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STATE OF THE UNION WITH JOHN KING

Pre-Inauguration Coverage of Barack Obama and Washington, DC; David Axelrod Interview

Aired January 18, 2009 - 09:00   ET

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


JOHN KING, HOST: Good morning from Washington, D.C. A capital city filled, filled with anticipation, and as you can see by looking around, busy with last-minute preparations. Fast approaching, the moment Barack Obama stands on the west steps of the United States Capitol, places his hand on the Lincoln Bible and swears to serve as the 44th president of the United States, the first African-American to hold that office.
We will see the president-elect shortly this morning, and we'll take you there live when the next commander in chief visits the hallowed ground of Arlington National Cemetery.

I'm John King. Thanks for being with us. Today is the first broadcast of "State of the Union." This Sunday and every Sunday, I'll sit down with Washington's power players, key international and business leaders, the people making the decisions and the policies you talk about and worry about around your kitchen table. Our remarkable reporters and analysts will stop by to add their insight and debate, and we won't stop there. I'll also hit the road just about every week for the work I love and value the most, to visit you, to hear firsthand about the impact of the decisions made here in Washington, and to test whether all the promises that politicians make to help in these troubling economic times are being kept.

We'll also have some help tracking the state of our union with our state-of-the-art CNN technologies, including my friend from the historic 2008 campaign, CNN's remarkable magic wall.

So let's begin. David Axelrod is as influential as it gets when it comes to the new administration, a key architect of Barack Obama's presidential campaign, and now set to serve as a senior adviser in the West Wing.

We'll talk to David in just a moment, but let's start with the man of the moment in what is his last scheduled interview before the inauguration. Barack Obama told me about taking his family to the Lincoln Memorial.

(BEGIN VIDEO CLIP)

OBAMA: We go and look at the Lincoln second inaugural, which is on the other wall, and Sasha looks up and she says, "Well, that's a long speech. Do you have to give one of those?" I said, "Actually, that one is pretty short. Mine may even be a little longer." At which point then Malia turns to me and says, "First African-American president. Better be good." (LAUGHTER)

(END VIDEO CLIP)

KING: The entire interview just ahead. And you won't want to miss the president-elect offering his economic prescription and his new impressions of the outgoing president. But first, the latest on Mr. Obama's preparations for this historic inaugural and his pivotal early hours in office. David Axelrod, thanks for joining us on "State of the Union."

AXELROD: Great to be here, John.

KING: I want to get to the big decisions that the new president will have to make, but, first, you're a friend. You are not just a senior adviser, you're a friend to Barack Obama. You were a key architect of the campaign that brought this moment about, and you've spent a lot of time with him as he goes over the speech and considers what he wants his first words to be to the American people as president.

What does this moment mean to you?

AXELROD: Oh, it's hard to put in words, John. It's been such an extraordinary journey. I mean, we started off together trying to persuade people that he could get elected as senator from Illinois, and it's been a magical journey ever since. And really, I applaud your notion about getting out to talk to the American people, because we drew our strength and inspiration from them.

But you can't help but be here this weekend and not be moved by the magnitude of this. And mostly, I'm thrilled because I really believe in him. I think this country needs an extraordinary president right now, and I think he'll be one.

KING: First actions matter. They set the tone of a new administration, they signal to the country and the world what will come. What do you expect this president's very first act will be?

AXELROD: Well, first of all, let me say I think it's telling that his first acts happened before he was president. He came to town two weeks early to begin working on an economic recovery package, because getting this economy moving again is absolutely paramount. And so he is going to continue to work on that.

And, you know, he's going to follow through on some of his other commitments. He will be meeting with the Joint Chiefs of Staff to -- to begin an orderly and responsible withdrawal from Iraq. He will be doing many of the other things that you heard him commit to during the campaign.

KING: There's some breaking news this morning. Israel yesterday said it would implement a cease-fire in Gaza. Hamas this morning, CNN has now confirmed, has said it will abide by a cease-fire as well. As you know from watching from the outside, these things often are very tentative and very fragile. Will the Obama administration have an envoy on the ground in the Middle East on Tuesday, on day one?

AXELROD: Well, first of all, let me say that all of us are hopeful that a cessation of violence will hold. But the president- elect has said repeatedly that he intends to engage early and aggressively with diplomacy all over the world and using the men and women, the professionals who are in place, who are great, and, where appropriate, special envoys.

KING: That fast, though?

AXELROD: Well, I think that the events around the world demand that he act quickly, and I think you'll see him act quickly.

KING: The big priority at home, obviously, is the economy. And the stimulus package is making its way through Congress, $850 billion roughly is the House version. It still of course has to go over to the Senate.

There are some in the House who say this is a starting point, a down payment. The economy is in such dire straits, we are going to need even more money. There are Republicans who say we'd like to work with the new president, but we look at this bill and we see a whole bunch of old Democratic pork barrel spending, a lot of which they don't believe will actually create jobs in America, but will instead go to schools or go to places that might be worthy spending, but not something that will create jobs immediately.

Will President Obama say this is all we can afford, $825, $850 billion, or will we be printing money throughout this administration?

