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STARTING POINT WITH SOLEDAD O'BRIEN

State of the Union Tonight; Funeral Procession for Chris Kyle; U.S Under Attack by Cyber Spies; Free Divorce for Valentine's Day; "Cliffhanger": Behind the Scenes; U.S. Stock Futures Up

Aired February 12, 2013 - 08:30   ET

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


(COMMERCIAL BREAK)

SOLEDAD O'BRIEN, CNN ANCHOR: Welcome back, everybody. You're watching STARTING POINT. The U.N. Security Council is going to be holding an emergency meeting in roughly half an hour. It's going to talk about North Korea's new nuclear test that happened overnight. U.S. intelligence is estimating now that the blast was several kilotons in size, even caused a 5.1 earthquake in the region.

North Korea's minister says the test was a defensive measure against what he calls, quote, "hostile activity" from the United States and that more drastic measures could be on the way.

Other stories making news, John Berman's got that for us.

JOHN BERMAN, CNN ANCHOR, "EARLY START": Thanks, Soledad. More than 700 tips have poured into the Los Angeles Police Department since the $1 million reward has been offered for information leading to the arrest of accused cop killer Christopher Dorner. The renegade ex- police officer is accused of killing three people in a revenge plot targeting the LAPD. The search is now in its second week.

A 200-mile funeral procession will take Chris Kyle, known as the deadliest sniper in U.S. military history, to his final resting place in Austin today. Thousands gathered at Cowboy Stadium yesterday to remember Kyle, who was shot to death earlier this month. Chris Kyle was just 38 years old.

The United States is under attack by cyber spies. Intelligence officials report America is the target of a massive and sustained cyber espionage campaign that's threatening its ability to compete economically. The report singles out China as the country most aggressively seeking to penetrate the computer systems of U.S. business and institutions for economic gain. The estimated cost of combating the attacks is in the tens of billions of dollars a year.

So, a suburban Detroit attorney is offering clients a Valentine's Day special of sorts: a free divorce. Walter Bentley says he got the idea from a woman who invited him to a party to celebrate her own divorce now becoming finalized. The person with the most convincing and compelling story will be crowned the winner, as long as the divorce is uncontested and there are no serious child custody issues. The deadline for entries is midnight tonight. More than 500 people have already entered. Happy Valentine's Day. ROLAND MARTIN, CNN POLITICAL ANALYST: Probably one of the worst holidays we have.

BERMAN: I like it. I like romance and love.

MARTIN: No, I like romance and love. I like it too the other 364 days as well. That's that one day for guys to get a pass who've been ignoring their wives or girlfriends or whatever for the rest of the year, so that's what it is.

O'BRIEN: Just for the record, I like getting chocolates and flowers.

(CROSSTALK)

MARTIN: No, no, no. I set up flowers April 14, other 14s. Forget that one day. Take care of business the rest of the year.

O'BRIEN: Duly noted.

Now President Obama stands before Congress and the country tonight. He's going to deliver the State of the Union address. It's expected to be more partisan than the previous three.

Chief congressional correspondent Dana Bash is on live on Capitol Hill for us this morning. Dana, I know you had a chance to sit down with some young Republican lawmakers to talk about the gridlock in Congress. What did they tell you?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: That's right, of course. The ability for the president to get anything done will depend, again, largely on what happens with the Republican-led House.

I did sit down with three members of the class of 2010, the ones who gave Republicans that majority two years ago, and I asked them whether or not it is a fair criticism that part of the gridlock over the past couple of years is that John Boehner, the Speaker, couldn't do anything. His hands were tied because people like them, rank and file, were so dug in.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Well, look, again, being, as was mentioned, being the majority is tough, and especially when you deal with issues and you have sometimes people that say you can't flex on anything. We elected you not to compromise, not to flex on anything.

BASH: And you hear that?

UNIDENTIFIED MALE: Of course you do. You hear that and you hear, also, people come and say, hey look, both sides are going to have to put something on the table in order to govern. That never easy.

BASH: Do you think it's fair the Speaker has wanted to go to a compromise every now and then, like on the grand bargain, and he hasn't been to because of you all? REP. TREY GOWDY (R), SOUTH CAROLINA: John Boehner has the hardest job in Congress. In fact, if you really want to punish him, make him keep being the Speaker.

BASH: If you look at things like fiscal cliff at -- the fact you raised the debt ceiling without spending cuts, as you all had been very clear you were going to demand, what is that a sign of? Is that a sign of understanding the art of legislating a little bit more? Is that a sign of being a little bit more sophisticated in the ways of Washington?

