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Wall Street Whiplash; Hung Parliament; Immigration Debate; Senator Robert Bennett Interview

Aired May 6, 2010 - 19:00   ET


JOHN KING, HOST: Thanks, Wolf. It is decision day in the United Kingdom and voters there are demanding change, but a huge drama is unfolding. The Labour Party, which has ruled Great Britain for 13 years, is trailing but it's not clear yet whether conservatives will gain enough seats in parliament to take charge and lead America's closest ally.

It's also a big day in this country's emotional immigration debate. New calls today for a boycott of Arizona because of its tough new state law and new anger at the Obama White House from Latino groups who say the president is again breaking a key promise.

But we begin this hour with your money and a wild day on Wall Street. If you checked the markets over coffee in the morning and then again when you get home from work, today's headline is a nearly 350-point drop. But if you followed the Dow throughout date or just happened to check in late in the 2:00 hour, your heart likely skipped a few beats.

And the Dow down 350 at the close might somehow feel like a minor victory. In one gut-wrenching hour, the Dow dropped nearly 1,000 points -- why? There is more than one reason and we will break them down in just a second. But first, let's take a closer look at the plunge and the partial recovery. For that we we'll wander over here for a second and just watch how the day played out on Wall Street.

The Dow began here. Look, you see this as the trading plays out. It is right around 10,800. It seems like a pretty flat day mostly. Here we are at the 1:00 hour and the market has pretty much lost a little bit but been a straight day. Then as we get into the 2:00 hour, you see it starting to drop there. Some concerns and then, bang -- look at that -- down all the way down 997 points at the bottom, then it started to trickle back up and it closed the day here, down just shy of 350 points.

A remarkable drop and then, boom, back. The debt crisis in Greece and across Europe was one huge factor. A trading mistake was another. And there are some who say the uncertainty caused by the ongoing debate in Congress here in Washington about financial reforms is also a drag on the markets. Richard Quest is in London for us tonight to connect the dots in overseas financial turmoil to what is happening on Wall Street. And Christine Romans is in New York with details of how a mix-up over one stock contributed to the plunge.

Christine, let's start with you. Take us through the big mistake.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, first of all, let's just say the market has been weak for a few days because of Greece and concerns about European debt. So that is the backdrop of all of this. That's why the stock market was weak in the first place. Then about 2:45, you have this mysterious movement in Proctor & Gamble shares. Suddenly, they fall 37 percent.

At the New York Stock Exchange they got as low as 56, but on other exchanges they kept trading at lower and lower and lower prices. That started to affect the averages. This is a stock that is in both the S&P and the Dow Jones industrial average and then computer trading took over from there. When the computers saw this big move in the S&P and in S&P futures, suddenly, quite frankly, all hell broke loose and you had computerized trading selling these markets all the way down 998 points. Then, when there is no buying, when the market is down almost 1,000 points, or no more selling rather when the market is down all that much, then it started to bounce back.

KING: And so, Richard, we -- as Christine noted at the top we did have the glitch over Proctor & Gamble, but this is part of -- what happened in the United States is part of an international problem in financial markets at the moment?

RICHARD QUEST, CNN CORRESPONDENT: Yes. I think what happened, of course, was that the Dow Jones has been in a very bad temper all session because of what was happening in Greece and the Greece deficit. There have been numerous downgrades of countries, for example, Portugal and then Spain, then the debt there has been under question and I think we also, today, got a report that suggested that the banking system had a great deal more to take on board from this government.

In that scenario, John, it was a bad-tempered market that fell out of bed. Factor in what Christine is talking about and add in an election in the U.K. that looks, at best to be undecided tonight and you start to see why investors were so worried.

KING: And so the question is, is this a few days or is this a chronic problem? I want you to listen to some sound from the floor of the United States House of Representatives today. Republican Congressman Mark Kirk, who is running for the Senate in his home state says what is happening in Greece and across Europe could well come here.


REP. MARK KIRK (R), ILLINOIS: Fuelled by the irresponsible spending of this Congress, we need to cut federal spending now to reassure markets and assure that America's children will never have to ask this question, who will bail out America?


KING: It might sound alarmist, but I want to share some figures with our viewers and then ask our experts if you look at this debt as a percentage of GDP, which is what caused Greece to go into turmoil, Greece is 115 percent debt as a percentage of its overall economy, Italy is higher than that at 120 percent, but there is the United States, third, 93.6 percent -- percentage.

Richard Quest, does the United States have the same underlying problems that are causing the crisis in Greece and perhaps in Portugal, Spain and Italy as well?

QUEST: That is a wonderful question, John, and it ranks alongside when did you stop beating your wife? Because as you will be aware, yes, the United States has exactly the same problem, but at the same time it is a totally different scenario for the simple reason the debt is longer term, the economy is much more agile. It is much greater deregulated.

