good for any American.

BLITZER: Will the president accept health care reform that does not include a public option? In other words, public government-run health insurance companies competing with the private health insurance companies?

SEBELIUS: Again, he has said consistently and very strongly a public option is one of the strategies that will help lower costs, provide some competition for private insurers, and make sure that consumers in many parts of the country have a choice. Absent that, you won’t have cost competition and you won’t have choice. BLITZER: So be precise, is the president going to reject any -- if the House and Senate says, you know what, we can do this with co- ops, we can do this with other ways, but there’s not going to be a public government-run health insurance system, is the president going to accept this?

SEBELIUS: Well, I think you’re going to hear from senators in a little while about a variety of strategies to get to a public option. There isn’t one size fits all. So he -- I think, the president has said we can have competition -- the issues are competition and choice and how you bring that into the private marketplace. There probably are a variety of strategies, all of which are on the table.

The good news is that Congress is hard at work. We’ve got Republican senators working day in and day out with Democratic senators trying to figure out how to make sure reform happens this year. And they’re working really hard.

BLITZER: When is the president going to say, you know what, enough, the House and the Senate, they have got their own versions, I’m going to come up with a Barack Obama version that I want you guys to pass?

SEBELIUS: Well, everybody assumed that I had the 1,000-page plan in my purse as I traveled through the Senate for my pre-confirmation hearings. What the president understands is that this package of legislation, this very comprehensive bill needs to be a bipartisan approach. It needs to be owned by the House and the Senate with lots of input from the administration.

That’s exactly what’s going on now. Progress is happening day in and day out, people are at the table, Senator Grassley is working hard with Senator Baucus and Senator Conrad and others.

I think we’re going to have a bipartisan bill with not only votes from Republicans and Democrats, but lots of ideas from Republicans and Democrats to reform the health care system.

BLITZER: Let’s talk about the swine flu. You’re getting ready to...

SEBELIUS: H1N1.

BLITZER: Flu season is going to be starting in the fall here in the Northern Hemisphere. It’s going pretty wild right now in the Southern Hemisphere. Will there be a vaccine that will be ready when the flu season starts in the United States?

SEBELIUS: By mid-October, we will have a vaccination ready. When exactly the flu season starts, we can’t predict, but...

BLITZER: Because millions of people, potentially, are at risk in the United States.

SEBELIUS: Well, we have about a million cases of H1N1 right now in the United...

BLITZER: Around the world?

SEBELIUS: No, in the United States right now.

BLITZER: In the United States alone?

SEBELIUS: Yes. And 102 countries are seeing presentations of this disease. The good news is that it’s not terribly lethal right now. We’ve had about 170 deaths, that’s too many, but we know 36,000 people die every year with seasonal flu.

So we’re watching Southern Hemisphere, no vaccine, H1N1 mixing with flu right now. We’ll know a lot more as we move toward the fall, but we are preparing to keep Americans safe and secure.

BLITZER: Give us a preview of the announcement you’re going to make tomorrow on vaccines.

SEBELIUS: Well, there will be another billion dollars worth of orders placed to get the bulk ingredients for an H1N1 vaccination. Congress has agreed with the president that this is the number one priority, keeping Americans safe and secure.

BLITZER: Madam Secretary, thanks very much for coming in, good luck.

SEBELIUS: Thank you, great to see you.

BLITZER: Thank you.

President Obama even sees a health care bill -- says he wants to see a health care bill on his desk by the end of this year. Lawmakers on Capitol Hill have to agree on what goes into it. Up next, four key U.S. senators break down what needs to be done to reach a bipartisan agreement.

Also, Anderson Cooper’s exclusive interview with President Obama in Africa. It’s a remarkable interview from the exact location where millions of Africans were sold into slavery. You’re going to see it right here on “State of the Union.”

(COMMERCIAL BREAK)

BLITZER: Well, we just heard the Obama administration’s view of health care reform, now let’s turn to four U.S. senators who are playing a key role in crafting a plan. In his home state of New Hampshire, Republican Judd Gregg . And from her home state of Michigan, Democratic Senator Debbie Stabenow . Here with me in Washington, Republican Lamar Alexander of Tennessee, and Democrat Kent Conrad of North Dakota.

