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JOHN KING, USA

Uniting against Iran; Tea Party Variety Pack; Democrats Sell Health Care; Health Care Politics; Arne Duncan Interview

Aired March 30, 2010 - 19:00   ET

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


JOHN KING, CNN ANCHOR: Thanks, Wolf. You know the old saying, it sounds too good to be true, it probably is. That's what keeps going through my mind as I read more about the big changes in the student loan program that President Obama signed into law today.

Here's what supporters say. The new system will be simpler and less confusing for students and their families. Interest rates for the most common kind of loan can't be higher than 6.8 percent a year. And lower rates will be available for lower income families. Paying back the loan is also supposed to be easier.

Starting in 2014, for example, monthly payments will be capped at 10 percent of graduate's income. And get this; the Congressional Budget Office says it's not just a good deal for students but for all taxpayers. The CBO projects a $60 billion, billion with a "b" gain to the Treasury over the next decade, money the administration say can be used to fund more Pell grants, to help historically black colleges and to chip away a bit at the federal budget deficit.

Sounds too good to be true, right -- well in a few minutes, you'll hear the education secretary, Arne Duncan, make his case that it is true. You'll also hear him say that the test now is for the government to deliver, to prove wrong the skeptics who might not love dealing with banks but think even less of the government's ability to do things right. That's a big test, a big test any time but especially in this very skeptical political environment.

That ceremony to sign the new student loan provision into law along with some so-called fixes to the new health care reforms was just one of the president's big events today. He also held talks at the White House with the French president, Nicolas Sarkozy, and the big headline there was a push from Mr. Obama to reach a consensus on a new package of international sanctions against Iran for its refusal to halt its nuclear program.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm not interested in waiting month for a sanctions regime to be in place. I'm interested in seeing that regime in place in weeks.

(END VIDEO CLIP)

KING: But Russia and China today have not been willing to be as tough as the United States and France would like. CNN's White House correspondent Dan Lothian joins us now to dissect this difficult, diplomatic challenge -- Dan.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well you know it is difficult and what you're seeing here at the White House is less frustration and more resolve. This is the next step that the president has been pushing for in order to get Iran to comply to back down from its nuclear aspirations. White House aides privately will say that it has been difficult in getting these partner nations to -- all of them, to come on board. You pointed to China and also to Russia. Russia has softened its approach lately, but those negotiations will continue and as the president pointing out hoping that there will be some movement on that in the next few weeks.

KING: Dan Lothian for us at the White House. The president now enjoying a private dinner with the president of France. Thanks, Dan. And President Obama today offered a mix view of the Tea Party movement. On the one hand, he told NBC's "Today" that some Tea Party activists have legitimate questions about the federal deficit and whether the federal government should have bailed out Wall Street, but the president said some associated with the movement have very different concerns.

(BEGIN VIDEO CLIP)

OBAMA: We saw some of it leading up to my election. There are some folks who just weren't sure whether I was born in the United States, whether I was a socialist, right? So there's that segment of it which I think has just dug in ideologically and that strain has existed in American politics for a long time.

(END VIDEO CLIP)

KING: So do Tea Party activists agree with president's assessment? Well let's go directly to the source. CNN's Ed Lavandera is traveling with the Tea Party Express and joins us tonight from the windy Salt Lake City -- hey Ed.

ED LAVANDERA, CNN CORRESPONDENT: Good evening, John. Well here at the State Capitol in Salt Lake City the Tea Party rally ended just a short while ago. And it was interesting -- one of the speakers at today's rally actually quoted President Obama directly from that interview. They took exception with the president's wordings about to consider characterizing their criticisms of him as legitimate concerns. Listen to how one of those speakers took on the president's words this afternoon.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: They're going to question my legitimacy. Well, yes. Where did you -- I mean let's see some background on you, you know? Let's see your college records. And you know I might want to take my grandchildren to visit your birth place in Hawaii, or wherever. How about you show me where it is so I can stand there and take a picture. I can do that with Reagan's birthplace. I can do that with Kennedy's birthplace.

(END VIDEO CLIP) LAVANDERA: And John, we asked several people after the rally today, if they thought President Obama had also made the comment about that he thought he could win over some of these Tea Party activists. We asked some of the people who were here today and overwhelmingly people had a really hard time kind of imagining a moment or a way that that would actually happen in the months ahead. Tea Party Express movement continues. They're moving into Colorado as we speak now, John. The rally's tomorrow in Grand Junction, Colorado and in Denver.

KING: All right, Ed, stay safe out there. Thanks very much.

Another day, another vulnerable Democrat trying to sell a yes vote on health care back home -- last night we took you to Michigan's Seventh District where Mark Schauer is using this congressional recess to answer his health care critics.

(BEGIN VIDEO CLIP)

REP. MARK SCHAUER (D), MICHIGAN: Don't think for a minute that I didn't listen or I don't understand your concerns. I understand that many of you don't like this. You may see it as wrongfully as (INAUDIBLE) wrongfully as a government encroachment, government takeover, socialism. You know, the same kind of allegations were made about Medicare and Social Security.

