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STATE OF THE UNION WITH JOHN KING

State of the Union: Best Political Team on Television

Aired March 29, 2009 - 11:00   ET

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


JOHN KING, CNN ANCHOR: And here's what's still ahead on our STATE OF THE UNION report for this Sunday, March 29th.

In just a few days, President Obama heads to Europe for back-to- back summits on the global economy and the war in Afghanistan. Will he get the help he's looking for?

The best political team on television here to point out the global and domestic pitfalls.

Fresh troops will soon be on the ground in Afghanistan. Does the Obama strategy have a chance? The inside story from the men in charge, General David Petraeus and special envoy Richard Holbrooke.

And Fargo, North Dakota, watches and waits as the Red River stops its rise, inches from the top of their sandbag defenses.

That's all ahead in this hour of STATE OF THE UNION.

The president and top members of his team out this Sunday, both explaining the decision to put more American servicemen and women at risk in Afghanistan and defending an economic approach Republicans say spends much, much more than the nation can afford right now.

KING: As more troops head to Afghanistan, the commanding general for the region said right here on STATE OF THE UNION this morning, he doesn't rule out controversial operations across the border in Pakistan.

(BEGIN VIDEO CLIP)

PETRAEUS: I think the president made that clear the other day, where he talked about consulting with the Pakistanis, but if it ultimately comes to it, that we will, if necessary, take action.

(END VIDEO CLIP)

KING: So far, other countries have been reluctant to add more troops of their own in Afghanistan, but as President Obama heads off to Europe this week, his defense secretary says there's still hope.

(BEGIN VIDEO CLIP)

DEFENSE SECRETARY ROBERT M. GATES: No, we haven't. And in fact, I think some of our allies will send additional forces there to provide security before the August elections in Afghanistan. (END VIDEO CLIP)

KING: The president's opponent in last year's campaign is among the Republicans out warning the administration's spending plan is a recipe for disaster.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: No nation can spend this way and get out of it without debasing the current and us returning to a period that we had in the late '70s and the early '80s where we had inflation, a high unemployment and higher taxes.

(END VIDEO CLIP)

KING: The Treasury Secretary Tim Geithner says what the country can't afford right now is to do too little.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: The big mistake governments make in financial crises is to sit back, hope it's going to work itself out, put the brakes on too quickly, not act aggressively enough and we can't afford to make that mistake.

(END VIDEO CLIP)

KING: As you can see, as always on Sundays, we've been watching the other shows, so you don't have to.

Let's bring in the best political team on television, as we do every Sunday at this hour, and let's break down the issues. With me here in Washington, CNN senior political analyst David Gergen and two of our CNN contributors, Republican strategist Alex Castellanos and Democratic strategist Donna Brazile. Welcome to all of you on this Sunday morning.

Let's start where we left off about the debate about spending in this administration. David Gergen, you have served in Democratic and Republican administrations. This president has been in office just a little more than two months and already you can see the Republicans have decided to draw the line, saying this is not what you bought, American people, this is big government, big taxes, big spending.

DAVID GERGEN, CNN SR. POLITICAL ANALYST: Well, I think in fairness to the president, he is following up on his campaign promises, whether it's on health care, climate change, or education reform, and he also inherited this great big crisis.

I don't think anyone in the campaign quite understood how big the bills would be. And so when the budget came out, there was sticker shock. And now we even see some moderate Democrats, especially in the Senate, who are questioning this. Kent Conrad is chairman of the budget committee, a Democrat, wants to pare this back. So far, John, they're not making fundamental changes in the president's program, but for the first time, there's a big question now whether indeed health care and climate change legislation can both get passed this year.

KING: So, Donna Brazile, as a Democrat, should you go to the president and say, look, you're not up for more than three years. Some of these guys are up in less than two years and you lived through 1994 where Republicans were very successful in using that argument. You thought Bill Clinton was a different kind of Democrat. He's off on a big liberal agenda. Should this president to protect his party in the short-term just go at a little slower place? Not maybe compromise what he wants to do, but do it in pieces.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: John, this president, as David said, inherited a fiscal mess, record deficits and a huge debt. What the Democrats on Capitol Hill clearly are trying to do is to maintain the president's priorities, but at the same time cut back in areas where they believe the administration may go just a little slower.

The budget that they are going to present this week is fiscally prudent, it's sound, it cuts the deficit in half, as the president requested, by 2013, and I think they make the long-term strategic investments to grow our economy and to ensure that we don't get back in the kind of mess that we've been in. KING: That is your opinion, but there are many who say they want a five-year budget instead of a 10-year budget so they could mask the true size of the deficits down the road. And both Chairman Spratt and Chairman Conrad have left open the question of how they will pay for health care, which will be about $650 billion in the short-term. Do you see Alex, this is 1993, '94 all over again?

ALEX CASTELLANOS, CNN CONTRIBUTOR: I think this is the Democratic Party that used to lose a lot of elections. As far as President Obama's promises, one of the promises he made during the campaign was pay as you go budgeting. So there were enough promises to make everybody happy, but no, this is a real problem. The person whose put bipartisan out of reach here is President Obama. If he had said a week before the election, before he dispatched John McCain, that, you know, if you elect me in my first 60 days, I'm going to triple the debt. I'm going to sign a bill with 9,000 earmarks. I'm going to have a budget that is just going to nationalize the health care, energy, auto industries, Wall Streets and banks. Barack Obama would not have been elected.

