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updated 7/27/2008 12:32:56 PM ET 2008-07-27T16:32:56

MR. TOM BROKAW:  And we are here with Senator Obama late Saturday afternoon in London, the last stop of his nine-day overseas trip.

You head back to the United States in a few hours.  For purposes of this program, we'll say good morning.  By my judgment, at least, the only television appearances that you've missed this week have been the Home Shopping Network and "Morning Devotional." We're going to take...

SEN. BARACK OBAMA (D-IL):  Right.  But those are scheduled when I get back.

MR. BROKAW:  All right.  We're going to take you through the itinerary...

SEN. OBAMA:  Right.

MR. BROKAW:  ...so everyone will know what you've been doing.  A week ago on Saturday you were in Kuwait visiting troops.  On Sunday you moved to Afghanistan, where you visited troops and met with President Karzai.  Monday, the epicenter of the trip, Baghdad, meeting with Prime Minister Maliki and American commanders.  Tuesday you were in Amman, Jordan, with the king of that country, King Abdullah.  And Wednesday meeting a variety of Israeli leaders and a prominent Palestinian.  Thursday you were in Berlin meeting with the German Chancellor Merkel, and you gave a speech to a huge throng at Brandenburg Gate.  Friday, in Paris, meeting with President Sarkozy of France. Saturday, in London, meeting with Tony Blair, the former prime minister, then with Gordon Brown, the current prime minister, and with David Cameron as well, who is the opposition leader in this country where there's a fair amount of political turmoil here as well.

SEN. OBAMA:  It makes me, makes me tired just listening to you read it.

MR. BROKAW:  When you get home and Michelle says to you, "Barack, what did you learn that surprised you?  And did you change your mind about anything based on this entire trip?"

SEN. OBAMA:  Well, I, I, I didn't see a huge shift in the strategic policies that I've laid out throughout this campaign.  It was clear to me that Afghanistan is the central front on terror, that the Taliban and al-Qaeda have reconstituted themselves.  They are--they have safe havens along the Afghan-Pakistan border.  Our troops are doing an outstanding job, and many coalition troops are doing an outstanding job.  But frankly, we need a, a, a more serious effort on the part of the Afghan government and President Karzai to get out of Kabul, to start the development process.  We're going to need two additional brigades in Afghanistan and we've got to work with Pakistan to get serious about these terrorist safe havens.  So that's got to be a priority.  I was pleased to see the reductions in violence in Iraq.  And there's no doubt that we have seen violence lessen, our troops are performing in an extraordinary fashion.  The Sunni awakening has helped to eliminate, if not eliminate, then greatly lessen the possibilities of al-Qaeda reconstituting itself as a big and effective force.  And the fact that Prime Minister Maliki is ready to take on more responsibility for the security of their country, I think is a positive development.

MR. BROKAW:  Let's begin there in Iraq, and that judgment of yours that violence has lessened and that there is a possibility now that Prime Minister Maliki can take on more responsibility.  You engaged in some verbal kung fu with reporters and others as well this week about the surge.  You opposed the surge, the addition of other American troops in there.  Many analysts believe that the reason that violence has decreased is because the American troops were deployed in a more effective manner...

SEN. OBAMA:  Right.

MR. BROKAW:  ...And it allowed President Maliki to stabilize his government somewhat.  But you would not apologize, and you said you did not regret your opposition this surge.

SEN. OBAMA:  Right.

MR. BROKAW:  That prompted this radio ad from your opponent John McCain, which is running today.  So let's listen to that and then respond.

(Videotape)

SEN. JOHN McCAIN:  (From political ad) Now that it's clear that the surge has succeeded and brought victory in Iraq within sight, Senator Obama can't quite bring himself to admit his own failure in judgment.  Instead, he commits the even greater error of insisting that, even in hindsight, he would still oppose the surge.  Even in retrospect, he would choose the path of retreat and failure for America over the path of success and victory.  That's not exactly my idea of the judgment we seek in a commander-in-chief.

(End videotape)

MR. BROKAW:  That's a radio speech from Senator John McCain that is running on this Sunday in America.  He's referring to what you had to say on January 10th, 2007...

SEN. OBAMA:  Right.

MR. BROKAW:  ...and repeated several times.  Let's listen to you now and your immediate reaction to the idea of the surge back in the beginning of 2007.

(Videotape)

SEN. OBAMA:  I am not persuaded that 20,000 additional troops in Iraq is going to solve the sectarian violence there; in fact, I think it'll do the reverse.

(End videotape)

MR. BROKAW:  We're not talking about angels on the head of a pin here, but let me ask you a direct question.

SEN. OBAMA:  All right.

MR. BROKAW:  Do you believe that President Maliki would be in a position to more or less endorse your timetable of getting troops out within 16 months if it had not been for the surge?

SEN. OBAMA:  You know, we don't know, because in my earlier statements--I mean, I know that there's that little snippet that you ran, but there were also statements made during the course of this debate in which I said there's no doubt that additional U.S. troops could temporarily quell the violence. But unless we saw an underlying change in the politics of the country, unless Sunni, Shia, Kurd made different decisions, then we were going to have a civil war and we could not stop a civil war simply with more troops.  Now, I, I...