(END VIDEO CLIP)

KING: Michigan there. Tonight we take you to Ohio's First Congressional District. Congressman Steve Driehaus is one of the anti-abortion Democrats who agreed to vote yes after President Obama promised an executive order promising no federal funds will be used to pay for abortions. Here's a sample of what the congressman heard as he traveled his Cincinnati district today.

(BEGIN VIDEO CLIP)

MARK STENNIS, CINCINNATI, OHIO: Believe me, when someone gives their word, especially the congressman that's from your community, that's part of your church and part of your parish and then they renege on it, I think that's strike one and you're out in this case.

ERIN HUMPHREY, NEIGHBOR OF REP. DRIEHAUS: With the economy and everything that's going on, I think it's a good change for people that have had issues to be able to get covered in health care and be able to afford health care, so I think it's a good thing.

(END VIDEO CLIP)

KING: Our congressional correspondent Brianna Keilar is on the ground for us there and spoke to Congressman Driehaus about the emotional politics of health care -- hey Brianna.

BRIANNA KEILAR, CNN CORRESPONDENT: Hi there, John. I asked Congressman Driehaus point blank you could be gone in November. Have you come to grips with that and he said if you want job security don't get into politics and certainly don't get into politics in a competitive district like Ohio's first. And he has reason to sweat.

This is a fractured district. I spoke with voters who cast their ballot for Driehaus in 2008. But on this agreement he struck over the abortion issue, they feel betrayed, and they plan to cast their ballot for his Republican opponent in November. And John, I also spoke with voters who say they support his health care reform vote but in the next breath they would say he may have committed career suicide by casting it that way -- John.

KING: One of the fascinating districts, we'll keep watching -- Brianna Keilar. Brianna thanks so much.

After zigzagging through the day, the Dow industrials turned up during the final hour of trading closing at their second straight 18- month high. Investors are weighing conflicting signals about the economy. Consumer confidence is up and the dollar's looking a bit stronger, but there's still weakness in the housing sector and the debt crisis in Europe.

Let's head to the magic wall now for a look at still what's ahead. Wander over here for a little bit -- when we come back, we'll take our "Pulse".

When we come back, we're going to go to our "Pulse", that Cincinnati district you just saw Brianna. We'll talk to a key Republican foot soldier. She is critical to the Republican Party's comeback hope.

And then we'll go "One-on-One" with the education secretary, Arne Duncan. You won't want to miss his thoughts on the new student loan program and his worries that some schools are more worried about wins on the court than grades in the classroom.

And then "Wall-to-Wall", we'll apply Secretary Duncan's test to the teams in the "Final Four". Are they worried more about graduation rates or winning in hoops?

And in our "Play by Play", we'll break down some great tape today. The president talks Tea Party and you'll watch as Karl Rove tries to sign books but is heckled instead -- all of that in a very busy hour ahead.

(COMMERCIAL BREAK)

KING: We take "The Pulse" of America tonight. We focus on the southwest corner of Ohio which includes Cincinnati's first congressional district. I'm joined now by Maggie Wuellner. She's the executive director of the Hamilton County Republican Party.

Maggie thanks for joining us -- a quick question now. We just had Brianna on talking about Congressman Driehaus. He is fighting to keep his seat and you are trying to take it away from him. Health care is the big issue as the Congress goes on this recess. What about come November, seven months from now, 10 percent unemployment in your state, 10 percent unemployment there in Hamilton County. Will jobs outweigh health care by the time we get to November? MAGGIE WUELLNER, EXEC. DIR., HAMILTON COUNTY, OHIO, GOP: Well I think people are concerned about health care right now because that is what's on their minds. That's what's being talked about. Obviously jobs and unemployment is a huge issue here in Ohio and quite frankly I think the administration should start focusing on that and how we can improve and get our Ohioans and Cincinnatians jobs.

KING: Let's look at the history of this district because it's fascinating. I've been out there several times over the years, as you know, and it was the Republican candidate who is running this time is a former congressman. In 2004 President Bush carried it 51 percent of the district to 49 percent for John Kerry. And yet Steve Driehaus was elected in 2008 when President Obama won the district and won it big, 55 percent to 44 percent for John McCain. What happened in 2008? Why did it go from being a Republican district for president to being a Democratic district?

WUELLNER: Well, I think that, you know, the Republican Party fell apart for a little while there and we're picking up our pieces. And fortunately for the Democrats, President Obama was a great face for the top of their ticket. And he was appealing to a lot of swing voters that liked his message. And I think that's going to change here in 2010 with Congressman Chabot running again.

KING: You say Congressman Chabot running again. I want to show our voters the results from 2008; Steve Driehaus, the Democrat 52 percent; Steve Chabot, the Republican, 47 percent. In this environment, where people don't like politicians' period, we have an anti-establishment environment, why run a former congressman, why not a new face?

