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STATE OF THE UNION WITH CANDY CROWLEY

Interview With David Axelrod; Interview With Elijah Cummings and Jim McDermott

Aired December 12, 2010 - 09:00   ET

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


CANDY CROWLEY, HOST: By week's end, so many Democrats were fuming so publicly about the president's tax cut deal with Republicans, he had to call in reinforcements.

(BEGIN VIDEO CLIP)

FORMER PRESIDENT BILL CLINTON: I really believe this will be a significant net plus for the country. In my opinion, this is a good bill, and I hope that my fellow Democrats will support it.

(END VIDEO CLIP)

CROWLEY: It was quite the show, the former president so at ease in the White House briefing room it was hard to remember the Clinton era passed into history a decade ago.

If the current president was looking for a headline, he got it. The question is whether the best political salesman of his generation did anything to move the mountain of Democratic discontent with the Obama compromise.

(BEGIN VIDEOTAPE)

REP. CHRIS VAN HOLLEN, D-MD.: It is not acceptable to the House Democratic caucus.

REP. ANTHONY WEINER, D-N.Y.: It didn't reflect the best we could get and doesn't reflect Democratic values.

UNIDENTIFIED MALE: You can't give everybody a tax cut like it's Oprah Winfrey for Santa Claus. You get a tax cut, you get a tax cut.

REP. JAY INSLEE, D-WASH.: We were told yesterday by the vice president this was a take-it-or-leave-it deal. We're saying leave it.

(END VIDEOTAPE)

CROWLEY: So you can understand why the president thought he needed some help.

(BEGIN VIDEOTAPE)

CROWLEY: Today, the Democratic firestorm over the Obama tax deal. We are joined by the president's senior adviser, David Axelrod. AXELROD: What we need to do is focus on what's good for the country, what's good for the American people.

CROWLEY: And two of the Democrats whose choice between take it or leave it is leave it. Elijah Cummings and Jim McDermott. Then, Dick Durbin, the Senate's No. 2 Democrat on how to bridge his party's divide. And dealing with North Korea with a man just back from the region, former director of national intelligence, Dennis Blair. I'm Candy Crowley and this is State of the Union.

(END VIDEOTAPE)

CROWLEY: Having spent his first two years staring down Republicans, the president now finds himself in a standoff inside his own party. It is not a comfortable place to be and he is not pleased.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: This is a big, diverse country. Not everybody agrees with us. I know that shocks people. The New York Times editorial page does not permeate across all of America. Neither does the Wall Street Journal editorial page.

(END VIDEO CLIP)

CROWLEY: Tomorrow, the Senate is scheduled to vote on and likely pass the president's tax compromise, but the House Democratic leadership isn't even willing to put it up for a vote yet. What now? Joining me here in Washington, White House senior adviser, David Axelrod. David, thanks for being here.

AXELROD: Candy, great to be here.

CROWLEY: So what next?

AXELROD: Well, as you said, I think the Senate is going to take this bill up tomorrow, and we believe that when it comes back to the House, that we will get a vote, and that we'll prevail there, because at the end of the day, no one wants to see taxes go up on 150 million Americans on January 1st. No one wants to see 2 million people lose their unemployment insurance, and everybody understands what it would mean for the economy if we don't get this done.

On the flipside, if we do get this done, every economist from right to left has said this would mean a big boost for our economy, and so I believe that ultimately people will come together around this plan.

CROWLEY: So is that based on a hope, or are you having ongoing talks with the House leadership and you know that they will put it up for a vote?

AXELROD: I think it's fair to say that we're having broad conversations. This is an extraordinarily important moment for the country, and we want to make sure that everyone's questions are answered and that everyone understands exactly what's in this package, which is a tremendous win for middle-class people across this country, and again would be a great boost to our economy.

But understand that this is a compromise. There are elements of this plan that we didn't particularly like. We didn't particularly like even temporarily extending these high-end tax cuts, which cost money that we could apply to our deficit. We didn't particularly like the treatment of the estate tax for wealthy estates, but compromise by its very nature includes things that you don't necessarily like.

CROWLEY: But are you at this point -- are you selling it to these reluctant Democrats, or are you willing to change it in a major form, in particular the real estate tax, which really -- sorry, the estate tax -- that is really sticking in the craw of Democrats on the House side?

AXELROD: Look, this framework represents a compromise that both sides can accept, and we can't change it in major ways and expect that this thing's going to pass. Obviously people have discussions --

CROWLEY: So no, you wouldn't do a big change in the estate tax?

AXELROD: I expect that the framework that was agreed to will be largely what is voted on. And again, that's the nature of compromise. But it would be a tragic thing for people across this country if we didn't get this done, and it will be bad for our economy at a time when we really need to be moving forward.

