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JOHN KING, USA

Congress Ratifies START; Lame Duck Session Productive

Aired December 22, 2010 - 19:00   ET

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


JOHN KING, CNN HOST: Thanks, Wolf. Good evening, everyone. Wow, it is hard to know where to start tonight. Congress is done for the year after a huge final day ratifying a new nuclear arms treaty with Russia and creating a new program to help 9/11 first responders deal with health crisis.

Many Republicans think one month after an election they won big, but that they got snookered by Democrats even though they won those elections so big. In an exclusive interview with us, the man who engineered the lame duck Democratic game, the Senate Majority Leader Harry Reid, chooses diplomacy over gloating.

(BEGIN VIDEO CLIP)

SENATOR HARRY REID, (D) MAJORITY LEADER: Let's not talk about Harry Reid eating their lunch, but what we were able to do together, very, very good things for our country.

(END VIDEO CLIP)

KING: More of that conversation in just a moment. Also with the stroke of a pen today, the president made history.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: We are not a nation that says don't ask, don't tell. We are a nation that says out of many, we are one.

(END VIDEO CLIP)

KING: Is this big shift just related to gays in the military or is the next battleground same-sex marriage? That conversation ahead.

The president also worked on a year-end press conference before heading off to Hawaii tonight. Part victory lap after two very good weeks, part tone setter for next year when more Republican power will make his life a lot more complicated.

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: If there's any lesson to draw from these past few weeks, it's that we are not doomed to endless gridlock. We've shown in the wake of the November elections that we have the capacity not only to make progress but to make progress together. (END VIDEO CLIP)

KING: Really? Really? Well, bipartisanship carry over to a new year that includes a new Republican speaker of the house and tough debates about spending and deficits? Plenty to discuss and debate with our CNN contributors James Carville, Ed Rollins and John Avlon and with me here in Washington, Gloria Borger and Dana Bash.

Ed, I want to start with you first because right after the election, everybody was saying, wow, 63 seats in the House, Republican games in the Senate, lame duck session would be dead.

They would come in, the Democrats would have their tails between their legs and they'd pass the resolution to keep the government fund and go home. Are you surprised?

ED ROLLINS, CNN POLITICAL CONTRIBUTOR: Let me say, these are very effective jobs. This is the last hoorah. Obviously, the 63 new Republicans aren't there until after January. Harry Reid still had 59 Democrats in the Senate, but I give them full credit for getting what they accomplished in the spirit of the holidays. This is their high point and they'll look back on it for many, many years as their high point.

KING: What a nice holiday spirit from Ed Rollins. Let's see if we can get it to - let's listen to the president's assessment real quick. Because when he was talking today, yes, he was celebrating some pretty big victories in the last two weeks, but he also broadened it out. He makes the case, if we listen here, he's had a pretty good two years.

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: I think it's fair to say this has been the most productive post-election period we've had in decades and it comes on the heels of the most productive two years that we've had in generations. That doesn't mean that our business is finished.

(END VIDEO CLIP)

KING: We'll get to that business not finished part a little bit ahead, but let's focus on the here and now. John Avlon, can the president, as he's trying to rebuild his public standing and he has had a couple of good weeks, is he in dangerous water when he starts talking about before the last two weeks that we've had pretty good or two years or is that an important case he has to make?

JOHN AVLON, SENIOR POLITICAL CONTRIBUTOR, DAILYBEAST.COM: Well, I think that strains credibility a bit when he tries to build that bridge, but nobody can argue the last two weeks haven't been successful.

And I think in the sense that we've seen more bipartisan agreement in the last two weeks than we have seen in the last two years. That's an important part of the secret of his success going forward. If he draws lessons correctly and he's been making that case. It was the eight Republicans who made "Don't Ask, Don't Tell," ending it possible. It was 13 Republicans who made ending -- endorsing the START Treaty possible.

That's a record he's got to build on going forward and trying to re-characterize the Pelosi/Reid era, probably not going to do him any favors, but he's got a lot to build on in this last two weeks.

KING: James, you have been among the Democrats critical of how this president communicates sometimes. I want your assessment today because I was sitting here with your old partner Paul Begala and we were listening to the president during the news conference.

And he was talking directly to middle class families, talking about letters he gets from illegal immigrants, the children who would be affected by one piece of that unfinished dream act. He seemed to be trying to connect more in his conversational tone today, do you agree?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: I do agree and look, history can say it's the most productive - the 111th most productive Congress we've had since the '30s, what they accomplished. I don't know. The market sure loved it.

The S&P was up 39 percent since the 111th began its term so somebody thought something was going OK during the course of this. The stock market lost Democrats. That's just a fact.

KING: OK. I think that's on your Christmas card this year, isn't it?

CARVILLE: It is.

KING: Let's go over the wall. Let's put it to the test. We'll take a look at what we call the presidential report card. This takes into account not just the last two weeks, but last two years. Health care reform that was the presidential promise, the troop draw-down in Iraq, the surge in Afghanistan, the Credit Card Bill of Rights, expanding Pell grants, financial reform, repeal of "Don't Ask, Don't Tell," the Recovery Act, that's the stimulus, the new START Treaty, and $806 billion tax package.

