Interview with Larry King of CNN

KING: We welcome to LARRY KING LIVE Senator Barack Obama, the presumptive Democratic presidential nominee. He made a major foreign policy address today in Washington. We'll get to that in a moment.

But I've heard a lot of others comment on it. We haven't heard you speak about it yet. That "New Yorker" cover which depicts you and your wife, and you dressed in a Muslim outfit, your wife in a kind of military outfit, Osama bin Laden's picture burning.

What do you make of that?

OBAMA: Well, I know it was the "New Yorker's" attempt at satire. I don't think they were entirely successful with it. But you know what, it's a cartoon, Larry, and that's why we've got the First Amendment. And I think the American people are probably spending a little more time worrying about what's happening with the banking system and the housing market, and what's happening in Iraq and Afghanistan, than a cartoon. So I haven't spent a lot of time thinking about it.

KING: But didn't it personally sting you?

OBAMA: No. You know, we've -- one of the things, when you're running for president for almost two years, is you get a pretty thick skin. And, you know, I've seen and heard worse.

I do think that, you know, in attempting to satirize something, they probably fueled some misconceptions about me instead. But, you know, that was their editorial judgment. And, as I said, ultimately, it's a cartoon, it's not where the American people are spending a lot of their time thinking about.

KING: Considering that, though, there's a lot of e-mails going around. It gets rather terrible. A "Newsweek" poll shows that 12 percent of America believes that you're a Muslim and 26 believe -- 26 percent believe you were raised in a Muslim home -- a lot of misinformation.

How do you fight that?

OBAMA: Well, you know, by getting on LARRY KING and telling everybody I'm a Christian and I wasn't raised in a Muslim home and I pledge allegiance to the flag and, you know, all the things that have been reported in these e-mails are completely untrue and have been debunked again and again and again. So, hey, all you can do is just tell the truth and trust in the American people that, over time, they're going to know what the truth is.

One last point I want to -- I do want to make about these e- mails, though. And I think this has an impact on this "New Yorker" cover. You know, this is actually an insult against Muslim-Americans, something that we don't spend a lot of time talking about. And sometimes I've been derelict in pointing that out.

You know, there are wonderful Muslim-Americans all across the country who are doing wonderful things. And for this to be used as sort of an insult or to raise suspicions about me I think is unfortunate. And it's not what America is all about.

KING: All right. Let's turn to Iraq.

Do you go, by the way, with any kind of agenda?

OBAMA: You know, well, my agenda is making sure that we have a strategy to keep America safe and to meet our long-term national security interests. And the speech I gave today, Larry, really tried to describe what I think is the central difference between myself and John McCain.

John McCain, who supported the war from the start, said we'd be greeted as liberators, has really focused on the tactical issues in Iraq. And the surge has no doubt reduced violence. And I think all Americans are thrilled by that.

But what George Bush and John McCain have missed consistently from the start of this process is the broader strategy.

You know, was it a wise thing to go in there and what are the costs and benefits of staying there indefinitely?

We're spending $10 billion a month there. We've spent $200 billion since the surge began. Meanwhile, the situation where -- you know, where the central front against terrorism should be taking place, in Afghanistan, the situation has deteriorated. And we had this brazen attack on a U.S. base where nine servicemen were killed.

And we've got to recognize that perpetuating the strategy that we have in Iraq is costing us elsewhere, not only in Afghanistan, but also investments that we could be making here at home.

Imagine what we could have done with $200 billion invested in clean energy technology and figuring out how we're going to raise -- how we're going to raise fuel efficiency standards on cars. John McCain wants to spend $300 million in a prize to try to figure out the next round of car technologies. And meanwhile, we're spending $200 billion on a surge in Iraq.

It's just not a wise policy. That's why I want to bring this war to a close. But I do want to consult with our commanders on the ground to find out tactically how do we do it in a safe way and how do we make sure that the gains that have been obtained with respect to violence in Iraq are sustained.

KING: Senator McCain said that you were wrong about the surge and wrong in your Iraq proposals. Now, here's an example of what -- here's a sample of what he said. And we'll get you to comment.

Listen.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN: Senator Obama is departing soon on a trip abroad that will include a fact-finding mission to Iraq and Afghanistan. And I note that he's speaking today about his plans for Iraq and Afghanistan before he's even left, before he's talked to General Petraeus, before he's seen the progress in Iraq and before he has set foot in Afghanistan for the first time.

