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Aired July 26, 2009 - 11:00   ET


KING: I'm John King and this is STATE OF THE UNION.


KING (voice-over): It's 11:00 a.m. Eastern, time for STATE OF THE UNION's "Sound of Sunday." Twenty-five government officials, politicians, and analysts have had their say. The president's top adviser and secretary of state. The speaker of the House, the Senate GOP leader, and a rebellious Blue Dog Democrat.

We watch the Sunday shows you don't have to. We break it all down with Marc Morial, the head of the National Urban League, CNN contributors Bill Bennett, Paul Begala, and Alex Castellanos, and the best political team on television.

STATE OF THE UNION "Sound of Sunday" for July 26th.


KING: Stark evidence this Sunday of the political divide over health care. Right here on STATE OF THE UNION, the speaker of the House confidently predicts Democrats will overcome their internal disagreements. But the Senate's top Republican sounds equally confident the debate is moving his way.


KING: Are you worried your family is coming apart on this and that you might not...

PELOSI: Absolutely not.

KING: ... have the votes on the floor?

PELOSI: Absolutely, positively not. When I...

KING: You have the votes?

PELOSI: ... take this bill to the floor, it will win.

MCCONNELL: They pay for it by cutting doctors, cutting hospitals, and raising taxes on small business. Those are very difficult pay-fors, and they are having a hard time selling it to their own members. The only thing bipartisan about the measures so far is the opposition to them.


KING: Also this Sunday, tough words from nation's top diplomats. Secretary of State Hillary Clinton says Iran has no choice but to scale back its nuclear program.


HILLARY CLINTON, SECRETARY OF STATE: What we want to do is to send a message to whoever is making these decisions that if you're pursuing nuclear weapons for the purpose of intimidating, projecting your power, we're not going to let that happen. First, we're going to do everything we can to prevent you from ever getting a nuclear weapon, but your pursuit is futile.


KING: "Calibrated his words poorly" is how the president described his prime time criticism that police acted stupidly in arresting an African-American scholar. Not quite sorry, but the White House hopes the president's second take, why it's an emotional debate about race.


DAVID AXELROD, SENIOR ADVISER TO THE PRESIDENT: And what he was concerned about was that his poor choice of words helped push the debate in the wrong direction and he wanted to get it back on track. And I think he did do that.


KING: A picture of the White House there on a Sunday morning, the last Sunday in July. And as you can see, we've been watching all of the other Sunday shows so maybe you don't have to. Joining me to break this all down, Democratic strategist and CNN political contributor Paul Begala, Republican strategist and CNN political contributor Alex Castellanos, CNN political contributor and radio talk show host Bill Bennett, and Marc Morial who is the president and CEO of the National Urban League.

Marc, let me start with you. Welcome to the program. You just heard David Axelrod, after a rough few days for the president, saying he believes the second statement Friday in the briefing room saying that he wished he had chosen different words in that prime time news conference put us back on track. Is this debate over?

MARC MORIAL, PRES. & CEO, NATIONAL URBAN LEAGUE: It's not over, but what's important is what constructive steps can be taken. And I think there are two. One would be to embrace the end racial profiling act, which was actually introduced almost a decade ago, which is slated to be reintroduced by Congressman Conyers and Senator Feingold, which would set a strong national policy along with data collection points.

The second is, is perhaps the attorney general and the Civil Rights Division of the Justice Department might convene civil rights groups, police organizations, the International Association of Chiefs of Police, I think we need a dialogue that is at the community level in order to try to indicate and demonstrate that we can move forward in a united way to deal with the underlying issue of that of I think fairness and police community relations.

So I think that constructive steps beyond the debate that the nation should consider taking.

KING: Bill, what do you see as the next move here, next step?

BILL BENNETT, CNN POLITICAL CONTRIBUTOR: Well, I guess they are going have a beer at the White House, the president has backed off from his ridiculous statement at the press conference. And, of course, Sergeant Crowley has shown himself to be an exemplary police officer.

I hope if we get to so-called teachable moments and underlying issues, we'll get to some real problems. There obviously are wayward cops, not in this case, but let's talk about the fact that young black men in this country grow up 75 percent of the them without fathers.

And if we talk about crime in America, let's remember that 4 percent of American citizens are black males, but they are 35 percent of murder victims. This doesn't come from the police. These are big and serious problems and I think this whole issue has obscured those more serious problems because of the ego of a Harvard professor.

KING: I want to bring Paul and Alex into the conversation. But, Marc, let me go back to you on that point first. The president in one breath said he didn't know facts, and then a short time later said the police acted stupidly.

A partner of this police officer, who is an African-American police officer, says race played no role in this incident. You raised points and legitimate policy points and cultural societal points that may need to be discussed. But can you connect them to this incident or did the president make a mistake?

MORIAL: Well, I don't think the president made a mistake. He may have and I think he admitted that he used poor words in describing his reaction. But this issue is not an issue of words. It's an issue of the relationship between police and communities all across this nation, and disparities in arrests, disparities in searches are well- documented.

