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THE SITUATION ROOM

President Obama Confronts Controversial Comments; Judge Rules against Deepwater Moratorium; Compensating for the Spill;

Aired June 22, 2010 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thanks very much, Rick.

Happening now, an angry commander in chief orders his top commander in Afghanistan to come home and explain himself.

Will General Stanley McChrystal be fired for seeming to mock the president and others in a magazine interview? We're about to hear from the president of the United States. Stand by. He's getting ready to talk.

The Obama administration is rushing to appeal a new ruling blocking its temporary ban on deepwater drilling. The decision is raising serious legal and political and safety questions in the midst of America's worst environmental disaster.

And he's an icon of the anti-government movement, but does Congressman Ron Paul believe the administration was involved in a shakedown of BP? I'll ask Ron Paul about the controversial comments by his fellow Texas Republican congressman, Joe Barton.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Right now, the Obama White House is scrambling to deal with new setbacks involving two life and death challenges for the president. The Gulf oil spill and the war in Afghanistan.

A federal judge today blocked a six-month moratorium on new deepwater drilling. A safety precaution taken by the Obama administration in response to the oil disaster.

At the same time, the president is preparing to confront the Afghan war commander about remarks in a new magazine article in "Rolling Stone" magazine widely seen as so embarrassing and inappropriate.

General Stanley McChrystal has been summoned to meet with President Obama tomorrow at the White House. The White House press secretary Robert Gibbs is refusing to speculate whether McChrystal will be fired for the mocking remarks but he says, quote, "All options are on the table."

Joe Klein of our sister magazine, "TIME" magazine, is quoting an unnamed source who says that McChrystal has already submitted his resignation. We're working to confirm that for you right now. Maybe we'll hear momentarily from the president of the United States. He's meeting with his Cabinet then will speak with reporters.

Among the more controversial comments in the "Rolling Stone" article, this one from a McChrystal aide, describing the general's first meeting with President Obama.

"It was a ten minute photo-op. Obama clearly didn't know anything about him, who he was. Here's the guy who's going to run his f-ing war, but he didn't seem very engaged. The Boss was pretty disappointed."

The boss referring to General McChrystal. And this exchange between McChrystal and the top adviser about the Vice President Joe Biden.

"Are you asking about Vice President Biden, McChrystal asks with a laugh? Who's that? Biden? Suggest as top adviser. Did you say bite me?"

McChrystal has apologized but Gibbs says the president is fuming.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I was -- I gave him the article last night. And -- he was angry.

UNIDENTIFIED REPORTER: How so?

GIBBS: Angry. You would know it if you saw it.

(LAUGHTER)

(END OF VIDEO CLIP)

BLITZER: Let's bring in our Pentagon correspondent, Barbara Starr.

Barbara, General McChrystal is on his way back to Washington right now. He'll be over at the White House situation room. Tomorrow, you saw that -- we're getting this report from Joe Klein of "TIME" magazine, our sister publication, saying he has already submitted his resignation.

That should come as no surprise. A lot of us who know General McChrystal, know he's -- he's been around for a long time. This kind of controversy develops, the first thing you do is submit a resignation, the next thing you want to know, will the commander in chief accept it?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: That is the question on the table at this hour, Wolf. General McChrystal still in the air, expected to land at Andrews Air Force Base sometime in the early morning dawn hours and go very quickly to the White House for a series of meetings to explain himself.

You know there are so many issues here on the table about what General McChrystal said, what his staff said, what the article reported. But the White House press spokesman, Robert Gibbs, I think, really gave one of the bottom lines here today when he talked about the impact on the troops.

Have a listen.

(BEGIN VIDEO CLIP)

GIBBS: I think anybody that reads that article understands, as Secretary Gates talked about, what an enormous mistake this was. Given the fact that mothers and fathers all over this country are sending their children halfway across the world to participate in this.

They need to know that the structure --

(END OF VIDEO CLIP)

STARR: You know, what he -- what Gibbs is going on to say is that the president -- everyone needs to know that General McChrystal can still have the confidence of the president, that General McChrystal's staff can operate in a mature, appropriate fashion.

The real decision for the president, we are told, is whether he can continue to have trust and confidence in Stanley McChrystal to run this very troubled war in Afghanistan.

BLITZER: Well, how important is General McChrystal to the overall strategy, the counterinsurgency strategy, in Afghanistan?

STARR: Well, you know, you'll remember last year they fired General Dave McKiernan, the previous commander, because Bob Gates and Mike Mullen, the secretary of Defense and the chairman of the Joint Chiefs, went to the wall.

