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STATE OF THE UNION WITH JOHN KING

State of the Union: Interview With Governors Barbour, Patrick; Interview With Senate Minority Leader Mitch McConnell

Aired February 22, 2009 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JOHN KING, HOST: I'm John King, and this is our "State of the Union" report for this Sunday, February 22nd.

President Obama this week uses his first address to a joint session of Congress to give anxious Americans more details of his agenda. But can he restore confidence to the struggling economy? We will talk to two governors with very different ideas on how to pull us out of recession.

Plus, the auto makers are asking for additional billions in bailout money. We take you to the assembly line and visit a part of the country where a way of life is fading away, and talk to workers who tell us about the pain of losing their jobs and of disappointing their children.

And California closed a massive budget gap this past week with a mix of tax increases and program cuts. Governor Arnold Schwarzenegger live on the tough choices and his place in American politics. That's all ahead in this edition of "State of the Union."

Beautiful picture there of the U.S. Capitol on a Sunday morning here. And before we get to our guests on "State of the Union," a quick glance at what is ahead in our program.

Here in our 9:00 hour, as always, interviews with top newsmakers in the United States and around the world. At 10:00 a.m., Howie Kurtz and his "Reliable Sources" takes a critical look at the media. At 11:00 a.m. Eastern, members of the best political team on television, our reporters and analysts, will discuss and debate the day's major stories, including highlights of the Sunday morning talk shows. And at noon Eastern, we're the only live Sunday interview program. More newsmakers, and for one, "The Last Word." And through at all, we keep our promise to get outside of Washington and add your voices to our Sunday conversation.

So let's get started. Some big tests ahead this week for President Obama. For the first time, he'll address a joint session of Congress and outline his budget plan. This after a week when more than 600,000 new workers applied for unemployment insurance, joining nearly 5 million others, an all-time high. Whether Mr. Obama's plans will create all those promised jobs or stabilize the housing market remains an open question, but the reaction in financial markets is unenthusiastic, to say the least. Wall Street this past week hit a six-year low. So will the Obama plans work, and what do struggling states need most? I'm joined by two governors on the fiscal front lines, Haley Barbour, Republican of Mississippi; Deval Patrick, Democrat of Massachusetts.

Gentlemen, I want to talk specifics about the economy first, but I want to start with a political question. We have a brand new poll out this morning with incredibly high marks for our new president. 80 percent of the American people view President Obama as a strong leader; 75 percent of the American people say he inspires confidence. And, yes, when you ask those same Americans, will President Obama's stimulus plan improve your financial situation? Three in 10 Americans, only three in 10, 31 percent, say yes; 67 percent, more than two-thirds of Americans, say no.

Haley Barbour, let me start with you. As a Republican governor, former national party chairman, why the disconnect between what people think personally of President Obama and whether they think his policy will work.

BARBOUR: Well, I think Americans want our president to succeed. You know, whether you're a Republican who had voted for John McCain, he's our president, and our country needs him to succeed, particularly in times like this. So I think that's part of it. At the same time, people are pessimistic about the economy. And think about what they see on the news, John. I mean, they get pounded and pounded and pounded with the bad news. And, frankly, I think most economists are right when they say we likely won't hit bottom this year. That's why states like mine are trying to be very conservative and prudent.

KING: So, Governor Patrick, pessimistic about the economy or also maybe have doubts about the specifics of this plan?

PATRICK: I think Governor Barbour has it right. It's pessimism about the economy. It's wide-ranging anxiety. It's worries about, you know, if you have a job, whether you are going to be able to hang on to it, whether you're going to be able to educate your kids.

And you know, our ideas through this stimulus bill, but not just through the stimulus bill, are to put people back to work. And there are a whole host of ways to do that. But we know and the president knows, government doesn't create jobs; businesses do. And so we need to be investing in all the ways that the stimulus bill enables us and others in order to get people back to work.

KING: You are about to get a chunk of change from the federal government. Governor Patrick, you wanted it. You have budget shortfalls. Governor Barbour, you weren't so sure about this program, and you have even said you don't want some of it. I was out in Michigan with another governor who will be at your meetings here in Washington this week, and Michigan has the highest unemployment rate. I stopped by to see Governor Jennifer Granholm, and she had a message she wanted me to deliver to you and other Republican colleagues, Republican governors who have said maybe I won't take this money. Let's listen.

(BEGIN VIDEO CLIP) GOV. JENNIFER M. GRANHOLM, D-MICH.: The governors who are trying to decide whether they are going to accept the stimulus money or not -- we'll take it. We'll take your money. South Carolina, I'll take your money. Louisiana, we'll take it. We got plenty of work here, plenty of jobs that we would like to create here.

(END VIDEO CLIP)

KING: So, Haley Barbour, are you prepared to say no to the federal government, I won't take your money, and, Governor Granholm, would be grateful if you would take it, and then just write her a check?

PATRICK: Well, wait a minute, wait a minute. We're over here, too.

(LAUGHTER)

PATRICK: We'll take it too.

BARBOUR: Well, the truth is, I don't know any governor who's just talking about not taking any of the money.

KING: But you won't take some?

