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JOHN KING, USA

Deal Reached to Extend Payroll Tax Cut; Bombings Rock Iraq; Interview With Minnesota Congresswoman Michele Bachmann; Interview with Rep. Kelly

Aired December 22, 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.

Important breaking news tonight, a deal that gives you more money by extending the Social Security payroll tax cut for two more months. Speaker John Boehner, who just this morning said no, that House Republicans would only support a yearlong extension, retreated this afternoon, made the announcement just minutes ago.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: We have fought the fight, the good fight.

But, you know, I talked to enough members over the last 24 hours who believe that, hey, listen, we don't like this two-month extension. We don't like this reporting problem in the Senate bill, and if you can get this fixed, why not do the right thing for the American people, even though it's not exactly what we want?

(END VIDEO CLIP)

KING: The full details of this payroll tax deal, the compromise and the reaction still coming in.

President Obama just put out a statement saying -- quote -- "For the past several weeks I have stated consistently it was critical that Congress not go home without preventing a tax increase on 160 million working Americans. Today, I congratulate members of Congress for ending the partisan stalemate by reaching an agreement that meets that test."

More reaction coming in as well. Let's get the very latest on the details and the political fallout.

Our senior congressional correspondent, Dana Bash, is with us, also our chief White House correspondent, Jessica Yellin.

Dana, let's go to the Hill first. I know the House Republicans are saying we have a tweak in the language here to help small businesses, but this is cave with a capital C, no?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Oh, yes. And it's tweak with a little T., barely you can see the T. in tweak. There's no question that House Republicans gave in here. You could see it in the House speaker's demeanor. You could hear it in his voice. He all but gave a concession speech both on the politics and on the policy of this, policy meaning, as he said, we fought the good fight.

There's no question that they were under intense pressure inside the Republican caucus from fellow Republicans in the Senate, from "The Wall Street Journal" editorial board and more importantly, I think, in the past 24 hours or so, John, from their own constituents.

We're hearing from Republican sources that members of Congress left here yesterday, they went back home and they were hearing from your constituents what are you guys doing? We don't want to lose $1,000 from our paycheck on average, get this done, fix it. That's what they did.

KING: Dana, now what happens? Most of them have gone home. They can use a process called unanimous consent. As long as no one objects, you need one Democrat and one Republican in the House, one Democrat and one Republican in the Senate. When will that happen? Is there a possibility somebody could still throw a wrench in this?

BASH: There's always a possibility somebody could throw a wrench in this. And the ways things have gone this entire year, that would be an apt end to this year.

But the likelihood is that it will happen tomorrow and the expectation is it will go through without having to have a formal roll call vote. I just got off the phone with one member of Congress who was on the conference call with the House speaker who said it was pretty clear that he's not going to take any revolt this time.

He described the speaker as tired and ticked off, something he had never heard from the speaker before and he just said this is what we're going to do and this is the deal, the call lasted 10 minutes, he hung up, and that was it. It doesn't look like he's got a stomach for -- he's been through a lot from his own caucus and from everyone else. And the House speaker does not have the stomach to let this go any further. It's very likely going to pass tomorrow.

KING: Dana, stand by.

Let's go to the other end of Pennsylvania Avenue.

Jessica Yellin, just this morning the president was out surrounding himself, as the president has the bully pulpit and the advantage to do, with some real people, saying these people are going to lose on average $40 a paycheck. Tonight the president is celebrating. Interestingly, from a political standpoint he decided to do it by issuing a statement, not by coming out. Why?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, this isn't done yet, John. So I think they're going to hold their fire until it's all signed, sealed and delivered. But I will tell you the fact that Dana just reported that Speaker Boehner is not going to take any revolts is going to be music to the ears of everybody right here inside the West Wing, because one of the frustrations, time and again, has been that every time they feel that they have come close to a deal with Speaker Boehner, it's sort of been Lucy and the football and Charlie Brown. All of a sudden it's been snatched away and things fall apart because he caves to something that happens in his caucus that's unexpected.

So they don't ever want to get ahead of the story and want to wait and see that the vote happens and it's done before they actually celebrate and pop that champagne cork. So I think they're just being cautious at this point. But this sounds like, you know, the speaker's really going to hold firm on this one. I wouldn't be surprised if we do hear from the president after things are done, John.

KING: Jess, from a White House perspective and the politics of this, one of the reasons the Republicans took their position at first is that many Republicans thought the president would blink.

And let's be honest. In the past, sometimes he has blinked. From a political perspective, what does team Obama think is the biggest lesson for them here in victory tonight?

YELLIN: Well, in this instance, first of all, they, you know, this is their point of view, they don't think they have blinked in the past. Inside the bubble, or inside their views they have their own view of things.

But in this instance, there was no question that they had the right policy on their side, you know, a very clear question of a tax increase for the American people that was going to hit everyone in the pocketbook. And then they had Democrats and Republicans on their side and even Senator Mitch McConnell.

When you have the guy who was the president's archenemy all year politically siding with the president all day today and through this issue, it was not even a hard call for the president to hold firm. I will tell you one big game changer, one game changer, if you will, was when the speaker called the president this morning, he asked, would you send your people up to Capitol Hill to negotiate with me today?

