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JOHN KING, USA

Deficit Spending; Debt Crisis; Terrorism Attacks

Aired November 10, 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 Republican in line to be next speaker of the House says he will pass on one of the biggest perks of that powerful office, an Air Force jet to shuttle him home on weekends.

Also the first post election national interview with a woman making history, Susana Martinez will be New Mexico's first woman chief executive and the nation's first Latina governor. She's a one time Democrat turned Republican, is tough on border security but says Arizona's immigration law goes too far.

A new CNN reporting tonight that is chilling. Western intelligence sources telling us al Qaeda is planning Mumbai-style terror attacks in Europe and perhaps here in the United States -- that developing story in just a moment, but first, a defining post-election change with huge implications for your bottom line.

Consider this sober headline -- quote, "the problem is real. The solution is painful." The problem is the federal budget deficit and the long term debt. The painful solution will test whether your government, Democrats and Republicans, is serious about an issue that was just front and center in so many midterm campaigns. The bold shrink the debt proposal comes from the chairman of a commission appointed by the president. One of them is the colorful former senator from Wyoming, Alan Simpson.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's all there. We have harpooned every whale in the ocean.

(END VIDEO CLIP)

KING: Here's just a few of the harpoons -- deep cuts in domestic and military spending, a major overhaul of the tax code that would cut rates for many Americans but also take away or limit popular deductions like mortgage interest on loans over $500,000. Here's red flag number one. Tax revenues under the plan would increase by about $80 billion in 2015.

Even as they lecture about deficits, many Republicans have vowed no new taxes. And you might call these blue flags, numbers one and two. The plan would slow the growth of Medicare and make a number of changes to Social Security, including raising the retirement age and trimming future benefits for upper income Americans. Some Democrats greeted those ideas with this label, dead on arrival. So can this huge change be addressed when the partisans run to their quarters before the ink is even dry on this one proposal? Let's debate the path to fiscal sanity (ph) with Grover Norquist, a leading conservative voice and the president of Americans for Tax Reform and Thea Lee is the deputy chief of staff at the AFL-CIO, which was quick to condemn the proposal.

But first our senior White House correspondent Ed Henry is traveling with the president tonight in Seoul, South Korea. Ed, the president wanted this commission. He appointed its leaders. Is he prepared now to fight for the provocative proposals unveiled by these chairmen today?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, John, the early signs are maybe not because it's a very cautious reaction from the White House saying look, these are just preliminary. We want to se the final report. That's coming in part, that caution, because as you've noted, you've got top Democrats like Nancy Pelosi saying look, this may be dead on arrival, really lashing out on changes to Social Security, et cetera.

But on the other hand, one reason why I think this president may fight for these proposals in the end is I'm picking up information from top White House aides that in private this president has been saying since the election and even before it that, basically, he wants to call the Tea Party's bluff. They talked a lot about spending cuts.

John Boehner as well, the incoming speaker, they're going to cut spending. And the president is basically telling his advisers maybe he'll go all Ross Perot on people, that maybe bring he'll bring out some charts and he'll say, look, unless you come up with these deep cuts, we're not going to turn this around. And so try to force the Republicans to get specific about these cuts after riding to power by just generally saying they were going to cut spending, John.

KING: And Ed, how much does this whole concern about deficit spending and red ink -- of course it's a big domestic issue, but how much does it factor -- the president is there in Seoul for a big international economic summit and there's already frustration about the steps the Federal Reserve has taken. How much does the president face criticism from his fellow world leaders, well, don't lecture us or don't tell us to do things when your fiscal house back home is a mess?

HENRY: You're right, it's huge. Because I remember the first G- 20 with this president in London early 2009, he was sort of greeted like a rock star by the other leaders of the biggest 20 (ph) economies around the world and he also was all about stimulus, spending money. Let's stave off another great depression -- much different scene here in Seoul.

It's all about trying to rein in debt. This president, obviously, nowhere near a rock star, in a much different political standing. And you've got other leaders like British Prime Minister David Cameron, he's gotten specific. He's putting austerity measures on the table. And so there's pressure on this president to come up with specifics.

And so maybe he could use this commission's early findings at least to show look this is my commission, I appointed it, we're going to get tough on spending and reining in debt. On the other hand, since they've been very cautious so far, it's unclear whether the president's really going to get behind this.

So he's going to have to get more specific. And I anticipate he will at the next news conference where one of my colleagues, if not myself will ask that very question, John.

KING: We look forward to that. That is midnight Eastern Time. If you're staying up late, you can catch the president's news conference in South Korea. Ed Henry, thank you very much.

Bring the conversation into the room. Grover Norquist and Thea Lee, here's the document right here. It's a serious document. If you go through this it has -- I'll start with the right. It has a number. It combines agencies.

