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Interview With David Axelrod

Aired June 7, 2009 - 09:00   ET


KING: I'm John King. This is our STATE OF THE UNION report for this Sunday, June 7th.

President Obama is putting his promise of a new beginning with the Islamic world to a quick test, dispatching a special envoy to try to get Israeli and the Palestinians to revive peace talks. Arabs praise Mr. Obama's tough criticism of Israeli settlements. Will it strain ties with a critical U.S. ally? We'll hear from the president's top adviser David Axelrod.

America's unemployment rate hit a 26-year high in May. The numbers include potentially positive signs as job losses appear to be slowing. Three mayors from towns where major General Motors plants are about to close are here talk about the recession's toll on the America's cities.

And we'll head out to Las Vegas, ground zero of the nation's housing crisis where some are benefiting from lower prices, but others see a threat to their financial and their personal safety.

We begin today with the president's overseas trip and the ambitious domestic agenda awaiting the president as he returns today from overseas. The trip was five days in all. The president traveling from the United States first to Riyadh, Saudi Arabia, then it was on to Cairo, Egypt, where he delivered his major address to the Muslim world. The president then moved on to Europe.

Dresden, Germany, he visited a Nazi concentration camp, final stop of the trip was here in France, the president visiting Paris, also up to Normandy for the 65th anniversary of the D-Day landing. The trip ended in Paris, which is where this morning we find the president's senior adviser David Axelrod.

David, I want to begin first with the moment. With a new president, we are still seeing many things for the first time. He walked the hallowed grounds of the American cemetery near Normandy. It is a remarkable place, it is a sobering place. I'm wondering if he shared his reflections with you on being the commander-in-chief walking that ground? AXELROD: Well, look, I think there's an enormous sense of pride that he felt representing the United States of America. It's such an extraordinary, inspiring story of what happened on those cliffs off the beaches of Normandy.

And when you stand there and contemplate it, look at those at that cemetery, consider the valor of kids who were barely shaving and, yet, they saved -- they saved the world from the scourge of Nazism and fascism.

And so I think he felt all of that and he felt very, very proud to stand there as the president of the United States. It was particularly emotional for him because his uncle Charlie was there who helped liberate the Buchenwald concentration camp.

And Charlie, I think, reminded him about his grandfather who served and came across those beaches in Normandy, and an uncle -- another great uncle. So, you know, it was -- it was an extraordinary day for him and one I know he'll never forget.

KING: While there in Paris he announced that Senator George Mitchell, his special envoy to the Middle East, will be going back to the region this week to talk to the Israelis, to talk to the Palestinians.

What is the goal of this trip? Because many speak of the peace process but there really is no process. The Israelis and the Palestinians have not been at the table negotiating in earnest for some time. Is that the goal, to get them back to the table in the near future?

AXELROD: Well, certainly we want to get them back talking to each other. And I think there is a recognition -- a broad recognition in the region that there needs to be progress. One of the great heartening things about the president's speech in Cairo is the enormously positive reaction it generated across the region and around the world.

And from both Israel and the Arab world, we saw positive responses. And when the president talked to leaders in the region and here in Europe, I mean, there's just such a hunger for this process to move forward.

So the hope is that Senator Mitchell can get that -- can get -- can make some progress next week on his visit.

KING: Let's focus on the president's speech in Cairo. Public reactions were overwhelmingly positive, but there was a bit of grumbling from Israelis privately and from some in the American Jewish community back here. Not so much at what the president said, but that where he said it.

I want to listen to one line from the president's speech that raised some eyebrows, and it concerns his calling on Israel to stop building settlements. Let's listen.


PRESIDENT BARACK OBAMA: Israelis must acknowledge that just as Israeli's right to exist cannot be denied, neither can Palestine's. The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop.


KING: The interesting thing to some, David Axelrod, is that the president said that Cairo, Egypt, a major Arab capital, and the speech was, of course, covered around the Arab and Muslim world. He said a similar thing in the Oval Office last week with President Mahmoud Abbas of the Palestinian Authority.

And many Israelis are asking that you know, you should know that Netanyahu's government in Israel is so fragile that if he did that now, if he stopped the settlements now, his government might collapse.

And so they ask the question, why do you keep pushing?

AXELROD: Well, because these are agreements that the Israelis have made in the past. Palestinians have made agreements in the past that they have not observed. And the president's point in that speech is that everybody has to step up now and meet their responsibilities, because the prospect of generations more bloodshed, of generations, more suffering is something no one -- no one should accept.

