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Final Liftoff of Shuttle Atlantis; Depressing Jobs Report; Unemployment Rate Up to 9.2 Percent

Aired July 8, 2011 - 19:00   ET


JOHN KING, CNN ANCHOR: Thanks, Candy and good evening, everyone. Tonight, bittersweet history for America's space shuttle program.


UNIDENTIFIED MALE: 2, 1, 0, and liftoff. The final liftoff of "Atlantis" on the shoulders of the space shuttle, America will continue the dream.


KING: "Atlantis" roars majestically into space with the 135th mission is the last for the space shuttle program. "Right Stuff" author Tom Wolfe joins us to reflect on the American space program at a crossroads.


UNIDENTIFIED MALE: We lost a chance to explore the heavens and who know what is we will find if we explore the heavens.


KING: But up first tonight, a depressing jobs report from the government stuns economists, not to mention the Obama re-election campaign team. Just 18,000 new jobs created last month's and May's number was revised downward to just 25,000.

The unemployment rate went up as a result from 9.1 percent to 9.2 percent and truth be told, most economists agree that real rate, closer to 16 percent because so many Americans have stopped looking for work or have no choice, but to work part time.

Another sobering number there are now 14.1 million Americans officially considered unemployed. Nearly half of them have been looking for work for six months or longer.

In a moment, the politics of the jobs, how this anemic report complicates deficit reduction talks and the president's report on how to keep his job for four more years.

But first, how the economy is in a fragile state, what where it is hurting the most and what if anything the government can do to help. Let's take a look at break down of some of these numbers, as we go through we'll just show you the rate over time through the Obama administration. Remember, they passed the stimulus plan early on. They thought the rate was going to drop. It was above 10 percent, started to come down a little, then bang, back up, heading up now 9.2 percent today, that bad news for the administration.

Here is the big question, where are the jobs? You see jobs started to go up in a better rate, but the last two months, very bleak. Consider this, even if the economy added 125,000 jobs a month, 125,000 jobs a month, between now and the election next year, that would keep the unemployment rate flat lined, right around 9.2 percent.

The president, if he wants the rate to go down needs dramatic improvement in the jobs climate and need it is quickly. One more here, this is pretty sobering if you look at it, again, the government says 14.1 million unemployed, about half of them long term.

Add in those underemployed, people who can only find a part-time job, about 22.7 million people hurt and hurt badly by this economy. Let's dig deeper now with our chief White House correspondent Jessica Yellin and in New York where traders on Wall Street literally gasped when the report was released, CNN's Alison Kosik.

Jes, to you first, hard enough for the president, he's facing re- election, the unemployment rate is stubborn and now in the middle of this, he's trying to get a deficit reduction deal. You have reaction to the jobs report. I want you to read this.

This is from a liberal think tank in town, "This is a remarkable across-the-board back slide. The president and congressional leaders need to stop talking about deficit reduction and start talking about job creation."

That from the economic policy institute, a liberal think tank in town. The president is in quite a box.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: They know it. They have tried some pretty remarkable measures to kick start the economy the way they know how and they are sort of out of tools.

What they are frustrated about is they think that there are a few more tools left and that Congress is blocking them from using them at this point and they are trying to prod Congress into action on that.

There's also a measure of optimism that if there is a debt deal that could somehow encourage corporations to invest more in the economy and that in itself could jump start the economy, but it's very -- at an arm's reach from the White House. There's not that much the president himself can do it's frustrating.

KING: So Alison, describe this gasp on the floor of Wall Street and why. What so stunned? Why were they so disappointed to see this number and what did they make of it?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes, they did gasp and you heard that when this report came out at 8:30 this morning, my gosh, I can't believe only 18,000 job added. It is because the predictions were that up to 125,000 jobs would have been added.

This comes after that May report that you said that was downgraded to 25,000. And it's very frustrating for a lot of these investors, for a lot of traders, for Americans to see that we had gained that momentum from January through April, even adding 100,000, 200,000 jobs a month in some of those months.

And then to see the number of jobs literally fall off a cliff. Now, we all thought that May, may have been a blip, but now when we see June's numbers, it becomes more of a reality. John --

KING: We are heading closer and closer, not only to the sensitive deficit negotiations, but to the political campaign. Let's listen to a bit of what the president said this morning.

He very quickly scheduled an event for the Rose Garden. Remember, the White House sees the numbers the night before, they didn't have to wait until 8:30 in the morning. They knew what was coming. Here is a taste of what the president said today.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Today's job report confirms what most Americans already know. We still have a long way to go and a lot of work to do to give people the security and opportunity they deserve.


KING: Now the people watching, Jess, especially those who are unemployed or underemployed, they want to know how the president is going to help them get a job.

