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Tax Cut Deal; Residential Politics

Aired December 14, 2010 - 19:00   ET


JOHN KING, HOST: Thanks, Suzanne and good evening, everyone. Tonight, the tax cut deal brokered by President Obama is well on its way to Senate passage. Yet, caught in a Republican cross fire. It is a fight that exposes continuing Tea Party versus establishment tensions and some early 2010 GOP presidential fault lines.


SEN. JOHN THUNE (R), SOUTH DAKOTA: It's easy to stand on the sidelines and to criticize this proposal, and it's perhaps even politically expedient to stand on the sidelines and criticize this proposal. But make me -- let me make one thing very clear, Mr. President. Advocating against this tax proposal is to advocate for a tax increase.


KING: Also, Rahm Emanuel says Chicago is in his blood (INAUDIBLE) at times tense and at times hilarious hearing today the former White House chief of staff faced down more than two-dozen challenges to his legal right to run for mayor.


RAHM EMANUEL (D), CHICAGO MAYORAL CANDIDATE: There's also a coat that my grandfather on my mother's side, who came to Chicago in 1917, from the Russia/Romania border.


KING: In a bit, we'll explain, or try to explain, anyway, just what that coat has to do with whether Rahm can be on the ballot.

But we begin tonight with a riddle whose answer might make you wonder if anyone leading the Congress remembers there was a pretty big election last month. Here it is, it runs more than 1,900 pages, cost more than $1 trillion, and is loaded with earmarks.

The answer, it's a massive spending bill pulled together by the Senate Democratic leaders as they try to exert power one last time before the end of the year. Smart politics or pure arrogance?

Let's break down the spending plan and the politics behind it. Joining us Democratic pollster Cornell Belcher, CNN senior political analyst Gloria Borger, senior congressional correspondent Dana Bash, and in New York, CNN contributors Ed Rollins and John Avlon. Dana, to you first. This is your beat.

UNIDENTIFIED FEMALE: I didn't kill that tree, though.

KING: So you didn't kill this tree. There was an election about this. There was this thing called the Tea Party. The Republicans won 63 seats in the House. They picked up several seats in the Senate, and a lot of the election was about Congress shouldn't do this. Shouldn't just take big bills and say, here, vote on it. Load it up with earmarks. Why?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, look, the Senate -- I think the question -- the bigger question is why didn't Congress pass any of the 12 appropriations bills that they are required to do by law? This is their basic job, Congress, funding the government. They didn't do any of them.

And that is why they are all wrapped up in this particular bill. Senate Democrats are saying, look, we want to do this the right way. They're doing it with hours left in the session, but they say they're at least trying. And Republicans are saying, excuse me, to your point, this is exactly what we voted on.

Now let me just tell you that this bill, the spending bill that they're trying to put forward is only $15 billion above the spending levels that we're at right now, which is what Republicans want to continue. So the levels of spending aren't that different. It's just the question of why they didn't do the work before.

KING: Only $15 billion.


KING: You're all sitting at home saying, only $15 billion. What a great day this is in Washington!



KING: Yes, it's only $15 billion. You know, Cornell, I hate to come to you first on these things --



KING: -- your party -- you hate when I come to you -- look --


KING: To Dana's point, yes, we can Christmas shop at the last minute, but this is their only job. This is their biggest job, keep the government running, debate the budget, have these hearings all year long so that this is done in an orderly fashion. They can't run a toy railroad. BELCHER: Well I feel you know at odd having to defend them. But the truth of the matter is we're not one big -- we are sort of one big family but they're -- but broadly, we're like second cousins. But you know there's 300-some families in the congressional districts spread all around. And each congressional member, I know you guys don't like to hear this, but each congressional member has to fight his and her hardest for their district --


BELCHER: -- because if they do not --

UNIDENTIFIED FEMALE: That was yesterday.

BELCHER: Because if they do not, well then they get -- they get voted out. So this process is ugly and it's messy, but ultimately, you've got to fight for your district.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: And you know what they're going to wind up with instead of this, and I don't know, tell me if you agree with me, they could wind up with a short-term resolution to fund the government, get you past January --

BASH: At the current level.

BORGER: And get -- at the current level. And guess what, you come back, the new Congress, and you have a standoff over shutting down the government. Have we been there before?


KING: And so, John Avlon, my favorite in these earmarks, this is the 1,900 pages that's here. This is just a printout. It's about 70 pages of the earmarks. It's a big spreadsheet. It goes through every single state, every single project. We could go on.

There's some for $30 million. There's some for $50,000. Here's a great one, an $80 million fund to help restore Pacific Salmon populations. Now maybe that's very important, and of course, it covers Alaska and Oregon, but it also covers California, but Nevada? Nevada?


KING: I missed the Pacific Coast of Nevada. Have you been there?

JOHN AVLON, CNN CONTRIBUTOR: I keep looking for it when I'm out in Vegas and I can't seem to find it, though I've tried. Look to be fair, I mean you know this might be classified as a form of stimulus. I mean if you're into biology, but what Cornell is suggesting is really, this is the congressional version of the pre-Christmas rush.

What it is, is pork-a-palooza. I mean -- and Gloria's suggestion is exactly right. It's what they should do. This is ridiculous. That they're all doing this. It's like someone's shutting down the buffet and they're all trying to get theirs before they've got to go home. It's completely absurd.


BELCHER: But quick counterpoint, John. Here's the reality to the situation in the district. You say that salmon thing is really interesting. It's really interesting (INAUDIBLE) fun to us, but there are jobs connected to that. And you know, if I'm in Nevada and my senator is the leader and there's a project that I can get and I can put jobs in part of Nevada, doggone right he better go after it or I'm going to be upset about it --


AVLON: And all the people working in salmon hatcheries in Nevada agree with you. I just don't know how many there actually are.


