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JOHN KING, USA

Interview With Ron Paul; Interview With Herman Cain

Aired June 10, 2011 - 19:00   ET

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


JOHN KING, CNN ANCHOR: Thanks, Wolf. Good evening, everyone. Tonight from Saint Anselm College in Manchester, New Hampshire, the site of our exclusive debate Monday night among the Republican candidates for president, two of the seven contenders are with us right here tonight.

Plus a rising Republican star here, the freshman GOP Senator Kelly Ayotte sets the debate stakes and shares her breakfast conversation with Sarah Palin.

But up first tonight, major new developments in Syria and Libya. Tonight, forces loyal to Moammar Gadhafi are trying to fight their way into rebel-held city of Misrata from two directions. Today's casualty toll, the highest of the month, at least 31 dead and 150 wounded.

This new offensive also shows the Gadhafi regime has plenty of fight left, despite more than 10,000 sorties carried out over the past three months by NATO. In a farewell speech today, the Defense Secretary Robert Gates blasted NATO as a, quote, "two-tiered alliance poorly equipped," he said, to deal with challenges.

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: While every alliance member voted for the Libya mission, less than half have participated at all and fewer than a third have been willing to participate in the strike mission.

Frankly, many of those allies sitting on the sidelines do so not because they do not want to participate, but simply because they cannot. The military capabilities simply aren't there.

(END VIDEO CLIP)

KING: And yet another bizarre twist today, some U.S. lawmakers have received a letter that seems to be from Colonel Gadhafi, that letter says he's counting on the Congress to investigate what Gadhafi believes is NATOs, quote, "clear violation of the United Nation's resolution designed to protect Libyan civilians."

The political fallout of the Libyan operation in just a moment, but immediately let's get to the fighting, latest in the fighting in Misrata. CNN's Sara Sidner joins us live from Misrata.

Sara, just described, we talked about the deadly toll today. Describe what you're seeing on the front lines.

SARA SIDNER, CNN CORRESPONDENT: Well, on the front line we were on the western front line. As we've mentioned before to you, John, there are three really front line surrounding the city and I can tell you massive, massive bombing today.

We heard thunderous, thunderous claps. It sounded like thunder throughout the day, from early in the morning until the evening, only about two hours ago did it stop on the front line at the hospital that is there, that's very, very close to the front line.

It was absolute pandemonium. There were people coming in, there were bodies coming in, horrific injuries. One hundred sixty people now injured. That's the latest number that we've gotten from authorities here and 31 dead.

A scene that we have not seen here since we've been here for 2 1/2 weeks and according to doctors at that field hospital right there in the western front, this is the worst fighting they've seen in a month. And here's what happened.

On Friday, it seems the Gadhafi forces always try to make a move and they did so again this Friday, trying to push in, using their tanks, blasting away at the rebels' front line.

The rebels were able to hold their positions and fight back, that is why you saw all these casualties. We do not know what the casualties are on the other side, but I imagine there were quite a few. John --

KING: And, Sara, one of the questions as we watched this play out for months now are the capabilities. When the Gadhafi forces come in, we know they have superior fire power on the ground.

In terms of the opposition's ability to fight back. Have they taken this period of time, have they improved their capabilities and the quality of their equipment, or are they still disproportionately outgunned?

SIDNER: It's interesting you should ask that, because I put that exact same question to the commander yesterday. We were able to have a chat with him.

And he said there is a marked difference from the time they started a few weeks back and were able to push that front line outside of Misrata to now. They said the Gadhafi forces actually seem demoralized.

They've had people coming from that side over to the rebel side, surrendering themselves and then joining the rebels fight. They said they notice that the Gadhafi forces seemed to be throwing anything and everything at them, similar to what rebels have had to do with the weapons they had.

They also say that they were able to capture three women fighters that the Gadhafi forces are getting so desperate they're starting to employ women on the front lines. So they're saying the Gadhafi side is demoralized.

They are feeling very, very, very strong at this point in time and they've been able to hold off these attacks now for almost a month. John --

KING: And, Sara, lastly we've seen so many strikes on Tripoli of late by the NATO forces, did the opposition have any sense there's a tipping point just over the horizon or is it simply just a giant question mark?

SIDNER: I think what we are seeing is a tipping point, according to the commanders. Point blank was asked, how long will it be do you think, until you can push a lot further in and much closer to Tripoli?

At first he said, well, it might be a week or a few days then he said three days. That's the first time we've gotten any kind of number or any kind of timeline from the rebels. So I think there is a tipping point and I do want to mention this.

For the first time since we've been here, we heard planes overhead. And you know what that means because there's a no-fly zone it had to be NATO. And that's the first time we've heard them over Misrata.

Again and again, the opposition has been asking for Apache helicopters, asking for NATO to do something on this front to help them keep Gadhafi forces from the city. It sounds like something certainly has happened today, John.

