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STATE OF THE UNION WITH CANDY CROWLEY

Interview With Darrell Issa; Interview With Tim Kaine

Aired January 2, 2011 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ED HENRY, HOST: There's been a mercifully quiet holiday. The Obamas have been able to put together some real family time, to savor recent victories and recharge for the battles that lie ahead.

As the president gets ready to end his Hawaiian vacation the man who must rally Democrats for the 2012 campaign, party chairman Tim Kaine.

Then the Republican who plans to make life difficult for the administration, Darrell Issa.

(BEGIN VIDEO CLIP)

ISSA: If it makes the president miserable because I'm working 74 IGs, the General Accountability Office and others to make sure that we do a better job, well that's what he signed up for.

(END VIDEO CLIP)

HENRY: And then Elijah Cummings, the Democrat who will go toe to toe with Issa along with his Democratic colleague Steve Israel and Jason Altmire on the new tensions between the White House and congressional Democrtas.

I'm Ed Henry and this is State of the Union.

Candy Crowley is off today. The president returns to Washington Tuesday. The new congress is sworn in Wednesday. With the 2012 presidential campaign is already under way and this week, Democratic Party leader Tim Kaine went on offense writing "at the half way point of this term the president's list of achievements already dwarves that of many presidents. Taken together these accomplishments represent the most progressive and productive period of U.S. governance since the New Deal."

Now former Governor Kaine now joins us from Richmond. Happy New Year and thanks for joining us governor.

KAINE: You bet, Ed. Glad to be with you today.

HENRY: Great. And in your op-ed in Politico you noted all the president's accomplishments and yet a new Gallup poll shows that the president's approval rated 2010 at 53 percent, ended the year with a 47 percent approval despite all those accomplishments you listed. So you've made your case but seems like the American people are still not buying it, sir.

KAINE: Well, relatively if you look at the president's numbers compared to other presidents in the mid terms his numbers are fine. If you look at the president's numbers compared to how folks look at members of congress or other elected officials, he's fine.

It's a tough time, Ed. And with a challenging economy, folks are going to be dissatisfied until they see things moving more dramatically the right way. But the president's accomplishments have laid a foundation which we think we're already seeing start to work in improved economic signs and that's what it will take over the course of the next few months. And I think we'll see it and the president's numbers will continue to get better.

HENRY: Now you mentioned that difficult economy, employment still very high at 9.8 percent. The president mentioned that yesterday in his weekly radio and Internet address. Let's will be to what he said.

(BEGIN AUDIO CLIP)

PRESIDENT BARACK OBAMA: As president, that's my commitment to you, to do everything I can to make sure our economy is growing, creating jobs, and strengthening our middle class. That's my resolution for the coming year.

(END AUDIO CLIP)

HENRY: Now when you make a resolution, usually that means that you did something wrong and you want to do something better in the new year and that is year-end news conference the president also said his singular focus in the next two years is going to be focusing on creating jobs. Does that suggest that maybe he did not fully focus on creating jobs in the first two years?

KAINE: Well, Ed, he had a lot of things he had to do. When he started as president we were in the midst of two wars. He stopped one of them and we were also in the midst of the worst economic collapse since the Great Depression and we to spend an awful lot of time stabilizing the financial system of the country so that it wouldn't put us into a deeper tailspin.

With that work done he now can focus specifically on increasing job production. We've seen an economy from losing 750,000 jobs a month when he started to gaining jobs now. We just have to do work to accelerate the path of that recovery.

HENRY: But are you acknowledging, though, that all the time he spent on health care reform, for example, in the first two years, did that pull him off having that singular focus on jobs in the first two years?

KAINE: Well, Ed, I think health care reform is going to go down in history as one of the great achievements of this president. And it's not unrelated to the economy. One, you know, one-sixth of the American economy is health care and what we see in the small businesses are finding it increasingly difficult to provide health care to their employees. So it was important, both for the future of the economy, the health care and dealing with the deficit to bring health care costs down.

The president again has taken an economy that was shrinking in terms of its size, GDP, jobs being lost and now we're gaining jobs again, but we just have to, you know, now that we're climbing out of the ditch we were in, we have to keep climbing and that's what the president is focusing on. HENRY: Well now another factor in your trouble selling the policies to the public has been a determined Republican minority now is going to become a determined Republican majority in the House this week. And I want to get your reaction of before our next guest comes on, Congressman Darrell Issa. He says in this morning's L.A. Times, quote, "after a trillion-dollar stimulus that didn't create jobs, a trillion bailout of Wall Street and a trillion health care overhaul, the American people believe we need more oversight, not less."

We're going to fact check him when he comes on, because obviously...

KAINE: Please do.

HENRY: The Wall Street bailout obviously started under the Bush administration, we'll point that out and there are also signs that jobs are being created, so when he says the stimulus has not created any jobs, we'll talk about that later in the show. But my question is, how does a president work with Republicans who seem determined to insist he hasn't accomplished anything?

KAINE: Well, Ed, there's a couple of points. What we saw at the end of the 2010 in that lame duck session was dramatic accomplishments, the repeal of Don't Ask, Don't Tell, the approval of the START treaty, tax compromise going forward with additional stimulus, all those were done with some Republican votes. So if there are going to be members of the Republican Party who are willing to reach out and work as the president reaches toward them, we'll see some strong accomplishments.

