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STATE OF THE UNION WITH CANDY CROWLEY

Interview with Republican Presidential Candidate Texas Rep. Ron Paul; Interview with Iowa Republican Representative Steve King; Interview with Iowa Governor Terry Branstad; Analyzing the 2012 GOP Presidential Contenders

Aired January 1, 2012 - 09:00   ET

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


CANDY CROWLEY, HOST: Good morning and happy new year from Iowa, a state where Romney could begin to end it, Paul could complicate it, and any candidate could surprise.

Today, Ron Paul on the perils and promise of the efforts here and Rick Santorum on the sudden spotlight over his booming campaign.

Then, the lay of the land from two influential Iowa Republicans, Governor Terry Branstad and Congressman Steve King.

And fresh off the campaign trail, "The Washington Post" Dan Balz and "The Wall Street Journal's" Neil King give us their perspective.

I'm Candy Crowley in Des Moines. And this is STATE OF THE UNION.

It's been a rough couple of weeks for Ron Paul. His top-tier seating has brought new scrutiny to some of his old writings. He is now a big enough threat to draw near unanimous dismissals from opponents.

(BEGIN VIDEO CLIP)

FORMER GOV. JON HUNTSMAN JR., R-UTAH, PRESIDENTIAL CANDIDATE: He's unelectable.

FORMER SEN. RICK SANTORUM, R-PA., PRESIDENTIAL CANDIDATE: You need to think very long and hard about in casting your vote for Congressman Paul.

FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: One of the people running for president thinks it's OK for Iran to have a nuclear weapon. I don't.

REP. MICHELE BACHMANN, R-MINN., PRESIDENTIAL CANDIDATE: Ron Paul is not getting the nomination.

GOV. RICK PERRY, R-TEXAS, PRESIDENTIAL CANDIDATE: Someone that's so out of sync with the American people that they don't need to be the President of the United States.

WOLF BLITZER, HOST, THE SITUATION ROOM: Could you vote for him?

FORMER REP. NEWT GINGRICH, R-GA., PRESIDENTIAL CANDIDATE: No. (END VIDEO CLIP)

CROWLEY: Through it all Paul's proven support in Iowa has not wavered. He is marching on, dropping major cash for ads in New Hampshire and South Carolina, and he's confident enough about Iowa to spend this weekend at home in Texas. I spoke to the Congressman earlier this morning.

Congressman Paul, thank you so much for joining us this morning. A new "Des Moines Register" poll is out. It shows you in second place, very close to Mitt Romney at this point.

Another figure that caught our eye goes back to what so many of your colleagues on the campaign trail have been saying about you this weekend, that is that you are unelectable. That has been quite the word when they talked about you this week. And in this poll, 29 percent of likely Iowa Republican caucus-goers also found you the least electable of all the candidates. Why is that?

REP. RON PAUL, R-TEXAS, PRESIDENTIAL CANDIDATE: Well, maybe it's not true. I've been pretty electable. I was elected 12 times once people got to know me in my own congressional district. So I think that might be more propaganda than anything else. So we'll wait and see. And we'll know a lot more about how the election goes tomorrow.

CROWLEY: Being elected among folks that know you in a small district in Texas is somewhat of a less daunting task than across the country, and there is the feeling -- and I'm sure you heard your colleagues say he's not electable, he's too far outside the mainstream, his views on foreign policy, et cetera, et cetera,.

I wanted you to respond again to that, but I want you to listen. You've been very tough on Newt Gingrich, calling him a serial hypocrite, et cetera, et cetera. And he replied in kind. and I want you to take a listen to what he had to say.

(BEGIN VIDEO CLIP)

GINGRICH: I think as a protest, he's a very reasonable candidate.

As a potential president, a person who thinks the United States was responsible for 9/11, a person who believes -- who wrote in his newsletter that the World Trade Center bombing in '93 might have been a CIA plot, a person who believes it doesn't matter if the Iranians have a nuclear weapon, I'd rather just say you look at Ron Paul's total record of systemic avoidance of reality.

And you look at his newsletters and then you look at his ads. His ads are about as accurate as his newsletters.

(END VIDEO CLIP)

CROWLEY: So, Congressman Paul, you have denounced these newsletters that he's talking about. But, again, the idea that your views are outside the mainstream, about 9/11 and so many other things, your reaction? PAUL: Well, that's a gross distortion, and you could spend a long time trying to, you know, dispute what he's saying, but it's gross distortion. But the bigger question is why are the rallies going so well for him? Why are the crowds getting bigger and bigger?

Why is it that 70 percent of the American people want us to get out of Afghanistan? Why do about 85 percent of the people want us to rein in the Federal Reserve? Why do so many, especially conservative Republicans, want us to cut back, and nobody is offering any cuts?

So I would say that I'm pretty mainstream. I think that people who are attacking me now are the ones who can't defend their records, and they've been all over the place. They've been flip-flopping and they can't defend themselves. And they're having a little trouble finding any flip-flops on me, so they have to go and dig up and distort and demagogue issues.