The Commerce Department, the Small Business Administration, it cuts funding to the United Nations. It makes the Smithsonian Institution stop giving free admission and start charging fees. It cuts funding for the Corporation for Public Broadcasting, eliminates a lot of things, calls for a lot of cuts in spending, a serious document. And you rule it out from the start. Why?

GROVER NORQUIST, PRES., AMERICANS FOR TAX REFORM: Well, for the last two years, Obama's done nothing but spend. So has Pelosi and Reid. The idea that now they're going to come back and explain they really want to reduce spending is sort of silly. They could have done --

(CROSSTALK)

NORQUIST: They could have done everything there --

(CROSSTALK)

KING: You're a conservative who didn't like the big spending under the Bush administration either.

NORQUIST: Correct.

KING: At some point -- at some point the political leadership of the country needs to say we have all sinned in the past, all of us. Why don't we start today and go forward? Otherwise, we'll be having this conversation in 20 years and you'll need a report that's 10 times as thick.

NORQUIST: But if Obama, Reid or Pelosi wanted to rein in spending they could have avoided making all the expensive mistakes of the last two years. Step one is to undue the damage of the last two years. We could save $1 trillion simply by eliminating the spending explosion that Obama put into domestic discretionary. They don't even do that in this commission. They don't even step back from the disaster from 2008 on. That's $1 trillion off the table, no deep cuts -- just don't do all the massive spending that Obama's tried to talk us into.

KING: But can you get to the point -- and I'll (INAUDIBLE) -- can you get to the point this doesn't even eliminate the deficit, it just shrinks it substantially --

NORQUIST: OK.

KING: And they make the argument -- they make the argument, the leaders do, Alan Simpson does, that you take out wastes (INAUDIBLE), you can cut all the discretionary spending you want, but if you don't put some revenue on the table, you can't get there. Are you willing to put some revenue on the table?

NORQUIST: No, because the problem isn't the deficit, the problem is the spending. What this commission is trying to do is increase taxes by about $1 trillion in order to pay for Obama's spending spree. That's not what the Tea Party wanted.

That's not what the last election was about. It is to undue the spending spree of Obama, which as bad as Bush was, he was a piker compared to what Obama or even Pelosi have done to us in the last two years.

KING: So from the right, no. From the left, and I have (INAUDIBLE) your boss' statement here, I have Nancy Pelosi's statement here. I have liberals who sit on this commission's statement here; all say no, it's unacceptable.

THEA LEE, AFL-CIO: That's correct. This commission report is dead on arrival. It's a nonstarter in terms of addressing the problems that we need to have. We are right in the middle of an economic recession. We have 9.6 percent unemployment. The last thing we need to do right now is to cut spending in a deep way and to slash Social Security and Medicare and basically to put the burden of adjustment on working families and senior citizens.

Wall Street threw themselves a party. They gave themselves huge tax cuts. They were irresponsible, financial excesses. And now they're asking working people to pay the price. So the problem with this report is not that it closes the deficit. It's a good thing to do over the longer term, to figure out how we can be more fiscally responsible. And tax increases on the wealthy is going to have to be a really important part of that.

KING: I want you to listen to Alan Simpson because he essentially listens to your argument and he doesn't like Grover's argument either mind you, but he listens to your argument about Social Security and Medicare. He says simply, you can't be serious.

(BEGIN VIDEO CLIP)

ALAN SIMPSON, DEFICIT COMMISSION CO-CHAIRMAN: They've said, wait a minute, don't touch Social Security, wait a minute, don't touch Medicare, we just bled through the ears on that one. Wait a minute, don't touch -- you cannot get there -- let's just be -- everyone surely must hear that you can't get there unless you do constructive things that are not punitive with Medicare, Medicaid and Social Security.

(END VIDEO CLIP)

KING: Do you agree with this statement?

(CROSSTALK)

KING: Essentially your position that you can't get to a path to a balanced budget because you won't allow them to -- you will fight any politician who touches Social Security or Medicare?

LEE: You absolutely can get to a balanced budget without slashing benefits for seniors. People have paid into this program for their whole lives. They're taking away health benefits from senior citizens.

Social Security and Medicare didn't cause the problem. And they're not going to solve the problem. So you can, you know, restore the tax cuts, the Bush tax cuts on the wealthy. That gets you $700 billion over 10 years.

You can do a financial transactions tax. And you do need to rein in health care spending. But that's different from saying we need to cut Medicare and Social Security --

KING: The idea -- the idea of this commission --

(CROSSTALK)

KING: The idea of this commission, and we should be very clear, this draft is from the leaders, not from the commission, and the deal was if 14 of the 18 members of the commission voted in favor of a plan, and they could debate this and amend this and maybe. I don't believe in this kind of miracle anyway.

