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Closing Guantanamo; Dealing with Detainees

Aired January 25, 2009 - 12:00   ET


KING: I'm John King, and this is "State of the Union."

President Obama promised to close the detainee prison camp at Guantanamo Bay. Was it wrong for the United States to hold those men?

KING: And is it dangerous now to let them go? We'll get both sides from former Bush administration official Douglas Feith and detainee attorney Charlie Swift.

President Obama's economic stimulus plan is growing, but the economy remains in meltdown. Are we spending too much and gaining too little? The chairman of the Senate Budget Committee, Senator Kent Conrad, will join me live.

And many Republican legislators are convinced what they're hearing from the White House is simply a giveaway of taxpayer money. One of the most unconvinced, Congressman Mike Pence of Indiana, will get the last word.

And finally, something you won't see anywhere else -- the broadcast debut of's newest short film "New Day," his very personal diary of the Obama administration. All ahead this hour on "State of the Union."

Welcome back to "State of the Union." Senator Kent Conrad is chairman of the Budget Committee. He's one of those worried the federal government might not be doing enough. Senator Kent Conrad taking his seat here in the studio. Thank you for rushing in, Senator. We're flipping off a little bit here.

I want to talk to you especially because you're a Democrat. You have a new Democratic president. And, yet, you're not happy exactly with the details of this stimulus plan. You've had an exchange of letters back and forth. When it comes to reviving the economy, creating -- Obama says his plan will create 3 to 4 million new jobs. A, do you buy that number?

CONRAD: I think we have to have some question about the number, simply because most of the models that determine you can create that number of jobs are based on the financial system working normally. And, of course, what we know, John, is the financial system is not working normally. So I think it's critically important that we focus on the overall package. That means the TARP funds as well as the economic recovery funds, how they function together. Because I think the basic underlying package the president's supporting is wise. It's required. The question is, are we doing enough to help the financial sector? And are we doing enough about housing? Because if we don't get those two right, we're not going to see the kind of lift out of this downturn that we need.

KING: I want to move -- I want to come back to the TARP issue, but I want to stay on the stimulus plan. The bill, as it now stands, has $50 million for the NEA, the National Endowment for the Arts; $600 million for the government to buy a fleet of new cars; $650 million to help the transition to digital television, in an economic stimulus bill. Do those proposals create jobs?

CONRAD: Yes. They probably do create some jobs. Certainly, buying cars that are going to have to be replaced to get more fuel- efficient cars in the federal fleet. That makes sense on two grounds. Number one, it creates the jobs, but in addition to that, it makes our government work more effectively, and we get a better use of taxpayer funds. You know, there are some other...

KING: Is this the way (inaudible).

CONRAD: ... there are some other things that I think we should -- that we should be concerned about, and that is those parts of the package that spend out beyond two years. Because, you know, we need to be temporary. We need it to be timely, we need it to be targeted. So we have got to be concerned about things that add to the deficit and the debt beyond the two years of what we anticipate to be this downturn.

KING: Let me follow up on that point, because this is something you said to "The Washington Post" back in September of 2006, when we had a Republican president in the White House. Speaking of his budget, "It's utterly reckless. The debt load and our growing obligations to foreign creditors are weakening us. We're running risks we shouldn't run."

So if we have an $825 billion stimulus plan, $750 billion in a financial industry bailout plan, on Wall Street they say that won't be enough. They'll be back for more money. On Capitol Hill, some of your colleagues in the Democratic Party say, won't be enough, they'll be back for more money.

At what point does even these well-intentioned programs to try to salvage the financial institutions, revive the economy, at what point do they take us off a cliff?

CONRAD: We've got to be very concerned about our long-term fiscal condition. That's why I'm delighted President Obama's called for a fiscal responsibility summit in February. He's called on a number of us to help in designing how that will be run. And that we focus on pivoting once we get through this downturn and get back to fiscal responsibility. Because, as you know, the previous administration doubled the debt of this country. We're on track to double it again if we don't get our long-term circumstances under control.

KING: And what would you do -- you've seen the House proposal. When it comes across to the Senate, where are you going to say, I'm sorry, Mr. President, not this one and not this one, here's a better way? CONRAD: What I think we have to focus on, number one, how does the economic recovery package work in conjunction with the TARP funds, which, as you know, are designed to deal with the downturn in the financial situation, the financial markets. I think that's where we've got to focus. Do these work in combination effectively? Is there enough money in a financial rescue package to prevent a further decline in credit availability, which would prevent the economic recovery package from working effectively?

