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JOHN KING, USA

Super Committee Fails to Reach Deal; Interview With New York City Mayor Michael Bloomberg; Interview With Jon Huntsman

Aired November 21, 2011 - 18:00   ET

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


JOHN KING, CNN ANCHOR: Good evening, everyone.

Breaking news in Washington tonight, and it reinforces this self- evident truth. Washington is broken, unable or unwilling to tackle the biggest threat to our nation's health and to your economic future.

Just a short time ago, a stunning, yet sadly not surprising admission of failure from the so-called congressional super committee charged with slicing at least $1.2 trillion off the federal budget deficit. A joint statement from the committee co-chairs reads in part -- quote -- "Despite our inability to bridge the committee's significant differences, we end this process united in our belief the nation's fiscal crisis must be addressed and that we cannot leave it for the next generation to solve" -- that statement issued in Congress.

And just moments ago at the White House, President Obama too said tonight's collapse of the super committee must not end efforts at deficit cutting, but the president said if Congress now tries to get around the automatic cuts called for in the law that created the super committee, he will veto it.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My message to them is simple: No. I will veto any effort to get rid of those automatic spending cuts to domestic and defense spending. There will be no easy off-ramps on this one. We need to keep the pressure up to compromise, not turn off the pressure.

(END VIDEO CLIP)

KING: The super committee's failure has important consequences. Stocks fell sharply as investors added Washington's gridlock over America's debt to an already long list of worries about economic growth here at home and Europe's financial crisis.

Plus, there are worries of a possible, another additional downgrade to the U.S. credit rating. And the legislation that created that super committee as point just noted calls for across the board spending cuts in the event of failure including deep Pentagon savings that military commanders say would dangerously undermine national security.

One thing Washington excels at is partisan finger-pointing and sniping and there is a surplus of that tonight. Democrats blame Republicans accusing them of sabotaging the process by refusing to keep an open mind about new tax revenues. Republicans in turn say Democrats are too timid about cutting spending, especially Medicare and Social Security.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D), MASSACHUSETTS: The Republicans have been insisting that we make permanent and extend the tax cut to the wealthiest Americans.

SEN. JON KYL (R-AZ), MINORITY WHIP: If you look at the Democrats' position, it was we have to raise taxes. We have to pass this jobs bill which is another almost half a trillion dollars. And we're not excited about entitlement reform.

(END VIDEO CLIP)

KING: So how did this happen? How did a committee established with such great urgency in the end produce nothing? In a word, politics.

Get this. The president had a big event at the White House earlier today just hours before the super committee deadline. A great chance for one last nudge, right? Except he said nothing. Not a word about the super committee despite his can-do push back when that committee was given its mission in August.

(BEGIN VIDEO CLIP)

OBAMA: Voters may have chosen divided government but they sure didn't vote for dysfunctional government. They want us to solve problems.

(END VIDEO CLIP)

KING: Now Republicans control the House and so they too have an obligation to help govern. Yet their speaker today like the president, silent all day, no last-minute nudge from him, though he did issue a paper statement expressing disappointment once the committee collapsed.

Now, to be fair to Speaker Boehner, he was skeptical of the super committee from the outset, but he not too long ago was much more emphatic about the need to confront the problem.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: I have been very consistent that it is time for America to deal with its spending problem and deal with the fact that we have made promises to the American people that our kids and grandkids just can't afford.

(END VIDEO CLIP)

KING: Now though with no prayer, no sign of compromise in sight, it is clear both the president and the speaker prefer to fight this one out in the 2012 campaign.

Our chief White House correspondent Jessica Yellin is with us, as is congressional correspondent Kate Bolduan.

Jess, I want to go to your first because we just heard from the president. The president says we still need to get this done. He for the first time says he would veto any effort by Congress to do an end- around the automatic cuts unless they come up with a big deficit reduction plan. But he has to know one of the big criticisms has been that he has been largely silent, Jess, during the three months of this super committee.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: That's right, John.

And I also was struck by how partisan his remarks were. It was very clear that he laid the blame at the Republicans' feet. As you point out, the president himself was not working the phones during this process. His most senior aides were talking to Democrats.

There is a question, how effective could he have been working the phones with Republicans after the debacle of the debt talks earlier this summer? But there are downsides, there were political downsides to getting involved with this one, because this deal did not look like it was necessarily going to succeed. Lots of us in Washington expected a failure or thought a failure was likely, so getting the president involved wasn't necessarily politically wise.

And the more distance the president gets from Congress, John, the higher his poll numbers go. So keeping him at a distance from Congress is not a bad thing for the political minds on his team as 2012 approaches.

KING: And does that mean no specific proposal from the president now, no bold move to say you have failed, here's my plan? Will he just fight this one out in the campaign?

YELLIN: Well, their argument is that they have already given him one. And in fact they have. He put a roughly $3 trillion debt cutting deal and proposal and they could continue to push that. So I think you will hear them push that, but mostly continue on the jobs themselves and pushing his American Jobs Act, which you heard him do today just now, and again tomorrow when he goes to New Hampshire to push the American Jobs Act. Maybe not a coincidence that it's an early voting state.

