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STATE OF THE UNION WITH CANDY CROWLEY

Interview With Gov. Riley; Interview With Congressman Pence, Congressman Clyburn

Aired June 13, 2010 - 09:00   ET

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


CANDY CROWLEY, HOST: Oil in the water and politics in the air. Day 55. The president prepares for another trip to the Gulf this week, his third in 18 days. A New York Times editorial this morning rips into the man the Times supported in the election. Quote, "the president cannot plug the leak or magically clean up the fouled Gulf of Mexico, but he and his administration need to do a lot more to show they're on top of this mess and not perpetually behind the curve."

And the Coast Guard awaits an answer to its Friday letter, released to the public, directing the CEO of BP to stop the leak and hurry. Quote, "BP must identify in the next 48 hours additional leak containment capacity that could be operationalized and expedited to avoid the continued discharge of oil."

Just how much oil is discharging remains an ever-changing calculation.

(BEGIN VIDEO CLIP)

ADM. MARY LANDRY, U.S. COAST GUARD: There's no crude oil at this time leaking from the wellhead.

What we now know we are dealing with in addition to that is oil emanating from the well.

NOAA experts believe the output can be as much as 5,000 barrels.

ADM. THAD ALLEN, U.S. COAST GUARD: We first thought it was 1,000 barrels, then we thought it was 5,000 barrels.

KEN SALAZAR, INTERIOR SECRETARY: The best estimates are, at this point, that there is 5,000 barrels a day.

ALLEN: They came up with two ranges, 12 to 19 and 12 to 25,000, and we're still dealing with a flow estimate and we're still trying to refine those numbers. One portion of the work is we've just indicted, came up with a higher flow rate.

(END VIDEO CLIP)

CROWLEY: Try 20,000 to 40,000 barrels. That's the latest estimate, anyway. The magnitude of this disaster has made BP a household enemy No. 1 in the U.S. and undercut confidence in the Obama administration. The political fallout may be as enduring as the sludge.

Today, the oil spill reaches into Alabama's white beaches and protected wildlife areas. We'll talk to Governor Bob Riley.

(BEGIN VIDEO CLIP)

RILEY: What we're trying to do is get the people that are going to need this help, get it as quickly as we can. (END VIDEO CLIP)

CROWLEY: Then, assessing the president's leadership during the worst U.S. environmental disaster in history with two congressional leaders, Democrat James Clyburn of South Carolina and Republican Mike Pence of Indiana.

And, are we headed up or down again? Interpreting the economy with Doug Holtz-Eakin and Greg Ip. I'm Candy Crowley and this is State of the Union.

The coast of Louisiana took the first heavy hit of this man-made catastrophe, but three other Gulf states have thrown out the boom and called for the skimmers and now watch the horizon for incoming oil. Yesterday morning, residents of Gulf Shores and Orange Beach, Alabama, woke up to beaches blanketed in brown, gooey oil.

Joining us now from Dauphin Island, Alabama, is Governor Bob Riley. Governor, thank you so much for being here. I want to talk to you about some breaking news that CNN has, and that is that the president, as you know, will meet with BP executives next week after he visits you, and he will tell them that he wants an escrow account, BP-funded escrow account that would be administered by a third party, probably a panel to be appointed, to make sure that some of these claims are paid. And he says it will be transparent. Does that sound like a good idea to you?

RILEY: Well, as long as they're paid, Candy, I really don't care how they do it, whether they set up an escrow account or not. And BP and every conversation I've ever had with them, has guaranteed that they would pay it. I think the costs are mounting. What their total cost is today, I don't think anyone knows.

But we have to do something. If you look at what's going on with the economy and the state of Alabama and Mississippi, Louisiana, and now Florida, we're going to have to have some level of compensation, because our tourist season here is essentially from Memorial Day to Labor Day. And with the beaches the way they are this morning, it's going to be very, very difficult to sustain the economic balance that we've had in the past.

CROWLEY: But Governor, let me just hone in on this a little bit, because who gets compensated? You've got oil workers who can't work because there's no deepwater drilling, you've got shop owners who don't have customers, hotels with empty rooms. You've got fishermen with no place to fish. Give us an idea of who gets money from BP. Everybody?

RILEY: Every one of them.

CROWLEY: Really?

