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State of the Union Is... Frozen; Will Dems Retain Senate?;

Aired January 28, 2014 - 19:00   ET


WOLF BLITZER, CNN ANCHOR: Official kick off of CNN's State of the Union coverage begins only a few minutes from now, right at the top of the hour. Our senior White House correspondent Brianna Keilar has some exclusive, behind-the-scenes details of how the president is preparing.

Our chief national correspondent John King will take a close look at which promises the president made last year, which ones were kept, which ones weren't.

Also, Anderson Cooper, Jake Tapper, the full resources of CNN -- that's coming up next.



RONALD REAGAN, FORMER PRESIDENT: As they said in the film, "Back to the Future", where we're going, we don't need roads.

GEORGE H.W. BUSH, FORMER PRESIDENT: If anyone tells you that America's best days are behind her, they're looking the wrong way.

WILLIAM J. CLINTON, FORMER PRESIDENT: The era of big government is over.

GEORGE W. BUSH, FORMER PRESIDENT: States like these and their terrorist allies constitute an axis of evil.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let's seize this moment to start anew, to carry the dream forward and to strengthen our union once more.



BLITZER: We are counting down to one of President Obama's most important speeches of the year.

ANDERSON COOPER, CNN ANCHOR: He is ready to make new promises to the American people and he may provoke a new confrontation with Republicans in Congress.


UNIDENTIFIED MALE: Mr. Speaker, the president of the United States.

ANNOUNCER: He's about to make his big entrance. And the pressure is on. With control of Congress up for grabs and the race for the White House around the corner, the president's time in the spotlight is the running out.

OBAMA: This has to be a year of action.

ANNOUNCER: Tonight is, Barack Obama faces the American people with the next two elections on his mind.

PRESIDENT OBAMA: My main message today is we're not going back.

ANNOUNCER: He's vowing to move forward on his own and side step Republicans who stand in his way.

REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: It's time for the president to admit his policies are not working.

ANNOUNCER: After a year of showdowns and the Obamacare backlash, and can America's leader get out of his second term rut?

PRESIDENT OBAMA: I am not a perfect man and I will not be a perfect president.

ANNOUNCER: This is CNN's coverage of the state of the union address, the Republican response, and the issue shaping the battle for Congress. His vision, their challenge, your future, the 2014 campaign is under way right now.

PRESIDENT OBAMA: We can say with renewed confidence that the state of our union is strong.


WOLF BLITZER, CNN ANCHOR: Inside the White House right now, last minute tweaks, last minute tension. President Obama is getting ready to head to the U.S. capitol to address the nation at a challenging moment in his presidency. We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer in Washington.

The president will walk into the House Chamber about two hours from now to deliver his "State of the Union" address. It's one of his best chances to try to grab the attention of a huge TV audience before the midterm election in November. He'll face a divided Congress as he has for most, most of his presidency, but if Republicans manage to win control of the Senate this fall, the political climate could change dramatically.

And by this time next year, President Obama will have to compete for attention with the likely 2016 presidential contenders as the race for the White House takes off. Clearly, this will be a significant moment for President Obama. CNN anchor, Jake Tapper, is up on Capitol Hill right now. Jake, what are we learning about the president's speech?

JAKE TAPPER, CNN ANCHOR: Wolf, good evening. We're told the president and his team have been making late tweaks within the last couple hours. We should expect some surprises in the "State of the Union" address. A senior official tells CNN that are Mr. Obama will call for more executive actions than he's ever before called for in a "State of the Union" speech and that he will make another hard push for immigration reform as a potential area where there can be bipartisan work.

The White House sums up the speech in three words. They say opportunity, action, and optimism. CNN of course will be bringing you the first reaction to his speech and Anderson Cooper has more on that -- Anderson.

ANDERSON COOPER, CNN ANCHOR: Yes, Jake, thanks very much. Republicans are putting a new face on their official response to the president. Kathy McMorris Rogers is the highest ranking Republican woman in Congress. You may not have heard of her before. She's also a mom. Republicans are hoping she maybe will be able to help them improve their appeal to women.

After the speeches tonight, we'll bring reaction from voters in the leadoff presidential battleground state of Iowa. We put together a focus group of Democrats, Republicans and independent voters. They've dialed their responses to the president in real-time. It will look like this with lines going up and down. Back to you, Wolf.

BLITZER: Anderson, thanks very much. We're also getting an exclusive look behind the scenes of preparations for the president's speech. And new details on emerging what he's going to say. Our senior White House correspondent, Brianna Keilar, has been working her sources. Brianna, what are you seeing and hearing?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, I've spoken with a number of sources very familiar with President Obama's speech tonight. They say he'll deliver a populist message focused on middle class families. In addition to announcing that he will increase the minimum wage for employees working on new federal contracts, we should expect, I am told, the announcement of executive actions on technology, education, and in this key midterm election year a focus on women.


KEILAR (voice-over): Facing midterm elections that will frame his final years in office or leave him a lame duck, the president won't just describe the "State of the Union" tonight. He'll try to turn around the state of his presidency. In an address focused on working Americans, Obama will push to raise the federal minimum wage from $7.25 to more than $10 an hour. Arguing hourly wages today in effect go only as far as when President Truman was in office.

On a host of issues, the president will tell Congress that if they, especially House Republicans, won't act, he will. Changing wage rules for federal contractors and working directly with states and businesses to get things done.