So what does that mean? That means in the economic recovery package, we've got to make certain that we are targeted -- that we're timely, that those moneys are going out in a way that will give short- term lift to the economy, but also that there are enough resources to deal with housing and to deal with the financial sector.

KING: Let's talk about the financial sector. You sent a letter to the Treasury Department this Friday, just two days ago, in which you were complaining about how this TARP money, this bailout money, $700 billion, the first $350 billion has been spent. And you're quite mad about how of it has been spent. In your letter, you say this -- it's utterly reckless. That's -- let me move around here. Here we go. "TARP was intended to restore liquidity to the credit markets, so that Main Street businesses could get the funds they need to meet payroll, purchase materials and finance sales. It was never intended to fund lavish bonuses for the people who got us into this mess."

Now, that was spent when George W. Bush was president of the United States, a Republican, but the Democrats controlled the Congress. Was this program approved by your party, as well as the president, without proper strings and controls?

CONRAD: You know, we thought we had strings and controls. For example, we had an oversight board. Only the outgoing administration never called it to meet. So I'm not sure what you can do about that if you aren't part of the administration.

Look, very serious mistakes were made. On the other hand, I think we have to recognize, without that first package, we might well have had a financial collapse in this country. In fact, I believe the Dow Jones today would be at 4,000 without that package in place.

However, it wasn't used as well as it might have been. For example, money was given to some of the major banks in this country, some $250 billion, with no strings attached. They weren't required to expand the credit pool. They weren't restricted on bonuses. Although, you know, the legislation clearly called for such restrictions.

One way they got around it in the case of Merrill Lynch is they put the bonuses out before they got the federal money. In other words, they almost created a circumstance in which they would have to get federal money, because they put out $4 billion in bonuses in December of last year. Then were sold, bailed out basically by Bank of America, and then Bank of America gets $20 billion in taxpayer money. That is an outrage.

And for the man who ran Merrill Lynch to then go to Bank of America and spend over $1 million redoing his office at Bank of America, when he knew there were massive losses and that the federal government, taxpayers of the country, were going to be asked to make up this money, that really is outrageous.

KING: So how do you feel as a Democrat? Outrageous the way this money is being spent. It's $700 billion in that, probably more as we go forward. $825 billion in the stimulus plan, perhaps more as we go forward. How concerned are you that these problems are pretty profound and these things are going to take time to turn around? That in the midterm elections of the Obama presidency, Republicans will say Democrats spent $700 billion here, more than $800 billion there. The economy is still in the tank. The unemployment rate is 8 or 9 percent. Hold the Democrats accountable. That's a tough (inaudible) message.

CONRAD: Yes, look, but let's remember the history. The $700 billion was approved under the previous president. The $800 billion of economic recovery fund, I think economists of almost every stripe -- and I've had many of them before the Budget Committee, Republicans, Democrats, conservatives, progressives, they've all delivered the same message. In fact, we just had Martin Feldstein, who was Ronald Reagan's chief economic adviser, come before the Budget Committee this week and say this package is not enough. Conservative, Republican, chief economic adviser to Ronald Reagan saying this package is not big enough.

KING: How big? How big?

CONRAD: I don't think anybody knows. I mean, if we're just honest with people, we're in uncharted territory. We've never been in a circumstance quite like this one before, where you have not only an economic slowdown, but the financial sector locking up. That's the point I don't think can be lost here.

We've got to make certain that, yes, there's a robust economic recovery package. I think the president is going in precisely the right direction there. But that also, we have enough resources to give lift to the financial sector and that we deal with housing foreclosures.

We have a circumstance now where one in 10 houses in America are behind in their payments or under foreclosure. One in five are upside down. That is they owe more than their house is worth. That is a continuing crisis that has never been dealt with adequately, and we've got to make certain in these two packages, second half of TARP and the economic recovery plan, that there are sufficient resources to deal effectively with the housing crisis and with the -- our financial institutions.

KING: A lot of money. We'll keep our eye on it as these debates go forward. Budget Committee Chairman Kent Conrad, thanks so much for your time today on "State of the Union."

KING: And up next, the man Barack Obama calls "the unsung hero of the campaign," a rare interview with Obama campaign manager David Plouffe. That's next on "State of the Union." (COMMERCIAL BREAK)

KING: He's the man Barack Obama singled out for high praise on election night.


OBAMA: To my campaign manager, David Plouffe...


... the unsung hero of this campaign, who built the best -- the best political campaign, I think, in the history of the United States of America.


