TRANSCRIPT: Bob Woodward Talks to ABC's Diane Sawyer About 'Obama's Wars'

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WOODWARD: And then it turns out it's 100 being trained. And so it's -- the more you live in this world, as the president must, it -- it's a drumbeat. They're coming. They're -- they're planning. They're plotting. They've -- they're communicating.

SAWYER: And what is his reaction to that when he gets these briefings?

WOODWARD: Well, if you want to play what he told me, I'll -- I mean, I was -- I jumped in my chair a little bit when he told me, when he literally said, "We can absorb a terrorist attack."

SAWYER: And we will play that at the moment. A couple of things though – COOPEX? They had a kind of -- well, a kind of test run...

WOODWARD: Exercise, yes.

SAWYER: ... an exercise, a test run, of a terrorist attack on Indianapolis and then one on Los Angeles, and the result was...

WOODWARD: What happened, they have an exercise because the president, as he told me, is worried about terrorists getting a nuclear weapon and setting it off in an American city. So last spring they had an exercise called a Continuity of Operations Exercise to see how we might respond.

And in the exercise scenario, a nuke went off in Indianapolis, killed thousands of people, and then you take all the leaders of the departments, and say, OK, what do we do? How do we respond? And it turned out maybe there was enough to make a second bomb in Los Angeles. One of the CIA men said there might be a third bomb.

And people I talked to who were at this exercise said that, you know, we're not ready. We don't know what to do. It was all in the -- it was an exercise where the government dealt with other arms of the government, the public, the media, the Congress played no role.

Now, imagine something like that happening in the media and the public and the Congress playing no role. I mean, we would -- you can't factor that out. And they did in this case, and some participants said, you know, this is -- this is the nightmare. And are we ready?

SAWYER: And you indicate they know that -- they seem to know that Osama bin Laden is still out there and he is still in contact and he is still -- he is still a sponsor, if not the -- the prod, for more action for more missions.

WOODWARD: This was last year in the Riedel review of Afghanistan/Pakistan, where the CIA veteran was called in personally by Obama and said, "Look at this." And Riedel is an expert, and he had -- they put him on Air Force One when President Obama was going out to do the Jay Leno show in California, and so he had time with Obama alone.

And he said, look, I've looked at the intelligence, and Osama bin Laden is still communicating. They're still plotting, and they're still recruiting. It's as dangerous as it was on September 10, 2001, the day before the big terrorist attack. So...

SAWYER: And then the president goes on Jay Leno and has to do what he's...

WOODWARD: What presidents do and everyone does on Jay Leno. I wouldn't fault him for that. It's...

SAWYER: No, I just mean the contrast of having to be...

WOODWARD: But to go back to Pakistan and -- I keep drumming on this, because they kept drumming on it in these meetings in secret...

SAWYER: Right.

WOODWARD: ... intelligence. Bruce Riedel, who knows as much about Pakistan as anyone, said to President Obama, said that you have to change Pakistan, what he calls their strategic calculus. You have to get them to think differently. They're living this lie of they fight some of the terrorists, and they sponsor and support some of the others.

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