VALERIE JARRETT, SENIOR OBAMA ADVISER: He's not going to just sit and wait. He wants to take action. There are so many opportunities where we could help the economy, help hard working Americans and if someone has a good idea for how we can do that and it doesn't require Congress, why would we wait?

KEILAR: CNN has learned Obama will put women's issues front and center calling for equal pay for equal work, and better treatment for working moms. That's a response to vulnerable Senate Democrats who met with the president earlier this month. Appealing to women voters in their states is keys during the midterm elections if he wants to maintain control of the Senate. CNN was given exclusive access to the final moments leading up to tonight's speech.

(on camera): This is something you've been working on for a very long time.

(voice-over): An event months in the making, the president exchanging drafts with his speechwriters and editing late into the night. Valerie Jarrett, one of the president's closest advisors, took us behind the scenes.

JARRETT: This is where we've had several our meetings.

KEILAR: Sources say tonight the president will announce the result of those meetings, new public/private partnerships including expanding internet to disadvantaged communities.

(on camera): How much of this is trying to really push forward into this New Year?

JARRETT: It is absolutely pushing forward. He will remind everyone about why we are here. We're here to improve the quality of life for the American people.

KEILAR (voice-over): Putting a face on the president's message tonight, working Americans like Sabrina Jenkins, a single mom from South Carolina with a teenager heading to college. Jenkins was flown to Washington overnight to the sit with the first lady.

SABRINA JENKINS, INVITED TO SIT WITH FIRST LADY: We need to focus more on women who are trying. They're living almost from pay check to pay check, and they're trying to do the best that they can.


KEILAR: And also, we are told by sources as Jake Tapper has reported that we should expect some surprises in this speech. And Wolf, I'm told by a source that right now, President Obama should be having dinner with the first family. Something that he does regularly and certainly before big speeches, before doing his "State of the Union" address as he does each year, and after that, he will do what he always does which is take some time, some quiet time to himself away from aides as much as about 20 minutes collecting his thoughts before he heads up to Capitol Hill. BLITZER: He's got a major speech. A lot of pressure is on him right now. Brianna over at the White House. John King, the challenges are enormous. Right now, if you take a look what has happened over the past year?

JOHN KING, CNN CHIEF POLITICAL CORRESPONDENT: The 2013 was disastrous for the president. We focused at the end of the year a lot on the rollout of Obamacare, the political problems, the policy problems with that. But Wolf, if you want to why the president is leaning so heavily on executive action this year is because he very much remembers this.


PRESIDENT OBAMA: Let's declare that in the wealthiest nation on earth, no one who, would full-time have to live in poverty and raise the federal minimum wage to $9 an hour.

Overwhelming majorities of Americans, Americans who believe in the second amendment have come together around common sense reform. Like background checks that will make it harder for criminals to get their hands on a gun.

Right now, leaders from the business, labor, law enforcement, faith communities, they all agree that the time has come to pass comprehensive immigration reform. Now is the time to do it.


KING: Now, that's the president last year, Wolf, just some of the promises he made to the American people, some of the priorities he laid out for Congress, didn't get did the minimum wage hike, didn't get immigration reform, didn't get climate change legislation, nowhere on tax reform, rebuffed on gun control, and we could go on and on. That's why many of these issues, including minimum wage, immigration, including gun control still on the president's wish list as he moves into 2014.

He knows the big difference this year is that his approval ratings are down from last year. None of this was done last year. This year not only can he not count on republicans, on several issues he can't count on Democrats. There's been some hope in recent days. I'll believe it when I see it, they might actually move on immigration reform. Otherwise the president is very sceptical. Congress will do much, which is why from the White House with his pen, he'll do as much as he can.

BLITZER: Immigration reform, there may be a compromise. They are not everything the president wants, but he may be able to work with the House Speaker John Boehner.

KING: If he'll accept something short of citizenship, one of the many 2014 questions.

BLITZER: We'll see if he does that. John, thanks very much. Many Americans think the president's speech tonight is a waste of time based on his track record, the political climate here in Washington right now, Anderson's back with some analysts. Is the president of the United States some suggest, Anderson, already for all practical purposes a lame duck? I don't think he is.

COOPER: That's the question we'll start off with our panel, chief political analyst, Gloria Borger and also with David Maraniss, author of "Barack Obama The Story." Is there something -- I mean, they were just talking about immigration reform or possible compromise on that. Are there other things that the president really can accomplish?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: I do think there are. I don't think he's a lame duck by any stretch of the imagination. Look, I think when people believe in Congress that it is in their own self- interest to do something on immigration reform, they will do it, not because they want to make Barack Obama a transformational president, but because they think it will work for them.

COOPER: Are you talking about comprehensive immigration reform?

BORGER: No, I think that the one of the lessons of the affordable care act is that these huge pieces of legislation don't do well. And I think what the White House has learned and I think what Republicans are talking about, the ones that want to do immigration is that they might be able to do it in a piecemeal way. As John pointed out, the key problem is going to be whether there is a pathway to citizenship or whether there's some detour that would be allowed.

COOPER: David, do you think he's a lame duck at this point?

DAVID MARANISS, AUTHOR, "BARACK OBAMA: THE STORY": No, I don't. But you know, his whole sensibility is sort of time and patience. He doesn't go in for the 24-hour news cycle that dominates our culture.

