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CNN LARRY KING LIVE

Interview with Michelle Obama

Aired October 8, 2008 - 21:00   ET

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


LARRY KING, HOST: Tonight, Michelle Obama -- she's in the thick of a nasty political race.
Is it taking a toll on the family?

How's the economic crisis affecting the Obamas?

What does she think of Sarah Palin?

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, BARACK OBAMA'S WIFE: She's doing publicly what so many women are doing on their own privately.

(END VIDEO CLIP)

KING: And just how much clout does she have with her husband's campaign?

(BEGIN VIDEO CLIP)

TOM BROKAW, NBC NEWS: What don't you know and how will you learn it?

SEN. BARACK OBAMA (D), PRESUMPTIVE NOMINEE: My wife, Michelle, is there. And she could give you a much longer list than I would. And most of the time I learn it by asking her.

(END VIDEO CLIP)

KING: Plus, the debate.

(BEGIN VIDEO CLIP)

OBAMA: Just a quick follow-up on this. I think...

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: If we're going to have follow-ups, then I will want follow-ups, as well.

BROKAW: Yes, no. I know. That was so...

MCCAIN: And fine with me.

BROKAW: I think we'll get at it, if I can, with this question.

MCCAIN: And fine with me.

OBAMA: He just had one.

(END VIDEO CLIP)

KING: Who won?

It's all next on LARRY KING LIVE.

Good evening.

Welcome to a very special edition of LARRY KING LIVE.

It was taped earlier this afternoon so I could observe Yom Kippur, the end of the Jewish New Year.

Michelle Obama's second trip to this program.

Been busy?

MICHELLE OBAMA, WIFE OF BARACK

M. OBAMA: Been busy.

Happy New Year.

KING: Same to you.

I heard -- I heard you've been busy.

M. OBAMA: I've been a little busy.

(LAUGHTER)

KING: All right. Let's get to it. Let's get right to it. Many have noted that McCain last night -- John McCain never looked at your husband during the first debate. There's a lot of buzz about this moment -- this moment especially.

Let's watch.

(BEGIN VIDEO CLIP)

MCCAIN: There was an energy bill on the floor of the Senate loaded down with goodies -- billions for the oil companies. And it was sponsored by Bush and Cheney.

You know who voted for it?

You might never know -- that one. You know who voted against it? Me.

(END VIDEO CLIP)

KING: Do you take offense to "that one?"

M. OBAMA: No. No. I mean, you know...

KING: People are talking about it.

M. OBAMA: Well, you know, I think there are two conversations that have been going on throughout this whole election. There's the conversation that's been happening with the pundits and, you know, the polls. And then there's the conversation that's been happening on the ground. And the folks out there right now are scared. They're nervous about the economy. They don't care about the sort of back and forth between the candidates. They want real answers about we're going to, you know, fix this economy and get the health care -- health care benefits back on track.

So, you know, this is part of politics, how people praise things...

KING: So you think it's the pundits that are more interested in that term and...

M. OBAMA: That's my sense of it, you know. I mean, I have traveled around this country. I was in a few states just in the last day-and-a-half. And no one asks about this kind of stuff. I mean, they want to know about the positions that the candidates have on the issues -- you know, what are we going to do with this war, how are we going to get our education system on track. And people really want to understand, you know, how this economy is going to really affect their bottom line.

KING: Did it in any way offend you?

M. OBAMA: No. No. I have to say that, you know, I -- in these debates, I am so focused on what Barack is saying, you know, and how he is, you know, phrasing his words. And I'm really trying to listen to the substance of what he's saying to make sure that I understand what's going on that these little, you know, sound bites don't register with me. A lot of times I'm looking around at the faces of the undecided voters in the room and I'm trying to see how they're reacting.

So there's so much going on in a room that a phrase here or there just doesn't -- you know, it just doesn't resonate.

KING: Do these two candidates, as has been reported, not like each other?

M. OBAMA: I can only speak for Barack. And I know that Barack has the utmost respect for Senator McCain. He's said so on so many occasions.

You know, I think this has been a long, tough fight. And politics sometimes leads to things said between the candidates. But again, what we've found is that people are really focused on who's going to -- who's got the vision that's going to take us to the next level?

So...

KING: Your husband appears so cool, though.

Doesn't he get angry?

M. OBAMA: Yes, he gets angry. But he gets -- he doesn't get angry about this stuff. I mean, he's very...

KING: No?

M. OBAMA: ...I mean, what you heard in that debate, when you saw his passion, it was when he was talking about the health care crisis. And he talked about his mother dying of ovarian cancer and how angry it made him to see her worrying about the insurance company and the payments rather than worrying about getting well. And that's what we're seeing.

That's the kind of stuff that makes Barack angry. It's not the back and forth. It's not something said about him. I think Barack said today, he can take, you know, any name calling or the back and forth that -- you know, that stuff doesn't bother him. But the unfairness that we're seeing across the country, that makes him mad.

