>> ros welcome to the broadct. tonight, president oma on wall street. we hear fit from jake daer, the abc news senior whiteouse corrpondent. >> they ow this idea of them spending a tremendous amount of money, getting involved in every cet of the american econo and the lis of americans and the deficit a the natial debt, that thes areheir real hilles heels. anthey could rlly hurt president obama and democrats in 2010 ifhere are no results. in other words, if f the economy is worse off than it is today. if there are n benefits to heth care refor rose: we continue with andrew ross skin of the "new york times" and mes stewart of the "new yorker" magazine. >> the s rlity is that we're

here 365 days later and nothing hashanged. you know, i was down and saw president oma speak today downtown. we have no new legislation we haveo.... >> rose: regulatory legislation? >> regulaty legislatn. you know, when hk paulson talks about the abily to... that he didn't have t authority, they still don'tave the authority to wind down institution that's too big to fail. >> hav we literally just threat market te over? you know, yeah, i thk free markets right. eventuly it will correct itself. and meanwhile we will go bac to the iron age while it's doing it. i think today we are simply not lling to accepthe volatility and the so-called destruction thats theree market. >> rose: we conclude this evening with the beginning of series of convertions about afghanistan ashe obama administtion begins to take a serious look at what its strategy oug to be. we talk is evening with setor carl levin. he is chairman of theenate arms services committee. >> lot of americans, growing

mber, have a growing concern out gettingn deeper with our own combat forces. we have oversetched forces. we've been in two ws a lg me and i think what americans would like to do is to protect our interest in ways which do not get us in deeper. do notlunge us in deeper into afghanistan in terms of ou combatorces. so when it comes to tiners, when it comes to eipment, i think at tre's going to support for that in t arican pele. there's a ki of an unctainty in terms of more and more combat forces. rose: wall streetne year lateandecision time about afghanistan next.

captioni sponsored by rose communications from our studiosn new york ci, this is charlie rose. >> rose: thiweek marks the one year anniversary of the collse of lehman brotrs and the escalation of e global nancial crisis. president obama marked the day by speaking directly to ll street leaders at federal hall in new york city. the president spoke of progress over the past year andhe pressing need far broad relatory overhaul. eight months later the work of recovery continues. and thoughly never b satisfied while people are out ofork and our nancial system is weakened

wean beonfident that the storms othe past two years are beginning to bre. in fact, while the continues to be a need for government involvent to stabilize the financial system, that necessity is wanin unfortunely, already some in the nancial industry who are misreading this moment. stead of learning the lessons of lehmanand the crisis from which we'r still recoveng, they're choosi to igno those lessons. i'm convied they do so not just at their own perilbut at our nation's. so i want everybody heretoear my words. we will t go back to the days of reckless behior and unchecked excess that was at the heart of thiscrisis. for too many were mivated only by the appetite for qckills and bloated bonuses. the on wall street cann resume taking risks withou regardor consequences and expect that next time american

taxpayers will be there to bak their fall. >> rose: the speech w the president's last effort to show progrs in combati the recession ashe unemployment rate hovers near 10%. in an interview last nht on s' "60 minutes", he defended his response to the economic crisis. >> >> you ran f thi job sing that you wereot aig spending liberal and that you were definitely under no circumstances a sialist. >> (laughs) >> and i know that you inherited an a unique set of circstances. but in nin months, you've, in effect, nationalized two autobile companies, sections of the banking industry. >> oh, wait, hold on. me out a send, steve. come on, now. let's think about it. on the banking issue, when i walked in the banng system, the financial syst, was on a verge collapse. d what have i done?

i've essentiallyaken th program th was voted on by the previous congress, support by th previous republican president, and we've made it work. so thatidn't originate under my watch. >> re: joining me from from abc studios in new york is senior wte house corresponnt jakeapper. he's been following the president, i'm pleased to have him ba on this program. ke, welcome. >>hank you, charlie. >> rose: stt with what the esident said on wall street. the theme seemed to be we're all responsible, wall street, ma street, washington, and they're also jointly responsible for inging everything back tother. is that thessage? >> yeah, and there was nothing new in terms of policy. the prident outlined the policies for his regulatory reform agendathat he outlid in june. there wasothing new. although since then the have been repor in the mediabout inflated bonuses, out some financia institutions returng to somerisky morage practices. also resistance from walltreet the president' relatively

othless non-binding resolution for shareholders to have a say in executiveay. and because ofll this, the president told wall seet... there was a room full owall stet executives heren new york and at federal hall, he told them thatsome people are gettinghe wrong message from this fincial stabilization that we can return to the way thin were and that is not to be thecase. >> rose: what ishe regulatory scheme that... regulatory architecture that th have in mind? >> well, tre are a number of steps, and i kneyou were goin asme so i actually wrote them wn, because onef them in partular is very complicated. the on that's notomplicated buis the most controversial on wall street is called consumer financial protecti agency. and this would b a consumer advocatehen it comes to mortgages, when it comes to crit cardolders. and that is the one that wall street is oosed to. they say that it doesn't make any sensto have regulations divided up between thoseho are ing the lendingre supervised by one agency and those who are