I think you have got to put it in perspective of being all these economies with deficits in the 10, 12 range know that they have got to get them down. Getting that to some form of fiscal probity is absolutely crucial, but you don't do it now. You've just got to have a plan to do it. You have got to have the confidence of the market. And still, you know, John, the U.S. is the biggest game in town and we saw it with U.S. bonds, where the yield actually fell and the dollar which today rallied against the Euro and against sterling.

KING: And Christine, let's close this out, the one thing the markets hate most is uncertainty. I received a few e-mails the middle of this today when I was asking people, some traders on Wall Street, some people here in Washington what's happening and they cited all the reasons you guys have cited -- the glitch, the debt crisis. And they also said there is a little drag because of uncertainty over what the United States Congress will do about financial reform. Yes or no?

ROMANS: Yes. Yes and there's also uncertainty about the implementation of health care reform. There's uncertainty about all kinds of new regulations for energy and when they are coming and what they are going to look like and there's uncertainty about when the jobs market is going to come back and how robust the consumer will be. I could go on and on forever.

That's an awful lot of uncertainty all pulled together. It's interesting, John, tomorrow we're going to get jobs report. It could show some pretty decent jobs growth, interesting that it's coming in all this international uncertainty and throwing more doubt into just how robust any kind of recovery is going to be in this country.

We still have a lot of -- a lot to work through. After a market that is up 70 percent over the past year, John there's a lot of reasons for people still to be nervous and people to take money off the table and I think you're going to see that continue.

KING: We will continue the covering about the economy tomorrow. Richard, I want you to stay by because we're watching another major story tonight right where you are -- what may be the biggest political mess since Bush versus Gore seems to be developing as they count the votes tonight in the United Kingdom. The latest exit polls from today's National Election Center indicate no clear winner. It takes 326 seats in parliament to form a government. Exit polls show the conservatives winning 305, the Labour Party has 255, liberal Democrats, 61 -- so Richard, now what?

QUEST: And that is a really good question tonight. We are just not used to having coalition government and to having this sort of hung parliament in the U.K. The last was in 1974 and tonight it looks as if there is going to be a hung parliament with a large party that can perhaps, perhaps rule or govern on its own. This has been over the course of the night and I'm going to be showing not only you but also "AMERICAN MORNING" tomorrow this is 326 that you've got to get to get to get past the (INAUDIBLE).

Very early days, very early hours, nothing like your "Magic Wall", but it does the trick. Labour has just got three seats because we've only been -- the polls have only been closed for two hours. But in the hours ahead, who gets here and if they don't get here and it is looking like (INAUDIBLE) get to about here, what happens then? We just don't know.

KING: And in this environment where we don't know, just don't know, Richard in closing, tell the American people tonight, should they be worried about anything, whether you get a coalition government, whether conservatives manage to take charge? Is there anything on the table in the election there about a shift in U.K. policy in terms of U.S. policy that no matter which of the three leading candidates ended up as prime minister in a week or a month, would anything change?

QUEST: If it was the third party, the liberal Democrats they might have a little tinge, a little scintilla of worry, but they are not going to get the results tonight. Nick Clegg is not going to be prime minister. As between Gordon Brown and David Cameron, the United States needs have absolutely no fear. The two are absolutely true Atlantis's (ph). They believe in the Transatlantic and the special relationship and the U.S. tonight, maybe investors need to worry about the pound, but as for the relationship between my country and yours there's nothing to worry about.

KING: Richard Quest for us tonight in London, we will check in tomorrow as the vote count intensifies. And Richard maybe I'll pack you up a mini "Magic Wall" and send it across the pond -- Richard, thanks so much for your help.

When we come back, the emotional immigration debate here in the United States, Latino groups angry at Arizona are threatening a boycott now, but are they almost just as angry at President Obama?


KING: A mix of labor and civil rights organizations today called for a boycott of Arizona because of a new state immigration law they consider extremist and anti-immigrant. The coalition includes the Service Employees International Union and the National Council of La Raza. They promise not to hold meetings or conventions in Arizona and are urging others to join them n the boycott. Yet these groups share something in common with Arizona's Republican governor who signed the new measure into law. Governor Jan Brewer said she had no choice but to act because the federal government has not met its duty to secure Arizona's borders. And as mad as they are at Governor Brewer, many Latino groups are furious at the White House for making clear it will not demand action in Congress on the immigration issue this year.

Joining me is Clarissa Martinez, director of Immigration for the National Council of La Raza. And I want to begin with that. The president of the United States, he was in the Rose Garden last night making a statement about immigration on Cinco de Mayo. I want you to listen because we went back in time. We want to compare to what the president says now to what he promised as a candidate.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What I can guarantee you is -- is that we will have in the first year an immigration bill that I strongly support.

OBAMA: I know there may not be an appetite immediately to dive into another controversial issue. There is still work that has to be done on energy. Midterms are coming up.

OBAMA: I want to begin work this year and I want Democrats and Republicans to work with me because we have got to stay true who we are a nation of laws and a nation of immigrants.