But if you look at the real issues that count, I wish we would concentrate on that, and that is the foreign policy, the spending, the monetary policy, the personal liberties that I talk about all the time. And under those -- with those conditions, this is where I get the support.

And not only is it with Republicans, but these views are really, really, you know, attractive to the independents and the Democrats. So the rallies, it is true, people say, oh, well, he's going to have some independents come in.

Well, that's the name of the game. You get people. You bring coalitions together. You get the frustrated progressives, you get the independents, you get the Republicans who truly want spending cuts. And, all of a sudden, I'm mainstream. So they're looking for things. They're struggling. And they're demagoguing the issue.

CROWLEY: Let me ask you, you have addressed a lot of these complaints about past writings that were at least under your name, but that you said you had no knowledge of and didn't write. But there was one thing that caught my eye, when I was looking through some of the briefing books.

And it was something that was in the Congressional Record that you inserted into the Congressional Record from June of 2004. And I wanted to talk to you about it. You said, contrary to the claims of the supporters of the Civil Rights Act of 1964, the act did not improve race relations or enhance freedom.

Instead, the forced integration dictated by the Civil Rights Act of 1964 increased racial tensions while diminishing individual liberty. So my question to you is, whose individual liberty did it diminish? And do you think the country would have been better off in terms of race relations without the Civil Rights Act of 1964?

PAUL: Well, we just could have -- we could have done it a better way because the Jim Crow laws, obviously had to get rid of and we're all better off for that. And that is an important issue, so I strongly supported that. What you don't want to do is undermine the concept of liberty in that process. And what they did in that bill was they destroyed the principle of private property and private choices.

So if you do this, all civil liberties are protected by property rights, where it's your TV stations -- that's a piece of property -- or whether it's the newspaper, whether it's the church building, or whether it's the bedroom. This is something that people don't quite understand, that civil liberties aren't divorced from property.

So if you try to improve relationships by forcing and telling people what they can't do, and you ignore and undermine the principles of liberty, then the government can come into our bedrooms. And that's exactly what has happened.

Look at what's happened with the PATRIOT Act. They can come into our houses, our bedrooms our businesses. And so the principle private property has been in their mind. And it was started back then.

But they can't twist that and say that I was against or favored Jim Crow laws or anything else. I mean, it's the government that causes so much of the racial tensions, when you look at anything from slavery on down to segregation in the military and the Jim Crow laws.

And right now, the real problem we face today is the discrimination in our court system, the war on drugs. Just think of how biased that is against the minorities. They go into prison much way out of proportion to their numbers. They get the death penalty out of proportion with their numbers.

And if you look at what minorities suffer in ordinary wars, whether there's a draft or no draft, they suffer much out of proposition. So those are the kind of things of discrimination that have to be dealt with, but you don't ever want to undermine the principle of private property and private choices in order to solve some of these problems.

You need to repeal the very, very bad laws that governments have propagated over the many centuries, because it is the government, so often, that institutionalized segregation and slavery and all the other things.

So the understanding of private property would solve our problems. And we indeed need to look at the war on drugs, if anybody cares about the -- about the abuse of our civil liberties and the abuse of minorities in the court system.

CROWLEY: Congressman, stick with me a minute. After the break, more with Ron Paul on his Republican rivals and those never-ending rumors about a third party bid.

(COMMERCIAL BREAK)

CROWLEY: Back with Republican Presidential Candidate Ron Paul.

Congressman, on Iran, a lot of your colleague on the campaign trail have said this idea that it's OK for Iran to require -- to acquire nuclear power, which you have -- they say you have suggested is no big deal, is one of the huge things that they hit you on.

We're now learning that scientists in Iran have produced the country's first nuclear fuel rod, this according to Iran itself. Does nothing give you pause about a country like Iran, which is an enemy of the United States, basically, acquiring nuclear weaponry?

PAUL: Sure, it does, and those words you were trying to put in my mouth just aren't true. I'm very concerned about it. As a matter of fact, I would like to see a lot less nuclear weapons.

At least Iran is in the Nuclear Non-Proliferation Treaty, and that's a step and they do have inspections. The AEIE did not find any evidence that they are on the verge of a weapon.

You know, and even the head of the Mossad in Israel are saying, well, you know, they -- even if they had a weapon they are not an existential threat. So I think we need to get this in the balance.

I don't want them to have a weapon. We have to be careful. We have to contain them if they do get one. But if even Israel's top Mossad leaders are saying they would not be an existential threat and we if we said go easy -- as a matter of fact, Myer Dagan (ph) said bombing those sites right now would be stupid.

So I would say that we just need to be more cautious. I think if we overreact and participate in bombing Iran, we're looking for a lot more trouble. We went into Iraq carelessly. We don't need a war in Iran carelessly.