BARBOUR: There is some we will not take in Mississippi. If we were to take the unemployment insurance reform package that they have, it would cause us to raise taxes on employment when the money runs out, and the money will run out in a couple of years. And then we'll have to raise the unemployment insurance tax, which is literally a tax on employment. I mean, we want more jobs. You don't get more jobs by putting an extra tax on creating jobs.

KING: Is that -- is he right about that? That if you take this money, you're going to have to raise taxes?

PATRICK: I don't think so. I respectfully disagree. I mean, even before we went on camera, we were talking about you getting out and the show getting out, talking to people, learning from people outside of Washington, and frankly, outside of government. And everywhere across the country, certainly in Massachusetts -- and I'll bet it's true in Mississippi -- people want their roads repaired, they want their bridges repaired, they want a clean energy strategy and alternatives and real alternatives, and they want us to be candid with them about those needs. So whether governors say that they will or won't take this or that part of the stimulus bill in some ways is irrelevant. People want that help.

Now, I think that the point that the governor has made about what happens after the stimulus bill runs out is an important one, for all of us. And how we plan for that and how we are prudent about that is a challenge in states led by Democrats just as in states led by Republicans.

KING: One of the things... BARBOUR: I want to say, John, I think most governors from both parties wish there had been more money for infrastructure, more money for roads and bridges. But a lot of the money is social policy, in this particular instance. Our state would be required to pay unemployment compensation to people who are not willing to work full- time. We've never done that in our state. Most states do not do that. If we were to change so we get this extra federal money, then we would have to put in extra tax on job creation in Mississippi.

This is not about whether or not we're going to take money to build roads. This is about whether we're going to change policy to what the left wants, and then have to raise taxes on our employers to do it. It's a small item out of a big bill.

KING: There's an accountability challenge for the president -- this is his program -- but also for you as governors. And I want to go through the numbers. The federal government says Massachusetts will get $8 billion roughly in the stimulus program, should create 79,000 jobs is what the federal government says. Mississippi would get $2.3 billion, maybe you'll send some of that back, but the federal government says the stimulus should create 30,000 jobs in the state of Mississippi. Do you accept those numbers, and will you be held accountable, Governor Patrick, you first?

PATRICK: Well, first of all, I think the most -- the most critical element of accountability is wise choices in terms of how the money is spent. And we have created a position to oversee all of that, and also a website so that you will be able to follow every dollar for every project against its budget and timeline. And I think the people are crying out for that kind of accountability. The president accepts it. I accept it. I think it will be...

(CROSSTALK)

KING: To the point of nearly 80,000 jobs?

PATRICK: I think it's 80,000 jobs created or saved, and certainly that is aligned with our own independent initiative. So, yes, we want to do that.

KING: Do you accept his numbers?

BARBOUR: I think you're probably right about $2.3, $2.5 billion. How many jobs it will create or not create I think is an estimate. I don't take issue with it, I just can't confirm it.

But we in Mississippi, because of Katrina, have had the experience of getting a huge amount of federal money, kind of unexpectedly.

KING: Right.

BARBOUR: And you do have to put in structures to manage the money, to help the local governments, because the American people have a right to expect us to be good stewards of this money, and we're going to be. We learned how to do it with Katrina and we're going to do it with this money too.

KING: You mentioned your home state of Mississippi. I want to start with a headline here in a Sunday morning newspaper, "The Hattiesburg American." "Obama wants deficit halved." He will present his budget to the Congress in this coming week, and he says even though they are spending all this money on the stimulus program, all the money on the financial industry bailout, he will try to get about the business of cutting the deficit in half. One way he will do that, Haley Barbour, is by letting the Bush tax cuts expire. Americans who make more than $250,000 will pay more in income taxes. There are also some higher taxes on some investments in this plan. Is that the right thing to do in the middle of a recession, in your view?

BARBOUR: I don't think there's an economist in the United States that thinks when you're trying to get out of a recession and to create jobs, you ought to raise taxes.

KING: You agree with that?

PATRICK: Look, I think that what the people want is candor. They want us to be honest about what the cost of the services that they say they want actually is. That's what we're trying to do in Massachusetts. Just this last week...

KING: But you say -- I want to show this headline as you speak, Governor, because you're taking some heat back home. This is "The Boston Herald." My first job was delivering this newspaper many years ago.

PATRICK: Yes.

KING: "Just Gas-tly."

PATRICK: Look at you now, John.

KING: I tell everybody, get a job delivering "The Herald." Nineteen cent tax rip-off, they are calling it on the front page of "The Boston Herald." You have to make tough choices.

PATRICK: They are miserable choices. And it's not, you know, it's not a joyful decision, but it's that or substantial cuts in services in mass transit, as well as fare increases, or doubling of the tolls on the turnpike.

I have put all of that out there, and we are dealing, frankly, with 16 years of a lack of stewardship, where we took debt from the Big Dig project and stashed it away in all kinds of places and told people they could have things without paying for it.

That bill is now due. And so I am just trying to be candid with the people of Massachusetts about what our choices really are. And none of them are particularly pleasant. But grown-ups that know you can't have something for nothing.

KING: Much more of our conversation with both governors, just after a quick break. They will stay with us. We'll hear a lot more. Later this hour, we take you up close on a GM assembly line, where workers live in constant fear their job's in jeopardy. And they say middle-class America is fading.

