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JOHN KING, USA

Jobs and Politics; Salty Language

Aired October 8, 2010 - 19:00   ET

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


JOHN KING, HOST: Thanks Wolf and good evening everyone. Tonight the government's last report on jobs before the November election and a crackling new debate over who's to blame for high unemployment, also did the Democratic candidate for governor in California call his Republican opponent a "whore"? His campaign says no, but at a minimum he was part of a conversation when someone did, and she says it's an affront to all women. Plus Nevada Senate candidate Sharron Angle says there are a few places right here in America where they practice Sharia law. We'll show you one she listed and put her claim to the test.

And get this -- how tough of a year has there this been for President Obama? Americans are now evenly split when asked to pick the better president, Barack Obama or George W. Bush. One year ago, Mr. Obama had a 23-point advantage on that question -- wow.

Driving those shaking poll numbers and sinking poll numbers is by far the most important issue in the country and in the midterm campaign, the economy. They say numbers don't lie. So then consider these numbers tough truth for the Obama White House and the Democratic Party. A 9.6 percent unemployment rate nationally and it's higher, much higher in some, in many state where the Democrats are on the defensive in the big midterm election contests. In many of those races, Republicans are making the case that part of the problem is the big stimulus package the Obama White House promised would keep unemployment in check.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE, POLITICAL AD: She voted for Obama's stimulus that increased debt and failed to create jobs.

UNIDENTIFIED MALE, POLITICAL AD: And claimed the $787 billion failed stimulus package would create jobs and fix our economy.

UNIDENTIFIED FEMALE, POLITICAL AD: Want to know just how out of touch Harry Reid is? Spending 787 billion on a stimulus that failed is a start.

(END VIDEO CLIP)

KING: We know the White House disagrees. But tonight, 25 days until the election, Vice President Joe Biden is upping the ante. In a way, many Democrats might cringe when they hear. The stimulus plan doesn't do enough, the vice president says, because, quote, "we couldn't spend enough".

Let's talk jobs and the politics of jobs with Republican strategist and CNN political contributor Ed Rollins, John Avlon, a CNN contributor and also senior columnist for TheDailyBeast.com, here in Washington Democratic strategist and political contributor Paul Begala and CNN national political correspondent Jessica Yellin.

Paul Begala, in a campaign in which the Republicans have been saying the problem is too much Democratic spending, a lot of Democrats are not going to appreciate their vice president saying the problem is we didn't spend enough.

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: He's economically correct but politically incorrect, right, and the truth is the economy needs more spending. We need more customers. Business needs consumers to have a little extra change in their pockets so they can go spend. So economically he's on very solid ground.

The problem is this is not an economics seminar. This is a political election. And it is so important for Democrats -- I cannot get through their thick heads -- stop defending and start attacking. The vice president needs to go give a speech and say the Republicans want to do away with the minimum wage. How many jobs will that create? The Republicans want to put Wall Street in charge of Social Security. How many jobs will that create? In other words, stop trying to explain something that's complicated and difficult for people to understand that they don't agree with anyway and start attacking the other guy. That's what they need to do.

KING: But John Avlon, as you know, Independent voters are the ones flocking from the Democrats and to the Republicans right now, and Paul, that might be good advice for Paul, but that's not what the vice president said. He said the Recovery Act didn't do enough because we couldn't spend enough.

JOHN AVLON, CNN CONTRIBUTOR: Yes and that's (INAUDIBLE) most Independent voters who are angry about the spending, angry about the debt and the deficit. And Democrats really can't be in denial about the numbers. I mean one of the most recent poll shows Independent voters 2-1 voting -- likely voters voting against Democrats for Republicans this year. That is a very clear sign. And it's tough to turn that tide.

Even if you try to parse the economic numbers and say, look, the private sector has been gaining jobs every month this year. It's actually the public sector which has been cutting those jobs. That's an economic seminar. The hardcore fact is it's not about spending and this die is already cast.

KING: And the man who would be speaker, the House Republican leader, John Boehner, he was doing an event back in his home state in Ohio today and the stimulus package -- this was before the vice president spoke -- the stimulus package one of his big complaints. He said the Obama administration and the Democratic Congress simply will not listen to voters' concerns about spending. Mr. Boehner.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), MINORITY LEADER: Ladies and gentlemen, your government has not been listening. Your government is disrespecting you, your family, your job, your children. Your government is out of control. Do you have to accept it? Do you have --

UNIDENTIFIED GROUP: (INAUDIBLE)

BOEHNER: Do you have to take it?

UNIDENTIFIED GROUP: No.

BOEHNER: Hell no you don't!

(END VIDEO CLIP)

KING: A bit of emotion there, but Ed Rollins, you know some might call that contrived and calculated, some would call it passion. Whatever you want to think it is, Mr. Boehner does have reason to be full of energy tonight. As the government comes out with this last unemployment report before the election, which is bad news for the Democrats, we also have new poll numbers tonight that are good news for the Republicans.