KING: Do you consider it a broken promise? You go back to that first interview -- he said in the first year -- we are three months into the second year, has the president broken his promise to you?

CLARISSA MARTINEZ, NATIONAL COUNCIL OF LA RAZA: Look, Latinos, like the rest of Americans, understand that our country is facing numerous crises, however, we do think that it is the time, now is the time and as a matter of fact, Arizona has only made it very clear how the immigration system is in crisis. We appreciate the president's words, but we think that the response from the White House and his administration does not yet match the level of the crisis.

KING: On that point, I want to continue the conversation, but I want to bring in -- we reached out today to Mario Solis Marich, a Latino radio host and he says that the community is furious because they look at the president's statement from last night, and as he used the words, it has no substance.


MARIO SOLIS MARICH, DEMOCRATIC POLITICAL CAMPAIGN CONSULTANT: It really didn't make any of the activist community feel any better about the prospects of helping the millions of families that are currently facing deportation and separation from each other. It helps -- it doesn't help and actually it hurts the Obama administration and the Democratic Party tremendously.


KING: In 2006 and then in 2008, Latino voters were a big reason the Democrats had such an upswing and a big reason that President Obama won Colorado, Nevada, Florida --

MARTINEZ: That's right.

KING: -- and other states by a large margin. Is there a price that the Democrats should pay in your mind, this year for not acting on this in the first two years of this Democratic administration?

MARTINEZ: I think it is imperative for Democrats and for the president to demonstrate they can deliverer on promises made if they want to keep the support that came from Latinos, but --

KING: And so if they don't deliver by November, should Latinos vote Republican or stay home?

MARTINEZ: Well, here is the issue for the Republican Party. The president also needs Republicans to step forward. So I think the pressure is right now building on the president and on Republicans and for Republicans it is also essential. If they do not start repairing their relationship with the Latino community, they are on a suicide mission when it comes to the presidential election that compels both of these parties, the president and Republicans, to join hands with the Democrats who have stepped forward and solve this issue and frankly prevent other Arizonans from happening.

KING: You talk about the next presidential election and the risk for the Republican Party. In the short-term though Republicans clearly believe public opinion is on their side. They cite national polls; they cite state polls in Arizona showing a majority support the new law. I want you to listen to Texas Republican Lamar Smith on the floor today.


REP. LAMAR SMITH (R), TEXAS: Despite the media bias against immigration laws, the American people still overwhelmingly want to secure their border, save jobs for those in the country legally and reduce the burden of illegal immigration.


KING: In this election year, I guess you are in a difficult position, I ask you for someone who disagrees with Congressman Smith, but can be mad at the Democrats for, again, with huge majorities in the House and the Senate and a Democratic president for not delivering on the promise to you, what should a Latino voter do in November? Stay home? Hold their nose and vote Democrat?

MARTINEZ: Now I think that both parties are going to have to respond for this and frankly, I hear Representative Smith, he has never been a friend of solutions on this issue. We are holding accountable both parties and the president to deliver. At the end of the day, yes, people -- Americans overall are frustrated with this issue and the president can say what he may about whether the appetite is there or not but Americans are tired. They want results. And Congress may not have the appetite for it, but it is their job and they need to do it.

KING: Is it his job to push them this year in your view --

MARTINEZ: Absolutely.

KING: But he just made clear last night no.

MARTINEZ: Well, I think the president is being a little ambivalent and that is one of the reasons why we are saying his response is not matching the urgency this issue needs, not only for the Latino community but frankly, for the country and for the people of Arizona. They need a real solution, not the false choice or the false solution that Governor Brewer has given them.

KING: Clarissa Martinez, we thank you for coming here.

MARTINEZ: Thank you.

KING: We will stay in touch and we have a lot more still to come in the program. Let's go over and take a peek. When we come back, we'll look at the latest in the terror investigation, the Times Square attempted bombing, including this question, do more drone attacks in Pakistan, have they somehow inspired this suspect and are they killing terrorists or creating terrorists?

We will go "One-on-One" tonight with a Republican senator in deep trouble. Robert Bennett could lose his party's nomination back home despite his veteran leadership -- purity or pragmatism? That is a big question this year in the Republican Party. And the most important person you don't know today -- this is a National Day of Prayer across the United States. This man we will introduce you to, he is often the man who gets to preach to the president.


KING: In "Wall-to-Wall" tonight, an update on the terror plot in Times Square, the attempted car bombing and some insight on the potential motive if this suspect's story to investigators is true. First some new photos today, we did see some pictures released -- a surveillance camera -- this is the suspect, Faisal Shahzad when he was buying fireworks in Pennsylvania.

Other developments in the case today include this -- officials now telling CNN the suspect did have help they believe from extremists inside the Taliban in Pakistan. The surveillance video we just showed you show the fireworks purchased and the attorney general today said the suspect, one reason he has not been in court yet is because he continues to cooperate and provide useful information. Those are the updates in the investigation.