And the president said, no, I'm not negotiating with you. You have to talk to Speaker Reid's office. And then Speaker Boehner's office realized they had nowhere to turn, they had to deal with Speaker Reid. Then you had Mitch McConnell coming out and saying I'm not with you. And so he really had no space to maneuver.

KING: Jessica Yellin at the White House, Dana Bash on Capitol Hill, we will check back with both of you throughout the hour as news warrants.

Joining us now for some perspective, our senior analyst David Gergen.

David, you have been saying all week the Republicans were in an untenable position. Speaker Boehner over the weekend, maybe he heard from his conservative members saying you can't accept this deal. What do you believe was the key in the speaker going back to the very same members and saying, we're taking it now?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, John, as you know, there's this whole Kenny Rogers line that you have to know when to hold them and when to fold them, and it became increasingly obvious to Speaker Boehner he had to fold.

He was not only under pressure from constituents back home, but there was intense pressure coming from senior Republicans who believe this whole thing has been so botched that it has not only, you know, soured the American people once again on Congress and Washington, but it's left the impression that the real problem in a broken Washington is a Republican Party that is held hostage by the Tea Party.

And that was playing into a narrative that was very powerful for the president and Democrats next fall. I think it's the political reality of what they were facing that I think eventually forced their hands. Even though they -- as you and I talked about earlier this week on Monday on the merits they had a pretty good case for a yearlong. That's what President Obama wanted was a yearlong tax extension.

But on the politics, they were playing a terrible hand and they had to fold.

KING: Taxes will not go up in nine days, David. The American people will not have their payroll taxes go up. When those credit card bill from the holiday shopping come, they won't look at their check and say, whoa, I'm a little short of what I thought I was going to have in there.

Is this forgotten or will the price the Republicans paid this week carry over?

GERGEN: That's a really good question, John.

My sense is that the issue itself will be forgotten pretty quickly, but, symbolically, it had an importance that went beyond the merits or the immediacy. And that is coming right at the end of a really rotten year in Washington, it left the impression right at end that the real problem is the Tea Party and the extremism on the Republican side.

Even though Democrats deserve an awful lot of blame for what happened, what went wrong in Washington this year, there's no question that the year ended on a down note for Republicans. Even as they fold, there is symbolically, I think, some lasting damage. And overall, you have to say, if you look at overall picture over the last three or four months this has been a story, the bigger story is the resurrection of President Obama and Democratic hope for 2012.

KING: There's no doubt about that. If you look at -- again, it's a long way off, and a lot can happen, but if you look at the president's approval rating, especially among middle-class Americans, it's up, and his overall approval rating is inching up. We're talking in 2011, still approaching the new year. We will see what happens.

David, let me ask you this. A bit of a contrarian view or a contrarian question, you heard Dana Bash reporting there Speaker Boehner was ticked off, he was tired. He essentially told those freshman members who at times have pulled him along this year, this time you're listening to me.

Might there be an important lesson for them there? Could Speaker Boehner actually benefit from this in the long run? Next time around, can he say we're not doing that again?

GERGEN: I think so.

And I think he's going to get tougher because Speaker Boehner was put in a really awkward position. Not only were the Republicans getting hurt but there was a real chance Republican losses next fall would be larger than he expected, in which case Speaker Boehner's job might be in question as you well know.

The other issue here that I think has really gotten interesting is having made such an important argument, are we ever going to be able to return payroll taxes to their old levels? You know, this does have a lot to do with the viability of Social Security.

But if we are going to act like you can't raise taxes $1,000 in order to pay for Social Security, we have got a more severe problem than we ever thought we had with the deficits.

KING: Absolutely right. They have a severe problem that the only way to do this, the only way out of this -- the Bush tax cuts are about to expire. Now you have this payroll tax holiday on the books and it's become a huge political issue.

Like you say, the only way out of this is to do big comprehensive tax reform and try to get done before a presidential election.

David Gergen, appreciate your insights tonight.

We just want to one quick moment for those of you watching at home, again, this is not just a Washington political fight. This is money, would have been money out of your wallet. We assume now the deal's going to go through. We will watch it tomorrow and you can watch it with us.

But if now this compromise holds, $35,000 you make a year, that means you will keep that $700-a-year payroll tax holiday you have been getting in recent years, instead of having your taxes go up $27 a paycheck. If you make $50,000 a year, let's assume now that means you will keep that $1,000 payroll tax holiday next year, instead of losing nearly $40 a paycheck.

This is the number the White House is focusing on most. Those making about 75 grand, you will keep next year about $60 a paycheck. That's a paycheck every two weeks is the calculation the White House makes there. If you make more money, obviously, you will save more money. Still ahead here, an exclusive talk with Congresswoman Michele Bachmann, who says she's sensing something in Iowa that will shock the rest of us.

Plus, continuing coverage of tonight's breaking news, this deal now to extend your payroll tax cuts.

(COMMERCIAL BREAK)

KING: Tonight's breaking news: Your payroll taxes will not go up in the new year.