Look at these numbers -- your likely choice for Congress. Fifty- two percent of Americans say they will vote Republican; 45 percent Democrat. So a seven point gap and significantly virtually unchanged from a poll that came out of the field for us 12, 13 days ago, so we've had Democrats on the attack. We've had a more visible president. But, Ed Rollins, what do you make of that and Mr. Boehner's passion?

ED ROLLINS, CNN CONTRIBUTOR: Well, first of all, it's the first time I've ever seen John Boehner -- I've known him since 1980 -- without a shirt, suit and tie -- looks pretty good. Good look. Those numbers are terrible, and they're not going to turn around. They're only going to get worse in the next three weeks.

I think the reality is people in Washington are starting to realize Republicans are going to have this. Twenty-two seats that most of the experts say are already Democratic seats that are already Republican seats, there's another 60 in play. All we have to win is 17 of those to be the majority. We have real clear politics today, race the Senate with no toss-ups, 50/50 right today.

And I think to a certain extent the momentum of those kinds of numbers when the president basically who's beat on George Bush for two years, blamed everything on him, is two points ahead of him and worse numbers on the disapproval, I think it's a bad omen for Democrats coming into this election --

KING: And Jess, when you've been out covering campaigns -- you were in Connecticut this past week, one of the big debating points between Linda McMahon, the Republican and Dick Blumenthal, the Democrat (INAUDIBLE) how do you create a job. I mean the jobs debate it's not just a number in the unemployment report. It's not just an attack line in the ads. This is what is driving races.

JESSICA YELLIN, CNN NATIONAL CORRESPONDENT: It's what matters more than anything else. There's no question about it. Blumenthal has come out, a Democrat, very lukewarm on the stimulus, so not all Democrats are embracing it. I'll tell you the telltale thing for me is I've been talking to some top Democratic strategists who say as long as our economic message is they want to increase tax breaks for the corporations, they want to privatize Social Security, they want to send jobs offshore, that's when we're in our sweet spot. They're not promoting what the Democrats have done in office.

KING: And we're hearing a lot more of that, sending jobs to China offshore. I want to stop the politics discussion for just a second, just to go over and show some of the numbers here because this is what's driving this and then we'll close with what I always find is a stunning number. I just want to look at the unemployment rate during the Obama presidency because remember when the stimulus passed they made what they now concede politically was a mistake.

They said unemployment would not go above 8.1 percent if you pass the stimulus program. Of course it is now at nine percent and you see it up here throughout the Obama presidency. Here's the problem. If you go look at job growth here, all jobs during the Obama administration up here, private sector jobs down here, a slight growth of late. They can say private sector jobs are on the way up in recent months but boy that's a tough sell because those numbers are so modest.

I just want to show one other place here. The reason this matters in all these campaigns is you talk 9.6 percent nationally, Oregon, you have a Democratic senator there who's a little nervous, California, you have Democrats thinking they could lose possibly the governor's seat and the Senate seat, Nevada, Harry Reid, the Democratic leader in trouble, the highest unemployment in the country.

Illinois, the Republicans think they have a shot to pick up Barack Obama's seat, maybe a House district or two, Michigan, the governor's race, the Republicans might pick up 13.1 percent. Several House seats there. We could go on and on and on, Ohio, Indiana, Florida, Rhode Island, the highest unemployment rate. But in many of these states with double-digit unemployment, that's where you find Republicans saying maybe it's the governor's seat, maybe it's the Senate seat, maybe it's two, three, some states four House seats.

Paul Begala, 25 days left. You cannot change the strategic direction of the campaign. So your only message is forget the numbers and --

BEGALA: It's tactical. No, that's right. They have to be tactical at this point. First off, from the beginning of this year, the beginning of this cycle I've been saying on this network the Democrats have to move the needle on jobs if they hope to move the political needle. They've been unable to do that.

Now I can explain here that the stimulus helped and all that, but let's just deal with reality. Those kinds of numbers they are politically disastrous. And so again, what do you do? I understand the human impulse to want to defend their accomplishments, because I think they've been impressive. But what they need to do is turn loose of that and put the Republicans on trial.

The truth is Republicans don't have a jobs agenda at all and Democrats can say and prove that Republicans do want to put Wall Street in charge of Social Security, put insurance companies in charge of Medicare and eliminate the minimum wage. Now that is not a jobs agenda that middle class Americans want, but they don't know it yet because the Democrats are too busy defending their own agenda. They need to attack the other --

KING: And there are Democrats out there watching saying you know it's not all the president's fault, he inherited a bad economy, and he couldn't get something through the Congress because the Senate, especially in the Senate, they filibuster, they filibuster, they filibuster. That may all be true but the lesson of American politics is the president takes the hit when the economy is going bad.

You went through this in the Clinton days. I just want to show a number because this one jumped out today. Sometimes we pay too much attention to the polls. You want to understand -- and I mentioned this at the top -- the bad year Barack Obama has had. A year ago we asked voters pick the better president, Barack Obama or George W. Bush -- 57-34, Obama won.

We asked them again in recent days, 47 Obama, 45 Bush, essentially a dead heat. If you're the White House and you're looking at those numbers, only 20 months in, but Ed Rollins, that tells you -- you remember the Reagan midterm in '82. You look at a number like that, that tells you ouch.

