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CNN Larry King Live

Obama Picks First Black Attorney General/Should Hillary Clinton Be Secretary of State?

Aired November 18, 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, President-Elect Obama makes more history, choosing Eric Holder as the country's first black attorney general.
But hold on. Holder has a past that's already drawing fire.

Can you say pardon?

And Secretary of State Hillary Clinton?

It could happen.

But can she really work with a man she said this about?

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D), FORMER PRESIDENTIAL CANDIDATE: I don't think that he really gets it, that people are looking for a president who stands up for you and not look down on you.

(END VIDEO CLIP)

KING: Plus, the big three go begging -- the car makers' plea -- give us $25 billion.

Should we?

All right now on LARRY KING LIVE.

Good evening.

A group of terrific guests tonight.

We start with a panel that includes, in Chicago, Reverend Jesse Jackson, the founder and president of the Rainbow/PUSH Coalition.

In Washington, Lanny Davis, former special counsel to President Clinton. He's known, by the way, Eric Holder for several years.

Also in Washington, Michael Isikoff, the investigative correspondent with "Newsweek" who broke the Eric Holder story today.

And in Boston, our old friend David Gergen, the CNN senior political analyst.

Michael, how did you get this?

MICHAEL ISIKOFF, INVESTIGATIVE CORRESPONDENT, "NEWSWEEK": Well, through reporting, Larry. But, basically, look, I don't think this is a shock to anybody in Washington. Eric Holder has been on the shortest of short lists for attorney general all along. He was deputy attorney general under Janet Reno during the Clinton administration, a former U.S. attorney in the District of Columbia, widely respected in Washington, widely respected within the Justice Department. And he had forged a relationship with Barack Obama, having served as the co-chief of the vice presidential selection process that ended up picking Joe Biden. It was Eric Holder who vetted the candidates for vice president.

KING: All right...

ISIKOFF: So everybody was expecting and looking at Eric Holder to begin with as the obvious choice. There was one question, which I'm sure we will get to. And that was the reservations...

KING: OK...

ISIKOFF: ...that Holder himself had about going through a confirmation process that was going to bring up the Mark Rich pardon. But the Obama people and Holder and his advisers looked at that closely and concluded, especially with the increased Democratic margin in the Senate, that that was not likely to be an obstacle to confirmation.

KING: I'll bring that up with Lanny in a minute.

But, Jesse, as a long time civil rights leader, what does -- how does it feel to have a black attorney general?

REV. JESSE JACKSON, FOUNDER/PRESIDENT, RAINBOW PUSH COALITION: You know, his blackness is really self-evident. What he really is, he has experience in the Department of Justice. He has integrity. He's smart and he's fair.

While he may be concerned that he will be about, say, enforcing, voting rights laws and fair lending laws, coal miners who are trapped without -- without protection in those mines, that's an Eric Holder issue, too. The kind of corporate thievery -- that is an Eric Holder issue, too.

So he brings to this issue a body of experience that makes him fit for the national job.

KING: All right.

Lanny, what about the pardon, the Mark Rich story?

LANNY DAVIS, FRIEND, FORMER ASSOCIATE, ERIC HOLDER: Well, I know, as a matter of fact, that Eric Holder did not have responsibility for that pardon. At the time that he was asked one question, the night before the last day of the Clinton presidency. He gave an answer in the context of knowing that the prime minister of Israel had called the president of the United States to ask for that pardon.

He stepped up to the line at a public hearing and took responsibility for saying I'm neutral to leaning favorable, in the context of knowing about that call from the prime minister of Israel.

But he had nothing do with that pardon. And if that is the only thing that you can hold against a man who is a judge, a prosecutor, a person at the Justice Department, highly respected and one of the nicest people I've known in all my years in this city, then he'll get by without any problems.

KING: And the Israeli involvement in many things, including Mark Rich -- who I spoke to right after that pardon. He was in Switzerland. He is Orthodox Jew.

David Gergen, is this going to be a problem?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: I don't think it will be much of a problem, Larry. And I think the point that was made that the Congress being so heavily Democratic is going to really make a difference here in these hearings for everyone. And that is you've got a lot of friendly faces there asking the questions. And it's hard for the Republicans to push an issue when they're not controlling the committee. That's the price you pay when you lose the Senate.

And beyond that, Eric Holder does have this reputation as a very high quality individual. He knows -- he knows Obama, which is very important with an attorney general. They've had a relationship stretching back now some four years. And obviously Obama trusted him or he wouldn't have asked him to be the co-chair of the transition.

But because he's also a -- he knows the Justice Department system so well, he's been trained in it, he's been a prosecutor, he's also not only on the issue of civil rights at home, as Jesse Jackson just suggested, he's also going to be strong on some of these international criminal issues about Guantanamo, about torture, you know, executive orders -- all the kind of questions that go to America's reputation abroad.

