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John King, USA

White House Staff Shake-up; Navy Investigation

Aired January 03, 2011 - 19:00   ET

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

JOHN KING, HOST: Thanks Wolf and good evening everyone and Happy New Year. Major breaking political news tonight on two fronts, CNN has new details this hour on how the new House Republican majority plans to move immediately on one of its central and most controversial campaign promises, repealing the Obama health care law and we're told tonight President Obama is considering a major White House staff shake-up, debating whether to bring in as his chief of staff a man with a legendary name in Chicago Democratic politics, yet someone who has good relationships with Republicans and the business community.

Let's begin there with that breaking news. I'm told tonight by several top Democratic sources including two current senior Obama administration officials that banking executive William Daley is being considered as a possible chief of staff candidate. Daley is the brother of the Chicago Mayor Richard Daley and was commerce secretary back in the Clinton administration. He also was a top official in the Gore presidential campaign back in 2000.

My sources tell me Daley's name figures prominently as the president and his close advisers debate how to respond to the new environment of divided government here in Washington, and how to put the White House on the best possible footing heading into the president's re-election campaign in 2012. One of these sources said that as of last week, Daley had not, not been offered the job.

Another said whether to make that offer was part of the president's work on his Hawaii vacation. And a third source confirming a Bloomberg news report this afternoon that Daley's name was part of a broader discussion about White House changes for the new year and the new political environment. So why consider Bill Daley and what does it signal about the president's thinking after the midterm election shellacking?

Gloria Borger is here. She's been working her sources this evening too. Also with us, CNN contributors Roland Martin, a veteran himself of Chicago politics, John Avlon and Erick Erickson. Gloria, let me start with you.

Sometimes in what we're told we have to try to crack the reporting code and one of the things that strikes me is officially White House officials are saying no comment. Not go away. No comment.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: No comment. Can't confirm or deny. And you know this is something our White House correspondent Ed Henry was hearing back in early September. He was getting a whiff of this. He was waved away from it. I was waved away from it. It is very clear that this White House has been doing an internal review led by the current chief of staff, Pete Rouse, about what they need to do heading in to a new Congress with a new political reality and the political reality, as you pointed out, is a divided Congress and Bill Daley is somebody who really knows how to reach out to Republicans.

We saw that when he passed NAFTA, the North American Free Trade Agreement when Bill Clinton was there. And I bet they're going to -- you know that's one reason that he's attractive to them.

KING: Roland martin, you know the Daley family, you know Bill Daley and you know how he is a very tough guy when it comes to negotiations and politics. He's done that in the business community. He's done that in politics. Yet, unlike probably anyone in a senior role in this White House he does have a pretty good relationship with Republicans dating back to the commerce secretary days and he gets along very well with the business community which has complained for months and months and months about this White House.

ROLAND MARTIN, CNN CONTRIBUTOR: But beyond his commerce secretary role, he was a hiring executive with Southwestern Bell. And so that is also critical, somebody who's been in the position of working in the private sector, having to deal in terms of with various corporate executives as well. It is different when you're on the political side talking to corporate folks. When you're one of those corporate folks and saying look I understand when it comes to job creation.

I understand what we have to do to get the economy moving, that also is important but also he brings experience I think is also important as a cabinet secretary. One of the criticisms of this administration, how have they not been utilizing the broader cabinet as opposed to officials (INAUDIBLE) the president. He also brings (INAUDIBLE).

KING: Let's be clear. We don't know that this is a done deal. We are getting indications he is being seriously considered, that the president makes the decision on his Hawaii vacation so we'll watch as this comes out. John and Erick I want you to come in the conversation, but first I just want to show our viewers a little bit more about who is Bill Daley if they don't remember from the Clinton administration.

He's 62 years old. He's been executive at JPMorgan Chase Company from 2004 to the present. As Roland noted, president of SBC Communications back in 2001-2004, the chairman of the "Gore for President" campaign and the secretary of commerce back in the late 1990s. John Avlon, one of the criticism perhaps if he does come in is that I can see liberals saying, oh, my god, Wall Street, Wall Street, Wall Street, Wall Street.

JOHN AVLON, CNN CONTRIBUTOR: Oh, yes. And you can already anticipate the criticism on the right, too, which is Chicago, Chicago, Chicago, Chicago. Look, politics is perception. On the plus side of the ledger is everything that's been said -- business experience, Clinton administration experience, and that this is a guy who helped pass NAFTA, got a lot of credibility with the business community. That's huge in terms of addressing an unmet need in the Obama administration but it doubles down -- it doesn't even double down -- it quadruples down on Chicago and that's going to draw a lot of screams of anger, frustration about the insularity of the White House, which has also been under attack today.

KING: And yet Erick Erickson, would you consider it a positive development if the president brought in to the White House a business executive, someone who has worked on major trade deals, the Republicans say that's one of the areas they hope to work with the president in this new environment here in Washington, and someone who has had some -- I'm sure there are some Republicans out there about to e-mail me "hell no" but who has had over the years a pretty good relationship and a relationship level of trust with Republicans.

ERICK ERICKSON, CNN CONTRIBUTOR: Right. You know when the story came out this afternoon I talked to a lot of Republicans, none of them had anything critical to say of Bill Daley. They all kind of have the slap on the forehead, said this would be a great pick.