That's both promise kept and promise broken when you think about the Bush tax cuts for the high-end people. Unemployment benefits extended, the Food Safety Bill, 9/11 responders, takes me a while because that's a long list.

But the president can rightly say, boom, those are things passed in the last two years that were top priorities. You come over here. This is both on him and the Congress. They didn't pass a budget. That's really not the best way to run the country. They don't really have a budget in place.

The president promised to do an immigration reform. He did not. Dream Act is a subset of that. He did not close Guantanamo Bay. He did not reduce earmarks to 1994 levels and he did not keep his campaign promise to allow prescription drug imports into country.

So there are some things the president has failed to keep. Promises the president still to keep, but Dana Bash, this is your beat, when your walk these halls, the Democrats, they're sort of having mixed mood, because they have the sour feelings because they lost.

Speaker Pelosi has to give up the gavel, but when they look at that, do they look at that -- now, they know they did that and lost so it's bittersweet but --

DANA BASH, SENIOR CONGRESSIONAL CORRESPONDENT: I think they wish that they did more of the touting of the things on the pass list. The problem the Democrats obviously faced in the election and we're going to see the fallout from that in next year, is that many of the things that they passed, American people didn't like or maybe didn't know enough about. Who knows?

But that is what drove the election. I think what was most interesting to me in talking to senators in the hallway today is hearing from Republicans. Lindsey Graham of South Carolina for example, he was talking about how angry he was that his fellow Republicans broke and gave Democrats these victory, saying, I don't understand why they don't realize things would be a lot easier for us, Republicans, when we have more seats and we can do things better.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Just wait. I mean, they will have more seats and this was, you know, as Ed said, sort of the Democrats last hoorah. I also think it was a response on both sides, Republican and Democrats, to the last election where voters said, you have to get something done.

And the things that they passed were actually things that a lot of voters wanted and liked. You know, this tax cut package, as you know, was quite popular with voters because why not? Everybody gets something out of it, right?

BASH: Right.

KING: It's an important point, because as we were saying today, that the president does deserve credit for some victories he wanted. Start treaty is a big deal to the president of the United States. "Don't Ask, Don't Tell," is a big deal to the president of the United States.

You know, a lot of liberals are mad at him on that tax deal -- I was getting e-mails from Republicans saying, don't forget, we did OK in this session too. They denied the omnibus spending bill, which had all those earmarks and they pulled those earmarks out and they just passed a continuing resolution. We'll have a budget in March.

The Republicans got this Democratic president who campaigned on a promise to get rid of the Bush tax cuts for the rich to extend them another two years. They also cut the size, John Avlon, of that 9/11 responders bill -- there was a large of outrage they wouldn't pass it, but in the end the Republicans cut the price tag down from $7.5 billion to somewhere in the ball park of $4 billion. So they think that's good conservative governance.

AVLON: That's right, and it's a good indication of how this lame duck has been productive because it's been characterized by principled compromise and Gloria is right. It represents the message I think the voters were sending, which has to do with checks and balances, the virtues of divided government.

It shows us going forward that divided government does not mean -- need to mean gridlock. If you look forward to some of those undone issues like immigration reform or rolling back earmarks, there's -- I have every confidence those can be accomplished in the next two years if this model is followed forward.

KING: James, I want you to listen here to Senator Jim DeMint because to the point Dana was just making. She talked to Lindsey Graham about this. There are a lot of conservatives saying, wait a minute.

Let's just block anything because when we come back in January we'll be more powerful and even if we get a good deal today, we'll be able to get a better deal in January. Listen to Jim DeMint's frustration.

(BEGIN VIDEO CLIP)

SENATOR JIM DEMINT (R) SOUTH CAROLINA: So much is being pushed through because of the fear here that if we actually let the newly elected congressmen and senators be sworn in before we take up these important issues that they will actually reflect the opinions of the American people and stop what we're doing.

(END VIDEO CLIP)

KING: He's frustrated, James, but none of this could have been done without some Republican votes, three on this issue, eight on this issue, 15 on another an issue.

CARVILLE: There's a new crowd coming to town. There's no doubt about it, Senator DeMint and his people are going to have an interesting thing. Also, the Republican presidential race's gearing up.

My friend Governor Barber of Mississippi is already weighing in with some comments here so in some ways as a Democrat, I'm looking for a lot of these people to voice their opinions. Let's hear what they got to say out there. There's more coming. Sarah Palin, Newt Gingrich. Let's bring the whole thing on.

ROLLINS: The interesting thing is everything that you list there as success, which obviously to the president these are things he had promised in the campaign, that's what we're going to debate again in the presidential year.

Republicans are obviously going to try to make the case. I mean, it's not going to be the START Treaty. No one's going to care about that in a year or two, but these other issue, certainly some of that is going to be in the forefront. But the most important numbers not the stock market. It goes up and down, and I'm not a rich guy so it doesn't make a difference to me.

But what does matter is 9.8 percent unemployment and if that number does not come down substantially then it's going to be a very close election. We'll all concede that. Everything forward is going to be about getting this economy moving.