They told the president that McKiernan wasn't getting the job done, that they had to have McChrystal, that he was the only one who could really turn the war around. And now Stan McChrystal has embarrassed both Gates and Mullen rather significantly with the White House.

You know, this is not what anybody wanted to see and it comes back to that very question -- if they keep him, is this a distraction that can be overcome or is it time to cut things loose and move on -- Wolf.

BLITZER: And we're awaiting the president. He's meeting with his Cabinet in the Cabinet room over at the White House right now. They've just told reporters that they will be allowed to go in with camera crews. Inside the president will make a statement presumably maybe answer some reporters' questions as well.

This would be his first chance to speak to what has developed into a bombshell right now. We'll of course the president's remarks momentarily. We're awaiting those remarks at the White House.

Barbara, stand by with us. We're going to have a lot more on this story coming up.

But there's another huge story we're following today. The breaking news, a ruling against the temporary ban on deepwater drilling in the Gulf of Mexico. The ban that the administration imposed. So what happens now?

Brian Todd is working this part of the story for us.

The Obama administration said no deepwater drilling for six months until they have a chance to investigate all the safety procedures but a judge now says that moratorium should be lifted?

BRIAN TODD, CNN CORRESPONDENT: That's right. And a very sharp review from this judge, Wolf. This district judge in Louisiana, Martin Feldman, skewered the Obama administration in this ruling.

He said the administration's report on drilling safety after the Deepwater Horizon blast basically lacked analysis. And he said the White House and the Interior Department made an arbitrary decision in imposing this temporary ban, says they painted the entire drilling industry with a broad brush.

Here's a passage from the ruling. Quote, "If some drilling parts are flawed, is it rational to say they all are? Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavyhanded and rather overbearing."

Judge Feldman essentially ruled that the moratorium does not justify what he called the immeasurable effect on the local economy. From the local business group that filed a lawsuit in this case to the Gulf state politicians, many had argued that the moratorium would cost potentially hundreds of thousands of jobs.

Many of those jobs in the businesses that support the oil industry. And a man who runs a boat company supplying oil rigs said the six-month moratorium would in reality extend a lot longer.

(BEGIN VIDEO CLIP)

SHANE GUIDRY, PRES., CEO, HARVEY GULF INTL.: This moratorium turns from six months to 12 to 18 or 24, depending on available of equipment, fabrication yard, shipyards, so the moratorium is not just six months. And that's the concern we all have. We don't know what that end in sight is for us.

(END OF VIDEO CLIP)

TODD: And the end may still not be in sight for the industry. This case could be immediately tied up in the courts. It likely will be. The White House said it disagrees with Judge Feldman and will immediately appeal the ruling to the Fifth Circuit Court of Appeals.

(BEGIN VIDEO CLIP)

GIBBS: The president strongly believes, as the Department of Interior and the Department of Justice, argued yesterday that continuing to drill at these depths without knowing what happened is -- does not make any sense, and puts the safety of those involved -- potentially puts the safety of those involved on the rigs and safety of the environment and the Gulf at a danger that the president does not believe we can afford right now.

(END OF VIDEO CLIP)

TODD: The administration is not alone in its disappointment here. An attorney for environment groups that had joined in this case says the ruling overlooks the ecological harm in the Gulf and the devastation that that has had on people's lives -- Wolf. This is very controversial.

BLITZER: And the argument on the loss of jobs, these are jobs that from people that support the oil industry, not necessarily directly involved in deepwater drilling.

TODD: That's right. The suit was filed actually by people who run businesses who support the oil industry. Their argument was look, the rig operators themselves are not necessarily going to lose so much here. They can take their operations, especially those mobile rigs, they can take them overseas, to Brazil, to China. They can still make money.

It's these businesses, like the tugboat operators, the suppliers in Louisiana and Texas, and those areas that are going to lose out because they can't move. And they're stuck if there's no deepwater drilling.

BLITZER: Our senior legal analyst Jeff Toobin is going to be joining us later. We'll get some legal analysis on what exactly is going on, the practical impact of this major decision down -- down in the Gulf.

Thanks very much for that, Brian.

The commander in chief mocked by a top U.S. general. Does it prove Republicans' claims that America needs to get tougher?

Mary Matalin and Paul Begala, they are both standing by for our strategy session.

And I'll talk to the front man for BP's handling of the damage claims in the oil spill. I'll ask him what happens if the company simply runs out of money.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Remember, we're waiting for the president of the United States. He's about to make a statement. We assume on either the oil moratorium that a judge says must be lifted or on General Stanley McChrystal and this controversial article. Stand by, we'll go to the White House as soon as the president starts speaking. In the meantime, let's go to Jack. He's got "The Cafferty File." Jack?