Inside the White House says they tried to deal with that. You mentioned they think they have some problems getting things through the Congress right now.

What about the president's own job in the sense if we go back a couple months, Alison noted, creating more jobs, the president was starting to get more optimistic, saying we turned a corner, things were getting better, we are on the right path. He can't say that anymore.

YELLIN: They can't, at this point, run on the economy. They have to run on we have started making changes. It hasn't exactly come to pass quite yet, but don't stop us now.

As you have heard reported, one of his top aides said that people like the president, they will be voting on whether they like him and whether their own personal circumstance feels good.

Look, Republicans are having a field day and they're going to argue that the president's policies made things worse. Got us where we are and that this White House is not getting it and, in fact, these jobs numbers could make debt talks worse, we don't know.

KING: Could make them worse. Alison, on Wall Street what is the sense? Because some liberal economists will say and you heard from a think tank at the top of the show.

Don't do deficit reduction now, don't cut spending right now, that's the worst thing you do in the economy, but the president himself said today that he thinks one of the hesitations businesses have to hiring is they want to see if Washington can get serious.

Is that the sense on Wall Street that if they can negotiate a real deficit reduction deal, even if it cuts spending, maybe take some federal money out of the economy that it is actually good for job creation?

KOSIK: Yes, they do think that and just say so you know, people I talk to on Wall Street they really think that a deal will happen in the 11th hour, but the reality is the uncertainty is still there.

It is the lack of confidence and that lack of certainty that's keeping these companies from hiring. So if Congress can reach an agreement on the debt ceiling, companies are going to feel a lot better about maybe expanding their businesses, maybe about hiring.

But right now, they are thinking, you know what I'm not going to put myself out there. I'm not going to start hiring people until I know the economy is on solid footing and that Washington's got its act together. John --

KING: Alison Kosik in New York, our chief White House correspondent Jessica Yellin with me. Guys, thanks. Let's get some perspective now from our senior political analyst, David Gergen who has advised four U.S. presidents.

David, I'm going to go back to the wall because I just underscore that it is almost impossible to find anything encouraging in this report. If you look at it, you see employment down in government, down in education, down in financial services, down in construction, down in manufacturing.

If you look deeper in this report, David Gergen, you see temporary workers being laid off, wages have flat lined. If you were advising this president of the United States, what do you do now?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, John, that is very tough and politically it is very tough. You know, this was an administration that promised if they got a stimulus bill, they could hold unemployment below 8 percent.

We have now had 29 months, 29 months a modern record of unemployment being above 8 percent. This is rare. We're in an uncharted territory. We haven't seen this kind of thing since the great depression.

I think what the president has to do is twofold, John. It is not just a question of getting the numbers coming back, he has to got to build confidence in his leadership and that people have a sense he can get things done and knows where he is going, psychological as much as about numbers.

Franklin Roosevelt could still win with high unemployment because he had the confidence of the country. Obama does not yet have that confidence on his economic stewardship. What does that mean?

I think it puts more leverage on him, more pressure on him to come up with the deal on the deficits. I think it gives the Republicans more leverage and if anything, the Democrats and Congress as you know think that the Republicans had been out negotiating in the White House.

And they're very, very upset about the direction of the negotiations, but he has got to come up with a deal. Secondly, I think to go back to Jessica Yellin's point, where is plan B for getting jobs and for getting growth?

Right now, when the president is asking for things from the Congress, they are pretty small stuff, pretty much at the margins, getting a new patent law that's not going to produce jobs any time in the near future.

It is a good thing to do extending payroll taxes that just keeps us where we are. Where is the big bold plan B? Where is -- what else can he bring out of the tool box that will give people a sense that he is on our side and he is going to get some things done?

It may not -- it may not bring all the jobs back, but at least he is fighting for us?

KING: Ask you to stand by one second this is the oddest split screen I have seen in quite a bit here. We're talking about a very sober unemployment report, but we want to show our viewers live pictures of the Duke and Duchess of Cambridge arriving in California for a visit here to the United States.

Governor Jerry Brown greeting them on the tarmac there. They're obviously here for an official visit, to help raise money for causes, to see a bit of the United States of America. I'm sure many people are going to wonder what is she wearing? That's been the big question.

You see them gathering there. All right, back to our conversation. David, here is one of the problems politically and we will show pictures of the royals as they make their way if we have some interesting pictures for you.

Here's one of the hard parts politically. From a policy point, and sometimes I don't like to dwell on the politics of this because there's somebody out there this unemployed saying what about getting me a job?

Somebody out there underemployed, what about getting me a job? But sometimes, to those people especially, this can matter. You have David Plouffe, the president's adviser saying, you know, people don't worry about the unemployment rate.

They make their decision based on how they feel in their gut to a degree that is true, people feel things are getting better, they tend to maybe listen to an incumbent president. But from a communication's standpoint, those words best left unspoken?