Senator Conrad, let me start with you. You just heard Kathleen Sebelius , the secretary of Health and Human Services say the Obama White House is open to this House proposal that Charlie Rangel, the chairman of the Ways and Means Committee has put forward to put additional taxes on the richest American families to pay for health care reform for everybody else who doesn’t have it yet. Is that a good idea?

CONRAD: Look, everything does have to be on the table. You can’t negotiate properly without that rule in place. But I don’t think the House proposal as I’ve heard it will be what’s part of the final package. I think there may be some request from those of us who at the highest levels of income this country to pay a bit more. But there will be a much broader package of revenue as well as spending reductions in order to make this package work.

BLITZER: Yeah, are you open to the House version to consider a tax on people making more than let’s say $250,000 or $300,000 or $350,000 a year at 1 percent or 2 percent additional tax on their gross income to pay for health care reform?

ALEXANDER: That’s a bad idea, Wolf. What is on the table seems to be taxes like that more state taxes to support Medicaid, more cuts in Medicare, more employer taxes. What should be on the table and more government programs. What should be on the table are more proposals like the one Senator Gregg has made or Senator Burr, Senator Coburn. There are 14 of us, Democrats and Republicans, who support the Wyden-Bennett plan, and that would give every American dollars with which to buy their own health insurance and could be done without adding a penny to the debt.

BLITZER: You want to tax benefits, health care benefits that employers provide to their employees as income?

ALEXANDER: I’m willing to stop giving tax deductions to people for Cadillac health insurance plans in order to give everybody a chance to buy their own health care insurance and not add a penny to the debt. I think that would be a good way.

BLITZER: No matter what their income.

ALEXANDER: No matter --

BLITZER: No matter what the income?

ALEXANDER: What it means is if we’ve got a Cadillac insurance plan and your employer gives you that, then some of it’s going to be taxed. That money will be used to make sure we do -- we can’t keep adding to the debt in the way we are.

BLITZER: Senator Stabenow, is that OK with you?

STABENOW: Well, Wolf, I think realistically, the one thing that is off the table is taxing employee benefits. I think we’ll see some other combination of things. But employees don’t determine what insurance companies are going to charge them for their health care for their family. And I think that’s pretty much off the table. What’s most important --

BLITZER: Senator Alexander says it should be on the table.

STABENOW: Well that may be his view. I respect that. But it is not I believe the majority opinion. But I think what’s also very important in this discussion is that over half of the cost of reforming and changing the health care system is going to come with greater efficiencies, it’s going to come with changing from quantity of tests to paying for quality, paying for health care not sick care.

BLITZER: But hundreds of billions of dollars, Senator Stabenow, are still going to be required and that money according to President Obama, he wants a deficit neutral plan, doesn’t want the taxpayers to be burdened with additional costs. That’s going to have to come from somewhere, and that’s what I hear you saying is you don’t want it to come from taxing health insurance benefits. Let me ask Senator Gregg what he thinks.

STABENOW: That’s correct.

GREGG: What do I think about that issue? Well, I think the UAW is calling the shots there, and that’s why it’s not on the table because they’ve got some very high-end health policies, and they don’t want them to, their union members to have to reduce those health policies.

Why don’t we look at trying to control the rate of spending by looking at better quality delivery systems, which are more affordable? We’ve got a lot of excellent studies that tell us you can deliver a lot better health care at a lot less cost if you give people incentives to go out and buy health care intelligently, if you give the employers capacity to reward people for purchasing health care intelligently and giving up lifestyles which are basically counterproductive such as smoking.

BLITZER: Quickly, Senator Gregg, would you support, could you see yourself voting in favor of health care reform legislation that includes this public option, a public government-run insurance company to compete with the private insurance companies like Blue Cross and Blue Shield or United Health Care or some of these others?

GREGG: No. We do not want to go down the road that basically undermines our fundamental health care delivery by creating a state- run government system in this country and that’s what a public plan is, it’s a stocking horse for a single payer system.

BLITZER: Because Senator Conrad, you’re not convinced that a public option would necessarily pass, that’s why you’ve come up with your own compromise version of co-ops. Having these co-ops that wouldn’t necessarily be completely public or private, it would be somewhere in the middle. You think that’s passive?

