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JOHN KING, USA

New Well Cap; Low Poll Numbers; Immigration Reform

Aired July 13, 2010 - 19:00   ET

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


JOHN KING, CNN ANCHOR: Thanks, Wolf and good evening. Tonight dramatic new evidence of the horrible political climate facing President Obama and his Democratic Party in this year's midterm elections, the economy is your number one concern by far and the president's standing on that issue is at a new and an all-time low tonight.

Our exclusive political duo James Carville and Mary Matalin are with us to debate the politics of the economy, the president's standing and new word tonight that the Obama White House is working with a man James and Mary know well, former President Bill Clinton on a big fall campaign role. But first, the question people across the Gulf Coast and across America are asking tonight -- did it work?

Here's a live look and it's clear from this image that oil continues to spew into the Gulf of Mexico 85 days now since the explosion on BP's Deepwater Horizon drilling rig. It was here last night when we showed you these dramatic, at the time, live images of the new cap being set in place. I'm told by a source familiar with the testing that BP is being deliberately cautious, both from an operations and a public relations standpoint, saying very little publicly as the testing gets underway, but its scientists and others involved, including administration officials monitoring the operation are tentatively scheduled to assess the early testing late tonight, 11:00 p.m. Eastern is the current target.

They will assess it then and decide how to proceed next. So what is the mood in the Gulf region about the latest effort to stop the spill and the administration's new deep water moratorium? Let's begin our conversation tonight on that point with James and Mary, who are standing by in New Orleans. First and foremost, James and Mary, the whole country is watching this. Where you are in New Orleans across the Gulf Coast, is there -- BP says it's cautiously optimistic, the White House says it's cautiously optimistic. Do you share that there?

JAMES CARVILLE, CNN POLITICAL ANALYST: Well I think here cautiously optimistic, I would say it is 80 percent caution and 20 percent optimism, but that's the best that people have felt in a long time, between this and the relief well being closed, I think that people have a sense that maybe this thing will be over here before long, but very, very cautious, and we just you know hoping for the best here.

MARY MATALIN, REPUBLICAN STRATEGIST: The other good news of the day, and this is really good news, is the bipartisan presidential commission began its hearings yesterday, and one of the issues they were not going to entertain was the moratorium, but they said late this afternoon William Reilly (ph) is the cochairman and Bob Graham (ph) of Florida agreed with him on this, that since being here, they have a much greater sense of the economic dislocation and they're going to go back and try to press the issue. There's no need to have this moratorium go on until November 30th. So that's really a piece of great news today.

KING: Well let's spend a little time on that and then we'll come back in a minute to get the capping operation because you both have been very outspoken in saying the administration is not understanding the economic catastrophe that is coming in the wake of the environmental catastrophe with thousands of people thrown out of work like this.

The administration says this is absolutely necessary. They say for, number one, they still don't know exactly what happened. Number two, that all of the resource available across the country are there dealing with the BP spill right now, and if, god forbid, another deep water accident happened, there would be no resource to get it. Are you convinced that the commission can work quickly enough to get new recommendations to the president before the November 30th, which is now the moratorium?

CARVILLE: Yes, I think -- and I think that these are very, very competent people. I think any number of recommendations -- I'll tell you one of the recommendations is that they drill and don't penetrate the reservoir. I can't imagine why they wouldn't let them do that, but the economic impact down here economically is devastating as a result of this moratorium and there's ways and Professor Bee (ph) and any number of people that really know this that are very, very cautious and tremendous engineers say that this is unnecessary and there's a way to do this and if we don't get this done quickly, the economy, this region is going to be devastated.

MATALIN: You know the rigs are already leaving. What the commissioner said today was -- what Bill O'Reilly -- Bill Riley (ph) said he was particularly impressed with what was very strong testimony by Senator Mary Landrieu. There's only a couple of dozen of these rigs that have to be monitored and none of them operate the way the BP rig did work, so we have a sense of what went wrong there, and the rigs are starting to leave. One has already left. It is destined for Egypt and he said -- we hate to -- as they were departing, were loathe to lose these American jobs, but they won't be back for a couple of years and you know that's the nature of the beast here. And other rigs are destined to follow if they don't press this issue and expedite it before the new administration deadline of November 30th.

KING: Senator Landrieu on the record calling the moratorium unnecessary, ill-conceived and the second economic disaster for the Gulf Coast, but James and Mary, as you know full well, there are others who argue -- and maybe we can even show the pictures of the capping operation under way, as we continue the conversation, there are others who argue, if you look at these pictures, why would you take that chance, why would you take that risk, make BP pay those workers, make somebody pay those workers, but why would you take that chance until we know a little bit more about just what went wrong here?

CARVILLE: Well, we know a pretty good bit. You know it's just like when you see the horror of an airplane crash, you know, you don't say, gee, let's just shut down all airplanes. And again, this rig was being operated unsafely. It certainly needed a stiffer regulatory environment around here. There needs to be a wall of separation between the regulated and the regulators, but I mean if the president and the administration could do that, but by not doing this, by just doing the easy way out and just saying let's just have a blanket moratorium, and you're wrecking the economy here, and you're also hurting the security to the extent that we're losing a lot of production of our domestic resources here. So, you know, again, there's a way to do this properly. Really good engineers say that it can be done and it should be done.