JACK CAFFERTY, CNN ANCHOR: The debate over immigration reform -- excuse me -- has turned into a childish game of he said, she said.

Republican Senator John Kyl says President Obama told him in a one-on-one meeting, quote, "If we secure the border then you all won't have any reason to support comprehensive immigration reform," unquote.

Senator Kyl suggests border security is being held hostage by the Democrats for political reasons. The White House denies it saying, quote, "The president didn't say that and Senator Kyl knows it," unquote. But Senator Kyl is not backing down from his version of that conversation.

Actually it almost doesn't matter who you believe in all this. The truth is that immigration reform is looking less and less likely to happen yet again. Gee, what a surprise. But this time inaction could cost the Democrats dearly.

Take Senate Majority Leader Harry Reid who is facing an uphill battle for re-election in Nevada. Reid is now pandering to Latinos there running Spanish-language TV commercials. He needs their vote and is still hoping they'll support him even though he promised immigration reform and now likely will not deliver.

Democratic Senator Robert Menendez of New Jersey tells Politico, quote, "I don't necessarily think we're going to have a comprehensive bill this summer." One key Republican, Senator Lindsey Graham, has backed away from bipartisan efforts at immigration reform.

Meanwhile, as Arizona moves forward with its own immigration law, the Obama Justice Department is thinking of suing that state. It's absolutely absurd. The federal government refuses to do anything about the illegal immigration crisis in this country.

After all, if they sealed the border -- like they're supposed to -- if they enforced their own laws against illegal immigration, then Arizona wouldn't have needed this law in the first place now, would they?

Our government is badly broken.

Here's the question: How badly will a lack of immigration reform hurt the Democrats in the midterm elections? Your thoughts, go to CNN.com/jackcaffertyfile.

BLITZER: All right, thank you, Jack.

Meanwhile, new pressure on BP this hour to pay money owed to those suffering economically from the oil spill. Claims administrator Ken Feinberg says he wants to accelerate the processing of claims. All of this as the oil giant tries to reassure Americans that it is on the case. (BEGIN VIDEO CLIP)

DARRYL WILLIS, V.P., RESOURCES, BP AMERICA: The fishermen, the shrimpers, the laborers, the deckhands, the people who work in restaurants, these are the people of the Gulf Coast will need our help.

I'm Darryl Willis. I oversee BP's claims process on the Gulf Coast.

BP has got to make things right and that's why we're here.

(END OF VIDEO CLIP)

BLITZER: And Darryl Willis is joining us now here in THE SITUATION ROOM.

Darryl, thanks very much for coming in.

WILLIS: Hi, Wolf.

BLITZER: All right --

WILLIS: Good to be with you.

BLITZER: Let's just walk through this claims process. What people right now -- if they make an emergency claim to Ken Feinberg over the next 30 to 60 days, they can get an emergency payment, but if they get a lump sum down the road, they forego their ability to file lawsuits against BP? Is that right?

WILLIS: Wolf, I was actually in a meeting all day yesterday with Ken Feinberg and I can tell you that he is on the case, on the job, and we're working through all of the details around how the forward plan is going to work.

What we've been doing over the last 28 -- 24 to 48 hours is really preparing to transition the program over so that the folks along the Gulf Coast who are being affected aren't impacted by any transition process.

BLITZER: Because right now --

WILLIS: So the details are being worked --

BLITZER: Right now you're saying BP is paying those claims but pretty soon Ken Feinberg and his operation will be making those emergency payments. Is that what you're saying?

WILLIS: We'll be transitioning the process over to Ken Feinberg. That's correct.

BLITZER: And -- what is your understanding about lawsuits that could be filed by individuals getting compensation from BP, either directly from BP or through Ken Feinberg's operation? What is your understanding on that? Could you clarify that? WILLIS: All I can tell you is that anyone who files a claim through the process is not -- can always still have -- retain the option to file a lawsuit. They are not precluded from filing a lawsuit because they filed a claim.

My focus has been over the last 50 days of making sure folks can file claims and get paid for the losses that they've substantiated.

BLITZER: Are you differentiating between emergency payments right now over the next 30 to 60 days and long-term lump-sum payments? Are you saying that they can still file lawsuits even if they get those lump-sum payments down the road?

WILLIS: What I'm talking about is the claims process as it currently has been articulated. Anyone who's filing a claim can maintain their rights to file a lawsuit if they see fit.

Our hope is that we're able to satisfy the needs of the folks who've been impacted. Mr. Feinberg will continue to refine process, I'm sure, and there'll be more to come on that in due course.

