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STATE OF THE UNION WITH JOHN KING

State of the Union: Best Political Team on Television

Aired June 14, 2009 - 11:00   ET

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


JOHN KING, HOST: We continue now with another hour of STATE OF THE UNION. Iran's president Mahmoud Ahmadinejad says he has been overwhelmingly re- elected fair and square, but his main opponents says the election was rigged. And Vice President Joe Biden says he may have point.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT: We don't have all the details. It sure looks like the way they're suppressing speech, the way they're suppressing crowds, the way in which people are being treated that there's some real doubt about that. I don't think we're in a position to say.

(END VIDEO CLIP)

KING: Here at home it's a big week ahead for the health care reform debate. Some in Congress want to pay for the reforms by taxing health benefits many Americans receive from their employers.

The administration won't flatly rule that out, here on STATE OF THE UNION, the president's health secretary came pretty close.

(BEGIN VIDEO CLIP)

KATHLEEN SEBELIUS, HEALTH AND HUMAN SERVICES SECRETARY: The president starts with the premise that 180 million Americans have health coverage through their employer, that a tax on those benefits may dismantle that marketplace. So while you're trying to make sure we cover the 47 million Americans who don't have coverage, what we don't want to do is destroy the system that currently is in place that lots of Americans like.

(END VIDEO CLIP)

KING: Another controversy in the health debate is whether to create a government-run insurance program to compete with private insurance. The president wants to do that and so do most leading liberals in Congress.

KING: But most Republicans don't like it. Some warn, it's the first step of a government takeover.

(BEGIN VIDEO CLIP, "THIS WEEK WITH GEORGE STEPHANOPOULOS") MITT ROMNEY (R), FORMER MASSACHUSETTS GOVERNOR: This is not about getting competition in health insurance, which is already there. This is, instead, a Trojan horse.

Barack Obama, when he ran for office, said he is in favor of single-payer system. He has said it for years. This is a way of getting government into the insurance business, so they can take over health care.

(END VIDEO CLIP)

KING: You see the White House there on a beautiful Sunday here in Washington. And, as you can see, we have been watching all the other Sunday shows, so you don't have to.

Let's bring in two members of the best political team on television, as we do every hour this Sunday, and break down the issues.

Joining me from their home in New Orleans, two CNN contributors, Democratic strategist James Carville and Republican strategist Mary Matalin.

James and Mary, thanks for being with us.

I want to start with the vice president's words on the election in Iran. President Ahmadinejad says he won big, fair and square. The leading opposition candidate says the election was rigged.

And, if you listen to Vice President Biden there, he seems to think there are a number of questions, a number of doubts about this.

You have both worked in international elections. This is not like here in the United States. We cannot expect, can we, a transparent and open recount?

(CROSSTALK)

CARVILLE: Well, I don't know that we can.

The truth of the matter is, is that, in these -- in these elections, the best safeguard against this is to have a credible poll taken by some international organizations, news media organizations, which you can do pretty effectively in a country like Iran.

And had we done something like that, and had it shown a close election, or even Ahmadinejad losing, then there would -- we could be legitimately a lot more skeptical. I think every American, everybody around the world is skeptical about this outcome.

But the state controls the election -- election machinery there. So, we may never know here. But there's certainly reasons to doubt this outcome. But, boy, a good poll 10 days ago would have been a lot of help to people in the international community who -- who -- who don't much like this regime or particularly Ahmadinejad. KING: But, absent such a poll, Mary Matalin, what are the options for the U.S. administration at this standpoint, when Mr. Ahmadinejad says, "I won, I won overwhelmingly, and I have a mandate"?

MATALIN: Well, the option for the United States is as it always was, which was to accept reality.

They are not like us. They are not transparent. They're not a democracy. A Carnegie scholar said every election in Iran is unfree, unfair, and unpredictable. So, this one was predictable, however, that the mullahs control, and the mullahs do -- it don't matter to the clerics if it's Ahmadinejad, or Mousavi, or who is in that position.

They still want to pursue the nuclear ambitions. And that's an ongoing threat to us.

KING: And, so, let's say what happens going forward. And I want you both to listen. We had a number of senators on the program earlier.

And, as you know, President Obama, during the campaign, said he would sit down with Ahmadinejad, Kim Jong Il, any of the leaders of so-called rogue nations, in his first year in office.

The administration has since retreated some, saying they would sit down if they see a reason, in preliminary talks, that there would be some progress.

But I asked Senator Susan Collins, Republican of Maine, should the administration now be less open to dialogue? She said this.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: It certainly makes such a dialogue much more difficult.

But, frankly, I have always been skeptical about the success of any kind of dialogue with the hard-line leaders of Iran. We should certainly give diplomacy a chance. But I am skeptical that it will be successful. And these voting irregularities, the arrests of opposition clerics and opposition leaders, certainly makes it far more challenging for the president. (END VIDEO CLIP)

KING: James, does the Democratic president now have to isolate Iran, or do you just accept the cards you're dealt, even if you don't like them, and sit down at the table with him?

CARVILLE: Well, we know eight years of not talking to people has led to failure. So, that -- we have had that experience.

And, you know, whether or not you can get to something by talking to these guys, I don't know. I think Senator Collins is probably right to be very skeptical. I think the president is right that -- that you would have to see some kind of a thing in some preliminary talks. But the reality is, is that they are the regime there. And the reality is, is the United States has a great interest in -- in trying to do something about them pursuing this nuclear program. So, it's a difficult situation. Hopefully, you know, that something will come around and there will be some break in these negotiations. But, right now, I think the -- I think the position of the administration is -- actually makes some sense, at least for the time being.