WUELLNER: Well I guess you have to live here to know Congressman Chabot, but he is true to the people. He's honest and he's not your typical politician and that's one thing that the Republican Party needs to do these days and that is find good candidates that have a good message for the party.

KING: And help us understand, you're the executive director of the party there. I've come out to see you before. Your job, of course, is to count the votes, help people out, get the signs out there. The intensity gap -- you mentioned Obama was a good candidate for the Democrats last time, in 2008 it was hard to find Republican conservative intensity. What is different this time? How do you -- how can you prove that the intensity is back on your side?

WUELLNER: Well, all you have to do is work in my office for one day right now. You will know that there are people that have never had interest in politics before that are fired up and they're frustrated because things are going on in Washington, D.C. that they're not a fan of. And part of that is that they feel like their voices aren't being heard and that our great country of representation isn't being carried out correctly right now.

KING: And help me understand, you mentioned how you thought Obama was good for the Democratic ticket back in 2008. Would he be good for Congressman Driehaus now or has he lost his glow in the First District?

WUELLNER: You know, I think Congressman Driehaus was able to kind of carry on the coattails of President Obama and the numbers that were coming in for him. I think it's going to be much more difficult for him in 2010 when you don't see the turnout that you would normally see in a presidential year.

KING: Let me ask you, Maggie, you're in the First District of Ohio. There's been a lot of focus in the last couple of days on the leadership of the Republican National Committee. Does that matter out there questions about Chairman Steele, questions about whether the party is raising enough money? Do you feel the impact of that in the first -- in your county, Hamilton County, or is it irrelevant?

WUELLNER: I don't think it's irrelevant, but I have to say Congressman Steele's been here to Cincinnati to talk about the Republican message and I think that's important. But I think what's more so important is what's happening at the grassroots level and what our representatives are doing to carry out the voice of the people.

KING: Maggie Wuellner is the executive director of the Hamilton County Republican Party in Ohio's First Congressional District. We will check in, in the weeks and months ahead, one of the fascinating House races in this campaign, also a big Senate and governor's race out there. Thanks, Maggie.

WUELLNER: Thanks, John.

KING: Next, I go "One-on-One" with the education secretary, Arne Duncan. He answers critics who say the government takeover of student loans will cost Americans jobs and he has some scathing criticism -- you won't want to miss this -- accusing some colleges of exploiting their student athletes.

(COMMERCIAL BREAK)

KING: With the stroke of his pens today, President Obama signed into law a round of fixes to the health care reform law. But look closely. That very tall man in the back had nothing to do with health care. That's the education secretary, Arne Duncan. He was at the signing ceremony because the bill also contains an important overhaul of the nation's student loan program. Later, I caught up with Secretary Duncan outside the White House.

(BEGIN VIDEOTAPE)

KING: Mr. Secretary, first, thanks for joining us.

ARNE DUNCAN, EDUCATION SECRETARY: Thanks for having me.

KING: It's a big day for you and you think this is great progress when it comes to student loans. Answer the skeptic out there who might think OK, I'm getting rid of the middle man, the banks but can the government really handle this? Do I trust the government to be more efficient and more effective? DUNCAN: This is simply removing the subsidies of banks, putting all those stages of education, putting students first, it's the right thing due to the private market driving up over the past couple of years have actually gone from about 1,000 universities doing direct lending to over 2,300 before we did anything. So this was happening already. So far, FSA has handled this extraordinarily well. I'm going to continue to make sure they do a great job. I'm absolutely confident that we can do this well, do it efficiently, and put tens of billions of dollars of savings behind education, which is where it should be.

KING: We looked at a lot of student newspapers around the country and there's not a lot of criticism. Actually people seem pretty happy about the changes but there are some questions about where do I get more information, so for somebody out there who says, you know, over night this is changing, what do they need to do?

DUNCAN: They can visit our Web site and it's actually pretty significant. We've dramatically simplified the financial aid form itself, the FAFSA form, which is hugely complicated. I kept saying you had to have a PhD to figure it out. And that's a problem when you're 17 you don't have your PhD yet. Tens of billions, $36 billion in increased Pell grants for students making college much more assessable and affordable, $2 billion for community colleges, $2.5 billion for HBCU's and other minority-serving institutions, and in the back end, this is really important.

Some call it income-base repayment, IBR, loan repayments are reduced to 10 percent of income. And after 10 years of public service, working in the community, at a nonprofit, teaching, whatever it might be, 10 years of that public service work, any remaining loans will be erased. So this is a big, big deal.

KING: Is there any downside? People out there will hear you putting off all of those numbers, it all sounds favorable, such a big transition like this, is there anything negative to it?

DUNCAN: We have to make sure we execute well against this, but at a time we have to educate our way to a better economy, to stop subsidizing banks and put $68 billion into education. This is a historic opportunity. I'm so thankful for the president's leadership and Congress' courage in passing this. This is the right idea at the right time.