ROLLINS: Oh there's no question that has to hurt and you can't -- you know, you can't be in denial anymore. I mean I think the bottom line and the one number I would use if I was running a campaign out there today is one of the reasons stimulus didn't work is 72,000 dead people got stimulus checks. I would take all the mistakes that are out there in the stimulus bill and basically highlight them and show how ineffective this administration has been, not only in spending too much money but not spending the money wisely.

KING: John Avlon, did you ever think you'd see Barack Obama essentially equal to George W. Bush when people are asked to rate them?

AVLON: I mean that's stunning. Look, presidents always look better in the rear-view mirror but that is a terrible number and it indicates the slip Barack Obama has had among the center of the electorate this year. But the one silver lining I think the Obama administration can get is that Bill Clinton's approval rating in 1994 and George W. Bush's in 2006, the last time the congressional control switched, were actually in the 30's. So by that historical benchmark, Obama is doing slightly better, but I wouldn't hang too much hope on that --

YELLIN: And didn't you find a t-shirt with a picture of President Bush that said "miss me yet"?

KING: I did up in Martha's Vineyard --

(CROSSTALK)

KING: Martha's Vineyard of all places, that known conservative bastion of Martha's Vineyard --

(CROSSTALK)

KING: -- Massachusetts.

(CROSSTALK)

BEGALA: No doubt made in China like --

(LAUGHTER)

(CROSSTALK)

KING: All right, a quick time out here, but our next stop, California's bruising governor's race where Meg Whitman, her campaign says a conversation involving her opponent, Jerry Brown, includes, quote, "an appalling and unforgivable smear" and later more on the economy from a Democratic governor and a Republican senator fighting it out.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Do you know how much that added to the deficit next year, $88 billion --

UNIDENTIFIED FEMALE: It was paid for --

UNIDENTIFIED MALE: No, it was not paid for, Governor.

(CROSSTALK)

UNIDENTIFIED MALE: You don't know what you're talking about.

UNIDENTIFIED FEMALE: Every dollar was paid for.

UNIDENTIFIED MALE: It was not, Governor.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Jerry Brown's campaign spent the day trying to tamp down a controversy over what it calls, quote, "salty language", actually and a warning here the language is more offensive than salty. "The Los Angeles Times" obtained a recording where we hear Brown in a conversation about political endorsements and the word "whore" is used to describe his opponent, Meg Whitman. It may have been said by a Brown aide, although there's been some speculation out in California it could be Brown himself. Listen. (BEGIN VIDEO CLIP)

JERRY BROWN (D), CA GOV. CANDIDATE: They know Whitman will give them, will cut them a deal, but I won't.

UNIDENTIFIED MALE: (INAUDIBLE)

UNIDENTIFIED MALE: What about saying she's a whore?

(CROSSTALK)

UNIDENTIFIED MALE: Whore.

BROWN: Well, I'm going to use that. It proves you've cut a secret deal to protect the pensions.

(END VIDEO CLIP)

KING: Whitman's campaign demanded an apology as soon as the reporting surfaced. "The use of the term whore is an insult to both Meg Whitman and to the women of California. This is an appalling and unforgivable smear against Meg Whitman. At the very least, Mr. Brown tacitly approved this despicable slur and he himself may have used the term at least once on this recording."

The Brown campaign's response: "This was a jumbled and often inaudible recording of a private conversation. At times, our language was salty. We apologize to Ms. Whitman and anyone who may have been offended."

Let's get back to our conversation. Jessica Yellin, you've spent a lot of time covering this race. I just want to note before we start the conversation, in recent days it looked like Jerry Brown was starting to open up a little bit of a gap. Our latest poll just last week out there Brown 52 percent, Whitman 43 percent among likely voters, so at a minimum it's bad timing. What do we think the political impact is?

YELLIN: Look, there's obviously a concern that this could hurt women voters. I don't want to discount the use of this word and its impact, but it is in the context of him saying that I stand for principles and she will sell out, so the more you talk about it, the more he's reaffirming the very narrative of his campaign. And I can add that the National Organization for Women in California has today just now come out endorsing Jerry Brown saying that he has throughout his career defended and promoted women's rights.

KING: So let's see. Now I'm not going to dispute that NOW would have endorsed Jerry Brown anyway, but this -- Meg Whitman starts to trail and this recording that hurts Brown is leaked, the recording is leaked and this organization endorses Brown. (INAUDIBLE) politics works in a funny way, doesn't it, Paul?

BEGALA: It does. First, who taped the call? Who's taping Jerry Brown's calls?

(CROSSTALK)

KING: Well what they say happened --

(CROSSTALK)

KING: What they say happened is that he left a message for the police union, trying to talk them out of endorsing Whitman and trying to get them into his camp, and then hung up the phone thinking the conversation was done but somehow one of the lines stayed open and it was recorded on the voice mail.

BEGALA: OK, in any event, it was -- it's an offensive word, certainly. It should not have been used. It was not used in a gender-specific or even sexual way. It was used as another word, a synonym for sellout. This was about Mrs. Whitman allegedly cutting a deal with the police officers' union to protect their pension in exchange for their support. Don't know if that's true or not, but that's what that was about and as they say in California, Meg Whitman needs to chill here.