REP. KRISTI NOEM (R), SOUTH DAKOTA: It's a sign of recognizing opportunities here in the next few months to really reduce our spending and to give the president an opportunity to reach out a hand and say, "Take it. Help us fix this country."

(END VIDEO CLIP)

BASH: And, Soledad, that is what all three lawmakers said that they are going to be listening for tonight. Obviously, this is the beginning of the president's second term but they question whether or not his focus is going to be more on electing a Democratic House than reaching out and getting something done for these first two years of his last four years.

O'BRIEN: Dana, you also talked to them about Lincoln. What did they say?

BASH: Really interesting. Of course, today is Lincoln's birthday, people may not realize that. But there's so much talk about the president being so entranced and taken aback by the Lincoln movie. I asked what their perspective was and I got a really interesting few answers. Listen.

(BEGIN VIDEO CLIP)

BASH: The movie "Lincoln", the president apparently quotes from it all the time, walks around the White House doing so. Did you all see it? And is there any kind of lessons that you can take from that going forward?

NOEM: I saw it three times.

BASH: Really?

NOEM: Yes. The biggest quote that really resonated with me, and it did the first time I heard it, was when Lincoln was talking about a compass and talking about knowing true north, and but what good does it do to really know where true north is if it doesn't tell you about the swamps and deserts and valleys in between?

GOWDY: I watched it sitting beside Tim Scott, so it was emotional for me, being from South Carolina, having him as my senator. I'm proud of him for a lot of reasons but the fact that he represents my state and watching that movie with him was something I'll never forget.

(END VIDEO CLIP)

BASH: And, Soledad, that was quite a moment in that interview, having Trey Gowdy, the congressman from South Carolina, get so choked up about sitting with his black Republican colleague, the senator from South Carolina who he's clearly close with and very proud of.

O'BRIEN: All right, Dana Bash for us this morning. Thanks, Dana, appreciate it.

Want to get right to CNN anchor and chief Washington correspondent, Jake Dapper -- Jake Tapper. Nice to have you with us.

JAKE TAPPER, CNN ANCHOR: Thank you, Soledad. Great to be here.

O'BRIEN: He's also so dapper. You've got some breaking news about what we can expect in the State of the Union this evening.

TAPPER: That's right, Soledad. According to sources with knowledge of the president's State of the Union address this evening, President Obama tonight will announce that, by this time next year, 34,000 U.S. troops currently in Afghanistan will be back home. That will be reducing the number of troops in that country by roughly a half.

So CNN can report that tonight President Obama will make that news, will announce that 34,000 U.S. troops currently in Afghanistan will be back home by this time next year. That is a big announcement to be making, a big foreign policy announcement to be making, in a State of the Union address. It is expected to be largely about domestic issues and the middle class.

O'BRIEN: Yes, we were talking about jobs, jobs, jobs as being the focus of this. What do you think -- is it going to be partisan or more of an olive branch extended to folks?

TAPPER: I don't think it will be either, if I can be so bold as to take something that you're not offering, a choice that you're not offering.

O'BRIEN: You may take it as always.

TAPPER: I think he will be assertive. I think he will not perceive, he and the White House, will not perceive what he's saying as overtly confrontational. I'm sure it will be interpreted that way. I don't anticipate a big olive branch of a speech. He'll talk about common sense measures that Republicans have supported in the past and he'll view that as bipartisan, I'm sure.

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: You know, it really feels like two tracks. On the one hand, the agenda that he's put forward on some of the non-economic issues -- immigration, gun control, climate -- by definition are pre-staged conflict with Republicans who are ambivalent at best about moving forward on anything.

On the other hand, on the big issue of the debt and deficit, since the summer of 2011, he has signaled that he is willing to make a big deal, including some elements, maybe less than two years ago, that would antagonize Democrats. So I think you can't kind of -- I think, Jake, what you're saying is, you can't really kind of put it in one box or the other. There are different strategies, I think, on different fronts.

REP. RANDY FORBES (R), VIRGINIA: But you have to recognize every time the president says something like that, he moves the goal posts continually. He says he's willing to do one thing and then once Republicans talk about it, he moves it.

The two areas that the American people want to hear tonight and I don't think they'll hear it is, one, what you're going to do to stop talking about jobs but really create jobs. That's what's really at the heart of Americans are concerned about. But the second one is this: they're concerned about this polarized country that we're in and they want to see a leader step up to the plate and really say something that brings people together. I don't think you're going to see that tonight.

O'BRIEN: You're not hopeful for that?

FORBES: I'm hopeful for it, but I don't think we're going to see it.

TAPPER: On the jobs front, he will talk, I'm told from sources in the White House, he will talk about creating middle class jobs.