We don't have the 911 tape. We don't know the overall background of the Cambridge police. What we do know is that this very distinguished Harvard professor, one of the nation's great scholars, was involved in this confrontation and an incident.

What's noteworthy to me is how quickly the charges were dropped. How quickly the charges were dropped. But I think that it's so, so important that we recognize that just discussing it and saying if the discussion goes away, the issue goes away.

No, I think there's a chance to take strong steps and that's why I urge that national legislation that was introduced a decade ago be revived. And I think it's a chance for there to be a bipartisan coalition to pass that legislation.

KING: All right. Let's -- I want to go back in time with you two gentlemen and bring you into the conversation, but I want to go back to precisely what the president said because both of you have worked for political candidates.

Paul, you worked in the White House in the Clinton days. I want to go back, it's a prime time news conference. The president is talking mostly about health care, frankly, not advancing the ball all that much because there's such sensitive negotiations going on.

At the very end a Chicago reporter he knows very well asked him about this incident and the president says this.


OBAMA: I don't know, not having been there and not seeing all the facts, what role race played in that. But I think it's fair to say, number one, any of us would be pretty angry. Number two, that the Cambridge police acted stupidly in arresting somebody when there was already proof that they were in their own home.


KING: Now, Paul, what's going through your mind at that moment if you're David Axelrod, Rahm Emanuel, a member of the White House staff, you're at the last question of this news conference and you know it, health care is your focus, your top priority and you know as he's speaking those words, he's the first African-American president, he knows anything he says about race is going to be magnified enormously, what goes through your mind?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Right. I think you start to worry, is this going to get us off message? And you're sitting there, and, well, but then again. I mean, who wouldn't be angry? Cops come into your home, you prove that it's your home, they arrest you anyway? For what crime? For mouthing off to a cop? For being understandably angry?

I think what happened to Dr. Gates is an outrage. You compound that by the fact that Dr. Gates, in addition to being a great scholar, is a friend of the president's. And so as an aide, you kind of worry that it might take us off.

But these guys are human, these presidents. You know, they...

KING: He's human.

BEGALA: He's human. He spoke as a human being. I think he gave voice to what most people would have felt, which is it is outrageous to drag a man out of his home in handcuffs who has proved that he committed no crime.

But, when you're the president, and you're there... UNIDENTIFIED MALE: Nobody was dragged, nobody was dragged.

BEGALA: He was hauled, excuse me. And by the way, if we're going to start arresting Harvard professors, which could be a very good idea, we might have to start with Professor...



BEGALA: ... Castellanos here, maybe Professor Bennett. I mean, Skip Gates would be way down the list of Harvard professors that I would arrest.

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: I think that's the real issue here, though. He's not just a regular American, he is president of the United States and he put kerosene on a fire here instead of using his authority and his office to tamp things down.

Barack Obama won this election because he took America in a better place, a place where we had put a lot of racial division and polarization behind us. At least he offered us the hope of that. In one moment he took us back.

Now to his credit -- by the way, that's not good for Democrats, that's not good for Republicans or anybody. To his credit, let's give him a thumbs up here, he backed off of that. And he said, look, let's all get together, have a beer at the White House, try to put it behind us.

KING: But let me ask you, this is a bald political question, but you're a Republican ad man. In the next campaign, will Republicans run an ad against this president in white working class areas saying, first he said he didn't know the facts, then he said the cops were stupid?

CASTELLANOS: There's a story here about recklessness. This is a young president who is, one, taking on every single problem in -- you know, at the same time, who has got a health care plan and every other plan that is spending recklessly, and who now responds recklessly to questions.

So I think the story you might see next election is an impetuous, reckless young president who says ready, aim...


MORIAL: There is nothing -- there is nothing...

KING: Marc, then Bill. Go ahead, Marc.

MORIAL: Reckless is a spin word. And the president admitted that he made a poor choice of words. But you know, it's easy to get into a discussion about the president's statements and "who shot John." But I think that it is very important that at the community level, where people live and work every single day, that the relationship between the police and the community is very important. And I can tell you that when the police -- when the community has distrust for the police, it makes the police and their efforts to deter crime much more difficult. So that's why I think that while "who shot John" and the politics is interesting and makes good headlines, I hope that we take the next step and the next step is to try to seriously deal with this.

And I would point out that in his first State of the Union speech...

BENNETT: Let me say something.

MORIAL: ... former President George Bush said that he wanted to take a strong step against racial profiling, 9/11 occurred, the nation went in another direction. So I think there is and there has been a strong support for doing something about the underlying issue.


KING: Bill, you have been waiting patiently. Go ahead.

BENNETT: Yes, John, look, there was no racial profiling here, OK? They were called to this house. They went into the house because of a reported break in. But if you want to talk about the relationship between police and community, then I hope Professor Gates has -- examines his conscience, because the abusive and bigoted things that were said in this case, were said by Professor Gates to this police officer.