COOPER: He's got a longer game.

MARANISS: Well, he's always thought that way. That's his natural sensibility, be cool and patient. But now he's realizing the time is running out. So I don't know whether the speech is critical except as a definition where he wants to go, but he's not a lame duck yet. The president still has a lot of power.

COOPER: A lot about tonight is focused on the 2014 congressional elections.

KING: It is because he's looking at and understands the environment. Most unlikely the Democrats can get the House back. It's early in the year. A lot can change. The Republicans shut down the government they can be their own worst enemy. Part of the Democrats think if the president steers a steady course, maybe the Republicans will screw up.

But at the moment, you have to think if you're a smart Democratic strategist, the Republicans are most likely to keep the House and have a pretty good shot. If you're the president of the United States and trying to figure out how can I shape that environment to try to at least keep the Senate and to try to keep the House relatively where it is, look, there are two ways to lead.

The president understands from last year's experience he's not going to list 27 policy priorities, pieces of legislation and get them through the Congress. It's just into going to happen, but he can be more aspirational and aim at a north star. I think that's where this income equality, how does he communicate it and get at the economic stuff? Can he lead the country or force the country into a campaign.

COOPER: One thing to watch is how forceful will he be will about the executive orders.

BORGER: He's got a pessimistic country that doesn't believe he can get anything done. He's got a low approval rating. He's got a high bar here. He's got to say to the country, look, we can get action done. Don't forget, this is a president who came here saying, I'm going to change the way Washington, would. And now what we're going to hear him say is I'm going to work around Washington.

COOPER: The good news is he's speaking to a crowd that as a lower approval rating than he does. A lot more is coming up. Also the man who could lose the Senate, the Democratic Leader Harry Reid, is he going too far in defending President Obama? He's saying surprising things in an exclusive CNN interview. We'll show that to you.

We'll talk to some of the heroes who will be sitting with the first lady tonight. They are sharing their remarkable stories only here on CNN. First this state of the union flashback.


UNIDENTIFIED MALE: This administration today here and now declares unconditional war on poverty in America.

UNIDENTIFIED FEMALE: Only two months after the assassination of JFK, LBJ called to are an unconditional war on poverty. He wanted something that would be his own program, something that hadn't been started by another president. And poverty was the thing that hit him emotionally that he had always wanted to do something about. So this became his signature program.

UNIDENTIFIED MALE: And I urge this Congress and all an Americans to join with me in that effort.



TAPPER: Welcome back to Capitol Hill. Right now, the State of the Union here is frozen. It's very cold here in Washington. But we're used to it, compared to people in the south. They're in the midst of a paralyzing and dangerous blast of ice and snow. CNN's severe weather expert, Chad Myers, joins us live from New Orleans -- Chad.

CHAD MYERS, CNN METEOROLOGIST: Yes, it iced up here already. We're in the French Quarter, a little bit warmer down here. But it's about to ice up for the rest of the night. The entire country, the Eastern half is way below normal. Temperatures zero, 5 below, 10 below, wind-chill factors 30 below zero with this arctic blast, this arctic outbreak. It's not really the polar vortex we were talking about before. We used to call it the Siberian Express. Whatever. It is just cold air. The cold got all the way to the Gulf Coast, and then all of a sudden, it decided to rain, and it rained here at 32 degrees. But it snowed in Atlanta.

Jake, it's safe to say, there are still tens of thousands of people stuck on the highways around Atlanta, Georgia, because they all tried to leave at the same time. A million people got on the road. They didn't cancel schools today until it was too late. They sent them all home early. Well, that just means a crush of people trying to go get their children, and that really didn't work out.

There are still many cars on the roadways now. Some of them are even running out of gas.

This is what we have here. It's all ice. No snow yet. But we'll see what happens the rest of the night. It's going to get slick, and it's going to stay slick. This isn't going to warm up today, not going to warm up tomorrow and probably not on Thursday, Jake.

TAPPER: All right. Chad Myers in New Orleans, stay warm.

When President Obama steps up to the podium tonight, the Senate leader, Democrat Harry Reid of Nevada, we he will have a considerable stake in the speech. He wants to hear something that will help him and his party hang on to control of the Senate in this midterm election we're facing.

Our chief congressional correspondent, Dana Bash, has an exclusive interview with Reid -- Dana.

DANA BASH, CNN CORRESPONDENT: That's right, Jake. And before we get to that, I just want to set the scene of the atmospherics here on Capitol Hill. Just an hour plus before the president comes and speaks.

I'm standing just a few feet away from the House chamber that is behind me. But this is Statuary Hall. This is, as you see, where all the hustle and bustle is. It's also where members of Congress come through. I'm not sure if you can see. We have one member, Cory Gardener, coming through with his young kids and his wife. This is the kind of thing that we're seeing.

How are you guys?

We're going to see it inside the Senate chamber and inside the gallery, of people bringing their guests.

And here after the speech, this is sort of a spin alley. A lot of members of Congress come through here to talk to all the media here, not just national media: local media and international media, as well. So that is the scene here in Statuary Hall -- Jake. TAPPER: And Dana, President Obama, for his entire presidency, has really relied on Democratic control of the Senate. And that really hangs in the balance this year.