KING: Reporting bravely from the front lines, important reporting there, CNN Sara Sidner. Sara, thank you so much. Stay safe.

Now we turn to today's bloody developments in Syria. There were huge anti-government demonstrations, but we have multiple reports of security forces, some in helicopters, indiscriminately spraying gunfire into those crowds of protesters in Syria.

Look at some of these pictures. Also today, the Assad regime launched an assault on the cities in the northwest part of the country. The regime saying it attempts to punish what it calls armed groups.

The regime again saying those groups attacked and massacred at least 120 security forces several days ago. This military advance is spreading panic throughout the civilian population. At least 38,000 Syrian refugees have fled across the border in recent days in Turkey.

Let's continue our conversation about the overseas challenge in Syria, in Libya and elsewhere with the Republican presidential candidate who has consistently challenged presidents of both parties about U.S. military interventions and involvement overseas, is the Republican Ron Paul of Texas. Good to be with you here in New Hampshire.

REP. RON PAUL (R), PRESIDENTIAL CANDIDATE: Thank you. KING: A few days before our big debate, welcome. I want to talk about some of these challenges and I want to talk particularly first about Libya.

Back in the Congress today, there was a conversation about the NATO operations. NATO has been quite open in recent days that their goal now is to continue the military strikes until Gadhafi yields power.

And there's been some grumbling the president has not asked the Congress to endorse this military action. Let's listen to Senator Jeff Sessions, Republican of Alabama.

(BEGIN VIDEO CLIP)

SENATOR JEFF SESSIONS (R), ARMED SERVICES COMMITTEE: The Obama administration is clearly in violation of the War Powers Act, so I suppose that represents a death blow to the War Powers Act, if a liberal Democratic administration clearly has no intention of complying with it.

(END VIDEO CLIP)

KING: What is your sense there? Should the president ask or is the president right in saying I'm the commander in chief, and this is being done through NATO, I don't need the blessing of Congress.

PAUL: That's absolutely wrong. You don't even need the War Powers resolution because the constitution is enough. He can't go to war without permission from the Congress.

So the War Powers resolution was meant to put some restraints on the president, and technically I'm not all that excited about the War Powers resolution, believing the constitution would be enough.

But it is a real insult to the American people, it's an insult to Congress for him to say, I don't even need to tell you, all I need to do is get a U.N. resolution and then use the force through the -- through NATO.

NATO was set up to fight and stand up against the communists. So they're searching for a mission instead of now defending Europe they're starting wars.

KING: On the bigger question, do you think the administration's goal and the policy of the United States should be regime change in Libya?

PAUL: Absolutely not. It's none of our business. We ought to just stay out of it.

KING: None of our business?

PAUL: None of our business. We don't need to be in there. That's a commercial business going in there, and that's why the British have commercial interests, the British and the French have commercial interests, and I'm sure we do too.

We've been doing business with Gadhafi for the past five years, and now the oil is over in the east. That's where the rebels are, and I understand that there's very likely some al Qaeda there. So we're probably inadvertently getting involved in something that is going to have blowback and a consequence.

Already we have the consequences costing way too much money. We don't have any money and we're getting involved there and it's not in our self interest. This is detrimental.

KING: Do you worry at all as you seek the nomination for president of the Republican Party that your views might leave you out of the Republican mainstream and Colonel Gadhafi has sent a letter apparently to the United States Congress asking for Congress's help.

He wants Congress to continue its investigation of military activities, NATO's and its allies, and here's what he says, to confirm what we believe - this is Gadhafi. To confirm what we is a clear violation of U.N. Security Resolution 1973.

Do you worry that in the public discourse it could be argued Ron Paul is on the side of Moammar Gadhafi?

PAUL: Hardly, because I don't want to be on his side. I'm not supporting him. I'm supporting the United States. I'm supporting neutrality. I'm supporting our position of staying out of this.

I'm supporting are the position that NATO and the United Nations has no authority to send our kids off to war so, no, and besides the American people don't want to go.

We've got a vote already about hands off over there, and almost, if not everyone in the Congress, says don't send in ground troops. They're very, very leery of this.

KING: The president said no ground troops.

PAUL: Yes, we've told the president that, but we're also coming close on winning this vote no money, bring the troops home and quit, cease and desist.

So, no, I'm not worried one bit. I think those who will support -- that are supporting this and supporting our militarism. I think they're going to be in trouble with the American people because the American people are coming my way.

KING: As this plays out we're also seeing disturbing images coming out of Syria. You see political protests. We know there's been a brutal crackdown by the regime.

We've seen some videos apparently of teenagers tortured by the regime. The administration has not called for regime change in Syria, but its language is beginning to get more muscular. Listen here to the Defense Secretary Robert Gates.

(BEGIN VIDEO CLIP)

GATES: The slaughter of innocent lives in Syria should be a problem and a concern for everybody. And whether Assad still has the legitimacy to govern in his own country after this kind of a slaughter, I think is a question everybody needs to consider.

