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STATE OF THE UNION WITH CANDY CROWLEY

Interview With David Plouffe; Interview With Senators Alexander, Warner; Interview With Mitch Daniels

Aired September 25, 2011 - 09:00   ET

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


CANDY CROWLEY, HOST: The House and Senate in a stare-down over a shutdown. Perry stumbles and Bachmann tumbles in an unstable Republican field, and the president pushes his agenda in full-bore campaign mode.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: I'm a warrior for the middle class.

(END VIDEO CLIP)

CROWLEY: 408 days until the election.

Today -- jobs, debt and re-election with White House adviser David Plouffe. Political stalemate in congress with two moderate senators, Republican Lamar Alexander and Democrat Mark Warner.

Then Indiana Governor Mitch Daniels on the GOP presidential field. And 2012 politics with "USA Today's" Susan Page and "Time" magazine's Michael Crowley.

I'm Candy Crowley -- and this is State of the Union.

Mark this down as the week Barack Obama took ownership of the economy, more precisely it was given to him. A "USA Today"-Gallup poll shows that for the first time a majority of Americans, 53 percent, feel that President Obama is greatly or moderately to blame for the economy. More people still blame former President George Bush but President Obama won't be running against George Bush next year.

With me now, David Plouffe, campaign manager Obama's 2008 presidential campaign. And now senior White House adviser. David, thank you so much for joining us.

Let me start -- before we get to the politics of it, which is fascinating to all of us, let's get to the jobs part -- and the president's jobs bill. Would you be open to breaking up this bill for the parts that you know you could get agreement on?

DAVID PLOUFFE, WHITE HOUSE SR. ADVISER: Well, the president has been very clear as he's traveled across the country and in the speech to congress that he thinks this -- the American Jobs Act would have a profound impact on our economy right now. It would put a lot more people back to work, put more money in the pockets of workers, put construction workers, teachers, veterans, back to work, help small businesses all across the country. This is what the economy needs right now.

And the question is if you think the economy's doing okay I guess you're not going to act. But if you think this economy is far too weak and needs a jump-start -- so we expect there will be a vote on the entire American Jobs Act at some point in October in the Senate. We're going to keep making the case. And by the way, these are things that generally would not be highly controversial. There's things that have broad bipartisan support in the past.

CROWLEY: But you know, and I know the president knows because both of you do understand politics, that there are going to be things in this, particularly when it comes to paying for it, that the Republicans won't agree to. The Republicans have said well we can agree to certain things, including the infrastructure bank which is important for creating jobs.

So push coming to shove, would you rather take parts of it or do you have to have the whole of it?

PLOUFFE: Well again, there's going to be any number of hypotheticals in the coming months, but we're going to continue to demand this type of action that is going to have a profound impact on the economy right now aimed squarely at the middle class. So the question really for folks in congress is do they want to go back at the end of the year and report back to their constituents that they didn't do anything to help the economy create jobs, help the middle class.

When we think at the end of the day there's going to be some action here. We think it needs to be the American Jobs Act is aimed squarely at providing the jump-start the economy right now, but it is part after long-term economic strategy. Get our fiscal house in order in the long term, continue to build new industries in high-tech manufacturing, investment in education, but the economy is far too weak right now. It needs a jump-start. That's what the American Jobs Act is intended to do.

CROWLEY: The president in his various appearances around his country pushing for the jobs act has been quoting Mark Zandi from Moody's Analytics about how many jobs this would create. Mark Zandi certainly a guy that a lot of people quote. And I want to put up for our audience something that Zandi said to the Associated Press on Saturday.

When he says he sticks by his numbers for 2012, but he says beginning in 2013, and certainly into 2014, the plan is a drag on the economy because the stimulus starts fading away. So by 2015 the economy is in the same place as now, as if there were no jobs package.

PLOUFFE: Well, it just -- that statement points out how weak the economy is right now. And I think that if you don't act right now, the economy's going to be in a deeper hole. So we have to do some things right now to immediately jump-start the economy, but that will help lead to more consistent positive economic growth. Investments in small business, investments in roads and bridges and ports, our schools. In many states teachers are being laid off. You know, we don't have students learning.

Listen, they're competing against kids...

CROWLEY: I guess his point is that they'll still be laid off when the stimulus money runs out.

PLOUFFE: Well listen, I think that we can act right now or we cannot act right now. And if we act right now it is going to be part of strengthening this economy. This economy will eventually begin to fully recover and this is going to be an important part of it, because obviously we had a couple of months early in the year where we had some very significant job growth. But we're not producing enough jobs, we don't have enough growth.

There's a lot of headwinds out there. We see what's happening in Europe right now. Another significant headwind on our economy. So we have to act right now and do some things.