CROWLEY: Just to pin it down, you don't see any changes in the estate tax compromise as it now stands?

AXELROD: I think that the framework that was agreed to is the one that will be voted on tomorrow, and I think that that's the one that we're going to be working with.

CROWLEY: I'm going to read you something, and this came from Jim Moran, who I'm sure you know well, Democrat from Virginia, and in an interview with the Hill he had this to say. "This is a lack of leadership on the part of Obama. I don't know where the -- expletive -- Obama is on this or anything else. They are AWOL."

It does seem to me that Democrats not only object to some of the portions of this compromise, they object to the way you handled it. You cut them out, they say. Why not -- I mean, A, are you surprised by the ferocity of this blow-back?

AXELROD: No, no, look, I understand -- I understand the concerns of people in the Congress, because they're worried about their legislative --

CROWLEY: (inaudible) AWOL, it's like...

(CROSSTALK)

AXELROD: Well, look, I'm not going to comment on the comments of one particular member of Congress. I understand the concerns about the process, but ultimately we've got a few days left before the end of the year. If we don't act, then we're going to see a major tax increase on people across this country, and 2 million people who are on unemployment insurance will be cut loose. And we simply can't afford that. The economy can't afford that, and obviously, you can't have it both ways. The president took the initiative to try and resolve this so that we don't have that crisis. That is leadership. And you know, we could engage in endless discussions, let this roll over beyond the first of the year, but the result of it would be very devastating for people across this country.

CROWLEY: Speaker Pelosi on board in terms of putting it on. Are you confident that she will? Have you heard from her that she will put whatever the Senate does on the House floor?

AXELROD: I'm not going to speak for the speaker, but I know she has a great sensitivity to the importance of getting something done, and --

CROWLEY: She also has a pretty big sensitivity over her liberal membership at the moment.

AXELROD: Right, and we will work with her through this period to try and get this done, and to get this done. But ultimately, I think she has a great sense of responsibility to the American people. She understands the consequences of inaction.

CROWLEY: One of our guests coming up, Elijah Cummings, has said that he thinks the president needs to come up to Capitol Hill and look some of these folks in the eye and say, I understand the risk that you took in supporting me on a variety of issues in the first two years of my term. I need you to come along. Here's why I made this particular decision about these tax cuts. Will he go to Capitol Hill and talk to some of these folks?

AXELROD: Well, Candy, he's been talking to individual members of Congress all through the weekend, and before. He'll continue to do that. And what he's going to say to them is, there is an enormous amount of good in this package, that will help their constituents, that will help the broader public, and that will move our economy forward. Economists say this will ad a point, or a point and a half to our GDP.

CROWLEY: But they have kind of heard that and --

AXELROD: Well, it's important to focus on that, because you can focus on what you don't like, and cut your noses off to spite your face, your nose off to spite your face, and that would be the wrong thing to do.

It is egregious that the Republican Party that made their demand, you know, tax breaks for the wealthy -- we insisted on a temporary tax breaks. We're going to have a big debate about this in two years, but right now, given the state of the economy, given the fact that so many people across this country are living with the uncertainty of not knowing whether their taxes are going to go up on January 1st, or whether their unemployment insurance is going to be --

CROWLEY: So you're sort of selling this as a necessary evil in some ways, that you have to take this because otherwise you cut off the middle class. But I think I'm talking tonally here, because what I get from the Democrats -- and I'm sure you get it, too, because you have a great political ear.

AXELROD: I've heard from a few of them. CROWLEY: Yes, you have heard from a few of them. Is that, you know, he is selling us down the river, particularly the liberal side. They feel as though they went out on a limb for him on so many things, and he is sawing it off now in order to --

AXELROD: I don't think you can ever say you're selling anyone down the river when you can -- when you're talking about tax cuts that are going to make a significant -- in addition to extending --

CROWLEY: They spent an entire election saying they didn't want tax cuts extended for the wealthy.

AXELROD: -- for the middle class, for the -- yes he did, Candy, and he still thinks that's not a good idea.

AXELROD: But what is a good idea is extending tax cuts for the middle class. What is a good idea is the payroll tax cut that will go into effect January 1st, under this plan, that wasn't in effect before that's going to make $1,000 difference for everyone is going to make paychecks bigger, that will help our economy, it will help families.

That's what we're focused on. We're trying to get something done here for the American people.

CROWLEY: Could you have handled it better?

AXELROD: We handled it as best as we could given the time frame that we had. And I'm not looking for style points here, what I'm looking for is progress for the American people, what I'm looking for is to forestall what would be devastating for the American people and our economy. And that's what we should be focused on.

CROWLEY: Let me combine your current job as a senior adviser to the president and your soon to be job next year leaving to kind of head up the re-election campaign. Do you expect president Obama to have a challenge in the primary?