And the question now is, of course, he's not going to be on the ballot in two years, but those Democrats in Congress are and that's the record they'll have to defend.

BRAZILE: But the election is, as you've said, two years away, and while it might be a matter of my personal opinion, as someone who understands that when the non-partisan CBO comes out with a conservative estimate, what the Democrats are doing is responding responsibly to the CBO request. Yes, John, it is an honest budget, something that we didn't see over the last eight years. It includes the war in Afghanistan as well as Iraq. It also, in some ways, makes sure that we can pay for the things that we want to spend. And that's what's in the Senate budget. They will have to reconcile and hopefully it will be a stronger budget. KING: Is it honest, David, to the point that Chairman Spratt and Chairman Conrad, god bless them, they're trying to stick to their principles when it comes to the deficit, but also accommodate their very popular newly elected Democratic president. Is it honest when Kent Conrad in a state today that faces the river flooding took out the contingency money? President Obama was honest. He put that money in his budget and said, we need this money. He put $250 billion in this budget, saying, I'm probably going to have to come back to you, more help for Wall Street, the big financial firms, here it is, here's my marker. Is it honest to take that money out for the Democrats in Congress who at the end do get a little bit of the smaller deficit?

GERGEN: I think, John, what President Obama sent up was a much more honest budget than what we have typically seen. When the sticker shot hit and when he then heard from the CBO that the deficits would be $1 trillion a year for 10 years, it was huge. Then the Democrats went back to some of the old gimmicks, out of the Bush years. And they're now hiding some of this stuff in order to make the deficits look bigger.

But to come back to the central point. They've got a real problem now, given these deficits, how do you find the money to pay for health care reform? If it's going to cost $1 trillion over 10 years, you do want to go to something like pay-go, which means you've got to pay for it as you go. Where do you get the money? Do you find it in new spending cuts? Do you find it in new taxes? That's going to be a huge problem if we're going to get health care reform done.

CASTELLANOS: Ad that's a problem for President Obama, because his popularity is up, but his policies' popularity is about 20 points lower. His agenda is so ambitious and his spending is so big, that eventually he's going to be defined by his policies. He will become his policies, as ambitious presidents do. Therefore, when that gulf closes, that's what's going to be, I think, a problem for the Democrats in 2010.

BRAZILE: But how long can we lay health care off the table? 14,000 Americans losing their health care each and every day. We know that more than a third of home foreclosures are due to the fact that people do not have health insurance and they face --

CASTELLANOS: Donna raises a good point. The question Republicans have, the only way to do this, the old way, for Washington to more, no. There are other ways. Let's be innovative here and not just send a bucket of money to Washington.

GERGEN: I was going to say that the overriding issue for the president is whether he can turn this economy around. Are we seeing the bottom now, or is this a false bottom? We've had the stock market go up over 20 percent, but as someone in the White House pointed out to me, yes, that's very encouraging, but the stock market went up over 20 percent at least a half dozen times during the Great Depression. So you don't know where we are yet.

KING: I want you to both listen because I raised a minute ago the question about whether there should be money in the budget, in the congressional budgets for more Wall Street bailouts, more financial bailout.

I asked the chairman of the House Budget Committee, John Spratt, about this a bit earlier this morning and here's -- in his answer, he gave away how reluctant members of Congress, Democrat and Republican are, to give the president more money. Let's listen.

(BEGIN VIDEO CLIP)

SPRATT: We're essentially saying, come make your case, the burden of persuasion is upon the president. Nobody likes funding these things. We like to see more definition than we've got in the last package, so this is our way of exercising a little leverage over it. If it's needed, we'll be there to support it.

(END VIDEO CLIP)

KING: Donna, bailout angst among the politicians. I know and I also know it's true that you inherited deficits from George W. Bush. You inherited a bad economy from George W. Bush. But when Congressman Spratt and his colleagues are on the bailout in 2010, that's not going to work. They're going to have to cast the votes on these things. This is the Obama plan now.

BRAZILE: Look, I agree with Chairman Spratt. If more money is needed to help bring these banks back to some liquidity, fine. But bring that proposal to the table. It should be separate from the overall budget. I understand why the president probably put it in the budget, but on the other hand, I think the committees should look at how we spent the first $700 billion before we put another $250 billion on the table.

KING: I want to also bring in the treasury secretary, Timothy Geithner out today, talking about the issue the administration you know just wants to go away. The whole question of these AIG bailouts. I want you to listen to Secretary Geithner. Remember, the president said he was outraged, said he wanted to use any power he could at his disposal to get the money back. Listen today to Secretary Geithner.

(BEGIN VIDEO CLIP)

GEITHNER: We had no good choices in that context. These were contracts that were set well before the government came in, before Ed Liddy became CEO. We're a nation of laws. We cannot run this country, expect our economy to work, businesses to function. If there's an ongoing fear that the government will come in and retroactively change the terms of existing contracts. So we had no good choices.

(END VIDEO CLIP)

KING: No good choices, David Gergen, but the government is essentially an 80 percent stakeholder now in AIG. Should they have handled this different? Are they paying a price for it?

GERGEN: I think that they in retrospect they know that they mishandled this in a variety of ways. They didn't get their signals straight. They kept on shifting positions. They are trying to get it behind them.