And listen Mark Zandi and others have looked at the American Jobs Act, up to 2 million jobs, drop of unemployment right by a percent. It will help us grow...

CROWLEY: ...signed on to what he thinks will happen in the out years?

PLOUFFE: We think these things can have a profound impact not in the next year or year-and-a-half, but provide a foundation for longer term growth as we go through the decade.

CROWLEY: Let me ask you, a lot of economists I talk to say there can't be any recovery until the housing industry recovers. Do you all have anything else in the works, any kind of debt restructuring for homeowners who are under water, or those about to lose their homes? Is there something else you can do?

PLOUFFE: Well, obviously the best thing we can do for the housing market is to have the economy recover. You know, if you were able to drop the unemployment rate by a point, that's going to have a profound impact on the housing.

CROWLEY: But you all say it will be around 9 percent this time next year.

PLOUFFE: Well, we have to -- so the fundamental recovery of the housing market is going to be twin to a recovery in the economy, but there are some things we can and we have done. We announced additional forbearance so that people who have been unemployed have more time in terms of their home loans.

The president announced in his jobs speech and plan two significant items: one a neighborhood stabilization fund to allow local communities to rehabilitate, tear down, turn into rental housing refinancing proposal that would allow millions of Americans to save $2,000 a year. And we're going to be exploring additional ideas. We're going to have to throw everything we can at this.

CROWLEY: But there are other things you can do, such as?

PLOUFFE: Well, are are -- as I said, we announced those two in the jobs package. We think a refinancing proposal to give the average family $2,000 a year would be significant taking advantage of these historically low interest rates. We've obviously got in many urban areas in particular, you've got homes that are in need of repair, even demolition, turn them into rental. That would be an important thing to do.

But obviously we're going to look at every other idea out there. And again there is not going to be any silver bullet. It's going take a lot of different things to make an impact.

CROWLEY: You heard that poll coming in to this interview that more and more people think the president is at least moderately to blame for the state of the economy. What then is your pitch in 2012? If it is going to be on the economy, you all know and have predicted it will be slow through next year. It seems as though you can't run on the economy.

PLOUFFE: The American people understand it took us a long time to get to this point. It's going to take us a long time to get out. And for the middle class, this wasn't just about what happened in 2008 in the great recession. For a long time they've been seeing their wages stagnate, they are falling farther and farther behind. That's the central mission for our country and for President Obama.

CROWLEY: A couple quick questions as we close this out. Does the president expect to make any major changes in the White House staff or in his cabinet between now and the election? Any of that in the works?

PLOUFFE: I think the president is very confident in his team, in the direction we've laid out here. We've laid out for the American people a clear plan for immediate action on the economy through the American Jobs Act, an approach to our long-term fiscal future that we think is smart and balanced.

So no, I think he's got a good plan. He's got a good team to execute that.

CROWLEY: So no major changes in either staff or cabinet that you can say particularly on the economic part of the cabinet.

PLOUFFE: I don't expect that, no.

CROWLEY: OK.

And let me ask you about Pakistan. We had Admiral Mullen, chairman of the joint chiefs out there saying, look, Pakistan supported the Haqqani Network attack on the U.S. embassy. You now have the Pakistanis firing back saying U.S. policy is confused and in disarray. What is the state of U.S.-Pakistan relationships right now?

PLOUFFE: Well, we've made it clear and Admiral Mullen and Secretary Clinton talked to their counterparts in Pakistan as recently as this week, that obviously with the Haqqani Network there are safe havens there that are being abided and there are links. And so the message is...

CROWLEY: ...so this seems a little ratcheted up.

PLOUFFE: Well, the message has been clear that obviously the Haqqani Network provides great danger to the people of the Pakistan, to the United States, to other countries, and those links and those safe havens -- you know, we are continuing to insist that the Pakistani government make clear and take action to make sure that these safe havens and these links are eliminated because it is providing clearly the situation where they are free to operate in a way that's quite dangerous.

CROWLEY: And again that's kind of been so for some time now. This is now saying that Pakistani -- an arm the Pakistani government, the intelligence arm of the Pakistani government supported an attack on U.S. embassy. Can you let that stand?

PLOUFFE: Well, listen. We obviously continue to engage in a great deal of cooperation with Pakistan as it relates to al Qaeda. 20 of the top 30 al Qaeda leaders have been eliminated, including obviously Osama bin Laden. So we've made great progress here.

PLOUFFE: But obviously we are going to continue to intensify and make the case that any arm of the Pakistani government that's providing aid and comfort, and providing safe haven for the Haqqani network, we can't abide that.

CROWLEY: Or else?

PLOUFFE: Well, we're going to continue to make the case in every way possible -- as I mentioned, Secretary Clinton, Admiral Mullen were meeting with our Pakistani counterparts as recently as this week. We have got to continue to try to make progress on this.