KING: How about, you and he are together, you're looking at television, and you see a commercial for the other side that really lambastes you?

M. OBAMA: Well, first of all, we'd have to be together...

(LAUGHTER)

M. OBAMA: ... In a room at the same time.

KING: Oddity number one.

M. OBAMA: Hmmm, when did that happen last?

And we'd have to be -- you know, fortunately, we are just too busy to watch this stuff. I mean, this...

KING: You don't watch...

M. OBAMA: I don't have time to watch TV, Larry. By the time I get through -- I'm going to get home tonight at about 9:30, 10:00. I'm going to hit the pillows so hard. And even when I try to watch TV, I can't keep my eyes open for one minute. And when Barack is watching TV, he's watching sports, you know?

We try to get our heads out of this game when we have down time -- out of this conversation. But when we're on the campaign trail, we're really trying to focus on what the voters want to know. And they don't ask about this stuff. Not once has somebody asked about the name calling and the back and forth.

They want to know, what are you going to do about the economy?

KING: Do you like campaigning?

M. OBAMA: I do. I do. I like it more than I would have imagined. I was telling someone when I was getting my makeup done, this would be a hard thing to do if you didn't fundamentally like people. But interestingly enough, me, Barack, and our girls, we get energy from people. You know, when I'm tired, I get more energy coming out of a rally where I get to get hugs and I see people on the rope line tearing up because they never thought they'd see this moment. I see kids who are focused and engaged in a way that I've never seen before. That gives us both energy.

KING: Are the girls into it?

M. OBAMA: No.

(LAUGHTER)

KING: A 10-year-old could be.

M. OBAMA: You know, they know what's going on, but into it?

I think we've tried to structure it so that they're not into it, so that they're still into their lives on a day-to-day basis. So when we go home, the minute I walk in that door, the first thing out of Malia's mouth, who's 10, is going to be what happened at school that day and what are we doing on Saturday and can we get the Halloween costumes.

And I really, Larry, want her to be in that place, because it could be tough for her. Barack can handle it, but, you know, she's a kid...

KING: Yes.

M. OBAMA: You know, I want her to stay -- her and Sasha to stay pretty focused on their lives.

KING: With the economy the way it is...

M. OBAMA: Yes.

KING: ... How has it affected the Obamas?

M. OBAMA: You know, we've been blessed.

KING: You haven't lost anything in this?

M. OBAMA: You know, I have to say, I don't know. I've been -- I haven't talked -- we haven't had time to really review kind of our financial situation. We're, you know, on the road all of the time.

KING: Do you assume you've lost something?

M. OBAMA: Probably so. I can't imagine -- I think everybody has lost a little bit of something. But, you know, we have family members, friends, folks in our neighborhoods. Everyone is nervous.

You know, we live in a community that's pretty diverse. And folks have been out of work in our neighborhood for a long time. I mean, that's the thing that we're seeing, is that what's playing out on Wall Street now has been playing out in our neighborhood for a long time. Folks have lost jobs in communities and we've seen commercial districts dry up.

We're seeing -- I work at a hospital that's an academic health center and we see our emergency rooms filled with people who don't have insurance.

So this has been going on for a while. So, relatively speaking, we're blessed, which is another reason why, you know, that's what makes Barack angry, is to see the inequity going on. And it's been going for a while.

KING: Michelle Obama is the guest.

Want to take part in the show?

Go to our interactive blog at CNN.com/larryking and comment on our show as it airs.

More with Mrs. Obama, after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

M. OBAMA: Let's get this done.

Can we do this?

UNIDENTIFIED SUPPORTERS: Yes!

M. OBAMA: Can we do this?

UNIDENTIFIED SUPPORTERS: Yes!

M. OBAMA: I come here as a wife who loves my husband and believes he will be an extraordinary president.

(APPLAUSE)

UNIDENTIFIED SUPPORTERS: Yes, we can! Yes, we can! Yes, we can!

(END VIDEO CLIP)

KING: We're back with Michelle Obama.

Sarah Palin has been taking the role of kind of attack dog in recent days.

Here's an example, and we'll get a comment.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Our opponent is someone who sees America as imperfect enough to pal around with terrorists who targeted their own country. (END VIDEO CLIP)

KING: That don't get you mad?

M. OBAMA: You know, fortunately, I don't watch it.

KING: Oh, well, now you've seen it.

M. OBAMA: I've seen it.

KING: All right. She said that your husband pals around with terrorists. And she's referring to William Ayers, I guess.

Do you know William Ayers?

M. OBAMA: Yes. Yes. Yes. Barack served on the board of the Annenberg Challenge with Bill Ayers and...

KING: That was started by the Annenberg family, right?

