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JOHN KING, USA

Fiery Package at Postal Plant; Repealing Health Care Reform; Mitch McConnell Interview; Democratic Leadership On The Hill Are Coping With The Transition

Aired January 7, 2011 - 19:00   ET

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


JOHN KING, HOST: Thanks Wolf and good evening everyone. A very busy day in politics, but first some breaking security news. A package addressed to the homeland security secretary, Janet Napolitano, ignited at a Washington postal facility today. No one was hurt, but the Washington police chief, Cathy Lanier (ph), says today's package is, quote, "similar in nature to a pair of envelopes that ignited yesterday at state offices in Maryland."

(BEGIN VIDEO CLIP)

CHIEF CATHY LANIER, DC METROPOLITAN POLICE: The package had been described as popping, smoking and with a brief flash of fire and then it went out extinguished itself.

(END VIDEO CLIP)

KING: Postal Service investigators aren't giving out much about what was in today's package. But earlier Maryland authorities showed off the note and the envelope sent to the State Transportation Department. It reads, quote, "Report suspicious activity total bull. You have created a self-fulfilling prophecy." It is signed with an X.

So what is this and what should authorities be looking for now? Joining us on the phone from New York is our CNN national security contributor Fran Townsend who was President George W. Bush's homeland security adviser. Fran, on the one hand, you think a crank who has some grievances against the government, but on the other hand, you have to be thinking perhaps somebody testing the system?

FRANCES TOWNSEND, FORMER BUSH HOMELAND SEC. ADVISER (via phone): That's exactly right, John, and you know when you get two events so close in time and so similar, your first inclination in the investigation is to assume these are in some way related, and you begin to look for the links. You know the fact that they're both to government buildings; they're both to senior officials. They're both letter bombs, but they weren't bombs and such. They were sort of incendiary devices that ignited and so no doubt they're looking at both facilities in Maryland and the one in D.C. to try and understand both the bomb maker and the motivation.

KING: And they're not saying very much, (A", because it's early in the investigation and, "B", because they don't like to say much until they can privately do some work and connect some of the dots. But you're well plugged in the intelligence law enforcement community. Are you hearing anything that troubles you or does this look like some domestic problem?

TOWNSEND: It looks -- truthfully John to me based on sort of prior experience, it looks like a domestic problem. The thing that's not clear is that someone who has some sort of stated political agenda or is this somebody who's disgruntled either with the state or the federal government for some inane reason but has chosen to take it out on federal officials.

Equally dangerous, of course, but better to understand, but I would be surprised, this is not sophisticated on the scale. You know if this had been a sort of sophisticated organization or terrorist group, those devices likely would have ignited and really hurt people.

KING: Fran Townsend, appreciate --

(CROSSTALK)

KING: Sorry, Fran -- Fran Townsend, thanks for joining us tonight. We'll stay on top of this story at CNN, stay with us for further developments.

Now though to politics -- tonight we close a fascinating week of transition in Washington with another exclusive newsmaker interview. The Senate Republican leader, Mitch McConnell, he is just ahead with us tonight.

Plus we should all be thrilled when the unemployment rate drops, right? Well it did just that last month from 9.8 percent to 9.4 percent. But hold off on the party. The economy added only an anemic 103,000 jobs. The reason the rate went down is that many Americans dropped out of the labor pool, meaning they just gave up looking for work. We'll map out the ups and downs in the job market and explain why the president still is sounding more optimistic.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: The economy added 1.3 million jobs last year. And each quarter was stronger than the previous quarter, which means that the pace of hiring is beginning to pick up.

(END VIDEO CLIP)

KING: Let's hope the president's right. Also tonight the first big proof that elections have consequences. The new Republican majority in the House flexed its muscles today keeping its promise to quickly move to repeal the Obama health care law.

(BEGIN VIDEO CLIP)

REP. MIKE PENCE (R), INDIANA: We'll vote to repeal Obama-care again and again until we can sign their government takeover of health care to the ash heap of history where it belongs.

(END VIDEO CLIP)

KING: Now Republicans like to call it the quote, "jobs killing Obama health care plan", today Democrats upped the rhetorical ante.

(BEGIN VIDEO CLIP)

REP. JOHN GARAMENDI (D), CALIFORNIA: The repeal of it is actually a killer of human beings. Some 40,000 Americans die every year for lack of health insurance. That's the reality. Repeal this bill and you're going to find more Americans dying.

(END VIDEO CLIP)

KING: Oh, politics back in the Capitol -- the reality is the repeal effort doesn't stand a prayer of succeeding, yet it isn't just political theater. This is the beginning of a consequential debate about the role and the reach of government beginning with health care but soon to include education, transportation, Social Security and more. So let's assess round one the health care repeal effort with two veterans of campaigns and Capitol Hill Democratic strategist Paul Begala and Republican strategist Kevin Madden. Gentlemen, a simple question to start with, what have we learned in our first week of divided government?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Just sometimes you stumble coming out of the chute. OK, I mean the -- they missed the swearing in of it. They're reading the Constitution and at least two Republican congressmen violated Article Six, which requires congressmen to be sworn in.

UNIDENTIFIED MALE: Oh details.

BEGALA: That's a detail. The bigger thing is the Republicans rode in to office on it seems to me a singular pledge to cut government spending, and they put a number on it, $100 billion and they have already backed off of that, saying, well, maybe it will be 50, and you know then they pledged to repeal health care.