receiving th loans have a fferent agency. that'she one they're opposed to. thbigger one has to do with the financial seices orsight council, andhis would tak a broader viewf the economy in general. particular those institutio deemed too big to fail. no this oversight council would be headedy treasury secretartim geithner and the federal reserve would be given more powers to regate these two big fail agencies such as a.i.g. and then rking with e fed and the f.d.i.c., seetary geiter or treasury seetaries in the future could decide to ha the government take over these institution before they go bellyp. thiss called relution trust auority. so it's expansiveew pows for the government to rulate some of these agencies and to step in aheaof time. >>ose: how much concern is there on the part of the administration that the sts that they think ve been essential to stop the slide in the glalconomy decline has

also painted the ainistration wi a certain political philosophy that mig not be mainstreammerica? >> the idea bag in they're being painted... >> rose: governmt interventiist deficit build you know... >> i think that's their biggest concern, frankly, charlie. theynow-- and i rember talking a senior white house official a f months ago on this-- they know that this idea of them spending a tremendous amount ofoney, getting invoed in every facet of the american economy and the lives of americans an the deficit, and the national debt, that these are their real achilles heels. and they cld really hurt president obama and demrats in 2010 if ere areo results in other words, if the economy is worse off than it is day. if there areo benefit to healthare rerm as we discussenot long ago, there

is... he'saken a lotf hits for this healt care bill. theoretically if it pses one of the first things that will happen will be these very popular reforms o the insurance industry suc as yr insurance agens would noonger be abl torop people because ty get an illness. that wouldake affect immediately. so iother words if those things take affect in addion all the deficit spending, then thedemocrats feel like they might bekay for the 2010 midterms. but ththey haven't taken effect, th idea of them intervening in every fet of american livesnd being big spenders and big...riving up a lot of deb couldeally hurt them. and i think absolutelyhis does feed into that to a degree. although the pple are unhappy about the prident's financial regulatis, with the exception of that consumer agcy we discussed, are t peopleho are part of consur groups.

wall street is generally speang... when you talk to their lobbyists, they' not unhappy wi what the president is proposing. >> ros in general, i his stocon wall street okay? >> yeah. i mean, the stock is good and the market's going up and they feel like the economy ishere it needs to be. th feel... the white house feels uncomfortableof course, with the lagging economic indicator of joblessness and, in fact, at a briefing a few days ago, the natial economic counci director, dr. larry summers, said that ty thought that unemployment was going to be... i forget the exact term, either inlerably high or unacceptably high. unemployment was goingo be unacceptablyigh for years to come. so they're certainly not setting expectations high on tha front. but they general feel decent about the stock marketnd the nasdaq. >> rose: occasionally you'll s arguements that paul volcker and othersanted the adminiration to go further in regulatory reform than it's willing to go.

do you know any confirmation of that? >> i don'tnow about the specific debat with pau volcker, but i can tell you this s been a very, very intense debateithin the administrion with some pple... some forces, some individuals whoreore comfortae with a more unregulad wall street or less regulated wall street sang at the obama admistration shld not rulate too much. and others, perhaps more of e progressivwing of the democratic party, theiberal wing, wanting more regulation. and think it's difficult to argue on the merits that the... for want ofa batte term, wall street pro-busine types in the adnistration didn't win out. beuse with thexception of this consumer financi protection agcy, there is nothing the admistration is proposing that wl street is really fightin tooth andail. >> rose: my impression from watching is that the secretary of the treary, tim geithner, is increasingly comfortable and

sure food and confident about his role. >> y know, we've had some off-the-rerd meetings with tim geithner and i have never been undethe impression at he lackfor confince on a person basis. i know he started out in his blic personaith a ratr shaktestimony, shaky appearance wh the stock market. not exactly applauding that day, i believe itas in february or marc bu generally speaking, he sms pretty condent abouthat he is prescribing andwhat he willinng to andhether or not it's the rht course even if it meets with resistance or public disapproval. unfortunately, mt of the convsations... or rather, i should say, every conversatio i've had wit tim geiner has en off the record so i can't say more thathat. t i don't think that... i ink maybe his pubc persona seems more sure footed, but

behind the scenes this is... you do. you know, you hear sries about how is really athletic and really into, like, me ereme sports. and it doesn'teemo match up with the keebler elf demeanor has at times. but when you talk to him in person, you see the guy who go down the doue diamon slopes and it's not as tough to see. >> rose: so how would you measure the level of condence of dr. summers? >> he's a... >> rose: (lahs) >> you've had him onour show. i mean,thesere... look,he ople who enter th our... i guess it's dferent. because the world of medias... you have lot of ople who are very insecure fundamentally lookinfor approval. >> rose: (laughs) yes. >> so witho getting into psychoanalyzg you or me, i will s that th world of politics, tse are not a lotf