(CROSSTALK)

ERICKSON: It keeps the president in his comfort zone -- yes -- I mean it keeps the president in his comfort zone of having someone from Chicago which to the people I've been talking to says you know this is a president who has trouble reaching out to Republicans so he's got the Bill Daley comfort zone there and Bill Daley, the Republicans like him so he can reach out. It is a good pick.

(CROSSTALK)

ERICKSON: And frankly, I would say real quick, Gloria that some of the Republicans I've said -- talked to said this is a little bit troubling in that the president really does want to win re-election.

BORGER: But financial reform is clearly a key issue here because JPMorgan was not lobbying in favor of financial reform shall we say.

KING: Bill Daley is on the record against a very significant initiative from this administration --

(CROSSTALK)

MARTIN: Also this whole notion of how will the left respond. He is not coming from a conservative political family. I mean this is somebody who his brother is -- was a huge gun rights advocate, so it's not like he's not -- the Daley family is not beloved by the left.

KING: They're not -- let's look a little bit at the current lineup at the White House in the sense that Pete Rouse is the current chief of staff. He was the deputy chief of staff and he took this job when Rahm Emanuel went back to Chicago. Pete Rouse became the chief of staff and I'm told he is among those saying maybe I shouldn't keep this job. Maybe you need somebody more high profile. Robert Gibbs is the press secretary but there is lot of talk that Robert will slide over into David Axelrod's job as a senior adviser. David is right now the president's top political adviser, but he's leaving. He's going back to Chicago to set up shop for the reelection campaign and so one of the theories to bring in Bill Daley is that you would have an experienced grown-up to be in the White House, a chief executive, a CEO, a guy who's been in this business before and has deep experience. When the president is out running around the country --

UNIDENTIFIED MALE: Right.

KING: -- one thing is you want someone you trust minding the store.

MARTIN: This is different than the Clinton administration when he had lots of young folks who didn't quite understand Washington, D.C. This is somebody who has significant experience and again I think when you put all of the pieces together this is different than Leon Panetta coming in when Bill Clinton was in the White House.

KING: Does it tell us that initially after the election a lot of people said no, no, Pete's staying, Pete's staying, Pete's staying meaning Pete Rouse. Does it tell us that they've had a moment of reflection to make them think, this is a new environment. Both Republican control of the House and the idea that he's going to have to start gearing up for re-election.

BORGER: Yes and that maybe you know Pete Rouse is the ultimate inside man. He's the insider's insider who makes everything work at the White House. And what it tells you is that they're thinking that they need an outside man as they head into the 2012 election replacing, by the way, Rahm Emanuel who was both an insider and knew how to play the outside game and go on television, for example. Bill Daley knows how to do this job.

MARTIN: It's kind of weird calling any of these folks outsiders.

(CROSSTALK)

KING: He would be a new insider.

UNIDENTIFIED MALE: Right, right, right --

(CROSSTALK)

ERICKSON: Republicans are concerned that there are still a lot of Republicans out there who feel like the White House hasn't been doing as much outreach as they had anticipated. Bill Daley is a guy that's in everybody's comfort zone.

AVLON: Look the lame duck, the story of the lame duck was outreach. And Erick to your earlier point, if Republicans are saying that this is, "A", a good pick, "B", it shows how serious the president is not only about recognizing the results of the last election but primping towards re-elect, that means it is a very strong pick.

KING: All right, guys, I want y'all to stand by. We'll come back with our group in a little bit.

But more breaking news just ahead, new details first reported right here on CNN on how and when Republicans will try to repeal the Obama health care law.

(COMMERCIAL BREAK)

KING: On Wednesday the balance of power in the United States shifts dramatically to the right. Republicans take command of the House of Representatives and while Democrats still run the Senate, more Republican seats there gives the GOP near-veto power on any big issue. And tonight CNN was first to report just how Republicans plan to keep one major 2010 mid-term campaign promise -- repealing the Obama health care law. Our senior congressional correspondent Dana Bash broke that news a bit earlier and joins us now with new details -- Dana.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well John, we are told by House Republican sources that they do plan to move this week to do this, to make this their first major piece of legislation in taking that majority in the House. Now there will be a critical procedural vote on Friday, then there will be a final vote in the House on next Wednesday. So one week after they formally take over from Democrats.

Now this is something that we're told actually will be online tonight. Tonight we're talking about two days before the House Republicans actually formally take the reins of control but it is something they say they need to do to keep promises to show legislation online for three days beforehand. So this is quite interesting because, look, the bottom line is, John, that we know that joblessness is a huge issue in this country but Republicans say that they believe that the health care law is very much tied to joblessness. They say according to one source, Obama care is a job killer for businesses, large and small -- John.

KING: And Dana, do they acknowledge any risk here in the sense that they know they can't repeal the law, they know they probably can't get it through the Senate even if somehow they pulled off that miracle, the president has a veto pen, so and parts of it are popular. How do they assess the risks?

BASH: Very interesting. I'm told that as part of the package that they're going to put forward they're going to have instructions for the key committees with jurisdiction over this to immediately talk about what they're going to do to replace this law. Obviously things like the pre-existing condition provision, making sure that people who have those pre-existing conditions can still get health care. Those are, as you said, incredibly popular, so expect committees that will be now run by Republicans in the House to be talking about that.