KING: Earlier here, at "State of the Union," we sat down and talked politics with David Plouffe, Barack Obama's campaign manager.


KING: For two-plus years, you're in the war room, throughout the campaign, in all the big meetings. I want to get your perspective now, from the outside looking in, your impressions of the first week and the changes between a candidate and a president.

PLOUFFE: Well, I think it's been just an outstanding week for the president and the country.

I think many of the things he talked about in the campaign were beginning to see manifested itself here: a recovery plan that's really focused on the middle class and small businesses, but doesn't put aside the hard choices in energy and health care that are going to help us create jobs today, but are going to be the engines of growth tomorrow; making government more open and accessible; rebuilding that trust with the American people.

So I think it's been a terrific week.

KING: Look at our latest poll: 78 percent of the American people have a favorable opinion of the new president. That's a great blessing, but does it also put you on a perch of such high expectations that you think, how can we meet these?

PLOUFFE: Well, I don't think you're going to see the administration paying too much attention to polls, day-to-day, at all. But I think the American people are very realistic about the challenges we face. They're sober about them. They realize it's going to take a long time to dig us out of this economic hole.

In many respects, they don't want it to go too fast. They want a slow, steady recovery, and I think they're going to give the president time.

KING: One of his central promises was to change the way this town does business. And with great fanfare, on his first full day in office, President Obama pulled the senior White House staff together, announced their pay would be frozen. And he also signed some orders imposing what he said were the strictest rules in history to limit the revolving door, lobbyists coming in and out of government.

Let's listen to the president for a second.


OBAMA: These steps are aimed at establishing firm rules of the road for my administration and all who serve in it, and to help restore that faith in government without which we cannot deliver the changes we were sent here to make.


KING: And yet, within 48 hours, we learned that his choice to be the number two at the Pentagon, William Lynn, a former lobbyist for Raytheon, gets a waiver.

How can you say, all who serve in my administration will have to abide by these rules, and then in your first week of office, say, except this guy?

PLOUFFE: Well, as we said during the campaign, no standard is perfect, and you retain the right to make exceptions. He is uniquely qualified in a critical position in government.

But I'd like to focus on not that one exception, but the general rule. These are the most far-reaching ethical reforms we've ever seen in Washington. No one who works in that administration, including Mr. Lynn, can then leave and lobby the administration.

It was, I think, a remarkably far-reaching set of proposals, and I think it's going to rebuild trust.

KING: But an example like that can help undermine it. It gives your opponents, your critics to say, look, he didn't really mean it. That's the same old Washington that he promised to change.

When you say that one exemption, is that it, or will there be more exemptions as we go forward?

PLOUFFE: Well, I'm not in the government, as you know. But I think what the American people are going to focus on is the large standard, and I think they realize that there can be an exception from time to time.

But that has never happened before. A president has never said that no one who works in his administration can then go out and lobby it. And that's a fundamental change in the way this town works, and it's desperately needed.

KING: I want to take you over -- as we continue the questions, I'm going to walk you over to the map here and bring it up. Because your new job, outside of government, is to use the grassroots network. You have at your disposal 13 million e-mail addresses, 4 million cell phones that you can text-message, 2 million active volunteers.

You had them to do this, which was quite extraordinary, 53 percent of the vote turning. And I just want to show your viewers quickly, if they don't remember this from the campaign, look at these blue states out here in the West. If you go back in time, that was how -- those were Bush states before; they are Obama states now.

The question is, from outside of government, how do you keep this stimulus debate that's going through Congress -- and you had some people saying, no, Mr. President; we don't like that spending -- how are you going to use that to move the map out in the states, as this happens, and will you use that money -- Kent Conrad will be on this program a bit later.

He is the Budget Committee chairman. He says he wants to help the new president, but he doesn't like some of the things in this bill.

John Kerry, a chairman in the Congress from a blue state, Massachusetts, says he doesn't like some things in this bill.

Will you use that network against Democrats during these policy debates?

PLOUFFE: It's a nice-looking map, first of all...

KING: Thank you. We like it.

PLOUFFE: ... the blue.


But I think that, first of all, I think it's a little bit misunderstood. What we're trying to do is to -- we have found that millions of Americans were part of the campaign, and our hopes is millions that weren't, who may agree with the president on an issue like energy or health care, want to get involved in building support, educating, having conversations. It's going to be great for democracy if these debates aren't just Washington-centered, if, in states and communities all across the country, people are talking to their neighbors and their colleagues and their family members about energy and health care and economy.