KING: It could be a swing state come next November. The president in New Hampshire tomorrow.

Jessica Yellin, our chief White House correspondent for us tonight.

Let's head now up to Capitol Hill, our congressional correspondent Kate Bolduan with more from there.

Kate, if you read all the statements from the Democrats and all the statements from Republicans, gee, they agree we have to get something done. But the failure of this committee, Congress has single-digit approval ratings. They have to know they might go into the negative.

KATE BOLDUAN, CNN CORRESPONDENT: That's a very good point. I will tell you that's one of the first questions -- as senators and members of this committee after issuing their paper statements came out, that's one of the first questions that they're being presented with is this just another example of how dysfunctional government is, specifically Congress is?

I believe we have a sound bite from Senator Patty Murray, a Democratic senator, the Democratic co-chair of the committee where she is addressing this very question.

(BEGIN VIDEO CLIP)

SEN. PATTY MURRAY (D), WASHINGTON: We have two tasks. We have to find $1.2 trillion in deficit reduction. But we also have to show the country that we can work. We didn't reach the first goal and that's disappointing. I am concerned about the second one. But I know in my heart having done this that I respect people from both sides.

(END VIDEO CLIP)

BOLDUAN: John, it's very interesting.

There is kind of an acknowledgement that this has completely broken down and was absolutely a failure on the part of this committee. But both sides continue to say that they want to find bigger deficit reduction measures. They want to push for a bigger deal.

But the big question is how will that be at all possible the further we move into a campaign season? When this committee was set up to -- if any committee, if any group was going to be able to pull this off, it was supposed to be this super committee. They were given an amazing amount of power to bypass all the procedural hurdles that slow down legislation up here on Capitol Hill all the time, no filibusters, no amendments, and even this committee could not pull it off.

It begs the question, will they be able to pull it off at all going forward, John?

KING: A stacked deck, as Kate notes, and they could not pull it off.

Kate Bolduan on Capitol Hill tonight. Thank you, Kate, tracking the breaking news from that end.

If this failure makes you mad, don't just blame Washington. The divide here in this town reflects the divide out in the country. On the tax question, for example, our new CNN/ORC poll found two-thirds of Americans do support raising taxes on the wealthy as part of a deficit deal. But look more closely -- 88 percent of Democrats are for that and nearly 70 percent of independents, but only four in 10 Republicans back higher taxes, which is why so many Republicans say no.

And with Washington so dysfunctional, the country divided on many of the big deficit reduction pieces, what now?

My colleague Erin Burnett is here. She knows the risks of doing nothing. As does a man who once crunched the country's numbers, the former Comptroller General David Walker.

Erin, the markets were down today on the expectation this committee would fail. If you're an investor in the financial markets, if you're a CEO who was looking for some certainty from Washington before you started hiring people or built a new factory or expanded a factory, you got nothing today.

ERIN BURNETT, CNN ANCHOR: You got absolutely nothing. And I think you said it best at the top of the show, shocked, but not surprised.

People really were hoping something would happen. The market dropped in part because there was hopes they would actually come forth and deliver. We're talking about 2.6 percent of the anticipated spending in this country over the next 10 years. It is a really, really small amount. The fact that they failed at that really sends a message around the world to the people that set our interest rates and also to companies. This will impact hiring now.

KING: And, David Walker, joining the conversation, Erin makes what I think is the seminal point. Less than three cents on the dollar.

If you go back, I cannot imagine one family out there watching tonight who in 2007, 2008, 2009, 2010, has not had to sit around the table, whether their home lost all or half of its value, what somebody in the family was laid off. Their investments tanked because of the financial meltdown. Everybody in America has had to deal with more than 3 cents on the dollar and Washington can't. Why?

DAVID WALKER, FORMER UNITED STATES COMPTROLLER GENERAL: It's politics over progress. It's the great ideological divide. It's everybody trying to position themselves for the next election.

Frankly, this committee was a total failure and it also shows what a huge leadership deficit that we have. The co-chairs failed. The leaders of Congress who appointed the people to this committee failed. And frankly, the president failed. That's the biggest deficit we have.

It is time for a Ross Perot-type education engagement effort to tell the truth to the American people. Both political parties are to blame. The future of this country is at risk. And the first three words of the Constitution have to come alive, we the people.

KING: We the people, David Walker says, but we the people are pretty disgusted and lacking trust in any big institution. Their government can't do anything. They don't like the banks. We see people occupying. If the Tea Party and Occupy Wall Street agree on anything, it's they don't trust the politicians or the big institutions.

What now after this? If you cannot do big, can you do small and get to the same goal? Or are we going off to have to have a presidential election and then try again?

BURNETT: Well, it seems to me obviously you are going to have the unemployment benefits coming up as well, as well the payroll tax cuts. Both very popular. The payroll tax cuts, as you know, something that both big business likes as well as employees. That's something that everybody likes. Those will have to come back up by the end of the year. That means you will have to have spending cuts on the other side of it.