I don't think it's going to happen. But the idea would be if they got 14 of the 18, Speaker Pelosi and Leader Reid agreed this year to put it to an up or down vote. That looks almost impossible that that will happen.

Do you believe -- will the Republicans pick this up in the House? They have to write a budget. They have to work with the president. Will they pick this up and say well at least look at the cuts here if they won't take a look at the taxes.

NORQUIST: Well I think some of the cuts you might well look at. But the idea of raising taxes, raising taxes is what politicians do when they don't have the guts to govern. When they're not like the Governor Christie in New Jersey, willing to rein in spending.

KING: The people around Bill Clinton would tell you that had George H.W. Bush not called everybody out to Camp David and raised taxes a little bit and he was vilified by the right for doing it, that they would have had a much more difficult path at getting to the last balanced budget this country had.

NORQUIST: If George H.W. Bush had not taken everyone out to that meeting where they raised taxes, Clinton would never have been elected.

LEE: Grover, it's not all spending, that's just ridiculous.

NORQUIST: It is all spending, absolutely.

LEE: Well the economy's in a recession now. You have maybe a Herbert Hoover-style proposal that we should cut spending in the middle of a recession. That's actually the worst thing you can do for the deficit.

NORQUIST: Excuse me, I went to public school but I know that Herbert Hoover exploded spending. FDR -- nothing FDR did wasn't the stupid idea that Hoover hadn't tried first. He took the top tax rate to 75 percent on the rich, which turned the recession into a depression, spent a lot of money, had all sorts of subsidy programs.

And FDR just continued Hoover's policies, which is why the recession lasted 10 years. The first recession the federal government ever tried to fix. The danger here is that Obama's doing exactly what Hoover and FDR did, which was spend. That's what gives you a depression.

KING: I'm going to call a time-out on this conversation, but I promise you as this gets debated and we can see the debate has begun we'll bring you both back in to continue the conversation. Thea and Grover thank you.

And I want to just quickly bring in our senior analyst David Gergen. David, when you listen to a conversation like this, the left and the right essentially saying before the ink is dry, no way, dead on arrival, do you have any confidence at all that even after this election we're spending and deficits were a huge concern, that the leadership in Washington is prepared to have a grown-up conversation about how to deal with it?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I have -- John, I have hope but not confidence. I think that last conversation where people continue to be dug in, in the face of massive deficit this country is running up, country on the road to bankruptcy. And people can't get out of their sand boxes to get serious about this and to say, look, we've all got to come together and be statesmen and figure out a constructive solution to this.

You know we'll condemn this country to second-class status. We're already worried about decline. They will put us there if they do not come to grips with the fact that we've got these huge deficits. And to get there, what Alan Simpson and Erskine Bowles, these two chairmen who courageously proposed is that we balance the budget at 21 percent of GDP for taxes and 21 percent for spending. That's what we did when Erskine Bowles was chief of staff to Bill Clinton and negotiated with Newt Gingrich and the Republicans in the Houses. You remember, John, when that first major balanced budget was achieved back in the 1990's, it was exactly at 21 percent, spending 21 percent taxes, and we had three balanced budgets in a row. And we had great prosperity and jobs in this country.

And we're going to have to do both. Now, the fact is we've got deficits over the next 10 years of $10 trillion -- $10 trillion. This deficit commission is only proposing that we cut four trillion out of the 10 trillion. We're still going to have big deficits, but at least it gets us on the road to sanity. And if we can't do four, you know, we are -- we -- just count on it, we will be a second class country --

KING: David Gergen, I'm going to stop you there. They're head shaking in the room here, but I've got to let these guys go because we have to go because we have to move on, but there's an interesting debate starting. Maybe we can walk through the substance in the days ahead.

Up next for us though new alarming information that at least one of the cargo packages sent from Yemen nearly two weeks ago was timed to blow up just as the plane was landing here in the United States, plus new reporting tonight from CNN that al Qaeda is planning Mumbai- style attacks in Europe and perhaps here at home.

(COMMERCIAL BREAK)

KING: Two chilling developments today in the fight against global terrorism. Counterterrorism officials in Europe and the United States are telling CNN al Qaeda is still planning Mumbai-style attacks in Europe and possibly here in the United States.

Also today, Scotland Yard says its analysis of the package bomb sent from Yemen last month and intercepted near London shows it probably would have exploded over the eastern U.S. seaboard. Joining me from New York still with us our CNN senior political analyst and former presidential adviser David Gergen and CNN terrorism analyst Paul Cruickshank.