When you say, do you know who you're messing with, this is not the cry of a victim. When you say, go outside and see your mama, if the police officer had said something like that to Gates, the police officer would be hanging by his toes.

That kind of arrogant, class-based superiority is what needs to be examined here as well.


BENNETT: And they backed off -- the White House backed off completely on this because they were getting shelled. The opinion polls were coming in and they knew that they were on the wrong side of this.

CASTELLANOS: And wouldn't it have been better, John, if the president said first what he said second, which is, let's all have a beer together? Wouldn't it have been better if the president of the United States had said, you know, maybe there's a silver lining in this and that is that we may have come to the great day where someone can be arrested for being a jerk regardless of your race.

Maybe that's where we are. Now, maybe whether he should have or shouldn't have been...

MORIAL: We don't arrest people...


CASTELLANOS: Well, you know what, that's a fair debate. Maybe the police overreached. Maybe they didn't. But what if it wasn't racial? And why did we respond that way first?


BEGALA: But maybe this -- in addition to class is a regional element here. Apparently Sergeant Crowley has...

BENNETT: But we know that Gates overreached.

BEGALA: Apparently -- I don't think so at all. Let me tell you something, I don't think so at all. Mr. Gates is a citizen. Sergeant Crowley is a cop, he has a gun. He's responsible to keep himself under control in a way, frankly, ordinary citizens are not. He has a higher duty, Sergeant Crowley.

BENNETT: He was under control.

BEGALA: But what's interesting, he...


BENNETT: He was under control.

BEGALA: He had no business of arresting the man. That's why they dropped the charges immediately. There was no case -- there was no criminal case...

BENNETT: Nonsense.

BEGALA: ... against Dr. Gates. But what I find interesting is this, it's a little human interest.


BENNETT: That's a separate decision.

BEGALA: Sergeant Crowley, when the president called him and invited him in for a beer...

BENNETT: You often arrest to cool down the situation.

BEGALA: I don't think arrest...

MORIAL: No, Bill, that's not why you arrest...


BEGALA: Arresting someone isn't cool...


BENNETT: You often arrest to get control of the situation.

MORIAL: That is a per se illegal arrest to cut -- to arrest someone...

BENNETT: Nonsense.

MORIAL: ... to cool down the situation.


BEGALA: You arrest someone only because there is probable cause...

MORIAL: You arrest somebody...

BEGALA: ... that he committed a crime.


BEGALA: Excuse me for being a lawyer here, but you don't arrest someone to calm them down.


CASTELLANOS: It's the most powerful weapon the police have to show authority. It's the respect we have for authority.

BENNETT: The black officer...


KING: Yes, quickly, then I'm going to take this one back over. Here we go.

BEGALA: Officer Crowley asked the president, when the president said, will you come in for a beer, what kind of beer do you drink? Sergeant Crowley said, Blue Moon. Now maybe that's a Cambridge thing. That's a hand-crafted, very elite beer. That's not a Houston cop. We would be drinking Shiner Bock back home in Houston. But so there is sort of a Cambridge -- is that what they drink up there?


KING: Well, across the river in Dorchester, where I grew up, we tend to be more Budweiser guys. Or maybe when we're upscale, we go Sam Adams. All right. I'm going to call a quick time out. A quick time out. We'll come back. We're going to take a quick time out, we'll be right back with our panel. STATE OF THE UNION will be right back.


KING: We're back with CNN contributors Paul Begala, Alex Castellanos, and Bill Bennett, and National Urban League President Marc Morial.

Before the break, gentlemen, we were very feisty, to say the least, and at times testy about this. So I want to try to reset this about the president and the Gates controversy. And, Marc, I want to go to you first, because I think part of the issue here is that -- and I want you to play along with me here, let's assume that Bill Bennett is exactly right about what happened on the scene -- I know you don't think that, but let's just go along with me here.

That if Bill Bennett is exactly right and it is Professor Gates whose language perhaps first escalated this, help us understand, I'm a white man asking you this question, that the sensitivity to this issue that clearly got under the president's skin and clearly has, if you have conversations and I was on the road this week talking to African- Americans, and they were also fired up about this even though many of them conceded, I'm not sure what happened.

But an African-American in his own neighborhood and in this case in his own home, why?

MORIAL: Because he was in his own house and it could have easily been determined by viewing his ID that he was in his own home. And normal procedure would have been for the police officer to leave, not to arrest someone for disorderly conduct, even if the citizen got agitated, excited.

Police officers are taught -- I know very, very well, they are taught to deal with the fact that sometimes citizens are going to be upset, they are going to be agitated, they are going to be jarred when they have a confrontation with the police, especially if they have never had a confrontation with the police before.

So when it turned into not just the police responding to a call, but an actual arrest taking place, and then to add to that the disorderly conduct charges which were 24 hours later dropped, that's what you're talking about.