M. OBAMA: Absolutely. And Mrs. Annenberg, in fact, endorsed John McCain. So I don't know anyone in Chicago who's heavily involved in education policy who doesn't know Bill Ayers. But, you know, again, I go back to the point that, you know, the American people aren't asking these questions.

KING: You don't think it affects the campaign?

M. OBAMA: You know, I think that we've been in this for 20 months. And people have gotten to know Barack. He's written books. Books have been written about him. He, like all of the other candidates, have been thoroughly vetted. And I think people know Barack Obama. They know his heart, they know his spirit.

And the thing that I just encourage people is to judge Barack and judge all of these candidates based on what they do, their actions, their character, what they do in their lives, rather than what somebody did when they were eight or six years old.

KING: When someone calls and says he's running for vice president, that your husband associates with terrorism, that upsets you, I would think.

M. OBAMA: You know, that's part of politics. But...

KING: It doesn't -- it blows...

M. OBAMA: ...the thing...

KING: ...it goes right off of you?

M. OBAMA: You know, these issues have come up before. But the one thing that I'm proud about with Barack is that one of the things he's been talking about is our tone. And it's the notion that he says we can disagree without being disagreeable. And that's, you know, where he's trying to get to in this campaign, the notion that we can disagree on some fundamental issues in this country, but we have to do it without demonizing one another, without labeling one another, because we're in some tough times now.

And what we can see from the fall of this economy is that when we fall, we all fall. And when we rise, we all rise. And whether we're Republicans or Democrats or Independents or black or white or straight or gay, that we're in this together. And that there are times that we will disagree, that we won't share the same policies. But we're going to rise and fall together.

And that's the tone that I like. And I think that's where Americans want their elected officials to be.

KING: So you bear her no umbrage?

M. OBAMA: Not at all. Not at all. I mean, that's not where we need to be right now. I mean, we need to be at a point where we're figuring out how to work together, again, whether we agree or disagree...

KING: What do you make...

M. OBAMA: ...so that we can move things forward in this country.

KING: What do you make of her running for a vice president and having kids -- many kids and being a good parent and bouncing all the balls?

M. OBAMA: You know, I think she provides an excellent of example of all the different roles that women can and should play. You know, I'm a mother with kids and I've had a career and I've had to juggle. She's doing publicly what so many women are doing on their own privately. And what we're fighting for is to make sure that all women have the choices that Sarah Palin and I have to make these decision and do it without hurting their families.

And we're in a position now, as I go across the country and I've had conversations with working women. And many find that they have to do the juggling, but they're doing it without the support. They're living in communities where jobs have dried up, so their family members have had to move away so they can't rely on mothers and all those informal support structures. They don't have access to decent child care and they're worrying about health care.

So what Sarah Palin and I have that all women deserve is the choice and the resources to make their choices work.

KING: The senator...

M. OBAMA: And I think that's what we need to fight for.

KING: And the senator shares that view?

M. OBAMA: Absolutely. I mean, he's seen -- you know, Barack has grown up with strong women. He's seen me and he grew up in a household where his grandmother was the primary breadwinner. He saw her juggling to support the entire family, saw her working her way up from being a secretary at a bank to being a senior official. His mother was a single parent. He saw her struggle in many ways.

He's seen the struggles of women and knows that there's an inequity there and that we're still, in this country, dealing with pay equity issues for women. Women still earn $0.79 to the dollar, compared to men, for the same job.

And that's where we have to move from, you know?

We have to move out of that inequity and give women the salaries that they need so that in the event that they have to make the choice or want to make the choice to work, that they're able to support their family like I can, like Sarah Palin can.

KING: The extraordinary Michelle Obama.

And we'll be back in 60 seconds.

(COMMERCIAL BREAK)

(AUDIO GAP)

M. OBAMA: I believe that kids thrive with structure and rules and boundaries. I'm a big proponent of that. And I've been grateful that Barack supports that.

So he doesn't come home after a long, you know, week away and he's not trying to be the fun dad, right, so that he does all the fun and I do all the work. I mean he definitely reinforces the rules that we have in place.

And one of those is making bed time. We have a pretty strict bed time. And I told Barack, if you want to talk to the kids, which you should every night, you've got to call before bed time. So that no matter where he is, he'll stop a fundraiser, he won't go in...

KING: He always calls...

M. OBAMA: He always calls every night, before bed time.

KING: An e-mail from Theresa (ph) -- I've got boys, not that (INAUDIBLE).

An e-mail question from Theresa in Virginia Beach: "What's driving your husband to run for president? What motivates him to give up so much time he could have with you and your daughters?"

M. OBAMA: Yes. You know, I've been asking him that question for years -- what's wrong with you?

No, I'm just kidding.

(LAUGHTER)

M. OBAMA: You know... KING: You've got a point, though. But quick.

(LAUGHTER)

M. OBAMA: You know, from the time that I've known Barack, we've had these intense conversations about how do you effect the world?