In our 10 o'clock hour, outspoken author Bernie Goldberg calls the media's relationship with Obama, quote, "a slobbering love affair." Howard Kurtz puts that controversial claim to the test.

At 11:00 a.m., our provocative Sunday conversation with the best political team on television.

And at 12 p.m., California Governor Arnold Schwarzenegger. He'll be here, live, to talk about the state of the economy and the Republican Party.

Much more of our "State of the Union" report, right after a quick break.

(COMMERCIAL BREAK)

KING: We're back now with the governors of Mississippi and Massachusetts, Democrat Deval Patrick and Republican Haley Barbour.

Gentlemen, I want to use the map, for just a second, and get your advice on what you think of this. President Obama, as he sells the stimulus plan, has been getting outside of Washington.

Here's some of the places he's gone. He's gone down to the state of Florida. He's been out to Ohio. He's been out to Indiana. He's gone to Virginia. He was out in Colorado. And he went down here to Arizona.

Now why am I circling these states? Let's just do this, take the Telestrator off. Let's remember these states here.

See the circles? Let's go back in time to the 2004 election: a red state, a red state, a red state, a red state, and a red state.

This state stayed red this time, John McCain's home state, but Barack Obama would like to change it next time.

Haley Barbour, you were once the national Republican Party chairman. As a salesman, rate the president in terms of how he does on the road -- you think he's going those places for a reason?

BARBOUR: Of course, he's going to those places for a reason, John. I mean, in the -- David Axelrod, who's his campaign consultant/manager/guru really is one of the brightest, most capable people in American politics. And so this is what we've become accustomed to, the perpetual campaign.

KING: I thought he said he was going to be different?

BARBOUR: Well, this is the perpetual campaign. I mean, that's...

(LAUGHTER)

I'm not going to try to get in an argument with the president or his people. That's not my purpose of being here. But this is the perpetual campaign. And I think, after awhile, people will get more focused on how are we doing, rather than on the campaign techniques.

KING: Governor Patrick, we had Senator McCain on the program last week. And remember, after the election, he said he wanted to work with Barack Obama. He was going to come back to the Senate; the campaign was over; he wanted to get things done.

But he said the stimulus debate has left him with a very sour taste. Let's listen to Senator McCain last week.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: It was a bad beginning. It was a bad beginning because it wasn't what we'd promised the American people, what President Obama promised the American people, that we would sit down together.

(END VIDEO CLIP)

KING: The president gives a big speech Tuesday night. He goes up to Congress for the first time. You're a Democrat. I'm guessing you blame the Republicans for the lack of bipartisanship, but let us put the past behind us.

Senator McCain says "a bad beginning." To get him and other Republicans, say, more open on the next fight, what should the president do...

(CROSSTALK)

PATRICK: Well, first of all, I have to -- I have to differ with that being a bad beginning. Yesterday was the four-week anniversary of this new administration. And in that four weeks, there's a great big new stimulus bill with, frankly, the largest energy bill in history in it, and a big, big step forward in terms of alternative energy.

I think that the Congress -- there are questions that regular people have about whether the Congress is ready for bipartisanship, whether people really understand the give-and-take in the Congress that the people out in the field really expect of all of us.

And you know, I had the -- had the honor of serving as master of ceremonies at the bipartisan dinner in honor of John McCain, right before the -- right before the inauguration.

It was a wonderful event. And I had occasion to say, there, that I hope that the spirit of that evening translates into the new -- into the new government. And I think it's learned behavior. And I think it will.

There's a lot to like, from a Republican point of view, in this bill. I heard Governor Barbour say, just a moment ago, that he wished that there was more infrastructure money dedicated in the bill. So do I. I wish I had heard that From Republicans during the debate, and we might have gotten more of that -- that infrastructure money in there.

But I think it's a process. I think the president is genuinely committed to it. I think a whole lot of people in the general public are ready for.

KING; Let's shift gears, a little bit. You are one of three African-American governors in this country since Reconstruction.

Your state has the highest percentage of African-Americans, I believe, in the country, 37 percent of Mississippi residents.

BARBOUR: And the highest percentage -- the most African-American elected officials in the United States are in Mississippi.

KING: OK. So our new attorney general, who is also an African- American, said something this past week that raised a lot of eyebrows, talking about how we deal with race in America. Let's listen to Eric Holder.

(BEGIN VIDEO CLIP)

ATTORNEY GENERAL ERIC HOLDER: Though this nation has proudly thought of itself as an ethnic melting pot, in things racial, we have always been, and we, I believe, continue to be, in too many ways, essentially a nation of cowards.

Though race-related issues continue to occupy a significant portion of our political discussion, and though there remain many unresolved racial issues in this nation, we, average Americans, simply do not talk enough with each other about things racial.

(END VIDEO CLIP)

KING: Haley Barbour, is Eric Holder right?

Are we cowards, and do we not talk about race enough?

BARBOUR: I think too many people in politics sometimes make race the issue. Race ought not to be an issue. I mean, Martin Luther King was right. We ought to judge people by the content of their character and not the color of the skin.

I'm a very conservative Republican governor. I've got African- Americans in the equivalent of what passes for my cabinet -- we don't call it a cabinet -- all through my administration.

I have a legislature that has 50-something African-Americans in it, many of whom support me -- all Democrats, but many of whom support me on various issues.