I think it's going to be very problematic. But I think one of the great travesties here is how they have pushed it off until after take election, when the Bush tax cuts are slated to go away, when these automatic cuts come in. Note there is no automatic cuts before the election. So no one will feel the pain and punish anyone in office.

That's capital-C coward I think is the way we call that.

I'm going to ask David Walker to stay with us. We're going to take a break. Erin Burnett needs to go to prepare for her program, "ERIN BURNETT OUTFRONT," at the top of the hour. Stay here, much more on this story, David Walker, if you can stand by.

When we come back, Mayor Michael Bloomberg will join us. He will tell us who he thinks is to blame for the super committee's failure.

Also with us when we return, the man Democrats say is singularly responsible for the Republican refusal to put tax hikes on the table.

Stay with us.

(COMMERCIAL BREAK)

KING: A dramatic night here in Washington, breaking news, the collapse of that special super committee. designed with coming up with deficit reduction plans.

Well, the president after that committee collapsed is promising there will be "no easy off-ramp" when it comes to deficit reduction. Just moments ago at the White House, he said he would veto any effort to get around the automatic spending cuts, defense or domestic programs that are now called for in the wake of the congressional super committee's failure to make a deal.

Let's consider more on this breaking news with our senior political analyst, David Gergen, chief political analyst Gloria Borger. Still with us, the former comptroller general of the United States, David Walker. David Gergen, as someone who has served four U.S. presidents and watched many more, when you watch this process set up with such fanfare to get the United States debt limit raised over the summertime, the total collapse, the message that sends of Washington gridlock and dysfunction, is there any way out now or do we just go through a presidential campaign?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: We're mostly going to go through a presidential campaign. I don't see any way out in the next 12 months.

David Walker points out that there is a sequestration trigger that the president says he will veto any attempt to get around it. But frankly I think most people will be so angry about this. It appears that Washington has gone nuts. And the country is going to be angry. The markets are going to be volatile.

This is going to strike most people as a reckless gamble with our economy, because we don't know where the markets are going, especially in the context of Europe also having serious political leadership problems, serious failures of leadership. And I don't see a quick way out of this at all. We have been here for months. I thought David Walker was right. The blame is evenly divided here between the Congress and the White House and between Republicans and Democrats.

(CROSSTALK)

KING: David Walker, to the president -- hold on one second, Gloria.

Hold on just one second.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: OK.

KING: David Walker, to David Gergen's point about the president's veto threat, you view that as potentially a good thing if it comes to that, because everyone expects now the Congress, even though the law says do your job on this super committee or else automatic cuts kick in, they're already talking about, oh, never mind, we're not going to touch defense, oh, never mind, we will change that.

You view the veto threat as the one good thing to happen tonight?

WALKER: I agree, because basically the president said he will make sure that $1.2 trillion in spending reductions happens. The Congress may want to he end up deciding how to allocate that different , but he is basically saying there has got to be at least $1.2 trillion in spending reductions over 10 years.

And I think that's a good sign, because lots of people want to do things that will increase the deficit. Not many people want to do things that will bring it down.

KING: And yet, Gloria, when the $1.2 trillion, that was the floor. A lot of people wanted a ceiling of $4 trillion over 10 years, even more, saying that's the signal the markets wanted. A lot of people tonight will ask, was this a waste of time? Should they have just let this go through the regular congressional committee process and not create this super committee if what you get in the end is super fail?

BORGER: Right. I think you would probably have to say it was a waste of time, John, because they did not make any progress.

I think the political problem here was that neither side felt it would lose by having a failure because the Republicans are playing to their base and Republicans don't want to raise taxes. Democrats don't want to cut entitlements. They're playing to their base.

The question that I have is in our poll today, we talk about independent voters. Six out of 10 independent voters favored increased taxes on higher-income Americans. Seven out of 10 want to cut spending. My question is, how do independent voters react to this when it comes time to a presidential campaign?

That's where the blame game starts, because people will try and convince independent voters that the other side is to blame and they're kind of undecided on that right now.

KING: And, David Gergen, the voters have a responsibility here, too, in the sense that they have the divided government. When you get divided government, you have conflict.

But is one lesson here that the only way is to do anything bold anymore in Washington, at least in this Washington, is to do it incrementally one step at a time? You can't do comprehensive immigration reform. They won't pass it. The president could not get a big jobs bill through. They wouldn't pass it. He had to break it up into little pieces.

Is the only way to do anything in Washington is take it one bite at a time?

GERGEN: That's a good point, John. Yes. You can make more progress sometimes incrementally.

And what's so starting about this is we have always had a contentious politics. We have always had disagreements between factions, between parties. But in the past, we have had the capacity, our leaders have had the capacity to sort of see if they cannot forge a compromise and go forward.

That's what the founders did repeatedly. This group of people have just thrown out all that wisdom. I will tell you where I think we are. I don't think this was a waste of time because I think it revealed once and for all just how broken the system is. And I do think you will get a voter response.