AXELROD: Well, we -- we have been involved in discussions with Congress for the last few weeks. We started with a figure that was somewhat lower than that. Obviously, there are limits to what we can do, but we do have to think boldly right now, that the scope of the emergency we face is so large that economists from the right to the left agree we have to do something big.

But let me just say this on the question of how the money is spent. We were determined and we are determined not to simply spend money to create jobs in the short term -- and we do believe it will create 3.5 to 4 million jobs -- but we're determined to make investments that will strengthen the economy in the long run. Investments in alternative energy, investments in creating the classrooms of the 21st century, so our kids can be competitive, investments in computerizing medical records across this country to reduce health care costs and improve care. These are the kinds of investments that we need to make as a down payment on our future. And it does have economic -- profound economic implications. So we have to think long term and short term here.

KING: In the campaign, candidate Barack Obama promised the most open and transparent administration in American history. Your Treasury secretary nominee has hit a speed bump at a minimum over the disclosure that he failed to pay some $30,000 in taxes. He has paid those taxes, he has paid the interest, but the transition disclosed that to the Senate Finance Committee on December 5th. The American people were not told about this publicly until January 13th. Is that -- can you call that truly open and transparent, when the American people were not told something for more than a month that's pretty critical?

AXELROD: John, it is absolutely appropriate for us to first take this matter to the Finance Committee. It was very clear that that was going to be discussed in open hearings for the American people to watch and formulate their own judgment. So I wouldn't say this is a transparency issue.

And as to Tim Geithner, yes, he made a mistake on his taxes. It was related to his service overseas and how certain withholding was treated. Most accountants say this is a fairly common mistake. When it was discovered, he redressed it.

The bigger point is, here is a guy who'd been involved in public service all his life, who was a major architect of the last international financial rescue in the '90s, who has vast experience and great values and a great insight into this process.

So I think when the American people get to know Tim Geithner, it's going to inspire the same kind of confidence that those in the financial and economic community feel.

KING: Let me ask you lastly a question about this inauguration. We are expecting millions here in Washington. There is a great sense of anticipation and celebration. Also some questions about some of the decisions made. More than $5 million in licensing rights paid to the Inaugural Committee. There's a concert this afternoon at the Lincoln Memorial. One network, cable network, has purchased the rights to that. ABC has purchased the rights to other events, other media outlets.

In an open and transparent administration, is that the way to do business, to sell exclusive access to events?

AXELROD: Well, the real issue was how were we going to finance these events. And, you know, we've asked the American people to help support the inaugural, but these are hard times. They have their limits. This was a way to defray some of those costs, and that's the decision we made.

But I'm sure that you and others will be thoroughly covering all of these events. I don't think the American people will be cheated in the least.

KING: All right, David Axelrod, I wish we had more time, but we are tight on time today because we have a big interview with your boss, the president-elect of the United States. We thank you for joining us...

AXELROD: Good luck.

KING: ... on "State of the Union," and you're welcome back anytime.

AXELROD: Thank you.

KING: David, thank you very much.

And later, we'll get a very different take from David's counterpart in the outgoing Bush administration, the White Counselor Ed Gillespie. "State of the Union" is just getting started.

We will also talk over Tuesday's celebration with some of our top analysts. Howie Kurtz will take a tough look at how the media covers the new administration with his "Reliable Sources." And CNN's reporters across the city will bring you everything that's happening in these big final hours before the inauguration.

But next, my exclusive interview with President-elect Barack Obama, when "State of the Union" returns.

(COMMERCIAL BREAK)

KING: Welcome back to "State of the Union," live today from high atop the Newseum in beautiful Washington, D.C.

When Barack Obama takes office this Tuesday, job one will be turning around an economy in deep recession. The effects are being felt across the United States, but it's particularly tough in the industrial states like Ohio, where the unemployment rate is among the highest in the country.

On Friday, I joined Barack Obama in Bedford Heights, Ohio, at a plant that manufactures parts for wind turbines, exactly the type of green business the president-elect hopes to boost with a proposed stimulus package that will cost the taxpayers some $800 billion.

When we sat down on the factory floor, we talked at length about his economic policies, but I began by asking about the history at hand.

(BEGIN VIDEOTAPE)

KING: Mr. President-Elect, thanks so much for joining us.

OBAMA: Thanks for having me.

KING: A lot of policy ground I want to cover, but I want to start with the moment. You are on the verge of putting your hand on the Lincoln Bible and taking the oath of office on the steps of the United States Capitol, built on the back of slaves. And you will walk down Pennsylvania Avenue and you will move into a historic house, built on the backs of slaves.

OBAMA: Yes.

KING: You're known as no-drama Obama. Some people say, well, he's too detached and he's so cool, you never see his emotions. This has to be incredibly overwhelming.

OBAMA: Well, look, if you think about the journey that this country has made, then it can't help but stir your heart. Obviously, it's an extraordinary personal moment, but you know, you don't have to go back to slavery. You can think about what Washington, D.C. was like 50 years ago or 60 years ago, and the notion that I now will be standing there and sworn in as the 44th president I think is something that hopefully our children take for granted, but our grandparents I think are still stunned by, and it's a remarkable moment.