And so we look at this as a way to connect people to their democracy, a way to build public support. But it's, I think -- the notion that somehow this is going to be a weapon aimed at individual members of Congress misses the purpose.

KING: You ordered a postmortem on the campaign, and from that comes Organizing for America, this new project of yours. Five hundred pages -- is that about right, in this postmortem?


PLOUFFE: Well, a lot of data to look at.

KING: And so my understanding of it -- my copy must have been lost in the mail; I haven't received it yet. But my understanding, from talking to some people, is that you've identified pretty distinct groups from the election, and there are Democrats and then there are Obama Democrats, new voters who came to play and participate because of their affinity for Barack Obama, not necessarily the Democratic Party.

As you go forward, how do you bring them into the Democratic fold?

Or do you worry -- you leave that to the next guy to worry about and you worry about Barack Obama?

PLOUFFE: Well, it's a good question. If you look at our support, we had a lot of people who hadn't volunteered before. Half of the people who contributed and volunteered for our campaign had never done so before -- a remarkable statistic; a lot of independents and Republicans.

PLOUFFE: So Organizing for America, the work they are going to be doing does not have an electoral aim in mind. It is to build support out there for these issues, and, again, connect America to these debates in Washington. So my great hope is that someone who didn't even help us in '08 and who may not vote for us in 2012 says, you know what, but on energy, I agree with where President Obama is trying to lead the country, I am going to pitch in, in my community. We do want this to be a very open entity.


KING: Up next, President Obama may have ordered that torture be banned and Guantanamo closed, but are these actions going to make Americans less safe? We'll look at this from both sides, with two men who have been involved in this debate for years.

And then Republican Congressman Mike Pence has the last word this Sunday. Straight ahead on "State of the Union."


KING: I'm John King and this is "State of the Union." Here are some stories breaking today. The Vatican is going wireless, with a new channel on Youtube. Pope Benedict XVI expressed hope today the new channel could be the source of spiritual enrichment.

The Israeli government today approved a measure that would give legal protections to its military officers if they're accused of war crimes during the recent Gaza conflict. Israeli Prime Minister Ehud Olmert says his country will fully back those who acted in Israel's behalf.

And federal investigators say there is evidence that the U.S. Airways flight that crash-landed in New York's Hudson River hit a, quote, "soft body." The pilot said the plane hit a flock of birds shortly after takeoff on January 15th. All passengers and crew members survived that crash.

One of President Obama's first executive actions was to sign orders that reversed the detainee policies established by President Bush. Now major political and logistical questions remain. Helping me search for answers, two men who have had key roles in these terror policies. In Seattle, Washington, is retired Lieutenant Commander Charlie Swift. As a naval attorney, he defended Osama bin Laden's driver, Salim Hamdan, before the Supreme Court, and he won. And in Charlottesville, Virginia, is Douglas Feith. He was the undersecretary of defense for President George W. Bush, and he helped shape the administration's terrorism policies. Gentlemen, thank you both for joining us.

I want to begin with the basic question. And Doug Feith, I want to start with you. The president has issued this executive order. He says Guantanamo will close in a year. And if you listen in Washington, there are many saying, even who support that decision saying, but what next? Where will all these detainees go and what shape will the trials take place as we go? Is this a decision, Doug Feith, that you see as making Americans safer or more at risk?

FEITH: I don't think that it's much more than a symbolic decision. The real issue is whether -- whether we can make sure that the extremely dangerous people that were holding at Guantanamo can continue to be held so they don't engage in terrorism in the future. And the real problem is that we have some people there who -- for whom we can't provide trials through any of the existing legal systems. But they're much too dangerous to release. We have information about them that is considered good national security information, but it's not the kind of information that would allow you to establish guilt beyond a reasonable doubt in a court of law. Because our military, of course, doesn't operate the way law enforcement officials operate domestically in gathering evidence.

KING: Well, Charlie Swift, what do you make to that point? And as, perhaps, imperfect as Guantanamo might have been, does Doug have a point in saying that if you close it down, you're ultimately might end up with some people, very dangerous people out on the streets?

CHARLIE SWIFT, FORMER NAVAL DEFENSE ATTORNEY: Actually, that's not what Mr. Feith said. Mr. Feith said that we still have a problem determining detention.

Remember, the Supreme Court this summer in Boumediene ruled that all detainees have habeas rights. So whether they're in Guantanamo or they are in Kansas, they have habeas rights.

Guantanamo is an extraordinary debilitory (ph) symbol in the United States and the United States' standing on the world community. Closing it makes good sense.