The attorney general's office has had an awful lot to do with shaping the culture of the Bush administration on those issues.

KING: Yes.

GERGEN: And Eric Holder will take it in a very different direction.

KING: Michael, we know about the problems that Alberto Gonzales had.

Do you see these as two entirely different people?

ISIKOFF: Oh, they are. I mean, in fact, you couldn't find somebody more different than Alberto Gonzales than Eric Holder. Eric Holder comes out of the Justice Department. He is steeped in the culture of the Justice Department. When he graduated Columbia Law School in 1976, he went into the Justice Department. He served for years in the Public Integrity Section of the criminal division prosecuting -- trying cases against Republicans and Democrats.

He understands and has a feel for how politics isn't -- doesn't play a role in prosecutorial -- decisions. And that's something that the Justice Department, during the last four years, has not fully appreciated.

KING: OK.

ISIKOFF: They didn't understand that culture.

So I think that's a very big difference. And that's one reason why I think he's going to be welcomed by a lot of people at the Justice Department.

KING: Jesse, are you surprised that this is yet another Clinton person?

JACKSON: Well, I'm not. Larry, you know, so many people during the primary season were number one, from Iraq; number two, for Hillary; number one, and vice versa. So there is a certain closeness philosophically.

I'm not surprised, really, of Hillary becoming secretary of State or Eric Holder becoming attorney general. There is a -- there is a certain closeness among these people. And I think that you will see that combination which broadens the big tent of the Democratic Party. And now, to include some Republicans, will take the nation in a -- in a different course in a very bipartisan way.

KING: We'll come back and we'll ask the panel how is Obama doing so far?

Don't go away.

If he's, by the way, confirmed, what kind of attorney general will he be?

Stick around.

(COMMERCIAL BREAK)

KING: Lanny Davis, how's he doing?

DAVIS: How is he doing?

I think he's doing great. Every promise, every expectation -- the "Team of Rivals," rising above politics. I wrote a book about got-you politics destroying America. And here we have a president-elect who is sitting down with John McCain, talking to Hillary Clinton about possibly being secretary of State; picking the first African-American attorney general; forgiving Joe Lieberman; going on to pull the country together -- and not red state/blue state. In other words, for the first time, we have somebody, with all the rhetoric in a campaign actually living up to that rhetoric. I just couldn't be more excited about this guy.

KING: David, what about the Joe Lieberman thing?

It was Obama that recommended that he be held in good status and he got an overwhelming vote today.

GERGEN: Yes, he did. And I thought that spoke well both of Obama and of the Democrats more generally -- and Harry Reid, because they easily could have punished him. There were some of the younger members who wanted to strip him of his chairmanship.

But I think if you're going to get into a post-partisan so-called environment, that's what you want to create. It was important to embrace Joe Lieberman and not to throw him out. After all, you're trying to create a larger coalition that crosses party lines. And I think to forgive and forget and be magnanimous about it was a good idea.

And let me just say, overall, Larry, I think the transition has been extremely smooth. It's one of the high quality transitions we've seen so far. They've got a ways to go and the problems are immense.

I read the Eric Holder appointment as strengthening the possibility that Hillary Clinton will be secretary of State. And I say because I do think they're...

KING: Why?

GERGEN: It's a jigsaw puzzle when you put together your cabinet. And the top four cabinet positions, the front lines, so to speak, are historically -- historically have been State, Defense, Justice and Treasury.

And I think if Barack Obama is going to want to have one woman in that group -- he's now got a man at Justice. The candidates for Treasury and for Defense almost are all men. I think that suggests very strongly there is going to be a woman at the State Department.

KING: Michael, do you agree?

GERGEN: And that woman is Hillary.

ISIKOFF: Yes. Certainly, there are a lot of indications about that. I'm not sure it's a done deal yet. I think there are a lot of complications, particularly with the Clintons' financial matters and Bill Clinton's library, his foundation, his business deals and whether he's going to be willing to fulfill all the requirements of the Obama vetters.

This is a much thornier, difficult set of issues than, I think, Obama's people first imagined when they agreed that -- and confirmed that Hillary Clinton was a top choice for secretary of State.

KING: Jesse...

ISIKOFF: I think there's a lot of work do on that issue.

KING: Jesse, on a personal note, do you think your son, the congressman from Illinois, will be appointed to fill Obama's seat in the Senate?

JACKSON: Well, I do not know that. I know he is eminently qualified. He's been in Congress for almost 15 years now. He's only missed two votes. One was when my father died. And so I am impressed. But I stop right there. And I approve that message of not getting involved in that situation.

(LAUGHTER)

DAVIS: Can I vote for Jesse, Jr. , Larry?

KING: Yes.