KING: But Ed Rollins, you have a lot of experience in California politics and you also have a lot of experiencing maybe telling your candidates if it comes down to a choice between using the word whore or sellout, I recommend you use sellout.

(CROSSTALK)

ROLLINS: Let me just say this. I've been around and known Jerry Brown for 40 years. Jerry Brown is an ex-Jesuit seminary and he does not use that word. I clearly listened to that tape. It was some staff person, doesn't make it acceptable. He apologized as quickly as he can. I think it's a one or two-day story. I think we're back to where the campaign is and the interesting thing here is Meg Whitman having spent $140 million is dead even with him, who now has sufficient money to run a full scale campaign the last few weeks here, so we have a real donnybrook out there.

KING: And so you say advantage (INAUDIBLE) Brown and as we do so, I just want to show the gender gap in our polling before this incident happened. We asked how (INAUDIBLE) choice for governor, Brown among men, it was 47-47, but among women Jerry Brown had a 15- point advantage, which is not -- Democrats tend to have a gender gap, but that's 55-40. You don't think, Ed Rollins, that's going to have a big impact?

ROLLINS: Well I think -- I think some women were offended. I think it's certainly a distraction to his campaign. It was moving pretty well. At the end of the day, this is a guy with a very long record and people who are for him are for him and people who are against him are against him. And I think at the end of the day he's been a pretty good supporter of women's rights. You know obviously I want the other side to win but I just want to give him his fair due.

KING: In that race there, this temporarily, to Ed's point, seems to help Whitman (INAUDIBLE) Brown. But does it get away from the issues in the campaign? She wants to make -- run a campaign saying he's the old guard in Sacramento. You need a business person.

YELLIN: Well yes, but the problem is she's been so away from those issues in recent days anyway --

(CROSSTALK)

YELLIN: -- because of her nanny gate (ph) that anything she can do to sort of shift the balance of power at this point is a net plus for her. They just want to get the momentum in any quarter they can and making him a bully is one way that they're looking at doing it, as Ed's suggesting not likely to stick.

KING: Do you run seminars for your candidates on the acceptable and not acceptable words?

(CROSSTALK)

BEGALA: I'm glad you knew how it was inadvertently recorded (INAUDIBLE). I shouldn't have raised that without having better knowledge of it, John. But it is a world of technology that did not used to exist. It was a huge deal a few years ago when Bob Kerrey told an off-colored joke that C-SPAN picked up and oh we all got the vapors about that. Now everything is recorded. Everything is broadcast. And I don't think it's a better world for that, John. I have to say --

(CROSSTALK)

KING: What have we learned this week? You cannot send e-mails. Don't trust no one's recording. There's this voice mail technology, candidates, where we need new technology schools for candidates. Ed and Paul thanks. We'll see Jess a bit later in the program -- next, another shake-up and a big one in the Obama White House.

(COMMERCIAL BREAK)

KING: Welcome back. Let's bring in Joe Johns for the latest political news you need to know right now -- hey there.

JOE JOHNS, CNN SENIOR CORRESPONDENT: Hey John. A big Tea Party Patriots Convention is under way in Richmond, Virginia. Two thousand activists are expected to hear from, among others, Congressman Ron Paul, former Senators Rick Santorum and George Allen and Lou Dobbs.

Former President Bill Clinton is heading to West Virginia Monday to help out with Governor Joe Manchin's U.S. Senate campaign.

There's more turnover in the Obama administration. National Security Adviser Jim Jones is leaving his post. Two people close to him tell CNN the retired Marine general took the job with the understanding he'd only stay for two years. Jones' top deputy, Tom Donilon, will become national security adviser. The post does not require Senate confirmation, but it has a stamp of approval from Defense Secretary Robert Gates.

(BEGIN VIDEO CLIP) ROBERT GATES, DEFENSE SECRETARY: I have thoroughly enjoyed working with General Jones, and I have and have had a very productive and very good working relationship with Tom Donilon, contrary to what you may have read.

(END VIDEO CLIP)

JOHNS: You get the feeling General Jones just didn't fit in. Maybe he was too tall with all those little advisers scurrying around or something.

KING: (INAUDIBLE) it's one of the toughest jobs in Washington because as national security adviser you're supposed to be essentially the gatekeeper for the president. Everybody gives you ideas and often they disagree, as we learned during the Afghanistan debate, and you've got to the president sometimes you give him your advice, sometimes you just tell him here's what everybody says -- interesting that point Secretary Gates was making. That's Bob Woodward's book "Obama's War", in which Bob Woodward reports that you know Tom Donilon in Secretary Gates' view of the book didn't have the right respect for the military, didn't treat them with respect.

Secretary Gates saying that's not true, but there's something to it there. You know General Jones was here, national security adviser, in the middle of the Afghanistan debate, at a time when the Marine commandant criticized the president publicly for setting that time line to get out and General Jones was here saying, you know what, we'll be OK.

