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STATE OF THE UNION WITH JOHN KING

Sound of Sunday

Aired October 18, 2009 - 11:00   ET

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


KING: I'm John King, and this is "State of the Union."

(BEGIN VIDEO CLIP)

KING (voice-over): It's 11 a.m. Eastern. Time for STATE OF THE UNION "Sound of Sunday." Thirteen government officials, politicians and analysts have had their say. The White House chief of staff, the chairman of the Senate Foreign Relations Committee and a trusted presidential friend and adviser. We've watched the Sunday shows so you don't have to.

We'll break it all down with Bill Bennett and Donna Brazile, the best political team on television. STATE OF THE UNION "Sound of Sunday" for October 18th.

(END VIDEO CLIP)

A direct message this Sunday from the White House to Afghan President Hamid Karzai. Move quickly to resolve the dispute over major election fraud.

(BEGIN VIDEO CLIP)

EMANUEL: There's basically two roads there or two basically processes. One is another runoff election, where between the two top candidates or a negotiation between those candidates. But the end result must be a legitimate and credible government to the Afghan people.

(END VIDEO CLIP)

KING: And the president's chief of staff is in full agreement with the leading congressional voice on foreign policy. The Senate Foreign Relations Committee chairman says President Obama should delay the decision on adding more troops in Afghanistan until that Afghan political crisis is settled.

(BEGIN VIDEO CLIP)

KERRY: It would be entirely irresponsible for the president of the United States to commit more troops to this country when we don't even have an election finished and know who the president is and what kind of government we're working with.

(END VIDEO CLIP) KING: Labor leaders who helped the president win last year's election don't like how the leading senate proposal pays for health care reform. One went as far to call the proposed fee on generous insurance plans a slap in the face to America's workers, but a top presidential adviser insists that's not the case.

(BEGIN VIDEO CLIP)

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER: Analyses of this have suggested otherwise, that the bulk of it is not going to hit middle class. This is a tax on insurance companies, a fee on insurance companies, on high-end policies and everyone agrees it will help lower the growth and health care cost.

(END VIDEO CLIP)

KING: One place you won't see a White House official this morning is on "FOX News Sunday." Some Democrats say the administration boycott as a risky strategy, but top presidential advisors defend it.

(BEGIN VIDEO CLIP)

EMANUEL: It's not so much a conflict with FOX News, but unlike, I suppose, the way to look at it and the way the president looks at it and the way we look at it, is it's not a news organization so much as it has a perspective and that's a different take.

(END VIDEO CLIP)

KING: As you can see, we've been watching all of the other Sunday shows so maybe you don't have to.

With me in Washington, Democratic strategist and CNN political contributor Donna Brazile. The host of "Morning in America" and CNN political contributor Bill Bennett. And from Boston, CNN senior political analyst and former presidential adviser David Gergen.

Thanks all for being with us this morning. Let's start with this irony, I will call it. And David, we'll go to you first since you're not in the room, that the massive election fraud in Afghanistan has somehow created this opening now where the White House believes it has more time to make the decision about Afghan troop levels, whether to increase Afghan troop levels. As you know, David, some conservatives have said this president is not being deliberative. Does this give him the space?

DAVID GERGEN, CNN SR. POLITICAL ANALYST: John, I think it may give him a couple of weeks while they try to get through this crisis of whether they're going to have another election or whether they're going try to put together a coalition government, but I must say I respectfully disagree with Senator Kerry if his point is we have to wait until we know who the new president is going to be and what the government's going to look like.

If they have another election, as the United States is urging, that election, it won't take place until some time in early November and it is widely believed that the results will not be counted until some time in January. To wait that long is to invite a total turnaround defeat in Afghanistan as General McChrystal has made clear. General McChrystal's report right in the beginning has said that time is of the essence, that we must reverse the momentum now and if the implications of this are we may wait as long as January, I just think that there's going to be an uproar to decide not to decide is to invite defeat.

KING: And Bill on that point, to decide not to decide as David put it to invite defeat, what is the window? How long does it give them? They're originally planning the end of October, first week or so of November.

BENNETT: Well, they certainly can't take as long as David described. I think David's right. I would put it even a little differently which is this whole argument about we have to wait for the resolution of who is in charge, why is that the case? Isn't the Taliban our enemy? Isn't al Qaeda over the border, coming in, being invited and urged to be our enemy? Wasn't this a matter of our security? Isn't that what the president said?

He had talked about this being a war of necessity and not a war of choice. It's now becoming not clear what choice he's going to take. Look, either side, Karzai, Abdullah Abdullah are on our side. They don't want us to leave. As another Kerry, Bob Kerry wrote in "The Wall Street Journal," no one in a responsible position is asking us to leave.

Finally, if the rationale that we shouldn't bring in more troops until all of this is decided because it's critical what kind of government they have, why do we have any troops there at all? They are changing the rationale for why we are in Afghanistan. What's really going on here is a dither, a big dither, indecisiveness. It is costly and it is going to get worse unless they make up their minds and lord knows I think they're going to make up their minds and pull out and not give McChrystal what he want.