GERGEN: But what I think one of the important news to this week was that, after this bungling and rough weeks, that Tim Geithner had a much, much better week. He presented his plan, this week, for dealing with the toxic assets and the banks. It was well-received on Wall Street.

And he'd been under a lot of pressure. The president had been under a lot of pressure to, maybe, look for a new secretary. I think he bought himself six months of peace in the job.

(LAUGHTER)

And we'll see whether the plan works or not.

The other thing he said, today on the television, Tim Geithner did -- and good for him to get out there -- is whether the government's doing enough.

Ultimately, the issue may have been whether the government, doing all these things, whether it was enough.

CASTELLANOS: Well, he's made -- Tim Geithner has given the Republicans a campaign issue that's already in play in the race for Congress in New York 20. And that's the AIG bailout. And, of course they would have handled this differently.

Right now, this administration has created the perception that it understands Wall Street, the very top and elite, very well; understands the bottom, the poor. But the vast middle -- middle class of America, I don't think this administration understood how outraged they'd be at this bailout or they would have handled it differently. There's a middle-class dead zone in the Obama administration.

BRAZILE: Well, they understand, because 95 percent of American workers this week will begin to feel the effects of that stimulus package. So they understand the middle class.

But, look, John, once again, this bailout began in the Bush administration in September of 2008. Then-Secretary Paulson basically put the money on the table with no guidelines. We need guidelines. We should not be giving taxpayers' money to any corporation without some strings attached.

CASTELLANOS: Chris Dodd...

BRAZILE: That's my personal... CASTELLANOS: Chris Dodd put it back in and Geithner -- the Treasury signed off on it, and now we're stunned that we put it in.

BRAZILE: So we can blame both parties.

(CROSSTALK)

KING: Quick time-out for the moment. A bipartisan agreement to blame both parties... (LAUGHTER)

... maybe, on this one. We'll come back with our panel in just a minute. Much more to discuss, including the president's overseas agenda, including the war in Afghanistan.

But, first, let's take a look at what's still coming up on "State of the Union." I just a few moments, we'll look for signs of the president's inner city support as we revisit one of our campaign stomping grounds, Afroworld, in St. Louis.

And from a rocketing stock market to a possible rocket launch in North Korea, three of CNN's top reporters will be right here to break down all the issues.

And at the top of the hour, General David Petraeus joins me at the magic wall to explain what's really at stake in Afghanistan.

And after all the other Sunday shows have gone off the air, the number one Republican in the Senate, Mitch McConnell of Kentucky -- this week, he gets the last word. Stay with us.

(COMMERCIAL BREAK)

KING: We're back with David Gergen, Alex Castellanos, and Donna Brazile.

I want to move to the international agenda now. The president, on Friday, outlined his new strategy for Afghanistan. He's sending in more troops; also sending in diplomats, civilians to help train up and rid the Afghan government of corruption.

A huge challenge across the border in Pakistan. His rival in the last campaign, Senator John McCain, was out this morning. He doesn't disagree necessarily with the president's strategy, but he does think, in outlining it, he should have been more candid with the American people. Let's listen.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: The main thing I would have done in that speech, I'm sorry to say, tell the American people it's going to be long and hard and tough and, as these additional troops come in and we move into the South, which we do not have control of, the southern part of Afghanistan, there's going to be an increase in casualties.

(END VIDEO CLIP)

KING: David Gergen, did -- is Senator McCain right, that President Obama -- was he not candid enough in the risks and the trouble ahead for the American people?

GERGEN: I don't think he, frankly, addressed the long-term, and we didn't have an exit strategy out of this. It's very, very unclear how this now ends. And it is going to be long and hard and tough. But you asked a number of questions today of Dick Holbrooke and General Petraeus about trust, the Afghans -- trusting the Afghans, trusting the -- one thing we can do, we can trust that people that President Obama has put in charge of this -- and in Dick Holbrooke and in General Petraeus, we have two of the finest public service -- servants this country has ever had. They are top-flight diplomats and generals.

And I think a lot of us feel better that people of such extraordinary talent are there.

And beyond that, I must say, John, he has -- they put a lot of time in trying to figure this out and trying to come up with a new strategy. It is a strategy that, by Bob Gates's own definition -- and he is a terrific Cabinet officer, as part of this -- they've narrowed the objectives down.

It's not as open-ended. It's not trying to bring democracy to Afghanistan in the Bush way. And therefore, it is, let's take care of Al Qaida; let's push back on the Taliban; let's try to do more on the civilian side. And let's take another look at it a year from now.

KING: And Donna, the president says he has no choice to do this, but you know the base of your party very well. This was the "get us out of Iraq as soon as possible," and there are some questions about this new Afghanistan strategy, because it will involve, as you send in more troops and you escalate the pace of activities, combat activities, it will involve more casualties.

BRAZILE: Well, first of all, at the end of the president's speech -- maybe Senator McCain didn't listen to it; I did. It was a Friday, and unfortunately I had nothing else to do.

(LAUGHTER)

But he said that we face a long and difficult road ahead. And I think the president framed it as a regional war, where we have to stabilize both Pakistan, as well as Afghanistan.

And I think the president also acknowledged that we've lost troops in that war, 700, and God bless their souls. They fought the battle for the country.

But I think, in going forward, what the president's trying to do in Afghanistan is to stabilize it so it doesn't become a failed state, so that we don't reawaken the Taliban that's already been strengthened, but we do not pose -- we do not allow them to pose another threat to our country. So it was a comprehensive strategy.