Within the past hour, Speaker John Boehner announced House Republicans now degree to a two-month extension. Now the speaker just this morning had said no, he wanted a one-year extension. Tonight, the speaker bowing to political reality.

With us now to discuss it, Democratic strategist and CNN political contributor Paul Begala, along with Republican strategist Nancy Pfotenhauer, who worked for the McCain campaign back in 2008, and Susan Molinari, a former congresswoman from New York, a Mitt Romney supporter in this presidential year.

You have experience in these deals in the United States Congress.

(CROSSTALK)

KING: I'm going to come to you first.

NANCY PFOTENHAUER, REPUBLICAN STRATEGIST: Lucky you.

KING: You have -- I know you are not a fan of him in the presidential race, but former Speaker Gingrich was out on the road yesterday saying Republicans are right on the policy, two months is a joke, it should be a year. They're right on principle. They should stand up and make the process work better in Washington. But they need to find their way out of this because the Democrat, an incumbent president, he said, in this case the Democrat, almost always wins.

Right?

SUSAN MOLINARI (R), FORMER U.S. CONGRESSWOMAN: It so pains me to say this, but Newt Gingrich in this occasion was right.

(LAUGHTER)

MOLINARI: This was a -- the Republicans were lagging on this discussion in the beginning, making it so that the Democrats were able to finally, you know, reclaim the mantle of the party of the middle class which they have not been all year. The Republicans ceded that.

Then I think the Republicans came up brilliantly with the Keystone amendment forcing the president to choose between his base and the independents who want to see job creation in the year of his election. They should have declared victory and gone home. It was an amazingly brilliant political move. It still will bear fruit. A year from now, no one's going to remember this, but this did not have to be fought.

KING: I agree with you a year from now people are not likely to remember the details of this. I think there could be a lasting piece of the who's on your side narrative that we will find out in a minute.

But, Nancy, to Susan's point, the Republicans, some people at home agree with them, some people at home disagree with them, but the Republicans have been remarkably disciplined, leader McConnell on the Senate side, Speaker Boehner since they took charge in the House, been remarkably disciplined in being together on strategy. Here it seems like they got right up to the goal line, they even got the Keystone pipeline and then they fumbled.

PFOTENHAUER: They did.

KING: What we have here is a failure to communicate obviously and that Mitch McConnell thought it was a good deal and Speaker Boehner couldn't sell it. What happened?

PFOTENHAUER: I think you really had idealists within the Republican Party saying correctly that a one-year extension would be far better for the economy and far better, by the way, for taxpayers and that they were tired of the "kick the can down the road" brinkmanship we that have seen over the last year.

Unfortunately, everything's timing in life. This did not go well. It was good policy and bad politics. Boehner knew it, because he's a professional, McConnell knew it because he's a professional, and they had to extricate.

KING: Paul, you're not always a fan of how this president communicates, President Obama.

Today, he used the bully pulpit, as any good president, regardless of party, would do in a fight like this. He surrounds himself at the White House with real people and says the Republican are wrong, don't listen to me, listen to real people.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Richard from Rhode Island wrote to tell us that having an extra $40 in his check buys enough heating oil to keep his family warm for three nights. In his words -- I'm quoting -- "If someone doesn't think that 12 gallons of heating oil is important, I invite them to spend three nights in an unheated home, or you can believe me when I say that it makes a difference."

(END VIDEO CLIP)

KING: Not a natural populist, but they figured this one out.

PAUL BEGALA, CNN POLITICAL ANALYST: Right.

That is an event Ronald Reagan could have done 30 years ago. Bill Clinton certainly would have done 15 years ago. And bully for President Obama. This question of who's on your side to me can be the defining issue of his reelection campaign.

I think 2010 was all about who is going to cut spending and Republicans always win that fight. If President Obama, and it looks like he's spent the whole year moving the debate off of who is going to cut spending and on to who is on your side.

And now the Republicans, God bless them, and I do -- I publicly want to thank them for doing what my party could never have done on its own, which is redefining the Democrats again as the party of the middle class and Republicans the party of the rich. We know how to run this playbook. It is. It's just a gift. And I want to thank them. They're filled with the spirit of the holiday season.

KING: I don't mean this the way it's about to come out, because I have great respect for people in both parties in position of leadership. But Speaker Boehner is sometimes like a puppy dog in the sense that you can see his emotions on his face. He might be trying to say I won this one, but you can tell by his eyes that he didn't. Look at the speaker earlier.

(BEGIN VIDEO CLIP)

BOEHNER: Sometimes, it's hard to do the right thing. And, sometimes, it's politically difficult to do the right thing.

But, you know, when everybody called for a one-year extension of the payroll tax deduction, when everybody wanted a full year of extended unemployment benefits, we were here fighting for the right things. It may not have been politically the smartest thing in the world, but I'm going to tell you what. I think our members waged a good fight.

We were able to come to an agreement. We were able to fix what came out of the Senate.

(END VIDEO CLIP)

KING: Is he hurt by this? Is his standing with his own caucus hurt by this?

MOLINARI: I think everybody gets that this was a fractured caucus, to your point.