They're not going to be able to do it, you're right. But it is important. You're right about that too. What they ought to do -- you want my advice? Repeal their own. That would not be just symbolic. That would be living the life, walking the walk. They can repeal their own health care. They can decline the generous congressional health care package. I've been on it as a staffer on the Hill. It's (INAUDIBLE) and they can just walk because it's evil, you know it's communist, it's dictatorial. It's dispodat (ph), so they can at least do that. They can repeal their own and don't hold your breath until you --

(CROSSTALK)

BEGALA: You see Mr. Boehner --

KING: That line is not going to be very long.

KEVIN MADDEN, REPUBLICAN STRATEGIST: Look, the pageantry (ph) of day one is already gone. It didn't take long for folks to start using very hot political rhetoric on the House floor. But I think what I have learned from this first week is that already is that both parties think that the electoral judgment that we saw in November, they're trying now to play to their advantages.

Democrats think what we have to -- what they have to do is that they have to communicate better and they have to fight harder. And that's been -- you know that's emblematic in the congressman's words that you saw used on the House floor. And Republicans feel that we're perfectly aligned with voter sentiment on big spending, big government -- against big spending, against big government and you're going to see those two -- those two themes continually threaded throughout our actions through the first couple of weeks and months. And I believe that the big middle of this electorate right now is more closely aligned with the Republican sentiment that focus on spending or focus on big government is going to help the main focus which is the economy and jobs.

KING: Here's what's striking, we just went through a campaign in which the Republicans campaigned aggressively against Nancy Pelosi, against the Obama health care plan, against the Democrats and big government. And missing I think at least from many campaigns out there in Middle America were Democrats fiercely defending the plan like this.

(BEGIN VIDEO CLIP)

KING: If I went back into the last campaign, I could count on one hand, one hand the number of members in real races.

(END VIDEO CLIP)

KING: That's -- we'll get to that in a minute, but first this is from the House floor today. Democrats fiercely defending the health care plan.

(BEGIN VIDEO CLIP)

REP. PETER WELCH (D), VERMONT: Preventative care we're taking it away from seniors who are trying to take care of themselves, get those free mammograms, keep the cost of health care down. You are taking it away. Admit it. Own it. State it proudly. It's what you campaigned on; it's what you're doing.

REP. ED MARKEY (D), MASSACHUSETTS: The Republicans don't care about grandma; they want to take back the drug benefits in the new law. GOP used to stand for grand old party. Now it stands for grandma is out of prescriptions.

(END VIDEO CLIP)

KING: Now Peter Welch and Ed Markey, they're two Democrats from pretty safe seats so they weren't really in danger in this election anyway. But I sat down with the former speaker, Nancy Pelosi, now the Democratic leader, last night and I put the irony question to her, where was this in the campaign?

(BEGIN VIDEO CLIP)

KING: If I went back into the last campaign, I could count on one hand, one hand the number of members in real races who ran as giving the proud testimonials about the impact of the health care bill that they're giving today. Do you think we'd be in a different position if many in your party weren't afraid to defend it in the campaign?

REP. NANCY PELOSI (D-CA), MINORITY LEADER: Well first of all, this election was not about health care reform. This election was about 9.5 percent unemployment. It's about jobs.

KING: The Republicans said Nancy Pelosi, big government health care --

(CROSSTALK)

KING: I understand you think that was the undercurrent among the electorate and I agree with you to a large degree. However, on the substance, it was government takeover of health care. Nancy Pelosi --

PELOSI: But if we hadn't passed it, it would have been the same thing. So our members are very proud that we accomplished -- we came here to get a job done, not to keep a job.

(END VIDEO CLIP)

KING: Where were those Democrats?

(CROSSTALK)

KING: I guess the opposition's easier?

MADDEN: The only folks that are left on Capitol Hill that are Democrats are big government liberals. That's why they're being so vocal in defending it now. And I think you look at folks like Dan Boren (ph), who's in a competitive district, is a Democrat in a competitive district. He voted for the rule today and he's probably going to vote to repeal the bill. That is much more -- those are the Democrats I think that are going to continue to survive instead of the ones that are in, you know pretty safe liberal districts.

BEGALA: You're right when you say opposition is easier, right. If the Democrats had gone around and said, give me a gold star, I passed health care -- much of it had not taken effect yet. Second, with 9.5 percent unemployment voters are really angry, if Democrats had come to voters and said even though I support this health care bill, I think it's really good, if they had said that in the campaign, they would have done worse because voters were not in the mood to reward anybody. But now, this is -- I'm telling you this is going to be like World War I trench warfare, right. Whoever is on defense wins and the Republicans now are going to charge out of their trench and say repeal health care and now the Democrats are going to machine gun them down the same way the Republicans are going to machine gun --

(CROSSTALK)

MADDEN: And real quickly, I think you're going to see a line by line litigation of what's in the bill and I really think the reason Republicans won the last debate (INAUDIBLE) going to win it now is because people aren't looking at this like a health care bill. What they see is a trillion dollar spending bill. And again that's why I think we're favorably aligned with the public on this issue because they're sick of the federal spending and they're sick of --

(CROSSTALK)

BEGALA: -- deficit reduction bill that's been passed since Bill Clinton was president. The biggest deficit reduction -- Congressional Budget Office says if you repeal it, you add another quarter of a trillion dollars to the deficit. That's what the --

KING: All right, well the fight has begun. Paul and Kevin aren't going anywhere. They're going to stay with us. When we come back, Paul made mention of it, on the day they were reading the Constitution, well, two members of the new Republican majority kind of violated it. We'll have that just ahead. And also Sarah Palin says President Obama is weakening America.

