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Interview With Herman Cain; Interview with Michele Bachmann

Aired October 9, 2011 - 09:00   ET


CANDY CROWLEY, HOST: In the two month since she won the Iowa straw poll, Michele Bachmann has fallen from the top tier to the bottom, Herman Cain has gone from the bottom tier to the top, Rick Perry blew up his cat bird seat with a couple of bad debates and began to slide, while Mitt Romney has gone from weak front-runner to, well, weak front- runner.

Today the race to the White House with Republican presidential candidates businessman Herman Cain and congresswoman Michele Bachmann.

Then, the economy, the jobs bill and 2012 with Moody's Analytics chief economist Mark Zandi and veteran political journalist Ron Brownstein of the "National Journal" and Peter Baker of the "New York Times."

I'm Candy Crowley, and this is "State of the Union."

Herman Cain and Michele Bachmann were on this show the day after the Iowa straw poll in August. She won, he was fifth, but unbowed.


HERMAN CAIN, REPUBLICAN PRESIDENTIAL CANDIDATE: This campaign is encouraged. And our momentum continues to grow.


CROWLEY: In an August Quinnipiac poll, Bachmann ranked third among Republicans with 12 percent, Cain just 5 percent.

Now in a CBS News poll of Republican primary voters she sits between Ron Paul and Rick Santorum with 4 percent. He's tied for first with Mitt Romney.

Herman Cain is big-league now, soaking up the limelight on "The View" and the "Tonight Show" promoting his book "This is Herman Cain."

Still, in the top tier of a universe of 2012 politics getting to the top and staying there are wholly different things.

With me now, presidential contender Herman Cain.

CAIN: Thank you, Candy.

CROWLEY: Thanks for finding time for us between "The View" and the "Tonight Show."

CAIN: It's a pleasure.

CROWLEY: Appreciate it.

Let me talk about a couple of topics that have been in the news and I want to play you something that Pastor Robert Jeffress, who is head of the Southern Baptist Convention and senior pastor at a church in Texas, had to say about -- sort of aimed at Mitt Romney. Take a listen here.

(BEGIN VIDEO CLIP) ROBERT JEFFRESS, SOUTHERN BAPTIST CONVENTION: The Southern Baptist Convention, which is the largest Protestant denomination in the world, has officially labeled Mormonism as a cult. I think Mitt Romney is a good moral man, but I think those of us who are born-again followers of Christ should always prefer a competent Christian to a competent non-Christian like Mitt Romney.


CROWLEY: Is Mitt Romney a non-Christian?

CAIN: I'm not running for theologian in chief. I'm a lifelong Christian. And that that means is one of my guiding principles for the decisions I make is I start with do the right thing. I'm not getting into that controversy.

CROWLEY: But it still will beg the question that you dodged a direct question which is, is Mitt Romney not a Christian?

CAIN: He's a Mormon. That much I know. I am not going to do an analysis of Mormonism versus Christianity for the sake of answering that. I'm not getting into that. I am a Christian...

CROWLEY: Even knowing, it will look like you're dodging it.

CAIN: If that's what it looks like, I'm dodging it because it is not going to help us boost this economy. And you know that that's my number one priority.

CROWLEY: And on a more general note, is someone's religion a valid campaign issue?

CAIN: I believe it is a valid concern, but I don't think it necessarily should be a big campaign issue. What I believe people want to know, what are your guiding principles and what are your values? Because your guiding principles and your values will impact how you make decisions. That's what I believe it is.

So just focusing in on religion alone is not enough to determine how that person will make decisions.

CROWLEY: And we should add here for folks that have not followed your campaign all along, you have from time to time talked about Muslims and the nature of Islam and have expressed reservations about having a Muslim in your cabinet... CAIN: Extremist, extremist, not peaceful Muslims. You have peaceful Muslims and you have extremists.

I have nothing against peaceful Muslims. Jihadists and extremists are the ones I'm careful not to infiltrate my cabinet when I become president.

CROWLEY: Well, that's a differential you didn't make before.

CAIN: I did not make that differentiation before, but that was the intent of the comment.


In your book "This is Herman Cain," you wrote that the Obama White House disconnection with the American people is, quote, "absolutely unbelievable." So I want to ask you about your connection with the American people.

CAIN: Yes.

CROWLEY: The idea of a surtax on millionaires to help pay for a jobs bill you are opposed to to.

CAIN: I am opposed to it, because it is a distraction and it doesn't solve the problem. If they were to put a surtax on everybody making over a million dollars, if they were to double it, it doesn't solve the problem of too much spending and the problem that this economy is not growing. The economy is on life support. So it doesn't solve the problem. All it does is it fans the flame of class warfare.