KING: And one of the risks, Alex, as David noted, is you need a partner. You can send in more troops; you can send in good diplomats; you can send in all the civilians you want to help build things and get rid of the poppy crop and do everything else, but you need good partners on both sides of the border.

And I put that question to Ambassador Holbrooke earlier because of the corruption in the Afghan government. And here's what Ambassador Holbrooke has to say.

(BEGIN VIDEO CLIP)

HOLBROOKE: There isn't any question that the government has corruption at high levels. We do think it's a cancer. President Karzai says, publicly, that he agrees with that. And now it's up to his government to take action.

(END VIDEO CLIP)

KING: How difficult is that, not so much the foreign policy question, but sustaining the support of the American people, if you're sending in more troops, sending billions of more dollars, and you can't say that you trust President Karzai to do everything because of corruption in his government?

You can't say that you can have the most sensitive conversation with Pakistani security officials because you're afraid they're going to leak that information to the very people you're fighting, Al Qaida and the Taliban?

CASTELLANOS: It's -- it's incredibly difficult, because there's very little structure to the government there that we can count on. But this is one area where President Obama's actually protected politically. This is one area where he has not put bipartisanship out of reach. He's kept Bob Gates. He's kept General Petraeus.

CASTELLANOS: He has got everybody in the boat before he starts to sail here.

And so, politically, he has got the political cover, in effect, to stay on this agenda. And also, it doesn't happen to be at the top of the issue agenda as we go into next year. So for those reasons, he's -- and also, he's being very smart about it.

He's making all of his Afghanistan announcements on Friday evenings, late into the news cycle. He has got enough to worry about with the economy. American politics is about three things: culture, economy, and security.

He has got enough trouble with the economy right now, and he's trying to downplay all of the other issues.

BRAZILE: But he's embarking on a major trip this next week to Europe. And in order to succeed, we need NATO support to continue to provide troops and resources, as we try to rebuild this Afghanistan government and to try to give the Pakistani government some support, so they can rid out the Taliban as well.

KING: And, David, Donna makes a key point. The president's first trip to Europe, we will watch this. I was on President Bush's first tripe to Europe. They were mad as hell that he wouldn't sign onto the Kyoto Accord and the trip went downhill from there.

This president, in the campaign, said -- as a candidate, Senator Obama said, elect me, I will fix the alliances, I will restore America's respect and credibility in the world. One sign of that respect and credibility would be governments in Europe saying, we will send you some troops into Afghanistan, we will send money as well.

Bob Gates said this morning -- Secretary Gates said that might still happen. Do you see any reason to believe that European governments who are facing the same economic crunch we have, and have as anti-war political bases will send more troops?

GERGEN: No, not in any significant numbers. They may send tiny numbers and, you know, give us a little political cover, but I think fundamentally the president is going to find a lot of resistance to his proposals.

He wants to get more troops for Afghanistan. He's probably not going to get that. He may get more money. He wants the Europeans to put more money into stimulus. You know, France and Germany have already said, no, we're not doing that. The White House has already said, we're not going to push very hard.

I think he's not going to get very much, but I think at the end of the day, at the end of the trip, President Obama is so popular internationally, and these other leaders need his support and want to be seen wrapped around him, I think they will cover over their differences and it will be seen as a very successful diplomatic trip, it was a good maiden voyage.

KING: The Bush White House was furious that Democrats would criticize him when he went overseas, raising the Iraq thing. Are we -- can we go back to the old rules? Does partisanship stop at the water's edge? Should the president be allowed to have this trip without partisan attacks on him?

CASTELLANOS: It's going to be difficult, because the economic agenda that the president has put forward is so far out of the mainstream and so beyond bipartisan accord. He's going to a Europe now where the Euro-socialists have tried the approach he's trying here. They've tried spending their way to prosperity.

And when we're getting the French, when we're getting the Germans telling us, America, you're spending too much, you're being irresponsible, that's going to encourage Republicans here to say, no, hey, we agree with France, we agree with Germany, this president is just spending too much.

KING: By luck of the timing, you get the last word.

BRAZILE: Well, we're in a worldwide recession. While Alex would like to frame all of this as Republican-Democrats, the truth is, is that I think the president has to show leadership in helping other especially countries who are facing much more severe crisis, stabilize those countries so that we're not paying even more money down the road.

CASTELLANOS: By the way, Republicans are Americans too. We would love for the economy to come back. We just don't happen to think this is the best way to do it. BRAZILE: And we wish you guys didn't leave us such a huge triple-digit deficit.

(LAUGHTER)

CASTELLANOS: Stepping on the gas.

KING: We will continue the conversation into the break. You people at home miss the best parts. But we've got to go here.

Coming up to next, we head to Sweetie Pie's in St. Louis. I can tell you the food is good, and the talk was everything from lost jobs to hard to find bank loans. Our weekly conversation over coffee and some fabulous soul food just ahead.

(COMMERCIAL BREAK) KING: As you know, we get out of Washington every week and we sit down with everyday Americans, usually over a meal to ask them how they're doing, what they think of what's happening here in Washington.

This week, we went out to Missouri and we went back to St. Louis. We wanted to visit a community we had spent some time in during the campaign and get the sense on the African-American street of how they view the first African-American president.