KING: A remarkable moment, but you're still pretty cool in describing it. In private, do you get more emotional? John Lewis, for example. He was beaten. He was jailed. He walked the walk of the journey he thinks you're helping almost complete. There's more to be done, and he says he might not be able to keep it together at the inauguration.

OBAMA: Well, I'm going to try to keep it together. But I will tell you that during the convention, there was a moment at the end of my convention speech, where I talk about Dr. King and what he accomplished. And the first time we practiced it, I had to stop. I started choking up, because, you know, what you start thinking about is not just your own personal journey, but you think about all the women who walked instead of riding the bus, about Montgomery and Birmingham, and what a moment like this would mean to them.

And what's remarkable is, some of them are still alive. They're still there, and some of them are going to be standing there at the inauguration.

KING: We'll get back to the moment, but I want to go through some policy ground. Let's start with where we are. We're in Ohio.

OBAMA: Right.

KING: This state is struggling. The country is struggling. This factory we're in today is a success story, and it's one of the reasons you're here. But if you go around this neighborhood, many of the factories are bleeding jobs and they're losing, a lot of them are in the auto industry.

We had breakfast this morning with some local people, and if I could boil their economic concerns into one question, it would be, to their new president, they want to know when will the bleeding stop?

OBAMA: Well, we're going to have a tough year, 2009. I don't think that any economist disputes that we're in the worst economic crisis since the Great Depression. The good news is that we're getting a consensus around what needs to be done. We've got to have a bold, aggressive reinvestment and recovery package. It's working its way through Congress. That's going to help create or save 3 to 4 million new jobs.

What we also need is to make sure that those jobs are in industries that can lay the foundation for long-term economic growth. And that's why this factory's so special, because what you're seeing here are traditional manufacturing converted to focus on the wind turbines and wind power of the future. And so, what we want to do is to try to duplicate the success here. These folks use American steel. They've got American workers, and their goods are being imported to create American energy. And what we want to see if what we can do is to duplicate this, train workers. We're still going to have to focus on stabilizing our financial system, and so I was glad that Congress gave us the authority to use much more wisely the money that's been allocated to stabilize the financial system, deal with home foreclosures in a serious way. And we've got to have tough financial regulations, so that we don't have Wall Street getting the country into the kind of crisis that we're in right now anymore.

KING: You mentioned the solutions -- the stimulus plan, the recovery plan as you call it, the bailout plan, the TARP program as they call it in Washington. You'll get that money. It's hard to find anybody who disputes the urgency, but you find a lot of people worried about the price tag.

OBAMA: And they should be.

KING: One of your key allies in Congress said just yesterday, $850 billion in stimulus may be a first step. They might need more. You know what the bankers are saying on Wall Street, that the financial institutions are still losing money. Many of them holding on to that federal money even, and they say it might not be enough. $700 billion might not be enough. Are you going to have to in your early days draw a line, say we can't keep printing money? This is it.

OBAMA: Here's what we're going to have to do. We've got to distinguish between short term and long term. Short term, the most important thing is to put people back to work. All those folks that you had breakfast with. If they're working, that means they're paying taxes, that means that they're buying goods and services, and the economy, instead of being on a downward spiral, starts back up on an upward spiral.

But what we also have to recognize is that the deficit levels that I'm inheriting -- over $1 trillion coming out of last year -- that that is unsustainable. At a certain point, other countries stop buying our debt. At a certain point, we'd end up having to raise interest rates, and it would end up creating more economic chaos, and potentially inflation.

So what we want to do is to say that instead of just printing more money, let's look at medium term and long term. Let's get a handle on Social Security. Let's get a handle on Medicare. Let's eliminate waste in government where it exists. Let's reform our Pentagon procurement practices. All those things are going to have to be done in concert, and that's going to be tough. It's going to be tough, because the only way to do it is if Democrats and Republicans both are willing to give up a little bit of what they consider to be their favorite programs. And we're going to have to look at all this stuff in a fairly short period of time, because we're not going to have five or 10 or 15 years to kick the can down the road. We've got to get started right now.

KING: Back a few years ago, Ross Perot used to get attention for saying there's this giant sucking sound of U.S. jobs going overseas. Many people now say they hear this constant flushing sound, $700 billion. They don't know where it's going, and they think it's going literally down the toilet.

I want to read you a question. We asked some of our viewers what would they like to ask the president-elect, and John Stevens (ph) of Torriton (ph), Connecticut, to the point you were just making about mortgages and foreclosures. He says.

(BEGIN VIDEO CLIP)

UNKNOWN: I'm unemployed, going through a foreclosure. The bank doesn't want to work with me. They've actually told me on the phone that it's easier for them and more cost-effective for them to take my home than to work out a payment plan with me.

(END VIDEO CLIP)

KING: Are there not specific things, requirements for these banks? If you're going to get billions of dollars in taxpayer money, you have to help these people.

OBAMA: That's my attitude, and that's what we're going to have in our plan.

Look, there's no doubt that we needed to stabilize the banking system. It could have been even more catastrophic. When we saw the stock market start collapsing in September, we could have seen a serious downward spiral.