BASH: It does. And it's part of what I spoke to the Senate majority leader, Harry Reid, about earlier today. Look, he once told me that he is one of the biggest pessimists that he knows. But today in his office, he was just the opposite.


SEN. HARRY REID (D-NV), MAJORITY LEADER: It's time to change the Senate.

BASH (voice-over): He's the one Democrat who may have more at stake than the president himself.

REID: You're asking me?

BASH: Control of the Senate.

REID: Don't screw it up.

BASH: And his position as Senate majority leader.

REID: Self-destructive.

BASH: Harry Reid is doubling down on President Obama.

REID: Anytime the president of the United States appears supporting a candidate, it helps. Barack Obama is personally a very popular guy. And people love this man.

BASH (on camera): You would encourage some of your most vulnerable Senate Democratic candidates to invite President Obama to appear with them?

REID: Yes, and they will.

BASH: So Mark Pryor from Arkansas, Kay Hagen from North Carolina?

REID: It's interesting one of the first people that Pryor had come to California was Bill Clinton.

BASH: Bill Clinton is from Arkansas. That's a little different.

REID: Barack Obama is a good person to campaign for anybody.

BASH (voice-over): Reid told us he's meeting with the president next week to discuss campaign plans. He also revealed he'll try to help endangered Democrats by holding Senate votes on changes they're proposing to Obama care, which is hurting most of them politically.

(on camera): What do you think the most likely change is that you will put up for a vote?

REID: I don't know. Because right now, there's probably five or six really substantive proposals.

BASH (voice-over): Reid predicts Republicans could block those Obama care changes. In fact, GOP obstruction is why Reid tells us Senate Democrats encourage the president to do the kind of thing he's announcing tonight: use his executive power for a limited minimum wage increase.

(on camera): Name another issue where you are encouraging the president to use an executive order.

REID: There are some things with the environment. The Republicans are obsessed with there is no climate change. The EPA is trying to ruin the country. We shouldn't do renewable energy.

The president, I think, has some leeway to do some things administratively, and I'm confident he will, to help the environment which is being denigrated as we speak.

BASH: The president is going to discuss what he wants to do this year and the remaining years of his term. Much of what he wants to do will be upended if Republicans take control of the Senate. It's looking more possible that that's going to happen.

REID: Right now we feel quite comfortable where we are. If you're comfortable -- I feel comfortable where we are.

BASH: Do you think you're going to keep the Senate?

REID: I think without any doubt.


BASH: Jake, I did ask one hypothetical (ph) question. That is, if in fact, the Democrats do lose the Senate, if he will stay on as minority leader. He would not go there. He said, "I won't do hypotheticals" -- Jake.

TAPPER: All right. Dana Bash.

And now with more on what will likely problem to be a vicious fight for control of the U.S. Senate, let's go back to Wolf Blitzer -- Wolf.

BLITZER: All right, Jake. Thanks very much.

John King has been studying what's going on in the Senate. How realistic would it be for the Republicans to gain that net six that they need to be the majority?

KING: Jake is wise to use the word "vicious," because this is going to be so close and so tight, some of these campaigns are going to get very expensive and very ugly.

Here's the Senate right now, 55-45 if you give the Democrats the two independents who vote with the Democrats on that.

So here's what you get in 2014. You've got 36 seats, three dozen seats up for grabs. If they've got a red ring, they're Republican seats. If they've got a blue ring, they're Democratic seats. But really, of these, 12, 13 races are viewed as the most competitive. And here they are. And this, Wolf, is why it is possible.

You have in West Virginia Jay Rockefeller, a Democrat. He is retiring. He's not running for reelection. Republicans think, given that state's history in recent years, they get that one.

South Dakota, again a state President Obama did not carry. Tim Johnson is retiring. Republicans think they get that one.

Montana, now held by Democrat Max Baucus. He's retiring. Again, they think they get that one.

So then you're looking at some other seats here. Arkansas, as Dana just mentioned, Pryor. Republicans think they get this. This will be a tough race. But the Republicans think they get this one. They think also they can get -- come up here to Alaska. They think this one's gone. The Republicans think they have that. Democrats disagree. And they think Louisiana is a very good chance for the Republicans there.

If you just did that right there -- and again, Democrats are going to disagree with those calls -- that gets to you 49. So then you've got retiring Democrats in Iowa, a retiring Democrat in Michigan, a vulnerable Democrat in Kay Hagen, making her first run in North Carolina. So Wolf, there are many -- plenty of opportunities for the Republicans.

Again, is it easy? No. Is it possible? Yes.

And one other piece, since we're using the word "palace intrigue" tonight, as all this plays out, one other race to watch is the man who would be the Republican leader if they can get the net gain of six, assuming Mitch McConnell can win his own race. It's very close.

BLITZER: He's being challenged by a Tea Party -- a Tea Party supporter in Kentucky.

KING: Very low numbers back home. He thinks he'll survive that primary challenge. But if he does, he'll have a tough general election, as well.

BLITZER: All right, John, stand by.

Coming up, America's income gap. Which president has the worst record? The surprising numbers behind one of President Obama's top priorities.

And the first lady is surrounding herself with heroes and trailblazers tonight, including an athlete who made a courageous choice. We're going to hear from him.

Now a State of the Union flashback.

