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STATE OF THE UNION WITH JOHN KING

Interview With David Axelrod; Interview With Orrin Hatch, Robert Menendez

Aired January 24, 2010 - 09:00   ET

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


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

(BEGIN VIDEO CLIP)

KING (voice-over): A stunning loss for Democrats puts President Obama's agenda at risk.

PRESIDENT BARACK OBAMA: We had a little bit of a buzz saw this week.

KING: Can he reconnect with angry Americans? We'll ask the president's top adviser, David Axelrod.

Two influential senators on what happens to health care and other issues in this new political landscape. Republican Orrin Hatch from Utah, and the man responsible for keeping a Democratic majority in the Senate, Robert Menendez of New Jersey. And 50 states in 50 weeks. Our "American Dispatch" looks up close at economic anxiety and the people coast-to-coast whose frustration with the pace of change is again reshaping the political landscape. This is the "State of the Union" report for Sunday, January 24th.

(END VIDEO CLIP)

KING: We have a lot of things to talk about this Sunday. A president who for a year insisted on sweeping health care reform is now opened to a scaled down version as long as it meets what he calls core goals. A White House that for years opposed creating a powerful congressional panel to fight deficit spending is now asking for just such a commission ASAP.

A Fed chairman who days ago had an easy path to Senate confirmation now faces speed bumps at a minimum on his route to a second term. And a Republican Party that a year ago seemed beyond lost is full of energy and optimism thanks to rising doubts about the Obama agenda, and to voters in the last place you would probably think of looking for signs of a Republican resurgence, Massachusetts.

If you are a cynic who thinks elections don't matter, think again. The economic anxiety and political disaffection that made 2008 such a historical election year are again front and center, big time. The pendulum of change that swept Barack Obama to victory 14 months ago swung back this past week and thumped the president and his party like a two-by-four. We know this, year two of the Obama administration will be different from year one. For a better sense of just how, let's bring in the president's top political adviser, David Axelrod, who joins us from Chicago. David, a lot to talk about in the wake of the big Massachusetts election. But I want to start this morning with some breaking news. There's a new audio tape in which Osama bin Laden claims credit. He says al Qaeda was responsible for that attempted jetliner bombing back on Christmas Day. Does the administration have intelligence that traces this attack back to bin Laden? AXELROD: Well look, I can't confirm that, nor can we confirm the authenticity of the tape. But assuming that it is him, his message contains the same hollow justifications for the mass slaughter of innocence that we have heard before. And the irony in the same of Islam, he has killed more Muslims than people from any other religion. He is a murderer. And we are going to continue to be on the offense against bin Laden, against al Qaeda, to protect the American people.

KING: Let's bring the debate back home. The president late Saturday endorsed the idea of a very strong congressional commission that would have the power to look at the federal spending, propose new efforts to reduce deficit spending. And this could include tax increases. I want to ask you a question, but first I want to remind the American people of a promise candidate Barack Obama made in the 2008 election. Let's listen.

(BEGIN VIDEO CLIP)

OBAMA: I can make a firm pledge under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.

(END VIDEO CLIP)

KING: David Axelrod, if such a commission comes about and if its recommendations include paying for everybody, including tax increases that would be in violation, in contradiction of that pledge from 2008, would the president go to the American people and say I am sorry I need to go back on that promise because this problem is deeper than we thought?

AXELROD: First, let me say that the president has kept his pledge, John, as you know. Middle class people are getting killed in this economy and are working harder and harder for less. Many have lost their jobs. There is a sense of economic insecurity out there. And so that's why the president cut taxes for the middle class, cut taxes for small businesses last year.

We are going to continue that in the current budget. And I am not going to prejudge what any commission would do. What the president is saying, however, is that in the -- we do have to do everything we can in the short run to stir job creation, to see the economy grow, but in the mid to long term, we have to deal with these deficits.

When President Clinton left office, we had a $237 billion surplus. When Barack Obama took office, he was handed a $1.3 trillion deficit, and a projected $8 trillion deficits for the following decade. So we have to deal with this and it has to be done in a bipartisan way. We can't play games with this and we want to sit down in a constructive way and approach this problem.

KING: You say you can't play games with it. If the president supports such a commission, which he now does and he is calling for Congress to enact it, is it fair to say that he would not then say never mind if the commission recommended some painful things including some things that violated that pledge?

AXELROD: Whatever the appropriate approach is, the president is going -- will be straight up with the nation about it. But I am not going to -- that's part of the game, John, that Washington plays, which is would you, might you, so on and so forth. I am not going to do that here.

Let's wait and see, first of all, if there is such a commission, because it's a proposal that hasn't yet been embraced by the Congress. But let's see what a bipartisan effort to deal with these deficits will produce. And by the way, if anybody has a plan to do this without raising any taxes on anybody, you know upper income or lower or below, then they should come forward with it because nobody wants to raise taxes.