And I must say that the reason the speech was well-received is because it was very candid and it was very clear, and he was very clear to the Palestinians, clear to the Israelis. He was very clear to the Arab world and he was very clear about what our responsibilities are and have been.

And I think that kind of candor clears away some of the debris that has stood in the way of progress. And our hope is now we can take advantage of that.

One thing I would say, John, is one of the most heartening statements came from Shimon Peres, the president of Israel who called the speech "brave and courageous" and praised the president for his leadership. I think that was an encouraging statement.

KING: But are you asking then to continue the candor? If Mr. Netanyahu's coalition would not allow him to stop settlements, would not allow him to sit down with the Palestinians and start talking about the difficult choices, land for peace, should Mr. Netanyahu then either challenge his own ministers or should he try to form a new government?

AXELROD: John, look, the president is very -- has been very clear that he understands that there are enormous difficulties, enormous difficulties for Prime Minister Netanyahu, enormous difficulties for President Abbas in this process. It's laden with difficulties and he understands the politics of it. But the stakes are so enormous, enormous for Israel, for the region. You know, Israel is our greatest ally in the region.

We have bonds that are not just strategic, but bonds of the heart with Israel, and we care deeply about its security and we want peace to come so Israel can live in peace, in secure borders and -- but that's not going to come without people stepping up and -- and challenging the prevailing politics on both sides, and the president is urging them to do that. KING: Let's focus on something else in the president's speech in Cairo. It is not uncommon, it is considered fair game to be harshly critical of your predecessor here within the borders of the United States, that's how American politics are played. It is rare, though, for a president of the United States standing in the world stage to be so critical of his predecessor.

President Obama quite critical of George W. Bush. Let's listen.


OBAMA: Unlike Afghanistan, Iraq was a war of choice that provoked strong differences in my country and around the world. Just as America can never tolerate violence by extremists, we must never alter or forget our principles.

9/11 was an enormous trauma to our country. The fear and anger that it provoked was understandable. But, in some cases, it led us to act contrary to our traditions and our ideals. We are taking concrete actions to change course.


KING: Why, David Axelrod, did the president feel it was important, so important that he would essentially say George W. Bush launched a war of choice and that George W. Bush tortured people?

AXELROD: Well, John, I think that it's important to make clear that he didn't point a finger at George W. Bush and he didn't offer those observations to make a political point. He offered them to report candidly on the history of the last few years that is well- understood and well-known.

And I think that kind of -- you can't be candid about other people's actions and responsibilities and not your own. It wasn't meant to criticize any one person. It was meant to -- it was meant to discuss in an open and honest way where we've been in order to, as I said, clear away the debris so we can move forward.

And I think it was important that he do so.

KING: It was obviously the centerpiece of the trip, a big speech. When a president, any politician closes the books and walks off-stage, he has a feeling for the room, he has a feeling for whether he met the bar he had set for himself in advance. What did he tell you in private about how he thought it went?

AXELROD: Well, I think he was very happy after the speech. You know, he worked very hard on the speech. He was still tinkering with the speech on his way -- on his way to Cairo. So he really knew how important the speech was and he wanted it to reflect exactly his thinking and I think he achieved that.

He was pleased with the response. The audience was engaged and he appreciated that and he felt that he said what needed to be said. And so I know him well. I've been with him for a long time. AXELROD: Whenever he can say, you know, I said what I wanted to say, he walks away satisfied. And he was very, very happy with this particular speech.

KING: And how does he respond to those who say he has been on an apology tour, going around the world apologizing for the United States' actions in the past?

AXELROD: I think that they didn't pay attention to this speech or any of the speeches that he's making, because embedded in this speech was a very strong -- a strong explanation -- explication of who we are and what we're all about, about our values as a country and our history as a country.

John, the whole point that he made was there are stereotypes of the Muslim world that have been -- that have grown up because of a small group of extremists who have been -- who have been used to define the entire Muslim world. And he said by the same token, America has been stereotyped in a way that bears no resemblance to who we are. So I think he made a strong statement for our country there.

KING: David Axelrod, we're going to ask you to stand by. We need to sneak in a quick break here, but when we return, we will talk to David about the president's crowded domestic agenda, rising unemployment, a complicated and expensive health care debate, and a confirmation of a Supreme Court justice. Stay with us.


KING: Let's continue our conversation with the president's senior adviser, David Axelrod. He is in Paris at the end of the president's overseas trip.

