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JOHN KING, USA

A Conservative Bows Out; Rahm Emanuel's Mayoral Bid; White House Staff Shakeup; Tea Party's Meeting; Sarah Palin's Views

Aired January 27, 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 lot of breaking political news tonight, another big staff shakeup at the Obama White House, this one bearing the clear imprint of the president's new chief of staff and a big mayoral debate next hour in Chicago.

Former Obama chief of staff Rahm Emanuel will be there thanks to a court ruling reviving his candidacy. Plus, the inaugural meeting of the Senate Tea Party caucus, and who didn't come is generating as much buzz as who did.

But we begin with 2012 presidential politics and a big decision that will help shape the contest for the Republican nomination. Conservative Congressman Mike Pence of Indiana just announced he will not run for president in 2012, and instead will explore running for governor of Indiana. So why does this matter?

Yes, Pence is a relatively obscure House member. He would have been a long shot if he did run. But he's a favorite of both economic and social conservatives, and he was lobbied heavily in recent weeks by important grassroots Republicans and Tea Party leaders who played a big role in his past campaign and who find the current list of Republican prospects, as long as it is, to be lacking.

A lot to dissect tonight with CNN contributors John Avlon, John Brabender is a Republican strategist, Donna Brazile and our Gloria Borger. Let's begin and John I want to start with you. As a Republican strategist, you are close to Rick Santorum, another prospect in this race. What is it?

The Republican Party has always been the party of a front-runner. You know coming into the cycle, that's the lead guy. Some people say maybe that's Mitt Romney, the former Massachusetts governor. But what is it that had Tea Party people who were very important in last year's election, other grassroots Republicans, very important, going to Mike Pence and saying please run, we don't like these guys?

JOHN BRABENDER, REPUBLICAN MEDIA CONSULTANT: Well first it's a different Republican Party. You've got to understand we're now broken into the Tea Party side of the party and the social conservative side of the party and then everybody else. What was attractive about Mike Pence was everybody of those groups liked him. Social conservatives particularly are unhappy because these days we have a lot of people that will check the box. They're pro-life, pro-marriage, whatever, but they're not out there every day talking about the issue. They're not passionate about it. Mike Pence was somebody that was and so winning the nomination, particularly in early states is about planning your flag and having some real estate. That is now real estate that is open and should help some of the other social conservative candidates.

KING: You say others. Hang on just one sec, Gloria. I want you in because it's 374 days, sounds like a long time if you're watching at home, but it's 374 days to the Iowa caucuses. And that's what kicks off the campaign. This much we know.

When you're thinking about the White House and the next campaign, who is the Democratic candidate? Well we know. It's one guy. Maybe some fringe Democrat will challenge him. That's unlikely. He will be the Democratic nominee. Case closed. That's what makes this part so interesting.

You move the president over here and you say who is going to come in from the right? And who wants to live here who will come in from the right? I'll get you to move over a little bit -- just got to be nice -- and here's what gets very interesting because you get a collection of people who just come up here.

And you look -- more than a dozen people here. Some of these are definite candidates. Some of them are maybe candidates. Some have said repeatedly oh no way. But if you look, former Governor Pawlenty, Governor Jindal has said no, former Governor Romney most definitely running. Governor Barbour maybe, Jim DeMint told Wolf Blitzer yesterday no.

His people tell us today well he's going to Iowa (INAUDIBLE). We'll think about it and you look and you look. Governor Palin, of course, then there's Mike Pence; he's the guy tonight who we will take him out of the picture. And if you look at this, Gloria Borger, some people who have run before, Rick Santorum, one of John's candidates, the Donald says he might get in. But there are a number of people here, you look, yes, OK, there's a good resume there. Senator Thune says he will tell us next month. A lot of people and yet not a lot of excitement at the grassroots level of the party looking at this group.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: You know I think they're looking for somebody they haven't seen before, John, right? And so they look at Mike Huckabee, who is very appealing to social conservatives, but he's run before, and he lost before. Rick Santorum, same kind of situation. They know him. They know him, you know --

BRABENDER: Why are you telling me?

(LAUGHTER)

BORGER: And so and of course, you know, the person we're not talking about is below the "R" (ph), Sarah Palin. And that's -- you know that's the elephant sitting in the room, literally, which is, is she going to run or not? And they're afraid of who gets in first because if you get in first, high expectations. You've got to raise a lot of money, and then what if Sarah Palin comes in late and takes away all your steam and blows the field away --

KING: And John Avlon, you used to write speeches for Rudy Giuliani. He told Piers Morgan last week maybe, maybe most people think that's unlikely because frankly, he just bombed last time. But to John's point about this is a new Republican Party. It's that uncertainty.

The Republicans used to be the predictable party. We were pretty certain it would be Bob Dole. We were pretty certain it would be George W. Bush. Then we were pretty certain -- it was a little rocky, but it ended up being John McCain, who was the front-runner at the beginning. This is a brand new "huh" when you look at the Republican field.

JOHN AVLON, CNN CONTRIBUTOR: Well I mean as you say, Republican Party usually goes with the conventional wisdom frontrunner and by most accounts that's Mitt Romney, but because of the health care bill in Massachusetts and other reasons, he does not have that grassroots support. And you are looking at a wide open field, at a party that's sort of in war lord status.