CROWLEY: Well, I ask -- this isn't something that he's doing sort of in a vacuum. This would be to pay for the jobs bill. And I am assuming that there are things within the jobs bill that you would agree to.

CAIN: Very little. This jobs -- this so-called jobs bill is a sneak a-taxes bill. I went through it, Candy, there are 84 sneak a- taxes that nobody talks about. So the focus on this millionaire surtax is a distraction for people not to look into the body of the bill. It is loaded with sneak a-taxes that will impact everybody.

CROWLEY: Well, as I understand this would be substituting for the president's way of paying for it.

And I guess my point here is that when ABC News and "The Washington Post" asked people do you support or oppose raising taxes on people making over $1 million a year, 75 percent of Americans said raise them. We're in a big deficit situation, separate this from the jobs bill. But you oppose it.

CAIN: I oppose it because number one it doesn't solve the problem.

CROWLEY: Doesn't that make you seriously out of step with the American people? That's my point as you accuse the president of being.

CAIN: No, No. The American people are being deceived with this class warfare stuff. And I'm not going to perpetuate it because that poll says it. The same people that took that survey I challenge them to tell me what's in that jobs bill. I challenge them to tell me what percentage of the taxes are currently being paid by 50% of the taxpayers, 97 percent.

You see, D.C. has a definition of fairness and Webster has a definition of fairness and the president keeps talking about, well, in all fairness -- when he's not sharing with the American people. If the American people knew the facts about how the taxes are being paid I think they might have a different opinion.

And one other thing on this note, here's the other thing, to talk about the millionaire's tax is just fanning class warfare because the people don't have the facts about how the tax structure breaks down in terms of who pays what.

CROWLEY: Well, but you would not dismiss the notion that some people in middle class tax bracket do pay more of a percentage of their income and certainly they pay a larger percentage when it comes to Social Security payroll taxes than do rich people.

CAIN: Yes, I would acknowledge that. Are you absolutely right.

CROWLEY: So this is trying to correct that, in part. It corrects what is seen as an inequity that rich people pay a smaller percentage in some cases in their income than do middle class people.

CAIN: I love you, but it doesn't. And the other thing is...

CROWLEY: I'm sorry, it doesn't?

CAIN: It doesn't make that correction is what I'm saying. If you look at the details of his so-called jobs plan, it simply doesn't. This is what they say it does, but in fact it does not.

Here's the other thing it does not do -- it doesn't do anything to help bring down the national debt or the annual deficit. It does not because it's so minuscule.

CROWLEY: Well, why wouldn't it bring down the debt if you tax people more? It goes into the Treasury...

CAIN: Because this administration continues to spend more. They want to tax more but they are not putting caps on the spending. That's why it won't do any good.

CROWLEY: Let me move you to your plan.

CAIN: Okay.

CROWLEY: 999. I know you love to talk about this. So, this would be -- your plan would be to have everybody pay 9 percent of their gross income and the only thing you could deduct would be charitable contributions.

CAIN: Correct.

CROWLEY: 9 percent corporate tax rate, now at 35 percent just for purposes of comparison. And then a 9 percent sales tax or consumption tax.

CAIN: Yes. CROWLEY: So the criticism of this has been, a, it won't raise enough money as much money as is need, and, b, it is really regressive, because I would pay the same amount for a blouse in taxes as someone making $10,000 a year and that's regressive. It's not fair.

CAIN: Let me start with the first one about how much revenue it will raise. The people who are saying it will not be revenue-neutral? They are absolutely wrong because they did a static analysis. We had this done with the dynamic analysis with an outside independent firm so they are making an erroneous assumption.

Relative to regression. No, it is not. If you take a family of four at $50,000, and $25,000, start with the fact that if they're getting a paycheck, they pay 15.3% in the payroll tax like you pointed out earlier.

CROWLEY: Social Security...

CAIN: Social Security and Medicare. So that 15.3 becomes 9 percent. That's a six percentage point differential.

Now let's take someone making $50,000 a year. We can do it for $25,000 or $50,000. It doesn't matter. You now have -- they will pay in taxes based on standard deductions, and standard exemptions if they're making $50,000 a year, family of four, they're going to pay over $10,000 in total taxes.

Go to the 999 plan. They're going to pay $4,500. So they have a $5,500 gap to apply to the sales tax. If the person applies that to both new and used goods, they will come out just fine.

CROWLEY: Is there any exception, as you see it, in this consumption tax? Would you -- except for clothing perhaps? Except for food? Would food be a consumption?

CAIN: No, you don't have to do that.

CROWLEY: No food, clothing?