But there's nothing wrong with us placing some conditions, making sure the money's not going to executive compensation, making sure that you're not seeing big dividend payouts to shareholders, and making sure that money is being lent so that we can get credit flowing again, not just to individual homeowners who are losing their homes, but also small businesses, who are the lifeblood of this economy. If they can't get credit, then they end up having to shutter their doors. And when they shutter their doors, people lose jobs. They then can't pay their mortgage, and you start down the road that we're on.

We want to reverse that path, and that means that the way we use the next $350 billion that Congress voted on -- and that was a very tough vote for a lot of people, so -- and it was tough for me to have to request it. We've got to make sure that it's transparent, that there's oversight, that the American people know exactly how the money's being used, and that dealing with home foreclosure is a central policy in that program.

(END VIDEOTAPE)

KING: President-elect Barack Obama on what he plans to do when he gets to the Oval Office. When we come back, I'll ask the president-elect which campaign promises he may simply not be able to keep. Much more of "State of the Union" just ahead.

(COMMERCIAL BREAK) KING: Live picture here of 1651 Pennsylvania Avenue. 1651 just across the street from 1600 Pennsylvania Avenue. Barack Obama will move into 1600, the White House, on Tuesday. For now, he's staying at the presidential guest house, that is Blair House in Washington, D.C. We're watching these pictures because Mr. Obama will soon leave Blair House and head across the Potomac River to Arlington National Cemetery, where the Vice President-elect Joe Biden will join him for a wreath laying ceremony. We will bring you that event live, but first, let's return to my exclusive interview with the president-elect. During the heated presidential campaign, Barack Obama offered a long list of promises he hoped to pass if elected. Now, faced with a dismal economic outlook for the next year, and maybe much longer, the president-elect faces some tough decisions. Those hard choices were part of our conversation in Bedford Heights, Ohio.

(BEGIN VIDEOTAPE)

KING: Every new president learns that government -- governing math is sometimes a little more difficult than campaign math, and you've talked about this, that there will be trade-offs and some people are going to have to wait.

I want to talk about a couple of them. You made a big priority during the campaign, you said $50 to $65 billion you would spend on health care reform, and you would get that money from rolling back the Bush tax cuts for people who make over $250,000 a year. Even many who want to roll those tax cuts back say not now, would hurt the economy at a precious time. Does that mean you will let those tax cuts stay in place for a while and say to people who are urgently waiting, health care reform is going to have to wait a little bit?

OBAMA: We have not made a final decision on this. We'll be unveiling our budget in February. The important principle is that folks making more than $250,000 a year can afford to give up those Bush tax cuts so we can give those tax breaks to 95 percent of working families, who desperately need some relief.

We are going to make sure that that's part of our package.

KING: But it might take a little longer.

OBAMA: It might take a little bit longer. Keep in mind, though, that the legislation to get our health care plan in place is going to take a significant amount of time during the course of this year. That is a huge process.

We've got to get all the stakeholders together, the providers, the nurses, the doctors, the hospitals, everybody is going to have to sit around the table, and then we've got to move it through Congress.

So what I -- but here's the good news, that in the economic recovery package that we put together, we have a lot of investment in making the health care system more efficient. Those are things that had to be paid for anyway.

Just a simple thing like converting from a paper system to electronic medical records for every single person can drastically reduce costs, drastically reduce medical error, make not only health care more affordable, but also improve its quality.

KING: If you're not busy enough, you now say early on you will have an entitlement summit.

OBAMA: Yes.

KING: President Clinton tried some of this.

OBAMA: Yes.

KING: I know you disagreed with his proposals, but President Bush put a lot of capital into this. It's a frustrating challenge that presidents in the past have faced. You'll have this summit, but what is your timetable for action in Congress?

OBAMA: Well, you know, I think here's the difference. There is something about $1 trillion that gets people's attention. And...

KING: One would hope.

OBAMA: I hope. And I think that across the political spectrum, people are looking at what we have to do now to get this economy back on track, and they're saying to themselves, we know we can't sustain this, and that means we've got to make some tough decisions. And I'm going to be using a significant amount of political capital.

OBAMA: What I want to do is lay out the situation for the American people. And this is going to be a general principle of governing. No spin, play it straight, describe to the American people the state that we're in. And then provide them and Congress a sense of direction.

Here's how I think we can solve this problem. Now I'm not going to get my way 100 percent of the time. I expect that people will have good ideas. And if they've got better ideas in terms of how to deal with Medicare or Social Security than I do, I will gladly accept them. I just want things to work.

But what I know will not work is us seeing our debt levels double again like they did under George W. Bush. We can't do it and it's a burden on future generations that I'm not willing to accept.

KING: You went to every corner of this country promising to restore trust and confidence in government and particularly and especially in Washington.

OBAMA: Yes.

KING: Do you think that promise is in any way at risk because of the controversy over your pick to be treasury secretary, who failed to pay more than $30,000 in taxes? You have said it's an honest mistake, people make them.

The New York Times, for example, has an editorial today saying, not the right guy for the job at this time of economic peril. They say this controversy has tainted his ability to command respect and instill confidence.