We're also going to see this president not being afraid to be the chief executive of the American public asked him to be. He's not going to play "mother may I" with the Republicans. He's going to govern. But if the Republicans are willing to work as they did at the end of that lame duck session I think we will see productive efforts in a number of ways.

There will be disagreements, surely, that's part of the process, but there are many more areas where we can continue to agree and move forward.

HENRY: Well let's get a little specific on what he might work with Republicans, what he might do on jobs. He has a big State of the Union address at the end of this month. Can the American people expect a jobs plan in there? What is the president going to tell the American people at the end of January? KAINE: Well, I'm going to let the president decide on when to announce that, Ed. But let me just say in terms of working together, here's one, the president wants there to be earmark reform. You're going to have Congressman Issa on. He's the head of the government reform committee in the House, probably the most significant reform that the American people want to see is a reform in congress. I understand Congressman Issa agrees with no earmarks and I hope he'll use his leadership within his caucus to be about that. The president is very serious about deficit reduction. With the bipartisan deficit commission, you're going to see the president roll out a series of proposals from that commission and others who have weighed in during his budget and State of the Union and we're going see if the Republicans are serious about cutting the size of government. They weren't during the Bush administration. Perhaps now they'll decide that they do want to get serious about that.

So those are two areas where we think there's significant room. And then always in terms of fighting for the middle class and fighting for job creation. Often the Republicans in the last years fought against things like small business lending bill and stimulus for the economy, but now the majority in the House they have the opportunity and responsibility to govern and we'll see if they take that seriously or not.

HENRY: But governor I want to challenge you on the deficit reduction part. You're saying the president is serious about deficit reduction, he spent $787 billion on the first stimulus. This tax deal your touting that he worked with Republicans on in December, $800 billion to $900 billion, maybe even - it amount to a second stimulus. Didn't the American people send your party a tough message in the shellacking in November that Washington has to stop spending money?

KAINE: They certainly sent a message that they're concerned about the deficit, but I think the number one priority of the American public, Ed, as you know and I'm sure you agree is getting the economy going again. The best way to deal with the deficit is through economic growth. The tax compromise wasn't ideal from the president's standpoint. He didn't like the fact the Republicans were holding the middle class hostage to give the wealthiest Americans tax cuts. Nevertheless the president found compromise, which is what you ought to be doing in Washington, and convinced the Republicans to do things like payroll tax adjustments and unemployment insurance extension, that will have a stimulating effect on the economy going forward.

But now is the time when we see the economy picking off some strong Christmas sales numbers and lowered unemployment claims, now is the time to start wrestling with the side of the federal based budget. The president will challenge Republicans in congress to just do that.

HENRY: But let's talk about that point on the deficit, governor. Because earlier in December the president's own debt panel as you mentioned came out on December 3rd, and the Democratic co-chair Erskine Bowles said, quote, "I really am pleading with you, please make the tough Choices, reduce spending." The president came out later that day with a written statement. In part he said, quote, "we must correct our fiscal course." That was December 3rd. Then on Monday December 6th, just three days later, the president cut the tax deal with Republicans, $800 billion to $900 billion, and said, quote, "we have arrived at a framework for a bipartisan agreement for the next two years. Every American family will keep their tax cuts." Very high cost to that. I know what you're saying, in the short- term you have to try to rebuild the economy. But didn't the president throw his Own debt panel under the bus there?

KAINE: You know what? Well, Ed I doubt that. I don't think the debt panel said the best thing for the American economy is let all the tax cuts expire. The tax cuts, if they expired were going to hit low income working people the hardest in a way that would have hurt the economy, hurt revenues and likely exacerbated the deficit by slowing down economic growth. But now we have to deal with the deficit panel's recommendations and there have been other groups as well, Alice Rivlin and former Senator Domenici have come up with a strong plan for dealing with the deficit, other members have weighed in. And you're going to see the president put that out for congress to deal with and we'll see if they'll take it seriously in the House.

HENRY: Governor, let's talk a little bit about 2012. You started out as a civil rights attorney. So I know the words of Clarence B. Jones, a former confidante of Dr. King with matter to you. He wrote in the Huffington Post recently, I'm sure you saw it.

HENRY: Quote: "It is not easy to consider challenging the first African-American to be elected, but regrettably I believe the time has come to do this."

Will the president face a primary challenge in 2012, a challenge from the left?

KAINE: Ed, I think it's very unlikely that the president is going to face any kind of a serious primary challenge within the Democratic Party. You and I know that you can always get a fringe candidate or somebody to run.

So, you know, could somebody throw in their name? And, yes, it's possible. But I think the likelihood of any serious challenge to the president is virtually nil. And I think the president's strong performance and especially the three major accomplishments at the end of the year make it even smaller.

HENRY: Senator -- Governor, Sarah Palin may also run in 2012. One of the president's top advisers is so confident that she would lose a general election, he told me recently: "I'll pay her filing fee if she wants to run."

You have got the Democratic Party's checkbook. Are you ready to write the check this Sunday morning so that Sarah Palin will get in?

KAINE: No, look, I'm going to let the other guys sort it out on their side. You know, what we are seeing, Ed, is polling done even since the midterm elections, which were tough for us, obviously, the president matches up very, very well against any of the Republican potential contenders, including Sarah Palin.

And so, you know, we just feel like if he keeps doing the job that the American public elected him to do, we feel very good going into the 2012 cycle.