CAIN: No. You don't have to do that. No. Because that 6 percentage point difference makes up for a lot of the sales tax that people will have to pay. Here's the thing that people don't talk about...

CROWLEY: I'm sorry, but I think I misunderstood you.


CROWLEY: You would make an exemption for food and clothing?

CAIN: No, no, no.

CROWLEY: No exemptions to the sales tax.

CAIN: No, you don't need those exemptions. No, you don't need those exemptions.

CROWLEY: So a person poor person is paying the same amount of tax on groceries as I am.

CAIN: Right. Now...

CROWLEY: Does that sound fair to you, just in a vacuum?

CAIN: Yes, it does sound fair, because of the other point that I'm about to make. If they need to buy a car or a home or some hard goods that are used, they pay no taxes. So they have an opportunity for them to leverage their income.

The assumption made by the critics is that they're going to spend all of the rest of their money on new goods. No. That's not how my parents did it. They knew how to stretch a dollar. So to say that it is regressive is based upon erroneous assumptions.

CROWLEY: Let me have you hold it right there. We'll be right back with Herman Cain.

Up next, we'll be taking a closer look at what shaped Herman Cain into the kind of candidate he is today.


CROWLEY: To understand politics, you need to know where the politician comes from. In segregated Atlanta, Herman Cain grew up poor, he says, "but I didn't know it." Sometimes he didn't have money for lunch. His father held three jobs, his mother cleaned houses.

Cain graduated second in his high school class, was the first in his family to go to college and later earn a graduate degree. Working at a series of jobs, he eventually took over and turned around the faltering Godfather's pizza chain.

He was asked this week what he thought of anti-Wall Street protesters.


CAIN: Don't blame Wall Street. Don't blame the big banks. If you don't have a job and you are not rich, blame yourself.


CROWLEY: Seventeen years ago as CEO of Godfather's, Cain went to a town hall meeting with President Clinton and told him that the cost of health care known as "Hillary-care" would force Cain and other CEOs to lay off workers.


CAIN: First of all, Mr. President, with all due respect, your calculation on what the impact would do, quite honestly, is incorrect.


CROWLEY: Five years ago, when friends were expecting Herman Cain to move happily into retirement, he was diagnosed with stage four liver and colon cancer and given a 30 percent chance to live. He beat the odds and has a doctor's letter showing he is cancer-free.


CAIN: If God gives you an opportunity to stick around here a little longer, it's not to try and improve your golf game.


CROWLEY: Herman Cain on Herman Cain when we come back.



CROWLEY: We are back with Republican presidential candidate Herman Cain. I want to play for our audience something that you said Friday. You were addressing the Values Voter Summit and the subject was racism.


CAIN: I have achieved all of my American dreams and then some because of the great nation, the United States of America! What is there to be angry about?


CROWLEY: And I would say to you, an unemployment rate for blacks that is far higher, almost 6 percent higher -- 7 percent higher than for whites. A percentage of black incarceration in the nation's prison systems that is far greater. A lack of -- and for all of your skills, is there not some luck in that? I want to ask you that.

But, you know, there -- I would tell you that minorities, especially African-Americans, can name a lot of things that speak to a certain amount of racism that they can still complain about.

And so I wonder if you are taking your good fortune and super- imposing it over everyone else when it doesn't really apply?

CAIN: Luck is when preparation meets opportunity. That's what I've done all my career. Secondly, I don't believe racism in this country today holds anybody back in a big way. Is there some -- are there some elements of racism? Yes. It gets back to if we don't grow this economy, there is a ripple effect for every economic level, and because blacks are more disproportionately unemployed, they get hit the worst when economic policies don't work.

That's where it starts. Grow this economy and it's going to help everybody to get jobs and to get back into the work force.

CROWLEY: But at this very moment the black jobless rate is 16 percent. For everyone it is 9.1 percent. The black teen unemployment is 44.2 percent. That can't just be random luck, can it?

CAIN: It is not random luck.

CROWLEY: Or bad luck...


CAIN: Or bad luck. It's failed economic policy.

CROWLEY: But what accounts for the gap?

CAIN: The gap is due to a number of factors. One is a differential in education. Two is a concentration of a lot of blacks in certain areas like the city of Detroit where the unemployment rate there is 14 percent versus the 9.1 percent we have nationally.

So if you have a city like Detroit where they have lost 25 percent of their population, economically they've done nothing but go down, down, down. If we do not boost this national economy, you're never going to be able to close that gap.

So there are a number of factors that cause that differential but we must start with feeding this economic engine, which is why I have proposed the bold "999" plan.

And, in addition to that, we are developing an empowerment zone feature off of the "999" platform that I will be announcing shortly.