CROWLEY: Haven't you been making the case for some time?

PLOUFFE: Well, we have been making the case for some time.

CROWLEY: So doesn't there have to be an "or else"? Like end of aid? We give them billions.

PLOUFFE: Yes. We have. And obviously there has been obviously some, I think, mention that some aid could be in jeopardy here. But I think that we're going to continue -- we have to work closely with them obviously in terms of the fight against al Qaeda in that region.

But at the end of the day, we have to continue to make the point, yes.

CROWLEY: Just to pinpoint this. You would think about cutting back aid?

PLOUFFE: Well, again...

CROWLEY: You agree to that approach?

PLOUFFE: ... those discussions are happening between our foreign policy and national security teams. And obviously we need to continue to have as much cooperation as we can, but we cannot abide the situation where the Haqqani network is being provided safe havens.

Any links there need to be decoupled and that's going to be a very important aim for us in the coming period of time.

CROWLEY: David Plouffe, senior adviser at the White House, thanks for joining us.

PLOUFFE: Thanks, Candy.

CROWLEY: When we come back, round three of a looming government shutdown, we look for some common ground with senators Mark Warner and Lamar Alexander.

(COMMERCIAL BREAK)

CROWLEY: Joining me to talk about the latest budget showdown in Congress, from Nashville, Republican Senator Lamar Alexander of Tennessee, and here with me, Senator Mark Warner of Virginia.

Gentlemen, thank you both. We are now in the midst of a discussion about a third government shutdown in a year. Let me start with you, Senator Warner, and ask you if you think there is a point at which you think this is embarrassing.

SEN. MARK WARNER, D-VA.: Yes, it is embarrassing.

CROWLEY: Are we there?

WARNER: Can we, once again, inflict on the country and the American people the spectacle of a near government shutdown? I sure as heck hope not. If we're going to have the discussion right now, it is about how we pay for emergency assistance. FEMA.

The Senate passed, with the support of Republicans, a FEMA legislation that would fund it for a period of time.

CROWLEY: Federal Emergency Management Agency...

WARNER: Yes, yes.

CROWLEY: ... which helps people after Hurricane Irene, anything...

WARNER: Through disasters, through disasters.

And we've seen now come out of the House, driven by a small group within the House of the tea party crowd, that says, hold on here, the deal we cut at the end of July that said we're not going to try to do another fight, at least through the balance of this year, about the budget numbers, that deal is no longer being put in place and there is this effort that's my way or the highway again.

And the Senate is saying, and I -- we're going to be back in on Monday, why should we in effect rebuild schools in Iraq on the credit card, but expect that rebuilding schools in Joplin, Missouri, at this moment in time have to be paid for in a way that has never been in any of the previous disaster assistance that we've put out before?

So I think we ought to find a resolution to this. I think there is -- you know, the choice is between pay for it all now or never pay for it. I think there are alternatives, let's do a rolling 10-year average to pay for disaster relief the way we laid out in our so- called "Gang of Six" plan.

But at the end of the day, the most important thing is, we should not end up getting an eleventh hour shutdown potential on Friday.

CROWLEY: Senator Alexander, let me ask you if you buy into Senator Warner's premise, which is that tea party folks are basically at fault, I think I'm -- that's not a direct quote, but that the tea party-backed folks in the House are the ones behind this stalemate that is now threatening yet another government shutdown. Do you agree with that?

SEN. LAMAR ALEXANDER (R), TENNESSEE: No, I don't. You know, I'll give the Senate Democratic leader most of the credit. He manufactured a crisis all week about disaster when there's no crisis.

Everybody knows we're going to pay for every single penny of disaster aid that the president declares and that FEMA certifies. And the House sent over a bill that does that and the Senate should have approved it.

What it did was take $1.5 billion of unobligated funds and say, we're going to -- instead of adding to the debt we're going to not add to the debt when we do this.

Now what we should have been doing this past week is all we could do to create an environment so the work that Senator Warner, Senator Chambliss, and others have done to reduce the debt by $4 trillion succeeds. That would have been a good use of the week instead of this chest-pounding and game-playing that has been going on.

CROWLEY: Well, we kind of are where we are. And Monday, as far as we understand it, there will be a key test vote in the Senate which is not -- the Senate version at this point being, we will accept the spending levels in the House bill for Federal Emergency Management Agency and other things, but we will not do the offsets or the pay- for-it parts of the House bill.

It looks like that's not going to happen. It looks like that cloture vote, as we call it, it is a test vote, will fail. What then, Senator Alexander? ALEXANDER: Well, that's up to Senator Reid, Senator McConnell, and others. But let's be clear about this. We spent all week talking about this with Senator Reid saying we had to have $7 billion, when that hadn't -- when nobody certified that much damage.

