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Obama Cabinet Arrives; Iran Holding Ten U.S. Sailors; Awaiting President Speech; Obama Outside House Chamber; Obama Enters House Chamber; Obama Greets Supreme Court; Obama Greets Joint Chiefs; Obama Speech Moments Away; President Obama Gives State of the Union Address; Republican Response by Gov. Nikki Haley. Aired 9-11p ET

Aired January 12, 2016 - 21:00   ET


WOLF BLITZER, CNN ANCHOR: Here come the members of the Cabinet led by the Secretary of State. That's why you have the number one Cabinet, secretary, the Secretary of the Treasury Jacob Lew. Following, there's John Kerry. There's Jacob Lew.

[21:00:00] Members of the Cabinet walking into the house of chamber right now to listen to the president's State of the Union Address.

Once again we want to welcome our viewers in the United States and around the world. We're awaiting the President of the United States. He is about to deliver his last State of the Union Address. It comes in an awkward moment. 10 U.S. sailors, they are being held right now in Iran. The vice president and the secretary of state have told our Dana Bash they expect those 10 sailors to be released fairly soon.

There's a bit of tension, Jake Tapper, as we await the release of these 10 American sailors. It's been an awkward moment clearly for the president and his address. Something they certainly did not want to have deal with on this important night.

JAKE TAPPER, CNN ANCHOR: That's right, we see Secretary of State John Kerry on our screen there. He and the Secretary of Defense, Ash Carter learned about midafternoon that these 10 sailors had been picked up by the Iranian Revolutionary Guard and were being held. So far the administration has said that they are not going to add any information about this in the State of the Union, because they anticipate that it will be a positive result.

But let's pause, if we can, Wolf, and just talk about the momentous moment that this is the important moment, President Obama's last State of the Union Address. Vice President Biden for his part, his last State of the Union address, having probably attended almost every one, if not every one, since 1973, as a senator and then a vice president. This is truly the end of an era.

The president has just over a year left in office. He's going to be talking about the nation he sees, not the nation is represented by the anxiety that we heard about, by so many candidates on the campaign trail, both Democrats and Republicans.

BLITZER: He's going to try to look ahead, to, we're told, instead of a specific long list of proposals, that will be some, but the president wants to look ahead, what he sees for the country over the next 5, 10, even 20 years. It's going to be also a relatively optimistic assessment. He's going to go through the past seven years, where the country was when he took office a back on January 20th, 2009, and where it is today on economic issues and other related issues, including health care for millions of Americans. He's very proud of that achievement.

TAPPER: I know you see with the white hair walking through shaking hands Denis McDonough, the White House Chief of Staff, the president's final and by all accounts favorite chief-of-staff, Obama's Obama, he's been called. There is only one member of the cabinet who is still serving in his original position. And that is the Secretary of Agriculture Tom Vilsack.

BLITZER: Yeah, he's been there since day one, he's still there right now, we saw him walk in just a little while ago. There's Ash Carter, the Secretary of Defense. He's certainly got a lot on his plate right now. He was with as you point out, he was with John Kerry earlier when they got word that 10 American sailors, nine men, one woman, were detained -- were being held in Iran together with two very small U.S. Navy Vessels. We're getting word from the vice President and the secretary of state. They expect the Iranians to release those 10 sailors very soon.

Dana Bash is there in Statuary Hall, what are you seeing now, Dana?

DANA BASH, CNN CHIEF POLITICAL CORRSPONDENT: Wolf, you might have come to me with my back to you, and my apologies for that. But the reason is, because I'm looking down here and in years past, I've actually been able to see something pretty cool, I have to say, a totally nonpartisan thing, just to be witness to history at a moment like this, and that is the President of the United States lining up and waiting for the sergeant at arms to scream that are now familiar announcement "Mr. Speaker, the President of the United States."

So, I'm watching for him, he should be back there any minute, but while we're doing this, just one kind of impression that I had in our longtime producer here there to watch, usually here in Statuary Hall, there's kind of an electricity, an anticipation, and it's different this year.

To quote Donald Trump, its low energy, it just doesn't feel the same. You know, whether or not it is because it is his last, or because the situation here has become so incredibly partisan, it does feel different this time around.

BLITZER: We'll await those words by Paul Irving the House sergeant at arms, who will be making that declaration as you point out, "Mr. President -- Mr. Speaker -- excuse me -- the President of the United States."

Jake, you and I and Dana, and other reporters, we attended a breakfast this morning with Paul Ryan, the new Speaker of the House. And he was asked to describe how he saw the State of the Union. The president always says the State of the Union is strong, the State of the Union is excellent.

[21:05:00] Whatever the president says, he doesn't necessarily believe that, does he?

TAPPER: No, the president of the United States, whoever it is, almost always says strong, in second option might be quite strong, but Paul Ryan, Speaker of the House said he agreed with Donald Trump's assessment that the State of the Union is a mess. And that is one of the things that President Obama I believe in his speech this evening will be trying to rebut. Not just that sentiment, but any sort of national anxiety. He will be talking about hope.

BLITZER: The president is about to be introduced by Paul Irving, the House sergeant at arms. Let's listen in.

PAUL IRVING, HOUSE SERGEANT AT ARMS: Mr. Speaker, the President of the United States.

UNIDENTIFIED MALE: Happy New Year. Happy New Year to you.

BARACK OBAMA, UNITED STATES OF AMERICA PRESIDENT: Thank you. Good to see you. Happy New Year. Happy New Year. Good to see you.

UNIDENTIFIED MALE: Good to see you. We're going to get there. Happy New Year. Thank you. Great to see you. Happy New Year.

OBAMA: Thank you. So nice to see you. How are you? Happy New Year. Great to see you. Good to see you.

Good to see you. Happy New Year. Haven't seen you in a while. Happy New Year.

BLITZER: He's about to go up on the podium, Jake, stand in front of the Speaker of the House, the Vice President of the United States, also the president of the U.S. Senate, and he'll be making his remarks. We're told his speech will be a little shorter than last year. We'll see how long it actually is. The president is been working they told very hard personally getting involved in drafting the speech.

Jake, this is an important speech for the president, the last State of the Union Address. There he is with the vice president and the speaker. And there's the first lady.

TAPPER: That's right, as President Obama saying he wants his team to be able to say they couldn't think of anything else that we didn't try to do. He wants to put it on and leave it all on the field, he says. And he says he's an energized to give this speech as he was the first time he delivered it.

BLITZER: All right. Let's listen in.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Mr. Speaker, Mr. Vice President, members of Congress, my fellow Americans: tonight marks the eighth year that I've come here to report on the state of the Union. And for this final one, I'm going to try to make it a little shorter.


OBAMA: I know some of you are antsy to get back to Iowa.


I've been there. I'll be shaking hands afterwards if you want some tips.

Now, I understand that because it's an election season, expectations for what we will achieve this year are low. But, Mr. Speaker, I appreciate the constructive approach that you and other leaders took at the end of last year to pass a budget and make tax cuts permanent for working families.

So I hope we can work together this year on some bipartisan priorities like criminal justice reform, and helping...


... and helping people who are battling prescription drug abuse and heroin abuse.


So who knows. We might surprise the cynics again.

But tonight, I want to go easy on the traditional list of proposals for the year ahead. Don't worry, I've got plenty, from helping students learn to write computer code to personalizing medical treatments for patients.

And I will keep pushing for progress on the work that I believe still needs to be done: fixing a broken immigration system...


... protecting our kids from gun violence, equal pay for equal work, paid leave, raising the minimum wage.


All these things -- all these things still matter to hardworking families. They're still the right thing to do, and I won't let up until they get done. But for my final address to this chamber, I don't want to just talk about next year. I want to focus on the next five years, the next ten years and beyond. I want to focus on our future.

We live in a time of extraordinary change -- change that's reshaping the way we live, the way we work, our planet, our place in the world. It's change that promises amazing medical breakthroughs, but also economic disruptions that strain working families.

It promises education for girls in the most remote villages, but also connects terrorists, plotting an ocean away. It's change that can broaden opportunity, or widen inequality. And whether we like it or not, the pace of this change will only accelerate.

America has been through big changes before -- wars and depression, the influx of new immigrants, workers fighting for a fair deal, movements to expand civil rights.

Each time, there have been those who told us to fear the future, who claimed we could slam the brakes on change, who promised to restore past glory if we just got some group or idea that was threatening America under control. And each time, we overcame those fears.

We did not, in the words of Lincoln, adhere to the dogmas of the quiet past. Instead we thought anew and acted anew.

We made change work for us, always extending America's promise outward, to the next frontier, to more people. And because we did, because we saw opportunity where others saw peril, we emerged stronger and better than before.

What was true then can be true now. Our unique strengths as a nation -- our optimism and work ethic, our spirit of discovery, our diversity, our commitment to rule of law -- these things give us everything we need to ensure prosperity and security for generations to come.

In fact, it's in that spirit that we have made the progress these past seven years. That's how we recovered from the worst economic crisis in generations.


That's how we reformed our health care system and reinvented our energy sector.


That's how -- that's how we -- that's how we delivered more care and benefits to our troops coming home and our veterans.


That's how we -- that's -- that's how we secured the freedom in every state to marry the person we love.