I think, John, actually the speaker helped himself because he came up with what was a really smart strategy and he was sort of pushing against the ideologue, for better or for worse. I think at end of the day he was the one that cracked the whip and said we're not winning this, it's time to cut our losses and slink back.

Let me just say something, though, because it is always easier for an incumbent president, one president, to stand up there and have the bully pulpit, and you don't even have to be a great communicator to be that one person who is out there to make the speech when you have to deal with a multitude of ideologies that make up one political party. There's no one in the Republican Party that wants to see anyone go without their heat or to go cold. What they were trying to do, to Nancy's point, was to say, two months, three months is not really workable and it's not practical. Let's act like grownups and get a real deal. When it looked like that just wasn't going to happen and they...

(CROSSTALK)

KING: But that -- they lost that argument.

Look, whether Democrats or Republicans, a two-month extension of a tax policy is foolish. It's foolish.

And the way Washington works right now is childish. I think we can all agree on that at the table. But they lost that fight when a majority of Senate Republicans joined Democrats in embracing the two- month extension. Nancy, if Republicans were going to hold, that's when they had to told.

PFOTENHAUER: I agree with you.

And to the extent that the speaker's been hurt by this, it's probably because he didn't understand his own caucus well enough and communicate that well enough to Senator McConnell, so that the right flank could have held strong, if you will, because I do think they had the better policy.

One thing that is sad is to me in this in that the American people are angry at the House of Representatives. If I were going to be angry at anybody, body of government, it would be the Senate. The House has produced a budget. The House has done things that the Senate has just punted on. It's been almost three years since the Senate's even produced a budget.

So I'm a little annoyed that they're coming out looking like the heroes.

(CROSSTALK)

MOLINARI: And I think it does go to something that's already been said. It wasn't the argument as much as it was the timing.

I think if the Republicans advanced the arguments on all of these things, the extension of the payroll tax, which they intended to do but never talked about politically, and three months, two months vs. a year, if they started that conversation first, they would have won this.

KING: What happens next year? Because you're all smarter than I am on the math. But we have been taking this money out of the Social Security trust fund. It's a payroll tax holiday.

It comes out of the Social Security trust fund. The George W. Bush tax cuts are about to expire. Eventually, I assume the argument is you don't want to keep undermining Social Security so you need to take that money back, but you don't want to raise taxes on people, which means you have to do tax reform.

No way in you know what that's going to get done between now and a presidential election. How do they deal with the tax issue now? They're going to have to deal with it again.

(CROSSTALK)

BEGALA: Here what Senator Bob Casey, a former client of a mine and a dear friend of mine, the chairman of the Joint Economic Committee, proposed. Income over $1 million, first million dollars, you pay the same rates you have been paying. Over $1 million, they tack on a 1.9 percent surtax.

(CROSSTALK)

KING: That's not going to happen in an election year.

(CROSSTALK)

BEGALA: Oh, Democrats want that fight. They think it's a better policy, because then you're asking millionaires, like big shot cable news hosts, to pay 1.9 percent more on the money after the first million, so you can give a tax cut to working-class people.

That's better policy, better for the economy and it's certainly better politics. I think Senator Casey and the Democrats have the better of the argument here.

KING: You will all be back as we fight that one out next year.

(CROSSTALK)

PFOTENHAUER: Taxing job creators at this time is not a good idea.

(CROSSTALK)

KING: The breaking news tonight is your taxes will not go up in nine days, but remember this. There will be debates about this as soon as Congress gets back after the holidays.

Paul, Nancy, Susan, appreciate your coming in.

When we come back, developments, new developments after FedEx officials watched a video of one of their own deliverymen delivering a package, well, the hard way.

Plus, the most searched term on the Internet. Here's a hint. It's been on top three years in a row.

(COMMERCIAL BREAK)

KING: Major story developing overseas tonight. At least 66 people died and 196 wounded today in a coordinated series of bombings across Baghdad. Less than a week after the last U.S. troops pulled out of Iraq, the country seems to be descending into chaos. CNN's Arwa Damon joins us live now from Baghdad.

And, Arwa, how tied is this violence to what seems to be a political unraveling?

ARWA DAMON, CNN CORRESPONDENT: It most certainly is a political unraveling and perhaps the beginning of the collapse of this government, John.

Now, when it comes to the violence and politics here, the two tend to be fairly intertwined in the sense that political instability creates a vacuum and that vacuum when it comes to Iraq tends to be filled by terrorism.

For the Iraqis the challenge is not just going to be going after al Qaeda cells, training up the Iraqi security forces. If they really want to combat violence, they need to create political stability.

There are any number of extremist groups still operating in Iraq, not just al Qaeda, who view the political instability as being an opportunity to carry out acts of violence, because they believe that through violence they can grab power.

KING: Arwa, the U.S. troops are gone. Is there anything the United States can do to try to resolve this crisis, to help in any way or is the United States now powerless?

DAMON: Well, the U.S. is trying in the sense that it is urging the various political players here to try to get around a table and rebroker some sort of a power-sharing agreement.

But beyond that, the U.S. really does not yield all that much influence, although that's not necessarily a bad thing, because the current government largely came together because of a power-sharing deal that was to a certain degree negotiated by the U.S.