ople who are... who seem be having tooany sleepless nights in terms of their insecurities. maybe they're worried about things tt might haen that they can control. >>ose: as always, than you. >> thank you, charlie. >> rose: jake tapper, abc news, white house seni correspondent. back in a moment. st with us. >> rose: we ntinue our conversati about the financial crisis with two journalists who have closely dumented the events of the past year. anew ross sorkin ofthe "new yorkimes." he's an editor of the times daily financial reporthas been reporting onhe financial cris and has a book coming up in the nea future. al, james stewart of the "new rker" magazine. he chronicles the govnment's respse to the collapse of lean brothers in the magazine's most recent issue, eight ys last year ashe financial system stood on e brink, government officialsnd c.e.o.s foughto save catalism and themselves, revealing intviews with principle figures involved d panic deal making behin the scenes broht about unprecedented and controversial

government interntion. one year later, the question remas, did they make theight choices? yes? >> well, let's wor backwards. >> rose: all rht. >> thebrought us ba from the brink d they deserve, i think tremendo credit for that. >> re: the brink... >> the wednesday afr the lehman brothers failed, the desee tremendous praisefor th. they ao brought us to the brink. d i think they do notdeserve such praise for the evts that led us to that. particularly the failure of lehman bthers. i think itould have been avoided. >> rose:eally? >> yes. >> re: because their argument they me, obviously, is they didn't have any choice. >> well, yes. i think with benefitf hindght... because let'face it, almost everyone agrees that the lehman broers failureas disaster. and i think you c document that it is. now, i say "almost" becauseou haveeople like sator rhard shelby who will sti say "let them fail, l creative destruction work its w."

there's a very vocal crowd out there. but i saw a recent poll of0 economists, all of em said it was disaer to let lehman fail. eir argument was we didn't have the legal authorityo do it. i'm not saying they're lying or exactly wrong but is not that simple. they cld have found ou a way to deal, wch i spell out in the articl >> rose: which i well, you needed a bear steas kind of deal, a rescuer like.p. morgan. >> rose: a rescuer th a guarane like bear stear. >> extly. >> re: well,ait, before u sathat, they argued that they were o trying to sellit. they weren't but there were a lot of people and they were encouragg people to make a bid d there were no bids coming in. ateast you had j.p. morgan coming in with a bid wn they found out they had a gn tee. before this even started, the preswas full of repos that treasury was saying there ll be noovernment money at all. there will be bear stearns de. they repeated at, theyrought everybody into new york,he c.e.o.s from wall reet friday nigh the first words out of paulson's mouth, praically, dwlt will no government money, tre will be nbear

stearns ney." day he says, well, of coue, there's an asterisk the, had we had a j. morgan there mig have been so money. they'rall sort of hedgi that now. t they did not qualify that at the time. if they had not started out so forcefullyith the idea-- and i can talk aut why they did it, they hadood reasons for doing that way-- but i believe they would have found a j.p morgan. as iis, they did he a j.p. morgan, they let that slip through eir fingers is one way of putting , maybe. maybe they didn't... the didn't really want barclays to buy it. but l the element of a barclays rescue in the formatf bear stearns kind of al were there. therwere, you know, high level communications between british government officials and t amicans if what they're w saying is correct, then there was a shockg miscommunication, a failure of dipmacy at very hi level there because thai believdeal could have been done. >> rose:kay. shouldhey have foreseen the consequees of not doinghe deal? >> witut question.

i mean, i do... without question they should have seen it. and, frankly,in some cases they did see it and i d't think they knew what to do about i meing, goingnto that weekend going into... frankly, throughout the smer they were working anthinking about a lot of these isss. and yet clearly they didn't work hard enough. jim is absolutely ght. when they hit that sunday, the ran out of options, but th ly ran... they n out of options because they deced that they didn't want to play all of the cards. d so there was this moment where they had a very good chance to save this company and didn't i part because, frankly, i think they didn't want to. it not they didt want to.... >> rose: they didn't want to beuse they didn't want everybody think they would be iled out? >> ty didn't want to put up more money. now thessue was they neede.. as j said, you needed a vessel, u needed somethinto lend through. and so it's very tu. it's an odd nuance. the secondhat barclaysas out of the picture they lost at

vessel so is veryeasy for them to argue, think, th theyidn't have anything legal authoritto do anything. that is true. the question is y they let the vessel go and that, i think is going to be debated for years to come. >> rose: wait, wa, giv me best possible aners to why they let barclay's go? >> it's a nfluence of isss betwn what the british government w thinking, what rclay's... the executives we thinking, what lman was thinking and... there's a lot of issues. >> you he to remember the potical environment that existed a year ago. rst of all, i looked bk, not only the "ll street journal" but the "washington post" an the "new york mes" immedialy wre etorials hailing this decisi to let lehma others go. the theme everywhere... and is is the voicef moderation. the extremists were calling paulson socialist, they were calling for impeachment of bernanke. i meanhe press... the reaction to bear steas and thenhe government agency it is week before was ereme and hostile. >>ose: who's "they"? calling them socialist and...