You know, do you, with your skills and gifts, take those and sort of benefit your small world or is there an obligation to take those skills and gifts and help the greater good? And he believes that we all have an obligation. And I think Barack knows that he's blessed and he's been gifted because of his life story, because of the journey that he's had.

KING: We all give up something.

M. OBAMA: Yes, we all give up something. His just gets bigger and bigger.

KING: We'll ask Michelle about Cindy McCain and a lot more after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

M. OBAMA: It is my pleasure to introduce to you, the next president of the United States, my husband, Barack Obama.

OBAMA: Now you know why I asked her out so many times, even though she said no.

(END VIDEO CLIP)

KING: We're back with Michelle Obama.

"The Tennessean" is quoting Cindy McCain as saying that your husband is -- get this -- "is running the dirtiest campaign in American history."

Now, tell me you have no reaction to that.

M. OBAMA: Well, it's just not true. You know, it's a simple reaction. It's not true. And when something is not true, you don't take it to heart. You just keep rolling along.

I think -- I've been so proud of the way that Barack has conducted himself in this campaign. You know, I think he's one of the smartest men that I know. And he's able -- what we saw in that debate -- one of his many gifts is to be able to take really complex issues and make them real for people and explain them in a way that doesn't seem condescending or disrespectful. I don't think Barack has that kind of bone in his body. That's not his instinct. And his campaign doesn't reflect that.

So it's just not -- it's not true. KING: So it doesn't hurt you?

M. OBAMA: No. You know, when something's not true, you keep rolling. That's one thing my mother taught me. It's like, folks can say what they want, but you know who you are, you know what you're doing. And that's sort of -- you know, those are the values that Barack and I were raised on. So it's easy to sort of plow through this process.

And quite frankly, Larry, you couldn't be in politics if you, you know, didn't have a thick skin. You know, there are people who say things. It's not -- this race just isn't about me and Barack. It's about something bigger.

KING: So the next time, let's say you run into her, you wouldn't say anything?

M. OBAMA: I saw her last night. And I don't know when she said this, but, you know, I shook her hand. We shake hands. She, you know, addresses me politely. We, you know, have a very respectful relationship. So, you know, you can't have hard feelings. These -- no matter who comes away as the winner of this race, these two men -- our families, our community, our nation, we're going to have to work together, no matter what.

So you can't walk away from the stuff with hard feelings. You can't tear up the game so much so that, you know, you don't leave people something to come back to. You know, we're going to need John McCain. We're going to need Cindy McCain. We're going to need, you know, we're going to need Independents and Republicans working hard to fix this crisis.

KING: You obviously realize the historic nature of this. We are either going to have a female vice president or a black president.

M. OBAMA: Absolutely. Absolutely.

KING: The world ain't going to be the same.

M. OBAMA: Right. That's -- you know, what a wonderful year this has been. You know, this has been an amazing year throughout. And I think my 10 year-old daughter summed it up best the night that Barack clinched the nomination. And I came home, woke up in the morning and I sort of, you know, explained that dad, you know, actually won the nomination.

And I said, don't you think this is amazing?

You know, I said, this is this first time an African-American will have been a nominee.

And Malia said, well, yes. You know, I realize what a big deal it is, she said. But it would have been a big deal if Hillary Clinton had won, too. She said it without blinking an eye. She said, because women didn't have the right to vote and there was inequality there. It was a matter-of-fact. It's like that's where we've come, where our 10-year- olds and 7-year-olds understand that this is big, but they know this is the next step. You know, this is where we've grown as a country. And I think it's beautiful to watch our young people being able to see these changes in action, because they're going to grow up with a different reality than any of us.

KING: Speaking of Hillary, are you happy with the way she's supporting your husband?

M. OBAMA: She has been phenomenal. From the minute after this was done, right, she has always been just cordial and open. I've called her. I've talked to her. She's given me advice about the kids. We've talked at length about this kind of stuff, how you feel, how you react. She has been amazing. She is a real pro and a woman with character.

KING: And will she campaign and go all the way?

M. OBAMA: She's been campaigning. She's on the road. I don't know her schedule completely, but she's been raising money for the campaign, she's been working on her donors, she's been in swing states. She and Bill Clinton have been working hard to make sure that Barack is the next president of the United States.

KING: James Carville says it's over, you're going to win.

M. OBAMA: Oh, well...

KING: That's what he said.

M. OBAMA: ...nothing has ever been that simple in this race. You know, it ain't over until it's over. We are going to run through the tape. And there's still a lot of work to do. People have to get registered to vote. That's the first step. And we're encouraging people to go to our Web site, VoteForChange.com, to get registered.

Then there's early voting, because we want people to vote early so that they'll have time to help others to vote. And then we've got to work on get out the vote. Because it's not just about winning. That's important. But it's about changing democracy. We want these numbers of voters to be high because people have to pay attention forever.