It's tough in the city. The unemployment rate in St. Louis is 9.1 percent, the fifth-highest crime rate in the country in the city of St. Louis and a stunning poverty rate of 22.4 percent. So how is the president doing? How is the economy doing in your neighborhood? And what do young African-Americans on the street want of their president?

All topics over mac and cheese and cabbage at Sweetie Pie's.

(BEGIN VIDEOTAPE)

KING: And when you see so much time in these early days spent on things like big banks, AIG, big insurance companies, they're big major problems and the president makes the case that you have to deal with them or else there's a domino effect on everybody in the economy, including you.

But do you ever worry that, you know, how come all of the attention is on these big guys, all of the rich institutions and what about us in a neighborhood like this?

ROBBIE MONTGOMERY, OWNER, SWEETIE PIE'S: I'm waiting on him to get down to us. Because these people, the problems that they're fixing for them are not the problems we're having. They're dealing with big money. We are little people waiting on the money to trickle down to us.

TRYMIAH MILLER, ST. LOUIS RESIDENT: We are paying for it, but we're still not seeing the light of day with the banks. One example is that we're trying to open a business. We're catching a lot of slack (ph) from the banks because it's a new business, but everybody is on edge now.

MONTGOMERY: I'm having the same problem. I'm trying to open a new restaurant and now they're all afraid to take a chance on a restaurant, and I've got two successful restaurants.

MILLER: Right.

KING: Are your expectations of the president any different, any higher because of the history, because he's the first African- American?

DEREK BECKS, WAITER, SWEETIE PIE'S: Well, we've been waiting a long time and now we've reached that time. And it's coming. I mean, it's going to take time. It doesn't happen overnight. MILLER: My expectations are extremely high for him, but I am confident. I see him working. I see him as -- you know, I've heard people say, well, he's not the messiah, he's not Jesus. I wouldn't compare him to the messiah, but he has come to make a change and I see a huge difference.

KING: Do you still pay as much attention as you did during the campaign?

BECKS: Well, all in all, I've been watching the NCAA basketball.

KING: He has got North Carolina winning the final four. Who you got?

BECKS: Well, we want Mizzou.

KING: You've got Mizzou?

BECKS: Yes.

MILLER: I'm from Missouri, but I'm going with the president on this one.

(LAUGHTER)

KING: There is your big disagreement with Obama. He has got the...

(CROSSTALK)

BECKS: That's the only disagreement we've got.

KING: Is the system -- even with a president you trust, is the system stacked against the little guy and a neighborhood like this as opposed to...

MONTGOMERY: I think so. I think it always has been.

KING: Now in two to four years, if that hasn't changed, does that become President Obama's problem and fault?

MONTGOMERY: Not to me.

KING: Not to you.

MONTGOMERY: Not to me.

MILLER: I disagree. But I think ultimately he is responsible, because he should -- he's there to put the right people in place.

KING: How is the conversation different on the street in an African-American community, now that there's a black president?

MONTGOMERY: Me, I'm in my 60s, this is something that I thought I'd never live to see.

MILLER: It is. It's totally different within our community.

MILLER: I have a 15-year-old. He can't -- he couldn't really understand why we were crying when the president was elected.

KING: What do they want?

DEREK BECKS, WAITER: Better jobs. Better cars. Better lifestyle. Like I said, it doesn't happen overnight.

(UNKNOWN): A better chance.

BECKS: Because all of a sudden, people start losing their jobs and we've got a lot of car sales going on, breaking into stores, you know. Security is --

(UNKNOWN): It's not security.

KING: So the neighborhood problems are still the same?

BECKS: right, but they got a little worse.

KING: They got worse even?

BECKS: Yeah, because the economy has dropped. A lot of people don't have jobs.

(END VIDEOTAPE)

KING: Our thanks to our friends at Sweetie Pie for a great conversation and a fabulous meal. And for more on our trip to St. Louis, go to CNNpolitics.com.

Coming right up, President Obama hit the Sunday shows for the first time since moving into the White House. CNN's best political team empty their notebooks, right here, up next. (COMMERCIAL BREAK)

KING: I'm John King and this is STATE OF THE UNION. Here are some stories breaking this Sunday morning. Fargo, North Dakota, remains on edge. The slowly receding Red River breached a dike overnight, devastating a school campus. But widespread flooding did not reach other areas. The mayor of Fargo warns more breaches are likely today, and sandbagging continues. So far, two people have died in the flooding.

The airport in Anchorage, Alaska, remains closed this morning because of ash from a nearby volcano. Mt. Redoubt erupted again yesterday sending a plume of ash 45,000 feet into the air. The volcano is about 100 miles southwest of Anchorage. It has been erupting off and on since last Sunday.

And a show of support for the pope's controversial position on condoms. Today, about 100 African Catholics gathered in St. Peter's Square to support the pope's statement that condoms aggravate the AIDS crisis. The pontiff made that comment during his recent trip to Africa.

STATE OF THE UNION continues right now.

Live pictures of the White House on a Sunday here in Washington, D.C. And joining us to continue our conversation of all the day's headlines and what's ahead in the week to come, CNN Pentagon correspondent, Barbara Starr, national political correspondent Jessica Yellin, and senior congressional correspondent, Dana Bash.