But such progress is not inevitable. It's the result of choices we make together. And we face such choices right now. Will we respond to the changes of our time with fear, turning inward as a nation, turning against each other as a people? Or will we face the future with confidence in who we are, in what we stand for, and the incredible things we can do together? So let's talk about the future, and four big questions that I believe we as a country have to answer, regardless of who the next president is or who controls the next Congress. First, how do we give everyone a fair shot at opportunity and security in this new economy?


Second, how do we make technology work for us, and not against us, especially when it comes to solving urgent challenges like climate change?


Third, how do we keep America safe and lead the world without becoming its policeman?


And finally, how can we make our politics reflect what's best in us, and not what's worst?


Let me start with the economy and a basic fact. The United States of America, right now, has the strongest, most durable economy in the world.


We're in the middle of the longest streak of private-sector job creation in history.


OBAMA: More than 14 million new jobs, the strongest two years of job growth since the 1990s, an unemployment rate cut in half. Our auto industry just had its best year ever.


That's just part of a manufacturing surge that's created nearly 900,000 new jobs in the past six years. And we've done all this while cutting our deficits by almost three-quarters.


Anyone claiming that America's economy is in decline is peddling fiction. Now...


What is true -- and the reason that a lot of Americans feel anxious -- is that the economy has been changing in profound ways, changes that started long before the Great Recession hit, changes that have not let up. Today, technology doesn't just replace jobs on the assembly line, but any job where work can be automated. Companies in a global economy can locate anywhere, and they face tougher competition. As a result, workers have less leverage for a raise. Companies have

less loyalty to their communities. And more and more wealth and income is concentrated at the very top.

All these trends have squeezed workers, even when they have jobs, even when the economy is growing. It's made it harder for a hardworking family to pull itself out of poverty, harder for young people to start their careers, tougher for workers to retire when they want to. And although none of these trends are unique to America, they do offend our uniquely American belief that everybody who works hard should get a fair shot.

For the past seven years, our goal has been a growing economy that also works better for everybody. We've made progress, but we need to make more. And despite all the political arguments that we've had these past few years, there are actually some areas where Americans broadly agree.

We agree that real opportunity requires every American to get the education and training they need to land a good-paying job. The bipartisan reform of No Child Left Behind was an important start, and together, we've increased early childhood education, lifted high school graduation rates to new highs, boosted graduates in fields like engineering.

In the coming years, we should build on that progress, by providing Pre-K for all and offering every student...


... offering every student the hands-on computer science and math classes that make them job-ready on day one. We should recruit and support more great teachers for our kids.


And -- and we have to make college affordable for every American.


No hardworking student should be stuck in the red. We've already reduced student loan payments by -- to 10 percent of a borrower's income. And that's good. But now we've actually got to cut the cost of college.


Providing two years of community college at no cost for every responsible student is one of the best ways to do that, and I'm going to keep fighting to get that started this year. It's the right thing to do.


But a great education isn't all we need in this new economy. We also need benefits, and protections that provide a basic measure of security. It's not too much of a stretch to say that some of the only people in America who are going to work the same job, in the same place with a health, and a retirement package for 30 years are sitting in this chamber. For everyone else, especially folks in their 40's and 50's, saving for retirement, or bouncing back from job loss has gotten a lot tougher. Americans understand that at some point in their careers, in this new economy, they may have to retool, they may have to retrain, but they shouldn't loose what they've already worked so hard to build in the process.

That's why Social Security and Medicare are more important than ever, we shouldn't weaken them, we should strengthen them.


And for American short of retirement, basic benefits should be just as mobile as everything else is today.

That, by the way, is what the Affordable Care Act is all about. It's about filling the gaps in employer based care so that when you lose a job, or you go back to school, or you strike out and launch that new business you'll still have coverage. Nearly 18 million people have gained coverage so far, and in the process...


In the process health care inflation has slowed, our businesses have created jobs every single month since it became law.

Now, I'm guessing we won't agree on health care anytime soon.


A little applause right there.


Just a guess.

But there should be other ways parties can work together improve economic security. Say a hardworking American loses his job, we shouldn't just make sure he can get unemployment insurance; we should make sure that program encourages him to retrain for a business that's ready to hire him. If that new job doesn't pay as much, there should be a system of wage insurance in place so that he can still pay his bills. And even if he's going from job to job, he should still be able to save for retirement and take his savings with him. That's the way we make the new economy work better for everybody.

I also know Speaker Ryan has talked about his interest in tackling poverty. America is about giving everybody willing to work a chance, a hand up, and I'd welcome a serious discussion about strategies we can all support, like expanding tax cuts for low-income workers who don't have children.

(APPLAUSE) But there are some areas where we just have to be honest. It has been more difficult to find agreement over the last seven years, and a lot of them fall under the category of what role the government should play in making sure the system's not rigged in favor of the wealthiest and biggest corporations.


And it's an honest disagreement. And, the American people have a choice to make.

I believe a thriving private sector is the lifeblood of our economy. I think there are outdated regulations that need to be changed, there is red tape that needs to be cut.


There you go. Yes.



But after years of record corporate profits, working families won't get more opportunity or bigger paychecks just by letting big banks or big oil or hedge funds make their own rules at everybody else's expense.


Middle-class families are not going to feel more secure because we allowed attacks on collective bargaining to go unanswered. Food Stamp recipients did not cause the financial crisis; recklessness on Wall Street did.


Immigrants aren't the principal reason wages haven't gone up. Those decisions are made in the boardrooms that all too often put quarterly earnings over long-term returns. It's sure not the average family watching tonight that avoids paying taxes through offshore accounts.


The point is, I believe, that in this new economy, workers and start- ups and small businesses need more of a voice, not less. The rules should work for them. And...


... I'm not alone in this. This year, I plan to lift up the many businesses who've figured out that doing right by their workers or their customers or their communities ends up being good for their shareholders...

(APPLAUSE) ... and I want to spread those best practices across America. That's

part of a brighter future. In fact, it turns out many of our best corporate citizens are also our most creative.

And this brings me to the second big question we as a country have to answer: how do we reignite that spirit of innovation to meet our biggest challenges?

Sixty years ago, when the Russians beat us into space, we didn't deny Sputnik was up there.


We didn't argue about the science, or shrink our research and development budget. We built a space program almost overnight, and twelve years later, we were walking on the moon.


Now, that spirit of discovery is in our DNA. America is Thomas Edison and the Wright Brothers and George Washington Carver. America is Grace Hopper and Katherine Johnson and Sally Ride. America is every immigrant and entrepreneur from Boston to Austin to Silicon Valley racing to shape a better future.


That's who we are, and over the past seven years, we've nurtured that spirit. We've protected an open Internet, and taken bold new steps to get more students and low-income Americans online.


We've launched next-generation manufacturing hubs and online tools that give an entrepreneur everything he or she needs to start a business in a single day. But we can do so much more.

You know, last year, Vice President Biden said that, with a new moon- shot, America can cure cancer. Last month, he worked with this Congress to give scientists at the National Institutes of Health the strongest resources that they've had in over a decade.


Well, so -- so tonight, I'm announcing a new national effort to get it done. And because he's gone to the mat for all of us on so many issues over the past 40 years, I'm putting Joe in charge of mission control.


For the loved ones we've all lost, for the families that we can still save, let's make America the country that cures cancer once and for all. What do you think? Let's make it happen.

(APPLAUSE) And medical research is critical. We need the same level of

commitment when it comes to developing clean energy sources.


Look, if anybody still wants to dispute the science around climate change, have at it.


OBAMA: You will be pretty lonely because you'll be debating our military, most of America's business leaders, the majority of the American people, almost the entire scientific community, and 200 nations around the world who agree it's a problem and intend to solve it.


But even if -- even if the planet wasn't at stake, even if 2014 wasn't the warmest year on record until 2015 turned out even hotter -- why would we want to pass up the chance for American businesses to produce and sell the energy of the future?


Listen, seven years ago, we made the single biggest investment in clean energy in our history. Here are the results. In fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power. On rooftops from Arizona to New York, solar is saving Americans tens of millions of dollars a year on their energy bills and employs more Americans than coal -- in jobs that pay better than average.

We're taking steps to give homeowners the freedom to generate and store their own energy -- something, by the way, that environmentalists and Tea Partiers have teamed up to support. And meanwhile, we've cut our imports of foreign oil by nearly 60 percent and cut carbon pollution more than any other country on Earth.


Gas under $2 a gallon ain't bad either.


Now we've got to accelerate the transition away from old, dirtier energy sources. Rather than subsidize the past, we should invest in the future, especially in communities that rely on fossil fuels. We do them no favor when we don't show them where the trends are going. And that's why I'm going to push to change the way we manage our oil and coal resources so that they better reflect the costs they impose on taxpayers and our planet. And that way, we put money back into those communities and put tens of thousands of Americans to work building a 21st century transportation system.

(APPLAUSE) Now, none of this is going to happen overnight, and yes, there are plenty of entrenched interests who want to protect the status quo. But the jobs we'll create, the money we'll save, the planet we'll preserve, that is the kind of future our kids and our grandkids deserve. And it's within our grasp.

Now, climate change is just one of many issues where our security is linked to the rest of the world, and that's why the third big question that we have to answer together is how to keep America safe and strong without either isolating ourselves or trying to nation- build everywhere there's a problem.

I told you earlier all the talk of America's economic decline is political hot air. Well, so is all the rhetoric you hear about our enemies getting stronger and America getting weaker. Let me tell you something. The United States of America is the most powerful nation on Earth, period. Period.