I tell people when I'm out on the campaign trail, we have to change the way we see politics forever. We can't go back to the way things were when we sort of voted and some people didn't and some people didn't pay attention. We have to be vigilant.

You know, it's not enough that Barack wins, he's got to have an engaged electorate to help him lead and make the changes that we need.

KING: We'll be right back with Michelle Obama on this edition of LARRY KING LIVE.

Don't go away.

(COMMERCIAL BREAK) KING: We're back with Michelle Obama. How do you react when people talk about the Tom Bradley effect? Tom Bradley was mayor of Los Angeles. He ran for governor of California. The polls had him 65 percent, a sweep, it's over. I think he was practicing his acceptance speech and he lost. And the Bradley factors become people who were afraid to say, I'm against a black and then voted against.

Do you fear that here? An anti-black vote?

M. OBAMA: People talk about it all the time. But, it's theoretical in the case of this election. Because --

KING: But you have a past case to look at.

M. OBAMA: But also, look where are, Larry. Barack Obama is the Democratic nominee. If there was going to be a Bradley effect, or it was going to be in play, Barack wouldn't be the nominee.

We have to focus on the country as it is. That was several decades ago. And I that there's been growth and movement. Now, there will be people who will never vote for Barack Obama. But, there will be people who will never vote for John McCain either. I think right now, people are so focused on what is the fate of our country, not just here domestically, but internationally. And I just believe that the issues are going to weigh in people's hearts more so as they go into the voting booths this time around, than anything else.

KING: Your husband gave you a shout out near the end of last night's debate in response to moderator Tom Brokaw described as a Zen- like Internet question from a woman in New Hampshire. Let's watch.

(BEGIN VIDEO CLIP)

TOM BROKAW, MODERATOR OF PRESIDENTIAL DEBATE: What don't you know and how will you learn it?

BROKAW: Senator Obama, you get first crack at that.

B. OBAMA: My wife Michelle is there and she could give you a much longer list than I do. And most the time I learn it by asking her.

(END VIDEO CLIP)

KING: How'd you react to that?

M. OBAMA: I thought, he's so cute. And I started going down my list.

(LAUGHTER)

KING: What doesn't he know?

M. OBAMA: You know, whatever he doesn't know, the beauty is, he knows he doesn't know it. And he's not afraid to reach out to people who are smarter, more prepared. I think his vice presidential pick is an indication of how Barack thinks. Barack looked around the room and he got somebody who was smart, who was an equal, who'd be his partner, who would challenge him --

KING: Had more experience than him, in the Senate.

M. OBAMA: In some areas, absolutely. He surrounds himself with experienced people because he knows what he doesn't know. He can learn it fast. But, he also wants the best and the brightest, the smartest people around the table. I think he's built a great campaign because of that.

We've got some of the smartest young people and not-so-young people working on this campaign. And a lot of the advice they give are things that he doesn't know. And he's open to it. And his ego isn't so huge that he can't admit that he's wrong, or he can't laugh at himself.

I think humor is such an important part of leadership. You've got to be able to sort of look at yourself and go, well, you know, that didn't work. Let's give that a try. That's something that you know, some of our greatest presidents have been able to do. Sort of, look around and go, this isn't working so we need to try something different. And I need to reach out and talk to people who know more than I do. That's the kind of leader that we'll get in Barack Obama.

KING: The thought of being First Lady. Has it ever overwhelmed you?

M. OBAMA: You know, I think the more that I learn about the position, there are a lot of things to do. Fortunately, I'm a great multi-tasker so I start sort of getting my list in order and creating order out of my life. But, it's not as much overwhelming. I try not to focus on that. Because things sort of fall into place, you know? I think about the opportunity. I think about, OK, what can I do that is useful with this role?

I've spent a lot of time focusing on working the challenges of work/family balance with women and families. We talked about that when you asked me about Governor Palin. You know, what I'm hearing around the country is that there are women who are struggling to keep their heads above water. And these issues transcend party and even socioeconomic status.

We need to give those issues a voice because I think women need a different model, a template for you know, insuring that we're creating policies that actually make sense. I want to work on those. But also, I've been having more conversations with military spouses. Not just women, but you know, you imagine -- if you could just imagine the challenges that a normal family is facing in these economic times. And then you add on two, three, four tours of duty.

And then you look at the fact that our military men and women are coming back. They don't have the resources they need, the health care, the mental health support. I want to use my platform to bring voice to some of those challenges. Because we have to remember in this country, when our troops go to war, their families go. And they need to come back ensured that their families will be intact and whole. That they'll have homes to come back to, especially our reservists. They need to know that they're going to have jobs and insurance and a G.I. Bill that they can get an education. Those are the kind of things that I'd love to take on if I have the honor to do it.

KING: We'll be back with our remaining moments with Michelle Obama. Don't go away.