KING: You call it the Washington game, part of what you call the Washington game is after a tough election like you had last week in Massachusetts, is to say what must we have here? Some White Houses in the past have had big shake ups. You have decided in the Obama White House to give a bigger role to David Plouffe, who was your partner in the Obama campaign. He will NOW take a big role outside of the White House, but keeping a closer eye on public opinion, a closer eye on the governors and Senate and House races across the country. There are some, David, as you know, who are saying what about inside the White House? Shouldn't we have a shake-up there? This is an administration, some say, that has been too deferential to Congress in crafting policy, and some would even say, too close with Wall Street and not close enough with Main Street. Do you need to shake up your inside team?

AXELROD: Well, first of all, let me say you're right, that is part of the Washington game. Washington loves to throw out a body. There is nothing that gets Washington more excited than the prospect of somebody losing their job. The fact is that we've got a wonderful group in the White House, they are working really hard. And David is value added, we love him and he has been off writing a book for a year. We are happy to have his talents back with us on a more regular basis.

KING: David Plouffe, who you just mentioned, will take this bigger role, wrote an op/ed essay in the "Washington Post" today where he talks about what Democrats need to do in this midterm election year to get things done. He said you need to make the tough choices, that you need to do the things you promised to do in the last campaign. One of the terms he uses, he says, no bedwetting. The Democrats need to be bold enough to make tough decisions. No bedwetting, he says. As you have seen in the past 48 to 72 hours, a number of Democrats have come out against the confirmation of Ben Bernanke. He's the Federal Research chairman. He came over from the Bush administration, but President Obama thinks he's done a good job and wants to give him another term. All of these jitters, all of this sudden opposition from Democrats -- David Axelrod, is that bedwetting?

AXELROD: Well, I think there is obvious concern about what we just talked about. There is a great deal of concern about public consternation relative to the financial sector. Consternation, by the way, that we share, but understand that Chairman Bernanke offered very strong and steady leadership during this crisis without which we also may have slipped into the abyss and we are still in a fragile state here though the economy is growing. And we need his leadership. And the president is very confident that the chairman will be confirmed.

KING: What is his message to Democrats who are saying in the wake of Massachusetts, in the wake of this rising economic anxiety, I can't do it?

AXELROD: Well first of all, he has not had that many of those conversations. The readings he is getting from his conversations are that Chairman Bernanke will be confirmed. But he would say to them what I have said to you, which is that he has been a very steady hand in this crisis. He has taken initiatives that have been very important in terms of stabilizing the economy. And we need his continued leadership.

KING: Much more to talk about with the president's top adviser, David Axelrod, including the upcoming "State of the Union" address. And when we come back, we'll put some of the questions from people we have met in our travels the past year to Mr. Axelrod. Stay with us.

(COMMERCIAL BREAK)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: The truth is, is this job is a little confining, and -- and that is frustrating. I can't just go to the barbershop or sit in a diner.

(END VIDEO CLIP)

KING: We're back with senior presidential adviser David Axelrod.

You heard the president right there. That was his town hall on Friday. David, when you came to Washington, we talked a lot about this. You're not a Washington guy. You were elected to come yourself, and you said you had to find a way to keep the president from getting held hostage in the bubble.

I want to bring you just a question now. I want to show something to you and bring you a question from our travel, because the president voicing frustration at a time when his standing on the economy -- we'll show you some poll numbers here -- has dropped considerably.

One of the people we met in our 50 state travels this past year was in his home state of Illinois. We met Maribeth and John Feagin a few months back when they were both laid off, a husband and wife, on the same day from the Caterpillar plant in Peoria. We asked Maribeth if she had a question, and this is it.

(BEGIN VIDEO CLIP)

FEAGIN: They said, too, that, you know, they were going to have jobs created and things were going to get better. And you're still looking at your unemployment rate, and it really hasn't changed much. And it's like, you know, when is it going -- when is it going to come around for the rest of us?

(END VIDEO CLIP)

KING: "When is it going to come around for the rest of us?" is her question. And I should note, her husband, David, volunteered to go back into the Army so that he can feed his family. He's about to be deployed overseas. What do and the president say to a family like that who say, "Where are the jobs?"

AXELROD: Well, look, I hear this when I get out of town, and I -- I -- I hear this all the time, and it's completely understandable.

Look, John, a year ago, I said to the president, a year from now, your numbers are going to be much different than they are right now because of the economic forecast that we were hearing. And we knew that, even as the economy started growing, it would take time for the jobs to follow. That's the nature -- nature of the economy.