KING: Donna, I want you to come in, but first, I just want to make clear by playing this bit of sound from the White House Chief of Staff Rahm Emanuel, it's not just Senator Kerry who thinks because of the political crisis, the president should wait. The chief of staff seems in full agreement of that theory.

(BEGIN VIDEO CLIP)

EMANUEL: It would be reckless to make a decision on U.S. troop level if, in fact, you haven't done a thorough analysis of whether in fact there's an Afghan partner ready to fill that space that the U.S. troops would create and become a true partner in governing the Afghan country.

(END VIDEO CLIP)

BRAZILE: Well, Rahm is absolutely right that we need a credible partner because if our troops, and they've done a great job over the last eight years -- if they clear the territory where the Taliban, you know, is clearly hiding or in charge, we need to have a credible government presence to help us hold that territory and to rebuild the kind of infrastructure you need to win the hearts and minds as General McChrystal has said of the people, the Afghanistani people. That's important. That's an important part of our strategy.

We are at an important crossroads and I don't think the president is going to recommend that we pull out, but what he must do is to convince a war-weary public that our continued engagement in Afghanistan is important to our strategic interest, to our national interest and of course to regional interests because Pakistan is involved.

This is not about dithering. This is not about indecisiveness. This is about looking at a comprehensive strategy and getting it right. We spent eight years. We didn't have a strategy for victory and now we're paying the price and this president is going to get it right.

KING: One thing it is about, I think we can all agree on is it is a snapshot of a presidential leadership. This is a big decision for any commander-in-chief. And this one comes at a time where some have been writing, as we've been talking for months here on this program, is he trying to do too much at once?

Now there's a theme that is he tough enough? Many people saying he needs to be like Lyndon Johnson, he needs to crack head. That question was put to David Axelrod, one of the president's close friends and closest advisers, this morning, is the president tough enough?

(BEGIN VIDEO CLIP)

AXELROD: I think if the president weren't tough, we wouldn't be where we are vis-a-vis trying to deal with the economy, two wars and so on. Remember, what he inherited here. He walked in the door. We had the worst economy since the Great Depression. He had to take immediate steps to pull us back from what many thought might be a Great Depression. He had to sort out in Afghanistan a war where we had seven years of drift and no policy and he's passed a series of things that are going to move this country forward from children's health care.

(END VIDEO CLIP

KING: David Gergen, for a president who as a senator was harshly critical of the last commander-in-chief for how he conducted the war in Iraq, for how he lost the support of the American people through a mismanagement of that war and through strategic decisions that candidate Obama and Senator Obama said were based on ideology and not on any national security interests, what are we learning about this president now?

GERGEN: I think we're learning to support part of what David Axelrod was saying is that he is bold. He has been willing to take on these tough challenges. He has taken on health care, something that so many other presidents have failed at. He's tried to re-engage in the Middle East, something that other presidents have found as a graveyard of their hopes.

So I think he gets high marks for trying big things, tough things, but the issue that is now sort of rattling around Washington, as you say, John, is he tough enough in the crunch when you've got to get the decision made, for example, to withdraw our missile defenses that George W. Bush had planned in Poland and the Czech Republic was widely seen as, well, that's part of a deal that he must have made with the Russians on sanctions in Iran.

And so it's probably -- it may be a very smart thing if we can get it cracked down on Iran. So we announced we're going to withdraw the missiles and lo and behold, we don't have any deal. The Russians sort of throw it back in our faces when Hillary Clinton goes over here in the last few days and says, we're not in favor of sanctions and the Chinese are backing out, too.

I think in international relations, just as at home, it is important for people to know that the president of the United States speaks with great authority and if you cross him or if he doesn't punch it through that you can, there's a power game and people begin to get a sense, they can roll you. And that isn't exactly where you do not want to be as president and I do think there is some growing danger of that perception setting in.

KING: Do you agree with that? John Bolton, the former U.N. ambassador, look, he's a conservative, he's a harsh critic of this president. Bill, he writes in "The Los Angeles Times" that he's no Harry Truman. He might not even be Jimmy Carter.

BENNETT: Well, I'm very worried about it. David cites the Czech Republic issue. But what about Maureen Dowd's column today? Vaclav Havel, why won't the president see the Dalai Lama? Because the Chinese government asked him not to see the Dalai Lama, the first president in modern history not to see the Dalai Lama. We read in The Washington Post yesterday that they're going to soften their posture toward Darfur.

You know, this is another example. My concern is not only that he's not tough enough. I don't think he's compassionate enough when it comes to real issues of human rights, take the issue of Iran. But I think the decisiveness is missing.

By the way, when people talk about failure in Afghanistan, Afghanistan is one heck of a lot better off than it was when we found it. As Christopher Hitchens said, this is one the first cases in history of a country being bombed out of the stone age. The Taliban were running that country, they are not running that country now.

Yes, there are questions of governance, and what government is going to be in power, but I take it by the very terms that the president laid out in March, this is still our war and our war to win. And we've got to win it.

By the way, Kerry said in your interview, I don't know if caught it, there was a lot going on, he said indecisiveness is very costly. It sure is, Senator, and President.

