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Interview with John Boehner; What You Can Do to Fight H1N1; Last Word with Gov. Haley Barbour; Voter Discontent in New Jersey

Aired November 1, 2009 - 20:00   ET


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


KING: After one of the deepest recessions in U.S. history, this bold claim from the White House.


BIDEN: We've hit bottom.


KING: In an interview you will see only on CNN, the vice president says the Obama stimulus is helping power the recovery. And the Republicans ask a powerful question -- where are the jobs?

We'll talk exclusively with the House GOP leader John Boehner about the economy and his new health care outline.

Plus, Virginia and New Jersey pick new governors, but are voters also sending a national message?

And our "American Dispatch" from New Jersey, where an underdog candidate for governor tests whether voter frustration with both parties can add up to an independent surprise.

Plus he was one of the key architects of 1994's Republican revolution. Is another GOP rebound in the offing? Mississippi governor Haley Barbour gets "The Last Word."

This is the STATE OF THE UNION report for Sunday, November 1st.


KING: We begin this Sunday with a question asked every day, not only here in Washington, but at kitchen tables across the America. Is the economy out of its rut, and will it soon start creating jobs again?

The official statistics can be pretty confusing. The government, for example, told us this past week Gross Domestic Product -- that is the most comprehensive look at the overall economy -- grew in the third quarter of the year, and grew at a fairly robust pace. But consumer spending is still shaky, meaning many of you aren't confident you can afford to spend more. And the president's economic team believes the unemployment rate will continue to grow for a while, likely past 10 percent soon.

The Republican view in a moment from the man who hopes to be the next speaker of the House. But first, a telling glimpse at the delicate balance the administration is trying to strike.

Our senior White House correspondent Ed Henry sat down for an exclusive conversation with Vice President Joe Biden. His bottom line on the economy is quite upbeat, but the vice president is also well aware millions of unemployed Americans see it differently.


JOE BIDEN, VICE PRESIDENT: Well, look, there's a necessary disconnect when people are out of a job -- and a lot of people are -- that no matter what you say -- for example, the GDP grew 3.5 percent. Every expert out there has said, Ed, and you know this, is that it in large part is attributable to the stimulus package.

Put another way, without the stimulus package, the economy wouldn't have grown this past quarter, number one.

Number two, this is the most transparent undertaking the government has ever engaged in. You can go on, pick a zip code that you live in, go down to the corner of the street that you want to find out about that crosswalk being built with federal money, be able to spend -- how much was spent, who spent it, who the contractor was, how many jobs.

We're going to be able today announce that just from the one portion of the plan, 650,000 jobs were created. That is direct contracts given to -- federal money sent to the states, sent into a community.

There's another close to a million job independent verifiers have acknowledged that are a consequence of the money put in for recovery for everything from extended unemployment benefits to make sure that states are able to keep teachers hired, to policemen hired, being able to make sure that they have what they called F-MAT, fancy federal phrase for saying Medicaid in the states. So it is working.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: So do you think we've hit bottom?

BIDEN: Oh, I'm confident we've hit bottom. The question -- look, we're not going to be satisfied, Ed, until we -- I'm able to sit in front of you and say, look, this month we grew jobs. The net effect is growing jobs.

It doesn't say a lot to people to say, you know, there would have been a million more or a 1.6 million more jobs lost, but for this. My grand-pop used to have an expression, Ed. We lived in Scranton, Pennsylvania.

He said when a guy in Dixon City, a suburb, is out of work, it's an economic slowdown; when your brother-in-law is out of work, it's a recession; when you're out of work, it's a depression. It's a depression for millions of people.


KING: So has the economy hit bottom? Did the Obama stimulus plan really make the difference, and does the Republican Party really have a new comprehensive health care alternative?

All questions for the House Republican leader, John Boehner, who's with us exclusively this Sunday.

Do you share the vice president's assessment? Have we hit bottom?

REP. JOHN BOEHNER (R), MINORITY LEADER: I don't think anybody knows whether we've hit bottom. The one thing I do know is that there's no model for estimating how many jobs could have been saved or created as a result of the stimulus package.

All I know are the facts. The president said that when he signed the bill that unemployment would not exceed 8 percent. Now we have unemployment nearly 10 percent. He also said that jobs would be created immediately, and the fact is, they haven't.

Most of the so-called jobs that have been saved or created are government jobs, even though the president promised that 90 percent of these jobs would be private-sector jobs. Three million Americans have lost their jobs since the stimulus was signed into law. And yes, the economy grew last month.

But after $1 trillion of an economic stimulus plan was spent, probably another $7 or $8 trillion that the Fed has pumped into the economy, I would hope that we've seen some economic growth. But Americans all around the country continue to ask the question, where are the jobs?

KING: And so the vice president says it grew because of the stimulus. You opposed the stimulus. Your party opposed the stimulus. Stand by that vote or was it a mistake? Was that spending necessary, to do something?

BOEHNER: That spending, in the stimulus bill, did nothing more than grow government. Republicans had a better solution that would have cost half as much and created twice as many jobs, according to a model created by the president's own chairwoman of the Council of Economic Advisers.