GERGEN: Absolutely. It reminds me of last month when they said terrible unemployment numbers were just a bump on the road and they got stuffed on that. Mitt Romney began running ads, as you know.

So I think David Plouffe who usually is very carefully on what he says. I'm sure he wishes he had stated that a different way.

KING: David, we'll ask to you stand by, take be a quick break here.


KING: Still ahead, "Atlantis" roars into space and the space shuttle era nears its end. Tom Wolfe, whose "Right Stuff" brilliantly chronicled the birth of America's space journey reflects on the shuttle program's closing chapter.


UNIDENTIFIED MALE: I think it will be remembered as a very game attempt to keep the manned space program alive.


KING: Plus, how do we get America back to work? Is President Obama's agenda helping or hurting? That's next.


KING: Set to host another round of high stakes talks on the debt crisis this Sunday evening. It isn't just Democrats putting pressure on Republicans. Senator Jim DeMint of South Carolina is pushing his GOP colleagues to get behind what he calls a cut, cap and balance pledge.

And include a balanced budget amendment to the constitution in any possible deal that's generating some pushback from his fellow Republicans. Senator DeMint with us now from South Carolina. His new book "The Great Awakening Two Years That Changed America, Washington and Me" came out just this week.

Senator, I want to get to the debt talks, but I want to talk first about today's very disappointing unemployment report, jobs report, showing still very anemic job growth in the American economy.

Here is one of the things the president says must be done. He says, if you look at the sectors that are hurting most, construction is one of them and the president says Washington can help. Let's listen.


PRESIDENT OBAMA: Right now, there are over a million construction workers out of work after the housing boom went bust, just as a lot of America needs lot of rebuilding. We connect the two by investing in rebuilding our roads and our bridges and our rail ways and our infrastructure.


KING: Is the president right, even as you negotiate with him big spending cuts, maybe changes to Social Security and Medicare, your push for a balanced budget amendment? Is he right that even as that goes on, maybe we need to find some money to put construction workers to work?

SENATOR JIM DEMINT (R), SOUTH CAROLINA: I don't want to be disrespectful to the president, but it's pretty clear he does not know how to get people back to work. He spent more on economic stimulus than any other president.

He promised a lot of that was shovel-ready infrastructure work. It didn't turn out like that and what we need to realize right now is the president's policies have made it very difficult and more expensive for businesses to hire people.

I think I know how to create some jobs and I don't think the president has any standing at this point to suggest we should spend more government money to make that happen.

KING: So let's focus on those negotiations. One of the other things the president said today is he acknowledge there's some uncertainty out there in the business community.

I think you would agree with him on that even though you disagree with what he has done. He says part of that uncertainty is that markets are waiting. Businesses are waiting before they invest to see if Washington will get serious about the deficit and the debt.

As the president moves forward on that you are saying you should have a balanced budget amendment. You just made it clear right here saying taxes should be off the table.

Your Republican colleague John McCain went to the floor of the Senate the other day. He said look, my fellow Republicans, we're not going to get it. Forget about a balanced budget amendment and Senator McCain said this.


SENATOR JOHN MCCAIN (R), ARIZONA: I feel a need to provide my colleagues with some straight talk. It is my view the way to break this gridlock is to agree, is to agree to certain tax increase and closing loopholes, but only in return for an overall reduction of the corporate tax rate.

(END VIDEO CLIP) KING: Are you open to that?

DEMINT: Well, I've actually introduced a bill like that and so have many Republicans, get rid of all the credits, the loopholes, the subsidies and just have a low flat corporate rate.

KING: Can there be -- can there be a - Senator, forgive me for interrupting, can there also be some tax increases in addition to doing that? He describes a bit of a trade off there.

DEMINT: Well, John, if raising taxes would solve our problems and get people back to work, I would support it, but I know it wouldn't. Particularly what the president is talking about is likely to cost more jobs than it would save.

And Marco Rubio was right yesterday when he said we don't need more taxes, we need more taxpayers. And what the president is suggesting and the surveys show or the economists who have looked at that time could cost us 70,000 jobs.

Just what he is talking about with very little, if any, new revenue so the president is playing politics on the tax increases.

KING: As you know there are some who would dispute your argument on taxes and they would go back to the 1990s and they would make this argument, Senator. They would say George H. W. Bush raised taxes near the end of his administration, probably lost his job because of it. Bill Clinton won the election, came to office, kept a campaign promise.

He cut taxes on the middle class, but he raised them on wealthy Americans and what we got over the next eight years was the biggest economic expansion of our lifetime, 21 million jobs created in that period of time.

So there are some who would say you have no evidence that at least modest tax increases won't create jobs, wouldn't help.