MATALIN: If we knew what the administration's current position is.

This is a quintessential Obama-esque kind of straw man, to say the failure of the last eight years, that there was no talking. There is -- everybody who works in this arena understands there's always talking going on behind the scenes. There's pressure from other leaders in the region, because they want the same thing we want, which is not to have a nuclear-armed Iran.

But diplomacy, talking at any level, does not work without being married to the certainty of action. And hard-liners perceive talking in, the absence of the certainty of action, as a weakness. And weakness invites provocation.

So, welcome to the real world, Mr. President. This is how it works there. And you can talk, but you have to assure that, if they don't act in ways consistent with our security and our needs, there will be some action.

KING: Let me bring you both home to the health care reform debate going on here in the United States.

And, during the campaign, then Senator Obama disagreed with Senator McCain when he said one way to raise the money to help pay for this is taxing the benefits that most Americans, many Americans, get from their employers.

The administration has since said it is open to these ideas, as Congress puts together a bill, that it would open to that, doesn't like it, but is open to it.

But, this morning, both Secretary Sebelius here on this program, and Vice President Biden on another, delivered quite strong language, suggesting the administration has a change of heart and wants to push that option off the table.

Let's listen to the vice president.

(BEGIN VIDEO CLIP, "MEET THE PRESS")

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: And the bill is going to come. This is the most -- this is going to be one of the most comprehensive changes in the law since Medicare in the beginning.

We will have to see what the whole bill says. But we have made it clear we do not believe you should be taxing -- taxing -- the benefits that people receive through their employers now. (END VIDEO CLIP)

KING: Emphases on the word "taxing," James, from the vice president there.

CARVILLE: Right.

KING: Do you get the sense the administration that opened the door to this is now seeing more views out there that there's more spending and more taxing, and maybe they need to retreat from this?

CARVILLE: Yes. Actually, Senator McCain proposed that during the election. And that didn't work out very well for him.

And I think people -- this is a political nonstarter. And I think the vice president is right -- right, and I think Secretary Sebelius is right. I think there are other ways to pursue this. But -- but a lot of people that get their insurance through their employer are satisfied with the insurance as it exists right now.

And, politically, this is not going to happen. And I think -- I think the statement that they made this morning is consistent with -- with -- with good politics. And I suspect it's consistent with good policy also.

MATALIN: And, John, it's also a reflection of what polls are showing, which is that the public prefers an attention to deficit reduction and economic stabilization, and -- and -- reforming Medicare, which is the currently existing government-run health care program.

When those three things are under control, then we can take a look at reforms, some of which were enumerated by Senator Collins and Senator Nelson and Senator Conrad earlier on your show. There's not just the government-run option. There are many options that have been tried, do work, and have a better possibility for passing.

And that's what we should be focusing, not just this sort of government-run takeover, before we fix anything else, which does not work and for which there are not sufficient votes.

CARVILLE: Well...

KING: I want to take you both up to 30,000 feet. We're about 150 days into this administration.

And you know, James, what the Republicans are saying. And "The Washington Post" had a pretty fascinating set of graphics this morning that we have borrowed to show borrowing under this administration. And I want to put it up on our screen, if we can.

This is the cost of government borrowing. They show -- a small circle is the cost of the Iraq war. A bigger circle is the cost of borrowing for World War II. That was $3.6 trillion. And that big blue circle on the screen right there is the cost of proposed borrowing in the Obama administration over the next decade from 2010 to 2020, $9 trillion.

Now, James, the president says this is necessary to fix the economy, to deal with health care, to do other things. But, as somebody who runs political campaigns, as somebody who lived through 1994, when you look at something like that, if you were Mary, you would run against the tax-and-spend Democrats.

How do the Democrats deal with that?

CARVILLE: Well, first thing is, you would point out that, as many people did, that this is primarily because of policies that were instituted the -- the last eight years. This is primarily because we chose to -- to pay for three wars with three tax cuts.

And most of this is not President Obama's doing. But this is a problem. Debt is going to be the biggest problem that we're going to be talking about in American politics for some time to come. It's certainly going to impact the health care debate.

I suspect that the biggest event in the coming health care debate is going to be how CBO scores this. And depending on how they score this is going to have a -- a pretty big -- be a pretty big determinative fact on the -- on the outcome of this debate.

But you're right. It is a problem. People look at it, and they have got a sense of this. And the way that the savings are going to come, by the way, is through health care. And this administration is already talking about $200 million in -- in -- in savings in the way that hospitals are reimbursed.

I suspect the hospitals will not much like that, and they will fight it pretty hard. But the debate has begun, and it's been engaged here. And I think they have got some good people ready to deal with this.

KING: I wish you could see, James, out of the side of your head at your wife shaking her head and her lips pursed when you're speaking.

(LAUGHTER) KING: Go ahead, Mary.

(LAUGHTER)

MATALIN: Well, I -- I -- I'm just counting. I'm wondering how long it's going to take the Democrats, and not just James, but this is an Obama model.

He has a straw man model, where he says a position that isn't a position -- then you have to defend it -- what he's going to say in his speech tomorrow, that the alternative to his government-run won't work, costs too much. Health care reform is the Republicans saying do nothing.

Senator Collins and her Democratic colleagues this morning had credible alternative reforms. So, that's a straw man. The second thing is to blame the president, the previous president. How long can they go to keep blaming the Bush administration? It's just -- it's -- it's absurd. It doesn't work. It's getting -- it's getting less politically palatable by the day.

If they want to, they have to focus on getting done what we can get now on health care reform. And all of this deficit-spending and this debt building up has nothing to do with the Bush years. Bush's deficits never exceeded 6 percent of the GDP.