HENRY: Governor, last question I want to ask you real quick about your future. There has been reports that Robert Gibbs, the White House press secretary, he might want to be DNC chairman. I've talked to other officials who say your interested in a cabinet secretary post if one opens somewhere.

And David Axelrod at the White House basically says, look, this is up to Tim Kaine, if he wants to serve another two years, the president will have him as DNC chair. So what is it? Do you want it? Are you going to stay on? KAINE: My agreement with the president is I was going to do what he wants me to do. And what I know sitting here today is he wants me to continue in this spot and that's what I'm going to do with excitement, you know, traveling all around the country, going through the TSA lines like everybody else, going out and being the president's advocate, and promoter. And it's a wonderful job and I intend continue it.

HENRY: Governor, thank you for your time this morning and happy New Year.

KAINE: OK. Ed, thanks.

HENRY: Now the Republican who has been called the president's "annoyer-in-chief" has an important new role in the Congress, investigating the White House. Congressman Darrell Issa tells us what he has in store, next.

(COMMERCIAL BREAK)

HENRY: Last month President Obama had some familiar words of wisdom, think, oh, "Spider-Man," for the Republican leaders in the 112th Congress.

(BEGIN VIDEO CLIP)

OBAMA: With greater power is going to come greater responsibility.

(END VIDEO CLIP)

HENRY: Now the president may have had our next guest in mind. When the GOP takes control of the House this week, with it comes the power of subpoena. And California Congressman Darrell Issa will take the helm of the Oversight and Government Reform Committee.

Well, he has vowed to focus on policy and not personal attacks. He has also called Mr. Obama one of the most corrupt presidents in modern times, leading some Democrats to think back to the 1990s, the last time Republicans led this committee and a Democrat occupied the White House.

(BEGIN VIDEO CLIP)

REP. DAN BURTON (R-IN), THEN-CHAIRMAN, OVERSIGHT COMMITTEE: Today we continue to look into illegal foreign money that flowed into national campaigns through Florida. We are not going to have a pretty debate today.

Is it the business of the people to rent out the Lincoln Bedroom and seats on Air Force 1 for campaign contributions?

The Chinese gun merchants, Cuban drug smugglers, and Russian mob figures were being invited to intimate White House events with the president.

Today, we are meeting to hear testimony about the White House's failure to produce documents to the committee.

(END VIDEO CLIP)

HENRY: Chairman Dan Burton issued over 1,000 subpoenas and launched a flurry of investigations directed at President Clinton with very mixed results. When we come back, incoming Chairman Darrell Issa, and he'll tell us his approach.

(COMMERCIAL BREAK)

HENRY: And joining me here in Washington, Republican Congressman Darrell Issa, incoming chairman of the House Committee on Oversight and Government Reform.

Welcome and happy New Year.

ISSA: Happy New Year.

HENRY: Now I wonder, you've been wanting this gavel for a long time, you're about to get it, what are you going to do with it?

ISSA: Well, I'm going to try to make a real difference in Washington's spending patterns. You know, it doesn't take a genius in the private sector to know that you can save literally hundreds of billions of dollars in federal spending if you can make it more responsive. That's the main job. That's really what we do in oversight is look at the mechanisms of government, see if they're working, and if they're not working, ensure that the executive branch fix them.

HENRY: But are you going to have specific hearings laid out January, February? Do you have a plan already?

ISSA: Oh, obviously. In the last Congress, Chairman Towns and I did FDA oversight. We're going to continue that. There is more work to be done on food and drug safety, those kinds of items which the American people care about perennially.

We're going to start into the whole question of Medicare. Here you have $100 billion of waste. You know, "Obama-care," for all of it what it wanted to do, it didn't touch the fact that basically they pay to non-existent entities in the tens of billions of dollars every year. That has got to be changed.

HENRY: Now I notice you just used the word "Obama-care," that's not exactly a non-partisan look at what the health care reform is. That's what partisans call it when they want to attack it. They call it "Obama-care."

ISSA: And in all fairness, people always call everything "reform" when they want you to think it's reform.

ISSA: The health care bill clearly, when it became law, was about expanding Medicaid mandates that have been at least tentatively ruled unconstitutional, and a big growth in government, and the reform was extremely light or nonexistent.

So as Republicans, our goal is to repeal what was done on a partisan basis, come back and do on a bipartisan basis real reform, and my committee, which has the dominant amount of oversight historically needs to make the case for where that waste, fraud and abuse is, where government is part of the problem, where government can be part of the solution.

HENRY: I've been reading a lot of the profiles the big newspapers as you get ready to take the gavel and you've been talking about bipartisanship, working with Democrats on your panel. But that's not the approach you took -- right before the election, you went on Rush Limbaugh's radio program. Let's listen to that.

(BEGIN AUDIO CLIP)

ISSA: It's going to be acrimonious. There's no question. He has been one of the most corrupt presidents in modern times.

(END AUDIO CLIP)

HENRY: You have since said you regret saying that.

(CROSSTALK)

ISSA: I corrected -- what I meant to say -- you know, on live radio, with Rush going back and forth -- and by the way that was because Rush had me on to answer the question of -- about coming together, having compromise. He didn't like the compromise word, when I said we're going to agree to disagree and then we're going to find a kind of common ground, the kind of compromise that makes -- and gets things done.