(END VIDEO CLIP)

KING: Now, Senator Obama, Senator McCain is saying that you're going about it backwards.

OBAMA: Well, I mean, Senator McCain obviously is involved in a political campaign. I understand that. You know, when I said that I was going to be talking with commanders and we would be refining our plan, he suggested that somehow we had changed our mind.

Where Senator McCain I think is confused is the difference between tactics and strategy. I am absolutely convinced that, strategically, it is time for us to bring this war to an end. And we can bring our combat troops out over the course of 16 months, which would mean that we would have gotten our combat troops out two years from now -- seven years from the time that the war began.

And that is not a precipitous withdrawal. It is a pace that I think would allow us to do what we need to do in Iraq, and that is to make sure that their army and their police forces are sufficiently trained to manage day-to-day operations inside of Iraq.

I've also said that we'll leave a residual force there to engage in counterterrorism activities inside of Iraq, as well, to protect our bases and our diplomats and civilian workers there. But this gives us ample time to wind this thing down in a way that allows us to support what's happening in Afghanistan and relieves the extraordinary stresses that have been placed on military families.

Larry, when you travel around the country, you meet folks all the time -- their spouses are on their third or fourth tour of duty. The family has been completely upended. And it's not sustainable over time. And I think everybody has acknowledged that. Not to mention the amount of money that we're spending there -- $10 billion a month at a time when we've got enormous needs here at home.

We've got to stabilize the housing market. We've got to help people. And we've got 7,000 people a day who are undergoing foreclosure proceedings on their homes. We have, you know, the extraordinary burden of gas prices that are hitting people all across the country. And one of the things that I think we need to do is to have another round of stimulus, providing energy rebates to families to help absorb these rising costs.

We're going to have a lot of needs, both here and in Afghanistan. And we've got to -- my job as commander-in-chief is going to be to look at the total picture and not just a narrow slice of the picture, as John McCain has had a tendency to do.

KING: Who should Senator Obama pick as his running mate?

Vote now at CNN.com/larryking. It's your chance to have your say.

But first, we'll ask Senator Obama about the vice presidential contenders, next. You're watching LARRY KING LIVE.

(COMMERCIAL BREAK)

KING: We're back with Senator Barack Obama, the presumptive Democratic presidential nominee.

Senator McCain said that he will get bin Laden and bring him to justice.

How far would you go? Would you go -- would you go into Pakistan to try to get him if you knew he were there?

OBAMA: Well, as I've said before, Larry, I said this last August. I think it is extraordinary, the failure of this administration, to roll up al Qaeda leadership in a serious way. We know they're based now in Pakistan. And I've said that if we had actionable intelligence on those high-value targets, then we should go after them.

Now, I think that we're -- in order for us to be effective in dealing with the resurgence of al Qaeda and the Taliban as they use Pakistan -- the northwest provinces -- as a sanctuary, we've got to have a stronger relationship with the Pakistani government -- the new Pakistani government.

We had put all our eggs in the Musharraf basket. President Musharraf has lost credibility with his people. And what we need to do is to form an alliance with the Pakistani people, saying that we're willing to significantly increase aid for humanitarian purposes, for schools, for hospitals, for health care. We want to support democratic efforts in Pakistan.

But in exchange, we've got to have some firmness about going after al Qaeda and Taliban, because it's not good for American security, but it's also not good for Pakistani security.

KING: But would you go in? Would you go in to Pakistan, militarily, to get him?

OBAMA: As I've said before, I would use -- if I had actionable intelligence, we would go after bin Laden.

KING: And bring him back here, if possible?

OBAMA: Well, I think that, you know, we want to capture him or kill him. And as I've said -- as I just said this past weekend, if we captured him, then we would want to put him on trial. And I think he would be deserving of the death penalty.

KING: If president, you're the commander-in-chief.

How will you perceive dealing with your generals, your chiefs of staff and the like?

Are they -- their impact important, very important, deciding?

How do you view it?

OBAMA: Well, I think they're critically important. And developing a strong relationship with our top military officers is critical for any commander-in-chief. And I've been so impressed with the work that they have done consistently, even when they've been handed a very difficult and, in some cases, misguided mission, they've still executed with extraordinary skill and precision.