But understand that, in this recession that began at the beginning of 2007, we've lost 7 million jobs. Now, the Recovery Act the president passed has created more than -- or saved more than 2 million jobs. But against 7 million, you know, that -- that is -- it is cold comfort to those who still are looking.

And so we have a big problem. And we -- believe me, the president is working on that day and night. And you'll hear in the State of the Union his -- some of his ideas about additional steps that we can take to help create and stir hiring around the country.

KING: As the president prepares to give that speech -- and we certainly will listen to it -- CNN is going to spend this next week -- we call it stimulus week -- we're going to look at the president's proposal, we're going to look at the implementation, and we're going to bring people stories from all across the country on where the money is being spent, whether it's creating jobs, and that big debate.

I want to share with you this morning what I find to be a pretty stunning poll number: 56 percent of the American people in our new polling now oppose the stimulus plan the president put forward last month. That as a result, of course, as you know, many of them don't feel like it has created jobs. One of the places we visited this year was a rural county, Jefferson County, Mississippi, largely African-American, high unemployment, well above the national average. When we were there, they said we hope there's stimulus money coming. I want you to listen right now to the county administrator.

(BEGIN VIDEO CLIP)

BUCK: Hi, I'm Brenda Buck, county administrator, Jefferson County, Mississippi. My question is, during the stimulus funds, many of the rural counties and rural communities did not receive monies for infrastructure, as it relates to road and bridges.

(END VIDEO CLIP)

KING: We heard this, David, in Jefferson County, Mississippi, Selma, Alabama, smaller rural communities who said essentially the money went to their governor and he sent it to the big cities, not to the smaller rural communities, a lot of those communities predominantly African-American. In year two, will there be an effort to look around and say, "Where did we miss?" AXELROD: Absolutely. We're going to keep reviewing and -- and -- and tinkering with and improving on what we've done, John. I will say that, given the speed with which this program had to be undertaken, there has been a -- a remarkable lack of controversy about it.

And I think the vice president and his team, who have run this program, have done an extraordinary job. And it is making a difference in communities around the country. But we want the effect to be felt as broadly as possible, and we'll take whatever steps necessary to ensure that that's the case.

KING: As you know, Massachusetts is my home state. It has a reputation of being a very blue state. This is Massachusetts on the map in 2008, when the president swept it handily, winning statewide, every county turned in blue. I'm showing voters now what happened this -- viewers now what happened this past week. Scott Brown, the Republican candidate, won all these counties in red, in part because of sweeping support among independent voters.

I want to show you the president's standing among independents dropped dramatically this year. And we saw this not only, David, in Massachusetts, but it also played out last year in the gubernatorial elections in New Jersey and in Virginia, the Republican candidates doing much better among independents.

One thing the Brown campaign believes worked for them is sharp criticism of their Democratic opponent, and she supported the president's approach to terrorism, trying the suspect of the Christmas Day bombing in the federal court system. I want you to listen to Scott Brown saying that's a bad idea.

(BEGIN VIDEO CLIP)

SENATOR-ELECT SCOTT BROWN (R), MASSACHUSETTS: To think that we would give people who want to kill us constitutional rights and lawyer them up at our expense instead of treating them as enemy combatants to get as much information as we can under legal means, it just makes no sense to me. And it shows me that you don't quite understand the law when it comes to enemy combatants versus terrorists versus United States citizens.

(END VIDEO CLIP)

KING: And, David, as you comment on that, I want you to also listen to a dramatic moment at a congressional hearing this past week, when Senator John McCain asked three people who worked for you on the front lines of the war on terrorism whether they had been consulted in a decision to take the Christmas Day bombing suspect and put him in the federal system.

(BEGIN VIDEO CLIP)

MCCAIN: I understand, Admiral Blair, that in response to Senator Collins, you were not consulted as to what venue the Christmas bomber would be tried in. Is that correct? BLAIR: That's correct. Yes, sir.

MCCAIN: How about you, Mr. Leiter?

LEITER: No, I wasn't.

MCCAIN: Secretary Napolitano?

NAPOLITANO: No.

(END VIDEO CLIP)

KING: Is that the way this is supposed to be done, that if somebody is arrested, that the Justice Department or whoever can just go simply ahead with this prosecution or taking them into the federal system and questioning them without consulting the intelligence community, the Department of Homeland Security, essentially, the people whose job it is to protect the American people?

AXELROD: First of all, let me say, there were consultations on a whole range of matters between all the relevant agencies...

KING: Why'd they say there were not?

AXELROD: ... because that decision. Well, Admiral Blair corrected his testimony later in a -- in a public statement. And let's be clear, John. What happened with that bomber or attempted bombing in Detroit was, this man was interrogated for some time by the FBI, who have our top interrogators. These are the people who got the key information from Khalid Sheikh Mohammed and so on. This notion that he was lawyered up and didn't give us information, he gave us very useful information.