DEMINT: There's a lot of evidence that the economy in the '90s was created by innovation and explosion of technology in the '80s that paid off. But we could argue about that all day, John, but I don't think you are going to find many economists and even the president a few months ago said we can't raise taxes in a down economy.

The economy is worse now than it was then and so, it doesn't make sense for him to come back as part of this negotiation and say, okay we got to raise taxes in order to cut spending. We don't have a revenue problem.

We had historic levels of revenue for the last five years. And next year, we are projecting the highest level of tax revenue in history. What we have is a spending problem, spending has gone up 60 percent in the last eight years in our country.

We need to begin to roll back spending and devolve functions out of the federal level. The only way that we are going to do that is if we force ourselves to balance the budget.

Sometimes six or eight years out, we're not talking about next year. We're just talking about working our way towards a balanced budget and avoiding bankruptcy as a nation.

KING: You made a name for yourself, Senator, the last couple of years with your involvement in conservative cause, particularly the Tea Party. That is the subject of your book here, "The Great Awakening."

I'm holding up the cover here. You talked about two years that changed America, Washington and me. What is your message going forward into 2012 because as you know and write about in the book, you made a lot of enemies within your own party because you challenged the orthodox.

You challenged the establishment. You challenged the leadership. If your leadership cuts a deal with the president that doesn't get you a balanced budget amendment that maybe includes some tax increases.

What will you do as you do in 2010? Will as you did in 2010 look for targets out there including Republican incumbents?

DEMINT: Yes, I had to take on my party but now, I think our party is increasingly united around this fiscal problem and that unites with a lot of Americans. Over 70 percent of Americans don't think we should raise this debt limit and over 70 percent think we should balance our budget.

So that is our focus and I don't think that is hardly a radical thing to say 49 states have to balance their budget every year. It means they have to make tough decisions. It's time we make tough decisions in Washington.

KING: And so, are you confident you won't have to do it again. That you wouldn't have to go out there and target Republicans saying you haven't kept your word.

You haven't kept your bond with the Tea Party, or is that, maybe call it a warning, threat is a strong word. Is that out there for those who might be involved in these negotiations?

DEMINT: Well, Republicans don't need to worry as much about me as they do the voters. And I think voters expect a lot of this new class of Republicans that they sent last November. We need to keep our word and our word was that we were going to billion this budget and we were going to get control of the debt.

So I think that's responsibility and there won't be another point of leverage like we have right now with this debt ceiling for the next year or so. So now is the time and I think it's not an unreasonable request to let the states decide whether or not we should have a balanced budget.

And John, that's an important point. We can pass a constitutional amendment in Congress, but the states still have to ratify it. And after they do, it's five years before it takes effect.

So we have plenty of time to move in an orderly way that doesn't disrupt government services toward a balanced budget. That's my commitment to America and I think more and more congressmen and senators are making that same commitment.

KING: Senator Jim DeMint of South Carolina, sir, appreciate your time tonight.

DEMINT: Thanks, John.

KING: Next, live to mission control in Houston for an update on the last flight of the space shuttle program and an exclusive interview with us. Author Tom Wolfe tells us where he thinks Congress and NASA lost what you might call the right stuff.


KING: Tonight, the space shuttle "Atlantis" is on its way towards the International Space Station one last time. Its 12-day mission, which started this morning is the final flight of the space shuttle program.

Let's go back through some of the history. Here is your shuttle time line. The program started in 1981 that is how far it goes back. You see all the missions here in the '80s, different color for each of the carriers.

Here is the 1990s, look at that as well, through the '90s and then now, of course, into the past decade, plus 2011, you see right here "Atlantis" now on the final mission, STS-135.

What have we seen in this time? Dramatic. Look at that, miles traveled, distance traveled, "Columbia" and "Challenger." The two shuttles we lost. Of course, the tragic accident "Discovery," "Atlantis" and "Endeavour," you see the millions of miles they have flown over time.

It's quite amazing when you look at it how much did this program cost us? If you look at it this way, the space shuttle program and the "Apollo" program, they've come out to roughly the same, $200 billion, $170 billion.

But remember 11 Apollo flights, 137 shuttle flights. Earlier the Gemini and the Mercury programs costing less money here. One of the questions people ask, what do we get for this? What do we for this computer technology, a number of things, electronic banking advances, scheduling software out of the shuttle program.

Let's just look at something else here, consumer home recreation, a lot of different things that were perfected on shuttle missions you can now find around your home.

Tracking this last mission for us, mission control in Houston, CNN's Ed Lavandera. He's live with us. Ed, how is it going? ED LAVANDERA: Great, John. This has actually been rather fascinating place to kind of catch this glimpse of this moment in history so it has been a fascinating day for us.

