tonight on "nightline," a day in the life of president barack obama. we've got exclusive one-on-one access and a critical moment of his young presidency. on the day when his healthcare plans may have been dealt a major blow. race debate. the morning after he sparked national controversy by saying police acted stupidly, arresting his friend, scholar henry louis gates, does the president stand by his comments? power of prayer. president obama reveals the new deeper role of spirituality in his life. all the questions, all the answers on a special edition of "nightline," starting right now. captions paid for by abc, inc.

good evening, everyone. i'm terry moran. and we're in cleveland, ohio tonight. president barack obama took his healthcare proposal here directly to the american people today at a town hall meeting just outside the city. and as the president fielded questions on costs and quality of care, back home in washington democratic leaders acknowledge that his goal of passing sweeping reform in both the house and the senate before the august congressional break, that's not going to happen. and at the same time the president took center stage in another controversy, one involving delicate questions of race and policing and i was there with him today. air force one touched down in rainy cleveland this morning as president obama arrived to try

to dispel some of the growing doubts about his healthcare reform plan. it's a critical moment for him. for the first time polls show major slippage in support for his policies. we caught up with the president backstage at a town meeting held at shaker heights high school and if you thought the grinding high-stakes healthcare debate was getting to him, well, it doesn't look like it. you really are betting the presidency on this thing. >> no. >> you don't think so? >> no, i think that's how you guys like to dramatize these issues so that, you know, your stories get on tv. but, you know, what i do think is that the country has to reform its healthcare system or elle not only else -- not else are you going to have people going through a hard time, but seeing a continuing escalation of the budget problems that can't get under control. >> you don't think there's some

grain of truth to what senator demint said, this is your waterloo, you have to win it here? >> no. i think america has to win it here. >> but today america or talk radio water cooler said a distraction was underway. >> i -- >> everyone it seemed was talking about the arrest in cambridge, massachusetts, of the scholar henry louis gates at his own home. he had locked himself out and police were called when he was observed trying to get inside the front door. at his press conference last night, president obama, a friend of gates, spoke out. >> i don't know not having been there and seeing all the facts what role raced played in that, but i think it's fair to say, you were in one, any one of us would be angry. number two, that the cambridge police acted stupidly in

arresting somebody when there was already proof that they were in their own home. and number three, what i think we know separate and apart from this incident is that there is a long history in this country of african-americans and latinos being stopped by law enforcement disproportionately. that's just a fact. >> i had to ask him about all this today and he was eager to respond. and you were tough on the cambridge police department. do you regret saying that the cambridge police acted stupidly? >> you know, i have to say i'm surprised by the controversy surrounding my statement because i think it was a pretty straightforward commentary that you probably don't need to handcuff a guy -- a middle-aged man who uses a cane, who's in his own home. now, what i do know is as i said last night, i don't know all the details to the case. i think that i had extraordinary respect for the difficulties of

the jobs that police officers do. as i say, they're -- them responding was the exactly right thing to do, and my suspicion is is that words were exchanged between the police officer and mr. gates and that everybody should have just settled down and cooler heads should have prevailed. that's my suspicion. but i was asked, you know, did it make sense for it to escalate to the level that it did. and i said probably not and t t that, you know, it would have been more sensible for everybody just to -- once they established mr. gates was in his own home we should settle this down. >> you still think the cambridge police acted stupidly? >> you know, this is the thing, terry, i think this is a classic example at a time when we're struggling about healthcare, energy, we've got two wars going on that issues like this get

elevated in ways tt probably don't make much sense. i think that it doesn't make sense with all the problems that we have out in to -- out there to arrest a guy in his own home if he's not causing a serious disturbance. now, i don't know all the extenuating circumstances and as i said, i respect what police officers do. what i can tell -- from what i can tell, the sergeant who was involved is an outstanding police officer, but my suspicion is it's probably that it would have been better if cooler heads had prevailed. >> our president, barack obama. >> but this, the struggle to reshape the country's gigantic troubled healthcare system, this is what president obama was really focused on today. >> welcome to shaker heights. >> thank you. >> my question and maybe my request is this.