FORBES: He's going to talk about that, but he's not going to talk about what job creators want, which is taking some of these taxes off their back, and these regulations. He's going to talk about putting more of it on --

BROWNSTEIN: But do you see any opportunity on some of those areas, either domestic energy production, infrastructure bank, areas like that, where there may in fact be some agreement, as opposed to the taxes?

FORBES: I do, but I don't think it's so much for the president. For example, tonight, I'll be sitting with Tim Kaine, Democratic Senator from Virginia. We differ on a lot of issues. We both love Virginia, we love America, we have a lot of respect for each other. We're going to be working together, try to get those kinds of compromises. But I think that's what it's going to take to move this country forward. I hope the president does that tonight. I'm just not optimistic.

MARTIN: But, Congressman, to be perfectly blunt, that's y'all's job. I mean, the president is clearly the president, but when it comes to those kind of changes, Congress has to pass those laws. So at some point, members of Congress must say, "We have to step up, stop spend so much time on recess, and actually get to work to pass those things."

FORBES: I'm glad you said that.

O'BRIEN: What are you hearing about he's going to say about the sequester? TAPPER: About the sequester, I don't think he's going to get into specific deadlines but he'll talk about how there is a big grand bargain to be achieved but, on the short term, Congress needs to take care of avoiding these cuts and avoiding these draconian cuts.

FORBES: But if we look at what Roland said about Congress stepping up and doing their job, the House did that. They passed a budget last year that would have dealt with sequestration. The Senate has yet to do it, and the president has yet to put forward a proposal. Unfortunately, we don't get to do both. We can't do the House and the Senate's job.

BROWNSTEIN: Will the House remain committed to the centerpieces if that budget from 2011 and 2012, which were converting Medicare into a premium support system, converting Medicaid into block grant? Is that something that is still on the table from your point of view?

FORBES: I don't think we're going to draw lines in the sand. I think that what you have to do is what Roland said. We passed a budget, and the way this process has to work, then, the Senate has to pass something -- they've refused to do it - so we can come to a table and compromise.

O'BRIEN: We'll see what the president has to say this evening for State of the Union.

Jake Tapper, nice to have you with us. Appreciate it. Of course, Jake and the rest of the CNN team, 7:00 p.m. tonight for CNN's full coverage of the president's State of the Union address.

Coming up next, less than two months ago, the country almost went off the fiscal cliff. Just how did we get so close to the brink? A new documentary takes a look. It's called "Cliffhanger". Exposes what really happened. We'll have that coming up.

(COMMERCIAL BREAK)

O'BRIEN: As we look forward to the State of the Union address tonight, a new documentary reveals some of the behind-the-scenes drama of the tense fiscal cliff negotiations.

Here's a look at a point where negotiations broke down between the President and the House Speaker John Boehner and Majority Leader Eric Cantor when Cantor insisted on no new tax revenue.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: And at one meeting the President's chief of staff thought Cantor went too far.

WILLIAM DALEY, BARACK OBAMA'S FORMER CHIEF OF STAFF: There was a time where he kind of jumped in to correct the President and with a tone that was a little disrespectful of the President and the President took great umbrage.

UNIDENTIFIED MALE: And the President just says no you know this isn't a bluff, don't call my bluff and literally walks out, and this is a bit of a thunderclap for everyone to say the least. And it's frightening.

(END VIDEO CLIP)

O'BRIEN: This is a look at the debt ceiling debate back in 2011. It's a little interesting to watch parts of this documentary because you realize some of it is the sort of scary music you put behind it. Just how much was at stake in here? Take us back to those negotiations. Were you able to figure out really at the end of the day who was at fault in this?

MIKE KIRK, DIRECTOR & PRODUCER, FRONTLINE'S "CLIFFHANGER": I'm not sure it's a question of at fault, but when you look at the clash of personalities and the people who were involved, Boehner, Cantor, the 87 new Republicans, the sort of unruly, new Republicans, unorthodox new Republicans and the President who had taken a real beating in the first two years of his -- of his presidency and then a shellacking at the midterm you realize that they all came to the table with certain grudges and certain assumptions about the way things were going to work and they were not speaking the same language.

O'BRIEN: Much of what you look at are personalities, kind of outsized personalities. Walk us through some of the personalities behind the -- the new stories that we all covered.

KIRK: Well, you know, you look at Cantor, Eric Cantor. He's a fascinating character. He's one of the young guns, he raises that new class, he helps them get elected. He thinks he can, with the idea of using the debt ceiling as a -- as a -- as a lever, a hostage for the President, he thinks he controls them. You've got Boehner, who is his sort of boss, but they're rivals behind the scenes, their staffs really don't like each other.