OBAMA: Well, you know, The New York Times editorial page has a lot of opinions, as does The Wall Street Journal editorial page, and some of them are better than others. This wasn't a good one.

Tim Geithner...

KING: He's going to be the head of the IRS, the man who...

OBAMA: I understand.

KING: ... implements and administers the tax code.

OBAMA: But keep in mind, nobody disputes that this guy is the best-equipped guy for the job. That he has got the best qualifications imaginable. That he has dealt with financial crises consistently and steadily.

And so the notion that somebody who has made what is a common mistake because they worked for an international organization, they paid this money back, paid penalties, and the notion that somehow that is disqualifying makes absolutely no sense.

And, you know, the -- I think that one of the things that we need to change about Washington is this notion that if you can play gotcha and you find, over the course of an exemplary record, one mistake that somebody makes that somehow that's disqualifying.

If that were true, then I could be president, and you probably couldn't be a correspondent. So what I want is somebody who has terrific qualifications for the job, who has core integrity. I'm not looking for somebody who has never made a mistake in their life. And I don't think the American people are either.

KING: You will have the power at the end of that parade to, at the stroke of a pen, lift the federal ban on embryonic stem cell research. There may be the votes to do it in Congress now, but you don't have to wait, you could do it in your first few minutes in office, will you?

OBAMA: Well, you know, if we can do something legislative, then I usually prefer a legislative process because those are the people's representatives.

And I think that on embryonic stem cell research, the fact that you have a bipartisan support around that issue, the fact that you have Republicans like Orrin Hatch who are fierce opponents of abortion and yet recognize that there is a moral and ethical mechanism to insure that people with Parkinson's disease and Alzheimer's can actually find potentially some hope out there, you know, I think that sends a powerful message.

So we're still examining what things we'll do through executive order. But I like the idea of the American people's representatives expressing their views on an issue like this.

KING: You spent two years traveling the country saying President Bush was incompetent when it came to domestic leadership, had a debacle of a war in Iraq, and had hurt our image around the world.

You've gotten to know him a little bit better during what by all accounts is an incredibly smooth and professional transition. Anything about him you want to take back or any new judgments about him?

OBAMA: You know, I think if you would look at my -- if you look at my statements throughout the campaign, I always thought he was a good guy. I mean, I think personally he is a good man who loves his family and loves his country.

And I think he made the best decisions that he could at times under some very difficult circumstances. That does not detract from my assessment that over the last several years we have made a series of bad choices and we are now going to be inheriting the consequences of a lot of those bad choices.

That does not mean that I think he's not a good person. And his White House staff has done an extraordinary job in working with us for a smooth transition. And that's part of what, I think, America is about. That we can have disagreements politically but still treat each other civilly, and I think he has embodied that during this process.

(END VIDEOTAPE)

KING: And indeed, by all accounts, this has been an amazingly cordial and efficient transition period. In the final part of the interview, we turn from policy to the personal.

How has the Obama family handled the move to Washington? And have they decided, you'll want to know this, on that first puppy yet?

If you've missed any of our exclusive interview with Barack Obama, you'll get another chance at noon Eastern time. "STATE OF THE UNION," the first and last words in Sunday talk, live from the Newseum here in Washington, D.C., we'll be right back.

(COMMERCIAL BREAK)

KING: You're looking at the beautiful National Mall in Washington, D.C. President-elect Barack Obama has an entire team of experts to help him with the official transition to power. It's a different matter, of course, in his personal transition. That was the subject of the third and the most personal part of our exclusive conversation.

(BEGIN VIDEOTAPE)

KING: Let's spend a few minutes, as we close, on your personal transition.

OBAMA: Yes. KING: Another one of our questions from viewers was about the big choice you have to make for the family. This is Jill Pearson (ph) from Marietta, Georgia:

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Have you decided on your first puppy?

(END VIDEO CLIP)

OBAMA: Well, yes, we have narrowed it down. I made the statement that says we're thinking about either a Labradoodle or a Portuguese Water Dog. Malia is allergic, so we have to have a hypoallergenic dog.

We'd also like a shelter dog, though. So, you know, how we're going to manage all of this will be closely watched, I know, in the weeks and months to come.

KING: I have spent some time since the election with a young boy named Melvin Thomas (ph). He's 14 years old, lives just outside of Baltimore, African-American.

KING: He says, if I visited him a year and a half ago and said, "Who's your hero?" he would have said, without blinking, "Michael Jordan." If I asked him today, he says, "Barack Obama."

OBAMA: Well...

KING: And he says, "Barack Obama's going to change the country." He thinks you're going to create more jobs. And he thinks you're going to "help stop people from hating black people."

What's the burden you feel there, and the responsibility, to kids like Melvin Thomas?

OBAMA: Well, you know, first of all, I hope that part of what my election communicates to Melvin is he can shoot for the stars. He can go as far as his work ethic and his -- his imagination takes him.

And what I also hope is that not only me but all of us take responsibility for the millions of Melvins out there. There are so many young people with so much talent.

KING: What, specifically, do you need to do?

OBAMA: Well, I think that part of what we have to do is make sure that our school system works. Part of it is all of us, as parents, taking responsibility. Because government can't do it all.