>> congress! >> well, i quoted them, that was congressman who did it. >> ros but a congressman is no.. >> it was quoted allver the media. i mean, the bashing was amazing so the political context was fierce and it was... now, remember, paulso isn't an agent of the executive branch. he ds have to bear in mindthe political apl work. but to swer the other qstion what didn't they anticipate? i think th most strikg faile of their anticipation was that they didn'tsee that the failuref lean would brindown or thrten to bri down the $4 trillion plus money market industry. now, the whole... one of theirer that reis was... i heard the from everybody. everybody ne lehman wasn trouble. so iyou held any kd of lehman exposure, if youad ocks, certainly, ifou had bonds, if you evehad short-term commercial paper om lean, then you were a speculator. on some sense you derved to lose because you were rolling

the dmis a very riy game. so they didn realize that conservativeoney market funds would be sitting on hundreds of millio of dolrs oflehman short-rm paper. why? well, because it was rated "a" or more an "a"y the ratg agencies until that monday after lehman declad bankruptcy. so the reserve fun broke, a putnam fund hadto close down. you had a panicked run. there we reports the chinese were goi to pull all their sovereign wealth mon out of the money mark funds. peop, main street, people keep their fe savings in money market funds. they use it to y their bls. i mean, that wod have been a majo catastrophe and they all... bernae, plson, they al acknowledged to me that they did not fesee the failure of money market fundas a coequence. >> i tnk it's as much the money maets was what they missed in london. i don't know if you'll recl this but at thtime that lehman brotrs went under, the broker deal in the united states stayed in business. so those trades, if yowill, were able to benwound

properly. but what ty didn'tnticipate or appreciate s that a lot of the trades went through lehman's london it which went bankrupt immediately. which ant a that a lot of money got locked up. when i look at... when you think about thconfidence that got sued out of the system so quickly those daysfter, i thinit was in part beuse all of a sudden hedge fund invt not justnvestors in london, we're talking about invesrs in the united states who ha all of th money, they had no access to it, they hd to stt selling things at fire sale pre which is started domino affect on the st of the system so i think it's the confluence, frankly, of the money mket issue plus this issue in ldon which... it's almost inexcusable that they dn't appreciat but that to me is the issue. >> i agree with ma that. the londo failure is a big par of i that tggered panic ang the hedge funds. they started to r primarily against morgan anley but to some extent against goldman sachs and part of the sty that we is the catastrophe that didn't hpen. morgan stanley was hanging by a

thre and aloyd blankfine put it.... rose: the c.o. of goldman sachs. >> the.e.o. of goldman sachs. goldn was one step behind. 20 seconds? 20 minut? i don't know but goldman was ing go dow if rgan stanley wen down. those tw were barely... and this is in part why i thi the government lears do deserve credit because they brght us back by om that brink. >>ose: how did ey do that? >> well, numbe one they aranteed the money marke funds ich talk about moral haza, pulling ou moral hazd this was suddey an over four illion dollar guaranteed. 100% of the ney market funds guaranteed. even your ban account is n guarante 100%. this was a stunningntrusion. didn't get as mh attention but a stunning intrusion and yet i was a ld step, it worked. paulson did it on sbuls, it turned tbe a brilliant move. when it came toe morgan stanley and goldman shs,they drantic efforts to eitr rais capital, i report in the

story paulson is calling the financminister of china, president sh is calling chinese prident hu to encourage them in their highly stylized way to peopleonfident out puttingoney inmerican institutio. >> rose: and ty call the japanese, as well. >> and you know they called the japane. and ultimately the japanese came to the rescue. that's the story that's beyon my... the scope of my story. but the way that the treasury and the fed works to keep the japanese in that deal, they serve some kind government metal honor. >> they sure d >> rose: exaly. it might not have happened without them. >> and goldman g the money from warren buett and was able to raise money anthen they turnthem into bas, the government overnight. steps that otherwise would have tan months and months if not years in one weekend they turn them io banks. >> rose:ecame holding compies. >> yes. and that solved the process. >> ros one big issue that was pervasive at this time, certainly true about a.i.g and certainly true aut city, too g to fail. yes. >> rose: ahas that changed? >> well, i think sad reality is

thate're here 365days later anthat nothi hashanged. you know, i was down and saw presidt obama speak today downtown. we he no new legislation. we have no.... >> rose: regulory legistion. >> regulatory legislatio you ow, when hank paulson talks about the ability to... that he didn't have the authity, they still d't the authority to winddown an initution that's o big fail. and so what we are left doing as a country, as tae payers, is propping these institutions up. so you have that issue. a lot of the structura sues that were underpinning a of these problems have n really abated. the compensation no different. the lerage has come down, but you ok at airm like goldman sachs, they have done very, very well over thpast several quarters but,ou know, eir trades gould theother way, too. and so you cod be in a whole world of hurt there's a lot things that e... sadly, i don'telieve we'rin that much better shape. an in fact, ithink when you look asome of the

institutionsopefully knock on wood it doesn't ppen-- we cod do this all over agai >> rose: and there was story in the la weekbout how wal street's beginning to develop these sortf very exotic security instruments again >> and as long as.... >> rose: not tide to morages but tied to otherinds of things. >> and that's going to ctinue becausthis is the like the wall street way. >> this is like water finding itown level. >> rose: (laughs) you look ate likewhat the hell do you think tlits f?" >> if there's piece meat on the plate, you ha to put a nce around the peat of meat or they're gog to eat ." wspaper and will the fence that they planorect, is high enough? >> well,hat is a serious question. >> rose: and ishere a debate within the administratn how high to make thesfens? >> i think theres and i don't know i it will be high enough in the end. i think someof the reforms that they're talking about what r somewhat tid in that i'm not su they go far engh. and when youook at frankly...