MATALIN: And in fact, the administration did send down a SWAT team immediately after the blowout preventer and the spill in the first place, failed, and they cleared all these other rigs. Again there's only a couple of dozen. And we're not just talking about the jobs on the rigs; the expediential magnifying force is the vessels that service the rigs, the vendors that service the vessels. We're talking hundreds of thousands of jobs, and that is a national issue. This is not an economy that can withstand the loss of hundreds of thousands of jobs.

KING: As this new operation unfolds, 24 hours now since they put the new cap in place, we're told perhaps late tonight, early tomorrow we'll get some preliminary results of the testing. What is the sense -- we've had this conversation many times in the last 85 days, the disenchantment with local officials about what they perceive as a lack of coordination between the White House and BP, sometimes a lack of the White House using a stick to get BP to move more quickly. As this operation unfolds, is there a sense that maybe finally there are people who have, "A", a decent plan, and "B", the right level of coordination?

CARVILLE: Yes, I think -- I think that you know that Admiral Allen was you know very instrumental in the administration in getting that second relief well. You can't be too cautious with something like this. You know this is a pretty -- this is an environmental catastrophe. It was underestimated at first, and (INAUDIBLE) always going to be problems with coordination, but you know again as cautiously optimistic, it's already an environmental catastrophe, the greatest one we've had in the country, probably the greatest environmental catastrophe in the world by the time we really find out what happened here, but let's hope this thing works. And you know a lot of these engineers and these Coast Guard people have been working day and night out there and we hope that this thing works. I hope and pray it does.

MATALIN: And you know John one of the really daunting problems was the anxiety attendant to the uncertainty. Once people -- people aren't afraid to work here. They're not afraid to go out there and clean it off those marshes off one blade at a time. The certainty of the well being capped and they know they can turn all their attention to the cleanup that really is a great relief and absolves of the anxiety that's been attendant to the whole mess.

KING: James and Mary are going to stand by for a minute.

(CROSSTALK)

KING: Go ahead -- go ahead, James.

CARVILLE: I just -- I just can't -- I have to emphasize that here in the city of New Orleans there's no effect whatsoever other than obviously you can't get oysters, but summertime is not the best time for oysters anyway. But the -- there's no reason not to come here for anything, I can assure you. I just want to be very clear about that.

KING: The New Orleans commission of tourism -- James Carville taking on a new role. James and Mary are going to stay with us. When we come back some fascinating new numbers, not for the White House though, the president at an all-time low when it comes to (INAUDIBLE) economy how will that impact the midterm election campaign? James and Mary know how this plays out quite well.

But as we go to break, one more look at these pictures undersea because we're going to show you these pictures under the Gulf of Mexico -- all hour long you'll see in the lower right hand of your screen. You see that oil flowing out at the top. If you see that flow of oil start to slow down, that is evidence to you that the testing has reached a critical stage when they start to close the valve to test the pressure you will see it right there. We'll continue to track this throughout the hour -- more James and Mary on politics when we come back.

(COMMERCIAL BREAK)

KING: Let's continue our conversation, some fascinating new numbers to discuss tonight with our CNN political contributors Democrat James Carville and Republican Mary Matalin. You guys know the politics at midterm elections quite well. Some new numbers about the president I want to share with you and our viewers.

CNN has put out a new poll of polls, a compilation of several new polls showing the president's approval rating, how is President Obama handling his job? In our poll of polls 47 percent approve; 46 percent disapprove. Now, let's look, back in January the president's approval rating was right up at about 50 percent. Now it is down about three points to 47 percent, a slight drop, not good news for the White House but not a huge drop, but look at this number.

How is the president performing when it comes to the economy by far the number one issue for the American electorate? A new CBS News poll tonight say only four in 10 Americans, only four in 10 Americans approve of how the president is handling the economy. That is down, James, 16 points from May 2009. If you are the president of the United States, the first midterm election is essentially a referendum on your agenda. The economy is issue one and you're at 40 percent, you're in trouble. CARVILLE: Well it's no doubt about it, and I mean you look at these numbers, but you know the interesting thing on the ABC poll, which I was discussing this morning actually the Democrats have an eight-point advantage over the Republicans on the economy, so I think when President Clinton goes down there out and campaign, they're going to draw that contrast.

But nobody is happy right now about the economy, unemployment is over nine percent, so we'll just have to -- you know we'll get through this, but it's not going to be a very good election for Democrats. But I've never seen any incumbent party do well when unemployment is this high. The bad news is we're not doing that well on the economy. The good news is we're eight points better than the Republicans, so I guess there's some solace in that.

MATALIN: The problem with these polls for all the Democrats is the consistency of them. One poll is worse than its predecessor. Each one gets worse, also the persistence of the intensity of the opposition which gives their strategic imperative of trying to make this be a race of choice. But you know Democrats versus Republicans in which that case, that number would matter. It isn't.