And I think John made an interesting point, though, pulling the curtain back that for all the focus on fiscal issues, for the Tea Party that social conservatism is really the driving factor litmus test for many of these activist groups. That's sort of the untold truth. The other elephant in the living room is that it's not a particularly strong field right now. And the Republican Party is going to have to deal with that.

KING: Donna Brazile, when you look at the field of the Republicans, you did this for Al Gore back in 2000, came pretty close. Let's not re-litigate that one.

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: No, let's not.

KING: But if you look at this field, where we are now. And where we are now could be completely different from where we are down the road. But the Congressional Budget Office says look for eight percent unemployment around election time in 2012. So it will be a tough climate for the incumbent president, even if people are feeling a little better about the economy. When you look at that list of people, does anybody there jump out, and you say that's the profile, that's the person I would not want to run against in a tough economy?

BRAZILE: Actually, the Republican Party faces a stature gap. We saw in 2010 the Democrats with an enthusiasm gap. I think they're looking for somebody who cannot only rally the Tea Party regulars, but also appeal to some of what I call the regular Republicans. So they have a big job on their hands. But I want to say this about Mike Pence, since I also worked for Dick Gephardt back in the day. It's been over 131 years since we've elected somebody directly from the House of Representatives to the oval office. While we've had 15 presidents who have served in the House of Representatives most members of Congress especially on the House side know that it's very difficult to go straight to oval office.

KING: At 51 years old, he's going to try to be governor of Indiana --

(CROSSTALK)

KING: I suspect we'll be having a conversation about Pence for president down the road a little bit.

But let's move on to another breaking political story tonight. The candidates for Chicago mayor will debate next hour. And Rahm Emanuel will be there, and again, as the race's certain front-runner. Ending a roller coaster week, even by Chicago politic standards the Illinois Supreme Court last hour ruled the former congressman and White House chief of staff is eligible to run for mayor. A lower court earlier this week you'll remember had said Emanuel did not meet a strict residency requirement. Our national political correspondent Jessica Yellin is tracking that drama and Jess, a drama it is.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: It really is, John. You know this was also a resounding victory for Rahm Emanuel. They were on pins and needles in Chicago, not only his campaign, but the other campaigns just waiting to see how this would all shake out. It was a unanimous decision finding that Rahm Emanuel does meet the residency requirements, and a pretty scathing view of what the lower court ruled.

The finding said that for -- what it means to be a resident for election purposes was clearly established long ago. It's been consistent law since the 19th Century. They found that the lower court which ruled against Rahm Emanuel used a quote, "novel standard that had no foundation in law" -- pretty harsh to the lower court and John, so this means game on there. The debate, you mentioned, begins in an hour. Early voting begins on Monday and this race is off and running.

KING: And they've got to run out and print some ballots pretty quickly, right?

YELLIN: Yes, they sure do.

KING: Jessica Yellin thanks for tracking that one. You know Jess just went through the legalese there and one of the ways I would call this is like an NFL replay. The Chicago Board of Elections, the local Board of Elections is the first referee and they ruled one way.

And so it got up to the Supreme Court and they put their head in the booth and they looked at the replay and they said you know what, we can't overturn that. It's their call to make. They said he's on the ballot. (INAUDIBLE) so the middle part ended up being just a little bit of drama. But now do we assume he's the next mayor of Chicago?

BRAZILE: He has to still get 50 percent of the vote next -- on February 22nd to avoid a runoff. He is clearly the front-runner in the race. And I'm sure tonight now that Carol Moseley Braun and Mr. Chico and others know that he's on the ballot, this is probably going to be a more livelier debate --

KING: It will be a lively event. However, he also got -- he didn't just get help from the Illinois Supreme Court today. I want you to listen here. This is Carol Moseley Braun. She's on the radio -- this is last week and she's talking about why the people of Chicago should make her their mayor.

(BEGIN VIDEO CLIP)

CAROL MOSELEY BRAUN (D), CHICAGO MAYOR CANDIDATE: I'm a product of the Chicago public schools. I walked to school in the neighborhood in which I lived. I got a quality education. It took me on to a law degree at the University of Chicago, advanced degree from Harvard, and I've got 12 honorary doctorates.

(END VIDEO CLIP)

KING: One problem. She does not have an advanced degree, singular. And she does not have an advanced degrees plural from Harvard as she said in that interview. She was a visiting fellow at the Institute of Politics, which is a great honor. You get to spend your time with some great people in politics, but you don't get a degree for it.

BRAZILE: I'm here to tell you, I did the same thing and I don't have a degree. I have a nice certificate, though.

BORGER: Right --

KING: But she was number two in the polls. She was number two in the polls, way behind --

(CROSSTALK)

BRAZILE: I think she misspoke, but I don't think that will hurt --

BORGER: Well her campaign said she misspoke. But she specifically said it was an advanced degree and while we all love the Institute of Politics, it does great work. It's not an advanced degree.

(CROSSTALK)

BRABENDER: All I know is Jay Cutler didn't show up and it looks like Rahm Emanuel is tonight --

(CROSSTALK)

BRABENDER: -- that's news in Chicago.