But as you said, it is important to put the reality check out there, that House Republicans have the votes for this. It is almost surely to die in the Senate because the Democrats still run the Senate, but this is something that is symbolically at least very important for House Republicans, clearly to keep this very important campaign promise -- John.

KING: Dana Bash tracking the breaking news on Capitol Hill and now let's have a conversation. Why push for repeal right now when you know the president could block it with his veto pen and what does this plan tell us about the priorities and the tone of the new Congress? Allen West is a freshman Republican from Florida elected with enthusiastic backing of the Tea Party (INAUDIBLE) a promise to push for repeal. Karen Bass is a member of the much smaller Democratic freshman class in the new Congress, the former speaker of the California Assembly, represents a district from Los Angeles.

Congressman West, to you first, sir, you know you don't have the votes in the end. You know the president has a veto pen in the end. What does it say that as a new House Republican you want to do this right out of the box?

ALLEN WEST (R), FLORIDA REP.-ELECT: Well, this is one of the things that we were pretty much on mandate to do and I think when you look at the huge change that happened in the House of Representatives, that's the people's House and that's the voice. So we have to take this forward because this is something that really is tied to our economic long-term growth and security. When I talk to people down in my district, it is really killing them especially at the small business level because they're not able to grow their business. They're dropping people off their health insurance plans or they're pushing people over to part-time. And there are some good portions to Obama care but that could probably be capsulized in five to ten pages. It is the rest of that that we need to scrap it and we need to start over again.

KING: You're not only a new member of Congress; you are a physician's assistant.

KAREN BASS (D), CALIFORNIA REP.-ELECT: That's right --

KING: You have health care experience. Is the congressman right, should most of this law be repealed and then maybe keep in place pieces of it or do you fight him to the death on this one?

BASS: Well I definitely do not think it should be repealed. And frankly, I think that the message that voters sent is that people are concerned about jobs. I think our first order of business needs to be getting Americans back to work, frankly. And I just wonder who is going to call up the parents of the 24-year-old to tell them that we want to take away their ability to have health insurance. Who is going to call the person with cancer to tell them that pre-existing conditions that they might get insurance for now under the health care reform law, that that's not going to happen anymore.

KING: Congressman West, do you worry about that number one, that some people will say it is the tone, that the Republicans are taking away something that does help some Americans in this time of crisis, but more importantly, it was many Republicans who criticized President Obama and even some Democrats who supported the health care law saying Mr. President, what are you doing? The number one issue in the country right now is jobs, jobs, jobs, push health care aside for six or nine months.

WEST: But this health care law is tied to jobs because when you look at the 52-employee rule, a lot of people are not going to have more than 52 employees because of the threat of the high cost. And we also see that insurance premiums are already going up for Americans. Look, you know if we're talking about improving health care that does not mean 11 new taxes. That does not mean 159 new government agencies or bureaucracies. It does not mean 16,000 new IRS agents.

And I'm waiting for someone to explain to me what does government control of college education loans have to do with health care, which was part of that law. So there are some things that we need to carefully examine and we need to come up with a right, free market, free enterprise-based solution that looks at the cost analysis of health care and not just a simple government expansion.

KING: Let me get to some more of the specifics you just mentioned but I want to first to do that in the context of the tone of what's about to happen. Congressman West will be in the majority come Wednesday, when John Boehner becomes the speaker of the House and during your campaign, sir, you were very aggressive in saying you wanted to come to Washington and fight the liberals, fight what you believed was a socialist administration. I want to play here -- this is you on one radio talk show. I believe it is a radio talk show during the campaign. I want you to listen to this.

(BEGIN VIDEO CLIP)

WEST: What they need to understand now is that I'm even more committed, even more focused on making sure that this liberal progressive socialist agenda, this left wing, vile, vicious, despicable machine that is out there is soundly brought to its knees.

(END VIDEO CLIP)

KING: That is you, Congressman West, just a few days after the election, November 11th. I said it was during the campaign, it was just after the campaign. Do you consider our guest here, Congresswoman Bass or Congresswoman-to-be Bass is she part of the vile liberal progressive socialist agenda?

WEST: Well I will tell you this. If you look at the tenets of socialism, number one, it is the nationalize in the production. We see that in the automobile industry, finance industry, health care if cap-and-trade had gone through the energy sector. We see a creation and expansion of an entitlement class, a welfare state. And if you look at what happened when I went through my campaign, the fact that people put my Social Security number out in the public domain in a mailer. When you look at the fact that I was supposedly the first black member of an all-white motorcycle gang and supposedly a drug dealer and run in prostitution, this is what I'm talking about with this vile and despicable machine that really came after me. BASS: Mr. West, we don't know each other. I did introduce myself to you during freshman orientation but I would hope -- and I want to give you the benefit of the doubt -- that you would certainly take the time to get to know the people on the other side of the aisle before you come to conclusions. I know absolutely nothing about your race and so I think if the voters told us anything, they want us to work together.

And that's why what happened in the lame duck session frankly was applauded, because work got done. And so I know on January 5th when I raise my hand to be sworn in to the 112th Congress, I'm going to reach across the aisle to you and try to work with you.