David, I want to focus on the nomination fight to confirm Judge Sonia Sotomayor. A week ago on this program, the debate had been defined early by her statement -- you know it well -- where she said, "I would hope that a wise Latina woman, with the richness of her experiences, would more often than not reach a better conclusion than a white male who hasn't lived that life."

Now, the president of the United States said last week that she was sure she would like to restate that. You used the words and Robert Gibbs, the press secretary, used -- said that she had made a poor choice of words, and if she could rewrite that speech, she would do it differently. But in the materials you submitted, the White House submitted to the Senate, if you go back through prior speeches, prior comments, we have found at least a half dozen times where she has used that language.

So a poor choice of words many are saying has happened repeatedly, and critics are saying this shows poor judgment, not a poor choice of words.

AXELROD: Well, first of all, John, I don't think that the words in those speeches were all precisely that language that the president was referring to. But the point she was making and the point the president made about the point she was making is that we're all the sum total of our experiences and you bring those experiences with you to the bench. It's the same point that Justice Ginsburg and Justice Alito have made.

And I think that the debate is kind of a diversion from her 17- year record as a judge. As you and I have talked about before, no one has come to this point, being appointed to the Supreme Court, with more experience on the bench than Judge Sotomayor does now, in 100 years. No one has had the combination of being a big-city prosecutor, an international commercial litigator, a trial court judge and an appeals court judge. Her opinions are widely quoted. She is widely respected as a judge. So I think those who oppose her nomination would like to create a side debate by taking her words out of context.

I think the American people, however, are going to look at the -- at her life, at her record, and I think the Senate will as well when the time comes to vote.

KING: Was the president aware of the time she used similar language, though, when he said it was a poor choice of words?

AXELROD: I don't know whether the president was aware or not, but he certainly is now. I don't think it's changed -- changed his view on that.

But the interesting thing is I think that the Senate was aware of it when they confirmed her for the U.S. court of appeals, because some of those speeches occurred before her confirmation in 1998.

So, again, I think this is a kind of a side show. The fact is that there is nothing in her record that reflects anything but fairness and fidelity to the law, and I think that's what we want in a U.S. Supreme Court justice.

KING: As we await the scheduling of the confirmation hearings, most Republicans say they view it as unlikely, almost impossible that there would be a filibuster. But the Senate Republican leader, Mitch McConnell, is not ruling that out, in part, he says, because of a standard set by then Senator Barack Obama. Let's listen.


SEN. MITCH MCCONNELL, R-KY., SENATE MINORITY LEADER: The Democrats firmly established the principle with seven filibusters against this outstanding Hispanic American, that filibusters of judges are the precedent in the Senate. So it can be done. The question is, will it be done? I think it's entirely too early to tell. The president himself filibustered, as you pointed out, in the first segment, Justice Alito. So I think the precedent is firmly established.


KING: Do you see any circumstances in which the Republicans might filibuster your nominee, and what would the president's reaction be if they said we're doing this, sir, because you did it? AXELROD: Well, the question isn't whether it could be done. It's whether it should be done. Based on her record, it plainly should not. She has been confirmed twice by this same United States Senate, once unanimously, another with strong bipartisan support. And what I hear Senator McConnell saying is that for political retribution, that there might be a filibuster, and that would be a shame. I don't think that's -- with the serious issues that are facing this country and facing the court, I don't think Americans have much of an appetite for that.

Look at her record. Make a judgment on her record. Her record is outstanding. She is a great American story. She is someone everyone can be proud of and everyone can have faith in. They ought to confirm her.

KING: While the president was overseas, the government announced that the unemployment rate last month went up to 9.4 percent. Almost 3 million jobs have been lost since the president took office in January of 2009. 2.1 million of those jobs have been lost since the stimulus bill passed. As you know, there's a debate in Washington. Some believe we need more stimulation, more money pumped into the economy. Where does the White House stand on that question?

AXELROD: Well, John, first of all, let me point out that when the president -- when the stimulus package passed earlier this year, the president said it was going to take some time for it to filter through the system, and that employment was the last thing that was going to respond. It's the nature -- it's the economics of this.

One of the hopeful signs among very bad news in this past week is that far fewer jobs were lost last month than the month before. In fact, far fewer jobs than were anticipated.

AXELROD: And, hopefully, that is a sign that this is turning.

And while it's going to take some time for these unemployment numbers to turn around, for the momentum to completely stop and turn in the other direction, it feels as if we're moving. And the stimulus package now is -- is not nearly done. It's just really at its beginnings. That is the way the money is distributed.

