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STATE OF THE UNION WITH CANDY CROWLEY

Interview With Secretary Clinton; Interview With Vice President Biden; Interview With Senate Minority Leader Mitch McConnell

Aired October 23, 2011 - 09:00   ET

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


CANDY CROWLEY, CNN ANCHOR: History turns a page to a post- Gadhafi Libya and a post U.S. Iraq.

Today, the next chapter in the Arab world with Secretary of State Hillary Clinton.

Then, jobs, jobs, and 2012, on the campaign trail with Vice President Joe Biden.

(BEGIN VIDEO CLIP)

BIDEN: It's a different Republican Party in the House of Representatives. It's different.

(END VIDEO CLIP)

CROWLEY: And from Louisville, Senate Republican Leader Mitch McConnell.

(BEGIN VIDEO CLIP)

MCCONNELL: The president is out there doing his best Howard Dean impersonation. He's completely out of touch.

(END VIDEO CLIP)

CROWLEY: I'm Candy Crowley. And this is "State of the Union." The remaining 39,000 U.S. troops in Iraq will be out by December, the fulfillment of an Obama campaign promise, the end of a war, the beginning of the unknown.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: I think that they deserve great credit. At the same time, we are now leaving Iraq completely which is the number one priority of the Iranian -- of the Iranians.

(END VIDEO CLIP)

CROWLEY: Another journey into the unknown is full throttle in Libya now, after the brutal death of its brutal dictator, Moammar Gadhafi. Only two days earlier, Secretary of State Hillary Clinton was in Libya, pledging support to the transitional government. Her reaction to Gadhafi's death caught on camera while in Afghanistan went viral.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON, SECRETARY OF STATE: Wow. We came. We saw. He died.

(END VIDEO CLIP)

CROWLEY: Earlier, I spoke with Secretary Clinton, who was in Uzbekistan.

(BEGIN VIDEOTAPE)

CROWLEY: Secretary Clinton, thank you so much for joining us.

I want to start with Iraq. And clearly the biggest concern here is that with the exit of U.S. troops, Iran will move in where the U.S. is moving out.

I want to bring to your attention an interview that CNN's Fareed Zakaria did with President Ahmadinejad.

FAREED ZAKARIA, CNN ANCHOR: Since there will be a need in Iraq for training and support, will the Iranian government be providing greater support in that area?

MAHMOUD AHMADINEJAD, PRESIDENT OF IRAN (through translator): I think we should have done it sooner, maybe seven or eight years ago.

CROWLEY: May I assume the U.S. would not look favorably upon the Iranians training the Iraqi army and police?

CLINTON: Well, Candy, thanks for asking about this, because I do believe there's a lot of questioning. And to me, it is very clear to make three points.

First, we are continuing a training mission in Iraq. That has been agreed to. We will have the same kind of training and support mission that we have with many other partner countries around the world. What we will not have are combat troops and bases.

Now that was really a decision put into motion back in the Bush administration, and President Obama has demonstrated great leadership as he has made it possible for our troops to leave, as was promised, and by the end of this year. But leaving behind a training and support mission, along with a very robust, diplomatic presence, also envisioned by the agreements reached back in the Bush administration.

CROWLEY: How many troops are we talking about?

CLINTON: I also think it's important to underscore -- well, but let me just finish. It's also important to underscore that Iran would be badly miscalculating if they did not look at the entire region and all of our presence in many countries in the region, both in bases, in training, with NATO allies, like Turkey. So I'm used to the president of Iran saying all kinds of things, but I think it's important to set the record straight.

CROWLEY: Can you tell me how many troops we're talking about staying there? Is it beyond the usual contingent that's around an embassy? And can you tell me the level of your fear that Iran, whether it's in supporting troops or not, is going to be an increased presence in Iraq as the U.S. pulls out?

CLINTON: Well, yes, the support and training mission is in addition to the usual Marine contingent, the defense attache and other normal relations between our diplomats and our Department of Defense representatives.

This will be run out of an office of security cooperation. It will be comparable to what we've done in many countries, where we handle military sales. The Iraqis are buying military equipment from the United States. And we will be working with them as we work with Jordanians, Colombians and others around the world.

And I also would underscore that it is not our only presence in the region. In addition to a very significant diplomatic presence in Iraq, which will carry much of the responsibility for dealing with an independent sovereign democratic Iraq, we have bases in neighboring countries. We have our NATO ally in Turkey. We have a lot of presence in that region.

So no one, most particularly Iran, should miscalculate about our continuing commitment to and with the Iraqis going forward.

CROWLEY: Madam Secretary, 57 percent of Americans said in a recent poll that the war in Iraq was not worth it. Do you think it was?

CLINTON: Well, I think we can either look backward or we can look forward. I choose to look forward. An enormous amount of sacrifice was made by Americans, most particularly our young men and women in uniform, many of whom lost their lives or suffered grievous injuries, and then of course, I'm particularly proud of our diplomats and the other U.S. government representatives in Iraq.

So we are where we are right now. We have a plan in place. There's been an enormous amount of effort in conjunction with the Iraqi government. The Iraqi government is looking forward. They're trying to chart a new course that will give them the kind of independence and sovereignty from everyone, including their big neighbor, Iran, and we're going to support that. It's very much in America's interests to do so.

CROWLEY: So I'm going to take that as you'd rather not answer that question as to whether it was worth it.

Let me move you to Libya, where the U.N...

CLINTON: I think I'll leave it to others to argue.