KING: Well let me see if I can find some areas of common ground right here. One of the big decisions you will face heading forward is there was a continuing resolution -- that's Washington speak for those of you at home -- but it kept the government running until March. Then they have to -- then the Congress will have to pass a new plan to keep the government running and as part of that the Congress is likely to be asked to raise the debt ceiling in this country. Congressman West, are you prepared to say I don't like this, I don't want this to happen but I will give you another six or nine months, Mr. President, and my new speaker and raise the debt ceiling?

WEST: Well the thing with the debt ceiling is we must show the American people that we are serious about being fiscally responsible. For us to just raise the debt ceiling and not putting any other type of measures in place shows that we are not serious and we did not hear the American people. We need to have some type of spending cap for the federal government.

We need to also make sure we have some type of balanced budget amendment. And you're right we need to work across the aisle and we need to come up with a bipartisan plan that looks at Social Security, Medicare, Medicaid. We have to take it off of auto pilot and put some type of budgetary controls on that. So I'm more than willing to work with people that are serious about reducing the debt and reducing the deficit that we have in our country because the most important thing is to produce a long-term sustainable economic growth plan for the American people.

KING: In the last seven months of 2010 the United States added $1 trillion to its long-term debt, $1 trillion.

BASS: Exactly.

KING: In seven months. Does the congressman have a point and should there be -- as a Democrat would you tell your leadership I will vote to raise the debt ceiling but only if you can find some accommodation on a big package of spending cuts?

BASS: Well frankly, over the last few months, one of the things that contributed to the debt, as you know, was the Republicans' demand that we end the tax breaks -- or rather, that we continue the tax breaks for the highest ONE percent income earners in our country. That was one of the contributing factors. So I will tell you that I cannot even imagine agreeing to shut down the government which is what it means. If we refuse to take that vote, it means we shut down the government.

KING: But will you show your good will by supporting cuts? One of the things I think Congressman West is on board with --

BASS: Absolutely.

KING: -- there is about $45 billion in unspent stimulus money and many Republicans say put it back in the Treasury as a down payment. Congressman West, am I right about that?

WEST: You're absolutely right.

(CROSSTALK)

BASS: I think -- well first of all, I don't know that. If there is $45 billion of unspent economic stimulus money I frankly want that money to stimulate the economy. Now I do agree that the debt is absolutely important and I think we have to look for ways to cut absolutely and so that's where I would agree with congressman-elect.

KING: Let me ask you Congressman West one last question, what specifically -- give me two or three examples of what you think should be cut as part of what is called again, as Washington speak for those of you at home, a rescissions package, you come forward with a package of cuts to cut spending that's already been approved. What should it be, sir?

WEST: Well I think one of the things we need to do very quickly, John -- I can't answer that specifically right now but we need to look for redundancies. We need to look at duplicitous programs, failed programs and those need to be the type of things that we need to start cutting. And I think that when we re-resurrect that art of inquiry of congressional oversight hearings, we need to follow the money. We need to tighten up our budget appropriation process and I think that that's something Congresswoman Bass and myself we can definitely agree on.

BASS: Absolutely. I would agree with that.

KING: You're willing to work with him on some spending cuts.

BASS: Absolutely I am and you know I think that one of the things the Government Reform Committee is going to do is look at the foreclosure crisis, which is another reason why we have such, you know, problems in our economy. I think that's very important. I think it is important to go after fraud if that exists. If there's fraud in the Medicare system I think we need to go and we need to deal with that.

KING: I suspect we're going to have a lot of partisan fighting in the weeks and months ahead but if you two can find common ground we'll bring you right back here and talk about that and if you have a few things you want to debate --

BASS: Well I look forward to it --

KING: You have a few things you want to debate we can do that as well. Congressman West, Congresswoman Bass, thanks so much for coming in tonight. We'll keep in touch in the weeks ahead.

And up next for us, Erickson, Martin and Avlon, left, right and center rejoin us to debate the tough choices and the aisles (ph) of compromise as power sharing comes to Washington.

And if none of his party's big elected leaders want him to stay, why is Michael Steele fighting so hard to stay on as the Republican National chairman?

(COMMERCIAL BREAK)

KING: Let's have a quick discussion about what we just heard from the new members of Congress and some other big political news today. Back with us John Avlon, Erick Erickson and Roland Martin. Let's start with the conversation we just had. You had incoming Republican Tea Party favorite, incoming Democrat from Los Angeles, a safe district. They were trying to be nice to each other but it is pretty clear, Erick, starting with the health care debate, when the House Republicans vote next week to repeal and probably pass it that that is going to fracture whatever spirit of goodwill there was from -- at least from the lame duck session. No?

ERICKSON: Very much so. It is kind of rich to hear the Democrats talk about we need to get on to the jobs business when on November 2nd all the people crying saying oh we got our message wrong, we should have talked about jobs. Let's go back and talk about "don't ask, don't tell" and the DREAM Act. You know they're going to be able to do more than one thing at the same time. Repealing health care they know they're not going to get it through the White House. But this is all about building momentum headed into 201. Yes it is political but yes they have to do it o keep with the good graces of the Tea Party movement.