KING: On that point, let's take a quick time-out. When we come back that's just what we'll do, look forward. What lessons have we learned since the election, in the last two weeks? What will it mean when a very new Congress and a very new Washington comes back to work in January?

(COMMERCIAL BREAK)

KING: If we've learned anything in the last several weeks, it is that American politics at the moment are more than a little volatile. The Republicans win big in November. The president called it a shellacking then. You might say he's had a December to remember.

Let's get back to everybody. James Carville, Ed Rollins, John Avlon, Gloria Borger, Dana Bash here. Let's listen to the president today because at this news conference he wasn't trying to glow. He was taking a bit of a victory lap, but he also when he comes back, this town is going to be fascinating because the big issue is going to be spending, deficit reduction.

How do you do those things without knocking the economy off its sort of anemic path of growth at the moment? So the president says we're going to have some differences and I'm going to make my case.

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: A debate that will have to answer an increasingly urgent question. And that is, how do we cut spending that we don't need while still making investments we do need? Investments in education, research and development, innovation and the things that are essential to grow our economy over the long run, create jobs and compete with every other nation in the world? I look forward to hearing from folks on both sides of the aisle -

(END VIDEO CLIP)

KING: So James Carville, how does he make that case? When he's under all the pressure to cut spending, to go to a Republican House, a Senate with some new Tea Party members and say, you know, we still have to build roads and bridge. We still have to give colleges this research and development money. We still have to maybe build some high speed rail. Can the president make that case?

CARVILLE: First of all, there will be other people making the case with him and for him. Secondly, we're going to -- I'm waiting to see -- so far they've cut National Public Radio or something like that. Added $700 billion to the deficit by tax cuts to the rich. So I don't know, but I'm very anxious to see the proposals by the new Republicans coming to town. The Tea Party people and Senator DeMint, they're talking about shutting the government down. Let's see if that happens. We'll just have to wait and see.

BORGER: I think what --

ROLLINS: James, challenge you on that. No one has said that, James. You have said it.

(CROSSTALK)

BORGER: I think what we saw from Barack Obama today -- was he laid down the marker. He told them exactly --

KING: But can he keep it?

BORGER: Well, but it depends how vulnerable and how -- that majority is of Republicans, i.e., how do they behave? And do they seem responsible or do they come in and say, we just want to cut everything or not?

KING: And Ed is right when he says nobody in an elected position of responsibility is talking about shutting down the government. However --

ROLLINS: Shut it down --

KING: However, they passed a temporary resolution that gets them only to march, Ed Rollins and this is where I think what they changed me and then they have to vote to maybe lift the debt ceiling then they have to make additional decisions. So in effect, they've set themselves up for that possibility. Is it a real prospect?

BASH: Shutting down the government?

KING: Yes.

BAHS: I mean, if you talk to the Republican leader, the answer is no and they are the ones who are going to be in the room negotiating. Are there people who have come in and are there people who kind of in the back benchers who say they might want to do that? Absolutely, but I just don't see that happening right now.

But I think what has been interesting, in talking to Republicans about the way this lame duck session has been, is that they are -- some of them who actually may want to get some things done, they tell me they are concerned that by having these Obama victories.

It is going to inflame the base even more than they already were beforehand and push the people they elected to be even more against compromise than they were before.

KING: And so, Ed, how does Mitch McConnell and John Boehner, two guys who are conservatives, but they are legislators. How do they deal with that when the Tea Party guys come in January and say you gave away too much in December, stop, stop, stop?

ROLLINS: Well, first of all, it's a matter of priorities. The president laid out his priorities. He wants to spend a lot of money on education and what have you. That will be part of the debate and I think to a certain extent, the budget is the document.

By letting this go to march, let's us draw the document. Put the draft down everybody that says we don't have. Let's see if we have and that's how you set priorities. You're going to have to basically reduce spending and you're going to have raise revenue eventually before you're even going to resolve this thing.

AVLON: Ed's right. Take the big step back. This is about the deficit and the debt, which is allegedly the number one concern of the Tea Party. It's not of necessarily about shutting down the government. I think Republicans remember that didn't work out too well --

BORGER: John, but the Republicans I talk to say what they're going to do when it comes - time to raise the debt ceiling and Dana, you know about this, is they're going to propose cuts at the same time. You talk about raising the debt and give $100 billion in cut, right?

AVLON: You make some condition. Here's an opportunity for the president to lead. He talks about deficit and debt reduction. Before the inauguration, he talked about the importance of entitlement reform.

So you talk about him being the adult in the room. He's going to have to lead this conversation, but he can do that. He can raise revenues with tax reform in ways that don't raise taxes outright, but close loopholes.

That's the kind of negotiation you're going to see. That will be very effective for him in terms of reconnecting with centrist and independent voters continuing from --

KING: James, what does it tell you about public opinion? What does it tell you when you look at our new polling right now? The president got his butt kicked last month and yet is Obama doing enough to cooperate with Republicans?

The American people, 59 percent say yes, 37 percent say no so the president getting credit there for cooperating with Republicans. Are Republicans doing enough to cooperate with Obama, 28 percent yes, 7 in 10 Americans say no. They just won an election and the American people are saying never mind.