In saying that this is one of the most corrupt administrations, which is what I meant to say there, when you hand out $1 trillion in TARP just before this president came in, most of it unspent, $1 trillion nearly in stimulus that this president asked for, plus this huge expansion in health care and government, it has a corrupting effect.

When I look at waste, fraud and abuse in the bureaucracy and in the government, this is like steroids to pump up the muscles of waste. HENRY: But first of all, on TARP, that was before the Obama administration. That was pushed through by the Bush administration, not -- so how could you call the Obama administration one of the most corrupt ever if the Bush administration pushed TARP through?

ISSA: I was -- I wasn't talking about TARP legislation. What I said...

HENRY: But you said now that that's what you meant.

ISSA: What I said was the administration got this money. That money sent trillions of dollars of extra money that were basically used like presidential earmarks, handing them out, deciding what to do with General Motors and Chrysler, who lives, who dies, what union gets the benefit.

All of that would not have been possible if Congress had done its job, if we'd said, Mr. President, in the case of President Bush, what is it you need; tell us blow by blow, dollar by dollar, and we will give you the money on a case by case basis.

Instead what happened is we gave President Bush, and President Obama inherited $80 billion worth of walking-around money with no guidelines so that what was supposed to help financial institutions ultimately bailed out car manufacturers.

HENRY: OK, but specifically you also went -- went after President Obama in the Joe Sestak case in Pennsylvania and called it "Obama's Watergate," and you said it was an impeachable offense. So I know you're -- you seem to be backpedaling now and saying you're not going after him.

ISSA: Ed, just so you understand...

HENRY: But why did you call...

(CROSSTALK)

ISSA: Just so you understand, you're misquoting. And it's very important that we get it right here.

HENRY: No, we found the quotes, and you...

ISSA: What you'll find is...

(CROSSTALK)

HENRY: In an e-mail, you said...

ISSA: I quoted Dick Morris...

HENRY: Right, that's who said...

(CROSSTALK)

ISSA: ... who had said it was an impeachable event. OK... HENRY: And an e-mail you put out said it was Obama's Watergate.

ISSA: OK, so let's not -- let's not compare the two.

HENRY: Well, but Watergate was impeachable offenses.

(CROSSTALK)

ISSA: Ed -- Ed, I came on your show, but don't create a statement which has to be answered...

(CROSSTALK)

HENRY: ... Obama's Watergate. It's not a creation.

ISSA: It is in fact an example of misconduct, in my opinion. Now, what happened throughout this process -- and I've made this very clear -- is we've discovered the problem's bigger than that. It's bigger than President Obama.

President Bush's people said we did the same thing. Guess what? It was a criminal event under the law -- a Criminal event, when President Bush's people did it, and I don't know when they did it. They've just admitted that they did it, when president -- well...

HENRY: In terms of trying get a candidate out of a race...

(CROSSTALK)

ISSA: When you offer a position, paid or unpaid, existing statute makes it illegal to offer that job in return for affecting an election. That is -- that is something we've got to get to stop. The American people do not want ambassadorships or any other position handed out to save a party money.

HENRY: So do you still believe it was Obama's Watergate, the Joe Sestak case?

ISSA: Once we knew, as we discovered, that it turns out that Republicans and previous administrations thought it was OK in spite of the absolute black and white letter of the law, it got bigger -- it got bigger than President Obama.

HENRY: So are you going to investigate the Joe Sestak case?

ISSA: No we're not. Here's the whole point.

HENRY: But if it was Obama's Watergate, now you're going to walk away?

ISSA: Ed, what we know now is we know that there is a problem in government that executive branch people think it's OK to do this. It's not OK.

Do we need to get this administration to stop doing it? Do we need, if anything, to find out who it was in the Bush administration that thought it was OK to use your taxpayer dollars to affect a Republican primary? That's -- it was wrong if it was done in the Bush administration. It's wrong in the Obama administration. But remember, the focus of our committee has always been, and you look at all the work I've done over the last four years on the oversight committee; it has been consistently about looking for waste, fraud and abuse. That's the vast majority of what we do.

HENRY: Well, let's -- Congressman Boehner, who is going to be the speaker, has said he wants to cut $100 billion from the federal budget and he wants to start with committees.

How are you going to fund all these various investigations when Democrats point out that you had the Securities and Exchange Commission investigate the timing of the -- of its suit against Goldman Sachs some time ago because there was a suggestion that you had that maybe the Democrats were timing that suit so that it would help them pass financial reform legislation?

Basically the SEC inspector general went through 3.4 million e- mails from 64 employees. They took all kinds of sworn statements. They spent weeks and weeks on this. And at the end there was nothing there.

How much did an investigation like that cost and are you going to be transparent about how much taxpayer money you're spending on all of this?

ISSA: Ed, I'm glad you asked this because what we did was we noted the timing. We sent to the SEC -- and the inspector general there said yes, this looks like the kind of thing that we follow up and investigate.

He conducted an investigation, with no interference and no guidance from us. He did what he thought was right and he reported out his findings. When his findings came out and said, yes, it's a coincidence; it's not any corrupt behavior, we never said or did another thing. That's government doing what it's supposed to do.

HENRY: But they went through 3.4 million e-mails and found nothing. It cost a lot of money, didn't it?

ISSA: First of all, they have the tools in government to go through 3.4 e-mails in a matter of hours on a keyword search, the same as you go through trillions of things when you do a Google search.