AXELROD: I really don't. I mean I can't predict obviously anybody can file for an office but I see strong support among Democrats for this president. They understand that he's fighting hard, trying hard to move this country forward. They understand what we've accomplished already.

The biggest lament I hear from Democrats is you've done so much, how come people aren't responding better? Well first of all, his standing is actually compared to other presidents in the midterm in these kinds of circumstances with the difficult economy are fairly good, but beyond that, you know, you can't expect people, until we complete the recovery, until we push forward, until we get that unemployment rate down, you're going to have static out there politically and I understand that. CROWLEY: Do you think, would you agree with this description, the president is tacking back to the center?

AXELROD: No, I think the president is who the president always has been. He's someone trying to solve problems for the American people. He's someone who is trying to improve the lives of middle class.

CROWLEY: But the president was one who opposed these, except for what the president was someone who opposed what the Republicans wanted and now he's someone who has accepted it.

AXELROD: Well, that's...

CROWLEY: Seems to be tacking to the center.

AXELROD: That's not true at all. In fact, part of the package this tax package was something the president proposed months ago which is accelerated expensing for businesses across the country so they can buy equipment next year and defer their taxes on it. He thought that would be good and for the economy, that was a Republican idea.

The health care plan that he ultimately passed had at its roots Republican ideas about how to reform the health care system based on the market. So that's simply not true, Candy. He is who he's always been and he's always going to be someone who is going to look for the best ways to improve the lives of people, to build the economy for the future.

CROWLEY: And quickly, if I could, Richard Holbrooke, one of the president's top foreign policy advisers is critically ill. Can you give us an update on him?

AXELROD: Well he is, Candy but he's also very tough person. He had a tremendously difficult situation Friday. He had an aortic bleed, and many people would have succumbed to that. Richard is fighting through it. Anyone who knows him - and I was with him Friday morning before this happened, knows how tough and resilient he is. And we're all praying that that quality sees him through now.

CROWLEY: David Axelrod, senior adviser to the president thanks for stopping by.

AXELROD: Good to be here.

CROWLEY: When we come back two of those House Democrats who are outraged by the tax deal President Obama cut with Republicans.

(COMMERCIAL BREAK)

CROWLEY: Joining me now here in Washington, Democratic Congressman Jim McDermott of Washington State and Elijah Cummings of Maryland. Gentlemen, thank you so much for coming.

MCDERMOTT: It's good to be here with you.

CUMMINGS: Good to be with you.

CROWLEY: If I could sum up what David Axelrod just said I think I would say they basically believe there is no way the House of Representatives now still controlled by Democrats is going to walk away from this session without passing a tax cut extension bill. Yes?

CUMMINGS: I think it's quite possible the tax cut extension will be passed, but not with my vote, and that's because, Candy, there are two things that I look at with regard to this deal that the president has structured. One, does it saddle our children with debt and increase the deficit over the course of time but more importantly, does it create jobs? What part creates jobs?

Now when we look at the estate tax portion and we also look at the various things that they are doing, it does not do that. In other words, the estate tax and giving tax cuts to the richest of the rich doesn't help create any jobs. I mean, your experts will tell you that, and so that concerns me greatly.

And you know, there have been some concerns about the way this was done, of course, whereby the House had absolutely nothing to do with this estate tax portion, we weren't even in the room, and so...

CROWLEY: Congressman McDermott, how much of it is a tonal thing here? It's more than a policy disagreement from what I'm hearing. It is a feeling that you all did go out on a limb for him in health care any number of the issues in the first two years and you feel deserted by a guy tacking center.

MCDERMOTT: Can I say one thing about what your first question was. People seem to have forgotten the House of Representatives passed an extension of middle class tax cuts.

CROWLEY: Right.

MCDERMOTT: They are sitting on the desk in the Senate. We have also passed an extension of unemployment benefits. It is sitting on the desk in the Senate, to be taken up tomorrow morning.

McConnell said I won't deal with either one of them. I want something for the rich.

CROWLEY: But they did vote in the Senate on a tax cut extension for just the middle class and they couldn't get enough votes to bring it to the floor.

MCDERMOTT: And the Republican...

CROWLEY: So you guys have got to figure out something. And I guess the question then is are you going to walk away? Can the House afford to walk away and let those middle class tax cuts disappear?

MCDERMOTT: Well, I've been around long enough to know that they will, the Republicans are coming in on the 4th of January, and they can reinstitute this tax package, they put it in, in 1981 -- 2001 all by themselves. They can put it in all by themselves on the 5th of January. There will be no tax increase to the American middle class or anything else.

They simply want us to do it so that it becomes Obama's tax cuts.

CROWLEY: Will you do it?

MCDERMOTT: Well, I'm like...

CROWLEY: It seems like congressman saying yes we think it will happen but not with my vote.