It's a referendum on Obama. It's not just the economy. If you go into your internals, there's no support for any of his policies and all the Democrats are going to have to answer for them out there (INAUDIBLE) races.

KING: And let me get your thoughts --

(CROSSTALK)

KING: I want to get your thoughts on the point you just made, James, because you helped get Bill Clinton elected based on the economy. Mary, you worked for George H.W. Bush in that campaign and were not happy with your now husband and with the effect of the campaign. Can Bill Clinton -- yes, he's still popular among Democrats, but President Obama is in the White House -- this will be a referendum on his first two years. Can he still help? James, I ask in the context -- I'm going to a map here -- there's a big Senate race in his home state of Arkansas. Clearly Bill Clinton is still popular there, that's a very tough race. There's a big Senate and a governor's race out in California. It was always one of his biggest states when he was president. There are big races down in Florida, a state that Bill Clinton did pretty well in his time and perhaps other big states like Pennsylvania where you have a Senate race, Ohio, a Senate race and a governor's race. Can Bill Clinton, James, really help Democrats on the campaign trail or is that asking too much?

CARVILLE: Yes, let me disclose something, as of Saturday night I'm going to be in Little Rock, I'll speak (INAUDIBLE) on behalf of Senator Lincoln up there, so I just wanted to be clear our viewers knew that. Look, can he turn the entire thing around? No, but can he make a difference? And yes, I think he can. I think people feel like that he knows what he's talking about. They trust him. They like him. They think fondly of his presidency. Some people don't, but I think most people do. And when you're in a situation like this, and this is not a very good situation, the Democrats, you try everything. And I'm glad to see that the former president is out there willing to help some of these people in his party and I'm sure you're going to try it and it'll help some, but whether it turns the whole thing around, I doubt it, but it can help on the margins (ph).

KING: Mary, how do you view it in the sense that some Democrats see double star power, Obama and Clinton, others say privately well it's proof that the current president isn't popular in some parts of the country?

MATALIN: Well, that's right. And the problem for President Clinton who is a better politician is that he has to -- when he's running on his issues, he's good. When he's running on or trying to help on Obama's issues, he's not going to be able to change his sentiment. This is not just a matter of personal preference. It's not about Obama. It is about the policies.

Clinton was in the end after facing an electorate not dissimilar to this, walking up to 1994, after '94, he cut taxes, he was a deficit cutter. He was a free trader. He was a centrist. This president is not a centrist and that's why his polls are where they are, and that's what those Democrats have to run on, because they are going back to a Congress that unless it's taken over by the Republicans, will still be run by far left liberals, Nancy Pelosi and Harry Reid, so Clinton can't undo that. He can't undo these policies.

CARVILLE: Well people know that his act of 1993 is the most significant and productive piece of economic legislation in the history of modern United States. And I think it gives him a great deal of credibility, although he lost seats about that. It was an act of (INAUDIBLE) political courage to do that. And hopefully that will help some of the Democrats along the way.

KING: Let me ask you one more very quick question. ABC/"Washington Post" poll, registered voters, would you reelect your congressman or will you look around. Sixty-two percent say they're looking around. That is an all-time high on that question. Again, James, you've made some pretty strong points, but there are more Democrats. They're the bigger majorities on the ballot. That's not a good number.

CARVILLE: Right. Right. Yes, look, we're going to lose seats. We won seats in '06 and won seats in '08. We're going to lose seats here. And you know we're not (INAUDIBLE) we'd say that, there's no question about that, but the difference between losing 25 seats and losing 55 seats is all the difference in the world. And you know, we'll wait and see. And actually, I think that Mr. Gibbs, the White House press secretary was smart to say look they make take over the House, because you know Democrat consultants are calling me all the time (INAUDIBLE) groups of people saying well (INAUDIBLE) protest my vote. They're not going to do any of that stuff that they're talking about, and I think the country needs to be reminded that there's a choice here. It's not just protests. You're electing somebody to govern you and I think that's an important thing --

MATALIN: There is a choice, there's a big choice. The only thing standing between a complete government takeover and the voters are Republicans. The choice is you can vote for them, and they will repeal some of these policies and reform. Steny Hoyer doesn't think Robert Gibbs is all that smart, so --

(CROSSTALK)

MATALIN: They have one strategy left, which is to bash Republicans.

KING: I was going to call a quick timeout there, but we'll continue the conversation. James and Mary, appreciate your thoughts on both BP and on the big political news tonight.

And when we continue we'll go "Wall-to-Wall", a lot more to cover in the program tonight, including a big announcement today from the White House. The president released a new AIDS policy. We'll break down the White House plan and we'll show you some key moments at the White House and some key statistics of how this disease plays out across the country.

"One-on-One" tonight, some call him the "Avatar" mayor. San Antonio's young mayor is on the cusp of huge demographic change in the United States. You won't want to hear -- miss his views on immigration and the rise in Latino political power.

In "Play-by-Play" tonight -- this is fun -- Rush Limbaugh versus Scott Brown and Harry Reid versus the president of the United States. We'll show you just what we're talking about.