Ladies, welcome to STATE OF THE UNION. Let's start on the debate about the economy and the president's budget. Dana, I had the chairman of the House and Senate budget committee on earlier, and they say they're not compromising their principles when it comes to deficit reduction. They trimmed the president's proposal back a little. Is the mood on Capitol Hill that that will be enough, or is it that as we get further down the process, the president's going to have to give some?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Well I think at this point, that's probably going to be enough. Enough for at least in the Senate where it really matters, to get enough of those conservative Senate Democrats to vote for this. At least that in my very unscientific poll of some of those important senators that I did last week.

But I think the questions you ask are really important. And I think those are some of the questions that some of these senators that are very reluctant to have this high deficit, that they're going to be asking as they debate this coming week, which is whether or not the way they pulled back the deficit a little from where the president has it, whether or not that was from some fuzzy math they're trying to do to just to say, oh, look, our deficit is lower than President Obama's.

KING: And politically, Jessica, the president is not up for three years. Do Democrats have this deja vu, 1993, '94, that they're going to make tough decisions for their Democratic president, and when they go on the ballot, before a lot of this stuff kicks in, the Republicans will be say, tax and spend, tax and spend, tax and spend?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: And it's a real worry. It's a legitimate question right now. The big question going into if you look at electoral politics is where will the economy be when these folks are up for re-election? We all know that it's not going to recover by 2010. But in four years, if there's 11 percent unemployment, if the numbers stay high, there's going to be real trouble for these folks. So that's a lot of the reason you're seeing them play with numbers on the Hill and the president's going to have to make a lot of compromises he doesn't want to make.

KING: And Barbara, he's asking the Pentagon to come in with a smaller bottom line, even as he sends more troops to Afghanistan, says he wants to grow the army and grow the Marine Corps. So something's got to give, and most people think if you are going to get that money, you've got to get a big weapons program.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, that's what Secretary Gates is saying, that he's going to make real deep cuts in all of this. But you know with the president taking off this week for the big trip to Europe, half of it is the economic agenda with the G- 20, half of it is with NATO. He's got to take something to Europe and say to the Europeans, a lot of people think, here's what I want to have happen. He can't go and just listen. And so he's going with both the economic agenda and the security agenda and a lot of folks are watching to see what he actually comes back with.

KING: And in terms of the Pentagon finding something to cut, whether it's the F-22, whether it's something else down the road, when are we going to know?

STARR: That's being worked on in those 17.5 miles of Pentagon hallways right now. Nobody's talking about it, but you can sure bet that the lobbyists are scurrying all over Capitol Hill already.

YELLIN: Lobbyists?

KING: Lobbyists?

YELLIN: Bad word.

STARR: The defense contractors, they're trying to preserve everything they can.

KING: I want to bring some comments the president made this morning, another big question when it comes to the bottom line of the federal budget is how much more bailout money will there be? And among the people asking for money are the auto industry. And the president was out this morning talking to Bob Schieffer on "Face the Nation." And he's talking about, are the auto companies, Chrysler and GM, especially, doing enough to warrant more money? Let's listen to the president.

(BEGIN VIDEO CLIP)

OBAMA: They're not quite there yet. What we're trying to let them know is that we want to have a successful auto industry, U.S. auto industry. We think we can have a successful U.S. auto industry, but it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean, mean, and competitive than it currently is.

(END VIDEO CLIP) KING: So, Dana, that sounds like a maybe when it comes to more money, but the expectation, privately in Washington, is absolutely the Democratic president is not going to say no, to Detroit.

BASH: Probably. I think that is the expectation. But I think you're probably going to have another big fight. And again, the fight, especially, given this latest controversy over AIG bonuses, the fight, I think even more now is going to be over the disparity.

BASH: You're going to hear probably a lot of Democrats, especially those from the state of Michigan, saying, why are you fighting us so hard and making sure every, you know, T is crossed and I is dotted in terms of the plans for these auto companies, where you don't seem to be asking those same questions when you give millions -- really, billions to Wall Street before you really know that their fiscal house is in order.

KING: And from a political standpoint, bailout angst, not just the auto industries, but more money for Wall Street?

YELLIN: There's a huge amount of bailout angst. There's absolutely no political will to give more money to Wall Street right now.

The big issue is, Secretary Geithner is proposing a plan right now that really says, we trust that Wall Street will work again, that the fundamental way it has operated is fine, we just have to encourage them to be more restrained in the future and to take more risk now.

And if that succeeds, if this plan succeeds, that will be where he is treated as a hero. Because he believes that Wall Street could fix our problems. But if he fails, he will be lampooned and tarred for saying that we have -- for trusting Wall Street again.

KING: We'll get to the specifics of the international agenda in a moment, Barbara, but from a psychological, political standpoint, the Pentagon was front and center all during the George W. Bush administration. Is it a benefit to Bob Gates and those generals in the how many miles of corridors?

STARR: Seventeen-and-a-half, I counted.

KING: Seventeen-and-a-half miles of...

(LAUGHTER)

KING: Is it a benefit that they're almost an afterthought when it comes to the big decisions they have to make about spending and their budget or do they -- are they over there saying, hey, don't forget us?

STARR: I think at the moment, they're happy to take the lower road. Afghanistan, that war really looms on the horizon and there's a lot of folks worried about what's going to happen next year. KING: And that is what we will talk about when we come back. Barbara Starr, Jessica Yellin, Dana Bash, stay with us, we'll be right back. More, and we'll also get a top-level briefing on that new strategy for Afghanistan and Pakistan from the two men tasked with carrying it out.