Paul, start with your reporting -- let's first with the idea that the package coming to the United States was somehow a timer-based, a cell phone timer-based to have it explode just over the eastern seaboard?

PAUL CRUICKSHANK, CNN TERRORISM ANALYST: That's right. And they may have done a dry run back in mid-September to try and figure out when exactly to time the device. And this was timed the British are saying to explode over the U.S. eastern seaboard. That's the most densely, heavily populated area in the United States.

There have could been dozens, perhaps hundreds of casualties on the ground, John, so a lot of concern about what they were planning here. The more people that were killed the more prestige for this group, al Qaeda amongst their supporters. It's a very good write-in (ph) cry for them if they had succeeded, John. KING: And separately, this reporting about the planning by al Qaeda of Mumbai-style attacks, essentially gunmen going to places like hotels, where you have a large segment of the population, what are your sources telling you?

CRUICKSHANK: We understand that al Qaeda also are not only planning that in Europe but also in the United States, a lot of concern about this, United States seen as very vulnerable to this. It's quite easy to buy weapons if you actually get operatives into the United States.

So a lot of concern that what played out in Mumbai in November 2008 could one day perhaps play out in the United States. Al Qaeda are planning this. One of their senior operatives, Ilyas Kashmiri (ph), a very dangerous man, is planning this. A lot of concern at the moment that these plots could be imminent in Europe in the next weeks and that at some point they could happen in the United States.

KING: David Gergen, when you hear a chilling assessment like that, chilling account from intelligence officials about continued planning of a horrific hotel-style attack like Mumbai, "A", what goes through your head, and "B", should our government -- obviously this is sensitive information, classified information, but should the people be getting more of a warning about this, more of an education about this?

GERGEN: Well, John, you know we went through that whole code, yellow code, code red business and I think most people thought it was a joke and they stopped paying attention. I think this kind of reporting is actually very, very helpful. Because it tells people, look, you've got to be vigilant, but don't be scared.

We can go about our lives. It's unlikely this is going to happen. And after all we are now talking about gun attacks, not nuclear attacks or gas attacks or chemical attacks. Someone with a gun is not going to get that many people, but we -- and so we have to be careful, watch out for strange people, watch out for strange things.

But nonetheless, I don't think this is the kind of thing that -- it's like the -- you know, fortunately we got away from those color warnings. And I think we're living a much more sensible way now. We all know we live in dangerous times.

KING: But we also have a very different president and maybe it's just the passing of time. I guess that's my question. Is it the passing of time or is it a different leadership style? In the Bush administration, we heard frequently stay vigilant, there's a lot of chatter, we continued to get warnings, there's still a possibility, you know, we're working against it.

This president seems to have a different approach to it. Is it just because the passing of time, less grave warnings in that chatter? Or is it a different leadership style?

GERGEN: Well if I can respond to that, John. My sense it is a different leadership style, but it's also a very different sense of priorities. The last president, you know the 9/11 occurred on his watch. He thought we were at war and he put us -- you know he tried to put us mentally on a war footing and keep us there.

And this president obviously thinks this is more like a law enforcement-type problem, it's not a war. He's deescalated the rhetoric and instead has shifted the focus over to the economy now increasingly. You know as he faces the world, as we see on this trip he's taken now, he's put an increase emphasis on American competitiveness. And I think for most Americans, in fact, the competitiveness issue and jobs is really what they want to hear about.

KING: And Paul Cruickshank quickly in closing, when you hear from these intelligence sources, is there a date on a calendar, is there a time line, or is it just that they hear about theoretical planning?

CRUICKSHANK: Well, they hear about actual planning in Pakistan, al Qaeda central over there, planning Mumbai-style attacks against the United States and against Europe. We saw a U.S. travel alert back in October for U.S. citizens traveling in Europe. So there's real concern about this as far as Europe is concerned and more about the United States now that we're seeing. So in terms of time, sometime in the future is what they're talking about. It's difficult for them to know exactly, John.

KING: Paul Cruickshank, David Gergen, appreciate your insights tonight on this sobering story. Thank you both.

When we come back a lot more to go in the program tonight including we're going to introduce you to a new face in American politics you will hear a lot about in the years to come. Susana Martinez is about to become New Mexico's governor, the first Latina governor in the United States of America, a rising Republican star. You'll be interested in her views.

And Karl Rove versus Sarah Palin, it's not the only example of tensions within the Republican family. We'll explore that when we come back tonight too, and you might say Pete's -- maybe Pete's hungry tonight, Pete Dominick wants to talk about fast food politics. Stay with us.