(BEGIN VIDEO CLIP) DORIS KEARNS GOODWIN, PRESIDENTIAL HISTORIAN: In 1974, as the Watergate crisis was reaching its crescendo, President Nixon went before Congress in a State of the Union.

RICHARD M. NIXON, FORMER PRESIDENT OF THE UNITED STATES: The time has come to bring that investigation and the other investigations of this matter to an end. One year of Watergate is enough.

GOODWIN: Says less about the State of the Union than about the state of the president. I mean, here he is, facing down the very people who are beginning to think about his impeachment, and he has to stand before them in that assembly.

NIXON: I have no intention whatever of ever walking away from the job that the people elected me to do for the people of the United States.



BLITZER: President Obama is getting ready to leave the White House and head to Capitol Hill. We're following his every move. We'll be analyzing his every word, the words coming up in his big speech tonight.

We're about an hour and a half or so away from the main event here in Washington, D.C., the State of the Union address.

Several Republicans will respond to the president tonight. Congresswoman Cathy McMorris Rogers will give the party's official response in English while Congresswoman Ileana Ros-Lehtinen will speak for the GOP in Spanish.

Senator Mike Lee will give the Tea Party's official response, and Senator Rand Paul will respond to the president online, speaking only for himself.

One of the top buzzwords tonight, income inequality. We're going to expect the president to talk a good deal about that issue tonight. It's an issue that hits many Americans where they live.

Tom Foreman is in our virtual studio to break it all down for us -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Yes, Wolf. Many of the president's ideas revolve around this idea of an income gap between the people in the country who make the most money, the very wealthy and everybody else. So let's look at what's happened in that in the past 21 years since Bill Clinton took office.

This is what's happened to the average household income in the country. It has risen a little bit to about $56,000. That may look OK until you see how this flattens out compared to the top 1 percent.

Look at how that has climbed and climbed and absolutely shot up to $1.25 million a year. That's not an income gap. That is an income canyon now for many Democrats.

Who makes this kind of money?

Well, there are billionaires like Larry Ellison, of course, Warren Buffett, we've all heard of them. They have an awful lot of money in their net worth. And, of course, you have to think about Microsoft did, Bill Gates, $72 billion. You want to talk about an income gap? If an average American making those wages wanted to earn this much, he would have had to have started working back at the dawn of modern man, 1.5 million years ago.

This is why Democrats look at the nation and say, this is a crisis. It has to be dealt with right now.

But Republicans, not so much. Republicans say it is a problem but one that can be dealt with over time. Yes, there are ideological differences between the parties but there are also may be geographical difference at play here.

Imagine that I live in Kansas City right now and I make $80,000 a year. I'm living just fine and I decide I'm going to move to New York City. Look at what happens to all of my expenses. These are real calculations. This is actually what you would experience with that money.

Suddenly, you would find you had to make twice as much and more just to break even. It's not just New York City. If you went across the country to, say, Chicago, you would also have to make more money to stay afloat. If you all the way out to the West Coast to San Francisco, again, even more money just to stay afloat.

So, if you moved to a major metropolitan area, you feel the income gap more sharply. What if you move to some place like Birmingham, Alabama? Now, I can take a pay cut and live just as well as I did in Kansas City or I can go to Amarillo, Texas, same effect. Or maybe if I go up to Cheyenne, Wyoming, same thing happens.

So, let's bring the big map and consider what this means. The orange dots here are where it's more expensive to live, where people feel the income gap more sharply and guess what, when you bring in the political map, those are also the places that tend to vote Democratic.

Everywhere in the country, we have stagnant wages. We have poverty everywhere. The point is, that in the urban areas, people may feel it more sharply for a lot of different reasons and they're telling lawmakers about it, and those tend to be Democratic lawmakers. That's one other reason why Democrats may see this as a crisis right now, Wolf, and Republicans, not so much.

BLITZER: Tom, what happens if nothing is done about this great gap between the super rich and everyone else?

FOREMAN: Well, if you listen to the market people, the free market people, they're going to say, leave it alone. Just like market forces made this happened, market forces will stop it eventually. But others say there's just not much evidence it's changing. And they worry that we have reached a tipping point here where there are so few people controlling so much wealth, that everybody else is struggling to pay for education, for any kind of economic mobility, for job training, for changing jobs, anything like that.

And the fear is, if you don't do something about it, it becomes permanent, Wolf, and we have a world of a whole lot of have-nots and only a few haves.

BLITZER: Tom Foreman, good explanation. Thanks very much.

Anderson, back to you.

ANDERSON COOPER, CNN ANCHOR: Let's talk about it with our panelists here. Introduce you to Paul Krugman, "New York Times" columnist, economist, Grover Norquist, president of the Americans for Tax Reform, and also the mayor of Baltimore, Stephanie Rawlings-Blake.

Great to have you all here.

Paul, you just see Tom's report. What role does government have in trying to address this inequality? And how do they go about it if --

PAUL KRUGMAN, NEW YORK TIMES: OK. First of all, taxes and spending.

And by the way, Obama has already done much more than people give him credit for. I've been a pretty harsh critic of him a lot. But in terms of mitigating some of the consequences of inequality, he's actually done quite a lot.