So let's see how this stimulus package works before we begin talking about whether there is need for another.

KING: Also just at its beginning is the health care reform debate, a top priority of the president. He says it must be done this year. Senator Kennedy has distributed a draft of his bill. There are other proposals in the Congress that include a mandate, essentially a requirement that Americans get health insurance.

During the campaign, the campaign you helped run, then-Senator Obama distributed this brochure against Hillary Clinton. I'm holding it up for our viewers. I know you can't see it. But he criticized the mandate going on in this brochure to say that the mandate would punish families who can't afford health insurance. But the White House now says it is open to that. Is that true? Something the president thought was bad in the campaign is possible now?

AXELROD: Well, i think if you look at the president's comments during the campaign, what he said was that he felt that a mandate, without making health care affordable, was something that he did not want to do.

Any health reform has to be geared toward reducing the cost of health care for people and making health care affordable. And certainly if there were such a mandate, it would have to have provisions to help those who can't afford it get health care.

But the real thrust of health reform has to be to reduce costs. The cost is crushing families, businesses, and the federal government and state governments as well, state and local governments. We have to bring down the cost of health care.

If we do that, and make it affordable, people are going to buy it, mandate or no mandate. People want health care.

KING: And one more question on how we pay for this. During the campaign, Senator McCain proposed taxing the health insurance benefit that most Americans receive from their employers and the Obama campaign, again, a campaign you ran, launched this ad criticizing that proposal.


(UNKNOWN): John McCain: taxing health benefits, cutting Medicare. We can't afford John McCain.

OBAMA: I'm Barack Obama and I approve this message.


KING: But if you listen now, David, to the chief Democrats in the Senate writing this legislation, they say they have been told by the White House that you don't like doing it that way but that you're open to it. Is that fair?

AXELROD: Well, I was in the meeting when the president met with the Senate Democrats and what he -- and he made a very strong case for the proposal that he put on the table, which is to cap deductions for high income Americans.

And he urged them to go back and look at that. He said, I'm not -- you know, everybody ought to put their ideas on the table. I'm not foreclosing anything, but I really think my idea is the best.

Now, people may have drawn -- they can draw whatever conclusions they want from this, but the president believes that is the best approach. He was critical of the other approach. He has concerns about it. And that's a discussion we're going to have to have moving forward. KING: I want to close our conversation by asking you to take us inside the great pyramids of Egypt. The president is on a tour of the great pyramids. He is dressed casually and something on the wall catches his attention. He is shown it by the guide and he is noting the big ears and he calls over David Axelrod and Rahm Emanuel and says, look at this. What was the president telling you?

AXELROD: Right. He said, who does that look like? He said, it's me. And I have to confess that the ears were a giveaway, it really did look like him. I was wondering whether someone chiseled that in there in honor of our visit, but apparently this was done some thousands of years ago.

So kind of interesting. We didn't know what to make of it. But our guide said that he thinks the president might be descendant from King Tut. So we'll see. We have no proof of that. We're not claiming that. But -- and I think perhaps he says that to all the visiting dignitaries.

But the ears were unmistakable, I must say.

KING: We will go back and retrace the family tree. David Axelrod, thanks so much for joining us on STATE OF THE UNION from Paris today. Have a safe trip home.


KING: We just heard from the president's right-hand man. Next, we'll go into America and talk with three mayors whose communities are being hard-hit by this punishing recession. Stay with us.


KING: I'm John King, and this is STATE OF THE UNION. Here are stories breaking this Sunday morning. President Obama is heading back home after wrapping up a five-day trip to the Middle East and Europe. Before leaving Paris today, the president did some sight-seeing with his wife and daughters. The first family the visited the Pompidou Center, a landmark art museum.

Israeli Prime Minister Benjamin Netanyahu says he will deliver a major policy speech next week laying out his plan for Israeli's peace and security. The speech follows President Obama's address to the Muslim world. The president endorsed a two-state solution between the Israelis and the Palestinians and said he does not accept the legitimacy of continued Israeli settlements in the West Bank.

French and Brazilian crews searching again today for more evidence of the doomed Air France Flight 447. Yesterday crews pulled two bodies from the Atlantic. They are being taken ashore for identification. The plane was heading from -- to Paris from Rio de Janeiro nearly a week ago when it disappeared with 228 people on board.

That and more ahead on STATE OF THE UNION. Before we get to our next guest, we want to give you a snapshot of the big economic news this week to help put that conversation into context. This is a graph here showing job losses. If you go back nine months ago to last September, 321,000 jobs lost in the economy back then.