DAVIS: He's one of the most outstanding members of Congress. He's better looking than his father by a whole margin.

(LAUGHTER)

DAVIS: And I'd also like to say...

KING: Oh, yes.

DAVIS: ...in answer to my friend, Michael Isikoff, here is a fact. Bill Clinton will do whatever is necessary to support Hillary Clinton. That's the way he's conducted himself for the last year.

KING: OK...

DAVIS: He will be a fantastic...

JACKSON: Larry...

DAVIS: ...husband of a great secretary of State, if she gets the choice.

JACKSON: Larry...

KING: All right, quickly.

I've got some breaking news.

Yes, Jess?

JACKSON: I'm simply saying that Barack has handled this extremely well, while the media is merely managing the staff -- the cabinet members. His position about Guantanamo and torture, about how to save all the industry and the bridge loan and not just a gift, he's dealing with the big stuff. And I think...

KING: ...that is his -- his genius. And that is what he has done, I think, very well so far.

DAVIS: Yes.

KING: David, we've got more breaking news.

Alaska Senator Ted Stevenson -- Ted Stevens -- has lost his re- election bid to Democrat Mark Begich. CNN is reporting that late tonight, Stevens, a convicted felon, had a decade-long hold on that Senate seat from Alaska. He served six terms -- the longest serving Republican in the history of the Senate -- will not return to Congress.

Again, Alaska Senator Ted Stevens has officially lost his re- election bid to Democrat Mark Begich, the mayor of Anchorage -- and, by the way, on his 85th birthday.

David, your thought?

GERGEN: Wow! Well, that's a big one, Larry. This -- he was a lion of the Senate, chairman of Appropriations Committee, one of the most powerful people in Washington. This conviction -- these convictions, I think, obviously did him in. You know, it was a surprise on election night that he actually seemed to be winning that vote after the convictions. And then they started counting more closely and Begich just came up and up and up and then he slipped past him in the last few days.

I guess tonight we have the -- we have the final result.

KING: Yes.

GERGEN: That brings the Democrats to 58, with two outstandings.

KING: To 58.

GERGEN: Yes. So there's -- they're within, you know, they're within a whisker of getting to 60, which is the magic number.

JACKSON: And, Larry, it means that Mrs. Palin is now less able to appoint herself to succeed him if he had been convicted alone.

(LAUGHTER)

JACKSON: So that's a big blow to her -- to her views.

KING: That's right. A good point.

Thank you all very much.

DAVIS: Thanks, Larry.

SANCHEZ: We'll be calling you on you lots.

Can Hillary Clinton work with Barack Obama?

Back in 60 seconds. (COMMERCIAL BREAK)

KING: While Hillary Clinton certainly appears to be a strong contender for secretary of State, it's hard to forget the times that she was critical of Barack Obama not all that long ago.

Watch.

(BEGIN VIDEO CLIP FROM FEBRUARY 13)

CLINTON: Let's have a real campaign. Enough with the speeches and the big rallies and then using tactics that are right out of Karl Rove's playbook.

Senator McCain will bring a lifetime of experience to the campaign. I will bring a lifetime of experience. And Senator Obama will bring a speech that he gave in 2002.

And I disagree with his continuing to say that he would meet with some of the worst dictators in the world without preconditions and without the real, you know, understanding of what we would get from it.

As Evan said, if it were so easy that all did you was show up in Washington and say let's change...

(APPLAUSE)

CLINTON: Senator Obama, it is very difficult having a straight up debate with you, because you never take responsibility for any vote.

OBAMA: Oh, really?

CLINTON: And that has been a pattern.

Speeches versus solutions, talk versus action -- you know, some people may think words are change. But you and I know better. Words are cheap.

I am in the solutions business. My opponent is in the promises business. I think we need answers, not questions, about what we're going to do (INAUDIBLE).

(END VIDEO CLIP)

KING: We will discuss Hillary and the possibility of her being the next secretary of State, right after this.

(COMMERCIAL BREAK)

KING: Thomas Friedman of "The New York Times" still to come.

Is Senator Hillary Clinton a good choice for U.S. secretary of State in the Obama administration?

Well, go to our blog at CNN.com/larryking and let us know and we'll share your comments later in the show.

Let's meet our panel -- all in Washington.

Congresswoman Debbie Wasserman Schultz, Democrat of Florida.

Peter Beinart, senior fellow, Council On Foreign Relations. He says Hillary should not take the job.

And Jim Vandehei, executive editor of Politico.

Congresswoman Schultz, do you think she'll get it?

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: Well, I think that that's a big decision for her. And I think it speaks volumes of Senator Obama -- President-Elect Obama -- that he's considering offering the job to her. She would be an incredible international diplomat -- the skills that she has, the relationships that she has would really advance President-Elect Obama's agenda and move us a long way toward re-establishing our place in the world as the diplomatic -- as the premier diplomatic nation in the world and help us rejoin the community of nations.