So any citizen in this situation where the call and the police going out is not really the issue so much as what happened after the police officer arrived at the scene. So I think that it could have been handled in a very different way and it's easy to turn it into what Officer Crowley said or what Dr. Gates said and whose side you're on.

But at the end of the day, an arrest took place. My view is that the arrest should not have taken place and that the police officer could have handled it in a different way.

KING: Well, then let me try it this way. Paul, you were talking about this earlier, and pretty much consistent with what Marc was saying. Let me argue it a different way. What if Sergeant Crowley thought the language was abusive and getting out of control, you mentioned he has a higher authority. Citizens also have the responsibility to respect authority, especially a man with a badge. And is there any -- can you see a scenario where the sergeant thought, you know, the best thing I have to do here is a circuit- breaker and the only one available to me now is to exercise my authority and then dropping the charges the next day is the responsible way to say, look, we didn't want an incident to begin with, let's just move on. BEGALA: No. Circuit-breaker, I think Marc is right, he was the mayor of a big city where they had a lot of police controversies. And the circuit-breaker is the 180 degree turn. The cop ascertains that no crime has taken effect. The citizen is angry, probably using some strong language.

But it's the cop who then has to be the circuit-breaker by saying, well, I'm sorry you're upset, but we were doing our job. They were right to go and investigate that. The cops were absolutely right to go and investigate.

KING: And if I'm a young man, black or white, 15 years old, standing 10 feet away watching that, is it my lesson that I can scream at a cop and he has to walk away?

BEGALA: Let me tell you, I grew up in Texas where cops did not turn and walk away, believe me. And I'm teaching my kids to respect those cops. But I make my living criticizing the government. Bill Bennett makes his living criticizing the government. We don't want to have a law that says you can't mouth off to authority -- to governmental authority or Bill and I would be out of work.

CASTELLANOS: But sometimes you have to because the most powerful weapon that the police have to protect us is not a gun, it's our respect for their authority. And when that -- when we undermine them, when we throw that away, all they have left is force and the gun. And we don't -- none of us want to abuse that.

That's why it's important to respect that authority and that's why sometimes police have to take action and arrest people...


KING: Hold on, Marc. Hold on, hold on. I'll let you back in, Marc. I want to give Bill a chance.

BENNETT: Yes, John, a thin blue line here. Paul was impugning me -- my reputation earlier by saying I taught at Harvard. He's right. I did teach at Harvard.


BENNETT: But I also worked with the police department, have been in law enforcement. I've been on both sides of this. The officer had not concluded yet that there was no crime. Remember how police procedures in these situations. Guys often -- a report of a break-in in the house, sometimes it's an estranged husband in a domestic dispute, the most dangerous kind of situation a policeman can encounter. There was report of two men, he only saw one. He was trying to ascertain what was going on and you always in that situation ask the person to step outside. At that, Gates went nuts and said, you don't know who you're messing with, et cetera.

You've got to give a lot of credence here to the police. You've got to give them latitude if they are to protect us. And particularly given the state of crime in the black community, you do not want cops saying, I'm not going to get into that because you know I'm just going to be accused of racism. This is the real issue.

MORIAL: What you do, there are two things. Obviously I think we want to encourage citizens to respect law enforcement and respect the police. On the other hand, I would concede policing in an urban community is tough.

It's hard work. It requires a great deal of skill, a great deal of skill, a great deal of patience, and what you try to do in urban policing is you prepare officers for the fact that they are going have confrontations with citizens where citizens may not necessarily be so happy, so glad, so welcoming of the confrontation.

And that is part of the training, that is part of the monitoring. The interesting thing is, is that perhaps a small minority of police officers are responsible for the majority of the complaints against most police departments.

So, yes, let's say...

BENNETT: I think that's right.

MORIAL: ... that citizens should respect police, but we also have to understand that in most cases, and this is a very important lesson about what is required to be a police, it does require a great deal of patience and a great deal of skill.

That's why I think that moving forward with some legislation, I think that convening all parties concerned would be a good step for us to take. I don't think it ends with the president's statements or how we feel about the president's statements or this incident. I think we need to take further constructive steps.

KING: OK. I want to take about as sharp as a turn as you can take in terms of subject matter. I want to button up this conversation for now. I think we've all had our say whether we agree or disagree. I want to talk in our last minute or so about this.

The governor of Arkansas -- sorry, I can't even say it Alaska. I'm looking at you and I'm thinking it's the governor of Arkansas, Paul Begala.


KING: That's how bad this gets. I'm thinking of Bill Clinton. The governor of Alaska is stepping down today, Sarah Palin. It is her last day. Earlier on the program I asked the Senate Republican leader, Mitch McConnell. I said to Mr. McConnell, is she passing from the stage or will she be back?

Mitch McConnell had this to say.


MCCONNELL: Well, I don't think we've seen the last of Sarah Palin. She excites an awful lot of members of my party and they're anxious to see what she is going to do next and so am I. (END VIDEO CLIP)

KING: Democrat go first here, Paul Begala. You're just back from Alaska. Are you signing on to help Sarah Palin?

