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STATE OF THE UNION WITH CANDY CROWLEY

Interview with John McCain; Interview with Steve Forbes, Austan Goolsbee

Aired February 16, 2014 - 09:00   ET

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


CANDY CROWLEY, CNN ANCHOR: Peace talks in Geneva all but collapse while Syria implodes.

(BEGIN VIDEOTAPE)

CROWLEY: Today, the Syrian government lays waste to rebel-held territories. Anti-government forces turn on each other, and militant Islamists use the chaos to get a foothold.

OBAMA: It's bad for the region. It is bad for global national security.

MCCAIN: It's more than that. It is and should be an affront to our conscience.

CROWLEY: More than 9 million people have fled their homes and an estimated 135,000 are dead. Senator John McCain joins us on the horrific humanitarian problem in Syria.

And closer to home, his thoughts on whether Republicans are blowing the mid-term elections. Then.

OBAMA: Our economy has been growing for four years. Our businesses have created 8.5 million new jobs.

BOEHNER: I think the American people are tired of being disappointed. They are tired of settling for this new normal under the Obama economy.

CROWLEY: Confused about the economy? Us, too. It's why we ask businessman Steve Forbes and former chairman of the Council of Economic Advisers, Austan Goolsbee, to explain what's happening on Main Street and Wall Street.

Plus, relying on the kindness of strangers. House Republicans turn to Democrats to raise the debt ceiling. Is that surrender or strategy? Our panel considers Speaker Boehner's next move and gives us a read on the friend of Hillary papers, what they say about her past and future. This is "State of the Union."

(END VIDEOTAPE)

CROWLEY: Good morning. From Washington, I'm Candy Crowley. The crisis in Syria reaching new lows. It is evident in the numbers. Nearly 5,000 people died in the last three weeks. That's the deadliest stretch of violence in the nearly 3-year-old civil war. It is evident in the pictures, the thousands of injured, some of them starving, people fleeing the city of Homs during a brief cease-fire, and it's evident in the rhetoric.

(BEGIN VIDEO CLIP)

KERRY: This is grotesque.

CLAPPER: Apocalyptic disaster.

OBAMA: A horrendous situation on the ground in Syria.

(END VIDEO CLIP)

CROWLEY: Unproductive to this point, peace talks in Geneva seem doomed with no indication when or whether they will resume. Our Jim Sciutto joins us now. Jim, there's this talk about the U.S. sort of stepping back, thinking about new policies, new strategies. Realistically, what does the U.S. have that it can bring to this table?

JIM SCIUTTO, CNN CORRESPONDENT: Not much. The administration policy has depended at this point on peace talks, which just ended with no progress, no date set, and in fact, as you mentioned, violence accelerated, while those talks were under way. And those talks are dependent in effect on the Russians pressuring the Syrians to be actors in this process, and it was a really damning moment in these talks when the Russian deputy foreign minister refused to even discuss political transition, which is one of the key foundations of these talks.

CROWLEY: Which is sort of code for Bashar al-Assad going.

SCIUTTO: Absolutely. And if that's not on the table, then the opposition is not truly going to be involved in these.

The trouble is the other options, as the president is looking for other options, have in effect already been eliminated. Military intervention, no-fly zone. If you're talking about a more rigorous arming of the opposition, that's happening, but that's happening by others. We have a report this week that the Saudis are sending shoulder-fired missiles. And what's happening is we're dealing with the consequences now as a result.

I've got multiple briefings on Syria as a failed state, a new base for terror. Terrorists who want to target American interests in Europe and possibly the homeland. This is a horrendous situation, and you see the administration falling over themselves for stronger adjectives to describe it.

CROWLEY: Exactly, and then there's also this Syria getting rid of its chemical weapons deal that the U.S. and Russia brokered, and it's not going well. SCIUTTO: It's not. All the chemicals were supposed to be out of the country by February 5th. At this point, our reporting, it's only 11 percent has been removed. That means you're going to likely miss the next deadline, which is when all those chemicals and agents have to be destroyed by June. And this is another policy which is dependent on the Russians pressuring the Syrians to be good actors in this process, and you really have to wonder, what is our leverage with the Russian and the Syrians at this point? It reminds me of the old joke they used to say about unarmed British policeman, stop or I will stay stop again. Right? What is the leverage to force the Syrians to abide by this agreement? And that's a problem going forward?