CUMMINGS: There will be a lot of Democrats will vote against this, a lot of Democrats.

CROWLEY: But not enough to defeat it.

CUMMINGS: The president is going to be depending largely on Republicans to do this. They love this deal. The president said - they do, they love it. I was talking to some of my Republican friends the other day, and I said how do you feel about this? How do you feel about it? They said oh, Elijah, we love this.

CROWLEY: Well, sure they do, because they've...

CUMMINGS: They said we never expected to get the estate tax. We would not have left here not doing unemployment, we wouldn't have done that. They also said we expected that we were going to have a fight over the 250, this is like a gift to us. So they're happy with it.

CROWLEY: Let me first just tack down this one question, that is you believe that this will pass, but probably with not either of your votes.

CUMMINGS: Not just without our votes, but a lot of other Democrats' votes.

MCDERMOTT: I have the feeling that there is some chance it will pass. It may not pass. Because it will...

CROWLEY: But it will come for a vote.

MCDERMOTT: It will come to a vote.

CROWLEY: You think Pelosi will put it up for a vote, OK.

MCDERMOTT: Oh, yes.

CROWLEY: OK.

MCDERMOTT: Yes, I don't think there's any doubt about that.

CROWLEY: So let me ask you about the package that -- because I've heard this argument, oh, this is a Republican package. And then you go and you break it down, it has a lot of things that you all have been wanting. It has an extension of the child care tax credit, an extension of the earned income tax credit, it has an extension of the college tuition tax credit, it has a full year of unemployment benefits for the long-term unemployed. Why not just say, thank you very much, vote for the dang thing and go home?

CUMMINGS: But then you have to ask one question, at what price do you pay and what price do our children and children yet unborn pay? And when you've got, say, the estate tax, where you've got $68 billion going to 39,000 families over the course of the next two years, that's a lot of money. CROWLEY: It's an $850 billion-plus package, yes it's a lot of money, but in -- but 95 billion (ph) up against the totality of this package, it's not that much.

CUMMINGS: Well, I didn't even mention the upper class -- the 2 percent...

CROWLEY: The total is $114 billion. When you take the upper reaches of the tax bracket, extend their tax cuts, do the estate tax the way it's currently formulated, and you come up with about $114 billion in an $850 billion-plus package, it's compromise time.

MCDERMOTT: Can I say?

CROWLEY: Sure.

MCDERMOTT: 1980, 5 percent of American population had $8 trillion in wealth, 30 years later, 5 percent of American population has $40 trillion in wealth. They have quintupled their wealth.

Now, if you don't stop that at some point, the disparity in income, the middle class has been clobbered over the last 30 years. Their pay hasn't gone up. There is nobody in this building whose wealth has quintupled five times -- or has quintupled in the last 30 years.

But there is a group at the top and we are shoveling more of it. Now we should stop that. The estate tax and the tax for the rich should be stopped because if you're not looking long term, if you're looking at short term, sure, this is a good deal for the next two years. I don't think it's so good for the president because all of this is going to come up right in the middle of the election.

CROWLEY: Right. Let me -- I want to ask you about that and I want to ask why there is so much fierce pushback on this, because it seems quite personal, and I think out there, people tend to think this is always about a policy argument. But in fact, there's some personal feelings here at play, are there not, by the base of the Democratic Party?

CUMMINGS: I think there's some, but, you know, I think a lot of Democrats felt that we were left out. But that -- but I think that's small potatoes compared...

CROWLEY: Don't you think he's -- I understand, but...

CUMMINGS: But there is -- and see, Candy, that's the mistake I don't want people to make. There are some principled concerns that we have on the Democratic side. It's not just some purist ideological theories. This is what -- these are principles. When we're going to be in a situation, and mark my words, within about a year, the -- if this passes, where the Republicans are going to come back and you know what they're going to say? They're going to say, oh, those were -- we've got an Obama deficit. And then the next thing they're going to say is, we've got to now begin to cut programs. The very people that we are supposed to be helping, that you just talked about, are going to be hurt. And guess who else is going to be hurt? There are going to be governors all over this country who are going to be screaming.

They're going to be screaming because they're not going to have the money to carry out the programs that they need to have. And they're going to blame it on this president, and this Democratic Congress. That's exactly -- I guarantee you that's what's going to happen.

CROWLEY: Well, you got blamed in the last election because you're the party in charge. So that's kind of how that works. But what can the president do at this point to calm down your caucus?

MCDERMOTT: Calm down his rhetoric. I think that would be the best thing he should do. You see, if you just take one specific issue to show the unfairness of this, you have two groups of people in this country who do not have jobs. You have trust fund babies and you have the unemployed.

And in his package he gives $68 billion to the trust fund babies with security, it's going to last two years. To the unemployed, he gives $56 billion. It's going to go for a year, and then it's sort of up to the Republican-controlled Congress to go into the second year.