It is worth remembering that in Europe, three governments now have fallen in recent weeks over this question of deficits. We have had the government fall in Greece and in Italy and in Spain. And there's going to be a big effort now I think by a lot of voters to throw bums out. Let's get some new people out there, people who can work together on both sides.

KING: David Gergen, Gloria Borger, David Walker, thank you for your insights tonight.

When we come tonight, a man who very much agrees with what David Gergen just said, that it's time, if they won't act responsibly, to throw all the bums out. New York City Mayor Bloomberg, he's not just a mayor. Remember, he was a big company CEO. He will join us and tell us what he thinks of the super committee's failure next.

(COMMERCIAL BREAK)

KING: Important breaking news in Washington tonight -- the collapse of the Congressional so-called super committee. Its charge, cut $1. 2 trillion from the deficit over 10 years.

Democrats blame Republicans for the collapse. The Republicans, of course, blame the Democrats.

New York City Mayor Michael Bloomberg, an Independent, blames them all.

Let's get some perspective now from a former corporate CEO who now is the mayor of America's largest city, Mayor Michael Bloomberg of New York -- Mr. Mayor, the super committee tonight has become a super failure. Mayors, governors and average Americans are asking why.

Why did this collapse?

MICHAEL BLOOMBERG (I), MAYOR OF NEW YORK: Well, I don't know why it collapsed. But let me just say, it is not the instability in Europe. It is not the monetary policy of China that is the big problem for America. It is this cowed-ness and this partisanship in Washington that is really hurting our country.

And if you take a look, whether it was the deficit ceiling fight or this fight, the number of jobs that were destroyed, the wealth that was ruined and taken away, it's just mind-boggling. It's really -- nobody could write a novel where this scenario took place and sell the book. People would say impossible.

And yet we've just seen it.

Both sides of the aisle, both ends of Pennsylvania Avenue. They can't even come up with something that would not have even solved the problem. If you think about it, the 1. 2 trillion odd dollars that they were trying to save will only cut about 13 percent of our deficit. And today, we have a public debt of $10 trillion. We have -- in 10 years, it will be $20 trillion. You know, $20 trillion is something like $70,000 for every man, woman and child in this country. And even then, we would be doing what we're doing today.

Today, the government is borrowing one out of every three dollars that it spends. You could not do that personally, because nobody would loan you the money.

KING: Well, let's try to go through some of the issues.

You are an iii now. You've been both a Democrat and Republican. The Republicans were adamant going in, they would not raise tax rates on anybody. And many Republicans said they weren't even open to tax rate that lowered rates, if, in the end, it brought Washington more money.

Can you solve this problem without raising some taxes?

BLOOMBERG: You cannot solve the deficit problem without both increasing government revenues and decreasing government expenses.

Right now, the difference is so grand -- so large, you couldn't possibly do it with either one. You have to do both. And I don't care what you promised your constituents, I don't care what your constituents want, those are the facts.

And so every elected official has to make the decision -- am I going to do what's right politically or am I going to do what's right for the country?

Because there is no -- there's no reputable economist in the whole world who would tell you that what I just said isn't true. You have to have revenue and you have to cut expenses.

And so when you take one off the table, you just can't have a deal. And now the question is...

KING: And the old...

BLOOMBERG: -- what do we do next?

KING: And part of the question is what do we do next.

But what did we do over the last three months?

One of the questions is where was the leadership?

You say the Republicans should have come to the table on revenues.

A lot of people in this town are asking, where was the president?

Now, at the White House, they say this was a Congressional committee.

I want you to listen quickly here to Senator John Kerry, one of the Democrats on the committee. He says the Republicans were adamant that the president stay out of it.

Let's listen.

(BEGIN VIDEO CLIP)

KERRY: The president was specifically asked by the Republicans not to get engaged in their deliberations, because they didn't want it to become a political football. This was a Congressional idea, to have this committee. This was Congress' responsibility.

(END VIDEO CLIP)

KING: So the president had no responsibility, Mr. Mayor, or is that a cop-out?

BLOOMBERG: I would argue that the president, as the chief executive of the country, has the responsibility to make things come together. I understand the problems of partisanship and the jealousies and the pettiness and selfishness that occur at the other end of Pennsylvania.

But in the end, no CEO would send a proposal and just say, well, let's see what happens. You send a proposal and then you go fight for it.

Nor would any CEO let the other side write the proposal. The job of the president is to lead the country and to lead Congress. And the president should now just stand up and say we aren't going to take it anymore. Forget about the politics. This country is crying out for leadership. It's crying out for courage and I, President Obama, is saying this, and I'm going to provide exactly that.

And the president can do it. All the president has to do is make one simple declaratory statement and all of this will come together. And that statement is, he should say, I am going to veto any extension of any of the Bush-era tax cuts, not just those for the wealthy, but for everybody, because it's everybody's problem.

And most of the money that you need to close the deficit is in the average middle class person, not with the wealthy. The wealthy pay a very -- maybe a disproportionate percentage of their income in taxes. Some people say maybe it should be worse.

But the total amount of taxes that the wealthy pay do not go anywhere remotely toward solving the problem.