KING: Your party, nationally, though -- your party, nationally, was crushed among African-Americans in the last election. BARBOUR: Not just in the last election. It goes back for -- for decades. But the fact is, I think, too often, things are made to be about race, when race is not what we ought to be thinking about. We ought to be thinking about what's the best thing for our state as a whole.

KING: So why would Eric Holder, then, if you agree with this, that it shouldn't be about race, why -- why those comments?

PATRICK: Well, you know, you just showed the most context I have yet seen for that comment.

KING: Right. Most people boil it down to the "cowards."

(CROSSTALK)

PATRICK: Just those few -- just those few words. Look, we have a real challenge in this country, and it goes back a long time, striking a balance between acknowledging the remarkable progress that we have made over the last 40 or 50 years, and, at the same time, acknowledging how much remains to be done.

Race is with us. It doesn't mean people in every setting are making every judgment on the basis of race, but race is with us. And in personal ways, in personal choices -- where we go to church and with whom, where we live and with whom, how we live our private lives, our social lives, how integrated or not our own personal lives are -- still a very -- it's very delicate in many, many quarters in this country. And I think that's what the attorney general is trying to get at.

KING: Governors, we're about out of time. I'll ask you quickly, and I can only give you about 15 seconds each. The state of your national guards. You are the commanders in chief in the state national guards. I spent a lot of time a couple of years ago looking at the deplorable breakdown of the equipment across the country. In Mississippi, you've had 10,000 members of your National Guard go for at least one tour overseas. In Massachusetts, it's 6,300. That's about 80 percent of your National Guard, essentially...

PATRICK: That's right.

KING: ... that have gone overseas at some point. Are they getting the resources they need, and are they still going off to Iraq and Afghanistan, and is it acceptable?

BARBOUR: I'm about to have 4,000 go back. And let me just tell you, the best way to answer your question, we're at 100 percent of our recruiting goals for the Army National Guard, we're at 100 percent of our recruiting goals for the Air National Guard. We have no vacancies, because people stay in, people want to serve. They love their country and they make great sacrifices, and their families and their employers make sacrifices. But we have no vacancies. I think that speaks for itself.

KING: Do they have what they need? PATRICK: We have -- we have also a tremendous uptake in terms of the willingness of people to offer their service, and we should -- and I want to take the occasion to honor that service.

The equipment is another issue, and sometimes the equipment goes over and either doesn't come back or it does not come back in a state of good repair. And that is a concern of governors all over the country.

KING: Governor Deval Patrick of Massachusetts, Haley Barbour of Mississippi. Gentlemen, thanks for coming in this morning.

PATRICK: Thank you, John.

KING: You're welcome back anytime.

Now, one Midwest city is watching Washington closely. That's because it's not just the workers on the assembly line whose livelihood could depend on another auto bailout. An American way of life that is disappearing, still ahead.

And the nation's top elected Republican on dealing with the new Democratic president and confronting the auto industry's struggles in his home state. Senator Mitch McConnell of Kentucky, next.

(COMMERCIAL BREAK)

KING: I'm John King, and this is "State of the Union." Here are some stories breaking this Sunday morning.

An administration official says President Obama will seek to cut the federal deficit in half, to $533 billion, by the end of his first term. The official says most of those savings will come from spending less in Iraq and by raising taxes on people who make more than $250,000 a year.

Secretary of State Hillary Clinton is heading home from China after wrapping up her first overseas trip as America's top diplomat. Secretary Clinton went to church in Beijing today before heading back to Washington. During talks with Chinese officials, she said China and Washington must work together to get through the global financial crisis.

Headway in the 8-year-old murder case of Chandra Levy. Her mother says an arrest is imminent. A source close to the investigation says an arrest warrant now being finalized. The suspect is a man convicted of similar attacks in the Washington park where the former federal intern disappeared back in 2001.

That and more ahead on "State of the Union."

GM and Chrysler announced past week -- and you're looking there at a shot of the United States Capitol -- GM and Chrysler announcing they'll need more than $21 billion to stay in business. That's on top of the billions they've already received. Detroit is, of course, the historic home of the automobile industry in America, but its reach and struggles go well beyond Michigan, including Bowling Green, Kentucky, where a GM plant is set to reopen tomorrow after a two-month shutdown. That plant is in the home state of our next guest, the Senate Republican leader, the minority leader, Mitch McConnell.

Senator, thanks for joining us on "State of the Union."

I'll get to the auto question in a minute, but I want to start with the president's budget and this promise we're hearing this morning to cut the federal budget deficit in half by the end of the first term. To do that, the Obama administration says it will, as he promised during the campaign, let the Bush tax cuts go away for Americans who make more than $250,000 a year. There are some other what you would call I assume tax increases involved in that as well.

Let's start with that basic premise. The Democrats have the votes in the House, but they need some Republicans in the Senate as we learned in the stimulus battle. Will that fly, and do you think it's the right approach given the state of the economy?

MCCONNELL: Well, I don't think raising taxes is a great idea, and when our good friends on the other side of the aisle say raising the taxes on the wealthy, what they are really talking about is small business. A vast majority of American small businesses pay taxes as individual taxpayers. So we have got to ask ourselves whether increasing capital gains taxes, dividend taxes and taxes on small businesses is a great thing to do in the middle of a deep recession. I think most of my members will think that that's not a smart move.