RILEY: Absolutely. I don't think -- I don't think there is a dividing line. I don't think you can say that one group is going to get it and another one doesn't. If a restaurant in Gulf Shores, Alabama, is off 50 percent because the tourists didn't come, I think he is owed 50 percent of his revenues from last year. The same thing with anyone in these areas, because the whole economy is based on the tourist market. And when it goes away, someone's got to compensate them, because most of these people are not going to be here next year if we don't.

CROWLEY: And your superintendent of schools has suggested, because, obviously, schools are affected by tax receipts, that BP ought to make up for lost tax receipts to the state government so that they continue to operate. Is that something BP should pay for?

RILEY: Absolutely. And that's what I'm saying, Candy. I don't know how far this is going to go. I don't know how many people are going to be affected, but the state of Alabama is being negatively affected, in our tax revenues, in our ad valorem base, across the board. And it's going to have to be taken care of, either by BP or someone else, because each one of these coastal states are going to take a hit, and they're going to take a hit for the next five, 10 years, especially if some of the fishermen can't get back into the water, especially if our estuaries end up being soiled. It could take 10 years before we get this taken care of.

CROWLEY: Governor, the president's coming down there a third time in 18 days. What do you want to hear from him? And what have you got to tell him about how it's going?

RILEY: Well, I guess the biggest concern I have today, Candy, is this, quote, unified command. What we have is a committee. It's a committee that essentially consists of all of the different federal agencies sitting down here, and as a committee, each one has a veto over whatever policies we have.

You can't continue to do that. We're going to have to have one person who makes the call on what we do and where.

Let me give you an example. The Coast Guard built a plan for Alabama. Someone in the unified command decided that wasn't a good plan and has taken 45 days now to come back and revise a plan that we can stop this oil from going into some of the most sensitive estuaries we have in the state of Alabama.

We have a claims process today that the Coast Guard is supposed to manage and implement. But on the other hand, BP is going to be the one that makes a determination about whether or not a claim is paid. We've been told that we want the oil to go onto the beach -- we don't want it to go onto the beach -- but now that it's there, they say, well, we'll put snare booms out. Well, you put snare booms out, and then Fish and Wildlife comes in and says, well, you can't put those booms out. Well, if you can't put the booms out because of the turtle, what do you do?

CROWLEY: Governor, it sounds like you are as frustrated with the Obama administration and the lack of coordination and commonality of purpose as you might be with BP?

RILEY: Well, absolutely. Because you can't have a committee making the decisions that are going to impact this entire coastal area. You can't have someone come in and say, well, if it gets onto the beach, we'll clean it up and we'll clean it up rapidly, and then OSHA come in and say, well, the people can't work but 20 minutes out of an hour or two hours a day, and get it cleaned up. Someone is going to have to be in charge of each one of these operations. They're going to have to make a determination about what we're going to do, and they're going to have to set priorities.

CROWLEY: We're also told that the president, after he comes back from his visit to the Gulf, is going to give a nationwide address about the situation. What can he say to the nation that's going to be helpful to you? And it sounds like what you're battling here is an ongoing oil spill and a bureaucracy that's not talking to each other.

RILEY: Well, it's not that they're not talking to each other. Again, if we're going to make a priority that we're going to keep oil out of an estuary, we're going to have to have the resources to do it. We're going to clean up Gulf Shores and Orange Beach, we're going to have to have a system that allows that to happen. You can't have people out in a hazmat suit working 20 minutes out of the hour and try to clean it up. There has to be someone that comes in and makes that determination about the decisions that are impacting the people along the Gulf Coast and will for a long time.

CROWLEY: Alabama Governor Bob Riley, good luck. Sounds like it's just starting to come into Alabama. We wish you well. Thank you.

RILEY: Thank you.

CROWLEY: When we come back, questions about President Obama's leadership in the oil spill disaster.

(COMMERCIAL BREAK)

CROWLEY: A presidency can either define or be defined by a crisis. Think Jimmy Carter and the Iranian hostage crisis, George W. Bush and Katrina. President Obama still wrestles for the upper hand in the BP oil spill. Early on, confusion about who was in charge led critics to suggest the president had relied too much on BP. Five weeks into this mess, the president held a news conference. message received.

(BEGIN VIDEO CLIP)

OBAMA: I take responsibility. It is my job to make sure that everything is done to shut this down.