KING: I volunteer to go look. Ed Rollins, we're making fun of the Democrats here because they've been charge of the Senate and the House all year long and here we are, it's like Christmas Eve. Oh god, I've got to go out and shop for everybody. Oh they've got to fund the United States government and they're coming up with the last minute, but if you go through this list of earmarks, the Republicans had this Tea Party help.

They came -- now they say they're going to be the reformers. Right here on the front page, $30 million, Dick Shelby, Republican senator from Alabama, for the University of Alabama Tuscaloosa to help the science, teaching, and engineering research corridor. The senators from Mississippi, Thad Cochran, one of the great appropriators of all times, I could go on for a few pages with his earmarks. Did the Republicans not after the election have an obligation to go back and say, I know I asked for that before the election, could you please take it out of the bill now?

ED ROLLINS, CNN CONTRIBUTOR: It certainly would have been nice, but obviously there are guys on both sides who think this is the way things should be done. The game is going to change dramatically, though. Come January, either the new Tea Party members or the old Republicans who learned the lessons from 2006 are going to basically set new rules. And we will pass a budget.

We will pass resolutions. We will pass appropriations bills. And if we don't, we deserve to be beat. I just challenge one of my friends here on this show who says that members lose if they don't bring home the bacon. Show me one single member who lost this last year, because he didn't bring back earmarks, and I'll show you 10 who basically got re-elected for having no earmarks. The game needs to change and change dramatically.

KING: To Ed's point, it was an interesting year. The old rules did not apply. You know, Bob Bennett lost his seat in Utah. He went home saying hey, I'm doing what I'm supposed to do. I'm bringing home money. I'm doing my job. And the Tea Party said see you, and we can go through other states and find examples of that. BELCHER: That was --


BELCHER: That's more about ideology than it was anything and you had sort of an ideology sort of purification going with the Tea Party. But Ed, you know as well as I do that as a member of Congress your job is to bring home the bacon. And if you don't bring home the bacon and you're losing jobs, you know what, Ed --


UNIDENTIFIED MALE: I'm not sure --


KING: I'm not sure after two years in which every American family has had to make horrendously tough choices about their personal finances those rules still apply. I get that that's the playbook here in this town.


KING: But I don't think they get the message of what average Americans have been through the last couple of years.

BELCHER: They're not going to change on their own. There's going to have to be (INAUDIBLE) rule --

BASH: But on that point, of course, Republicans did make a pledge the minute they got back after the election, with all of the new Republicans, make a pledge, no new earmarks.

KING: Here's the list from Mitch McConnell. Now, he's mad about this, right, because he's in a pickle. He's the Senate Republican leader. He loves earmarks, and he said as much when he went to the Senate floor and said but the Tea Party sent us a message. The American people sent us a message. So why are these still in there?

BASH: Not just these -- I just want to be clear because we added them all up. We added almost $108 million in earmarks from the GOP leader, Mitch McConnell.


BASH: He could have taken them out.

BORGER: -- going to have to take them out --

BASH: He could have taken them out, according to the Senate Appropriations staff that we talked to. We asked him that question today and he said it doesn't matter because I'm fighting against this whole bill. So he's trying to kill the bill that includes all of these earmarks in there, but it's also --

AVLON: That's cynical. BASH: But it's about --


BASH: It's about --


UNIDENTIFIED FEMALE: It's about Alice in Wonderland.

KING: He was for them before he was against them.


UNIDENTIFIED FEMALE: He went to Senate floor and said that. It is a little bit Alice in Wonderland --

BORGER: You know what --


BORGER: It's the new rule czar. It's not about bringing home the pork or whatever you want to call it. It's about leading. And it's about saying to the American public, OK, you understand we have a deficit problem. I understand we have a deficit problem. We're not going to fix the deficit with pork. We're going to do it another way --


BORGER: -- and how about --


BELCHER: One man's pork is another man's --


UNIDENTIFIED FEMALE: But I just want to say one thing (INAUDIBLE) perspective here. Perspective here.

KING: When I want --


KING: When I want an earmark, I'm voting for Senator Cornell Belcher. I'll tell you right now.



AVLON: I just can't wait for the Tea Party --

BASH: This is $8 billion -- $8 billion in earmarks in a $1 trillion plus budget. It's less than -- KING: It's a tiny slice. It always is a tiny slice --


KING: -- but it's the symbolism.


KING: Go ahead, John.

AVLON: And I just want to see the Tea Party challenge to, you know, Thad Cochran. I'm just really looking forward to that in the spirit of consistency down the line. I'm looking forward to that one.

KING: Here's one of my favorite --


ROLLINS: It's not going to happen, John, I'm sorry.

AVLON: I know and why isn't it?


AVLON: That's the point.

ROLLINS: Maybe it will be one of your independents from your new party that you're creating (INAUDIBLE) but at the end of the day you're not going to beat him. The key thing here though is --

AVLON: That just shows the hypocrisy of it, Ed.

ROLLINS: Well I'm not arguing this hypocrisy. What I'm arguing is the process will change. It needs to change. We have a budget resolution. We have a system that everybody's not adhered to, and at the end of the day, judge Republicans one year from now.

We still don't have control of the House of Representatives. We are part of the minority in the Congress. And let's see where we are a year from now. I promise you it will be better.