KING: Peter are you saying -- WASSERMAN SCHULTZ: So, I'm hopeful that she gets it.

KING: OK.

Peter, are you saying she should not take it or she should not have it offered to her?

PETER BEINART, SENIOR FELLOW, COUNCIL ON FOREIGN RELATIONS: I think she'd do a good job. I mean, I think the Clinton administration's foreign policy was generally very good, particularly in the second term. And she's shown herself to be a very good senator. She's very hardworking and smart.

But I think if she wants to run for president again, I think becoming secretary of State would make -- would be a mistake.

There's a reason we haven't chosen a former secretary of State as president since the middle of the 19th century. It takes you out of contention in terms of the domestic political arena. And were she to stay in the Senate, she's still young enough to run in 2016.

KING: Jim, your organization, Politico, reported today that Hillary might reject the job if offered.

What more do you know?

JIM VANDEHEI, EXECUTIVE EDITOR, POLITICO: I think what's going on here is that there's real fear now in the Hillary camp that she might not be able to get the job because the vetting process of Bill Clinton won't come up in a positive way. And I think they want to make sure that they have another alternative story to talk about.

I also want to talk a little bit about this whole idea of a "Team of Rivals" and having some of your political enemies or people you've fought with in the past inside of your cabinet.

It was a great idea for Abraham Lincoln. Obviously, in most parts, it worked for him. And it's a fabulous book.

But the modern presidency is also a much different presidency. And I think that the White Houses that have been most successful have run from the inside out -- had very powerful chief of staffs, very powerful senior advisers. And it's clearly what Barack Obama wants to do with this White House.

So there's no guarantee that it will work. And there's the real possibility that there could be the distractions that sometimes come with the Clintons and sometimes come with Bill Clinton. And that's what -- that's why you hear a lot of unease when you talk to some people around Obama and some of the Democratic activists.

KING: All right, Congresswoman Schulz, what do make of that?

WASSERMAN SCHULTZ: Larry, I mean, with all due respect to the excellent reporting of Politico, I really think way too much is being made out of this vetting process and it being a tangled web that -- that is so complicated that it can't be unraveled.

I think this is a legitimately difficult decision and Senator Clinton is a wonderful senator, enjoying all time popularity in New York.

She is, you know, looking forward to working on big issues that we're going to be really able to move down the field, like universal health care. And I think that the vetting issue really appears to be, from the complications I've had, as not that big a deal.

I mean they're going to go through the process. She clearly wants to be able to help President-Elect Obama get the job done. And I think that way too much is being made out of President Clinton and his relationship with her.

KING: All right. Peter, when we see those clips of Hillary during the campaign, wouldn't you guess it would have to be uncomfortable for the two of them to work together as close as a president and secretary of State have to work together?

BEINART: Well, I think one of the calculations may be that Obama is going to have to work with the Clintons anyway. The Clintons are not going away. They're going to be powerful people in Washington, with -- with a strong group of supporters of their own anyway.

So why not have her invested in the success of your administration, in which, if she's successful, you're successful?

I mean I think it's probably true that too much is made about -- has been made about this Lincoln analogy. And some Lincoln historians are actually coming now out to challenge that.

But there are other examples. I mean there are other examples. FDR, for instance, reaching out to very prominent Republicans and former opponent in his administration.

There are -- there are risks, but there is also just a basic logic in taking people who...

KING: All right...

BEINART: ...to -- and making them invested in your success, because it's their success.

KING: Jim, your Politico is also reporting today that there's resistance from hard core Obama supporters about giving the job to someone who fought him so fiercely.

What do you think?

VANDEHEI: I think it's real. I don't think it's that big of a deal anymore, because I think the tension exists mostly inside of the camps. I don't think it really -- I don't think it exists that much between the principals anymore. I think they've put a lot of their tension behind them.

I certainly think if she gets the job -- I think she wants the job. I think Obama wants her to have the job.

So if she does get it, I think it will probably work fine, because if you think about this presidency and what's going to take place in that first hundred days, there are so many issues on Obama's plate -- Afghanistan, Iraq, the economy, the auto bailout. Any help he can get in having somebody take on some of those duties, going overseas, doing diplomacy in a smart and efficient way, that helps him.

KING: Wouldn't it be smart, Congresswoman Schulz, to have a secretary of State in place quickly so that he or she can meet with Condoleezza Rice and others?

WASSERMAN SCHULTZ: Oh, absolutely. I think it's going to be incredibly important, especially given the foreign policy challenges that are in front of us, simultaneous to the fact that we have to really take significant affirmative action on turning this economy around. Having someone of the caliber of Hillary Clinton is going to be incredibly important.