(END VIDEO CLIP) CROWLEY: More than 50 days into the crisis, there were questions about why the president still hasn't met with the families of the 11 who died on the Deepwater Horizon. Asked and answered.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The president will express his heartfelt condolences for the families of the 11 that lost their lives.

(END VIDEO CLIP)

CROWLEY: And as the anger over the gulf builds, the president, so often praised for his cool, seemed too detached for some. Message, he gets it.

(BEGIN VIDEO CLIP)

OBAMA: We talk to these folks because they potentially had the best answers, so I know whose ass to kick.

(END VIDEO CLIP)

CROWLEY: And this too from the generally administration-friendly editorial page of The New York Times: "A year-and-a-half into this presidency, the contemplative nature that was so appealing in a candidate can seem indecisive in a president. His promise of bipartisanship seems naive. His inclination to hold back, then ride to the rescue, has sometimes made problems worse." Up next, Congressman Clyburn and Pence.

(COMMERCIAL BREAK)

CROWLEY: Joining us now, two members of the House of Representatives leadership, Democrat James Clyburn of South Carolina and Republican Mike Pence of Indiana.

Congressman Clyburn, let me begin with you. Blistering editorial in The New York Times today, accusing the president of not showing enough leadership on the oil spill. We also have Maureen Dowd, another friendly, sort of Obama person, taking him to ask. What is the president doing wrong here that's bringing critiques not just from conservatives, but from his base, basically?

CLYBURN: Well, I don't know that the president is doing anything wrong. I think that the president's style is something that a lot of people feel very comfortable with during the campaign. They were looking for a steady hand, they were looking for someone who was intellectually capable of understanding all the nuances of various issues.

But when it came time for governing, people like to see a little more emotional involvement on the part of their leaders. So I think...

CROWLEY: But if I could just ask you, sir, just because -- The New York Times editorial wasn't talking about he needs to emote more, they were talking about leadership. And there's not a lot of nuance to oil coming up from the bottom of the Gulf of Mexico. What they question is, he has not taken hold of this and shown leadership. You don't agree with that assessment?

CLYBURN: No, I don't. I really believe that when you have so many entities involved in this, then it becomes a problem of trying to get everybody on to the same page and focus on to a process that seems sometimes to be contradictory if you go from one agency to another.

If this were only one or two agencies involved in this process, that would be one thing. But there must be 12, 14, almost 20 entities involved, and so managing that gets clumsy sometimes. But I do believe that the president is much more hands-on at this point than he was at the beginning.

I don't think any of us knew the real extent of the spill, because we were getting information from BP that now we find out was not quite true, in fact, was far from the truth.

CROWLEY: Let me bring Congressman Pence into this. I remember in Katrina, some of the first complaints about the president was when the administration said, we didn't know it was this bad. and it wasn't really a fairly good excuse for a lot of people, because it was fairly obvious.

How do you judge how the administration has been doing? And does it fit -- I mean, I'm going to anticipate you thinking he hasn't done as well as Congressman Clyburn thinks.

PENCE: Well, yes, I think -- I respect Jim's opinion on this, but this is not a matter of the president's style. It's not a matter of public relations. This administration did not send cabinet-level officials to the region until 10 days after the explosion occurred.

It would be two weeks after the explosion occurred that we began to hear from members of Congress from the region that you literally had fishermen standing on docks, you had parish presidents who were waiting for BP to give them permission to go out and deploy boom to protect their wetlands and their coastline.

Then we began to hear from Governor Bobby Jindal about a delay in permitting for the construction of barrier islands. I think what has become clear to people at every end of the political spectrum, and now even on the editorial pages of The New York Times is that this administration was slow to respond and continues to fail...

CROWLEY: But have they done better?

PENCE: Well, continues to fail to provide the kind of energetic leadership that the American people expect, and, Candy, that the law demands. Under the Oil Pollution Act that was adopted after the Exxon Valdez disaster, it says the president of the United States shall develop a plan to contain the discharge. I mean, I read this morning in the news... CROWLEY: But, Congressman, he has -- in fact, he has been down there. He has been looking over it. He put Thad Allen down there, and said, here's my point guy. He can't plug the leak. He can't clean up the oil. He tells his people to go do it. Why isn't that sufficient?

PENCE: Well, but he could have picked up the phone and called the CEO of BP sooner than 50 days. I'm glad he is meeting with the chairman of BP next week. But I think the fact that he never spoke to the CEO of British Petroleum for the first 50 days of this incident is emblematic of the kind of detached style of leadership that we're seeing here.