(COMMERCIAL BREAK)

KING: So if you have been watching Washington the last couple of days, you know when the new Republican majority took power in the House, they thought it was important to read the United States Constitution. Democrats initially were reluctant, but then they joined in. They read the Constitution on the floor of the House.

However, however, it turns out two members of the new majority were technically violating the Constitution because they hadn't been sworn in. They were out of the room when the speaker said raise your hand and take the oath. They're Pete Sessions of Texas and Mike Fitzpatrick of Pennsylvania. Tonight they have released this letter kind of saying sorry.

Let me read a line from it. "While we immediately took steps to rectify the situation, we understand that our error allowed the integrity of this great legislative body's proceedings to be called into question." They go on to say we regret the incident and sorry. It's kind of funny. It's kind of silly, but it's also a little bit of those first days you know where's my locker in high school I guess -- you have to take the oath. Both of these guys -- these are not new guys. Fitzpatrick has been in before. Sessions is coming back for another term, they should know better.

MADDEN: Didn't they always say 90 percent of politics is just showing up? This is one of those cases. Look, I always tell the story of about when my father showed up late to my first communion and the trauma of that event has made sure that I've been 10 minutes early to everything ever since. I have a feeling that Congressman Sessions and Congressman Fitzpatrick are going to be 10 minutes early for every single meeting and every single vote from here on out.

BEGALA: I do. I hope so and you can't understand scheduling (INAUDIBLE). But they were at a reception, apparently not a fundraiser. There's some I think inaccurate reporting originally saying they were raising money, but they were clearly at some sort of a party reception celebration, you know, party on, Garth, I'm all for it --

(CROSSTALK)

KING: They turned to the TV though -- they turned to the TV and put their hand up like --

(CROSSTALK)

BEGALA: -- this morning; we're in the company of heroes -- men and women of the National War College and they gave us this coin.

(CROSSTALK)

BEGALA: They take an oath. And they show up. They're not out, you know, partying with their friends. They are deadly serious people serving our country and they're elected representatives I think should honor and actually swear their oath as well.

MADDEN: And in their defense I mean there was a sincere apology and I'm sure they regret it terribly and they won't let it happen --

KING: And they're going to be poked about it for the next two years. All right, let's move on to something else. Will she or won't she is the great question. The 2012 campaign is starting; even though we're only in early 2011 and one of the questions is will Sarah Palin run? Listen to this, she was on the "Laura Ingraham Radio Show" and she's going right after the president of the United States.

(BEGIN VIDEO CLIP)

SARAH PALIN (R), FORMER GOVERNOR OF ALASKA: What I believe that Obama is doing right now, he is hell bent on weakening America and he has told us back in March of '06, he told us that it weakens America domestically and internationally to raise debt, right, to raise the debt ceiling and he said it is a sign of failed leadership to support raising the debt ceiling and now he's doing exactly that.

(END VIDEO CLIP)

KING: She is referring to a speech then Senator Barack Obama gave criticizing raising the debt ceiling, raising the debt ceiling when he was in the Senate. At that point he was saying we got to get serious about deficit reduction. He's the president now and like it or not, he needs to ask the Congress to increase the debt ceiling. Is that the right language, Kevin Madden, weakening -- hell bent on weakening America?

MADDEN: Look, Sarah Palin has always been very aggressive about making her views known and her views are once they're stated, everybody reports on them. But I think as a communications issue, I think one of the things that's really important is when you set up the contrast that you don't try and set a contrast about good or bad, but instead right versus wrong, that you believe you have the right policies to put the country going in the right direction going forward and that you believe the opposition has the wrong policies, misguided policies. I think that is a better contrast and it's a better platform to really drive home your point because when you start making it good versus bad, it becomes a distraction, quite frankly and --

KING: That's what you're going to advise Governor Romney -- you're a friend -- if he's against her at some Iowa candidate's forum, say right or wrong not --

MADDEN: That was one of the first lessons I learned as a communicator when I was working on a presidential campaign is that we're -- they're not bad guys. They are -- and we're the good guys. They are wrong in the policies that they're prescribing for the direction of the country.

KING: But she's not doing this willy-nilly. She has some calculation that at least to the audience she wants to speak to, she wants to say he is hell bent on weakening America?

BEGALA: Right and I have no idea if she's going to run, but I am wearing my knees out in prayer. OK, three words -- run, Sarah, run. Because she's (INAUDIBLE) entertaining (INAUDIBLE) she'd be God's gift to cable pundits. But then as a Democrat, she's remarkably polarizing, remarkably strident (ph) and frankly, her party has moved so far right that they just might nominate her. I don't think it's inconceivable that a party that has gone so far right that Ronald Reagan would not recognize it could very well turn and nominate Sarah Palin. It would be the best thing that ever happened to Barack Obama. It wouldn't be great for the Republicans, but it would be great for President Obama.