CROWLEY: But, can you be surprised if African-Americans look at you saying, I'm -- you know, became the CEO of Godfather's Pizza, you know, I -- you know didn't have any -- you grew up poor but had a loving family, it sounds like to me.

CAIN: Yes.

CROWLEY: Others are not so lucky and they need help. You've been critical of the entitlement society. Who -- what do you think Americans, black Americans, white Americans, Latino Americans, what are we entitled to as a society?

CAIN: We are all entitled to an opportunity to be able to go after our definition of the American dream. Everybody's definition of the American dream is different. You are owed the opportunity for a level playing field. CROWLEY: And do blacks have a level playing field right now with whites?

CAIN: Many of them do. Many of them do have a level playing field. I absolutely believe that. Because not only because of the businesses that I have run, which has had the combination of whites, blacks, Hispanics -- you know, we had a total diversity. But also because of the corporations whose board I've served on for the last 20 years.

I have seen blacks in middle management move up to top management in some of the biggest corporations in America. They weren't held back because of racism. No. People sometimes hold themselves back, because they want to use racism as an excuse for them not being able to achieve what they want to achieve.

CROWLEY: Let me ask you quickly about your campaign. And read you something comes from CDG (ph) a conservative Iowa radio host who told "The Washington Post" on Friday, "I think he," meaning you, "is at this point not a viable candidate in Iowa. The race appears to be about raising his profile and not running for president. He has not surrounded himself with the best people and he's not serious about running for president."

Also the Crystal Ball comes out of University of Virginia Center for Politics had this to say, "will the Republican Party, especially in light of Chris Christie's decision not to run opt for Cain who has never held public office, who has lost -- and who lost his only prior election in 2004 GOP U.S. senate race primary in Georgia? Almost certainly not. A Cain nomination would be an aberration of historic proportions. American political parties typically don't nominate people without previous office holding experience for president."

You add to that the fact that I'm told you have not been back to Iowa in some time. You're out an a book tour and you don't look like a serious presidential candidate. Convince me.

CAIN: I would say get ready for an aberration of historic proportion, and here's why. I give dozens of speeches a week. I have been speaking, and I've been to Iowa 24 times. The perception that I am not focusing on Iowa is simply a misperception. When I give speeches to rallies, town hall meetings, whatever the audience, no matter how big or small, and I get to my lack of having held public office, I get a spontaneous applause.

I'm saying this, Candy, that people who are criticizing me because I have not held public office, they are out of touch with the voters out there. This is why I won that Florida straw poll. This is why i won another poll that just came out yesterday, the Midwestern Republican leadership poll. That one maybe hasn't hit all the news wires yet.

What I'm saying is the disconnect isn't between me and the voters, the disconnect is between the people who aren't connected to the voters. I'm not concerned at all, because the people are saying they like the fact that I have not held public office and they love my concrete specific ideas about how we need to fix this economy and the other problems.

CROWLEY: Herman Cain, "This is Herman Cain," your book out there. But you will eventually get back to Iowa.

CAIN: I will. It is on the schedule. And I can promote a book and campaign at the same time.

CROWLEY: Thanks so much for your time this morning.

CAIN: Thank you.

CROWLEY; Up next, Michele Bachmann asks voters not to settle for anything less than a true conservative. We'll ask her about that and the future of her presidential campaign.


CROWLEY: Joining me from the critical primary state of New Hampshire, congresswoman and GOP presidential candidate Michele Bachmann.

Congresswoman, thank you so much for being here. I want to start out with some of the things that are in the news beginning with the pastor who was introducing and supporting Governor Perry in Texas who said that Governor Romney, who is a Mormon, is not a Christian. I want to know if you agree with that statement.

REP. MICHELE BACHMANN (R), MINNESOTA: You know, this is so inconsequential as far as this campaign is concerned. We have religious tolerance in this country and we understand that people have different views on their faith and I have a very sincerely held believe on faith and I think we just leave it at that.

CROWLEY: Well the thing is, it is not so inconsequential, is it? In a primary on the Republican side where conservative Christians have quite a lot of say so, particularly when you of move south into South Carolina and places like that. So it is not inconsequential for someone to call a major candidate in the Republican Party and the primary season not a Christian.

BACHMANN: Well, again, I have a very strong sincerely held faith. I talked about it as the values voters and the candidates can have the faith that they want. But the beauty about America is that we do have tolerance for each one's faith and that's where it's at.

CROWLEY: And let me just, because I gave Herman Cain the same opportunity, you know that by not answering the direct question do you think Mitt Romney is a Christian, you leave open the possibility that people are going to say that you dodged the question, the direct question.