KING: I know you're aware of the Republican criticism; on this particular program they say why should the government do this? They also say it kills jobs.

DUNCAN: All of the servicing of the loans, where the action is, 100 percent of that will be done by the private sector. It doesn't matter who originates it, but servicing those loans good actors will get more business, bad actors will lose business. The free market will play. Not our sweet spot, not our (INAUDIBLE) all of that will be done in the private sector. That's a huge and growing business opportunity. KING: Address, also, the Education Department is usually exempt from this, but you're in a town now that's very political and the critics link this into their narrative. They say this is an administration that thinks government knows best, government does best, let's get more government.

DUNCAN: Obviously just simply not the case. Sixty billion dollars you continue to subsidize banks or do you invest in education? This is the right thing for students. It's the right thing for the country. It's the right thing for American taxpayers. Very simple choice, it's the right idea.

KING: What happens to somebody who's in mid stream? Obviously if you're coming out of high school, it's a brand-new program. If you're in mid stream, how does it change your life?

DUNCAN: You keep going the way you were, but for students coming in to have a simplified FAFSA form, to have much more accessibility to Pell grants at a time going to college is so expensive and then to have your loan repayments reduced at the back end, this is going change their life opportunities going forward.

KING: One of the other challenges you face is reauthorizing "no child left behind" and you'd like some changes in that. Pretty poisonous political environment in town now, you were trying to get that done on a bipartisan basis. A lot of Republicans are saying, you know after the health care debate, we don't really see any chance for bipartisan cooperation. Can you do that this year?

DUNCAN: I'm actually very optimistic. We've seen tremendous bipartisan support. Republicans, Democrats, House, Senate, everyone wants to get better. Education has to rise above politics and ideology, all that has to go to the side. People have been very, very thoughtful. No one is protecting the status quo. We have to educate --

KING: Get it done by this year?

(CROSSTALK)

DUNCAN: We want to get it done this year. We have a dropout rate that's 27 percent in this country, John. That is economically unsustainable, morally unacceptable. We have to graduate many more students and we have to make sure many more of our students who graduate are actually prepared for college and careers. That's what this is about. We have to work together to get there.

KING: Your problem in selling that isn't just reaching out to Republicans. You get a lot of criticism from the teachers unions who say that this administration is too willing to hold teachers accountable. And they say in the "no child left behind" that they get all this responsibility but not the authority they would need to implement it.

DUNCAN: We all have to work together. One of the big changes we want to make under this is not just hold schools and teaches accountable but school districts and even states. All of us have to move outside of our comfort zones. All of us have to stop pointing fingers. We have to educate our way to a better economy. We as adults have to step up to give our students the education opportunities they desperately need and deserve.

KING: I'm go ask you lastly as people prepare for the "Final Four", you have been rather outspoken in saying, look, a lot of these schools that have wonderful basketball programs don't necessarily have the highest education standards. And you think if they don't graduate 40 percent of their students, the NCAA should say you know you can't be involved in "March Madness" and in other -- other of the tournaments like -- but you don't -- you say you don't want to enforce that, you can't make it mandatory. How do you make that work?

DUNCAN: Well we're working with the NCAA and it's really up to them, but I just think, John, if universities can't graduate two out of five of their student athletes how serious they are about their core mission. And the core mission isn't to win games. It's to make sure student athletes get that -- graduate, get that piece of paper, get that diploma at the back end, and I was lucky enough to have a phenomenal college athletic experience.

The vast majority of student athletes get that. I worry when athletes are simply used by their universities to produce revenue, to make money for them, nothing to show at the back end. I grew up with a lot of players who had very, very tough lives -- after the ball started bouncing for them and that's what I'm going to continue to fight.

KING: You say it's not their core mission, but is it -- in some schools is it the core mission more to use the athletes, your language, as opposed to actually get them education and athletics is secondary.

DUNCAN: Well if that's how they see that, I would argue they have the wrong values. This is about student athletes, students always coming first and where those values are out of line or misplaced, I think I have an obligation to challenge the status quo and I'm going to continue to do that.

KING: Is there anything the government does if the NCAA doesn't go along or --

DUNCAN: Well we're going to continue to work with them and think this thing through. But again, we have to make sure there are 18, 19, 20-year-olds aren't just you know dribbling a basketball or you know playing football just to make money for their university. They have to be working towards that degree. The vast majority of schools do a phenomenal job of this, do it impeccably well.

What I don't understand is why we -- those handful -- that small handful of bad apples I don't know why we continue to tolerate that. We don't need to tolerate that.

KING: Mr. Secretary, thanks for your time.

(END VIDEOTAPE)

KING: And remember what the secretary just said because next we go "Wall-to-Wall" to check out the graduation rates for the schools in the "Final Four" -- see if your favorite team will win that one.

(COMMERCIAL BREAK)

KING: In our last segment you heard the education secretary's challenge. If colleges can't graduate 40 percent of their student athletes he doesn't think they should be allowed in "March Madness" or other postseason tournaments. So did the teams in this year's "Final Four" meet that test? Let's take a look.