KING: Mr. Madden (INAUDIBLE) his first communion --

(CROSSTALK)

KING: Paul and Kevin thanks for coming in on a Friday night --

UNIDENTIFIED MALE: Great to be with you.

KING: All right, we'll see you guys next week.

And up next, my exclusive interview with the Senate minority leader, Republican Mitch McConnell.

(COMMERCIAL BREAK)

KING: I have had a lot of fun this week getting out of the office and roaming the halls on Capitol Hill. Last night we had an exclusive conversation with the former speaker, now Democratic Leader Nancy Pelosi. As the first week in the new Congress wound up today I went up to the Hill again today to visit the Senate Republican leader, Mitch McConnell.

(BEGIN VIDEOTAPE)

KING: First Mr. Leader thanks for your time. Let me just ask you quickly off the top, what lesson have you learned in our first week of divided government? It sounds like after a relatively calm bipartisan lame duck session to be a lot more partisan around here again. SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: Oh I think we have a got a six to nine month opportunity here to do some things together, the tax bill and the lame duck was a good example of both sides being able to come together to prevent a tax increase on every American. That you know may be some indication that things are heading in a better direction.

I like the president's new chief of staff. I don't really know him all that well, but it strikes me that he's a guy that -- you know finally they found somebody that actually had some real, real world business experience and Gene Sperling sounds like a pretty good choice as well. So maybe the president's going to take a more centrist direction and if he does, we may be able to do some business.

KING: I was going to get to the new chief of staff in a bit because of something you said about him. Well let me get to it right now. You said -- after that was announced you actually said it's good to have Bill Daley, a business executive because up until this point in your view they don't have anybody down there who's even run a lemonade stand.

MCCONNELL: Yes, that's what I used to say about this White House, is that nobody had ever even run a lemonade stand. You know these were a bunch of college professors and former elected officials. You know maybe, maybe this is an indication that the president is going to go in a different direction. I think they are concerned about their anti-business image, which they earned. And this is a hopeful sign that maybe the president listened to the voices of the American people on November 2nd, if he did and he tries to move to the center, we can do some business on things like spending, debt, trade. There are things where we may be able to find common ground.

KING: Could they say the same thing about you though? You were pretty much a career politician, you were a prosecutor then you've been in politics. And you have a pretty significant voice in economic policy too. Couldn't they say well Mitch McConnell has never run a lemonade stand?

MCCONNELL: Sure, but I'm not the president of the United States nor do I aspire to be. And I think if you're the president of the United States, you ought to have around you people who have some real world business experience. And they clearly did not have that in the first couple of years.

KING: So I am sitting with the one Senate Republican who does not aspire to be president of the United States, that's good to know. Let's move on to serious issues over on the House side, today, the new majority flexed its muscle and brought to the floor its plan to repeal the health care plan. Is that a waste of time? You can't get that through the Senate when they pass it through the House, even if you could, the president would veto it. Is that a waste of time when you say we have a six maybe a nine month window for bipartisan progress? Why start off with what is clearly a partisan exercise?

MCCONNELL: Well I think we have to do both. We both had to make sure that the American people knew that their voices were listened to. And we believe that people that gave the majority to House Republicans and who gave us a much more significant, robust minority in the Senate want the 2,700-page monstrosity called Obama-care repealed. And so we owe them --

KING: But you can't do it.

MCCONNELL: Well, the House I hope will pass it and we can get a vote on that in the Senate and I understand Senate Democrats have written the House saying sort of make our day. Send it over to us. Well that's great, let's have the vote, put everybody on record and then we'll go forward.

KING: What happens next? Will we have repeal vote after repeal vote after repeal vote or will we have an adult conversation like you had on taxes in the lame duck. Where maybe you sit down with the Democrats and maybe you convince the Tea Party guys and the more feisty new conservatives here, we can't repeal it, so why don't we have a conservation about some changes maybe you can get the Democrats to agree on.

MCCONNELL: Yes, I don't think there's much chance for common ground on health care. We have a very, very different view of the way American health care ought to be handled. They have sort of a Europeanized version of it that they jammed through without a single Republican vote in the last Congress. To be perfectly candid with you John, I don't see health care is an area where there's going to be bipartisan cooperation. We have a very different world view of the way we ought to handle that issue.

KING: You're going to have to have a vote to increase the government's debt ceiling, the ability of the government to borrow money. And many conservatives, especially again the new guys who are here -- you have several in your Republican conference over here in the Senate. They're a lot more of them over in the House. They say no way, unless when they vote to increase the debt ceiling, the government's ability to borrow, they also have a very substantial package of spending cuts before them to prove the will. Name them. What would you cut?

MCCONNELL: Well I'm not going to name them today, but I mean I do think --

(CROSSTALK)

KING: Let me stop you there because the Republicans just ran a campaign saying we will cut spending. Why can't you name some today? Was it a hollow promise? You have to have specific cuts in mind.

MCCONNELL: Well you're asking me initially about whether we want to attach those commitments to the debt ceiling. We don't know the answer to that yet.

KING: You can't give me a couple of examples, here's what Mitch McConnell, senior senator from Kentucky, here's what Mitch McConnell, the Republican leader of the Senate, if we're going to have a conversation about spending cuts, here's two or three specifics I would put on the table --

MCCONNELL: Well --

KING: -- and say where's yours.