BLITZER: What about people who need money indirectly? They weren't necessarily a shrimper or fishermen and losing money right now from their businesses, but people who supported those businesses, whether grocery store owners and others? Are they eligible for emergency compensation from you?

WILLIS: We have an open claims process. And anyone who feels like they've been damaged or harmed or lost income as a result of the spill in the Gulf of Mexico, my advice would be to file a claim.

Get it into one of our 33 claims offices across the Gulf Coast. Call the 1-800 number, go online, but file a claim, get it into the system and let us evaluate it.

BLITZER: And right now, you're going to put aside, I guess, over the next four years or so $20 billion. BP has agreed to that escrow fund over the next four years. But in the short term, you have that money that you might need to make these emergency payments? Is that coming forward quickly from BP?

WILLIS: We've got the money, Wolf. We've paid over the last 16 to 17 days of July, $71 million in claims, about 20,000 claims since July 1st. Since we started the claims process, we've paid over $118 million in claims and written about 37,000 checks.

We've got the money. We're going to pay claims that come to us that have been substantiated and that are legitimate claims. It's our obligation. We're going to do it until every drop of oil is cleaned up.

BLITZER: And so far how long does it usually take to turn around that check? If somebody files a claim, how long before they get the money?

WILLIS: For individuals, Wolf, from the time that they actually call our 1-800 number to the time they present us with documents, and receive a check, it's on average running somewhere between three and four days.

BLITZER: That's pretty good, three and four days. Do you think you can keep that up?

WILLIS: That is our intention, to not only keep it up but to do whatever we can to make it better.

BLITZER: And you're totally on board with Ken Feinberg and his operation? You're working very closely with him? You support him?

WILLIS: Absolutely. We had a great meeting yesterday for about eight hours. Those meetings are continuing over the course of today. I'm currently in Alabama en route to Florida. And we're going to do the right thing. And Mr. Feinberg is going to be a big, big catalyst in that process.

BLITZER: Darryl Willis of BP America. He's joining us from Pensacola.

Good luck to you and thanks very much.

WILLIS: Thank you.

BLITZER: We're going to get more on the claims process in the next hour. My interview with the oil claims administration, Ken Feinberg. We're going to try to pinpoint the whole issue of lawsuits.

Can folks who get compensation -- can they still file lawsuits or are will they not be able to file lawsuits? We'll pin that down with Ken Feinberg. That's coming up.

And fire and water wreaking havoc in the United States and around the world. We'll have the latest on some deadly flooding in Brazil and Arizona's raging wildfire.

(COMMERCIAL BREAK)

BLITZER: A pool of reporters has now gone into the Cabinet room to hear what the president has to say. The president has been meeting with his Cabinet. He's about to make a statement, we assume, on either General McChrystal or the oil moratorium being lifted by a judge down along the Gulf Coast.

We'll watch it. The tape is coming back. Stand by. We'll hear what the president of the United States is about to say.

In the meantime, let's check in with Brianna Keilar. She's monitoring some of the other top stories in THE SITUATION ROOM right now.

What's going on, Brianna?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, an American detained in Pakistan on the hunt for Osama bin Laden is going to be released. A source close to the family tells CNN that no charges are being filed against Gary Faulkner.

Faulkner suffers from kidney disease but is said to be in good condition. And he told police last week that he had been looking for bin Laden since the 9/11 -- since the 9/11 terror attacks on the United States.

Now new concerns that American taxpayer money could be going toward paying off Afghan insurgents. The U.S. military is investigating whether government contractors use money from a $2 billion contract to pay the country's security companies for protection.

That money was allegedly given to insurgents so they wouldn't attack the contractors. The issue is a subject of a hearing on Capitol Hill today and a separate congressional investigation is also going to be released.

At least 40 people are dead, more than 100,000 homeless in the wake of those brutal floods in Brazil. Seventy-five cities have declared a state of emergency and officials are working to provide shelter, food, water and power to all of the displaced.

The bad news here, more rain is expected in the region today.

And in Arizona, a vicious wildfire near Flagstaff has grown to 10,000 acres. It's only 10 percent contained and forecasters say gusty winds are hampering the firefighting efforts there. The Shultz fire has shut down a highway and evacuations of more than 700 properties remain in place today.

So far, though, Wolf, no structures have been destroyed.

BLITZER: Brianna, thanks very much.

The Afghan war commander hands the commander in chief a brand-new headache. We're standing by to hear from President Obama right now. We expect him to make a statement on General Stanley McChrystal. We'll monitor what's going on. The tape from the Cabinet room is coming out soon.

And like father, like son. I'll ask Congressman Ron Paul about his controversial son Rand Paul and whether he's up to the pressure of running for the U.S. Senate.