So this is my argument. But to say that I don't care, that's just not fair.

CROWLEY: OK, let me move you on to politics since we're kind not political world right now we're in Iowa.

You have not precisely ruled out a third-party bid. I'm wondering if some of these attacks on you that have been out there the past 10 days have given you any pause about staying inside the Republican party.

PAUL: I haven't even thought about it except when people like you keep asking me about it because I have a race going. I'm essentially tied for first place, and why would I even consider doing anything like that?

So -- but I don't like absolutes. I don't want to say I will never do so-and-so. But -- I have no plans in doing it. We're doing very, very well. And people should just be a little bit patient, you know. You know, on Tuesday, we're going to find out a lot more about the future of this election.

CROWLEY: And you have also said that your support of your -- any colleague that might beat you and become the Republican nominee would depend on how close they came to your views on certain things. In particular, does that include oversight of the Fed or what in particular are you talking about?

And who comes closest, do you think, of being a candidate you could support right now should they beat you?

PAUL: Well, I think they all fit the status quo. None of them really challenges foreign policy. They don't challenge the spending. Nobody has proposed any real cuts, nobody really challenged the Federal Reserve.

But I think this is going to shift. Matter of fact, they do hint at a -- a few of them have said something about auditing the Fed and others, at times, have hinted that maybe we ought to be a little more cautious and little more diplomatic with our foreign policy. So I'd have to wait and see, you know, what the platform looks like.

CROWLEY: What do you make -- one of the interesting things, I think, about the "Des Moines Register" poll today is that it was a three-day poll, but if you take just the last few days, Rick Santorum overtakes you and goes into second place showing that he really is gathering up some momentum.

What do you think the appeal is there with Rick Santorum? Why has he suddenly become kind of the person to watch?

PAUL: Well, maybe it's the people who just got frustrated with the other ones and they're just shifting their views. That's one thing you can't say about my supporters. They don't shift their views. Once they join and understand what the cause of liberty is all about, what the foreign policy is all about and the monetary policy is all about, they don't leave.

So the other group, they've been shifting back and forth and they're up and down. So I think it's part of that.

CROWLEY: One of the other things that the poll showed is when they talked to your supporters, 56 percent of them said they were definitely going. That is lower than the number of the -- of Romney supporters who said they would go and lower than the number of Santorum supporters who said they would be going.

What do you think has happened here? Because we so often say, you know, Ron Paul has the best turnout operation. He is the one that is really working on the ground, and yet 56 percent of the supporters say they're definitely going.

PAUL: They're definitely what?

CROWLEY: They're definitely going to go caucus. Fifty-six percent of people of likely caucus-goers only will say that they're definitely going. So, in other words, more than 40 percent --

(LAUGHTER)

PAUL: Well --

CROWLEY: -- say they may not go.

PAUL: I wouldn't -- I wouldn't bet too much money on that kind of a statistic. I mean, we have the names and the telephone numbers and the enthusiasm. So I don't think -- only Tuesday is going to tell you how that's going to work out. We're pretty optimistic about getting our people there.

CROWLEY: Give me a prediction here in the last 30 seconds, Congressman. Are you going to pull this out in Iowa, and if you do, what does it mean for the future of your campaign?

PAUL: I have no idea what's going to happen. I may come in first, I may come in second. I doubt I'll come in third or fourth. And the future of the campaign for liberty will always be ongoing, and I think we're doing to have a good showing. We already have had. And we're doing quite well in New Hampshire.

So I would say the momentum for the cause of freedom in this country and restoration of the Constitution, a sensible foreign policy and addressing the Federal Reserve and our economic crisis and spending, I would say the people are with me on this and the momentum is going to continue regardless of exactly what happens and what place I am on Tuesday night.

CROWLEY: Congressman Ron Paul, thanks for joining us. We will see you a little later here in Iowa.

Up next, some know him as the Iowa kingmaker, so why hasn't Congressman Steve King made an endorsement? We'll ask him next.

(COMMERCIAL BREAK)

CROWLEY: You can't be in Iowa too long without hearing the name Steve King. The Republican congressman's endorsement is well quoted by some of the presidential candidates stomping through this state. But so far they've come up empty-handed. And that's including one of his good friends, Michele Bachmann.

Steve King is join meg here in Des Moines. Congressman, thank you so much for being here. I want to remind you of the last time we were together, which was in August right after the Ames straw poll, which was won by your good friend, Michele Bachmann.

(BEGIN VIDEO CLIP)

REP. STEVE KING (R-IOWA): I, like everyone, needs to measure who would make the best President of the United States. I already know who will make the best friend. But we need to weigh who will make the best President of the United States, and I want to sit back for a while and get into September and see how these candidates conduct themselves.

(END VIDEO CLIP)

CROWLEY: Not only are we into September, we're actually into January now. We have two more days, three more -- two more days till the caucuses. Who's your choice here?