KING: I want you to listen to one of my favorite moments of the day. Because as this debate is playing out, they're also debating big tax cut compromise. We're going to get to that in a minute. But here's Senator Kay Bailey Hutchison.

We thought she wouldn't be in the Senate anymore because she was running for governor. Of course she didn't win the primary down in Texas. Here she is on the floor today -- while they're about to debate this monstrosity, the 1,900 pages I have right here. They're talking about the tax cuts, $900 billion to add to the deficit. Senator Hutchison --


SEN. KAY BAILEY HUTCHISON (R), TEXAS: Once this bill is passed, we must get about the business of cutting overall spending in this government. And that is not just the discretionary part, which is a minor part of our budget. It is also the entitlements.


KING: I just do want to note for the record, Senator Hutchison voted yes on George W. Bush's Medicare Part "D" prescription drug benefit, which if you ask any deficit hawk in town, is one of the reasons we have a big deficit. But everybody seems to have gotten the message of the election for their speeches. The question, then, is, why are they killing trees?

BORGER: It's like one last drink. OK, it's sort of, I'm going to stop, I'm going to quit, but I've got to have one last drink before --

UNIDENTIFIED MALE: After the holidays.

BORGER: Right, exactly.

ROLLINS: I'm going on the diet, too, after the holidays.

KING: That's excellent. Well, when we come back from the break, we'll see if our weight loss plan includes perhaps as early as tonight in the United States Senate that big tax cut compromise. Stay with us.


KING: The Senate, perhaps tonight, most likely early tomorrow, will vote on that big tax cut compromise President Obama brokered with the Republican congressional leadership. When it passes the Senate, it goes to the House. We'll debate some of it in a minute, including interesting politics within the Republican Party.

But every night this week, we're going to break down some key provisions in it. Tonight, we want to look at what the compromise does to the Bush tax cuts. The Bush tax cuts remember -- and this is one of the big controversies because if we break them down, one of the things Democrats are mad about is this part right here, $82 billion and that goes to the federal deficit because that's money not coming in to Washington.

It's for the highest income families -- $463 billion of the cost is to extend those tax cuts for families making $250,000 a year or less. This has been one of the fault lines. The president wanted the yellow part. The Republicans insisted on the red part. That's all in the compromise. Why does this matter?

Well if you take a look at this right here, this is the America broken down by income. Sixty-six percent of Americans make between $20,000 and just shy of $200,000. Almost 30 percent of Americans make below $20,000 a year. That's a troubling number there. Only 0.9 percent make more than 500,000.

That's that little tiny slice right here, and about 3.4 percent make between 200 and $500,000. Those income rates matters because here are the tax rates right now. The darker blue over this side, that's what's in the compromise. The lighter blue, that's what the president wanted. So you can see every single tax rate for an income group is a little bit lower in the compromise than the president had proposed in his plan.

Especially on this end, he wanted high-end tax rates to go up more. Why does that matter? Let's take one quick look here. Here's how this affects you and this is why Democrats, especially liberals are mad. If you look from here over, $500,000 or less, you're actually going to pay more in taxes next year than you would have had President Obama had his initial plan put through the Congress.

Twenty-one hundred dollars, if you make $200,000 or below that's on average. If you make 200 to $500,000, you're going to pay about $2,600 more in taxes next year under this compromise, because the president's plan had some additional tax cuts for those groups. But if you're on this end, the upper income here's what the president wanted you to do.

Here's what you get. You will make money under this proposal. If you're on the higher end, you will pay less in taxes. This is what the Obama plan would have taken away from you if you make more than $1 million, instead, you will actually make a little bit more next year. That's why when this goes over to the House they probably can't stop it, but you're going to hear a lot of liberals criticizing it. This is a done deal, though, right?

BASH: It seems to be going that way. I'm reluctant to say total done deal. But the Senate is, as you said, probably going to vote at this point tomorrow morning. That seems to be all over but you know whatever the singing. But in the House, Democratic leaders are making pretty clear that they think that this is probably going to be done. The question still is though whether or not they're going to actually be able to change it, particularly the estate tax --


KING: But Ed Rollins, as this debate plays out, it has become a fault line among Republicans. It's not just the Democrats. The Democrats are mad because they think the rich get a great deal here on the estate tax --


KING: -- and those upper income, but you have a little Tea Party Republican establishment going here, in part because the unemployment benefit extension that's in here, it's not paid for. So it adds to the deficit. I want you to listen. Here's John Thune, Republican senator, a member of the leadership.

He's from South Dakota. Here's an important footnote. He's thinking about running for the Republican nomination for president. He's on the floor today. He's not naming names, but he's sending a message.


THUNE: When it's perhaps even politically expedient to stand on the sidelines and criticize this proposal. But make me -- let me make one thing very clear, Mr. President. Advocating against this tax proposal is to advocate for a tax increase. And that is something that we cannot and the American economy cannot afford.


KING: Now, I'm not naming names, but perhaps, just perhaps, he read "USA Today" this morning, where there's a guy, the former Massachusetts governor, Mitt Romney, I think he's running for the Republican nomination as well. And he wrote this.

"Given the unambiguous message that the American people sent to Washington in November, it is difficult to understand how our political leaders could have reached such a disappointing agreement. Because the tax deal is temporary, a large portion of this beneficent effect is missing. What some are calling a grand compromise is not grand at all, except in its price tag. The total package will cost nearly $1 trillion, resulting in substantial new borrowing at a time we are already drowning in red ink."

So Thune versus Romney, and Ed, it's not just those two. There's a split in your party.