And this was about allowing the American people, families and small businesses, to keep more of what they earned. We really would have gotten the economy going.

And the problem we're having is that small businesses and large businesses are sitting on their hands. Why? They're seeing a government here in Washington with spending that's out of control, a national energy tax, a nationalization of our health care delivery system, and higher taxes on the horizon.

And so business people are afraid to invest in their business, afraid to grow their business, because they don't know what's going to happen next.

KING: Let me ask you -- I want to move on to health care, but let me ask you one question about that. One of the things that has people nervous out there is increasing federal deficits. And there's a story in the "New York Times" today that the administration might be warming to an idea that for 10 months, it has flatly resisted, and that is some sort of a bipartisan commission, get together, look at how to reduce the deficit.

You'd have to deal with entitlement reforms there. And one proposal on the table from Senator Kent Conrad, a Democrat, and Republican Senator Judd Gregg, is have one of these commissions, they come up with recommendations. Congress would have to vote up or down, no amendments.

Would you sign on to something like that, knowing that one recommendation would likely be some higher taxes?

BOEHNER: I've co-sponsored a bill by Representative Frank Wolf from Northern Virginia that would create such a commission. I am concerned that the answer is going to be we're going to raise taxes. But I do agree that we have to get our arms around this deficit. We've got to get our arms around growing entitlement programs.

But before we get to creating this commission, why don't we do something about the spending that's going on right now? It's out of control. You can have $1 trillion deficits for as far as the eye can see, and that's what the budget is that's been passed by the liberals here in Washington.

KING: You would accept that commission, if it was structured in a way you were comfortable with, to try to take the politics out of that debate going forward? I assume...

BOEHNER: Absolutely. Because these entitlement programs are not sustainable. The American people know they're not sustainable. Baby boomers have made promises to each other that our kids and grandkids can't afford. And it's time to do something about it.

KING: Let's move on to health care. And I know you brought something with you, and it's more than 1,900 pages, and that is the House Democratic health care bill. Before we get to that, I want to hold up something else.

This is the text of your radio address. It's two pages. Now this was an effort by the Republican Party to say we have alternatives. It's not a bill, I want to be fair to you, but it lays out a number of things you would like to do in the Republican Party.

What it does not do, and what that does, even though you don't like it, in 1,900 pages, it lays out what they would do. It says how much it would cost. The Congressional Budget Office has said at the end what percentage of people would be covered.

Where is the Republican proposal where you can say to the American people, we'll spend this much over 10 years, it will do this to the deficit, and when we're done, X percent of the American people will have health insurance?

BOEHNER: You can go to and see our eight or nine ideas about how to make our current health care system work better.

KING: But they're separate pieces of legislation right now...

BOEHNER: There are separate pieces of legislation...

KING: But will you have something to stack next to that?

BOEHNER: What I am hopeful for is to take these eight or nine ideas and put them together in a bill that's being scored right now by the Congressional Budget Office and present it on the House floor during this debate. And I'm hopeful that Speaker Pelosi will allow us to offer an alternative.

But what we do is we try to make the current system work better. We take a step-by-step approach, by allowing people to buy insurance across state lines, allowing small businesses and other groups of individuals to group together for the purpose of buying health insurance at lower costs, like big businesses and unions can.

We need to do something about junk lawsuits. I think that one of our proposals is to give grants to states who have innovative programs to help bring down the cost of health insurance. And 34 states today have high-risk pools for those with pre-existing conditions.

We want to encourage all states to have these. And we put more money into these high-risk pools so that we can bring down the cost of health insurance. And at the end of the day, what we're doing with our proposal is lowering health care insurance premiums, lowering cost and expanding access.

KING: But the perception out there is, and the Democrats have fed this, and I understand that, and I have read some of the separate proposals Republicans have, that you don't have a comprehensive plan.

Here's a question we had on Twitter. "Where is the magical Republican plan?" Mario asked. "Where is the magical Republican health care bill? I've looked on Google and nothing."

How do you deal with the perception out there fed by the Democrats that do not have -- you have several proposals, but you don't have one where you can say, let's go through all of the issues right here.

BOEHNER: Well, the Democrats don't have one either. I mean, we just saw this first bill, this is the first real bill, one bill, that we've seen from the Democrats in the House, 1,990 pages. That ought to tell you all that you need to know, that we're going to have 1,990 pages of legislation.

The word "shall" exists in this bill 3,345 times. Shall, that means, you must do. The Republican proposals have been on since June. We've talked about them and we talked on the record and we're going to continue to talk about them. But it's a common sense approach to make the current system work better. We do not attempt to cover 46 million more Americans.

KING: How many?

BOEHNER: We will cover millions more Americans, but we don't attempt to do this.

KING: But how many more?

BOEHNER: This is not affordable.

KING: But the American people want to know how many more.

BOEHNER: This -- what this is going to do is bankrupt America. It's going to cost millions of Americans their jobs and cut benefits for seniors. This is not what the American people want.