So, first of all, taxes. If we're looking -- he's restored a lot of the progressivity of our tax system. The effect of tax rate on the 1 percent is back up to about what it was in 1979. So, if you just look at that measure, actually, Obama has rolled us back to pre-rate levels of average. Obviously, not all the rates are the same, but the overall level of taxation on 1 percent is back up to, you know, what used to be considered reasonably high levels.

Health reform -- health reform is a huge benefit in terms of economic security to lower income Americans, especially lower income working Americans because people who are too affluent to -- you know, to -- they didn't qualify for poverty programs but many of them lacked health insurance.

So, that's one thing. And Obama has actually done a pretty significant job of mitigating some of the extremes. Beyond that, you do things like the minimum wage. Minimum wage has, you know, overwhelming public support. It's not going to pass in Congress probably even so, but raising the minimum wage would do a substantial amount for incomes at the bottom.

COOPER: Tonight, he's going to propose raising it for federal contractor who gets new contracts.

Grover, you disagree with this -- about government's role in this. GROVER NORQUIST, AMERICANS FOR TAX REFORM: Well, government has an important role. If you look at the seven wealthiest counties in the United States, they're all around Washington, D.C. So, the federal government spends a lot of time accumulating other people's resources. If you look at the Bureau of Labor Statistics, they took a look at normal private sector jobs and compare them with state and local pay, benefits, pensions. Never mind federal, which is higher.

COOPER: Do you see this inequality as a problem?

NORQUIST: I'm talking about the federal government's contribution to creating inequality by looting the middle class and bring it to Washington, D.C.

D.C., Maryland, Northern Virginia are not wealthy because of the gold mines and the oil we drill here. It's because they drilled into the pockets of taxpayers.

Public sector government workers at the state and local level are paid 33 percent more than the private sector. Bureau of Labor Statistics looking as the pension and benefits.

And then what do they do to the middle class? Chamber of Commerce did a story of 1.9 million jobs that are held up by bureaucratic red tape in the energy industry alone. Those pay $90,000 a year. Those jobs don't exist because of what Obama has done with the EPA and others.

So --

COOPER: Paul, do you see them --


KRUGMAN: I just want to say a word. When you say public employee, what do we mean? The answer basically means school teachers. In other words, people with college degrees.

And once you take that into account, there is no pay gap. It's all a figment of your imagination.

COOPER: Mayor, you're in a city where people are struggling, where the middle class -- you're trying to grow the middle class.

MAYOR STEPHANIE RAWLINGS-BLAKE (D), BALTIMORE: It reminds me how out of touch the inner Beltway is. When you look at this is the richest Congress we've had. The thought they can continue to operate without getting anything done, it doesn't surprise me that the president is looking to do more executive orders. It doesn't surprise me at all that he's looking for mayors.

You just had the information about the income inequality and where those individuals live. The metro economies are responsible for over 90 percent of the country's GDP. So, of course, the president is going to pay attention to what's going on in those metro areas. I think Congress should, as well. That's where the jobs are being created and that's where we're going to help people to realize the American dream.

People want to know that they can work hard, play by the rules and make a living for themselves and for their family.

COOPER: Grover, I think she's calling you out a little bit. You're one of those beltway guys I think.

I mean, what do you think needs to be done? I mean, you're saying clearly government should not be doing --

NORQUIST: Made a list of things the government does to make that problem worse. Why is the president going to talk tonight about income inequality? Well, to avoid talking about Obamacare, to avoid answering the question of how many people have written a check and signed up for Obamacare, as opposed to how many people have visited and put something in their --

COOPER: They say 3 -- it's up to 3 million now.

NORQUIST: No, not have written checks, not who joined. We love to see those numbers. The most transparent government in the nation's history, we were promised. Let's see what the real numbers are. Not the number of people who have looked at something but the number of people who bought it.

I think the other challenge we have is -- he doesn't want to talk about 50 years of the war on poverty. He doesn't want to talk about the five years where he promised the stimulus was going to give us a stronger economy than we got. Unemployment he promised us would be 5 percent now if we passed his multibillion dollar stimulus package.

COOPER: What would help? In your opinion --

NORQUIST: He's trying to change the subject to anything else. What would help? Going to all those regulations, which is stopping 1.9 million jobs from going in -- from taking effect. These are people who put up permits to ask to do certain things. The government says we'll think about it.

COOPER: Mayor, do you see regulations standing in the way of --

RAWLINGS-BLAKE: No, I think congressional inaction is standing in the way. I think the president is doing what he can with the executive order on federal contracts. Cities like Baltimore are taking a look at raising the minimum wage, so is the state of Maryland. States around the country are taking a look at that because we understand. We have the most productive workforce in the world and yet, we're unwilling to pay for that.

That gap that you saw is because in the Great Recession, companies tightened their belts. And then they tightened what they expected from workers. Workers are more and more productive, and yet not seeing that while the companies make more and more money.

COOPER: Paul, are workers more and more productive? KRUGMAN: Yes. I mean, we have had -- there's been a stunning disconnect now for more than 30 years between rising productivity and flat wages. I was looking at that. It turns out for about a third of all workers in the United States. Real wages are down since 1973. That's for two-thirds of men. So, that's an amazing thing.

Our workers are vastly more productive than they were in 1973. Since Richard Nixon gave that speech. None of it has gone to most workers. That's a huge thing.

You have to ask, is that all somehow because the government is paying school teachers too much? It isn't. Because there's something else going on.