Then on Friday the Republicans said, OK, let's vote today. Let's not wait over the week, so he puts it off until Monday. I don't like this business of sitting around blaming each other over such small potatoes.

What we really ought to be doing is spending time to see if we can get $4 trillion in debt reduction. Senator Warner, Chambliss, and others have rounded up 37 senators, equally divided by party, who agree we should do that.

We'd like our super committee to succeed. If we could do that we could begin to get the economy in better shape and gain some confidence in the country. CROWLEY: Senator Warner, back to the sort of the larger question, rather than the inner workings of this bill, and that is Secretary Geithner actually put it this week, he talked about how our global trading partners think that the U.S. political system looks manifestly broken.

Is there something that you could -- I mean, and you hear this, I mean Senator Alexander saying this is -- we're talking about the wrong thing, this was a manufactured political debate, regardless of whether you agree with him -- you think it was a manufactured political debate, too, although you blame different people.

So why can't we -- why should we look at this and go, you know what, this should be the year the anti-incumbent -- just vote for any name you don't know.

WARNER: Well, I think -- I agree with Senator Alexander that we need to get back to the single biggest thing we can do to actually restore some confidence both internationally and domestically and that is put in place a long-term $4 trillion debt reduction plan. I think that would give confidence back to consumers to start spending, businesses who are -- actually large businesses who are sitting on a couple trillion dollars of cash on their balance sheets. I think that would be very, very positive.

And Senator Alexander's been very supportive of this effort. We've got an equal number of Democrats, Republicans trying to do this.

But I would say I mean, one point about who to blame or not to blame on this current hopefully non-shutdown is that there is a group -- I do believe it is mostly centered in the House in terms of some of these Tea Party Republicans -- who say on every issue we're going to make this a make-or-break. We saw it on the FAA when they shut down the Federal Aviation Administration. We're seeing it now on this debate about FEMA.

We should be able to have a legitimate debate about emergency aid. Why link that into a government shutdown or not? And so my hope is that cooler heads will prevail on this short-term so-called continuing resolution budget extension.

But I -and I do agree with Senator Alexander, we've got to get back to the bigger issue which is how do we send confidence back to the American public and to the markets. The only way we're going to get that done is if we actually, Democrats and Republicans, start being Americans before they put on their partisan hats.

CROWLEY: It is sort of what we've been talking about for a long time now. It never quite seems to happen.

Let me move you to the so-called super committee which is looking to find -- has to find $1.2 trillion to $1.5 trillion in savings that everyone can agree on by the end of the year. This seems to me to be a very tall order. And it also seems to me that we are seeing more and more stories now about how this is not going to happen. Can you all afford to not come up with some agreement? Because then, as you know, supposedly automatically budgets will be cut... WARNER: Here's the circumstance. Every economist that I've heard of has said that if we don't get $4 trillion in debt reduction over the next ten years, then we're not going to put our economy and get ourselves the debt-to-GDP ratio on a sustainable path. The challenge the super committee's got is we've cut about $1 trillion. Even if they do $1.5 trillion more, that's really not going to be enough.

So we've got to go ahead and say to them, go ahead and take on tax reform and generate some additional revenues, take on entitlement reform and make sure programs like Medicare and Social Security are going to be there for the next 75 years.

And what our group is trying to say, Democrats and Republicans alike, business leaders, if you will do that we got your back. If you will go big, we will stand there and be supportive, because this is a once in a long time opportunity, because whatever they come up with will get a straight up or down vote. That doesn't often happen. And we can actually then cut out the rhetoric and see where you stand on this issue.

CROWLEY: Senator Alexander, I'm going to give you the last word on this. I know that you hope that the super committee can go big or can at least go to what it's supposed to be doing. But I want you to tell me what you honestly think will be the work product of the super committee.

ALEXANDER: Well, I'm not sure exact -- I'm not sure the details, but I'm hopeful, I'm optimistic. The budget agreement that we agreed on in August is better than people think. It took 40% of the budget, the discretionary put, everything from national defense to national parks, and it's got it going up over the next ten years at about the rate of inflation, 55 percent that's mandatory spending is going up at three times the rate of inflation.

I hope that the super committee works on that part of the budget. And I'm willing to define success in terms of what happens not just in the next ten years, but the ten years and the ten years after that. Because as Mark said, we're looking at 75 years of solvency for Medicare, Social Security and these other programs. And if they make real progress in that area I think that would be success as well.

CROWLEY: Tennessee Senator Lamar Alexander, Mark Warner, senator from Virginia, thank you both so much.

Up next another Republican presidential debate that left more questions than answers.