KING: Where do you...

BOEHNER: They want a more gradual approach to fixing our current system.

KING: Where do you draw the line? You are a key player negotiating with the late Senator Edward Kennedy on No Child Left Behind when you had the education committee in the House. And that bill has some 'shalls' in it, too. It has some federal mandates. So the government does have a role. You acknowledged that in past legislation.

Where is your line in health care in the sense that the Republican Party is the party of states' rights? You believe Washington is too strong, let the states make the decisions. If you could get an opt-in public option -- it's a little confusing, I want to explain it to our viewers -- but not a public option where states have to make a decision to get out, but a national health care bill that says if states wanted to create a public option, they could do so on their own. Would you vote for that?

BOEHNER: Well, they already can. You know many states -- Massachusetts has a plan that they've enacted. Tennessee has enacted their own plan.

KING: There's no public plan in Massachusetts.

BOEHNER: There are a lot of innovative programs out there in the states. And I, frankly, think that we could help those programs work better.

KING: So you will have a proposal? I just want to clear this...

BOEHNER: We are going to have a proposal.

KING: You will have a proposal...

BOEHNER: And I would hope that the speaker will allow us to have a debate and a vote on our proposal.

KING: And it will be a bill? I'll be able to stack the two up...


KING: Two up side by side?

BOEHNER: Go to and look at the eight or nine proposals that we have that we expect to make part of -- as a part, together, our substitute.

KING: And so by the end of this week, will people be able to look at one proposal that says, we'll spend this much over 10 years, this is what the CBO says it will cost and this is what the CBO says will end up the percent of Americans who will have health insurance.

BOEHNER: We do not increase taxes. We do not cut Medicaid or Medicare, and we do not have mandates on individuals or businesses.

KING: Republican leader John Boehner. We're going to take a quick break. When we come back, we'll ask him about Afghanistan and the evolving political situation there. We'll also ask him about Tuesday's big elections here in the United States. Stay with us.


KING: We're back with the House Republican leader, John Boehner. I want to spend some time on politics, but a couple quick questions first. The administration announced Friday night that it is going to make the H1N1 vaccine available to detainees at the Guantanamo Bay, terror detention facility.

There are shortages here in the United States for families who are trying to get them. I wonder if you think that's a good idea.

BOEHNER: I don't think it's a good idea. The administration probably didn't think it would be very popular either, that's why they announced it on Friday night. We have prisoners in my own home county who are going to get H1N1 shots while there are vulnerable populations who want the shots who can't get them. I just think that's wrong.

KING: Let me ask you about the Afghan elections. The challenger, Abdullah Abdullah, has said he will not participate now because he doesn't trust the election process.

As you know, the administration has said we want to see who we have and what kind of partner we have in Afghanistan before the president makes this momentous decision about troop levels.

What does this political uncertainty in your mind do to the situation there and the president's decision?

BOEHNER: Well, I think President Karzai did the right thing by agreeing to the runoff and accepting the decision of the commission. But I think everyone expected that President Karzai was going to be re-elected. So Dr. Abdullah's exit from this race, I think, really says more about the fact that he knew he wasn't going to win.

But that should not hamper our decision with regard to Afghanistan. The president made clear that we are not going to withdraw from Afghanistan. But I have looked for every reason in the world to put off a decision, and the longer this decision hangs, the more jeopardy and the more danger our troops on the ground there are in the middle of.

We've had the highest casualty totals in years over the last month or two. Why? Because all of the uncertainty around what the president's going to decide. I'm concerned about this delay. I would hope that the president would make a decision and make it soon.

KING: I want to talk to you about politics. You'd like to be the next speaker of the House of Representatives. And while much of the attention on this year's elections are on the governor's races in New Jersey and Virginia, there's a special election in New York State.

I'm going to hold up the newspaper. This is the "Syracuse" newspaper. And you see "One Out, Two Left in Battle for 23rd." It's the 23rd district and the Republican Party's endorsed candidate, Dede Scozzafava, yesterday withdrew from the race.

You endorsed her. She was the party's nominee. But she withdrew from the race after Sarah Palin, Tim Pawlenty, the former governor of Alaska, the current governor of Minnesota, two people who might want to run for president some day, and other conservatives jumped in and said she's not good enough. She's not pure enough to be a Republican.

Can you be the speaker of the House? Can your party survive in this part of the country if things like this happen?

BOEHNER: Well, this is a pretty unusual situation. You had seven county chairmen who chose Dede to be our nominee. And clearly, she would be on the left side of our party, a conservative decided to leave the Republican Party and sign up on the conservative party ticket, which is allowed in New York.

And what's happened over the last several weeks is her numbers have continued to slide. Hoffman, Doug Hoffman, the conservative party candidate, his numbers continued to grow. And so Dede yesterday decided to withdraw from the race.

This is a pretty unusual circumstance, that we see in New York.