And let me turn to the larger point. Understand that hundreds of terrorists since 9/11 have been prosecuted in civilian or Article 3 courts. The Bush administration moved to -- to try two as enemy combatants and then moved them back into -- into civilian courts, because it is easier and there are less obstacles to getting a conviction and putting them away.

AXELROD: And that's why the 20th bomber, Moussaoui, was tried in a civilian court. The shoe bomber, Richard Reid, was tried in a civilian court. And understand that many of the people who are criticizing this now were celebrating this then. Rudy Giuliani called the Moussaoui conviction a "triumph of American justice."

So you have to ask yourself why Senator Brown and others were not making that point all those years during the Bush administration. Dick Cheney defended that practice during the Bush administration, because it's the most efficient way to get the job done.

So all I can assume is that there is politics at play here. Well, this president is not going to play politics on terrorism. He is going to do what is most effective in going after the terrorists, in catching them, interdicting them, and making sure that they will never threaten anybody again.

KING: Let me ask you, in closing, and I'm going to show the cover of TIME magazine to our viewers as I do, "Now What?" it says, showing the president sitting at his desk in the Oval Office. You mentioned he has a big speech, the State of the Union, this week.

President Reagan found himself in a very similar position back at the beginning of his term. The economy was in a ditch, the American people turned on him a bit in his first year of office. He famously, in the midterm elections of 1982, traveled the country saying stay the course, stay the course. His party suffered a bit in that midterm election year, but President Reagan of course went on to win 49 states when he ran for re-election.

Will the president look the American in the people this Wednesday night and say, stay the course, or will he say, I get the message, I'll change course?

AXELROD: Look, the president has always gotten the message, and the message is, we need to grow this economy in a way that allows hard-working people who are meeting their responsibilities to get ahead instead of falling behind. We need to create jobs with that possibility.

And we need to push back on the politics of Washington that is so consumed by special interests and withering partisanship that we don't solve the problems and can't solve problems right in front of us. And that's what people elected him to do. And that's what he is going to do. He knew, John, that this was going to be hard. When you walk in the door and you are handed the worse economy since the Great Depression, the biggest deficits ever, and a financial crisis, you know off the bat -- and a dysfunctional system in Washington, you know off the bat you are going to have a hard time.

He is not daunted by that. He knew what he was in for. And he is going to go at it. He is going to stick to it, because there is too much at stake to be daunted by these obstacles.

KING: David Axelrod joining us this morning from Chicago. David, we thank you, in any event. And we thank you especially because I know it's a rare trip home to see your family. We appreciate your time on this Sunday morning.

AXELROD: Thanks, John. Good to be with you.

KING: Thank you.

When we come back, in earthquake-ravaged Haiti, preventing the spread of disease is one of many urgent challenges. We will get a first-hand report from Dr. Sanjay Gupta next.

(COMMERCIAL BREAK)

KING: Joining me now for the latest on the recovery efforts in Haiti is our chief medical correspondent, Dr. Sanjay Gupta.

Sanjay, thanks for joining us this morning. Twelve days now since the quake. One of the big concerns, as you try to treat people in the recovery effort, is a wave of -- sort of a second wave of disease. Tell us what you are seeing on the ground.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, there is always this discussion about second wave of disease after a lot of natural disasters. I have heard people even estimate that the second wave could be larger than the first wave.

And I have to tell you that typically that does not happen. It does not happen after the tsunami. Did not happen after the earthquake in Pakistan. Did not happen after Hurricane Katrina. And we're not seeing evidence of it here either, John.

And the concern is that people living in close quarters, in tent city, what would otherwise be an infection that would just be to an isolated population, could it spread more quickly? It's a legitimate concern, but it doesn't seem to be happening here.

A couple of reasons, one is that they are getting water even in some of these tent cities behind me. Incidentally, John, I don't know if you can hear all the noise, but some good news in a way, back behind me here. It's a festival going on. People are gathering in this plaza, playing music.

It's the first time I have seen something like that since I've been down here. But in tent cities around that area, the concern that people living in clusters could potentially be a source of that disease, we have not seen it yet -- John.

KING: I want to get up, you can't see it, obviously, but (INAUDIBLE) walk over to the magic wall, because I want to play now for our viewers something that shows the situation on the ground there that I know you have been tracking closely. And that is efforts to get more hospitals up and running and to distribute more food.

And I'll just play this out on the map here. If we could play it out and -- move down here and play it out and get the video. But you will see this fill in on the thing. The Fs -- the orange Fs are food distribution sites around Port-au-Prince. And the red crosses are operational hospitals. You also see some non-operational hospitals in gray as this plays out.