MR. BROKAW:  But couldn't they make that political decision because troops were there to help them make it.

SEN. OBAMA:  Well, the--well, the--look, there's no doubt, and I've said this repeatedly, that our troops make a difference.  If--you know, they do extraordinary work.  The troops that I met, they were proud of their work, they had made enormous sacrifices, they had fought, they had helped to construct schools and, and rebuilt the countryside.  But, for example, in Anbar Province, where we went to visit, the Sunni awakening took place before the surge started, and tribal leaders made a decision that, instead of fighting the Americans, we're going to work with the Americans against al-Qaeda.  That was a political decision that was made that has made a huge difference in this entire process.

So the, the point I want to make is this, Tom, I mean, you know, if we want to look at the question of judgment which is the one that John McCain raised, John McCain's essential focus has been on the tactical issue of sending more troops, and he's, he's made his entire approach to foreign policy rest on that support of Bush's decision to send more troops in.  But we can have a whole range of arguments about past decisions--the decision to go into Iraq in the first place, and whether that was a good strategic decision, where we've spent a trillion dollars at least by the time this thing is over, lost thousands of lives in pursuit of goals John McCain supported that turned out to be false. We can make decisions about does it make sense for us to set a time frame for withdrawal to encourage the kind of political reconciliation that needs to take place to stabilize Iraq.  We can talk about the distractions from hunting down al-Qaeda and the Taliban in Afghanistan, where there is no doubt that we would be further along had we not engaged in some of these actions, and...

MR. BROKAW:  But we have to talk about the reality of what's going on in Iraq right now.

SEN. OBAMA:  Well, but, but, but, let me...

MR. BROKAW:  And the Anbar awakening, most people believe, was successful in large part because the American troops did come in and make it possible for them to have the kind of political reconciliation...

SEN. OBAMA:  Tom, look--Tom, I'm, I'm--the fact that--the...

MR. BROKAW:  Do you disagree with that?

SEN. OBAMA:  As I said before, our troops made an enormous contribution, but to try to single out one factor in a very messy situation is just not accurate, and it doesn't, it doesn't take into account the larger strategic issues that have been at stake throughout this process.  Look, we've got a finite amount of resources.  We've got a finite number of troops.  Our military is stretched extraordinarily because of trying to fight two wars at the same time.  And so my job as the next commander in chief is going to be to make a decision what is the right war to fight, and, and how do we fight it? And I think that we should have been focused on Afghanistan from the start. We should have finished that job.  We have not, but we now have the opportunity, moving forward, to begin a phased redeployment and to make sure that we're finishing the job in Afghanistan.

MR. BROKAW:  All right.  Well, let me show you what the USA Today said in its editorial, and then we'll move on to Afghanistan.  This is what USA Today had to say about your position on the surge.  "Why can't Obama bring himself to acknowledge the surge worked better than he and other skeptics thought that it would?" That's a conditioned response on their part.  "What does that stubbornness say about the kind of president that he would be?"

SEN. OBAMA:  Well, listen.  I, I actually think that there's no doubt that the violence has gone down more than any of us anticipated, including President Bush and John McCain.  If you, if you would--if you had talked to them and, and said, "You know what?  We're going to bring down violence to the levels that we have," I think--I, I, I suspect USA Today's own editorial board wouldn't have anticipated that.  That's not a, that's not a hard thing to acknowledge, that the situations have improved more rapidly than we had anticipated.  That doesn't change the broader strategic questions that we've got to deal with.

MR. BROKAW:  Here is some of the perception that you're working against based on the latest NBC News/Wall Street Journal poll about your qualifications to be a commander in chief.  Let's share with our viewers now that poll. Knowledge and experience, Senator McCain ahead of you by a factor of more than 2-to-1.  Would he be a good commander-in-chief, again, 2-to-1, 53 to 25 percent.  And then there is this as well, which is an important question that we asked our audience.  "Who's the riskier choice" to be the president with two wars and an economic meltdown going on at home?  Senator McCain does much better in that poll than you do.  Does that surprise you?

SEN. OBAMA:  No, because, let's say we had reversed--or rephrased the question.  Let's say the question had been, "Who's more likely to bring about change in the country?" I suspect I would beat Senator McCain handily.  Or another way we could have phrased it was, "Who's more likely to maintain the status quo?" Well, John McCain would have won that poll handily.  The fact is is that our campaign has been based on the idea that we need to fundamentally change how we do business, both domestically and internationally; that we should have a different kind of foreign policy we are deploying all of America's power, not just our military, but also our diplomatic, economic, cultural, political power; that domestically, we've got to promote not just trickle-down economics, but bottom-up economic growth and reinvest in, for example, the clean energy sector.  All those things--anytime you're bringing about big change, there are some risks involved.  But it's important, I think, to note that, in that poll, I'm also leading.  And, and so what that indicates is that the American people are ready for change.  But, as I've said before, this is a big leap for people.  You know, I don't look like previous commanders in chief.  I've been on the national scene a relatively short time. John McCain's been out there for 25 years.  It's not surprising that people would be more familiar with him.  But the fact that we are in the position we are in right now--very competitive in this race--indicates the degree to which people recognize we can't keep on doing the same things and somehow expect a different outcome.