This is explosive debt that our kids, your kids, their grandkids are going to pay for. And the Republican option is to join up with smart Democrats and stop it.

CARVILLE: Actually, there was a piece in "The New York Times" about this. And every credible analyst says -- knows exactly where this came from.

And we're never going to solve the problem unless we get to the root of the problem. The root of the problem is, is -- is, we chose to fund three wars with three tax cuts. And we have to change that policy.

KING: All right, let's -- let's take a quick time-out.

(LAUGHTER)

KING: There will be much more to discuss with Mary and James, a bit more on health care, and some interesting reflections from one of Mary's former bosses, former President George H.W. Bush.

We will be right back with Mary, James, and a lot more just ahead.

(COMMERCIAL BREAK)

KING: We're back with CNN political contributors Mary Matalin and James Carville.

And I'm at the map to go through a little bit the politics of health care reform. This is how the election played out last year. But this is the experience -- and I want you guys to watch this at home in New Orleans and around the country -- this is the experience of the last Democratic president.

Bill Clinton wins in 1992. Here's the Democrats, a majority in the House, the Democrats, a majority in the Senate, an advantage at the governors' level as well. But then they put the health care on the table. See if I can get this to play out. And we have the 1994 elections play through.

(LAUGHTER)

KING: And look at what happens if you bring that the here, 230 Republicans. The Republicans take the majority in the House by winning 52 seats. The Republicans take the majority in the Senate. And, James Carville, you were involved in one of the key Senate campaigns in that race, where Rick Santorum, running against your candidate, Harris Wofford, focused on health care, and ran this ad.

(BEGIN VIDEO CLIP, AD)

NARRATOR: Santorum's health care guarantees you can spend plenty of time with the doctor of your choice. With Harris Wofford's choice, you are guaranteed spend plenty of time.

Join the fight -- Santorum for Senate.

(END VIDEO CLIP)

(LAUGHTER)

KING: Could this possibly be, James, if the Democrats don't handle health care reform right, deja vu all over again?

CARVILLE: Well, John, you really know how to hurt a guy. I mean...

(LAUGHTER) CARVILLE: ... thanks for bringing all that up.

(LAUGHTER)

CARVILLE: No, sure. Sure, it -- it could.

And my -- you know, my daddy used to have expression when he would serve something. And I was the oldest of eight kids. And he would announce, "You are going to like it because you have got to like it."

And I think the Democrats -- and every Democrat -- and I know I am -- are -- we're very cognizant of our experience to this. And that's why I think something is going to pass.

You know, is it going to be easy? Is it going to be everything that everybody wants? No. But, if you look like you're too disorganized -- and what happened was that the combination of health care failing, and then, believe it or not, it was because we lost a rule on a -- on a crime bill, that people had the sense that, well, Democrats really couldn't govern.

And that's something they are going to be faced with. And, I mean, I -- I look at people like Rahm Emanuel. He understands that. He is working with Senator Baucus. He's, you know, day and night in the Congress doing these kinds of things.

And I think that my sense is, in the end, that they are going to get this ball across the goal line. But it's -- it's a long drive ahead of them. But they -- they know they have to score here.

(CROSSTALK)

KING: And, Mary, is the risk for Republicans that they think that model will work, that they think, just let the Democrats go, let them do this, and we can go to the 1994 model? Is that risky for your party? Could they be relying maybe on old-school thinking?

MATALIN: Well, they're not. That's -- that's not the option. That's what Obama is trying to make us think is the option, that they are presenting no alternative, or, as Governor or Secretary Sebelius said this morning, the status quo.

They're not presenting the status quo. They're presenting what Susan Collins talked about, targeting chronic cost drivers, like diabetes, getting home health care, help pooling insurance. There's a lot of Republican programs that increase competition, which reduces costs and improves quality. There's plans out there.

That's what they're doing. They're not counting on the Democrats just destroying themselves. And many of the Democrats are not going to let Obama destroy them. Our own Democratic senator here, Mary Landrieu, said there will be no vote from her for a public option.

And the Democrats you had on this morning did not sound like they were for the public option. Rahm Emanuel knows that. James is 100 percent right. They can -- they can walk and chew gum. And you have to do that when you're in the White House. But no -- there's no poll that shows that Americans want to completely have the government take over health care before they deal with the existing problems.

CARVILLE: You know, I'm old enough, unfortunately or fortunately, to remember that was what we heard when we had Medicare, that this was going to be socialism. This was the government takeover of health care.

Well, you know, the Republicans tried to cut Medicare. That didn't work out too good for them.

KING: Let's...

CARVILLE: And what you have here, if -- if -- if you have a public option, that's hardly the government taking over health care. This is the same argument that -- that we always hear.

MATALIN: John...

CARVILLE: This is something that we have got to, you know -- go ahead. I'm sorry.

MATALIN: Go ahead. I just want to say this.

KING: All right, quickly.

CARVILLE: Right.

MATALIN: Medicare funding is going to run out in eight years, James, eight years. It costs 15 times more than its original estimates. That's what will happen with this. We can't afford it. It won't improve quality. It will dismantle private insurance and it will eliminate options. It is government-run health care. CARVILLE: Well, let me say this. The Democrats want to keep Medicare...

(CROSSTALK)

KING: All right, let's -- let's close -- let's close on a different subject. Let -- let me call time-out and close on a different subject.

I first met your...

CARVILLE: All right.

KING: I met your bride, James, when she worked for President George H.W. Bush back in the 1988 presidential campaign.

(LAUGHTER)

KING: We can all live vicariously through him today, because, even at the ripe age of 85, he's jumping out of airplanes.