(COMMERCIAL BREAK)

CROWLEY: Six Republican presidential debates so far and a lot to ponder. Rick Perry's less than boffo performances.

(BEGIN VIDEO CLIP)

PERRY: As a matter of fact, between books your hard copy book you said that it was exactly what the American people needed to have that Romneycare given to them as you had in Massachusetts.

(END VIDEO CLIP)

CROWLEY: And Michele Bachmann's suggestion that the president is so weak, Republicans can choose a conservative candidate instead of a moderate one deemed more electable.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MINN.), REPUBLICAN PRESIDENTIAL CANDIDATE: Every four years conservatives are told that we have to settle. And it's anybody but Obama, that's what we're hearing this year. I don't think that's true. We need to choose a candidate who represents conservatives and constitutional conservative positions.

(END VIDEO CLIP)

CROWLEY: And whether Governor Perry's Texas decision to give college tuition assistance to the children of illegal aliens will cost him part of his conservative fan base.

(BEGIN VIDEO CLIP)

PERRY: If you say that we should not educate children who have come in to our state for no other reason than they've been brought there by no fault of their own, I don't think you have a heart.

(END VIDEO CLIP)

CROWLEY: And has the rest of the Republican field become just background noise?

Next up -- a man who thought about but ultimately backed away from his own presidential bid, Indiana Governor Mitch Daniels.

(COMMERCIAL BREAK)

CROWLEY: Joining me here in Washington, Republican Indiana Governor Mitch Daniels whose new book is called "Keeping the Republic: Saving America by Trusting Americans."

Governor, thank you for being with us today.

GOV. MITCH DANIELS (R), INDIANA: Glad to be here.

CROWLEY: Appreciate it. I want to start off talking a little bit about the Republican field which you chose not to join, and ask you to size it up for me. You're watching from afar as most Americans are watching right now. They're not as intensely involved as, say, reporters and...

DANIELS: Maybe further than some of them, yes.

CROWLEY: Who do you think is standing out at this point in the Republican field?

DANIELS: Well, I don't have anything original to say. I think the two governors, Romney and Perry, seem to be getting the most attention and for the moment at least seem to be the dominant personalities in the race.

CROWLEY: I wanted to play you something that Mike Huckabee said about Governor Perry's performance in this past debate.

(BEGIN VIDEO CLIP)

MIKE HUCKABEE (R), FORMER PRESIDENTIAL CANDIDATE: I think Rick Perry is not prepared for the pressure of the presidential stage yet. Rick Perry has got a struggle ahead of him.

(END VIDEO CLIP)

CROWLEY: Now you add to this that The Weekly Standard, a conservative publication, called it almost disqualifying, speaking of Perry's performance in the debates. He seems to be fading partially because running for governor is not the same as running on the national scene.

Do you envision a Republican Party that at this point would pick Rick Perry?

DANIELS: Yes, maybe. I think it's way too early to know or to issue -- pronounce last rites over one performance. There are so many of these -- too many maybe. And so let's -- he hasn't been in it that long. I understand what Governor Huckabee was saying, but I'd cut him a little slack, give him a little time.

CROWLEY: One of the things that you have said over time is that you've been a little disappointed of the things the Republican field has chosen to take up. The things that they're saying. What in particular do you think they're not talking about?

DANIELS: I don't think they're yet talking about the things that the two senators just spoke to, you know, the things that have a lot of zeros attached to them, the ones that are threatening to kill not just an economy but the entire idea of America, the idea of upward mobility from the bottom and tomorrow is better than today.

And so I'm hoping that things will evolve. I'll tell you what's bothering me a little bit, Candy, the president is clearly in very desperate political shape. And it seems more clear every day. And I worry a little bit, ironically, that the Republican field or our nominee might look at that and say, I'll just play it safe, I'll get elected as the default option, you know, he made it worse, I'm not him, vote for me.

And that will be, I think, a huge missed opportunity because there's a clock ticking. This is not a philosophical argument I make in this book or anywhere else, it is arithmetic. And very encouraging, by the way, to hear a guy like Senator Warner speak to it as clearly as he just did. I wish he were president.

And so I just hope...

CROWLEY: There's a little bipartisanship there, a little bit, right? A Republican governor.

DANIELS: It's going to take that. You know, the Brits have a great saying, now that the money has run out we shall have to begin to think. And I just hope that even though the chances of electoral success next year look pretty good to me and better all the time, next year I think should be seized as an opportunity to talk with all our fellow Americans about this common problem.

It threatens us all, left to right, R and D. And I hope our party -- I mean, this president is not going to do it so it has to be our nominee.

CROWLEY: In fact, you said in your book, that debt -- U.S. debt, that's what we're talking about here, is more likely to sink democracy or personal freedom than in previous times when the Soviet nuclear threat was seen as the big danger to democracy.