Boehner, who is more of a sort of country club Republican, as Obama describes him, a deal maker and -- and you've got those two very different personalities. Boehner, who doesn't really know how to handle that class, and Obama, who is not sure about his own party, where they stand, where Pelosi stands on the things he might have to give up to get a grand bargain.

Boehner and Obama meeting in secret in those famous nicorette-iced tea mellow-and cigarette sessions at the White House and you put -- and you that all together and it's a fabulous witches' brew for failure, especially once Biden, the Vice President, accidentally maybe drops on -- on Eric Cantor the idea that the President is meeting secretly with -- with his boss.

O'BRIEN: The movie is called "Cliffhanger". Mike Kirk is the director and the producer and you can see it tonight 8:00 p.m. on the PBS station. Thanks for joining us to talk about it. We appreciate it.

KIRK: You're welcome.

Housing prices are rising in those major U.S. cities but doesn't necessarily mean the market is getting better. Does it? We'll take a look at that up next.

You're watching STARTING POINT. We're back in just a moment.

(COMMERCIAL BREAK)

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I'm Christine Romans "Minding Your Business" this morning.

Stock futures are up slightly but news of North Korea's new nuclear test could cause investors to stay cautious here. Look we're below record highs in stocks but they are up seven percent so far this year.

Gas prices, by the way, also up. According to AAA a gallon costs an average of $3.60, that's up 31 cents or nine percent in the last 26 days.

The National Association of Realtors says home prices in the fourth quarter rose 10 percent compared with the year before, that's the biggest jump in seven years. And the gains in home prices are widespread, 133 of 152 cities are seeing price increases.

Apple's CEO Tim Cook has a coveted spot at the State of the Union tonight, he'll be sitting with First Lady Michelle Obama in special box seats. This isn't the first time the First Lady's guest list has included tech stars. Last year she was joined by Laureen Powell Jobs, the widow of Steve Jobs and Instagram co-founder Mike Krieger.

STARTING POINT begins after this.

(COMMERCIAL BREAK)

COSTELLO: We end, as always, with "End Point". Ron, you want to start us off?

BROWNSTEIN: Yes, so we had eight years of tax cuts and deregulation under President Bush, we've had four years of public investment and stimulus under President Obama. The median income today is lower than it was in 2000. There are barely anymore people working in the worst 10 year record of job growth we've had since the depression. Many Americans doubt that either party has an answer to the jobs and income crisis we're facing and they are right to wonder.

MARTIN: I flew from Miami yesterday. The investment project will have a 102 year-old black woman who twice almost was denied the opportunity to vote in the last election. Voter suppression, changing voter law, should be a significant part of tonight's speech, especially with the U.S. Supreme Court revisiting Section 5 of the Voting Rights Act February 27th. This is a huge issue affecting Americans.

O'BRIEN: And Congressman, what do you think?

FORBES: State of the Union is always like the old story, "Emperor's New Clothes". You come out and you say how wonderful everything is, but the American people realize it ---

(CROSSTALK)

O'BRIEN: State of the Union is strong.

FORBES: -- the American people realize this they need jobs and the most important thing they want outside of the jobs, they want this country to come back together again. I hope the President is listening to this show. You can do that, you can do that.

(CROSSTALK)

O'BRIEN: Can you tee up jobs, tee up one side?

FORBES: No. But here's what they want to see. They want to hear that we are turning back this heavy tax and heavy regulation that's killing our jobs, but the most important thing this President could do is he could come out tonight and say we want to bring this country back together.

BROWNSTEIN: And that's what they want to hear, turning back any tax, any regulation maybe what they want to hear.

FORBES: That's not what they --

BROWNSTEIN: But no, no, but there are districts where that is not what they want to hear. And that is the fundamental problem. Like I said, we went through eight years of President Bush of deregulation and cutting taxes and that did not create jobs. We have a larger structural problem it's not clear that either party really knows how to address, and I think that is, above all, what Americans want some answer on that.

MARTIN: And, of course, what Americans want to hear -- guess what, America? You voted for the two parties that are in Congress, right, so when they said it one thing, this is what they voted for.

(CROSSTALK)

O'BRIEN: Tomorrow, I'm sorry, we're all going to be here back again in D.C. with a full recap of the President's State of the Union Address. We're going to be talking to the former Minnesota Governor Tim Pawlenty; Democratic National Committee Chair, Debbie Wasserman Schultz, will be with us; Maryland Congressman Chris Van Hollen will be our guest; and also Ohio Senator Bob Portman is joining us as well.

We can't wait to see you then tomorrow morning.

First though, let's get it right over to the NEWSROOM with CAROL COSTELLO, begins right now.