Give us your best, Sanjay -- your best sense, Sanjay, last week there was all of this talk about all of these supplies were sitting on the tarmac, but the food, the water, and especially the medicine were not getting to those who need it. Has that improved?

GUPTA: Yes, that has improved. And let me break it down in three ways like that, because I have been thinking about this a lot. I can't see your map here, but I do know that food and distribution centers have improved around the city of Port-au-Prince, specifically. There are around 30 four days ago. There are more than 300 now, people just -- places distributing food and water.

When it comes to supplies, you know, we investigated this quite a bit, a lot of these supplies that we have been talking about, antibiotics, pain medications, medical supplies, we can tell they're in the city of Port-au-Prince, but many of them were sort of stuck at the airport for some time. The distribution of those types of supplies outside the airport was just simply taking too long. And very frustrating for a lot of the doctors and first aid clinics and nurses that are running them.

With regard to personnel, this may surprise you a bit, John, but I am hearing this over and over again. That in fact that many of the hospitals in Port-au-Prince, there may in fact be too many doctors, specifically sub-specialty doctors now. People are really hearing the call for need and coming down in large numbers.

Personnel-wise, they seem to be manned up. Where they need to go is probably outside of Port-au-Prince, areas that have not been -- really gotten enough relief yet and they can create these mobile units to do that.

But sort of a little bit of a surprising turn here when it comes to supply of personnel specifically.

KING: And so, Sanjay, let me close, I asked you at the beginning of our conversation last week, is today better than yesterday. You seem to suggest this week is better than last week. To that point, if you have too many doctors maybe in one place. As you assess on the ground the needs of the Haitian people, what is your biggest concern? If they came to you and said, what is the one thing we need to make better tomorrow than it is today, what would it be? GUPTA: Well, let me say this, that I think typically what happens here is there is a venting of compassion that occurs around the time of a natural disaster. People really care.

GUPTA: I'm seeing it on the streets. I'm hearing it.

But what I think really needs to be reminded, John, is that, a month from now, two months from now, three months from now, the need is going to be as great, probably, in many of these places.

So if you're watching and you want to help, but you're frustrated that you can't get down here, come in a month. People are still going to need a tremendous amount of help. John?

KING: Sanjay Gupta, part of our remarkable team on the ground in Haiti.

Doc, we thank you for your time today. And it is nice to see those people celebrating a bit behind you. So much hardship for them in the past 12 days, and so much struggle ahead for them. It's good to see people taking a little bit of a break to have a bit of a festival.

Dr. Gupta, you stay well and keep up the good work. Thank you much.

And up next, we dissect the Massachusetts message and its impact on health care and other big debates right here in Washington.

When we come back, the Democrat in charge of protecting his party's Senate majority and a Republican whose voice is critical to any talk of producing a new bipartisan health plan.

(COMMERCIAL BREAK)

KING: Joining us now, here in Washington, two top senators, Robert Menendez, Democrat of New Jersey -- he's also the chairman of the Democratic Senatorial Campaign Committee -- and Republican Orrin Hatch of Utah, a leading Republican on the committees that deal with intelligence and health care.

Gentlemen, a lot to talk about this morning. I want to get to the political climate in the wake of the big election in Massachusetts, but some specifics that you will face as senators in the days ahead.

I'll start with you, Senator Menendez. The president wants Ben Bernanke to get a second term as the chairman of the Federal Reserve. Will you vote yes? MENENDEZ: Look, I've had concerns, as I expressed in the Banking Committee, with Chairman Bernanke, about consumer protection, of being ahead of the curve on the economy, and particularly on mortgage foreclosures. I think he's learned from those lessons.

I give him credit for making some significant moves to, along with President Obama, from stopping us from going into a deep depression. So, yes, I will support Chairman Bernanke, and I believe that his confirmation will be assured.

KING: Are you on the same page?

HATCH: Yes, in all honesty, there are some things I don't agree with that have been done, but I think he basically has -- has all of the ability to do it. I'd be terrified of having him replaced by this administration. You never know what you're going to get.

This man knows what he's doing. Yes, can he improve? You bet your life. But I'm going to vote for him. KING: Another tough vote you'll have this week is on raising the debt ceiling. And as part of that, there is an amendment that would create a new statutory powerful commission, like the Congress does when it's debating whether to close military bases.

A panel would look at the deficit. It would say, what do we have to do; what program might we have to cut; what taxes might we have to raise? And then you would get to vote up or down on the commission's findings.

Will you support, Senator Hatch, creating that commission, even though -- many Republicans are worried about this -- in the end, it is likely to have, in that package it recommends, some tax increases?

HATCH: Well, I suspect that the main thing that will come out of any kind of commission like that will be tax increases. I don't see -- I don't see the stomach in the administration or friends on the other side to do any cutting, to do any paring down of government.