Just explain that in terms of what happens if we have a debt? Because there is this feeling that, well, debt doesn't actually matter that much, there doesn't seem to be that kind of urgent -- there's politics to it, that's where the politics are right now, but is it where the urgency is?

DANIELS: Well, it needs to be. Because it is a mathematical fact that we are headed for debt levels we cannot sustain. In simple terms...

CROWLEY: Well, what would that mean practically speaking?

DANIELS: In practical terms it would mean that the mortgage payments, just the interest payments that we are making as a federal government, not to mention states and even private citizens, is consuming so much money there is not enough left to hire anybody.

It is consuming so much money on the public side, by the way, that public education will be devastated. And so -- and it means... CROWLEY: So lower money -- higher interest rates for -- on everything, and less money to spend on things we might want to spend on.

DANIELS: Too much money going to the mortgage and not enough to pay the rest of the necessities of life. It is very clear, and, again, it is not ideological in any way, it is very clear that nations that go past a certain point of debt do not recover.

You know, the heart of my concern has to do with the promise of America and we're starting to see that fraying around the edges. And without an America in which people really believe, that even if things are tough today, they are going to be better, and my kids will live better, without a stable, hopeful middle class, we'll lose something even more precious than material well-being, we'll lose the self- governance that we've brought to the world.

CROWLEY: The underlying premise of your book, "Keeping the Republic: Saving America by Trusting Americans," is that Americans will step up to the plate if you just tell them the truth, if you lay it out for them. Who is not telling the American public the truth and what is the truth, as you see it, that we can handle?

DANIELS: Well, the truth is that we just talked about the first -- again, arithmetic fact. It's not a matter of opinion, it's math. Secondly, that we cannot possibly continue on with the safety net programs we have in exactly their current forms.

CROWLEY: Social Security, Medicare, Medicaid.

DANIELS: That's right. That's right. We can say to today's and even those entering the program, today's seniors and those entering in the next few years, don't worry about a thing, nothing changes for you, you are good to go, a deal is a deal.

Now, please join with us and let's create new programs starting in the future that mean that the young people who are paying for your retirement have some protection, too. And those programs will have to look different. They will have to stop sending checks to the wealthiest citizens, for instance. But, you know, this is what Mark Warner was talking about and Senator Alexander, and, you know, the sooner people from both sides concentrate on that problem and then all the rest of the grossly excessive federal government spending that we're doing, the sooner we can get on the way to an economic recovery.

CROWLEY: Indiana Governor Mitch Daniels, thank you for joining us. The book is "Keeping the Republic." I appreciate your stopping by.

DANIELS: Thank you.

CROWLEY: And after the break, Governor Perry takes a distant second to Herman Cain in the Florida Straw Poll. Is Perry's front- runner status in jeopardy? We're going to ask our panel.

(COMMERCIAL BREAK) CROWLEY: Joining me now, Susan Page, Washington bureau chief for "USA Today," and Michael Crowley, deputy Washington bureau chief for "Time" magazine who we forgive for pronouncing his name incorrectly.

Let me start with the Florida straw poll results in which we saw Herman Cain take 37.1 percent of the folks voting down there, Florida activists, followed by Rick Perry and Mitt Romney virtually tied 15.4 percent, 14.0 percent, down to Santorum and then Ron Paul.

So this was characterized as a big surprise that Herman Cain was everybody's second choice and became everyone's first choice after the debate.

You buy that?

SUSAN PAGE, USA TODAY: You know, I was down there, I talked to a lot of delegates yesterday coming in. And, yes, there were a lot of delegates who said I wanted to vote for Rick Perry, but I was concerned about his debate performance, but even more that than that, about his stance on immigration.

And then he didn't show up with the speeches to the convention yesterday afternoon. Herman Cain was there, gave a real stem-winder of a speech. And I think that just tipped people, people were quite -- not quite ready to endorse Rick Perry. And Herman Cain gave them a place to be.

CROWLEY: Because we're getting a lot of talk now that Perry's fading and part of it is his -- we should just explain that his immigration stance being that he gives in-state tuition aid to the children of illegal aliens and this makes him -- this is not a popular position inside the -- certainly not a conservative position inside the Republican Party.

Do you think he is fading a la Michele Bachmann in that it is hard to see a path for her toward the nomination? Or is this a temporary thing?

MICHAEL CROWLEY, TIME MAGAZINE: Well, I don't know if it is temporary. I would be very surprised if he disappeared the way Bachmann has. It's been incredible the way she essentially vanished, in large part due to Perry.

But I think he has much more credibility as a president. I think his electability case is much stronger. Obviously he's run the largest or run of the largest states in the country for a decade. He has much more establishment support.