MR. BROKAW:  Let's talk about Afghanistan.  That war, as you've emphasized a lot in the past week or so, that war's been going on since shortly after 9/11. This was your first trip.  You're a member the Senate Foreign Relations Committee.  I know schoolteachers and NGO volunteers

SEN. OBAMA:  Right.

MR. BROKAW:  ...who go there on a regular basis.  How is it possible that, as a candidate for president of the United States and a member of the Senate Foreign Relations Committee, is making his first trip to what you call the central front in the war on terror?

SEN. OBAMA:  Well, look, the, the fact is, is that I've been busy also working on issues like Iraq, on nuclear proliferation.  There are a whole range of issues that we've got to deal with.  But my assessment of Afghanistan has not been incorrect, it's been correct.  And I haven't just been talking about it in the last week, I've been talking about it for a year and a half. When I gave a speech about Afghanistan towards the beginning of this campaign, I said we are going to need more troops in Afghanistan.  We've got to work with Pakistan to make sure that they're taking seriously the incursions by terrorists into Afghanistan from Pakistan, that we've got to develop a strategy to encourage economic development both in Afghanistan and Pakistan. So I, I think that, if you look at my assessment of the situation there, it's been accurate.  In fact, John McCain and others have moved in my direction on that critical issue.

MR. BROKAW:  You want to add two brigades of American troops to the fighting force in Afghanistan.

SEN. OBAMA:  Right.

MR. BROKAW:  Now, you've just been meeting this week with French President Sarkozy and the German Chancellor Merkel.  She is prepared to add another 1,000 German troops, but that'll take their contingent up to only 4500.  And both independent military analysts and certainly the Pentagon believes that the Germans are not doing their fair share of the fighting.  They want to stay in the north; the hot zone is in the south.

SEN. OBAMA:  Right.

MR. BROKAW:  Did you bring that up with her?

SEN. OBAMA:  I did.  Look...

MR. BROKAW:  And what was her response?

SEN. OBAMA:  We've got NATO troops who are doing terrific.  Some of them are in the direct line of fire.  The British, they're fighting.

MR. BROKAW:  And the Canadians.

SEN. OBAMA:  The French, they're fighting.  The Canadians, they're fighting. The Dutch are, are fighting and, and involved in very difficult work. Countries like Germany are doing important functions in Afghanistan, and it's not as if there's not work to do in the north.  But what is true is the rules of engagement that have been set up are ones that constrain them.  I think that Chancellor Merkel is very serious about Afghanistan.  I think she is doing as much as she can, given her politics in her country right now.  Part of the reason that I wanted to give a speech in Berlin is to--and speak directly to the German people is to remind them of the historic alliance that has been formed post World War II that served as the cornerstone of our mutual security.  And this is the first effort by NATO outside of the European theater.  We can't afford for it to fail.  And, and my hope is, is that if the German people get a sense that this is--Afghanistan is very different than Iraq, that this is a war that we needed to fight.  These people attacked a NATO member, killed 3,000 civilians, that they are plotting to kill more of us, and...

MR. BROKAW:  And terrorists were living in Germany.

SEN. OBAMA:  ...and terrorists were living in Germany, and we've got to take this seriously, then hopefully we can give the political space to, to Chancellor Merkel to do more than they're doing right now.

MR. BROKAW:  The U.S. secretary of Defense, Robert Gates, apparently has sent a pretty sharp letter to the Germans, saying, "You've got to do more."

SEN. OBAMA:  Right.

MR. BROKAW:  She complain about that?

SEN. OBAMA:  She did not complain about it.  I, I was very impressed with Chancellor Merkel and her, her understanding of the situation.  She takes it very seriously.  And you know what?  She also takes seriously the notion that a country like Germany has to participate in burden sharing when it comes to our key security issues.  President Sarkozy in France feels the same way. Gordon Brown here in England feels the same way.  Part of the problem that we've had is that because of the unpopularity of the war in Iraq, we have seen European voters very turned off with participation in coalitions generally, and that's impacted their ability to move troops into Afghanistan.  This is not just my assessment, Secretary Gates had a similar assessment a while back. And so what we want to do is to refocus attention, say that, you know, "We've got to be careful in terms of how we drawdown troops in Iraq, but America's going to make these commitments in Afghanistan.  We need your help, we need your cooperation.  And if we do, then we can finish the job and all of us will be safer."

MR. BROKAW:  And the troops that you take out of Iraq, those that don't go to Afghanistan, will they stay in the region and protect Saudi oil fields and the idea that there could be another resurgence of the insurgency in Iraq?  And where will they be deployed?