And what Melvin's going to benefit from, hopefully, is some good policies from my White House, but I also hope he's going to benefit from parents who instill in him a thirst for learning, that he has a community that is supportive of the idea that there's nothing wrong with black boys, or any American child, hitting the books before they worry about whether they're popular or whether they're worrying about their sports.

You know, I think that the idea that each and every one of us has responsibilities to the next generation is one of the things that I want to communicate, both on inauguration day and throughout my presidency.

KING: We're short on time, so a couple more quick ones. You took your family to the Lincoln Memorial.

OBAMA: Yes.

KING: What did you talk about, walking around and looking at the president and reading those walls?

OBAMA: Now, this is a good story. I love the Lincoln Memorial at night. It always inspires me.

So I take Michelle and the girls. We're looking at the Gettysburg Address. And Michelle's describing what Lincoln's words mean.

The fact that these soldiers died on this battlefield means that any words that Lincoln could have said, or any of us could have said, would ring hollow. They've already consecrated this ground, and what we have to do is to honor them by working for -- for more -- more justice, more equality here in America, at which point Malia turns to me, and she says, "Yes, how are we doing on that?"

(LAUGHTER)

Mr. President-elect?

KING: Accountability in the house -- that's a good thing.

OBAMA: Absolutely. And then we go and look at the -- Lincoln's second inaugural, which is on the other wall. And Sasha looks up, and she says, "Boy, that's a long speech. Do you have to give one of those?"

I said, "Actually, that one's pretty short. Mine may even be a little longer."

At which point, then Malia turns to me and says, "First African- American president. Better be good."

(LAUGHTER)

KING: You were tired during the campaign, and it's a pretty exhausting process. At one point, you got a little confused about how many years you've been married.

(LAUGHTER)

I know you're busy right now, so I just wanted to help you out. You know what this weekend is, right? OBAMA: This is her birthday, Michelle's birthday. And we are going to make sure that we -- we actually had a little birthday party last night. And...

KING: Ahead of the curve this time. That's smart.

OBAMA: You know, listen, if you're going to miss it, better miss it early than miss it late.

KING: Well, actually, one last question. And it's, in part, silly. But it's not always silly. You like these. I was just with you before this, and you have a couple of them. And there are a lot of people who say, because this will end up in the presidential library, because you don't have privacy any more, your life's about to change.

Tuesday noon, you have to give this up.

OBAMA: Yes.

KING: You going to do it?

OBAMA: I think we're going to be able to beat this back.

KING: Beat this back?

OBAMA: I think we're going to be able to hang onto one of these. Now...

KING: Do you want mine?

(LAUGHTER)

OBAMA: My -- my working assumption, and this is not new, is that anything I write on an e-mail could end up being on CNN. So I make sure to -- to think before I press "send."

But what this has been -- what this does is -- and it's just one tool among a number of tools that I'm trying to use, to break out of the bubble, to make sure that people can still reach me, that if I'm doing something stupid, somebody in Chicago can send me an e-mail and say, "What are you doing?" You know? Or "you seem detached" or "you're not listening to what is going on here in the neighborhood."

I want to be able to have voices, other than the people who are immediately working for me, be able to reach out and -- and send me a message about what's happening in America.

KING: Do you think you fully comprehend how much your life's about to change?

OBAMA: Oh, I've gotten a pretty good sense over the last few...

(LAUGHTER)

... last few days, and truthfully, over the last two years. It's -- it's a process of consistently ratcheting up. And you've got to pick up your game correspondingly. And so far, so good.

KING: Mr. President-elect, we thank you for your time.

OBAMA: Sure.

KING: I wish you the best.

OBAMA: Thank you so much.

KING: I hope to see you again when we drop the "elect" part.

OBAMA: There you go. Appreciate it.

KING: Thank you very much.

OBAMA: Thank you.

KING: In our next hour, one more question for Barack Obama. How should the media cover his young daughters? CNN's Howard Kurtz will tackle that question and a whole lot more on the "Reliable Sources" portion of our new Sunday program.

But, right after the break, I'll be joined by two friends, who are members of the best political team on television, for a preview of the new administration, James Carville and Bill Bennett.

You're watching "State of the Union," live from the Newseum in Washington, D.C.

(COMMERCIAL BREAK)

KING: This is "State of the Union," live from Washington, the view there -- and it is majestic -- from the Washington monument toward the United States Capitol.

The National Mall, there, will be filled with the estimated more than a million, perhaps 3 million or 4 million coming here to Washington to witness the historic inauguration of Barack Obama.

And with that inauguration begins the pressure, the new administration already working with Congress on legislation to pull this country out of a deepening recession. This week they had their first victory, but it's only one step in a very, very long journey.

Joining us now to discuss the pressure and the moment, two CNN contributors, James Carville, a veteran of the Clinton administration and a Democratic strategist.

KING: Bill Bennett is here, a veteran of the Reagan administration and host of a popular radio program.

James, let me start with the moment for you. The Democrats are coming back to power in Washington, Barack Obama will be the first African-American president, the moment means to you?