And I think that they will move relatively quickly. I think that's why the information has become public. And I think that -- one of the things I think it's important to note, Larry, is that, lets remember how vigorously Hillary Clinton campaigned for President-Elect Obama.

KING: Yes.

WASSERMAN SCHULTZ: They long ago put aside their differences and have locked arms and have been working very closely together.

KING: We'll be right back with more. Don't go away on this edition of LARRY KING LIVE. (COMMERCIAL BREAK)

KING: We're back with our panel.

Peter Beinart, if he asks Hillary to take the job and she takes it, what does it say about him?

BEINART: I think that it suggests that -- that he's confident enough to have very strong people around him and that I think he values in other people some of the same characteristics he has -- people who are smart and hardworking.

And I think that he knows that Hillary Clinton's political base would be helpful, actually, in selling things domestically, as well.

I mean let's think if there's a big deal with Iran -- a diplomatic deal with Iran. That could be very controversial in the United States. And having someone like Hillary Clinton, with that kind of political base, might be helpful in actually selling a deal domestically, creating the public -- the right kind of public mood, not just negotiating overseas.

KING: Jim, we have a blog from George. He asks, "do you think Bill's ties to foreign countries will be a conflict of interest?"

VANDEHEI: I mean, that's what they are trying to figure out in the vetting process. I do think that this vetting process has been a little more difficult than they thought it would be. Do I think it remains a big, big issue. I think it is the reason that people around Hillary Clinton are trying to put out tonight that it is not a done deal, because there is so much they have to unwind. There's a lot of money that has gone to the Bill Clinton Foundation and to the Library. He has taken a lot of money in speaking fees. They just want to make sure there is nothing that would be a distraction or embarrassment or a perceived or real conflict of interest when she takes the job.

I think that's a real and genuine fear and I think that's part of what do you in this vetting process. You want to make sure you don't expose yourself to anything that would be a distraction when you have to talk about all those issues that are discussed earlier, Iraq, Afghanistan, all the stuff on the economic front.

KING: Congresswoman, let's get down to basics. Who is going to be the next secretary of state, do you think?

SCHULTZ: I think it is going to be Hillary Clinton. At the end of the day, I think that's what's going to be -- Barack Obama will decide is best for the country, and I think she will decide that she can do the most good for the most people right away as secretary of state.

KING: Peter, who do you think?

BEINART: What's striking is the other -- there are not a lot of other contenders who really rise to her level. I think that one of the dangers they would have, at this point, if she didn't take it, was that the other people would look kind of -- you know, look small by comparison. And so, I think that there seems to be -- once have you gone this far, there is an incentive on both sides to get it done. And, look, if Bill Clinton -- most of this money that Bill Clinton has been getting has been for his charity. It is charity work. I think people will probably be fairly understanding about that, because it was not money in his pocket. It was money going to good causes.

KING: Jim, if it is not her, who would you bet on?

VANDEHEI: Well, I mean, John Kerry has been one that folks have talked about a lot. He did a tremendous amount for Obama during the campaign. He was often the one the campaign would put on conference calls to defend Obama on foreign policy matters. I think he would be at the top of that list. There has been discussion about trying to lure in a Republican, Dick Lugar or someone like that. I don't think that will happen. Dick Lugar said he doesn't want that to happen.

To answer your questions to the other two, I think both Clinton and Obama really want this to happen. The fact that it hasn't happened so far, the cynic and skeptic in me thinks that there is a problem and it may not happen. We could be talking about a different name. I don't think that's what the Obama camp wants. They want to run a very smooth transition.

KING: How about Ambassador Holbrooke, congresswoman?

SCHULTZ: Well, there are a number of different people who would be just as qualified and would do an excellent job. But I think the message it could send to Americans and to the world to appoint Hillary Clinton as secretary of state would be the best thing for a foreign policy that badly needs retooling, and needs the retooling with the vision of President-Elect Obama and the leadership of Senator Hillary Clinton. I think the team that they provide combined would be unstoppable.

KING: Thank you all. We shall see what we shall see. Your thoughts from our blog after the break.

(COMMERCIAL BREAK)

KING: Recapping the breaking news from Alaska; it appears that U.S. Senator Ted Stevens lost his re-election bid to Democrat Mark Begich. This comes from the Begich campaign. Stevens, a convicted felon, has had a decades-long hold on the Senate seat from Alaska, serving six terms, longest serving Republican in the history of the Senate. It looks like he will not be returning to Congress. Our own David Theall has been manning the blogs. David, what's everybody talking about tonight?