But he's clearly failed to close the deal early on. And I think you do still see there's this energy on the right of the Republican Party, this kind of desire for a visceral satisfaction that you got first from Donald Trump, then from Michele Bachmann, now maybe Herman Cain is having his moment.

And I think Perry's profile has enough gaps in it on the right that that's still going to be sloshing around for a while. He's got to find a way to lock those people down if he wants to put Romney away.

CROWLEY: And let me, we also had another straw poll from Michigan this morning and I think it was 50 -- more than 50 percent here, 50.9 percent, the Mackinaw straw poll, Rick Perry 16.8.

So Mitt Romney runs away with it now. Mitt Romney is basically the hometown boy in Michigan. His father was governor there and this is activist Republicans, Romney's a very familiar name.

Is there anything we should read into any of these straw polls?

PAGE: I think that -- you don't want to over interpret straw polls, because what the 600, 700 people in Michigan voting in that, 3,500 in Florida. But they do tell you that the race is continue to be unsettled.

I think what we've learned this weekend is that there's going to be an extended fight between Mitt Romney and Rick Perry. They both have some strength. They both have a considerable amount of money, we think, the ability to raise money. And neither of them have closed the deal. That's what I take away from this weekend.

M. CROWLEY: And can I just point out that Mitt Romney has been an incredibly lucky candidate. When he was sort of coasting along above the fray as the front-runner, you know in the spring and summer the other candidates didn't really want to engage too much on one another. They were introducing themselves. Tim Pawlenty was famously shied away from attack in a debate, which was a key reason why Pawlenty got out of the race.

And then when we got to the fall and it was time, all right, everybody gang up on the front-runner. Well, there was a new front- runner, it wasn't Romney anymore, it was Rick Perry.

And now Herman Cain steals the straw poll in Florida. Romney was not a force in the straw poll, but we're not talking about that. And then they go right to Michigan, which is Romney's home turf. I mean, one break after another. I do think sooner or later we're going to start a conversation about all these flip-flops in Romney's record. I think Perry is really going to look forward to that. And the pack is going to turn on Romney as the front-runner in the way that they have on Perry. So that's why I think it's a little early to say Perry is done and Romney has got it. CROWLEY: I saw a poll recently that said that about half of Republicans said that they really want a conservative candidate, that that was their first choice first choice over someone electable. I find that so hard to believe. When you look at the polling, certainly Romney stands out as more electable, not that much more electable, but more electable than Governor Perry.

What's going to win out in the end?

M. CROWLEY: Well, I think you often see early on a desire for ideological credentials. And I think back to the 2004 presidential campaign when Howard Dean was galloping away, Democrats were so frustrated with President Bush but they were saying give him hell, somebody who tells it like it is, it going to be fearless, is really going to change things. And then finally they said, well, John Kerry, we don't love him, but he might be the guy who could actually get the White House back.

And if I have to bet, I'd say that's the dynamic that will play out this time.

CROWLEY: As we called it at the time, is it a question of the Republicans are dating Perry, will they Marry Romney?

PAGE: Well, there is that -- you know, when the party is out of power, I think the argument is much more powerful that we want somebody who can get us back into power. If you're holding the White House and you're trying to look to nominate a new person, as the Republicans were last time, I think it is a less powerful argument, because people forget how terrible it is to be out of power and how much -- how much power a president has. How much winning matters.

CROWLEY: President Obama's poll problem under the microscope when we come back with our reporter panel.

(COMMERCIAL BREAK)

CROWLEY: We're back with U.S. Today's Susan Page and Time magazine's Michael Crowley.

I was fascinated by your poll this week, in U.S. Today, which showed that now a majority of Americans do moderately, or a lot, blame President Obama for the state of the economy. This to me was a pivotal moment and a bad one for him.

PAGE: You know, there's a point where a president owns the economy, even if he inherited a bad one. We see President -- blame for President Obama going up -- 60 percent of independents now say he bears some responsibility for economic woes -- blame for President Bush going down. And I think, at some point before the 2012 election, those lines will intersect and...

CROWLEY: They will blame President Obama more?

PAGE: It will be Obama's economy for good or ill.

CROWLEY: The White House is looking at this and saying, yes, we get it; we understand it. But the fact of the matter is that, when people get a gander at Rick Perry or Mitt Romney, they will come back to the president. Do you -- I mean, it may be their only defense at this point...

(LAUGHTER)

M. CROWLEY: I think so.

CROWLEY: But do you buy that?

M. CROWLEY: Well, I think it's their only hope.

When unemployment is in this condition; when the public is no longer even assigning primary blame to the past administration, I think Republicans have done a very effective job in suggesting, for instance, a stimulus program, which I think there is a lot of evidence softened the blow of this terrible recession -- the Republicans have done a great job in suggesting it exacerbated the problem, that Obama's policies are making things worse as opposed to not sufficiently improving them.