(BEGIN VIDEO CLIP)

GEN. JIM JONES (RET.), NATIONAL SECURITY ADVISER: I will simply say that in the course of our deliberations on our Afghan strategy, everyone had a chance to voice their opinion around the table, both civilian and military. And the strategy that was announced was one that was agreed on -- agreed upon.

(END VIDEO CLIP)

KING: Very diplomatic language there, Joe. That's what it takes in that job. Agree or disagree. When you go out in public, you have to essentially say everything is fine. (INAUDIBLE) but this team rocks. They have a fight -- they have a lot of fights. The president says he likes that. I've known Tom for 20 years. We'll see how Mr. Donilon does in that job.

A lot more to come Joe, we'll see you a bit later. When we come back though we return to the biggest issue in the campaign, and that is the economy and a fascinating clash of ideas between a Democratic governor of Michigan, Jennifer Granholm her state has been punished in the recession and a leading Republican senator on budget matters. Trust me they have sharp disagreements over jobs, the economy, and the deficit.

And we'll talk to "PARKER-SPITZER", Eliot Spitzer and Kathleen Parker, they're coming up at 8:00, but we'll talk to them in a preview about this new poll showing voters essentially look at Obama and Bush and see the same.

And later on Bill Maher is with us again tonight to wrap up the week. He talks God and politics and a little Christine O'Donnell. And Pete Dominick, we've missed him this week. He'll be here as we put Nevada Senate candidate Sharron Angle's claim that Sharia law is practiced near Dallas, Texas, to the test.

(COMMERCIAL BREAK)

KING: Our next guests have for years been in the middle of the big policy and political fights over jobs, taxes and spending, but their roles are a bit odd as the economy dominates the election debate this year. Democratic Governor Jennifer Granholm of Michigan is term limited, so she is not on the ballot and leaves office in January. And Republican Senator Judd Gregg of New Hampshire decided not to run for re-election, so he, too, will be leaving office soon.

Governor, Senator, appreciate your time. We don't know exactly what's going to happen on November 2nd, but we do know we're going to have more Republicans in Washington. And Senator Gregg, to you first because you have so much experience in the Capitol, where you are today, is gridlock a foregone conclusion if you have a Democratic president who says we need more spending on infrastructure, more stimulus spending, and more Republicans who come to town saying, no, sir, not going to happen. What do the American people get gridlock?

SEN. JUDD GREGG (R), NEW HAMPSHIRE: I don't think so. First off, I believe that we have a difference of view here, which is my view is very simply this -- jobs, deficits, and debt are connected, that the American people, especially the small entrepreneurs in this country, the people who create jobs, are so worried about the future of this nation relative to our deficits and debt that they're not willing to take the risk. There's just tremendous uncertainty out there. One of the greatest uncertainties is our tax policies. If you allow that to raise, you're going to frustrate economic expansion. Your question, can a Republican Congress work with a Democratic president to get something done? I happen to think it's probably going to work better than the present scenario with a Democratic Congress move so lurch to the left and expanding the government so radically that we've basically seen an explosion in debt and deficits which we can't afford and the American people have reacted in a negative way. If you look at the Clinton years, you had a Republican Congress, a Democratic Congress. We got a balanced budget and we got welfare reform. Now we know beyond any question that we have to address entitlement reform as a country in a bipartisan way, and that's the only way to do it and maybe Republican Congressmen and a Democratic president can sit down and accomplish that. I certainly hope so because if we don't accomplish it, we're headed for a fiscal train wreck potential insolvency of our nation along the lines of what happened in Greece.

KING: Just on the perspective of the tax debate Senator Gregg just mentioned, should the president extend all the Bush tax cuts, should he hold firm and say, no, only for those under $250,000? Should he try to cut deal in the short term? In your state, do businesses say, governor, it's uncertainty? We have a lot of capital saved up but we're not going to invest it or spend it because we don't know what will happen to our tax structure in six months or 12 months?

GOV. JENNIFER GRANHOLM (D), MICHIGAN: In our state, our economy has been pegged to the loss of manufacturing jobs and the meltdown in the automotive sector. The most effective intervention that has occurred over this past very difficult period has been the intervention to save the automotive industry. And that required some spending. In our state, people are concerned, and businesses are concerned about access to capital. The thing that the president signed last week, which is a small business access to capital bill, which I don't even think Senator Gregg supported but it did contain six different tax cuts and the ability for banks to loan, small banks to loan to small businesses, that creates certainty. What has created uncertainty is the lockdown on the capital markets that have prevented these small businesses from accessing credit. So the bottom line is that was a good bill last week. That provides some certainty. The ability to extend the tax cuts for the middle class and down I think are very important. Do the top two percent need that? If you get back to the conservative argument of paying for it, I think it's really speaking out of both sides of your mouth. How can you afford it?

KING: Go ahead, Senator.

GREGG: It would be hard for me to disagree with that more strongly. Most small businesses in this country, you know, 53 percent of the employment in small business is in businesses which have more than $250,000 of income. When you start taxing those businesses, you're saying you have to spend money in Washington instead of adding new employees. Now that small business bill the governor talked about, conceptually it was a good idea. It just wasn't paid for. Do you know how much it added to the deficit next year? $88 billion.

GRANHOLM: It was paid for.