KING: But does it not send a signal? Your friend and former House speaker Republican Newt Gingrich said if this happened, it would be a purge of the Republican Party. This is what Chris Hollen -- obviously, he's a Democrat and your colleague in the House. He's chairman of the Democratic Congressional Campaign Committee. He says, "The far-right tea-bag party is leading the Republican Party around by the nose."

BOEHNER: Now, listen, we accept moderates in our party and we want moderates in our party. We cover a wide range of Americans. I've -- I was at the tea party in Bakersfield, California on April 15th.

I answered questions in front of 18,000 tea-party people Labor Day weekend in West Chester, Ohio. I've worked with these people. And what they're concerned about is the growing size of government. They want someone who's really going to actively reduce spending and reduce control here in Washington. They're scared to death.

And in this particular case, they think that Mr. Hoffman was a better candidate than the Republican.

KING: If you were a pro-choice Republican, say in the northeast part of the country, maybe you support same-sex marriage as well, but you're a fiscal conservative and you think you're a New England moderate Republican, northeast moderate Republican, would you enter a race now, for Congress next year, seek the Republican nomination, knowing that something like this might happen?

BOEHNER: I -- I would hope so. I would hope so. Because what we need is we need a broad group of people in our party.

KING: Doesn't this send a pretty...

BOEHNER: No, this is...

KING: ... stern signal to those people?

BOEHNER: This is a very unusual circumstance.

KING: You don't think the people who went after Dede are going to think, "We can go after other Republicans now," now that they've succeeded here?

BOEHNER: Well, I think that going after Republicans is one thing. Having a party standing on fiscal responsibility, like we have all year; standing on principle against the crazy policies that we see out of Speaker Pelosi and Majority Leader Reid -- the American people want to see us take these principled stands.

And they want to see us continue to offer what we think are better solutions. If we can continue to do that, we'll have a broad cross-section of people in our party.

KING: As the House Republican leader and the man who would like to be speaker, how do you -- looking at what happened here, you think it's isolated; you hope it's isolated. What do you do when you're in a room with a Sarah Palin, a Governor Pawlenty, the Club for Growth, the people who attacked your party's nominee there?

What message do you send to them about -- I assume you'd want them to pick and choose future battles pretty carefully. You don't have much room for error in next year's elections if you want to get your ultimate goal.

BOEHNER: Well, we're in the middle of, I think, of a political rebellion going on in America. And this rebellion are (sic) by people who really have not been actively involved in the political process. And they don't really care whether you're a Democrat or a Republican. They want to see people who are going to stand up and protect the future for our kids and grandkids.

And so it's going to be a difficult road to walk, to work with relatively new entrants into the political system and to work with them to show them that, by and large, we are the party who represents their interests.

KING: Let me ask you, lastly, though, but sometimes does the party need to draw a line? What's the point of having a party if people in your party will attack your own nominees? I mean, where do you draw that line?

BOEHNER: Listen, I'm a big believer in Ronald Reagan's 11 commandment -- 11th commandment. Never talk ill about another Republican.

KING: That was not followed in this race.

BOEHNER: I know.

KING: John Boehner, the House Republican leader, the man who hopes to be speaker, we appreciate your coming in here today.

The H1N1 virus is spreading fast and the government is behind its goals of producing vaccines. Up next, we put your questions to our CNN chief medical correspondent, Dr. Sanjay Gupta.


KING: Let's get some insight now on the challenges of fighting the H1N1 flu virus and what you can do to protect your family. Let's bring in our chief medical correspondent, Dr. Sanjay Gupta. You see him there at Boston Children's Hospital.



KING: Let's deal with the first question. Even the administration now suggests it overpromised when it came to the number of vaccines available. You've been out there in Boston and other places around the country. Still bad shortages or starting to get better?

GUPTA: Starting to get better, but still bad. You know, back in the spring when we first talked about this, they said they would be up to 120 million doses by the fall. That was back in May they were saying that. They revised those numbers to about 40 million doses available by the end of this -- or end of last month now and then 10 million doses a week after that. You just said it, 27 million doses roughly, so 13 million behind.

The problem is, I think, for people on the front lines, it's sort of forced them to act in this ad hoc sort of position. They had some really clear guidelines on who would get it. There would be enough for everybody. There's not, so doctors, hospitals, are being forced to make some choices, and there's a lot of frustration going around.

KING: And the number of pediatric deaths is quite alarming. It's now past what we normally have in a full season of regular flu.

GUPTA: That's right.

KING: So -- and that's alarming to parents out there. And I think people are starting to get confused. What are they supposed to do?

GUPTA: Yes, so you know, normally, in any given flu season, about 80 to 90 deaths in kids in a seasonal flu season. Already 114 deaths, as you mentioned. It is concerning. About a third, they say, are in healthy children as well. So these were children that didn't have any other underlying illness.

What are they supposed to do? You know, I think -- I think the basic rules still apply. It doesn't change the advice that's being given either by the doctors or the CDC. I think it does make the vaccination issue a larger issue. The vaccine does seems to be pretty effective in these early and short clinical trials, but it really ends up being a very good tactic at sort of trying to stave off some of these numbers.