So let's understand. The I.G. has a budget; he lived within his budget; he did his investigation the way he thought he should do with no interference from Congress, only a letter saying we think you should consider looking at that.

They agreed -- they actually agreed and expanded their investigation, but they did it without any interference. It was the Obama administration, because these people are nominated by the president and confirmed by the Senate -- the Obama administration investigating itself and coming up with a legitimate finding that there was no wrongdoing in spite of the way it looked. That's government doing its job properly.

HENRY: OK, I want to fact-check something you said in this morning's Los Angeles Times. You said, and we told this...

ISSA: I must have gotten up really early.

(LAUGHTER)

HENRY: Well, you said, "After a trillion-dollar stimulus that didn't create jobs, a trillion-dollar bailout of Wall Street and a trillion-dollar health care overhaul, the American people believed we need more oversight, not less."

On that first part, a trillion-dollar stimulus that did not create jobs, you say. Bloomberg has a story out also saying "Employment probably rose for a third month in December, bringing U.S. payroll growth last year to $1 million and pointing to further improvement in the labor market for 2011, economists said before a report this week."

How can you make the case that no jobs have been created?

Maybe the White House didn't create as many as they advertised, no doubt about it, but how can you make the case that they've created no jobs with the stimulus? And you're about to investigate this.

ISSA: First of all, unemployment rose. By hearings held under a Democratic chairman, we were told under sworn testimony, with Chairman Towns sitting next to me, that it cost, just to keep a teacher on the salary one more year, $174,000 each.

Now, you can say those are jobs created or saved. Really, they're simply dollars spent for one year of kicking the can down the road. It didn't create -- there's not a lot of ripple effect in that kind of spending.

Real creation of jobs, permanent jobs is what we didn't get out of this. Of course, you get your money spent. If I hire you and give you a quarter million dollars or $174,000, you have a job for that year. That's not creating a job. That's hiring or continuing to pay for a government worker.

Creating a job is about something you do that becomes permanent. Stimulus should have been about private-sector creation.

And you know what, Ed, when you say no, it's a net business -- when you look and say, where there's some absolute jobs created? Of course. Those contracts let for what the president now discovers is not shovel-ready because there's no such thing as shovel-ready when you have years of bureaucracy to move something, but those jobs were real jobs, in the private sector, on behalf of government projects.

When you look at the effects of the stimulus, we spend $1 trillion. We didn't have net growth, and we didn't have net growth because we didn't spend it right. And more importantly, we didn't make the kinds of investment we need to make. ISSA: We could have used that same trillion dollars to tell industry you make the investments that make sense, you hire the people, we'll give you a helping hand and some sort of an abatement, but if you don't create the jobs, and if they're not permanent jobs, we're not giving you the money.

HENRY: Very last question, are you -- what kind of cooperation are you expecting from the Obama administration? And if they don't cooperate, and I stress, if they don't cooperate in some of your investigations, are you willing to press criminal contempt of Congress charges?

ISSA: Ed, as soon as I got this job I got a call from Vice President Biden. We had a 45-minute or so meeting, and it was a wonderful meeting because he cares about the same things I care about. He cares about the dollar going further. He has a huge government that needs help.

I've got IGs, the General Accounting Office, I've got all of government, including all of them that report to the president, I've got them wanting to do the same thing. I just have to help them do it.

Earl Devaney, with stimulus money -- and I note this all the time, with stimulus money, did some forensic work that has already shown that we can find far more waste and fraud than we ever did before.

Now that's one of the good things that came out of stimulus is an IG who was temporarily put in as a chairman here, has looked and said, I can do a better job, it's the first time I've been given the kind of money for me to do this forensic work.

We could save tens of billions of dollars next year alone if we took the technology that he did for a song, a couple of million bucks total, and went after it. Imagine spending a few million to save tens of billions in fraud. That's what we need to do.

President Obama has the same goal I have. Now he may want to re- spend the money somewhere else. I want the money not to be spent at all. But let's first find the fraud and then we can decide how to not spend the money.

HENRY: Congressman Darrell Issa, we appreciate your time this morning.

ISSA: Thank you, Ed.

HENRY: Now up next, going from the party in power to the minority. Three House Democrats from across the political spectrum explain how they plan to deal with the White House and the new Republican majority, right up next.

(COMMERCIAL BREAK)

HENRY: And joining me now live, three important Democratic voices in the House: Congressman Elijah Cummings, who will be the ranking member of the Oversight and Government Reform Committee; Congressman Jason Altmire, a member of the centrist Blue Dog coalition; and Congressman Steve Israel, the new chairman of the Democratic Congressional Campaign Committee, his first Sunday appearance.

Welcome all. We want to have a free-wheeling conversation, I want all of to you jump in. The only topic we won't be able to get to is football because we separated -- you're from Baltimore, the stadium is one block from your district.

CUMMINGS: That's right. That's right.

HENRY: Pittsburgh -- the Steelers in your district. And Congressman Israel, you're agnostic...

ISRAEL: Jets, Giants.

HENRY: ... so you won't pick a side.

(CROSSTALK)

ISRAEL: I'm partisan about baseball. I'm partisan about the Mets and Yankees, but I'll avoid...