PENCE: Look -- and this business about the president looking for somebody's A-double-S to kick this week -- you know, as the New York Times this morning, I think -- I think everybody in America knew on day two whose A-double-S ought to be kicked.

The reality is that BP is responsible to plug that oil; BP is financially responsible to contain the impacts of the discharge on the coast and on the economy. But that's our coastline, and the president should be marshaling every resource of this country, every resource available around the world to spare our coastline and to spare the families in the region -- the extent of the impact of this spill.

CROWLEY: Congressman Clyburn, CNN is reporting now that the president, in his Wednesday meeting with BP executives that Congressman Pence just referred to, will say that he wants an escrow fund. He wants BP to fund it. He wants that to be ruled, if you will, or run by a third party that will decide who gets what -- what sort of compensation for what damage.

Does that sound like a good idea?

Because there had been a movement on Capitol Hill, a lot of people saying, look, BP should stop paying dividends to its stockholders and start giving money to some of these people who have been damaged.

Is this a way around that, and a good idea?

CLYBURN: I think this is a good idea, but I think both those ideas are worth us exploring. The fact of the matter is, I do not believe that BP can continue to pay big stock dividends, can continue to get these -- pay for these full-page ads, running a public relations campaign while so many families, so many communities are being ruined.

I think the focus must be on developing and putting resources into these communities and on to these families and on to these working men and women, in whatever way we can do that, by an independent third-party agency or by the federal government working in tandem with BP Whatever way is what we ought to do.

That's where the focus ought to be. I don't think that BP has sufficiently put the focus on these communities and on what's happening to the occupations of those working men and women whose families are going to be ruined as a result of this.

CROWLEY: Congressman Clyburn, Congressman Pence, let me ask you to just stick with me for a minute. I want to take a quick break.

There are questions that surround an unknown, surprising win in South Carolina, and a leading Republican voice is calling for a truce on social issues. We turn to politics with Congressman Clyburn and Pence, right after this.

(COMMERCIAL BREAK)

CROWLEY: We are back with Congressman Clyburn and Pence.

Congressman Pence, the president has written a letter to the leadership in the House and Senate, saying he wants $50 billion in emergency funds to stave off state layoffs, teachers, policemen, firemen.

Rahm Emanuel did an interview with the Washington Post in which he said the following in response to "But what about the deficit?"

"While some people say you have to spend and some people say you have to cut, the president wants to talk about both cuts and investing."

How do you interpret that?

PENCE: Well, I interpret that -- this is an administration that is -- that is groping for some economic policy. I mean, the truth is that the president likes to talk about the failed economic policies of the past. The truth is, the economic policies of this administration and this Congress are the failed economic policies of the present.

I mean, we were -- unemployment was at 7.5 percent when they passed their so-called stimulus bill, borrowed $1 trillion from future generations. It's at 9.9 percent nationally today.

What the American people know is that we can't borrow and spend and bail our way back to a growing economy. We need fiscal discipline in Washington, D.C. We need to abandon this spending approach to stimulus, adding to deficits and debt, and we need to provide immediate across-the-board tax relief for working families, small businesses, and family farms.

We need a new approach. The economic policies of this administration and this Congress are failing to put America back to work.

CROWLEY: Congressman Clyburn, I suspect you have heard the "We need to cut taxes" argument before from the Republicans. But you also are looking at a difficult election year, in which one of the primary concerns of the American people is the economy, and inside that concern, the growing deficit. People just, sort of, innately know that we're spending too much money.

Yet, there is talk of this $50 billion in emergency funds and talk of a second stimulus. Can the United States afford that kind of money to try to stimulate more jobs and try to get the economy moving a little faster? CLYBURN: Well, Candy, I do not think the American people can afford not to. The fact of the matter is, I think that, if you look at 300,000 teachers being laid off, that's not just 300,000 people losing their jobs; that is putting America's students, their children, at tremendous risk. So we have to take into account exactly what the situation is that we're faced with.

Congressman Pence keeps talking about the fact that we are failing in our approach. We all know exactly what this president inherited. And we will stop talking about that inheritance when Congressman Pence and others stop talking about taking us back to those failed policies.