BACHMANN: No. I think what the real focus is here again is on religious tolerance. That's really what this is about. And I think -- again to make this a big issue is just ridiculous right now because every day I'm on the street talking to people this is not what people are talking about. I was very open about my faith, very clear about my faith. It's very important. But I don't think that I'll be judged based on my faith as president of the United States, I think I'll be judged based upon the good ideas that I have to turn the economy around and have job creation.

CROWLEY: So, let's talk about turning the economy around. The rage this week has been a surtax on millionaires. Anything they make over $1 million would be taxed an additional 5.6 percent or so. Am I correct in assuming that you think that's a bad idea?

BACHMANN: It is a very bad idea, because remember, that's on top of all of the other tax increases that President Obama is putting on this same group of people who are the job creators in this country but on every American, because we can't forget Obamacare itself is a huge tax increase.

BACHMANN: And the Dodd-Frank bill, which does to financial services what "Obama-care" does to health care, also comes with increases in fees which are exactly the same as taxes as far as people's pocketbooks are concerned. So this is a very bad idea.

CROWLEY: Well, Congresswoman, here is the problem I think some people have. The unemployment rate is 9.1 percent. There is the feeling that the government needs to do something to break this logjam.

And the idea of let's repeal, you know, regulations and environmental regulations or this or that because it is so costly to business doesn't seem to be catching fire. And yet when you ask Americans about a surtax to help bring down the deficit, more than 70 percent say, good idea.

So you seem -- and other Republicans seem out of step.

BACHMANN: Well, it isn't out of step to actually turn the economy around. What's out of step are all of the agendas that President Obama has put into place. If we could wind the clock back to the time of the $700 billion bailout, I opposed that bailout.

And had government not intervened with the trillion dollar failed stimulus and the "Obama-care" bill and Dodd-Frank and all of the interventions that President Obama put into place, the economy would have turned itself around.

Because what President Obama doesn't seem to understand is that government doesn't create jobs, the private sector does. We need permanent solutions in the private sector. The failure has been that government -- we've had government-directed gimmicks and temporary fixes. That's what doesn't work.

We have a proven record of two-and-a-half, three years of what doesn't work. Now we need to engage what does work and that's permanent solutions in the private sector.

CROWLEY: Let me just put out there that a lot of people think that the president's stimulus program did work and saved us from losing more jobs, but I want to move you on...

BACHMANN: Well, it certainly did not. There's nothing that's more provable and that's the fact that it didn't work at all. It was a complete failure.

CROWLEY: Well, the economy is creating jobs now -- not enough jobs and the White House would admit that, but it is creating jobs now whereas before...

BACHMANN: Not because of the stimulus.

CROWLEY: OK. Let me move you on because I know that's an argument that happens a lot on the campaign trail and I wanted to ask you what you make of these Wall Street protests, these anti-Wall Street protests. Do you see any anger in there that you can understand and that you relate to in any way?

BACHMANN: Well, I went by one of the protests in Washington, D.C., on Friday and I saw a lot of signs from AFSCME and other unions that were there. So I don't know how spontaneous these protests were but it seems to me that their anger should be directed at the White House, because Barack Obama's policies have put us in one of the worst tailspins economically that we have. And maybe that's why the protests that I saw was within shouting distance of the White House.

CROWLEY: Let me ask you about -- you've been saying for the past couple of weeks that this is an opportunity for Republicans to nominate a true conservative. Some of the value voters, I assume you would think, are true conservatives. They had a straw poll.

You were in fourth place, tied with Mitt Romney. Herman Cain was up the list. And I wanted to ask you, since he seems to be the one with the rising poll numbers at this point, do you consider Herman Cain a true conservative?

BACHMANN: Sure. I think Herman Cain is a conservative. I think he's doing a great job and I think that in this race right now we have an opportunity to be able to elect a candidate who could do it all, because there's no question in my mind that Barack Obama will be a one-term candidate.

I see that everywhere across the United States that I'm going. People are very disaffected by the president and by his policies, and now we're looking for someone who has the answers and someone who has the experience to be able to put those answers forward, and I think I'm that candidate.

CROWLEY: Does Herman Cain have the experience and is Mitt Romney a true conservative?

BACHMANN: Well, again, I'm here to talk about me and my candidacy. And I've got 55 years of experience. Strong experience in the private sector and also I think what sets me apart from all of the candidates in the race, for five years I have lived, breathed, and fought against these out-of-control policies on the front lines in Washington, D.C. I have a proven record that I have stood up in the gale-force winds of Washington. I fought against "Obama-care," against Dodd- Frank, against the bailouts, against all of what has contributed to the joblessness in the United States.

I understand this issue from the inside. We need a president who has been on the inside who understands. But I also have extensive private sector experience as a federal tax lawyer and as someone who has created my own business as well.