KING: What can you see right there as you are tracking mission control? Take us around and give us a tour.

LAVANDERA: Sure. Sure. All right, if you look behind me here, just right behind me is where the flight director sits, and that is the person that they have teamed that will rotate here.

This will be manned 24/7 during the course of this mission. And what's fascinating is that there are very few monitors that actually show them video of the space shuttle. They're really just reading all those monitors you see down there. It's just full of data that they constantly monitor. The main map up on the mission control center here gives them the course of where the space shuttle "Atlantis" is in orbit.

Right now, just past the eastern seaboard and out over the Atlantic waters right now. So it has been fascinating to see just how quickly that space shuttle, "Atlantis," John, has been whipping around the earth, traveling at 17,500 miles per hour and it takes about 90 minutes to do a full orbit around the earth.

So they are already hard at work. The cargo bay has been opened up and they are planning to connect with the International Space Station Sunday morning.

KING: And Ed, as you are there, they obviously have a busy 12 days ahead at mission control, working around the clock. When you talk to folks, any sense of nostalgia that this is over?

LAVANDERA: You know, I think that is starting to settle in there. It was a fascinating day in the hours up to the launch this morning. Everyone in mission control was consumed with the weather situation. It was really a last-minute decision.

It was fascinating to see about three or four minutes before the launch, the intensity that was picking up in this room, the flight director, Richard Jones, pacing back and forth, scratching his head. One points, he said everyone give me a second, I need to think about some things.

So it was last minute and about two minutes before the launch, everything settled down, you could tell that they were confident that this was going to be a go and they kind of enjoyed the moment. Afterwards, we got speak with Richard Jones, he said, look, now it is really starting to sink in.

These people have to make sure that that shuttle crew gets home safely, that they complete the mission and then that is wasn't motion of this moment will really sink in.

Remember, there are a great deal of people who will be loses their jobs here in the coming months, some 2,100 people contracted to work and support the shuttle program. John --

KING: Ed Lavandera live for us in mission control. Ed, thanks.

Joining us now is the legendary author Tom Wolfe, among his remarkable works, perhaps the best book ever written about the early space program, "The Right Stuff."

Mr. Wolfe, thanks for being with us on this historic day. Watching a space launch, a shuttle launch in recent years, it's majestic. It is like a piece of poetry. I know you're not a great fan of the shuttle program itself, but when watch one of these, what goes through your mind?

TOM WOLFE, AUTHOR, "THE RIGHT STUFF": The only one I saw was at night and so that was really something. At the time, I remember thinking, who on earth would do this? Who -- this rocket was 35 stories high and this little thimble up at the top, the capsule, and somebody lights the fuse below and this huge thrust goes up and I just -- who is really -- be that was the beginning of my writing "The Right Stuff," my curiosity as to who does this.

KING: "The Right Stuff" -- it's a signature work. And it's a remarkable -- in some ways, a romantic account of the beginning of the space program. Why are you not such a fan of the shuttle program? Do you think it let down the early promise?

WOLFE: It is not that I'm a fan or not a fan, it's just that, obviously, Congress would not allow NASA to do what they should have been doing, to fulfill their destiny, not to be too grand about it. NASA had to settle for the shuttle program, which was a sad substitute for something as grand as building a bridge to the stars.

The shuttle program was really -- it was sold to Congress on the grounds that this would be something for civilians. Once they got things straightened out, they'd have civilians, every sort of type, riding, getting their space ride. Unfortunately, the first civilian sent up, Christa McAuliffe, a school teacher, died in the terrible disaster, Challenger disaster, 1986. And never again did they -- were they willing to send up another person.

And Congress was bored stiff with the space program from the very beginning, except that they had to do it to stay ahead of the Russians. Looking back at it -- I'm not the quite sure why we had to stay ahead of the Russians. But, anyway that was the motivation. Since then, Congress has wanted to say, hey, here's all this money, we can do other things with it. We can do inconsequential things with it. And so, funny now with all the budgetary concerns, the administration just said, well, we'll just knock it off, not do this anymore.

KING: Is that the right thing to do? Or should America have, maybe the shuttle program, in your view wasn't the right way. But should America be reaching for the stars, whether for scientific exploration, whether just for the romance of it?

WOLFE: Oh, I think definitely we should. Of course, it costs an enormous amount of -- it costs an enormous amount of money.

But -- in a way, even from a nationalistic point of view, to do that, to be the first to land on mars says something extraordinary about your civilization.

KING: If NASA lost its purpose, at what point was that?

WOLFE: It was, I would say, 10:56 p.m. on July 20th, 1969. That was the very moment that Neil Armstrong stepped on the moon. And in Congress, from that time on, OK, we did that. We beat the Russians. And now, let's use this money for something we like. And that was really the end.