CONRAD: I do. And really just to be clear, the cooperative plan is something that we see across many business lines in the country, very successful. The “Associated Press” is a co-op, we’ve got Ace Hardware as a co-op, Land O’Lakes, a $9 billion entity is a co-op. The beauty of it is that it does provide competition for insurance companies. But it is not government-run, government-controlled, it’s membership-run, membership-controlled.

BLITZER: Could you support that Senator Alexander, the cooperatives?

ALEXANDER: Well, it all depends. I mean, Blue Cross could probably fit under his definition of a co-op. The problem with a government-run plan would be something like this. Say the president said let’s buy the rest of General Motors to keep the Ford Motor Company honest. And that wouldn’t matter unless he gave the government car some advantage.

So he might say, well, all your repairs are going to be at a very low cost, but all of the mechanics might say, we’re not going to -- we’re not going to work on the government car. That’s what you have with a government plan today with Medicaid, 40 percent of the doctors won’t serve Medicaid patients because of the low service and it’s the only option --

BLITZER: I want to ask Senator Stabenow, I’ll rephrase the question for Senator Stabenow. Could you support health care reform that does not include a public option?

STABENOW: Well, my first choice and very strong choice is a public option. And I have to say, Wolf, that what my friends are saying, Senator Gregg and Senator Alexander really are scare tactics that have been put forward by folks that don’t want to change the system because they make a lot of money off the current system right now.

BLITZER: Very quickly, all four of you, if you can give me a yes or no answer, I’m going to play a clip of what the president of the United States said in an exchange with a reporter in Italy on Friday. And I want your answer, listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Is it a pretty much a do or die by the August recess?

OBAMA: I never believe anything is a do or die. But I really want to get it done by the August recess.

(END VIDEO CLIP)

BLITZER: Will there be legislation on the president’s desk, Senator Gregg, by the August recess?

GREGG: On health care, I think that’s highly unlikely since the Finance Committee doesn’t even have a bill drafted yet. And we’re in the middle of the Sotomayor hearings for this week and then we’re going to be debating her nomination for a week before we adjourn for the August recess.

BLITZER: Let me ask the chairman. What do you think?

CONRAD: I think we’ll be through the Finance Committee by the August recess and I think that’s a realistic goal. You know, there really is plenty of time. Congress is going to be in session until Christmas Eve.

BLITZER: What do you think?

ALEXANDER: No, there’s no reason to rush. We need to get it right, not add debt, not have a Washington takeover.

BLITZER: Is the president going to be disappointed, Senator Stabenow?

STABENOW: Well, I think he’s going to be very pleased with the progress we’re making. I believe we’re going to move this through the Finance Committee. We’re going to get it done as quickly as possible. The most important thing is to get it right. The American people have waited for a long time.

BLITZER: I want all of you to stand by because we have a lot more to discuss. We’re coming back with the senators. Also, word that the CIA withheld information about a secret counter-terrorism program from Congress on direct orders from then Vice President Dick Cheney .

Plus, we’ll bring you Anderson Cooper’s exclusive interview with President Obama recorded only hours before the president left Africa. It’s a remarkable interview done in the Gulf Coast castle. That was a prison where Africans were held before being sold into slavery. You’re going to want to see it and hear it right here on “State of the Union.”

(COMMERCIAL BREAK) BLITZER: We’re back with four U.S. senators, Republican Judd Gregg and Democrat Debbie Stabenow . And here in Washington, Republican Lamar Alexander and Democrat Kent Conrad .

Senator Alexander, the stories in the “New York Times,” we’ve confirmed it that the former Vice President Dick Cheney over nearly eight years told the CIA on one very sensitive piece of intelligence, and we don’t know what that piece of intelligence is, do not share that information with the U.S. House of Representatives or the Senate. Is that appropriate?

ALEXANDER: Well, let’s -- we don’t know whether it was appropriate. The CIA is in the secrecy business. And what I hear from the Democratic members of Congress is they want the CIA to tell more of them what’s going on. The best way to ruin a secrecy business is to tell --

BLITZER: Even if you just tell the leaders, if you tell eight leaders, four in the House and four in the Senate, the majority leader, the minority leader, and the chairman and the ranking member of the two intelligence committees.