(LAUGHTER)

KING: And I want to show our viewers some of this footage. George H.W. Bush jumps out of an airplane with CNN's Robin Meade. And he -- there you go. I'm not sure you could get me to do that. You could try.

When he gets to the bottom, he conducts an interview, in which he has something quite interesting to say. He's asked about his legacy, but he also talks, not only about himself, but about his son and his son's decision to keep pretty quiet.

Let's listen.

(BEGIN VIDEO CLIP)

GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: We had a good administration and good people. And I think the same thing is true of our son.

And, you know, he had tough times and all, but he's -- he's doing it right. He's laying back there and he's not criticizing the president. And I'm very proud of him.

And I hope that we both have set examples for how you ought to conduct yourself when you have been president and then go out of office. Let the other guy do it. And -- and support him when you can, and be silent. Don't be out there criticizing all the time.

(END VIDEO CLIP)

KING: Mary Matalin, I love you, and I hate to do this to you, but I'm going to put you on the spot.

Your former boss George H.W. Bush says, be silent; don't criticizing the other guy when you leave.

Your more recent former boss, Dick Cheney, has been out there quite a bit criticizing this administration.

Who's right, George H.W. Bush or Dick Cheney?

MATALIN: It's -- you would have to infer from -- which would be a wrong inference from what poppy, beloved poppy, who can stand up there and give an interview after jumping out of an airplane -- I get vertigo standing on a -- a stepladder -- be -- he's not attacking Dick Cheney.

I'm fairly confident -- and you can be confident in my confidence -- that the -- the 43rd president -- or the former president, W. Bush, is quite happy that Dick Cheney is defending those policies that Obama would retract that were keeping us safe.

And Laura Bush said as much that last week. I believe she said that on CNN. So, the Bushes -- a president attacking a president in office is not what the Bushes do, but defending those policies is an obligation of the people who worked for that former president. CARVILLE: Well, John, I also thought it was interesting that -- that he took on the talk radio crowd, when he defended Judge Sotomayor, which is, of course, somebody that he originally appointed to the bench.

And I think that everything about President Bush 41 is, he's just a classy guy. Mary and I had a chance to work with he and Mrs. Bush on a health care thing in Houston this past January. And he -- he is really a remarkable man, and has done some really remarkable things in his post-presidency, too.

And he and President Clinton have been enormously good to our home city of New Orleans, obviously, in the post-Katrina thing.

(CROSSTALK)

KING: Well, we shall end, see, on this touching moment -- on this touching moment on a Sunday morning, a moment of agreement in the Carville-Matalin residence. We shall end it there.

(LAUGHTER)

KING: James and Mary, thanks for coming in today. And we will see you soon.

We will have more analysis of what to expect in the coming week in just a moment.

But, straight ahead, we will head to Orlando's Florida and Junior's Diner, where the food was delicious -- I had the oatmeal -- and the conversation was about health care.

We will be right back.

(COMMERCIAL BREAK) KING: If you look at the map, the brighter the state, the higher percentage of uninsured in that state.

Health care was the focus of our travels this week. We went down to Florida.

Before we get to our diner, a few more statistics. Young adults in the 19-to-29 group, that's the largest group of uninsured Americans across the country. Twenty percent of Americans live in rural areas. But only 9 percent of the nation's physicians practice in rural areas.

And get this. For every one percentage point rise in the nation's unemployment rate, the number of uninsured people increases by a stunning 1.1 million.

So, we went to Junior's Diner. It's in Orlando, Florida. We sat down. Everyone at the table agreed on the urgency -- the urgency -- of doing something about health care. But getting them to agree on just what, that is a whole other matter.

(BEGIN VIDEOTAPE)

KING: ... with the way we do health care in this country now, if anything?

BLANCHE DORMADY, ORLANDO, FLORIDA: I think that depends on the person. I -- I have -- I don't like the insurance. The insurances decide what you're going to have and what you're not going to have. And I certainly don't want the -- the government to have that ability. And I like it to be private.

KING: Well, are you -- are you -- are you worried, though, that they will make it worse, the politicians will make it worse?

B. DORMADY: It will make it worse. But I'm not a worrier.

(LAUGHTER)

MARGARET DORMADY, ORLANDO, FLORIDA: I'm against health -- national health care. I personally don't have health insurance, because it is too expensive.

But I want to get for myself what I need. I -- I don't want to be told what I can have and when I can have it. And I sure as hell -- excuse me -- don't want...

(LAUGHTER)

M. DORMADY: ... the government having my medical records running throughout the U.S.

KING: One of the things in the proposal put forward by Senator Kennedy, and most likely in the House by the Democrats as well, would be a mandate that would require you to get health insurance. That's the way they do it in the state of Massachusetts now. And you would have to get health insurance. If you had a job, and you were able to afford it, you would be -- you would have to get it, and you would be penalized if you didn't?

Is that right?

M. DORMADY: Just like the car insurance. I understand that. And I don't like that either.

STAFFORD EZZARD, WINTER PARK, FLORIDA: I trust the government more than many people do. I'm a Democrat. And I think the Democratic Party, at heart, has the people's interests in mind. I'm somewhat skeptical of our ability, politically speaking, to reach a -- maybe a conclusion at all.

KING: You don't want the government involved, but do you think they will pass something? The Democrats have big majorities.

M. DORMADY: I'm a Democrat. I vote open ticket. And I'm afraid they will. And I just feel more power, control by the government, so that I no longer have ambition to be able to go out and strive and do what I want to do in life and have the life that I want. I have to be under someone's thumb.

KING: You think they will do something?

B. DORMADY: Oh, I hope not.

(LAUGHTER)

B. DORMADY: I'm sorry, but if they put it back in the hands of the doctors to do what the doctors want, maybe it will be done. But to have government getting involved....