(COMMERCIAL BREAK)

KING: One important note before we wind it up. We have a standing invitation out to John McCain's wife Cindy. We interviewed the McCain's daughter Meghan last month and we're hoping both Meghan's parents will join us on LARRY KING LIVE.

All right, some people regard you as a role model. Who are your role models?

M. OBAMA: Well, first and foremost is my mom. You know, I come from modest means. My parents were working-class folks. My mother didn't get a college education, neither did my father. But they are two of the most common sense based people that I know.

KING: Did you scholarship to Harvard?

M. OBAMA: To -- undergrad I went to Princeton. And we -- financial aid scholarship and all loans for law school.

KING: Harvard Law School.

M. OBAMA: Harvard Law, right, right.

KING: Who else?

M. OBAMA: So, oh gosh, there are so many people. I've gotten to meet some of those folks and -- Lilly Ledbetter -- I just met her. She's one of the champions of equal pay. And I got to meet her and campaign with her and this is a 70-year-old grandmother who is fighting -- she's long since lost her ability to gain any financial return from her Supreme Court loss, but she is out on the road, fighting hard to make sure that our daughters and granddaughters get paid equally for the work that they do. And she's -- she's a special lady, a working class lady, and a fighter. And I -- those are the kind of women that I'm drawn to.

KING: Historically, would Rosa Parks be on the list?

M. OBAMA: Oh absolutely. I mean, I could go on and on and on if you want to do a show on the -- I met Maya Angelou. She's -- was also a terrific -- Dorothy Height, who I got an opportunity to meet, who is in her late 90s and she is smart and sharp and clear and focused and it was an honor to sit down and meet her. She's still chairing board meetings. This is amazing, so many amazing women.

KING: As Election Day draws nearer, are you getting nervous?

M. OBAMA: You know, I think there's so much work to do. That's the beauty of being way too busy, that you're -- you're just too busy to be nervous or anxious about anything. You know, what I just want to make sure is that people continue to be engaged. I mean -- we're seeing the kind of turn out and engagement, we're knocking on doors. We knocked on 100,000 doors in Missouri. We've made millions of phone calls. I want our troops to continue to be engaged and to run through the finish line because again, this isn't about the win in November, this is about leading long beyond that.

KING: Are you surprised that McCain pulled out of Michigan?

M. OBAMA: No, I -- I didn't -- I don't have a reaction because I don't know their strategy.

KING: Have you been to Michigan?

M. OBAMA: Oh yes. I was in Michigan -- I was in Michigan twice last week. I did a debate watch party and a rally and the weekend before that with the Bidens and Barack and I we did a big rally with over 30,000 people in Detroit.

But again, we're still playing hard in every state that we're focused on because again, it's not just about winning the state, but it's making sure that folks in Detroit, for example, are registered. That we increase those registration numbers so that people now get in the habit of being engaged in politics. So it's not just about winning a state. It's about really changing how people view their role in democracy.

KING: It's an always an honor seeing you.

M. OBAMA: Thank you so much.

KING: Try to do one more visit before the election.

M. OBAMA: I would love to. I would love to.

KING: Loved having you.

M. OBAMA: Thank you.

KING: Michelle Obama. Who won last night's debate? We're going to ask Karen Hughes and James Carville in 60 seconds.

(COMMERCIAL BREAK)

KING: Now joining us from Austin, Texas, Karen Hughes, who served as councilor to President George W. Bush and is now vice chair for Burson Marsteller, the global P.R. and communications firm. She, by the way, is a John McCain supporter.

And in Washington, James Carville, the Democratic strategist, CNN political contributor, supporter of Barack Obama. We're going to debate the debate. Let's take a look at some of the highlights and then we'll grade it all. (BEGIN VIDEO CLIP)

B. OBAMA: I believe this is a final verdict on the failed economic policies of the last eight years, strongly promoted by President Bush and supported by Senator McCain.

MCCAIN: Until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy. And we've got to give some trust and confidence back to America.

OBAMA: Senator McCain is right that we've got to stabilize housing prices. But underlying that is loss of jobs and loss of income, that's something that the next treasury secretary is going to have to work on.

MCCAIN: You know, he said some time ago, he said he would forgo his tax increases if the economy was bad. I've got some news, Senator Obama, the news is bad.

OBAMA: He says that he is going to give you a $5,000 tax credit. What he doesn't tell you is that he is going to tax your employer-based health care benefits for the first time ever. So what one hand giveth, the other hand taketh away.

MCCAIN: He will impose mandates. If you're a small business person and you don't insure your employees, Senator Obama will fine you. Will fine you. That's remarkable.

In his short career, he does not understand our national security challenges. We don't have time for on-the-job training, my friend.

OBAMA: It's true, there are some things I don't understand. I don't understand how we ended up invading a country that had nothing to do with 9/11, while Osama bin Laden and al Qaeda are setting up base camps and safe havens to train terrorists to attack us.