It's not even close. It's not even close. It's not even close. We spend more on our military than the next eight nations combined.


Our troops are the finest fighting force in the history of the world.


No nation attacks us directly or our allies because they know that's the path to ruin. Surveys show our standing around the world is higher than when I was elected to this office, and when it comes to every important international issue, people of the world do not look to Beijing or Moscow to lead. They call us.


So I think it's useful to level set here, because when we don't, we don't make good decisions. Now, as someone who begins every day with an intelligence briefing, I know this is a dangerous time. But that's not primarily because of some looming superpower out there, and it's certainly not because of diminished American strength.

In today's world, we're threatened less by evil empires and more by failing states. The Middle East is going through a transformation that will play out for a generation, rooted in conflicts that date back millennia. Economic headwinds are blowing in from a Chinese economy that is in significant transition. Even as their economy severely contracts, Russia is pouring resources in to prop up Ukraine and Syria, client states that they saw slipping away from their orbit. And the international system we built after World War II is now struggling to keep pace with this new reality.

It's up to us to help, the United States of America, to help remake that system. And to do that well, it means that we've got to set priorities. Priority number one is protecting the American people and going after terrorist networks.


Both Al Qaida and now ISIL pose a direct threat to our people, because in today's world, even a handful of terrorists who place no value on human life, including their own, can do a lot of damage. They use the Internet to poison the minds of individuals inside our country; their actions undermine and destabilize our allies. We have to take them out.

But as we focus on destroying ISIL, over-the-top claims that this is World War III just play into their hands. Masses of fighters on the back of pickup trucks, twisted souls plotting in apartments or garages, they pose an enormous danger to civilians, they have to be stopped, but they do not threaten our national existence. That is the story ISIL wants to tell; that's the kind of propaganda they use to recruit.

We don't need to build them up to show that we're serious, and we sure don't need to push away vital allies in this fight by echoing the lie that ISIL is somehow representative of one of the world's largest religions.


We just need to call them what they are: killers and fanatics who have to be rooted out, hunted down, and destroyed.


And that's exactly what we're doing. For more than a year, America has led a coalition of more than 60 countries to cut off ISIL's financing, disrupt their plots, stop the flow of terrorist fighters, and stamp out their vicious ideology. With nearly 10,000 air strikes, we are taking out their leadership, their oil, their training camps, their vicious ideology.

With nearly 10,000 air strikes, we're taking out their leadership, their oil, their training camps, their weapons. We're training, arming and supporting forces who are steadily reclaiming territory in Iraq and Syria.

If this Congress is serious about winning this war and wants to send a message to our troops and the world, authorize the use of military force against ISIL. Take a vote.


Take a vote. But the American people should know that, with or without Congressional action, ISIL will learn the same lessons as terrorists before them. If you doubt America's commitment -- or mine -- to see that justice is done, just ask Osama bin Laden.


Ask -- ask the leader of Al Qaida in Yemen, who was taken out last year, or the perpetrator of the Benghazi attacks, who sits in a prison cell. When you come after Americans, we go after you. And it may take time, but we have long memories, and our reach has no limits.


Our foreign policy has to be focused on the threat from ISIL and Al Qaida, but it can't stop there. For even without ISIL, even without Al Qaida, instability will continue for decades in many parts of the world -- in the Middle East, in Afghanistan and parts of Pakistan, in parts of Central America and Africa and Asia.

Some of these places may become safe havens for new terrorist networks. Others will just fall victim to ethnic conflict or famine, feeding the next wave of refugees.

The world will look to us to help solve these problems, and our answer needs to be more than tough talk or calls to carpet-bomb civilians. That may work as a TV sound bite, but it doesn't pass muster on the world stage.

We also can't try to take over and rebuild every country that falls into crisis...


... even if it's done with the best of intentions. That's not leadership; that's a recipe for quagmire, spilling American blood and treasure that ultimately will weaken us. It's the lesson of Vietnam. It's the lesson of Iraq, and we should have learned it by now.


Fortunately, there is a smarter approach, a patient and disciplined strategy that uses every element of our national power. It says America will always act, alone if necessary, to protect our people and our allies, but on issues of global concern, we will mobilize the world to work with us, and make sure other countries pull their own weight.

That's our approach to conflicts like Syria, where we're partnering with local forces and leading international efforts to help that broken society pursue a lasting peace.

That's why we built a global coalition, with sanctions and principled diplomacy, to prevent a nuclear-armed Iran. And as we speak, Iran has rolled back its nuclear program, shipped out its uranium stockpile, and the world has avoided another war.


That's how -- that's how we stopped the spread of Ebola in West Africa.


Our military, our doctors, our development workers -- they were heroic. They set up the platform that then allowed other countries to join in behind us and stamp out that epidemic. Hundreds of thousands -- maybe a couple million lives were saved.

That's how we forged a trans pacific partnership to open markets, and protect workers and the environment, and advance American leadership in Asia. It cuts 18,000 taxes on products made in America which will then support more good jobs here in America. With TPP, China does not set the rules in that region, we do. We want to show our strength in this new century? Approve this agreement, give us the tools to enforce it. It's the right thing to do.


Let me give you another example.

Fifty years of isolating Cuba had failed to promote democracy, it set us back in Latin America. That's why we restored diplomatic relations, opened the door to travel and commerce, positioned ourselves to improve the lives of the Cuban people.


So, if you want to consolidate our leadership and credibility in the hemisphere, recognize that the Cold War is over. Lift the embargo.


The point is American leadership in the 21st century is not a choice between ignoring the rest of the world, except when we kill terrorists; or occupying and rebuilding whatever society is unraveling. Leadership means a wise application of military power, and rallying the world behind causes that are right. It means seeing our foreign assistance as part of our national security, not something separate, not charity. When we lead nearly 200 nations to the most ambitious agreement in history to fight climate change, yes, that helps vulnerable countries, but it also protects our kids. When we help Ukraine defend its democracy, or Colombia resolve a decades-long war, that strengthens the international order we depend on. When we help African countries feed their people and care for the sick...


It's the right thing to do, and it prevents the next pandemic from reaching our shores. Now right now, we are on track to end the scourge of HIV/AIDS, that's within our grasp, and we have the chance to accomplish the same thing with malaria, something I'll be pushing this Congress to fund this year.

That's American strength. That's American leadership. And that kind of leadership depends on the power of our example. That is why I will keep working to shut down the prison at Guantanamo. It's expensive, it's unnecessary, and it only serves as a recruitment brochure for our enemies. There's a better way.


And that's why we need to reject any politics -- any politics that targets people because of race or religion.


Let me just say this.

This isn't a matter of political correctness. This is a matter of understanding just what it is that makes us strong. The world respects us not just for our arsenal, it respects us for our diversity and our openness and the way we respect every faith. His Holiness, Pope Francis, told this body from the very spot I'm standing on tonight that "to imitate the hatred and violence of tyrants and murderers is the best way to take their place." When politicians insult Muslims, whether abroad, or fellow citizens, when a mosque is vandalized, or a kid is called names, that doesn't make us safer. That's not telling it what -- telling it like it is, it's just wrong. It diminishes us in the eyes of the world.


It makes it harder to achieve our goals. It betrays who we are as a country.

"We the People." Our Constitution begins with those three simple words, words we've come to recognize mean all the people, not just some. Words that insist we rise and fall together, that that's how we might perfect our union.

And that brings me to the fourth, and maybe most important thing that I want to say tonight. The future we want, all of us want -- opportunity and security for our families, a rising standard of living, a sustainable, peaceful planet for our kids -- all that is within our reach. But it will only happen if we work together. It will only happen if we can have rational, constructive debates. It will only happen if we fix our politics.

A better politics doesn't mean we have to agree on everything. This is a big country, different regions, different attitudes, different interests. That's one of our strengths, too. Our Founders distributed power between states and branches of government, and expected us to argue, just as they did, fiercely, over the size and shape of government, over commerce and foreign relations, over the meaning of liberty and the imperatives of security.

But democracy does require basic bonds of trust between its citizens. It doesn't -- it doesn't work if we think the people who disagree with us are all motivated by malice, it doesn't work if we think that our political opponents are unpatriotic or trying to weaken America.

Democracy grinds to a halt without a willingness to compromise or when even basic facts are contested or when we listen only to those who agree with us. Our public life withers when only the most extreme voices get all the attention. And most of all, democracy breaks down when the average person feels their voice doesn't matter; that the system is rigged in favor of the rich or the powerful or some special interest. Too many Americans feel that way right now. It's one of the few regrets of my presidency -- that the rancor and suspicion between the parties has gotten worse instead of better. I have no doubt a president with the gifts of Lincoln or Roosevelt might have better bridged the divide, and I guarantee I'll keep trying to be better so long as I hold this office.

But my fellow Americans, this cannot be my task -- or any president's -- alone. There are a whole lot of folks in this chamber -- good people -- who would like to see more cooperation, would like to see a more elevated debate in Washington but feel trapped by the imperatives of getting elected, by the noise coming out of your base. I know; you've told me. It's the worst-kept secret in Washington. And a lot of you aren't enjoying being trapped in that kind of rancor.

But that means if we want a better politics -- and I'm addressing the American people now -- if we want a better politics, it's not enough just to change a congressman or change a senator or even change a president. We have to change the system to reflect our better selves.