JAMES CARVILLE, CNN CONTRIBUTOR: It's hard to imagine, and I don't think any of us are going to know, have any idea how we're going to feel Tuesday. I mean, the whole country, and I mean, particularly African-Americans.

But, I mean, I hope the country, it just has great hope and promise, and is this going to be a remarkable thing. And it's very difficult to anticipate how you're going to feel at the time that he takes oath of office, but it's going to be quite extraordinary. And I just kind of want to savor the moment myself.

KING: And as Barack Obama makes history and savors his moment, Bill, there is also a lot of pressure, though, to use the moment, not just to celebrate it, to kick a barrier, but to begin a new administration.

BILL BENNETT, CNN CONTRIBUTOR: Yes. And I think that starts Wednesday, and we will start on Wednesday, you know, doing the tough scrutiny. But Tuesday is a day of celebration, and that's right, it will be a day of exuberance.

But I think also in some ways a day of relief. You know, we got here, we really did get here, free at last, free at last, 146 years ago the Emancipation Proclamation, that other memorial back there. And now a black man is elected president of the United States.

I think you're going to hear the whole country cheering. And I'm very heartened. And I plan to be a tough critic when called for. But I'm very heartened by the approval ratings which suggests an awful lot of Republicans are saying this is a good thing, this is a great moment for America.

KING: You mention the approval ratings, 78 percent approve of the president-elect, 17 percent disapprove in our new poll. James, that's a great blessing and a gift, but there is a flip side to that, isn't there?

CARVILLE: There is. And I mean, we heard about, you know, 91 percent approval ratings and things like that, and David Axelrod knows exactly, Rahm Emanuel, Barack Obama, everybody knows this.

And come Wednesday, by the end of a week it's going to feel like he has been in office for four years, because you can tell, they are coming with a major announcement about these banks, I mean, really major, you can just feel it when you read the news.

All kinds of things are going to be happening. They're going to really kind of hit the ground running. And it just -- watch how fast all of this -- all of this happens. But I think people like these high approval ratings but I think that the history of these things is not all that great and you shouldn't take too much from them.

BENNETT: And the deep divides on the issues, John and James, look at the bailout. This is not a popular thing, yet Barack Obama, like George Bush, wants to bail out the banks. The banks are not very popular at the moment.

Andrew Jackson moment, one thinks of that Inaugural, you know? The situation in Iraq which he's facing. I believe that our side is going to criticize him, but I'll bet you in the first few weeks we will be defending him on some issues against criticism from the left.

KING: When is the delivery point? Because, you know, the economic anxiety, crisis in the country that undermined McCain, undermined the last days of the Bush presidency, Tuesday noon this is Barack Obama's economy. And as Bill said, people don't like this bailout.

They're worried about the price tag of the stimulus, they understand the need for it but they're a little antsy about this is more of my money, more government money.

CARVILLE: Yes, I think the new president is going to have to explain to people I think this is more than a bailout, I think the large segments of our banking system are essentially nonexistent right now.

And I think that he's going have to explain why. Because people do see this, and they see this money go to offshore tax havens and things like that, there's going to be a lot of changes there.

Secondly, people say, oh, he has time, he has a year, he has a couple of years to do this. When this country hits 9 percent unemployment, it does not -- they're not going to last very long without people getting really mad.

BENNETT: Yes.

KING: What's the difference? You remember Ronald Reagan, now that's back a ways. Since then, you know, George W. Bush came to power, the first term, with 49 percent of the vote, a contested election, the Supreme Court had to settle it.

Bill Clinton before that came to power, 43 percent of the vote because Ross Perot was involved back in 1992. Barack Obama has 53 percent, he has an Electoral College mandate. But how much more power does that give him compared to our most recent president?

BENNETT: Well, I think we've just covered it in some ways. I think a lot of this has to do with the man, with the message he had with making history. When you get into policy, you might find it breaking down -- the numbers breaking down a little differently. We will see.

He's going to have a grace period because everybody loves him, or 80 percent of the American people love him, and this is historical and this is the guy we wanted. But the issues he's facing are very, very tough.

And the divides on these issues, let's just take Iraq, I know it's not in the headlines now, but will be. If he says he's going to -- as he seem to be saying, he's going to abide by the forces -- the Status of Forces Agreement, he's going to get hammered by the left.

I mean, some of that is starting already. So a lot of grace for the man, a lot of approval of the man. When it gets to policies, I think it's going to be something.

KING: We're about to run out of time here. Is his biggest challenge from the left or right?

CARVILLE: I think his biggest challenge is we know what his strategy is, "no drama Obama." He remains calm, cool, he remains cool. That has been consistent with him the whole time. And I think they really are pushing a lot of this working with these Republicans, I think that's part of their strategy. Yes, there are going to be a lot of splits coming, but...

KING: We need to leave this conversation for now. We'll bring you both back many times in the weeks and months ahead. Thank you both for being here at our first day here.

I want to show you a live picture now, the president-elect and the vice president elect on their way to Arlington Cemetery. We're going to go live to a wreath-laying ceremony out here at this hallowed ground as soon as they arrive.