GREGG: No it was not paid for. Governor, you don't know what you're talking about.

GRANHOLM: It was paid for.

GREGG: No it was not Governor. I happen to be the ranking member on the budget committee. I'll tell you it wasn't paid for. Next year it added $88 billion to the deficit. Over ten years they allege it was paid for. In the last three or four years, they allege that there's an adjustment that accomplishes that in the seventh, eight and ninth year. It's the same thing, same old game and gimmick that they play around here on almost everything, which is to take the money and --

GRANHOLM: Why did the business community roundly support it? Why were the business community totally supportive of this small business package? Universally it was held up in the Senate by the Republicans.

GREGG: Governor, I think you probably know if you're going to give somebody a tax cut and pass the bill for it on to somebody else, people who are getting the benefit of the tax cut tend to support it, people who are getting the bill don't even know it's coming, our kids specifically. If you want to continue to run these deficits up on our kids, you go ahead and do it Governor. If your party wants to continue to run deficits which are running $1.2 trillion a year, the largest deficit in our history, you go ahead and do it. I don't want to do it. I think most Americans are sick and tired of it. They're sick and tired of these spending, these deficits and the debt and that's why people are angry, it's why I happen to be upset, and it happens to be a reflection of this Congress when they pass a bill like they did two weeks ago which basically added another $88 billion of new spending unpaid for adding to the deficit.

KING: All right. Let me give governor the last word before we've got to go here.

GRANHOLM: I, too, am angry and I'm in the state that has had the worst economy for the past decade because of the loss of manufacturing jobs and a failure on the part of the previous administration to stand up for businesses in America. So much of ...

GREGG: The previous administration. We're not talking about the previous administration.

GRANHOLM: It's a result of the --

GREGG: When are you going to stop passing the buck?

GRANHOLM: I allowed you to finish. Will you let me finish?

GREGG: I'd be happy to let you finish.

GRANHOLM: The loss of our jobs in Michigan has been a result of jobs going to Mexico, to China, to India, because we have had a trade policy that has not supported businesses in our country. We are in a global economy. And other countries are making sure they are making public/private investments to support businesses in their countries. Up until this administration, we had not been doing this. Now the economy in Michigan has stabilized. We are starting to create jobs month over month. To be able to go -- if you want to reduce the deficit, the best way is to invest, to grow the economy. And I can tell you that will reduce the deficit more quickly than slashing and slashing and slashing and laying people off and creating a downward spiral.

KING: I need to call a time-out here. I need to call a time-out here.

GREGG: Add debt to reduce debt.

KING: Senator Gregg, Governor Granholm, you would never know from the feistiness here that you're not on the ballot this year. Maybe we'll try this again in the future sometime.

GRANHOLM: Thank you.

KING: Senator, Governor, thanks so much for your time.

Still ahead, remember Shirley Sherrod, the agriculture department official fired because a conservative blogger posted clips of a speech online way out of context? She says racism in the Obama administration led in part to a rush to judgment. And Nevada Senate candidate Sharron Angle says Sharia law is practiced in a community not far from Dallas. Just wait until we give you a look.

(COMMERCIAL BREAK)

KING: Welcome back. Let's check in with Joe Johns for the latest political news you need to know right now. Joe?

JOE JOHNS, CNN CORRESPONDENT: John, former agriculture department employee Shirley Sherrod says some newly released e-mails about her firing show, quote, we cannot forget that racism still exists. CNN has obtained hundreds of e-mails through the freedom of information act that show how officials at the white house including then chief of staff Rahm Emanuel were keeping tabs on the story as it unfolded last July. It started after conservative blogger Andrew Breitbart posted an out of context video clip showing Sherrod talking about her attitudes towards helping a white farmer. The e-mails show the agriculture secretary Tom Vilsack put pressure on his staff to get rid of Sherrod even though department officials knew there may have been more context to the video showing that Sherrod was not a racist.

Here's a story that will fuel speculation about Sarah Palin's White House ambitions. She was taping a webcast for the conservative magazine NewsMax when she told a live audience, "I'll run for president if the American people want me to." You know, John, I heard that other quote from David saying we're not going to get that lucky or whatever. And, you know, it's so funny talking to Democrats around the country. They just can't get their head around the idea of Sarah Palin sort of being a phenomenon.

KING: That's the paradox. When you look at Sarah Palin and our national political correspondent Jessica Yellin is back with us, on the one hand it's been a great year for her. Many of the candidates she's endorsed have gone on to at least win primaries. We'll see what happens on November 2nd. The tea party has ascended to the Republican Party and they tend to love Sarah Palin. But if you look at the broader electorate, she's still unpopular in some ways. There's a Pew Research poll the other day for National Journal, if Sarah Palin campaigns on behalf of a candidate, are you more likely or less likely to vote for them? 42 percent of Americans said they would be less likely to vote for that candidate, 15 percent said more likely, the rest said it doesn't matter either way. So it's sort of a tough question. Who is she saying, if the American people ask me, Jess, is she saying if Republican voters ask me to or everybody?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: I don't know. I guess we'll have to vote to see if she'll run and then if anybody votes for her. The bottom line is Sarah Palin is she's enormously popular as a celebrity. She draws eyeballs to television. But her deep popularity as a politician is within a very narrow swath of conservative voter and broadly you have to have that far reach to win nationally. Even if she runs, that's why Democrats are hoping she runs, they don't think she has national draw.