KING: And they do repealing health care, as Erick says to keep in the good graces of the Tea Party movement, John Avlon. Then they come in with a package of spending cuts that the Democrats will fight. Then we have the budget fight. Do you have any hope that the relatively bipartisan spirit of the last couple of weeks of December will carry over or is it gone?

AVLON: I do. I do have hope because the American people reacted so overwhelmingly positively towards it. We actually got a lot done. We got tax cuts extended. We got legislation passed. That's what the American people I believe want to see and they also want to see controlling of the deficit -- debt. The one thing that you know check (INAUDIBLE) on health care, right? It's going to happen but the one thing you saw both congressmen agree on is they need to reduce spending in waste, fraud and abuse. Well that's kind of a no-brainer folks. That's not going to put a dent in the deficit, let alone the debt. So you got to move that ball a little bit further and that's where the real common ground, the really serious conversation has got to occur. MARTIN: You know John, I think John Avlon's theme song (INAUDIBLE) is "we are one." It's like oh, it's so wonderful and nice. John that's nice and wonderful and it works here. But come January 5th, it ain't happening.

(CROSSTALK)

MARTIN: But it's very interesting. When you listen to Congressman-elect West, he talked about cuts. He said Medicare, Medicaid, Social Security. Did not mention defense and you cannot talk about the need to deal with our deficit if you don't deal with defense as well as Medicaid and Social Security. But also Congressman-elect Bass you have to deal with the reality there are going to have to be cuts on the Democratic side. We -- part of the problem is until we're forced to make the changes, Republicans and Democrats don't really want to touch the hard stuff.

KING: You're going to see the House Democrats laying back now and saying we'll see what the Senate does. The House Democrats feel, the new ones and the old news, they did a lot of stuff last session. The Senate wouldn't follow up --

(CROSSTALK)

KING: Let's move on to some Republican politics. Today there is a debate here in Washington with the five candidates who want to be the next chairman of the Republican National Committee. Now most Americans say wow, what does that matter to me? But the Republicans will be heading into a presidential year obviously. The Republicans are the ascendant political party at the moment.

And Erick Erickson, I don't know -- I know -- let's put it this way -- the speaker's office, the new speaker's office, they don't want Michael Steele to stay on.

UNIDENTIFIED MALE: Right.

KING: Republican leader in the Senate, Mitch McConnell, he doesn't want Michael Steele to stay on. The new Republican governors and the big name Republican governors who are carrying over, I don't know any of them or not more than one or two who want Michael Steele to stay on. He fighting to keep his job. Here's a sample of this debate today.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think the Republican national committee is at a moment of crisis.

UNIDENTIFIED FEMALE: And we fell down as the national committee in this last election cycle.

UNIDENTIFIED MALE: I mean I care to revisit the past but I do think in the future we do need a fully funded GO-TV effort.

UNIDENTIFIED MALE: My record stands for itself. We won. (END VIDEO CLIP)

KING: That's Mr. Steele at the end, Erick Erickson. Most Republicans would tell you they won despite him, not because of him.

ERICKSON: Yes, yes, they did win despite him. You know Michael Steele trying to take credit for this is like someone trying to take credit for it raining during a hurricane. It doesn't fly. You know the issue here is that Michael Steele does not have the votes to become the chairman of the RNC again. He does not have them.

KING: So why not get out? Why not do the party a favor and get out?

(CROSSTALK)

ERICKSON: There are a lot of people who suggest that Reince Priebus, who was his general counsel are in this together. If Michael Steele were to get out, the majority of his votes would go to Reince. Likewise a lot of Reince's votes would go to Michael Steele. But they can't do it separately because those votes would have the opportunity to go to someone like Ann Wagner or Saul, or Maureen Aseno (ph). So you have to remember with the Republican National Committee chairman's ballot it happens on a multiple series of ballots until they get to someone who can get a majority vote. * MARTIN: How about this -- you run because you can? He's a sitting chairman. If he loses, OK, fine. But also, keep in mind, Boehner, McConnell also had issues with him the moment he was sworn in. We all remember the meeting when they said, look, let us handle the politics, you go do something else. There's been friction with this chairman from day one and folks can't deny that.

KING: John Avlon, does it matter to average Americans out there? Or does it even matter to the Republicans thinking about running for president in 2012?

JOHN AVLON, POLITICAL ANALYST: No, it does not matter to Americans at home and the reality is even party chairmen have very little to do with wave elections. It is a lot bigger than a party chairman. One thing that is extraordinary is we had this success for the Republican Party but it was groups mobilizing around the RNC to fund candidates. You've got a lot of palace intrigue on the RNC side of the aisle right now, but it doesn't translate to anything really important to folks at home, no.

MARTIN: It is truly inside the Beltway.

KING: Inside the Beltway, all right. Roland, Erick, John thanks for coming in. I had a lot more to talk about but we'll do it on another night.

Because we have to move on. When we come back a lot of important news still to discuss in the program. Including a huge controversy of a video scandal aboard one of the navy's largest aircraft carrier. Raunchy videos, now the commander officer is in charge of it when he was the number two on the ship. Two military veterans right here to debate with us and Barbara Starr to bring us the latest on the story.

Also with the baby boomers. Remember them? I'm on the tail end, but the beginning end of the baby boom retires this year. What's that do to the Social Security system? What does it do to your federal budget and your retirement? We'll explore that.