CROWLEY: Let me ask you, in our final moments here, in talking about your campaign, the last time we spoke you had just won the Iowa Straw Poll. Since then you came in dead-last in the Florida Straw Poll. You came in fourth at the Value Voters Summit yesterday that we know of. It appears that your campaign is imploding.

What has -- why has there been such a downfall in the national polls, as well as in the state polls for you?

BACHMANN: Well, your assessment is completely inaccurate. It is not true at all. We're just starting a kick-off today of four days here in New Hampshire and we've got a wonderful experience in Iowa, and we've been in South Carolina, Florida, we've work very hard and we have very strong numbers in those states and we're looking forward to continuing that.

But I'll be doing several town halls today in New Hampshire and we look forward to it. And let me correct you, we did not participate in the Florida Straw Poll. We didn't participate at all so the ranking is completely inaccurate.

CROWLEY: Well, then let's take New Hampshire, which they just put out a poll. Your favorability there was 29 percent in July. It is now something like minus 18 percent. Do you feel that anything has gone wrong in your campaign? What accounts, do you think, for at least the trajectory of these numbers?

BACHMANN: I think we are doing a good job getting our message out on job growth and on turning the economy around. That's what we're working on. We're not focusing on the day-to-day. Because as you have seen with many of the other candidates, candidates go up, candidates go down.

And what we're very concerned about is making sure that the message gets out there, because it is not about any one of us, it is about turning the economy around and creating jobs. That's my focus and I think that's why I won the all-important Iowa Straw Poll.

That poll is the only poll of all the ones that you've mentioned where anyone in the state can participate. It's the most reflective of an actual primary election or caucus and that's why we were excited to win that poll.

CROWLEY: Congresswoman, thank you. Just quickly. Are you planning to run for re-election in your district or have you decided come what may, you won't? BACHMANN: Candy, I am running to be president of the United States.

CROWLEY: Have you ruled out running in your district? BACHMANN: Candy, I am running to be president of the United States.

CROWLEY: OK. Fair enough. Thank you so much. Congresswoman Michele Bachmann, good luck to you there in New Hampshire.

BACHMANN: Thank you, Candy.

CROWLEY: After the break, we'll talk to our panel about the latest jobs numbers and how the economy could shake up this election season.


CROWLEY: Joining me here in Washington to discuss the politics of a recovering economy, we hope, Mark Zandi, chief economist for Moody's Analytics, Peter Baker White House correspondent for the New York Times, and Ron Brownstein editorial director for the National Journal and a CNN senior political analyst.

Time's up.

Let's start with this surtax on the rich. From a purely economic point of view, good idea?

MARK ZANDI, MOODY'S ANALYTICS: Well, you think we need to extend and expand the payroll tax holiday for workers, that's in the president's proposal. That's vital, I think, to keep the recovery going, because if that doesn't happen the tax rates are going to rise for everybody. And in this weak economy, that's a problem. And it has to be paid for. And I think a surtax on millionaires is a reasonable way to pay for it.

It is going to hurt. You raise taxes on anybody, it has negative consequences.

CROWLEY: To the economy?

ZANDI: To the economy, sure. Yeah, on the margin. But I think of all the different ways you can think of to try to pay for this thing and it has to be paid for in the long run, this seems like the most reasonable way to do it.

CROWLEY: So from a political basis, someone made an interesting argument that once you define rich as a millionaire, it then becomes hard to come back and say -- and let's stop the Bush tax cuts on someone making $250,000. Have they walk themselves or backed themselves into a corner on this?

PETER BAKER, NEW YORK TIMES: It depends on what counts as rich today and where you stand and where you sit, right. And, look, President Obama with this idea of looking after millionaires on taxes partly trying to make up to his base what happened last December when he agreed to the extension of the Bush tax cuts across the board, including for the wealthiest people saying liberal base very upset about that. He's trying to sort of come back around on that saying, look, I agree with you that the wealthiest are not paying its fair share.

CROWLEY: But millionaires has a great ring for the campaign trail.

RON BROWNSTEIN, NATIONAL JOURNAL: Well, if you look at all the options for reducing the deficit, the only one that really polls well consistently is raising taxes on the affluent, even at 250,000 and above.

And this goes to a larger issue for the president, which is whether the voters in 2012 will make their judgment on him mostly retrospectively or prospectively. Because all the assessments of his performance looking back over these three years, as you know, have been deteriorating and are pretty difficult shape at this point. But when you compare his plans for either creating jobs or reducing the deficit to Republican plans and polling that we've done at National Journal and elsewhere, he looks much better.