Also, updates in the political fallout, you might call it. Independent Senator Joe Lieberman of Connecticut among those today who introduced new legislation that say if Faisal Shahzad, a naturalized U.S. citizen is convicted of these crimes he is charged with, that he should be stripped of his citizenship.


SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: To me, somebody who takes up arms against the United States, whether they wear the uniform of a foreign country or they associate with a foreign terrorist organization has given up their right to be an American citizen.


KING: Still questions about what motivated this attack in Times Square. One thing that Faisal Shahzad has told investigators, we are told, is that he has been upset with U.S. attacks inside Pakistan that he views as anti-Islam, anti-Muslim. Let's go over to the "Magic Wall" and take a look at that particular issue.

Investigators, we should be clear, say they are still trying to verify a lot of what he says, "A", was that was his motivation, "B", did he receive terrorist training here, but you see the key area here, the border between Afghanistan and Pakistan. Let's get in a little bit closer and show you exactly what we are talking about. As you get into the key border regions up here where there are known terrorist camps, al Qaeda and Taliban in Waziristan, all these little dots right here are places where we know there have been drone and drone attacks from above.

I want to show you first some video of what we are talking about. Pop this up here. The first thing you will see -- this is me in Iraq a couple of years ago holding a relatively small unmanned aerial. This one used for surveillance purposes. There are cameras in -- they fly them up. Over here -- here are the bigger ones here that not only carry cameras down here, but can also carry missiles as well, so they can go up, they gather intelligence with the cameras, but if they see a target they want to strike they can fire down from it and you see increasingly these are being used by the military.

Number one, because they are effective, number two, because they keep boots off the ground -- boots on the ground out of harm's watch. Let's shut this down for a second and take a peek at this here. This is a study by the New America Foundation looking at the number, estimated drone attacks and deaths -- 2004 through May 2010. Look how the numbers go up, attacks against militants, 77 back here, 105, 284 last year, 143 to low and high range just this year so far in 2010.

And the deaths, of course, now the death numbers are higher here because this is one of the controversies. You see the estimated deaths of militants, the higher number here because civilians also are killed sometimes in the drone attacks. That is one of the big controversies. This is the use of technology that is being used more and more by the military and we'll continue in our reporting to see if it is true that Faisal Shahzad is saying these drone attacks up here are one of the reasons he turned in his sentiment against America. Later in the program we switch to politics. Sarah Palin made a surprise pick in a key governor's race then pushed back against critics who say she made the wrong choice, but first, a sitting senator fighting for his political life. Will he even make it on the primary ballot? I will go "One-on-One" with him after the break.


ANNOUNCER: It's time to go "One-on-One".

KING: You might say something is in the water this year for the Republican Party. To some, purity outranks pragmatism, seasoning and experience is playing out across the country. Florida's Republican governor saw no choice, for example, but to drop out of the GOP Senate primary to run on his own. In Utah, polling of delegates to this weekend's State Republican Convention show three-term Republican Senator Robert Bennett running third. He joins me now to go "One-on- One". And Senator, just let me start there. Why is your party so restless? What's in the water?

SEN. ROBERT BENNETT (R), UTAH: Well there's great anger about Washington. A lot of people say we hate what's going on; we hate everybody who's there. And in Utah the only anybody they can vote against who happens to be there turns out to be me. I keep telling him I'm not part of the problem, I'm part of the solution, and we will see at the convention whether I can make that sale.

KING: You're hearing this back home, Senator --


KING: What your opponents say is that you know in Utah you say you are a fiscal conservative, but when you come to Washington that in the Bush administration and now in the Obama administration, you are one of the Republicans helping to run up all this spending.

BENNETT: Well, I point out to them, those who will listen and increasing number of them do I say, you know, the areas in the Bush administration where the spending went up were three, number one, entitlements and I'm the only one of the candidates who has been talking about entitlements for a long time, now, Bridgewater (ph) and Lee (ph) both have gotten on that bandwagon, but I'm the leader that's pointed out that that's where the big problem lies. Number two, we are at war and defense spending went up. And number three, 9/11 happened and we started spending money on homeland security.

KING: You say those who would look at the facts. You're saying that in part some of this is emotion and some of it is perhaps not rational --


KING: We came out there -- we sent a crew out there for the caucuses earlier on and this week our political correspondent Jessica Yellin is out there and she says one of the complaints she hears repeatedly about you is that you didn't stop the health care bill from getting to the floor. The Democrats, of course, are in the majority. You don't have that power, but is that anger out there so palpable that maybe there is nothing you can do?

SEN ROBERT BENNETT, (R) UTAH: I think there is something I can do. The anger is palpable, the anger is very strong and that's why I'm in trouble. But if I meet with the delegate, if I spend time with them going through the facts, I find I can turn them around. Just this morning, I had a breakfast with a group of delegates and I said how many of you are undecided, a majority raised their hand and that's what makes me think I still have a shot at this.