SEN. OBAMA:  Well, these are issues, obviously, that you'd have to work through with the commanders.  I have committed to making sure that we've got a residual force that can do a couple of things.  We can provide logistical support, intelligence support.  Training for Iraqi troops is still going to be critical.  They are now at a point where they are taking the lead in actions, but they are not completely independent of us, and we've got to make sure that that oversight, overwatch role continues.  And we've got to have a counterterrorism, a counterinsurgency strike force in the region.  Where it's most effectively deployed, I think, is a decision that would be made in consultation with the, with the generals.  How large that force might be, I think, is also something that we would want to consult with folks on the ground about, as well as the Iraqi government.  But...

MR. BROKAW:  And what countries would accept it.

SEN. OBAMA:  And what countries are going to be interested in having them. But I think that if we have played our cards right in the coming months then you're going to see countries like Iraq, like Afghanistan, like Kuwait--those countries are going to be much more comfortable with our troop presence if they feel that they've been consulted and that there's not the prospect of a long-term occupation or permanent bases in Iraq.

MR. BROKAW:  Senator, you can't talk about Afghanistan without talking about Pakistan.  Here's what you told Time magazine recently about additional assistance.  We've already spent $10 billion with the Pakistanis, they've not made a dent in the Taliban.  You said, "We should condition some assistance to Pakistan on their action to take the fight to the terrorists within their borders.  And if we have actionable intelligence about high-level al-Qaeda targets, we must act if Pakistan will not or cannot." Let me take the first half of that statement.  That seems, to me, to be a fairly tepid statement, "We'll condition some assistance." What does that mean?

SEN. OBAMA:  Well, I--it's not tepid at all, it's very concrete.  We give money to Pakistan, much of it in the form of military aid.  I would argue that too much of it has been in the form of just military aid and not enough of it has been in the form of building schools and building infrastructure in the country to help develop and give opportunity to the Pakistani people.

MR. BROKAW:  But how...

SEN. OBAMA:  And--but, but...

MR. BROKAW:  How, how do we measure that then?  Then how do we know when they're not going after them?  They say, as they have repeatedly, "We've been doing the best we can."

SEN. OBAMA:  Oh, well, my assessment is different, our intelligence assessments are different, our military commanders' assessments are different. The fact is, is that if you've got training camps in Pakistani territory where these folks are operating with--without any worry that they are going to be broken up or that strikes are going to take place--we know where these folks are.  You know, I was--I would talk to commanders and, and U.S. forces that could identify where there are training camps that are taking place.  We have provided significant amounts of military aid, but much of it has been conventional military aid that is used by Pakistan because they're worried about India or they're involved in disputes about Kashmir.  And the point that I've made is, is that if we are going to provide military assistance to Pakistan, we should at least expect that that money is effectively deployed to deal with what is the most important security threat that we face.  That only makes sense.  On the other hand, we've also got to make sure that we're reaching out to the Pakistani government and helping them to provide a better life for their people.

MR. BROKAW:  I'm sure you heard the same thing that I have heard every time I've gone to Pakistan.  Got about 150 million people there.  The estimates are as many as 50 percent of them are sympathetic to the terrorists.  If the United States makes a unilateral attack, it'll set off a conflagration within Pakistan.  That's part of the reason that Musharraf played it the way that he did.

SEN. OBAMA:  Right.  Well, look, there's no doubt that the situation in Pakistan is, is complicated.  I think it was made more complicated by our insistence on providing Musharraf with a lot of military aid, ignoring some of the problems in terms of his anti-democratic practices, and ignoring the fact that the Taliban and al-Qaeda was resurgent in that area.  If we are reaching out to the Pakistanis and working with them not only about our security interests, but also about the well-being of the Pakistani people.  If we are encouraging democratic practices and human rights and making sure that Supreme Court justices are not kicked off the bench because they're not providing rulings that are of the liking to the military, that will gain more support for our policies in the region and in Pakistan, and hopefully will give more political space for them to act forcefully against the extremists in the region.

MR. BROKAW:  Let's move on to Israel, where you got very good notices across the political spectrum from Israeli leaders, but you also met with King Abdullah of Jordan.  He recently told The Washington Post, and he's been saying in--this in the United States, as well; when asked if Iran is the number one threat of the region, he said, no, "I think the lack of peace [between Israel and the Palestinians] is the major threat.  I don't see the ability of creating a two-state solution beyond 2008, 2009.  I think this is really the last chance.  If this fails, I think this is going to be a major threat for the Middle East:  Are we going to go for another 60 years of `fortress Israel,' or are we going to have a neighborhood where Israel is actually incorporated?  That's our major challenge, I'm very concerned that the clock is ticking, that the door is closing on all of us." I'm confident that he said the same thing to you.

SEN. OBAMA:  Yes.

MR. BROKAW:  Did you tell him that you would appoint a presidential envoy who would report only to you to work exclusively on the issues of peace between the Palestinians and the Israelis?

SEN. OBAMA:  I told him something approximating that.  What I told him was that this will be an issue that I don't wait until the last minute to work on, that I want to pick up on some of the progress that has been made coming out of Annapolis.  I give the Bush administration credit that the Annapolis process has gotten Prime Minister Olmert in Israel and President Abbas in the Palestinian territories to have very serious and frank discussions.  I think they have moved the ball forward.  They may not be able to finish the job. They certainly can't finish it without serious participation by the next administration, and we've got to start early.