The budget started declining immediately after success of Apollo 11.

KING: How will the shuttle program be remembered? What will its legacy be?

WOLFE: Well, think -- I'm not trying to be cynical -- I think it will be remembered as very game attempt to keep the manned space program alive. And they did a great job in doing that. Well, they didn't keep up so much interest in it. I mean, it's hard to believe that this flight today is 135th space shuttle flight. And so, many of them went by with the public having very little notice or very little realization of it that this was going on.

That's lot of flights when you consider the attention that was centered on every one of the -- of the early space shot, including all of the Apollo missions.

KING: And now, at least until we see what the next generation of NASA, the next generation of our manned spaceflight program might be, and it's an open question, this could be largely a commercial enterprise. You have entrepreneurs like Richard Branson saying I'm going to take civilians into space, I'm going to do what they said might happen with the shuttle program.

If Richard Branson were to call you up, Tom Wolfe, and say, you know, I love "The Right Stuff" and I think you're the guy I want on one of my first flights into space, what would you say?

WOLFE: I'd say pick somebody in his 20s.

Putting a team like this together is an extraordinary feat in itself. So much of the work is learned on the job, by trial and error. And you just simply cannot just put want ads in the paper and find people of this caliber.

KING: Sounds like you worried we may be closing a chapter and suffering irreparable harm because of it?

WOLFE: It's certainly giving up a great, great mission for man to not be able to go into space the way it was done, the Apollo program particularly. I wouldn't say irreparable harm but certainly we lost a chance to explore the heavens. And who knows what we'll find if we explore the heavens.

KING: Tom Wolfe, author of "The Right Stuff" -- always great read, particularly on this day as which watch the final shuttle mission take off.

Mr. Wolfe, thanks for your time.

WOLFE: Thank you, John, I have enjoyed it.

KING: Next, stories developing since the top of the hour. The most famous newlyweds in the world -- well, they've just arrived in United States and right now, they're heading for Beverly Hills.


KING: Welcome back.

Here's the latest news you need to know right now:

Just moments ago, the newlyweds arrived in California. The first stop of the three-day visit, conference of British and American venture capitalist in -- where else -- Beverly Hills. Prince William and Duchess Catherine probably had a bit more fun earlier today when they attended the Calgary stampede in Canada.

Africa gets a new country tomorrow, the Republic of South Sudan. It's declared independence from the North, which has agreed to let it go.

Crowds in the new capital city of Juba started celebrating early. Look at that.

United Nations has send 7,000 troops and 900 uniforms police to keep the peace.

After weeks of doubts and angry demonstrations against austerity measures in Greece, the International Monetary Fund released the equivalent of almost $5 billion tonight, which will help country defaulting on its debts.

Joints chief, General Mike Mullen, is heading to China where he is likely to face criticism for the United States' decision to take part in a weekend naval exercise along with Japan and Australia in the South China Sea.

When we come back, back to our top story, the depressing jobs report from the government. In the wake of that report, is President Obama's agenda helping or hurting?


KING: A horrible jobs report from the government today was a kick in the teeth to the Obama White House, proof not only that its efforts to strengthen the recovery are faltering, but also that unemployment is likely to remain high right up until next year's election. Is there anything the president can do to help? And is Washington's focus on deficit and spending cuts something that will help or maybe hurt the jobs market?

Joining us is Jennifer Granholm, the former two-term governor of Michigan. And Christina Romer, just a few months removed from serving as President Obama's top White House economist.

So, let me stand there thank you both for being with us.

I want you to listen to the president today. He came out after this report, obviously voicing concerns that we need to do more to create jobs. But, he says, one way to create more jobs is to getting a deal on deficit reduction.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We've got to rein in our deficits and get the government to live within its means while still making the investments that help put people to work right now and make us more competitive in the future.


KING: Dr. Romer, there are some who argued that's a contradiction, that the government can't be cutting spending right now, that that would actually have an adverse effect.

CHRISTINA ROMER, FORMER CHAIRWOMAN, OBAMA'S COUNCIL OF ECON. ADVISERS: Well, I'm sure what the president is talk about we absolutely have to pass a plan. I mean, he has to get a resolution of the deficit. We've got to get that debt ceiling raised. But I think you're right that if we were to actually do the spending cuts right now, or do the revenue increases right now, that would be hard on the economy.

So, the right thing is to pass the plan but then put it into effect much more gradually. And also, there's room in part of -- as a part of that plan to do actually more in the short run to stimulate the economy do that infrastructure spending that the president was talking about, cut payroll taxes again, as we did last December. Those would be things that would help job creation right now and could be part of that comprehensive package.