And Pete on the street tonight, Red Sox fan John King, Yankee fan Pete Dominick, we'll talk about the passing of "The Boss". Love George Steinbrenner (ph) or not, you have to respect his tenacity to win and he changed baseball.

(COMMERCIAL BREAK)

KING: In "Wall-to-Wall" tonight a look at the new Obama administration HIV/AIDS policy that the administration says is the first comprehensive plan in U.S. government history. Back in 1995, 44 percent of Americans said HIV and ADIS was the number one leading health concern, but what about today? Let's take a look at the number.

You see the huge difference. Only six percent of Americans now identify HIV/AIDS as the biggest health problem facing the United States, a dramatic change over those 15 years. Now what about today, what is AIDS in America today -- 56,000 HIV infections every year, minorities are at greater risk, 1.1 million Americans have HIV, about 500,000 have developed into the full AIDS virus.

About 20 percent are unaware they carry the HIV infection, and 30 percent with HIV get no care. One of the things the administration is trying to address today, so what is the president's plan and the goals? Reduce infection rates, number one, increase access to care, reduce HIV-related disparities in the health care system, increase abstinence, education, make condoms and needles, clean needles more available, and increase HIV testing. As the president was outlining this new policy today at the White House, he was briefly interrupted by a heckler. Take a listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: To support our new direction we're investing $30 million in new money and I've committed to working with working with Congress to make sure these investments continue in the future. The second --

UNIDENTIFIED MALE: Mr. President.

OBAMA: Hold -- let's -- hold on. You can talk to me -- we'll be able to talk after I speak. That's why I invited you here, right? So you don't have to yell.

(APPLAUSE)

OBAMA: Thank you.

(END VIDEO CLIP)

KING: Spending level is (INAUDIBLE) one source of disagreement, even though this policy was widely praised by the HIV/AIDS community and the health care community, there is some dispute about whether there's enough money in the plan -- excuse me for turning my back for one second. Let's take a closer look at that.

In the 2011 administration budget, about $14 billion goes to care and treatment of people with HIV/AIDS; about $6.7 billion was spent overseas on global efforts to fight the disease; 2.6 billion of the money goes for cash and housing assistance. Just shy of $1 billion for prevention, just shy of $1 billion for research, and some other costs as well. As we go forward, what about the scope of the disease in the United States? The darker the state, the higher the HIV infection rate and as you notice, most of this is the larger the state in the East Coast here and the larger state down in Florida, Illinois, the bigger the state, it tends to be -- follow through with a higher infection rate.

Who are the people impacted here? No surprise if you'd studies this issue before. About 44 percent disproportionate amount among black/African-Americans, 35 percent of those with HIV are white; 19 percent are Hispanic or Latino. The administration announcing this new policy today, again widely being praised, but one question in the HIV/AIDS community -- will the president and will the Congress follow up with the money not only this year, in the years to come, an issue, an important issue to keep an eye on.

When we come back, "One-on-One" with a rising star in the Democratic Party. He leads a city that is on the cutting edge of the big demographic changes sweeping across America, the rise of Latino power, how it impacts immigration and other issues. San Antonio's mayor when we come back.

(COMMERCIAL BREAK) ANNOUNCER: It's time to go "One-on-One".

KING: A lot of eyes are on a rising Democratic star in Texas. Julian Castro (ph) was only 26 when he became the youngest person ever elected to the City Council. Now at the ripe young age of 35, he's San Antonio's mayor, the youngest mayor of a top 50 U.S. city. It is a job that puts him in the middle of big debates over immigration, diversity, jobs and more and the mayor is here with us to go "One-on- One". Thank you.

You are in Washington today and this town is torn over what to do on a number of issues that directly affect your city and your community. Let's start with immigration. Should the Democrats in Congress bring to the floor what they call comprehensive immigration reform before the midterm elections? Some in the party are quite nervous. They think that would hurt, not help.

MAYOR JULIAN CASTRO (D), SAN ANTONIO, TEXAS: I think that this is an issue that has been on the table for three or four years now and is one that's ripe for legislation, because if you think about it, folks on both sides, folks who agree with SB 1070 (ph) in Arizona and folks who disagree are saying the same thing, which is that the federal government needs to do something on immigration. And the rest of it I think is working out the details, but you know I've watched Washington long enough to know that oftentimes the political takes precedence over policy.

KING: To that point, you disagree with the Arizona law.

CASTRO: I do.

KING: And yet do you share the governor's frustration and her belief that Washington has failed?

CASTRO: I do. I think that Washington can do much more, both to secure the border and also to ensure that the 12 million folks who are here have a pathway to citizenship after they've learned English, after they've paid a fine, after they go back to the end of the line so that you're not faced with folks who are literally living in the shadows, but still contributing to the economy of the United States of America.

KING: The president of the United States promised the Latino community he would have a bill in his first year. He promised this would be a big priority. It obviously has not been dealt with yet. We're a year and a half into the administration. The big question mark is whether it will be dealt with this year. Has he failed to keep that political promise to your community?