Everybody is part of the solution. Everybody gets benefits from government. And I think everybody should pay.

And if the president said, I will veto any piece of legislation that extends any of the Bush-era tax cuts, I think he'd have enough support to prevent an override of his veto. It would then say to the Republicans, you know, I don't know what you're talking about. We've solved the revenue side. There's nothing you can do to stop the revenues. Now, let's work together on the expense side.

And then you don't just sit around in a committee and say, well, I will cut mine if you cut yours, and let's trade this, this guy was a campaign supporter of mine, and that guy, I always liked. I own stock in his company.

You don't do any of that. You go and you look to who's looked at this problem intelligently, with some real thought -- and I think Simpson-Bowles is as good a place to start and maybe end -- and just say they've done the research. It may not be perfect, but at least it wasn't done by a partisan swapping of one of mine for one of yours. And they could go, and Congress would, I think, at that point, adopt the Simpson-Bowles cuts together with the end of the Bush-era tax cuts. You would generate something like $8 trillion. You'd balance the budget, $8 trillion worth in ten years.

KING: In the meantime, as Washington tries to figure out if it can solve its dysfunction -- I won't say when it will solve its dysfunction; I will say if it can solve its dysfunction -- what is your sense, Mr. Mayor, of the impact of this, A, on the markets and the economy, and B, on the average American family? Will they pay more in interest because Washington can't get its act together?

BLOOMBERG: Well, I think, No. 1, nobody thinks that the sequestered moneys or these cuts that are supposed to automatically go in will happen. Congress, in its usual ways of obfuscation, had this committee. If the committee failed, the cuts would go automatically. Except the cuts don't go automatically for a whole other year, during which time you can rest assured, Congress will, in a normal political fashion, sop and save anybody that has political power in Washington's -- Washington from losing their benefits or their cuts.

And so we're right back to having an enormous deficit problem. But no solution. And then investors are just not going to invest. Businesses are not going to hire. Banks are not going to make loans. Individuals are not going to buy a new house or take a vacation or buy a new car. Everybody is frozen. Because they just look and they say, "This cannot go on. You cannot have a government that doesn't function." And that's exactly what we have now.

And incidentally, you can blame the White House. You can blame Congress. You can blame Republicans. You can blame Democrats. You can blame this party and that party and this faction and that faction. The bottom line, this is America.

America used to come together and solve the problems. And when patriotism required you to put away your partisan, petty self- interests, people did. But they're not willing to do it now.

And I guess I think that this is the time for the president to stand up and say, "I'm not going to take it anymore. I'm going to do what's right. I ran on a campaign of change, and that's what I'm going to do. And if the voters like it, they'll reelect me. And if the voters don't, at least I'll be able to look myself in a mirror."

KING: Very sober assessment from the New York City mayor, Michael Bloomberg. Mr. Mayor, thank you for your time tonight.

BLOOMBERG: You're welcome, John.

KING: So how old were you when you got your first job? When we come back, tonight's "Number." It's a novel plan from a presidential candidate who thinks maybe we should lower the starting work age.

(COMMERCIAL BREAK)

KING: Tonight's "Number is 9." Nine years old, that's how old American children would have to be to get a job under a new proposal by Republican presidential candidate Newt Gingrich.

Right now the nation's child labor laws say 14 is the minimum age for employment in this country. And even at that, there are restrictions on teens doing manufacturing, mining and other hazardous jobs.

Also, $14 an hour is the average wage of unionized janitors. Now, why would I mention that? Well, you'll understand more next when we explain just why Newt Gingrich wants to lower the working age to 9.

(COMMERCIAL BREAK)

KING: On the presidential campaign trail today, several interesting news nuggets from the state of New Hampshire.

Mitt Romney collected another big endorsement, this one from Republican Congressman Charlie Bass, who joins Senator Kelly Ayotte aboard the Romney Granite State bandwagon.

Herman Cain has rescheduled the meeting he missed with officials of the influential "New Hampshire Union-Leader" newspaper. After failing to hook up last week, they'll sit down together next weekend. Mr. Cain says he'll let the cameras in.

Also in New Hampshire, Newt Gingrich again called for doing away with child labor laws so students can work as school janitors.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: They'd be dramatically less expensive than unionized janitors, and you begin to reestablish the dignity of work. And in very poor neighborhoods, you have to literally reestablish the dignity of work.

(END VIDEO CLIP)

KING: A lot to talk over with our contributors tonight: Republican David Frum, who was a speechwriter for President George W. Bush, and Democratic strategist Donna Brazile.

David, Speaker Gingrich says he's not joking about that. He describe s it as an anti-poverty program. He says only in special cases, but in places where you had schools that were run down, you could put kids to work. Is it serious?

DAVID FRUM, FORMER BUSH SPEECHWRITER: I think it is a gambit. And it is a way to change the subject away from Freddie Mac.

Everybody is excited by this thing. It resonates positively with certain elements of the Republican base. It excites the media. It's a big topic. And he had a topic over the past couple days he really didn't want to talk about. With the media you have to give them a bigger prize to get them to change the subject.