(END VIDEO CLIP)

KING: We'll get the thoughts of Hughes and Carville right after this.

(COMMERCIAL BREAK)

ANDERSON COOPER, CNN ANCHOR: Coming up at the top of the hour on "360," breaking news on the economy and your money. The Federal Reserve and banking institutions around the world lowering interest rates, but the move not calming markets. International markets lost staggering amounts, and the Dow was way up and way down and then landed somewhere in the middle. Asian markets just now opening. We'll tell you how they are doing.

Also breaking news in politics. Moments ago, Sarah Palin's husband Todd submitting answers to questions about the firing of Alaska's public safety commissioner. You'll remember he first refused to answer the questions, but now he has. We'll try to get some of the details for you.

All that, plus our new investigation, the 10 most wanted, culprits of the collapse, the people who are behind this horrible economic mess we're in. We're naming names, calling them out. Who's really to blame? Find out tonight. A busy hour starting at the top of the hour in about 12 minutes.

KING: All right. Karen Hughes, did John McCain do what he had to do last night?

KAREN HUGHES, FORMER UNDER SECRETARY FOR PUBLIC DIPLOMACY & PUBLIC AFFAIRS: Well, Larry, the conventional wisdom crowd will say not. But I think -- I said he had to connect with voters. And I think he came across as very genuine. There were a few moments that really stood out to me.

The one where he said everything he learned about leadership that he has learned from a chief petty officer, I thought that was a very human moment. And that military families, especially, across the world could really connect with that.

I also think he did a good job of rolling out a new program to help homeowners stay in their homes. He is the only candidate that offered something new to deal with this economic crisis.

And so -- and from his very first answer, he talked about the mood of Americans being angry and upset and fearful. And so I think he really was able to identify. Barack Obama did a good job. He is a smooth talker.

I think you had a straight talker versus a smooth talker, and I woke up this morning and realized I couldn't remember much of what Senator Obama had said.

KING: James, how did, in your opinion, Obama do?

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: Well, I thought, it didn't matter, I'm one vote, I was going to vote for Obama anyway. But by every piece of evidence, the public thought he did very well. And I think the race effectively ended last night. I think that while we're just talking about -- we're down to talking about the margin right now.

I think McCain had to win this debate. Not only did he not win it, I think he lost the debate. And my view, for whatever it's worth, is he -- and I have liked Senator McCain, at least before this election, I guess I still do to some extent.

He was just trying too hard. And he had a new proposal for housing that he never flushed out. And we don't know exactly what it means, it just looked like something before he went into the debates, somebody said, well, be for the federal government buying up all of the bad housing debt in the country.

And that's about as much thought -- they gave about as much to that as they did picking Sarah Palin.

KING: All right. Let's show another clip. This deals with the economy. And then we'll get the thoughts of our panel. Watch.

(BEGIN VIDEO CLIP)

OBAMA: The middle class need a rescue package. And that means tax cuts for the middle class. It means help for homeowners so that they can stay in their homes. It means that we are helping state and local governments set up road projects and bridge projects that keep people in their jobs.

MCCAIN: I think if we act effectively, if we stabilize the housing market, which I believe we can, if we go out and buy up these bad loans so that people can have a new mortgage at the new value of their home, I think if we get rid of the cronyism and special interest influence in Washington so we can act more effectively.

(END VIDEO CLIP)

KING: Karen, "The Daily News" has quoted a top McCain strategist as saying: "If we keep talking about the economy crisis, we are going to lose."

HUGHES: Well, that's the conventional wisdom, that an economic crisis tends to favor Democratic candidates. I think in this case that's not going to be the case, because John McCain is the reformer in this race. He has accomplished reform.

Barack Obama has not ever reformed anything. He has never stood up, as Senator McCain said last night, to people in his own party. John McCain has. You know, the fundamental problem here is Fannie Mae and Freddie Mac, the home loan credit guaranty agencies.

Senator Obama asked about that last night, said he sent a letter. Sent a letter? You can't mail it in as president. You know, if you care about an issue and you're a member of the Senate, you have hearings, you introduce legislation. You don't just mail off a letter.

KING: James, you're the one who coined "it's the economy, stupid," is that still true?

CARVILLE: Well, it is true in spades. And as much as Senator McCain would like to change the subject from the economy, American families can't. I mean, there is record job losses out there, the stock market is plunging. Nobody can borrow money.

So it's not like -- I always loved this when McCain people say, we need to change the subject. People are not going to change the subject between now and Election Day. This is obviously a disaster. And it's all benefiting Senator Obama, and it's going to benefit down and out.

What these Republicans need to do is start blaming each other and get a leg up on the blame game and point some fingers at each other.

KING: We'll be right back with Karen Hughes and James Carville right after this.

(COMMERCIAL BREAK) KING: We're back with Karen Hughes and James Carville. Barack Obama and John McCain went at it on foreign policy last night. Watch.