Look at the steady increase to the peak, 742,000 jobs lost in January of this year. And then slight decreases every month since, 345,000 jobs lost in May, the government reported on Friday.

Some see that as encouraging news because it is a lower number than the months previously. But the jobs may be falling at a slower -- being lost at slower pace. This is the unemployment snapshot, September of last year and follow it over nine months from 6.2 percent up on a steady climb, 9.4 percent now the unemployment rate in the United States.

We're going to get next three mayors on the front line of this, but we want to first do this to help put this into context. Here is a map of the country. This is where General Motors has plants in the United States. And you see one down here just south of the border in Mexico.

But this is what General Motors announced as it filed for bankruptcy. The red dots are the 14 plants that will be closed or idle as GM goes through a painful bankruptcy restructuring plan.

One other point we want to get to. It also has announced it is closing -- these are 300 dealerships we know will be closed by General Motors as part of the restructuring. And there are hundreds more at risk across the country.

KING: The gold dots. Other dealers that potentially will be closed as we await the final details of this plan.

Which brings us to the conversation we want to have now with three mayors on the front lines: Mayors Michael Dinwiddie of Spring Hill, Tennessee; Michael Brown of Flint, Michigan; and James Baker of Wilmington, Delaware.

Gentlemen, thank you for joining us. The thing you share in common is the painful news this past week that General Motors will close or idle a plant in your community.

I want to start with you, Mayor Brown. In Flint, Michigan, a town that has already suffered through the recession -- Michigan has the highest unemployment rate -- a simple question to you first and then for your colleagues. Bad news for your town this week, but are you convinced, as some in Washington are, that we've hit bottom and that things are about to get better or do you see more pain coming?

BROWN: Well, certainly, as we make budget decisions, it feels like we're in quicksand at times. But even the news this week was good for us, in a way, because we had two plants identified that were globally competitive -- our truck plant and our Flint Engine South plant -- and they have survived and become part of the new G.M. So that's good news for Flint.

The Flint North site we expected would close, but, as you say, we've been experiencing this recession for 25 years in Flint, so we're really the epicenter of this crisis.

KING: And, Mayor Baker in Wilmington, Delaware, do you see any irony -- the vice president is from your state, and your plant gets closed, while there's a G.M. plant, say, in Kentucky -- the Senate Republican leader, Mitch McConnell, lives there. He opposes any money going to G.M. for a bailout, but he gets to keep his plant. Any irony in that?

BAKER: Well, I don't know about the irony. We've known for some time that there has been talk about closing the plant. We also have the Chrysler.

Actually, the plant is in Newark. It's not in Wilmington, Delaware, precisely, but it affects our whole area.

So I don't -- I just think the restructuring was coming and it was necessary. It hurts us because, obviously, we have a lot of people who work at G.M. and -- and Chrysler, and it affects us very much.

But the governor and others are not giving up totally. They will begin immediately to work on maybe solutions as to alternatives. So it's not a total loss yet; we're -- we're still fighting.

KING: Mayor Dinwiddie, yours is the smallest of these communities I'm mentioning, and the Spring Hill plant was the Saturn plant. It was supposed to be the new G.M. back in the day. Then it was building Chevy Traverses. Now it is idle. There's a possibility G.M. will keep that plant open. It may choose your community for the new small car manufacturing plant.

What is that competition like? How do you convince G.M., build those new cars in your community, not somewhere else?

DINWIDDIE: Well, I think if you look at the Spring Hill plant and you look at what it can do, and the fact that they just put a billion dollars' worth of improvements into that plant roughly a year- and-a-half ago, it is the most technologically advanced plant in the country, in all of North America, in fact.

So I think if -- if G.M. looks at this strictly from a business standpoint, they're going to -- they're going to have to realize that that plant is a very valuable asset to them.

KING: And, gentlemen, again, let's stay in the same order. We'll go to Flint first. Do you think -- does the government belong in the car business, the government making these decisions, and talking about people involved from the White House and the Treasury Department about which plant should be closed, which dealership should be closed? Is that the right role for the federal government?

BROWN: Well, certainly, somebody had to do something. I mean, you know, this is kind of a -- this isn't just about the auto industry, you know? The credit markets dried up. We've got a housing industry in crisis. And, certainly, the federal government had to do something here.

I think, from our point of view, we're just glad somebody is listening. And we had Dr. Ed Montgomery in town. We put together a plan for Flint, calling together stakeholders. We submitted that plan, and we believe they're listening. So that's positive.