And one of the great mysteries early in the new year, what killed all those birds down in Arkansas? Our Ed Lavandera on the scene will bring you the latest.

(COMMERCIAL BREAK)

JOHN KING, CNN ANCHOR, JOHN KING USA: Some videos full of sexual innuendo and anti-gay slurs have suddenly hit the captain of the aircraft carrier USS Enterprise, well shall we say, sailing, in some very hot water. CNN Pentagon Correspondent Barbara Starr has been reporting all day on this story and is here to tell us who he is, and why we are only now learning about these raunchy videos.

Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, John, what can you say, except what on earth was this man thinking? Captain Owen Honors of the U.S. Navy just promoted recently to be the commanding officer of the USS Enterprise, a nuclear powered aircraft carrier, that's about to set sail for the war zone.

Now these videos coming to light in "The Virginia Pilot" newspaper that show everything you said and more, plenty that we can't show on television. The Navy launching a major investigation into all of it. He was reprimanded apparently back in 2006-2007 when he made the videos, when he was the number two onboard the carrier. But now the Navy is looking at who else might have known about it. How did all of this happen without anybody speaking up and saying that this was unacceptable, John.

KING: And, Barbara, how far up the chain of command does this go now that they are looking into it? Is this a Navy decision? Is this an Admiral Mullen decision? Is this a Secretary Gates decision?

STARR: Well, you raised the key point, which no one can really answer tonight. The captain may soon find himself, according to sources, with not being captain of this ship as it goes to the war zone. They will look to see if they can find a replacement for him. But the fundamental question for the military is, again, one more time, what was the command climate, what was the command environment onboard this ship of 6,000 sailors that this went on. That there were repeated videos made, showing senior officers onboard, had to have known is the way the Navy is thinking about it. Why didn't they speak up after all these years of repeated scandals of this type throughout the U.S. military, why one more time are they dealing with it?

KING: Barbara, you're exactly right. The culture, the tone, tone of conduct -- code of conduct is number one here, but there are specific engineering issues about this ship that make it hard to just have a new commander, right? STARR: Yeah, absolutely. I mean this situation puts the Navy in a very tough spot. If they want to go ahead, as sources are indicating they do, and make a switch. There are only 11 nuclear powered carriers in the U.S. Navy. These are some of the most coveted jobs, but this carrier, Enterprise, in particular, because of the way it was built decades ago has a very unique nuclear configuration. They are going to look for someone who knows how to deal with it. He will have to be nuclear certified and there are only so many people in the U.S. Navy that know this line of work, John.

KING: Barbara Starr for us tonight from the Pentagon. Barbara, thanks for all that report.

And joining to us talk this over, Retired Admiral Joe Sestak, whose term as a Democratic congressman from Pennsylvania, just ended. And on the phone, Retired Army General and form NATO Supreme Commander Wesley Clark.

Congressman Sestak, to you first: Any doubt in your mind the Navy needs to say, the Pentagon just needs to say, sorry, sir, you're done?

JOE SESTAK, (D) FMR. CONGRESSMAN FROM PENNSYLVANIA: I do think they have to do a full investigation. But that said, a leader so senior sets the example that others imitate if he's good or if he's not good. He also sets the environment for people to feel comfortable. I think this shows such poor judgment that after this is investigated, I think you're going to see that accountability is going to be had. Look, I understand this. I commanded an aircraft carrier battle group, a similar ship. And I know challenges of deployment. But what I found was probably the more daunting statements this officer made is when he said there are those who are gutless that complained about it. That type of environment, I don't think is conducive to what you want to have, where everyone feels part of a unit.

KING: General Clark, I want you to join the conversation. You are an Army man, this is a Navy decision, but you have commanded men at that level, the equivalent level, and you have been the commander of the entire NATO force structure. If were you in NATO command and this person served under you, would they get to sail that ship from port?

GEN. WESLEY CLARK, (RET.), FMR. SUPREME COMMANDER, NATO: You know you have to establish an atmosphere, a climate of command, in which people are treated with dignity and respect. That means you've got to respect those-all of them-who serve under you. Not 90 percent, but all of them. And you've got to encourage others to do the same thing.

I think the issue for the Navy is going to be has this officer forfeited his credibility in command, because of these tapes that he made? Does it show something about the way that he looks at others that would undercut his ability to enforce discipline and maintain a high standard as a commander? And that's the issue that's going to have to be raised. The Navy has to do it. It will go up to the CNO and chief of naval operations and secretary of the Navy, Ray Mabus. But I think it is going to be very hard for them to keep him in command.

I agree with what Joe Sestak said. Look, there's nothing tougher than commanding an aircraft carrier. The pilots are under incredible stress. They're landing big, heavy aircraft at night. It's dangerous, even without combat. You've got crewmen who are pulling tough shifts when they're trying to get rest, they're doing fire drills. This is a really tough command to hold. No one can underestimate the difficulties of it or criticize him for wanting to maintain morale when he was the number two guy onboard the ship. But when he come right down and look at it, you've got to do it in the right way. I think the Navy will look at this. I think it is going to be very hard to keep him in command.

KING: Let's take a little closer look at what General Clark has just talking about. Here is the Enterprise, right here for you. Here is the aircraft carrier-whoa, take that back. Here we go. Come back. Sensitive sometimes.