HENRY: All right. Well, let's get serious about what Congressman Issa was saying. You're going to be the top Democrat going toe-to-toe with him. This is your only appearance on Sunday morning, what do you think about what he said and what is your approach -- what is going to be your approach on that panel?

CUMMINGS: I think -- as I listened to Mr. Issa, I couldn't help but think about the fact he has called this president the most corrupt in history. And basically what he started with, he's supposed -- and keep in mind, Issa will have subpoena power to subpoena almost anybody he wants to.

And that's a problem when you come to these conclusions before you even bring people in. You know, I think we -- I sat on this committee for 14 years and I watched what happened with the Clinton administration and how witnesses were dragged in to depositions, people making $50,000 a year had to pay $25,000, $30,000 to hire a lawyer.

I think that we're just going to have to be careful with this power. And my approach is to make sure that we have oversight and reform, that is, we spent a lot of time on oversight but now we need to also have reform, if it is appropriate. And I just...

HENRY: But are you going to be willing to investigate the Obama administration even though you're a Democrat? Are you just going to protect them? Are you going to be willing...

CUMMINGS: Let me make it abundantly clear, I now sit as chairman of the Coast Guard Committee, and what we did with that committee is that we made sure that we look for every -- we held them to a very high standard and now and over a course of two or three years we've been able to bring them to make them an excellent organization.

The same thing is going to happen here. And we did that in a bipartisan way and we're going to do it in a bipartisan way here if, if Mr. Issa cooperates. Now we can't have witch hunts. We can't have these fishing expeditions. We've got to work together. And, yes, I am going to hold this administration to a very, very high standard.

HENRY: OK. Let's broaden the conversation. You guys, we all know, took a shellacking in November. You're going to be dealing with being in the minority. John Boehner is going to be sworn in as speaker this week. And some of you, including Congressman Cummings, I know you were upset about the tax deal the president cut with Republicans in December, and there are some Democrats wondering if you're going to be triangulated like Bill Clinton did to Democrats on the Hill after '94-'95.

And then there is this, this CNN/Opinion Research Corporation poll from December: "Who do you have most confidence in?" The public said -- 40 percent said Republicans in Congress, 35 percent said Barack Obama, only 15 percent said Democrats in Congress.

Congressman Israel, you decided after the shellacking to take on the task of being the Democratic campaign chairman. Other than that, Mrs. Lincoln, how'd you like the play?

(LAUGHTER)

HENRY: I mean, what in the world -- why did you take on this job and what is your strategy to pull the Democrats back when it looks like you've got a mountain to climb?

ISRAEL: Well, look, there's no question it's an uphill battle. I love uphill battles. And let me give the landscape. We need 25 seats to take the House back. Fourteen seats currently represented by Republicans voted for Senator Kerry for president and President Obama. Sixty-one seats voted for President Obama. So, of the 25 seats we need to take the House back, we know that there are 61 that have a Democratic presence.

Second point, the Republicans are at their historic high tide. This has only happened four times in history have they reached the numbers that they have now. Each time they suffered an average 48- seat loss in the next cycle. Why? Buyer's remorse. And I think that will happen again.

HENRY: Well, some of the centrist Democrats in that Blue Dog coalition, like you, Congressman Altmire, you're one of the last Blue Dogs standing. And so Bill Clinton's reaction after the '94 tsunami was to move to the center, and in his State of the Union in '95 he did that.

This president has a State of the Union coming up in a couple of weeks. Are you looking for a Clinton-esque moment? Do you want him to move to the center?

ALTMIRE: I think what the president did on the tax cut compromise with the Senate and Republicans in the House I think is a model for what he should do moving forward.

I know we have a difference of opinion among the Democrats at this table on that issue, but I think given the results of the election, we lost 63 seats. We lost middle America. We got shellacked in Pennsylvania, in Ohio, in New York, in Illinois, in Michigan.

HENRY: So what does he do about that? We know that. What does he do?

ALTMIRE: We have to look at the world as it is. The Republicans have retaken control of the House and there is certainly a threat that they may overreach and make the same mistakes that previous leaderships have made, both Republican and Democrat.

HENRY: Congressman Cummings, you didn't like the tax deal, so how...

CUMMINGS: Yes, I didn't like the tax deal, but I'm glad the president was able to achieve what he was able to achieve. The people in my district are happy about the fact that unemployment insurance passed. They are happy about the FICA reduction.

So all of that is good. My point was that I just think that what's going to happen is the Republicans are going to come back and propose drastic cuts. And the same people that benefited from all of the tax cut proposals will now suffer.

And so that's my concern, but I applaud the president for achieving what he has achieved because, I'll tell you, when I walk around my district, people in many instances disagree with me. I just think that the president now has to keep in mind his base. His base is very, very important, and...

HENRY: But the base is unhappy in some ways.

CUMMINGS: The base is unhappy but I think the president's theory is that he's going to do some things for the base. I think the base felt pretty good about some of the things that he was able to accomplish at the end of this session, again, and I realize that the president has got appeal to districts like my friend's, and he's got to get the independents. And I think he went a long way towards doing that. So it's going to be, he's got a balancing act to do.

CUMMINGS: But one thing is for sure at the end when the dust settles I think it will be clear that this president accomplished more than any president in the last 50 or 60 years.

HENRY: Just hold it right there. We've got a quick break. We've got a lot more ground to cover with these three important Democrats. We'll do it right on the other side of the break.