KING: Deflection. Is that what this is? DONNA BRAZILE, DEMOCRATIC STRATEGIST: There's no question this is a distraction. Newt had an opportunity, the speaker, this weekend when he was at a farm in Iowa to try to put -- put aside some of his past controversial statements. Instead, he once again offered another dumb idea. They said have you changed? He said, "Yes, I will say fewer dumber things." This is a dumb idea, and here's why, John.

We know that one out of five children in this country are now living under poverty. Probably, the only way they'll reduce poverty is to provide these kids and their parents with a better education, tools that can help them navigate all of the economic issues that they're facing.

The most important thing, John, is that they need jobs. They need jobs. Their parents need jobs.

KING: And so again, to play devil's advocate: in a rundown school district, the kid that otherwise might be drifting on the street, to get them a job helping clean up, teach them the value of hard work and also teach them the results of hard work: a cleaner school, a better school. Bad?

FRUM: Look, it's not going to do what Newt Gingrich wants it to do. If you want a properly structured program, supervised work, it is going to cost more than hiring a janitor. That is -- it is very expensive to do these things right.

So as a way to -- if your goal is to save money, that's one goal. If your goal is to teach -- integrate work and education, that's a different goal and an expensive goal.

KING: If Newt Gingrich had said this two weeks, four weeks, six weeks ago, we probably wouldn't have spent a moment on it. Here's why we're spending a lot of time on it.

Look at our new CNN/ORC poll out just tonight, a national poll. Choice of Republicans for the nominee for president: Newt Gingrich, 24 percent; Mitt Romney, 20 percent; Herman Cain, 17; Rick Perry, 11; Ron Paul, 9 and on and on and on. This is the first time -- the first time Newt Gingrich has been atop a national poll of Republicans. That is within the margin of error. So statistically, it's a tie. But when you see Newt Gingrich at 24 percent there, look at this.

Look at this from just a month ago. Gingrich at 8 percent, Romney at 26, Cain at 25, Perry at 13. Donna Brazile, that's a surge.

BRAZILE: He imploded early in the process, so Republicans have given him a second chance. But I'll tell you one thing, if he continues to make remarks like he did the other day, well, his 15 minutes of fame will be up again. He will implode, and we'll see him come back probably in mid-December.

KING: Why? Why are Republicans going back to the future with Newt Gingrich?

FRUM: Look, he is the confrontational candidate, and Republicans want confrontation. Republicans are also beginning to feel very optimistic about this election, maybe unwisely so, but they think they can win with anybody, so why not win with somebody they like rather than with Mitt Romney, somebody they feel obliged?

But here's where I think all of this may change. As the problems in the E.U. and the euro currency come to the fore, Romney's great strength on international currency matters is going to really matter. I hope that's a topic in the debate tomorrow night. Because the break-up of the euro is an important threat to American national security.

KING: I think all these economic issues, especially the interrelation, will be a big topic tomorrow night.

And David makes an important point, because I want to show you some more polling. You've been through this.

Al Gore was pretty, you know, much a shoe-in when he ran for the Democratic nomination.

BRAZILE: He still had a primary challenge.

KING: He had a primary challenge, but can you look now? Look at this. This is about are Republicans open to changing their minds. "Definitely support my candidate," 27 percent. Almost 70 -percent, two-thirds of Republicans, 67 percent, say they're open to changing their minds. So Newt Gingrich can celebrate his lead in that national poll. I wouldn't pop the champagne just yet.

But if you look at how Republicans are making their decision. To David's point, "most likely to understand complex issues." This is -- this is proof that Gingrich has done well and impressed in the debates. Two-one advantage, 43 percent to 18. More than 2-1 over Governor Romney.

"Best qualified to be commander-in-chief." Gingrich with an almost 2-1 edge over Romney, 36 to 20. But "best chance of beating Obama"? Romney 40, Gingrich 21.

A big debate here on national security issues. And the economy is a national security issue. Gingrich has taken great advantage of the many debates in this season so far. Does he become a target now that he's at the top?

FRUM: Gingrich is a lot of raw mental processing power. If you've got -- it's true. If you've got a complicated issue, he will understand it, which is an important virtue. They are temperament questions that go to the commander in chief that other candidates may -- may do better on.

Will he be a target? The candidates have been careful about targeting any one of their number. And I think the Romney strategy has been just to wait for each of these souffles to subside.

BRAZILE: Romney's problem is he cannot clear the field. Newt Gingrich has been very good at these debates, especially in attacking the media and attacking the president. Let's see if he puts forward any new ideas on how to keep America strong and stable.

KING: A giant strategic question for the Romney campaign is how hard to play in Iowa. They did open a campaign office today, an old Blockbuster building. It's a pretty good-sized office. Will they play hard is the big question.

He skipped a forum this weekend. Christian conservatives, social conservatives, evangelical voters are critically important. I believe they were a majority of the voters in the caucuses last time around. And one of his rivals, the former Pennsylvania senator, Rick Santorum, suggested his -- let's listen to Rick Santorum's explanation of why Governor Romney didn't come.