KING: All right. We're going to take a quick break. Donna Brazile, Bill Bennett, David Gergen, we'll be joined by more members of the best political team on television. We have a lot more to talk about, don't go anywhere.

(COMMERCIAL BREAK)

KING: We're back with CNN's Bill Bennett, Donna Brazile, and David Gergen. Also joining us now, national political correspondent Jessica Yellin, senior political analyst Gloria Borger.

You know, we have this hour so we can have some fun and so we can also dissect some of the great sound of Sunday. Here's something I find both interesting and perhaps a little fun. You remember Arlen Specter, longtime moderate Republican senator from the state of Pennsylvania. He's a Democrat now. He has a primary, which may explain why he is so anti-Republican, talking about health care.

(BEGIN VIDEO CLIP FROM "FOX NEWS SUNDAY")

SEN. ARLEN SPECTER (D), PENNSYLVANIA: On the Republican side it is no, no, no. A party of obstructionism. This is no longer the party of John Heinz and Mac Mathias and Lowell Weicker. You have responsible Republicans who had been in the Senate like Howard Baker and Bob Dole and Bill Frist who say Republicans ought to cooperate. Well, they're not cooperating. Bob Dole reportedly wouldn't even return a telephone call from a Republican leader who wanted him to back off. Take a look at the absence of any Republican plan.

(END VIDEO CLIP)

KING: Jessica, this is not only not your father's Oldsmobile, apparently it's not Senator Specter's old Republican Party.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Can you imagine if you played that clip for him 10 years ago, he would deny that he could ever be that person. I mean, it's a remarkable shift. But he is mouthing the Democratic talking points right now, which is, this is the party of no, the Republicans are the party of no, and it's because they've been very effective with their no and they're getting very strong.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: You know, he has got run to the left, so he's running to the left right now. He does have a primary in a state where the left is very left. So that's where your going to see Arlen Specter. You know, he is known, if anything, as a pragmatist, and that's exactly what you saw right there.

KING: Well, let's continue the conversation, but first, to be fair to the Republican Party, I want to bring in the voice of Senator Jon Kyl, the number two in the Republican leadership, who says, you know what, we have a lot of ideas, we're just in the minority, nobody pays attention.

(BEGIN VIDEO CLIP FROM "MEET THE PRESS")

SEN. JON KYL (R), ARIZONA: We've offered alternatives that do not rely upon a big government takeover and a public insurance company, but rather use the market that we have today, focusing on patients and trying to ensure that we can both bring down cost and increase access to care.

(END VIDEO CLIP)

KING: So, Donna, you want to say they're the party of no. They want to say, no, we're just the party of not what Obama wants.

BRAZILE: Well, let's look at what the American people want. The American people would like to see their premiums not rise each and every year, and they've already heard from the health insurance company -- companies that they will have an increase in premiums next year.

So the truth is, is that the Democrats now have a benchmark by which to come to an agreement. We're in the endgame now, and if the Republicans have any additional ideas to offer as amendments in an alternative, they should put it up now because Democrats are going to bring this to the floor pretty soon.

BENNETT: I've just got to pause on the Specter thing.

(LAUGHTER)

BENNETT: (INAUDIBLE), but there's some movie where the priest says, my son, your conversion is now complete.

(LAUGHTER)

BENNETT: But we are no longer the party of Mac Mathias and Lowell Weicker. Holy smokes!

BORGER: That has been that way for a long time.

BENNETT: I have got to stop going to the Reagan Library and go to the Weicker Center, where is the Weicker Center, by the way, where all of us conservatives gather? No, the conversion is complete. Kyl is absolutely right.

And you know, we would like to ask some other questions about the health care program, such as if it passes, will Congress subject itself to it? Why won't they do any tort reform in this? Why won't they let people buy health insurance in other states?

My question about the Baucus thing, and boy, it really was interesting with Olympia Snowe because now the focus is back on the Democrats, is the Baucus thing, the beginning -- or is it the beginning of the unraveling?

KING: I want to bring David -- David, come into the conversation. But first, I want you to listen. I was in Alaska this week, it's a fascinating state, has a new senator, Mark Begich, who replaced Ted Stevens, and Mark Begich is a Democrat. He is the former mayor of Anchorage. And he was talking about how difficult it is. He says the Republicans are winning by saying, you know, don't vote for what Obama wants. He says they're winning the message because the Democratic caucus is so complicated and diverse. Listen.

(BEGIN VIDEO CLIP)

SEN. MARK BEGICH (D), ALASKA: I think they're pounding away on that narrative. And obviously when you pound away, enough people, it starts to resonate. And I think we have -- as Democrats, we're so diverse in our caucus now. I mean, think about it. Here I am from Alaska. You take me and I'll go all the way over to Bernie Sanders from Vermont, and you're talking about a pretty wide extreme from either level, much different than the Republican caucus today.

And I think that creates its own friction and one of the challenges we have as Democrats is, what's our message? And how do we make sure that we're reaching the right message with what we're doing?

(END VIDEO CLIP)

KING: Are they reaching that right message, David Gergen, or are the Republicans at the moment winning the message war?