KING: I want to come back to the broader political climate. As I do so, I want to go back in time to 1992 when Bob Bennett won election. You remember that year very well. It was the Perot year. There was a lot of fracturing in our politics. The economy was in tough times, and you had the Perot candidacy, the Bill Clinton candidacy, and people were mad at Washington. They didn't think Washington was answering their concerns in a time of a tough economy. And here is what you said on election night.


BENNETT: The one thing that has not changed to keep up with the time has been the Congress. And so we ran on a platform to change the Congress, and if we can solve our Congress problem, then perhaps we can begin to solve our national problem.


KING: It sounds a lot like what your opponents are saying right now, Senator. Is this a case of what goes around comes around maybe?

BENNETT: Well, it's very interesting that the desire for change is a constant in American politics. We've had 16 elections, presidential elections since the end of the second World War. The party in power has won eight and the party out of power has won eight. So, a lot of people campaign on change and I find this as I begin to remind the delegates that I have had -- I have been a voice for change and a one who has produced change and say, oh yes, we kind of forgot about that.

Now I say, no, I know how to do it, keep me there and I can keep doing it and that's the message that I think is beginning to resonate better than I did at the beginning.

KING: Let me ask you lastly about an issue that is resonating across the country right now, crackling, you might say, and it's an issue that divides many Americans. That's illegal immigration. Arizona, to your state south, just passed a tough new immigration law. There are some conservatives in your state who say we better match that or else illegal immigrants will leave Arizona and come in to Utah.

The delegates to your convention this weekend will consider a resolution, a pretty tough resolution that opposes illegal immigration, amnesty or any illegal status for illegal immigrants and any government benefits, temporary worker programs and the like. What is your sense of the Arizona law and whether you need to copy it in Utah and the current mood in the immigration debate?

BENNETT: I have a daughter who lives in Arizona, and I'm distressed with what she tells me. She says neighbors who have lived peacefully side by side for years are now screaming at each other. With one side saying, well, but the passage of this law, class size is going to go down and the schools, the emergency rooms will be empty. The state budget will go up. We will -- we will get nirvana. And the other side is saying this will be a police state. You'll have Gestapo on the streets. This will be the disaster that will end freedom as we know it.

We can solve the immigration problem without that kind of divisive rhetoric. It should be solved on the federal level so that the states don't have to get in it and too many of my colleagues at the federal level saying, no, we don't want to deal with it because it is controversial. That's the wrong attitude to take, as far as the Congress is concerned, in my opinion.

KING: In your opinion, should they deal with it including some sort of legal status for the 10, 12, whatever how many million American it is here illegally, those immigrants here illegally, I should say or should it just be border security first?

BENNETT: Well, you can start out with border security, but you have to then move very quickly to a guest worker kind of program that makes the border security effective because if the border patrol continues to spend all of its time -- not all, most of its time chasing chambermaids and lettuce pickers, you have a serious problem. Now, as far as the people who are here already are concerned, I don't think anybody should be rewarded for breaking the law. I don't think anybody should break the law without some kind of a penalty.

And we can work out some kind of a penalty that says, OK, we can -- if you have committed no other kinds of crime beyond overstaying your visa, for example, which is the case with many of them. They came here legally and then they overstayed their visa. If that's the only law you've broken, here's a very stiff fine for having done that all right. Now, your status is legal. Now, we'll talk about whether or not you qualify to get on this temporary worker program.

You'll notice in this conversation, I have not used the word citizenship. I don't think any of these things should be part of the path to citizenship. We have rules and laws for that and they exist now. I don't think they should be changed or loosened in any way.

KING: Senator Bennett, we thank you for your time. We'll let you get back to campaigning and we will watch closely the result of the state convention this weekend. Thank you, sir.

And when we come back, today's most important person you don't know. When the president of the United States asks, he has a prayer of being heard.

(COMMERCIAL BREAK) KING: This just into CNN, the government has announced tonight it will investigate today's computer glitch that may have contributed to the Dow Industrial's 1,000-point drop during today's trading. That glitch involved the price of Proctor & Gamble stock. The Securities Exchange Commission and the Commodities Future Trading Commission issued a joint statement just now saying they're working closely with other financial regulators as well as the exchanges to review just what happened and to take any appropriate steps to protect investors.

We all remember Barack Obama's falling out with the Reverend Jeremiah Wright. So, on this National day of Prayer, today's Most Important Person you don't know just might be the president's favorite preacher nowadays. Lieutenant Carey Cash, the chaplain at Camp David. If you're wondering about the last name or that background music, yes, Johnny Cash was his great uncle. His elder sister, by the way, is Kelly Cash, 1987's Miss America.