CASTRO: Well, there's no question that a year has passed and that that action has not happened. But I wouldn't say -- I wouldn't call President Obama a failure on this issue. I think most reasonable folks understand that there has to be a calculation about whether you're going to get legislation passed or not.

KING: Help, because of your unique position, us understand one of the bigger challenges of this. You are on the cutting edge of the demographic change that's changing America, and that complicates and, in some cases, causes fear in this debate. Nationally, about 15 percent, 16 percent of America are Latinos. In Texas, it's about 36, 37 percent. But in your city, it is 61 percent. You already have a majority Latino city. If you look around the state of Texas, if you look around in Arizona, where this demographic change is happening fast, some of this is born of resentment and fear, is it not, of that change?

CASTRO: I think that there is a kind of fear animating some of this. A few years ago, Arthur Schlessinger wrote a book "The Disuniting of America," and there's this fear sometimes that America is going to get balkanized if you have this inflow of Hispanics and Mexicans from Mexico. And the nation has a lot to learn from San Antonio, because it is a city that's about 60 percent Hispanic. Yet, it's one of the most successful cities in the country right now, the seventh largest city, the second largest city in Texas, been ranked as one of the most recession-proof cities. It's a hub for military medicine and so forth. Our unemployment rate is about 2.5 points underneath the national average.

So you have a community there that's learned to work together.

KING: Sometime in the next decade, there will be more Latinos in the state of Texas than there are Anglos. That will happen sometime in the next five to eight to ten years. Yet, right now, in your state, Democrats tend to get the higher percentage of the Latino vote, and yet Republicans control all 29 statewide offices. What is happening in the state of Texas?

CASTRO: Well, they do. You know, Texas has quite a history of being a one-party state. For many, many years, until really the late 1970s or early 1980s, it was a solidly Democratic state. And for about a decade now, it's been solidly Republican. But the demographic changes that are taking place in the state, as you mentioned, certainly will make it interesting.

And I do think that what you see now, for instance, in the governor's race, with the former mayor of Houston, Bill White, running a competitive race against Rick Perry, the current governor -- you see some of that demographic change sort of impacting those numbers. That's only going to, I think, become more and more prevalent in the future.

The thing is that the Hispanic community, though, is not monolithic politically. George Bush was able to capture a significant percentage of the vote when he was Texas governor and when he ran for president. So the vote is there for the taking, as long as either party is responsive to the concerns that the community has.

KING: Jorge Ramos was on the program last week. And he said he is convinced -- Jorge Ramos, obviously, the anchor on Univision. He is convinced the first Latino president of the United States has been born. He said maybe it's his daughter, maybe it's you.

CASTRO: Well, I think -- you know, that's an open question of who it's going to be. I think the first issue in Texas is, as you said, there are 29 statewide offices and zero of them are Democrats.

KING: You need to be governor, first, is that what you're telling us?

CASTRO: I think for, first, for any 35 years old. Right now, I'm the mayor of San Antonio. And I was born there and grew up there. so that's what I'm focused on doing. But Texas is a fascinating state. It's been very economically successful in the short term, but has a long way to go in terms of education and other things. It will be interesting to see how the state develops in the future.

KING: Do you agree with the basic premise that the first Latino president of the United States is among us now, has been born?

CASTRO: I think that's true. If you think about tit, President Obama was born in 1961. So, on the day that Martin Luther King Jr. delivered his "I Have a Dream" Speech, little did he know that already there was Barack Obama having been born in the United States of America, and one day he would be president.

KING: Mr. Mayor, we thank you for your time.

CASTRO: Thank you.

KING: If you'd rather do anything than balance your checkbook, stick around for today's most important person you don't know. He's about to be head of the checkbook that's a trillion -- trillion dollars in the red. Guess what? It's your money. That's next.

(COMMERCIAL BREAK)

KING: Today's most important person you don't know is just about to get his hands on a budget that's one trillion dollars in the red. That's just for this year. Jacob Lew, President Obama's new choice for the director of the Office of Management and Budget. The president joked that he had to trade a number of first-round draft picks with Secretary of State Hillary Clinton to get Lew out of the State Department, where he has been her chief operating officer.

Lew is 54, and goes by Jack, has played on a number of big Democratic teams. He was Speaker Tip O'Neil's top domestic policy adviser back in the '80s, also was the OMB director for President Bill Clinton during that brief era -- maybe you remember it -- that the U.S. actually ran budget surpluses.

That will be a little bit more of a challenge now and something worth discussing with our senior political analyst, Gloria Borger, and our national political correspondent, Jessica Yellin. A clear signal from the administration at a time Americans, who get to vote in 113 days, and a lot of people in Washington are saying, what about all the deficit spending? You need to take it more seriously. In Jack Lew, they do have someone who can say, this guy has actually seen a budget that has black ink at the end.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Over 50 percent of Americans disapprove of the way the president's handled the budget deficit. It's a huge problem for him. Jack Lew had a 237 billion dollars surplus, which is a word we don't ever, ever hear anymore. So clearly this is a signal to all of us in the media and everyone who votes that yes, I really care about the budget deficit.