M. DORMADY: And I think that's a good point. Doctors need to be more involved in this, and not be pushed around.

KING: Well, do you think they're pushed around by -- by the insurance companies?

M. DORMADY: I think they're pushed around by insurance companies. I really do.

EZZARD: Yes, I think we are agreed on that.

I just had an experience with -- with my primary provider, who joined a -- a private -- I don't know what you would call it, but it's a -- but it's a group of doctors who have banded together.

And, in order to stay with him, I was going to have to pay him $1,500 cash, and my wife would have had to pay $1,500. My son would have had to pay $1,500. That's in addition to our health insurance.

KING: Paying for it is the big question mark, where many think this could collapse. One of the things on the table is to tax the health benefits you get from your employer.

Is that a fair way to do it?

B. DORMADY: I don't think the government ought to get into it.

M. DORMADY: Well, I see what you're saying.

And even McCain was trying to say we should back...

KING: Right.

M. DORMADY: ... we should tax...

KING: Right.

M. DORMADY: ... everything. So, you would have to pay more taxes on what your benefits are.

But you know what? Why not. I don't have a problem with that. (END VIDEOTAPE)

KING: A fun discussion and great oatmeal with raisins at Junior's Diner. You can see we brought the CNN Express along, and took up most of the parking lot there.

(LAUGHTER)

KING: We will be right back with three veteran Washington reporters for a preview of next week's political headlines.

And we want to know what the headlines are in your hometown paper. Find the link on our Facebook page, CNN.com/stateoftheunion, and tell us what you're thinking about this morning.

STATE OF THE UNION will be back in a moment.

(COMMERCIAL BREAK)

KING: I'm John King, and this is STATE OF THE UNION.

Here are stories breaking this Sunday morning.

New clashes between police and protesters in Iran today, even though President Mahmoud Ahmadinejad insists his reelection was legitimate. At a news conference today, President Obama refused to guarantee the safety of his rival, Mir Hossein Mousavi. On the streets of Tehran, Ahmadinejad's supporters held a huge victory rally.

Israel's prime minister scheduled to give what's being called a major speech on Mideast peace today. Benjamin Netanyahu has so far been cool to the idea of creating two states for Israelis and Palestinians, and he has not listened to the United States' demand he freeze Israeli settlements in the West Bank. Those are the goals President Obama has endorsed, including in his big policy speech in Cairo.

Vice President Joe Biden says it is critical the United States and other nations enforce new United Nations sanctions against North Korea. Those sanctions include searching ships suspected of carrying banned materials into North Korea and expanding an arms embargo against the communist nation. The sanctions were passed Friday in response to Pyongyang's recent nuclear tests -- that and more ahead on STATE OF THE UNION.

A shot of the Capitol there on a mid-June Sunday here in Washington.

And I'm joined here in studio by Jerry Seib of "The Wall Street Journal," Karen Tumulty of "TIME" magazine, and CNN senior White House correspondent Ed Henry.

Let's begin with the drama in Tehran -- more demonstrations on the speech today, more pro-Ahmadinejad people out today, questions about the legitimacy of the election. The first opposition candidate, the leading candidate, says he believes this election was stolen by the incumbent president. The White House says there were some irregularities.

And vice President Biden today -- and I want you to listen to this -- quite strong in saying, we're not sure, but we think the opposition candidate might be right.

(BEGIN VIDEO CLIP, "MEET THE PRESS")

BIDEN: We don't have all the details. It sure looks like, the way they're suppressing speech, the way they're suppressing crowds, the way in which people are being treated, that there's some real doubt about that. I don't think we're in a position to say.

(END VIDEO CLIP)

KING: Ed Henry, you cover the White House.

If there's real don't about that, what happens now, including with the administration efforts to have a dialogue?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, the administration has to be very careful not to be interfering too much, and that's why Vice President Biden walking a very fine line there. If the U.S. gets too involved, then Ahmadinejad can use that to his advantage.

It certainly complicates the equation. If the opposition leader had won, obviously, a week, a week-and-a-half after the president gave this speech to the Muslim world, it would have been a big victory for this administration.

Now it complicates things, because, if people around the world do not believe that this was a legitimate election, and the U.S. sits down to talk with Ahmadinejad and his representatives, and pushes forward on diplomacy, starts giving him concessions, that's going to harden the right in this country and around the world, saying, look, you're giving in to somebody who did not win a legitimate election.

KING: So, how does the administration handle this? The vice president out there pretty much saying they -- they're worried there were irregularities.

KAREN TUMULTY, NATIONAL POLITICAL CORRESPONDENT, "TIME": I think the administration really has no choice but to let this play out a little bit.

You saw it in the awkwardness of the statement that came out of White House Press Secretary Robert Gibbs yesterday, sort of commending Iran for the vigor with which it had engaged in this election debate.

But you look at what's going on, on the streets now in Tehran, I mean, this is a country that could be at the verge of a really big moment of social change. And I think, at this point, again, the White House and the administration and this country have to let it play out a little bit.

KING: As they let it play out, Jerry, it would have been a dramatic change if Mr. Mousavi had won the election. And then it would be very hard to criticize President Obama's efforts, saying, we're going to reach out and talk.

If Ahmadinejad is the current and future president of Iran, does it change the world diplomacy dynamic at all? Or do we not know what pressures he will respond to?

GERALD SEIB, "THE WALL STREET JOURNAL": Well, I think it changes the world dynamic in the -- in the way that Ed suggested, which is, you have to confront, then, not only negotiate with an erratic Iranian leader, but an erratic Iranian leader who may not seem legitimate. That's a difficult thing to do.