GERGEN: Well, John, they're making -- the Democrats are achieving momentum, as Donna says, in the Senate and the House, but they have not really cracked public opinion. A variety of polls show that the country is extremely divided. Some actually show more people are against this health care reform than are for it.

I want to go back to this question of where the Republicans are just for just a second. Donna, the tort reform -- the malpractice point that Bill Bennett brought up is actually very popular in the country. I think it would be a worthy edition.

But to Bill, the Republicans are having a hard time getting on the radar screen with the public about sort of something like malpractice, which is a winning argument for them, in part because there seems to be a vacuum of -- and voices on the Hill are not very strong, instead, they're drowned out by many of the conservative talk show hosts.

And has that not become a problem?

GERGEN: For Republicans, that they can't get their own message out about policy because they're so caught up in a lot of the -- the kind of dialogue and rhetoric of the -- of the conservative talk show hosts?

BENNETT: A quick answer, conservative talk show hosts, yes, God forbid that they -- they should be listened to.

(LAUGHTER)

But, no, I think it's a matter of priorities, the short answer. Look, first, stop the program that we think is going to do so much damage. Seventy-five percent of the American people, or 78 percent, like their plans. And a lot of people, especially the independents, which is one reason things are shifting, are very worried about -- about this stage.

Once you defeat this plan, then you can go forward with -- with plans. Coburn-Ryan is a plan. Even Wyden-Bennett -- you know, Bob Bennett of Utah and Ron Wyden, a Democrat, is a better plan.

BORGER: You know, why don't Republicans, then, if they really want to get something done on health care, call the White House's bluff and say, here are the six things we agree with you on; they're in your bill; let's get together, let's pass one health care bill; then we'll talk about the next.

Why don't Republicans do that? Because there is plenty of stuff that they can agree on, particularly on insurance reform?

BENNETT: Well, I don't think there are six things. There may be -- there may be a couple of things.

(LAUGHTER)

BORGER: OK, five.

BENNETT: But, no, I think -- I think you've seen that agreement; you've heard that agreement from a number of Republicans about the need to...

(CROSSTALK)

BORGER: No, but they haven't pushed it. They haven't gone out there. BENNETT: Because all the means, I think, are different, and because there is disagreement. There's -- there's not a unified...

(CROSSTALK)

KING: Quickly?

YELLIN: But Democrats had an important shift this week when the insurance industries came out with plans attacking this premium, saying that this plan is going to cost more. You heard the president go after the insurance industries. It was a gift to the Democrats. I think it will make momentum shift.

KING: When we shift, we'll come back -- outrage over bonuses on Wall Street. You're outraged. The White House says it's outraged, too. We'll talk the economy, when we come back. Don't go anywhere.

(COMMERCIAL BREAK)

KING: All right. We're back with our group. We're having a spirited discussion. Let's move on to the issue of bonuses. Obviously, a lot of big banks got money from the bailout funds, two in particular. Citibank got $45 billion. It paid out, this past week -- said it would pay out some $5.5 billion in bonus. Bank of America gets $45 billion in your money, taxpayers' money, says it will pay out $3.3 billion in bonuses.

When you travel the country, trust me, people use very foul language when this subject comes up. I put the question to the White House chief of staff, Rahm Emanuel, this morning. Shouldn't people be angry?

(BEGIN VIDEO CLIP)

EMANUEL: I think the American people have a right to be frustrated and angry, in this sense. When the financial markets and the financial system had frozen up to a point that, literally -- one of the reasons the economy was literally going toward a depression.

(END VIDEO CLIP)

KING: He went on to say these same Wall Street industries, Jessica, are now fighting the regulatory reforms that the administration says are vital.

YELLIN: That's right. And after Rahm was on your show, one of his aides e-mailed me to say, we want to make the point even stronger. They want to say that they find it, quote, "outrageous that these same banks were bailed out by the American people and are now spending all this money on lobbyists to kill the consumer agency."

The bottom line is this administration is going to try to shame the banks into controlling their bonuses. They don't have very much power to force it. They have to shame them, and then use that as momentum to get these financial regulatory reforms through Congress, in an election year, which will be a very popular piece of legislation, they hope.

And unlike health care reform, where the president sent principals to the Hill, the Treasury Department has sent 618 pages of actual legislative language to the Hill, saying, "This is how we think. Wall Street needs to change. These are the protections we think consumers need."

I had a meeting at the Treasury Department this past week, and they've made it clear that this is their key issue, going forward, and that they are going to be very specific with both House and Senate about what should be in this bill.

KING: Well, let's talk about the power of the anti-bonus message, but I also do want to note, for the record, the administration now voicing outrage. Remember back, months ago, when there were some in Congress who wanted to put restrictions on bonuses in legislation. It was the same administration that said you can't do that.

BORGER: Right. And the president -- it's interesting the e-mail used the word "outrageous." Because it's the same word the president used after the AIG bonuses... YELLIN: Right.

BORGER: ... came out, and -- and the president, you know, stirred up something in Congress which still sits there, because it was unconstitutional to stop these -- to stop these bonuses from being issued.