CARVILLE: Well, of course, they're against the 9/11 responders till Jon Stewart made them be for it. I'm on a different planet than other people. Thank you, Dana Bash.

You have Republican members of Congress talking about shutting the government down. The Republican Party shut the government down in the '90s. This is not some crazy Glenn Beck conspiracy thing, guys. This is real Congress I'm talking about. This is something that your party has a history of doing and these people coming in, they --

BORGER: James, don't you think the leaders have learned?

KING: We're going to see if they learned. On that feisty note, I'm going to --

CARVILLE: -- I know people are talking about it.

KING: We'll continue this conversation, but I need to call a time-out right now. A lot more come in the program. The reason I'm calling a time-out is because we have so much packed in tonight.

When we come back, we're going to go exclusively one on one with Harry Reid. He is the Democratic leader who just in the view of many Republicans snookered them. We'll talk to him exclusively about the lame duck and some Republicans think he just ate their lunch.

Also, I think an intelligent story to talk about tonight. Is there a holiday threat and is the president's director of National Intelligence out of the loop. We'll talk to the chair of the Senate Intelligence Committee. She'll tell us that one.

And when we come back the president made history today by signing the repeal of "Don't Ask, Don't Tell." He also talked about his views on same-sex marriage. Gay right, is it still right issue?

(COMMERCIAL BREAK)

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

JOE JOHNS: You're in for a shock if you haven't filled up for your holiday trip. Triple A says the national average for gasoline is just about to hit $3 a gallon. The highest price at the pump since October 2008.

A half dozen Southern California counties are under an emergency declaration as another powerful storm from the pacific is hitting the region. But right now, there is a beautiful double rainbow over Los Angeles. Live pictures right there. You're looking at it as it happens.

President Obama is on his way to join his family for a Christmas vacation in Hawaii. Air Force One took of just before the top of the hour.

And in Alaska today, Joe Miller lost again. The state Supreme Court ruled against every point of his challenge to Senator Lisa Murkowski's write-in victory. The court declared there are no remaining issues to prevent Murkowski's re-election from being certified. A long fight over at last.

KING: A lot of Republicans had been urging him even Republicans who supported Joe Miller have been urging to give it up, give it up. On that note, Senator Murkowski will be right here with us tomorrow night to talk about her votes in the lame duck session of Congress. Since she won that race, she seems a little liberated. Joe, it's been very interesting.

JOHNS: She certainly has.

KING: Yes, she'll be with us tomorrow. Senator Murkowski, Republican of Alaska. When we come back, Democrat Harry Reid of Nevada. He just won a tough re-election battle and then as the majority leader, he led the Democrats in the so-called lame-duck session. He's with us exclusively in just a minute.

(COMMERCIAL BREAK)

KING: The man even Republicans begrudgingly give a great deal of credit for all of the advancements in the lame-duck session of Congress, the Senate Majority Leader Harry Reid, Democrat of Nevada joins us now from his office on Capitol Hill.

Senator, I want to get to some of the specifics, but I want to start with what might be the ultimate irony. This was the lame-duck session and in this campaign year, Republicans had hoped to make you target number one.

Lame duck number one if you will. They tried so hard to beat you in that campaign. You won the campaign. You came back and you had what by all accounts was a very successful lame duck session. How?

SENATOR HARRY REID, (D) MAJORITY LEADER: The midterm elections proved to me, Democrats, and Republicans that during this lame duck session, what the American people wanted was for us to work together.

I think you saw in this very short congested work period we had is Democrats and Republicans were working together. We accomplished a lot of stuff and we did it because we worked together.

KING: Not everybody's happy about that. I want you to listen here to Senator Lindsey Graham, Republican, of South Carolina. He believes you took it to the Republicans pretty good. Listen to his choice of words.

(BEGIN VIDEO CLIP)

SENATOR LINDSEY GRAHAM, (R) SOUTH CAROLINA: When it's all going to be said and done, Harry Reid has eaten our lunch. This has been a capitulation in two weeks of dramatic proportions of policies that wouldn't have passed in the new Congress.

(END VIDEO CLIP)

KING: Did you eat the Republican's lunch? Get them to capitulate on things that would never have passed next time?

REID: Lindsey Graham and I are friends. I'm sorry he feels that way. I'm sorry he didn't join with us. He's an outstanding advocate and I'm sure we will work together in the future. Let's not talk about Harry Reid eating their lunch. What we were able to do together, very, very good things for our country.

KING: On the floor on Friday when you were fighting for the START Treaty, at a time when its future, its ratification was in doubt, you said of all the things done in this Congress, there was nothing, nothing more important than this START Treaty.

Those are your words. Do you really believe that? Health care reform was passed, financial reform, the repeal of "Don't Ask, Don't Tell." Is START Treaty the most important or is that a bit of hyperbole at the moment?

REID: Well, you know, John, whatever I'm working on at the time seems the most important.

KING: In context, what do you think, looking back at the past two years not the past two weeks, what was the most important thing you did?

REID: Well, as I look back over this Congress, it was so many things we worked so hard on. I mean, something like the public lands bill. That was hard to get done. Lily Ledbetter.