And in just a moment, Howie Kurtz will join me to look at -- you see right there the president-elect of the United States and the vice president-elect of the United States coming out at Arlington National Cemetery. We're going to stay with this and watch this event as it unfolds. Very important symbolism today, the next commander-in-chief at the Tomb of the Unknowns.

(MUSIC PLAYING, "TAPS")

KING: Not a word spoken, but a powerful, symbolic moment, at one of the most special and solemn places in and around our nation's capital, the Tomb of the Unknowns at Arlington National Cemetery. You saw the president-elect, Barack Obama, the vice president-elect, Joe Biden there. I'm still joined here by Bill Bennett and James Carville.

You know, Bill, sometimes you don't have to speak a word to send a powerful message.

BENNETT: That's exactly right. There will be a lot of words the next couple of days, but his showing respect at that the institution for all of those who have given their lives in the service of the country is another part of the ritual by means of which he enters into this position, into this job, and we are reminded he is the president of all the people.

KING: We see the commander-in-chief there just about every Veterans Day.

CARVILLE: Right. Well, I mean, I thought it was touching. And you're right, in fact, there wasn't a word. And it's one of my favorite things to do in Washington, any time you visit, you go to the Changing of the Guard, they do that at the Tomb of the Unknowns.

BENNETT: Exactly right.

CARVILLE: It's a spectacular, moving thing to watch, I'm just, you know, reminded of that.

BENNETT: The worst day, the worst weather, the worst storms, those guys are not missing a beat. I was out there once in high school in one of those nights.

KING: Gentlemen, again, thanks again for coming in. We'll have you back many, many times.

And as we continue, I want to remind of a promise I've made on this first day and we'll make many times, we will get outside of Washington, outside of the Beltway, for your stories and your insights.

The man of the moment, of course, is Barack Obama. But this is not a solo journey. In small town South Carolina, Edith Childs walking the walk before Barack Obama was born.

(BEGIN VIDEOTAPE)

KING (voice-over): Greenwood, South Carolina, a monument to heroes, but also a reminder of the dark days of hatred and segregation.

(on camera): That's you right there.

(voice-over): Edith Childs has lived here all of her 60 years, knows the divide as well as anyone.

OBAMA: I want to know one thing, Edith...

KING: And as much as she celebrates the success of her new friend, knows just as well that making history doesn't erase history. She was 6 or 7 when a noise in the night stirred her to peek out the window.

EDITH CHILDS, COMMUNITY ACTIVIST: And there was actually people on a horse with white clothes and all.

CHILDS: There was no question who they were, they were the Ku Klux Klan. That was the worst time, because I was so scared.

KING: On walks to school, taunting was common.

CHILDS: You could walk past cars and even children would say, you know, "Mom, those are Niggers."

KING: And once in the classroom, more reminders of separate but hardly equal.

CHILDS: We got those things that were left over from the white school. Our books were always secondhand books that came to us. Many times they weren't even worth using, really, but we didn't have a choice.

KING: Edith Childs grew both precocious and defiant. At the five and dime, she waited for when no one was looking. CHILDS: The white water fountain was nice cool water, and our water was just hot water. I would always get me some cold water. Always.

KING: Always a divide.

(on camera): And if you were black and you wanted to go to this theater, where would you be?

UNIDENTIFIED MALE: You would be up here in the balcony section. There was a separate colored entrance from the front of the building.

KING (voice-over): Matt Edwards (ph) runs the town museum. Segregation is a threat in the photographs. This, a late 1950s all- white snapshot outside a local mill.

I haven't seen one yet that has any African-American folks in it. I know these folks worked at the plants and at the mills, but they weren't in the shift photos that came out.

Nursing school was the first time Edith Childs shared a classroom with whites. She's on the county council now and says things are better.

She first met Barack Obama when he visited in 2007. In the back of the room, she began to repeat an old civil rights chant.

CHILDS: Fired up. Ready to go. Fired up. Ready to go.

OBAMA: Fired up.

KING: Obama adopted the cheer. And even though he lost conservative South Carolina, Childs and Greenwood became part of his improbable journey, and he a part of theirs.

CHILDS: The day after the election, it was so quiet in Greenwood until it was unreal. I just could not believe it was that quiet. I mean, the kind of quiet that you're saying, "What is going on?" You know. But you know why the quiet is.

KING: A shocked we quiet, Edith says, because, while things are better in Greenwood, they are far from perfect. The monument to confederate soldiers still stands. And even today, in 2009, the stars and stripes flies over two American Legion halls in Greenwood. Locals know this one as the white post. This one for blacks.

CHILDS: There we go again, John. There are still those that are not going to change no matter what.

KING: But Edith Childs is betting more minds and hearts will change now. She is off to Washington to watch her friend make history, knowing it won't change Greenwood's past, but maybe its future.

CHILDS: I never thought that I would be able to see this day, so I just need to be there. Don't want to be nowhere near the front. I just want to be there. It means everything to me, because I want to be treated as a person. Not because I'm Edith Childs and black, but because I'm a person.

(END VIDEOTAPE)

KING: A truly remarkable woman. It was such a treat to visit her and visit her community. And she will be here over the next few days, and we will keep in touch with Edith Childs and perhaps bring you some of her reflects on history made next week.

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