BEGALA: I don't know if you guys can zoom in here. But my boys and I caught silver salmon in Resurrection Bay off of Seward, Alaska. We had the best time. She may -- Sarah Palin may want to come to the lower 48. We in the lower 48 need to go Alaska. I've never had a better vacation. It's fantastic.

And no one, interestingly, in two weeks there, fishing, hiking, and drinking beer -- not necessarily in that order, no one mentioned Sarah Palin. It was really interesting. She's sort of passing from the scene up there.

I hope, as a Democrat, Mitch McConnell is right. I hope she is their nominee because I think she's easiest to beat.

KING: All right. I want to give Alex and Bill the last word on this issue. What's the future for Sarah Palin? Alex, you're first.

CASTELLANOS: I've been a Sarah Palin supporter at times. She gave the McCain campaign its best two weeks, the only time he was ahead. But you know, if we're going be critical of Democrats when they shirk their responsibilities, we have to do the same within our own house.

She abandoned her state in the middle of a term. They didn't ask for her to run. She volunteered to run and assumed that job. I think she has hurt herself. You've seen those numbers turn. We're going to have a division in the right on the Republican Party. We now have two Mike Huckabees, people who have a powerful force in the party, but can't possibly get out of the party in a general election and win.

KING: Bill Bennett, jump in quickly on this point.

BENNETT: John King, let me put you at ease, I have no opinion about this. I really don't know what's going to happen with Sarah Palin.

KING: All right-y. We need to end it there, unfortunately, for time. I appreciate the provocative discussion. Marc Morial, president of the National Urban League, Bill Bennett, Alex Castellanos, and Paul Begala, we will invite you all back.

And up next, the outside-the-Beltway perspective, our weekly diner segment brings us to Dallas, Texas, and Norma's Cafe for a chat about health care and whether the politicians debating reforms understand the problems you encounter.


KING: In our travels this week, we wanted to visit a state that comes up often in the debate over health care reform. And the state is Texas. This is one of the reasons it comes up so much in the state. The highest percentage in the country of uninsured. Nearly 25 percent of Texans lack health insurance. Now 24 percent of the state's uninsured are illegal immigrants. That puts a strain on public hospitals and the state's budget -- $677 million spent for uncompensated health care for illegal immigrants. Again, a big strain on the state budget.

So we went down to Norma's Cafe. It's in Dallas, Texas, and we asked residents, what do you want in health care? What is your own experience, and do you trust the government?


KING: So that I understand your perspective better, give me sort of your most important health care experience to you?

CONNIE OBENHAUS, DALLAS: I found myself in a medical issue where I didn't know how to go about dealing with it. I went to several doctors and could not get beyond the you better pay this road before we can go further. I went to JPS in Ft. Worth and they took me in and treated my cancer first. Then I had a colon issue and they took care of that. I think it took me three years now and I'm just past three years to get to where I'm healthy again.

KING: How about you, sir?

CHASE ROBINSON, DALLAS: Mine started one day when I realized I was having pain in my leg. I did not have any health care. I heard about this study, and it was a research situation and it was free. I went in, and when they checked me they found out that I had PAD, peripheral artery disease and that I almost had complete blockage from my calf to my right foot. One of the surgeons there said if it hadn't been for the grace of God or however that I got in to see them on this research, they would have been amputating my leg.

THERESA MORENO, DALLAS: My mom, she is a senior citizen and she's, of course, she has diabetes, high blood pressure. The public hospital, they try to do the best they can but she never -- one doctor -- she sees 10 doctors within a month's time. It's hard. Health care should be a little better for senior citizens. KING: Let me ask for a show of hands. If you're a Democrat, raise your hand. If you're a Republican raise your hand. It's OK, it's all right. You're a Republican also.

MORENO: No, I'm not a Republican. I'm in the middle.

KING: You're in the middle. All right, so we have a good representative group. Raise your hand if the answer to this question is yes. If there is national health care reform, should taxpayer money be allowed to use to pay for abortions?

MORENO: That's a tough question. That's a very tough question. I would say depending on their life or death.

KING: Health of the woman at risk. What if it is just somebody who wants one?

MORENO: No, that's not a good idea.

OBENHAUS: I disagree. I don't think we need to have abortions at all.


KING: What about if you have a plan that is designed to cover just about everybody, the uninsured so people who can't afford it, or people who are out of work and they figure out a way to do it, what about somebody who is in the country illegally? Should they be able to get care?


OBENHAUS: I don't think we should allow them to come here and us support them.

MORENO: If they are here, they are obviously working. And if they are working, they are paying taxes. And if they can show income, I guess if they are working and paying taxes, I think they should benefit from the taxes that are taken out of their checks.

KING: On a scale of one to 10 -- 10 is you completely trust the politicians, one is you don't really trust them at all, to do this right, where are you?

MORENO: I'm at a five.