Cash played college football at the Citadel, but a brain tumor kept him out of the NFL. Instead, he earned a theology degree at Southwestern Baptist Theological Seminary. Cash's book, "A Table in the Presence" is about his 2003 deployment in Iraq. Camp David chaplain served for three years preaching to the 400 or so staff members, their families, and occasionally, the president of the United States

Joined in studio now by Democratic strategist, Cornell Belcher and Neil Newhouse who is a bit of a dustup about would the president pick a church or the president do this, but he has said he doesn't want to do that, but he does enjoy when he is at Camp David sharing prayer in the chapel.

NEIL NEWHOUSE, REPUBLICAN STRATEGIST: New poll out today, 58 percent of Americans say they pray on a daily basis.

CORNELL BELCHER, DEMOCRATIC STRATEGIST: And I pray every day for my retirement investment.

NEWHOUSE: I was praying about 3:00 this afternoon, I can tell you that.

KING: That's an excellent point. All right. Let's look at some stories on my radar. We'll get you guys to weigh in on them. And let's start with tonight's election results or impartial results in Great Britain. Updated exit polling shows the conservatives winning 305 seats in parliament, the incumbent Labour party is projected to get 255, and the liberal Democrats projected to get 61. But here is the rub, it takes 326 seats to form a government. What do we do now?

NEWHOUSE: Coalition politics.

BELCHER: You know, first of all, I think that's a big disappointment for Tory (ph) because we go back a couple of months ago, these guys were running way ahead. You know, he was using a lot of Obama speaks, trying to be the party of change and Labour came back. I mean some of those voters that were voting Labour consistently came back over Labour. So, it's a real disappointment to me for Tory.

NEWHOUSE: I mean, it looks like it's going into -- if not recount, we will see what happens, but you know, it can't be -- you can't count a victory as a loss.


NEWHOUSE: I mean, I'm sorry. They won.

BELCHER: But one thing about exit polls, I was sitting in the DSCC, Senate Campaign Committee in 2002 watching the early exit polls come in and I thought we had --

NEWHOUSE: I know. I know. The exit polls are unpredictable and who knows how accurate they really are. But if these numbers are anywhere close to accurate, you know, it's a terrific victory for conservatives, but you know --

KING: The kind reform of government.

NEWHOUSE: Yes, exactly.

BELCHER: Not terrific it is, but it is a victory for them.

KING: All right. So, we'll watch how this plays out, and back here, at home, Republicans have been ramping up their criticism of the Obama administration's war on terrorism ever since the Times Square bombing attempt. Today, the House Minority Leader John Boehner fired the hardest shot yet, provoking a quick response from speaker Nancy Pelosi.


REP. JOHN BOEHNER, (R-OH) MINORITY LEADER: Yes, we've been lucky, but luck is not an effective strategy for fighting the terrorist threat. This is a nation at war.

REP. NANCY PELOSI, (D-CA) HOUSE SPEAKER: The harder we work, the luckier we get. I think that's probably the point. I don't think anybody accused them of being lucky when the millennium plot was foiled. Well, now, ten years ago.


KING: How does this play?

NEWHOUSE: You know what, I agree with John Boehner. I mean, it is -- it's luck that this guy graduated at the bottom of his class at bomb making school and the thing didn't go off. I mean, it wasn't luck they caught him. It wasn't luck. You know, it was good police investigation, good police work, but yes, the fact that it didn't go off that's luck.

BELCHER: This is politics to me at its worst. I think it is not lucky. It's almost insulting to say to these officers that is lucky. Hard work, police efforts, and coordination got this guy 50 hours cold.

KING: You say politics at its worst. Any evidence in the data that it works?

BELCHER: Here's the evidence. A pollster is, in fact, behind those talking points because, look, you go back to when the Republican brand was at its strongest, they were built on two pillars to me and one of those pillars was their double-digit lead on national security. We shrank that lead, and they now go into election year. If they're going to see their coalition build again, they got to drive that national security and they got to take that advantage back. That's what this is. This is politics.

NEWHOUSE: Everything is politics, of course. Come on, give me a break. You know, is it politics? Of course, it's politics. But what Boehner is talking about is he's not - he's not, you know, casting aspersions on the investigation. He is saying it's luck the thing didn't go off, and we didn't have ma mass casualties in Times Square.

KING: So, let's thankful we were lucky.

NEWHOUSE: That's what he is saying.

KING: Another one that's going to continue through November, we will stay with it. Here's an interesting one, Sarah Palin took sides today in California's Senate race. Instead of going with the more conservative Chuck Devor in the three-way Republican primary, Palin signs with the former Hewlett-Packard CEO, Carly Fiorina. They met in a McCain campaign. On her Facebook page, Palin writes California is still Reagan country and Carly promises her Reagan conservative values where we put to good use for her state and for our great nation.

Shaking it up in California is long overdue. Let's help Carly do it. Mary Quickly, some of her supporters were putting protests on her Facebook site, and Sarah Palin came back with this update, in the face of that backlash. Fiorina is pro-life, pro-traditional marriage, pro- military and pro-strict border security and against amnesty. Most importantly, Carly is the only conservative in the race who can beat Barbara Boxer. That is no RINO. That's a winner. RINO being Republican in name only.