And, and one thing I want to pick up on, because I think King, King Abdullah is as savvy a analyst of the region and player in the region as, as there is, one of the points that he made and I think a lot of people made, is that we've got to have an overarching strategy recognizing that all these issues are connected.  If we can solve the Israeli/Palestinian process, then that will make it easier for Arab states and the Gulf states to support us when it comes to issues like Iraq and Afghanistan.

It will also weaken Iran, which has been using Hamas and Hezbollah as a way to stir up mischief in the region.  If we've gotten an Israeli/Palestinian peace deal, maybe at the same time peeling Syria out of the Iranian orbit, that makes it easier to isolate Iran so that they have a tougher time developing a nuclear weapon.

So we've got to take all these issues, and I think the next president has to start very quickly in moving both on the peace process forward and still recognizing that issues like Iran are connected and of extraordinary priority.

MR. BROKAW:  You met with a wide variety of Israelis; you only met with Palestinian President Abbas.  But you went to an Israeli village that had been shelled.  You went to the Holocaust museum.  Any number of people have commented on the fact that you really didn't spend any time with Palestinian businessmen or go to a Palestinian family that lost a child to Israeli gunfire.  You didn't even get a falafel in east Jerusalem while you were there.  Can't you see why anytime an American goes to the Middle East, goes to an Arab capital, on the street or in a corridors of power, they say, "You just do whatever the Israelis want you to do, and the politicians come out here looking for Jewish votes."

SEN. OBAMA:  Well, I, I, I don't think that's entirely fair.  This is my second trip to Israel and the West Bank.  And the first time that I went, I did meet with Palestinian businessmen, I did talk to Palestinian students in Ramallah.  When you're in a region for a day, you've got a lot of boxes that you've got to check.  And in Israel in particular, a big chunk of our day was meeting with not only the current prime minister, but former prime ministers and a whole bunch of people who intend to be prime minister.  And the--it was important for us to make sure that we had covered our bases there.

But the, the larger point I think to be made is this.  That the Palestinian people are having a very tough time right now economically, and it is in U.S. interests to make sure that they have a sense of hope and opportunity and a Palestinian state.  I think it's in Israelis' interest as well.  And what I've said is that we're going to make sure that the Palestinians have the--a state that allows them to prosper as long as we also have certainty that Israel's security is not being compromised.  I think it's in the interest of both parties, but we are the critical ingredient in terms of making sure that a deal actually gets done.

MR. BROKAW:  Next stop, Berlin.  You were a rock star, as you often are when you give a speech.  You had some, by estimates, 200,000 people listening to you.  Big crowd.  Not everyone in America was an admirer.  Charles Krauthammer, the conservative columnist said, "He hasn't earned the right to speak there." And David Brooks, for The New York Times, who was an early admirer of your rhetoric in the early stages of the campaign had this to say in his column about your appearance in Berlin:

"When John F.  Kennedy and Ronald Reagan went to Berlin, their rhetoric soared, but their optimism was grounded in the reality of politics, conflict and hard choices.  Kennedy didn't dream of the universal brotherhood of man. He drew lines that reflected hard realities.  Reagan didn't call for a kumbaya moment.  He cited tough policies that sparked harsh political disagreements.

"Much of Obama's Berlin speech fed the illusion that we could solve our problems if only people mystically come together.  We should help Palestinians and Israelis unite.  We should unite to prevent genocide in Darfur.  We should unite so the Iranians won't develop nukes.

"The great illusion of the 1990s," according to David Brooks, "was that we were entering an era of global convergence in which politics and power didn't matter.  What Obama offered in Berlin flowed right out of that mind-set.

"Since then, autocracies have arisen, the competition for resources has grown fiercer, Russia has clamped down, Iran is on the march.  It will take politics and power to address those challenges, the two factors that dare not speak their name in Obama's lofty peroration.  ...  Obama has benefited form a week of good images.  But substantively, optimism without reality isn't eloquence. It's just Disney."

Why didn't you use that occasion to spell out in great detail a sweeping vision of the Obama doctrine?

SEN. OBAMA:  Well, let me, let, let...

MR. BROKAW:  You're a candidate for president of the United States.

SEN. OBAMA:  Let me say first of all, there were a bunch of really good reviews that you didn't, you didn't put up on the screen.  I'd, I'd say there were about nine good reviews for every, every bad one.  And number two, I think David Brooks is one of my favorite conservatives, but he is a conservative who is supportive of John McCain, so let's, you know, put that out there as, as a caveat.

MR. BROKAW:  But get to the point.

SEN. OBAMA:  But, but, but, but let's, let's get to the point.  No one speech does everything, right?  I could have delivered a exhaustive list of policy prescriptions.  I suspect that 200,000 people would have slowly drifted off as I entered into the 45th minute of the speech.  What I was trying to do was provide some broad themes in terms of where America needs to go and where Europe needs to go.  And contrary to David Brooks' suggestion and some of the suggestions of other conservatives, I was, I think, pretty clear about the, the difficulties of, of power and of politics.