(COMMERCIAL BREAK)

BLITZER: He heads up the U.S.-led war effort Afghanistan. Now a scathing new magazine article is raising critical questions about whether General Stanley McChrystal is fit to serve.

(BEGIN VIDEO CLIP)

SEN. JIM WEBB (D), VIRGINIA: I think he's had three bites out of the apple. One was with the situation with Pat Tillman. He was in the middle of that. I mentioned that during his confirmation hearing. The second was when he gave an interview with "60 Minutes" while this policy was being formulated. The third was when he was giving a speech in London at the same time other people were in the white house trying to figure out where to go on the policies. So I think it's a pretty serious matter but it's up to the president.

BLITZER: Joining us now in our strategy session, two CNN political contributors and former white house insiders, the Democratic strategist Paul Begala and the Republican strategist Mary Matalin. And we're about to get tape guys, the president speaking to reporters at the end of his cabinet meeting in the cabinet room at the white house. As soon as we'll hear from the president. We'll see what he has to say about this and perhaps some other subjects as well. Paul first to you, based on what you know right now, do you believe General McChrystal should resign?

PAUL BEGALA, DEMOCRATIC STRATEGIST: Well no I believe he should be fired. With great respect for the decades he has given to our country and his service, you cannot demarcate the commander in chief or the vice president or our allies or General Jim Jones, a four-star marine general retired who is our national security adviser, you cannot do that with impunity and continue to command troops who you want -- who must remain loyal to the chain of command. I think this is insubordination and I think he should be fired. I don't think they should give him the dignity of resignation even with all respect to the heroic service that he has given us over these decades, you cannot allow this to stand.

BLITZER: What do you think, Mary?

MARY MATALIN, REPUBLICAN STRATEGIST: Paul is right but it's not insubordination in the sense that it's violating the president's policy. This is the best general by everyone's estimations to implement the president's counter insurgency strategy there and by all accounts doing it in a fashion that would almost comfort with at this point it appears the president's timeline to start to draw down troops. So that's the irony and sadness of this. Paul is right. It appears to be insubordination and this isn't the first time. But as soon as talking to the press using his name instead of anonymously, which is how they usually fight things out using the press but I'm afraid Paul is right in this case and it's sad because it will be difficult for the policy to go forward, particularly on the president's timeline without a general of this stature and experience doing it.

BLITZER: I've been checking in with my sources over at the white house, Paul. So far at least at the white house they don't have any formal resignation letter from General McChrystal, although maybe he's working through the chain of command over at the department of defense on that. But what I hear you saying he shouldn't be allowed the dignity of offering a letter of resignation. He should be fired. But would you go one step further and court-martial him?

BEGALA: I guess I wouldn't. But I sure think about it. I think those are the two options here. Look the whole world is watching this, Wolf. This is water cooler conversation in America. Yeah, it's a big political topic in Washington. But our adversaries, our enemies are looking at this, our allies are watching this and you know I think this is a bit of a gut check for our president. I will say on the domestic side, he rose to the occasion when there was a gut check on health care. Everyone told him to cut a deal and not to try to pass a tough bill that takes on the insurance companies. He rose to that occasion and I am certainly hopeful that he will do the same here. But I think this is a gut check for this president and he needs to step up and fire this general and there's plenty -- this is a guy who has given terrific service and he should be respected and admired for that. But there's lots of generals and there's lots of people who can implement the president's policies. But our constitution requires faithfulness to civilian leadership over the military.

BLITZER: Hold on, Mary. Because we're about to get the tape. The president has just spoken in the cabinet room in the white house. He's been speaking about the economy and other issues. And at the end of this tape you're about to see it. He's asked about General McChrystal and we'll offer a response. The president of the United States.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Well, we just finished up a cabinet meeting with obviously a very wide ranging agenda. One of the first things we talked about was the progress that we're making in terms of growing the economy again. We've now seen five straight months of job growth and economic growth of over half a million private sector jobs that have been created since the beginning of the year but we also know that it is not moving as fast as we want. That there's still millions of Americans out there looking for work or looking for more hours or behind on their payments because they experienced unemployment very recently. And so we discussed how all of us working together by agency are going to be working to encourage job growth and we discussed the need for Congress to continue to move forward on an agenda of targeted measures that can help small businesses invest, that can make sure that unemployed workers are getting hired that continue to add to the momentum of job growth and economic growth that is need sod badly after the damage that's been done over the last couple of years.