KING: OK, first I was wearing the same time, and so I need to go out and buy some ties. But it was my choice. And, you know, this is just a very tough decision. And --

CROWLEY: Why is it so tough though?

KING: It's tough because of a whole series of things. More than one friend in this race, for one thing. And those things do weigh into this, although it should be and needs to be about who will make the best President of the United States, who will best match up against Barack Obama, who carries the principles best, who has emerged through this crucible.

This is a gauntlet here in Iowa, and it's a -- and it's an even tougher gauntlet going through New Hampshire and South Carolina and beyond. And I'll tell you what: one of the things that holds me back -- and it's in an article in the "Des Moines Register" day before yesterday that Jim DeMint and I wrote. But to have that vision of how the budget situation that we are in has changed since August: it's gotten worse.

And it's clear to me that the leadership doesn't exist ,or at least it's not deployed in Congress, in the House or the Senate, to lead us out of this and get us to the point where we can pay the first dollar -- the first net dollar off our national debt.

That's part of -- I want to hear that. I want to know they believe it and they can lead America where we need to go to get us back from the abyss of a fiscal calamity. And that's part of it. I haven't seen that with the clarity that I want to see. And if me holding back on this helps get that case before the American people, I 'm -- I may well have to do that.

CROWLEY: Well, the power of your endorsement is greatest here in Iowa. You are a social conservative. Certainly, if you look at the slate of candidates, you would have to say Rick Santorum comes closest to you in terms of the social issues. Am I correct?

KING: Well, you know, I don't know about that. He's, you know, very, very strong. His reputation, his activities in it is very, very strong. Michele Bachmann has a strong set of beliefs that match up with Rick Santorum.

(CROSSTALK)

CROWLEY: Let me rephrase: of those who now look as though they may come out of Iowa with one of the three tickets, Rick -- between Rick Santorum, Ron Paul and Mitt Romney?

KING: I'd be closer on the social issues with Rick Santorum, of those three, without question.

CROWLEY: Is that (inaudible)?

KING: And Rick Perry needs to have a nod, because of where, you know, where he stands. He's very solid, too. But go ahead.

CROWLEY: Does that -- is that paramount to you? Or is now electability something that comes into play? KING: I think it's three things. I -- yes, I'm a social conservative, but I'm also a fiscal conservative. And I am a full spectrum conservative. It's always been that way. I've always gone where I thought the greatest urgency existed for it to weigh in on these issues. And it's -- so it's the bread though, the fiscal issues meeting a balanced budget amendment.

If somebody that understands that and will get that done, someone who will stand on the issues of life and marriage, and then to take a look at the electability, and having a foreign policy and the vision for where America needs to go to take us upwards to the next level of our destiny, I am still looking for that.

And if that instant comes and I'm convinced that one will do a significant better job than the others, I won't hesitate. I'll step in. But it has to be a conviction on my part. I don't think I'd be doing justice to this privilege that I have if it were not a conviction.

CROWLEY: Let me show you the "Des Moines Register" poll, which I'm sure you have already seen; it came out this morning. Generally "Des Moines Register" is very good to being predictive in terms of caucus results: Mitt Romney, 24 percent; Ron Paul, 22 percent.; Rick Santorum, 15; Newt Gingrich, 12; Rick Perry, Michele Bachmann, down the line.

You had said that you did want to see the "Des Moines Register" poll before you began to make up your mind. You have also said that you think Ron Paul's foreign policy views are scary. Now would be the time if you wanted to help a social conservative, now would be the time to do it.

So that says to me that there is something paramount in your -- in gaining your endorsement that is more than just you have to believe everything I do.

KING: Well, take a look at Ron Paul's foreign policy, for example. And that is also a factor in this. There are many things I can say good about Ron Paul. And I served with him for nine years in the Congress, and we sometimes find ourselves a handful voting together.

Of all across the spectrum of other things, audit the Fed and sound money and constitutionalism, Ron Paul stands excellent on all of that.

But his position, which is -- when I asked the question of him in Columbia, South Carolina, where would you project power as President of the United States, he said he wouldn't. He said he'd pull all of our military back to the 50 states, back inside the borders of the United States of America.

Now power of war is a vacuum. It will be filled immediately. If we took that -- and the president would have the constitutional authority to do that abruptly. And so I could see the Chinese coming into that vacuum ,and the Russians and Hugo Chavez, perhaps, helping out a -- helping out a revolution in Cuba. This is very frightening to me, to think that there's a solid support out there that might think that, since the last 114 years of America's blood and treasure that's been spent could all be squandered with the stroke of a president's pen.

CROWLEY: In the little time we have left -- and we're reading the tea leaves here, because you're not going to tell me who you are going to endorse. Why have you not got gone hunting with Mitt Romney? You went hunting with Rick Santorum and others over time. Why not Mitt Romney?

KING: Well, I hope we can work that in the last couple days here. There's really not a reason why not. I mean, he was --

CROWLEY: It's a tea leaf.