(CROSSTALK)

KING: But, David, if you're working in a White House, as you have, and you think you're doing the right thing -- and, obviously, the Dow's gone up, and that's a good thing, but unemployment's also going up, and then the bonuses are going on -- as an administration, how do you deal with the mixed message of the economic data, if you will, when you understand that it affects your political standing, whether it's your doing or not?

GERGEN: Very carefully. Very carefully.

(LAUGHTER)

This is a delicate matter. There's a balance to be struck here. If the administration allows the populism, it's there, and -- and these banks may think they're home free, but they're still on probation with the American people, as you found, John. And there's a lot of -- a lot of populist anti-bank sentiment still out there.

The administration wants to make -- should want to make sure that doesn't go too far, in regulations that are excessive, that in effect, dampen the competitive capacity of the American financial system.

At the same time, they've got to make sure that these banks don't act irresponsibly. And I think the idea of shaming them into, sort of, showing self-restraint has some merit to it.

I think what Rahm Emanuel said, I thought -- I thought was pretty measured, today, because he's -- if the banks -- you know, Goldman Sachs, now, is sitting on a ton of money, but a Bank of America and Citi and Morgan Stanley and JPMorgan -- if they all, sort of, engage in large-scale bonuses now, just after this, when Main Street is still hurting so much, it's going to deepen the divide between Wall Street and Main Street in ways that could come back and really hurt Wall Street.

And this is extremely important to the financial future of the country.

KING: I want to bring Bill and Donna in on this point, but as I do, I want to reinforce David's point about Main Street and how there's a disconnect.

I was in Alaska this week. I went to a job training center in Anchorage. The unemployment rate there is now 8.4 percent. And one of the problems they have is, not only are there no jobs in Alaska, but they say that people from other states, where the unemployment rate is higher -- 15 percent in Michigan, for example -- are coming to Alaska because they think there are jobs there.

Listen to Brad Gillespie. He runs that job training center.

(BEGIN VIDEO CLIP)

BRAD GILLESPIE, ANCHORAGE AREAS ALASKA JOB CENTER: Just last week, one of my staff said that we had an R.V. pull into our parking lot here, and a family of 10 got out, and the parents came in straight from the highway and started looking for work through the job center.

GILLESPIE: And that's a tough way to come to Alaska when you don't have anything lined up and particularly with us headed into the winter season.

(END VIDEO CLIP)

KING: So you have Americans who will get in their RV and drive from the lower 48 to Alaska looking for work and they pick up a newspaper and the banks that got their tax dollars, six or eight months ago are now handing out bonuses.

BENNETT: Well I think something needs to be said, you know often said about people in Washington you should get out and you get out of these features which is a good thing. Some of the folks on Wall Street need to get out too and hear this, listen to this. Now I think I'm not one for a whole lot more regulations out of Washington on this and one of the things I do is I talk sometimes to these boards on Wall Street as others here do. They are in shock and not awe. Shock and disappointment and anger at Obama. They just can't believe how they're being vilified by them so they're going make this their number one priority, too.

But they had a lot of neighborly and priggishness that we saw on display last year, and they can behave a little better within their own rules, they can set better rules themselves, it seems to me and be more comfortable. Nevertheless, there are contracts and there are reasons why you pay people bonuses and one of them has to do with increasing the return which is also a return of America.

BORGER: But how about paying them salaries?

BRAZILE: And why not use any additional money to provide jobs by lending the small businesses that we all know will create jobs if they're given money from these banks.

My problem with giving the banks a lifeline, John, is that they didn't extend the same line of credit to the American people, to mom and pop on Main Street, the people that you visit each and every week.

This is what the administration and the Congress forced these banks to do because we still have a lot of leverage with the TARP money that is still available and still out there and they still owe us.

They still owe the American taxpayers this money and let me just say one other issue and this goes on credit cards. I pay my credit card bills every month because I know these banks, they're greedy, but they are now raising fees and interest rates because they know Congress has put the damp on them being able to do this. And they say well we need 15 months to get our system together. But they're already increasing the rates. That is absolutely wrong. Main Street should revolt. They should tell the administration and Congress to act now to curb these excesses on Wall Street.

YELLIN: And they're spending a huge amount of money on lobbyists to keep these rights so that they can keep increasing the rights.

BRAZILE: The American people should revolt.

KING: The American people might need a better lobbyist. We're going to take a quick break. When we come back, we're going to talk more politics. And get this, if you look at the polling right now, Secretary of State Hillary Clinton has a higher favorability rating than President Obama. Does that mean anything? We'll be back.

(COMMERCIAL BREAK)

KING: I'm John King and this is "State of the Union." Here are stories breaking this Sunday morning. A suicide bomber strikes in Iran. At least 29 people are dead including the deputy commander of the elite revolutionary guard and four other top commanders. It happened today in the southeastern city of Sarbaz. The speaker of Iran's parliament blames the United States for the bombing, but the State Department says the accusation is completely false and it is condemning that attack.

Pakistan's military says it killed at least 60 insurgents in its massive ground operation against the Taliban. This is day two of that offensive. It's taking place in the tribal region of south Waziristan, the power base for militants operating in the tribal region.