KING: As you know though, Governor Granholm, when you talked about infrastructure investments, Republican would say that's another fancy word for stimulus spending, which they say failed and which they say the Americans do not want. The president is in a bit of a box now, isn't he, because he has to do business with the Republican Party, Republican majority in House, that won't give him the infrastructure spending -- call it what you will.

JENNIFER GRANHOLM (D), FORMER MICHIGAN GOVERNOR: I think the Republicans are in a box, too. They're both in a box. And the question is, can they reach an agreement to get out of the box? They can't retreat to the partisan and extreme corners of both the Democrats and the Republicans. They've got to get a deal.

And they've got to deal because the point is, that people care about job creation, and this obsession with simply working on the deficit without recognizing that you have to invest in order to create jobs in this country is crazy. When you ask every day citizens, they care about creating jobs, yes, they care about the deficit. But they care about job creation, too.

And I think you can do both and the clearly, as Dr. Romer says, you got to get a deal first.

KING: Dr. Romer, why, I guess is the question. Why? You've studied this economy.

I just want to show something. If you show right here, I'm showing our viewers a chart. If you look at this recession, this yellow line is a recession, flat line in jobs. There are hardly any jobs being created in this economy, almost neutral the last couple of months, and yet if you look at corporate profits since we have come out of the recession, they're up nearly 50 percent.

Why is it that there are no jobs? But if you're the CEO or the board, you are making big bucks?

ROMER: Well, I think, you know, this recession has been different than other recessions. I think the fundamental problem we're facing now is still a lack of demand. We went through a horrible shock with the financial crisis -- we've been through a terrible shock for consumer, when they've seen the price of their homes collapse. I think all of that has taken a toll on how much consumers are willing to buy, how much firms are willing to invest.

And so, that's certainly what's still fundamentally holding the economy back.

KING: Governor --

GRANHOLM: I'm sorry -- I was just going to say, John, just to jump in on that. Can I just say, from my perspective, a slightly different take on it is that we have lost, as a nation, 42,000 former factories since the beginning of the year 2000.

Globalization and this shift in manufacturing jobs to low-wage countries has changed the dynamic. We are not in a cycle anymore. We are in a structural change to the nature of our nation's economy.

And so, we have to decide as nation, how do we intervene in order to create jobs here rather than seeing all of these jobs go overseas, which, by the way, helps to increase the profits of the multinational corporation and, obviously, pads the bottom line of those CEOs, not that they -- that's just what they do, right? They increase their profit margins.

But we, as a nation have to realize that without, for example, a manufacturing policy or a clean energy policy, or something that makes a good business case for those businesses to locate here, we are going to continue to see this shift in jobs and we've got to be serious about it. KING: Dr. Romer, I'm holding up a report dated January 9th, 2009, you were the lead author of this report. It's on what the administration thought would happen under what you called the Recovery Act, the stimulus program.

As you know, you are out of government now. But this is in many ways, Exhibit A for the Republicans when they say, "Aha, Mr. President, it didn't work" -- because if you go to page five of this report, you see a chart, it predicts, if the stimulus program passes, unemployment will not go above 8.1 percent.

Now, I know it's a tough business predicting the economy. I know a lot are surprised by the depth of this recession. But if you could get this back, would you like to say to the copy editors, "Please take that out"?

ROMER: You know, of course, I would. But I think the most important thing, you know, the thing that we said in the report is what the Recovery Act would do would be to save or, create some 3.5 million jobs. And every single report that's come out from -- you know, whether it's the Congressional Budget Office, private forecasters like Goldman Sachs, to the Council of Economic Advisers, had said it has done that. I mean, yes, we got the baseline wrong. We did -- we like all the other forecasters -- did not realize how terrible this recession would be.

But in terms of what the policies did, I think there's actually a very strong professional consensus that absolutely, the Recovery Act did what the president said it would do. It just wasn't big enough relative to the problem that we ended up actually facing.

KING: Dr. Romer, Governor Granholm, I want to thank you for your time.

What the viewers don't know is you went through a lot of technical glitches, I'll call it, with us to make -- to get this on live tonight. I appreciate your patience through that. Thank you both very much. Have a great weekend.

When we come back, Moammar Gadhafi threatens Europe. Is he serious?

Stay with us.


KING: Eventful and important Friday across North Africa and the Middle East.

Thousands marched in Syria to show their opposition to a government-backed dialogue process that's supposed to start this weekend. The demonstrators said no ideologue can begin until government thugs stop attacking people. Security forces just today killed at least eight.

Tens of thousands filled Cairo's Tahrir Square today, demanding Egypt's government speed up the pace of reforms. You not only saw the faces of change today, we also saw the faces of resistance.

Yemen's president appeared on TV for the first time since he was injured in a rebel attack last month, saying he won't step down.

And on a speech broadcast on Libyan television -- get this -- Moammar Gadhafi threatened to send hundreds of martyrs to launch attacks in Europe.