CROWLEY: It is, and something I'll ask our next guest. Jim Sciutto, thanks for joining us.

And joining me now, Senator John McCain, Republican from Arizona, a member of the Armed Services and Foreign Relations Committee. Senator McCain, thanks for being here. Let me start out where I finished with Jim Sciutto, which is what is the U.S. leverage at this point?

MCCAIN: Well, first of all, recognize that the policy towards Syria has been an abysmal failure and a disgraceful one, as we have watched these horrendous -- what Director Clapper said was an apocalyptic situation, particularly in regard to those photos that have now come out. There's 11,000 documented pictures of starvation, beating, torture and murder of men, women and children.

CROWLEY: There is, Senator, but that's kind of like --

MCCAIN: First they acknowledge that they--

CROWLEY: Right. What you're saying is that has happened in the past.

MCCAIN: Acknowledge that -- a failure. They are still -- the president was still touting at the State of the Union message the removal of chemical weapons. Then, if you acknowledge failure, then you examine and re-examine options which were rejected. Increasing arming to the free Syrian army, perhaps establishment of a free zone, better arming and equipping.

There's a number of tell the Bashar Assad to stop and take measures if necessary, these horrible barrel bombs that they are dropping on people, which is just indiscriminate killing.

We have options. The question is whether we will use them or not. After 8,000 people were ethnically cleansed at Srebrenica, Bill Clinton acted. None of us want boots on the ground, but to not revisit other options, which are viable, then I think it is the only thing that we can do. This is shameful. This is shameful what's going on.

CROWLEY: Let me ask you about the viability, because it is argued, and it is arguable that perhaps three years ago if we had begun to make relationships with some of the legitimate rebel Syrians who wanted a say-so in their government, that is one thing. Now you have a situation where lots of fighters have come in from the outside, some of them linked to al Qaeda, some of them Islamist militants, who are also laying waste to Syria. They are -- there's fighting amongst each other, and what the U.S. fears is that you find a legitimate rebel group, you give them the weaponry, and somehow it ends up really in the hands of those who want to attack the U.S., and it's just a bad idea to put more weaponry in a situation that is already chaotic.

MCCAIN: Isn't it a terrible idea to do nothing? The fact is that we still have a viable opposition. Yes, these foreign fighters, 7,000 of them, foreign fighters are there. 26,000 jihadists. The black flag of al Qaeda is now flying over the city of Fallujah as the Iraq-Syria border becomes a transshipment for and base for al Qaeda.

All of these things are far worse than they were three years ago. There are viable options. There is a viable free Syrian army. There are people, who -- there's groups that have joined together against these extremists. ISIS, radical al Qaeda extremists that are there. There is still viable opposition that we can help and assist. We can do that, and to do nothing, of course, we'll see a further deterioration and a regionalization of the conflict.

Look at the situation in Jordan. Look at it in Lebanon. Look at -- and recognize that it is Russians and Syrians and outside help and Iranians, look, the Iran Revolutionary Guard are there, 5,000 Hezbollah out of Lebanon have come in and reversed the tide. Remember when the president of the United States--

CROWLEY: But why not --

MCCAIN: -- said it's not a matter of whether Bashar Assad will leave, it's a matter of when?

CROWLEY: Right, and that now seems to now not be happening. I think that's maybe the point here, is that Bashar al-Assad is as strong as he's been since the civil war started. He's strengthened his positions. He's trying to roust out the rebels in the cities that they have captured. You've got all these people running around with weaponry.

Yes, there are legitimate groups, but there's no legitimate way to tell if they will prevail.

So you mentioned all of these countries around that are affected by the humanitarian crisis, among them Jordan, Saudi Arabia, Lebanon. What about them? Why can't they arm the people that they find to be legitimate? I think, you know, you've seen the polls, Senator. You know that people are really reluctant to put the U.S. even at the edge of a war in the Middle East. The Middle East has not been a great place for the U.S. to try to help other countries.