The opposing bloc to Prime Minister al-Maliki's State of Law coalition, the Iraqiya bloc, says flat out that the U.S. put them under immense pressure to accept this power sharing deal that they say at the end of the day was nothing but a sham and that, they say, is what has led to the current unraveling of the government that could potentially down the road lead to even more violence, John.

KING: Arwa Damon live in Baghdad for us tracking this disturbing story, Arwa, thank you.

(NEWS BREAK)

KATE BOLDUAN, CNN CORRESPONDENT: And you have to remember those incredible pictures of the 2004 Indonesian tsunami sweeping everything away in its path.

Just recently a 15-year-old girl arrived in a small town telling people she was looking for her mother. She was only 8 when the waves swept her away from her mother. The girl not only survived, but people in the town helped her reunite with parents and relatives who had given her up for dead seven years ago.

John, can you believe that?

KING: Yes. I teared up -- I teared up this morning hearing about this story.

When I was there after the tsunami, I spent a day with a gentleman named Sabri (ph) going through refugee camp after refugee camp after refugee camp. He was trying to find his 2-year-old daughter, who he was holding, and, when the waters came, they pulled her away. Never found her. So it's remarkable.

UNIDENTIFIED FEMALE: Seven years later, that they can be together again. Amazing.

KING: It's remarkable, seven years later. That's a miracle. Thank you.

Up next, we're going to go back to our reporters at the White House and Capitol Hill with the latest details on tonight's breaking news. A deal to extend the Social Security payroll tax cuts. Meaning your taxes will not go up in nine days.

Plus, today's moment you missed: Mitt Romney, he tries to show at least he's just like us.

(COMMERCIAL BREAK)

KING: An exclusive conversation with Michele Bachmann, who says we're all in for a big surprise in Iowa. And in about 15 minutes tonight's "Truth" explores the decision by Santa Claus to take sides in campaign 2012.

But this hour we're continuing to cover breaking news, reaction continues to pour in after House Speaker John Boehner and his fellow Republicans cave and agree to let you keep a tax cut. Just this morning the speaker said there was no way Republicans would give in. They would not take a two-month extension. He said it had to be a one-year extension of the Social Security payroll tax. But less than an hour ago, Speaker Boehner changed his tune.

(BEGIN VIDEO CLIP)

JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: We have fought the fight, the good fight. But you know, I talked to enough members over the last 24 hours who believe that, hey, listen, we don't like this two-month extension. We don't like this reporting problem in a Senate bill. If you get this fixed, why not -- why not do the right thing for the American people, even though it's not exactly what we want?

(END VIDEO CLIP)

KING: Tax cut extensions now supposed to be approved by Christmas; emphasis on supposed to be because this has been kind of quirky. Chief congressional correspondent Dana Bash joins us again from Capitol Hill. Any questions at all this will be approved by Christmas, and taxes will not go up, even temporarily?

DANA BASH, CNN CORRESPONDENT: Well, you said it's been quirky, so I'm going to stick with that. But you know, you never know that it's going to be done until it is done. But there is every expectation that tomorrow we will see this two-month extension of the payroll tax, this two-month extension of people's money in their paycheck continue, and it will pass. I don't expect that to change.

What's very interesting is that the House is not calling members back to actually vote on this. They're going to try to get this through and hope that nobody objects. And what's even more interesting politically is that the House speaker when he had a conference call with his rank and file just about an hour and a half ago, John.

He just announced the deal. He said, "This is what it is. This is what's going to happen. And he did not allow any time for questions and answers or, more importantly, the complaints, the kind of complaints that really led the House Republicans to this problem that they had where the Republicans said, "We didn't like this two- month deal," but now they're caving.

KING: Fascinating point there. Our CNN congressional correspondent, Dana Bash. And let's talk now to one of those Republicans who was on that call. Representative Mike Kelly of Pennsylvania, freshman Republican.

Let me start right there, sir. Just two days ago you issued this statement: "The American people deserve better than the short-term, short-sighted solution that the Senate was willing to give them." Tonight, your speaker says, tweaking a little tiny bit of language, but essentially, you have to embrace now what you call short-term, short-sighted solutions. You OK with that?

REP. MIKE KELLY (R), PENNSYLVANIA: Well, no, I'm not OK with it. Here's what I'm not OK with. I was up and down the 3rd District in Northwest Pennsylvania today, John. You can see the frustration in people's faces; you can hear it in their voices. They want certainty. They want to know that they can go forward into the next year having some type of an idea that, at least for one year, you know, something's going to be done.

This -- why the agreement was made, I don't know. I wasn't in the conference. I listened to the conference call, but I wasn't in the conversation. So I've got to tell you, you know, the colleagues that I came to Congress with this year, the freshmen, we came with a real sense of purpose. And we were sent to fix the way Washington works.

So am I disappointed? Yes. But I'll tell you what, I have more resolve now than I ever had to get back to Washington, make sure we fix this. This is not so much for me. I'm going to sit at that Christmas table in a couple days with my four children and my five grandchildren, and I'm going to tell them, "Your grandpa's not giving up. We're not going to quit. We're going to get it fixed." Because at the end of the day, this is not about Republicans or Democrats. It's about the American people. They are so disgusted with the fact that we can't come up with a fix, and we've got to do that.