We also got a full briefing from our national security team as well as Vice President Biden on Iraq. It hasn't received a lot of attention lately but we are on pace to meet every target that we set at the beginning of this administration to have our combat troops out and to transfer security responsibilities to the Iraqis and we had a discussion about the progress that's been made in terms of government formation there. We also discussed the importance of the transition from a defense-weighted U.S. approach to a more state department weighted approach and the need to make sure that we are adequately supporting and funding all the diplomatic measures that are going to be necessary to partner effectively with a new Iraqi government over the long haul.

We had a discussion about the oil spill in the gulf and the important measures that are being taken both in capping the well, in making sure that we are dealing with the consequences on the shorelines and bays across the gulf and also making sure that ordinary Americans, who are being devastated economically, are compensated properly. Ken Feinberg has already traveled to the gulf and he's meeting with governors and local officials with the $20 billion fund that has been set up. We want to make sure that that money is moving out as quickly as possible, as fairly as possible, and that some of the people who I have talked to in the gulf that are desperate for relief are getting help as quickly as possible. And Secretary Napolitano also briefed us on the range of measures that are being taken to ensure that we are coordinating as effectively as possible when it comes to skimming the oil as it's coming forward, initiating the burns, trying to make sure that we are capturing all of the oil that we can.

And finally we talked about energy. In the context of the oil spill, as I said last week, during my oval office address, this has to be a wake-up call to the country that we are prepared and ready to move forward on a new energy strategy that the American people desperately want but for which there has been insufficient political will. It's time for us to move to a clean energy future. I think the American people understand that it is a jobs creator, that it's a national security enhancer, that it is what is needed environmentally, and we have the opportunity to build on actions that have already been taken in the House of Representatives. The Senate has an opportunity before the august recess and the elections to stand up and move forward on something that could have enormous positive consequences for generations to come. And the entire cabinet here recognizes, with all of the other stuff that they are doing, that if we get energy right, that an awful lot of things can happen as a consequence. So we are mindful that we have a lot of work to do but we are very pleased with the progress that has been made by each of these cabinet members and we are looking forward to redoubling our efforts in the months to come. All right. Thank you.

UNIDENTIFIED MALE: Are you going to fire Mr. McChrystal?

OBAMA: General McChrystal is on his way here and I am going to meet with him. Secretary Gates will be meeting with him as well. I think it's clear that the article in which he and his team appear showed a poor -- showed poor judgment and -- but I also want to make sure that I talk to him directly before I make any final decisions. All right?

UNIDENTIFIED FEMALE: Thank you.

OBAMA: Actually, let me make one last point about this. Even as General McChrystal is on his way here, I want everybody to keep in mind what our central focus is. And that is, success in making sure that al Qaeda and its affiliates cannot attack the United States and its allies and we've got young men and women there making enormous sacrifices, families back home making enormous sacrifices. And so whatever decision I make with respect to General McChrystal or any other aspect of Afghan policy is determined entirely on how I can make sure that we have a strategy that justifies the enormous courage and sacrifice that those men and women are making over there and that ultimately makes this country safer. I know Secretary Gates feels the exact same way. All right? Thank you very much.

UNIDENTIFIED FEMALE: Thank you.

BLITZER: All right. So there it is. The president of the United States saying he wants to meet tomorrow with General Stanley McChrystal and then he'll decide whether he goes or stays as the overall U.S. and NATO commander in Afghanistan. He wants to hear directly from general McChrystal. Let's assess what we've just heard. Paul Begala and Mary Matalin, they are still with us. Also here in THE SITUATION ROOM, Fran Townsend, our national security contributor who worked with President Bush as homeland security adviser, and Gloria Borger, our senior political analyst. Mary let me start with you, a measured statement by the president that says, I want to hear what he says and then we'll decide what to do. But he said that his cooperation in the rolling stones magazine and was a very poor --

MATALIN: It was a very measured and appropriate response from the president and a very good one. What I was going to say before he said what he said is that what he needed to say was to whatever to his issue with McChrystal, he needs to reassert his commitment to the mission. And he said exactly that. That whatever the determination of McChrystal's fate is, his mission is to stay committed to the mission. That was the right thing for the commander in chief to say and he said it very well and very measured.

BLITZER: What did you think, Paul?

BEGALA: It was classic Barack Obama. He's a lawyer's lawyer. He believes in process. He's not going to fire somebody without a fair hearing and in this case, he's the commander in chief. This is his general that he put in. Don't forget he removed David McKiernan the prior commanding general in a time of war because he wanted this mission, as Mary points out, executed his way. But he's going to give him a fair hearing. His aides have all told me this today, he's not a guy to go off half cocked, sometimes his critics suggest he doesn't even go off fully cocked but this meeting tomorrow is real and a lot of people like me think he ought to go. I don't even know that he even deserves a hearing but Barack Obama's a very fair boss and he's a very fair minded lawyer. And he's going to hear the general out. I'm sure as one aide told me he didn't invite him back here to give him an attaboy. That's for sure.