KING: They don't think but we don't know a lot about 2012, so whatever we say today, it's with pencil.

JOHNS: Like Ronald Reagan.

KING: Let's come back to the election that's 25 days away, essentially when we get through this weekend, there will be three weeks left in this campaign. We showed these numbers at the top and I want to show them again. We asked people in a new poll, how are you going to vote for Congress this fall, Republican or Democrat? 52 percent say Republican, 45 percent say Democrat. This is likely voters so a seven point Republican advantage, 25 days out. If you look more closely, 62 percent of independents say they're going to vote for the Republicans, 71 percent of white, blue-collar voters, which a lot of those house districts across the Midwest say they'll vote Republican. You've been talking to a lot of Democrats. What races and what dynamics would they see as critical that they can build this firewall in the last three weeks?

YELLIN: I'm talking to both Democratic and Republican strategists, they've narrowed down essentially four races they think will come down to the wire Election Day. It will be razor close, Nevada, Colorado, Illinois, and West Virginia. There's also talk by both sides that the Pennsylvania race could close. That's the one between Toomey and Sestak. One of the interesting dynamics we're seeing is in the races where Democrats have been behind and are making up the difference, they're hitting hard. I was just talking to Paul Begala about this, on that theme of outsourcing. That's something that is really connecting for Democrats. Those are some of the states where we're seeing Democratic gains.

KING: We had an ad last night. Sestak saying Toomey when he was in the Congress reported all these policies and had the jobs going to China. It even had a gong. We're seeing that in a lot of campaigns, China, China, China, Democrats trying to scratch their way back. When you know the fundamentals of the economy are not against you, I guess this is the way you try to attack.

JOHNS: And there's a lot of economic angst out there, there's a lot of disagreement with the way corporations appointed themselves, particularly banks. And so this plays into that. Democrats have been saying for a long time they were going to bring this issue of China again and again because it plays well, especially around the unions, especially unions that see jobs being shipped overseas.

YELLIN: It's worked really well for Boxer in California, who gained this big lead over Fiorina by saying Fiorina outsourced while she was at HP and it clicks for her.

KING: And quickly and lastly, these strategists on the Democratic side say there's something called an O'Donnell effect?

YELLIN: So yes. Democrats, multiple top strategists say that when Christine O'Donnell was elected they saw an uptick in donations from small donors, their donors, and an increase in polling showing Democrats are more likely to vote. Their analysis of this is that she is so not credible as a candidate, and she puts a face on with the tea party is. Even more so than say Sharron Angle or Rand Paul. It's a little bit hard to prove. As a Republican, I thought, really? Because I thought the face of the Republican Party was Glenn Beck or John Boehner or Rush Limbaugh. They're flaying. That's the quote.

KING: They're flaying that's what the Republican says. Well let's see. 25 days to go. Pay attention to your races in your community. Jess and Joe, thank you. We will see you on Monday.

When we come back, one of the startling things in our new poll is Americans look at George W. Bush and Barack Obama and rate them the same. We'll talk it over with our new 8 p.m. hosts Eliot Spitzer and Kathleen Parker just after the break.

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KING: Something in our new poll today caught my eye, and I need a couple smart people to help me sort it out. Let's head up to New York check in with Pulitzer Prize winning columnist Kathleen Parker and New York's former Democratic governor and attorney general, Eliot Spitzer. Their new program of course "PARKER/SPITZER" just ahead at the top of the hour. Looking through the polling today, the question is who has been a better president, Barack Obama or George W. Bush? The American people are now split on this question, 47 percent for Barack Obama, 45 percent for George W. Bush. Just a year ago it was lopsided 57 percent to 34 percent in Obama's favor. I think that says it all about what the past year has been for this president.

KATHLEEN PARKER, CNN CO-HOST: Wow. That's really something. I'm shocked. But, you know, I think I'm shocked. I think it's more a referendum on Obama than it is on a reappraisal of George W. Bush.

ELIOT SPITZER, CNN CO-HOST: We're shocked by it. We're living with what I call pinball politics where our emotions go back and forth so quickly. Last year as we all know we were euphoric about the president and now we're so down on him. We need to get some grounding, take these things seriously, not throw people overboard so quickly. This is a stunning set of numbers. You know I just hope it comes back. The president has to govern, let's give him some support.

PARKER: Well and you know let's just make this point. We did the same thing to George W. Bush when he was in office. He was under siege similarly as President Obama is now. We do have a tendency to have to measure every little thing according to the latest event, and it's nonsense. No offense to CNN, because it's a great poll, really.

SPITZER: I'm sure the poll is accurate. Polls are accurate snapshots of the moment but our emotions change so quickly. Think back to George Bush the first and the way he was after the gulf war up in the 90s, and he didn't win reelection. These things crash overnight especially when the economics fall apart.