(BEGIN VIDEO CLIP)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: Clearly, this was not a forum that Mitt Romney was particularly comfortable with. And it was one that was longer form. It was one that was much more personal, much more reflective of where you've been and where you're going, as opposed to just talking about, you know, the future in sound bites. I think that -- that played to my strength. And I don't think it would play to Governor Romney's strength.

(END VIDEO CLIP)

KING: There were some who took that as that Governor Romney is not here with these evangelical Christians conservatives for long-form answers because being a Mormon might come up.

FRUM: Well, I don't think that's where Rick Santorum is going on this. And actually, I think he's a candidate who, in this race, has deserved more attention than he's gotten. I mean, Rick Santorum has been the one who's been speaking most to issues of poverty and upward mobility, and he does have some moving stories to tell on these social issues.

I think he is there expressing some frustration. He thinks he's got smart things to say, and he doesn't feel like he's getting enough attention.

BRAZILE: Rick Santorum has also talked about the plight of the middle class and the fact that they have been left behind and all of this talk about the recessions.

But you know what? I watched the debate. It was a very emotional debate. I'm not a Christian conservative. I'm a Christian. But I thought some of the answers were very enlightening in terms of their own personal trials and tribulations. Herman Cain talked about his bout with cancer. Rick Santorum talked about his daughter, who was born with some kind of genital -- genital, sorry about that. Some kind of...

KING: Genetic.

BRAZILE: ... defect. Genetic defect. I've been listening to too many debates, I guess. KING: Too many debates. A big debate, big debate in this hall tomorrow night. Donna Brazile, David Frum, thanks for being here.

Remember that debate tomorrow night, national security debate right here on CNN tomorrow night.

Next, thought, one of the candidates who will be here tomorrow night, Jon Huntsman, grades President Obama on his handling of the deficit and the super committee. Here's a hint: he doesn't get an "F."

(COMMERCIAL BREAK)

KING: The Republican presidential candidates will be right here in this hall tomorrow night to debate national security issues. And we know there are some big differences.

Tonight, though, they're unified in saying President Obama should get most of the blame now that the so-called congressional super committee has failed and that deadline to get deficit reduction will not be met.

Earlier today, I discussed the deficit challenge with one of the Republican candidates, the former Utah governor, Jon Huntsman.

(BEGIN VIDEOTAPE)

KING: Let's start with today. If President Huntsman were in office today and the deadline were a few hours away, what would you do?

JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: I would pull out the Simpson-Bowles Commission report and say, "Here's our road map." We don't need to recreate the wheel. We don't need to recreate the super committee. That's just kicking the can down the road. We need presidential leadership. We need someone to stand up and say, "We have a template. We've got some ideas on Capitol Hill." We've done all the thinking. We just lack leadership.

That's the problem today, John, is leadership has been completely missing in action. And so in that void, you have mischief making. You have partisanship. You have the extreme ends of the political spectrum that now are going to point fingers of blame, and the work of the people is not going to get done.

KING: Grade the president through this several weeks and months of the super committee.

HUNTSMAN: Well, it's a D minus. When you're not -- when you're not on deck showing a little bit of leadership, when you're not using the bully pulpit, which is the most powerful weapon in the presidency, then you deserve practically a failing grade.

You can't expect Congress, which is divided all by itself, to get done the work of the people in today's political environment without the president standing up and leading by example and putting some ideas forward that Congress can then work on, on behalf of the American people.

KING: What is the responsibility of the Republicans in this process? They control the House of Representatives. They have said absolutely no when it comes to any revenues as part of this deal. Would a President Huntsman have told them keep an open mind, or can you get this done without any new revenues?

HUNTSMAN: President Huntsman would have said, "Get the work of the people done."

KING: But two thirds of the American people say raise taxes on the wealthy, as long as you then do the cut to make it part of the deal.

HUNTSMAN: Get the work of the people done.

KING: So you're OK with that?

HUNTSMAN: When I was -- when I was voted in as governor, I was -- I was elected to do the work of the people of my state. That's my background; that's my orientation.

At the end of the day, you've got to make the system work. You've got to -- you've got to create a pathway for -- to allow the system to function, to allow this country to grow.

Right now, we're a motorcycle stuck in neutral. We can't kick it into first gear. We're stuck. We're like a battery that's run out of energy. And you've got to get the work of the people done. And that means you've got to come together at some point; you've got to strike a deal. Not everybody is going to like it, but you've got to move forward.

KING: I want to be very specific, though. Would a President Huntsman -- is a candidate Huntsman open to a deal that, as long as you got entitlement reforms, as long as you got what you believed to be real and lasting spending cuts, to a deal that also includes raising tax rates on wealthy Americans?

HUNTSMAN: Well, tax -- raising tax rates at a time when we are sinking economically is not the right thing to do. Instead, I would raise revenue in our tax code. I'd say no more corporate welfare, no more subsidies. No more loopholes and deductions. Sweep it clear. Because that then allows us to lower the rate to grow.

I did this in my state when I delivered a flat tax. I saw what it did in terms of economic uplift.