KING: Well, OK. But from the time in the -- in the state here, most of this has happened a little bit spontaneously. The first time with Rick Perry happened because one of my campaign people were in the same room with his when he said, "When am I going to get to pick up a shotgun?" And my staff overheard that and said, "We can help you out with that. And so that was the first hunt.

And then Rick Santorum the next day. And then they organized the second hunt with Rick Santorum. And I will tell you that Michele Bachmann and I planned to do this over a year ago, and logistics just didn't work out. So I just talked to her a couple of days ago, and we started it up again, you know, after this. So she has time next year. We'll go pheasant hunting. That's the plan we have with each other.

And I hope I can do that also with Mitt Romney.

CROWLEY: Forty-one percent still undecided. Are you shocked by that?

KING: No, but I'm a little surprised that that number seems to be going up, if I'm seeing the same polls, instead of down, creeping up. And I'm going to make this point, too, that encourage your people everywhere, especially, and to come out to the caucus. Going there undecided is just fine. You'll be in good company with lots of Iowans going to the caucuses undecided.

CROWLEY: And lots of people arguing as well, help them make up their minds.

KING: Well, and I sat there and watched the dynamics of that happen: 1774 caucus locations. That means if you've got 1,774 well-respected, effective speakers on your behalf, you're going to pick up a lot of the undecided. And that's going to make the difference on Tuesday night.

CROWLEY: Congressman Steve King, thank you so much for (inaudible).

KING: Thanks, Candy.

CROWLEY: We appreciate it. Next, another week, another search for a Republican. This time, Rick Santorum. We dig a little deeper with the former Pennsylvania senator after the break.

(COMMERCIAL BREAK)

CROWLEY: Going from also running to top tier, Rick Santorum is all the rage recently. He's enjoying a larger media scrum and withstanding a higher level of scrutiny.

I spoke with Santorum earlier this week about his use of earmarks while in Congress. The former senator sought over a billion dollars in federal money for pet projects back home. He explained to me, back then, earmarks weren't a dirty word.

(BEGIN VIDEO CLIP)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: Went that became evident and that the public was upset about it and saw this as a -- as a real disqualifier, that that shouldn't be done anymore, I said, you know, look, if -- if the public is -- is saying that Congress shouldn't be doing this anymore, I'll go along with it. And -- but it's not a particularly hard thing for a -- for a presidential candidate to say that they're against Congressional earmarks because that means the president gets the -- the -- the ability to spend more of that money without Congress telling them how to do it.

So I understand the problem. But, you know, we have a very good and strong record on spending.

(END VIDEO CLIP)

CROWLEY: Like others in the race, Santorum calls himself the consistent conservative, though he fesses up to lapses.

(BEGIN VIDEO CLIP)

SANTORUM: I've made some mistakes. For example, you know, I talk all the time about having voted for No Child Left Behind. And, you know, it was a mistake. You know, it was a -- it was a dumb thing to vote for because it gave more federal control over education, which was something that, you know, I didn't advocate for, but I voted for.

And, you know, so you -- you go through and you -- you learn from -- from what you've gone -- you've gone through in your career. And the great thing I had was a few years to step out, take a look at -- at the career, a look at what's going on in Washington, to see the problems that I didn't see as clearly from outside and come back with a lot, you know, a lot of -- a lot of commitment and the ability to -- to get a lot of those things done.

(END VIDEO CLIP)

CROWLEY: Santorum dismisses the notion that he's too far to the right to beat President Obama. He says he can and has won those working class socially conservative voters once known as Reagan Democrats. (BEGIN VIDEO CLIP)

SANTORUM: We need someone who understands the intrinsic value of the role of the family, who went out and fought those issues when it wasn't popular.

I'm the candidate that actually was able to win in states, as a conservative, in getting Democrats and Independents to vote for us when, you know, when I was out there fighting all these battles. Mitt Romney has no track history of doing that. In fact, he's only run as a moderate or liberal. And when as a conservative in the -- in the primary last time, he lost.

So look at -- look at our record. And the people of Iowa, the more they look -- and the people of America, the more they look, they're going to see someone who is exactly the right person to carry the mail and has the right policies to deliver that mail in the swing states in this country.

(END VIDEO CLIP)

CROWLEY: Santorum has spent more time here in Iowa than any other candidate. The question is whether it will pay off Tuesday. We'll have Iowa's governor, next.

(COMMERCIAL BREAK)

CROWLEY: Joining me from his state capital to talk about the influence of Iowa, Republican Governor Terry Branstad.

Thank you so much for joining us here --

GOV. TERRY BRANSTAD (R), IOWA: You're welcome.

Great to be with you.

CROWLEY: -- in your beautiful building.

BRANSTAD: Thank you.

We're real proud of it.

CROWLEY: I imagine. It's gorgeous.

Listen, you've seen, I am sure, "The Des Moines Register" poll this morning -- Romney, Paul, Santorum.