KING: But it's a bipartisan commission, and there are Republicans on it as well to recommend those cuts.

HATCH: Well, I have a rough time supporting it, to be honest with you, because I think it would just wind up being another excuse, rather than facing the tough problems that we all should be facing right now, that the president should be facing. And he ought to be putting pressure on the Congress to face these problems, and we ought to do something about it, rather than push it off again to another commission that never seems to work anyway.

KING: Do you think -- you support the president now that he has gone behind this commission?

MENENDEZ: Well, John, I'm looking at the one that he proposed by executive order, which would basically do the same thing, have the same competition... KING: It's not buy-in, though?

MENENDEZ: ... but would allow some amendment to be offered to it because, you know, up or down votes on what a group of people decided is, in some degree, a -- you know, giving up the responsibility that you had to the people who elected you.

So I do think what the president is right on is trying to work on this, you know, debt reduction. He inherited, you know, a $1.3 trillion deficit. You know, President Bush inherited a $236 billion surplus. It went from that, from a surplus to a $1.3 trillion deficit that President Obama inherited.

So he understands that in fact we need to deal with this. The commission may be the way. I'd like a commission that gives me some flexibility to make adjustments.

KING: So you'll vote no?

MENENDEZ: I haven't made that final conclusion. I'm looking at, in fact, which of the two might be the best way to ensure that we reduce the deficit.

KING: Another big thing that happened this week, and it directly affects you as chairman of the Democratic Senatorial Campaign Committee, but will affect the election climate overall, was this Supreme Court ruling, essentially opening the doors again for labor unions and big corporations to flood money into campaigns.

The Congress had tried to stop that. There was a suit, of course, that went to the Supreme Court.

What is your sense of what this means in the election environment we are now in, that all the big money can come back in?

And what should the president or the Congress do to stop it, if anything?

MENENDEZ: Well, it's a dark day for democracy in our country. It's a dark day for the average citizen. The last thing we need is big oil, big health insurance companies, big banks being able to spend unlimited amounts of money from their treasury to influence the result of elections.

And I hope that our Republican colleagues, who joined us 20 years ago in having a reform effort that was clearly reform, to stop the special-interest money coming in directly in that way, will join us again in limiting the influence.

The last thing that the average citizen needs, who already feels that these big, moneyed interests already have too much influence in Washington, is to add more money.

And even a foreign corporation -- there's no differentiation in the Supreme Court's ruling -- a foreign corporation could spend money and influence who is sitting in the United States Senate and House of Representatives. I don't think that's in America's interests, and I hope our colleagues on the Republican side will join with us to curtail the essence of the court's decision.

KING: Would you join with him in writing new legislation?

HATCH: Well, all these corporations can do that now. But what the senator fails to mention is that, in the last two-year election, the unions put up over $1 billion -- they finally admitted that -- about $70 million in monies they had to disclose; the rest of it were -- happened to be monies that were used to -- to elect -- to basically get out the vote for Democrats.

But, also, as vice chairman of the National Republican Senatorial committee, in the last two years before President Obama's election, I have to say, we raised about $90 million for Republican candidates for Senate.

HATCH: The Democrats raised $150 million and they got it mainly from businesses. If anybody thinks that businesses are Republican, especially big businesses, they ought to think twice because most of them are Democrat, and they are going to give all kinds of money. And look, it comes down to free speech. Do these people have a right to participate in the political process? And the answer is yes. I think the unions should. I think the corporations should, and the fact of the matter is, there are ways that we can curtail offensive action if we want to.

KING: So there won't be a law passed this year, then.

MENENDEZ: I hope Orrin will join us. Look, it's not about the unions. I believe the same limitations that existed on union before this case was decided should continue to exist. The reality is corporations have spent, the Chamber of Commerce has spent on limited amounts of money under the present system, but not directly from treasuries. Should share holders not have a say about how much money is being spent from their company for campaigns and elections? This is going to be about who stands on your side. If Republicans want to stand with big moneyed interests and the special interests to influence elections, versus with the average citizen, so be it. But Democrats are going to stand with the average citizen and try to curtail this.

HATCH: The point I've been making is that the big business interests have been Democratic. The big union interests are all Democratic. In all honesty, they don't have trouble raising money. They don't have trouble spending money. Their problem is they are on the wrong side of the issue. That's what is killing them.

MENENDEZ: I don't think the U.S. Chamber of Commerce is Democratic.

KING: We will agree that the two of you disagree on this one. Let's move on to health care. Senator Menendez, this was the president's signature initiative. He wanted in the speech to Congress last year to sign it in 2009. He wanted this to be a big Democratic victory. That didn't happen. The election in Massachusetts obviously takes away one of your votes. You don't have 60 votes in the Democratic caucus anymore. The question is will Democrats try to work out a compromise between the existing Senate in the House bill, or will they say Massachusetts sent us a message, forget that, let's go back to the drawing board and start over. What is your position and the position you believe all those Democratic candidates out there you are trying to help in this election should take? Figure it out or start from scratch?