We're trying to correct some things that we had absolutely nothing to do with, and the American people know that. And I would wish that all of us would get on board with some bipartisan approaches to trying to get our economy stabilized, trying to get our children educated, trying to get working men and women back to -- on their jobs and look for the future -- look to the future with a little more compassion and bipartisanship.

CROWLEY: And, Congressman, I think nobody disagrees with you on the goals. I think one of the questions that's cropping up now is, when does the statute of limitations run out...

(LAUGHTER)

... on blaming the Bush administration, and when is it on you all, as the governing, really, in the House and the Senate, and in the White House -- when does the economy become your baby, so to speak?

CLYBURN: The economy is our baby. But let's stop talking about cutting taxes, cutting taxes, cutting taxes. That simplistic approach to trying to get this economy moving again is what got us in this position in the first place.

(CROSSTALK)

CLYBURN: We just had an across-the-board cut on 95 percent of working men and women. They got an across-the-board tax cut. We all know that.

CROWLEY: Let me get Congressman Pence in here, just a little bit, Congressman.

PENCE: What also got us into that problem was a doubling of the national debt under the last Republican administration, was a Wall Street bailout, that now they're trying to make permanent in the financial services bill.

PENCE: We're talking about breaking from the runaway federal spending that characterized this administration and the last administration and say it's time for fiscal discipline in Washington, D.C. Let's reject the deficits and the debt and the bailouts. And let's add to that the kind of fast-acting, across-the-board tax relief, Jim, that John F. Kennedy did back in the 1960s, that we did in the the early part of the Bush administration, the Reagan administration. It's always what works to get the economy moving again.

CROWLEY: Before we go back to the '60s, I don't think we're going to settle this tax cut argument. But, Congressman, I need to turn you to something a little more local. And that is your nominee for the U.S. Senate, Alvin Greene, came out of nowhere. You think he's a Republican plant. He is calling now for the Democratic establishment to get behind him. That he, in fact, has been elected to be the nominee. Do you foresee yourself getting behind Mr. Greene?

CLYBURN: No, I don't see myself getting behind Mr. Greene. The fact of the matter is, of course, Candy, I never said he was a Republican plant. I said he was someone's plant. And it turned up after the elections, we found out, as I said earlier, something untoward was going on.

Now all of a sudden, we see that Congressman Joe Wilson -- his campaign manager, was, in fact, managing the campaign of my primary opponent. I saw the patterns in this. I know a Democratic pattern, I know a Republican pattern, and I saw in the Democratic primary elephant dung all over the place.

And so I knew something was wrong in that primary. And this result tells us that. People intentionally circumvented the law, the rules and regulations, did not file any disclosures, did not file any of their campaign finances, yet they spent hundreds of thousands of dollars running this campaign and broke every law.

CROWLEY: I want to get one quick question in. And we'll leave it at elephant dung,which is certainly the most colorful explanation I've had of politics before. I want to ask you about something that Governor Mitch Daniels of Indiana, you know him well, said recently about the next presidential race. "The next president, whoever he is, will have to call a truce on the so-called social issues. We're going to just have to agree to get along far little while until the economic issues are resolved." Do we need to stop paying -- not paying attention, but concentrating on abortion, you know, school prayer, any number of things that have been hot-button issues for Republicans?

PENCE: Well, first, let me say, I haven't spoken to Governor Daniels about what he meant. And I think Mitch Daniels is the best governor in the United States of America. He has done a fantastic job for the people of Indiana. But it's also...

(CROSSTALK)

CROWLEY: Do you think abortion needs to be put on the back burner?

PENCE: Well, it's also true, Barack Obama is the most pro- abortion president in American history. This administration has worked to expand public funding for abortion at home and abroad since the first day Barack Obama took office. And I believe with all my heart that Republicans need to continue to fight for the sanctity of life and the sanctity of marriage with everything we've got in 2010 and in 2012.

CROWLEY: So I'm going to take that as a slight disagreement with you and the governor of Indiana. Thank you so much for being here, Congressman Pence, Congressman Clyburn, I appreciate you both.

When we come back, the economy's mixed signals.

(COMMERCIAL BREAK)

CROWLEY: Turning to the economy, a look at a week of confusing signals. Jobs and retail sales were disappointing. The housing mark fell off when the tax credits for first-time homeowners ended. Still, the stock market, falling for weeks, began to recover. And most experts forecast modest growth, except for the ones talking about a second recession and the ones talking about both.