For the first time in the history of our country, we now have the FDI controlling tobacco. Credit card legislation. We did health care reform. We did Wall Street reform. We did national service legislation. We did the HIRE act, Small Business Administration that was so important to stimulate the economy as much as it did.

So there isn't any one thing that I look back on as the thing that is the most important. I say everything that we worked on at the time was extremely important.

KING: One of the things that came up in the lame-duck session that you were forced to compromise on, was you tried to bring the 1,900 page on to the spending bill to the floor and there were a lot of complaints that it was loaded up with earmarks. You went to the floor and called the Republicans hypocrites. Saying they were criticizing that bill, but in a little bit of a wink that they cynically wanted it to pass, even though they were criticizing, because they wanted all their earmarks.

Then the Republicans did hold together, sir, and they forced you to pull that from the floor and instead negotiate what we call a continuing resolution, here in Washington, to fund the government through March. No earmarks. Do you owe those Republicans an apology?

REID: Oh, of course not.

KING: But how raw -- how raw did you feel personally, being essentially iced out of these negotiations in the end, when it was the vice president negotiating with Leader McConnell and the Republicans on the other side, a tax compromise deal that you and the leadership of the House knew nothing about at the outset?

REID: John, I was not iced out. I made a decision not to get involved in the negotiations. I was invited to many meetings. The president will tell you that. Joe Biden will tell you that. I made a decision that these negotiations were something that I thought the president should do on his own. I did not want to go to my caucus and tell the caucus I'd agreed to these tax cuts for rich people. I'm satisfied with the ultimate package. Think the president did an outstanding job of negotiating things for the American people. But I was not in favor of tax cuts for people making more than $1 million a year.

KING: As you know, you personally don't like that. Many members of your caucus don't like that on the House side. That you might say it is even a bit more intense. I want you to listen to Peter DeFazio who was furious at the president for negotiating this compromise.

He said, "The president has allowed himself to be blackmailed by the Senate Republicans and I will not support it. Compromise requires give and take, but once again, the middle class gave and the millionaires took."

Are you worried that this is -- in the Clinton days, we called it triangulation. Is this a new Barack Obama? Is he going to put himself ahead of what the Democratic base thinks?

REID: I know Peter DeFazio very, very well. I like him a lot. But he's wrong. The president did a very, very good job of making sure that the American people were taken care of. That the economy continues to grow; that people who are out of work can drawn unemployment benefits still. That the great middle-class programs that were destined to go out of business are now part of the law of this country, because of Barack Obama and Joe Biden. They did an outstanding job. And even though I like Peter DeFazio. He's absolutely wrong. The president did a good job. He did a good job without me.

KING: Did the president do a good job when he said those who were criticizing him, including Mr. DeFazio, and many members of your conference, were sanctimonious?

REID: I've heard that term kicked around a little bit. But it is easy to take words out of context. I don't do much name calling, on purpose. So I don't know what that is all about. But I don't consider that anything that was directed toward me.

KING: You're auditioning for secretary of State here, it's quite admirable, Leader Reid.

I want to look ahead to the next Congress, because when you come back, you will have a Republican speaker of the House, John Boehner. You will still be a leader in the Senate, but you'll have a more narrow Democratic majority. Here's what leader McConnell said just the other day, to Politico.

"There's much for Democrats to be angst ridden about. If they think it's bad now, wait till next year.:

What do you think he meant? REID: I don't know what he meant by that. I think that now that we have 53 and not 58, I think that we're going to be obligated to make sure that Mitch McConnell believes he's part of the process. I'm going to do everything I can to work with Mitch. He and I have a very fine relationship. And I don't know why he made that statement. But I -- he's made statements to me personally that he wants to get a lot of things done.

We have an idea of how we can get things done. We're going to try to get our appropriation bills done. We are going to have a run at energy legislation. As you know, there's a number of Republicans who want to do comprehensive immigration reform. I look forward to working with them on that issue.

So I'm not going to be challenging what Mitch said, in whatever setting he was in, other than to say that my conversation with him had been very positive about the next year.

KING: You truly believe things of that size, scope and importance can get done when we come out to a new year with divided government in which, Sir, you know this as well as I do, the presidential campaign in 2012 will be starting even before we say Happy New Year?

REID: Some of the most important legislation has been passed with divided government. There's nothing wrong with divided government. I would rather that we still had 60 votes in the Senate, and we had the White House, and we had a heavy majority in the House. But that's not the way it is. Divided government does not mean you can't get things done. Legislation is the art of compromise. And when you have divide government, that's when you have to compromise.

KING: That's a nice place to stop and wish you a great holiday, Sir. Wish you a well-deserved break and send our best wishes to your wife as well.

REID: Thank you very much.

KING: Senate Majority Leader Harry Reid, thank you, Sir.

When we come back, remember the underwear bomber last Christmas? What does the intelligence say about the threat this holiday season? The Chairwoman of the Senate Intelligence Committee Dianne Feinstein, after the break.

(COMMERCIAL BREAK)

KING: It was a year ago this week the term underwear bomber entered our lexicon after a failed Christmas Day attempt to blow up a U.S.-bound jetliner using explosives the suspected terrorist was able to get through overseas airport screenings.