When I specifically said that Europeans need to step up and do more in Afghanistan, that wasn't an applause line in Germany.  When I talked about the fact that they need to do more in Iraq despite our past differences, that wasn't an applause line in Germany.  When I talked about the fact that there has been too much anti-American sentiment and a, and a stereotyping of America in Europe, that wasn't an applause line in Germany, that wasn't a bunch of high-flying rhetoric.  So I, I think that, given the purpose that I had, which is to get Europeans to recognize the extraordinary sacrifices that Americans have made on behalf of world freedom and security and to get Americans to recognize we need partners in order to be effective to solve our problems, I would give myself a, a slightly better grade than David Brooks did.

MR. BROKAW:  Senator, we're going to give you a chance to make some real news here in a moment.  You can talk about the vice presidential choices that may be on your mind.

But we'll have a brief break first, and we'll be back to continue our discussion with Senator Obama, talk about his vice presidential choices, the economy, and also race in America.

(Announcements)

MR. BROKAW:  I'll have more from London with Democratic presidential candidate Barack Obama after this brief station break.

(Announcements)

MR. BROKAW:  We're back here in London with Senator Barack Obama, who is wrapping up his trip to the Middle East and to Europe, returning to the United States.

And wherever you are, Senator, as you know, all politics is local.  Vice presidential candidates, tantalizing to everyone.  Recent poll said that, by a factor of about 60 percent, the American people believe that John McCain should have a vice presidential running mate who is strong on the economy. Think it's fair to say that conventional political wisdom in this country is that you need a vice presidential candidate who has very good national security credentials.  Is that your number one criteria?

SEN. OBAMA:  You know, I hate to do this to you, Tom, but I made a pledge that the next time you heard me talk about vice president it would be to introduce my vice presidential running mate.  So here's what I'll tell you: I'm going to want somebody with integrity; I'm going to want somebody with independence, who's willing to tell me where he thinks or she thinks I'm wrong; and I'm, I'm going to want somebody who shares a vision of the country where we need to go, that we've got to fundamentally change not only our policies, but how our politics works, how business is done in Washington.  And I think that there are a number of great candidates out there.  I'll be selecting one soon enough, and, and I'm sure NBC will be reporting on it.

MR. BROKAW:  Are you going to break the old rules?  The old rules have been you pick a vice presidential candidate because you need electoral strength in some region and you need somebody who is stronger in some policy area than you are.

SEN. OBAMA:  I, I think the most important thing from my perspective is somebody who can help me govern.  I want somebody who I'm compatible with, who I can work with, who has a shared vision, who certainly complements me in the sense that they provide a knowledge base or an area of, of expertise that can be useful.  Because we're going to have a lot of problems and a lot of work to do, and I'm not interested in a vice president who I just send off to go to funerals.  I want somebody who's going to be able to roll up their sleeves and really do some work.

MR. BROKAW:  Mike Murphy, who you know is a political consultant primarily for Republicans, is now working with NBC as an analyst, said on this broadcast two weeks ago something very interesting.  He said, "Republican Party always has trouble when the Democrats put on the ticket a Southern white male Protestant." Reviewing their short history, that's true--Lyndon Johnson with John Kennedy; Lyndon Johnson running by himself; Jimmy Carter, a man from the South; Bill Clinton and Al Gore, two Southerners running.

SEN. OBAMA:  Right.

MR. BROKAW:  Will that be a factor in your consideration?

SEN. OBAMA:  Tom, you can fish as much as you want.  You're not going to get it out of me.

MR. BROKAW:  Well, let me--you, you had a conversation with a prominent Hillary fundraiser that got reported in the Los Angeles Times, in which she asked you--she's still a fan of, of Hillary, and she said...

SEN. OBAMA:  So am I.

MR. BROKAW:  And is she on your list?

SEN. OBAMA:  I think Hillary Clinton--I've said--this one I can actually answer, because I've said consistently that I think Hillary Clinton would be on anybody's short list.  She, she is one of the most effective, intelligent, courageous leaders that we have in the Democratic Party.

MR. BROKAW:  And according to the woman that you were talking to, you said that "we just don't know what to do about Bill," or something to that effect.

SEN. OBAMA:  Oh, you know, I maybe--I think that a lot of conversations get characterized.  I think that not only do I want Hillary Clinton campaigning with me, I want Bill Clinton, one of the smartest men in the history of politics, involved in our campaign.  But I'm not going to, I'm not going to spill the beans here.  You, you can, you can do what you want...

MR. BROKAW:  Bill Clinton as, Bill Clinton as a surrogate for you day in and day out, throughout the campaign?

SEN. OBAMA:  I, I would love to have Bill Clinton campaigning for me.  I--he was very effective when it came to our primary, you know.  He was traveling to little towns in Texas and Ohio, and it was very hard to keep up, given that he was campaigning so hard at the same time as Hillary was campaigning as hard as she was.

MR. BROKAW:  We continue to hear that timing, obviously, will be a factor. It's no secret that next week the Olympics begin.

SEN. OBAMA:  Right.