KING: Another question for the government is the continuing financial institutions bailout.

MCCONNELL: Yes.

KING: And even though the first installment began under President Bush -- you helped broker that compromise -- I know many of your members aren't happy with the way that money has been spent. Now, there's some talk, because the banks, even though they are getting this money, their bottom lines keep getting worse and worse and worse. The administration says it does not want to nationalize the banks in the United States, but your colleague on the Democratic side, Chris Dodd, who is the chairman of the Banking Committee, said this to Bloomberg Television on Friday. "I don't welcome that at all," meaning nationalizing the banking industry, "but I could see how it's possible it may happen. I'm concerned we may end up having to do that, at least for a short time."

Have we come to that, sir?

MCCONNELL: I agree with the administration. I think nationalizing the banks is exactly the wrong thing to do, and we certainly shouldn't go in that direction.

We have been on an incredible spending spree, though. We've spent in this new administration, 32 days, $36 billion a day. If you add all that up, that's as much as the previous administration spent over seven years on both the war on terror and the recovery from Katrina. So I think it's timely that the president is having a meeting at the White House tomorrow to talk about the deficit, because we're spending money at a very, very rapid pace, far beyond anything in history.

KING: Do you think that he will listen? I know Republicans complained he did not listen to your specific ideas in the stimulus debate. When it comes to the deficit, can you come to him and say, Mr. President, I know you want to eliminate the Bush tax cuts, which you call a tax increase. Let's not do that. I can show you another way to get that piece of money?

MCCONNELL: Well, what we need to do is get a handle on our long- term unfunded liabilities for Medicare, Medicaid and Social Security. We do know that the president has indicated he's in favor of the Gregg-Conrad bill, which basically tackles all entitlements, but you know, if he is willing to at least target Social Security -- because I hear that he'd like to deal with Medicare and Medicaid in the context of health care -- let's go after the Social Security problem. It's going -- it's going to be bankrupt in very short order.

The Gregg-Conrad proposal would basically set up a base, a closing type approach, where you appoint a commission, it would come up with a solution, and come to the Congress with an up-or-down vote, which would guarantee a result. That's something we can have a bipartisan approach on. I'm in favor of that kind of a move, to give us the ability to tackle one of our long-term deficit problems.

So I hope what the meeting at the White House is about tomorrow is about sobering up here and beginning to re-think the kind of debt that we're laying on future generations.

KING: You mentioned the spending that you don't like, that you think it's excessive. Another question for the administration and for the Congress is whether to give billions more to the auto industry.

MCCONNELL: Yes.

KING: G.M. and Chrysler want money. G.M. wants the most. You have a plant in your home state, in Bowling Green, that's been shut down because production has been shut down. Those workers come back on Monday. There's a question of whether that plant survives.

I was in Michigan this week. And when I brought up the question of should Washington give you the money, an autoworker named Mike Huerta -- I met him -- he's going to be out of work in a few weeks. He specifically mentioned you by name and some other southern senators who he thinks are not as sympathetic as they should be. Let's listen.

(BEGIN VIDEO CLIP)

MIKE HUERTA, AUTO WORKER: Maybe somebody like Bob Corker or Mitch McConnell who has a -- a plant in Bowling Green, Bob Corker has a plant in Spring Hill, Tennessee, if those plants end up closing and coming -- that product comes north, you know why.

You can't spurn a corporation, an American corporation who gives Americans jobs and -- and puts money back into our economy. You can't -- you can't treat them like that.

(END VIDEO CLIP)

KING: You said you wanted to see proof that G.M. and Chrysler understood what they needed to do to restructure before you would support giving them money. Have you seen the plans? And are you now willing to support giving them more money? Or will you go home to Bowling Green and say, "I'm sorry, but your jobs may disappear because they don't deserve it"?

MCCONNELL: Well, in Kentucky, we have Toyota, we have Ford, and we have G.M. We have a diversified automobile industry. Everybody wants to see the automobile industry succeed. The question is, can it do it with this kind of approach?

I opposed the bailout back in December because it was no indication that the companies that were seeking the money -- in this case, G.M. and Chrysler -- were willing to make the kind of restructuring decisions that were needed.

KING: And so are they now...

(CROSSTALK)

MCCONNELL: They came back -- they came back earlier this week, and those decisions have still not been made.

KING: Still not made?

MCCONNELL: No, they've still not been made, and they've -- they've doubled their request from December. So the question is not whether we want to save the automobile business, but how do you best do that?

And it strikes me that, at least at this -- at this -- at least at this stage, the companies are not doing what needs to be done to save the companies. So that puts us on a long-term policy of the government simply propping up this industry endlessly.

KING: I want to ask you about a piece of Senate business. It's not your business directly, because he is a Democrat, but Roland Burris took the seat previously held by now-President Barack Obama. The governor of Illinois, who has since been impeached, appointed him to that seat.

Senator Burris now has given what many would say are inconsistent accounts of whether he tried to raise money for the former discredited governor who put him there. And a number of Democrats, including the new governor of Illinois, have said he should step down and resign, that he is not fit to serve in the United States Senate. Should he?