(BEGIN VIDEOTAPE)

BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: Of course, a double dip is always -- you know, never can be entirely ruled out, of course. But right now our expectation is the economy will continue to grow at around a 3 to 4 percent pace this year.

CROWLEY (voice-over): Fed Chairman Ben Bernanke testified before Congress Wednesday, sometimes reassuring and sometimes not.

BERNANKE: Our nation's fiscal position has deteriorated appreciably since the onset of the financial crisis and the recession.

CROWLEY: Reassuring.

BERNANKE: And so we see at this point a moderate recovery.

CROWLEY: Or not.

BERNANKE: The federal budget appears to be on an unsustainable path.

CROWLEY: Or really not.

BERNANKE: Failure to achieve fiscal sustainability will over time sap the nation's economic vitality, reduce our living standards, and greatly increase the risk of economic and financial instability.

(END VIDEOTAPE)

CROWLEY: We'll try to sort this out with Doug Holtz-Eakin and Greg Ip.

(COMMERCIAL BREAK)

CROWLEY: A whirlwind of data this week leads to the question, will the economy's resurgence be dominated by fits and starts? Joining us now are Greg Ip of the Economist magazine, and Douglas Holtz-Eakin, the former director of the Congressional Budget Office and now president of the American Action Forum.

So clear this up for me. I can't tell if we're all going to you- know-where in a hand-basket, or if it's going to be OK. And I think we just get double signals all the time.

HOLTZ-EAKIN: I think it's going to be disappointing. What you see in the economy, once you take out all of the special factors, a lot of inventory changes, housing task credits to spur purchases, cash for clunkers, Census workers, is an economy that's growing pretty slowly, 1.5, 2 percent a year. Not the kind of growth we're used to. Not the kind that's going to power a lot of jobs and a big recovery.

CROWLEY: Greg, is it possible the economy that we know is just gone?

IP: It is a "new normal," as they say. What we know from other countries that have been through financial crises like what we've just been through, is that you don't get that nice sharp V-shaped rebound. You get kind of a slow, grinding recovery as people pay down all of those bad debts they took on.

Now what you're seeing right now, in the last week or two, is two things. First of all, all of the troubles we've had in Greece have made investors very nervous. That has caused the stock market to fall quite sharply.

IP: And then here in the United States, you've had a couple of very disappointing economic reports, on jobs, and just the other day, on retail sales.

But when you actually look beneath the details, you don't see an economy going back into recession. You sort of see an economy just trudging along. And unfortunately, some of the people who had gotten all bulled up, not just on Wall Street, but in the administration and in Congress thinking, hey, maybe this is a V-shaped recovery, they've had to recalibrate and realize, no, it's going to be more like a U.

CROWLEY: I want to show our viewers a chart here. It's on long- term unemployment, because to me, this is fairly worrisome. And what it shows that over time, we are currently at 46 percent of the total unemployment is long-term unemployed, people who haven't seen a job in almost a year, right? So is that also part of the new normal? Are there just people out there that are going to stay long-term unemployed for a longer term?

HOLTZ-EAKIN: I think one of the real concerns in this recession is that a lot of those long-term unemployed are young people. The age group 21 to 35 has been hurt disproportionately hard in this recession. They've been out of work for a long time. They took the bulk of the pay hits. And they report, many of them, that their job's gone forever. What we do for that group will dictate our abilities going forward to a great extent. We're not doing enough, in my view.

CROWLEY: What do we do for that group? IP: Well, there's a couple of things. First of all, you want to, if you can, avoid having them withdraw from the labor market. Because once people just stop looking for work, never mind working, they lose the habits--

CROWLEY: Can 30-year-olds quit looking for work? I mean, we're talking about the newest workers.

IP: We do see it happening. So in fact, one of the things that you're seeing is that these efforts to keep people on unemployment insurance, although it's expensive, it may at least keep them in the market looking for work. So when demand for workers comes back, they'll be ready to go to work.

CROWLEY: Let me ask you a question about unemployment benefits. I did an interview with former Congressman Tom DeLay a while back. And he said, look, there's evidence that extending those unemployment benefits keeps some people on unemployment. I got so much mail about that, saying how dare he say that people want to be on unemployment. Is there evidence that maybe those extensions are too many extensions?