ALEXANDER: That is appropriate.

BLITZER: Because that’s the tradition, you tell the eight or so- called gang of eight.

ALEXANDER: But what I’m hearing from the Democratic members of the House is tell us all, tell more of us about it. If the eight leaders think what Vice President Cheney did was inappropriate, they should sit down with the new president and the new CIA director and say we’d like to know more. That’s the way to fix that problem. I have no way of knowing -- nor do or anybody else.

BLITZER: No because presumably, Senator Conrad, even these eight leaders who traditionally are informed I think of almost everything, they were told by the vice president if you believe this story, don’t even tell them about this program.

CONRAD: That’s a serious breach. Look, you can’t gloss over it. It has nothing to do with what the House is asking going forward. This is a question of whether something was not given the elected leaders of the Congress, which is required by law. That’s a serious matter.

BLITZER: If the current vice president, Senator Gregg, told the CIA, you know what, there’s a really sensitive program, I don’t want you to tell these eight leaders of the House and Senate what’s going on, would that be appropriate?

GREGG: No. But let’s -- there’s no question that’s not appropriate. But the problem here is different than that in my opinion. This continued attack on the CIA and our intelligence gathering organizations is undermining the morale and the capacity of those organizations to gather intelligence. The war we’re in today is a war of intelligence. The only way we’re going to stop a terrorist from using a weapon of mass destruction on us is to find out who that terrorist is and what they have before they attack us.

The only way we’re going to get that information is through intelligence gathering. We have to have an extraordinarily robust and strong CIA, an extraordinarily and robust intelligence gathering organization. And this national attempt by some of our colleagues on the other side of the aisle to basically undermine the capacity to protect and develop intelligence is, I think, going to harm us in the long run.

(CROSSTALK)

GREGG: Yes, this is wrong. If somebody told the CIA not to inform the appropriate members of Congress on information they should be informed on, that’s wrong, but that isn’t -- that isn’t reason to disassemble the CIA and make them a whipping child in the middle of the public opinion, which undermines the morality of the whole agency.

BLITZER: Senator Gregg, no one wants dismantle the CIA, at least no one in a serious position. But if the former vice president, Dick Cheney -- and I want to pin you down on this -- if he did tell the CIA, “Don’t share this information with the House and the Senate -- if he did say that, would he have been wrong?

GREGG: Yes, if that information was correctly -- it should have been shared. I mean, I don’t know what the information was; you don’t know what it was. And there are instances, I presume, where something is so sensitive that it can’t be released. But as a very practical matter, if it should have been shared, it should have been shared.

BLITZER: Because I went back and looked back at the legislation, at the law, of the 1947 law, Senator Stabenow, and it does leave a loophole there for the executive branch of the U.S. government not to share certain intelligence information with the legislative branch of the U.S. government.

It says that the congressional intelligence committees should be fully and currently informed of all intelligence activities, but it does say this, “to the extent consistent with due regard for the protection from unauthorized disclosure of classified information relating to sensitive intelligence, sources, and methods or other exceptionally sensitive matters.”

So, presumably, the former vice president could have determined this was such an exceptionally sensitive matter, it would fall into that loophole.

STABENOW: Well, I would be extremely surprised if that was the case, Wolf. I think the person who’s been undermining the credibility of the CIA is the former vice president, by his actions, if, in fact, this is true.

BLITZER: Very quickly.

CONRAD: ... just make this point?

Look, I’ve had close relatives in the CIA. I’ve got profound respect for what they do. Senator Gregg is entirely correct. We absolutely are in a war of intelligence. It’s critically important we’re the best at it.

But this story in the “New York Times” has nothing to do with an attack on the CIA. This is a question of whether the former vice president of the United States denied certain sensitive information to the intelligence leaders in Congress. That is not acceptable.

BLITZER: Well, I’m sure there’s going to be a lot more on this coming up, but I want to thank all four of the senators for joining us here on “State of the Union.” Thanks so much.

(CROSSTALK)

BLITZER: Thank you. And President Obama’s back home from an overseas trip, including a visit to Ghana. CNN’s Anderson Cooper was in the African nation and spoke with the president. We’re going to bring you some of Anderson’s exclusive interview. That’s ahead on “State of the Union.”