Now, obviously, we want G.M. to be running their own business as we go forward, but I think there was no alternative at this point in time, as far as I'm concerned.

KING: There's been a bit of a dustup, Mayor Baker, here in Washington. A lot of the car dealers who are being told they're being shut down, whether they're from G.M. or Chrysler, are complaining that this is not being handled right and that many of them say, "Hey, I'm profitable. I could be helping G.M. or helping Chrysler." Is the government handling that part of the equation right?

BAKER: Well, I don't know if it's just the government themselves. I think we're talking about just looking at the whole industry and -- and this company and what must be done.

I agree with the mayor from Flint that thank God the government got involved, because what we're seeing is just a stack of cards or a domino effect where things have just gone awry. And we're all suffering; we're all trying to deal with loss of revenues. I mean, it was just like our revenues went off the cliff.

Well, if we don't do something, it's only going to get worse. And I know there's people that don't want to see the government involved, and you get that dumb argument down there in Washington about the conservatives and the liberals and all that. Who needs it? We need the country working together on our problems.

So, you know, I'm not condemning the government. They didn't create the problem. So we've got to get this thing straightened out.

KING: Mayor -- Mayor Dinwiddie, follow up on that point, because we have a lot of arguments here in Washington that apparently look pretty dumb to the mayors out there in America.

Is what Washington is doing -- I want to talk to you after a commercial break we're going to take in a moment about the specifics in your cities. But in terms of the auto industry, is what's happening in Washington, does it make sense? Does it work in the real world?

DINWIDDIE: Well, I've got to agree with both my colleagues here. And I don't think this is a Republican issue or a Democrat issue. I think the worse thing that we could possibly do is turn this into a political battle. This is an American issue.

We have thousands, hundreds of thousands of American lives at stake. American families are going to be suffering. And we have got to -- we have all got to come together. This is not just a city-by- city issue; this is a nationwide issue.

And if we continue to see an exodus of our jobs market going to other countries that -- that have different forms of government than we have that that we can't, quite frankly, compete with, because it's not on a level playing field, we are going to see -- I think the state of our nation is going to decline as we move forward.

So I think that we need to do everything possible to come together and solve these issues now.

KING: I want to ask all three of you gentlemen to stand by. We'll be right back, continue our conversation with the mayors, including their thoughts on whether they're starting to get the federal stimulus money. Stay with us.


KING: We continue our conversation now with three mayors on the front lines of this recession. Michael Dinwiddie is the mayor of Spring Hill, Tennessee; Mayor Michael Brown in Flint, Michigan; and Mayor James Baker of Wilmington, Delaware.

KING: Gentlemen, I want to ask you about the impact of the stimulus program. And as I do so, first, I just want to beam into each of your states. Delaware is supposed to get 11,000 jobs saved or created -- that's what the Obama administration believes -- from the stimulus plan and almost $400 million in funding there.

Let's zoom out the map and come on over and pull out Tennessee. Tennessee in all is supposed to get 70,000 jobs in this equation and about $2.3 million in total funding.

And, lastly, up here to the state of Michigan, up here -- we'll pull this out and take a look. Oops, I'm in the wrong state. You go to Wisconsin when you're supposed to go to Michigan, and that's what happens. Here's Michigan right here. Let me pull that out and slide that over, 109,000 jobs in Michigan, about $4 million. The larger -- larger state, obviously, gets more money.

Let me start in Delaware. Mayor, are you seeing this stimulus money? And what is it doing to help you when you have to make decisions? You mentioned your revenues are down; that means you have to maybe close schools or lay off teachers or lay off policemen and firefighters. How is it helping you? Or is it not getting there fast enough?

BAKER: Well, the stimulus money doesn't go directly into our budget. It helps us in other ways. For example, in our housing area, we've got stimulus money. In our public works area, we've got stimulus money. We're applying for all of the different grants.

We're doing very good with the energy and the weatherization money so that we plan to work with the DuPont company. And we already have a big contract with Honeywell to do some energy stuff.

But as for our bottom-line budget, the stimulus package doesn't really touch it, so it's put us in a position where the council and I have had to work together on, what do we do? We've asked our employees not to take raises next year and not have layoffs, and we're still trying to deal with that, because I don't think people really understand.

Everybody thinks you can cut your way out of this. Well, you can't. We've had to raise property taxes. We have to raise all of our fees to just stay above water.