(END VIDEO CLIP)

KING: Does Assad have the legitimacy to govern in your view? Should the United States now be demanding regime change in Syria?

PAUL: My personal opinion is not as relevant as what our policies should be and what our constitution says and what the responsibility is to defend this country.

Yes, there should be some question, but that's a personal opinion. But that doesn't justify us going in and picking sides in a several war. That's how we get into these messes.

KING: What would President Paul do? If you were seeing images of children being tortured, people by the hundreds trying to flee their country because their own government was shooting at them and imprisoning them if they were marching in the streets demanding rights.

PAUL: I don't think we have authority to get involved. We don't have constitutional authority. We don't have congressional authority. We don't have the money to do it. We don't know all the details.

We shouldn't be picking sides in civil wars. That's what we've been doing and that's why we're in 130 countries, 700 bases and we're bankrupt. So I would say it's bad policy. It's bad for our national defense and it's bankrupting our country.

KING: How different do you feel advocating these positions in this campaign? I remember if we go back four years when you advocated very similar positions, you took it pretty hard from Senator McCain and others who cast you as the outcast, the noninterventionist.

They put you on the extreme saying that was not the mainstream of the Republican Party. We do hear more Republicans, maybe not adopting fully your position, but talking about their skeptical about Libya. They think maybe it's time to start coming home at a quicker pace from Afghanistan.

PAUL: I think we just had 87 Republicans join a coalition of getting out of -- staying out of Libya and coming home, so we're winning this vote. The American people are sick and tire tired of it, they want us out of Afghanistan.

KING: Is the evolution was of the constitutional questions or is it because of the financial cost?

PAUL: Well, I wish it had been based on moral principles and the constitution, but I'll take the support any way I can get it. I always made fun of myself, it won't because I give a grand speech and I'm going to convert them, it's always going to be the money.

All great nations come down because they extend themselves too far, the empire gets too big, and they can't afford it. Just as the Soviet system came down, that is what's happening. We better wake up and realize it, and realize that if we live within our means and within our constitution, we're going to be safer and more prosperous.

KING: I'm going to ask last, you're a veteran at these things, some of your rivals up there on that stage Monday night will be new to these debates. Do you spend a lot of time preparing for them or you just swing it?

PAUL: I try to keep up on the news. I thought you were going to say you're a veteran of these things and I am a five-year veteran so I know a little bit about the military. So, yes, I prepare by reading the news, I don't have a system, and when I make my mistakes people say, well, maybe he should practice more.

But I deal in issues and on principles and the things I believe in, so my answers are always the same. I've been practicing a long time. I've been practicing and voting this way for, you know, 24 years.

So I don't think you know, taking a lot of instructions and doing a little cramming for this test is going to help me much. People say, what are you going to do? I say I'm going to try to get a good night's sleep and get exercise that day.

KING: Excellent advice. Congressman, we'll see you Monday night. Appreciate your time. Good to see you, sir.

Still ahead tonight, perhaps the biggest early surprise of the GOP presidential campaign, the Georgia businessman Herman Cain.

Plus, New Hampshire Senator Kelly Ayotte on our debate and her breakfast with Sarah Palin. You've got any gut on whether she's going to run?

But next, Syria's day of kinship, we'll go inside the protests and explore whether the Obama administration is now inching closer to demanding regime change in Damascus.

(COMMERCIAL BREAK)

KING: More now on today's bloody developments in Syria where security forces in helicopter gunships indiscriminately sprayed gunfire into huge crowds of anti-government protesters.

CNN's Arwa Damon is monitoring the situation in Syria from Beirut.

ARWA DAMON, CNN CORRESPONDENT: John, today was dubbed the Friday of kinship by activists and we saw them reporting and we also saw videos on Youtube whose authenticity CNN could not independently verify depicting thousands of people across Syria chanting slogans. Calling for the downfall of the regime, calling for the unity of the nation, and on a number of occasions in a fair amount of locations we also heard various reports that Syrian security forces once again indiscriminately opened fire on demonstrators, causing dozens of casualties. Killed and wounded.

This time, however, we also interestingly saw Syrian state television for the first time reporting on these demonstrations. But they were calling them small gatherings that dispersed fairly quickly and said there were deviant groups trying to cause problems, unrest amongst individuals located at these small gatherings.

They also were saying the groups had snipers firing both on civilians and on Syrian security forces. In a number of areas where we heard activists reporting about deaths due to the use of force by Syrian security forces, we saw state television saying that those casualties were being caused by what they were defining as being armed masked men.

Now, when it comes to what's happening in the north western part of the country, (inaudible) appears to be under military siege. That area largely deserted as it has been for days. The majority of residents fear - fleeing, fearing that imminent crackdown.

It does appear that the bulk of the casualties were caused in an area that is quite close to (inaudible). They're according to one activist, based outside of Syria, but it has a fairly extensive network inside the country.