Lots to digest and discuss with Nicholas Burns, a veteran diplomat, and CNN national security contributor, Fran Townsend, who advised President Bush and is now on the external advisory board at the Department of Homeland Security and the CIA.

Let's start with Gadhafi's defiant message. The NATO military campaign, the opposition in his country, clearly, have been unable to knock him from power. S o, he goes on state television today aiming his fury at NATO and says this --


MOAMMAR GADHAFI, LIBYAN LEADER (through translator): We love martyrdom, tens, hundreds and thousands of Libyans might become martyrs in Europe. We will target their houses, their offices, their children and their women -- the way they targeted ours. I have told you it is a tooth for a tooth, an eye for an eye. They know that. But we give them a chance, a chance that may not last for long.


KING: Nick Burns, ranting, rambling. Does he have any potential, any capacity of sending attacks -- martyrs into Europe?

NICHOLAS BURNS, FORMER U.S. AMBASSADOR TO NATO: John, any time they make a threat like this, you have to take it seriously. Remember, Gadhafi sent agents to kill American servicemen in Berlin, at the La Belle disco attack in 1986. And he infamously and brutally brought down Pan Am 103 in December 1988.

So, he's done this kind of thing before, but this threat things hollow to me. There aren't tens of thousands or hundreds of thousands of Libyan citizens who would be willing to go to Europe for Gadhafi. They wanted -- most of them want to overthrow him.

And, John, it doesn't make sense what Gadhafi is trying to accomplish. He wants to cut a deal with the European governments, either to stay in power or to exit gracefully without an indictment. And if he carries out such attacks, he's going to anger the European populations and the European governments to want to bring him down more aggressively.

So, this one is Gadhafi at his rhetorical worst and it does ring hollow to me.

KING: If it rings hollow, it does beg the question, though, does he want a negotiated deal or is he perhaps unstable? FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Well, I haven't met him but I've always believed he's unable. But Nick is right. I mean, this is a guy having done these attacks -- these kind of things before, you've got to take it seriously.

I do think now, at this point, he has said he wants to be a martyr. He wants his blood on Libyan soil. But I think if they could find a way to cut a deal that didn't involve him being surrendered to the International Criminal Court where he's been indicted, he might -- he might take it.

KING: I don't want to spend too much time on this, but either of you -- Nick, to you first, do you think President Saleh will ever return? He's in Saudi Arabia, being treated. Does he have any chance of going back to Yemen?

BURNS: He just might. Apparently, you saw the statement he made. He was badly burned and badly injured. It may be months before he can go back to Yemen.

But his supporters are running the country. His family members are still there. He doesn't want to give up power. He is the great survivor in Middle East politics.

I wouldn't count out the possibility of him returning to power in a couple of months.

KING: Do you agree with it?

TOWNSEND: I think that's right. I mean, he is tenacious. Clearly, the Saudis and the U.S., nobody wants had him to go back, but the fact that he didn't relinquish power in his statement is an indication that he wants to hold on.

KING: We were all together in the early days of the remarkable revolution in Egypt. It ahs been months now, the caretaker government is there, and many of those protesters who brought about the change, they are worried. They think these guys are too slow to bring Mubarak to trial, too slow to bring about democratic reform.

Listen to a sampling from Tahrir Square today.


UNIDENTIFIED FEMALE (through translator): To us, it feels like Mubarak is still there. He might not be the president but very little has changed. It is still like a dictatorship. There is no freedom.

UNIDENTIFIED MALE: Nothing changed. Nothing. Just the face and the name.

UNIDENTIFIED MALE: Our army doesn't protect our revolution. They're protecting themselves, protect the old system, the old guys.

(END VIDEO CLIP) KING: Nick Burns, on the one, obvious frustration. On the other, you might say, hey, they have a right to demonstrate and make demands of their government.

BURNS: Well, they certainly made progress in Egypt. But you know what, John? I think that the demonstrators, the opposition in Egypt, is very concerned that the political time line is going to favor the Muslim Brotherhood -- early elections and early constitutional reform. They want to lengthen that out.

You see they're using these Friday demonstrations in effect to pressure the government and that's very effective tactic by the Egyptians. You're seeing it in Syria, as well, with these extraordinary demonstrations today in Hama and Hums and other cities.

KING: Is the Egyptian government moving fast enough?

TOWNSEND: This frustration was inevitable. They were never going to be able to move at the pace the Egyptian people wanted them to. So, I think that we had to expect this.

KING: And we'll keep an eye it. Nick Burns and Fran Townsend, thanks for coming in, an important day in the Middle East.

That's all for us. We'll see you Monday night right here.

Coming up CNN presents "Beyond Atlantis: The Next Frontier" is next. Have a great weekend.