ROLLINS: There's a split in my party and obviously, we're not for expanding the deficits. But you have to -- you've got to make a compromise. If you didn't want the tax increases in January, we had to make -- we don't have the whole government. And as Mitt Romney ought to know better than anybody, because when he was the governor of Massachusetts and he had a Democrat-controlled, about the only thing that he accomplished was Romney-care, which he'll get to explain the difference between Romney-care and Obama-care for the next two years.

UNIDENTIFIED FEMALE: It's not your candidate, Ed?

ROLLINS: Pardon me?

UNIDENTIFIED FEMALE: It's not your candidate?

UNIDENTIFIED MALE: Ed Rollins got to that before John Thune could.


ROLLINS: I think at the end of the day, as the senator has said, and Romney did try to be a senator, he didn't make it, but he tried to be a senator. And I think at the end of the day he tried to take Democrats out and he didn't succeed. So what he did the last year of his governorship is he ran around the country 344 days running for president. So he's off trying to run for president again.

KING: If you're scoring this one at home, Ed Rollins is not for Mitt Romney --


KING: Twenty-five years covering politics and I got that one.




KING: But, John, to Ed's point, I mean Ed said it in a semi- political kind of way. But it is interesting that the day after this big federal court ruling that puts the Obama health care plan back into play, which every time Romney campaigns in a conservative area does put Romney-care, the Massachusetts plan, which has a mandate, back into play. (INAUDIBLE) this seems pretty clear to the Tea Party.

AVLON: Oh, yes. No, this isn't subtle. No more subtle than Ed's coming attraction speech just a second ago. I mean Mitt Romney's trying to open up a fight on another front to distract people from the mandate-driven health care debate going on in the courts, which is, after all, the basis of his health care plan in Massachusetts.

So he's got a real problem on his right. He's trying to play offense on the other front. But the larger fault lines are really interesting. Because what Republicans are wrestling with in public right now is the fact that their theology about tax cuts breaks down if you really care about the deficit. And it's essentially an admission that tax cuts don't pay for themselves, at every level. And so that's the fault line here, and it's fascinating to watch. And I hope they do enter the new Congress with a real commitment --


BORGER: But the Republican Party has -- the Republican Party has always had that fault line between the people who worship at the shrine at the balanced budget and the folks like Jack Kemp. Remember Jack Kemp, who said I don't worship at that shrine. I'm for tax cuts because I think it's going to stimulate the economy.

KING: But after -- after this election, boy, is it hard.

BORGER: Right and this is welcome to Mitch McConnell's world and to John Boehner's world because they're going to have that problem.

BASH: And just to show you where the fault lines are right now, yesterday in the key test vote, 37 Republicans voted for this, only five Republicans voted no and stood with Mitt Romney and Sarah Palin and the Tea Party, so --

KING: So taxes still trump deficit reduction for now. But Cornell, the biggest challenge is going to be come January, where Republicans are going to have to prove it by coming for spending cuts and the question is how far will the president go with them.

BELCHER: Well -- well -- see what the president has to deal and what congressional Democrats have to do are two different things. The president I think right now is really showing where he's going to go on this bipartisanship. And the polling is really interesting, because you put this bipartisan tax cut sort of proposal out there in a big sort of form and all Americans are clamoring for it, yes, bipartisanship, but when you start breaking down in bits and pieces of it, support begins to fall away.

The president has to show leadership and look like the adult in the room on this. However, congressional Democrats have to draw big lines of distinction around what you were just talking about. They're for the rich. We're fighting for you.

KING: All right I've got to call a time-out -- sorry we'll continue the conversation. I got to call a time-out here. If I can afford the postage, I'm going to send every one of you all 1,900 pages, you can read through them --


KING: -- on the panel -- not everybody at home, just on the panel. I definitely can't afford that postage.


UNIDENTIFIED FEMALE: -- be after you.

KING: When we come back, we told you at the top of the program Rahm Emanuel, he's trying to run for Chicago mayor and he has an interesting question of shall we call it, residential politics.


KING: Rahm Emanuel says it shouldn't be an issue at all. Yes, he was in Washington as the president's chief of staff, but the man who wants to be Chicago's next mayor says there was never any doubt that the city was his permanent home. But there he was today at a trial of sorts. A city hearing on challenges to Emanuel's right to run.

Now there is a state law that says to seek municipal office, you must have lived in that city for a year prior to the election. Emanuel critics say he didn't, period. Emanuel says he still owns a home in Chicago and shouldn't be penalized for serving the president here in Washington. As you all know, Chicago politics are fun and bruising.

And today's hearing was both and more. Here to help us sort through the theater and the facts are CNN contributor Roland Martin and Lynn Sweet of the "Chicago Sun-Times". This was a little bit of everything. What about your newspaper subscriptions? What about your mail? Why are you storing things in your basement then? It's not really your house.

LYNN SWEET, "CHICAGO SUN-TIMES": Well and he said, wait a minute, things are in my basement, such as my wife's wedding dress and the jacket that my grandfather wore. It was a free-for-all hearing. I watched some of it on a live stream. He even had people who were bringing up conspiracy theories, some things having nothing to do with the mayor of Chicago and his residency claim.

KING: Oh we need a conspiracy theory every now and then, don't we, Roland?

ROLAND MARTIN, CNN CONTRIBUTOR: Absolutely. First of all, I think it's hilarious also to see the chief of staff to the president of the United States -- the former chief of staff to say, oh, I'm sorry. That was a little mistake we made saying that we were actually part-time residents. No, we really were full-time residents of Chicago after of course the fact when he realized Mayor Daley was not seeking re-election.