Do you think that's how it's --

BRANSTAD: A wide open race. And, you know, I predicted all along that Santorum was going to do a lot better than the polls had showed previously. And the fact that he has been here a lot, gone to all 99 counties, I think that's helped him.

Romney has done a bus tour here lately and he's had bigger crowds, I think, than ever before. But it's a wide open race. People have been watching the debates and they're looking for the perfect candidate.

CROWLEY: Is that the key, because, you know, generally Iowans have the freedom to vote their heart?

BRANSTAD: Right.

CROWLEY: Like, boy, this guy is right with me.

Do they have that freedom?

Is it different in this caucus now?

Do they need to look and say which one of these guys can get into the White House?

BRANSTAD: Well, I think Iowans -- and Americans generally -- are looking for somebody that has the leadership ability to focus on the things that are going to revitalize the private sector and bring jobs back and also get this federal deficit under control. We don't want to be like Europe and have this massive debt which is just going to strangle future generations.

CROWLEY: Do you think that Iowans are going to vote with their heads this time around?

Is electability the key thing?

BRANSTAD: Well, I was elected governor again two years ago, basically because people were looking for a leader that can restore stability and predictability and focus on jobs and get our financial house in order. And I think that happened across the Upper Midwest here with the election of governors. I think it's going to be a key issue in the election in the next president, as well.

CROWLEY: If Ron Paul should win this -- and he's got a great organization here, as you know -- do you think, with so many people saying and -- and some polls indicating that he's not electable on a nationwide basis, do you think that renders the Iowa caucuses meaningless in their message?

BRANSTAD: No, I don't think so because the Iowa caucuses have always winnowed the field to about three candidates. So it's all about beating the expectations here.

And Ron Paul, to his credit, has put a lot of time, a lot of effort and a lot of resources in, in his focus on that he's voted against all these deficits, he's been against all this manipulation of the currency. I think it's resonated with Iowa voters. And that's the number one issue.

But I think people also have some concerns about his position on foreign policy. And, as a result, I think as they sort it out, I think he's going to get a significant showing here. But even if he wins Iowa, I think It's really a question of who is going to be in the top three?

The person that's going to really lose --

CROWLEY: You answer that question.

BRANSTAD: Well, I can tell you who's -- who's not going to be, and that's Jon Huntsman. He messed -- he messed up big time.

(LAUGHTER)

BRANSTAD: He skipped Iowa.

CROWLEY: So you --

BRANSTAD: And the result is he is going to be -- he's an asterisk and he's never going to get beyond that.

CROWLEY: You know, but I want to talk to you in a second about Jon Huntsman.

But if you could -- looking at it now, what does your gut tell you about who the top three will be?

BRANSTAD: Well, I predicted all along that Santorum would do better than people expect. I think he could get in the top three. So, you know, it -- it looks to me like Romney, Paul and Santorum.

CROWLEY: All right.

BRANSTAD: But I think -- don't count out Congressman -- Senator -- excuse me. I think the one that could do better than some expect would be Governor Perry. And also, Gingrich, who just a few weeks ago was ahead, and I don't know where he's going to end up, but he seems to be going down. Yes, it's really wide open and it really depends on who turns out. I think we're going to have a good turnout. I think people are really concerned about the direction of the country and they want a new leader.

CROWLEY: Let me talk to you a bit about November and Iowa. The president won here by 9.5 percent points the last time around. He has quite a team here and the Obama folks, I can tell you, are out pushing today about what kind of structure they have in place for November.

Does Iowa stay red? Sorry. Does Iowa say Democratic?

BRANSTAD: I think there's a good chance they beat Obama just like I beat the incumbent governor last time.

CROWLEY: Really?

BRANSTAD: People are unhappy with the direction of the country.

CROWLEY: But your economy is good.

BRANSTAD: Yes, but not because of him, because of agriculture. In fact, what he has done is he has divided the country. He said he would bring people together. He had the opportunity to do that in the State of the Union a year ago, and instead what he did, he punted. And he spent all of his time now attacking the very people, the entrepreneurs and the businesspeople that need to invest and create jobs, and that's not the way to bring this country together.

And they look at his record. Obama's health care is a disaster. It would increase our participation in Medicaid by 150,000. We can't afford that, nor the can other states in this country, and he has -- and he's still not willing to admit that he's moving the country in the wrong direction and I think we need a new leader. And that's why -- I think that's why there's so much interest and I think there's a good chance to defeat him.

I'll tell you, my goal is as governor, unite the Republican Party, attract the independents, and defeat Obama. We launched him, we want to sink him.

CROWLEY: Republican Iowa Governor Terry Branstad. Need I say that? Thank you so much for joining us.

BRANSTAD: Thank you very much.

CROWLEY: We appreciate it.

BRANSTAD: Good to be with you.