(COMMERCIAL BREAK)

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

JOE JOHNS, CNN SENIOR CORRESPONDENT: John, Attorney General Eric Holder says the government is close to a decision on where to try alleged 9/11 mastermind Khalid Sheikh Mohammed. Senator Chuck Schumer quickly put out a statement saying the trial should not and will not be held in New York.

Outgoing House Speaker Nancy Pelosi was at today's groundbreaking for a new memorial honoring American veterans disabled for life. It will be near the Capitol and include a star shaped reflecting pool with an internal flame.

Meanwhile House Speaker-to-be John Boehner is complaining about how much money federal bureaucrats make.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), MINORITY LEADER: There ought to be a freeze on the hiring of new federal employees and frankly we ought to freeze the pay. It's gotten to a point where the average federal worker makes twice as much as the average private sector worker.

(END VIDEO CLIP)

JOHNS: Now I do know the incoming House Republican leadership is mad at the Postal Service and they think it's totally bloated, but there are also an awful lot of engineers, lawyers, doctors, who could probably be making a lot more in the private sector but they choose the federal government --

KING: Well it's an interesting point you make. Stand by. Let's go over to the wall and take a look at that because this is one of the big Republican ways they say they're going to rein in federal spending. So let's look at some of the complaints you get from people. And here's a change over the last five years.

There has been a dramatic increase, for example, in the number of federal workers who make more than $150,000. Here's 2005 only 7,400, here we are now, so a dramatic increase of federal workers making more than 150 grand, also a dramatic increase making more than 160,000. You see from 2,800 to more than 44,000 and you see, so there has been a dramatic increase. That's one of the things the Republicans complain about.

Let's make a comparison about the private sector. And you see here -- here's your average federal civilian worker here, salary and benefits, 123,000. Here's your private sector, 61,000, so half as much. That's one of the Republican complaints. You hear someone who works for state and local government also gets less than a federal civilian worker.

That is one of the complaints that plays into this. Let's look here at just some industry comparisons. If you're an airline pilot for the government, you make less money. You could make more in the private sector. You see right here. If you're a cook for the federal government though, you tend to do a lot better, about $15,000 a year better than you do in the private sector.

And you see some of these other jobs coming down here, janitors, optometrists. If you're a doctor, you make less. One last thing though, if you think that even if you froze federal salaries or cut federal salaries, you're going to make a huge dent in the budget deficit, look at this, civilian workers, only six percent of the federal government.

The rest of it goes obviously to bigger spending in the pie, so Joe, that's just a small slice, but it will be a big issue debated as the Republicans take over the House and when we come back, a new Republican face who will not be working here in Washington, but in the round house. That's what they call the State Capitol in New Mexico.

(COMMERCIAL BREAK)

KING: Susana Martinez is among the Republican Party's rising stars. But she's not heading to Congress. Martinez will be New Mexico's first Hispanic female governor and will confront a big budget crisis as well as the same thorny immigration issues her next door neighbor Arizona faces. Governor-elect Martinez joins us to go one on one. First, congratulations on your victory.

SUSANA MARTINEZ, NEW MEXICO GOVERNOR-ELECT: Thank you, I appreciate it very much.

KING: Already people are saying Susana Martinez is a new face of the National Republican Party. A Latina, somebody who can help the party deal with, among other things, an issue, an image problem it has among Latina Americans. Do you welcome that role?

MARTINEZ: I do. I welcome the role of making sure we're having conversations with other Latinos throughout the country, particularly the way we did in New Mexico. Talking about what's important to them, changing the economy in New Mexico, making sure we get our kids educated in the best possible way and certainly cutting back on spending in state government. So I am proud to be part of that conversation with New Mexicans and changing the face of the Republican Party.

KING: Does the National Republican Party need to deal with immigration in a comprehensive way?

MARTINEZ: Sure. Absolutely we have to. But we cannot do that without first securing our border. As the district attorney on the second largest county in New Mexico, that borders Mexico, we have to shore up our border first before we can tackle the comprehensive immigration issues. I don't support amnesty. I don't support that we solve the problems in that fashion. There has to be some other way of dealing with the issue where it may be a tagback, where it may be where we identify individuals, but we cannot just have a path to citizenship created when there are people in line already doing the proper things in order to become citizens of the United States. And so I do think we have to deal with this issue. The federal government has to come to the table. We have to make sure we're doing what's best. We can't invite the next wave of 10, 11, 12 million individuals coming from throughout the world illegally into the United States thinking that we've solved the problem by merely providing amnesty once again.