DAVID THEALL, LARRY KING LIVE PRODUCER: Larry, you might be surprised to learn we are blogging about the Clintons. Who would have thought it? All day long, as more stories came out about Senator Hillary Clinton, about possible problems in the vetting process caused by President Clinton and whether or not Senator Clinton is a good choice as a possible cabinet position as secretary of state, to begin with. Now, what we found, Larry, is that the groups are basically divided into three different groups. The majority of those blogging today think that it is not a good idea, not because of senator Clinton, rather because of her husband, former President Bill Clinton. Those are best wrapped up by Vincent, who says "she deserves the position. But President-Elect Obama would be setting himself up for a big problem later as Bill Clinton continues to receive cash and gifts in return for influence." Vincent has some advice for our new president-elect. He says "just say no." He believes it will pay off in the long run.

Certainly, we heard from a lot of people such as Carl. I won't read his e-mail in the interest of time. He thinks it is an absolutely fantastic idea, because he thinks it proves that President- Elect Obama is, in fact, a uniter. But we also heard, Larry, from a group of people, smaller though in numbers, but still showing themselves up on the blog with enough numbers for us to pay attention to them. These are people who think that President-Elect Obama is not upholding the promises that he made in his campaign. That's wrapped up by Scott, who says "is this the change we were supposed to believe in? President-Elect Obama seems good on promises and bad on delivery. He rallied against Washington, but his cabinet and staff picks sure look a lot like the Washington that we are used to."

Of course, Larry, we are going to continue this conversation throughout the evening on your blog. It's at CNN.com/LarryKing. When you go there, look for the live blog link, click it, come on in and join the conversation. You will find this conversation happening under our question of the day.

KING: Thank you, David. We will be right back.

(COMMERCIAL BREAK)

KING: Let's get to the questions about the auto companies. Senator Jon Kyl, Republican of Arizona, who opposed the bailout, Senator Evan Bayh, Democrat of Indiana, who supports it. We are also joined -- he will be with us in a little while fully to discuss his new book, Thomas Friedman, the "New York Times" columnist and three times Pulitzer Prize winner. John, why are you opposed?

SEN. JON KYL (R), ARIZONA: Larry, there's no indication that the problems that the auto companies have had are going to be solved by simply throwing taxpayer dollars at them. They need to make some fundamental changes in the way that they operate or they are not going to survive.

Just to give you a couple of examples: in terms of franchises, GM has 7,000 franchises, Toyota has less than 1,500. Yet, they both represent about 20 percent of the automobile market here in the United States. So much of GM's costs these are due to retiree costs. A third of their costs are health benefits. They simply can't sustain the kind of obligations that they have and the union contracts and other obligations they have and maintain their current course.

As a result, simply giving them money to pay bills for three or four months is not going to solve the problem in any permanent way.

KING: Senator Bayh, why should we bail them out?

SEN. EVAN BAYH (D), INDIANA: Larry, I agree with Jon that structural changes need to be made. But I also think that the prospect of letting three of the largest companies in America go bankrupt, tens of thousands of people possibly lose their jobs, thousands of small businesses who are dealers or suppliers going under, at this very fragile moment for our economy, would have significant, possibly very grave consequences for all of the rest of us. And so I think -- the deal needs to be this: they need to agree, all the stakeholders, labor, management, shareholders, need to come to the table and make significant structural changes.

Tom Friedman has written I think very well about this. They need to make the hard decisions to change their model, be more environmentally friendly, higher mileage vehicles, all those kind of things. Final thing, Larry, by did this 30 or 40 years ago in the Chrysler situation. Taxpayers got paid back ahead of time, actually made money.

KING: Thomas Friedman, you don't have a vote, so what's your thought?

THOMAS FRIEDMAN, "NEW YORK TIMES": I have a column, though. My thought is that we're -- we have been put in a terrible predicament by the auto companies. If we let them fail now, as the senators said, many, many tens of thousands of people could be unemployed. It would be terrible. But there is no indication -- I have seen nothing from them that they have a restructuring plan on the table that suggests if we give them a check now that they will succeed.

We are in a terrible situation. On the one hand, they are too big to fail. On the other hand, as my friend David Rothco (ph) said, they may be too dumb to succeed. So unless they are restructured, I see no reason to give them the money. The question --

KING: You would vote no?

FRIEDMAN: I would vote no until I see a plan to really restructure these companies.

KING: Do you expect to see that, Senator Kyl?

KYL: Larry, I think that's the problem. I think we all know what the problem is, what the solution is. But they are not going to voluntarily restructure, because primarily they got labor union obligations and the union simply is not going to make concessions sufficient to enable them to operate. You can understand that. The only way do it is through the code of the law, Chapter 11 of the bankruptcy code, which gives them temporary protection and permits them to work out all of these things, so that they can emerge from that, more successful and able to compete without the obligations they currently have.

KING: We have little time left. Senator Bayh, what do you think will happen?