We'll also have right in here the chairman of the House and Senate budget committees. They'll ask the question whether Democrats or Republicans are responsible and will support the president's multi- trillion dollar budget. Stay with us.

(COMMERCIAL BREAK)

KING: Let's continue our conversation with Barbara Starr, our Pentagon correspondent; our political correspondent, Jessica Yellin; and senior congressional correspondent Dana Bash.

Barbara, let's focus on the president's new strategy. And it's a risky one. He's sending more troops into Afghanistan, more diplomats into Afghanistan, more civilians to help build the Afghanistan government.

One of the key questions is, though, what happens if you see something across the border in Pakistan? The president has been very careful, saying that's a sovereign nation. But as you know better than any of us, the military from time to time sees a target and isn't sure the Pakistani forces either can or will respond in time.

Let's listen to what the president had to say about this, this morning.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If we have a high- value target within our sights, after consulting with Pakistan, we're going after them. But our main thrust has to be to help Pakistan defeat these extremists.

(END VIDEO CLIP)

KING: Is the president and is the Pentagon truly so deferential and they will consult, which could be valuable, valuable time, or is that the public line, that they will consult the government of Pakistan, but that they will quietly do whatever they can as fast as they can?

STARR: Well, maybe they'll consult them after they go do it. Who knows? You know, I think what the president was doing here, perhaps, is sending that message to Pakistan. Sovereign nation, we're not sending in ground troops, but if we see the so-called high-value target, we will go do something about it.

And this is what every top commander will tell you behind the scenes. They're trying to be very deferential to Pakistan publicly, but behind the scenes, the message is now clear. Pakistan has to get its act together and it has to go after these people, or the U.S. will. KING: We just spent years in a domestic political argument about George W. Bush's war in Iraq. What is at this moment in time the state of the political argument about President Barack Obama's escalation in Afghanistan?

BASH: You know, it's very similar to what we heard after he made his announcement on Iraq. You have Republicans -- it is, again, very ironic, you have Republicans for the most part coming out and saying, we support him. We think that he's doing the exact right thing here, we think he's doing what he perhaps wouldn't have said that he would do during the Democratic primary, because at that point, many Republicans are saying he was trying to appeal to the left.

So you definitely see a reversal with this national security issue, as you did with Iraq. Democrats are not coming out as much as opposed to this as I perhaps thought that they would, but they're very cautious, unlike Republicans, who are pretty gung ho about it.

KING: Cautious, Jessica, because you can't see where the end is, the president has no timetable on this strategy, and more troops means more risk?

YELLIN: They -- look, his base does not want the U.S. committed to a war overseas, period, his left base. So it's going to be a constant struggle to keep them along, to keep them understanding that it's a narrow goal, it's a narrow mission, and, you know, that he believes that there's a way to exit, even though all of that could change in time.

The big problem he has politically is that he has decided to open Dover Air Force Base, allow people to see fallen men and women come home in coffins. And I think that that will really change the mood of the country this time in reaction to this war if people start to come home in big numbers. It will be hard for him politically.

STARR: It will be. But, you know, he also has that sort of -- remember the Dick Cheney remark of a few weeks ago, Barack Obama has made the country less safe. This war is not Iraq, this is about 9/11, the Taliban, and al Qaeda. There has been no attack on the homeland since then, but that's always the risk out there.

That's why he has to politically make the full-out effort on this war to show that he's doing everything he possibly can. But he has also got to show that he has got game here, you know? He can't just put out all of these policies, it all sounds fabulous. Now the hard work, how do you make this all happen? That's the tougher...

(CROSSTALK)

KING: Well, and to that point, each of you jump in, please, how do you make all of this happen? He has laid out this plan, it calls for an escalation in troops, everything we've talked about, more civilians (INAUDIBLE). But, you know, remember, this is not, we'll be greeted as liberators and the Iraqi people will be up and running in no time. But this is a situation where, you know, Hamid Karzai has been in charge of Afghanistan for seven years and the special envoy, Richard Holbrooke, says corruption is a cancer. He has been in charge of the country, Barbara, for seven years.

Can the Pentagon trust the people on either side of the border that they have to do business with?

STARR: You sure don't see Hamid Karzai out there with President Obama, with General Petraeus, with Defense Secretary Robert Gates. All of the visual clues we see is that the U.S. is trying to back away from Karzai a little bit and say, look, you know, you've got to change your ways here.

There is no question later this year when those 17,000 U.S. troops get to Afghanistan, mainly in the south, there is a Taliban welcome party waiting for them.

STARR: It is going to be very tough fighting, village by village, town by town, valley by valley, through all of those mountains. It's going to get a lot worse before it gets better.

And the president is going to have to be in the position of explaining that to Congress and to the American people.

KING: And to the point of explaining it, Senator McCain, who's out this morning, saying he did not think that President Obama met the test of a commander in chief, that Senator McCain saying he was not as candid as he should have been, again, in Senator McCain's view, about the potential price, about more casualties, about a lot more money and a lot more blood.

Is that the sense, in Congress, as this goes forward, that, if the president's going to have this strategy, the president better get out there a lot, talking about it?

BASH: I think that, eventually, absolutely. I mean, there's no question that members of Congress want the president to lead on this, rhetorically as much as anything else.