The most difficult question, and for those watching -- KSM, Khalid Sheikh Mohamed, he's not going to be let go. He's going to be found guilty in either a federal trial or a military court-martial.

There are these, quote/unquote, hard cases, that lie somewhere between being able to establish it in a court of law and very strong intelligence information that they should be detained. How they're going to be handled, whether in a habeas system or a national security court, is what's still being studied. And that's why the Obama administration asked for a 120-day time-out.

KING: I want you both to listen to this sound from Senator John McCain on "Larry King" Thursday night. He agreed, they both in the campaign -- both McCain and Obama said they wanted to close Gitmo, but Senator McCain thinks that Obama is going in reverse order, not putting in place what comes next before he says he's going to close it down. Let's listen.


MCCAIN: We should have, in my view, continued these military commissions, which were finally after years of delay and obfuscation, we were moving forward with the military commissions, with some of these trials.

So the easy part, in all due respect, is to say we're going to close Guantanamo. Then we, I think I would have said where they were going to be taken.


KING: Where are they going to be taken, Charlie Swift? And you heard many politicians, including the House speaker this morning, say not Alcatraz. Is that part of the plan in place? Where do they go?

SWIFT: The Pentagon had several different plans that they put together. I think in putting -- in saying that we're going to close it now was required to create the political will to pick a place and to work on foreign options for returning a lot of detainees or holding them in another country.

To Senator McCain's point on the military commissions, a person who agreed with him was Khalid Sheikh Mohamed. One thing that was absolutely smart to do was shut down those military commissions, because you were going to get conviction that did not have credence. Khalid Sheikh Mohamed understands that to be a martyr, he would rather be convicted in a military commission than a federal court, which is going to have legitimacy worldwide.

And so, I disagree completely with the senator on stopping the military commissions. They weren't a solution in the process.

Finding the political -- final answer on where we can detain everyone in the United States is probably the most difficult part. But until you absolutely put a timetable in place, no one is going to step up.

KING: No one is going to step up. And Doug Feith, as that debate continues, are you concerned? KING: You made the point earlier some of this evidence, the reason these people are being held, is gathered through the intelligence channels. And some of it is stuff that the CIA is simply -- or the Defense Intelligence Agency is just simply not comfortable going into a federal court and saying, your honor, here's the evidence. They think it would compromise sources and methods. If that is the case, what is the risk that somebody who is a terrorist or at least there's a credible proof that he or she is a terrorist will be let go because the CIA doesn't want to have that public trial in a federal court?

FEITH: Well, I think that there is a risk. We've already seen some of people that we've released. I know there is a debate over the numbers. But some of the people that we've released over the recent years on the basis of judgments that the government made that they were not a risk.

We later found went back to terrorism and there's a balancing of risks always in this operation. I think one of the main things that should come across here from what Mr. Swift said and from what I said is that there's a world of difference between being a critic of government policy and actually having government responsibility.

And what we see with the Obama administration is that some of the fairly simple criticisms that were leveled against the Bush administration turn out to actually have some validity. And when President Obama came in, he started -- and he's done it with the way he's proceeded so far -- he started to recognize that the Bush administration was facing real dilemmas here and was trying to balance a whole bunch of considerations relating to civil liberties and security. And these are extremely difficult questions.

And the reason the Obama administration has not come up with the plan of what it's going to do with these extremely dangerous people at Guantanamo is because it's a hard problem. And it was a hard problem in the Bush administration. It's a hard problem for the Obama administration. And I think that one of the things the American public can learn out of this is that a lot of the criticisms that were leveled against the Bush administration were really overly simplistic efforts to basically score political points by emphasizing only one piece of the problem rather than the full set of considerations that policymakers have to balance.

KING: Charlie Swift, I want you to counter that if you want. But first, I want you to listen to Vice President Cheney because as Doug makes the case and defends most of the policies, the vice president on his way out also was very clear saying that, look, this is controversial. But he thinks necessary and it kept Americans safe. Let's listen.


DICK CHENEY, FORMER VICE PRESIDENT: Very few times, when it was necessary, I think it produced good results. I think there are Americans alive today because we used that technique on those three individuals. (END VIDEO CLIP)

KING: Speaking about controversial interrogation tactics like water boarding. Charlie Swift, is he right? Are there Americans alive today because the Bush administration used these controversial tactics?

SWIFT: Who knows? See, that's the problem. No evidence is brought forth or said that everything that was learned is so secret that we can't tell you.