If you look at community right here, it is a one-of-a-kind aircraft carrier, as Barbara Starr noted, nuclear powered, commissioned back in 1961; holds approximately 80 aircraft on the deck and in the storage areas down below. When you take a closer look at what we are talking about in the community here, its height 250 feet. That's roughly 25 stories tall.

Imagine a 25-story skyscraper. That is the height. Here's the length, 1,088 feet long, 3 1/2 football fields. Here's what we're talking about. This is a small town at sea, 571 officers, 5,244 enlisted people onboard this carrier. So this is the community.

And Admiral Sestak you just heard General Clark talk about how tough it is. You know how tough it is to live in this environment, in a potential combat deployment, for months on end. So, the XO at the time, now the captain, Mr. Honors, is trying to come up with some environment. The question is people say, well, boys will be boys. And they're sailing, you have to have morale. But I want you to watch this segment. If you have children in the room you may want to shoo them away. I want you to watch this segment here, one of the shower scenes, if you will. And tell me, boys might be boys, but does not this grossly cross the line?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Let's get to my favorite topic and something foreign to the gay kid over there, chicks in the shower. This is certainly the most popular video of any of the XO move videos. It is also the one that's landed me with the most complaints. This evening, we've got some different chicks in the shower in a clip that was previously too sensitive to show. However, we have protected their identities.

(END VIDEO CLIP)

SESTAK: It's beyond the line. That ship, first of all, thanks for bringing me home. But that ship is a small city. And I understand the challenges of deployment. Every ship has videos but not like this to have morale. But I understand good order and discipline. And this was poor judgment because there were those that weren't comfortable and were offended, without a doubt.

Matter of fact, they was executive officer, this officer said that. Why I think he, without a doubt, is a fantastic warrior, when you're up at that level, you are leading men and women into something that sets our profession apart from any other into the dignity of danger. To have people continue to want to be part of that group and to continue going forward you have to show the best ideals and the best judgment. This was beyond what I find acceptable, without question.

KING: You say beyond. I want you to listen, General Clark, to this. This is then the XO, Mr. Honors was the XO, meaning the number two at the time, talking as he introduced one of these videos saying essentially those above me have no idea. I want you to listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I'm here tonight with my SWO (ph), an aviator, alternate personalities. As usual the admiral and captain have no idea about the contents of the video or movie this evening, and they should not be able held accountable in new judicial sense. Over the years I've gotten several complaints about inappropriate material during these videos. Never to me personally, but gutlessly through other channels.

(END VIDEO CLIP)

KING: Well, General Clark, can that hold sway. These were shown on an in-house system, 6,000 people on that ship. The XO is sitting there saying, well, those above me know nothing about this. They are responsible, sir, for what happens on that ship, are they not?

CLARK: They are. They had to have known. Even if they didn't, they should have. And so you can't hold that. But I go back to what the idea about people being gutless. The XO on a ship has a lot of authority. If you're a sailor or a junior officer and you are offended by this, it is pretty hard to come up and say to his face, "Sir, you offended me by that." Some people might have, in this case they didn't. But complaints? That's a pretty good indicator itself that it crossed the line.

There's got to be other ways to maintain morale than offending people like this and demeaning people's-you've got to show respect and dignity. You have to create a climate in which people treat each other the right way. I think this crosses the line.

KING: General Clark, appreciate your time tonight. Admiral Sestak, Congressman Sestak, as I let you go, to that point. Should the captain, at the time, should he be part of this investigation? Do you think needs to be- SESTAK: Yes. I think that any investigation should look at those who were junior, that might have participated, willingly. But also those who were more senior. If I could, I don't think this is representative at all of the institution of the Navy.

KING: It is not across naval culture?

SESTAK: No, sir. But I will say, there was an incident three years ago to speak highly of the present chief of naval operations. It came to my attention a year-and-a-half ago that a year-and-a-half earlier a young sailor had been abused, dragged through dog feces, in a military dog unit in Bahrain. This investigation was done, but no action was taken. When I reported it to the present chief of naval operations he not only dismissed the individual but disciplined up to a three-star admiral rank, that of a senior. If the seniors were aware of it should be held accountable. Second, if they weren't, how well were they involved with this unit, if they were in charge?

KING: Congressman Sestak, appreciate it. General Clark, appreciate it as well. When we come back, 2011, the baby boom. It is a milestone. We'll break it down and what it costs when we come back.

(COMMERCIAL BREAK)

KING: In the weeks and months ahead you'll hear a lot in Washington about deficit reduction. When you hear deficit reduction, people will talk about finding ways to reduce the cost of Medicare and Social Security. Well, that Social Security debate and the Medicare debate takes on especially more meaning right now because of a key demographic and that is the beginning retirement of the baby boom generation.

The baby boomers are beginning to retire, and if you look at this, this you se the growth right here. The bulk right here. Men at the top, women at the bottom. You see the thickness there. That's the growing population of people age 50 and older, and 65 and older, that is the baby boom generation reaching retirement. Let's blank that out and show you why this matters.

As more and more Americans of that baby boom generation retire, here's what Social Security is taking in. That's the yellow line. See that's pretty flat-lined. Here's 2010, that's this year, as the baby boom generation begins to retire, whoa, up goes the costs. You don't need me to explain that to you right there. That's what we're taking in and that's what it's going to cost. That's a problem for the government going forward.