HOLTZ-EAKIN: Get ready for more mail, because the evidence is unambiguous, that the longer you have unemployment insurance, the longer you will see people unemployed. There are some estimates that if we went back to normal duration of unemployment benefits, the unemployment rate would drop 1.5 to 1 percentage points, something like that.

The issue is not what's the impact on unemployment. Unquestionably, it extends it. The question is, will you get a better job and a better future when you go back? And that's why you have unemployment insurance, so people can look for the right job.

CROWLEY: We're going to come back and I'll have you button up that particular conversation. We'll have more with Greg Ip and Douglas Holtz-Eakin after this.

(COMMERCIAL BREAK)

CROWLEY: We are back with Greg Ip and Douglas Holtz-Eakin. Let's wrap up this long-term and very young unemployed problem.

IP: I just want to respond a bit to what Doug was saying. Yes, it's true that there is evidence that giving people more unemployment insurance benefit does keep them unemployed longer as they take longer to look for a job, but that's usually only true in a healthy economy, where there are jobs available that they're turning down as they keep looking. It's probably not so true in an economy like we have today, where there's just no jobs available, and so the person whose benefit runs out, primarily he's not going back to that job that's available. He's just basically withdrawing from the labor force altogether. And giving that person some extra money to live on right now actually maintains some spending in the economy.

CROWLEY: It's also politically unsustainable to cut those off, so I don't think that's probably going to happen any time soon. But it always was an interesting concept to me.

I want to talk about what might or might not help the economy at this point. I want to show you something from David Brooks, you know, columnist from the New York Times. He wrote this Friday, "Overall, most economists seem to think the stimulus" -- first one -- "was a good idea, but there's a general acknowledgement that we know relatively little about the relationship between fiscal policy and job creation. If the economists are divided about what just happened, the rest of the world is not divided about what should come next. Voters, business leaders and political leaders do not seem to think that the stimulus was such a smashing success that we should do it again, even with today's high unemployment."

And yet we have the president who wants $50 billion to try to save teacher jobs, sort of help bail out the states. There is talk of needing to pump more money into the economy. HOLTZ-EAKIN: No. I think this really misses some important points. No. 1, it's the lesson of history. This was the way we did business in the '60s and '70s, and it failed miserably, so we swore off it for a long time. We should do it again.

No. 2, it's aimed at the wrong place. This economy will recover as fast as business spending and our export communities get healthy, and we're not doing things for them. We're focused elsewhere.

And the third is, this is all a confidence game. In the end, you have to give businesses the confidence to go and hire people, invest in capital equipment, and this administration has not inspired the confidence of the business community, in part because they really haven't made jobs a top priority. They did health care first. Just this last week, we saw them say, no, no, we want to go ahead and regulate carbon in the Clean Air Act. The business community looks at it and says, they don't care about us. And we have a problem as a result.

CROWLEY: Greg, we do see a reluctance to hire in the private sector, probably why we see some initiatives from the president about small businesses. He's talking about that again. The question is, though, can you afford to let the economy, I don't know -- is limping along the right word for what it's doing now? Or does it need a quick injection of big cash?

IP: I don't think it's absolutely essential, but I think it would probably do a little bit of good.

Look, yes, people are very worried about deficits. We saw that when the House, for example, when they passed a version of the stimulus, they cut the stimulus portion basically in half. But let's get our priorities straight here. The problem is not that we're thinking of adding $50 billion to the deficit this year. It's those gigantic deficits in the future, once the economy is back to full strength. The right strategy would be to give a little bit more stimulus now and couple that with like a medium-term plan to deal with, for example, our Medicare and Social Security entitlement problems in the future. That's the kind of thing that would reassure (inaudible). CROWLEY: Where have I heard that before?

HOLTZ-EAKIN: I think that's a blackboard discussion, and I understand the blackboard discussion, but that's not taking place in the real world. What the business community and what Americans see is a Congress that does the $50 billion and then says, maybe we'll do another $60, and how about $100 over here? And there is no confidence conveyed that we will get on the right track going forward, and that scares everyone a lot.