KING: You have said no to an Arizona-like law in your state. You have said you don't think undocumented should get a driver's license in your state, for example. If the governor-elect of Florida or some other governor-elect called you and said, I'm going to do that in my state, why don't you like it, would you urge them not to do that? MARTINEZ: My focus has always been because we're right up against the murder capital of the world, which is what is Juarez, Mexico, my county that I was the district attorney of, it was right up against the murder capital of the world. We have to first secure the border. My focus has been on removing the driver's licenses and revoking those that have already been issued. We have people coming from Jamaica, Poland, from other countries, to get driver's licenses in New Mexico, which then gives them passage throughout the country without being detected. There's nothing different about their driver's license and the driver's license I carry. So my focus has been on the criminal element. I never want an individual who's in New Mexico who has been a victim of a violent crime not to be able to dial 911 and call the police and get the same treatment that any American citizen would receive as a victim of crime. We don't want to deal with immigration in that situation. We want to make sure that justice is brought to that type of an individual who has been a victim now of a violent crime. And so there's many layers to dealing with this immigration issue. We have to make sure it is a fair one, a constitutional one, but first the border has to be secured.

KING: Let's move on to other challenges. You will be an example to the nation in some other ways. In Washington, we're dealing with divided government again, a Democratic president, a Democratic Senate but a Republican House. You will be the new Republican governor of a state with a Democratic legislature facing somewhere in the ballpark of a $260 million budget shortfall. How will you deal with $260 million budget short fall? When you look specifically at the budget, is there any scenario under which the governor would raise taxes or how do you deal with that gap.

MARTINEZ: I don't think that raising taxes is the answer to bringing back the positive aspects of our economy. In New Mexico alone, government has grown by about 54 percent, when the population and inflation has never justified that. And so we have to cut back spending, zero growth budgets in reference to state government.

KING: You will be the Republican governor in a few short weeks, but you're a former Democrat, why did you switch?

MARTINEZ: I was registered Democrat. My parents were registered Democrat. I didn't really have a conversation with anyone about why. I just did what my parents did. But two friends actually sat us down and we had a long conversation about issues and it was about a two- hour conversation. I grew up in a very Democratic city, where I was district attorney, Republicans are outnumbered 3-1. And we talked about issues without using single words that people think completely define us. And they don't. We talked about whether welfare should be a way of life or a hand up to people who are struggling. I support the second amendment and the right to bear arms, whether we should have a big government that provides the answers to all our problems. But we just went down the litany of all issues, and after two hours, we walked away, my husband and I did and said we're Republicans. I'm the same conservative individual that my parent raised. But I was registered as a Democrat as my parents were.

KING: The president of the United States says he looks forward to meeting with this new class of governors. I was at the white house when Jan Brewer had a meeting with the president and it was largely on immigration and it was very unsatisfying to her. If you get five minutes with the president of the United States, what would you tell him?

MARTINEZ: I certainly want him to focus in on New Mexico and the issue of one creating jobs and reviving our economy, but also on the border. We must secure or border. We cannot continue to have the issues that we have, particularly living right next door to the murder capital of the world. People are dying every day by the dozens. Last weekend, 20 individuals were murdered in Juarez. We can't let that violence move over to the United States. I will talk to the governors and talk about how they must start dealing with it as a federal government.

KING: Back in the primaries you received the endorsement of former governor of Alaska Sarah Palin. If she were to run for president in 2012, would you endorse her?

MARTINEZ: I was pleased to receive her endorsement. I was pleased to receive the endorsement of Governor Christy, Governor Jindal, Governor - several governors throughout the state that are in office today, Mitt Romney, I'm very honored to receive her support. But people are going to decide whether she should become the next president. She has certainly energized Americans to stay focused on what the elected officials are doing.

KING: I suspect all those potential Republican candidates you just mentioned and probably a few months will be calling on the governor of New Mexico. Appreciate your time today.

When we come back, live to Alaska in the latest on the hand counts in the still undecided Senate race. And why are Sarah Palin and Karl Rove in another spat?

(COMMERCIAL BREAK)

KING: Up in Alaska today they started the painstakingly slow process of hand counting the 92,000 or so write in ballots in the U.S. Senate race. Presumably most of those ballots contain Senator Lisa Murkowski's name. CNN's Shannon Travis is in Juneau with the latest. How is it going?

SHANNON TRAVIS, CNN POLITICAL PRODUCER: It's going. We have got about just over an hour to go for the vote count here. Just want to give you the numbers. These were the first numbers that were released today of what they're actually counting so far in these write in ballots. They counted about 7,000 or exactly 7,638. Of that amount, 89 percent, just over 89 percent are being sorted for Lisa Murkowski, that means they're not being contested, they're being put in a box, not added to the official tally but put in a box and saying hey these are clearly for her. Only about 8 percent are being counted for her and are being challenged so this is a very positive development for Senator Murkowski's campaign.