MCCONNELL: Well, look, I felt that there should have been a special election in Illinois to begin with. That didn't happen. The appointment occurred. Senator Burris is now a senator. The Ethics Committee has jurisdiction over it. I hope they will look at it, and I hope they'll look at it quickly.

KING: But leaders have to take -- sometimes set the tone. You're the Republican leader. I know it's more of a Democratic question than a Republican question. But would you -- if he were in your caucus facing the same circumstances, would you look him in the eye and say, "Sir, you must leave"?

MCCONNELL: Look, I'm willing to accept responsibility. I was chairman of the Ethics Committee when we asked a member of my party who was chairman of the Finance Committee to be expelled from the Senate. I think the Ethics Committee can work. I think, in this particular instance, it ought to work quickly, and resolve these differences, and make a recommendation to the full Senate.

KING: But you don't think he belongs in the Senate?

MCCONNELL: I think the Ethics Committee ought to give us a recommendation quickly.

KING: All right, we'll leave it at that. Senator Mitch McConnell, the Republican leader, we'll have you back. Many, many more issues to talk about in the weeks and months ahead. Thank you, sir.

MCCONNELL: Thank you, John.

KING: So far Republicans haven't bought into President Obama's plans. Is Tuesday's big speech to Congress a chance to turn a new bipartisan page? When we come back, we'll talk to two veteran political strategists who know just how hard that can be.

And later, a conversation with one Republican governor who says being post-partisan is the only course that works, California's Arnold Schwarzenegger.

(COMMERCIAL BREAK)

KING: Because his presidency is just a month old, the speech Barack Obama gives to Congress Tuesday night is not technically considered a State of the Union address, but it is a critical report on his agenda and his take on the state of America's economy and its place in the world.

And it's a difficult balance, spending billions hoping to stimulate the economy, while also promising to use his new budget to make a big down payment on reducing the record budget deficit.

Let's bring in two veteran political advisers who have helped presidents confront big challenges like this. James Carville is a Democrat. He joins us this morning from New Orleans. Ed Rollins, Republican, joins us from New York.

And, gentlemen, let's just start with the threshold question. The first time the president goes up, joint address to the Congress -- Ed, let me start with you -- what is the threshold challenge for President Obama?

ED ROLLINS, CNN CONTRIBUTOR: Well, he's made many great speeches in the past, but this is a unique one. It's before the Congress. The country is now looking at him as the president, as the commander-in- chief. He's really laying out his agenda, not as a candidate, not as an inaugural address, but really as the man who's running the show, and this is sort of his blueprint. This is a big week, combination of this speech, which is very, very important, will have a gigantic audience, and laying out his budget, which he'll do on Thursday.

KING: James, to you. President Clinton, who you served, used these speeches -- they tended to be a little long, but he used them to lay out his agenda, and that's how we hold them accountable months down the road. "Here's what you promised in February. What have you done?" Is that what we're looking at here?

JAMES CARVILLE, CNN CONTRIBUTOR: We're looking at some of that, but I think, John, to be honest, we have a tendency sometimes to over- hype speeches. I don't think that we can over-hype this speech. I think this is a really important speech.

It's going to be very critical what the president says. He's got a tough job, to -- to be realistic and hopeful at the same time. I think -- I think he's going to do both. I've heard some things about the speech. I think it will be a superb speech.

But this is a very, very important speech, much more important, I think, than the inaugural address.

KING: I want you both, because you're pros at this, to help me understand the disconnect we see in some of the polling. And you say we tend to over-hype speeches; I know you both agree we tend to overuse polling. But this one's quite fascinating.

Our new poll just out this morning, CNN-Opinion Research Corporation, opinion of President Obama: 80 percent, 8 in 10 Americans say he's a strong leader; 75 percent say he inspires confidence. And yet, despite that, when you ask them, "Will his -- will your economic situation improve because of his stimulus plan?" only 31 percent, only 3 in 10 Americans, James, say yes. Why the disconnect between popular -- his popularity and whether people think his policies will work?

CARVILLE: Well, people are looking at -- at -- at an economic situation that they see and they say, "Gee, I don't know how it's going to get better." A lot of people say that -- that you have to have, you know, when people can't see it getting better is actually when it starts to. I know it's kind of counterintuitive.

But I think people have confidence in him. But, look, he's been in office for a month. They want to see more; that's understandable. And that's why this speech Tuesday night is so important, because they're going to get a chance to see more of the president, and I think he can -- he can -- he can help close that gap some. But right now, people are not feeling very good, and they're kind of pessimistic about their future. While they have a lot of trust in -- in -- in the president, they want to hear more, and I think they'll hear a lot more.

KING: Ed, is that they just -- they're pessimistic about the economy or are they pessimistic that his approach is the right approach?

ROLLINS: It's kind of a mix. I think there's been some confusion relative to what's in the stimulus package and whether it's really going to help them or whether it's going to really create jobs or whether it's going to end up costing them a lot of money.

At the end of the day, I think he has good marks as a leader, and I think that's a very important part of -- of the whole game. I think he's off to a good start. But at the end of the day, is this program going to work? Is my ordinary life -- will I have to get up and go to work every day? Is there going to be a job there for me? Am I going to be able to put food -- and tuition for my kids going to school?