MCCAIN: If the president of the United States went on national television and showed those pictures that are on my website that have been released, which are documented, of the horrific things that are being done, the American people at least would be I think more willing to help these people. No one is asking for military intervention. There are legitimate groups there. They have succeeded in some areas in fighting back against al Qaeda, by the way, who Bashar Assad is not fighting very hard against. There are viable alternatives inside Syria, but we also have to address the outside influences.

MCCAIN: You talk about the surrounding countries. Let -- Jordan is helping a lot, but they are on the verge of collapse because of this horrendous influx of refugees from Syria. Lebanon is destabilized. The whole region has turned into a regional conflict, and who is behind it? The Russians and the Iranians. While we sit down at the table with them on nuclear weapons, while we talk about the removal of chemical weapons, it has turned into a regional conflict, and the weapons flow in from Russia and the training from Iran and all of it is evolved into the situation that we're in today. Do not believe we are out of options. There are many options if we have the courage to pursue them.

CROWLEY: There are humanitarian crises in a number of places where the pictures are horrific, and you know these places, many of them in Central Africa, but we don't -- there's not this kind of push to help arm the rebels or whoever it is we side with in these places, and I think when you look at the pictures, you can't help but be moved, Senator, but you -- and you say it's what is worse than doing nothing? Maybe doing harm. Do you entertain the possibility that some harm could happen if we increase -- more harm could happen if we increased it, helped with military aid?

MCCAIN: More harm could happen? More harm could happen? Candy, with all due respect that's ludicrous. That's ludicrous. And, by the way, in Africa we -- we make efforts with the U.N. We do -- we are working. We are providing assistance and things to do in Africa. In the Middle East this situation was predicted and predictable and -- and the stakes here, frankly, are incredibly high. The stakes, humanitarian stakes any place else in the world are incredibly high, but we're now looking at a regional conflict, which could over time draw the United States into it if it spreads throughout the region. The second battle of Fallujah, we lost 96 Marines and soldiers, 600 wounded, and now the black flags of al Qaeda are flying over Fallujah. It's disgraceful.

CROWLEY: Let me turn you to a couple of political problems back home. One of them is that we're now led to believe by the leaders in both the Senate and the House, Republican leaders, that there will be no immigration reform this year. I want to remind you of something that you said in July of 2013 in an interview to PBS when you said "If we don't do that," meaning immigration reform, "Frankly I don't see -- I see further polarization of the Hispanic voter and the demographics are clear, that the Republican Party cannot win a national election. That's just a fact." Is that still a fact, and do you believe that Republicans are undermining or enhancing their chances in the mid- terms by not dealing with immigration reform? MCCAIN: I think that I stick absolutely those words that I uttered, and were absolutely true and states like mine over time, the demographics will overtake not only mine, but throughout the whole southwest and many other parts of the country. I won't give up. We have the broadest coalition of support of any legislation I've ever been involved in. Big business, small business, Evangelicals, Catholic Church, the list goes on and on. It's time for those people to weigh in and bring pressure to bear and say, look. We need to act, and we -- I have not given up hope that we will act, and we must act, and I would, again, urge my House colleagues to consider whatever way they want to pursue to try to address this issue because it's going to have to be addressed, and to wait until 2015 when we're now involved in Republican primaries, obviously, would not be a viable scenario.

CROWLEY: And finally, Senator Cruz this week forced Republicans to join with Democrats in the House to get past a threatened filibuster, so you could raise the debt ceiling, as -- and you voted in favor of moving past debate, but then against raising the debt ceiling. You've been critical of Senator Cruz, but it reminds me a little bit of -- coming at it from a different direction, albeit of John McCain, the maverick, the guy that told his party what they didn't want to hear. Do you see any similarities? Do you understand where Senator Cruz is coming from?

MCCAIN: I understand where Senator Cruz is coming from. We have a cordial relationship, and I respect his right to do -- exercise his rights as the United States senator which he did last week, but I allege that there was no plan. There was no plan once we had taken the United States on the brink of this financial crisis that we were approaching. I appreciate our leadership voting the way that they did, even though they face primary oppositions, especially Senator McConnell, but he exercises his rights. There was enough of us that we move forward and put this issue behind us and now focus on Obamacare, on the economy, on many other issues, in which we think are winning issues.