(BEGIN VIDEO CLIP)

MCCAIN: My hero is a guy named Teddy Roosevelt. Teddy Roosevelt used to say walk softly -- talk softly but carry a big stick. Senator Obama likes to talk loudly. In fact, he said he wants to announce that he is going to attack Pakistan. Remarkable.

OBAMA: Senator McCain, this is a guy who sang "bomb, bomb, bomb Iran." Who called for the annihilation of North Korea. That, I don't think, is an example of speaking softly. This is the person who, after we had -- we hadn't even finished Afghanistan, when he said, next up, Baghdad.

(END VIDEO CLIP)

KING: Let's start this go around with James Carville.

Isn't the foreign policy -- shouldn't it be McCain's strong point?

CARVILLE: I guess one of the things that I took away from the debate is, is these two guys don't much (INAUDIBLE) cotton to each other. You can almost see the contempt --

HUGHES: I think that's an understatement.

(CROSSTALK)

CARVILLE: I liked Karen Hughes a lot and -- going to deal (ph) with politics I like, but -- I do think that the public did see that Senator Obama was sitting up there talking foreign policy with Senator McCain. Actually I thought he was pretty -- I thought he was -- in some ways -- he was strong on the foreign policy part of the debate than he was on the economic part of the debate. But again, that's a personal opinion.

He had a -- he had a very strong performance and he did really good there. But you still couldn't -- another thing is, if I may make a point, is this has got to be the end of this presidential commission. These rules were so stifling last night, this thing was so poorly put on, we'll have to think of a new way to do this in the next cycle.

KING: Would you agree with that, Karen?

HUGHES: I do agree with that. I thought the format was stifling and it sort of put Tom Brokaw in the position of being the nag, trying to scold the candidates for violating the rules. And, you know, I thought -- I didn't think it really allowed a substantive engagement. I was a little disappointed. We didn't see much more back and forth with the voters.

I do think that Senator Obama had a pretty effective parry to Senator McCain on foreign policy. And he's clearly better than he was in the debates against the candidate James used to support, Senator Clinton. But I do think that Senator McCain, when he's talking about foreign policy, the depth of his experience really does come through. And I think that's comforting for voters, not only on foreign policy matters, but also on economic matters.

This economic crisis is a global crisis. And I think his international -- Senator McCain's international experience can be very helpful in dealing with that as well.

KING: How important, James, is the last debate next week?

CARVILLE: You know I -- again, I -- my view is this election is a done deal and I think the congressional elections are a done deal. I -- you have to acknowledge that somehow or another if Senator Obama had a major gaffe or something happened, but that's highly unlikely. Remember, he's been through, I think, 23 different debates in the Democratic primaries and he and Senator Clinton had any number of head to head debates. This will be his third one in this cycle. It -- he -- let's face it, he's gotten pretty good at it. And I suspect that he will do fine in the last debate.

And I think that Senator McCain, you saw last night, is - I think he was trying a little too hard. I think he was pressing too hard, and somehow or another I think it sort of came through the screen. And I think that's why the public gave Senator Obama such an overwhelming win here.

KING: Karen, does McCain have to literally pour it on now in a sense?

HUGHES: Well, I think he has to follow up on some themes that he opened up and talked about last night. He has to talk about his bipartisan efforts to reach across the aisle. He has to talk about the fact that he has a record of reforming things. And if you think things in Washington need to be reformed, and I think most people do, that he's the candidate who can accomplish that as president.

Now, I agree with some of what James said about the third debate, that I -- it probably -- we've had two debates now. They've been very substantive, they've been pretty predictable, no major gaffes, no major -- particularly big, memorable moments. And I expect the third one will probably be the same because these are both good debaters.

But what I don't agree with him about is the fact that he declared the election over last night, and it was a very funny sound bite, but the voters of America have something to say about that. And he might want to change the law to have the election in October when his candidate is a little ahead instead of in November. But again, the people of America are going to speak on Election Day in November, and there's a lot, as he and I both know from our own experience, there is a lot that can happen in 27 days in a presidential campaign.

CARVILLE: It can, and they can even make a fool or a genius out of me. I await the verdict on the --

KING: One thing about Carville, he rolls the dice.

Thank you both very much. Karen Hughes, who was counselor to President George W. Bush, and James Carville, CNN political contributor.

Still time to participate in our quick vote. Who would make a better First Lady? Vote now at CNN.com/LarryKing. Also, I want to take a second to thank you for the success of our new blog. We've had tens of thousands of your post comments and we look to each and every one of them. We're open 24/7 and constantly updating our blog. You may have even heard your questions or comments on our show. Now remember, it's your chance to let us know your opinions. If you're just watching and not posting your comments, you're missing out. CNN.com/LarryKing.

Anderson Cooper and "A.C. 360" starts right now.