MCCONNELL: You know we know that Republicans believe we ought to reduce our annual discretionary spending to '08 levels. That's one option. We've said to the president repeatedly --

KING: Across the board --

(CROSSTALK)

KING: That means cutting Pell grants, cutting --

(CROSSTALK)

MCCONNELL: -- craft the package at the moment. The -- we have said repeatedly and I'll say again that any time the president wants to join us in a bipartisan effort to deal with our long-term debt, entitlements, now we're ready to talk. There are a lot of things that could be done in conjunction with a decision to raise the debt ceiling that would reassure the American people that we're serious about doing something about our spending and debt.

KING: We're speaking though in a new environment. The reason I ask the question, you know Speaker Boehner last night was interviewed by Brian Williams of NBC. He said I can't think of one -- couldn't think of one off the top of his head, something he would cut. You are the leader of, as you said, a bigger Republican group over here, you have essentially veto power over the United States Senate. Do you agree that the Republicans have more responsibility now than they did a few weeks ago?

(CROSSTALK)

KING: So don't the American people deserve, here, I would cut X million --

MCCONNELL: I've just given you two examples. Would you like me to give them to you again? I mean we've indicated we thought spending ought to be kept -- our annual discretionary spending ought to be kept at '08 levels. That's one example. We've also said repeatedly before and since the election that if the president wants to join hands with us and do something on the long-term unfunded liability problems of entitlements, we're happy to do that. That's two examples. There may be others.

KING: On the entitlement issue, I spoke to Leader Reid right after the elections and he said he would like to do the base closing commission model. Senator Gregg (ph) on your side who is now gone, Senator Conrad on the other side proposed that essentially. You come together, you have a group, they come up with a new deal on Medicare, a new deal on Social Security, painful choices there those would be, maybe some other cuts in the government. Members have to vote up or down just like the base commission. Would you work with him to do that? Is that the right approach?

MCCONNELL: Well I think any of these things are possible. I mean one of the good things about divided government I think people in your line of work tend to focus on the problems of divided government, there are also opportunities with divided government.

KING: Do you think it's a possibility that Medicare and Social Security will not be issues in 2012 because this divided government would have dealt with them --

MCCONNELL: I think that any entitlement reform done by Democrats and Republicans jointly will not be an issue in '12.

KING: Let me talk about the relationships that we are in your suite of offices here essentially where that tax deal was cut. The vice president was up here, did a lot of the negotiating; you were deeply involved in that. Is that more of what we're going to see, negotiating over here on the Republican side and what did you learn in those negotiations that maybe you can carry forward, about the president, about the vice president, about how it should work?

MCCONNELL: And whether it becomes the operating mode on other issues in the future, I couldn't tell you, but I do think it was an indication that divided government, although we didn't have divided government yet, we were on the way to having divided government in the lame duck could be very productive.

KING: And do you see follow-up already or did it stop at that deal? You -- we've talked many times over the last couple of years and you don't have much of a relationship with the president of the United States or vice versa. You're beginning to have more contact now, but is that continuing? Is it a consistent thing or is it only when you're in the middle of a negotiation or is there an honest to god effort to get to know each other better and to trust each other --

(CROSSTALK)

MCCONNELL: I'm not going to send out a press release every time we have a conversation, but let me just say this. We're having a lot more conversation than we've had in the first two years.

KING: On the subject of the debt ceiling, there are some Republicans, small number, some Republicans who say if we don't get a substantial enough spending package, that would be a place to dig in your heels. The government runs out of money in March under the Continuing Resolution that you passed in the last session, on the scale of one to 10, one being unlikely, 10 being very likely, what is the prospect of a government shut down on this.

MCCONNELL: John, you know I'm not going to answer a hypothetical like that. I mean-

KING: Is it at all possible?

MCCONNELL: It's an issue that has to be dealt with, I view it as an opportunity to do something important on spending and debt. And hopefully we'll take advantage of that opportunity.

KING: Senator, thanks for your time.

MCCONNELL: Thank you.

(END VIDEOTAPE)

KING: When we come back, the government has new data on unemployment. The numbers look good unless you look real closely. We'll break it down and we'll debate what the government should do next when we come back.

(COMMERCIAL BREAK)

KING: The government released new unemployment data today and the rate fell from 9.8 percent to 9.4 percent. Well, that's good news, right? But if you break down the report you could have a big debate about glass half empty, glass half full.

Let's look at the economy. This is the unemployment rate today, 9.4 percent. This is from just before Obama became president through now. You look at to the rate going up, as we come through 2009 into 2010. So, bang, down a bit in the last month. That's good news, except the reason it happens is a lot of people left the job market.

Let's look month by month at what's happened in the economy. Again, starting back in 2008, just before Barack Obama became president of the United States, you see all this red. That is job losses, job losses, job losses, a little glimmer, a little down, a little roller coaster there. Then it started to go up, went down again, in the middle of this year. The first and second quarter, here's what we have had the last few months, positive job growth, again, just 103,000, though, net jobs there. That's why that one is a little bit troubling.

Let's look at this over the five-year period. Why is 2010 viewed as at least progress? Because look at 2008 and 2009, losing jobs. Growing jobs for the first time since 2007. That is a positive. But, look at this-but-but-but-look at this. This is a stunning graph. Pay attention closely here.