But that means if we want a better politics -- and I'm addressing the American people now -- if we want a better politics, it's not enough just to change a congressman or change a senator or even change a president. We have to change the system to reflect our better selves.

I think we've got to end the practice of drawing our congressional districts so that politicians can pick their voters and not the other way around.


Let a bipartisan group do it.


I believe we've got to reduce the influence of money in our politics, so that a handful of families or hidden interests can't bankroll our elections.


And if our existing approach to campaign finance reform can't pass muster in the courts, we need to work together to find a real solution, because it's a problem. And most of you don't like raising money. I know. I've done it.

We've got to make it easier to vote, not harder. We need to modernize it for the way we live now.


This is America. We want to make it easier for people to participate. And over the course of this year, I intend to travel the country to push for reforms that do just that.

But I can't do these things on my own. Changes in our political process -- in not just who gets elected, but how they get elected -- that will only happen when the American people demand it. It depends on you. That's what's meant by a government of, by, and for the people.

What I'm suggesting is hard. It's a lot easier to be cynical, to accept that change is not possible, and politics is hopeless, and the problem is, all the folks who are elected don't care, and to believe that our voices and our actions don't matter.

But if we give up now, then we forsake a better future. Those with money and power will gain greater control over the decisions that could send a young soldier to war, or allow another economic disaster, or roll back the equal rights and voting rights that generations of Americans have fought, even died, to secure. And then, as frustration grows, there will be voices urging us to fall back into our respective tribes, to scapegoat fellow citizens who don't look like us, or pray like us, or vote like we do, or share the same background.

We can't afford to go down that path. It won't deliver the economy we want. It will not produce the security we want. But most of all, it contradicts everything that makes us the envy of the world.

So, my fellow Americans, whatever you may believe, whether you prefer one party or no party, whether you supported my agenda or fought as hard as you could against it, our collective futures depends on your willingness to uphold your duties as a citizen, to vote, to speak out, to stand up for others, especially the weak, especially the vulnerable, knowing that each of us is only here because somebody somewhere stood up for us.


We need every American to stay active in our public life and not just during election time so that our public life reflects the goodness and the decency that I see in the American people every single day.

It is not easy. Our brand of democracy is hard. But I can promise that, a little over a year from now, when I no longer hold this office, I will be right there with you as a citizen, inspired by those voices of fairness and vision, of grit and good humor and kindness, that have helped America travel so far.

Voices that help us see ourselves not first and foremost as black or white or Asian or Latino; not as gay or straight, immigrant or native born; not Democrat or Republican; but as Americans first, bound by a common creed.

Voices Dr. King believed would have the final word -- voices of unarmed truth and unconditional love. And they're out there, those voices. They don't get a lot of attention. They don't seek a lot of fanfare, but they're busy doing the work this country needs doing.

I see them everywhere I travel in this incredible country of ours. I see you, the American people. And in your daily acts of citizenship, I see our future unfolding. I see it in the worker on the assembly line who clocked extra shifts

to keep his company open, and the boss who pays him higher wages instead of laying him off.

I see it in the Dreamer who stays up late at night to finish her science project, and the teacher who comes in early, maybe with some extra supplies that she bought, because she knows that that young girl might someday cure a disease.

I see it in the American who's served his time, made bad mistakes as a child, but now is dreaming of starting over, and I see it in the business owner who gives him that second chance; the protester determined to prove that justice matters; and the young cop walking the beat, treating everybody with respect, doing the brave, quiet work of keeping us safe.


I see it in the soldier who gives almost everything to save his brothers, the nurse who tends to him until he can run a marathon, the community that lines up to cheer him on. It's the son who finds the courage to come out as who he is, and the father whose love for that son overrides everything he's been taught.

(APPLAUSE) I see it in the elderly woman who will wait in line to cast her vote as long as she has to; the new citizen who casts his vote for the first time; the volunteers at the polls who believe every vote should count, because each of them, in different ways, know how much that precious right is worth.

That's the America I know. That's the country we love. Clear- eyed, big-hearted, undaunted by challenge, optimistic that unarmed truth and unconditional love will have the final word. That's what makes me so hopeful about our future.


I believe in change because I believe in you, the American people. And that's why I stand here, as confident as I have ever been, that the state of our Union is strong.


Thank you, God bless you, and God bless the United States of America.

BLITZER: A very, very forceful speech by the president hitting so many issues clearly designed to try to solidify his legacy. He was blunt and some not so subtle. Very tough criticism of republican presidential candidates on several very sensitive issues.

Jake Tapper, this was a speech that the president wants the American public to remember.

TAPPER: This is the book end in the film of Obama. This is the end speech. This is the one that you run at the very end after you started the movie, the drama with those early-day speeches perhaps the one from the 2004 democratic convention when he was first introduced to the the people.

[22:15:11] It was a very forceful defense of his legacy, an instruction or lecturing or fact checking from I'm sure his point of view, talking about how the United States of America is the strongest, most powerful nation in the country -- in the world.

How we have the strongest, most durable economy in the world. And in many ways, a direct repudiation of some of the language we're hearing, some of the rhetoric we're hearing on the campaign trail from republicans.

You heard allusions to remarks Ted Cruz made about carpet bombing civilians in President Obama's characterization, how you need more than tough talk that doesn't wash. You heard a lot of revenues to Donald Trump and the president's characterization of a demonizing, going after the people based on their religion and their race.

There was even a shot or two at other candidates on the campaign trail like Chris Christie, his reference to the fight against ISIS being World War III.

So, a strong defense of himself, couched in an optimistic way talking about the way he looked at the world, and also, a very harsh judgment at some of the language and some of the reaction he has heard to his presidency from republicans on the campaign trail, Wolf.

BLITZER: He spoke for almost exactly one hour. Dana Bash, you listened to every word. He did acknowledged and hears to the very end that one of the few regrets of his presidency was the rancor and suspicion between the parties here in Washington has gotten worse instead of better during these past seven years.

BASH: That was one of the most fascinating and telling moments from my perspective, of the entire speech. I have watched the Obama presidency from the perch of Capitol Hill and watched what everybody thought would be potentially a new era in Washington back seven years ago, when he came in, unravel slowly but surely and as he said gotten worse.

First of all, just on a personal level, you don't hear this president talk about regrets very much, especially in such a forum like this, but also, because he's right that things got worse.

I will give you a little bit of a reality check having witnessed it and sort of been a part of it for the past seven years, it won't both ways. I think the irony is the fact that the president started out with a super majority of democrats in the Senate and a majority in the House, the entire democratic control, almost at the end of the day, hurt him because he didn't have to reach out to republicans. He was too worried about his own party and then things sort of went downhill with politically at least with of course him pushing his health care bill.

So, there's no question he is right. Things are very -- are much worse. And if you go back in time and think about as, you know, we heard the hope and change when he came in here it is ironic and certainly not worthy that he admitted that it is a regret.

BLITZER: Anderson, now earlier today, the Speaker of the House, Paul Ryan, like Donald Trump said that the state of the economy is a mess, the State of the Union right now -- the State of the Union, the president says is strong.

ANDERSON COOPER, CNN ANCHOR: And not only that that he trumpeted the unemployment numbers, comparing it to what it was that he inherited when he took office.

I want to bring in our analyst, chief national correspondent, John King, political commentator, Michael Smerconish, chief political analyst, Gloria Borger, and senior political commentator and former Obama senior advisor, David Axelrod.

David, let's start with you. And I think for a lot of people who voted for this president, perhaps, what they heard tonight harkens back to what they heard back in 2008 on the campaign trail.

DAVID AXELROD, CNN SENIOR POLITICAL COMMENTATOR: Now this was pure Obama. I mean, really what he was saying is that we live in times of great change. We are a strong resilient country, we can either embrace that change and adapt to it and grab it and make it an opportunity or we can allow it to be used to tear us apart.

And that's really the essence of -- he is a -- we are talking about a transformational president. He is a president in a time of change, and we've seen. We need to go backwards and resort to tribalism and fight with each other or we can move forward with confidence. He was urging that second course.

COOPER: And as Jake said, I mean, definitely commenting on a lot of the rhetoric we're hearing on the republican side.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right. Absolutely. Taking on Donald Trump, taking on Ted Cruz on the issue of the called to carpet bomb civilians, that was that he referenced to Cruz.

I think this was a Barack Obama's version of his view of American exceptionalism. He's always been criticized by republicans for not believing that America is exceptional. And tonight, he made the case about why America is exceptional as he also set the agenda for the next democratic nominee.

UNIDENTIFIED MALE: I never really understood that because I don't know anybody...

BORGER: Right.

UNIDENTIFIED MALE: ... anybody who believes more deeply in America. He believes that he's lived it.

[22:15:00] BORGER: But here's the thing about Obama, he is not going to be president any more. But this was a speech for the next democratic president. Because his legacy depends on a democratic president getting elected. Because if there is no democratic president, all those executive

orders go away. Obamacare can be undone. And he understands that and I think this was sort of taking it a step to the future and saying this is the course for you, and in it, I must say, it sounded a little bit like he was channeling Bernie Sanders on economic policy.

A very political speech. The language wasn't terribly harsh but it takes down to Gloria's note, definitely going after Donald Trump several times, going after Ted Cruz, specifically Chris Christie, more broadly, going after the republicans on just economics. He said they're wrong, what they're selling you is fiction.

On climate change, keep denying it if you want but you are wrong. The leadership in the world and the things he has done on the global stage, he says they are wrong and essentially, you know, reject them. That is what the president was saying, without saying it, so why do I, is reject them.