And that's one of the other parts of the Obama executive order that is critical. He's asking for a complete look into the interrogation methods, what happened and what was seen. Part of this, the real problems with Guantanamo was a lack of transparency. We're right. You have to trust us. And every time the administration turned out to be wrong, and they were wrong many times, then that trust was lowered each time that happened.

So from the standpoint of whether my personal belief is it's very unlikely that enhanced interrogation techniques really produced a great deal of actionable intelligence. But that's a belief. That's not an informed opinion based on all of the evidence. We have to wait and see. And, you know, one of the things that I am looking forward to in an Obama administration is a much more open way of looking at these issues rather than simply throwing out slogans.

KING: Doug Feith, we're short on time. But as you look at this new administration and some of its decisions trouble you, what are you looking for next in this debate for you to get a comfort level of I may disagree with the decision but at least I believe they're weighing these issues seriously? What's the next test?

FEITH: My sense is they are weighing them seriously. I think that, as I said, it's quite clear that the -- that President Obama has recognized that there are serious security problems involved here. This is not simply a matter of establishing, you know, civil liberties issues. It's a balancing of very important civil liberties issues against security issues.

I think the administration has an interest as Mr. Swift says in being as transparent as possible, so did the Bush administration. Reasonable people can differ about how those balances get struck. But I think this administration is going to have to take very seriously the security issues and they're going to realize that this is a problem that is not as simple as it was suggested during the campaign that it was.

KING: We'll continue to watch this development, this issue as it develops over the next several months. Douglas Feith and Charlie Swift, thanks so much for sharing your thoughts today.

And next, my exclusive interview with the New York Mayor Michael Bloomberg. You'll want to hear his questions about the new president's management experience. STATE OF THE UNION will be right back. (COMMERCIAL BREAK)

KING: The struggling economy is on everyone's mind. And few politicians have a better handle on it than the New York Mayor Michael Bloomberg. He is a former CEO of a multibillion dollar company and has Wall Street as part of his constituency. I had the chance to sit down with the mayor at City Hall. We talked about the challenges ahead for the economy and the new president.


KING: You're the CEO of a large and sometimes difficult to manage city.


KING: Before that you were a very successful CEO in the corporate world. Barack Obama has never been a chief executive. Only watching the first week unfold before us, but just what do you make of the man, when you watch how he makes decisions and who he's assembled around him?

BLOOMBERG: Well, the first thing he has to do is put together a great team. And what he has done that impresses me is he's reached out, different political persuasions, different ages, different levels of experience.

I think the reason that New York City has done well, or at least people seem happy with the mayor, is not me, but I've picked the best and the brightest.

Would it be better if he had more management experience? Yes, I suppose so. He's learning on the job. But you know, virtually everybody that comes into being president of the United States learns on the job. There is no other comparable job.

Only when you are running for re-election have you -- can you say to the public, "I know what it's about; I know I can do it, and I've demonstrated I can do it."

KING: You have spoken quite passionately and forcefully about what you call a crisis of confidence...

BLOOMBERG: Yes. KING: ... in the economy. Can just having a new president -- there's enormous goodwill for him. His approval ratings are off the charts. Any politician would love to have them.

BLOOMBERG: Sure. But keep in mind that George W. Bush had a 90 percent approval rating at one point.

KING: At one point. So, just having sky-high approval ratings and a new boss in Washington, a new president in Washington, is that enough to deal with the crisis of confidence?

BLOOMBERG: No, it's not enough, but it helps. I think people are optimistic. They're looking for leadership. Of course, now he has to deliver. He ran on a campaign of change. And people say, well, sometimes he wasn't as explicit as to what those changes would be. And I've said, look, cut the guy some slack. The problems that he's going to face once he's president are not the problems that the country faced when he was campaigning. You don't know what the next when you look around that corner, you don't know what you're going to find.

But I do think that it is a crisis of confidence. I do think the public wants to think that somebody's in charge. What is going to get the public to spend again? To invest again? To be expansive and to take risks again? It is not sending them a check. I'm not so sure I wouldn't vote to send them the check if I were in Congress, but I'm not so sure that I'd rush to do it either.

What this country needs to see is that we have a government that is addressing the key problems. And even if those problems have little to do with the economy, it sets that tone.

KING: The American people don't like this $700 billion bailout plan. They seem to have the belief that it is -- the first $350 billion, anyway, is money that went to the big banks, went to Wall Street, and has not flowed back to them, as they thought it was supposed to.