CROWLEY: Coming up, Mitt Romney plays down Iowa expectations but the signs are pointing to a good night for the former Massachusetts governor. We'll explain next.

(COMMERCIAL BREAK)

CROWLEY: Fueled by the electability factor, Mitt Romney's momentum seems palpable here in Iowa.

(BEGIN VIDEO CLIP)

ROMNEY: I want to win Iowa. Everybody wants to win Iowa. I'm not going to predict who is going to win.

(END VIDEO CLIP)

CROWLEY: In 2008 caucuses, Romney spent a lot of time and close to $10 million to woo Iowans, paying an army of staffers to build a network of supporters.

(BEGIN VIDEO CLIP)

ROMNEY: I love Iowa a whole lot.

(END VIDEO CLIP)

CROWLEY: But Romney finished a distance second to Mike Huckabee, a favorite of Iowa's conservative and Evangelical voters who dominated caucus turnout. This time around Romney has spent less money and less than three weeks in Iowa. Using the network he set up in 2008, his original goal was to make a good enough showing in Iowa to stay viable for the rest of the primary season without wasting time and resources on a state not necessarily attune to his brand of Republicanism.

But as Romney's wife told me in an Iowa hotel two days ago, it's so different this time around. And she's right. Unlike four years ago when they caucused for Huckabee, the social-conservative voting bloc is split among four candidates. The 25 percent Romney got in 2008 may be enough to win this in 2012. He's got a solid lead in New Hampshire, an Iowa win could propel Romney to do what no other GOP presidential candidate has, sweep the first two contests.

Up next, we'll ask our panel: Can anyone stop Romney?

(COMMERCIAL BREAK)

CROWLEY: Joining me now, two veteran campaign reporters, Neil King of "The Wall Street Journal" and Dan Balz of "The Washington Post."

Thanks, guys, for joining us.

I want to start with someone more veteran than the two of you and that's Bob Dole, the Republican nominee in '96 and in the Senate forever before that. I talked to him earlier. He, of course, is a Romney supporter and I asked him why. I want to play you his response.

(BEGIN VIDEO CLIP)

FORMER SEN. BOB DOLE, FORMER REPUBLICAN PRESIDENTIAL CANDIDATE: He looks like a president, he acts like a president, he talks like a president, and just seems to me this is Romney's time.

(END VIDEO CLIP)

CROWLEY: Does it seem to you this is Romney's time?

DAN BALZ, "THE WASHINGTON POST": Well, in many ways it does seem like it's Romney's time. He is the person who has run before. He's a favorite of a lot of the Republican establishment. He's scooping up endorsements.

For a long time people have thought that if there's a likely nominee it's him and yet he has struggled and struggled and struggled to show, A, that he can generate enthusiasm among the base of a party that's clearly in a different place than he is; and, two, to grow the support over what he's had in the past.

CROWLEY: And he is blessed in some ways by who he is running against.

NEIL KING, "THE WALL STREET JOURNAL": Yes. I mean, that's the amazing thing. What's interesting, the "Des Moines Register" poll that came out this morning had him and basically exactly where he was four years ago in the Des Moines register poll then and yet, of course, he lost that race.

The magic of this Iowa caucus is he could win conceivably with that same support mainly because there's such a fractured field on the other side of the Republican spectrum.

CROWLEY: And there's the Evangelical vote, religious conservative vote that put Huckabee over the top and now they're looking at four different candidates, which is why there is all this talk about the Evangelicals trying to get one of these guys to get out.

N. N. KING: Yes, there's been a whole series of meetings among pastors and others over the last months or weeks. But, you know, it's not going to happen. That's pretty clear.

But trying to cut a -- cut a deal among Rick Perry, Michele Bachmann, you know, for there to be a sort of coalescing. And the only coalescing that's going on now -- it's been amazing to watch -- is the coalescing of sorts behind Rick Santorum.

And, you know, in the end, if evangelicals come out in large numbers -- and it's sort of sketchy at the moment on the polling whether they will -- they could possibly push him into second place, or maybe even into the first place.

CROWLEY: Then we'd have a story to write, although I wonder --

(CROSSTALK)

BALZ: -- a story to write.

CROWLEY: Yes, -- either way, I'd probably say something about it on Wednesday morning.

I was amazed, I think, when Newt -- when Newt Gingrich began to rise at the beginning of December, everybody thought he's not -- this is not Michele Bachmann. This is not Rick Perry. This is a guy who has been around the block. This is not his first rodeo. He can really use this limelight and turn it into something.

In the "Des Moines Register" poll, where he's out of the upper tier, a couple of things caught my eye. Thirty-six percent of the likely Republican caucus-goers found him to be the least consistent candidate. Forty-one percent thought he was the most ego-driven candidate.

Did Newt -- what happened to Newt? Did he do himself in and was helped along by the ads? Or did the ads just remind people who he was and that was sort of solely responsible?