KING: You mentioned stave off and effective. There's a debate about this as well, as you know, out there. There are people out there who say, is it safe; can I trust it; it's new; what are the side effects.

You were in Boston this week interviewing the former Massachusetts governor Mitt Romney, mainly on health care policy, because he was the architect of the Massachusetts plan.

I want to deal with the issue of the vaccine because as you know people out there are criticizing it. Rush Limbaugh, a conservative, says the government tells me to get this vaccine, for that reason alone, I will not get it. You put the question to Governor Romney, do you think it's safe? Let's listen.


MITT ROMNEY (R), FORMER MASSACHUSETTS GOVERNOR: Everybody is willing to make their own or should make their own decision about their own health care treatment. You know my wife makes it a practice not to describe her own treatment for her MS, for instance, because she doesn't want people to think that's the -- you know, the approved approach.

Everybody has to look at their health care in their own way. But I can tell you when it comes to vaccines, I'm in favor for myself. But other people will have to decide what's right for them. But I've been getting the flu shots for a number of years, and fortunately, knock on wood, I haven't been getting the flu.


KING: If you travel, if you look at our Twitter tweets, and if you look on Facebook, anywhere you go, even down in our unit, we've had several people get the H1N1 and people say, is this safe?

GUPTA: Well you know, it's interesting. What I have found so fascinating is that there seems to be two reasons people don't want to get the vaccine. One is that. You know, is it safe? Two is there's a lot of people out there who still don't think it's a big deal, this whole H1N1. I think that may have been what Rush Limbaugh was talking about as well.

You know it's -- I would love to see five years of safety data on everything, especially if I'm giving it to my kids, John, but the reality is, every year the flu vaccine is different, because there's a different strain of flu that becomes a dominant strain and they make a vaccine based on that.

I think it's better than, you know, 1976. There was a concern about Guillain-Barre. I don't think we're going to those problems now. There haven't been any side effects in the trials or really so far. So I did give them to my kids. And I say it that way only because I think at the end of the day that's what people want to know. I looked at a lot of papers, I looked at the studies, and that's the decision I made.

KING: You communicate about health care all the time and you've been covering this crisis to the point that people have all these questions out there. Is that just the way it is and the way it would be anyway, or has the administration missed a beat or failed in some step in terms of the communication, saying -- they, obviously, don't have enough vaccine.

They failed that test and they're trying to adapt to it. But in terms of communicating to people, this is safe, trust us, are they doing something wrong?

GUPTA: No, I think they've been out there quite a bit saying that exact message. You know there have a little bit -- a couple of missteps where people maybe weren't as forceful I think in the initial steps as -- regarding the safety or the efficacy of the vaccine.

But I think, so far, it's been pretty good. There is a deep distrust of government. There has been a sordid history when it comes to vaccines overall, especially dating back to 1976 and there are concerns that linger still about vaccines overall and the links potentially with autism in children. So these three things sort of in combination I think have -- it's not surprising, I think in many ways, that we're seeing this. But I also think that -- you know, there are still more people that want this vaccine than vaccine is available. So that's -- you know, the demand is still outstripping the supply.

KING: Dr. Sanjay Gupta there. And Republican Party is hoping to capture two key governors' races this Tuesday. Mississippi Republican governor Haley Barbour would be here to discuss those races. He gets "The Last Word" next.


DON LEMON, CNN ANCHOR: I'm Don Lemon live at the CNN world headquarters in Atlanta. Here are a couple of your headlines for you.

Afghanistan's presidential runoff is now a one-man. The only opposition candidate has dropped out. Candidate Abdullah Abdullah's withdrawal ensures the reelection of President Hamid Karzai if voting proceeds as scheduled next Saturday. The runoff was forced after complaints of widespread fraud in election -- in the election from office.

In Iraq, at least seven people are dead after a trio of bombings today. The Interior of Ministry says five people were killed in a motorcycle bomb attacks south of Baghdad. Thirty-seven more were wounded.

And in Anbar's provincial capital of Ramadi a pair of car bombs detonated near a police precinct killing two and wounding eight others.

Craven and contemptible. That's what New York City mayor Michael Bloomberg says about the suspected arsonist who sets fire to the memorial park chapel on Saturday. It is a temporary site where the remains of some 9/11 victims are held. Police have arrested 26-year- old Brian Schroeder, charging him with arson and criminal mischief.

A train derail in north of Chicago today, 17 cars off the tracks when a freight train collided with a stationary train in Northbrook. A nearby strip mall was evacuated as a precaution and we're told none of the three people on board the train suffered major injuries.

Philadelphia's transit agency and its largest union returning to the bargaining tomorrow morning trying to avoid a possible walkout. Transit workers are demanding better wages, pensions and health care. Union leaders agreed not to strike this weekend because of the World Series games being played in the city.

It is going to be a rough Monday commute for people in the San Francisco area. The San Francisco Oakland Bay Bridge will not be reopened in time for rush hour tomorrow morning. And the bridge was closed for repairs last Tuesday following the failure of two rods and a crossbar installed during Labor Day repairs. The bridge is normally a vital link for Bay Area commuters.