(CROSSTALK)

KING: All right. All right, Mr. Avlon, I'm going to leave you out of this one because I want to move on because I do want your views on this one here. The White House has a new press secretary tonight, a new face to represent President Obama at a critical time as he navigates this new more Republican balance of power here in Washington and as he gears up for his re-election effort.

The choice to replace Robert Gibbs has more experience asking questions than answering them. He's long time reporter Jay Carney who for the past two years has been a spokesman for Vice President Joe Biden. A few years back while still working at "TIME" magazine he had this take on the job he's about to take.

(BEGIN VIDEO CLIP)

JAY CARNEY, TIME MAGAZINE BUREAU CHIEF: (INAUDIBLE) press secretaries were very deft at serving both their boss, the president, the White House, the administration and the press. And not -- and it's a tricky job. I'm sure I wouldn't be any good at it.

(END VIDEO CLIP)

KING: Senior White House correspondent Ed Henry is with us. And he's one of the guys who is going to see just how good Jay Carney is at it. Why Jay Carney, and how much of this, Ed Henry, is the influence of the new chief of staff, Bill Daley?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Oh, I think the fingerprints of Bill Daley are all over it from talking to senior Democrats in a number of ways. Number one, I've been told privately that Bill Daley believes this administration needs to do a better job of reaching out to the media. Part of that is getting more spokesmen out there and spokeswomen and making sure it's not just the president carrying the ball on everything.

Daley is going to do his first Sunday show this weekend on CBS. He thinks Jay Carney is going to be a bit of a fresh face. And he thinks they need to repair some relations with the media, and maybe Jay Carney can do that as a former reporter, but as he was mentioning, it's a tricky balancing act of who you're serving -- you know the president or the press.

You're sort of trying to walk in the middle there. Robert Gibbs was so close to this the president, sometimes the balance was a little bit more towards the president and not serving our needs. Jay Carney is going to have to feel his way through that. I think the other big thing, because there was more than just this. He brought in some new deputy chiefs of staff, et cetera.

And when you look at the whole picture, you can ask Donna Brazile this because I've talked to a lot of people from the 2000 Gore campaign, they say this is Bill Daley managing a lot of different egos, moving the charts around, but finding a way to move the White House forward and get past any petty turf fights and get some new fresh blood in there. And we'll see how it all works out.

KING: Well let's put the question to Donna Brazile. Ed Henry thanks. It was interesting because as Ed points, it has his fingerprints all over it to the point that the White House when they announced this released a Bill Daley e-mail to the staff announcing this. It wasn't the press secretary says or the president says. It was the chief of staff says. Why, Donna?

BRAZILE: Because Bill Daley is a great judge of talent. He understands the job that he's been hired to do for the president, but he also knows the people that needs to be around the president, communicating well, working effectively, so I think this is a great selection. As Joe Biden would say, it's a big Biden deal.

(LAUGHTER)

BORGER: Jay is great, but here's what I was told also, which is that Bill Daley really cares about people in the White House having actual defined responsibilities. No more senior adviser roaming around, going into meetings, coming up with ideas in the 11th hour. I mean he said, look, we want people who have specific jobs and specific responsibilities just like they do in corporate America, right?

KING: And John Avlon, help -- I want John Avlon first and then John Brabender -- from a communication standpoint at this moment. Number one, you do have some frayed relations with the press inside that briefing room. Number two, you have a Republican divided government with the Republicans running the House. And number three we're ramping up for reelection and there will be a guy who speaks for the campaign, but the day-to-day job of speaking for the president is the White House press secretary.

AVLON: Yes, look it is a huge job. It is the face of the administration. And historically it's been very well served by former reporters. This was actually a standard operating procedure back under FDR and Truman and really through many successive administrations. So there's every sign that that is a good precedent to build on.

Jay Carney's own statements on C-SPAN aside, I think he'll probably do just fine. But the other piece is the mark of Bill Daley. And this really does echo to me the steadying centrist influence that Leon Panetta had in the Clinton administration after the 1994 Republican revolution. Daley is professionalizing the White House. He is strengthening the president's stake (ph) to the center and with those actions you're going to see continued connection to the Independent voters who have been swinging so decisively towards the administration and the president since the election.

KING: And John Brabender, how hard is it to go from being on our side, my side, to being a communicator. You're in the communication -- you can help candidates communicate. As you answer, I just want to show -- show our viewers at home -- I know a lot about Jay Carney back in the old days. That's Jay Carney right there and if they pull out a little bit you'll see the guy sitting next to him. He used to cover the White House. I don't know if we can see the pictures there. Some guy named John King who was a senior --

(CROSSTALK)

KING: Look at that. Look at that, look at less gray hair -- that's an amazing thing.

BRABENDER: Most of the time when they try to make that transition they fail quite frankly.

UNIDENTIFIED FEMALE: Yes.

BRABENDER: The difference is he got to spend about two years with Biden, so we know he's good at crisis management at that point (INAUDIBLE).