ROBINSON: I'm still at six. I just -- I haven't seen a plan yet that is actually says this is what we get. Do you trust it to actually come about? I don't know.

OBENHAUS: I'm still at six. I'm with him on that. I don't give politicians 100 percent trust any time.


KING: As you can see a bit of skepticism there but a great meal at Norma's Cafe in Dallas, Texas. Up next, more sound of Sunday and a look at the week ahead with the best political team on television.


KING: Joining me now here in Washington, CNN senior correspondent Joe Johns, senior White House correspondent Ed Henry and senior congressional correspondent Dana Bash.

Let's begin with health care. A big debate this Sunday about of course the big sticking point is how fast to go and how to pay for it. Let's start how to pay for it. David Axelrod on was the program earlier this morning and as you all know, the White House has essentially said, well, we like this and that, but we'll let Congress do its business. A proposal now gaining steam in the Senate would tax so-called Cadillac health insurance plans. If you have a plan way above what the average American gets, it would face higher taxes. Here's David Axelrod. (BEGIN VIDEO CLIP)

AXELROD: What the president has said is that this is a new proposal that has surfaced to put an excise tax on insurance companies on high end policies such as the $40,000 policies that the head of Goldman Sachs has that will not impact on the middle class. And that was our big concern is that we not impose vast new burdens on the middle class. So, he said that it's an intriguing proposal. We're looking at that.


KING: He also said let the committees run their course but Ed, are they starting to show more leg? Are they trying to nudge Congress in that direction?

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: A little bit. You're right. I think they are starting to show some leg. They're not supporting that Cadillac proposal yet, but I am told reliably that on Friday when the president sat down with Max Baucus, the finance chairman and Harry Reid, the majority leader, people familiar with it say the president started to give some ground to Max Baucus, some suggestions perhaps on where he might be willing to go. That's something he hasn't done yet.

However, these sources are not giving up what the president is showing. That's significant, though, because it suggests the president realizes, that we talk about the House bills, the other Senate bills, the only thing matters is what the Senate Finance Committee does. That's why Dana has been parked outside that committee room for the last few days and it's because unless you can get a consensus from that committee and then you get 60 or 65, some Republicans as well as Democrats to support it in the Senate, nothing else matters.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Yes, I mean, the blisters on my feet, you can see them, they are pretty bad. But in getting those blisters, I have been able to talk to a lot of those senators meeting and negotiating and on that issue of this relatively new idea of taxing the high cost insurance plans. There's no question that that is gaining steam and that is absolutely on the table and a part of what they are trying to crack.

Here's the problem. The challenge, the big challenge is paying for the trillion dollar price tag for health care and what they have been initially talking about, taxing benefits, that was about $310 billion. That was a big chunk of change. I talked to Max Baucus, the finance chairman, about this plan. And he said that the revenue generated from taxing insurance companies, he said it doesn't even come close to that. So that's why they are still in that room, they're meeting because that is still a big problem. How do you pay for it? They don't have the answers yet.

JOE JOHNS, CNN SR. CORRESPONDENT: The critique on that, though is that even though they say they are taxing the companies, it's still really a tax on benefits at the end of the day and everybody knows that. On the other side, those it is cost-cutting, so it's attractive at least because other talking about wealthy people here that keep throwing in --

BASH: And the insurance companies.

JOHNS: Right. So maybe it can reach them and the middle class won't complain.

HENRY: The insurance company is likely to pass that cost on to you.

KING: Let's just for the sake of argument, assume they figure this part out, at least in the Senate Finance Committee, and we'll talk more about the House calculation in a minute.

But then there's the other thing, the public option. So even if Republicans went along with a plan that taxed the Cadillac plans some other way, there's still the public option which the Democrats say is central. A public insurance, a government insurance plan to compete against private insurance. I put the question to the Senate Republican Leader Mitch McConnell, could you support that under any circumstance?


SEN. MITCH MCCONNELL (R), MINORITY LEADER: We have to see what they come up with. I think -- I don't believe either one of them will sign on to a package that the vast majority of our members think is a bad idea. Our idea of bipartisanship in the end is not just talking, it's what do you do? What kind of proposal is it? What is the policy?


KING: So he says no, the public option and he's watching closely the three or four Republicans in the room with Max Baucus. And it was pretty clear that he believes he has an assurance from Senator Chuck Grassley, as the leader of those Republicans, that even if it's something Senator Grassley likes or Senator Ensign likes, or Senator Snowe likes, those three Republicans in there, that if it's not good enough to get eight, 10 more Republicans, that they will say no. Is that right?

BASH: I believe so. I talked to another member of the Senate Republican leadership this week who said virtually the same thing, that they have an assurance from those just three Republicans negotiating with Democrats, the only Republicans on Capitol Hill negotiating with Democrats that if they can't get something that is beyond those three Republicans, really genuinely bipartisan, that they will walk.