KING: Shannon a lot of lawyers involved. Do we have a sense this is going forward smoothly or when they get to the final numbers we're going to end up in court?

TRAVIS: I think it's probably headed for a lot of legal challenges if today or yesterday was any indication. You know, Joe Miller filed that lawsuit basically wanting to put a stop to a lot of the counting today saying that it's unconstitutional because the division of elections is designing the rules for how the ballot is going as opposed to following what the legislature has laid out already, so we're probably in for a protracted legal battle.

KING: Shannon Travis on the ground for us in Alaska. Let's talk this and other political developments of the day over. Our senior correspondent Joe Johns is here, our senior Congressional correspondent Dana Bash and from Los Angeles our national political correspondent Jessica Yellin. I have to tell you when I look at those pictures of the recount, I have those flash backs to Bush versus Gore. Do we just assume, we had a pretty smooth election process, a lot of talk about the recount in Nevada and a recount here? We haven't seen a lot of lawyers. Is this going to be our exception this year?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: We sort of have a pool going among the capitol hill press core in the senate gallery, we were talking about this today, what's going to be longer, this or what happened in Minnesota where it took seven, eight months with Norm Coleman. There's no question it's going to be.

JOE JOHNS, CNN SENIOR CORRESPONDENT: It's all about the technicalities.

KING: Jessica Yellin, I want you to come in about another big Alaska story and that is the former governor, Sarah Palin, seems like every couple of days we get a hint, will she or won't she in 2012, listen to this.

SARAH PALIN (R), FORMER ALASKA GOVERNOR: A lot of sacrifices have to be made and getting a good lay of the land because I would be in it to win it.

KING: In it to win it, Jess that sounds kind of familiar.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Flash blacks, hello, that was the line that then candidate Hillary Clinton used when she announced she would be running for president. Sarah Palin is trying to define this new sort of wave for conservative women to run for office, this ma grizzly umbrella term. And it seems like more and more women are turning to Hillary Clinton for inspiration, but she seems to be the one role modeled as a successful female candidate they can kind of look to and it's sort of fascinating. You remember Christine O'Donnell used to talk about Hillary Clinton a lot too.

KING: Here's someone who manned up today. John Boehner will be the new speaker of the House of Representatives. He says he will be transparent, he won't be wasteful. Today he says he can get a jet at Andrews Air Force base. Speaker Pelosi would go home to San Francisco usually in a 737, it's a military model. John Boehner says, not me, let's listen. REP. JOHN BOEHNER (R), EXPECTED TO BE HOUSE SPEAKER: I have talked to our security folks about the security that's involved in my new role. But over the last 20 years, I have flown forth to my district on commercial aircraft and I'm going to continue to do it.

KING: Symbolically important?

BASH: It is symbolically important and to be fair, speakers until 911 flew commercial all the time, and Denny Hastert, a Republican speaker started to change that. Republicans have been all over Nancy Pelosi because he knew a much larger aircraft on the taxpayer dime but this is something that when you're talking about John Boehner, talking about the new Republican majority, this is a no- brainer.

KING: It's pennies on the dollar in terms of saving any money. But they have to start somewhere.

JOHNS: Right. It's also the optics of it plain and simple. The other thing that you have to say is the speaker shuttle as they call it was going a lot farther distance from here than all the way to California than John Boehner I mean that's like literally to Ohio at least to Columbus it's probably about 45 minutes.

BASH: Do you think he's going to wear the sweater, when he flies commercial? That's my question.

KING: Just what kind of plane does CNN send to get you when you're out on the west coast?

YELLIN: It's so swank. I have any own stewardess on board. The last row doesn't recline.

BASH: Jess, the fantasy's over.

KING: All right. A quick time-out for us. When we come back, is this a new era of Republican infighting as the party comes to power in Washington or more power in Washington? There seems to be a lot of squabbling, stay with us.

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KING: It's about to be a new era on Capitol Hill. Republicans are taking over the House of Representatives and it will be a stronger Republican minority in the Senate. All of which means, guess what? There's some infighting over just who gets positions and the real power. Watching it all, Democratic political strategist Peter Fenn and our CNN contributor Erick Erickson, editor in chief of the conservative blog redstate.com. I want to start with something I will call one of the political legacies of the BP oil spill. Everybody remembers when the BP CEO was brought up to Congress, Republican Joe Barton, the ranking Republican on the energy committee essentially apologized. He said the Obama administration was making too big of a deal of this and he went on to say this.

REP. JOE BARTON (R), TEXAS: I think this is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown. In this case, a $20 billion shakedown with the attorney general of the United States who's legitimately conducting a criminal investigation and has ever right to do so to protect the interests of the American people, participating in what amounts to a $20 billion slush fund that's unprecedented in our nation's history.