One of the problems here is that -- and I think Karen is right -- that the administration has to let this play out a little bit. What sort of crystallizing event is this really going to turn out to be?

In the meantime, though, the Iranian nuclear program does not stop. They keep buying centrifuges. They keep enriching uranium. That's the problem with this -- this situation, is, there's a tension between the diplomatic track and the stop-Iran track. And it will be interesting to see what the Israeli prime minister has to say about that this afternoon.

KING: And we will watch that.

And, as this plays out, I want to bring you something that was posted on our Facebook page. And, on the one hand, you say, oh, this is a political statement. But, on the other hand, it does get to some of the problems for the administration.

And Mackel writes this -- Marckel -- I'm sorry -- writes this on Facebook: "It would be very hard for the United States to say much about the Iran elections, because, if we can remember, the same thing happened in this country in 2000. The only people that can fix this problem are the people of Iran. I do feel the pain that those people are going through. To have your vote stolen is like a slap in the face."

(LAUGHTER)

KING: So, online, people are making Gore-Bush 2000 recount analogies.

(LAUGHTER)

KING: But, on the one hand, that's nice. We can laugh and joke about it. But, on the other hand, it does tell us, you know, whether you like or not the way it turned out, we had a recount process. We had a Supreme Court hearing and court hearings up the vine. We had transparency on that process.

We don't have that, Jerry, in Iran. And it's very hard for the international community, whether it's organizations or journalists, to have a good sense of what's happening.

SEIB: No, that's exactly right.

And the other thing that makes it difficult, from the Iranian perspective, is that what the Iranians could always say was, look, you may not like us, but we basically have a democratic government here. We have as democratic a government as there is in our region. If this is really seen as an illegitimate election, that's a harder claim for them to make. That puts them in a difficult position. I don't know if that makes the country more dangerous or less dangerous or the U.S. to deal with, by the way. That's going to be told over time.

But will change the way people look at this Iranian regime if this remains an illegitimate election or is seen as an illegitimate election.

KING: And, as we -- we watch, Ahmadinejad says, "I won fair and square." His opponent, says, "You stole the election from me."

I suppose the voices we want to hear most are the clerics, who actually call the shots.

TUMULTY: And the whole thing -- you hit on it, the transparency. We don't know who is calling the shots. And that is -- this is something that is -- as much as, you know, traditional media as attempting to cover this, most of the reports coming out of Iran at this point are on Twitter. This -- it is -- it is a very opaque situation right now.

KING: And that's an interesting point, because, online, in our community, on Facebook, on Twitter -- you can see the tweet board up behind me in the studio -- young Americans and young other people around the world are messaging about this all morning.

And one of the tactics, one of the strategies used by the opposition candidate was to text-message, borrowing from the Obama campaign, you might say, to organize rallies and events, text- messaging. The government shut that down at some point.

So, we may get a sense here technology may be our mini- transparency, our small...

HENRY: There may be the seeds of revolution, as Karen was talking about a few moments ago.

And, for the administration, it's sort of looking at these pictures, probably thinking, so close, and yet so far, because they almost saw the victory from the opposition leader. But maybe there are some seeds there that will keep building and building.

You're right. If you watch what's going on Twitter, you watch what's going all over the Internet, all kinds of people around the world talking about it. And people within Iran, young people -- it's something like 70 percent, 75 percent of the population there is 30 or -- or under -- they're tasting -- you know, trying to get a taste of freedom that the leaders may not want to get.

Now, if we get James Baker and Warren Christopher over to Iran...

(LAUGHTER)

HENRY: ... we will have 2000 all over again. TUMULTY: Or Katherine Harris.

HENRY: Yes.

(LAUGHTER)

HENRY: Well, that would be interesting.

SEIB: Just one quick cautionary note.

It is worth remembering that, early in the -- in the Bush 43 term, there was a period in which college students were in the streets in Iran, in Tehran. And people in the Bush administration then thought maybe this is the beginning. And then it just sort of went away and was ground down by the regime.

So, you could get a little carried away at a time like this and think maybe something started. And maybe it is. But we have been here before, and it never quite takes hold.

KING: And let's spend a few seconds more on this subject from the very important perspective, Jerry, you just mentioned.

Prime Minister Netanyahu is going to give a big speech today. He has said: Iran is my number-one priority. Then I will deal with the Palestinian conflict.

But he views the biggest threat to the state of Israel as the statements by President Ahmadinejad, that Israel should be wiped off the map, that the Holocaust never happened.

Does this strengthen Mr. Netanyahu's argument on the world stage?

SEIB: In an odd way, he may be actually the one person who is happy with the way the election turned out in Iran, because it's easier to demonize an Iran run by Ahmadinejad than by the opposition, by a moderating opposition.

So, I think, absolutely, it strengthens his conviction, his core conviction, which I think is quite genuine. It also may actually help him, in a strange way, in tactical terms.

KING: Much more of our conversation with Ed Henry, Karen Tumulty, and Jerry Seib after the break.

We will bring the debate home, the Supreme Court nomination of Sonia Sotomayor and the big health care reform debate.

Stay with us.

(COMMERCIAL BREAK)

KING: Los Angeles, California, there, a little traffic on the freeway, if I can see that just right. What a surprise.

(LAUGHTER)

KING: Once again, I'm joined by Jerry Seib, Karen Tumulty, and Ed Henry.

Let's bring the debate home and start with the nomination of Judge Sotomayor for the Supreme Court.

The initial conservative reaction was pretty harsh, most Republicans agree. Among those now commenting on it is former President George H.W. Bush, who jumped out of an airplane on Friday, God bless him, landed safely -- he likes to do that -- for his 85th birthday.