Here's my big question, can he change minds at this point in his presidency? I post the question because he's been under water in his approval ratings for 29 months now on average. But no question this will rally the democrats.

And he was essentially telling the country to elect a democrat. He didn't name them. But elect the -- but can he -- can he breakthrough at this moment or not only because his standing is down because the clock is ticking on him when you're left, but because the campaign to replace him so is competitive, is so exciting, is so interesting and is getting so much of the attention. And we will tomorrow afternoon. We're talking about the latest poll in Iowa and New Hampshire.


UNIDENTIFIED MALE: Or they change that...

UNIDENTIFIED MALE: Or was he speaking to the emerging American majority that elected him twice by significant margins? I think that's what he was leading.

BORGER: Well, I think to me...


COOPER: Michael, how do you think America heard this?

MICHAEL SMERCONISH, CNN HOST, "SMERCONISH": I think the most important part of his speech; first of all, I like the approach instead of just rattling off a laundry list. And he did get most of the things and that you would hear in the laundry list.

I like drilling down on several big picture items. The one line that sums it up for me, public life withers when only the most extreme voices get attention. I was so pleased that he addressed fixing the political system as his fourth point. Because without doing that, frankly, nothing else matters. BORGER: You know, I think that the president really understands, to

John's point about changing people's minds. This is not going to be a persuasion election. This is going to be a mobilization election. Nobody's minds going to get changed any more. But what the president is trying to do is say you people who support -- who supported my coalition for the next democratic nominee, you have to be there.

UNIDENTIFIED MALE: I don't want to be poly-annaish about this, but honestly, I think he was speaking beyond the election. He was saying these are the challenges that are going to define our future and we need to meet them with confidence, we need to embrace change, we need to re-knit together our American community.

BORGER: Fix this.

UNIDENTIFIED MALE: We need to face and we need to revitalize our democracy.

COOPER: Let's also bring Paul Begala, Van Jones, and Mike Rogers, just to get your quick feedback on what you think.

UNIDENTIFIED MALE: This was Obama at his best. You had the 2008 idealism, plus, the 2012 fighting spirit. And those two things to get a baffle in, you know, Obama is at his best. I thought it was so important that he stood with the Muslims. I thought it was so important that he chastised republicans for putting America down and building ISIL up.

He said like, you don't have to build them up, just take them out. And I thought that was very, very good. I also thought he snuck something in there that could prove very, very important. He gave an olive branch to Paul Ryan for reaching out to the poor.

Now remember, Paul Ryan said that makers versus takers. And he said the -- you have makers in the country and you have takers. You know, talking about poor people on welfare. Paul Ryan apologized for that, didn't get credit for it. And Paul Ryan is reaching out for poor people, and this president reached back. That is a big deal. That plus criminal justice which Paul Ryan was worked on he might have a path way through. That was important tonight.

COOPER: And obviously, we're going to be hearing from the republican side, the republican response. So, this is Amanda Carpenter from spokesperson of Ted Cruz, what did you hear tonight?

AMANDA CARPENTER, CNN POLITICAL COMMENTATOR: Well, looking at the arc of Obama's presidency when he came into office in 2009 with the super majority in Congress, and now when you listen to the applause that is so much quieter because they are so -- there is fewer democrats in the chamber.

And so, looking at what -- where he has left the Democratic Party as a whole, he lost the Senate, he lost the House. They lost a dozen governor seats. He's lost hundreds of states -- seats from the state legislature, what does the Democratic Party become? Right now it's fighting to be led by, you know, a socialist from

Vermont, and Paul may hate this, but a former president's wife. They are in shambles and I don't think Obama can pick up the pieces. He's broken the White House for the democrat, and I don't think he'll get that.


COOPER: Also a former senator.

UNIDENTIFIED MALE: I think Hillary Clinton is more than.


UNIDENTIFIED MALE: Reasonable accomplished.

CARPENTER: Well, I have to say that's the...

UNIDENTIFIED MALE: I have to be a fan of his husband, too. He seems like a nice guy.

COOPER: Paul, what did you think?

PAUL BEGALA, CNN POLITICAL COMMENTATOR: I thought it was a terrific speech first. I will quiver a little bit. Axel is probably right and I'm wrong. He is looking directly at the election.

[22:20:03] And I think while, yes, you can see this about Ted Cruz and this about Chris Christie. This is a rejection of 'Trumpism.' He referred to the very top of the speech to political hot air and anyone he said claiming that America's economy is in decline is peddling fiction, and he went through each one of this. Whether it was climate change, whether there was a notion that...


COOPER: In fact, let's play -- let's play that sound bite and then we'll continue with Paul.


OBAMA: I told you earlier all the talk of America's economic decline is political hot air. Well, so is all the rhetoric you hear about our enemies getting stronger and America getting weaker.

Let me tell you something, the United States of America is the most powerful nation on earth, period. Period.


OBAMA: Period. It's not even close. It's not even close.



BEGALA: That is a heat-seeking missile right at Donald J. Trump.


BEGALA: OK? And what I loved about it as a speechwriter is in tone and temperament was also a rejection, it was very strong, but it was bombastic, it wasn't insulting. He did reach out to the other side especially to Speaker Ryan. So, I couldn't be happier, I know Amanda thinks that my party is decimated. My party can run on this. My party will win.

CARPENTER: Well, I will say because...


COOPER: Sir, regardless, did you hear him reaching out?

MIKE ROGERS, CNN NATIONAL SECURITY COMMENTATOR: Listen, I thought it was a great speech. The rhetoric is good. This was a great speech for 2009 for Barack Obama. He's had seven years. He proposed nothing. He is living in fantasy land when he tells you things that if you are in a union bar in Michigan right now, they don't believe a word that he just said because they're living that economic picture in their lives.

BEGALA: They have jobs in that union bar because he saved the auto industry and the republicans tried to stop him. I'm sorry, Mike. But, come on, you have to give the guys a credit. He saved the autos...


ROGERS: No. Listen, you are absolutely living in fantasy land. There has been no median wage increase. And 94 million Americans have opted out of the work force. Their cost on health care have gone up. And what they're feeling -- what you're seeing is Americans rejecting even the institutions of government.

So, this isn't just about Trump or it's not Cruz or any republican candidate and, by the way, this irks me when he does -- this is typical Obama. He says, you know, we have to reject the division of politics and al of that great rhetoric, and then he goes on to go after republicans because they disagree with his positions.

I think this is exactly the problem. I saw more of the same. I think you're going to see a more emboldened American populous because they are living the economics of America that they don't align with right and that's democrats, too.

VAN JONES, CNN POLITICAL CONTRIBUTOR: But hold on to one second. Let's just be clear. Romney said in 2012, Obama is terrible. If you elect me I will give you 6 percent unemployment. We have 5 percent unemployment.

My good friend, Newt Gingrich said, Obama is terrible. Elect me I'll give you $3 gas. We have $2 gas which he opposed.


BEGALA: It was opposed.

JONES: No, he didn't. Listen, why do we have cheap gas? He provided over the shale revolution increasing supply and energy efficiency pulling down demand. Obama...


COOPER: Luckily we are on the last two hours to the business to the business, a lot to discuss. But we do have the republican response so we want to go to, Wolf...

BLITZER: Hear the republican response now from Nikki Haley, the Governor of South Carolina. She is coming to our own, Jake.

TAPPER: That's right. A two-term Governor of South Carolina and she really had the national stage and an opportunity when she made the decision and the announcement to bring down the Confederate Flag from the South Carolina Capitol. It was a moment that the whole nation was watching and emotion -- and the moment that republican officials in Washington really paid a lot of attention..

BLITZER: She's been the governor since 2011. She's got a lot of potential republicans say, including maybe a vice presidential nominee. Let's listen.

GOV. NIKKI HALEY (R), SOUTH CAROLINA: Good evening. I'm Nikki Haley, Governor of the great state of South Carolina.

I'm speaking tonight from Columbia, our state's capital city. Much like America as a whole, our state has a rich and complicated history, one that proves the idea that each day can be better than the last.

In just a minute, I'm going to talk about a vision of a brighter American future. But first, I want to say a few words about President Obama who just gave his final State of the Union address.

Barack Obama's election as president seven years ago broke historic barriers and inspired millions of Americans. As he did when he first ran for office, tonight, President Obama spoke eloquently about grand things. He's at his best when he does that.

Unfortunately, the president's record has often fallen far short of his soaring words. As he enters his final year in office, many Americans are still feeling the squeeze of an economy too weak to raise income levels. We're feeling a crushing national debt, a health care plan that has made insurance less affordable and doctors less available, and chaotic unrest in many of our cities.

Even worse, we are facing the most dangerous terrorist threat our nation has seen since September 11th, and this president appears unwilling or unable to deal with it.

Soon the Obama presidency will end, and America will have the chance to turn in a new direction. That direction is what I want to talk about tonight. At the outset, I'll say this. You've paid attention to what has been happening in Washington, and you're not naive. Neither am I. I see what you see, and many of your frustrations are my frustrations. A frustration with a government that has grown day after day, year after year, yet doesn't serve us any better. A frustration with the same endless conversations we hear over and over again. A frustration with promises made and never kept.

We need to be honest with each other and with ourselves. While Democrats in Washington bear much responsibility for the problems facing America today, they do not bear it alone. There is more than enough blame to go around.