KING: You guys both remember the blow back that came from the Democrats when Joe Barton said that. One of the criticisms Erick Erickson from the White House they said was you know elect the Republicans and this is what you'll get. This guy will be chairman of the committee that oversees the oil industry. The push back from the Republican leadership was, no, he's term limited. He's run out his time as the ranking member and he will not be the chairman if we win. And yet as we speak this evening, he is trying to get the chairmanship.

ERICK ERICKSON, CNN CONTRIBUTOR: Right absolutely. There are a number of them on appropriations as well. They're all term limited. I'm not in favor of waivers for any of them and from what I'm hearing, the house leadership probably will not extend waivers and so the question will become whether or not Fred Upton should get it or someone else. But I remember those conversations about Joe Barton where I was on TV with a lot of Democratic consultants saying the voters would punish the Republicans and there's no way they would take the house when comments like this were being said. I believed it when I saw it didn't happen.

KING: You'd love for him to be the chairman wouldn't you?

PETER FENN, PRES., FENN COMMUNICATION GROUP: This guy is a disaster waiting to happen John. In fact you may remember at that time the Republicans were running.

KING: He does know the industry.

FENN: He certainly does, I think it was $214 million over 20 years he got from these Republicans got from the oil and gas industry, he got a big chunk of it. The Republicans ran from him. The Republicans criticized him. They were furious and they came down very hard.

KING: Let's see, here's one, there's a little Republican legacy of BP that we'll have to watch in the current days, but here's a Democratic one, a new inspector general report out today from the interior department that said the Obama white house edited a report that came over from the department. Essentially the report that came over had a quote from these experts backing up one point. And the white house took the quote and moved it up so that it appeared that the outside experts were supporting the administration's deep water moratorium when they were doing no such thing. The inspector general said this, "The White House edit of the original draft executive summary led to the implication that the moratorium recommendation had been peer reviewed by the experts."

FENN: Problem, I mean peer review is something very, very important. They should haven't done that. That thing went out at 2:15 in the morning. That tells you something about sending out these kind of e-mails at 2:15 in the morning. The argument the white house is making it wasn't their intent to do that, what they were trying to do is show the arguments.

ERICKSON: There's a bigger issue saying this is why they need the moratorium, don't go with the injunction that the folks from Louisiana were trying to get, it made a federal judge in New Orleans very angry with them. They haven't gotten anything they wanted out of the federal courts in New Orleans after this.

KING: We're short on time but another dust up in the Republican Party, Erick, that you have been vocal is this idea that Senator Jim DeMint and others want to convince the leader Mitch McConnell to join the House leadership in banning earmarks. Are you going to win that fight?

ERICKSON: I hope so. This is really the mendacity of hope on the Republican side. I put up something on a red state today, I have heard from three senators, two senators elect, not from their staff but from them directly. And this afternoon he's coming out saying he's not whipping for this vote. There were two senators that were left with the distinct impression that they are.

KING: When we come back, what's the best part of a happy meal? The toy, right? Pete's on the street and he's investigating some fast food politics. One city telling restaurants, improve the nutrition or no toy. We'll be right back.

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KING: I'm going to let you in on a big secret here on the Pete Dominick retirement plan. Order off the kids menu. He does it all the time even though he's not 12 anymore. Pete's in New York tonight. I see you've got a happy meal. If I put you on a plane to San Francisco, you might have issues.

PETE DOMINICK, OFFBEAT REPORTER: Listen John King, it's official, San Francisco is now a Marxist city. San Francisco has decided that you can no longer sell toys in a happy meal. They are deciding what we can eat John King and I say this is America, if I want to fatten my 5 or 7-year-old up and make them diabetic, that's up to me. But the problem is it's an easy work around. So you can't buy the toy. I mean this is a high quality piece of plastic from China. All McDonald's has to do to get around this because they can't sell a toy now, John King, it's obvious. What else do kids love? I have the suggestion and the answer for McDonald's. Candy, John King, candy and gum. They can't tell you they can't put that in there, they can make it even less healthy. You can put all kinds of things in there that kids love John King. You could put in an Amex card. What child doesn't love a dollar, throw that in, throw in my license, give them a Blackberry, maybe they could throw in a picture of my daughter and maybe a rap CD, whatever they want.

KING: Pete, that box is like the circus, how many clowns can you fit in a Volkswagen? What else you got in there? DOMINICK: Well, it's mostly all gone. But it's a lot of goodies John. There's a lot of things other than toys.

KING: Enjoy your dinner my friend. We'll see you tomorrow. That's all from us. We hope you're here tomorrow. "PARKER SPITZER" starts right now.