JESSICA YELLIN, CNN SENIOR NATIONAL POLITICAL CORRESPONDENT: He also has a track record of working with Republicans in Congress and he's trusted. That could help in this very partisan time to negotiate a little bit, if there's a chance of cutting any deal.

KING: Negotiate a little bit, emphasis on a little bit, because we're in a political year. Look, there's important substance with the deficit. We all know that. And we know this commission will have the recommendations. But there's also an election in 113 days. And Republicans are seeing this number tonight that's quite dramatic. The new CBS poll, how is the president handling the economy? Forty percent approve, only forty percent. Four in 10 Americans approve. Back in May 2009, 56 percent approved. So he has dropped 16 points in his handling of the economy from just over a year. And the economy is, by far, the number one issue.

I was talking to a top strategist today. I asked him, when is the date of no return? Circle of a date on the calendar where the psychology of politics eventually takes hold. People think the country is in a funk, you're not going to change their mind. And he said, you know what, that date has gone. This is the political climate you're going to run in.

BORGER: And how much lower are you going to get the unemployment number before you get to the November election? Not much lower. And it may very well go higher. You know, this is a problem they have right now, particularly since he's had such an ambitious domestic agenda, where he wants to do energy. He wants to do immigration. He did health care reform, spent the first nine months on health care reform. People are asking now, wait a minute, what about me? What about my job? What about my life?

KING: Gloria makes an interesting point. When you have had an ambitious agenda, can you then have an election campaign in which the Democratic argument is elect the Republicans, because they'll take you back to George Bush's economy, and it was even worse than this one. Or is it not a referendum on the first two years of the Obama presidency?

YELLIN: It becomes a referendum on the first two years of the Obama presidency. We have said all along this election will ride on the unemployment rate and what the economy looks like. That is bearing out. The best that the Democrats can hope for is that they can encourage people that this is not the time to turn away from the pattern of change that this president is on. Let's double down on the change will be the message a little bit.

So they can hope that Democrats will turn out for that, and stop any bad hemmoraging. But there will be clearly losses.

BORGER: You can't say "I inherited" anymore. That --

YELLIN: Well, they'll try.

BORGER: Right, but that begins to sound like whining after a while, because he's in charge and he has to start bragging about the stimulus creating two million jobs, saving or creating jobs.

KING: Let's focus on one of the key pressures, because this president has so many conflicting pressures on him. We just talked about all this pressure from conservative and moderate Democrats, prove yourself on deficit reduction. There are others saying, Mr. President, you need to spend more. Let's show -- I want to show a graphic here of long-term unemployment. This goes back to the 1950s. If you look closely, see how low that was? That's the long term unemployment rate. That's unemployed for a long period of time, 26 weeks or more.

Look at that spike at the very end. Look at that spike at the very end, unemployed for more than 27 weeks. More -- today, 45 percent of those who are unemployed have been unemployed for more than 27 weeks. So the pressure is on Washington to extend their benefits, send them more money. The Republicans say we'll only vote for that if you cut spending somewhere else.

YELLIN: That's right. And they want it paid for. And they also make the argument that if you don't -- if you stay on unemployment, if it's too available, you won't be seeking a job. But, you know, the Bureau of Labor Statistics came out and said, at the end of May, there were only 3.2 million jobs available. Fifteen million people unemployed, 3.2 million jobs available. You do have to account for that.

BORGER: We're not used to this, because we haven't had people on such extended benefits since the late '80s. And in the late '80s, we only extended people for like 50 weeks, something like that. We're beyond that now. So I think that the Republicans are saying, look, we have a theological problem with this, because people are getting pickier about what job they're going to take, because they've got the net out there.

KING: How does this play out? I covered Bill Clinton for more than a decade. He's very proud of his presidency, especially the economic record. The White House is working with him to get him out much more often this campaign year. How can he go out there and say, when I was president, I created 28 million jobs --

YELLIN: Just like that.

KING: -- without somehow drawing a bad contrast with the current president, who's had a much tougher economy.

BORGER: Bill Clinton can say that George W. Bush got us into this ditch. OK? Bill Clinton can do that. Barack Obama not so much. But if Clinton is out there, it's not going to sound so much like whining, because he's going to say I handed George W. Bush a great economy.

YELLIN: Bill Clinton can sell it. KING: OK.

(CROSS TALK)

KING: I'm going to make sure I find a way out there when he does campaign. Jessica, Gloria, thank you.

The Senate majority leader takes a jab at the president? Hear what he has to say up next.

Plus, we're continuing to watch as BP begins to test its new cap in the Gulf of Mexico. You see right there, oil still flowing into the Gulf of Mexico. The testing is underway, though. We should have some more information hopefully late this evening. We'll stay on top of this story. Don't miss it. Much more to come when we come back.

(COMMERCIAL BREAK)

KING: If you're just joining us, here's what you need to know right now. Critical testing underway to see if the new cap can contain the oil leak in the Gulf of Mexico. A source tells me there's an 11:00 p.m. technical call or meeting scheduled tonight to assess the early hours of this testing.

In politics, all the polls will be closed at the top of the hour in Alabama. Runoffs there for congressional nominations, as well as the Republican nomination for governor.