SWEET: Well, actually, I think you're talking about the income tax point, but the point is everyone knew that Rahm Emanuel was only in Washington at the behest of President Obama. Those essential facts aren't in dispute. The legal question and I think this will go all the way up to the State Supreme Court, John, is whether or not the statutes are taken in a way that says, you could be, quote, "a service to the United States and have them invalidate your residency".

KING: Sort of a letter of the law, spirit of the law, where do you make an exemption for military service or serving a president --


SWEET: And that's why you have judges -- this is just the first of several layers of legal hearings we'll be having.

MARTIN: But you've got to go back to this whole notion of, OK, I'm serving the president of the United States. I got you. But it's a job. Your wife move with you. Your kids move with you. You put them in school. You know I could sit here and say that you know what, I enjoyed my time living in Chicago for six years, but CNN asked me to move to Washington, D.C., oh, but I'm still a resident of Chicago --


MARTIN: I mean it's you move --

SWEET: No, Roland, Roland, we've done this argument before. We'll do it again. There is a part of a law in Illinois that specifically talks about if you're in service to the United States.

MARTIN: Right and more than likely they were talking about the military, not some guy who's --

SWEET: No, but that's why --

MARTIN: -- chief of staff in an office.

KING: That's why they have judges. Let's listen to just a little bit. We put together some of the more -- some of them are colorful. Some of them are interesting. Some of them just seem a little bit bizarre, this hearing today. We put together --

SWEET: Do you have Waco (ph)? KING: Yes, we put together a little bit of it. Listen to this.


UNIDENTIFIED MALE: Governor Clinton was elected president, correct?

EMANUEL: That's the record, correct.

UNIDENTIFIED MALE: Did you subscribe to any Chicago newspapers on a home delivery basis in 2010 besides Exhibit 31?

EMANUEL: You mean in 2010?


EMANUEL: (INAUDIBLE) read them online.

UNIDENTIFIED MALE: So what -- October 29, you decided to get the paper copy, correct, delivered to your house?

EMANUEL: Correct.

UNIDENTIFIED MALE: And you stopped reading them online?

EMANUEL: I check them periodically during the day.

UNIDENTIFIED MALE: Of course that room is the kitchen.


UNIDENTIFIED MALE: Very good, Mr. Olsen (ph) --


UNIDENTIFIED MALE: U.S. history for 200.


KING: Now, some of the questioning is a tad bizarre, but they're trying to make the point, I guess, that's the house he rented out to somebody.

SWEET: Right, see, these facts are not in dispute, which is why the hearing today had the circus-like qualities. No one is -- there is no issue that Rahm rented the house and that the kitchen was the kitchen of the house he lived in. So that's why the hearing did have this circus-like atmosphere, because this is a good for democracy moment.

Anybody who filed an objection, any citizen was heard today and allowed to question Rahm Emanuel. Can you imagine that, if there was such a free-for-all when he was chief of staff, John, and we just had him sitting in a chair, having to sit for hours and just take our questions? MARTIN: Well here, John, as any lawyer will tell you, you never know how a judge's ruling may turn. And so when you're laying this whole thing out -- look, I've covered many cases and as tedious and as boring, when they're going through piece by piece and laying it out, you never know, but again, somebody could look at the law, literally, and say, you didn't live in the city as opposed to, well, I still had a house and I rented it. That -- you never know how a judge may rule.

KING: So there's the legal question, which, as you know, will probably go on for weeks --

SWEET: Yes -- yes.

KING: -- if not a little bit longer to get through the courts. There's also -- but because you have this open process, one of the challenges for Rahm here, as we all know, he can be short-tempered sometimes and he can get a little feisty sometimes and yet he kept his composure.


KING: He smirked a little bit. He rolled his eyes a couple of times, but he didn't lose his temper because no matter how any judge rules, if he says something wrong here, it's in a campaign ad.

SWEET: And he knows that -- I have seen him through House races. There's the good Rahm and the gooder Rahm, and then the bad Rahm. He is --

MARTIN: And then the devilish Rahm.

SWEET: Right. So what you saw today, he knew all the cameras were on him, that it was live stream. And that he wasn't going -- one, it was very amusing. He sat there somewhere between a smirk and a smile, and he knew that some of the questions were so from left and right field, it wasn't about him. And he just let them do their thing.

He is disciplined enough to not let any of this get to him, because he saw it for what it was, high Chicago political theater.

KING: There's nothing wrong with that.

No, we all love theater.

MARTIN: Right.

SWEET: Let the people speak. Let the people ask questions.


MARTIN: We all love theater. I go back to it. It's just so funny, all of a sudden, because here's the other piece. Trust me. If any of Rahm's opponents were in the exact same position, I guarantee you his attorneys would be on the other side doing the exact same questioning. So it's not as if, oh, it's poor me, I'm Rahm, no, they would be honored as well.

KING: Well, the guy he served here in Washington, Barack Obama, did that when he ran for office.


SWEET: That's how he started his political career. And that's just part of the Chicago political culture. Rahm challenged in 2004, a rival on the Democratic primary. He challenged his nominating petition. So even though this might sound a little weird to people who are listening, like why are they having this fight, it's because part of the political culture is, there are rules about getting on a ballot and we're going to hold your feet to the fire to make sure you have dotted every "I" and crossed every "T." That's part of this.

KING: The law is the law.

MARTIN: The law is the law.

MARTIN: Which is why this is going into court, and everyone knows that.

KING: We will continue to track the hearing. It could go on for two more days?

Is that right?

SWEET: Yes, at least.

MARTIN: Lawyers are saying, great legal fees.


KING: It is good for the lawyers.


All right. Lynn and Roland, thanks for coming in.