The sheriff in Larimer County, Colorado, says he expects criminal charges will be filed in the so-called runaway balloon saga. He's holding a news conference at 1 p.m. Eastern. CNN will carry that event live and then "Fareed Zakaria: GPS," "Amanpour" and "Your Money" will be seen in their entirety. Those are your top stories here on STATE OF THE UNION.

Back now with our panel, Jessica Yellin, Gloria Borger, Bill Bennett, Donna Brazile, and David Gergen joins us from Boston.

Let me tell you at home, you wish you could listen in during the breaks. It's very interesting. All right, let's have a little fun here. We have enough time. Let's talk some fun. New polling out this week, a little then and now. President Obama, his former rival and had now his Secretary of State Hillary Clinton. Back in January, the president's favorability rating was 78 percent, stratospheric. Secretary Clinton was 65 percent. Fast forward to now, the president at 56 percent, still not bad, but down quite a bad. Secretary Clinton, 63 percent. She did a number of interviews about very important subjects, don't get me wrong. She talked about Iran, she talked about the Middle East, she talked about her travels overseas. But she was also asked about NBC's Ann Curry, what about an election down the road?

(BEGIN VIDEO CLIP)

ANN CURRY, NBC NEWS CORRESPONDENT: Will you ever run for president again, yes or no?

HILLARY CLINTON, SECRETARY OF STATE: No.

CURRY: No?

CLINTON: No, no, I mean this, is a great job. It is a 24/7 job and I'm looking forward to retirement at some point.

(END VIDEO CLIP)

KING: David, let me start with you. Do you take her at her word this she'll never run for president, no?

GERGEN: I don't think so. It's inconceivable at this point, but I must say, Gloria will remember this, in these polls, I remember when Colin Powell was a lot more popular than George W. Bush and we had a little fun with it on television. But it also caused Colin Powell some problems in the White House. People over there weren't terribly appreciative of the fact this he was more popular than the president and made governing a little tougher and created some, you know, some rift there. I just -- I just say that, I don't know whether we'll see that yet or not, but I can tell you that it caused problems back then.

BORGER: Except lots of people in the White House now, David, are former Hillary people, too. Most notably the chief of staff.

GERGEN: There may be somewhat fewer number of those by the end of the first term.

BORGER: Right. But it's interesting because I do think in terms of their relationship, at least, Barack Obama and Hillary Clinton, from everyone I've spoken with both in the White House and Hillary Clinton people, the relationship itself is closer than anybody ever thought.

And that I'm told that at a meeting with other cabinet members, the president pointed to Hillary Clinton as sort of the model cabinet member. She's doing a brilliant job. This is the kind of cabinet member we need. It's just -- this relationship has evolved so tremendously, and I believe she's also popular because she knows her job.

KING: Let me ask from your perspective, Bill, she is so polarizing...

BENNETT: I'm deeply moved.

KING: For her, whether she runs again or not, she was such a polarizing figure and the arch enemy of conservatives. In this job, how she's handled herself in the cabinet, is she making a positive impression? BENNETT: I don't think she's making enough of an impression. I see the interviews. I just wish we actually heard more from her of a decisive nature.

BENNETT: I wish she spoke as clearly as she just did and answered that question, where she said no about other things.

I wish she'd get the president to meet the Dalai Lama, wish she'd speak out about Iran like she did during the campaign, and speak out on other things. She's got strong views, and my guess is, views probably closer to some of us than Obama's.

BRAZILE: Well, clearly, if you look at the polls, one of the reasons why she is doing better in the polls is because 35 percent of Republicans support the job that she's doing. She's an asset to the administration. She's done a lot of work and improved our relations with other countries and strengthened our ties. So I would hope that the president, in the coming debates on Iran and Afghanistan, would use her more.

YELLIN: But, remember, when Senator Clinton came into power as the senator, she was quiet for the first year. She kept her head down. She learned how it works, and then she started emerging and became very forceful.

This is how she does it. She sits; she focuses, and then she starts speaking out. We'll hear more from her.

BORGER: And, you know, you can't say that it's not right to have a public debate on Afghanistan with all these leaks of General McChrystal's report, et cetera, and then say that Hillary Clinton should be out there, talking to us about what she believes. Because I think she's, kind of, old-fashioned enough to believe, having been at the White House once before, when her husband was president, that those debates ought to stay in the room.

BENNETT: She can explain it to him privately, but strongly.

BORGER: Don't you think she does? Don't you think she does?

BENNETT: I think she's got a strong personality; that's what I think.

(CROSSTALK)

BENNETT: And I think she could make her...

(CROSSTALK)

KING: Come on in, David. I know it's hard when you're not in the room. Jump in.

(CROSSTALK)

(LAUGHTER)

GERGEN: No, what I -- I want to come back to what -- Gloria is right on Afghanistan. She needs -- the debate needs to be more inside the room than it has been. But I think Bill Bennett's point is well taken, that she has been very muted as secretary of state, and that she has not been what many of us expected.

I think she's been very close to the president personally, but she has not exercised that sort of a strength that comes with being the chief foreign policy spokesperson for the administration.

(CROSSTALK)

GERGEN: Much of that conversation has been reserved to the White House.