So, in the sense of really helping our bottom line, that doesn't happen, but it has helped us in terms of creating the ability to address economic development, infrastructure needs, and energy needs.

KING: Well, Mayor Brown, let me follow -- I want you in on this conversation -- and follow on that point. If it's not meeting those bottom-line concerns in the short term, the things you need most urgently now to stop from having to lay off policemen or firefighters or teachers -- is it, though well intentioned, is it perhaps not structured right to help you at the city level?

BROWN: No, I wouldn't say that. I think that this is a massive program. Jobs are certainly the number-one issue.

When you look at transportation dollars coming into the state, those are shovel-ready projects. It's going to get people to work right away. So that's positive.

We also have competitive grants for police and fire. What we've -- we've asked is some flexibility in that, especially for the fire grants, because the restrictions in the past have really prohibited us.

So, again, we talked to Dr. Montgomery about talking to Department of Justice about looking at the criteria around those grants, but just making sure that communities like ours can be competitive, because, certainly, 60 percent of our general fund budget is police and fire. It's public safety. And we need support, and we need it right away.

Now, what we're hopeful is that that will come in the first quarter of this year. So that's good news.

I think the other thing for us is that, with G.M. leaving, we've got 1,400 acres of brown field where 80,000 people one time worked for General Motors. Now we're down to about 7,500 jobs. We need to redevelop those properties. And we believe the stimulus dollars, through whether it's Department of Energy or whether it's EPA, they can help us with redevelopment of that.

That's going to create jobs for the future, help us expand our tax base. That's why this is an important program, this recovery program for America. And we appreciate, again, the Obama administration putting it together.

KING: Well, Mayor Dinwiddie, I want to bring you into the conversation. As I do so, a chance to maybe work out the kinks in these programs would come at your mayor's conference meeting that you have every year, but the Obama administration is not sending its delegation. The vice president is not going; several members of the cabinet not going because of a labor dispute in the city of Providence, where the meeting is being held.

Mayor Cicilline is having a fight with the firefighters union. They are going to have pickets outside that meeting. So the administration says, to respect the labor unions' pickets, it won't send its delegation.

Does that hurt the cause? Do you need eyeball time with these senior administration officials to say, "Thanks for the help you've sent, and here's how you can maybe do it a little better"?

DINWIDDIE: Oh, I think it's -- I think it's very important for us to have face time with these officials. I'll invite anybody in Washington. I'll invite the president himself to come down to Spring Hill and talk to us.

I know that a lot of this money coming into the state is going to help the -- the city of Spring Hill, but that's going to be funneled in probably by -- by Governor Bredesen, who's -- who, in my opinion, is probably the Michael Jordan of businessmen in the state. I think he's going to help us get through this.

But, yes, if -- if the president or his task force or anybody wants to come down to -- to Spring Hill, my arms are wide open.

KING: Gentlemen, I want to thank you all for coming in today. One of the things we try to do on this program is get out of Washington and touch America. You are on the front lines making the tough decisions, and we appreciate it. Mayor Dinwiddie, Mayor Brown, Mayor Baker, thanks for joining us this morning.

(UNKNOWN): Thanks for having us.

(UNKNOWN): Thank you.

KING: Gentlemen, take care, and good luck.

And, next, we'll head out to Las Vegas. A flood of foreclosures to some means a chance to finally own a home of their own, but to others it means a crumbling of what was once a cherished community.


KING: When we get out in the country, more often than not, the issue we're focused on in recent months, weeks and days has been the economy. That's our focus this week, as well. You just heard the mayors talking about the stresses of the economy. Let's look at some of the numbers.

Every three months, 250,000 families in the United States, 250,000 every three months enter foreclosure. Let's keep heading west. We'll see even more. This is another strain, especially as we enter into the summer months. The price of gas is up now to $2.60 a gallon. That's up 27 percent in the past seven-and-a-half weeks, not $4, where it was a year or so ago, but still up 27 percent just in the past seven-and-a- half weeks.

If you keep coming across -- this is a big one for many workers, used to work a 40-hour week. More and more now, businesses, instead of laying people off, are cutting back on the number of hours by their workers. They cut back the largest since 1975.

And if you continue and you move out, one of the places we have visited is Nevada, because it has a -- national unemployment rate is 9.4 percent, but in Nevada, it is 10.6 percent. It is running higher; that means there are fewer jobs. Another problem is, fewer jobs means less money in the pocket, meaning people have fallen behind on their mortgages.

KING: The foreclosure crisis and the housing crisis is redefining how and where people live.