Barack Obama gets to spend the other $350 billion. If the phone rang and he said, Mr. Mayor? Mike, help me out. What would you do differently? What would it be?

BLOOMBERG: Well, number one, I don't think it's fair to criticize. I know the public does think, incidentally, the $350 billion just went to a bunch of rich banks. But until you get the banking system stabilized, you can't do anything else. So, it's unfortunate we're in that situation. I know it doesn't make good theater. It isn't good, a populist thing. But I think Paulson was right, and Geithner was a big part of that process. And Geithner is now the secretary of Treasury -- or will be approved as soon -- and he's a very competent guy. I know he and Hank very well. They're New Yorkers.

So, the first $350 was not misspent. I think the government probably could have done a better job of promising.

But you remember, it thinks the world was coming apart. We were having brokerage firms and banks going belly up every day. The market was gyrating up and down 5 percent a day. They didn't have a lot of time to do things, and everybody was screaming, do it now, do it now, do it now. And then afterwards come back and say, you should have taken more time, you should have explained it. Come on, let's be fair.

I think if the president called me and said, what to do? I would focus on a handful of things that are doable and affordable, I think, and really would address the problem. Number one, Mr. President, you have got to be the leader on those issues that I just enumerated -- education, crime, immigration, health, terrorism, those kinds of things. Number two, if we're going to make investments, you have to first open up the municipal market, the municipal bond market. Municipalities won't build bridges to nowhere if it is their own money. They know what's needed. Building infrastructure has to get down to the level of where the rubber meets the road. Even -- clearly the case in roads, but in everything.

KING: Do you have the confidence, spending $825, $850 billion, some say they'll have to do more than that, that the Congress and the new president understand that at the level you're talking about, or do you think they're just going to spend money?

BLOOMBERG: You'll have to ask them. I think the politics are just spend money, that's sad (ph). I think if you ask Larry Summers, and Tim Geithner, there are some very smart people in government, and they'll have their views. But you'll certainly get a diverse range of views as to how effective these stimulus packages are. I am sort of of the mind that you don't send checks out to everyone. You have to pick and choose.

KING: It sounds to me like you believe, or at least you're deeply worried that they're going to take a grab bag approach to this, as opposed to a strategic approach to this.

BLOOMBERG: Well, I don't think there is any question they're going to do that. When they approved TARP, a friend of mine said to me, that was just outrageous that they added on, I think it was like $150 billion of member items, or earmarks, whatever they called it. Every legislative body has a different term. And I said, I was just thrilled it was that small a percentage. Usually, you have to bribe them with more.


KING: Up next, leading Republican Congressman Mike Pence has the last word. "State of the Union" will be right back.


KING: This morning, 40 newsmakers, analysts and reporters hit the Sunday morning talk show circuit, but only one gets to have the last word. That honor this Sunday goes to Republican Congressman Mike Pence of Indiana. Thank you, Congressman, for joining us on "State of the Union."

PENCE: Good morning, John.

KING: You're a fiscal conservative, from a conservative state, where Barack Obama actually did pretty well this time. Surprised a lot of people out in Indiana.

I want to ask you about this stimulus bill making its way through the House right now.

PENCE: Right. KING: The Congressional Budget Office says it's $825, $850 billion total. The CBO says only about $135, $136 billion designated for infrastructure will actually be spent quickly, that a lot of the spending is down the road. Number one, can you support this package as it is? And number two, do you think even if you can't support it, is there enough in there to actually create jobs in the short term?

PENCE: Well, I think that's the right focus, John, is -- I mean, this is intended to be temporary and have an immediate impact to create jobs in America. And I think what the American people are starting to see is that the Democrat plan is to engage in a kind of slow and wasteful and predictable big government spending that simply is not going to put America back to work.

Republicans came forward this week, had a chance on Friday to talk to the president about it, our leaders did, that would lay out a series of fast-acting tax relief measures that would bring growth and opportunity to working families, small businesses, family farms. We think that's what we ought to be doing. And I think there's great concern now that as this bill is scheduled to move to the floor on Wednesday, that we don't have the kind of legislation that is really going to create jobs in America.

KING: Let me stop you on that for a second. Because you say, you know, you met the president personally. He sought you out Tuesday, on inauguration day, at the lunch at the Capitol. He came around the back to find you and say hello. There was a meeting Friday at the White House. And he is coming to speak to your House Republican Conference on Tuesday.

PENCE: That's right.

KING: Then on Wednesday, this bill will go to the floor. As of now, is it fair to say that Republicans, House Republicans feel they have had pretty much zero input?