Tens of thousands went out to demonstrate and he says they were met again by indiscriminate use of force by Syrian security forces and according to him and according to one man who was wounded in those clashes.

Syrian security forces also used helicopter gunships to fire down on what activists are saying were unarmed civilians. By all counts, it most certainly appears as if the uprising in Syria is nowhere near resolution with the opposition determined to topple the regime and the regime determined to stay in power. John --

KING: Arwa Damon from Beirut. Joining us now to dig deeper on the Syria crisis is CNN national security contributor, Fran Townsend who is a top White House adviser to President George W. Bush, now member of the external advisory boards for the CIA and the Department of Homeland Security.

Also with us, one of our correspondents who knows this region as well as anyone, CNN international Hala Gorani. Hala, I want to start with you. In the significance of state TV, technology in these protests for the first time, you could read it two ways.

Number one, the regime just tried to minimize it as the state TV anchors were saying, just small groups of rogue people, or you could read it as the regime realizing it can no longer simply ignore these and have credibility with people who see these demonstrations all over their country. HALA GORANI, CNN INTERNATIONAL ANCHOR: It seems it's an attempt to discredit these gatherings and these protesters, calling them small groups of people, and it fits into the narrative of the regime from the beginning.

That these are, quote, "terrorist-armed gangs," that their intent on creating chaos and that the military is going into these towns and cities at the request of residents. But what's very interesting is what might just be happening in that north western town.

And that is potentially, according to some, and again we're not allowed to report from inside Syria, that there is some sort of split between security forces after reports a few days ago that 120 security forces were killed.

The regime blamed armed gangs, but it suggests much more organization and preparation to create that kind of bloodshed or to lead to that kind of bloodshed.

KING: So, Fran, take us inside what intelligence operatives are doing, connecting those dots. Hala says there could be some disagreement, some dissent within the Syrian military.

We now have in the neighborhood as we watch refugees flee across into Turkey, the Turkish government being critical of the Assad regime. What is your sense of - we asked these in so many of these questions and so many of these countries in the middle of dramatic change in the region, are we seeing a tipping point emerge perhaps?

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: John, I think we are. You have to expect, not only as U.S. intelligence trying to gather information about what's going on inside Syria, a very difficult and hostile environment for U.S. services.

But they're working with intelligence allies around the world, especially I suspect Israel. Israel has very good intelligence about what goes on inside Syria. As we know they used that intelligence to ban a nuclear facility several years ago.

So I expect that the U.S. intelligence services are working with our allies. Remember, John, back in Libya, there are tipping points here. In Libya, when the Gadhafi government there started using air power to shoot at unarmed civilians, that's when the international community galvanized.

We've seen the torture and murder of the 13-year-old boy several weeks ago and today this sort of activity, as it continues, will galvanize the international community. It will be interesting to see how much longer the international community's willing to wait before it takes action.

KING: Hala, take us inside this country. I'm sorry, go ahead --

GORANI: No, I was going to say, regarding the international response, we were discussing yesterday, you'll remember, John, that even verbal condemnations are not getting U.N. Security Council support from all the permanent members of the U.N. Security Council.

This is a long, long ways away from potential intervention. This is a very different scenario from Libya, and the Arab league, very importantly has remained silent on the uprisings in Syria. The only condemnation we're hearing is from the Turkish prime minister who is calling the videos and the violence he's seeing, quote, "unpalatable" and calling some of what he's seen on these videos, atrocities.

So it's interesting to see the international response, but it's far away from any kind of intervention.

KING: And, Fran, that's an interesting point and important point Hala makes because we've not heard from the Arab league as we have from other situations in the neighborhood.

I want you to listen here to the Defense Secretary Robert Gates. This is quite an interesting statement because, again, this is one of the statements where we'll listen to it and then at the end we can read it many different ways. Listen here.

(BEGIN VIDEO CLIP)

GATES: There clearly is a dividing line in the Middle East and that is between the rulers who are prepared to slaughter their own people to stay in power, and those who are willing to enable a transition. Obviously our sympathies and our support should be with the latter.

(END VIDEO CLIP)

KING: You could raise a lot of questions there, Fran. Certainly he's criticizing Libya, certainly he's criticizing Syria, but what is the secretary saying to Bahrain and perhaps even to Saudi Arabia there?

TOWNSEND: Well, it's clearly a warning. I mean, and by the way, the Kingdom of Saudi Arabia was not happy with statements that Secretary Gates made when he visited Bahrain shortly after the uprising.

I mean, John, going back for a moment to Syria, though, I think it's important, the distinction, the point Hala makes, the distinction between Libya and Syria has a lot to do with the fact that the Arab league, the countries in the Gulf are afraid of getting into a proxy war with Iran.

Remember, Iran is the single largest funder of Hezbollah, the terrorist group that resides in safety inside Syria. It is also supported by the Assad regime. Nobody, not the U.S., not the west, and not the Gulf Arabs want to get into some proxy war in Syria.