SWEET: Thank you.

KING: We'll keep our eye on that one.

When we come back, a lot more to come in the program tonight, including judicial conflict. The judge who issued the big health care ruling yesterday. There are some on the left who says he should have recused himself because of a conflict of interest. We'll break it down with our Jeff Toobin.

Also, when I was in Atlanta yesterday, I spoke to two African- Americans who were long-time Democrats who just decided we're going to become Republicans now. We'll let them explain why when we come back.

And also at the end of the program tonight, Pete Dominick, right here, breaking down a great new CNN iPad app. We'll see if Pete has the technical skills. (COMMERCIAL BREAK)

KING: Welcome back.

Before we get to some other important news, this quick political story. Break out your calendar.

CNN along with the New Hampshire Union leader and our affiliate, WMRU-TV will air the first debate of the 2012 season. That's right, the 2012 season. The Republican primary debate is scheduled for June 7th, 2011, so mark your calendars. Mark your calendars. A big debate in New Hampshire. I can't wait.

And with that, let's check in with Joe Johns for the latest news you need to know right now, before you back for New Hampshire.

JOE JOHNS, CNN CORRESPONDENT: I can't believe we're already talking about that. It seems like ten minutes ago.

KING: Well, the candidates are out there, Joe. We've got to cover them, let's have a debate.

JOHNS: Let's rock. All right.

Other news tonight, WikiLeaks founder Julian Assange remains in a London jail even though a judge granted him bail today. Swedish prosecutors who want to question Assange on rape allegations are challenging the bail ruling.

"The New York Times" reports North Korea's new plant to enrich nuclear fuel is significantly more advanced than Iran's nuclear facilities. Obama administration officials reportedly suspect Pyongyang has a network of other secret sites.

A Virginia man and Afghan native is accused of threatening to place pipe bombs in D.C.'s metro system. He allegedly revealed his plans on Facebook. He was arrested last week.

And Richard Holbrooke is being remembered as the diplomat, who in the words of Bill Clinton, made the world safer and stronger. Even as he was being sedated for surgery, Holbrooke said he was worried about the war in Afghanistan. He died yesterday at the age of 69. He was acerbic, interesting, the smartest guy in the room.

KING: And a giant in diplomacy. And a lot of Americans don't always follow foreign policy, if you remember one thing, forget my language at home, he helped get rid of the one of the scumbags of the 20th century with Milosevic.

JOHNS: That's right.

KING: And it took forever. They were skeptics and he stayed at it and God bless him for that work. A very important work and a big challenge now for the administration, filling the Afghan-Pakistan portfolio that was Richard Holbrooke. You know, Joe, we're beginning to get from the census bureau. They connect the census every 10 years. We're starting to get some of the data. This data, politically, is huge because it will tell us how many House districts does this state game. How many does this state lose? We get all that. But some of the early information you get from the census is on demographics. And here's the graphic.

Look at this. This is poverty in America by county. The lighter the color, the less poverty. For example, I'm going to circle this area up here in the northeast. First, I have to turn that on. There we go.

If you circle this up here, see how light that is? Lower poverty in those areas right along the coast. You see higher poverty down in here, out across the country. As you keep an eye on that, as we go through this, because now we want to look at income. It makes pretty much sense. As you would see incomes are higher in the areas where we saw lower poverty. Incomes are lower down here where we saw the higher poverty. That's your look across the country.

Here's one more. And again, this all tracks pretty steadily. Home values. Well, guess what? Where people have higher incomes, you see the higher home values here. Out on the west coast as well. Down here where you saw all that poverty, that's where you see much lower home values here. Fascinating data. Go to the census Web site, go to our Web site, catch a link if you want. Beginning to get this data, we get more and more in the weeks ahead. And we'll track it as the face of America, the demographics of America are changing. This is vital data to see and it affects politics. It affects just about everything else. We'll keep on top of that.

And when we come back, two African-Americans, long-time Democrats in Georgia politics just after the midterm elections. Will Republicans make big gains? What did they do? Switch parties. They'll tell us why on the other side.


KING: We all know Republicans made huge gains at the state legislative level in last month's elections. And since then, a dozen state lawmakers across the country have switched from the Democratic Party to the Republican Party. Lower level switches are harder to track. But two here in Georgia generated headlines recently.

Hall County Commissioner Ashley Bell and former state party executive committee member, Andre Walker, say the Democratic Party is drifting too far left and they feel more at home as Republicans.

Andre Walker and Ashley Bell are here with us now.

Let me start with the simple question. Why?

ASHLEY BELL (R), HALL COUNTY, GA., COMMISSIONER: Well, I'll tell you, John, this is a decision that my family and I had to come up to. Six or seven months ago, we decided that we had to take a close look at where the Democratic Party was going. I'm an elected official. I represent a district that was carried strongly by John McCain. I only have about 20 percent to 25 percent African-American vote. My district's already pretty conservative. I've been a conservative Democrat my entire life. But when I looked at the party after this last election, we realized there were no conservatives left in the Democratic Party.

KING: State party or national party, or both?

BELL: Let's just say both. You know, both, I would say, it's pretty fair to say that if you're a conservative, you've been put on the outside of the Democratic Party. So I had to make a choice. Would I rather be in a party where I can rally the base, or would I rather be in a party that really questions a lot of my stances of where I am. So I'd rather be in a party that is more comfortable.

KING: So answer the critic who says, this is opportunistic. That you have a Republican wave, the Republicans clearly in the state of Georgia and across the country are making gains, and what better way to get some headlines and a higher profile than for an African- American Democrat to say, I switch.