Those are your headlines. I'm Don Lemon. "STATE OF THE UNION" with John King continues right now.

KING: Eleven newsmakers, analysts and reporters were out on the Sunday morning talk shows but only one gets "The Last Word." That honor today goes to Governor Haley Barbour of Mississippi, who is also the chairman of the Republican Governors Association and an old friend who was, back in 1993/1994, the national chairman of the Republican National Committee.

Governor, thanks for being with us. I want to get to politics in a minute. But you're a chief executive of your state, you're dealing with this economy in hard times, you're one of the governors who was prominent in the debate about whether the stimulus would help or hurt.

I want you to listen to something the Treasury Secretary Tim Geithner said this morning about his sense of the economy. He says, yes, it's growing again but.


TIM GEITHER, TREASURY SECRETARY: It's going to be different recovery than in the past because Americans are going to have to save more. A lot of damage was caused by this crisis. It's going to take some time for us to grow out of this. Could be a little choppy, could be uneven and it's going to take a while, but I think again, this is encouraging signs.


KING: Encouraging signs is the growth in the national economy, the GDP. But if you go state by state, it depends on where you are in the country as for unemployment. What is, A, your sense, are we -- have we hit bottom? Are we on the way back? And, B, the national role in helping?

GOV. HALEY BARBOUR, CHAIRMAN, REPUBLICAN GOVERNORS ASSOCIATION: John, I've never seen as big a disconnect between Wall Street and stock market on the one hand and Main Street on the other. These banks have been given -- these big banks, particularly gigantic infusions of TARP money, but they're not lending the money out. They're buying assets, they're trading.

And when you look at Goldman Sachs, they're making all their money trading. Well, what the economy needs is for them is to be lending. And Main Street, small business, even middle-sized businesses, are really unable to borrow money, and I was one who believed and believes that for about half as much money, the stimulus package could create as many or more jobs.

I still believe that. But what is really, really hurting us on the ground today is the inability of small businesses to borrow money and the continued lack -- the continued decrease in employment that goes with that.

KING: What is your sense in the health care debate from the perspective of a governor and the Democrats trying to move their proposals forward? Right now the leading Senate proposal has a public option that would allow states to opt out. So the governor of Mississippi, if that plan passed, could say, I don't want a public option, I could opt out. Help me understand, what could you support?

If Republicans are the party of states' rights, believes Washington has too much power, what about an opt-in? Would you take a health care plan that allowed states to create one if they want one?

BARBOUR: Well, interesting, in my state, I have proposed a health exchange to help small businesses be able to afford health insurance. A little bit different than what they're talking about in Washington, I assure you.

But where governors, Republican and Democrat, do agree totally is that the Democrat bill wants to expand Medicaid to up to 150 percent of federal poverty level. That is a huge tax increase for states.

It's not just Haley Barbour that says that. David Paterson, the governor of New York. Arnold Schwarzenegger, the governor of California. They say look, our states can't afford this. Phil Bredesen, who's one of the real experts on health care among governors, happens to be a Democrat.

Governors understand if they do this, for me, it's a $230, $250 million tax increase on Mississippians. When they talk about in Congress, it's not going to cost anything, well yes, it's not going to cost anything. They're going to lay the cost off on the states. They're going to lay the cost off on small businesses. And the cost to health insurance premiums by every study are going to go up.

Even the CBO said -- which is controlled by Miss Pelosi -- that the cost of health insurance is going to go up. We all thought the idea here was to try to get the cost of health insurance and health care to go down.

Instead, we're getting a $500 billion cut in Medicare for our senior citizens and we're getting a huge tax increase laid upon our taxpaying citizens.

KING: I want to talk about the governors races that you're so intimately involved in. But I want to tap your experience as the national party chairman in the past to talk about this race for a minute.

This is a special congressional election in Upstate New York. The endorsed Republican candidate dropped out yesterday. She came under a storm of criticism from conservatives. And the big debate about this now, there are some like our Mary Matalin who say, look, she was far to the left and conservatives spoke out rightly so.

And you'll hear her husband, James Carville, as you listen to this, who say this is a danger sign for the Republican Party.

(BEGIN VIDEO CLIP) MARY MATALIN, REPUBLICAN STRATEGIST: People across the country of every party are feeling like we're moving too far too fast on too many issues and they don't want fundamental transformation of this country.

JAMES CARVILLE, DEMOCRATIC STRATEGIST: Well, John, I have an announcement to make. Ronald Reagan's big tent just collapsed in Upstate New York. It no longer exists.


KING: You helped Ronald Reagan build that tent. You were the political director in the Reagan White House. What does this say about the Republican Party that the endorsed candidate, conservatives didn't like her, so they came after her and they essentially forced her from the race.

BARBOUR: Well, they did take one step back. The endorsed candidate was endorsed by six or seven people. The state party chairman, who since then has left office, been replaced, state party chairman, instead of having a primary where all the Republicans in this district could have a voice in who they wanted, which is what Ronald Reagan and Haley Barbour would have done.