NEWHOUSE: You know what's really interesting is, Fiorina is a woman who mentioned - who talked about Palin in the last campaign as not qualified to run a major company in this country. And then they -- you know they kind of made up. I think this is simply a payback for Fiorina campaigning for Sarah Palin back in 2008.

BELCHER: I don't know who the Republican presidential front- runner is anymore. You know, she is one way -- she is -- you know, she is flip-flopping here. She is not --

NEWHOUSE: Moderate, right?

BELCHER: She is now. She's endorsing moderates, though, she's appearance, though, she's tea party (ph). A lot of her backers should think twice about this. I don't know if she's going to be the front- runner much longer.

NEWHOUSE: This is going to confuse voters in California more than anything else.

KING: They got a confusing year out there, so maybe a little more confusion wouldn't hurt them. Everybody stay put. Get your helmets or flack jackets. Next in the play-by-play, the latest shots from the ad war in Pennsylvania's rock 'em, sock 'em Senate race.


KING: All right. Time for play-by-play. You get the drill just like in the sports shows where we play the best shots of the day. We break down the action. Helping us tonight, Republican, Neil Newhouse and Democrat, Cornell Belcher. I want to start with what I'll call paycheck politics and what happened on Wall Street today. You, guys, were joking a little bit about it earlier, but let's play this out. Let's look at the wall and just play out the market today, flat, flat, flat.

Now, they're going to investigate exactly what happened. We'll leave that to the experts, but in terms of an election climate in a political climate, when you have something like that, high unemployment still, we'll see what the jobs report shows tomorrow. What is the political mood when it comes to the economy today?

NEWHOUSE: It's anxiousness. It's instability. I mean, Americans are concerned. This makes them more concerned about the economy, about the jobs, about the stability of what's going on in the country.

KING: Democrats are at a tough year anyway. I bet you're glad this didn't happen in October.

BELCHER: Right, but the bigger picture is, I mean, that's a blip. That was a mistake. But the bigger picture is that the market has been rallying. And we have had growth. We are seeing the policies put in place by this. Actually, begin to turn the corner on this, so I think if we go in with lower unemployment and a rosier figure, it is --



NEWHOUSE: No, it's -- what voters look at is the unemployment number. The stock market, it leads the news and it's important because of that, but they look at unemployment.

BELCHER: They want to be comfortable with their investments too.

KING: Let's move onto one of the most fascinating primary campaigns right now. It's in the state of Pennsylvania. You have Arlen Specter, who a year ago, was a Republican. Now, he's a democrat. I won't mention he was a client of yours. Oh, I just did, didn't I? A year ago, he was a Republican, now, he's a democrat. And he's got a primary from Joe Sestak who's a House member, a former admiral and the ad war here is getting pretty tough. Let's watch the sample.


UNIDENTIFIED MALE: I can count on this man. See, that's important. He's a firm ally.


UNIDENTIFIED MALE: y change in party will enable me to be re- elected.

UNIDENTIFIED MALE: Arlen Specter switched parties to save one job, is, not yours.

UNIDENTIFIED MALE: I go to work every day for Pennsylvania. I voted 20 times to raise the minimum wage and fought China's illegal trade practices.


KING: We get the picture. We can stop that there. This one's pretty intense, and Sestak has been narrowing the gap, but can he pull it off?

NEWHOUSE: Yes, absolutely. I mean this is -- we talked about the unemployment rate. This is a -- this may be a victim in next Tuesday, but this is a -- it's a very tight election. This is a devastating act. It's a devastating act, and it's not just that he used to be Republican, but it's -- it's the way he says this is about me. This election's all about me and it's about me. I changed party so I could get re-elected. He's forgetting the voters of the state.

KING: And Sestak -- let me jump in before you come in. Sestak has spent about $1.5 million on advertising. Specter, this is the interesting part, Specter's getting help from the Democratic Senatorial Campaign Committee. A $2.5 million is spending. Thanks to some of that DSCC money on his behalf. So, here's the guy who was a Republican a year ago is getting help from the National Democratic Party and the Obama White House.

BELCHER: You're going to get me in trouble because I want to be a company guy, but that ad is pretty devastating. And it's devastating because what it does is it takes the shots of him with Palin and the shots him with Bush, nothing gets Democrat primary voters more riled up than those.

NEWHOUSE: I know, but I really think it's the fact that it's about me. That's the devastating part of it.

BELCHER: I think it's both of it, but nothing's still riles up Democrats like images like Bush.

KING: The immigration debate is very emotional and it sometimes it gets feisty. An interesting question for you guys, from me, is in this political environment, where people are debating the Arizona law, it not only is playing out on our politics, it's playing out on our late-night comedy. Someone will find the jokes funny, but I want to play you some and then ask you guys about how this affects things.