KING: That's an interesting comparison because he didn't win reelection because he thought coming into October the economy was starting to come back much as the president's making the case to the American people now and President Obama is not on the ballot but his party, people out there don't think the economy is getting better. SPITZER: John can I break in? You know what? George Bush the first was right about that, the economy was coming back. It's just that nobody would know it for another four or five months.

PARKER: Where upon President Clinton claimed credit for it.

SPITZER: Of course. Come on. That's what we do as Democrats.

KING: As you close out your first week, I understand you're talking about Eliot's choice for treasury secretary and it's not me.

SPITZER: John you know if you wanted the job you should have called up and told us but no it is Nobel winning economist Paul Krugman. He is been brilliant. He has been right over the past 5, 10, 15 years diagnosing what was going on and telling us how to solve the problems. Not that he won a Nobel Prize, you know it's nice but being right is what I care about.

PARKER: And you'll have to watch to find out whether he wants the job.

KING: Would you give him the job, Kathleen? Or just your partner?

PARKER: Well, you know, I don't endorse candidates whether for cabinet members or for political office. I'm just a reporter like you, John.

KING: All right. Guys, we'll see you at the top of this hour. Great first week. We'll see you at the top of this hour and on next Monday as well. Have a great weekend.

In a minute we'll ask Bill Maher if he's found some greatest hits in his archives of Christine O'Donnell interviews, and Shariah law in Texas? Pete Dominick with us tonight, as we check it out.

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KING: All week we've been talking with Bill Maher. Tonight's conversation begins with what you might call a little viewer feed did not back.

A lot of people like you but as you know, a lot of people don't like you and you say things that offend them. After the program last night, within seconds I got several tweets, saying how can he call god the imaginary friend? You used the term "imaginary friend." does that bother you? How do you answer people of faith who takes offense at that.

BILL MAHER, HBO'S "REAL TIME WITH BILL MAHER": I can't answer them. Even if I get into the argument about faith, they are offended. See, that's how they've stopped the debate all these years, but saying we're going to put this wall around this subject. If you approach it, you're offending me. But you know what? Maybe they need to be offended then. I'm not trying to do it. If we're going to have the debate and they're going to be defended, that's what's going to go down. I just try to ask questions. My main question is, why is faith good, you people of faith? Just tell me why the purposeful suspension of critical thinking is a good thing. If you can answer that question, maybe I'll shut up.

KING: Give us a sense of what you got this week on "Real-Time"?

MAHER: We have a couple big surprises so I can't tell you that but we have P.J. O'Rourke, who is one of my favorite guests, always makes me laugh and Andrew Sorkin and Kipp are on the panel, my great friend Richard Dawkins, who is even better than I am talking to people of faith will be at the top of the show. So we're looking forward to it. It's going to be a fun Friday.

KING: Over the past couple weeks we have learned in one clip that Christine O'Donnell, our favorite candidate in Delaware, dabbled in witchcraft. We learned last week that she considered becoming a Hare Krishna until she found out she'd have to be a vegetarian and give up meatballs. What are you going to share this week?

MAHER: Well, first of all, at some point I really want to stop this. Otherwise I'm going to be indelibly intertwined with Christine O'Donnell and when I die the obituary is going to say Bill Maher outed Christine O'Donnell as a witch and other things he did. So, I'm not going to say. We might give Christine a break this week, we might have something even more interesting. I don't know. I can't tell you now.

KING: Bill Maher, thanks for joining us tonight and all week long. We appreciate it.

One guy we have missed all week long is our offbeat reporter Pete Dominick. He's down in Atlanta. He joins us now. Pete I want you to help me check something out. You know Sharron Angle. She's the Republican candidate for Senate out of the state of Nevada. She was at a tea party forum this week where somebody in the audiences asked her about places in America where that person said Islamic Shariah law was being practiced. Let's listen to Candidate Angle.

SHARRON ANGLE: First of all, Dearborn, Michigan, and Frankford, Texas are on America soil and under constitutional law, not Shariah law. I don't know how that happened in the United States. It seems to me that there is something fundamentally wrong with allowing a foreign system of law to even take hold in any municipality or government situation in the United States.

KING: You look a little stunned there, Pete.

PETE DOMINICK, OFFBEAT REPORTER: When can I have a drink?

KING: That's funny, but she's a serious candidates. So everyone knows Dearborn is in Michigan. There's a lot of Muslims live in Dearborn. It does not practice Sharia law. They have a mayor and everything else, but the other place she mentioned was Frankford, Texas and I want to show some video. It doesn't really exist anymore. It's part of Dallas now. There's the historical marker what used to be Frankford, Texas. It was founded way back, now we show you a cemetery and a country club. It's a pretty affluent community Pete. There's no Shariah law there.

DOMINICK: No clearly there's no Shariah law there. All I have to say, John, if you're a Nevada voter, you have to really dislike Harry Reid. I don't know. It's a gift that keeps on giving for comedians, I tell you that, John King.

KING: Our favorite comedian Pete Dominick in Atlanta. We'll see you back here on Monday. Pete, have a great weekend.

You have a greet weekend as well. That's all for us. We hope to see you Monday. "PARKER SPITZER" starts right now.