So I think that's part of what you're seeing, their reluctance to be pulled into a conflict in Syria.

KING: That is a fascinating story. We need to keep our eyes on Fran Townsend and Hala Gorani. Appreciate your help tonight. Up next here are the top headlines of the day including the CIA Director Leon Panetta makes a surprise visit to Pakistan.

And later, presidential politics with a rising star in the Republican field, maybe you've heard of him, maybe not. Herman Cain, he'll be live right here with us.

(COMMERCIAL BREAK)

KING: Welcome back, here's the latest news you need to know right now. CIA director Leon Panetta is in Pakistan right now. His first visit there since the United States raid that killed Osama Bin Laden. A U.S. official tells CNN Panetta plans to reiterate the U.S. commitment to cooperate with Pakistan in the fight against al Qaeda.

Power company that's serve Arizona spent today making contingency plans in case wildfires forced them to close down major supply lines. Now if that happens, customers in south eastern New Mexico and El Paso, Texas, could see rolling blackouts.

A rare fungus has infected eight people injured in the Joplin, Missouri tornado. Three of them have died. The Center for Disease Control and Prevention is studying those cases.

Up next here, one of the reasons we're right here in New Hampshire tonight. We're here for a presidential debate Monday night.

Seven contenders for the Republican presidential nomination will join us on this beautiful college campus here in Manchester, New Hampshire. One of them is the surprise in this race -- he's gone from zero percent to 10 percent in national polls like that. His name is Herman Cain. He's a businessman from Georgia.

He'll be with us live right after the break.

(COMMERCIAL BREAK)

KING: Businessman Herman Cain is perhaps so far the biggest surprise of the 2012 presidential race. Just this week, a Quinnipiac nationwide poll of Republicans puts Mr. Cain in third place, behind Mitt Romney and Sarah Palin. He'll be right here with us in New Hampshire for our CNN exclusive debate Monday night -- and he joins me now live from Atlanta.

Mr. Cain, congratulations on your success so far.

I want to ask you this question, though. Now as you step on to the stage in the debate, you'll have more people watching you, what do you see as your biggest test to prove you belong with the professional politicians, with the big guys on Monday night?

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: Well, I think the biggest test is going to be how I answer the questions in terms of my common sense solutions that I have been talking about around the country in New Hampshire, Iowa and other states. So, the biggest test is going to be able to live up to expectations relative to what I did in that first debate.

But I'm looking forward to it.

KING: We're looking forward to having you.

And you mentioned, you know, answering the questions. The biggest question, as you well know, sir, one of the reasons you're in this race is the economy is the biggest concern across the country.

CAIN: Yes.

KING: Among your proposals, you said lower corporate tax rates. You said lower individual tax rates -- 25 percent is the maximum tax rate is in your platform. And also, you want to take capital gains taxes all the way down to zero.

Let me ask you, to answer this question. For somebody out there watching who's a bit skeptical, who says, well, didn't George W. Bush try to do all that and where was the job growth, how would you answer that?

CAIN: I would say that he did some of that and we got some job growth. So, his did not fail. The problem then -- as it is now -- is that they had a spending problem, not a revenue problem, when it came to lowering taxes.

So, this is one of the reasons that I'm proposing take capital gains tax rate to zero, because you see, trying to take it down just a little bit is not going to help. Trying to take the corporate and the personal tax rates down just a little bit, that's not going to help.

And I happen to believe if you look at what happened in the '60s when John F. Kennedy made some big cuts and what happened in the '80s with Ronald Reagan, revenues went up over 50 percent.

We've got to be more aggressive instead of timid with the cuts in order for them to work.

KING: You've been harshly critical of the president, the Democratic president's current economic plan. I want to listen to something you said just this week on the Glenn Beck show, harshly critical of the president. Let's listen and we'll talk on the other side.

(BEGIN VIDEO CLIP)

CAIN: For about the first 12 months of the Obama administration, I hesitated in believing that they could make this many bad decisions, collectively. So, you can only conclude that there's a certain amount of intent to do some of these things.

(END VIDEO CLIP)

KING: I'm not sure what you mean by that -- a certain amount of intent to do some of these things. You're not saying the president of the United States and his administration, or they have an intent to do things that hurt the economy, that cause unemployment to go up, something like that, are you?

CAIN: No. What I meant was the president is supposed to be a very smart man. People have said that. Supposedly, he surrounded himself with a lot of smart people.

But, unfortunately, they weren't smart in the right things. They didn't talk about lowering taxes. They didn't talk about decreasing regulation. They talked about increasing regulation.

So, when I say, you know, have you to conclude that that was a certain amount of intent -- his intent was clearly to pass his agenda and not the agenda of the American people. And that's why his policies are failing.