KING: Congressman, you could if you wanted to. It's a couple hours drive from where you are in Washington, D.C. You could come to the Capitol tomorrow and say, "I object" and break this deal if you don't like it. Will you do that?

KELLY: Hey, John, you know what? I'm not so sure I'm not going to do that. I've got to get more information right now. I've got to find out more in the language. I just know, from a standpoint of did it add certainty? The only thing it's add is certainty.

For me, it's the fact that we don't project what the American people are looking for. This is a country that's always led. You can see behind me in Pittsburgh we've got a quarterback that played with a broken ankle. We've got a linebacker suspended because he's too tough. Are you kidding me?

Northwest Pennsylvania, we're going to keep fighting to cut the spending and get this country back in shape for everybody. Not just Republicans, not just Democrats, but for every single American family. That's our duty. We can't opt out on this; we've got to get it done.

And I'll tell you what. I may take that ride. I may get in my car right now and drive down. I'm that -- I am that -- I'm just so determined that we have to get this fixed for the people that sent us.

KING: Are you mad at the speaker? Did the speaker cave here?

KELLY: I'm not mad at the speaker, because the speaker's under great pressure. He's done everything he can to bring us in. I think that there's so much confusion. And again I go back to my colleagues. We have so much resolve. There's nobody that came for a career. I've got to tell you, I have a great career. I have a great family. Going to Washington every week and fighting that fight, it's just -- it's a fight that I have to do right now.

My parents fought World War II. They fought the depressions, everything else. They didn't do it because they wanted to. They did it because they had to. And we've got to get this fixed for the American people right now. We've got to let them know this is the greatest country in the world. It's the greatest country in the world because we've got great people willing to fight the right fight.

And we've got to keep doing this. We've got to start to live within our means and start to bring those together to give the folks that are out there that depend on us every day to do right thing, let us do the right thing. I'm getting so tired of hearing about the political strategy: who won, who lost. You know, at the end of the day, the American people have to win. It's not about the party. It's not about politics. It's about the American people. And we're going to fight that fight. And we're not going to give up until we get it fixed. KING: Congressman, if you decide to make that drive, let us know. And we'll have a convo. We'll continue this conversation tomorrow. If not, sir, merry Christmas. And we'll talk to you on the other side of the holidays. This fight, as you mentioned, is not over, no matter how this one ends up.

KELLY: It's not over. And I'll tell you what. I'll let you know. I may saddle up and start down there tonight before -- before too long. Merry Christmas to you and to all our viewers, John.

KING: Take care, Congressman. Thank you so much for your time tonight. You might be surprised by Congresswoman Michele Bachmann's take on the payroll tax extension fight. She's joining us from Iowa for an exclusive interview tonight.

Plus, this year's most searched term on Google. It's a repeat and, no, it's not a politician.

(COMMERCIAL BREAK)

KING: "ERIN BURNETT OUTFRONT" coming up at the top of the hour. Erin's here with a preview. And Erin, in the middle of this payroll tax partisan dust-up, you're going to sit down with the Massachusetts senator, Scott Brown, tonight.

ERIN BURNETT, CNN ANCHOR: That's right. We're going to talk to -- talk to Senator Brown. He had been one of the ones who had said this was just irresponsible and totally out of line by House Republicans. Got a lot of attention, because he was the most vocal in an angry way at his own party for what happened in the house.

Obviously, you know, you've been talking this week about now you've got people around the country having more confidence in the president to deal with the problems than they do with congressional Republicans. And you've seen the Republican Party approval ratings go down as Obama's has come up. So we're going to talk about all of that with Scott Brown who, as you know, is in a fight for his seat up in Massachusetts.

And also going to talk to the governor of Iowa about who he's voting for and who he thinks is a sleeper that you should be watching right now in Iowa that right now is not the center of media attention.

All of that coming up, top of the hour, John.

Back to you.

KING: We'll see you in just a few minutes, Erin. Thanks.

Michele Bachmann needs another Iowa surprise. The Republican presidential contender won the Ames straw poll back in August, and is counting on her grassroots supporters to shock the establishment again when Iowa votes just 12 nights from tonight.

The Minnesota congresswoman now crisscrossing Iowa on a bus tour. She joins us this evening from Marengo, Iowa. Congresswoman, it's good to see you. I want to get to Iowa and the campaign in a minute. I want to ask you about an issue that is big here in Washington and is reverberating around the country.

The president says House Republicans should compromise, give in, pass a temporary extension of the payroll tax cut. The Senate Republican leader now says they should give in and pass that temporary extension. And John McCain, who was your party's presidential nominee in the last cycle, says the GOP is getting hammered here. Listen.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: It is harming the Republican Party. It is harming the view, if it's possible anymore, of the American people about Congress. And we've got to get this thing resolved. And with the realization that the payroll tax cut must remain in effect.

(END VIDEO CLIP)

KING: Should Speaker Boehner and your fellow House Republicans give in here?