NORQUIST: A good chunk of it comes, you look at the cities he explains have high costs of living. They have extremely high taxes and extremely high burdens, and when you pay government workers more than the people who pay their salaries, it's expensive.

COOPER: Two very different view points. We're going to have more on this conversation.

Still ahead, two trail blazers sitting with the first lady tonight before the President Obama mentions them in his speech. They're sharing their remarkable stories with us here.

We'll check in with members of our Iowa focus group, as well. Get their opinions and the president, heading into his big speech tonight. Are they hoping to be impressed or expecting to be disappointed?

First, another State of the Union flashback.


RONALD REAGAN, FORMER PRESIDENT: In the midst of a terrible tragedy on the Potomac, we saw again the spirit of American heroism at its finest.

DORIS KEARNS GOODWIN, HISTORIAN: When Ronald Reagan turned to the House gallery and recognized Lenny Skutnik, a hero who jumped into the waters of the Potomac to help rescue survivors from an airplane crash, it began a tradition that continues to this day, where the first lady's box is peopled by ordinary citizens who have done extraordinary things. I think the president's use it as a human touch on their policies. Other times, it's sheer human interest, somebody who's been in the news recently, or sometimes has an emotional moment that makes the House and Senate come together because these people are not partisan and somebody that everybody else can look up to at the same time.


JAKE TAPPER, CNN ANCHOR: We're at the U.S. Capitol, closing in on President Obama's State of the Union Address.

The president will continue the tradition of honoring local heroes -- a tradition started by Ronald Reagan in 1982. Individuals who have done something remarkable in the past year who will have the honor of sitting with the first lady to watch the State of the Union Address. We'll be telling you about some of these heroes throughout the night.

Candy Crowley got to spend time with two of them -- Candy.

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: Hey, Jake, you know, I think I remember a time when those guests that are seated in the first lady's viewing box were surprises. The White House didn't want you to know, so that the president could refer to them and have them stand up.

Nowadays though, when so many of the guests that come are designed to bolster the president's agenda, they let these names out sort of over time to keep the media interested and to hint where the president is going to go.


CROWLEY (voice-over): What does a seven-foot tall veteran of the NBA and Stanford graduate have in common with a 5-foot-something teenager who doesn't much like school and is OK at archery?

(on camera): Who called you and said why don't you come to the State of the Union?


JASON COLLINS, FIRST OPENLY GAY NBA PLAYER: Of course, I said yes. And it's very prestigious honor to be invited and to sit in the first lady's viewing box.

CROWLEY (voice-over): And what's the difference between the two? Nerves.

HUDY: I was nervous because it's a very formal event. There's a lot of things going on. If I screw up, I screw up.

CROWLEY (on camera): Nervous?

COLLINS: No, I've been fortunate enough to meet the first lady last spring. We really could take a picture with her with my brother. We're going to be book ends for her. So it will be a cool picture.

CROWLEY (voice-over): This is the story of unlikely seat mates. Two of 24 ordinary people invited to sit with the first lady to watch the president give his State of the Union speech.

Jason Collins came out of the closet last April. It was a headliner. The first and still the only openly gay active NBA player was noted at the White House.

The president phoned. Michelle Obama tweeted.

(on camera): Did you ever think when you went public with your sexual orientation that you would end up in the first lady's box at the State of the Union address.

COLLINS: No, no. So much has happened to me since I've come out and this is another one of those, you know, frosting on the cake kind of moments.

CROWLEY: And most of it good?

COLLINS: All of it good.

CROWLEY (voice-over): Joey Hudy and the president bonded over an extreme marshmallow cannon.


HUDY: President Obama came into the room and he asks if he could shoot off the cannon. And so, you can't really say no to him. So we had --

CROWLEY (on camera): Only Congress is allowed to say no.

HUDY: Yes. So then we ended up shooting the cannon.


CROWLEY (voice-over): Don't let the marsh mallow thing fool you. Joey makes stuff.

HUDY: My most recent project was a scanner. And I built it for a school project. And I wanted to make it small. It was quite large and hard to travel with. So, I ended up setting it up in 3D software.

CROWLEY: "Business Insider" called him one of the ten smartest kids in the world.

HUDY: I kind of laughed. I think it's kind of silly.

CROWLEY (on camera): It's a lot to live up to.

(voice-over): Ronald Reagan began the tradition of inviting ordinary Americans with extraordinary stories to the State of the Union. Very often, the honored few also reinforce a president's agenda. Joey's never seen a whole State of the Union speech, but Jason who has done fund raising in the gay community with the first lady is a political watcher.

(on camera): What is the message of your presence?

COLLINS: I wanted to say that the president is supportive to the LGBT community. He's done so much during his time in office.

HUDY: They haven't told me why, but it's probably up to them.

CROWLEY (voice-over): Our wild guess is the president may again call for increased funding for STEM education, science, technology, engineering and math. So, it is on this premier night in politics, a seven-foot basketball player and a five-foot something teen who likes archery will be among those occupying a primo piece of real estate and become players in another kind of game entirely.


CROWLEY: One last thing, Jake, when I was talking to Jason Collins, I asked him if he was going to get in a little bit of basketball with the president because Jason's brother also played basketball. He said it hadn't happened so far but he sure would like it.

TAPPER: All right. Candy Crowley.