Here are the graduation rates, the "Final Four" schools for men's basketball athletics, Michigan State, graduates right now 58 percent of its basketball players. That meets the test. Butler, 90 percent of its athletes in basketball. West Virginia, 44 percent of its basketball players graduate right now on the men's team, and Duke University, 92 percent.

This is overall on the basketball programs. But if you look more closely at these numbers you'll see a big racial disparity. At Butler, for example, 75 percent of the African-American basketball players graduate; 100 percent of the white basketball students do. At Duke, it's 89 percent graduation rate for the African-Americans on the basketball team; 100 percent for the white basketball players.

Michigan State, just 44 percent of the African-Americans on the basketball team graduate; again, 100 percent of the white players do. And at West Virginia, just three in 10, 30 percent of the African- American players graduate; 60 percent of West Virginia's white basketball players graduate. For context, let's look at the overall graduation rates at these schools.

Seventy-five percent of Butler students graduate; 94 percent at Duke; 75 percent at Michigan State; and 56 percent just shy of that at West Virginia. The "Final Four" begins on Saturday. My bracket already shot. Same for the president, he picked Kansas to go all the way. The president had this prediction when talking to NBC's Matt Lauer.

(BEGIN VIDEO CLIP)

BARACK OBAMA: I will say this. Just to show that I'm not biased, I actually think that West Virginia's got a great chance. And I did not win that state, but they've got a really good team.

MATT LAUER, NBC: West Virginia over Duke.

OBAMA: I think -- I think the winner of West Virginia/Duke will end up winning the championship.

(END VIDEO CLIP)

KING: There's the president's prediction. Today's most important person you don't know wants to take over both Medicare and Medicaid. He's been working for years to assure your next trip to the doctor or hospital is safe.

(COMMERCIAL BREAK)

KING: Today's most important person you don't know may soon be running Medicare and Medicaid. That would make Dr. Donald Berwick the top doctor for 1 in 3 Americans. He's 63, a Harvard medical graduate and a pediatrician. What really gets your attention are his decades of work helping doctors and hospitals do a better job while holding down costs. Perhaps one reason he's a stickler about reducing medical errors, a botched operation when he was a medical student left him with knee problems. One of his recommendations confirms what your mother always told you, like the rest of us, doctors should wash their hands more often. Berwick's work with the British National Health Service earned him an honorary knighthood back in 2005. But once nominated, he'll need Senate confirmation, and these days that's a risky operation. Our political correspondent Jessica Yellin joining us. Why, in his case, might confirmation be difficult for Dr. Berwick?

JESSICA YELLIN, CNN POLITICAL CORRESPONDENT: I think John it's because he's a big proponent as you know of this idea that doctors need to study more patient information and compare outcomes. And then decide which doctors have the lowest costs and the best outcomes and make that the standard practice. The idea is if you do that at Medicare and Medicaid it's the government telling doctors which is the best practice. It might be a good thing, it might lead to good results and lowered costs but critics say it means the government is telling doctors what to do and as you know that getting gender fierce opposition.

KING: The comparative analysis.

YELLIN: You know the lingo.

KING: You know the lingo. Let's move to the economy. We're spending all this time on health care, but many people, especially the white house believe, the political complaint could change if the economy comes back. Unemployment rate still just below 10 percent. The economy lost 36,000 jobs last month but the private economists think it could create somewhere in the ballpark 190,000 jobs this month. We get the report on Friday. The treasury secretary, Tim Geithner, did an interview with CNBC today and sounds like he knows something already. Let's listen.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: I think you can say, generally, that, as the economy is getting stronger, and the economy is getting stronger, we're probably just on the verge now of what we think will be a sustained period of job creation finally.

(END VIDEO CLIP)

KING: Now, I assume he wouldn't say that unless he's confident that's coming but that's risky for the administration. YELLIN: I think it's really risky. A couple of reasons. One is included in the numbers are -- is the assumption that about 100,000 jobs that were created are from the census, the new census. Those are temporary. And then another 50,000 are because we had really bad weather last month and so people weren't at work and they counted lower. They're back this month. It jumps up higher. It's weather- related, also temporary. The economists say only 25,000 to 40,000 new jobs were actually created this month. If the white house gives out the perception we had almost 200,000 new jobs and then it plummets next month it looks very uneven. And they -- they are taking a risk getting people's expectations too high.

KING: Yet the president will be in North Carolina on Friday, hours after the unemployment report comes out. And he'll be doing economic event. Clearly, a, they want to focus on jobs and the economy but they have to think the news is more encouraging.

YELLIN: Sure. What campaign have you ever covered where jobs, jobs, jobs, the economy wasn't the most important thing? I mean a couple national security elections but really this matters more than anything. It's my sense, I don't know if you agree, it's my sense that the white house, too often takes too much credit when numbers are good saying it's because of the stimulus plan and then they get hit disproportionately when the numbers are bad when it's really just our economic reality, it's not their fault. Is that your sense?