And I think, for example, General Petraeus has done a terrific job with the cards that have been dealt to him.

But -- and this, I think, is the difference between myself and George Bush, and it's a difference between myself and John McCain. My job as commander-in-chief is to set the mission. It is to determine the strategy and then to ask our military to carry it out. Now, how I set that strategy is going to be informed by what capabilities we have, what information is on the ground. But, ultimately, the buck stops with me.

And so you will not hear me say what President Bush has said, which is General Petraeus has told me this is what we have to do and I'm just doing what he says. That's not -- that's not how the American government is supposed to work, and that is not supposed to be the role of the commander-in-chief. The role of the commander-in-chief is to take all of our national security interests into account and shape an overarching strategy that deals with the new challenges of the 21st century.

And I talked today, Larry, about not only Iraq, not only going after al Qaeda in Afghanistan and strengthening our situation there, but also locking down loose nuclear weapons and dealing with a new round of nuclear nonproliferation talks, making sure that we have an energy policy that frees ourselves from dependence on foreign oil.

Those are critical issues. That is part of what I have to take into account as commander-in-chief.

KING: A couple of other bases.

How is the vice presidential search going?

I know you're not going to tell us who he or she is tonight, but how far away is it?

OBAMA: Well, Larry, what I've said is I will not talk about the vice presidential process until I introduce my vice presidential nominee. And I'm sure that person will want to be on LARRY KING LIVE.

KING: That's -- that's all in the past. They come on the first night.

But the question was how is the process going?

OBAMA: Yes, the process is going well. We've got extraordinary talent in the country. And I'm sure that we're going to be able to identify somebody who has, you know, a similar vision of mine, the need to fundamentally change how Washington works so that the American people are seeing the economy work for them and so that we have a national security strategy that makes sense.

KING: How will you utilize the talents of President Clinton?

OBAMA: Well, as you know, Bill Clinton is one of the smartest people out here and certainly one of the most brilliant political minds we have. He's got extraordinary relationships all across the globe. And so I want him as an adviser and, you know, I would want him to be involved in implementing strategies on a range of issues.

So, you know, he's an enormous resources, as all former presidents are. I mean, I've said this before. I think on the foreign policy front, George Bush, Sr. Has a lot of wisdom to impart. And his foreign policy team, you know, people like Jim Baker and Brent Scowcroft and Colin Powell, are extraordinary thinkers. So I think you want to utilize all the talents out here. And part of what I'm interested in is bringing that tradition of bipartisanship to our foreign policy back to Washington.

KING: And, finally, Senator Obama, we're going to follow you with a discussion about what's going on in the country today with foreclosures and the like.

So, in that regard, what do you think of this -- what's your general look at how we deal with this ongoing tremendous problem?

OBAMA: Well, it is a huge disaster. We've got 7,000 foreclosures a day. And so much of this could have been prevented if we had had stronger oversight on the subprime lending market, if we had implemented some simple reforms around Fannie Mae and Freddie Mac, if we had had some serious efforts to curb predatory lending, a lot of these problems that we've seen could have been prevented. Not all, but a lot of them.

And so now, moving forward, I was glad to hear the president today say that he has embraced the housing bill that's coming out of the Senate and the House. I think it is very important for us to get the ball rolling in stabilizing homeowners right now who can pay a mortgage but may have gotten in over their heads in terms of either the rates or because housing values have gone down precipitously.

We need to get that bill passed. I think some of the ideas that were offered with respect to Fannie Mae and Freddie Mac are good ones. I just want to make sure that we're not bailing out shareholders and CEOs, but that we're focused on maintaining liquidity in the housing market.

If we do those things, then at least we can get a floor and banks can start making -- and lenders can start making some serious adjustments, writing down bad debt.

What we need is some clarity in the market so that people are not punishing sound borrowers, are not under-evaluating assets. You know, if we can just get back to where people have confidence that they know what's out there, what bad debt is there and can identify sound borrowers, then we can get credit flowing again. And that obviously will provide a big boost to the economy.

KING: Always good seeing you, Senator. Thanks for joining us.

OBAMA: It was great to talk to you, Larry. Thank you so much.