CROWLEY: Senator John McCain, thanks for getting up early to join us from Arizona. I appreciate it.

MCCAIN: Thank you, Candy.

CROWLEY: When we return, class warfare heats up with the vice president warning that Republican gains in 2014 will make it even worse.

(BEGIN VIDEO CLIP)

JOE BIDEN, U.S. VICE PRESIDENT: The middle class is being clobbered, you know. They talk about the fact that we shouldn't be talking about income inequality. I think it would be a sin if we didn't talk about income inequality.

(END VIDEO CLIP)

(COMMERCIAL BREAK) CROWLEY: Joining me now, Steve Forbes, he is chairman and editor-in-chief of Forbes Media, and Austan Goolsbee, professor of economics at the University of Chicago and former chairman of the Council of Economic Advisers under President Obama. Gentlemen, thank you both.

Steve, I want to come to you first and read you a couple of tweets in defense of billionaires by billionaires. This comes off the whole discussion about income disparity and the upper 1 percent versus everybody else. The first comes from venture capitalist Tom Perkins, who says of an idea he has. "You don't get to vote unless you pay a dollar of taxes. You pay a million dollars in taxes, you get a million votes." Then real estate billionaire Sam Zell said, "the one percent," meaning the top 1 percent, "work harder." And finally from Bud Konheim, who is a fashion -- co-founder and CEO of a fashion outlet -- "we've got a country that the poverty level is wealth in 99 percent of the rest of the world. So we're talking about woe is me, woe is us, woe is this."

In defense of billionaires, I don't think they are doing you any good in this fight.

FORBES: I think instead of just focusing on a few individuals who have opinions that you might find fun at a bar on Saturday night, or not, the real problem in the economy today is the lack of upward mobility. Median incomes today are lower than they were five years ago. This is the worst recovery in American history from a sharp economic downturn, and, unfortunately, government policies, including those of the Federal Reserve, have made this situation worse, not better.

CROWLEY: And Austan, you know, as you know, the income disparity is all the rage now, particularly in Democratic circles as they push a number of initiatives, and I think Steve sort of hits the points that Republicans are making, which it's not about income disparity, it's about opportunity disparity. Has this been poorly packaged?

GOOLSBEE: Well, I don't know if it's an issue to be packaged. I think I agree with Steve that the most important thing is that we get the growth rate of the economy up. Fundamentally, I think what has happened, the reason the recovery now we're getting a little bit of momentum, but the reason it's been so slow is we had a bubble. The main drivers of growth of the 2000s were fundamentally not sustainable and false, and if the economy can't go back to doing what it was doing before the recession began, if it has to shift industries and shift geographies, that takes a long time. But, you know, the sympathy for guys who believe that they are victims of the Holocaust because their valet did not get their car fast enough, I mean, that's kind of goofiness.

CROWLEY: And certainly at the side of the debate about the economy, I think you heard in our open that there is some debate about what kind of recovery this is. Have the basics of what fuels the U.S. economy changed since recovery began or since the recession, Steve?

FORBES: Well, in any vibrant economy, you're always going to get a change of new industries, new companies coming along. Remember in the 1970s, I'm old enough to remember back then, Microsoft, Apple, Amgen, FedEx and other companies were tiny babies then and became the giants they are today. So you're always getting that kind of shift, but what's remarkable about this recovery is that we haven't had a sharp upturn. We saw in the 1970s, a terrible decade, but after we got things straightened out in the early '80s, by golly, the economy took off. So you get a sharp downturn, you always get a sharp upturn, and we're not getting that this time. And the Federal Reserve has been practicing trickle-down economics. They messed up the credit markets, which hurt credit accession for small and new businesses, which are the job creators, and try to prop up the stock market, which guess what, helps upper-income people. And yet the Democrats gave a bye to Ben Bernanke and put in Janet Yellen as the successor to Ben Bernanke, practicing a policy that hurt credit markets and hurt job creators, the new businesses.