If he were serious about this unemployed, he would have put in two years, he would have demanded that he have two or three years of unemployment, because Bernanke is saying we're going to have high unemployment for the next five years. It's not going away.

And any avoidance of that is simply not caring about the unemployed in this country.

CUMMINGS: (INAUDIBLE) to the estate tax too, you asked what could be done. I heard -- I heard what Axelrod said this morning, and then I heard what Rove said on another network -- Karl Rove said. And one of the things he said is, you know what, I'm kind of expecting that there is going to be some movement, some changes with regard to this estate tax.

So, you know, so here you have Rove, who is saying, yes, I expect it. You have Republicans who love the deal. And I think we can -- and my constituents who are calling in are saying, we love the president, but we want him to fight, even if he doesn't get every single thing he wants, we want him to fight.

CROWLEY: Let me ask you just as a real quick closing question, in the current structure that it has, and that is the one-year extension for long-term unemployment, a two-year extension for tax cuts across the board, with some sweeteners thrown in, this will pass this session, yes?

CUMMINGS: Oh, I think it's going to pass. Oh, yes. MCDERMOTT: I don't know if it will have all of the elements you said. I expect that they will ultimately get a way to get it through, by putting enough sweeteners in, they're adding all kinds of things. You look, it's getting thicker and thicker.

CROWLEY: And costlier and costlier.

MCDERMOTT: And costlier and costlier.

(CROSSTALK)

CUMMINGS: ... adding to the deficit big time.

CROWLEY: All right. OK. Thank you so much, Congressman Jim McDermott, Elijah Cummings, I really appreciate you being here.

CUMMINGS: Absolutely.

MCDERMOTT: It's our pleasure.

CROWLEY: Next, can the Senate's second most powerful Democrat convince some of his colleagues in the House to vote for this deal? We will ask Senator Dick Durbin when we come back.

(COMMERCIAL BREAK)

CROWLEY: Joining me now from a snowy Chicago, Senator Dick Durbin.

Thank you so much for joining us. I know you heard our conversation with the two congressmen, and here's what I walk away with. The White House isn't going to budge on the totality of its package, and the House will eventually go along. Is that how you read what's going to happen this week?

DURBIN: I'm not going to presume what's going to happen in the House. We're counting votes in the Senate. Harry Reid and I have been on the phone over the weekend and I can say that we have a good cross-section of the Senate Democratic Caucus, from left to right, who are prepared to accept this.

There are a handful who will not, including Senator Sanders, who took to the floor just the other day, I understand it. But most of us believe, as painful as some of the provisions are, this is absolutely essential so that our economy doesn't slump and that we provide the kind of benefits that unemployed people and the middle class income folks need across America.

CROWLEY: So you see the vote happening tomorrow in the Senate as scheduled and you see it passing?

DURBIN: I don't want to presume that, because we will need Republican support to pass it. And I hope that they...

(CROSSTALK)

CROWLEY: I think you may have some.

(CROSSTALK)

DURBIN: ... Senator McConnell has promised.

Well, I think we will. Senator McConnell has promised that. And there will be some members of the Democratic Caucus will be unhappy. But, you know, the reality is this -- and I really like my colleagues Jim McDermott and Elijah Cummings. We sing from the same political hymn hymnal.

But, you know, the bottom line is this. In three weeks they'll no longer be in the majority. In three weeks, the Republicans take over the United States House of Representatives.

Try to project what the president's bargaining power is at that point and project where we would be with 2 million Americans losing their unemployment benefits by the end of this month and middle-class income going down in America because tax cuts would go up, without disagreement.

CROWLEY: Here's what I think bothers some of the Americans that have been out there saying what is wrong with this president; why won't he go and fight for it, and that is that you have -- still have a Democrat in the White House; you still have and it will remain a Democratically-controlled Senate; and for the next week or so, you have a Democratically-controlled house.

And yet the president is on TV saying, look, I have to do this because this is what the Republicans want. You all are saying, yes, we've got to go along because otherwise, you know, bad things will happen.

Can you explain to the American public why a Democratic majority, a Democratic-controlled Washington cannot get what it said it wants and has to give in to what it said it would never accept, and that is a continuation of tax cuts for the wealthy?

DURBIN: Well, Candy, I would only question one of your premises, a Democratically-controlled Senate. In the last two weeks we have watched the Republicans filibuster and stop the defense authorization bill, in the midst of two wars. They stopped it cold. They also voted against and filibustered a $250 check for disabled veterans and the elderly.

They've -- basically have told us, unless we get tax cuts for the wealthiest people in America, and now the estate tax, nothing will move in the United States Senate. So we don't control that situation, and the president knows that.