We as Republicans need to own that truth. We need to recognize our contributions to the erosion of the public trust in America's leadership. We need to accept that we've played a role in how and why our government is broken. And then we need to fix it.

The foundation that has made America that last best hope on Earth hasn't gone anywhere, it still exists. It's up to us to return to it. For me, that starts right where it always has. I am the proud daughter of Indian immigrants who reminded my brothers, my sister and me every day how blessed we were to live in this country.

Growing up in the rural south, my family didn't look like our neighbors, and we didn't have much. There were times that were tough, but we had each other and we had the opportunity to do anything, to be anything, as long as we were willing to work for it.

My story is really not much different from millions of other Americans. Immigrants have been coming to our shores for generations to live the dream that is America. They wanted better for their children than for themselves. That remains the dream of all of us, and in this country we have seen time and again that that dream is achievable.

Today, we live in a time of threats like few others in recent memory. During anxious times, it can be tempting to follow the siren call of the angriest voices. We must resist that temptation.

No one who is willing to work hard, abide by our laws and love our traditions should ever feel unwelcome in this country. At the same time, that does not mean we just flat out open our borders. We can't do that. We cannot continue to allow immigrants to come here illegally, and in this age of terrorism, we must not let in refugees whose intentions cannot be determined.

We must fix our broken immigration system. That means stopping illegal immigration and it means welcoming properly vetted legal immigrants, regardless of their race or religion, just like we have for centuries.

I have no doubt that if we act with proper focus, we can protect our borders, our sovereignty and our citizens, all while remaining true to America's noblest legacies. This past summer, South Carolina was dealt a tragic blow. On an

otherwise ordinary Wednesday evening in June, at the historic Mother Emanuel Church in Charleston, 12 faithful men and women, young and old, went to Bible study.

That night, someone new joined them. He didn't look like them, didn't act like them, didn't sound like them. They didn't throw him out, they didn't call the police. Instead, they pulled up a chair and prayed with him for an hour. We lost nine incredible souls that night. What happened after the tragedy is worth pausing to think about.

Our state was struck with shock, pain and fear, but our people would not allow hate to win. We didn't have violence, we had vigils. We didn't have riots, we had hugs. We didn't turn against each other's race or religion, we turned toward God, and to the values that have long made our country the freest and greatest in the world.

We removed a symbol that was being used to divide us, and we found a strength that united us against a domestic terrorist and the hate that filled him.

There's an important lesson in this. In many parts of society today, whether in popular culture, academia, the media, or politics, there's a tendency to falsely equate noise with results.

Some people think that you have to be the loudest voice in the room to make a difference. That's just not true. Often, the best thing we can do is turn down the volume. When the sound is quieter, you can actually hear what someone else is saying. And that can make a world of difference.

Of course, that doesn't mean we won't have strong disagreements. We will. And as we usher in this new era, Republicans will stand up for our beliefs. If we held the White House, taxes would be lower for working families, and we'd put the brakes on runaway spending and debt.

We would encourage American innovation and success instead of demonizing them, so our economy would truly soar and good jobs would be available across our country.

We would reform education so it worked best for students, parents and teachers, not Washington bureaucrats and union bosses. We would end a disastrous health care program, and replace it with reforms that lowered costs and actually let you keep your doctor.

We would respect differences in modern families, but we would also insist on respect for religious liberty as a cornerstone of our democracy.

We would recognize the importance of the separation of powers and honor the Constitution in its entirety. And yes, that includes the Second and Tenth Amendments. We would make international agreements that were celebrated in Israel and protested in Iran, not the other way around. And rather than just thanking our brave men and women in uniform, we

would actually strengthen our military, so both our friends and our enemies would know that America seeks peace, but when we fight wars, we win them.

We have big decisions to make. Our country is being tested. But we've been tested in the past, and our people have always risen to the challenge. We have all the guidance we need to be safe and successful.

Our forefathers paved the way for us. Let's take their values, and their strengths, and rededicate ourselves to doing whatever it takes to keep America the greatest country in the history of man -- and woman.

Thank you, good night, and God bless.

BLITZER: Nikki Haley, the Governor of South Carolina with the republican response. Jake, there were several lines in there that seem to be at least indirect criticism of republican presidential front runner Donald Trump.

TAPPER: That's right. There were two shadows over the State of the Union this evening. One is those 10 American sailors being held captive by Iran right now. They have not been mentioned by either President Obama or the republican responder, Governor Nikki Haley.

The other, of course, is the republican race and Donald Trump specifically. We heard lots of veiled references to Donald Trump and his rhetoric from President Obama. And then, Nikki Haley, a fellow republican, referring to the siren call of the angriest voices and how we must resist that temptation.

We should remember, Nikki Haley, last month, gave one of the most forceful denunciations we've heard of Donald Trump's proposed to ban on Muslims entering the country that we heard from anyone much less a republican calling it an embarrassment, un-American, unconstitutional, and just plain wrong.

Keep in mind, republican officials here in D.C. heard that and picked her to give the address.

BLITZER: The president didn't mention Donald Trump by name but the reference was clear. Watch this.


OBAMA: Democracy grinds to a halt without willingness to compromise. Or when even basic facts are contested. Or when we listen only to those who agree with us.

Our public life withers when only the most extreme voices get all the attention. And most of all, democracy breaks down when the average person feels their voice doesn't matter that the system is rigged in favor of the rich or the powerful or some special interest. Too many Americans feel that way right now. (END VIDEO CLIP)

BLITZER: So, it's clear the president, he certainly is irritated by what he is hearing from these republican presidential candidates especially Donald Trump.

[22:35:02] TAPPER: Yes. Although when you heard President Obama talk about the people who feel that they don't have a voice, who feel like the decades dunked against them. That's also one of the reasons for Donald Trump's popularity right now.

That's one of the reasons why people are coming to his rallies, they feel that he speaks for them and the republican leadership in Congress and other republican candidates do not. So, in some ways, President Obama was condemning and also diagnosing Donald Trump's rise.

BLITZER: He outlined specific strategies that he has in mind in dealing with national security. But as you point out, he did not specifically mention those 10 U.S. sailors who are currently being held by Iran.

TAPPER: That's right. Even though, Paul Ryan, the House Speaker, called for him basically in a statement before the State of the Union address, called for him to give an update to the American people about it, about this status, the president did not.

We're told by a senior White House official that's because they feel that the situation is in hand. And the sailors will be returned and are being treated well. So, they didn't want to highlight that.

National security was an area of the speech where I thought President Obama -- first of all, he was making a very strong defense of the Obama doctrine, if you will, which is still this wariness to involve the United States in the affairs of other countries, saying that it's a recipe for quagmire sometimes even if there are good intentions.

That's the lesson of the atonement (ph) ultimately it weakens us. He was defending in action in places like Syria. And yet, in another moment, when he was talking about ISIS, Wolf, and he kind of belittled them, I wouldn't say -- it was basically the definition of the word smattering of applause was heard in the room, not a lot of strong applause for him when he was talking about that these are some thugs in trucks we shouldn't glorify.

BLITZER: It's not every day you hear a President of the United States in a State of the Union address confess, regrets, deep regrets, mistakes that were made over the past several years.

TAPPER: No, not at all. But he was defending, I think it's fair to say, the -- his refusal to send combat ground troops, although there obviously are boots on the ground in Iraq, refusal to send them.

BLITZER: Listen to this. This is the president very, very candid, very blunt.

(BEGIN VIDEO CLIP) OBAMA: It's one of the few regrets of my presidency that the rancor

and suspicion between the parties has gotten worse instead of better. I have no doubt. A president with the gifts of Lincoln or Roosevelt might have better bridged the divide. And I guarantee I'll keep trying to be better so long as I hold this office.


BLITZER: He is promising he is going to try to work harder in his final year in office to bridge that gap, work with the republicans to get some more accomplished.

TAPPER: And one of the moments we've heard about from republicans in some areas where there might be room for discussion and bipartisan work, making college more affordable, you saw President Obama extends the all of the branch that Van Jones pointed out of talking about poverty lifting people out of poverty.

One of the most popular moments of the night was when he talked about basically he compared trying to cure cancer to when John F. Kennedy set his sights on the moon and said that Joe Biden would be in charge of mission control. That was a stirring moment given the vice president's loss of his son.

BLITZER: Let's play that clip right now. Listen to this.


OBAMA: Last year, Vice President Biden said that with a new moon shot, America can cure cancer. Last month, he worked with this Congress to give scientists at the National Institutes of Health the strongest resources that they've had in over a decade.


OBAMA: So, tonight, I'm announcing a new national effort to get it done. And because he's gone to the mat for all of us on so many issues over the past 40 years, I'm putting Joe in charge of mission control.


OBAMA: For the loved ones we've all lost. For the families that we can still save, let's make America the country that cures cancer once and for all. What do you say, Joe? Let's make it happen.



BLITZER: A very emotional moment as all of our viewers does. He lost his son, Beau Biden to cancer not that long ago.

TAPPER: Beau Biden was a great guy. You saw in the audience there standing and applauding not just democrats, but one of the rare moments where you saw people like the House majority whip, a republican, Steve Scalise, the house majority leader, Kevin McCarthy, both republicans standing and applauding, giving the president a standing ovation.

[22:40:08] BLITZER: Yes. Joe Biden has got a mission in the next year. We'll see what he does. All right, Anderson, back to you.