CROWLEY: And Austan, it is true, is it not -- Wall Street-- I'm sorry, Main Street, if you ask the general public, are we headed in the right direction? Does it feel like it's getting better? By and large they say no. What we see every day, and I know Wall Street has not been doing that well I think in January, but nonetheless, there seems to be this recovery, if you will, for the upper income, and no recovery in the middle incomes.

GOOLSBEE: Well, I think as a factual matter, that has been true, and that did not begin now, you know. Through the 2000s, the median family income fell $2,000. We then had the worst recession of our lifetimes, and now we've had a modest recovery since then. And I think that does characterize it, but if you look at the surveys where they asked small business people what is the biggest barrier to your growth, by far the overwhelming barrier is that people are not buying their services and their products.

CROWLEY: Right.

GOOLSBEE: So it absolutely is not government policy that's interfering with that. It's that the U.S. with 2, 2.5 percent growth, which is not enough, is among the fastest growing countries of the advanced world. I mean, this is a major worldwide problem that we're confronting.

CROWLEY: So it isn't great, and I want to -- there's a couple of issues that are out there, certainly that the Obama administration is pushing. I want to get both of you to ring in on whether these initiatives will help or hurt the economy going forward, which I think we all can say can't take any huge blows. And the first is on the subject of raising the minimum wage. When the president signed his executive order raising minimum wage for federal contract workers, here's something he said.

(BEGIN VIDEO CLIP)

OBAMA: Owners of small and large businesses are recognizing that fair wages and higher profits go hand in hand. It's good for the bottom line.

(END VIDEO CLIP)

CROWLEY: Increasing the minimum wage, good for the bottom lines, Steve?

FORBES: Well, Janet Yellen let the cat out of the bag on that one when she was asked in recent testimony about raising the minimum wage. She said those who keep their jobs, yes, that's very nice, but she acknowledged that it will be a job killer. It will destroy jobs.

Remember, in terms of minimum wage, they are often with businesses with small margins, and two-thirds of the people who start out in minimum wage are above the minimum wage within a year when they get skills. And most minimum wage workers, thankfully, are part of households where they are part of an earning capacity where they are not the sole breadwinner. But artificially trying to raise wages when you have an economy that's being hurt by the tax code, hurt by the Federal Reserve, hurt by this crazy health care thing we call Obamacare, that is just going to make the problem worse for those who need help the most, those who have no skills or are trying to break into the workforce. Those are the ones that are hurt when you substantially raise the minimum wage.

CROWLEY: Austan, is this -- is minimum wage an economic issue, or is it a political issue in Washington?

GOOLSBEE: I think certainly in Washington, it's a political issue, but everything is a political issue in Washington. I would say --

CROWLEY: You bet.

GOOLSBEE: -- when I saw the president in the State of the Union, he was calling for minimum wage, raising the earned income tax credit, investing in skills and education for low-skilled people, early education, community college. He's identified the issue of ordinary Americans' incomes being tied to an economic system where we want to get growth, and I think just snarking on any one policy saying, no, no, let's not do this one, let's not do that one, the overall broad issue is quite fundamental. That people don't get rich if they don't have customers, and if customers don't have income, they can't spend, and if we don't invest in the skilled base of our workforce, we're going to fall behind other countries and other locations that are doing that. So I hope we can together kind of address those issues because there's nothing more important than that.

CROWLEY: Doesn't sound like a ringing endorsement for increasing the minimum wage, but let me move you on to Obamacare. One of the things we heard over and over again while the economy has struggled is part of the problem with businesses not hiring, and, you know, people not buying is this uncertainty that is out there. Now we have the president delaying some more deadlines for businesses to get into the Obamacare system or have their employees get into the Obamacare system or provide it themselves. So it seems to me that that is, again, more uncertainty, so what is the overall effect of these delays as businesses look into whether they should hire up or lay off, Steve?

FORBES: Well, delay of a year or two when the president does it by decree, nothing was written in the law that allowed him to do this, that just raises the uncertainty. You don't know what the rules of the game are. You know the way this thing has been playing out, it's done more harm than good. 6 million individuals have lost their policies, and the uncertainty that creates when you know that small businesses, when they get hit with Obamacare, there's going to be another surge of people looking for new policies. So, again, that kind of uncertainty, that kind of expense slows job creation down. And the fact you may get a reprieve for a year or two, very nice, but you're not going to make long-term commitments when you know the results can be changed overnight.