CROWLEY: Let me ask you if you think, tonally, the president has hit the right keys in this argument?

DURBIN: Well, I could tell you that I would have written a little different statement for the president a couple days ago. But by and large, what he has tried to project is the reality. Our economy is weak, 9.8 percent unemployed. He wants to do everything in his power to bring this economy back to life and create jobs. He feared that losing the tax cuts across the board, cutting off unemployment benefits, not helping businesses would slump this economy.

He might win the rhetorical battle over tax cuts for the wealthy, but at the end of the day, the economy would slump and people would suffer. It's a hard calculation to make, but that's why we elect a president. He is making the right decision, as painful as it is politically for a lot of us.

CROWLEY: And what in particular about his tone -- because I've heard from so many Democrats on the House side who are pretty deeply offended and who believe that the president really did, sort of, cut them off at the knees in this sense, that they feel that they really went out on a limb on a number of things in the first few years, in particular the stimulus bill, in health care reform. They paid a very heavy-duty price on the House side, lost a lot of members.

And now they feel cut out, and he's, sort of, lecturing them on Tuesday. What offended you about that tone?

DURBIN: Well, you know, I think you've really put your finger on it. When I try to project the thinking of many in the House, they really have sacrificed for this president. They've gone out on a limb, and even more than the Senate, they've shown loyalty to his agenda and paid a dear price for it in the last election. And now, the one defining issue, the real difference between Democrats and Republicans in terms of economic justice, it appears this agreement doesn't honor what we think are the true values and principles of our party.

That's why I think we have the pushback from the left and even the center in the House Democratic Caucus.

I would just say to them we have to accept the reality. In three weeks the world is going to change dramatically in favor of the Republicans. What we can seize on today is something that will help working families across America. It is the only stimulus we can bring to this economy. We need to work together to pass it, and hope that this economy gets well.

And I think this president is going to come back and be strong with the House Democratic Caucus, even after the next -- the swearing- in that's going to occur January 5th.

CROWLEY: And, Senator, I know that you advised the president, are quite close to him. What would you tell him publicly he needs to do to heal what are clearly some really miffed feelings, some hurt feelings over on the House side? What has he got to do?

DURBIN: Well, the president's going to be working with a lot of issues. And let tell you, tomorrow is another day. Tomorrow is another battle. And I think this president is going to continue to battle for working families.

And he's going to find that his cause is shared by the House Democratic Caucus and the Senate Democrats as well. When it comes to the progressive values of this country, the president hasn't sold those out. I think he is going to fight those battles. And many of those who are critical today will join him.

We're a long way away from the next election. And I think that, in the period of time between now and then, we're going to have plenty of times where the president will demonstrate his commitment to the working families across America.

CROWLEY: And just quickly, you, a little bit, touched on it. I know the election is a long way off, but you know and I know that it really has already started, the re-election campaign, on both sides, the election campaign on the Republican side, re-election for the president.

Why should this not be viewed, this deal, as the president of the United States looking to 2012, tacking to the center?

DURBIN: Well, the harsh reality is that, to pass anything in the United States Senate, the president has to accommodate the demands of the Republicans. I wish that were not the case, but I live in that world and that is the reality.

Many in the Democratic Party have been upset because they didn't get a public option in the health care reform package. There were other things that they had hoped for, but we have to accept the reality that, if we want to change Washington and continue to move in the right direction, we need to stand together. And sometimes the accommodations that we make, the compromises that we make may be painful, but we've got to eat the spinach and keep moving on. It's going to be a good dessert when it's over...

(LAUGHTER)

... if we can say that we've worked together for the working families across America.

CROWLEY: Senator Dick Durbin on the feast that we call politics. Thanks so much. Appreciate it.

DURBIN: Thanks, Candy.

CROWLEY: Up next, we will turn to the foreign policy challenges facing the U.S. in North Korea and Afghanistan with President Obama's former director of national intelligence.

(COMMERCIAL BREAK) CROWLEY: The Obama administration has stepped up its criticism of China for not using its influence over North Korea to defuse tensions in the Korean peninsula.

In its most recent provocation, North Korea attacked a small fishing community off the South Korean coast last month, an aggression China has refused to criticize. Traveling in Seoul this week, chairman of the Joint Chiefs Admiral Mike Mullen delivered his harshest words yet for Beijing.

(BEGIN VIDEO CLIP)

ADMIRAL MIKE MULLEN (USN), CHAIRMAN, JOINT CHIEFS OF STAFF: The Chinese have enormous influence over the North, influence that no other nation on earth enjoys. And yet, despite a shared interest in reducing tensions, they appear unwilling to use it.

MULLEN: Even tacit approval of Pyongyang's brazenness leaves always their neighbors asking, what will be next?