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: Well, the real problem is that this is one more temporary gimmick. It's not a permanent solution. That's been the problem from the beginning. President Obama's unwilling to lead to get the country back on the track of job creation. This isn't going to create jobs, John. That's the president's problem in all of this.

He said if we lower the payroll tax that it will create jobs. There's not a shred of evidence it created jobs. All it did, John, is blow a $111 billion hole in the Social Security trust fund. It put at risk Social Security checks for senior citizens. I'm not willing to do that.

What I want to do is have a permanent solution that's actually going to create jobs. What we have to do is abolish the tax code and lower the tax rates on businesses so we can create jobs.

This is just more smoke and mirrors on the part of the president. This is what people hate all across Iowa. I just came from Brooklyn, Iowa, and a guy said, "Why is Congress doing this to senior citizens?" I'm with him; he's exactly right. I told my colleagues last year don't fall for the gimmick for President Obama.

KING: In the short term, Republicans are going to take the political heat here. Should they agree to some temporary compromise to help with the politics, or should they just hold firm until you get to the long-term debate?

BACHMANN: We need a long-term answer, and that's what we need to do. It was wrong for Harry Reid to lob a bomb into the House and then dismiss all the senators and send them on recess.

This is, again, complete failure in Washington. People are tired of it. That's why we need a new president, a new leader. I'll be one tough leader with an Iowa voice coming to Washington, saying, "Come on. Let's get it together, and get the country back on track." People are tired of it. They want jobs.

KING: And you make the case that you believe you'd be the tough candidate against the president of the United States. You've made it with me before. I want you to listen here...

BACHMANN: Absolutely I would.

KING: ... to yourself on the CBS -- I want you to listen to yourself on "The CBS Morning Show" just the other day.

(BEGIN VIDEO CLIP)

BACHMANN: I'm the only one that will be able to debate Barack Obama on the stage and defeat him. And I think it's very important that we have a candidate that can go toe to toe with Barack Obama.

(END VIDEO CLIP)

KING: You have confidence, Congresswoman Bachmann, you are that candidate. But in our polling we asked Republicans -- this is polling of Republicans -- who would you not support under any circumstances? Forty-two percent of Republicans, four in 10 Republicans, say they would not support you under any circumstance.

If you look at the head-to-head matchups, Governor Romney, Congressman Paul, Speaker Gingrich all do much better than you do head-to-head right now in our polling up against President Obama. We asked that question last week, and it was 58 percent Obama, 37 percent Bachmann. How can you make the case you're the best candidate?

BACHMANN: Well, John, everyone said the same thing before the Iowa straw poll, and I won the Iowa straw poll, the only statewide election we've had so far.

January 3 will tell the tale. We've had incredible numbers of people switching. People are undecided. They've been switching over toward me because they know that I will be the candidate to take on Obama. I did in the last debate. I took on Ron Paul over the issue of a nuclear Iran. People see that I am the one that will have the ability to take it to Barack Obama.

And that's what we're seeing here in Marengo, Iowa, as well. We're at the Deuce Cafe today, and people are very excited. They want a new president. They know that Barack Obama needs to be a one- termer. They want somebody who's going to speak with their voice forcefully, and I will. I look forward to being able to do that in the upcoming caucuses January 3, and Iowa then will get to have their voice, not the media. It will be real people in Iowa, and they want somebody who's going to represent them. And they're seeing that I'm the best candidate to do that.

KING: I'm with you 100 percent. It's time for the people to make their choices here. The people decide this, not the media. In the latest polling, though, of Iowa Republicans -- these are Iowa Republicans, not the media, answering the poll -- you come in fifth place right now. Your campaign doesn't have the resources of many of your rivals, and therefore, you're not up on television in the state right now.

If you place fifth in Iowa, Congresswoman, would that be farewell? Do you need to be in the top three or four?

BACHMANN: You know, John, all you're doing is just continuing to spin all the negative media spin.

In our race here, we're doing what no other candidate is doing. We're going to all 99 Iowa counties over a ten-day period. This is phenomenal what we're seeing here on the ground.

Iowa is not just a media state where you buy time. It's real people. It's person to person, voter to voter. And that's what we're doing. We're making a very real campaign, a positive campaign. And people are responding positively. People are going to be shocked what happens on January 3.

We're thrilled with the response. There's polls up and down all day. Who cares? The main thing is, what happens January 3? And real people are going to have their say. That's what I have behind me right now. All these good-looking people here in Marengo, Iowa. And they have something to say to CNN, and it's Michele Bachmann on January 3.

KING: Congresswoman Bachmann, we do appreciate the enthusiasm of your supporters, and we'll see. We'll see if this -- I like the old- fashioned go 99 counties way.

BACHMANN: Say hi to John, everybody. Say, "Hi, John."

UNIDENTIFIED MALE: Hi, John.

UNIDENTIFIED MALE: Hi, John. UNIDENTIFIED MALE: Hi, John.

KING: Tell them John says hi back. Congresswoman Bachmann, we'll keep in touch over the next 12 days. Thank you for your time today from Iowa.

BACHMANN: OK, thanks. From Iowa county, bye-bye.

KING: Ahead, his $20 million dream home is almost finished. We'll tell you what famous patriot will soon be hosting Tea Parties in that new Hollywood mansion.

