"Now, I believe myself that the secretary of State, the secretary of Defense -- and you have to make your own decision as to what the president knows -- that this war is lost and that the surge is not accomplishing anything, as indicated by the extreme violence in Iraq yesterday."
Reid was simply saying he believes that, given the levels of carnage, in Iraq, Rice and Gates, and, maybe, even Bush--to the extent that he's capable--all know that the surge has not worked and the war is lost.
With respect to the context upon which Reid based his comment, it is Bush who has framed this war, all along, as a win or lose proposition. And he didn't call for a surge because he believed we were winning the war. He called for it because it was to be the final attempt to turn things around. Well, it didn't turn things around, and Reid is simply stating the obvious--that the Bush administration knows this is true.
The spin that the right wing and the media are putting on Reid's words is beyond outrageous. CNN even asked Kyra Phillips, in Iraq, how this is affecting troop morale.
Here's a news flash for the media: your unwillingness to report the news accurately will do far more to hurt morale than anything Harry Reid said.