CROWLEY: Let me ask you a quick question here in our remaining minute and a half. And that is, the Bush tax cuts are set to expire. Everything I've ever heard is, you don't ever cut taxes when the economy is flailing or struggling. Should the Bush tax cuts be allowed to expire? IP: No. No. I mean, the economy, as Doug was saying earlier on, is weak right now. And when you have the stimulus (inaudible) rolling out at the same time as taxes going up, that's the kind of blow that could actually raise the risk of a double-dip recession. Could some of the tax cuts be allowed to expire? Yes. But all of them? I think that would be taking a lot of risks.

CROWLEY: So, there's two questions. Can you raise taxes? And should you allow those tax cuts of the Bush administration to expire?

HOLTZ-EAKIN: I think it's actually a different question. Number one, it's the Bush tax cuts, but it's also everything in the stimulus bill, all of which expires at the end of this year as well.

So that's an opportunity to stop talking about taxes up or down and talk about a tax code that actually allows us to grow. Our problem is our trend growth is too slow. Let's grow faster and also pay the bills. So we -- we really need a substantial amount of tax reform, not just up or down.

CROWLEY: You guys are great. Douglas Holtz-Eakin, Greg Ip, thank you so much for trying to explain this to us. I know more now.

Up next, a check of the morning's top stories, and then from the president in Iraq video to a senator's tweet with Snooki, we'll look at this week's quirkier side of politics.

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CROWLEY: Time now for a check of the headlines. In a recap of today's top story, President Obama will demand that B.P. set aside an escrow account to pay individuals and businesses damaged by the Gulf oil spill. The funds will be distributed by a third party. The president and B.P.'s chairman are set to meet at the White House Wednesday. The president will make his fourth visit to the Gulf Coast tomorrow and Tuesday, and he'll address the nation about the government's response to the catastrophe from the White House Tuesday night at 8:00 p.m. CNN will, of course, have live coverage of his speech.

Ethnic violence spread to new areas today in the Central Asian nation of Kyrgyzstan. Three days of rioting have left more than 100 people dead, 1,100 others injured, and burned down neighborhoods. The country's interim government is asking Russia to help end the unrest. Kyrgyzstan houses both Russian and U.S. military bases and is strategically important to the region for gas lines.

The search resumed this morning for nearly two dozen people believed missing as a result of the flood at a western Arkansas campground. At least 18 people were killed, including six children. Authorities are also focusing on whether a warning system that's supposed to notify campers on federal land about potentially dangerous weather actually worked properly. Agriculture secretary Tom Vilsack says warning systems at all federal campgrounds will undergo a review.

Passengers of Spirit airlines are grounded for a second straight day due to a strike by pilots. All of the airline's flights are canceled, affecting approximately 150 flights from the airports in the eastern U.S. The pilots want higher pay from the discount carrier. Contract negotiations between the airline and pilots have been dragging on for more than three years.

And if you've been following "Little Orphan Annie" in the funny pages, this is your last day to catch her. The comic strip is ending after 86 years. "Annie" made her debut in the New York Daily News back in 1924.

Those are your top stories here on "State of the Union." Up next...

(BEGIN VIDEO CLIP)

(UNKNOWN): (RAPPING)

(END VIDEO CLIP)

CROWLEY: Was that Barack Obama in the rap video?

(COMMERCIAL BREAK)

CROWLEY: And, finally, with due respect to "Us Weekly" magazine, our first edition of "Politicians: They're Just Like Us." They tweet reality stars. John McCain, who didn't carry a BlackBerry during the 2008 campaign, is now some kind of Twitter czar, with almost 2 million followers, but his conversation with MTV star Snooki left us tweetless.

The "Jersey Shore" star said that McCain would never tax tanning beds because, quote, "he's pale and he would probably want to be tan."

McCain tweeted, you're right, Snooki, I would never tax your tanning bed, but McCain, who has suffered from skin cancer, recommended that the colorful celebrity wear some sunscreen.

And how more in touch can you get than a president in a rap video? The 1993 video, "Whoomp! (There It Is)" went viral this week when an Obama doppelganger was spotted in the background. Take a look. Fun while it lasted, but a White House spokesman says it's not him, squashing the dream that a video extra can grow up to be president.

And, finally, politicians are just like us because they poke fun at themselves. Missouri Senate candidate Chuck Purgason, after two decades of looking like this, decided to ditch the wig in the name of transparency and to, quote, assure voters that "Nothing will be swept under the rug on my watch." Purgason is willing to auction it off if anyone is willing to pay.

Thanks for watching "State of the Union." I'm Candy Crowley in Washington.