Instead they let a handful of people pick somebody who is a -- not just a liberal Republican, she's more liberal than many of the Democrats. But that's not the issue. The issue is that people didn't get a choice and so they didn't feel beholden to this state representative.

They should have had a primary. They should have let Republicans choose who they wanted to have as their nominee instead of it being inside baseball smoke-filled room, the kind of stuff that we've all tried to get rid of.

KING: So going forward, then, is Haley Barbour's message to Sarah Palin, Governor Pawlenty, the Club for Growth, that if there's a primary, if there's a primary or a convention and a large organization, through the voters or a convention nominates somebody that you think is left of center, not a pure Republican, too bad, stay out, as long as it's done in a bigger process?

BARBOUR: I don't say too bad. When I was chairman of the Republican National Committee in four years, we never endorsed any candidate in a primary, including incumbents. And we had some incumbents who didn't like that.

But I say, let the Republicans in New York pick their candidate. That's who I'm going to be for. They don't need somebody from Yazoo City, Mississippi to tell them. Because, look, I chair an association that has got the governor of Vermont, the governor of Rhode Island, the governor of Connecticut, the governor of Hawaii.

You can't elect Haley Barbour governor of Vermont. Let me just tell you that.

KING: I'd like to cover that race.


BARBOUR: But we are a big party, just like the Democrats are. And in a two-party system, both parties necessarily are coalitions. But let New York Republicans decide who their candidate ought to be in an open race and then that's who I think the party not only should be for, that's who the party must be for.

KING: Let's take a quick break. We'll be back with Haley Barbour, the governor of Mississippi. And when we come back, they're electing governors in Virginia and New Jersey on Tuesday. What does it say about those states and what might it say about the president and national politics. Stay with us.


KING: We're back with Republican Governor Haley Barbour of Mississippi. He's the chairman of the Republican Governors Association, which has poured a lot of money into the gubernatorial elections this year.

One of them is up here in the state of New Jersey. There is a Democratic incumbent, the president of the United States is on his way there right now. This will be the third time President Obama campaigns for the embattled Democratic incumbent, Jon Corzine.

That's one of next Tuesday's gubernatorial elections. The other one is down here in the state of Virginia. And the president has been down there, too, although at the moment the Democratic candidate is about 11 points behind in a "Washington Post" poll.

So one the ways the president is trying to turn things around is by lending his name to the support.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Virginia, you helped lead a movement of Americans who believed that their voices can make a difference. That's what we need to do in this race. That's what Creigh Deeds is committed to.


KING: Haley Barbour, what will these gubernatorial elections tell us about the state of national politics, if anything? What's the president's investment?

BARBOUR: Of course, always governors' races are more about the candidate, the state, Corzine's election is more of a referendum on Corzine's record. But in this case, the national issues have really had a lot of -- particularly in Virginia, in Virginia where energy is a big issue and where the Washington newspapers, so close to Washington, so many people work for the federal government, that those federal issues have really bounded around in this race. And they've helped the Republican, McDonnell, and they've hurt the Democrat. I think it's a great overstatement to say this is a referendum on President Obama, but his policies have had a lot of effect on people's thinking. People are worried about jobs, and yet Congress is talking about health care, talking about energy, things that will drive up costs and reduce the number of jobs and most Americans don't understand it.

There's Mary Matalin who said also, most Americans can't understand why the government keeps spending so much money. They don't see much effect from it. And, look, people have learned in their lives you can't spend yourself rich.

KING: We spend a lot of time together in 1993 and 1994 when you were the Republican National Committee chairman. I was covering politics for the Associated Press. And that was the Republican Revolution, 52 seats in the House, big wins in the Senate, big wins in the gubernatorial elections.

As you sit here today, do you see similar ingredients? Many Republicans say yes, Democrats say hogwash. Do you see the building blocks for next year similar to 1994?

BARBOUR: Well, I do see a lot of similarities between 1993 and 2009. The two governors races, New Jersey is a state that Obama won by an enormous margin, enormous margin. And the Democratic candidate for governor is going to get about 40 percent of the vote. If he survives, it's going to be because an independent saved him from his record.

In Virginia, you know, nothing is done until it's done, but right now Republicans look very strong there, even though the president carried this state...


KING: Is your party -- we're about out of time. Is your party doing the structural things that you did in '93 and '94 to be ready if the opportunity comes?

BARBOUR: Particularly among governors, where I'm most familiar, the candidate recruiting this year looks like 1993. That a lot of people are saying, if I'm ever going to run, this is the time to do it. And that was very prevalent in 1993 and 1994.

One quick thing, after the Jersey and Virginia governor's races in 1993, most of them, more than half of the Republicans who got elected to the House as freshmen made their decision to run after those elections.

KING: After. We'll keep an eye on that. Governor Haley Barbour of Mississippi, thanks for coming in.