KING: We've talked about this in the past. I want to use the Newsday front page in Sunday's newspaper. We've talked about the long list of challenges this president faces. Next problem: $1.2 trillion deficit.

James Carville, how, as a Democrat, do you confront the idea that you need to spend, they believe, to prime the economy and at the same time you need to find cuts, because this deficit, over the long haul, is debilitating?

CARVILLE: Right. Well -- well, what they say is, once you get growth back, that will do more than anything else to -- to -- to cut the deficit, if you will. But very few people recommend that you sort of cut back on spending.

I was noticing some of these Republicans were saying they didn't want unemployment compensation, but they wanted tax breaks for the wealthy. I -- I don't quite understand the political benefit of that. But I -- I guess that's -- they have to appeal to their so-called base.

But, yes, he has to -- we have to get money out there to the unemployed in these states who are really hurting. But if you're able to get the growth back, then the large part to revenues will come back, but I think the president is going to lay out some -- some -- some cuts that they think can -- can help bring it down in the future.

KING: And so, Ed, the Republican calculation there, only three Senate Republicans, all moderates, went for the stimulus plan. As President Obama now comes forward with a budget that will allow the Bush tax cuts to expire and raise taxes on Americans who make more than $250,000 a year, also raise some other taxes on investments, is that a fight Republicans want to jump into with relish?

ROLLINS: Oh, I think they'll jump into it with relish, but equally as important, I think there will be some Democrats that aren't quite so sure of that.

First of all, I think the $1.2 trillion deficit shortfall, he inherited that. It will be probably $2 trillion by the time we're finished. It'll be $5 trillion over the next two years. That's a very significant amount of money.

We also owe right now $10.8 trillion, having borrowed $4 trillion from the Social Security, having borrowed other monies. So we've got a big, big gigantic deficit here.

So I applaud his efforts to try and reduce the deficit, and I applaud the fact that he's going to get rid of the gimmickry. At the same time, growth alone won't do it. He's got to basically restructure some programs, eliminate some federal programs. That's always very tough to do.

KING: I don't know if you can see, James, closely there, Ed. I'm going to hold up the front page of the Times-Picayune. If you look closely at James -- and when we get back to him, you'll see some beads hidden under the suit -- but right here, "Jindal readies for his national debut."

James, you mentioned the Republican governors who are saying they don't want all or some of this stimulus money, because they think it will force them down the road. Your governor is here. All of the governors are here for the National Governors Association. It's always an interesting meeting. You essentially get to look at the bench in national politics, people maneuvering and maybe looking down the road.

Your governor is one of those who said, no, this is a lot of wasteful spending in here, and this would tie my hands down the road. And you can off your beads while you answer if you want, because I know it's Mardi Gras time down there.

CARVILLE: Yes, it is Mardi Gras, and we have -- we have great crowds down here, and New Orleans people really enjoyed it, might be spending a bit less.

Look, this governor is very conservative. The first thing that he did in office is pass a creationism bill. I don't quite understand why you wouldn't want unemployment compensation in -- in the middle of a recession. This is temporary. You can phase it out in three years, if you have the political courage to do that.

But, you know, he has to -- it's interesting, because the Washington Republicans are like drilling out heretics all across the country. If you look at Ed's home state, Governor Schwarzenegger is not able to go to the Republican convention in Sacramento. If you look at what's happening to Governor Crist in Florida, he becomes -- the hard-core Rush Limbaugh Republicans are trying -- are really angry at him.

So you're seeing the Washington southern base, talk-radio base Republican Party is one thing, but you're seeing in states like Florida and California that have governors that want to get something done, it's quite another thing. I think Governor Jindal comes more out of the talk-radio, creationism wing of the Republican Party.

KING: And, Ed, finish our segment on that point, the state of the Republican Party, when you do have a pretty diverse debate about taxes, spending, stimulus, economy.

ROLLINS: Governors are on a front line. I used to handle the governors when I was in the White House. And -- and your former guest, Haley Barbour, was on my staff, as was Mitch Daniels. These guys have a tough, tough task. They have big shortfalls. They don't have the advantage of the federal government, in the sense that they can't borrow. They've got to balance budgets every year, and they've got to meet some very serious problems.

I think the future of our party is going to be the governors. I think we're going to have a better opportunity to pick up some seats in 2010. We've got to be supportive of those people.

At the same time, just to counter a little bit what James said, the objection of the governors to the unemployment is -- is to go to part-time employees, which we've never done before, and we basically then would have to tax more on -- on small business, which I think would be very detrimental.

KING: Ed Rollins in New York, James Carville in New Orleans. James, you behave this week so we can have you back next week, but have a good time at Mardi Gras.

ROLLINS: Enjoy, James. Take care, my friend.

KING: Enjoy. Gentlemen, thank you very much.

CARVILLE: Thank you. Appreciate it.

KING: Thank you, gentlemen.

And this reminder: Get ready for the president's speech to Congress with a few close friends. We're talking about Facebook friends here. Join me as I host a special Web edition of "State of the Union" on Tuesday, noon Eastern. Reserve your spot by going to Facebook.com/CNN. Join the conversation Tuesday at noon.

But up next, and up-close look at the auto industry's pain and how it is reshaping places that gave America its middle-class legacy.

(COMMERCIAL BREAK)

KING: Michigan is known as the home of the American auto industry and more recently as the state hardest hit by the punishing recession. Let's zoom in here and take a look.