Having said that, on the issue of the public option, having a government run insurance option to compete with private plans, Mitch McConnell is right, it's not just Republicans who are again it. It's a lot of Democrats. And that's why there was a very ugly meeting, I'm told and in fact I was standing outside of it among Democrats only on the Senate Finance Committee and part of the rub and part of the controversy is this public option. These are Democrats talking to Democrats and arguing and debating with fellow Democrats.

KING: So Ed, to your point, they believe at the White House the only thing that matters it what comes out of the Senate Finance Committee. Then why are they pressing the House to vote? If they don't like the details of the House plan and so many conservative House Democrats, vulnerable House Democrats, think it's suicide. They are going to vote for a plan that has higher taxes, has a lucrative government option and then the Senate is going to come up with something different and they are on the ballot next year.

HENRY: That's why it's very tricky politically for Democrats. But what the White House wants more than anything is to tout some progress. Right now there's no progress in the Senate Finance Committee.

While at the end of the day, that's the game in town, they need the House Democrats to push something through so they can keep pushing back on the media and the critics, the special interests the president talks about who are saying there's no progress. They need a vote in the House to at least get this going because now Harry Reid in the Senate say there's no vote in August on the Senate side.

So if you at least get some progress from the House Democrats and then Senate Finance comes up with some deal in the next few weeks, they hope there's progress. But you're right, at the end of all this, this is why the president, despite the calls for getting more involved in the details, he's walking a very careful line here because these House Democrats may go out a little bit on a limb here on raising taxes and the public option.

But at the end of the day, if the Senate Finance Committee down the road does not sign off on some of the taxes the House Democrats do and does not sign on with the public option, it's likely this president is going to have in order to get a deal, say sorry House Democrats, I know you went out on a limb, but this is the best thing we can get. This is the only thing that's going to get through the Senate. It's going to be some very tough conversations between the president and the woman you interviewed at the beginning of the show, Speaker Pelosi, down the road. They're going to have some very tough conversations.

JOHNS: And they'd really, really like to get something that they can call bipartisan here because you don't want your own people and the Congress hanging out there. August also, could be critical. There are a lot of people who very well might want to sit around and say hey, let's go out, hear from the people, see what the TV ads are doing, take the temperature a little bit more before we come back and do something. It's scary for them because next November is not that far away.

KING: I think scary is an operative word. Let's take a quick break, we'll be back with Joe and Ed and Dana in just a minute. Stay with "State of the Union."


KING: Welcome back. Let's continue our conversation with CNN's Joe Johns, Ed Henry and Dana Bash. The vice president is in the headlines this morning and if you work at the White House, that's not always a good thing. Let's look at the "New York Times" this morning. He writes this in an op/ed piece about the economy and the stimulus program. "The Recovery Act has led some people to ask whether we're moving too slowly. But the act was intended to provide steady support for our economy over an extended period, not a jolt that would last only a few months."

Not a jolt, Joe Biden writes in the Sunday newspaper this morning. This is the same Joe Biden seven weeks ago.


JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: And of course we also came forward with what we're going to talk about today, the American Recovery Reinvestment Act, an initial a big jolt to give the economy a real head start.


HENRY: I don't know what to say. I think on one hand, the vice president in the op/ed is correct, in fairness, that the vice president and president did say throughout the debate over the stimulus that it was not just about the early stages. It's about changing the economy long term. That part is accurate. Nevertheless, the vice president said what he said seven weeks ago and the president at his first prime time news conference said the government is the only entity left to provide a jolt to save -- something to the effect of bring the economy back to life, were his words. So they are changing the goal posts a bit.

JOHNS: And what's funny about this is that we all knew that the money really wasn't going have that big an effect at the very beginning because if you look back to the Reagan stimulus, it took months and even years for a lot of that money to get out there. We also knew that things like road projects that they were first funding were not going to create new jobs because there were people already on the ground. Everybody knew, but the administration still used that word "jolt," and now it's very funny in retrospect.

BASH: You know what it reminds me of? It reminds me of the Bush White House, oh, we went to war for democracy in the Middle East. That's the lesson. When things change, you have to try to change your message, and that's what they're trying to do here when things don't go your way.

KING: On Capitol Hill, they're increasing jitters. The ones who are on the ballot next year are not the president and the vice president, they're the members of Congress, 435 in the House and much of the Senate, about a third of the senate. Are Democrats increasingly nervous that they don't have the results, or do they think they'll actually benefit and they'll come in the election year? BASH: No, no, no, they're increasingly nervous and it is absolutely applying into the health care debate. I talked to a conservative Democrat who offered that unsolicited saying look, we've got to take our time here on health care because look at what happened with the stimulus plan. We rushed through, we passed a 1,000-page bill because we were told it was needed and we have all kinds of things in it, we don't even know what it is. So absolutely they think it is, that they got burned by it in many ways and that's why they're trying to not get burned again by health care.