are you willing to urge senator reid and speaker pelosi to get this job done? >> the president's message is simple -- the current healthcare system cannot be sustained and the country has to make a big change. >> sometimes delays in washington occur because people just don't want to do anything that they think might be controversial. at some point, if we're going to move this country forward we can't be afraid to change especially a system that we know is broken. >> in our interview we talked about how the pace of reform is slowing down in congress. the senate majority reid said today there will be no vote in the senate on healthcare reform before the august recess. so that deadline is gone now. how much of a setback is that? >> you know, given the progress that i'm seeing made, as long as everybody is working steadily,

as fast as they can, and particularly the senate finance committee, which i think is the committee that a lot of folks are waiting for, if that gets done before the august recess, i feel pretty good. >> but they blew your deadline the first deadline, and i wonder if you feel as you look at the polls that things are slipping away. it seems that the more people focus on your healthcare plans, the less they like them. >> well, terry, i don't think that's accurate. >> that's what the polls are showing. >> what the polls are showing is that the more they focus on the political arguments that are out there as opposed to my plan, the more anxious people get. but that happens every time we debate healthcare. if we do nothing, i can guarantee your premiums will double, we'll continue to see 14,000 people a day lose their healthcare and guaranteed that we'll blow the federal budget to a point where we essentially

can't provide other vital services. >> america, this is our moment. >> but the debate is now how to fix that. it's a debate that was at the center of last year's presidential campaign. >> i have said this before, if i were designing a system from scratch, that i -- then i'd probably set up a single payer system. >> you said when you were campaigning if you were starting from scratch, you'd want the single payer government-run system. but we're not starting from scratch. >> that's not exactly what i said, terry. if i started from scratch, thank the single payer system -- i think that the single payer system could make a lot of sense, but that's not the tradition that we have inherited over the last 50 years. >> but you said this that government program that you're proposing for healthcare could be you said a transition to a single payer national healthcare system. in your heart of hearts, is that what you would like to see, that

gradually we would transition to national healthcare? >> no, i think that what i want is an american system that works well for the american people. and i think it is possible and there are examples out there of private systems, a free market in healthcare, but a situation in which we assure that everybody has coverage. >> well, healthcare is not the only looming crisis the president is dealing with. when we come back, mr. obama, the war time president, and how the burdens of office have shaped his spirituality. [ female announcer ] there are few guarantees in life. olay professional pro-x wrinkle protocol is as effective as the leading wrinkle prescription brand that's because olay has teamed with a highly specialized group of dermatologists and created a wrinkle protocol

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president obama came to office facing an economic crisis and two wars. challenges as daunting as any of his predecessors confronted. now, the economy may have

stabilized, but the wars go on. and all of this has forced him not only to lean on others, but to seek council from a higher source. more now from my day with the president. president obama inherited two wars. in one in iraq the american commitment is winding down. but in afghanistan, the war and the american commitment are deepening. which has been the deadliest month for american and nato troops in afghanistan ever. define victory in afghanistan or maybe that's not the right word. >> i'm as, you know, worried about using the word victory because, you know, it evokes this notion of emperor hirohito coming down and citing a surrender to macarthur. we are not dealing with nation states at this point. we are concerned with al qaeda

and the taliban. al qaeda's allies. so when you have a nonstate actor, a shadowy operation like al qaeda, our goal is to make sure they can't attack the united states. nowing i think that's going to re -- now, i think that's going to require constant vigilance. >> is pakistan helping or hurting efforts in afghanistan or both? >> i think at this point what you have seen is the pakistan military step up in a way that we have not seen. i mean, they are engaged in serious fighting of al qaeda allies in that region. and are trying to reassert control into areas that had become lawless. i think that the pakistani government in the past has be been -- has tried to take the tiger by the tail and use in some cases, you know, militants to their advantage strategically. and i think they now realize