i was starting with goldman sachs. when you lk at goldman sachs, they are n considered a bank holding company but arguably they act exactly way they acted a yeargo maybe with le levera. they're not going to be happy i said thabut i think thatis true. >> theoo big to fail question is an importa one. i was surprised bthe obama remarks today because in some sense i think there trying to have it bot ways. if there'sany lessonrom a year ago, we know that, yes, some things are too big to fail. a.i.g. was to to big to fail. if there was a mistake it was not in bailing out beartearns and a.i.g., it was not in bailg out lehmans. so except for the extremists we now lieve some things are o big fail. we don't like it. as geithner said, it's a terrible thing. yowant to punish ese people but whdo you end up punishi? people on main street, the average workethey're thenes o really suffer. on the other hand, they want peop to think about the rks they're taking sobama is now saying well, no, youe not going to be too b to failext

me. and as you point out, without a new regulato framework, that just simply n't true. there e things that are too big to fl and believe the wall street institutions know that and will behave accordingly. >> rose: so whatdo youhink has changed in theast year? well, some things have changed. again, the leverag is down although that leverage can go right back up f they can get through the regulatory maze and they've shown the brilliant ability to do that. >> rose: the leverageis down as a ans of self-control or... >> as a means of risk reduction. >> rose: right. in other wordst's self-admintered risk reducti and leverage restraint rather than someby strturing it? >> right. >> butdo note, there somethin called value at risk ey call it var, whicis the amount of money you n lose on any give day. and if you were to looat goldman sachs' ra as of today and tir vaar a year ago. their vara is higher tay than

it was a year ago. why y is that? >> they woulargue they have ss le raj in the system to en though they can lose mor today, ty can't lose me overall. var. y? cause if you look the type of profits tt have been made onall street over the past several qrters, it's from tring. 's from the meype of trading, frankly, that got us into this mess. >>ell, to me t bigge thing that's changed i we're out of the panic. and, again, they deser credit frometting us back from that partular brink. yoknow, rational economics.... >> rose: and most of that came under paulson, bernanke, and geithner bore the obama adnistration? >> y, that is correct. the n irk was over by some time in october. >> well, would tell you the ama administration.... >> rose: the crisis of septber/october. >> b the obama administration would argue that if u looked at stock cha, hay walked in the door t a true pic. if you remember, the marke ved, actlly, in march even lower... >> it hit its low in mac.

>> even lower than it h in the fall. so there's a debate as to yes the steps paulson p in place appear to have helpe but then arguab we got into this other situation again and the do you giveredit to obama a geithner or paulson a bernanke? who do you giveredit. i happen to ink, by theway, what pauls put in plats did make a meaningful fference. >> that is a fundmental difference tod is how much new catal they needinjected into the system. >> yes,everybody gotxcited in march becae they said, wait minute, citigroup and bank of america s made some money, they can generateinternally some new capital buthey are probably a dece away from getting to t point where we have eugh capital inhe global some reay match the levels of risk they took on. >>ose: so it'sjust going to take te to general it that that capita >> and that's assuming everytng else is stable and we don't ve another crisi in the metime and have another panic. >> rose: allhis talk abo capitali and whether it's going to be diffent... i think it wi be differt on the margins but i'm not re

for better or wse that it's going to be so fundamentally dierent. >> rose: h it made john maynard riting? >> pple will disagree this but people who are fr mindilled say at canes is right. the markets cnot...ree market theoryoes notccount for emotion panic a irrational human behavior. and when that haens, the only sbi they is big enough and rh enough to resre calm and rational thinkg is the govement. and you're going have to have governme intervention. i would ink this would finally they debat to restecause it seems abundantly clear. hawe lerally just le the market take over, you know, yeah i ink the free market is right eventual it will correct itself. and meanile, we will goback the iron age whi it's doing it. i think today weare simpl not willing to accept theolatility and the so-call destruction that the fre markets prode.