But I do think that what Senator McCain said was interesting. But with Barbara just pointed out is really the thing that we all have to keep in mind, which is why this is so vexing, is because both President Obama and the two guests you had earlier today made it very clear that they are -- this whole strategy is hinging on help from the government of Pakistan and the government in Afghanistan.

And it's very clear that they don't trust the governments because they are filled with not just corruption, perhaps, but on many levels, the kind of, you know, terrorist backers that they're trying to defeat.

KING: And is this, Jessica, this more modest goal, get Al Qaida; get the Taliban -- it's a daunting challenge but a more modest goal than we're going to set up a shining democracy in Afghanistan and we're going to bring all the reform in the world to Pakistan. The more modest goal is we're going to get the enemy who is after us, and if that other stuff happens, great, but our main focus is -- is that a legacy of George W. Bush's Iraq?

YELLIN: Yes. I mean, that's exactly what the White House keeps delivering. When people say -- go to them and say, look, you guys, this sounds like some of the language President Bush used, they say it is substantively different because we are going after the enemy who attacked the U.S., period.

And that is the message, over and over. And I think that's what you'll hear President Obama articulate as this continues.

KING: Dana Bash, Jessica Yellin, and Barbara Starr, thanks for coming in on a Sunday.

And coming up at the top of the hour, an in-depth briefing on the challenging conflicts in Afghanistan and Pakistan from the four-star general David Petraeus and the president's special representative to the region, Ambassador Richard Holbrooke.

And then the latest on the economic warfare on Capitol Hill from the chairman of the Senate and House Budget Committees. "State of the Union" will be right back.

(COMMERCIAL BREAK)

KING: Sometimes in our travels we like to retrace steps we've taken in the past, including this year's campaign. So, as we noted a bit earlier, we were out in Missouri this week.

One of the places we went back to visit was a business called Afroworld. It was a struggling boutique and salon until the owner started selling Obama t-shirts -- this is during the campaign -- Obama t-shirts, Obama buttons. They started selling those during the campaign, and business just took off.

We wanted to go back because we wanted to get a sense of how is the president's support among African-Americans holding up in these early days in office?

Nationally, of course, the president received 95 percent, a whopping 95 percent of the African-American vote; 93 percent in the battleground state of Missouri.

So, still shy of 100 days in office, we wanted to go back out to St. Louis, get a sense, in the inner city, of how they feel about their new president. And, in doing so, we stopped back at Afroworld.

(BEGIN VIDEOTAPE)

KING: And this was an accident in many ways.

(UNKNOWN): It was. We started -- I had the pleasure of meeting him at a friend's house. And so one of the questions we asked him, how can we get the word out about you? And he said, just tell people about who we are. And so I ordered 100 buttons. And within a matter of days, they were gone. And so we continued to get more buttons and more buttons. And now we have over 200 styles of buttons.

KING: Take me back in time a little bit. Which of these were the ones that moved the best? (UNKNOWN): I think, initially, for our older crowd of African- Americans was "The King and Obama: A Legacy of Hope." This is one of the ones -- just a really hot piece item that was very difficult to have your hands on, initially.

The other one that was really a nice seller was actually, over here. This is the signature button. This is one of the original ones from the campaign. And it had his signature directly on there, saying "the 44th president." And people were just really -- were just excited about that one.

And then the next one was the family. And I think you have a lot of family buttons with Michelle. They love Michelle. It's really popular.

KING: Sleeveless. There's been a lot of talk about that since she came in, huh?

(LAUGHTER)

(UNKNOWN): Yes, she's hot.

(LAUGHTER)

And we all can't take our jackets off like that, I'll tell you. She's -- she's really a beautiful, beautiful woman, inside and out.

KING: When you watch him govern, what do you like the most?

(UNKNOWN): Oh, I love how he's able to present himself. He's always been well-mannered and always straight to the point. And then there is a comfort in his voice.

KING: Is there anything you've seen him do where you think, you know, Mr. President, I don't like that, or do this one a little differently?

(UNKNOWN): Not at this time because he's just got there. I think he's -- he's in new waters, you know, in terms of something he's probably never experienced -- well, of course, he's said he never experienced it before. I think it's just going to take a little time. And I'm still in the honeymoon period.

(LAUGHTER)

KING: What do you think he'd say if he found this one in here?

(LAUGHTER)

(UNKNOWN): We like that because that looks like everybody's little brother. So we use that as an inspiration, like you never know what a child's going to grow up to be.

KING: He was Barry then.

(LAUGHTER) Now he's Mr. President.

(UNKNOWN): I know. I know. That's amazing.

And so all this is really encouraging for the community. The kids love coming in here and looking at the pictures. And they're like -- and it's amazing, the three-year-olds and two-year-olds, they go "Obama." They know his name.

I don't know how many kids we had, when they come in -- before they walk into the building, they say, "I want to see the president." They think they he is here.

And I think that we've allowed ourselves to continue to celebrate because it is something to celebrate. We'll never see this again, you know?

Maybe -- maybe so. Maybe not in our lifetime. But we're looking toward 2012.

(LAUGHTER)

Isn't that a little early for that?

(UNKNOWN): Nope. Nope. Because you want to keep the whole momentum going. You want to understand that this is going to take all of us to make this country a better place. And it's going to take time.

People are embracing this because it's something that they can actually feel. We actually feel that this is a president that we can touch.

(END VIDEOTAPE)

KING: I have to tell you, that Obama 2012 sign does cause a bit of a double-take.

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