(COMMERCIAL BREAK)

BLITZER: I’m Wolf Blitzer, and this is “State of the Union.” John King is off today. Here are the stories breaking this Sunday morning.

Four U.S. Marines have been killed in Afghanistan’s dangerous Helmand province. Military officials say the Marines died yesterday in two separate bombings. A fifth U.S. servicemember died in the United States from wounds suffered in an attack last month. That brings the number of U.S. troops killed this year in Afghanistan to 106. That’s a record pace.

Sources confirming to CNN that the CIA withheld information about a secret counterterrorism program from Congress on direct orders from then- Vice President Dick Cheney . The sources say the CIA director, Leon Panetta, has informed lawmakers about Cheney’s role and has stopped the program. Efforts to contact Cheney for reaction have so far been unsuccessful.

NASA has given the green light to tonight’s planned launch of the Space Shuttle Endeavor. Fueling began a couple of hours ago. Liftoff is now set for 7:13 p.m. Eastern. CNN will bring it to you live. NASA scrubbed last month’s launch after several lightning strikes near the launch pad.

Those are the headlines on “State of the Union.”

After a week of international travel, President Obama and his family arrived back at the White House just after midnight. Before he left his final stop in Accra, Ghana, he sat down with CNN’s Anderson Cooper for an exclusive interview. You can see, by the way, the full interview tomorrow, Monday night, on “AC360.”

But here are some of the highlights. The number one topic, as it was for most of us, the U.S. economy.

(BEGIN VIDEOTAPE)

COOPER: Vice President Biden said that you misread the economy. You said no, no, no, we had incomplete information, and nevertheless you said that you would not have done anything differently.

That seems contradictory. How can you say that, if you had known unemployment would go to 9.5 percent, would you -- wouldn’t you have asked for more money in the stimulus?

OBAMA: No, it’s not contradictory. Keep in mind that we got an $800 billion stimulus package, by far the largest stimulus package ever approved by a United States Congress.

And the stimulus package is working exactly as we had anticipated. We gave out tax cuts early so that consumers could start spending or at least pay down debts so they could, at a later date, start spending. We put in $144 billion to states so that they wouldn’t have to cut teachers and police officers and, you know, other social services that are vital, particularly at a time of recession.

And we always anticipated that a big chunk of that money then would be spent not only in the second half of the year, but also next year. This was designed to be a two-year plan and not a six-month plan.

Now, it may turn out that the enormous loss of wealth, the depth of the recession that’s occurred requires us to reevaluate and see what else we can do in combination with the...

COOPER: A second stimulus?

OBAMA: Well, there are a whole range of things, Anderson, that we’ve done. The banks have stabilized much more quickly than we had anticipated. They’re not all the way to where we’d like them to, but we’ve seen significant progress.

COOPER: Do you still see glimmers of hope?

OBAMA: If you look at both the financial sectors, the ability of the businesses to get loans, the drop off of volatility that’s taken place, the general trajectory is in the right direction.

(END VIDEOTAPE)

BLITZER: Anderson also asked the president about a story that broke last week, a possible war crime committed by an ally of the United States during the 2001 war in Afghanistan.

(BEGIN VIDEOTAPE)

COOPER: It now seems clear that the Bush administration resisted efforts to pursue investigations of an Afghan warlord named General Dostum who was on the CIA payroll. It’s now come out there were hundreds of Taliban prisoners under his care who got killed. Some were suffocated in a steel container. Others were shot, possibly buried in mass graves.

Would you support, would you call for an investigation into possible war crimes in Afghanistan?

OBAMA: The indications that this had not been properly investigated just recently was brought to my attention. So what I’ve asked my national security team to do is to collect the facts for me that are known and we’ll probably make a decision in terms of how to approach it once we have all of the facts gathered up.

COOPER: But you wouldn’t resist, categorically, an investigation?

OBAMA: I think that, you know, there are responsibilities that all nations have, even in war. And if it appears that our conduct in some way supported violations of the laws of war, then I think that, you know, we have to know about that.