(END VIDEO CLIP)

CROWLEY: The answer to what next is scary stuff. New reports suggest the north is stepping up its nuclear program, building more enrichment facilities. We'll talk about the North Korean threat and more with President Obama's former national intelligence director who is just back from the region, Admiral Dennis Blair is next.

(COMMERCIAL BREAK)

CROWLEY: Joining me here in Washington is Dennis Blair, former director of national intelligence for President Obama. Thank you for joining us.

BLAIR: Good to be here.

CROWLEY: You literally just got back from the Korean peninsula.

BLAIR: Right.

CROWLEY: So, I want to start there with you. Assess the danger here, we get this feeling, some South Koreans were killed by a North Korean missile. We know that a ship was blown up, we're assuming by North Korea. Is the tension level really higher? What's the dynamic?

BLAIR: Right. The ship was blown up by North Korea. I looked at the ship. I've been in the navy 34 years, I talked to the investigators, and the South Koreans are pretty angry that China has chosen not to accept the results of the investigations. So part of the dynamic is I think North Korea's actions, part of it is the Chinese dynamic.

But on North Korea, we've seen cycles of North Korea provocation followed by negotiations, followed by concessions, followed by North Korea breaking agreements, followed by more provocations. So in a way...

CROWLEY: They kind of run up to the line and then run back.

BLAIR: Right. But they're going higher this time with torpedoing the South Korean ship, 46 dead sailors and then an artillery barrage against one of the five islands that's quite close to North Korea. And I was on one of the other ones yesterday I guess it was there or the day before, and they actually killed not only two South Korean marines but also two civilian fishermen there. So South Korea is beginning to lose patience with the north, which there was a great deal of patience.

CROWLEY: What does that mean exactly, when South Korea does lose patience, what does that mean?

BLAIR: It means they will be taking military action against North Korea.

CROWLEY: Do you see that happening?

BLAIR: Yes, I do see that happening.

Now North Korea knows that if it starts a big war with South Korea by artillery barrages against Seoul or a major aggression it will lose that war, it'll be the end of the regime. So I don't think a war is going to start but I think there is going to be a military confrontation at lower levels rather than simply accepting these, this North Korean aggression and going and bargaining.

So I think it's a tougher South Korean attitude with wide popular support. In fact, a South Korean government who does not react would not be able to survive there.

CROWLEY: And what is the degree of China's -- first let's talk about the degree of China's influence over North Korea. It doesn't seem to me that anyone has a lot of influence over North Korea.

BLAIR: I agree with you. There's -- China probably has less influence than some people say, because what China fears, instability in North Korea, is something that the North Koreans can sort of turn on any time they want and China is limited in the way that it can deal with that.

That being said, China's policy is not commensurate with the overall stature and growth of China. They still have a policy of the week, which is don't want anything to happen in North Korea, no instability there. Let's just keep things divided, a divided peninsula.

What they need to do I think is talk with the United States, talk with South Korea about the future of a united peninsula, which would be under Seoul's influence, there's no question. But I think there could be a united peninsula without nuclear weapons, observing the nonproliferation treaty with the United States alliance there that does not threaten China.

CROWLEY: But it would take China in a big way to move in and help, right, and it doesn't seem willing to do that.

BLAIR: No, it prefers to leave this divided situation the way it is. It prefers to condemn South Korean and American exercises rather than the North Korean aggression, so it's a really retro-Chinese policy that I don't think fits with the power and influence that's growing there.

CROWLEY: And finally in this region, should the U.S. be changing anything? What is Obama administration policy been toward the peninsula and has it been spot-on?

BLAIR: I think the main thing is that the Obama administration attention has been more on the Middle East with these immediate problems of Pakistan, Afghanistan, Iran, the Middle East peace process. And I think these events in East Asia have made us realize that there are big United States interests out there and we are going to have to provide steady leadership in more than one region of the world.

And I think we can do that. We've got the capability to do it. We've got good people on the ground.

CROWLEY: We need to pay more attention.

BLAIR: We need to paying more attention, yes.

CROWLEY: Let me turn your attention to Afghanistan, because we've seen these Wikileaks with even more evidence that the U.S. really considers Hamid Karzai to be unstable and not a totally reliable partner. I think we have seen this on the ground at some level. Is it possible to find a piece good enough for a U.S. withdrawal while Hamid Karzai is in charge?

BLAIR: I think it is. I think it is. I mean I know President Karzai. I met with him many times. I've also met with a lot of the people around him, and I think that you have to realize that the presidency in Afghanistan is not the whole story, in fact, what's really important is what goes on at the local level. The president has a patronage role in that, but it doesn't have a sort of direct visual role that would make that...

CROWLEY: So in other words there are ways to work around him in some cases?

BLAIR: Well, there are some ways to work with him and around him. And I think -- we're doing this big review now and I haven't read the review itself but I think that it's too early to tell whether we will succeed or not, but it's not too early to tell whether we can succeed or not. And I think the elements are there that we can succeed over time.