The Obama administration says it learned the big lessons of that attempt. And the president's top counterterrorism adviser visited the White House briefing room today to claim progress in making a number of security enhancements, but John Brennan also urged vigilance. (BEGIN VIDEO CLIP)

JOHN BRENNAN, W.H. COUNTERTERRORISM ADVISER: We're concerned about Al Qaeda's plans to carry out attacks and the Department of State had issued an advisory about Europe, and about plans by Al Qaeda to try to carry out attacks there. We do not limit our focus to one geographical area that is why we are constantly looking at whether or not there is something that is directed at the homeland here.

(END VIDEO CLIP)

KING: So is there specific intelligence about a holiday season threat to the United States? And are there still major problems in the management of and communication among U.S. intelligence agencies? Well, let's get the assessment of Democrat Dianne Feinstein of California, the chairwoman of the Senate Select Committee on Intelligence.

Senator, it is good to see you. I appreciate your time. I want to start with John Brennan, the president's top counterterrorism adviser. He comes into the White House briefing room today. And his message seemed to be, we're on top of this. But what is this? Have you heard in the chatter, the intelligence chatter, anything that tells you there's a specific threat against the United States this holiday season?

SEN. DIANNE FEINSTEIN, (D) CHAIR, SENATE SELECT CMTE. ON INTELLIGENCE: No. And I just reviewed the intelligence yesterday. There is a continuing threat. It's been in the news that there's a believability that Al Qaeda does have people in this country, but there is no specific threat that I'm aware of that the time.

KING: As you know, of course, we ask the questions with a little bit more urgency because of what happened last year, the underwear bomber, Mr. Abdulmutallab.

FEINSTEIN: That's right.

KING: Is there anything, when you look at the chatter now, the intelligence now, do you go back and compare it? Because we obviously didn't see this coming then?

FEINSTEIN: I would assess that we're at heightened vulnerability over the Christmas season based on past practice. I think you have to assume that. And you have to prepare for it. And you know, Al Qaeda is going to come after us if they can. There's no question about that. Some have questioned, you know, whether we need to be vigilant. I would say yes, we really need t be vigilant. There's no question about that.

KING: Also important is improving intelligence gathering and sharing information. Are you convinced this Christmas season the United States government and its friends around the world are doing a better job at preventing someone from getting on a plane with explosives in their underwear, and other key steps? Better this year than last year? FEINSTEIN: I would say so. I think the failures from the Abdulmutallab incident which were 14 to be specific, we in the Intelligence Committee looked at very carefully and sent a series of findings and recommendations to the administration. It's my understanding that every one of them has been corrected. So I would have to assume that we're in a much better place.

KING: We have talked many times in recent years about improvements, attempts at improvements, and some missteps in the years after 9/11 at making the agencies not only better, each of themselves, but better communication. I want -- I'm sure you've seen this but I want to play this for any of our viewers who have not seen this. Diane Sawyer of ABC News sat down with three of the president's top officials and was asking the director of National Intelligence about arrests that happened in London 12 hours before the interview, and yet this is what happened.

(BEGIN VIDEO CLIP)

DIANE SAWYER, ABC NEWS ANCHOR, ABC NEWS: London, how serious is it? Any implication that it was coming here? Any of the things that they have seen were coming here?

UNIDENTIFIED MALE: The arrests of the 12 individuals by the British this morning?

SAWYER: Yes.

UNIDENTIFIED MALE: Oh?

UNIDENTIFIED MALE: This is something the British informed us about early this morning and that it was taking place.

SAWYER (voice over): Later in the interview, I came back to the director. Did he really not know?

(On camera): I was a little surprised you didn't know about London, Director Clapper.

UNIDENTIFIED MALE: Oh, I'm sorry. I didn't.

UNIDENTIFIED MALE: You referenced London but you didn't talk about the arrests.

(END VIDEO CLIP)

KING: Does that frighten you, Senator?

FEINSTEIN: Well, first of all, Director Clapper was meeting with members of the Senate on the ratification of the START Treaty. Pretty important. If that were me, I'd be a little bit upset with my staff because before I went on television, I would have expected that my staff would have alerted me as to anything that came in. So that's a point that I would make.

KING: He's the director of National Intelligence? FEINSTEIN: Yes, yes, yes. John, but wait a second. We have a major national security treaty before the Senate. About to be voted on within the hour. Up to yesterday, we didn't know where the votes really were. And Director Clapper has been over here. We had a three-hour secure briefing. He was closeted in a room. Members were coming in to see him one by one. I don't think you can blame Director Clapper for this.

Getting the news to him, that's the job of the Counterterrorism Center. It's the job of his staff. And I think he will pick up on that. He's a very direct man. He was working very hard. I can testify to that. And I think to, you know, push this to any elevated status is a big fat mistake. It's making a -- what is it? A tempest out of a teapot.

KING: So, you see a staff problem and a communication problem, not a leadership problem?

FEINSTEIN: Yes, someone should have informed him what was happening before he went on TV, absolutely. And informed him of it, as soon as they knew of it. No question about that in my mind.