(END VIDEOTAPE)

BLITZER: Finally, the president spoke of how he was personally and deeply affected by the tour he took with his family, visiting the Cape Coast castle, a prison where enslaved Africans were held before being sold and shipped overseas. Anderson spoke to the president during that tour.

(BEGIN VIDEOTAPE)

COOPER: You think what happened here still has resonance in America, that the slave experience still is something that should be talked about and should be remembered and should be present in everyday life?

OBAMA: Well, you know, I think that the experience of slavery is like the experience of the Holocaust. I think it’s one of those things you don’t forget about. I think it’s important that the way we think about it and the way it’s taught is not one in which there’s simply a victim and a victimizer and that’s the end of the story.

I think the way it has to be thought about, the reason it’s relevant is because, whether it’s what’s happening in Darfur or what’s happening in the Congo or what’s happening in too many places around the world, you know, the capacity for cruelty still exists.

(END VIDEOTAPE)

BLITZER: And don’t forget, you can see Anderson’s interview with the president tomorrow night, 10:00 p.m. Eastern, only here on CNN.

BLITZER: He says it’s time for gays and lesbians to be able to serve openly in the United States military, and is heading a new effort to try to make that happen, the Iraq War veteran, Pennsylvania Democratic Congressman Patrick Murphy, he gets “The Last Word” when STATE OF THE UNION returns.

(COMMERCIAL BREAK)

BLITZER: Twenty-four newsmakers, analysts, and reporters were out there on the Sunday morning talk shows, but only one gets “The Last Word.” That honor today goes to Democratic Congressman Patrick Murphy from Pennsylvania. He is joining us from Philadelphia.

Congressman, thanks for coming in.

MURPHY: Great to be with you, Wolf.

BLITZER: If it’s true that the former vice president of the United States, Dick Cheney , ordered the CIA not to share with leaders in the House and Senate some sort of classified intelligence program that was under way, we don’t know what it was, would that be appropriate under some circumstances?

MURPHY: Absolutely not, Wolf. I mean, there is a reason why we have three branches of government that are co-equal branches of government. And the fact he, you know, really put the CIA in a bad position saying, don’t tell the Congress, even those “Gang of Eight,” those select few members of Congress that really should know what’s going on, it’s disturbing.

You know, when it comes to national security, Wolf, you know that politics should always stop at the water’s edge. And I really think that the vice president put the CIA in a bad position here. These CIA personnel, they’re just trying to do their job to keep our families safe.

BLITZER: You’re on the House Intelligence Committee. And do you know what this program was, this controversial program that apparently the vice president thought was so secret, so important, it shouldn’t be shared, the details should not be shared with the House and Senate intelligence committees?

MURPHY: I have been briefed by Director Panetta as a member of the Intelligence Committee. And obviously, Wolf, I can’t talk about it on TV or even in private because it is classified. But I will say that it’s a program that, to Director Panetta’s credit, he stopped it immediately as new CIA director. And he went immediately to the Congress, came and brought us together -- there was only a few of us that are on the intelligence committees in the House and the Senate.

He brought us together and said, listen, I just found out about this, I want to be straight with you. And we want to work, you know, with the executive branch, we want to work with these heroes in the CIA because, listen, they’re trying to keep us safe. But we cannot allow folks that take an oath to support and defend the Constitution to really disregard a co-equal branch of government.

BLITZER: Should the attorney general of the United States, Eric Holder, ask for a special prosecutor or a special counsel to investigate the Bush administration’s behavior in some of these areas, especially the enhanced interrogation techniques?

MURPHY: Well, listen, I’m not going to tell Attorney General Holder how to do this job, but I will tell in you that my job as a member of the Intelligence Committee, we’re getting after this, and we’re going to find out what was said, what was known, what happened, because it is disturbing, no doubt about it.

Listen, I came back from 7:30 Mass this morning and I read The New York Times on what happened, and I tell you, I was pretty upset, and I’m upset with the facts as they came out as related to me by the director of the CIA, Leon Panetta.

BLITZER: Now you’re taking a leadership role now in trying to get the U.S. military to move away from the “don’t ask, don’t tell” policy that bars homosexuals from serving openly in the United States military.

You’re a veteran of the Iraq War, you’ve served in the military. Why now, in the middle of two wars, do you think it’s a good time to move away from the “don’t ask, don’t tell” policy?