KING: Let's turn the page. Joe, you spent a fair amount of time up in Cambridge, Massachusetts this week looking into this whole controversy about the arrest of Professor Gates, a friend of the president. And here in Washington, Ed, you were at the White House and Dana, on Capitol Hill, this was buzzing around A, what happened and then B, did the president complicate it by saying he didn't know the facts but the police acted stupidly.

This morning again, David Axelrod, I asked him about the initial comments and then the president coming into the briefing room, surprising you all over at the White House on Friday and saying he wishes he had chosen his words a little more carefully. Let's listen to David Axelrod.


AXELROD: I think he obviously regretted that formulation. I think it was very clear from his remarks. The important thing now is, I think his statement had a very positive effect, and if you hear the dialogue since, it's been very constructive and we've sort of relieved some of the heat and now we're seeing more light in this discussion, and that's a positive thing.


KING: Seeing more light now, Joe?

JOHNS: Well, in the first place, stupidly, which was the president's formulation, that's a word I'm sure he wished he had been able to take back.

And politically, it was pretty surprising to see the president weigh in the way he did. On the other hand, from a personal level, I mean, when I first heard about the Gates case, I sort of wondered whether it was news.

This is a little embarrassing, but for African-American men in this country, this is a belief that's widely held, that the police tend to -- they will arrest you no matter your education, no matter how much money you make, no matter your situation, you're more likely to get arrested than not if you have an encounter with them.

So you can see where the president was coming from a personal perspective, but politically, it wasn't surprising that they walked that back just a bit because the word was not quite right.

KING: And quickly on that point, Ed, they prepare for news conferences for hours. Was that one of those rare moments where this is not a talking point, this is a glimpse?

HENRY: I think in part, because I think Joe's right, there was a visceral reaction by the president because on the face of it, in the initial reports, it certainly seemed crazy this well-known professor was arrested in his own home. Maybe he let his guard down. It was Barack Obama speaking, not necessarily President Obama. But on the other hand, obviously, the "stupidly" part, he lost sight of the fact that people also have to cooperate with the police. And I have to say, though, when you take a step back from the whole thing, walking into that briefing room and taking it on his own shoulders and not sticking his press secretary out there was a stand up thing to do. KING: All right, we need to call it a day there. Dana Bash, Ed Henry, Joe Johns, thanks so much. And up next, outside of Washington for a very different view of the health insurance crisis, the views from the doctors who treat the uninsured every day.


KING: In our travels week, we focused again on the health care debate. I want to take you back down to Texas here and in Dallas, Texas. And here's why. We wanted to visit a hospital that deals with so many of the uninsured because not only do they have to care for them, they're also being told now the government may squeeze their payments for Medicaid. In Texas, nearly 25 percent of state residents are uninsured, 24 percent of the state's uninsured are illegal immigrants and it costs $700 billion almost just to care for illegal immigrants. The costs, of course, are much higher, to care for those who are in the United States legally. Legally, many of them are working but they don't have insurance. So we wanted to go to the JPS Hospital to hear firsthand from the doctors.


ROBERT EARLEY, CEO, JPS HEALTH NETWORK: We've got surgery in two, three, prepping in four, got a surgery in five. The critical thing about this hospital and this network is it's a safety net hospital. It's where you're going to go when there aren't any alternatives for you. On any given day, you're going to get about 55 different languages here. We get people who haven't been to a doctor in 30 years. Some people use unfortunately the emergency department as their primary care physician and that creates problems for us. But others when they come into our emergency room oftentimes have multiple problems. They come in for one, but because they haven't seen a doctor in 10 years, they find out they've got two or three other issues.

KING: If it were a member of Congress here or a member of the White House staff sitting right here and say, OK, we're about to try to do this big thing. What are the two or three most important things to you so you don't get hurt in the process? What would they be?

EARLEY: The first thing I would tell them is god speed, and I'm happy I'm here and you're there. And I think the other aspect of that is that you can't make the decision that by carrying a health care card, it means health care. Pulling out an insurance card doesn't mean you have access and a portal to health care. We don't get you the cases. We get a situation that subscribed to you with seven people standing around this bed and saying, OK, what in the world do we do? Let's go, get them in and save a life.

KING: They all agree that they're going to try to squeeze out of Medicare and Medicaid. If you're in a facility like this, if people do have coverage, that's probably -- am I right in saying that's probably where they have it?


GARY FLOYD, CHIEF OF MEDICINE, JPS HOSPITAL: If they squeeze money out of Medicare and Medicaid, then you either cut services or you cut payment to providers. And in Texas, only 38 percent of our physicians participate in Medicaid programs, and it's falling for Medicare programs because they can't carry out normal business at what they're getting paid.

EARLEY: We had over 6,000 births here last year and over 70 percent of them were to an undocumented population and that's a population that no matter what your political viewpoint is, you have to address the issue.

FLOYD: I think the other fear is acting too quickly. There seems to be a rush. I hope we don't act in haste and find out six months, six years from now, that while we acted too hastily, we should have had more foresight and more thought.


KING: Our thanks there to the JPS Health Network in Ft. Worth, Texas.