KING: Let me ask you another big national security question. The administration is now preparing an executive order that we're told would allow the president to hold people indefinitely at Guantanamo Bay, Cuba. They would have a new review process so every year or so they could have lawyers and they could make their case they should not be held any longer. This was a president who promised to end indefinite detentions and promised, to end most indefinite detentions and who promised to close GITMO.

Are you OK with this order? Do you think it's the right thing or the wrong thing?

FEINSTEIN: Well, we're just in the process of reviewing it right now. There are people who are not going to be released, because they are a threat. And they were captured on the battlefield. And for one reason or another, they cannot be tried. So indefinite detention most likely is going to be a part of this.

Now, how you provide due process in that situation remains to be seen; whether you have an annual review, a biannual review, whether the individual's entitled to counsel at that time. These are things that need to be worked out. But the United States government certainly should not release somebody captured on the battlefield, who is a continuing threat to the well being of our country.

KING: Senator Dianne Feinstein is the chairwoman of the Senate Select Committee on Intelligence.

Senator, thanks for your time today.

FEINSTEIN: Thank you.

KING: When we come back, the president makes history signing the legislation repealing the "don't ask, don't tell". What does that say about the bigger gay rights debate? Just ahead.

(COMMERCIAL BREAK)

KING: Such a busy day here in Washington, one might forget history was made this morning. President Obama signed the legislation repealing the ban on gay Americans serving openly in the military. And as he celebrated the president did sound one cautionary note. The Pentagon gets several months to plan a transition. So "don't ask, don't tell," will be the official policy for while still.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It is especially important for service members to remember that. I've spoken to every one of the service chiefs and they are all committed to implementing this change swiftly and efficiently. We're not going to be dragging our feet to get this done.

(APPLAUSE)

(END VIDEO CLIP)

KING: Later, at his year-end press conference the president spoke of the evolving politics of gay rights, including his own rethinking of his long-standing opposition to same sex marriage.

(BEGIN VIDEO CLIP)

OBAMA: My feelings about this are constantly evolving. I struggle with this. I have friends, I have people who work for me, who are in powerful, strong long-lasting gay or lesbian unions. And they are extraordinary people. And this is something that means a lot to them. And they care deeply about.

(END VIDEO CLIP)

KING: So why the change? What does it tell us about the politics of gay rights? Let's ask two men who make tracking public opinion their business. Democrat Cornell Belcher and Republican Ed Goeas.

And let's begin by looking the numbers. We asked at CNN, in our polling recently, do you favor or oppose allowing gays to serve openly in the military: 72 percent of Americans say they favor that right; 23 percent opposed.

Slightly different question, but back in April 2009, do you favor or oppose "don't ask, don't tell", the current policy? It was 48/47, so a split. Why from a split, sort of a tough issue, to overwhelming support?

CORNELL BELCHER, PRES., BRILLIANT CORNERS RESEARCH & STRATEGIES: I think we're watching history unfold right here in front of us. If you go back to even before that time period, I mean there are gay rights issues, so gay marriage was a real strong wedge issue politically. It's been softening. And I've sort of watching the public support for it soften, to where you have 70 percent approve of it. And even a majority in the military now saying it is OK. I think we are watching, really, a transformation. Really quickly, I don't think we saw the same thing with women's rights, or certainly not with civil rights.

KING: The pace of it? The pace of acceptance?

BELCHER: The pace is really quick, yes.

KING: Is that fair?

ED GOEAS, PRES. & CEO, THE TERRENCE GROUP: I'm not quite sure. You do have to ask the question the same way to tell whether or not you're analyzing it the same way.

I think what you had several years ago was military leaders was adamant this was not a policy that should go through. And the American public not understanding exactly why it shouldn't, said, fine. They were split on it. The position of the military leaders were not as strong this time. They did get some coverage but not as strong. So I think they've kind of moved back to where they were naturally, which is they don't understand why not.

KING: So you separate the gays in the military issue from a broader conversation about public perception on gay rights?

GOEAS: Oh, absolutely. I mean, you're not seeing the numbers change in terms of gay marriage. Gay marriage is still overwhelmingly a majority say they're not for that. Much different issue when it comes to gays in the military. It's a policy that quite frankly the American public never understood.

BELCHER: But you wouldn't say that over-if you look back five or six years that even that number-now clearly, you don't have a mandate for gay marriage in this country, but you wouldn't say that number is softening? Because in almost everything I'm seeing, that number actually is softening. In particular it is soften with some part of even the Democratic base that I thought would be fractured, with African-Americans, who we saw some fracturing of that as a wedge issue before.

KING: Let me show the numbers to our viewers. Just so they see them. Should gay marriage be legal? This is and ABC News/"Washington Post" poll in February of 2010. Legal, 47, illegal, 51. Back in 2005, the same poll, ABC/"Washington Post", legal, 39 percent, illegal, 58 percent. So a little bit of a shift there.

BELCHER: That is what I'm thinking. I think there is really a softening there.

GOEAS: And two years before that, it was 47/47, so?