KING: Well, that's why we have elections. You're a Republican, he's a Democrat. You say his agenda is not the agenda of the American people. He might argue he won the last presidential election in a landslide. But that's why we're going to have this next election without a doubt.

I want to listen to a little more of what you said -- again, this is about where the president's heart lies, I guess, is my characterization of this. This is again from the Beck program.

Let's listen.

CAIN: Yes.

(BEGIN VIDEO CLIP)

CAIN: President Obama convinced a lot of people that he had America's best interest at heart. And if you look at the actions and the decisions that he has made, I am not convinced that he's had America's best interest at heart. And I -- it hurts me to say that, because of my respect for the office of the presidency.

GLENN BECK, FOX NEWS: You didn't think because he's black? Is that what it is?

(END VIDEO CLIP)

KING: It's an interesting way to phrase the criticism. You could say: I disagree. I think his policies are hurting America. But you say the president of the United States, you do not believe he has the country's best interest at heart? You really believe that?

CAIN: John, with all due respect, and it's painful for me to say like I said. I don't.

Here is an example. When the United States Senate and the House of Representatives cannot come up with a health care bill in resolution, the president used the power of the presidency to get a lot of members of the House of Representatives to literally walk the plank to pass what he wanted to pass.

There were polls clearly stating that the American people wanted something to be done about health care, but the polls clearly indicated that wasn't the solution that they wanted. So, I had to only conclude that he didn't have the best interests of the American people at heart based upon that particular decision.

KING: Even some conservatives, not just liberals, not just Democrats, sir, many conservatives have questioned comments you've made about Muslims and whether they would serve in your administration. You would be the president of all Americans if you win the election.

I want you to listen to this exchange with the organization Think Progress.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Would you be comfortable appointing a Muslim either in your cabinet or as a federal judge?

CAIN: No. I will not. And here's why: there is this creeping attempt -- there's this attempt to gradually ease Sharia law and the Muslim faith into our government. It does not belong in our government.

(END VIDEO CLIP)

KING: Now, subsequently you said that you weren't opposed flatly to any Muslims serving in your administration, but you would want to know from them first that they put the United States Constitution ahead of any of their religious beliefs. And here's how you explained that to Glenn Beck.

(BEGIN VIDEO CLIP)

BECK: Are you saying that it is -- that Muslims have to prove there has to be some loyalty proof?

CAIN: Yes, to the Constitution of the United States of America.

BECK: But would you do that to a Catholic or would you do that to a Mormon?

CAIN: No, I wouldn't. I wouldn't, because there is a greater dangerous part of the Muslim faith than there is in these other religions. I know there are Muslims who talk about, "But we are a peaceful religion," and I'm sure there are some peace-loving Muslims.

BECK: I know them. I know them.

CAIN: Yes, I know some of them, too.

BECK: Yes. OK.

CAIN: I absolutely do. So, this isn't casting a label on all Muslims. When that guy asked me that question in the middle of a rapid-fire Q&A session in Iowa, it came out of nowhere, number one.

(END VIDEO CLIP)

KING: You may not be casting aspersions on all Muslims, sir, but wouldn't that test essentially subject all Muslims to a test that you would subject no other ethnic or religious group to in the United States? Isn't that discrimination?

CAIN: No, that's not discrimination, John. It's called trying to protect the American people.

Look, in my 40 years of business, I hired people from all races, creed, religion, sexual orientation. I look for the best people. But, look, this nation is under attack constantly by people who want to kill all of us. So, I'm going to take extra precaution.

When interviewed people in my business career, there was the resume, there was the work history, and then there was the one-on-one interview. And the one-on-one interview is where you have the opportunity to try to get a sense of the individual in terms of whether they would fit into the culture of your organization as well as were they going to be basically loyal to the objectives of the organization. I'll to the same thing.

KING: But, sir, the Constitution Article VI, Clause III of the Constitution says no religion test shall ever be required as a quality case to any office or public trust under the United States. Isn't that a religious test?

CAIN: John, I just say it. It wasn't going to be an absolute religious test. The question that was asked to me in that clip that you showed was, would I be comfortable? Now, I said, no, I would not be comfortable. And the way I would get comfortable is in a one-on- one interview.

I never said that I was going to discriminate against Muslims or any other religion for that matter. But I am going to take extra precautions if a Muslim person who is competent wants to work in my administration.

KING: Mr. Cain, we appreciate your time tonight. We're very much looking forward to having you on the stage, one of the seven Republican candidates on our CNN Monday night. We'll see you then and we'll see more as this campaign unfolds. Herman Cain, one of the surprises early on in this Republican race for president.

And when we come back, New Hampshire's new Republican senator, she's in touch with the electorate here. What does she think are the stakes for this debate? And she recently had breakfast with Sarah Palin. Is she going to run? Find out.

(COMMERCIAL BREAK)

KING: What is the early lay of the land in New Hampshire and what are the stakes for our big debate Monday night?