ANDRE WALKER (R), FORMER GEORGIA DEMOCRAT: You know, that's just not the case, in my case, because I'm not an elected official. I don't have a seat to protect. I don't have a seat at all. I'm just a regular citizen. I run a political blog. And I decided to switch over to the Republican Party, purely for ideological reasons. I felt in my gut that it was time to go.

KING: What kind of a test do you have for the Republican Party? If you go back to the last two presidential elections, it's 9 percent or 8 percent or 10 percent African-American vote for the Republican Party?

Do you have a test, now that you're in the Republican Party, and say, you better listen?


WALKER: You know, I don't think there is a test. I think that when it all boils down to it, issues such as keeping taxes low, reducing the size of government, making government more efficient, I think that resonates across the board, regardless of what folks look like.

BELL: John, the issue is that -- the reason that Andre and I are here, because the story is African-Americans switch parties. But the reality is that a lot of people in the African-American community are conservative. We have just entered an era where we see Republicans who are African-American getting elected all across the south. This is a trend.

For myself, this was personal. It was my wife and my family sitting down deciding that, look, we've always been conservative. Now, where do we feel comfortable? Do I really want to argue with Democrats as a conservative Democrat ideologically, or would I rather argue with them as a Republican. And I just decided it was better off for me to do it as a Republican.

WALKER: And then what happens as a conservative in a -- a former conservative in the Democratic Party, you're mocked and ridiculed. And why would you want to continue to put yourself through that. It's much easier to go where you're welcomed with open arms, as both of us have been. We've had elected officials reach out to me. I know Ashley's had the governor-elect reach out to him and welcome him with open arms. And that's great.

KING: Did you vote for Barack Obama?

BELL: Yes.

KING: Did you vote for Barack Obama?


KING: You did not?

WALKER: I voted for John McCain.

KING: The president is the leader of the Democratic Party. Has he done anything right?

BELL: Yes. I think he -- these Bush tax cuts are much needed. Poor families and small businesses are going to be in a lot of trouble and a lot of pain if these tax cuts were not extended. I think he did a practical thing by making sure that these tax cuts went forward without putting that burden on the American taxpayers.

WALKER: And I certainly agree. I think it was good that the president stepped up and stood up to the left wing of the Democratic Party, because those guys can be very vocal. But ultimately, you know, it's the people in the center as well as more conservative folks across the nation that are going to decide the elections.

KING: Just this week, we're dealing with the big debate. Some legal decisions have been, yes, the Obama health care law is constitutional. There was one in Virginia this week that says, no, it's not.

What about the health care bill? Should the government be able to say, there's an individual mandate. If your employer doesn't give you health care, you've got to go out and get it.

WALKER: I don't think so. I really don't. I mean, you know, when it comes down to it, I think that, you know, there's nothing conservative about having the government say that you have to have health insurance.

BELL: Absolutely not. You know, I've always been a big supporter of the fair tax. I think the more you get government out of our lives, the more free we are. It's all about individual opportunity and individual chance to purchase affordable health care on the market. The government mandating you to do it, it's a slippery slope. Once they start getting a mandate, one thing, what's next? KING: Have you -- let me just ask it this way.

What kind of feedback in the African-American community, where overwhelmingly they are Democrats, what kind of feedback do you get? Are you getting criticized? Are you being called a traitor?

BELL: We started a great discussion. We have started a great discussion. It's one of those things where many African-Americans inherit this party. Many of us grew up, you don't think anything about it. But for the first time, you can say, look, I was national president of college Democrats in my 20s. I'm 30 years old, I'm married, I have kids. I have totally different concerns about life and fiscal responsibility, and social concerns than I did in my 20s.

And making an independent decision, I can look at both parties and say, on my social values, Republican. On my fiscal values, Republican. I am 100 percent comfortable being Republican.

KING: And no one's called you Benedict Arnold or anything like that?

WALKER: Not within the African-American community. Not in that way.

KING: Where?

BELL: On blogs. People don't have names, we just blog, you know.

KING: Ashley Bell, Andre Walker, we appreciate your time.

BELL: Thanks, John.

WALKER: Thank you.

KING: That interview conducted last night when I was in Atlanta, Georgia.

Now let's take a quick look. We're continuing to track the tax cut compromise debate. That's Debbie Stabenow, Democratic senator from Michigan, speaking on the Senate floor tonight. The debate continues late into the tonight. We're now told, though, to expect the final vote tomorrow morning. We'll stay on top of that one, though, and bring you the latest news as that one comes.

And when we come back, did the Virginia federal judge who struck down the key points of the national health care law have a conflict of interest in that case? We'll take a look at that controversy when we come back.


KING: Some on the left see conflict of interest on that big legal ruling declaring unconstitutional essential provision of the new Obama Health Care law. Federal District Judge Henry Hudson ruled Congress in writing that law overstepped its powers by mandating that most Americans obtain health insurance. That ruling was in a case brought by the Virginia Attorney General Kenneth Cuccinelli.

This is what has some on the left crying foul. Hudson is an investor in Republican consultant firm called Campaign Solutions. That Virginia firm's clients in recent years have included several critics of Obama Health Care law. Attorney General Cuccinelli among them, Sarah Palin and the House Speaker-to-be John Boehner, too.

Judge Hudson has owned stock in campaign solutions for 13 years. In its financial disclosure says it is valued at between $15,000 and $50,000. Now the company founder Becki Donatelli tells CNN, Hudson is a passive investor with no knowledge or involvement in the firm's daily business and that his shares amount to one percent non-voting share interest in the company.