CROWLEY: Last word, Austan. Is it a -- I'm sure you're not going to tell me that Obamacare is a drag on the economy, but has it been so far?

GOOLSBEE: I think that argument that this is uncertainty and uncertainty is why business is not investing or not hiring has been utterly disproven in the data. On the health side, the fact that more than 100 million people no longer have a dollar cap on their insurance over their lifetimes and don't have to be nervous about getting sick and don't have to be nervous about starting their own businesses, that they would lose their health insurance, all of those are for the good. I think we're in this transition period as it comes in, but thus far the data do not show that the firms that have been most affected by Obamacare are growing slower or hiring any less than the firms that have been less affected. The evidence is not there for that, and I think the overall net positive of health care on the economy is going to come from the ability to generate entrepreneurs.

CROWLEY: So Obamacare, as we would say in this business, TBD, the effect of a to be determined as we see it carry out over the next several years.

GOOLSBEE: Yes, I think that's fair.

CROWLEY: Steve Forbes, Austan Goolsbee, thank you both for joining me.

FORBES: Thank you.

GOOLSBEE: Thank you.

CROWLEY: Up next, Republicans throw in the towel on the debt ceiling, and their two leaders take heat for the loss. (BEGIN VIDEO CLIP)

MITCH MCCONNELL (R), SENATE MINORITY LEADER: My job is to protect the country when I can and to step up and lead when those occasions when it's required.

REP. JOHN BOEHNER (R), HOUSE SPEAKER: When you don't have 218 votes, you have nothing.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

CROWLEY: Joining me around the table, Democratic strategist, Margie Omero, Corey Dade, contributing editor for "The Root," and Kevin Madden, a Republican strategist and CNN political commentator. Thank you all.

MARGIE OMERO, DEMOCRATIC STRATEGIST: Thank you. CROWLEY: You so what's John Boehner up to? I'm having a hard time. You know, he caved on the debt ceiling. Realized he couldn't get his Republicans to agree to something that didn't have an attachment to it so he just threw it on the floor, voted for it and said we're going to be done with it. Sounds to me a little bit like 2014 is a mid-year, and we don't want another slam against the Republican Party.

OMERO: I mean, the other side, instead of caving is that he had a good week through the help of Democrats by not skipping out on a check which is what his caucus wanted to do so -- which is why he seemed cheerful as he left that press conference singing even. So, you know, I don't know if voters now are going to notice that the debt limit was raised, you know, if the debt limit is raised in the woods, does anybody notice? I think people notice the conflict more than they notice the smoothness, but if you had told me last fall that we'd be here and we wouldn't have this showdown, I would have said, forget it. There's no way.

(CROSSTALK)

CROWLEY: Really, because I would have said last fall absolutely because the fall was so brutal for Republicans.

KEVIN MADDEN, CNN POLITICAL COMMENTATOR: Yes. Let me agree with my Democrat friend that John Boehner had a good week. The hard part was getting there. You know this is something that I think John has really had a -- it's been a process getting to this point working with the particular conference that he has, but I think he's trying to get his members to fight the smart fight, and the smart fight right now is making this an election, the 2014 campaign about the contrast between the Republicans and Democrats on Obamacare. And now that we've moved past this and don't have the prospect of a congressional showdown over something like the debt ceiling, he's in a much better place and so is the congress. COREY DADE, CONTRIBUTING EDITOR, "THE ROOT": Well, there's really no tangible contrast between Democrats and Republicans on Obamacare as far as the policy because the Republicans haven't put forth a significant set of policies to fix Obamacare just yet. The key is with Boehner and the Republicans, they know from last fall how bad they looked in the polls coming off that debt fight and the government shutdown, and they knew they couldn't repeat it. They know that everything rests on their ability --

(CROSSTALK)

CROWLEY: Well (INAUDIBLE) did. I mean it's the leadership thing, right?