COOPER: Wolf and Jake, thank you. I'm wondering from our panelists was it a good night for Donald Trump? I mean, the fact that you have President Obama criticizing him and Nikki Haley for his supporters is that elevating Donald Trump?

ROGERS: Yes. This is exactly what Mr. Trump wants, too. He is -- everybody in the Republican Party disapproves of the president. OK. The Trump voters hate it. So, when the president singles him out that's great for Mr. Trump that suggests that perhaps he is authentic to his face, right? Which is just to stole an art here even though you're in Republican Party.

But then, Nikki Haley, he can say, Trump will say if he hadn't by now, he's going to tweet it, to see the establishment is out to get me. Somehow, an Indian -- a child of Indian immigrants is now GOP the establishment. But God bless her. I think Trump is going to say it. The establishment is out to get me. Obama is out to get me, it's just you and me that can follow...


COOPER: Amanda, your take.

CARPENTER: Yes. I think it was a mistake for Nikki Haley to kind of, you know, sub-tweet Donald Trump on giving a response to State of the Union.

We have to quit the self-loathing among the Republican Party. That is seems we'd evidenced at. We have a loud party; we have a lot of differing views. We should be welcoming as many people as we can, and the fact that Donald Trump is addressing the anger that you know, President Obama wants to believe doesn't exist, we have to stop saying that that republican...


ROGERS: Republicans hate their party and democrats love their party. This is a difference in our country. Democrats love their party and they love their president.

SMERCONISH: Oh, my gosh. This is so nice.

JONES: I thought Nikki Haley did something extraordinarily important for the country. She showed you could be a very tough conservative, a very strong conservative, a very, frankly, proud conservative but you don't have to be mean to people. And I think she was calling her party up. She wasn't calling Trump out as much I think is calling her party up. And that's important tonight.

SMERCONISH: I think it is stunning, though, that you have the President of the United States and in the rebuttal speech delivered by a member of the opposition party both, I think, trashing the republican front runner and I'll bet much to the delight of both sides of the aisle. That's the point, where is the support for Trump within the well of the Congress? Was there anybody sitting they are saying, oh, my God, this is terrible. The president is going after Trump, I doubt it.

BORGER: Nowhere. But I think she went intentionally rogue. I mean, this is not a speech that was vetted by -- you know, that wasn't vetted. Republicans vetted this speech. And when she said we need to own the truth that we, as republicans, are partly responsible for the dysfunction in Washington that was kind of...


ROGERS: So, I don't think...

BORGER: .... a big moment for her, though.

ROGERS: ... I don't think, well, I would -- that was -- it was remarkable. But I don't think it was going rogue. I don't think you can say they looked at her speech.


BORGER: You can (Inaudible) but you agree with her.

ROGERS: I think they chose a governor, obviously a minority but also a governor from outside of Washington.

BORGER: Right.

ROGERS: Because they understand how much loathing there is for this town generally and particularly in their party and they want to cleanse themselves of the stench of this town.

BORGER: So, she said...

KING: She is a governor who was speaking, though, for the republican establishment tonight. She may not be one of these members.


KING: But when you get that role you were speaking for the establishment. She is also the governor of the state that comes third in the presidential nominating process. The republican establishment wants to keep Donald Trump at 30 percent. Because they are hoping by the time they get to South Carolina then there is only three or four candidates left and 30 percent can't win.

Thirty percent can win Iowa, 30 percent can win New Hampshire with 12 people in the race. The republican establishment is hoping that when you get to South Carolina and Nevada and beyond, then you've got a four or five candidate race.

And Donald -- if you keep Donald Trump at 30 percent or below then they hope they can beat him. The question is who is the other candidate? We assume Ted Cruz will be there. Who is going to be this main stream republican at that point? Because at the moment, the closest it's Rubio, maybe in Iowa, it's Christie or Rubio or Kasich in New Hampshire, we don't know how all...


ROGERS: And if New Hampshire doesn't answer that question you won't get the reduction of the field that you need to not...


COOPER: Senator...

BORGER: I think she is kind of...

ROGERS: I think we're missing one important point here. Donald Trump is appealing as much to democrats as he is to republicans. And anybody that misses this point by missing the folks on the street who are drawn to his campaign. He's got this whole group of democrats for Trump, it's an economic issue.

There will be a republican candidate who can speak to these economic issues in a way that doesn't offend average Americans - I think Nikki Haley proved that point tonight - that that's where you're going to see the strength of this Republican Party.

But some notion that this is the Republican Party imploding on itself. This is a Republican Party attracting democrats, independents, Reagan democrats to a message that says this town is broken. The institutions of government are broken. The economy is broken.

So, when the president comes up and says, hey, everything is fine. Don't worry about it. Oh, buy the way, I want everyone to get along. I didn't say that the last seven years, but this last year, I want everyone to get along. And by the way, then he attacks republicans...


BORGER: Are you talking about...

ROGERS: ... shows, whole -- you bet. You want...

BORGER: Are you talking about independents or are you talking about democrats?

[22:44:59] ROGERS: ... when the stand -- when the polls are out -- this is fascinating. I'm not for any candidate. I'm just telling you when you look at the polls and you talk to folks who are actually working Americans back where -- or district like I come from in Michigan, which is a working class district, they're saying, you know what, this Trump makes sense to me. Nothing seems to be working.

JONES: Both political parties -- Mike, both parties - I agree with you - need to be worried because the populist on both sides are much stronger than I think any of the establishment folks and either party want to acknowledge. There is real pain out there, there is real fear out there and these other voices are calling people for it. But I think it's important. I think a star was born tonight. I think

Nikki Haley probably gave -- I think Obama gave his best State of the Union; she may have given one of the best responses to a State of the Union, period. I think that's important to note.


ROGERS: But the notion...

JONES: You need to listen to a lot more republicans.

SMERCONISH: You're going to find that she is in the mainstream of the Republican Party.

JONES: But she did it beautifully.

ROGERS: Right. But the notion that...

JONES: She did it beautifully.

ROGERS: The notion that Trump is appealing to democrats is myth, not math. Trump, he has a higher negative among democrats than various forms of syphilis. That's why I want him to be the republican nominee. OK?

JONES: That may be true but...


ROGERS: Hang on.

COOPER: How many forms of syphilis are there? That sounds familiar.

SMERCONSIH: Are you saying that most democrats on syphilis? My goodness.

ROGERS: I just want to make love not war. OK. You guys can't do either.

AXELROD: These general election numbers are -- these general election numbers are disastrous. So, I mean, we have...


JONES: They're better...

AXELROD: But, Van, I must say if -- I found her speech moving as well. But if you and I found her speech moving I don't know how it's going to play in the main stream of the Republican Party.

COOPER: She is in the main stream of the Republican Party, though. This notion that she is not...


AXELROD: Mike, when is that party going to show itself? ROGERS: She did something very important.

COOPER: The reason we call the majority legislatures and governors -- that's the majority of these republicans around the country.

ROGERS: We're talking about the -- we're talking about the presidential race.

COOPER: And they are governing.

KING: Amanda, eager for your view being a Cruz republican.

CARPENTER: I'm a conservative republican. I think that Nikki Haley did a beautiful job. I am a little bit irritated with the self- loathing that came out. I do not think that she had to critique Donald Trump. I do not think that she had to make the GOP take responsibility for the dysfunction in Congress. She had a primetime platform. I want to see a robust happy defense of conservative values.

COOPER: Let's just hold on one second. Dana Bash is standing by with Senator Sanders. Let's go to her. Dana?

BASH: Thanks, Anderson. Senator, thank you very much for joining me.


BASH: I appreciate it. We watched you during the speech. What did you think; were you happy with the president's message?

SANDERS: I thought it was an excellent speech. I think the president talked about the fact that we can utilize the changing world in a way that benefits all of us and that we should not be afraid of change.

And one of the points that he made which moved me very much, is that a time of massive income and wealth and inequality when so many people believe their voices and their ideas no longer matter. What he said, get involved in the political process no matter what your point of views. Don't allow billionaires and large corporations to be able to make all of the decisions. I thought that was important.

BASH: We heard that we thought maybe you would like that part of the speech. During the president's speech while you were in the chamber, Hillary Clinton released an ad that it ran digitally and initially it's going to run in Iowa and New Hampshire starting tomorrow, specifically on guns. I want you to take a listen.


HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: An average of 90 people are killed by guns in this country every single day. It has to stop. President Obama wants to make universal background checks the law of the land and he wants to make sure gun manufacturers can finally be held accountable when their guns are used to kill our children.

It's time to pick a side. Either we stand with the gun lobby or we join the president and stand up to them. I'm with him. Please join us. I'm Hillary Clinton and I approve this message.


BASH: Now the reason we wanted to play that for you isn't just because it happened during the speech, but is because it's not so subtle attempt to get the voters -- to get the voters to say, pick a side, meaning her side, and not your side on an issue that she has been hitting you on.

SANDERS: Let me just say this, first of all, I stand with the president on gun issues. The idea of expanding instant background checks, the idea of making sure that people who have criminal backgrounds or mentally unstable should not have guns is something I have believed in all our lives.

Now, we're going to run an ad ourselves and that ad is going to say, you know what, when millions of seniors are trying to get by on $11, $12,000 a year social security, disabled vets are struggling, maybe we should raise social security benefits by lifting the cap on taxable income. So, we look forward to Secretary Clinton coming on board with that issue so that millions of seniors can live in dignity.