Let's ask New Hampshire's new Republican senator, Kelly Ayotte, who just won election. Are you sure you don't want to jump into the field? We have seven candidates. We could an eight.

SEN. KELLY AYOTTE (R), NEW HAMPSHIRE: I'm quite sure. I just finished an election, and I'm happy to be in the Senate.

KING: So, you just finished an election where you won as a Republican in this state.

AYOTTE: Yes.

KING: When these seven candidates take the stage Monday night, what are you looking for? What is the defining question for these Republican candidates?

AYOTTE: Well, I really want to hear what is their plan on the debt and the spending in Washington. That's what we're grappling with right now. We've got the debt ceiling issue coming up in August, and what are they going to do?

And I think that the candidates have to get beyond the generalities of where we are right now for the debt. That was the biggest issue in my primary, and I think it's going to be the biggest issue in this primary, along with the economy.

KING: I'll say amen if we can get them beyond the generalities. I guess that's in part my job.

But how do you answer someone who says, yes, debt and deficits are a huge concern, spending is a huge concern -- but how far can you go right now, given the fragility of the recovery, some people, including the president of the United States -- I know he's from the other party -- he says you have to spend some, you have to have a little infrastructure spending, some -- I know it's a dirty word -- stimulus?

AYOTTE: Well, what I'd like to see -- hear from the candidates is how about taxes? Taxes and regulation are the biggest factor right now in terms of our economic growth. And we've seen it time and time again. This administration has continued to burden the private sector in a way that's made it difficult to grow and create jobs.

And so, I think that's the key. Where are they on taxes, where are they on issues like the corporate tax rate, and the burdensome regulations. And I'd like to hear what they think about this NLRB decision in Washington state because you think about how many jobs are lost there because of that decision.

KING: And do you have any doubt Republican primaries always venture into the debate about some of the social issues. We will have, I think, a very interesting debate because of the differences about whether it's Libya, or Afghanistan, or America's place in the world. Any doubt in your mind that this campaign will be not -- only in the Republican primary, but then in the general election -- mostly about the economy? AYOTTE: Well, I think you know, that is going to be the focus in this election, in this general election, and also in the primary. The social issues are important, particularly in the primary.

What's really going to drive it is the spending in Washington, the debt, the economy, the jobs -- we discussed such a negative jobs report the other day. And that's going to be particularly bad for the president. So, that's where he'll be vulnerable to Republicans. And I hope that's what we emphasize.

KING: And how much of a difference will it make, you know, in 2007, 2008, when we were here. You had an interesting Democratic race, a fascinating Democratic race and an interesting Republican race. And so, undeclared voters, independent voters in New Hampshire who can pick which primary to vote in had a tough choice to make.

AYOTTE: Right.

KING: This time, all those undeclared voters can, if they want, come into the Republican primary, because you won't have a challenge to President Obama. Do you think that will make a big difference or do we overplay that?

AYOTTE: I think it can make a difference. I mean, 40 percent of our electorate are registered independents. And it reminds me a little bit of the election I just went through because there wasn't a primary on the Democrat end, and there was a really vigorous primary on the Republican end. So, I think the independents took more of an interest in our primary and they're going to take more of an interest in this Republican primary right now.

And, certainly, John McCain, he focused on some independents and getting those in the -- getting in the primary.

KING: So, who's winning New Hampshire right now? Mitt Romney without a doubt here or --

AYOTTE: Well, right now, Governor Romney is certainly the front- runner. But there's a long way to go in this election, and it's going to be a long, hot summer in New Hampshire. We're expecting a lot of grassroots campaigning -- the diners, the door to door, and the town hall meetings, and especially those house parties. I think that will make the difference.

KING: We have the traditional game of chess going on in the sense the candidates deciding: do I compete everywhere?

AYOTTE: Right.

KING: Do I skip Iowa and focus on New Hampshire? Governor Romney said he won't participate in the Ames straw poll, participate to a degree in the caucuses. Some take that as a calculation, I don't want to spend too much time talking about abortion and same-sex marriage, I want to stay in New Hampshire and talk about the economy.

Is that how you see it? AYOTTE: What I see it is that you have to make calculated decisions in a presidential election. I think Governor Romney -- New Hampshire is particularly important to his campaign, and winning here, having finished here second last time around. So I can understand why he wants to focus here. And voters --

KING: Can he do anything but win here?

AYOTTE: I think he's got to win here. I really do. I think it's very important to his campaign. And I know the key is going to be -- as the front-runner -- is to be out, to show that you're not taking this for granted, you're really earning the support of New Hampshire voters, and you've got to do that one-on-one grassroots campaigning here.

Even if you have the most money, that is not what wins the election. In fact, it in my election, the person that had the most money and spent the most on TV came in third.

KING: You mentioned one-on-one. And you earlier mentioned getting into the diner. So, you've had a one-on-one conversation in a diner recently with Sarah Palin, who came through this state. She will not be at our debate. She says she's not sure, that she's thinking about it, exploring the possibility of running.