BLITZER: Fran Townsend, you think he should survive this don't you?

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: I do think so. Look it was terrible judgment. He issued an apology. He's spoken to leadership on the hill. He's spoken to Secretary Gates today. It's bad and he knows it is bad. I've worked with Stan McChrystal over the last decade, it's inconsistent with the professional soldier that I know. I think he regrets it sincerely. But the mission is more important as the president said. And so I think the president has confidence in McChrystal's execution of his mission and his objectives and this is an opportunity for the president to make it a teaching moment. It's okay to be critical of policy and people but you do that privately and that's the opportunity for him to make that point.

BLITZER: It's one thing to be critical. It's another thing to mock the president and his top advisers. If you read this article, the headline is the run away general and the subhead, Stanly McChrystal, Obama's top commander in Afghanistan has seized control of the war by never taking his eye off the real enemy: the wimps in the white house. And in this article, not only McChrystal but his aides make fun of Vice President Biden as Vice President Bite Me. They make fun of the U.S. Ambassador Holbrooke. They make fun of the national security adviser, the former commandant of the Marine Corps, the NATO supreme ally commander General Jones, as a clown, someone who lives back in 1985. I don't know how a guy like this, a general, can continue to work with these people after he and his top staff have ridiculed them so publicly.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: And I spoke with the senior administration official today that said that this was really not worthy of the risks that our troops are taking and that the problem that they have is that, is this emblematic of questions about administration policy right now. This president clearly wants to make it clear -- and that's what he said today -- that there's absolutely no ambiguity in the policy going forward. But is this disrespect? I mean McChrystal said Joe who? He was making fun -- mocking the vice president. Is that a sign of disrespect for the vice president who may in fact -- who says he wants the troops out by July 2011 and maybe there's another faction in this administration. Perhaps it's Gates and McChrystal who say you know what? Maybe we ought to start the withdrawal by then but not complete it by then.

BLITZER: All right. We're going to have a lot more on this. We're not going away from this story. We're not going to go away from the oil story either, the disaster in the gulf. Don't go too far away. When we come back, we'll get the assessment of Congressman Ron Paul, also on oil, his son running for the U.S. senate. Stand by, my interview with Ron Paul coming up next.

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BLITZER: Getting a clarification our sister publication "Time" magazine and Joe Klein who earlier here on CNN said that he had heard that General McChrystal has offered to resign, has already volunteered to resign. The clarification from "Time" magazine, they just tweeted this on Twitter, "Clarification from Joe Klein, General McChrystal has offered to resign. He has not submitted his resignation." In other words, he's offering his resignation but not yet doing the paperwork. We'll watch this. The president meanwhile, you just heard him say in the cabinet room over at the white house that he wants to speak with General McChrystal tomorrow before deciding what happens next. He did say that General McChrystal showed bad judgment in some of the statements he and his advisers made to "Rolling Stone" magazine. Let's talk about this and more with Congressman Ron Paul, Republican of Texas. What do you think, Congressman? Did he show insubordination more than just poor judgment? What do you think? Should General McChrystal step down?

REP. RON PAUL (R), TEXAS: I think insubordination is probably a subjective issue that the president has to decide himself. But no I think the president would be justified, you know, in putting him out. I don't see how he will survive it. Everybody is talking and worried about his survival. I worry a lot but I worry about the survival of our troops over there getting killed and I think the whole problem with McChrystal is the fact that the war is going so badly. There's no signs of victory, no end in sight. The people are dying and money is going out the window. And I think that this is symbolism and we're misdirecting. I'd much more energetic about talking about this if we talked about the failure of the policy and why are men are dying in a war that sees no end to it. That is where our real problem is, and the McChrystal argument is symbolic of it.

BLITZER: Yes. If you read that article in "Rolling Stone" magazine which I did, I don't know if you read it but it is shows a very dire situation right now, almost a quagmire and no victory in sight, about time U.S. troops to get out. I know you have wanted U.S. troops to get out of Afghanistan and Iraq for a long time, but obviously, that has not happened yet in either case. Let's talk a little bit about your colleague from Texas, Congressman Joe Barton, another Republican. He apologized to BP last week and later retracted it, but it caused a big uproar and the Republican leadership really came down on him hard. What is your assessment?

PAUL: Well, I don't know have a strong opinion because I don't know what went on. How can we judge what happened in a private conversation. I am waiting for a release of the discussion to know what really went on. But that bothers me, also, because of maybe picking of the words. What he called a shakedown. Well, what if he had said the president put pressure on BP to do this? Then it would have been politically correct. You'd have to check with the political correct police on how you word things, and if you misword things, you will get into big trouble. So it is a lot of that. But I'm concerned about the whole issue, because I think that this is unprecedented.