KING: They've had a roller coaster ride. Remember their original budget predicted unemployment wouldn't go above 8.1 percent. That didn't happen. I think they're coming out of the trough and to your point about that, my first presidential campaign, Michael Dukakis, good jobs at good wages. That was his message.

YELLIN: Didn't work out.

KING: Next in the class, the Republican Party versus itself. The RNC staffer fired for arranging a nightclub at a risque California nightclub is a woman who is supposed to be attracting young people to the GOP. Where is party Chairman Michael Steele in all of this?

(COMMERCIAL BREAK)

KING: Here for the clash, a pair of political operatives already knee deep in this year's midterm election fight. Former Republican National Committeeman executive director Scott Reed is the chairman of Chesapeake Enterprises, he advises a number of Republican governors and members of Congress and also has clients in the health care and defense industries. Democrat Mo Elleithee is a former Hillary Clinton senior spokesman and a partner in Hilltop Public Solutions which has clients that support President Obama's health care reform. Welcome, gentlemen. Let's start, Scott, I want to start, you were there in 1994 when the Republicans had the big year. Executive director of the Republican National Committee, Haleigh Barber was the chairman then. There's been a lot of talk about the Republican National Committee in the last 48 hours. It not really about elections, it's about this spending controversy out in California. I do, though, want to show viewers the website. If you go to the RNC's website, this is what you see, fire Pelosi. There's not much about the current spending controversy. From your experience being at party when it was so critical back then in 1994, is this chairman in his tenure a distraction or a benefit to the party?

SCOTT REED, FORMER EXEC. DIR., RNC: Well, he's a challenge, to say the least. And this experience this week has really been quite eye-opening. It is indefensible. The fact they have this fire Pelosi thing out there is a little bit of the old change, let's change the subject and get off to something differently. There's no question what happened this week is embarrassing and inexcusable. The fact is they won a couple of elections last year in Virginia and New Jersey, they won the special election in Massachusetts and that's really what matters at the end of the day. It's a distraction. It gives a lot of people something to talk about but the truth is at end of the day it really doesn't matter.

KING: To that point, is it true that Democrats can have fun with this, they don't like Michael Steele's tenure, they like stirring up trouble but Michael Steele's not going to determine whether or not the Democrats win a Congressional seat somewhere out in the country?

MO ELLEITHEE, WORKED ON HILLARY CLINTON'S PRES. CAMPAIGN: I think the national parties are helpful, obviously, in the campaign. They do good work mobilize troops on the ground, funneling a lot of money into the political environment. At the end of the day each race is decided by the candidates. Having said that, I think the word you used earlier, distraction is right. Every time Michael Steele opens his mouth, in this case he didn't have to open his mouth it takes Republicans off the message they want to be talking about. We've been talking about this story for a couple of days about that's not what Republicans need to be talking about.

KING: Let's focus on the message. You help candidates in the past hone their message. I want to go through some of the messages in the campaign. We'll start out in California. Meg Whitman is running for California governor. She was the eBay. She's known for running eBay, built a huge successful business. She's hoping in the environment that stressing that her business experience will convince people maybe these are the kind of people we want in politics. Let's listen.

(BEGIN VIDEO CLIP)

MEG WHITMAN: What I see in Sacramento is 90 percent advice and commentary and 10 percent doing. In the business world it's 10 percent advice and commentary and 90 percent doing.

(END VIDEO CLIP)

KING: Is that a right message? Scott is that what you would run at this moment in time?

REED: I think what she needs to do is if you thought a few months ago that a Republican could even be competitive in California after the last administration, you wouldn't believe that. What she needs to do is put the confidence together, a little ideology next, and then some new ideas. I think this the first step to doing that. She's spending a lot of her own money. She's made this a competitive race. It's one to watch.

KING: So Mo one of the fascinating Democratic races we're watching, the lieutenant governor of Arkansas is challenging a sitting Democratic senator, Blanche Lincoln, in the primary. Here's what Bill Halter is stressing in his new ad.

(BEGIN VIDEO CLIP)

LT. GOV. BILL HALTER (D), ARKANSAS: Value and I work to teach our daughters but Washington and Wall Street reject these values. They line their pockets with insider deals and stick Arkansas families with the bill. I'm Bill Halter and I approve this message because it's past time we have a senator who will stand up to special interest and put Arkansas families first.

(END VIDEO CLIP)

KING: He never mentions Blanche Lincoln but he talks about Washington lining its pockets, supporting Wall Street, being in the pockets of the special interests. If you're a Democrat, you don't know who's going to win the primary. If Senator Lincoln wins it, you don't appreciate that.

ELLEITHEE: I think you're going to see a lot of candidates running with populist message, I'm fighting for the little guy, Washington's fighting for the special interest and the big corporate interest. I think what Democratic incumbents need to do, regardless of whether or not they're running in a primary, is talk how those votes do help the little guy, how they do help every day people rather than just big D.C. terms like T.A.R.P. or whatever. If Blanch Lincoln can do that, maybe she holds on and maybe Democrats do better than conventional wisdom in November.