Did she tell you?

AYOTTE: She did not bring up running for president when you I met with her last week at a Portsmouth diner, basically. We talked about -- I had had my first town hall meeting the night before, and she wanted to know what were on voters' minds at the town hall meeting. So, she was curious about that.

KING: Was she questioning you like a candidate?

AYOTTE: She wasn't questioning me like a candidate. I mean, we talked a lot about our children. And my husband was with me, and he was stationed in Alaska. So, there was a lot of talk about hunting and fishing in Alaska, as you can imagine.

KING: In your gut, any gut on whether she's going to run?

AYOTTE: You know, it's obviously up to her. If I were to make a prediction right now, I don't -- I don't think that she will run. But again, anything can change. And as you know with Governor Palin, you never know what decision she's going to make until she makes that announcement.

KING: She endorsed you last time, called you one of those great mama grizzlies.

AYOTTE: Yes.

KING: Would you endorse her? Or are you going to endorse anybody? AYOTTE: I'm going to speak to every single presidential candidate. I look forward to it. And assess on what their plan is for America and whether they can beat Barack Obama. I think that's so important in this election.

And then I'm going to make a decision whether I'll get in and endorse in the primary.

KING: New Hampshire was good to President Obama. It has been good to the Democrats recently in presidential politics.

AYOTTE: Yes.

KING: When we get past the primary and into the general election, will New Hampshire be in play in your view?

AYOTTE: New Hampshire is in play in my view. If you look at what happened in 2010, New Hampshire is in play. I think it's very much a purple state, and it's not one that should be written off by Republicans in 2012.

KING: Any more advice for the poor moderator, one more question for Monday night?

AYOTTE: You know, I think -- I think the moderator should really be asking what is their plan on federal spending. And I hope the moderator asks about entitlements because to not talk about entitlements I think at this point is really -- that's a very important issue and it's 60 percent of the federal budget. So, I'd like to hear candidates, what their plan is for that -- especially when the president's been so absent on it.

KING: I'll make sure the moderator gets your message.

AYOTTE: I appreciate that.

KING: Senator Ayotte, I appreciate your time right here.

AYOTTE: Thanks, John.

KING: Thank you.

The Dow plummets below 12,000 for the first time in three months. Unemployment is up. The economy will dominate this campaign. Some great insights.

We'll be right back.

(COMMERCIAL BREAK)

KING: Today, the Dow Industrials closed below 12,000 for the first time in three months. Yet another reminder -- if we needed one -- that the 2012 presidential campaign will be first and foremost about the economy. A big debate here Monday night with the Republicans. Let's get some insights. Our chief political analyst Gloria Borger is with us from Washington. And with me here in Manchester, New Hampshire, the veteran "TIME" political columnist, Joe Klein.

I was just thinking today, talking to some people here and the candidates, it's something like 1992 where you just feel it. You just feel it.

JOE KLEIN, POLITICLA COLUMNIST, TIME MAGAZINE: You said that earlier in the broadcast. And it feels very much like that. Obama is going to be judged on the economy. People have already forgotten that he got Osama bin Laden.

And there really isn't all that much he can do about the economy. He's trapped. You know, the jobs report is terrible. And he can't do stimulus because the Republicans are going to block him.

KING: So, Gloria, the question is: can Republicans prove that they have a credible alternative? Because George H.W. Bush won the Gulf War. He had the high approval rating. Like killing bin Laden, it went away because people concerned about the economy.

Can the Republicans emerge as the credible alternative?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, they're going to try. And obviously, these -- you know, these numbers, the unemployment numbers, kind of help them.

But, you know, in talking to somebody at the White House, they understand their problem here, which is: they want to remind people that we were in a ditch as the president keeps saying, but they know that the public is kind of tired of that and they believe that right now this is Barack Obama's economy, and they have to say, OK, we've created about 2 million jobs, but just remember how bad it was.

And so, it's kind of a fine line they're walking because they know they can't go back to blaming Bush. That it's now theirs. So, they're --

KLEIN: Too fine a line. It's too fine a line.

BORGER: Right.

KLEIN: You know, it's the toughest argument to make in politics. Things could have been worse.

KING: Right. It's a bad bumper sticker.

KLEIN: You've got a big problem here in the Republican Party. It's like the NCAA playoffs. You've got the Iowa regional developments, you know, where the social issues are going to be decided, and the New Hampshire bracket, where it's going to be the moderate and business --

BORGER: Joe, they tried to say it could have been worse in 2010, but it didn't work for them, did it, in the midterm elections? KLEIN: No, it didn't.

KING: Monday night, right here 8:00 p.m. in the East -- 8:00 p.m. in the East.

The bells are ringing. You know what that means? That means it's all for us tonight.

We'll see you Monday night for this show then the debate. Have a great weekend.

"IN THE ARENA" starts right now.