BAYH: I think the odds of something happening this week, Larry, are not high. I think the odds of something happening in January, if these companies can get to January, is significantly higher. I think the new president has indicated that he wants to do something. The Congress wants to do something. Don't forget, Larry, if these companies go belly up, all these obligations, pensions, health care, it all gets tossed to the taxpayers. You can make an argument it is better for taxpayers to keep them up and running.

KING: Before we spend some time with Mr. Friedman, quickly, Senator Kyl, your thoughts apparently on the defeat of Senator Stevens.

KYL: It's an end to a long career, as you pointed out earlier. As you noted, it is his birthday today, not a very good birthday present. On the other hand, the people of Alaska appear to have spoken. My understanding is that we wouldn't know for sure until Thursday. Since it may not be official, I don't want to pronounce it at this time. But I don't distrust your source.

KING: Are you close friends?

KYL: Sure. Anybody that served with Ted all these years has to be -- you know -- Evan and I are friends, even though we sit on different sides of the aisle in the Senate. There are only 100 of you. The person you are against today you have to be with tomorrow. And so you tend to want to work together and you're friends, yes.

KING: Thanks. Thomas Friedman is sticking around. Don't you go anywhere. We will be right back after the break.

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KING: We stay now with Thomas Friedman, the "New York Times" columnist, three-time Pulitzer Prize winner, author of the new bestseller "Hot, Flat and Crowded, Why we Need a Green Revolution and How It Can Renew America." Specifically, Tom, what is a green revolution?

FRIEDMAN: Well, the basic argument here, Larry, is that the world is getting hot, global warming, flat, the rise of middle classes all over the world, from India to China, from Russia to Brazil, and crowded, over population. The world has gone from 2.8 billion people when I was born in 1953 to 9.2 billion by 2053. So in that kind of world, Larry, whoever is the leading country in producing clean power, clean energy, clean water, all these clean technologies, I believe is going to have a huge competitive sustainable advantage.

I call it the ability to out-green your competition. And I believe that country has to be the United States of America. We need to give birth to this new industry. We need to own this new industry. I call it ET, energy technology. As Jeffrey Immelt, the head of GE likes to say, Larry, if you want to be big, you have to be big in big things. The biggest thing coming down the road is ET. I believe in the next administration, in the next eight to 12 years, we need to make sure we lay the foundation for that industry. That's what the book is about.

KING: Who is ahead now?

FRIEDMAN: Who is ahead now? Different countries have different slices of it. One out of every three wind turbines of the world are made and sold from Denmark. Japan is great in energy efficiency. Europe has a lot of effective energy efficiency products going. We are the laggards. We are not in a leadership position. We need to be. Larry, the chance of our kids enjoying the standard of living we had if we don't own this next great global industry, ET, the way we owned It, information technology, I would say it is about zero.

KING: How did we get in this fix?

FRIEDMAN: Well, because year after year we never put in place the price signals we needed, a gasoline tax, a carbon tax, that would have stimulated the innovation around this industry. That's where the problems of the auto industry that we were just talking about meet the whole question of the energy technology industry. What all of the countries that are leading this industry, Larry, today have in common, whether it's Japan, Denmark, is that they put in the price signals. They have given a long-term fix durable price signal.

I was just in Houston today. I saw gas at 1.77 a gallon. That's going to kill the wind, solar and cellulosic Ethanol industry, unless the next administration is ready to put a price signal in.

KING: Let's say all your ideas are put in place, what are we going to look like?

FRIEDMAN: What we look like? What would we look like in 20 years? We have something I call in the book, Larry, the energy Internet. It is when IT meets ET. We would have a lot of clean generation of electrons, going into a smart grid, going into a smart home, where all your appliances would basically day trade automatically for electrons for you, fed into a smart car that would charged at night with electricity, and drive 100 miles on electricity and never have to fill up with gasoline. That's what it would look like.

I know it sounds like science fiction, don't fetch it too far. All these technologies exist today, Larry. They just don't exist at the speed, scope and scale we need.

KING: Will red China go -- You've give a lot of attention to China in your book because They're the largest. Will red China become green China?

FRIEDMAN: I think the Chinese are going to have to move down this road. They're waiting for us. They're really watching us, kind of hiding behind us now. When they see us move, I believe you'll see them move. I used the image in the book -- To me, China today is like the movie "Speed," where the terrorists take over a bus and if it goes under 50 miles an hour, it blows up. China is kind of like that bus, Larry, if their economy grows under eight percent, it could blow up. Their big challenge is they've got to change their engine from a dirty coal burning engine in that bus to a clean electric hybrid while the bus is going 50 miles an hour.

It's the greatest show on Earth. It's going to be a huge challenge. They are following us. And I think when we lead, they will follow.

KING: Suppose we become more hot, flat and crowded, what's the end result?