(CROSSTALK)

BRABENDER: I also think actually the administration very purposely decided they did not want anybody with any type of campaign background because I think they're afraid that was going to look like they're running --

(CROSSTALK)

BORGER: I think it's a very difficult transition to go from being a member of the press to go from being -- to a press secretary because we in the press want to answer every question all the way fully because those are the kinds of answers we want. Then when you get to the other side, you realize, wait a minute, there are things I can't say. And I think that was something that Jay Carney had to kind of adjust to in his new role. So when he stands at the podium and he's got to say to reporters, can't really go there, can't talk about that. It's going to be tough.

KING: It's a tough job. We've got to take a quick break here. When we come back, the first meeting of the Senate Tea Party caucus -- what did they get done? Who was there? Stay with us.

(COMMERCIAL BREAK)

KING: On Capitol Hill today the new Senate Tea Party caucus held its first meeting. Only four members mind you, proof most of the Republican establishment is still wary of the Tea Party label. But also on hand were dozens of activists who helped make the move in such a force in the 2010 midterms, and their Senate favorite South Carolina's Jim DeMint promised they would not be ignored now that campaigning gives way to governing.

(BEGIN VIDEO CLIP)

SEN. JIM DEMINT (R), SOUTH CAROLINA: The seats that we sit in every day in the Senate are not ours. They're yours, and they're lent to us to speak for you here. And we want to make sure that as we try to represent the Constitution, our oath of office, and you, that we listen to you.

(END VIDEO CLIP)

KING: Senior congressional correspondent Dana Bash was at this unusual meeting. And Dana, what is it they hope to accomplish?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well you know this is -- first of all, you say unusual. This is really, John, like nothing I remember seeing inside the halls of Congress. Inside being the operative word because many of the 150 activists who were here told me that they're used to being on the outside, rallying from the outside against what was going on here.

But that really speaks to the answer to your question, what they're hoping to accomplish that they being the three members of the Senate who are part of this Tea Party caucus who invited them. Basically is to make clear to these activists who elected them that they are trying to get done what they promised. Things like lowering -- cutting spending, lowering the deficit, and shrinking the size of government, and really trying to keep them active for the next election and for legislative battles ahead.

Certainly it was a festive atmosphere, John, but make no bones about it this was business for the Tea Party activists. Many of them told me that they want to hold these members accountable. One actually said to me that if they don't follow through on their promises they're gone and we'll bring somebody else in.

KING: Well, they get six years on the Senate side, so they've got a while to keep their promises. There are at least two people who rode to Washington at least in part with the Tea Party label -- Marco Rubio in Florida and Ron Johnson in Wisconsin -- who decided not to sign up at least at this initial meeting. What's the back story there?

BASH: Really, really interesting. Those two senators in particular, Marco Rubio, who of course really was a Tea Party darling in the last election, he says he's not really sure, but he definitely is not a member of the Tea Party caucus yet. And he said the primary reason is because he is worried that all of a sudden it becomes a movement run by politicians and that it's going to lose its effectiveness. And so that's his reason.

Other people give other reasons. There are a lot of senators who -- on the Republican side who are concerned that this will fracture the Republican caucus even further. Jim DeMint I talked to him about this -- he insisted this is nothing of the sort. This is a forum to keep the dialogue going and he says he's going to have more.

KING: All right, I think Senator Rubio's explanation sounds like political spin. Good to know he's getting quickly into the game here in Washington. Dana Bash, thank you very much. We'll keep an eye on that one.

And let's go quickly around the group here -- John Avlon let me start with you -- you are not in the room -- significant, important, just another meeting?

AVLON: Look, I think it's significant they opened the doors up but it's good they opened up the doors up. But now the Tea Party has to professionalize, it has to govern, it has to follow through, and that's going to be the real challenge. If it can hold folks feet to the fire and represent activists and bring down the deficit and the debt, they will be very effective at driving the agenda. If they get hijacked by activists and driven further right solely on social issues, that will end up being a problem, I think, in the long run into 2012 and further.

KING: And to that point John Brabender, can they accept compromise? Governing is hard. You have a Democratic president and a narrowly Democratic Senate. You're not going to get Rand Paul's $500 billion in cuts. You're not going to get everything the Tea Party wants.

BRABENDER: Yes, the Tea Party is doing pretty good so far. I don't think the Tea Party itself actually wants compromise. But you got to remember this. Right after the election, Mitch McConnell does a major switch, comes out against earmarks. The president the other night comes out against earmarks. In fact none other than Harry Reid gave him a dressing down today on that. The power of the Tea Party is not the people within the Senate. It's the people outside the Senate that's going --

KING: I want to turn the discussion to somebody who is a favorite of the Tea Party, the former Alaska Governor Sarah Palin. She gave her reaction to the president's State of the Union Address last night on FOX News. And one of her challenges, if you look at the polling, if you talk to people, the question is, is she serious?

Meaning, is she up to the major policy questions of being the president? So many have said will she try to talk more about policy? Will she try to improve her gravitas? I want you to listen to this response to the State of the Union and tell me if you think it's -- is it cute, is it funny, or is it out of bounds?

(BEGIN VIDEO CLIP)

SARAH PALIN (R), FORMER GOVERNOR OF ALASKA: His theme last night in the State of the Union was the WTF, you know, winning the future. And I thought OK, that acronym, spot on. There were a lot of WTF moments throughout that speech. Namely, when he made the statement, Greta, that he believed that we can't allow ourselves to, I guess, eventually become buried under a mountain of debt. That right there tells you he is so disconnected from reality.