BLITZER: But you want BP to pay up for all of the folks losing their livelihoods? That $20 billion escrow account that the white house put pressure on BP to come up with, that was a good idea, right?

PAUL: Well, I'm not sure about the process, but I don't think that the process has, and you can defend that with the rule of law and that is not how you do it, and if this is unprecedented in how they did it.

BLITZER: Unprecedented because the attorney general was there at the meeting to negotiate that.

PAUL: But by what authorities do presidents make deals with big companies? That is not part of the law. That isn't part of our constitution. I am always worried about the big business and big government in bed together. Here's a company that is in bed with big government already so I am already suspect. So they are champions of the cap and trade, and they get our protection, and they have a lot of oil in the Middle East and you know our navy and our troops are in the Middle East you know to protect our oil. So they are in bed with big governments already so this is good PR for the executive branch and good PR for BP, but it is not good PR for the process. BP had already started paying out, you know, claims, and working this through. But to come up with this scheme, I don't think it is proper, but if -- I think that BP should pay $100 billion if necessary but I want them to it right and I don't want this partnership between big business and big government to you know accelerate. BLITZER: Right.

PAUL: I don't like that. I like it to be separate and I like it to follow the rule of law.

BLITZER: Spoken as a true libertarian as you are. I'm not surprised. Let me talk briefly, we only have a little time left, about your son Rand Paul. He's an ophthalmologist. He's an M.D. just like you. Is he ready for the pressure that's being put on him as he runs as the Republican nominee for the U.S. Senate from Kentucky?

PAUL: Well if they were all like you Wolf and reasonably fair I think he's very much ready but when the demigods get lose none of us are ready. They can trap us and trick us. It's a shame that politics is are you ready for the entrapment by the media. I mean that's what it is. It's a game.

BLITZER: But you handled the media very well. I wonder if you think Rand Paul can do what you do.

PAUL: I think he's doing better than I did when I was his age. You know even though he's mature and in his 40s, I came to Congress approximately that age. I don't feel like I could handle things as well as I can now but I think things are tougher now. I think they're meaner and nastier and they're set up more and there's collusions. It's much different than just discussing the issue. I'm fortunate. I think I've gained acceptance enough that interviewers like you and others have treated me rather well and have dealt with me with the issues so I'm pleased with that but I would say that he will learn. I think he does a good job. I think his demeanor is rather good.

BLITZER: It's going to be a fascinating race in Kentucky. We'll watch it but you'll watch it a lot more closely I'm sure. Congressman, thanks very much. I know you're very proud of your son as you should be.

PAUL: Thank you Wolf.

BLITZER: Jack Cafferty is coming up next.

Also, a controversial article could take down the president's main man in Afghanistan. My interview with the executive editor of "Rolling Stone" magazine, that's ahead as well.

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BLITZER: Jack's back with "The Cafferty File" -- Jack?

CAFFERTY: How badly will a lack of immigration reform hurt the Democrats in the mid term elections?

Tom writes: "I think immigration will lead to the demise of the Democratic Party. Obama won the election primarily due to Hispanic votes and now he can't deliver what he promised. Yes, the economy is bad but immigration should be at the top of the agenda." Kenneth in Texas writes: "If the White House is telling the truth about the Kyl conversation then why have the borders not been secured? It's the first step most Americans want before comprehensive immigration reform. The answer is simple: the administration wants amnesty and 13 million more votes. The citizens of Arizona, Texas and New Mexico and their problems mean nothing."

Russ in Iowa: "Hopefully it will knock the Democrats out of D.C. and into the spit can where they belong, along with the progressive pile of ideas."

Lene in Illinois: "It probably won't hurt them bad at all as long as they keep dangling that carrot. Anyone who wants immigration reform (amnesty) will vote for Democrats and those who want the laws enforced will vote Republican."

Leon writes: "One of the greatest lies being pushed is that all Latinos are for comprehensive immigration reform. It's not true. I'm Latino and I wish the government would do its job, namely enforce our existing laws."

Phil writes from Florida: "The topic will decimate the incumbent Democrats but all of the incumbent politicians ought to be skinned and left to rot for their indifference to the voters in the United States."

And Tom writes: "With health care and all it ain't going to matter. They're done."

If you want to read more, you'll find it on my blog, CNN.com/CaffertyFile.

BLITZER: All right. Jack, thank you. We'll get back to the breaking news on General McChrystal right after this.

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