At its annual convention in Kansas City, in the NAACP just passed a resolution condemning what it feels is rampant racism in the Tea Party movement.

With us tonight for the play by play, to break down some interesting tape in politics, Democratic strategist Peter Fenn, Republican Robert Traynham. Get to the tape in a second. Let's talk quickly about this NAACP resolution, essentially saying that the Tea Party is full of racists. A, evidence of that? And B, what's the point?

ROBERT TRAYNHAM, HOST, "ROLL CALL WITH ROBERT TRAYNHAM": I'm not surprised that the NAACP would do that. Obviously, they're experiencing their national convention. What they're doing is they're expressing their frustration with, A, the lack of diversity, not only of thought, but obviously of color over at the Tea Party movement. But also, we remember these comments. We remember some comments of some Tea Party folks allegedly calling some folks the "N" word and some other things. I think those were very, very isolated things. That certainly does not condemn what the Tea Party movement -- what the folks were trying to do.

But the NAACP is the oldest civil rights organization in the country. They have every right to do what they did earlier today.

KING: But you pass a resolution condemning them all for perhaps some actions of a few. PETER FENN, DEMOCRATIC STRATEGIST: I think part of the problem, John, is you have Glenn Beck, who is one of the pushers of this movement, who called the president a racist, was condemned for that and never backed off it. So I think you're getting a little bit of reaction to what's been going on.

KING: We'll track this. Let's break down some tape now. Senate Majority Leader Harry Reid is in a very tough race back home in Nevada. He was on the state's big political show with Jon Rallston, and he was asked, where do you disagree with the Democratic president, Barack Obama? He hemmed and he hawed, and then he said.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: On a few occasions, I think he should have been more firm with those on the other side of the aisle. He is a person who doesn't like confrontation. He's a peacemaker. And sometimes I think you have to be a little more forceful. Sometimes I don't think he is enough with the Republicans.

(END VIDEO CLIP)

KING: Soft-spoken, but he's the top Democrat in the Senate.

FENN: I'll tell you, he is the softest-spoken boxer I have ever met. Most folks know that he worked his way up as a boxer. So he's used to this back and forth. I think the point was that when Barack Obama was elected president of the United States, he really was hoping to bring in Republicans, really hoping to change the tone in Washington, really hoping to have one America. It was really clear, real fast, that that wasn't going to happen.

And Harry Reid is probably right in some cases. He should have knocked some heads a little bit up there.

TRAYNHAM: John, that was the velvet glove pulling back a bow and throwing it across the -- an arrow across the bow. Harry Reid, I worked on Capitol Hill, as you know, for ten years. Harry Reid is tough as nails. He is a boxer, a former boxer, literally and figuratively. I think that was him basically saying, Mr. President, get a spine here, you know, whip these Republicans in shape. I think, Mr. President is probably saying, you know what, Harry, you just relax a little bit.

FENN: Harry's Senate candidate opponent better watch out, because, she's in for a real tough fight.

KING: A little Democratic discord there. Here we'll go to the Republican side. Scott Brown one of three Republicans who now say they will support the Wall Street financial reform bill. Well, Scott Brown sort of the poster child right now for some in the Republican party. But Rush Limbaugh doesn't like it.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: There is no conservative anywhere who would vote yes on financial regulatory reform. It is a fraud of a bill. It should not come close to even passing. But here we have a Republican voting for it. And if you read the story, he makes arguments that sound very much like liberal arguments, that it does all of these wonderful thing, that it got a consumer bill of rights in it. It's going to make sure that big fat cats on Wall Street don't get to screw anybody anymore, when, in fact, it does not do that, and it cannot do that, and it will not do that.

(END VIDEO CLIP)

KING: To the Republican in the room, a Rush-Scott Brown argument. Does that hurt Scott Brown?

TRAYNHAM: John, breaking news, news flash: Scott Brown is not a conservative. He's running -- he's ran as a moderate Republican in a Democratic state. He's not a conservative. For Rush Limbaugh to say that -- good for Rush for saying it, but it doesn't really make a lot of sense. Everyone knew that Scott Brown is not a conservative.

Having said that, this is called working in Washington, D.C. and trying to govern with some type of a majority. This is called realistic politics.

FENN: Scott Brown should send the biggest basket of flowers to Rush Limbaugh, along with candy. But the key point which Rush misses and Scott Brown gets is 71 percent to 21 percent is the view now that Republicans stand up to Wall Street and the big bankers.

KING: Let me quickly get this other issue. David Vitter, Republican senator from Louisiana, is back home. He is in a re- election campaign. Somebody at a town hall is among those who, despite all the evidence, still believes Barack Obama was not born in the United States. He says, what are we going to do about this? Here's Senator Vitter.

(BEGIN VIDEO CLIP)

SEN DAVID VITTER (R), LOUISIANA: I support conservative legal organizations and others who would bring that to court. I think that is the valid and most possibly effective grounds to do it.