MURPHY: It’s actually the best time to move away from it, Wolf, because we’ve discharged over 13,000 troops, that’s over three-and-a- half combat brigades, not for any type of sexual misconduct. If it’s sexual misconduct, they should be thrown out. But just because of their orientation, just because they’re gay, it doesn’t make any sense whatsoever.

Listen, when you’re a paratrooper like I was in the 82nd Airborne Division, you don’t care whether -- what race someone is or color or creed, you don’t care what their orientation is. You care if they can fire an M-4 assault rifle, whether they can kick down a door in Baghdad or Kabul, and whether they can do their job. That’s what you care about, and whether or not you can all make it home alive to see your families.

BLITZER: Thirteen thousand have been discharged since 1993 when the “don’t ask, don’t tell” policy was brought into line. Those who say, you know what, it has served pretty well and it’s good for unit cohesion and morale for the troops, that -- what do you say to those people who say, you know what, this is a good idea, keep it going the way it is?

MURPHY: Wolf, I asked those people why don’t they think our young men and women here in America are professional soldiers, are as professional as the 24 other countries that allow our troops to serve openly? Even our strongest allies, Great Britain and Israel, allow their troops to serve openly.

It will not affect unit cohesion. Listen, these troopers, these heroes that are 18, 19, 20, 22 years old, they don’t care about this. They care whether or not they can get the job done. And I tell you, it’s disheartening when I hear them question the professionalism of our men and women in uniform.

BLITZER: Do you have any reason to believe that the president of the United States, who, during the campaign, since the campaign has said, you know what, I think it’s time to move beyond “don’t ask, don’t tell,” but he -- so far he hasn’t done it. Do you have any reason to believe he will take the first steps necessary to remove this policy?

MURPHY: Absolutely. Wolf, in fact, he has -- already has done that. He talked a week ago to the secretary of defense and the chairman of the Joint Chiefs of Staff and said, listen, be ready to implement a change in the “don’t ask, don’t tell” policy.

He went and now it’s our job as the Congress to overturn that policy. What the president -- President Obama does, he understands and he has a healthy respect for a co-equal branch of government.

And he’s not saying to his military, well, disregard what the Congress passed 16 years ago, no matter how wrong it might be. It was an act of Congress, Wolf, that put this law into place -- the discriminatory law into place. It will take an act of Congress to repeal it.

BLITZER: Do you have the votes?

MURPHY: And then -- we’re going to have the votes when it comes to vote, Wolf. And that’s my job, to quarterback this through the House and get it to the president’s desk after it gets through the Senate to overturn and to change this wrongful policy.

BLITZER: Patrick Murphy is the Democratic congressman from Pennsylvania. Congressman, thanks for coming in.

MURPHY: Thanks, Wolf. I appreciate it.

BLITZER: And don’t forget, coming up right at 1:00 p.m. Eastern, at the top of the hour, “FAREED ZAKARA: GPS,” takes a comprehensive look at international affairs with world leaders, policy experts, and journalists.

This week Fareed speaks with the treasury secretary, Timothy Geithner, in an exclusive interview.

(BEGIN VIDEO CLIP)

SECRETARY OF THE TREASURY TIMOTHY F. GEITHNER: I mean, if you just look at the response of the (inaudible) as we go through this period of time, when people are most concerned about risk, generally they want to be investing in the most liquid, safest market in the world, which is still the market for our Treasury bills. And I think you’ve seen that pattern consistently over a period of time, and we want to make sure that we can sustain that basic response.

(END VIDEO CLIP)

BLITZER: Stay tuned for “Fareed Zakaria: GPS,” that comes up right at the top of the hour.

Up next, the challenges that come with rural health care. The nearest hospital is often miles and miles away. And many avoid getting even the most basic care because they can’t afford it.

(COMMERCIAL BREAK)

BLITZER: Welcome back to “State of the Union.” I’m Wolf Blitzer, sitting in for John King.

Every week, John likes to get outside of Washington and speak with you about the issues being debated right here in Washington. In John’s American dispatch this week, an up-close look at how many in rural America worry their unique concerns and challenges might not fit with Washington’s debate over accessible and affordable health care.