But on the corporate side, it also says to lobbyists, you're not -- you know, we don't want to give you more to lobby for. No more loopholes, no more deductions, no more corporate welfare.

Part of the problem here, John, is we need term limits in Congress. Part of the problem is we need restrictions on members of Congress who then go into lobbying. We've got some structural problems here that make it very difficult to do the work of the people.

And to have a president who's willing to use the bully pulpit in identifying and pointing out those issues, as well, would be a very good thing in this country.

KING: I want you to listen to a conversation, part of a conversation we had a few months back when I came up to New Hampshire to check in on the Huntsman campaign. And you were making the case that it is possible, in your view, to succeed in a partisan primary environment without being overly partisan. Let's listen.

(BEGIN VIDEO CLIP)

HUNTSMAN: I believe that we ought to have a civil discourse in this country. You're going -- you're not going to agree with people 100 percent of the time. But when they succeed and do things that are good, you can compliment them on it. I think we need to come together more on the issues that really do matter. I believe in civility. I believe in complimenting people when they do a good job.

(END VIDEO CLIP)

KING: Civility, coming together on the issues that really matter. We don't see any of that in this town at the moment. And if you look at the polls, our new national poll out today has Governor Jon Huntsman at 3 percent. Is that the proof that nice guys finish near last?

HUNTSMAN: Not that I'm a nice guy. I believe in getting the work of the people done. And I believe in putting forward the -- listen, I've been very outspoken on where I stand on Afghanistan, on tax reform, on some issues near and dear to the Republican Party, some of which people like, some of which they don't like. That's just the way I am.

This is a time for leadership. This is a time for the president of the United States to stand up and lead. The people of this country are crying out for it. By leading, I would argue, you're able to bring people together. I mean, this is a time in recent memory of unprecedented division in this country, which I would argue is unnatural, unhealthy and un-American.

People want to be brought together. We want to find common-sense solutions to our problems. That's going to take executive leadership, which we just don't have today.

KING: What is it that you think you have to do or that you need the electorate to think about to get your moment? If you look at the bouncing ball of the Republican polling, Donald Trump was up at one point. He didn't run. Michele Bachmann had a big rise after a spring debate. Then it was Herman Cain's moment. Governor Perry has had a moment. Newt Gingrich is now nationally in a tie with Mitt Romney. How does Jon Huntsman get the electorate to say, "Give me that poll?"

HUNTSMAN: We don't want 15 minutes of fame. We want sustainability. And the way you get sustainability is by proving the point in New Hampshire. That's the market advantage most in terms of the early primary states, and we're moving up in the right direction there. And I believe the weeks ahead are going to be critically important.

We've done 101 public events, town-hall meetings and house parties, we're connecting with folks there. And I believe that, when folks coalesce around your message in New Hampshire, that then is a message loud and clear to the rest of the country that this guy should be taken seriously, that he's got something worth listening to.

So it's all about a market-moving event, and for me the market- moving event will be New Hampshire.

KING: Humor and patience are two things you need in politics. You mentioned during your way back to New Hampshire you bring it up quite a bit. It is your focus right now, and it was also your focus when you made an appearance on "Saturday Night Live." I want you take a little peek at Governor Jon Huntsman joins "Weekend Update."

(BEGIN VIDEO CLIP)

SETH MYERS, CAST MEMBER, NBC'S "SATURDAY NIGHT LIVE": I can't help but notice you keep mentioning places from New Hampshire.

HUNTSMAN: Well, it's not on purpose, Seth. I would never tie myself to one state. I like to spread my wings and fly like the purple finch.

MYERS: Which is, of course, the state bird of New Hampshire?

HUNTSMAN: You know a lot about New Hampshire, Seth.

MYERS: I'm from New Hampshire.

HUNTSMAN: Well, that makes sense, because you're kind and good looking.

MYERS: Governor Huntsman, as a proud New Hampshirite, I can tell you that we do not fall for easy compliments.

HUNTSMAN: That's because you're wise like a Dartmouth professor.

MYERS: All right. Well, thank you so much for coming.

HUNTSMAN: Are your parents registered voters?

MYERS: My mom is a Democrat, and my father is an independent.

HUNTSMAN: Say hi to your dad for me.

MYERS: All right.

(END VIDEO CLIP)

KING: Independents can vote in the Republican primary up there. It's a funny moment there. But it is a serious challenge. What's the bar for Governor Huntsman in New Hampshire? Do you have to win or come in second to succeed and move on? You've made clear New Hampshire or bust.

HUNTSMAN: We've got to beat market expectations, which I believe is a first or second-place finish. And I believe we will be there. The folks in New Hampshire, if you read history, they don't coalesce around any particular candidate until about a week or ten days out. I don't see that this election cycle will be any different.

KING: Enjoy your trip back to New Hampshire, Governor. We'll see you here in the debate tomorrow night.

HUNTSMAN: Thank you much.

KING: Thank you.

(END VIDEOTAPE)

KING: That's all from us tonight. See you right back here tomorrow. "ERIN BURNETT OUTFRONT" starts right now.