Plus, why Britney Spears is generating buzz on the Internet tonight. Kate Bolduan is going to tell us why, next.

(COMMERCIAL BREAK)

KING: It's Christmas week, of course, so the mailbox is full of greetings from family and friends, new holiday pictures from the nieces and nephews. Some cards that are quite solemn; others that are pretty silly. And then, if you live in Iowa, there's this.

Glossy mailings about the presidential race, some of them just fancy resumes detailing a candidate's views on the issues. But many of them are, for lack of a better term, well, holiday hits. Santa even has a starring role in this one, suggesting President Obama's biggest Christmas wish is Newt Gingrich as the Republican presidential nominee. Here, a different look but the same message. First he wished for Obama care, now Newt.

Both of those Christmas-themed attacks from a political action committee that supports Mitt Romney, not the Romney campaign mind you, but some friends of the former Massachusetts governor. Ho-ho-humbug, right? The super PAC that stole Christmas? Well, here's tonight's "Truth."

An age-old lesson for the Republican Party: sometimes you gets what you ask for. Should the campaigns and these so-called super PACs have better Christmas season taste? Of course they should. But direct mail is a time-tested campaign tactic, and it works best when it's delivered in the final two weeks or so before election day.

Iowa votes in 12 days. Iowa's vote was, say, January 10, January 17, it would be different. But Iowa jumped up to January 3, because of the silly debate we have every four years, whether Iowa and New Hampshire deserve their place at the head of the nomination.

Truth is, I like Iowa and New Hampshire going first. But if that means a vote nine days after Christmas, well, then don't be surprised if Santa appears in an attack ad and mailings. Sometimes you get what you asked for.

Now here's Kate Bolduan with the latest news you need to know right now.

BOLDUAN: Hi, again, John.

Hey there, everyone.

Tonight, there are new signs distrust between the U.S. and Pakistan. The Pentagon says a review of the November air strike that killed two dozen Pakistani troops shows U.S. forces were targeted and engaged three times and acted in self-defense.

(BEGIN VIDEO CLIP)

GEORGE LITTLE, PENTAGON SPOKESMAN: The loss of life. And for the lack of proper coordination between U.S. and Pakistani forces that contributed to those losses, we express our deepest regret.

We further express sincere condolences to the Pakistani people, to the Pakistani government, and most importantly, to the families of the Pakistani soldiers who were killed or wounded.

(END VIDEO CLIP) BOLDUAN: Pakistani sources say their own investigation contradicts the U.S. findings of self-defense.

In other news, the Web site Mashable has released a list of the most searched terms on the Internet. The winner, what do you think? Facebook. It's the third year in a row that the popular social media site has topped that list. Wonder why people keep having to search it, though?

Facebook isn't the only social media site claiming success today. What are those sweet tunes I hear? Google celebrating two things to a pop star. Not that we ever doubted the enduring popularity of singer Britney Spears, but she's racked up another career first. "PC" magazine reports she's the first Google Plus member to reach 1 million followers.

John King is close behind. Google's challenge to Facebook launched last June.

And finally, take a look at this. This is the very impressive, brand-new $20 million dream home of New England Patriots quarterback Tom Brady and his supermodel wife.

According to Boston.com, the house has eight bedrooms, a covered bridge, a six-car garage and a lagoon-shaped swimming pool. Sounds very nice. And one heck of a commute to Boston.

So, my favorite Bostonian, clearly you bought them a housewarming gift, right?

KING: That's the house that Giselle built. I wouldn't call that the house that Tom built. Maybe he's going go Hollywood. I have a great housewarming gift. This is for Giselle or Tom. What do you think? Old-school Patriots? You see that right there? That's before Tom played, but he knows. They have the -- they do have the old uniforms they bring out every now and then. But I don't know, cufflinks for a housewarming gifts? That's better for a birthday or Christmas.

BOLDUAN: Birthday, Christmas. I mean, these are two people that have everything that they could possibly need, so maybe just a holiday card from John King.

KING: OK. And here's a moment you missed. You know, every candidate wants you to have you think, "I'm just like you. I do things just like you. I go to the grocery store, or even with prices as they are today, I pump gas."

Mitt Romney, the former Massachusetts governor, he's a very wealthy man. A private businessman. Look at this picture. This is his campaign bus. He's in Lancaster, New Hampshire, there.

Now, Democrats had a field day with this, because they say, do any of you use two hands when you pump gas? They were trying to make the case that Governor Romney doesn't do this all that often.

I wonder if it's on his credit card.

BOLDUAN: I mean, I'm -- we pump our own gas, but in that size of a bus, I don't know. Maybe it requires two hands. I'm not going to be the judge.

KING: Does the hose -- the hose reacts differently based on the size of the bus? I don't think so.

BOLDUAN: I think we're walking into dangerous territory.

KING: Well, it's -- you know. When you're a candidate, everything you do, everything you do...

BOLDUAN: Everything.

KING: ... everything you do is scrutinized. Kate, we'll see you tomorrow.

That's all for us tonight. Hope to see you tomorrow night. "ERIN BURNETT OUTFRONT" starts right now.