MR. BROKAW:  And then America's attention will--we hope, at NBC--will be consumed by the Olympics, as it traditionally happens every four years.  And then right after that, the Democrats have their convention.  Are you going to wait until the convention?

SEN. OBAMA:  You know, we will make the announcement when we make the announcement.  Let, let me, let me just--and not to dodge, because I've already dodged enough.  I think what's going to be on people's minds over the next week is going to be what's been on their minds for the last four weeks, and that is...

MR. BROKAW:  The economy.

SEN. OBAMA:  ...the state of the economy.  And so one of the things that I'll be doing on Monday, I'm going to be pulling together some of my core economic advisers--Paul Volcker, the former Fed chairman; Warren Buffet; Paul Schmidt--Eric Schmidt, the chairman of Google; Bob Rubin; Larry Summers; a host of people--Bob Reich--to come together and examine the policies that we've already put forward--a middle class tax cut, a second round of stimulus, a effort to shore up the housing market in addition to the bill that was already passed through Congress, what we need to do in terms of energy and infrastructure.  I think that that is what is driving people all across the country right now is worries and concerns about inability to pay the gas bill, inability to buy food because prices have gone up so high.  And the failures of the economy, despite the fact that we grew for seven years, to provide rising levels of income and wages for the American people, I think, indicates the degree to which we've got to fundamentally shift how we approach economic policy.

MR. BROKAW:  Let me ask you a question about housing.  A lot of attention this past week to federal aid for Fannie Mae and Freddie Mac, the two government quasi-agencies that got themselves in real trouble.  Banks have gotten in trouble.  There's now a housing bill out there to take care of people whose homes are being foreclosed.

SEN. OBAMA:  Right.

MR. BROKAW:  This is not as cold-blooded as it sounds, but I hear a lot of people around this country saying, "Look, I did the right thing."

SEN. OBAMA:  Right.

MR. BROKAW:  "I, I got a prudent mortgage," or I hear a lender saying, you know, "I wouldn't have gotten involved in one of those things." Why should they bail out people, many of whom were simply speculating?  Or the lenders who were taking the fees and doing loans that they knew that would not be being paid back and walking away?  Why should the hard-working taxpayer in this kind of an economy have to bail those people out?

SEN. OBAMA:  They shouldn't, which is why a couple of points that I've made. Any assistance to Fannie Mae or Freddie Mac should not be focused on the investors and the shareholders.  It should not be focused on management.  It should be focused on making sure that we've got liquidity in the housing market.  And there are ways of making sure that we are not giving a windfall to investors who were enjoying the upside all these years of Fannie Mae and Freddie Mac, extremely profitable partly because there was this implied federal guarantee.  Well, if they enjoyed all that upside, they should enjoy some downside as well.

MR. BROKAW:  Why not just reconstitute them as pure government agencies and take them out of the private sector?

SEN. OBAMA:  Well, I--you know, I think that part of what we have to recognize is they've got $5 trillion worth of, worth of mortgages out there, and we've got to make some decisions in terms of whether or not we want to take that--those liabilities onto the federal balance sheet.  So there are, there are a host of complicated issues here.  It is true that there may be some folks who didn't make the best decision that will still benefit from the home foreclosure plans that have been put forward.  But keep in mind that many of these folks were not so much speculators as they were probably in over their heads.  They tried to get more house than they could afford because they were told by these mortgage brokers that they could afford it.  We are better off helping them stay in their home if you can fix the mortgage and let them pay it off over time than have them foreclose, in which not only do they lose their home, not only do the lenders lose a lot, but that community suddenly sees its property values going down.  And what we need is a floor in the housing market, a, a stop to the decline in housing values, as well as some certainty on the part of lenders in terms of what houses are worth so that we can start restoring confidence in the housing market, but also confidence in the financial markets where credit has been contracting.  And that's affecting a lot of terrific businesses and good sound developments and entrepreneurial opportunities because they just can't get good credit.

MR. BROKAW:  As painful as it is, is the idea of $4 gasoline a good thing in a way because it's forced the country to confront finally the idea that we do have an energy crisis, and it's forcing Detroit to retool its line of automobiles, make them more energy efficient.

SEN. OBAMA:  Right.

MR. BROKAW:  People are driving less now.  In some states, there's an indication that maybe even traffic deaths are down.

SEN. OBAMA:  Yeah.  Well, I do not think that high gas prices are a good thing for American families.  I mean, I've, I've met teachers who have quit their jobs because the school where they were teaching was just too far.  It was consuming too much of their income.  I've met people who lost their job and couldn't go on a job search because they couldn't fill up the gas tank. Ordinary families are under extraordinary stress as a consequence of these high gas prices, so we need to do what we can to bring those prices down, but...

MR. BROKAW:  But there's no easy answer for that on a short term.