KING: To that point, more broadly, Democrats say populism, standing up for the middle class, fighting for the little guy, that's their best hope against Republicans who they want to say are here in Washington standing up for the insurance companies.

REED: What's amazing about that ad is it could be run by a Republican. One of our themes we're going to use for the next six or seven months is insider deals. As the health care debate continues to go on about as the bill's looked at and all of the little parts and all of the little deals are taken apart that's a theme for Republicans. I imagine the Democrats don't like that ad very much, because it's really quite effective and going to be part of our theme.

KING: One of our great races. Gentlemen, stand by. When we come back we'll go over to the big wall. Our team returns for play by play next, including a rocky stop on Karl Rove's book tour.

(COMMERCIAL BREAK)

KING: Back for the play by play with Republican Scott Reed and Democrat Mo Elleithee. All right gentlemen. The president today in an interview with the "Today" show gave an interesting assessment of his view of the tea party movement. Take a listen.

OBAMA: We saw some of it leading up to my election. There's some folks who just weren't sure whether I was important in the United States or, whether I was a socialist, right? There's that segment of it, which I think is just dug in ideologically, and that strain has existed.

KING: Stop it there. Stop it there. Is that the message? Let me start with the Republican on this one. Most of these people are aligned with conservatives at the moment, not necessarily in the long term. Is that the message if the president wants to reach out? He did go on to say, some of them are worried about the deficit, some of them have legitimate concerns about the role of government and the bailouts and all that. Does that help or hurt?

REED: I don't know. I think he was right, Sarah Palin was the canary in the coal mine with these tea partiers last year. The problem for Democrats and Republicans, you can't refer to the tea parties as those people. They're not those people. They're libertarians, they're conservative, they're independents that are upset with Washington, mad at this whole scene, and they're out making some noise. I think it's a productive thing. Look, I remember Perot in '94, this is nothing. Perot was nothing like this. This is steroids plus. This is really people out there, not around an individual but around an ideology and that's the difference. I was surprised the president weighed into that today because it's not good politics.

KING: He was asked the question. So I guess he had no choice although he could have deflected the question. To that point, Perot, you think, the intensity is greater than with Perot, but Perot was an organizing central figure, and he had a lot of money. What's your assessment of the political impact?

ELLEITHEE: I mean, you're right. They don't really have that centralized figure. I guess Sarah Palin is the closest thing. I'm not sure that helps their cause. I think the president was right. We can't ignore the underlying concerns there, deficit, the size of government. That -- that stuff is real. Democrats need to be talking about that and willing to address it. But the tea party as a movement, not necessarily those beliefs but the public base I don't think is doing anything to help causes. Even at today's rally, people up there railing against whether or not the president was really born really born in the United States, and I think a lot of the ugliness we have seen over the past couple of weeks is sort of what is becoming the public face of the tea party. That's not going to help their cause.

KING: I want to show you another moment. Karl Rove has sold a lot of books. He has been on the best-selling list. He has signed hundreds. Most of the signings have gone off without a hitch. I assume it was inevitable given how polarizing a figure he is that opponents of the Iraq war showed up last night and made a scene. Let's listen.

(BEGIN VIDEO CLIP) KARL ROVE: No, no. I didn't say go ahead. You get away.

UNIDENTIFIED FEMALE: Look what you did. You outed a CIA officer. You lied to take us to war. You ruined the country.

(END VIDEO CLIP)

KING: Code Pink activists here disrupting Karl Rove. It's rude. He is trying to have an event. But I guess in America they're entitled to do that. It hasn't happened that often?

ELLEITHEE: Actually, I've seen it happen quite a bit when I was traveling around during the 2008 presidential campaign. We saw --

KING: These are hard feelings.

ELLEITHEE: That's true. These are hard feelings left over. And again, I feel the same way about some of those tea party people. I think the underlying feelings are legitimate. You can be really upset with Karl Rove and the Bush administration over the Iraq war. But that kind of behavior actually doesn't help the cause.

KING: Why does he stoke such emotion?

REED: I'm surprised it hasn't happened sooner and happened louder because Rove did what I what they couldn't do. He won two presidential elections in a row and beat them. Any time a couple of kooks can turn out and make a little noise and get on the news and everything like that. I'm amazed it hasn't happened earlier because he does stoke emotion he is a winner.

KING: Let's close on - I was going to say a lighter note but I don't know if Ben's Chili Bowl qualifies as a lighter note. The French are known for their food. Yet here is the French president and his wife at Ben's Chili Bowl which is a great place here in D.C., but not a place you would expect to find the French president I guess. This is a little out of character. Now the president of the United States could not help mention this when the two presidents spoke earlier today.

OBAMA: Now I have to point out that the French are properly famous for their cuisine. And so the fact that Nicolas went to Ben's Chili Bowl for lunch I think shows his discriminating pallet. He was sampling the local wares. We appreciate that very much.