Now one other thing that happens as the baby boom generation gets older is the percentage of the population of the voting age over 65 gets older as well. Here's 2010, you get the picture right here, look as we go, right up. Right now, about 15 percent of the voting population is 65 or older. The forecast is that that number will climb as high as 26 percent by 2035. Something to watch demographically. The demographics are what are driving the big debate over Social Security. It is politics that will drive the debate over what to do about it.

But remember the demographics as that debate takes steam in the weeks and months ahead.

When we come back, tonight's top headlines including a fascinating, troubling mystery in Arkansas. What's killing all those birds?

(COMMERCIAL BREAK)

KING: Thousands of birds fell from the sky in Arkansas just before midnight on New Year's Eve. As you might expect, conspiracy theories abound. But what do we really know? CNN's Ed Lavandera is on the ground in Beebe, Arkansas, doing some reporting.

Ed, what do we know?

ED LAVANDERA, CNN CORRESPONDENT: Well, we know that officials here in Arkansas are saying late this afternoon that the initial testing -- preliminary testing that has been done on some of these birds show massive trauma. But what exactly caused that trauma is what has everybody kind of confused and scratching their heads here.

One of the theories that's floating around out there is there was some sort of boom that was heard by many residents here in town and that perhaps that startled the birds. These are birds, we are told, that don't see well. Don't fly normally at night, and that perhaps they were startled out of the trees, where they spend the night, in a little wooded area, where all these birds were found. And they started flying around and started crashing into each other and that is when the started falling from the sky. But as you might imagine, John, that's just not the kind of theory that a lot of people around here are buying at this point.

KING: That begs the question, how unusual is this? If people are questioning the explanation, one of the questions is, does this happen that often?

LAVANDERA: The folks here in Arkansas, say, look, it's not uncommon for birds to kind of fall out of the sky. What is uncommon is for this massive quantity. We're talking with one official with the state who said, we had a couple incidents like this. We asked him how many, it had been a couple dozen. So to go from a couple dozen to 5,000.

And John, I can also tell you, we walked through many parts of this town today, and we had one bird that flew up into our car. It kind of ran into the car and ended up dying shortly after. We picked it up off the side of the street. There are dead birds still that we're finding all over this town.

Ed Lavandera on the ground for us in Beebe, Arkansas. Ed, we'll keep in touch, thanks so much.

Are you still writing 2010 on your checks? Well, you're not alone. Pete on the street's next. (COMMERCIAL BREAK)

KING: New year means new challenges. Our Offbeat Reporter Pete Dominick feels that way. But what about you? Well, Pete went out on the street to find out.

(BEGIN VIDEOTAPE)

PETE DOMINICK, CNN OFFBEAT REPORTER: That's right, John, it's only the third day of 2011 and it will take me to June to remember to write '11 instead of '10. And when do I stop wishing people happy new year? I'm in lovely Nyack, New York. I'm going to get some advice in this diner.

Have you written the year yet?

UNIDENTIFIED MALE: Yes. I've written it, yes, many times. It's easy.

DOMINICK: Did you nail it the first time?

UNIDENTIFIED MALE: It's easy, 11.

DOMINICK: If I see someone for the first time like the third week of January, happy new year.

UNIDENTIFIED FEMALE: Right, absolutely.

DOMINICK: But when do you stop, though?

UNIDENTIFIED FEMALE: I think you give it a month.

DOMINICK: Have you written the date yet?

UNIDENTIFIED MALE: No.

DOMINICK: You haven't?

UNIDENTIFIED MALE: I've simplified my life to the point where I no longer write dates.

DOMINICK: You never write any dates at all?

UNIDENTIFIED MALE: No, no.

DOMINICK: When you do you stop wishing happy new year?

UNIDENTIFIED MALE: Oh.

DOMINICK: It's three days in. What's the etiquette?

UNIDENTIFIED MALE: Isn't it politically incorrect to say happy new year these days?

UNIDENTIFIED MALE: I think it starts to feel a little strange after a couple of days. DOMINICK: Have you written the date yet? 2011, we're three days in. Have you had to write it yet?

UNIDENTIFIED FEMALE: Yeah, on January 1st, 1/1/11.

DOMINICK: Did you write it, though?

UNIDENTIFIED FEMALE: Absolutely.

UNIDENTIFIED MALE: I wrote a check to her.

(LAUGHTER)

DOMINICK: You wrote out a check to her.

(LAUGHTER)

DOMINICK: Would you mind writing a check to me so I know you can get the date correct?

UNIDENTIFIED MALE: 2012, correct?

DOMINICK: Yes!

Oh, gets me every time!

When do I stop wishing people a happy new year?

UNIDENTIFIED MALE: Well, for me it is when the affects of my hangover wear off.

DOMINICK: All right, John.

Well, I'm going to have to figure it out. I think if just keep writing it over and over, I'll know. And if I guess after you see everybody you know, you done saying happy new year. So, John King, happy new year to you. Welcome back.

(END VIDEOTAPE)

KING: We'll see if Pete dates that expense account right. That's all for us tonight. PARKER SPITZER right now.