FRIEDMAN: Well, it's not a world you particularly want to live in. You know, small changes in global average temperature can have a huge effect. I call that chapter in my book "Global Weirding." It's a term kind coined by Hunter Lovins from the Rocky Mountain Institute. We're not going to have global warming. Global warming sounds so nice. To a kid from Minnesota, Larry, global warming, that sounds like golf in February. That's not what we are going to have. The hots are going to get hotter. The dries are going to get longer. The wets are going to get wetter. The snows are going to get thicker. The most violent hurricanes could become more numerous. That's what it will look like.

KING: Take a break and back with more of Thomas Friedman of the "New York Times." The book, "Hot, Flat and Crowded." Don't go away.

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KING: The book is "Hot, Flat and Crowded." The guest is Thomas Friedman. Two part question: how did the Bush administration do in this area and what do you expect of the Obama?

FRIEDMAN: I think we wasted eight years, Larry. We had a president who could barely get the word c -- c-- conservation out of his mouth. He basically was uninterested in a gasoline tax. He was uninterested in putting in place, I believe, the real regulation standards and price signals that could have launched a green revolution. He should have put a Patriot Tax in place right after 9/11. Gas was 1.69 that morning a gallon. And if he had done that, I think we'd have been in a different place today. And by the way, the auto companies would have been in a different place today.

I have high expectations for the Obama administration. President Elect Obama has talked about this issue a lot. But the key thing will be whether he is ready to put in a price signal. You are just not going to get a clean resolution if clean fuels are so expensive and dirty ones continue to be so cheap. You have to find a way to work that problem, make the dirty fuels more expensive and then give people a break on payroll tax, make it revenue neutral, but get people focused on working, cut taxes on working, and get them focused on using fewer dirty fuels and raise taxes on those.

KING: If you can get people like T. Boone Pickens coming your way, is it possible to turn this country around?

FRIEDMAN: Boone Pickens is a friend of mine and I think Boone is really typical of the new coalition around this issue. It's people who understand green is not liberal, tree hugging, sissy, girly man, unpatriotic, vaguely European. Green is geo-political, geo-strategic, geo-economic, patriotic, capitalistic. Green is the new red, white and blue. And there are plenty of conservative patriots like Boone Pickens who understand that, who don't think it's not smart to be sending 700 billion dollars a year, brought every year, to people who have drawn a bull's eye on our back. God bless them.

KING: Can you remember, Tom, how you got interested in this topic?

FRIEDMAN: I got really interested -- Actually, I got hired by the "New York Times" as an energy reporter back in 1981, in fact. But the big shift for me was really post 9/11. It was really seeing what happened with our energy purchases, seeing how our energy purchases have been empowering petro-dictators all over the world. It's poisoning geo-politics. It's really reversed the whole fall of the Berlin Wall Democratic trend that was initiated in 1989.

Then it really converged a few years later with the whole climate issue. And the combination of the rise of the climate issue, the geo- politics of this, and finally the need, Larry, to give birth to a new industry that our kids will be able to basically enjoy a higher standard of living off -- we have to give birth to that new industry. We can't just bail out the economy. We have to build it up. The way you do that is by giving birth to a new industry that in a world that is hot, flat and crowded, everybody will need green tech clean power.

KING: Are you optimistic?

FRIEDMAN: I'm cautiously optimistic. I have been to -- danced at a lot of weddings with people who told me they were really serious about this issue. I heard what President-Elect Obama has said. I think he's enthusiastic about it. I know the people that have working for him on this issue. I think they're serious, credible people. I'm from Minnesota and we're like the people in Missouri, show me.

KING: What's your next book?

FRIEDMAN: My next book is "Hot, Flat, Crowded and Busted."

KING: You're already working on it?

FRIEDMAN: No, not yet. But I think that the whole economic situation we're in right now is really going to dominate the next four years. That's really what I'm thinking about right now. I think, you know, we've been talking about the next secretary of state, will it be Mrs. Clinton or somebody else? I can tell you this, Larry, the next four years will be a lot more about General Motors than General Petraeus, and they're going to be a lot more about managing weakness in the world than managing strength. The next secretary of state is going to have to be up to that challenge.

KING: We only have 30 seconds. Every time I read you, you're somewhere else. How do you decide where you go?

FRIEDMAN: I just kind of follow my nose and get an instinct and intuition where I think the news is. Right now, Larry, you know what, I'm right here, because I think the story of America is the most amazing, compelling and, obviously, the most important story in the world right now. I don't want to be anywhere else.

KING: You're the best. Thanks, Thomas. Hope we do many more. Thomas Friedman, "New York Times," three times Pulitzer Prize winner, new book, a major best-seller already, "Hot, Flat and Crowded; Why We Need a Green Revolution and How It Can Renew America."

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