(END VIDEO CLIP)

KING: I'm always afraid to analyze Sarah Palin because she is successfully unorthodox.

UNIDENTIFIED FEMALE: Right.

KING: But normally someone who is a mom, WTF?

BORGER: Right and this is the reason a lot of Republicans at a certain point are just going to avert their eyes and say, you know what, we're exhausted by her. She's not doing the party any good and at some point they're going to have to move on and look for somebody else to speak for them because of moments like that, which are really, you know, she's talking about the president of the United States. She's talking about a State of the Union speech. She's talking about the future of the country. And it's really not a cute joke or a tweet. KING: That's what we think in official Washington and we can be a little stuffy sometimes. Donna, could we be reading this wrong? Her appeal is she runs against the elites. This one to me just seemed a little out there even for her.

BRAZILE: I think the American people are looking for both political parties to come to the table to solve our big crisis. That's what most people applauded in the president's speech. They didn't go cherry picking looking for things to say that sound cute on talk radio. That was not a presidential moment for Ms. Palin.

KING: You're the Republican strategist in the room. Is that presidential? If she wants to be presidential, it's interesting television. It's provocative. Is it presidential?

BRABENDER: I wouldn't advise it. It's the type of thing though that I see all the time where you're having pizza, watching the State of the Union, and someone throws that out, and it sounds hilarious. I'm going to use that and then when you do use it, you think better of it. I would guess she probably thinks better of it and I think it was slightly inappropriate.

KING: But John, do we trust our analysis of this? By the conventional rule somebody who thinks of themselves as a future president, WTF, winning the future -- I get the joke. It would be fine maybe for one of us to do. I don't think anybody in this conversation is going to -- about to run for president. For someone who is thinking about running for president and who the knock (ph) is that she's not serious.

AVLON: No, it compounds that problem, of course. And look, the reality is that Sarah Palin is a genius at getting media attention. She sucks up the oxygen. We all talk about her. And her hardcore supporters love her more for moments like this. But what's growing increasingly apparent, even within the Republican Party is a sense that she is not serious about running for president. She is not serious about policy. And therefore, she's not ready to be president. And that reality is going to sink in quicker than she realizes.

BORGER: You know of all people, Newt Gingrich who once compared himself to Napoleon last week said that she needs to be careful about what she says and I think slowly but surely you're seeing Republican conservatives come out and start sort of scratching away at the veneer of Sarah Palin. But they're all afraid.

(CROSSTALK)

KING: If they're running against her, they're going to have to do that, but if --

UNIDENTIFIED FEMALE: Right.

KING: -- she's not going to run then she's just a very brilliant marketer because she's in the mix all the time. All right we need to end that --

(CROSSTALK)

KING: We'll come back to this point. John Avlon, John Brabender, Donna Brazile, Gloria Borger, thank you.

Coming up, the Army is shopping for some new equipment. You won't believe the price tag and later a conversation with Senator Rand Paul.

(COMMERCIAL BREAK)

KING: Welcome back everyone. A quick update to one of our top stories -- Rahm Emanuel has just spoken with reporters about the Illinois Supreme Court unanimous ruling that allows him to stay on the ballot for Chicago mayor.

(BEGIN VIDEO CLIP)

RAHM EMANUEL (D), CHICAGO MAYORAL CANDIDATE: No, I'm not a lawyer and I don't pretend to -- I don't even play one on TV. What I am affirmed (ph) of the view is they made a clear decision, as did the Circuit Court was clear, as was the unanimous decision at the Board of Elections. I think that this now means and what I hope it means is rather what 7-0 means or interpreted is a clear decision that the voters will decide and we should focus on what the voters have asked us to focus on. We're a pretty avid playing Scrabble family. I have banned the word resident in Scrabble in our household.

(END VIDEO CLIP)

KING: You will hear from Rahm Emanuel. He'll be in the debate at the top of the hour. Now let's check in with Joe Johns for more on latest news you need to know right now.

JOE JOHNS, CNN CORRESPONDENT: Hey, John. Tomorrow may be the biggest day yet for anti-government demonstrations in Egypt. Egypt's interior ministry says no protests will be permitted and reports say the Internet is already going dark in some Egyptian cities.

A new U.S. Army report says the military needs a new generation of light tactical vehicles to replace the humvee. It predicts they'll cost at least $300,000 a piece, and that's before equipping them with the essential combat systems. And good gosh, that's a lot of money there. But you know, in this environment, budget cutting environment, will the military still get what it says?

KING: That is a huge question. One of the guys who wants to cut a lot from the budget is Rand Paul, the new Republican senator from Kentucky. He's a Tea Party favorite. When we come back, a conversation with Rand Paul. What should we cut and do the Republicans have a plan to create jobs?

(COMMERCIAL BREAK)

KING: The Senate Tea Party caucus held its first meeting today and so far it's a small group, just four members. One of those members is the freshman senator from Kentucky, Rand Paul, who joked at today's meeting that he can already see the Tea Party's impact on Washington.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL (R), KENTUCKY: I went to my first State of the Union the other day and guess who now is against earmarks? The president of the United States has been co-opted by the Tea Party.