KING (voice-over): To some, this is the sound of recovery, new homes being finished on the outskirts of Las Vegas. A few doors down, Donald Leffert and Robin Eddy Leffert (ph) are moving in, excited to own their first home.

D. LEFFERT: It was pre-wired for stuff, you know, networking. It was in a location we wanted. There was very little that needs to be done.

R. LEFFERT: Ta-da!

KING: And the price was right. Two years ago, this house sold for $400,000, but now on the market for $179,000.

D. LEFFERT: Everything else on the paper is the exact same. The only different is the date and the price.

KING: Las Vegas is ground zero in the nation's housing crisis. More inventory means lower prices.

(on-screen): Had the market not gone down significantly here, would you guys be able to afford this?

D. LEFFERT: This particular house? No.


D. LEFFERT: No. We would have been able to afford a house, just not this house.

R. LEFFERT: And not a decent house.

D. LEFFERT: And not a decent house. And there's another walk-in closet over here.

R. LEFFERT: Closet over there.

KING (voice-over): Though Donald and Robin (ph) are mindful, their gain, although someone else's foreclosure. R. LEFFERT: It is pretty sad when you think about the people who have lost their home. You can't go into a house thinking of it being someone's house or someone's home; you have to think of it as a new experience.

KING: The bank-owned signs are all over town, so many of them that real estate firms offer foreclosure bus tours.

(UNKNOWN): We're looking for a bargain. We may move from Florida to Las Vegas.

KING: Some agents do see some hopeful signs, like more offers of late.

(UNKNOWN): And if you hear the doorbell ring, that means that you just bought the property and we have left, OK? All right. Let's go.

KING: Neal Williams also sees evidence of profound change for the worse.

WILLIAMS: I've sat in my upstairs window and watched kids trying to break into a house next door.

KING: Williams says a wave of foreclosure has dramatically changed the streets he picked 14 years ago with his children in mind.

WILLIAMS: Just a nice neighborhood, a lot of -- a lot of comfortable people to be around, enjoy the nights like tonight, beautiful night, walk around, and walk down the street, and say, "Hi," and talk to people.

KING: No more. Someone recently threw a rock through one of the windows, and Williams plans to add cameras to these security lights. And he doesn't oil the gate on purpose.

WILLIAMS: This is my infamous squeaky gate that is one of my alarms.

KING: Williams says renters have moved into some of the foreclosed homes and the sense of community has collapsed, yards in disrepair, trash in the streets, graffiti and crime.

WILLIAMS: There was a shooting just recently a couple doors down. There's -- we've been robbed on several occasions.

I'm impressed, buddy.

I love my son. In one of his classes, he has a gang member. I go shooting once in a while, and he asked my son, Thomas, to steal my guns and knives out of my house and give it to him. KING: Adding to the fear and frustration is the financial price. He keeps current on his mortgage, but his home's value has collapsed.

WILLIAMS: I'm really scared to look. I know it's gone down quite a bit. My wife says more than half; I honestly don't know.

KING: His neighbor of six months is moving at a big loss because of the rising crime. But Williams is, for now, adding security systems, but holding firm.

WILLIAMS: Do I want to put up with the embarrassment of people saying, "You look like you live in a prison"? Yes, I'll deal with that embarrassment, but I know that I'm safer. I'm a stubborn son of a gun. This is my house. This is where I'm staying.


KING: Our thanks for Neal Williams, stubborn son of a gun is right. We wish him the best.

As you know, one of our goals is to get out of Washington as often as we can. We travel from New York to Nevada and a whole lot of states in between. But where should we go next? You can e-mail us at Tell us why we should come to your community.

We want to say goodbye to our international audience for this hour. But up next, for viewers here in the United States, a new book details some potentially tough years for the marriage of Michelle and Barack Obama. Howie Kurtz sits down with the author next.


KING: I'm John King. This is our "State of the Union" report for this Sunday, June 7th.

Was President Obama's speech in Cairo hyped out of proportion by the press? And if so, how will that affect the hard work that lies ahead? In our "Reliable Sources" hour, Howie Kurtz will break it down with three top journalists.

Should a television host who repeatedly called an abortion doctor a, quote, "killer" be held responsible when the doctor is gunned down? Commentators Bill Press and Kathleen Parker examine the line between free speech and accountability.

And this week in Washington, President Obama faces rising unemployment, a battle for health care, and a Supreme Court nomination battle. The best political team on television previews the domestic challenges ahead, all coming up on this Sunday's "State of the Union."