So is this a conflict? Let's ask our senior legal analyst Jeffrey Toobin.

Jeff, are there clear rules?

JEFFREY TOOBIN, CNN POLITICAL ANALYST: There are pretty clear rules, but this is not a conflict. You know, there's a tendency in Washington to see everything as an ethics violation.

Hudson has no involvement in this company. Hudson was appointed to the bench because he's a conservative. That's why George Bush put him on the bench. That's why presidents appoint people. They are ideological soul mates. That's not a secret, but it's also not a crime. And there's nothing wrong with the fact that he owns stock in this company anymore. It was in his disclosure form. If the federal government thought it was a conflict, they could have moved to recuse him. They didn't because this whole thing is no big deal.

KING: You mentioned he's a Bush appointee. I just want to run through it for our viewers, just who is Henry Hudson. He is now a judge on the U.S. District court in the eastern district of Virginia. As Jeff noted, appointed to the bench back in 2002 by George W. Bush. Before that, he was a former circuit court judge. He was the director of the U.S. Marshal Service. And the former U.S. attorney for the eastern district of Virginia. He's a prosecutor as well.

Jeff, when it comes to just recusal, common sense, we talked about this in the Supreme Court context in the past. When a case like this comes before Judge Hudson, he of course knows he has this small investment in this firm.

What's the process?

TOOBIN: Well, the process is to, it really leaves a lot of discretion to the judge. There are specific rules for the district court and the circuit court judges and they come down to, is there an appearance of impropriety.

It's different for the United States Supreme Court, where there are no rules at all. It's completely to the discretion of the justices which has led to some controversy in the past. But, frankly, I don't even think this one is very close to the line. The fact that this investment was in his disclosure documents and the government could look at those documents and move to disclose them if they wanted, and then didn't move to recuse him, I just think it's a non-issue.

KING: He has to know though, as someone who has been around politics, he was appointed now, he was appointed when he in fact was a prosecutor, the rules may be on his side, but certainly he knows the perception that somebody would say the attorney general who filed the case was a client of that firm, paid money to that firm, so in a sense the judge made a little bit of money off that. Sarah Palin, John Boehner. He had to know that perception-wise, the left would grab on that.

TOOBIN: He had to know that because one of the things that always happens in Washington is when one side can't pin actual violation of a rule on the other, they say, oh, but it's an appearance of impropriety.

Well, you know, appearance of impropriety is in the eye of the beholder. You know, I think there is a lot to question in the merits of Judge Hudson's decision. I think it's a very controversial and very questionable decision, frankly. But the idea that he didn't have the right to make it, I think is really just wrong.

KING: Jeff Toobin, I appreciate your insights on this issue. Thanks much.

Up next, our upbeat reporter Pete Dominick tonight take the new CNN iPad app for a test drive.


KING: You know we like technology here. We've got the Magic Wall. We've got our pretty touch screen behind us. Well, today, CNN is unveiling a new iPad app. I'll show you right here. I got it on mine. I was checking it out today. You can flip it around. Once my daughter finds out Justin Bieber is on here, I'll have a second iPad in the King Family.

Pete Dominick also busy checking it out today.

What do you think there, Pete?

PETE DOMINICK, CNN CORRESPONDENT: Wait, did you just say Justin Bieber is on here? Where is that? I must --

KING: You got to learn to surf, my friend. You got to learn to surf. You'll find it. It's in there.

DOMINICK: John, hold on. Don't bother me. I'm watching your interview with Jeffrey Toobin from just moments ago on the new iPad app. Take a look at that.

KING: That is great stuff, huh? Look at that.


KING: Look at that.

DOMINICK: Very interesting. And you know, you can just go -- this is great. And by the way, it's free, we should say, right? It's also now free on the iPhone, the app. And we can read a lot -- oh, my gosh, Ryan Reynolds and Scarlett Johansson have broken up according to's entertainment section.

Does that mean I have a shot, John?

KING: I think you should make a play off. But I think I remember your wife also watches the program, Pete.

DOMINICK: Oh, that's true, that's true. She's probably going to -- as if.

Oh, there's so much stuff on here, John. You can look through. I like the politics section, of course.

I mean, look at this thing. This is fantastic. Don't you have a big one in there, John?

KING: I do. We've loaded the iPad app in our screen here. I want to scroll to the WikiLeaks' founder. You see right here.

Here's one, Pete, right here. Jets suspend coach who tripped player.

You're a Jets fan, is that right?

DOMINICK: John King, I'm a Jets fan, but I'm not a partisan. That was a terrible, terrible thing to have done. And I agree with the suspension, sir.

That's on the iPad, huh?

KING: You can get that. You can put "Top Stories." You can click, "This Just In," up here. You can set, you go back up here, you can set your own preferences to it.

"How the Tax Cut Deal Would Affect Small Businesses." "Brett Favre Streak Over."

You can get everything. You can get news. You can get politics. You can get sports.

You know what I couldn't find, Pete? They must not have loaded this, yet, or they are just being nice to Pete Dominick on the first day of our iPad app. I couldn't find that "Cliff Lee Signs with Philadelphia, Not with the Yankees" story on there. I wanted to blow that one up huge.

DOMINICK: But the great thing, John is, with the iPad app, I can flip you upside down and all over the place. However I want, John King, I always wanted to put you upside down. There you go. KING: I'm getting dizzy, Pete. I'm getting dizzy.

All right, Pete, we'll see you here tomorrow. Have fun with this.


If you have an iPad, load up this app. It helps you attract the news. It's a great, great app. We'll see you right here tomorrow night. "PARKER SPITZER" starts right now.