If you peek at the vitals in Michigan right now, the unemployment rate, 10.6 percent. That's the highest in the country. Nearly 600,000 jobs lost since 2001. And just last month, 13 in every 5,000 homes foreclosed. That's just January 2009.

Now, the big issue of the moment is whether General Motors and Chrysler will get more bailout money from Washington, meaning more of your tax dollars. It's the company executives asking for that money, but it's the factory workers and the middle-class communities they live in -- places like Lansing, Michigan -- that have the most at stake.

(BEGIN VIDEOTAPE)

KING (voice-over): The Lansing Grand River assembly line, modern, clean and efficient. These Cadillacs among G.M.'s best- selling models. And yet this plant is down from two shifts to one. New cars just aren't selling.

(UNKNOWN): Scary times right now for a lot of people.

KING: Thousands already let go. Many on this line will be out of work in just a few weeks. Twelve-year seniority protects Fred Efaw for now.

FRED EFAW, AUTO WORKER: I'm married. I have two daughters. And, you know, they want to do things. And you can't commit to those things not knowing if you're going to have a full income, you know, in the next months or weeks ahead. So it is -- it is hard. You've got to explain to your kids, it may not be the way it's always been for you.

KING: Just one shift here and just one at another G.M. plant across town. Mike Huerta remembers when it ran around the clock. He'll be out of work in a few more weeks.

HUERTA: We haven't gone to see movies. You know, we eat at home. I pack lunches, those types of things. You know, you don't -- you don't really spend anything you don't have to.

KING: Huerta says a taxpayer-funded G.M. bailout is his only hope of being called back some day, and he fumes at those in Washington who say the company should take its lumps.

HUERTA: We had some -- some senators, from down south, in particular, with -- you know, that have a lot of Nissan or Honda or Toyota plants, basically come out and say that we should go bankrupt, and they're not talking about somebody that you can't see. That -- that means me. That takes away my family's livelihood.

KING: The pain is shared beyond the factory floor. This is one of two Saturn dealerships owned by Sherrill Freeborough.

SHERRILL FREEBOROUGH, SATURN DEALERSHIP OWNER: This is the biggest vehicle we've ever had.

KING: This SUV is made right here in Lansing, but G.M. is shedding the brand in three years as part of its restructuring. Saturn dealers like Freeborough who are determined to stay in business are now exploring partnerships with Indian and Chinese automakers.

(on-screen): So it's risky?

FREEBOROUGH: It's very risky.

KING (voice-over): But a risk Freeborough says she has to take for her employees and for herself.

FREEBOROUGH: I'm a small-business owner. Everything I have I've put into the dealership. My home, everything, is -- is in the company. My husband still can't breathe. I can't have a bad day and go home and tell him, because everything we have is wrapped up in this company.

KING: To listen and to look around is to hear and see a way of life fading.

FREEBOROUGH: My dad was an electrician for Ford Motor Company when I was growing up. I mean, I don't think there are many people in Michigan who don't have some sort of automotive touch to their lives.

KING: G.M.'s roots in Lansing go back more than 100 years. "Generous Motors" was the favorite nickname when Brad Fredline was growing up. Both grandfathers retired from G.M., his father, too.

BRAD FREDLINE: You graduated on a Friday, and by Monday you were working at the factory. You knew you had a rock-solid job for 30 years. You'd buy a little place up north and you retire. Those days are gone, I'm afraid.

There's no consumer confidence. There's no hope for the future, and that affects our communities, our homes, and our families. There's a lot of despair out there in Michigan.

(END VIDEOTAPE)

KING: It is a tough place to visit at the moment, but wonderful people in Lansing, Michigan, and across the state of Michigan. As you know, one of our goals is to get out of Washington as often as we can. We've traveled from Maryland to South Carolina, Ohio, Vermont, New York, Illinois, Indiana, Arizona, as you just saw, Michigan. So where should we go next? You can e-mail us at stateoftheunion@CNN.com. Tell us why we should come to your community.

We want to say goodbye now to our international audience for this hour. But up next, for our viewers here in North America, we'll go through some of the morning's headlines with Howie Kurtz. Stay with us.

(COMMERCIAL BREAK)

KING: I'm John King in Washington, D.C. In this hour of "State of the Union," we take our weekly critical look at the media with Howie Kurtz of the Washington Post and his "Reliable Sources."

Tonight is the Oscars, an annual orgy of designer gowns, expensive jewelry, and exclusive parties. But is the massive media coverage appropriate in a time of rising layoffs and home foreclosures? Howie talks to ABC's Robin Roberts, already in Hollywood for duty on the red carpet. Republican Governor Bobby Jindal confirmed this morning that he'll reject a portion of the stimulus money slated for his state of Louisiana. We'll analyze that and the rest of the news being made on the Sunday talk shows with the best political team on television.

And later, California's state government, after days of sleepless partisan stalemate, has finally passed a budget. Should we expect similar bitter battles in other states? We'll look for answers with the California governor, Arnold Schwarzenegger. He'll be with us live. That's all ahead on "State of the Union" for this Sunday, February 22nd.

But time -- time now, as always in this hour, to turn it over to Howie Kurtz and his "Reliable Sources."

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