SEN. OBAMA:  ...but there, but there, but there isn't, and, and that's what I was about to say.  The, the fact of the matter is that we should have, over the last 20 years, been planning for this day.  I have been an advocate for raising fuel efficiency standards for years, something that John McCain has opposed.  Had we taken those steps, we would not be in the same situation that we're in right now, the fact that all the big three U.S. automakers are getting hammered.  Had we worked with them to adjust and retool to adapt to this market, we would not be losing as many jobs as we're losing right now. That's, that's all hindsight.  Going forward, what we have to do is we do have to continue to push to make cars much more fuel efficient, and I think that the direction of hybrid plug-ins, where we can get a hundred miles per gallon of gas because we've developed battery technology and created a new electricity grid, that can make a huge difference.  Industrial use of oil, we can change that.  That's why I want to put $150 billion, $15 billion a year, into all these new technologies, research and development.  We have to have the same approach that John Kennedy said, "We're going to the moon in 10 years." We should be saying, "In 10 years time, we're going to be cutting our oil consumption drastically." That will bring down, by the way, the price of oil for when we do need to use it.

MR. BROKAW:  Let me ask you about race.  We have some recent polling on that, and, as you know, it's a whispered if not unspoken issue in your campaign. "Racism against blacks widespread in America?" That's the question.  When African-Americans were asked that question, they said yes, 78 percent to 20 percent.  Racial justice in America was the second half of this question. Again, we asked this question of African-Americans.  Is it biased against blacks?  Sixty-seven percent to, no, 27 percent.  Do you see those numbers the same way?

SEN. OBAMA:  You know, here's what I've said based on my life experience is that there have been profound changes since I was born, '61.  When I accepted the Democratic nomination, it will be the 40th anniversary of Dr. King's "I have a dream" speech, and here I am in a position to accept the Democratic nomination.  That, that is a profound change that we should celebrate.  We've still got work to do.  And there is no doubt that discrimination still exists in various parts of American life.  There's no doubt that--I think, I think...

MR. BROKAW:  What about the margins that we saw in that poll?

SEN. OBAMA:  Well, I, I think that when you say it's widespread, people think of, "Well, I've, I've had an experience," and, and they maybe extrapolate all across this society.  I think that's a mistake.  I think the vast majority of Americans are people of goodwill.  They want to do the right thing.

The biggest problem that we have in terms of race relations, I think, is dealing with the legacy of past discrimination which has resulted in extreme disparities in terms of poverty, in terms of wealth and in terms of income. Our inner cities are a legacy of what happened in the past.  And the question is less assigning blame or rooting out active racism, because that's not the reason that those inner cities are in such bad shape, but rather figuring out are we willing to make the investments to deal with that past history so we can move forward to a brighter future?  And that involves investing in early childhood education, fixing the schools in those communities, being willing to work in terms of job retraining.  And those are serious investments.  It also requires some responsibility on the part of the black community, and that's why I've talked about, for example, the need for fathers to re-engage in the lives of their children.  We can't have more than half of African-American children growing up without knowing their dads or having an incidental contact with their dads and expect that that's not going to have some sort of impact.

MR. BROKAW:  How many more times have you heard from Jesse Jackson about his comments about your speech to black families?

SEN. OBAMA:  I haven't heard too much from Reverend Jackson.  I, I--look, the fact is, Reverend Jackson used to preach similar issues and recognized the need for responsibility.  What I've said is, it's not an either/or proposition.  Those of us who are fortunate, those of us who are in positions of power, the society as a whole, we've got to take responsibility for creating ladders of opportunity for people.  People who are poor, impoverished in inner cities and rural communities and, and barrios all across the country, they've got to be responsible for grabbing hold of those ladders and using individual initiative to walk up those ladders.

MR. BROKAW:  Finally, Senator Obama, you said earlier when John McCain raised the possibility that the two of you could appear on a regular basis during the course of the campaign at town halls, you thought it was a good idea.  We haven't heard anything more from you.  Would you appear with him once, twice, three times a week in town halls at the end of the conventions until election day?

SEN. OBAMA:  Well, you know, the problem that we're going to have right now is we've got three debates that--official debates that we have definitely scheduled, and debates take time.  I mean, when you start having presidential debates, there's preparation and all that stuff.  I want to make sure that...

MR. BROKAW:  Well, that would be warmup.  I mean, it would be batting practice.

SEN. OBAMA:  Well, here's the thing, I mean, listen, I, I, I think--I can say a little something about debates since I had 22 of them in, in the Democratic primary.  I don't know how many John had.  At a certain point, they become, I think, less of a serious exchange of ideas and rather they have--they become competing talking points or, or press releases.  I, I think it's important for us to have some hard-hitting debates.  I think it's also important for us to spend time talking to the voters directly, and that's what I intend to do.

MR. BROKAW:  Senator Obama, thanks very much for being with us today.

SEN. OBAMA:  I had a great time.

MR. BROKAW:  Hope you get some sleep on the way home.

SEN. OBAMA:  Look forward to it.

MR. BROKAW:  All right.

We'll be right back.

(Announcements)

MR. BROKAW:  That's all for today.  Watch "NBC Nightly News" tomorrow night, something very exciting.  Brian Williams will be reported from Tehran where he'll interview Iran's president, Ahmadinejad.  There should be some news coming out of that one.

And I'll be back next week, because if it's Sunday, it's MEET THE PRESS.


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