Then, he gave an interview with HLN's Robin Meade. And he was asked about the criticism of the judge. And he said this.

(BEGIN VIDEO CLIP)

BUSH: I think she has had a distinguished record on the bench. And she should be entitled to fair hearings.

I mean, she was called by somebody a racist. Well, that's not right. I mean, it's not fair. And it doesn't help the process to be out there name-calling. So, let them -- let them decide whether they want to vote for her or not, and get on with it.

(END VIDEO CLIP)

KING: Maybe the current president will send the former president a little thank-you note for that one?

HENRY: Absolutely.

I mean, I think he certainly put his finger on a problem for the Republican Party, which is, some of the conservatives got a little ahead of themselves at the beginning of the problem, certainly helped Judge Sotomayor, because it pushed, you know, some party elders, like the former president and others before him, to come forward and said, wait a second; this is not the direction to go. And I think it sets the stage for her that, barring some major development we don't know about today, it seems like she is going to be confirmed, because maybe they went a little too far in the opposition early on. It wasn't on the substance. It was personal. And it backfired.

KING: That sound right? Tough questions on affirmative action, tough questions about this Latina heritage and the frequency of her mentioning it in speeches and stuff, but anything out there that says trouble?

TUMULTY: Well, the virtue of having nominated somebody who has been on the bench as long as she has, who has thousands and thousands and thousands of rulings, and -- on her record, is that it is hard to take two, or three, or four statements that she's made in various settings and speeches, and sort of turn those into the kind of weapons against her that the Republicans originally tried.

SEIB: I think that's right.

And, you know, if this were going to be an appointment that was really going to radically change the ideological balance on the bench, then maybe the stakes would be higher, and maybe you might have more opposition.

But I think, in this circumstances, in which you have a liberal justice being replaced by a liberal justice, essentially, I don't think people are going to go to the mats for this one in the end, you know, unless something happens, as Ed said.

KING: Let's -- let's move on to this issue. It is on the cover of "TIME" magazine, where Karen works. And many of us in the news industry are covering this big debate. And there's a policy -- there are policy questions and political questions as we look into health care.

And one of the big questions in this debate is, can the president and the Democrats sell a so-called public option? You create a government-run, government-sponsored insurance program that competes against Aetna and Blue Cross and everybody else out there in the private sector.

Republicans don't like it. Here is the Senate Republican leader, Mitch McConnell, saying, it's a bad idea.

(BEGIN VIDEO CLIP, "FACE THE NATION")

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: I think that, for virtually every Republican, a government plan is a nonstarter. There are a whole lot of other things we can agree to do on a bipartisan basis that will dramatically improve our system.

But we already have the best health care in the world. We know it costs a lot, but we have the best health care in the world.

(END VIDEO CLIP) KING: But it's not just Republicans raising objections.

Earlier, in this room, we had Kent Conrad, a centrist Democrat, the chairman of the Senate Budget Committee. And he says he's not necessarily opposed to it, per se, but you need 51 votes to pass the bill.

(BEGIN VIDEO CLIP)

SEN. KENT CONRAD (D), NORTH DAKOTA: This really isn't, to me, a matter of right or wrong. This is a matter of, where are the votes in the United States Senate?

(END VIDEO CLIP)

KING: So, if you can't get -- he wants 60 votes. He doesn't think you should do this through the Senate budget rules of so-called reconciliation.

But if Kent Conrad is worried, Karen Tumulty, is a public option in trouble?

TUMULTY: Well, first of all, I -- in here -- in Senator McConnell's comments, you heard conflating a whole bunch of different things.

When people say a public option, a government plan, it can mean any number of things. And what Senator McConnell was talking about, which is a big government-run system like Canada and Britain, nobody is talking about that.

And even a government plan could look like many, many different things. And Kent Conrad himself has proposed an idea that would operate almost like a rural co-op system.

So, I think that, ultimately, there is likely to be some version of this somewhere in the bill, but I think it's going to be very watered down and it's going to look like a private insurance company that happens to be financed through the government, than some sort of big new version of Medicare.

KING: When the president goes to the AMA tomorrow, doctors groups skeptical of a public option, skeptical of government reaching in to its business, what is he going to say?

HENRY: Well, he's going to need to try to build on what I saw Secretary Sebelius say on your program at the beginning, which is that the administration understands they have got to keep the parts of the system that worked and fix the parts that are broken, because they have to counter that argument that the government is going to come here and take over a system that has flaws, but largely works for millions of people.

The 46 million who are uninsured, you have got to deal with that, as you have been talking about. But I think, politically, for the president, he's going to use a lot of political capital here, because, unlike the Supreme Court fight, where the Republicans can't seem to find their voice of opposition, very easy for the Republicans to rally and say, the government is going to take over.

Even if it's technically not right, it's a great issue to demagogue. They're already starting to do that. And then you have got centrist Democrats adding to the mix, saying, "We're concerned as well," as you had on your program.

So, that's a bad political mix for the president. He's got to make that argument that he's going to find that sort of middle ground, where there's going to be a public option, where the government doesn't take over your health care, but sort of comes in and helps the people who are falling through the cracks.

KING: What happened this morning, because the administration -- during the campaign, Senator Obama said, do not tax the benefits, the health benefits, the most of us get from our employees. He said that's a bad idea.

Then the administration said, you know what? It's going to be hard to pay for this, and we're using our money from the Bush tax cuts somewhere else, for deficit reduction. So, we're open to that idea. If that's what the Congress decides, OK.

Then, today, Vice President Biden and Secretary Sebelius saying, don't do it, pushing back again heavily on the taxation-of-benefits issue.