(END VIDEO CLIP)

KING: Senator Paul joins us now from Capitol Hill. Senator, let's start right there. You know, the president did call for a ban on earmarks. He did say he would veto any legislation that had them in it. He has, as a senator he had some earmarks, but he has had an evolution on that issue. Is that proof to you that, yes, there will be some big partisan fights, but on some things there can be adult, grown-up conversations and agreements?

PAUL: Yeah, to a certain extent. I think the election is really resonating. I think people in Washington did listen and watched the results of the election in November, and I think things will be different. The other thing that makes it different though is not just the election, but it's the imminence of the debt problem. We have to do something about tackling the debt crisis.

KING: And I want to get to some of your specific proposals to do that, but first I want to talk about this Tea Party caucus. There were other senators, freshman Republican senators who ran with the Tea Party label who were not with you today. Marco Rubio has drawn a lot of attention for being somewhat uneasy about joining the Tea Party caucus. Does it matter to you? Do you think they should join? Is there some reason not to?

PAUL: Well I think the interesting thing is that not everybody knows what the Tea Party caucus is going to be until it happens. So today what we tried to show other members, as well as the country is this isn't a bunch of guys with cigars in a dark room deciding what the Tea Party caucus will be or what our agenda will be. We invited the grassroots leaders. We had six or eight grassroots leaders who sat in the front of the room with the senators. We also invited grassroots activists from around D.C., Pennsylvania, West Virginia, Virginia and New York, Delaware, who came down, and this is about a dialogue. The grassroots Tea Party movement, I've always said, is open mike. It's like they want to address their grievances. Now they have some representatives that can help them. But it's still about a dialogue between the Tea Party and between the legislature.

KING: And yet there are some, I don't know if suspicions is the right word, but there is some sense of unease among the establishment with what you're trying to do. People view it as perhaps a rival effort or somehow a competitive effort. Have you had any success in sort of easing that? Your own senior senator, Mitch McConnell, doesn't love this idea.

PAUL: I think what you'll find is when they see what we're talking about, today we talked about a balanced budget amendment to the Constitution. The vast majority of the Republican caucus agrees with that idea. In fact, it may be universal.

We're already talking about that here in Washington. The Republican senators are talking about a balanced budget amendment. I think they are on the House side, too. So the things the Tea Party is talking about, I've always said, are not extreme. What's extreme is the $2 trillion debt. What we're talking about is very reasonable and very rational. That's how do we balance our budget?

KING: You've had the courage to put forward, I say the courage because you lay out specifics, $500 billion in cuts. As you know, many of them are quite controversial, not just with the Democrats, but with members of your own party. So I want to go through some of them. Eliminating the Government Printing Office, some people say with technology you could do that. But some would debate it. But you call for eliminating the Department of Energy, eliminating the Department of Housing and Urban Development, the Bureau of Indian Affairs, Amtrak Subsidies, International Assistance, Consumer Product Safety Commissions, all arts funding, some affordable housing programs. I'm assuming, let's leave the Democrats out of this, that in your own Republican conference, most of that is a very tough sell.

PAUL: Well, here's what I would say. We have outlined the most bold initiative in Washington probably ever for cutting spending, $500 billion. But you know what, if I had my way and we passed it, it would only fix one-third of the annual deficit's problem. The deficit this year will be $1.5 trillion. To those who would argue that this is too draconian and we cannot do this, I say to them, what happens if we do nothing?

If we do nothing, entitlements in interest will consume the entire budget within a decade and there will be no room for any other spending. So I say let's get started now. My proposal may not pass, but let's start there, find things that are acceptable, not acceptable. But you can't not do anything. If we do nothing, I think our economy will drown under the weight of our debt.

KING: And what do you say to somebody out there who maybe is taking advantage of that affordable housing program, who is unemployed at the moment, who is getting the assistance for the first time in their life and wants nothing more to get off it, but needs it today?

PAUL: I think there can be some transitions to everything and there can be means testing to a lot of programs. You know for example, unemployment benefits, they do help some people and some people can't survive without them. But if you make a million dollars a year last year and you're unemployed, do you think we could exclude millionaires from unemployment benefits? So there are ways.

But you've got to start the discussion. You have to emphasize the enormity of the problem. Can we cut the $500 billion? I don't know. But that's a beginning. That's where we have to start. We can't start with $50 billion and say, oh, raise the debt ceiling, here's $50 billion in cuts. They'll be back six months later and they'll ask us to raise the debt ceiling again. Things are seriously broken. And the alternative is not the status quo. The alternative is the status quo may bankrupt America. KING: Answer to the chorus of criticism I'm sure you're hearing from Democrats who say the Republicans have been in the majority in the House and they have more Republicans in the Senate now. We're three or four weeks into this new environment here in Washington and they're talking cutting spending, balanced budget amendments, deficits, debts, red ink, where is the Republicans jobs program?

PAUL: Well, I think jobs program is we want to shrink the government sector and we want to expand the private sector. Right now one out of four gross domestic product dollars is spent in Washington. It used to be one in five. So we now have 25 percent of our gross domestic product spent in Washington. I want to shrink that back to the historic 20, 18, 19 percent, but send that extra 5 percent back into the private sector where useful creative jobs that consumers want can be creative. So I'm all for jobs and creating jobs. But I think the private sector creates jobs, not government.