The people who have taken the lead have been basically the president and, more recently, Jim Jones on Afghanistan. And this -- she, as secretary of state, has not been in the more traditional role we look to, for a George Shultz, say, or a Jim Baker or a Henry Kissinger, who's out there on the front line, helping to formulate and is the architect of American foreign policy. That has not come through yet.

KING: All right. We need to take a quick break. And I want to note for the record, as James Earl Jones would say, this is CNN.

(LAUGHTER)

But, up next, a special extended lightning round: the White House versus Fox News.

BENNETT: It's not the same.

(LAUGHTER)

KING: No, it's not.

(LAUGHTER)

(COMMERCIAL BREAK)

KING: All right. We'll call this an extended version of our traditional lightning round. We'll give our players here a little bit more time than normal because we want to discuss an interesting subject.

Normally, in this hour, we play for you sound not only from our program but from other Sunday programs. At this moment, I want to give you not a guest on another program, but listen to one of the anchors.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, HOST, "FOX NEWS SUNDAY": This week the Obama White House turned up the heat on Fox News. Communications director Anita Dunn called us, quote, "opinion journalism masquerading as news." We wanted to ask Dunn about her criticism, but as they've done every week since August, the White House refused to make any administration officials available to "Fox News Sunday" to talk about this or anything else.

(END VIDEO CLIP)

KING: Donna Brazile, you're an analyst here but you're also a leading Democrat and a Democratic strategist. Why does the White House want to pick this war?

BRAZILE: Well, John, I don't always agree with the White House. And on this one here I would disagree. Look, I understand that Fox has, you know, a very opinionated show. I made the rounds before becoming an analyst and contributor here at CNN, and I used to enjoy going on Fox because, after I did that round of fighting, I would come on CNN and feel like, oh, I can take a bath now.

(LAUGHTER)

But the truth is that the White House is, I'm sure, tired of the falsehoods, the lies, the smears that's been going with that network, and they've decided not to play.

KING: Smart, Bill?

BENNETT: No, not smart. Was it Mark Twain who said don't get into fights with people who buy ink by the barrel?

Also, having the spokesman do this, attack Fox, who says that Mao Zedong is one of the most influential figures in her life, was not...

(CROSSTALK)

BENNETT: No, it isn't. It isn't a small thing; it's a big thing.

(CROSSTALK)

(UNKNOWN): ... she is quoting Lee Atwater.

BENNETT: No, she was not quoting Lee Atwater. Lee Atwater had quoted Mao Zedong on a point, negatively...

(UNKNOWN): She was being ironic.

BENNETT: She was not being ironic. Read the speech. If you read the whole speech you will see... BRAZILE: I have it, actually.

BENNETT: ... two major influences in her life, Mother Teresa and Mao Zedong.

Now, look, I am not a right-wing nut, and when people go after Obama and say "socialism and Marxism," I say, take it easy, you know, calm down. But when she stands up, in a speech to high school kids, says she's deeply influenced by Mao Zedong, that -- I mean, that is crazy.

(CROSSTALK)

BRAZILE: She cited him.

(CROSSTALK)

KING: David, I want you to jump in here, and I want you first to listen to Rahm Emanuel. I asked him about this, this morning. I said, "Why?" Here's what Rahm says.

(BEGIN VIDEO CLIP)

EMANUEL: Well, it's not so much a -- a conflict with Fox News, but unlike -- I suppose, the way to look at it, and the way the president looks at it and we look at it, is it's not a news organization so much as it has a perspective. And that's a different take.

(END VIDEO CLIP)

KING: If you take that, it's not a news organization; it has a perspective -- that's their view -- why not get their voice into the debate on that network?

GERGEN: Well, cut two or three things. First of all, I sense that maybe Rahm Emanuel was trying to gently walk back from this fight today. You know, he's very pugnacious, as we all know. He's very colorful in his language when he wants to be. He chose his words very delicately to not create a headline.

I think they realize they've gotten themselves into a fight they don't necessarily want to be in. I don't think it's in their best interest. I totally agree with Donna Brazile on that.

But where they go from here, I'm not sure. I -- from my perspective, the faster they can get this behind them, the more they can treat Fox like one other organization, the easier they can get back to governing, and then put some people out on Fox.

I mean, for goodness sakes -- you know, you engage in the debate. What Americans want is a robust competition of ideas, and they ought to be willing to go out there and mix it up with some strong conservatives on Fox, just as there are strong conservatives on CNN like Bill Bennett.

GERGEN: They need to be mixing up, because that's what produces -- that's what creates our public understanding and public enlightenment, a fair, honest, a vigorous debate about issues and stay away from the personalities. Dwight Eisenhower taught a long time ago, when you have a disagreement with people out there, don't get into the gutter with them and get into a pissing contest with them because you'll wind with up at the White House getting hurt. BORGER: You know what, I think it's a really risky strategy for them, but I think in the end what's going to happen is they're just going to pick their spots they appear on FOX. Will they go on Glenn Beck? Probably not, OK? Will they go on Sunday morning on Chris Wallace? Maybe they will eventually.

YELLIN: Eventually.

BORGER: I think it's sort of --

KING: During the campaign he sat down with Bill O'Reilly. That was the way they brokered a truce.

