President Bush Slams 2008 Dems; America's Mortgage Mess; Children's Healthcare at Risk.(Broadcast transcript)

Original Source: THE SITUATION ROOM

WOLF BLITZER, CNN ANCHOR: Happening now, President Bush slams the 2008 Democrats, accusing them of being afraid of the left wing. It's a brash new turn in the political war over Iraq for a president who suddenly has a stronger hand.

Another target of Mr. Bush's wrath, the MoveOn.org ad slamming his Iraq commander. This hour, we'll have a debate about MoveOn's motives, its clout and whether it crossed the line.

Plus, top economic officials give Congress ideas for easing America's mortgage mess. We'll break down the subprime lending crisis into terms all of us can understand.

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

Up first this hour, President Bush stepping up to the bully pulpit today to give his Democratic critics on the Iraq war a peace of his mind. In a news conference, Mr. Bush used words like "irritating" and "disgusting". His top targets, a liberal anti-war group and the Democrats who want his job.

Let's go right to our White House correspondent, Ed Henry. He is standing by.

We are seeing a bit more forceful president, at least politically, emerge today, Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. He feels strong about pushing back against these Democratic attempts to take control of the war in Iraq. So after for so long insisting he would not be the pundit in chief in 2008, today Mr. Bush took aim at the Democratic presidential candidates that he says are too scared to take on MoveOn.org.

(BEGIN VIDEOTAPE)

HENRY (voice over): For the first time, the president publicly lashed out at the MoveOn.org ad that called his commander in Iraq "General Betray Us".

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I thought the ad was disgusting.

HENRY: Then Mr. Bush, who has repeatedly insisted he will resist the temptation to weigh in on the next presidential election, well, he couldn't resist. BUSH: I was disappointed that not more leaders in the Democrat Party spoke out strongly against that kind of ad. Most Democrats are afraid of irritating a left-wing group like MoveOn.org, or more afraid of irritating them than they are of irritating the United States military.

HENRY: Mr. Bush's brash comments are a sign of a commander in chief feeling strong. On Wednesday, he again kept pivotal Republicans like John Warner from voting to change his Iraq policy. This left Democrats beaten again, trying to put the best face on coming four short of the 60 votes need to force Mr. Bush's hand.

SEN. JIM WEBB (D), VIRGINIA: I regret the defection of Senator Warner. But other than that, I think that we have been able to, again, establish that a majority of the United States Senate wants to see this kind of policy in place. And we're going to keep persisting.

HENRY: Attacking MoveOn.org also allows the president to shift the focus away from actual problems with the war itself. In January, Mr. Bush said he wanted the Iraqis to take over security in all 18 provinces by this November. The administration now says that will not happen until at least next summer, though Mr. Bush denied he's moving the goal post.

BUSH: No, the goals are the same. Achieving those goals have been slower than we thought.

(END VIDEOTAPE)

HENRY: Now, this summer started with Mr. Bush's back against the wall on Iraq. A growing number of Republicans demanding a change in policy. But Democrats on the Hill have not been able to convert that criticism into actual Republican votes against the war, and that's why Mr. Bush has now seized the upper hand again. But obviously, he's still not out of the woods on Iraq. There's a lot of tough slogging ahead -- Wolf.

BLITZER: Are we going to see a more politically charged president in public, Ed, in the coming days and weeks?

HENRY: I think certainly him wading in into this MoveOn.org ad more than a week after all that controversy shows that maybe he's ready to jump into the fray finally -- Wolf.

BLITZER: All right. Let's see what happens.

Ed Henry at the White House.

Thanks.

We're going to have more on this story coming up. The executive director of MoveOn.org's political action committee, Eli Pariser, is standing by to join us live here in THE SITUATION ROOM, along the with the executive director of the pro-Iraq group Iraq Vets for Freedom, Pete Hegseth. They're both going to be here shortly.

Other important news.

Federal Reserve chairman Ben Bernanke is in the hot seat on Capitol Hill today. He's been testifying about the mortgage crisis that's costing some Americans their homes and sending shock waves through financial markets not only here but around the world.

Ali Velshi is in Washington, back in THE SITUATION ROOM with us.

All right, Ali, tell our viewers in terms we can all understand what is going on, especially in the aftermath of the decision by the Fed to cut this one key interest rate by half a point this week.

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Bigger than expected. That unexpected half a point drop is going to help some people keep their homes, but Ben Bernanke says the problem about subprime mortgages, people losing their homes because their interest rate is adjusting, is serious and more Americans are going to lose their homes.

(BEGIN VIDEOTAPE)

VELSHI (voice over): The subprime mortgage crisis is not over.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Delinquencies and foreclosures are likely to rise further.

VELSHI: Fed chairman Ben Bernanke is talking about borrowers with poor credit and adjustable rate mortgages. He wouldn't say how bad it will get, but he says for those still having trouble making their payment, talk to your bank.

BERNANKE: The Federal Reserve, together with the other federal supervisory agencies, has encouraged lenders and loan servicers to identify and contact borrowers who, with counseling and possible loan modifications, may be able to avoid entering delinquency or foreclosure.

VELSHI: The Fed chief says he's working with banks to make sure borrowers really understand how their monthly payments can change when they get an adjustable rate mortgage.

Treasury Secretary Henry Paulson says mortgages are just too complicated for most people.

HENRY PAULSON, TREASURY SECRETARY: The idea that I like a lot is every mortgage having one page, very simple, big print. You know, "Your mortgage payment is X dollars today and it could be as high as Y dollars."

VELSHI: Paulson and Bernanke emphasized that most Americans aren't facing a mortgage crisis. For homebuyers with good credit, a 30-year fixed rate mortgage is 6.29 percent, not even a full percentage point higher than it was a year ago. But there's still the actual housing problem. The median price for an existing home in America is $218,000, $3,700 less than it was a year ago.

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VELSHI: That's the median price. That's the price at which half the homes sell for more and half sell for less. Median prices don't mean much to people. The price that matters is the one that you got near you.

If you live in Phoenix or you live in Detroit, things are really bad. The -- one bright spot, as we started with, that Fed rate cut could give some people a bit of a break.

BLITZER: A break, because what we're talking about are people not able to pay their mortgages if their adjustable rate goes up. And there could be foreclosures.

There have been a dramatic increase in foreclosures. People losing their homes. They've worked so hard for so long to get this house. And all of a sudden they can't meet the mortgage payments.

VELSHI: And Ben Bernanke says to the banks, do what you can to talk to these people who are in trouble because it is better for the economy if they don't lose their homes. If you can adjust the mortgage terms that they have so that they can stay in that house, that's a better…