Remember, 103,000 jobs last month. If the economy were adding jobs at more than twice that pace, 208,000 jobs a month, we would not get back to where we were before the recession until 2022, at 200,000 jobs a month. What you would need is 321,000 jobs a month. That would get you back to the pre-recession standpoint, by 2014 or so. It would take nearly 500,000 jobs a month to get there more quickly, by the time the president runs for re-election.

So, if the economy stays in the 100,000 jobs a month, then it is five years, 10 years or more before you get back to prerecession levels. Still, the president says things are getting better. And he thinks one big reason is because of that tax cut package deal he made with the Republicans.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We're also seeing more optimistic economic forecasts for the year ahead, in part due to the package of tax cuts I signed last month. Including a payroll tax cut for workers and a series of tax cuts to encourage investment and innovation and hiring.

(END VIDEO CLIP)

KING: So is the president right, should the government do more or should the government get out of the way? That is a conversation I had a short time ago with the former House Majority Leader and the chairman of Freedom Works, Dick Armey, and the co-editor of the liberal "American Prospect" Robert Kuttner.

(BEGIN VIDEOTAPE)

ROBERT KUTTNER, CO-EDITOR, "THE AMERICAN PROSPECT": Well, if you're the president, of course, whether you're a Republican or a Democrat, you're going to talk up the economy, you're going to look at the part of the glass that's half full. I think the government needs to do more because the private sector really cannot get the economy into recovery by itself. And housing is still in dire straits, Wall Street is still in the saddle. It's disappointing that a couple of more guys from Wall Street have been appointed to top positions.

So, this is going to be a long slog, and I would like to see the president being more assertive, more aggressive in jobs, jobs, jobs.

KING: What's it tell you, Dick Armey, when you hear, what are supposed to be the president's allies, criticizing the Wall Street guys he's bringing into his administration.

DICK ARMEY, CHAIRMAN, FREEDOM WORKS: Right, it cracks me up. I suppose I suffer a little bit of a hardship and a handicap in that I actually read and studied John Maynard Keynes. John Maynard Keynes said with a baseline of balanced budget, not a legacy of budget surpluses and excesses, that is crippling to the economy, one would temporarily modestly increase the deficit. The fundamental problems choking off the ability of the private sector of the economy to perform is this government is too big, too clumsy, too intrusive into the affairs of the private sector. And it's-it's just paralyzing to the private sector.

They frankly just don't dare because they don't know what the silly government's going to do. To get real people with real business experience in, instead of a bunch of dreamy headed academics, I think will improve the ability of the Obama administration to come to something known heretofore in this country common sense that has served the nation well.

KING: Well, Bob Kuttner disagrees with the president on some of this. I want you to listen to someone I think Bob Kuttner will fully agree with. I spoke with former speaker, now the Democratic Leader in the House, Nancy Pelosi yesterday. And she say yes her party just took a thumping. Yes she had to give up the gavel, but listen here. She says it's not because of anything the Democrats did but because of the economy the last president left them.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, (D) MINORITY LEADER: If we hadn't done it, if we hadn't done health care, if we hadn't done Wall Street reform and the rest of it, we still would have lost the election because of the 9.5 percent unemployment. Let's take it where that came from. The policy of George W. Bush and the Republican support for his initiatives.

(END VIDEO CLIP)

KING: So Dick Armey, is she right, this is all George W. Bush's fault?

ARMEY: I feel bad because I have known and liked Nancy Pelosi for a lot of years. But she's so out of touch with reality, now it's almost-it is just sad to watch this. The fact of the matter is, this enormous grassroots uprising that we see sweeping the nation and command this whole election cycle, is born out of fearful disappointment of the Obama administration and the leadership of Speaker Pelosi and the Senate leadership.

They are directly responsible for their loss. Because they were contemptuous of the American people's right to be free and to govern their own affairs. And they just simply don't get it. It's really sad to watch. I feel bad about it.

KING: You feel bad about it, Bob?

KUTTNER: Oh, I feel bad about it. But look if the Bush tax cuts, which were in effect through most of the last decade, into the first two years of the Obama administration were not sufficient to stimulate any net job growth, there was no net job growth under Bush, they were not sufficient to prevent Wall Street from crashing the economy. Why does Congressman Armey think that simply continuing last year's tax code, which is really all we did, is going to make change in business behavior or any change in consumer behavior.

KING: Well, here's a question-hang on one second. Hang on one second. I want to get this in and then add your final thoughts.

But is part of this debate, we have the tax cut plan going forward, but the other big dynamic is there is pressure now in Washington to cut spending. Dick Armey, you are a leader of this Tea Party movement in the country. I want you to listen here to three members, two of them are Tea Party guys, one of them Senator John McCain, who is now trying to align himself with their cause. I was asking them, this week, as the new Congress came in: What happens if Republicans don't keep their promises to dramatically cut spending and do it fast?

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) ARIZONA: Well, if we can't justify what we're doing and that means significant cuts, then I think you're going to see, as I said, and I have said this before, a third party movement in the United States. REP. TIM SCOTT, (R) SOUTH CAROLINA: I think you will have 87 freshman who will be pretty ticked off.

SEN. RAND PAUL, (R) KENTUCKY: They should kick us all out and send us all home.

(END VIDEO CLIP)

KING: Kick them all out? Dick Armey, is that your take right now?