You have so little to run on in that area. You just have to do contrasts. You have to say, do you want to go back to the policies of the past? These guys are out of the mainstream. There will probably be some character-based attacks. So I think we're in for a pretty negative campaign as a result.

CROWLEY: And what we're seeing, of course, is that independents are just leaving him in droves. I think 52 percent of independents voted for him. His popularity, or his approval rating among them now is at about 35 percent.

But I want to talk about a different part that he absolutely cannot win without, and that's his base. This was the president last night at the -- at a Congressional Black Caucus dinner.

(BEGIN VIDEO CLIP)

OBAMA: I don't have time to feel sorry for myself. I don't have time to complain. I'm going to press on. I expect all of you to march with me and press on. Take off your bedroom slippers. Put on your marching shoes. Shake it off. Stop complaining. Stop grumbling. Stop crying. We are going to press on. We've got work to do.

(END VIDEO CLIP)

CROWLEY: This is to his base. These are -- and we have seen a big drop in African-American support for the president. But realistically speaking, it is very hard for me to believe that the people that he complained are grumbling, complaining, crying, are going to pick up on election morning in 2012 and go vote for the Republican candidate.

PAGE: You know, I think one of Barack Obama's great political strengths is his African-American base. They're going to be -- they're going to be with him. I think his bigger problem are other parts of the coalition he put together, young people, Hispanics, people who are not reliable voters. He got them to turn out last time. If they're not really enthused, will they turn out to vote? Probably not. That's what history tells us.

CROWLEY: And that is going to be where their turnout effort is -- is focused, which is the base, which is where everybody focuses. Because those are the folks you know are going to vote for you and aren't, kind of, deciding as they walk into the booth.

But the question is whether some of his base is going to be so depressed they just stay home, isn't it? M. CROWLEY: I think so. I mean, obviously, I think that you're not going to see a lot of African-Americans defecting to the Republican Party. But I think the concern would be that they stay home, other members of the base, the students, young people, the new voters who came into the system last time in particular. I think that's a big worry area for them.

And you can imagine, not to get too hypothetical, but a scenario where, say, Rick Perry is the nominee. His record on immigration, from the perspective of Hispanic voters, is not that bad, and then maybe Marco Rubio is on the ticket. You could really scramble that part of the equation.

The last point I would make is that is Obama at his best. That's -- it's the fire people are saying they don't see. He's, kind of, funny; he's joking. He looks loose. The applause is rising as he's hitting his notes.

And I think that is the thing that appealed to people in the last campaign. If he can do more of that and get himself away from this White House podium where he looks so dry and professorial, he might be able to get a little energy in his campaign.

CROWLEY: I have less than 30 seconds, so I want you to fill in the blank for me. "In order for President Obama to win re-election, he has to..."?

PAGE: Show some economic results. Because people understand the economy, and it's not an argument a politician can persuade them, if see unemployment, if they're worried about the future for their kids. That is a hard environment for an incumbent to get re-elected.

M. CROWLEY: And, well -- and the strange way to think about it is that Angela Merkel is crucial to that. Europe -- if Europe can pull this out, Obama might be able to pull it out. If they can't get it together, we may be headed for a catastrophe. And it will be very hard for Obama to recover from another step-back in the global economy.

CROWLEY: Michael Crowley, Susan Page, thank you, guys.

M. CROWLEY: Thank you.

CROWLEY: Up next, the top stories, and then, on "Fareed Zakaria: GPS," Fareed talks to key leaders from the United Nations General Assembly.

(COMMERCIAL BREAK)

CROWLEY: Now time for a check of today's top stories. Nineteen people were killed today, including two Americans, when a small plane crashed in Nepal. It was returning from a sightseeing tour when it hit a mountain and broke into pieces as it was trying to land.

And at least 10 people were killed and 70 wounded in four consecutive explosions in Iraq. All four blasts occurred about 60 miles southwest of Baghdad. Police say the explosions targeted civilians who were on their way to an office that issues passports and travel documents.

In Yemen, clashes between protesters and government troops this weekend have left dozens dead. Demonstrators are calling for the country's president, Ali Abdallah Saleh, to be tried for crimes against (inaudible).

Two American hikers released from an Iranian prison last week are headed back to the U.S. Josh Fattal and Shane Bauer were freed after being held by Iran for more than two years on spy charges. The men are expected to arrive at New York's JFK Airport later this morning. CNN will have coverage of their arrival.

And those are today's top stories. Thank you so much for watching "State of the Union." I'm Candy Crowley in Washington.