(COMMERCIAL BREAK)

HENRY: We're back with Democratic Congressmen Steve Israel, Elijah Cummings and Jason Altmire. Let me just pick up where we were with Congressman Cummings. E.J. Dionne in The Washington Post had an interesting column just a couple of days ago where he talked about some Democratic rank and file being disappointed in the president. He said, quote, "too often the White House has been caught whining about its progressive critics, the president's aides act as if whatever Obama happens to decide is the only sensible and realistic thing to do. For the left to ask Obama to be bolder and testing the limits of the possible means it is doing its job of pushing the president to do more and to do it faster. Conservatives have mastered this approach. Why can't liberals do the same?"

Congressman Israel? What do you say to that?

ISRAEL: Ed, look, I don't care if you are a progressive voter in Elijah district, a more conservative in Jason's district, a moderate voter in our hometown of Deer Park which I represent the American people expect us to focus on three things: create jobs, strengthen the middle class and reduce the debt. And that's what we need we're willing to work with Republicans to achieve those goals.

The problem is that Republicans have not set the right stage just since the election. They talk about - instead of talking about creating jobs, what do they do, they're trying to create a full employment act for stenographers and private investigators by saying on day one they're going to start investigating. They're talking about wasting time repealing health care, when they know that the Senate and administration won't go along with it. Don't waste time, create jobs.

Let's talk about some of the people they've put in charge over the next two years. You can talk about our leadership, but let's talk about their leadership. They talk about cutting spending, who did they appoint as chairman of the House appropriations committee? A congressman who is known widely on Capitol Hill as the prince of pork. Who did they appoint as chairman of the House financial services committee? A congressman who said the job of congress is not to regulate banks, but to serve banks.

And so we will work with members who reflect our priorities in strengthening the middle class and creating jobs and reducing debt and deficits but we have got to have somebody to work with.

HENRY: Jason Altmire, debt and deficit, something Blue Dogs talk about this all the time but right after the election where the voters were saying stop spending money, Washington, $800 billion, $900 billion tax deal that you supported that cost a lot of money.

ALTMIRE: Well, given that we're in a very weak recovery from a very deep recession, I think the worst possible thing we could have done at that time was to increase taxes for anybody in the economy. The next presidential election is going to be all about those tax cuts and the American people's voice is going to be heard, but we had to take that off the table to focus on the economy and creating jobs and getting us moving again. HENRY: But Congressman Israel mentioned some of the new faces on the Republican side. You weren't happy with Speaker Pelosi staying on as the Democratic leader on the minority side now. How do you see her and Democratic leaders like Congressman Israel who will now be part of the leadership pulling your party out of this mess if it's some of the same faces who have been running the party for the last four or six years?

ISRAEL: I think the Democrats have a fundamental decision to make. We're at a fork in the road. We can fight for an ideology that's been rejected by the American people or we can work together with the newly elected Republicans for the good of the American people.

I wasn't sent to Washington to be a Democrat, I was sent to Washington to work with Republicans and Democrats to fight for the needs of my district and do what's best for the country and I think that's what the majority of Democrats want.

HENRY: Well Congressman Cummings, you're at the fork in the road there in I-95 in Baltimore. I've traveled it many times on the way home to Long Island. Which way are you going to go? Are you saying these are failed policies that progressives want to go back to.

CUMMINGS: I think that going back to the Dionne article, I think progressives definitely want the president to fight harder. They felt he could have had a better deal with the tax bill, no doubt about it. But the facts still remains that we're going to, you know I think some people have gotten the wrong message about this election particularly the Republicans.

I think what the electorate was saying is they want us to work together. They want us to work with Republicans when we can, to try to make their lives better. They want government to work for them, not against them and I think that there will be maybe some things that we can work together on. But again we've got to, I mean, they've got to come half way.

Now you've got to remember, they've been on the side lines throwing spit balls saying no, no, no, no, no, no, no.

HENRY: Sure, but then...

CUMMINGS: And now they've got to do something.

HENRY: But congressman, the president tried to work with Republicans in December to do something, and you opposed the tax deal. You didn't want him to work with Republicans. So which one is it?

CUMMINGS: Let me be clear, I opposed the tax bill because I saw what was coming up this year, as I said before I do believe that we will pay dearly for that tax bill. On the other hand, going back to what my friend just said I believe there will be some stimulative effect with regard to the middle class tax cuts and the FICA holiday and also... HENRY: The payroll holiday...

CUMMINGS: Yes, I think those things will have something and the president I think is betting on the economy being much better by the time 2012 comes around. I hope so.

HENRY: Congressman Israel one of the, when I was in Hawaii covering the president, Bill Burton one of his staffers said among his reading list one of the books was "Role of a Lifetime" by Lou Cannon, a biography of Ronald Reagan. Does that send shivers up your spine as a Democratic leader that maybe he's going to be triangulating and taking some of the Reagan play book? Are you concerned?

ISRAEL: No, not at all. First of all, I love history. And, you know, we ought to read as much as we can, that's fine. It informs how we proceed. But more to the point, look, Democrats are united with this administration on those core values that I mentioned: strength in the economy, rebuilding the middle class, strengthening the middle class and reducing debt and deficit.