BORGER: He certainly did and it was probably good for Obama to do that.

YELLIN: FOX got a few heads. FOX went after a few administrative officials and they had to resign. And I think the White House, administration, was very angry, upset, and wanted to draw a line in the sand. They pushed back.

KING: If there were grounds for them to resign, is that FOX's fault?

YELLIN: Well, no, but the administration caved to some extent. They also saw the politics of it. They were very angry.

BENNETT: Are we going to drop MSNBC, even occasionally CNN? I mean really, are they going to cleanse the networks? Which is the network here which is perfectly objective?

BRAZILE: But you know, FOX has also dropped the administration, they have refused to cover some of the president's speeches.

BENNETT: They're conservative, there's no doubt about it.

BRAZILE: So let's not give FOX this halo effect.

BENNETT: They admit it, unlike the other guys.

BRAZILE: No halo.

KING: No halo here, just some fun Sunday discussion. David Gergen, Jessica Yellin, Gloria Borger, Bill Bennett, Donna Brazile, thank you all so much. When we come back, we go outside the Beltway to Wasilla, Alaska. Do you remember the name of that town? We have this week's diner discussion on the economy, health care, and the check of President Obama's job performance, the president's job performance, not the former mayor's -- so far.

(COMMERCIAL BREAK)

KING: Alaska was our travel stop this week, our main mission to look at the economy. But as you know, we're always on the lookout for a good meal and good conversation. For that, we decided to go to a small city that became famous during the presidential campaign. Wasilla, Alaska, is the hometown of former Governor Sarah Palin. We should note nearly 20 percent of Alaskans lack health insurance and look at this, Lyndon Johnson was the last Democrat to carry the state. That was back in 1964. So as you can tell, it's a conservative state and a place where folks are more than a little skeptical that Washington, D.C., has all the answers.

We got a good taste of that at Wasilla's Matsu Family Restaurant, along with a great halibut sandwich.

(BEGIN VIDEOTAPE)

KING: How is the economy doing here? The unemployment rate in Alaska has gone up a little bit, still behind the national average but starting to creep up. Are you worried about that?

ZINA EGBERT, OWNER, MATSO FAMILY RESTAURANT: Of course, yes, I'm worried.

KING: Does it affect the business?

EGBERT: Yes. Before we had more business. Right now a little bit is down because people don't have enough money to pay, you know. We try to save prices down, put more money because people don't have money to eat. I'm upset because a lot of people don't have a job. People come for job and ask like 50 people I have applications every day almost. I feel sorry for people that do have kids.

DAVID NEWLON, NORTH SLOPE OIL OWNER: UNIDENTIFIED MALE: I'm doing really well, but I have lots of friends that have lost their jobs. I work on the slope and there's -- it's pretty much a downturn up there. There has been quite a retraction up there. I always -- Alaska always has a lag, a two or three-year lag. I think we're just starting to see this lag, this winter is going to be a lot tougher than last winter.

KING: Should the government be doing more? There was a stimulus plan right after Obama became president. Some people liked it, some thought we couldn't afford it. Is it time to do more on that front or just let the thing run its course?

DAN KING, SEMI-RETIRED: I think the stimulus package I think obviously helped a lot of people, but I think it's short term. I think long term the government needs to let the economy take care of itself.

KING: While we're on the point of what the government should do, there is a big debate in the town I work in right now about national health care reform. Do you want Washington to help you here, lower the costs, regulate insurance companies, talk about preexisting conditions, or, again, should that be a state by state issue or for you to fight out with insurance companies?

NEWLON: I'd rather have it state by state. I don't believe New York knows what Alaska needs or Alaska knows what Virginia needs or Alaska knows what Michigan needs with 20 percent unemployment. D. KING: Why do we always have to reinvent something for the population? Congress has a health care plan that they subscribe to. What's wrong with the whole country subscribing to that health care plan? Or take the VA? The VA has a great health care system. There's a lot of people that don't understand it maybe, but once you get through the red tape and get into the health care system itself, it's second to none. And why do we need to reinvent it? Let's adapt it to make it work for everybody.

KING: Do you have health insurance?

EGBERT: I have on the business.

KING: How are your costs? Going up?

EGBERT: Too much money, we pay a lot, $25,000.

KING: Obama didn't win this state, obviously. But about nine months in, how is he doing? Disappointed? Surprised? About what you expected?

EGBERT: I don't see nothing too much changed.

KING: You don't see change.

EGBERT: We have to wait a couple more years.

NEWLON: I'll be honest. I'm no fan. I think Obama, his view is that the government can do it better with greater oversight, and I just would prefer less government is better government. And I don't agree with some of his views on a lot of issues.

D. KING: I was excited when with he was elected and he's our president, and I think we should support him. And I have, but I am starting to question some of the things he's doing, especially in our role as a leader in the world. He doesn't want to be seen as the leader of the free world. He wants to be a part of a consortium that leads the free world. And I don't know if that's the right place for us to be, at least right now.

(END VIDEOTAPE)

KING: A great meal and a great conversation. We're told when the famous Sarah Palin stops in her hometown restaurant there, she gets the French Dip sandwich.

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