So, I mean, this is part of a larger effort, this millionaire surtax which of course was a Senate Democratic idea, it is part of a larger effort to say we want the voters to be looking forward, we want this to be a choice not a referendum.

Not always easy to do for an incumbent president especially in hard times.

CROWLEY: Let me ask you about the housing market. And just from purely an economic point of view, can we have any kind of big recovery if the housing market is still in the tank?

ZANDI: No. I mean housing is so key to recoveries. It provides a lot of juice coming out of recessions, because it is the very interest rate sensitive sector. Rates come down, people go out and buy homes, build homes, house prices rise.

CROWLEY: Create jobs for people...

ZANDI: Absolutely.

So we haven't seen any of that. And it is largely because of the fact that the housing market is the crux of the matter, that's where all the speculation was, that's where all the overbuilding was, that's a lot of now the foreclosed properties a result of all this so we had to work through this further to get the housing market on more solid ground and the economy moving forward.

CROWLEY: And yet we hear about jobs programs, but we don't hear about housing programs.

BROWNSTEIN: You know, I love that -- Harry Truman -- you remember Harry Truman say give me a one-armed economist? You know, and they'll just say "on the other hand?" I mean, no. That was -- that was very rare.

And in fact if you do look at the states -- I mean, we've looked at kind of -- looking at the census data, did a 50-state report by the states that have the hardest hit, that have seen the biggest job loss and the biggest loss in income are those that have been at the epicenter of the housing crash.

So this is clearly at the center. And there is really no solution. The solutions that they have offered really have been disappointing I think in the number of people able to take advantage of it. There is a counter argument that says that rather than trying to put people in their homes, they should in fact let more foreclosures go through and let the market bottom out.

But it does seem that in many ways the agenda, as you say, that they put forward gets to the edges of this. And that it has other work for people who do construction, infrastructure or rehabbing schools, but it doesn't really resolve that core problem of creating a viable housing market. And all the economic engine that it provides.

BAKER: Well, the problem for President Obama of course is time is running out, right? I mean, he's had three years at this point. And under the best case scenario, if you waterboarded Mark Zandi, you waterboarded other economists and got them to say what's the most optimistic scenario? The economy will still be in bad shape a year from now.

What he has to hope for is that everything is trending in the right direction, that something comes along, either because of his jobs program or some other factor in the economy that begins, at least, to show some improvement, 300,000 jobs a month, 400,000 jobs a month, even if unemployment is above 8 percent. He's got to be able to argue things are better, not worse.

CROWLEY: And will he be able to argue that?

ZANDI: Well, I think if policymakers do a few right things over the next few months, not only, unfortunately, here in the U.S. but also in Europe because Europe is a very large problem as well, I think the economy should be moving more clearly in the right direction a year from now. But it is a close call.

And under the best of circumstances, I don't think we're below a 9 percent unemployment rate.

BROWNSTEIN: That would be extraordinary. No president since Roosevelt in '36 had to deal with anything like that.

CROWLEY: A little more on this when we get back. We have to take a quick break.


CROWLEY: We are back with Mark Zandi, Peter Baker and Ron Brownstein. Ron, let me start at that end of the table about Mormonism. We have this preacher who said that Romney is not a Christian. I think you saw, at the top of the show, both Herman Cain and Michele Bachmann would not say that's not right.


CROWLEY: They didn't want to talk about it. And they, sort of, went around it. Is this an issue?

BROWNSTEIN: This was not good for either Romney or Perry, for different reasons. For Romney, the problem, in the Republican primary, about his faith really has never gone away.

If you look at the results from 2008, he ran poorly among evangelical Christians, especially in the South. In all the Southern states, he never topped out above 20 percent of the vote among evangelical Christians, only 11 percent in the critical state, South Carolina.

And that matters. That's 45 percent of the total Republican primary vote are evangelical Christians.

On the other hand, I don't think it's a great moment for Rick Perry, either. Because the biggest concern that he faces, I think, in the Republican primary are the concerns among voters outside of the South about whether he can sell beyond the Mason-Dixon line.

And this is a reminder that, if you nominate Rick Perry, there's a lot of cultural baggage or cultural association that comes along with that that may not play as well in, say, Bergen County, New Jersey, as it does in Plano.

So I think this was not a really good 24 hours for either Romney, because it reminds the evangelicals about some of the things they won't like about him, or for Perry, because it reminds the more secular parts of the party why they may be hesitant about him.

BAKER: Well, I think, though, it was interesting with Romney. Because I think that he has to hope that this is already baked in, right?

In other words, all poll numbers that look at how he's doing and whether he can win are already assuming that these people won't vote for him because he's a Mormon. They know he's a Mormon.

BROWNSTEIN: And also the social issues. They don't trust him on social issues.