And I reject the premise that House democrats are triangulated. You look at December where we came together and passed emergency health care for 9/11 workers, we passed middle class tax cuts, extended unemployment insurance. This month the American people will open up their paychecks and there will actually be a reduction in their payroll taxes as a result of what House Democrats did with this administration. We want to build on those achievements, we want to build on the credit card bill of rights which the Republicans opposed. We want to build on making college more affordable which the Republicans opposed. On those issues we are joined at the hip.

HENRY: One of the things that Governor Kaine said at the top of the show as the DNC chairman was that the president's going to work with Republicans when we can but he's not going to play mother may I with them.

How does this president - how do you suggest as a conservative Democrat this president find that balance between working with Republicans on some things as you want him to and other times saying no way.

ALTMIRE: Well, again I think the lame duck is a good model to look at. Now the Democrats were still in control of the House at that time, but if you look at the compromises that were made, we moved forward in a way that was bipartisan, something that was lacking in previous congresses, not just the Democratic-run congresses. I'm optimistic that the president is going to find a way to navigate through a Democratic Senate, a Republican House. He's in the White House. We have to find a way to get it done.

HENRY: And are you going to be able to get that done, Congressman Cummings with a Senate more divided than it was a couple months ago?

CUMMINGS: I can't speak for the Senate. I can tell you though -- senate. HENRY: It's a strange place sometimes.

CUMMINGS: It's a strange place.

CUMMINGS: But the fact is that I think when all the dust settles and, again, we will have attained a lot. I may not agree with everything the president does, but the fact is, is that I know that he will do -- and he's acting in the best interests of our country, and I think he'll do -- continue to do a great job.

HENRY: Three Democrats representing their cities. We had Baltimore. We had Pittsburgh. Long Island, New York, my home. Say hi to my people there on West 12th Street. Appreciate it, congressmen. Happy New Year to all of you.

CUMMINGS: Happy New Year to you.

ISRAEL: Happy New Year.

ALTMIRE: Happy New Year.

HENRY: Up next, a check of today's top stories, and then bringing the security of the White House Situation Room to Hawaii. We'll take you behind the scenes.

(COMMERCIAL BREAK)

HENRY: Now time for a check of today's top stories. Venezuelan President Hugo Chavez and Secretary of State Hillary Clinton shook hands and chatted briefly Saturday in a rare, cordial encounter amid some diplomatic tensions. The occasion was the inauguration of Brazil's first female president. Thousands lined the streets Saturday to take part in those ceremonies. Dilma Rousseff's inauguration takes place 41 years after her arrest for subversive activities.

The total number of Iraqi civilians and security forces personnel killed in violence in 2010 was higher than the previous year. A CNN tally shows the number of Iraqi civilian deaths dropped in 2010 compared to the previous year, but the rise in overall death toll was due to an increased number of Iraqi security forces personnel who were killed.

Violent storms across the Midwest have now left seven people dead, thousands more still without power. Missouri's governor declared a state of emergency in the tornado zone. The storm system stretched more than a thousand miles from the Northern Plains all the way down to the mid-Mississippi Valley.

Massive flooding has also swept through Queensland, Australia, claiming at least one life. At least a thousand people are expected to be evacuated. Some 200,000 impacted by those storms. Regional airports expected to be closed for weeks.

Now the Washington Capitals, meanwhile, waited through raindrops to defeat the Pittsburgh Penguins 3-1 last night in a wet Winter Classic. Capitals player Eric Fehr stole the show by scoring twice. The NHL game was played in front of more than 68,000 fans outdoors at Pittsburgh's Heinz Field.

Those are your top stories here on STATE OF THE UNION. Up next, the traveling White House. We'll show you how a Hawaiian hotel becomes as secure, listen to this, as secure as the Situation Room.

(COMMERCIAL BREAK)

HENRY: You probably noticed over the last two weeks, I got just a little bit of ribbing from my CNN colleagues about my working vacation in Hawaii covering the president. But having also been in the Aloha State on Christmas Day, 2009, when the underwear bomber struck, I can tell you the president is always on call, and so are we.

(BEGIN VIDEOTAPE)

HENRY (voice-over): The challenge is to make the president's vacation rental as well as the beach front hotel where White House staffers stay every bit as secure as the White House Situation Room.

BILL BURTON, WHITE HOUSE DEPUTY PRESS SECRETARY: Even though the president might be here in Hawaii on vacation with his family, he's still the president of the United States and the job follows him wherever he goes.

HENRY: Leave the room where we broadcast from and right down the hall you see cables unlike anything you see in a normal hotel. Aides say the president was miffed last Christmas when the communications equipment failed him. So this vacation it was beefed up, and now no one without a high security clearance is passing through these doors.

(on camera): Look at this bad boy. It turns out it's a paper shredder. And I've seen officials coming in and out of here at all hours of the day basically shredding important papers after they've briefed the president. And they come in and out of some of these rooms, it looked like nondescript hotel rooms.

BURTON: I guarantee that on top of what you see as reporters or the people in the public see traveling with the president, there's always a lot more people who come in support in order to set up those secure communications lines in order to have reliable streams of information that are getting to the president.

(END VIDEOTAPE)

HENRY: So there you have it from no lesser authority than a top White House official that we were, in fact, working in Hawaii, although I confess that hula lesson I took may have stretched the bounds just a little bit.

Thanks for watching STATE OF THE UNION. I'm Ed Henry in Washington. Candy Crowley will be back here next week. Up next for our viewers here in the United States, "FAREED ZAKARIA: GPS."