MENENDEZ: Well first of all, we tried working with our Republican colleagues. As a matter of fact, three of the months that went by was working with a bipartisan group of Democrats and Republicans to try to come to health care reform that could be agreed upon in a bipartisan fashion. And so three of those months were lost in that effort. At the end of the day, they did not want to achieve such a goal. So I believe that we need to move forward. Clearly if you are a family without health insurance and you get ill, you are on the face of bankruptcy. If you are a family with insurance, you see skyrocketing premiums.

KING: Based on the existing bills or start over and say Senator Hatch, you were Ted Kennedy's friend, let's come in with a blank piece of paper and do something that we can all agree on?

MENENDEZ: Well, you know, when we hear about slow down and start over, it really means don't do anything. Republicans have come to the conclusion that the president's failure not only in health care but across the board is their way to political victory.

KING: Your leader this morning said start from scratch. Could you give Senator Menendez and the president of the United States, given your experience on this issue, including with your friend, the late Senator Kennedy, that if you will come in with a blank piece of paper, I will promise to try to get a bill by the end of this year?

HATCH: I've offered that from the beginning.

KING: This year?

HATCH: I have offered that from the beginning. The fact of the matter is, they did a health committee bill.

KING: That's what happened before.

HATCH: Everything they did was lacking...

KING: In this political environment, would your party stand with you if you said, let's go back and let's do preexisting conditions. Let's do some other things. Maybe we can get them to give us tort reform and let's take out of stuff that we don't agree on and try to get something done. Would you do it this year?

HATCH: I don't know one Republican who does not want health care reform. I don't know one Republican who would not try to work together with the Democrats. We weren't involved in this process. We weren't even asked. It was an arrogance of power. They had 60 votes. They felt they could put anything through they wanted to. And they found out that they couldn't.

Now look, you bet your life, we would have to start over. There are a lot of things we can agree on right off the bat. I have to say big spending issues is where it breaks down. Their answer to everything is let's spend more money and let's get more of the health care in the federal government into a single payer system, socialized medicine, if you will. That's what they want. That's what they have been pushing for. Let's push people into Medicaid. Let's push people into Medicare, when both of those programs are in deep financial insolvency.

KING: I need to get this to Senator Menendez. In the wake of the election, the White House has said they're going to have David Plouffe come back from the outside, the campaign manager they had in 2008. He is going to travel the country. He's going to get more involved in campaigns for governor and Senate. Implicit in all that is that your committee, the Democratic Senatorial Campaign Committee missed the boat in Massachusetts, didn't see this stunning upset coming, and they believe if you listen to them, that they somehow need to almost circumvent what you are doing so it doesn't happen again. Was the failure at your committee and do you need this help or is that meddling?

MENENDEZ: Look, we welcome the White House beefing up their political operation and the political atmosphere. Secondly, we didn't start under my term with 60 votes. We had 60 votes. Clearly we did everything we could in Massachusetts. I think the big takeaway from Massachusetts, however, is that in fact there is enormous economic angst in the country, both people who have lost their jobs, have a family member who lost their jobs. They house is worth less than their mortgage. And that economic angst came out to play in this election. It is something that I expect the president to deal with in the State of the Union speech, and something we will deal with as we deal with the jobs package that talks about helping small business so that they can build on their existing businesses and create jobs, helping to look at some of the infrastructure of the country, so people can get to work right away and have long term job opportunities, helping states and localities to make sure that critical employees are being able to be kept employed, not only for our economy but for the services they provide.

I hope Republicans will join us in meeting the economic challenges instead of just simply saying no. No doesn't create a job and no doesn't give health care to anybody or stop the insurance companies from arbitrarily and capriciously denying people. KING: We will continue the conversation as to what has turned into an even more interesting midterm election year unfold. Senator Hatch from Utah, Senator Menendez of New Jersey, gentlemen, thanks for coming in.

And coming up next, 50 states in 50 weeks. Even before the big vote in Massachusetts, our travels offered so many clues of the shifting political tide.

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KING: I went home to Massachusetts this past week to witness the end of its dramatic special election for what for 46 years was the Senate seat of the liberal icon, Edward M. Kennedy. What happened? A big Republican upset was stunning. But because of our travels this past year, the seeds of surprise were quite familiar. Anxiety over lost jobs and the sense that Washington is out of touch, and as partisan one year into a presidency that was supposed to be different.

Let's zoom in on Washington, D.C. to take a closer look at what has happened in the economy since Barack Obama became president just over a year ago -- 4.16 million jobs lost.