BAKER: Right.

BROWNSTEIN: It's not just the faith, yes.

BAKER: And look how quickly the other candidates have wanted to get away from that. So the question is how much would this conversation continue to dominate two months from now, three months from now? If it's dealt with, in effect, this early on and people move on, that's probably good for him.

And I think that the question that we ask in polls, will you be more likely or less likely to vote for somebody if they're a Mormon is taken in isolation. It doesn't actually assume a real person that they've gotten to know. And Romney now has been on the scene for about four years and people have gotten to know him, for good or bad.

BROWNSTEIN: It will still be a surprise if he gets a lot of evangelical Christian votes, especially in the South.

CROWLEY: Certainly in the primary.

BROWNSTEIN: Yeah, in the primary.

CROWLEY: Let me ask about Romney. Because he's not going to run on his Mormonism. I know that doesn't surprise you. He's going to run on his business experience.

ZANDI: Right.

CROWLEY: Can he? Is that a positive for Mitt Romney?

ZANDI: Yeah, I think so. I mean, I think that's certainly to his strength. He's an excellent business person, highly successful. He helped finance a lot of companies, successful companies, and he learned about their business, helped them with their business.

So I think he has a very good background with respect to the economy broadly, yes. Now, there's also the dark side to...

CROWLEY: Which is he fired a lot of people to get those profits, right?

ZANDI: Yeah, sure. But, you know, that's part of the economy, too, right? Because there's winners and losers and, you know, we need both for an economy to be successful.

So I think he's seen both sides. And, you know, hopefully that makes him a better president. But, yeah, clearly I think this is his strong suit.

CROWLEY: Dealer's choice here. I've got two questions in our final two minutes. One, how does a politician make use of these anti- Wall Street protests that are out there?

And, two, given what Mark says, which is he still sees 9 percent unemployment, basically a not-great economic picture in 2012, maybe a little more growth than we're seeing now, but bad economic picture, what does -- how does that bode for the president?

BROWNSTEIN: Well, question one, post-2008, faith collapsed in both the private sector and the public sector. Wall Street, big banks, corporations and government.

In 2009 and 2010, Republicans were able to turn that animus overwhelmingly toward government. This is an attempt by the left to begin to, kind of, equalize that scale.

Obama has to be careful with it because his coalition has changed. The Democratic coalition is more upscale than it used to be. And populism is not always a slam-dunk. On the other question, it's like Peter said; he has to argue trajectory. He wants to make the argument that things may not be perfect now, but at least we are moving in the right direction, and do you want to go back to the policies that he would argue ran us into the ditch?

He needs, however, some tailwind, some evidence that things are getting better to make that argument compelling.

BAKER: Yeah, on the first question, President Obama, as Ron said, has to be able to find a way to tap into that energy without taking ownership over the most extreme elements of -- of that movement in the same way Republicans don't want to own everything that the Tea Party might necessarily stand for.

In terms of 2012, I think what's really interesting for Obama is the challenge is exactly the opposite of 2008. In 2008 he won because he represented what seemed to be a positive force, hope, change, so forth. In 2012, because the economy is still going to be bad, he's going to have to say the other guy is worse. And it's going to be a campaign that will divide rather than unite.

CROWLEY: Well, and Mark, let me just give you a yes or no question since they -- they violated the rules of picking one question.


ZANDI: Yeah, right.

CROWLEY: And that is, will...



CROWLEY: Will the president have anything in the economy he can run on a year from now?

ZANDI: Yeah, I think so. I think it really matters on the trend line. So think, you know, late next year, coming up to the election, as stock prices are rising, you know, we see more green on our screen than red; the house prices have stopped falling and start rising; and we see some stronger job growth, I think that's something to run on.

CROWLEY: Mark Zandi, Peter Baker, Ron Brownstein, thank you.

Up next, a look at the top stories. Then, on "Fareed Zakaria: GPS," a discussion about the Achilles' heel of the economy. That's at the top of the hour.

(COMMERCIAL BREAK) CROWLEY: Time for a check of today's top stories. New York Mayor Michael Bloomberg says the Occupy Wall Street protesters could destroy the jobs of working people. The Occupy protests are now taking place in more than a dozen states.

Fighters loyal to Libya's new government say they're nearly in control of Moammar Gadhafi's hometown of Sirte. A field commander says a hospital in the city is one of the few places still holding out with Gadhafi loyalists.

Harsh words from Syria's foreign minister to countries that appear unsympathetic to his government. Walid Moallem says Syria will take strong measures against any country that recognizes an opposition council that's been formed in Turkey.

And those are today's top stories. Thanks for watching "State of the Union." I'm Candy Crowley in Washington.