What happened?

SEIB: Well, this is about reassuring the middle.

And you have to reassure the people in the center who have insurance that the change won't take their insurance away. The president says it. When people hear about their benefits being taxed potentially by their employer, they think, well, that -- that's going to make my employer drop my health benefits.

That basically destroys one of the cardinal rules for -- of the Obama administration, which is, keep people who are happy with what they have got happy with what they will still have.

I think the interesting thing that is easy to overlook -- and those of us who were around in '94 should not forget this -- that much of the arguing now is about how to do this, not whether to do this. And that's an important distinction now.

The -- a lot of the posturing, and even some of the opposition, is designed to improve people's position within the negotiation, under the assumption something is going to happen this year, not because they think they can stop the train entirely.

That's a big difference. And I don't know where that leaves the train at the end of this year, but people think this train is still moving, even if they're unhappy with some of the direction.

KING: And do -- do the leaders in Congress pushing this like this relatively hands-off approach from the White House, saying, you know our broad principles, you guys fill in the blanks, or would they like, Karen, the president, who has a higher approval rating than they do, to take on some of the hard ones?

TUMULTY: At some point, the president is going to have to come in and be clearer about where -- where he stands in the weeds, in the fine print of this. But we're not at that point yet.

And, right now, they want him to go out and sell the idea publicly and come up -- and come up with the arguments against the demagoguery that's out there. But they want to work this out themselves.

HENRY: Because, on those points, your -- your diner conversation, you saw it right there, where people -- there was clearly consensus that something needs to be done. But, there, it's also clear that the American people are not fully engaged in this debate yet. They don't really know, what is the prescription here?

And, as you mentioned, the president's approval ratings are very high. That's where he can use his political capital now, engage the public. That what he plans to do in Chicago tomorrow, to say, here is the direction we need to go, because they know there's a problem, but they don't know how to fix it.

KING: We will keep watching.

Ed Henry, Karen Tumulty, Jerry Seib, thanks for coming in on a Sunday and helping us out.

Usually, we bring you news about the tough economy, hard times, tough choices, the uninsured. In a moment, we want to make you smile, something a little different.

We were in Orlando. The NBA finals happened to be there -- no coincidence. I will admit that one. We want to show you NBA players making kids smile for a great cause.

Stay with us.

(COMMERCIAL BREAK)

KING: Often in our travels, we report on sadness, people who don't have health insurance, people who are losing their jobs, factories shutting down, and communities changing.

This week, we wanted to also make you smile. We were down in Orlando, Florida. We were focusing on health care. But I'm a big basketball fan. And the NBA finals were playing there. There's Dwight Howard jumping there against Andrew Bynum. That's the tipoff right there in game three.

We were down there, and we wanted to see some basketball. There's Kobe Bryant, the Lakers in a huddle right there during a time- out. This is the ultimate goal, winning the Larry O'Brien Championship Trophy. I got to hold that up in Orlando. It was pretty cool. But we were at this event for this reason. They're not only playing basketball. They are participating in the NBA Cares program. Look at the smile on these faces. This is the NBA community service project. And what it does is, it brings reading and literacy into schools.

And thanks to the investment of the NBA and its partners, they opened a new reading center at an inner-city school in Orlando. And when you see this happen, you think, pro athletes, they're rich, they make money. Some of them, many of them, also want to make kids, not only smile, but succeed.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Blue and white!

UNIDENTIFIED CHILDREN: Yeah!

UNIDENTIFIED FEMALE: Blue and white!

UNIDENTIFIED CHILDREN: Yeah!

AHMAD RASHAD, HOST, NBA TV'S "FAN NIGHT": Today, we're continuing an NBA finals tradition by dedicating a new reading and learning center filled with new furniture, books, computers and so many other great resources to help the young people in this community succeed.

BILLY HUNTER, EXECUTIVE DIRECTOR, NBA PLAYERS ASSOCIATION: There is no player that I know any more about in the NBA who is more committed to educating and expanding the horizons of youth than Adonal Foyle.

ADONAL FOYLE, NBA PLAYER: Whether or not we think we're role models or not is irrelevant. I think the kids view us as role models.

You want to be a point guard?

You know, we owe it to them to kind of create a space where they can have a -- a childhood. I mean, a lot of these kids, you know, don't have the opportunity to have safe places to play.

I think, as a professor athlete, we have a moral responsibility to give back to our community, to give back to the people who have made our lives amazing.

DAVID STERN, NBA COMMISSIONER: And that's something that we understand, because, actually, as government becomes more limited in its resources, I think the private sector has to step up.

KING: The resources for this harder to define in difficult economic times? STERN: Well, so far, they're OK, but they will be harder next year, and we're just going to have to dig deeper.

J.J. REDICK, NBA PLAYER: We like to be engaged. We like to actually give our energy, interact with the kids, put a smile on their face. That's important to us.

As fun as it is for the kids and as -- as much joy as it brings them, it's even more fun for us.

FOYLE: These are the people that make our life what it is. These are the people that come to the game who scrape up every last cent they have to buy a ticket. And we have to remember that. We're connected. And these kids are the ones that is going to determine our future. We have to do what we can to help them and to get them on the right path.

(END VIDEO CLIP)

KING: A great visit with the players and some former NBA greats at that learning center. And the kids were great. And let's hope it helps them succeed in life.

We would like to welcome back our international viewers now to the STATE OF THE UNION report for this Sunday, June 14.

President Obama makes a new push for health care reform, but there are strong objections to his call for a government-sponsored insurance option, as well as concerns about the cost of his ambitious plan.

The health secretary, Kathleen Sebelius, is here to lay out the administration's case.

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