UNIDENTIFIED MALE: So, the deal is in Arizona, they don't like immigrants and I was thinking, well that's odd, because right across the river there in California, they elected one governor.

UNIDENTIFIED MALE: So, the Phoenix Suns are wearing jerseys written in Spanish, made in China modeled after their best player, Canadian Steve Nash. There you go.

UNIDENTIFIED MALE: Even though the Clippers didn't make the playoffs, they're also showing their support. They're now the losers. They dropped the clip out of middle. I think that's a nice thing -- it's good to see people coming together.


KING: It's nice that we could laugh about this issue. A little laugh is good, but when an issue crosses in a pop culture like this what does it tell us?

BELCHER: I think for me it tells us that -- I think it's a positive thing because I think -- well positive thing from my side because I think it's really becoming a laughingstock. I mean, it's really becoming jokable in what Arizona's done. You know, and I think it sort of harms them. You can see all of these late-night show hosts come on making fun of this. I think it hurts the Arizona side on this a lot.

NEWHOUSE: I don't agree at all. I think it just demonstrates how much out of touch some of our entertainment world is. I think Americans support the Arizona law. I think they support it in the far west. I think it you know -- it's a no-brainer. When David Letterman's talking about Arizona not liking immigrants, that's baloney. It's illegal immigrants and everybody misses the fact this is about illegally. People who are not here legally.

KING: Referee play-by-play. Referees calling the time-out. Neil Newhouse, Cornell Belcher, we'll keep the intensity going. We got a lot of time. Here we go. Now, we've talked today about the National Day of Prayer, but what are you praying for? Here are some of the answers up next from Pete on the Street.


KING: Let's head up to New York. Check in with Campbell Brown. Get a sense of what's coming up at the top of the hour. Hi, Campbell.


Dr. Sanjay Gupta is going to be here to tell us about this pretty shocking new government report on American's cancer risk that is making a lot of news today. We've also got Nick Robertson from Karachi and on what the Times Square bomb suspect did while he was there and who he may have met with and the very latest on the 100-ton dome that's meant to stop the oil spill in the Gulf of Mexico. Serious questions tonight about whether it's actually going on work. We're going to talk about all of that at the top of the hour -- John.

KING: See you in a couple of minutes. Campbell, thanks.

Today is the National Day of Prayer, and if you spend much time with us, I hope as you've prayed today that you prayed for our offbeat reporter Pete Dominick as we know that he could use them.

PETE DOMINICK, JOHN KING, USA'S OFFBEAT REPORTER: Yes, thank you, John. I definitely could use a few prayers here and there but others need them more than me, John, and I went out and asked people, if they pray, what do they pray for?


DOMINICK: WHAT do you pray for?

UNIDENTIFIED MALE: Give me good money, good family, and good kids.

DOMINICK: No, please God, no bad kids?


DOMINICK: All right.

UNIDENTIFIED FEMALE: I work in a hospital.

DOMINICK: So for patients that you work for?

UNIDENTIFIED FEMALE: Yes. I also pray for myself to hit the lotto.

DOMINICK: All right. So, you do. All right!

What do you pray for, sir?


DOMINICK: Riches, wealth, dough?

UNIDENTIFIED MALE: Dough, all of good stuff.

DOMINICK: Lotto, yes, what else?

UNIDENTIFIED MALE: I don't play for lotto.

DOMINICK: No, you don't play for lotto.

UNIDENTIFIED MALE: That's a dream.

UNIDENTIFIED MALE: I supposed I should like praying, I do a lot more wishing.

DOMINICK: Will you pray for me.


DOMINICK: Thank you. You have a healthy head of hair is that something you talk to god about?

UNIDENTIFIED FEMALE: Vanity comes last. Come on, man.

DOMINICK: Really? All right, sir.

UNIDENTIFIED FEMALE: Guidance for our president. God, save him.

DOMINICK: Did you pray for last president to be saved? because --


DOMINICK: Because he choked on a pretzel and fell off of his bike.

UNIDENTIFIED FEMALE: I didn't curse him.

DOMINICK: You're 100 percent atheist. I'm borderline.

UNIDENTIFIED MALE: I'm no borderline atheist.

DOMINICK: What's border line?

UNIDENTIFIED MALE: Go to Arizona and cross the border line. I detest religion because it divides yourself because it means indiscretions. I'm a Jew. I hate them. What's your name.

DOMINICK: I'm Pete. What's your name?

UNIDENTIFIED MALE: My name is Schmuck.

UNIDENTIFIED MALE: Why don't you leave me alone?


DOMINICK: Well, John, I think I'm more with that last, the old guy there.

KING: Schmuck?

DOMINICK: Yes, Uncle Schmuck is what we called him. Yes.

KING: Colorful character. Pete, thanks so much and bless you, child. That's all for us tonight. Thanks for spending some time with us. "CAMPBELL BROWN" starts right now.