Look at some of the other guests that will be sitting with the first lady this evening is including the new CEO of General Motors, Mary Barra, is the first woman to lead a major U.S. car company. Kentucky Governor Steve Beshear, his state's enrollment of Obamacare has been successful. And Washington, D.C.'s Public School Teacher of the Year, Kathy Hollowell-Makel. She also snagged an invitation to sit with the first lady.

President Obama will leave the White House soon for the short drive here to the capitol. We'll show you that and bring you some of the actual lines he will deliver this evening.

And Jon Favreau has written some of the president's most important speech. He was brought back to the White House to look over tonight's address. Now, he'll join us with information that's been shared with very few people.

That's all ahead after this State of the Union flashback.


WILLIAM J. CLINTON, FORMER PRESIDENT: We have work to give the American people a smaller less bureaucratic government in Washington. And we have to give the American people one that lives within its means.


The era of big government is over.

GOODWIN: When Bill Clinton said the era of big government is over, he was reflecting the fact that in 1994, he had lost the mid-term elections, a big government health care bill had failed. He then went on that year to pass welfare reform, a Republican-sponsored idea, making some liberals mad but ensuring in some ways his re-election and the Democratic Party positioning itself more in the center than on the left.



BLITZER: Tonight, we'll be able to pinpoint which part of the president's speech make the strongest impression on voters both good and bad. We put together a focus group in Iowa, the state that put Barack Obama on the map back in 2008. It's one of the key presidential battleground states. It's also a key for fighting control of the U.S. senate this fall.

Our focus group members will listen to the president. They'll use a dial to record their reaction.

Here's the readout from our focus group during last year's State of the Union Address. You can seat lines go up and down for positive and negative responses. Blue represents Democrats, red Republicans, yellow independents. In 2013, the president got his best response from independent voters at 9:55 when he talked about bringing the troops home from Afghanistan.

He spiked with the Republicans in 9:48 when he talked about immigration reform. And in last year's address, the president's highest point of the night with Democrats came at 10:10. The topic gun control legislation.

We'll show you the president's best and worst moments tonight after his speech.

Our national correspondent Suzanne Malveaux is with our focus group in Des Moines.

She's joining us with a little preview. Susan?


Despite the fact it's 12 degrees here, I have been reassured that every single person in this group wants to be here, is excited to be here. They're all well fed and ready to go here. So, we are going to focus on them and the speech tonight.

Of course as we know, Iowa very important. This put Barack Obama on the map back in 2008. Very important Senate race as well. Tom Harkin is retiring. That means could give an opening for Republicans to take control of the Senate. And of course, the Republican governor's also up for his sixth term which could mean that he makes history.

I want to start off with our panelists here.

Thank you everybody for joining us. It's going to be a great evening. We've gotten to know each other well already. We're going to get to know each other a lot better.

Let's start off first. Show of hands, who voted for Barack Obama in 2012?


What we know today, show of hands, would you vote for Obama again today if this was election night? Show of hands.

OK. Not the same number of people. We know there might be a few people who are disappointed.

Want to go first just make a quick trip around the room here, get a sense of what you're looking for, what you're hope to hear from the president tonight.

UNIDENTIFIED FEMALE: I'm really hoping to hear him lead and give us some ideas about where we're going to go as a society and as a country.

MALVEAUX: All right. That was brief. That was good, because I want to get to you, ma'am. What are you hoping for and listening for? Are you an Obama supporter?

UNIDENTIFIED FEMALE: I'm an Obama supporter. I hope he'll take a big pen with a lot of ink in it and start doing the things that need to be done to get the country moving, get jobs out here. If the Congress doesn't want to work, fine. We'll do it another way.

MALVEAUX: All right. I think that's a reference to the executive orders he promises he's going to do to work around Congress to try to get the agenda done.

All right. Thank you.

Sir, what are you hoping to hear tonight?

UNIDENTIFIED MALE: I'm hoping to hear more about student indebtedness, getting students where they can be able to afford to pay their loans. And also more information about background checks in the field of mental health because the people with mental health disabilities.

MALVEAUX: OK. Thank you very much.

Wolf, getting a good cross-section here. We're going to get back to you, get those dials going. People are going to tell us what they like, what they don't like.

We'll be here all night.

BLITZER: All right. Suzanne with a focus group in Des Moines. We'll get back to you as well.

You can also follow the president's State of the Union Address in a whole new way on, with a strong dash of attitude.

Our national political reporter Peter Hamby is here to tell us about it.

All right. Set the stage. What are you guys planning?


Yes, we're doing something a little different tonight. We're going to be watching the president's speech and Republican reaction with some live color commentary. I'm joined by Tommy Vietor, former Obama White House spokesman, Tim Miller, former Republican National Committee spokesman, both two of the sharpest guys in Washington with a lot of experience in campaigns, politics, working on Capitol Hill.

And yes, the goal here tonight is just to hopefully provide viewers who check out and give them a sense of what it's like to really watch one of these events with people who really eat, sleep and breathe this stuff, Wolf.

So,, we're doing a live stream all night. It should be fun. Check us out.

BLITZER: We'll enjoy it. Thanks very much. Sounds really excellent, Peter and company.

Be sure to follow Peter on tonight for this first of a kind webcast. He and his team will bring you real-time commentary on the president's speech and the GOP response.

A special edition of "AC360" starts right now.