(BEGIN VIDEOTAPE)

JOHN KING, CNN ANCHOR (voice over): Clay, West Virginia, is tucked into the remote, rolling hills of coal country. The nearest hospital is 50 miles away on these winding, rural roads. With the poverty rate approaching 30 percent, many here could barely afford the drive, yet alone the care, like Carl and Elizabeth Walls.

CARL WALLS, CLAY, WEST VIRGINIA: If life and death depended on money, I’d just have to die.

ELIZABETH WALLS, CLAY, WEST VIRGINIA: You would be dead right now.

C. WALLS: I’d have been dead right now. KING: Carl had a massive heart attack a little more than a month ago. First, a long ambulance ride and blood thinners at a rural hospital, then an emergency Medevac to Charleston.

C. WALLS: (inaudible) with dignity with every (inaudible) that you could ask. And in spite of me not having any money, I’m treated as if I were a king, you know?

KING: Most of their life savings went to paying for back surgery and other health issues Elizabeth had a few years back. She has diabetes and is legally blind.

(on camera): Why won’t you go to the doctor?

E. WALLS: Because I can’t pay for him. And I -- you know, I could go and I get bills and I can’t pay those bills, so.

C. WALLS: We have got thousands and thousands of dollars worth of bills come in and what can you do about them?

KING: But so you’d rather not go to the doctor than to have a bill come that you can’t pay?

E. WALLS: Right.

(UNKNOWN): Did you get in touch with her regarding that repeat on the mammo?

KING (voice-over): It is the dilemma Dr. Sarah Chouinard faces every day, trying to convince the uninsured not to wait for the heart attack, cancer diagnosis, or some other major problem to seek medical care.

DR. SARAH CHOUINARD, CLAY PRIMARY HEALTH CARE CENTER: We offer sliding fee payment scales. If they’re at 100 percent federal poverty level or worse, then they owe us $5 only and the rest of their care is waived. Thirty-five percent of our patients are uninsured and so we have to come up ways to deliver health care at low cost and try to figure out what to do with their health care once they are outside of these walls.

KING: The urgent focus here is preventive care because it’s the right medical approach and because Dr. Chouinard and her colleagues know many of their poor and uninsured patients will ignore suggestions to see expensive specialists.

CHOUINARD: We see a large portion of diabetics, hypertensive and hypercholesterolemic patients. Our hope is that we keep people away from needing expensive health care services. So our role in a rural setting is key.

The question is, how do we keep paying for it? How do we keep giving discounted care? How do we afford to keep the doors open?

KING: A big chunk of the clinic’s budget comes from federal grants. And Dr. Chouinard says she hasn’t heard much talks during the reform debate in Washington about how to protect places like this in small town America.

CHOUINARD: It will be interesting to see what happens if they come up with universal coverage, what will our role as a federally- qualified health center be?

How is our role defined after that?

I worry that we have patients here who will maybe not fall into some category and somehow slip through the cracks.

KING: Carl and Elizabeth Walls share that concern. They sold two small businesses, watched the money go to health care bill, and now have thousands of dollars more because of Carl’s heart attack.

E. WALLS: You know, we have worked all of our life and tried and we can’t seem to get any programs that work for us.

KING: It’s not that the Walls or Dr. Chouinard oppose the idea of universal coverage. To the contrary, it’s just the sense that when there is talk of big change, people like them and places like this so often get left behind.

(END VIDEOTAPE)

BLITZER: John King, reporting.

We’re just getting this in from the White House. The president, this morning, was in the Oval Office, and he phoned Sonia Sotomayor, his Supreme Court justice nominee, to wish her good luck as she completed preparations for the confirmation hearings that begin tomorrow morning. He complimented her for making courtesy calls to 89 senators in the course of this -- the past several weeks.

Remember, our special coverage tomorrow will begin at 10:00 a.m. Eastern for Judge Sotomayor’s confirmation hearings before the Senate Judiciary Committee. We’ll have extensive coverage throughout the week.

If you missed any part of “State of the Union,” tune in tonight, 8:00 p.m. Eastern. We’ll showcase the best of today’s program.

I’m Wolf Blitzer in Washington. John King will be back next Sunday.