BASH: So, we will ask here about that. Sticking on the issue of guns, I want you to clear something up if you don't mind. In 2005, we heard about a lot of discussion about your vote to shield gun manufactory -- gun manufactures, rather, from liability. In the past few days, you have said that you would...


[22:50:02] SANDERS: Well, for the last several months, I have said that I'm willing to relook that piece of legislation.

BASH: Right. OK.

SANDERS: That it's a long build. There are things in it that are good, there are things in it and bad.

BASH: Right. But then yesterday, at the black and brown forum in Iowa, you said the vote wasn't a mistake. So, can you square those two things? It sounds like a contradict.

SANDERS: Well, no, no, Dana. There are votes that have a lot of things in it. And there were some parts of that bill that are right, some parts of the bill that are wrong. And I am, as I said several months ago, willing to relook that.

But I think it's important as the issue of guns are. And the fact that we have so many gun deaths, we also have to focus on other issues. And that includes the disappearance of the American middle class, a corrupt campaign finance system where candidates like Secretary Clinton have PACs that are bringing in huge amount of money from very wealthy and powerful special interests, and the fact that we have got to demand that the wealthiest people in this country start paying their fair share of taxes. BASH: Absolutely. But I just want to confirm because I do understand

how legislation works. What you are -- what you are saying is that the broad piece of legislation which included shielding you were OK with that but not the issue.

SANDERS: I have cast over 10,000 votes in my life. Very often pieces of legislation are complicated. There are good things in it, there are bad things in it. In this legislation there was something that I thought made sense, there are things in it that I think do not make sense.

BASH: So, was the -- was the liability...


SANDERS: I said several months ago that I was rethinking that legislation and I think that that's what -- now Secretary Clinton obviously now feels herself in trouble. We started this campaign at 2 percent in the polls, some polls now have us winning in Iowa and New Hampshire.

So, I think, you know, that it's fine that she wants to pick on this issue. I'm going to read -- you know, as I said, we are going to -- I said several months ago, we are going to work on changing that legislation, but you know what, there are one or two other issues that impact the American people.

BASH: One that you've been talking about is health care.


BASH: The universal effectively, Medicare for all of us is what you call it. It wasn't just Hillary Clinton but actually her daughter...

SANDERS: Her daughter.

BASH: ... Chelsea Clinton went on the campaign trail and went after you directly by name. I want you to listen to this and then react.


CHELSEA CLINTON, HILLARY CLINTON'S DAUGHTER: Because I don't want to live in a country that has an unequal health care system again. So, I don't want to empower republican governors to take away Medicaid to take away health insurance for low income and middle income working Americans. And I think very much that's what Senator Sanders plan would do.


SANDERS: Well, unfortunately, I have to say as much as I admire Chelsea, she didn't read the plan. What Chelsea should know is that we are the only major country on earth that doesn't guarantee health care to all people as a right. And yet, we end up spending far, far more per capita on health cap, as do the people of any other nation. Now what my plan would do is not only provide health care to all, it

would save middle class families thousands of dollars and where she is absolutely wrong. This is a plan that works in 50 states in this country, whether you have conservative republicans or progressive democrats. It's a national program in 50 states. Governors cannot with -- deny the people in their states.

BASH: So, when she and Hillary Clinton argue that you are going to turn over people's health care to republican governors are going to take away, she's flatten wrong?

SANDERS: Yes. Flatten wrong. This is a program for 50 states. We want states to play a roll, but if states they don't go forward in the legislation that we introduce, then the federal government will provide the plan.

BASH: Now your plan would cost a lot of money with equivalent with the -- with the -- they are at $15 trillion.

SANDERS: Hold it.

BASH: Go ahead.

SANDERS: My plan will save thousands of dollars for every middle class family in this country. Save thousands of dollars. Because right now we pay far more per capita for health care than do the people of any other country.

What has to be understood is when you move toward a Medicare for all - you're familiar with Medicare - it works very well for seniors. I think it should work for all people. And when we move to a Medicare for all system people are no longer going to have to pay private health -- private insurance companies. They're not going to have to pay premiums. In the long run, families will save substantial sums of money.

BASH: You told me a couple of weeks ago that you are going to release your tax plan on this issue, this is part of your tax plan before people go to the caucuses in Iowa. That's less than three weeks away, is that still coming?

SANDERS: Absolutely. If I said we're going to do it that's what we're going to do.


SANDERS: And what our tax plan will be is to say loudly and clearly that a time of massive income and wealth inequality, the wealthiest people and the largest corporations will start paying their fair share of taxes.

BASH: OK. Another interview that was on CNN was my colleagues, Gloria Borger, she talked to Joe Biden who talked about Hillary Clinton and on the issue of income inequality. I want you to listen to that as well.


JOE BIDEN, U.S. VICE PRESIDENT: Well, it's -- but it's relatively new for Hillary to talk about that. Hillary's focus has been on other things up until now and that's been Bernie -- no one questions Bernie's authenticity on those issues.


[22:55:09] BASH: Is he right? Is Hillary Clinton late to the game on income inequality?

SANDERS: I think, you know, Joe Biden and I both share and understanding that there is something fundamentally wrong when 20 wealthiest people in this country own more wealth than the bottom of 50 percent. Joe and I have been working on this issue for many, many years. I think it is fair to say that Hillary Clinton is new to this issue.

BASH: Senator, thank you very much. I appreciate your time. Good to see you.

SANDERS: Thank you. Back to you, Wolf and Anderson.

BLITZER: Thanks very much, Dana. You know, Jake, he is very, very right, Bernie Sanders, when he says recent polls have shown that he is actually ahead of Hillary Clinton among the democrats, not only in New Hampshire but in Iowa as well.

TAPPER: Not only that, but he's gaining nationally. A New York Times poll released today, CBS News-New York Times had them within I think five or six points of each other nationally which is a stunning turn of events given how commanding her national lead has been and how long she has been in public life.

Bernie Sanders, still a relatively a fresh face on the -- on the national scene. His age notwithstanding. She really faces a tough challenge from him which is why you see her really going after him on this issue of guns. It's one of the only issues if not the only issue, where she actually can outflank him on the left on everything else she is more moderate to conservative than he is in terms of democratic policy.

BLITZER: What did you think of Joe Biden's comments to Gloria about Hillary Clinton and Bernie Sanders? Because certainly those were -- I would assume irritating a bit to Hillary Clinton.

TAPPER: Well, I think that the vice president has complicated feelings about the presidential race. He made it very clear. He thinks he would be a better president than anybody else running. He also doesn't see a path to the nomination for him because of Hillary Clinton.

And I think that, look, there was a story that Maureen Dowd wrote in which Beau Biden, his now late son, was talking about the superiority of Biden values versus Clinton values. I think that sometimes he can't help himself. I think that he genuinely feels that Bernie Sanders is more sincere

and has been more active in talking about wealth inequality than Hillary Clinton. But I think he also likes to zing her a little bit, because I think he feels that he would be a better president than she is and a better nominee.

BLITZER: So many of Bernie Sanders supporters have said to me in recent days that they think that Bernie Sanders can do to Hillary Clinton what then Senator Barack Obama did to Hillary Clinton in 2008 capture the democratic presidential nomination.

TAPPER: Well, you know what, it's so interesting is that it's similar in a lot of ways. The challenges posed by Barack Obama and Bernie Sanders. I think Barack Obama is much more unique politician than anyone else in the democratic field in the last 10 years.

But that said, in terms of the way that the Clinton campaign didn't initially take Barack Obama's challenge as seriously as they should have. I think there is that same attitude towards Bernie Sanders. And I also think she is out there repeating the same arguments in some cases that were made by her and her campaign against Barack Obama, against Bernie Sanders, which is this argument about electability.

And to be quite candid, the people in Iowa and New Hampshire, the democratic voters there, many you have them remember that, remember that she said he can't win. She said that about Barack Obama very strongly. They said it off the record, too. They really thought there was no way Barack Obama could ever be elected president.

And to make that same statement about Bernie Sanders, even though they are very different candidates, Obama and Sanders, I think that might be a little bit troublesome.

BLITZER: He's a self-avowed socialist, too. Seventy four years old, but you got to admit, he has done amazing so far.

TAPPER: Well, he's been really good at capturing the hearts and minds of the democratic base. Liberals, progressives, young people, talking about teh issues that affect them day-to-day, their daily life, and frankly also, he is, as I said, a fresh face they don't necessarily know of him a lot of them, the way that they've known Hillary Clinton.

She's been in public life since 1991. And while he has been in office for that long, if not longer, it's been a much less profile, a much lower profile type of situation. So, he is new and fresh, 74 years old, notwithstanding.

BLITZER: Yes. It's hard to believe. And people didn't take him seriously at the beginning. But he has really, really stepped up over these past five, six months that his campaign is going on and he is doing remarkably well.

Can she -- let's say hypothetically, she loses the Iowa caucuses, the New Hampshire primary, and then they move to South Carolina and Nevada and elsewhere, can she come back after two losses like that? TAPPER: Of course she can. And one of the reasons in that all of the negative stuff that voters know about Hillary Clinton, they don't know negative stuff about Bernie Sanders.

[23:00:05] BLITZER: All right. Hold on for a moment. Jim Sciutto, our chief national security correspondent is here. You've got breaking news, what have you learn?