that that was a mistake. >> at six months in office now, barack obama has come to know the burdens of the presidency and found solace in faith. last question. as you know, there's a lot of curiosity about you and what you do, what you wear, all these things. and where you worship. if i may ask, how has -- how have the responsibilities of the presidency affected your spiritual life if at all? >> well, i had a habit of praying every night before i go to bed. i pray all the time now. because i've got a lot of stuff on my plate and i need -- i need guidance all the time. we haven't selected a permanent church home in d.c. i mentioned earlier that with all the transitions of the

girls, but also still trying to figure out how to move this big apparatus called the presidency without being hugely disruptive to congregations. how do we time that, how do we think about that? that's something we're still sorting out. you know, we have been attending church -- a little chapel up in camp david when we go up there. there's a wonderful young pastor who does wonderful work, and the camp david families attend. this is one use of my blackberry. my faith and neighbor initiatives director, joshua dubois, he has a devotional he sends to me on my blackberry every day. that's how i start the morning, it's got a passage, a scripture. in some cases quotes from other faiths to reflect on.

so -- but, look, you know, when you're in this job i think every president who's had it is constantly humbled by the degree with which there are a lot of issues out there and the notion that one person alone can solve all these problems i think you're -- you're cured of that illusion very quickly. you know, this something where you just hope that you're aligning your work with his purposes and that you're attuned to the needs of the people that you're there to serve. >> well, good luck. >> all right. thank you. >> god bless. i appreciate it. >> and the healthcare fight, well, that doesn't stop for president obama. tonight, he told the crowd in his hometown of chicago that because he's from chicago, he will not break in his pursuit of healthcare reform. and back to the president in a moment, but right after our

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starbucks, the seattle-based coffee giant has fired its latest salvo in the high stakes coffee wars. this time, not just a new product, but a whole new store. where the ubiquitous logo, that's out of sight where beer and wine are on the menu and where the vibe is more quaint coffeehouse than same old super chain. it's not brand awareness, it's

stealth branding. and for neal karlinsky, that is "a sign of the times". >> 180 -- >> so fierce is the competition for your coffee drinking dollar that starbucks the giant of the hot water and bean business is trying a radical approach unlike anything in its history. the idea and bear with us for a minute here is to be less like starbucks. that's right. this store right here the first of its kind is a starbucks that isn't called starbucks. no sign of that famous green logo, no expensive coffee cups to buy. it is a neighborhood store called 15th avenue coffee and tea. this is starbucks? why don't you call it starbucks? >> this is absolutely starbucks. it's just one more iteration of innovative design. >> why not call it starbucks? >> well, it actually is inspired by starbucks. >> the only sign of the

ubiquitous brand we could find is the signs printed at the bottom of the menus which says inspired by starbucks. arthur rubinfeld is the head of the product development and he insists the company isn't trying to trick anyone. >> we don't feel the need to provide that naming on every store front going forward. >> the coffee business is tough. starbucks grew itself to a point it seemed there was a store on every corner. so mcdonald's decided to be like starbucks with its own fancy coffee drink. starbucks started to act like mcdonald's with hot breakfast sandwiches. dunkin' donuts even got in on the coffee game. then starbucks tried value meals, even instant coffee. but today's reinvention is facing some skepticism. >> seems like a bait and switch to me. i think people are going to know. >> the new shop is supposed to

be pore like the -- more like the original home grown coffeehouse. you can get more than a caffeine buzz. beer and wine are on the menu. they hope to have coffee tastings and poetry readings inside along with an independent look and feel. a lot like some of seattle's other boutique coffeehouses. seattle coffee works sebastian simsch says starbucks observers looked for ideas. >>er this just peeking -- they were just peeking around and they had the big binders. so i said, look, guys, i think it's better to leave. if you don't want coffee that's the policy here. >> you know, people design from other parts of the company are in stores all over the world and we're taking that situation and feedback all the time. >> if the coffeehouse is a success, they have plans for more, many more. meaning the next time you take a

sip of the double tall latte, you might want to check the fine print. it could be the un-starbucks. i'll neal karlinsky in seattle. >> so it's big business in disguise. i wonder if it will work? our thanks to neal karlinsky for that. we'll be right back.