PENCE: Well, I think, you know, look, I take the president at his word. I think he -- I did have a chance to chat with him, my wife and I did, on Tuesday, immediately after his inauguration. And he in that moment, without, you know, betraying a private conversation, he expressed his desire to have a dialogue and to hear Republican ideas.

But the difference between what I think is the sincere intention of President Obama and what Speaker Nancy Pelosi and the Democrats are doing on Capitol Hill, which is, you know, moving forward through committees last week, what is as the Washington Post said this morning a lot of very predictable, big government spending that may have some merit down the road. But it's not stimulus for the most part.

KING: And, yet -- let me stop you for one second. And, yet, Nancy Pelosi says she's more than open to Republican ideas. Let's listen to what the speaker said this morning.


PELOSI: It will take some. We'll judge them by their ability to create jobs, to do -- to help turn the economy around, to stabilize the economy. And to see how much they cost. But we're open to them and we'll review them. It all has to be done right away because our bill has to come to the floor this week.


KING: We're open to them. We'll review them. Is the speaker being disingenuous there? Has she been open to them so far?

PENCE: I have a lot of respect for the speaker of the House. But I think she also said this morning on another network that, you know, about Republican ideas. It doesn't mean they didn't have an opportunity to vote on a stimulus bill. Bipartisanship should mean more than having the opportunity to vote on Democrat bills.

I mean the process, I think, the American people want to see us accomplish here is one where we're taking the best ideas from the party that won the majority, from the administration and from the minority that represents, you know, some 100 million Americans who are bringing them together. That's not what is happening here.

But, you know, I don't want to get lost in process. The American people know we cannot borrow and spend and bail our way back to a growing economy. The choice that they're faced with here is a Republican proposal that would provide fast acting tax relief for working families and small businesses versus the slow and wasteful big government spending bill that will not put America back to work.

KING: Quickly on another subject. We have less than a minute. But Obama plans fast action to tighten financial rules. This is to go after the market where the collapse of Wall Street. Is regulation the answer?

PENCE: Some regulation will be the answer. There is some financial instruments that were not regulated as securities that certainly are now and should be further.

But the end of the day, you know, Republicans again oppose the balance of sending this -- the next $350 in the banking bailout because what we really need to do here in a very real sense is pursue policies that will get this economy growing again.

We simply cannot continue to borrow billions of dollars from our children and grandchildren and bail out every failing business and every failing bank in America.

KING: But you don't have the votes to stop it?

PENCE: We don't have the votes to stop it now. But John, I always tell my colleagues, a minority in Congress plus the American people equals a majority. So we're going to take our case for tax relief versus slow and wasteful government spending to the American people this week. We'll take it to the president when he comes by our conference on Tuesday and we'll see where it goes from here.

KING: We need to leave it there for now. But we appreciate you joining us for the last word. Congressman Mike Pence, thank you. Remember, if you missed any STATE OF THE UNION, you can catch it tonight at 8:00 p.m. Eastern. Please stay with us.


KING: We're going to end our broadcast today with a single, very personal viewpoint. It's new day, a short film completed only yesterday by, the singer/actor and committed supporter of Barack Obama. These are his opinions, his emotions, what he saw and felt as the new president was sworn into office. This is the film's debut, exclusively on CNN.


UNKNOWN: Congratulations, Mr. President.

WILL.I.AM, SINGER: I was there. The whole world was there to see Barack Obama become the 44th president of the United States of America, they came from miles to witness history. Poor people, rich people, famous people, we, the people. We were there, connected like never before, united like never before. America, graduated and now we celebrate because we woke up. We celebrate because we stood up and we pushed for change and it changed at the dawn of the new day. And now here we are. Wow! A king stood on these steps. And now his dream is a reality.

The people's voices are now heard. The glass ceiling is now lifted. And we will fly into new era knowing all is possible. No obstacle will stand in our way. We are connected. We are one. Yes, we are. Just look what we've done. We made Obama our president. We know what else needs to be changed.

So let's keep pushing for proper education. Let's keep pushing. Let's help fix the nation. It's going to take us all, together. Beautiful.


KING: We'll be here again next Sunday and every Sunday at 9 a.m. Eastern for the first and last word in Sunday talk. Tune in tonight at 8:00 p.m. Eastern for another hour of STATE OF THE UNION. Until then, I'm John King in Washington. Thanks for sharing your day with us.

"The best of back story" is up next for our international viewers. For our North American viewers, "FAREED ZAKARIA: GPS" starts right now.