ARMEY: Well, first of all, you have got to cut the size of government. Remember this is like a 500-pound jockey riding a pony. It is killing the economy to force it to try to carry this gluttonous, wasteful government. You got to cut it out, reduce the waste, reduce the burden imposed on the private sector. And let me remind you, what we did with respect to the Bush tax cuts is we stopped taxes from going up.

In effect what we stopped was the government forcing this economy to take a knockout pill. So it wasn't a tax reduction, we held the line on taxes. But you're exactly right, Bob, the first most critically important thing is we have got to cut the size of this government to something that is rational, efficient, nonintrusive, and a burden that can be born by the private sector, then the private sector can prosper.

KING: Do you see, Bob, the Democratic president is facing pressure to get the votes he needs to raise the debt ceiling a month or two down the road, to cut spending. What is your sense on how far the Democratic president will go and the impact of big spending cuts right now on the economy?

KUTTNER: Well, I thought Austan Goolsbee, who was interviewed on CNN not very long ago, has it right. You don't play Russian roulette with a full facing credit of the United States. Let's have an argument about what to tax, what to cut, but let's not hold the full faith and credit of the United States hostage. And I think it's easier for the Republicans to be the party of no, when they're the opposition party. Now that they're the party of government, in the House, they're going to share some responsibility. And you're going to see some very interesting splits between the really extreme radicals of the Tea Party and the more moderate radicals, who just took over the House. And that's going to be rather divisive. It's going to be difficult for the Republicans to explain what they're for, not just what they're against.

KING: Bob Kuttner, Dick Armey, appreciate your time tonight. We'll continue this conversation in the weeks ahead. Thank you, gentlemen.

Next a new look at the Louisiana coast. Yes the oil's still there and one local official, he's going ballistic.

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We got to go out.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

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

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KING: Fascinating week in Washington from beginning to end. Let's talk it over. Ed Henry, Jessica Yellin and Dana Bash here with us; and as the week ends, the Senate Republican-the Senate Democratic Leader-sorry-Harry Reid-he won't like that-still the Senate majority leader. You know, he survived the Tea Party challenge. He is on "Meet the Press" this Sunday. And they released a little snippet of the interview. Harry Reid thinks the Tea Party going away.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D) MAJORITY LEADER: The Tea Party was born because of the economy. The economy is probably the worst it's ever been except for maybe the Great Depression. The Tea Party will disappear as soon as the economy gets better and the economy's getting better all the time.

(END VIDEO CLIP)

KING: I think the Republicans care about the Tea Party than he does at the moment, but wishful thinking?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Oh, I mean, well, it certainly seems like it right now. Look, there is nothing that the Tea Party is going to like more than to hear the Democratic leader in the Senate to say they're gone. And there is nothing that will actually empower them more than the statement like that.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: I think, though, the Tea Party to some measure is a reaction to the economic times and their focus on economic issues is, and should the economy improve, we could see the conservative movement reengage with social issues. And that would change what the Tea Party really is and that might be what he's talking about that more broadly.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: Even if Harry Reid is right, though, and if you listen Ben Bernanke today saying it is going to take four or five years to get the job market back. Uh, well, that takes you past the 2012 elections.

(CROSS TALK)

YELLIN: That's a life time in politics.

HENRY: Yeah, even if the Tea Party is around for one or two more election cycles, that could still be bad news for Democrats. KING: And so another bit-we spent time focusing on Capitol Hill. I actually got to go up and I see the place. I haven't been there in a long time.

(LAUGHTER)

YELLIN: That's the big one with the dome at the top?

KING: That's the big one with the dome, right.

But a lot of changes at the White House and we talked about that last night but now the question is, who will replace Robert Gibbs as the press secretary? Let's talk about that, Bill Daley. What does Bill Daley, the new chief of staff, is this his call, who gets the press secretary?

HENRY: Well, I think, he's going to have, obviously, a big say. I mean, they are taking great pains at the White House to say, look, Bill Daley is not going to run everything. I think they are a little concerned that some of the coverage has now made it seem that overall like Bill Daley will come in and change everything. And they keep pointing out, look, there's a guy named Barack Obama, who got over 350 electoral votes. He is going to have a say in this.

But Bill Daley, I think, is clearly pushing when you talk to people inside, to maybe go a little bit outside the box, so I think obviously --

KING: Ed says outside the box. Some people say maybe he wants a woman as the press secretary. I want to show some faces, some possibilities. Karen Finney, she worked at the Democratic National Committee, close to Howard Dean. She would be one. Stephanie Cutter, very close to this White House, still involved in the White House, has come in and out, in and out. A veteran of Capitol Hill as well. And some people are even talking would Dee Dee Myers and come back. Another Clinton face. Would she possibly come back, real or just Washington chatter?

YELLIN: Oh, I think there's real consideration here. I think that first of all, they are all able women. But we don't want to suggest that any one of them is particularly liked by the press because they would never get the job.

(LAUGHTER)

They don't want to pick someone the press actually likes.

But it is not just Bill Daley who has said that this White House needs a prominent woman in a prominent position. That this is a White House that is perceived internally, especially, by a lot of women, as one that is sometimes too heavily a boy's club.

BASH: Absolutely, absolutely. Look, all three of those women, we all know them very well. They are all incredibly capable, able women. I don't think anybody would be surprised if any of them got the job. But just the idea that they're putting out the women's names and floating them, it just seems just so transparent. I'm sorry it just does, because they have gotten so much-

KING: Right.