DADE: It was politics 101. Boehner said I'm not going to go down with this small tea party minority in my caucus just to lead us to another government shutdown. I'm not going to do it in a mid-term election year. We have good enough numbers of doubt and questions among the electorate around Obamacare so we're going to campaign on that. They are not going to touch this issue, and we've seen -- just like they are not going to touch immigration right now.

OMERO: And tell their primary (INAUDIBLE) folks --

CROWLEY: Well except for, it is true, that it allowed most of his caucus to vote against the debt ceiling.

MADDEN: That's right.

CROWLEY: And there was no big fight. Let me move you to the senate side where we had something similar where an order to avoid a Ted Cruz filibuster Republicans had to vote with Democrats to get past, to get cloture, to get past the filibuster and get to the vote. Mitch McConnell is in what may be a tough race, not all together clear to me how tough the primary is going to be, or for that matter the general, but has he been genuinely hurt, do you think, but what he had to do which is he had to vote for moving on?

OMERO: Right. He said I have to protect the country and do my job, and that means shutting down a faction in his party, a vocal faction in his party and again allowing Democrats to vote the way they did. But you know, I think -- look, Mitch McConnell can be seen as a political operator regardless of this. This was true before that vote. It can be true after the vote. This is just another piece of evidence, but I think a lot of this is already baked in the cake for primary voters, and we'll see if Matt Bevin, his primary challenger, can use that to his advantage or not.

CROWLEY: So less about conservative versus really conservative and more about inside Washington and outside Washington.

MADDEN: Well yes. I think And I think back in Kentucky, Mitch McConnell isn't in any worse off place than he was before this vote. I mean, he has had votes for raising the debt limit before that if conservatives back there who didn't like him wanted to use it against him they could. But, you know, I talked to one really smart reporter up on Capitol Hill who covers the Senate and said, look, this was one of those cases where we skipped to the last chapter. We ultimately knew that this was going to have to happen on the Senate side and it did. And I think Mitch McConnell will take a little bit of a hit on the early side, but he'd still in a much stronger position because we'll have the debt ceiling showdown off the table.

CROWLEY: Let me ask you a question about Ted Cruz. I'm reminded of that song in "The Sound of Music", "how do you solve a problem like Maria." Where the nuns were trying to figure out what to do with this loose cannon. To me that kind of -- how do they solve a problem like Ted Cruz in the Republican caucus in the Senate?

DADE: Well, I mean there was no plan if he -- he obviously wanted to continue to fight this debt ceiling debate but there's no plan after that, there's no, where do you go from here? They had to just go tell him to go sit down. I mean they just pulled rank on him, slapped him (ph) -

(CROSSTALK)

CROWLEY: He forced their vote though. DADE: He forced the votes, but really you have -- you have a lot of -you have several senators who are in purple states where shutting down the government, where leading us to the brink of economic ruin, is not playing well for them. They are this close, they think, to taking -- to re-taking the Senate. They don't want -- they don't want to toy with that.

MADDEN: You know, what's interesting -- just real quick, what's interesting on this is if Mitch McConnell, who is a master of tactician in the Senate, doesn't have the answer to this, I sure don't, and I think what's really interesting is a lot of the usual tools that you have at your disposal as majority leader to punish somebody like Ted Cruz they aren't there because Ted Cruz does not care about moving up in the Senate.

DADE: That's right.

MADDEN: He doesn't care about what his profile is with inside Washington.

DADE: That's what makes it difficult.

CROWLEY: Let me get you all to hold. You're first up out of box. Our panel is going to stick with us, and when we come back reading the tea leaves of Hillary Clinton's past and what they might suggest about her future.

(COMMERCIAL BREAK)

CROWLEY: We are back with Margie, Corey and Kevin. You all would like to share that. No need for last names. Diane Blair, very close friend of Hillary Clinton, now deceased, kept notes, treasure trove. They were available. "Washington Beacon" I think got a hold of them first. Among other things, there was a writing about Hillary Clinton's reaction. These are contemporaneous notes, like what Hillary Clinton said that day or the impression she got from Hillary Clinton. And this was her reaction to the Monica Lewinsky affair. It was elapsed, but she said to his, (INAUDIBLE) the president's credit, he tried to break it off, tried to pull away, tried to manage someone who was clearly a "narcissistic loony tune" but it was beyond control. I find this interesting for a lot of reasons, and one of them is how quickly that seemed to have been -- this was early on, how quickly it was almost forgiven. How does this play?