KING: Now let's stop that tape there. There is a little tension between these guys in this relationship lately. Is this a bonding moment? I remember when Tony Blair first came to Camp David we had the Colgate moment. The two presidents use Colgate. Is this just fun?

REED: I think it's an example of trying to suck up to the president, quite honestly. They had to do something for lunch. Why not go somewhere that the president is going to appreciate and talk about and open up a press conference with. I thought it was actually pretty good politics. ELLEITHEE: There is nothing like a good bowl of chili to help de-escalate tensions. Nothing like a good bowl of chili.

KING: You been to Ben's?

ELLEITHEE: Of course I've been to Ben's.

KING: Maybe we should go after the show. You can't blame the French president for that, can you?

REED: Not at all.

KING: Gentlemen, thanks for coming in.

Reconciliation is the buzzword in Washington right now. When is the last time you used it in casual conversation? Our offbeat reporter Pete on the street is asking that very question. He is next.

(COMMERCIAL BREAK)

KING: John Roberts is filling in for Campbell Brown tonight. Let's go to New York and get a sense of what is coming up at the top of the hour. Hey, John.

JOHN ROBERTS, CNN ANCHOR: Hi, John. Good to see you tonight. We're digging deep into the Hutaree militia story. A ninth member of the group planning to assassinate police in Michigan was arraigned today. We're going to talk with a woman who has spent years investigating militias, leading the Hutaree.

Also, did a gang of high school kids bully a classmate to death? And is there anything that adults can do to protect kids from each other? That and more at the top of the hour. We'll see you then.

KING: See you in a few minutes John. Thanks.

Now here in Washington, the health care changes and the student loan changes passed in a process only in Washington they call reconciliation. Pete Dominick is our offbeat reporter. He is on the street, and he loves to break down the lexicon of Washington. Hey, Pete.

PETE DOMINICK, COMEDIAN: It gets a little confusing. As you know the president signed the health care and education reconciliation act. But that word reconciliation I found out on the street, it means a lot of different things to different people.

And so they use this bill reconciliation. Are you a husband and wife?

UNIDENTIFIED FEMALE: Yes.

DOMINICK: Have you had to reconcile anything lately? Like you wanted to go to the game?

UNIDENTIFIED FEMALE: We've been married for 40 years. DOMINICK: So you reconciled everything.

UNIDENTIFIED FEMALE: A long time ago.

UNIDENTIFIED FEMALE: I would love to reconcile sibling rivalry.

DOMINICK: All right, done! Get in there. Are you a sibling? Get in the hug. There you go. How senators are there in the U.S. Senate?

UNIDENTIFIED FEMALE: 50. Two to every state.

DOMINICK: That would be 100.

How many senators are there in the U.S. Senate?

UNIDENTIFIED MALE: That's a good question.

DOMINICK: Yeah, it is.

UNIDENTIFIED MALE: 26?

DOMINICK: 26 is wrong. Higher than 26 and lower than 101.

UNIDENTIFIED MALE: There is only 100.

UNIDENTIFIED MALE: We know there are 100 senators, and we know that the vast majority of them think that we are really, really stupid.

DOMINICK: How many senators should it take to pass a law?

UNIDENTIFIED MALE: 51.

DOMINICK: No. That's weird! You need more than that. You need a super majority. Is there anything you want to reconcile in your life?

UNIDENTIFIED MALE: A lot of things. I would not take to the Senate.

DOMINICK: You filibuster a lot in the relationship? Does he filibuster?

UNIDENTIFIED MALE: No. He just does what he is told.

UNIDENTIFIED MALE: I'll filibuster you, right?

DOMINICK: We're here with Jack Abramoff, right?

UNIDENTIFIED MALE: No.

DOMINICK: Sorry. Have you had to reconcile anything in your life lately?

UNIDENTIFIED MALE: Absolutely.

DOMINICK: Like what?

UNIDENTIFIED MALE: Like being right here right now.

DOMINICK: You're reconciling your conversation with me?

UNIDENTIFIED MALE: Exactly.

DOMINICK: It's not that, John, that Americans are, you know, dumb, it's that that word gets confusing because I know it's a tool in the Senate. But isn't it when the Senate and the house come together? Isn't that reconciling a bill too?

KING: No. They need a conference committee to bring the two bills together. They do end up reconciling the differences. But they don't call it that. They call it a conference report.

DOMINICK: See? It gets confusing. I just reconciled my two e- mail boxes. Have you had to reconcile anything, John?

KING: I don't reconcile my e-mail boxes which is why this thing sometimes buzzes off the chart. What is the next word of Washington you're going to test on the street?

DOMINICK: I think filibuster as a comedian is always funny. I may try that one out. We'll see.

KING: Filibuster it is. Pete on the street, thank you so much tonight.

Thanks for joining us tonight and spending some time with us. We hope you'll come back to recall night. John Roberts in New York to take it away right now.