(END VIDEO CLIP)

FENN: In the old days, this would be a four to eight percenter, you know, the number of people that believe he wasn't born in the United States. The Harris Poll shows that 25 percent of Americans have questions about where he was born. He's trying to stir up trouble and he's trying to protect his base. He's trying to keep his base. He should know better. I thought this guy was a Rhodes Scholar. I guess he should know better on a whole host of things.

TRAYNHAM: Look, let's call a spade a spade. You are always going to have people out there that believe UFOs exist. You are always going to have people out there that believe that it was a conspiracy to kill JFK. You're always going to have people out there that just simply going to believe that Barack Obama is not a legal resident. The fact of the matter is --

KING: What is the senator supposed to say?

TRAYNHAM: Well, you know what, a senator shouldn't have said that. I'll tell you that. But he said it. He's got a valid point from a legal perspective. A conservative organization or a liberal organization can do a case. That's the American way.

FENN: We came up in the elevator with Elvis, though. There you go.

(CROSSTALK)

KING: Elvis is waiting in the green room. Peter, Robert, thanks for coming in. Love him or hate him, heat on the street has reaction to the death of the New York Yankees' owner, George Steinbrenner, coming up next.

(COMMERCIAL BREAK)

KING: Wow. Take a look at that, if you can. That is the White House, a live picture of the White House. Rainy night. Thunderstorms and lightning here in Washington, D.C. There you see the lightning. A little wacky July weather here in the nation's Capital, obscuring our view of the White House. And I'm inside and I can hear the thunder out there.

If you've been here before, you know I root for the Boston team, the Red Sox, when it comes to baseball. Today, baseball lost an owner who many thought he was controversial, but he did bring a once proud franchise back to fame. Fortune and success, George Steinbrenner, the owner of the New York Yankees. Our offbeat reporter Pete Dominick, Yankees fan -- I still love him. Pete?

PETE DOMINICK, CNN OFFBEAT REPORTER: That's right, John King. As you know, I am a huge Yankees' fan. Today is a sad day. As one New Yorker told me today, if you're a Yankee fan, George Steinbrenner was your father. We had a lot of interesting responses when I went out on the street to talk about George Steinbrenner.

(BEGIN VIDEOTAPE)

DOMINICK: George Steinbrenner memory.

UNIDENTIFIED MALE: Oh, George and Reggie Jackson always going at it in the '70s, because Reggie wanted to do his own thing.

UNIDENTIFIED MALE: Him and Billy Martin fights.

DOMINICK: The Billy Martin/Steinbrenner fights were legendary. He hired him and fired him and hired him. Do you think they're fighting in heaven?

UNIDENTIFIED MALE: Making Don Mattingly cut his hair. DOMINICK: Did you think it was weird that he always asked guys to be so clean cut, or did you like that? Is that a Yankee thing or is it Steinbrenner?

UNIDENTIFIED MALE: No, I think that's a corporate thing.

DOMINICK: You and I are very corporate with our hair cuts.

UNIDENTIFIED MALE: George Steinbrenner is every Yankee fan's father.

DOMINICK: Every Yankee fan's father?

UNIDENTIFIED MALE: Of course.

UNIDENTIFIED MALE: He will be missed. He was a titan. He has a Robert Moses type of effect on New York, in that he changed the landscape of New York sports.

UNIDENTIFIED FEMALE: I'm a red sox fan.

DOMINICK: As a Red Sox fan, what is your greatest George Steinbrenner memory?

UNIDENTIFIED FEMALE: They're all awful.

UNIDENTIFIED FEMALE: I think of him kind of bringing the Yankees, making them what they are today.

DOMINICK: Mets or Yankees?

UNIDENTIFIED FEMALE: Yankees.

DOMINICK: Mets or Yankees.

UNIDENTIFIED FEMALE: Yankees.

(END VIDEOTAPE)

DOMINICK: John King, I think one of the things about George Steinbrenner's death is the fact that it overshadows Bob Shepherd's death. The Yankees' P.A. announcer died two days ago, after 57 seasons of announcing the Yankees games.

KING: If you love the game, even if you hate the Yankees, you do that with respect, because of their proud heritage. Those are two fine gentlemen who loved their team and wanted to win. In George Steinbrenner's case, if you grew up a Red Sox fan, when he started the free agency era, the big signings, the big contracts -- he brought Wade Boggs there. He brought Roger Clemens there after a detour in Toronto. He brought Johnny Demon there. To your point, he made him shave. Johnny Demon we call him now. He's Johnny Damon, of course.

DOMINICK: That's right. That's right. He helped us win a world series, if I'm not mistaken. But yes, Steinbrenner was either loved or hated. I, myself was -- I always rooted for the players. I never really thought too much about the ownership. But he was always a colorful character. If you're a Yankee fan, you knew exactly who he was, and how much he micro-managed the team, to some extent.

KING: Pete Dominick tracking that tonight. As we say farewell tonight, let's take a look -- if I can get this to work here -- the countries of baseball, Red Sox Nation, Yankee Nation, all your teams across the country. George Steinbrenner passing away on the night will hold its All-Star Game.

That's all for us tonight. Campbell Brown standing by. She takes it away right now.