KING: And you're not worried about the political argument there. As you remember, you weren't in the Congress at the time, but Republicans were quite successful when President Obama had the health care bill, had some other initiatives first. They said there was a tonal problem, that he was not focusing on the number one concern of Americans. Do you worry the Democrats can successfully turn that on your party?

PAUL: Well the thing is, their programs I think are killing jobs. The financial regulation bill is going to add 5,000 regulations to community banks. That's not where the banking problem is. That's going to kill the local banks in each of our states. Obamacare or the health care takeover is creating penalties for a lot of businesses who hire part-time workers.

Where do you get a job if you're unemployed or lack education? You get a part time job or a temporary job. Those jobs, a lot of times, don't have health insurance. When you force them to buy health insurance or pay a penalty, you're going to have less jobs. So Obamacare has, I think they were well intended, but they didn't look at the unintended consequences of government getting involved in one- sixth of our economy.

KING: Let me close with a personal family question. On the first day of this Congress, I was with you up on that very balcony with your dad. He of course is a House member, a conservative from Texas. You're a senator, Republican from Kentucky. In the "Dallas Morning News" this morning, there's an article quoting your father, Ron Paul, saying he's thinking of running for the Senate seat that is on the ballot in Texas in 2012. Have you talked about that? Do you think that's likely?

PAUL: Well the thing about it is, we have talked about the House and the Senate. You know, if he comes over I would actually have seniority on him. So then he would have listen more to my arguments. And so far, he has had some pretty strong opinions of his own. So we'll see. I don't know what his decision is, but I think he is thinking about it, but I don't know really what his thoughts and conclusions are. KING: Senator Rand Paul of Kentucky. Sir, we appreciate your time today.

PAUL: Thank you.

KING: Up next, a competing voice, the head of the AFL-CIO is striking a rare alliance on one issue with the Chamber of Commerce. But he asks with all this talk of deficit reduction, where are the jobs?

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KING: In most big policy battles, take health care reform for example, organized labor and the Chamber of Commerce, well, they take competing sides. So it caught our attention the other day when the Chamber and the AFL-CIO issued a joint statement praising President Obama's State of the Union call for new spending of roads, bridges and other infrastructure. Is this a one-time alliance or a sign of things to come? And how worried is labor at the recent White House efforts to make peace with corporate America?

Richard Trumka is the president of the AFL-CIO and is with us tonight from the World Economic Forum in Davos, Switzerland. President Trumka, good to see you, sir.

Let's start with that statement. Tom Donohue, the chairman of the Chamber of Commerce, Rich Trumka, the president of the AFL-CIO, saying America's working families and business communities stand united in applauding President Obama's call to create jobs and grow our economy through investment in our nation's infrastructure. You know, sir, that most Republicans in the Congress said no. That's more spending. We can't afford it right now. Do you have a commitment from Tom Donohue that the Chamber will work with you to lobby Republicans to spend that money?

RICHARD TRUMKA, PRESIDENT, AFL-CIO: As you know, we have a $2.2 trillion infrastructure deficit for old infrastructure, and we have a $2 trillion infrastructure deficit to get us into the 21st century. He and I both know that we have to do infrastructure investment one to create jobs and two, to make this country more competitive. It's an absolute great policy and we're both on board with it and we'll both fight to make it happen. Yes, he committed to do that. We talked about it the past. And I would say that he understands and his word is his word.

KING: Give me your sense of the new political environment. We're talking to Rand Paul today and he has a proposal, unlikely to be passed. But it's one of the Republican proposals on the table that would eliminate government agencies, which as a result, would eliminate government jobs. We see this playing out at the state and city level where governors and majors simply don't have any money. Among your groups in the AFL-CIO are a lot of public sector employees. I assume you see very difficult times ahead at the federal, state and city level over the next year or so.

TRUMKA: Well, this is very difficult times for all workers. We have 50 million people unemployed right now. This isn't a time to be playing political games. This is a time to be creating jobs. We have a jobs crisis. And if the last election said anything, it said create jobs or you face the wrath of the voter. Now if they don't go back and create jobs, you'll the same turnaround in the next election. We have a jobs crisis. That's what they should be focused on.

KING: They say we have a deficit crisis.

TRUMKA: Well, you can't cut your way out of a deficit crisis. You have to grow your way out. The only way to do that is to create jobs. When you put people to work, they pay taxes and don't use government services. They add, not detract from anything. You cannot simply cut your way out of it. Every economist will tell you that. The world economists will tell you that.

KING: You applaud the infrastructure commitment the president made, proposal he made in the State of the Union address. But are you seeing enough from the president of the United States? Traditionally, since he's a Democrat, an ally, are you seeing enough from him on the jobs front, or has he moved too much to the center in your view because of this new political reality?

TRUMKA: Well I think if you look back to the stimulus program, it was effective. But everybody at the time knew that it was too small to solve the problem. He had to do that because the Republicans opposed everything that he was doing. Right now our fear is that they won't come to solve the problem with the scale necessary to do so. I think he probably boxed himself a little bit when he called for a five-year discretionary spending freeze. So are you going to invest in jobs and make us the 21st century power again if you can't do anything with the budget?