KING: Nearly 1 in 5 Americans are what we considered unemployed, meaning they're working part time, they wish they could work more; 17.3 percent the underunemployment rate; $158 billion in stimulus funds have been awarded, and the White House, of course, says more will be in the pipeline in this important election year.

In our "American Dispatch" this week, a look back at a 50-state journey that brought us face-to-face with that anxiety and frustration that's making our politics so volatile.

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(UNKNOWN): When you apply for a job now, you have 200 other people standing in the same lines.

(UNKNOWN): Having 46 million people who have no health insurance is an embarrassment.

(UNKNOWN): You go to college, get a degree so you can get a good job, it's just not working out that way.

KING: Fifty states are fifty very different pieces of the jigsaw puzzle. Have you seen stimulus money fast enough?

(UNKNOWN): There's not a government leader in American I think that wouldn't want more money to do more things right now.

(UNKNOWN): You work hard a number of years, retire, enjoy yourself, relax. Unfortunately, no more.

KING: Some of what we have seen over the last year is simply a reflection of what you see if you visit 50 states.

(UNKNOWN): There's no way I can vote Democrat.

(UNKNOWN): I have a lot (inaudible) in Obama.

(UNKNOWN): He's hiring on people who can't even pay their own taxes.

(UNKNOWN): I've been (inaudible) Republican so far.

(UNKNOWN): It's not just the government. It's also just the people in general. We all have to be willing to do a little changing.

KING: As you're learning about how diverse the country is politically, you're also seeing how diverse and breathtaking it is geographically.

(voice-over): Western Idaho is, in a word, spectacular. Hawaii is in the early stages of a dramatic energy evolution. Clay, West Virginia, is tucked into the remote rolling hills of coal country.

(on-screen): More often than not, what a place looks like tells you a lot about what it is and what it does.

The joy for me is in having the privilege and the gift of meeting people.

This is Kimberly. What's "turtle" in Spanish?

(UNKNOWN): (OFF-MIKE)

KING: There are a lot of very different families and philosophies and ways of life. In Washington, when you read a report from the Labor Department, you can look at the numbers and say, "Wow, that's bad," or you can be on the factory floor in Peoria when they tell 2,000 more people at Caterpillar, "You're losing your job."

(UNKNOWN): I don't want to be on unemployment. I've never been on unemployment before.

(UNKNOWN): They are not talking about somebody that you can't see. That means me.

(UNKNOWN): How are you going to explain to your kids it may not be the way it's always been for you.

KING: Economic anxiety is not a theory. It's the way of life for a whole lot of people.

(UNKNOWN): We've had young people come in and say, "I'm here. I'm 18 years old. My family can't afford me any more."

(UNKNOWN): I've been cold. I've been hungry. I've been soaked to the skin and tired and sick.

(UNKNOWN): Even though I'm homeless, I'd rather give the last dollar I have to the person who I think needs it more.

KING: It personalized the pain and the anxiety and the worries, and it also personalizes the resilience.

(UNKNOWN): We ran over an IED in Afghanistan. I broke the top of my femur. Two months later, I'm actually able to walk. I do some walking.

KING: What's your ultimate goal?

(UNKNOWN): Get back out in the fight.

KING: To see those people and hear their stories makes the numbers mean something.

(UNKNOWN): I came here kind of lost, and I found myself.

(UNKNOWN): Our daughter dates an architect who now works at the grocery store at the bakery because, you know, he's got to survive.

KING: If you keep in touch with those people over the course of time, it makes you a better reporter, because you can understand why somebody who felt so strongly last year feels so different now and maybe in five years feels differently again because of the experience of their life, the experience of their community, at their workplace, at their schools. They're watching their children grow up (inaudible)

You need to go and see it and feel it and taste it before you can even begin to understand.

(END VIDEOTAPE)

KING: I want to take a second to thank everyone who shared their remarkable stories with us over the past year from coast to coast. And if you want to learn more, check out cnn.com/stateoftheunion, where you can read and watch reports from each of the 50 states we visited.

We want to say goodbye to our international audience for this hour, but up next, for viewers here in the United States, Howie Kurtz and his "Reliable Sources" look at all the media coverage of Tuesday's surprising Massachusetts Senate race.

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

(BEGIN VIDEOTAPE)

BROWN: Massachusetts has spoken!

KING: Massachusetts Senate shocker grabs headlines and plenty of air time. Are the media overplaying the win or underestimating a truly toxic political climate?

Plus, the crisis in Haiti highlights the dual role of doctor- journalism. In the midst of such devastation, does it cross a line to become a part of the story you set out to cover? We'll talk with Dr. Nancy Snyderman from Port-au-Prince.

In this hour of "State of the Union," Howard Kurtz, as always, breaks it down with his "Reliable Sources."

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