>> rose: what will be different going forward from this day? is a consequencof the emergency powers necesry and action nessary in september and octobeof last year. >> i think we are going to have, particular if we don't addss the underlying conditions, government intvention in economy is going to beere to stay that the german, the french, the continental european model h gained tremendoucredibility. and, you know, people don want to hear this in this count, but i think that's going to be the reality. >> rose: do you al believe that iwe look back over a yea thathe people who re at the helm, fst pauls,eithner, and bernanke now gthner, bernanke, summers hav prey muchone at the end of the day a etty good j? >> absolutely. i think... they deserve some kind of special medal for getting us bacfrom the brink. >> rose:o you agree with that? >> i do. >> rose: is the an exception

in. >> i dwith the exception that ther is a xed elent which is that they bght us...im said it correctly, they brought us back om the brink after making several steps tha might have bught us.... >> re: at the beginng. >> ectly. and that wil... >> rose: b without lman the cord would be very good en, huh? lehman i the..which is this day we mark the one-year annirsary of lehman. expt for that they didell. >> but, you know the a fundamental problem, i think, maybe litically in a democracy that politicians d government officials don't get credit for th crisis tt they avert. >>ight. >>ose: thank you. back in aoment. stay witus. >> rose: we now tn to afghanista the white house currently reviewing generaltanley mcchstal's strategy recommdations for way forward. ter a summer of increase de is lens an record casualties, the top u.s. commander is widel expected to request thousands

more troops. president ama's dision will co as public support for the eight-year war s wed. skepticism among congressional democrats is also growing, with manyoncerned about a bigger u.s. footprintin afghanistan. me want the president to take a more forceful std inlaying outhe case for war to the erican people. butpassing healthcare rorm d questions about afghan president hamid karzai's reeltion may slow the pcess. joining me now from waington senator car levin. he is the senior sator from michig and chairman of the senaterms services comttee. welcome, senator. >> chaie, great being with you. >> rose: tell me, was there anything important about t ming of what you said over the weekend? >> well, we just t back from a trip and we've been spending a lot of tim on ts issue a wh i becameconvinced soft that before we send additiol combat troo-- and those ar words which i selectery carefull- before we comt to additional combat tros, that

we should spen some real effort to strengthen th afghan my and e police. and we he got to do a numbe ofhings that we have not yet donen order to do tt. but we shod put the focus the afghan army and police as the bestay to sceed in afghanistan. we ould continue, obviously, to send e troops that are already committed the in terms ofombat tros, but we've got todo threehings, charlie, if we're going toeally succeed wi the mechanism which gives us the besthance to succeed, which is the st trued institutn inafghanistan, and at's the afghan army. one, we've t to have a major stepup in terms of the traing of the afghan army. we he a goal which is way too low right now. we need to have a much lger goal, believe 240,000 afghan troops by the year 20 the secondly, we've t a lot of equipment and that wil take a

lot more trainers,y the way, hopelly somenato trainers not jus our trainers, but we've got to fus on additional trners to get to that larger level of troops r the afghan army and police, but second is the eqpment issue. we have a huge amount of equipmen a record amot of equipment sie world war ii we ven't seen this kind of a ploouchlt of equipment we have a l of i comingack re and some of that a significt part of it ought to be going to strengthenhe afgh army. that believe the american people willupport transfer of equipment to strengthen that armybefore we senddditional combat forces. and third, wve got to p a plan in place to reintrate those local low-level taliban people who are n the religious fanatics w are committed to destroy us butare doing it becae they might have a local charismatic official who signed them up for pay. d we can weanhem away fro the taliban the way weid in iraq if we hav a plan do

that. everybodsays it's one of the most important things we can do, cluding general mcchrystal. but we havenot yet put that plan in place. >>ose: okay. speaking of general mcchrystal he went thugh this ngthy and very, very -depth analysis and he has sent his report to the president. i dot know whether you were awarof it, have seen . i know he'coming to washington soon to testify, i think. am i correct? >> we don't know tha he's ming, but 're going to get briefed his report later on this wk. >> rose: you pretty ch know what's iit, don't you? >> no, i actually don'tnow what's in it. i know that there's no troop numbers in there. that much we kn. that's going tbe coming down the pike later. this question... this an asssment of our strategy is to how this rategy is working. he is givenhe responsibility ofimplementingthat strategy, the president,in so it' going toe an assessment of that strategy. but our understaings tha he

has not put any requt for troop si increases in this particular document, that's going to come lat. >> rose: okay. some peoplwould like to make an alogy with the sge that took place late in theraqi war that you needed a sur and you need more troops there in coert with what was hapning in anb provie. but the troops were anssential part of the... parts of the aqi body politic getting involved. and without the americ troops, u wouldn't have done it. >> well, two things were the most important pt of the turnarou in iraq to the exten there's been one,hich obviouslyhere has been. it's not yet a scessful deal in iraq. we got a lot of proems there, but nonheless there was a turnarnd. the most imptant thing, probably, it was co-ting of those lower-level iraqis, the sons ofraq tha swihed side and this's wha i made reference to before.