YELLIN: Also, they're first floating men's names and now they're floating women's names like the women weren't in the initial mix. I don't know, there is something very-

KING: Well, we'll see how that plays out. One more subject, but before we do that I want to clean up something I said last night about White House staff changes. I left the impression we do know from our sources that Bill Daley in taking the job was worried there were too many people who had access to the president. As we were talking about that last night, I left the impression that he had specifically objected to Robert Gibbs staying on. And Mr. Daley and I spoke last night. And he said, no, that Robert Gibbs had clearly made his decision to leave the White House before he got into the nitty-gritty. So, my apologies for leaving what could be seen as a false impression.

Let's move on to this final story. It is on your beat. Two members of the Congress, of the new Republican majority, were casting votes even though they were at a reception and they never raised the hands and took the oath. One of them is Mike Fitzpatrick, Republican of Pennsylvania. He talked to our Brianna Keilar today and he is a little sorry.

(BEGIN VIDEO CLIP)

REP. MIKE FITZPATRICK, (R) PENNSYLVANIA: It was an exciting day, a lot of constituents here, a lot of confusion. We intended to be on the floor but, you know, this is a serious issue. And we saw to rectify it immediately. And it's, you know, in my view, we want to move on.

(END VIDEO CLIP)

KING: Whoops.

YELLIN: Whoops is right.

BASH: You know, I have a funny story about that. I actually bumped into Mike Fitzpatrick right before that interview and I asked him if he would do it. Because I knew Brianna was working on that story. And it was right before the healthcare vote and he said, let me go vote first. I'm already -- in his words, on the D list.

But I think one of the most striking things about this story, and there are many, is the fact-and I'm not sure if we have the picture- but you can see a photograph, it has been out there of both of them, Pete Sessions and Mike Fitzpatrick, they are raising their hands at the reception.

YELLIN: At a party?

BASH: At a party. They realized they were missing the swearing-in. So, they were at the party and sort of assumed that maybe that would do the trick. KING: When you miss the White House briefing, you shout a question at the TV, right?

HENRY: Right, exactly. That is totally what I do.

And it is funny. I talked to a Democratic member this week who, in private, after watching some of these kinds of scenes played out, said governing is hard. And he start laughing. In some ways some House Democrats are looking at this saying, OK, you take things over. It is not as easy as you thought.

YELLIN: See how it works for you, yeah.

KING: All right. Everybody, have a great weekend. Week two of divided government starts Monday. And when we come back, Pete on the Street finds out the difference between a geek and a nerd.

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KING: Our Offbeat Reporter Pete Dominick, he is at the computer electronics show out in Las Vegas. It is a place where geek is an exalted title, and nerd not exactly a four-lettered word.

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PETE DOMINICK, CNN OFFBEAT REPORTER: John, I'm out here at CES trying to find out what is the big deal? And what people are most excited about. I don't understand a lot of this stuff but I'm about to find out. Let's go.

Ladies. What do you say about the stereotype of people that work in your industry. Everybody's a tech nerd. Is that a compliment or an insult?

UNIDENTIFIED FEMALE: A compliment!.

UNIDENTIFIED FEMALE: A compliment!

DOMINICK: Tech enthusiast, AKA nerds, yes or no?

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED MALE: Definitely, all the way. I'm a geek. I'm a nerd. I'm it all.

UNIDENTIFIED MALE: I consider myself a geek.

DOMINICK: A geek?

UNIDENTIFIED MALE: More than a nerd.

DOMINICK: What's the difference between a nerd and geek?

UNIDENTIFIED MALE: A nerd wants to be a geek, ultimately. That's the truth.

DOMINICK: Aha, gotcha.

Nerd. You consider yourself a nerd? Yes or no?

UNIDENTIFIED MALE: Yes.

DOMINICK: You do?

UNIDENTIFIED MALE: Yes.

DOMINICK: And is that something that you embrace and you're proud of?

UNIDENTIFIED MALE: I do, I do, actually.

DOMINICK: You have any trouble socializing at all?

UNIDENTIFIED MALE: No.

DOMINICK: You're good?

UNIDENTIFIED MALE: You see I just stopped to talk.

DOMINICK: You seem great. I want to be your friend, yeah. You don't seem like a nerd to me.

UNIDENTIFIED MALE: Well, I want to be.

DOMINICK: How about a gerd?

UNIDENTIFIED MALE: A gerd, what's that?

DOMINICK: Geek and nerd combined.

UNIDENTIFIED MALE: Really?

DOMINICK: That's what you are, a gerd?

UNIDENTIFIED MALE: A little bit.

DOMINICK: And is that a good thing? Do you get to get out, do you socialize?

UNIDENTIFIED MALE: Not so much.

DOMINICK: No? You don't have a lot of lady friends?

UNIDENTIFIED MALE: This is a big day for me.

DOMINICK: Yeah, you are excited to be outside your home?

(LAUGHTER)

UNIDENTIFIED MALE: Exactly.

DOMINICK: That's all I got for you from here at the CES in Las Vegas. Good night, John King and we learned it is not insulting to be called a nerd. It is something you should embrace. And you can always aspire to being a geek.

(END VIDEOTAPE)

KING: Have a great weekend. That's all from us. PARKER SPITZER starts right now.