OMERO: I don't think there is a single undecided or undecided- leaning voter out there who is going to change their mind based on these papers. I think Republicans, who want to dig through the archives as if they are Trekkies or Dead heads, take your pick, just sort of poring over the old archives, are not going to be demonstrating that they are the party of the future. It's going to very much remind people that they seem like the party of the past.

CROWLEY: Sure, because Rand Paul has first questioned about and later brought up again the whole Lewinsky affair and president Clinton as predator and that kind of thing. DADE: Yes. I think it's still -- it's not anything that most undecided or most sort of swing voters are really going to, you know, base their decisions on.

DADE: But it's just -- it's just the early vetting if you will of Hillary Clinton this time around. Rand Paul has been fairly, you know, shrewd in sort of bringing this up into the dialogue so that at the end of the day, you know, he can perhaps cleave away and the Republicans can cleave away some women who might be leaning Republican who don't appreciate being reminded of that and that reminds them of why they have doubts about Hillary Clinton. She still has negatives they can exploit.

OMERO: She's two to one approval rating, approve to disapprove...

(CROSSTALK)

...71 percent.

DADE: That's going to change.

MADDEN: For now we know that's going to change. I think there is some news in here. There is some relevancy to the political debate inside these papers, but Margie's main point is right. . The way to beat Hillary Clinton in 2016 if there is a Hillary Clinton candidacy is not through Arkansas and it's not through the past. It is a litigation of the future of this country. Does America want somebody who is associated with Washington as president who's been here for 25 years? Do we want an Obama third term? Those are going to be the key questions that are going to aid Republicans in litigating that campaign, not Arkansas not the past.

CROWLEY: Let's remember, a lot -- there are a number of voters coming into the system who are already in the system who don't remember the Clinton years.

MADDEN: Who weren't even born.

CROWLEY: Completely freaky to me. But OK. One of the other things I liked out of this was in her relationship with the press. And Hillary said, I'm not stupid, I know I should do more to suck up to the press, I know it confuses people when I change my hairdos, I should pretend not to have opinions but I'm just not going to. I think we knew that about her, but the whole -- I think part of that bringing up she had an enemy's list and she didn't like the press, I think there's drama that is around the Clinton family whether they created it or it's created around them, however you want to look at it, that the Lewinsky affair does kind of remind people of -- and I don't think people like drama in their White House. MADDEN: There's no doubt. With the Clintons come controversies and come a lot of drama, but at the same time they've survived a lot of controversies. They have survived a lot of drama. So that's the one thing that you also do learn on presidential campaigns is that the level of scrutiny that comes with it, that's something that not many people have the experience in dealing with. That's why you don't -- (CROSSTALK)

OMERO: And I think a lot of women find those attacks incredibly unfair.

CROWLEY: (INAUDIBLE) she had the affair.

OMERO: Whatever they are. And so I think anybody who attacks her is because --

(CROSSTALK)

MADDEN: To that point though they may also find it very unfair that Hillary Clinton was one of the people inside the Clinton machine that was promoting an attack against the women who were questioning Bill Clinton's behavior.

DADE: But I think what you -- what you just read about her, what she knows "she should be doing with the press and shouldn't," I think it does to some degree speak to sort of a little bit rigidity that the Hillary Clinton campaign had in 2008 and that she's had to sort of responding to what's out there in the echosphere among media. That will have to change a little bit. There have to be a little bit more nimble and responsive coming in to 2016 if she's going to run.

CROWLEY: Kevin Madden, Corey Dade, Margie, thank you all for being here very much. I appreciate it. To be continued with Hillary Clinton as we all know. Coming up, a controversial verdict in the so- called loud music trial.

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CROWLEY: Thanks for watching STATE OF THE UNION. I'm Candy Crowley in Washington. Head to CNN.com/SOTU for analysis and extras. If you missed any part of today's show find us on iTunes, search STATE OF THE UNION.

Fareed Zakaria, "GPS," is next right after a check of the headlines.