And next we head to one of those states we'll be watching closely Tuesday, New Jersey. We know the incumbent is unpopular. The Republicans have been controversial. We're going to see if there's any chance for Independent magic. Stay with us. (COMMERCIAL BREAK)

KING: As we were just discussing, two states elect new governors on Tuesday, Virginia and New Jersey. And a big question here in Washington is, will voters somehow be sending some national message?

We'll circle back when we have a better answer Tuesday night. But we do know this, Republicans are confident and Democrats more than a bit nervous they won't be able to match the energy of last year's election.

Let's look down here in the state of Virginia. Now this has been a state that has been trending Democratic. They've won five of the last seven gubernatorial elections and Virginia now has two Democratic U.S. senators for the first time in nearly 40 years.

And President Obama, of course, carried that state last time. So it has been trending Democratic, one reason Republicans think a win would be big.

Up here in New Jersey, you have three candidates in that race. The independent could swing the vote. The incumbent Democratic and the Republican tied just about even right now.

If you look at this state, Democrats also have been ascendant in New Jersey. Three of the last five gubernatorial elections, but no Republican has won statewide since 1997. President Obama on his way to New Jersey right now.

If you look at the polls or travel a lot as I do, you find plenty of evidence Americans are frustrated with both political parties and often don't see much difference between them. Well, there's an independent candidate in New Jersey trying to see if he can tap that frustration and turn it to victory.


KING (voice over): Rain or shine, the election is Tuesday. In a soggy morning commute from Princeton.

CHRIS DAGGETT (I), NEW JERSEY GOV. CANDIDATE: How are you doing? Can I say hello? I'm Chris Daggett. I'm running for governor.


KING: Chris Daggett.

DAGGETT: Thanks. Thank you.

KING: Finds hope.

DAGGETT: Are you happy with Jon Corzine this year?

UNIDENTIFIED MALE: I'm not particularly happy with anybody.

KING: Anger at the incumbent Democrat, grumbling about the Republican alternative.

DAGGETT: Did it work?


KING: For an independent like Daggett, the perfect storm.

UNIDENTIFIED FEMALE: He's an independent in the race.

KING: Well, not quite perfect.

DAGGETT: Actually, the trick is to see where I am on the ballot. If you look on the back, they manage to figure out how to try to bury us on the ballot.

KING: So with the literature comes a county-by-county guide to where you can find Daggett on the ballot.

DAGGETT: And what I said is we've got...

KING: He's also short money. There's no party apparatus to help with turnout, and yet predicts growing national frustration with both parties will bring a miracle in New Jersey.

DAGGETT: But I'm pretty sure that this is the beginning of a wave of independents. It's been growing for quite some time.

I did it, in part, because I sensed things were -- there was a feeling out there that things were going off-track and we needed an alternative. It's far deeper and more widespread than I -- I ever imagined.

KING: Daggett believes his own politics are a good fit for the state and for the times.

DAGGETT: I'm very supportive of a woman's right to choose. So I'm pro-choice. I've said that I support stem cell research. I support gay marriage. If a bill were to pass, I would sign it in the legislature.

I believe strongly in gun control, but at the same time, I believe in the Second Amendment right to have a weapon.

Most people are more centrist, I think, than they are on the extremes, but the extremes capture the two parties.

KING: In a campaign stop, like this synagogue, Daggett quickly looks to tap the anger.

DAGGETT: I believe that it doesn't matter who is in Trenton, Republican or Democrat; nothing ever changes. Just listen closely to those health care forums that we've heard. There's a lot more anger being expressed than about health care.

It's about the stimulus package that didn't stimulate. It's about full-time jobs to part-time jobs and people out of work and foreclosed homes and about politicians that can't ever seem to solve the problems that face us.

KING: There's no doubt the frustration is real.

UNIDENTIFIED MALE: I think you're about the only one who's actually addressed the issues and, you know, told us what you will do about it.

KING: The question, in the final days is, where is this going?

And John Weingart of the Eagleton Institute of Politics at Rutgers University is among those who see Daggett as making an important statement, even having a big impact.

JOHN WEINGART, RUTGERS UNIVERSITY: I don't think he can win. And I think most voters will find, when they go to make the final decision, even though they may wish that Daggett would win, they don't want to cast a vote that they think would help the major party candidate they like the least.

KING: Republicans worry they get hurt more. If Daggett draws away moderate GOP voters, it could help the profoundly unpopular Democratic incumbent.

(On camera): What if you wake up Wednesday morning and it doesn't go the way you want it to go and people are you saying, you know, Daggett, you're the spoiler. You caused -- most people think it would be Corzine to win again, but does it matter to you?

DAGGETT: No, not in the least. Because I never saw in the U.S. Constitution anything that said about it had to be a two-party system or that somebody who tried to challenge the two parties was a spoiler.

So democracy is about the exchange of ideas and the figuring out who's got the best ideas and voting for the best person. I keep saying in the debates it's never wrong to vote for the right person.


KING: We'll be here again next Sunday and every Sunday at 9 a.m. Eastern for the first and last word in Sunday talk. Until then, I'm John King in Washington. Take care.