BALZ: I think the ads have had a lot to do with it. I mean, he's had a tremendous amount of attack poured on him for the last month, and has basically violated the fundamental rule of politics, which is don't let an attack go unanswered.

He tried to stay above it, in part, I think, because he knew that his own history suggested that if he went hard against those, it would be bring up the bad side of Newt that people remember. So he was in a very difficult position. But I think those ads did a tremendous amount of damage to him.

N. KING: His greatest moments were the many, many debates that we had. You know, that's really what catapulted him up in the polls. And then we went into this big period a couple of weeks where there were no debates , and instead there was this, you know, barrage, aerial barrage on him here in Iowa. And it's really -- that's what's done it for him, I think.

CROWLEY: So his -- in a lot of ways, Newt Gingrich's down has been Rick Santorum's up. And I think the question now is, does Rick Santorum become 2012's Mike Huckabee, in other words, someone who wins Iowa, and it just doesn't matter in the long run?

BALZ: I think one of the greatest benefits that Mitt Romney is getting so far in Iowa is the fact that two of the people who might have had the wherewithal to go the distance against a Newt Gingrich and Rick Perry -- because Governor Perry has had a lot of money to use -- now look like they could finish out of the money, which is to say he could keep them from going on.

Rick Santorum may be able to gather some strength if he were to pull off a surprise victory. He'll be the hot candidate, but he has very little infrastructure, very little money and perhaps a ceiling on the kind of appeal he might be able to put together.

CROWLEY: Let me play for you real quick -- Santorum put an ad up recently that, I think, speaks to the biggest thing that weighs him down at this point. Take a listen.

(BEGIN AUDIO CLIP)

ADVERTISEMENT ANNOUNCER: Who has the best chance to beat Obama? Rick Santorum, a trusted conservative, who gives us the best chance to take back America.

(END AUDIO CLIP)

CROWLEY: Who has the best chance to beat Obama, Rick Santorum -- it seems to me that they know that their biggest problem is that people look and go, yes, that's nice, but Rick Santorum just doesn't have the wherewithal.

Does this -- and I asked both of our Iowa politicians, do you think this race comes down -- this race in Iowa right now comes down to caucus-goers wanting the most electable or caucus-goers wanting the person that most defines who they are?

N. KING: That's the big struggle. And at the moment, a lot of the polls have suggested that really there's a sort of pragmatism out there, and a lot of the voters -- even the evangelical voters that are usually moved by, you know, a core set of issues, really look at the electability issue, the fundamental leadership issue, and are leaning in that direction.

That's, of course, the -- what Romney wants more than anything, because that's really his main pitch.

CROWLEY: Because he's the head -- Romney is the head candidate.

(CROSSTALK)

BALZ: Well, the -- if you look at the various attributes they tested, the only one where he really shines is electability. And he is way ahead of everybody else on that. But on all other attributes, he doesn't. So if Mitt Romney wins these caucuses, it will be because the Iowa voters decided electability above all was what they wanted.

CROWLEY: And in a crowd that really, really wants President Obama to be a one-term president, you've got to believe that a lot of these folks are going in there and going, he's not with me, but -- on everything. But he could win.

BALZ: Possibly.

N. KING: Yes.

CROWLEY: Possibly. That's what -- well, that's what they think. I'm mirroring them. Dan Balz, "Washington Post"; Neil King, "The Wall Street Journal"; thank you both so much.

(CROSSTALK)

CROWLEY: Up next, top stories. And then on "FAREED ZAKARIA GPS," predictions for the new year . That's at the top of the hour.

(COMMERCIAL BREAK)

CROWLEY: Time for a check of today's top stories.

A 6.8 magnitude earthquake struck off the coast of Japan today, southwest of Tokyo. There were no reports of injuries or damage, and the Pacific Tsunami Warning Center did not issue a destructive tsunami warning.

And a 4.0 magnitude earthquake rattled eastern Ohio yesterday. It was centered five miles northwest of Youngstown. The quake hit one week after a smaller tremor struck the region.

Iran has built and tested the country's first nuclear fuel rod. Iranian state TV reports that the country today also fired medium- range anti-radar missiles in military drills near the Strait of Hormuz. Iran has threatened to shut down the strait, which is a major pathway for the world's oil shipments.

North Korea's urging its people to show allegiance to the country's new leader Kim Jong-Un. In a New Year's Day message, the government said the entire army should place absolute trust in the son of the late Kim Jong-Il. The message also said U.S. forces were the obstacle to the peace on the Korean Peninsula, and called for their withdrawal from the region.

Thank you so much for watching STATE OF THE UNION. Happy New Year's Day. I'm Candy Crowley in Des Moines, Iowa.

Later today, I'll be anchoring the contenders 2012, where the Republican candidates offer closing arguments in their own words.

Plus, you can find today's interviews, as well as analysis, web exclusives and much more at our website, CNN.com/SOTU.

Up next for our viewers here in the United States, FAREED ZAKARIA GPS.