KING: Who you hire is a reflection of what you think. When you look at the president's new chief of staff, who under President Clinton led the effort to pass NAFTA, if you look at the vice president's chief of staff, Bruce Reed, just came out of the Democratic Leadership Council, which spent a lot of time in the 1980s and 1990s arguing the Democratic Party was too beholden to organized labor. Do you see a personnel shift at the White House that signals to you, trouble?

TRUMKA: Here's what I know. The president makes the decisions. It's going to ultimately be up to him. We had a long relationship with Bill Daley. We have a working relationship with everyone of the secretaries. We have a working relationship with the administration. We think we're in pretty good shape. We have an open dialogue. We don't win every argument but we get our word in on every argument.

KING: Is it less friendly now than it was in the beginning of the term with these new people? I know from the history, sir, I covered the labor movement back in the NAFTA days, I know from the history there was a lot of tension back then. Is there peace now, detente now, or still suspicion?

TRUMKA: I think we have a good working relationship. We worked with the cabinet secretaries. We have a great working relationship with Hilda Solis. She's a great secretary of labor and we work with everybody. So I think it's a good relationship.

KING: You're in Davos and there was a report issued here in the United States today. I don't want to dive into the weeds of it about what happened, what caused the financial collapse back in 2008. What is the global sense there? Is there optimism? Is there still unease? Is it still sort of a, we're not sure what's around the corner?

TRUMKA: I think it's a little bit of both, John. There is a little bit of optimism, but I think there's still a lot of concern. We had a panel that I was on, and we had people from every different sector that was on the panel. They're concerned about this big kick towards austerity. They think that it can kick us back into recession. They're afraid that in our government, for instance, that the Republicans won't look at things realistically, they'll never raise revenue. So we won't be able to fix the deficit problem that we have in the midterm and long term.

I would say it's mixed. I would say there's skepticism. There's some optimism as well. There's some good signs out there. So we work together and if we can get this infrastructure program going in the United States, creates some other momentum, we can get jobs growing, and then we'll have a real recovery. Right now, Wall Street is seeing a little bit of a recovery, but Main Street has not seen a recovery, because we haven't seen any jobs created or enough to fill the hole that was created by the recession. And I think that's pretty much true around the globe. Everybody is saying a recovery happens when we have people back to work.

KING: Richard Trumka is the president of the AFL-CIO. Mr. Trumka, thanks for your time tonight.

TRUMKA: Thanks, John, thanks for having me on.

KING: Coming up, Pete Dominick on what he call's the greatest exercise of democracy ever.

PETE DOMINICK, CNN CORRESPONDENT: That's right.

KING: Wow.

DOMINICK: Stay here.

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KING: You know my friend Pete Dominick and I, we share a love of technology, not as a toy, but as a tool for communicating and keeping in touch. And for some times, for practicing and watching politics. The president answered questions on YouTube today which got both Pete and I thinking about how do we use, how do we use the Internet in our politics? This is from the Pew Research Center, 36 percent of political junkies on the Internet say it's a big reason because they want to feel more connected, 22 percent of people say a major reason they're on the Internet is because they get political news faster, 21 percent say they trust that information from the politicians more than traditional news sources. And you see in the middle, it's not a reason at all, trusting it, about half of Americans. So they understand the politicians are spinning. But Pete Dominick, you were watching the president answer questions today. You've got a radio show. You're big on Twitter. What struck you about the president of the United States on YouTube?

DOMINICK: Well, the president says he reads 10 letters from ordinary Americans every day. And that's fantastic. But the Internet offers this president and any future president the ability to connect with average, ordinary Americans. In this case, it was the YouTube Q&A. And John King, it was so great, because how much press conferences does the president give a year, on average, John?

KING: I used to say he would give one a month but that sort of slipped a little bit, we're lucky if we get five or six a year.

DOMINICK: But that's reporters. That's you guys asking those questions. In this case it was Americans getting to ask their questions. And John King, it was so good today, I say there should be an amendment to the Constitution that says the president should take questions quarterly from viewers on the Internet, whether it's YouTube or elsewhere.

We're seeing how people are using Twitter and Facebook for healthy revolutions in other countries because they want the freedoms that we have in America. So I say it's fantastic and I want more of the president and senators and everybody answering questions.

KING: Let's get a quick play of it. The president did, to be fair to him, he did answer some substance questions, some policy questions about cutting the budget. We also got some personal questions in talking about now that he's on the road as a campaigner, he's got to be nicer to the wife. Listen here.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The more I'm campaigning, the more I'm president, each Valentine's Day seems to get more expensive.

UNIDENTIFIED MALE: Oh, really?

OBAMA: I've got more to make up for. You know, used to be I could just get away with flowers.

(END VIDEO CLIP)

KING: Pete, you get more than flowers, right?

DOMINICK: Of course. One of the other great questions was Mr. President, how can we make fruit less expensive than Froot Loops?

KING: There you go. That is a good question. A good tough one for the president. Pete Dominick, have a good night. We'll see you back here tomorrow. That's all for us now though. "Parker Spitzer" starts right now.