KING: Right. So here's the question, still a divide on the question of should same sex marriage be legal? What about the politics of it? George W. Bush very effectively, Republicans would argue, used this as his closing pitch in 2004. When you looked at some close states, where cultural conservative turn out, maybe Ohio, say, a big battleground state, a lot of Republicans said that was part of the difference. Can you use it as a wedge, gay rights, gay marriage, as a wedge, as it has been in the past?

GOEAS: I don't think it was used as a wedge as much as people thought. Quite frankly, the only place we saw a difference was in the African-American community in the 2004 campaign. When you saw a shift of about 7 percent, 8 percent of the African-American community vote Republican because of the gay marriage issue, not the gay rights issue.

BELCHER: I think they were masterful in using it-of course I'm going to disagree with you, Ed. I think they were masterful in using it as a wedge issue particularly for energizing their base and pulling over some socially conservative groups that should have been us. But I think sort of softening of this issue, as we see, is taking away its effect to use as a solid cultural wedge issue, hopefully for sometime to come.

KING: Actions cause reactions in our politics. Since the "don't ask, don't tell" policy was repealed by the Congress, the president now signed it into law, you do see among social conservative groups a lot of criticism, a lot of pressure on lawmakers, and a lot of fundraising activities. Will you see, you think, in the next campaign, because of this quote/unquote defeat for them on this issue, will they try to make it a bigger issue?

GOEAS: You may see it among some groups. It is not going to be the daily diet of Republicans and Republican campaigns.

BELCHER: And I think, you know, I think this is sort of monumental because it is sort of what Truman did, sort of for African- Americans in the military, sort of allow for the '50s and the civil rights movement to come along. I think this allows for their human rights-we have to be careful about civil rights, because there's still some rifts in the communities about gay rights and civil rights. But for their rights movement, it's sort of take one step further.

KING: Would this be-not just gay rights but any big cultural question like this, would it be a different conversation, would the politics have been different over past six, nine months if we had 4 percent or 5 percent unemployment? Does a bad economy make it easier to do these things?

BELCHER: I think that's absolutely right. I would argue that the-the image of sort of these cultural warriors, and even sort of a terrorist to a certain extent, was replaced by a white guy in a blue suit with a foreclosure note, for middle American, sort of scaring the heck out of middle America. The economic angst of middle America, right now, I think does overshadow a lot of the typical cultural issues.

GOEAS: So does the spending in Washington in terms of the --

(LAUGHTER) KING: Let me ask, lastly, on these issues, is there a generational line? If you talk to people, just look at the debate in Congress, you talk to Senator McCain who served in the military some time ago. For him, this is like, no way, no way, no how. Scott Brown, a Republican who served in the military, still in the Reserves, I believe, served more recently. He thought about it and said, you know, I can do this.

GOEAS: Certainly see a generational difference. But I would come back to the difference if you want to talk about gay marriage, it is the religious versus the nonreligious. If they view marriage as a religious institution, a religious activity, then they view it much differently than civil marriage. That's really the divide, it is not a cultural divide as much as a religious divide.

BELCHER: I think the religiosity of it has an absolute impact on it. Although, I think your religiosity actually has something to do with where you are culturally, as well.

KING: Cornell Belcher, Ed Goeas, thank you very much.

GOEAS: Thank you.

KING: These days, when we want to make a point, we update our Facebook page or we Tweet. Maybe we send an e-mail. In the argument between North and South Korea, how about war of the faxes? Pete on the Streets, on this one, next.

(COMMERCIAL BREAK)

KING: Revenge of the faxes? That's apparently how the North Koreans think they can get their message across to their neighbors in the South. Pete Dominick has been tracking this one.

Pete, what's this all about?

PETE DOMINICK, PETE ON THE STREET: Yeah, John King, apparently the North Korean regime sent some kind of mass propaganda via fax machine to South Korean companies and churches, and so on. And, you know, I don't know much about too many things, John, but I do know a little bit about 21st century communication. When is the last time anyone used a fax machine? South Korean's arguably as technologically advanced as we in America.

John King, I work at CNN every day. And I work at SiriusXM everyday, two offices, I have no idea where the fax machine is. Wolf Blitzer was just in North Korea. I got to ask him what his hotel in- room entertainment was? An Atari 2600, and eight-track player? What's the next thing they'll use for propaganda? Where's your fax machine? Do you know?

KING: It's next to the mimeograph.

DOMINICK: Exactly, you guys are really arcane there. Have you ever used a fax machine? Has anybody? When's the last time you saw a fax machine? Miss? I mean, no one -- last week, really? You should upgrade your office, Sir. Last year, John, somebody tried to book me in a stand-up gig. They told me to fax them an I-9 form. I just canceled the gig. I don't think I'll ever get the check. Are you going to send it Pony Express? I'm not too worried about the North Koreans at this point, John.

KING: The Dear Leader is going to send you a Tweet, objecting to your criticism of their strategies.

DOMINICK: Good night, Dear Leader.

KING: That was the hologram Wolf Blitzer we sent to North Korea, Pete. We are on top of the technology here.

DOMINICK: Oh, right.

KING: We'll see you tomorrow night. "PARKER SPITZER" starts right now.