CROWLEY: And let me turn lastly to Iran, which to me is sort of like the North Korea of the Middle East simply because it seems immune to any kind of international pressure, any kind of U.S. pressure. Where is this nuclear confrontation over the U.S. saying they will not be allowed to get these weapons and Iran seemingly hell bent to get them. Where does this end? Where is this headed?

BLAIR: Well, I think there's an important difference between Korea and Iran. Korea glories in its isolation and in fact strengthened its own power position by maintaining this state of, this state of tension with the, all of its neighbors. Iran's self-image is not like that. Iran would like to be a part of the international community. It thinks it ought to be the leader in its part of the world. And so I think they're thinking within Iran, weighing the prospects of pushing all the way to a nuclear weapon in a very isolated economic state, huge unemployment, big youth population, is that where they want to be or would they stop short of a nuclear weapon? Right now they're under circumstances a year and a bit from a nuclear. But if they keep up IAEA safeguards, they can maintain potential nuclear capability, which any country has a peaceful nuclear program, and yet be a part of the world community.

BLAIR: And I think that debate is going on in Tehran. The person who ultimately decides it will be the supreme leader. There are lots of different opinions there. And I hope they make the right decision. And I think there is still the chance that they will be. But I -- it would be hard for me to call it.

CROWLEY: Admiral Dennis Blair, as always, it's really interesting to get your perspective in all areas of the globe. We appreciate it. Thanks for joining us.

BLAIR: Oh, you're welcome, Candy.

CROWLEY: Just ahead, a check of the top stories. And then, messages from lawmakers who are leaving Washington behind.

(COMMERCIAL BREAK)

CROWLEY: Time for a check of today's top stories. Six NATO troops were killed today in an insurgent attack in southern Afghanistan. Fighting has increased in the provinces of Helmand and Kandahar this year as U.S. troops have surged to push out the Taliban.

Sweden's foreign minister is calling a pair of explosions in central Stockholm an act of terrorism. The blast killed one person and injured two others. A Swedish news agency says it received an e- mail threat referring to Sweden's military presence in Afghanistan shortly before the bombings.

And as we mentioned earlier, U.S. diplomat Richard Holbrooke is in critical condition after undergoing surgery to repair a tear in his aorta. Holbrooke was taken to George Washington University Hospital after becoming ill Friday during a meeting with Secretary of State Hillary Clinton. Ambassador Holbrooke is President Obama's special envoy to Afghanistan and Pakistan.

The roof of Minneapolis' Metrodome has collapsed. There are no reports of injuries. The roof's deflation is the result of a blizzard that's pounding the upper Midwest with fierce winds, sub-zero temperatures, and heavy snowfall. The Metrodome is scheduled to host a game tomorrow night between the Minnesota Vikings and the New York Giants.

In the run-up to the upcoming wedding of Britain's Prince William and his fiance Kate Middleton, a pair of engagement photos have been released. The couple is set to get married April 29th at London's Westminster Abbey. Those are your top stories here on STATE OF THE UNION. Up next, the season of farewell in Washington.

(COMMERCIAL BREAK) CROWLEY: Some of them were elected to another office, many were defeated, and others retired. In all, 113 House and Senate lawmakers will not return next session, making the holiday season a season of good-byes.

(BEGIN VIDEO CLIP)

SEN. BOB BENNETT (R), UTAH: As a political junkie, what could be better? I was involved in the debate. I had access to all of the activity. And they even gave me a vote. It was a great time, a great opportunity, and I have enjoyed it immensely, and say farewell to it with kind of mixed feelings.

SEN. BYRON DORGAN (D), NORTH DAKOTA: It's hard to get here and it's also hard to leave here. But all of us do leave and the Senate always continues. And when finally you do leave, you understand that this is the most unique legislative body in the world.

SEN. CHRIS DODD (D), CONNECTICUT: My moment is now at an end, but to those whose moments are not yet over, and to those whose moments will soon begin, I wish you much more than good fortune. I wish you wisdom. I wish you courage. I wish for each of you that one day when you reflect back on your moment that you will know that you have lived up to the tremendous honor, the daunting responsibility of being in a United States senator.

SEN. SAM BROWNBACK (R), KANSAS: Thank you and my colleagues in the Senate for letting me serve with you. It has been a great joy. It is a fabulous nation, the greatest nation on the face of the earth, and it was an honor to serve here. God bless America.

(END VIDEO CLIP)

CROWLEY: "Auld Lang Syne" coming just a bit early on Capitol Hill.

Thank you so much for watching STATE OF THE UNION. I'm Candy Crowley in Washington. Up next for our viewers here in the United States, "FAREED ZAKARIA: GPS."