we've got toave a planoet the lower-level taliban, even the that fought again us, to switchides. it's not easyo put that plan in place it's going to take money and it also going to ta a commitment, a promise of an assurance at there will be protection forhose people and their families after theyswitch sides, even thoh some of them had previouslyeen attacking us just like that son of iraq. >> rose: b let me interrupt. may i interrup can we do that whout more troops? n we protect them without more troops? >> it's t iraqi army and policehich should protect them. >> rose:o, what'sin afghanistan. in afghanist with respect to the taliban, are you ying that it has to be t afgha who will protect those taliban we hope to ll away and act like ns of iraq? >> that shoulde our goal and ought to see if this is doable bore we commit to the additional combat forces beyond what is already committed. but therwas something else that worked in iq, which is

benning to work, byhe way, in afgnistan, and that is a chge of strategy. it's t just co-opting those lower-level fos in ira and afghanistan,ut it's a strategy whh has us hold territory, the afgh army hold territory with us, rather tha goingut and then going back to a base. anwe're doing that rightnow. we are wi the afghan army and we went out to visit in helmand provin, the three of usho were there. we went out to visit a marin un in theelmand provin. and they are livg with, eating with, fightg with with their afghan bdies. and so this is a much different strategy. theyre staying in the town an villagesinstead of gog t looking for taliban and then going back to a base. that strategy change, which is to look at thi as aninsurgency rather than ju aserrorists s a jor shift in iq, it's a change in afghastan, and it's whatorked in iraq as

well. we got a couple things goingor us in afghanistan which are going toreally count down the road. one ishat the afghan people hate t talib. the taliban has only a 5% support level inside of ghanistan. and secondly, e most trusted institution in iraq is their army and that army is a fighting army. these are most separated ghters and if we can dramatically irease the size of that army, we will be putting in place somethg which we ink would work. >> rose: you said iraq, i know you meant afghanista i meant afgnistan. i'm sor. >> rose: and this, the notion thate mayery well be en along with nato allies as a foreignnvader. >> that is one the rsons why we should be focusing on strengthening th afghan arm before we increase o footprint. every time we increase the otprint, yes, we give re

capability. and that's iortant. but we're also increasin our vulnerability as wellbecausewe becomehe propagaa target and the acal target of the enemy thatays, look, this is now more andore and occupyin wer, they're tryin to dominate a muslim cntry. and so it gives them a... when we inease our footprint, we are incasing the size of the target as well. so there's a down side. there's not just an upside wn you put incombat fces in terms of capability, but the's also down side in tms of the propaganda that y give toyour enemy. >> rose: and then there's also of thisoverecent. the troubl elections that were held and all of the allegatio of corruptn. >> it obviouslyomplicates the situation dramatically. thatafghan armyas a rit to fight for a governmt that is democratically ected, that is

t corrupt, and a time you have uncertaintyabout whether orot whether.. about eitr one those, you are actually weakening the situation for the afghan army. that haso go out and defend a government. d if that government is not solid and i not properly ect then that increasethe complety for the army. but this is the case that we have an elecon which has still unresolv problems, pefully those problems will resolved pretty soon. but either way in terms ofhe question, do we hd off on addition combat forcesow til we have taken the steps that are essential to strengthen the afghan army or not, either way wve got a complication because of that ection. >> oy, any down side on holding f on additional troops in the near future? >> there's always an additional risk that that additional capability... military capability couldake a positive

differen when link together with an incased afghan army. there'risks whatever we do here. but the question... the question remains to what is the greate chance of sucss in afghanisn? is ituilding up th army more quickly in police and getting them equipd and reming some of the threato them by co-opting some of the lower level taliban, is tha the tter course towards success or is it tdditional u.s. combat streng the better way? ther way, there's ing to be risks and the is, obviously, a plus when youdd military force and capability, butthere's a distinct minus,nd we are also then being much more vulnerable to the taliban arguments agait us. >> rose:s there anypace between where you are on this and where you think the president is on this? i really don't know where e prident is. as a mter of fact, i don't think that generalcchrystal

has even made a request yet in terms of troops. and i think thatequest has to come in and it has to go up the chain of command to admiral mullen, the chairman of the joint chiefs. it theseo through the cretary of defense, bob gates, before it getso the preside. so not only isthere notet a numb, a lot of speculation that generalmcchrystal will be making a request for significant combat forces, but that request apparently has not yet bn forthcoming and it has not bee reviewed by his higher ups in the ain of command. >> rose: what ought to be the debate in the country now, first question. and, b, do yo,ecause you are a politicn and havesome sense of a feel of people in your state, begin to see increasing concern thatfghanistan may be not place formerica.

>> well, i thi the peoe understand t stakes, first of all. they uerstand that a w taliban government,f it took ba control in afgnistan, would give a safe haor to al qaeda and qaeda are the people who obviously were the ones who aatcked us. more thaonce, but 9/11 being the mo dramatic example. and th are the ones who, if ey could, will attack us ain with everything they can get eir hands on. so it is important. it is clearly in our intere th afghanistan not fall bac intohe hands of the tiban. i think most pele understand that. they don want to just wal away from afghanistan without doing at will be effective to help the afghans avo what the afghans want t avoid, whic is another taliban government. ey lived under that government once. they had a tast of it. so think that that is understood. but what the american people... the on who i talk to-- and it's not oiously unimous--

but a t of aricans and a growin number hav a growing concern aboutetting in deeper with our own combat forces. we have overstretched rces. we've been in two rs a lg time. and i think what americans wod like that do to protect o interests in ways whicho not get us in deeper,do not plue us in deer into afghanistan in terms of our comba forces. so when it comes to traers, when it comes to equipment, think that there's going to be support far in the american people. buthere's a kind of an uncertainty in rms of me and more combat forces. >> rose: wha kind of metrix d you have wh this? what if six months from now it's worse rather thanetter? wh do you say then? >> then you make the best assessment youan as to how to improve the situation at th time the metcs, by the y, which we'vasked for in terms of how

do we mease improvement are going to actually be coming into us within thnext feways. we'rgoing to get bried on those metr which is were required to come in during september. they're going come in, i thin a week or so earlier than the legislative date. butbviously you want mak continuing assessmes as to what is theest way to cceed in afghanistan, like any other place. and if three mons from now or six months from now it lks like atrategy that is in place d the tactics a the policy decision which is haveeen made are notorking, then you adjust. you constantly need to adst. t the question, again, that i face iwhether before we make is commitment, while we hav troops going in right now we still have part of thi 2 is,000 commitment going in. should we make a commitment now before we take the steps which haveot yet been me to strengen the ahan forces which have r strong rces, reected forces, should we make a dision now to se in more

combat tops later on. that'shat i've been focusing on. >> rose: okay. but how lo and what will be your test about th afghan forces bei able to be stroer and to increasingly handle more of the load >> we would look at the situation three mths oras you meioned six months from now and to seeow many afgha rces do we have in place, how well traed they are, wha kind of eipment they have. they are clearly willingo ght. they've taken more losses than we have. but, you kn, when were in helmand province, the three of us, what we foundthere there is that wh those marines, the ratiof marines t afghans was 5-1. fi marines for each afghan ghter. that is the wrong ratio. that'shat wee... we oughto be reversing. so tt mric iimportant to me, o. what itheatio of marines, our people, t the ahan fighters?

and we want a much stronger proporti to be i the afghan fighters instead of r marines and i think afans do, too, by the way. you talk to the afghan defense minister, th are ready tgo. they got thpeople. is is not a shortage of people who will volueer for the afghanrmy. they've got the ople. it is a poor country,hey are very afforble, much, much, ch less expensive than, obviouslputting our own forces ere in terms of cost as well as the risk to us. >> rose: when you were the, did people tell u that we were losing in afghanistan? >> no. th told us that we he a difficult siation. yotalk about our commanders? our leaders? >> rose: commanderand local people as well. yeah. flo. they told us at obvious there's been some growth in the liban. that there been terr wch has worked in somelaces by the taliban. and, no what ty told us is they want to defen themselves. u know, we met with this wonderful grp of elder called

the shura. it's a village counc in this llage in helmand roe perot vince. we just hpened to bethere dung the meeti of the old timers sittg on the floorand we joined them andwe said "so you want usere? how long do you want us here?" an the answer that they gave us was basically " want you to make our army self-suicient. and then we wt you to leave. and we wantou toome back as guts, but we want you just to stay here longnough to mak our army self-suffient." that their words, and i think that's theight goal. >> re: looking at our nato allies, if they arenot ppared to support the unite states in s efforts-- and we know whe e questions that are going on right noin gmany do do it damage to the nato alliance? >> i thin it does whenever they do cay out the commitments that they've made. it's been very spotty. some oour natollies have

been terrific. the canadians, the brits, the germans. they'rreally the fighting and they've taken some very heavy losses, particully the canadians proportionately. some of our nat allies hpó not come tough, even wh their own financial mmitments they ha not come through. and that's been disappointing and it wken it is alliance any time that you particularly hav commitments which are not kept. now, notaking coitments to begin th to join in the effort isad enough. it a sign of weakness. nato has supported this effort. this ia u.n.-support effort, too, by the way, our presence in afghistan. but nato has supported th effortith its votes and some of the countries in nato have gone way beyon th and have shed blood in this effort as well. understanding that it isn everybody'interest that al qaednever have a se haven again anywhere i the world, partularly where it was doing the training in afghanistan prior to 9/11. >> rose: charactize for me in

your own words ain the signicance of afghanistan a priority item for american foreignolicy in september 2009. >> well, september, 2001 we saw what happened wn we were atcked by al qaeda based on their safe havens a their training gunds in a taliban-controed afghanistan. took our eye off tt ball and instead of putting adequate resourceto go aer al qaeda infghanistan, we wen off to iraq that's water now thas over the dam or uer the bridg and th's what happened. i thought it was a mistake, but that's what's happened. butnonetheless, the idea that we would standy and allow afghanistan of the fall into taliban han again who had once

again... wld once ain give safeay stron the pple who are out to kill us and destroy an awful lot o very iortant positive inuences in this worlis unthinkable. we canno stand byand just let at happen. we can't just pull out of afghanistan. so the question becomes what's the best way t succeed in afghanistan that bacit is issue an that's worth a lot of discussion. >> rose: senator levin, thank you very mh. pleasure to ha you on the program. >> charlie, is always gre beinwith you. captiong sponsored by rose communications captioned by media acce group at wgbh access.wgbh.org