CROWLEY: OK. CLINTON: I'll leave it to others to argue. My job, President Obama's leadership is leading us forward which is where I think America needs to be.

CROWLEY: OK.

Let me move you to Libya, where the U.N. is calling for -- wants an investigation as to how Moammar Gadhafi died, the circumstances, who killed him, what he died of. Is the U.S. interested? Is it a matter of consequence to the U.S. how Moammar Gadhafi died?

CLINTON: Of course it is. And we strongly support the U.N. call and we also strongly support the Transitional National Council of Libya's call for an independent investigation. Because as Libyans move into the future once again, they need to do so with a sense of unity and reconciliation. They need to hold each other accountable, those who do not have blood on their hands must be made to feel safe and included, regardless of whether or not they supported Gadhafi in the past.

So we believe in the rule of law, and accountability, and such an investigation would contribute to that.

CROWLEY: Will the U.S. put pressure on the transitional government to hold accountable the convicted Pan Am bomber, Al Megrahi?

CLINTON: We have certainly raised it in every meeting with the leadership. Now as you know, Candy, there will be later on Sunday an announcement of a new government. So once there's a government in place, we will renew our calls that Megrahi, who should never have been released in the first place, be returned to serve the rest of his sentence for the terrible crime against those passengers on Pan Am 103.

CROWLEY: You've spoke within members of the transitional government. Has this come up?

CLINTON: Absolutely. I've raised it a number of times.

Now there's not yet a government. That's what we're waiting for, a government to be put in place. The Transitional National Council said they would wait to declare the liberation of Libya, until they were sure that Sirte had been taken from the regime loyalists. They would then announce a government. That process begins today.

CROWLEY: And finally, let me turn you to Pakistan, where it seems to me the U.S. has spent many, many months warning Pakistan to crack down particularly on the Haqqani Network. We have had folks in the administration both publicly and privately say they believe the intelligence arm of the Pakistani government is, in fact, a supporter of the Haqqani Network which has attacked the U.S. embassy in Kabul, among other things.

Is your patience wearing thin with the Pakistani government? CLINTON: Well, as you know, I led a very high-level delegation of U.S. officials, including chairman of the joint chiefs, General Dempsey, now director of the CIA, Dave Petraeus and others, and we had intensive discussions.

And I would make three points.

CLINTON: First, the cooperation on security that we have received over the past years from Pakistan has been absolutely essential in our efforts to defeat and disrupt the al Qaeda network.

Secondly, the Pakistanis themselves, as you know, have suffered enormously from their military actions against the terrorist networks, and of course, that has not only been military losses, but civilians, to the total of about 30,000 over the last decade.

And finally, we are very clear, we need to do two things together. We need to squeeze the terrorist networks, including the Haqqani network, out of their safe havens, preventing them from being able to plan and carry out attacks across the border.

And we have to, on the Afghan side of the border, squeeze and eliminate safe havens of those who move back and forth, and who use safe havens in Afghanistan to attack Pakistan.

And we have to have a very firm commitment to an Afghan-led reconciliation peace process. We're about 90, 95 percent in agreement between the United States and Pakistan about the means of our moving toward what are commonly shared goals, and we have a work plan and a real commitment to making sure we are as effective as possible together.

CROWLEY: Secretary of State Hillary Clinton, thank you so much for your time. Safe travels to you.

When we come back, my interview with Vice President Joe Biden.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: No one is guaranteed anything in an election. This is going to be a tough election. The country has inherited very difficult political and economic times.

(END VIDEO CLIP)

CROWLEY: We caught up with Vice President Joe Biden this week in New Hampshire, where, among other things, he filed the official papers of President Obama to run in the state's primary next year. Biden opened the day at Plymouth State University, pushing for support of a jobs bill to help states keep or hire policemen, teachers, and firemen.

(BEGIN VIDEO CLIP) BIDEN: There are 30,000 unfilled police jobs nationwide now. People wonder why crime is going up in particularly difficult areas. More cops on the street means less crime. Fewer cops on the streets means more crime.

(END VIDEO CLIP)

CROWLEY: Biden has frequently expanded on this case, essentially arguing that a vote against the president's jobs bill means more rapes and murders. The suggestion set the conservative blogosphere into orbit and drew objections on Capitol Hill too.

(BEGIN VIDEO CLIP)

SEN. JOHN BARRASSO (R), WYOMING: Vice President Biden made a number of comments that I believe were over the top. To me, the vice president is attempting to use fear tactics on the American people.

(END VIDEO CLIP)

CROWLEY: Let me tell you the things, in case you haven't seen it, that made the blogosphere -- the conservative blogosphere explode, just ask you a really direct question.

BIDEN: Sure.

CROWLEY: Is it your intention to say, when you give these speeches, that if Republicans don't pass the president's jobs bill, they will be responsible for increases in rape and murder.

BIDEN: Well, no. Here's what my point is. It is a fact, ever since I wrote the crime bill 20 years ago, we've put to rest the notion that if you have more cops, there's less crime. When you drastically cut the number of police in cities, which is happening all across America, crime goes up. That is a fact.

Now, they either are going to figure out how to help those cities the way we want to help them or some other way, but if they don't get help, crime is going to continue to go up. It's that simple. It's not an ideological point. It's not a political point. It's just a physical reality.

CROWLEY: And I guess their point is, again, the conservative blogosphere, some of your colleagues say, it's like he's blaming us for increases in rape and murder in Flint, and let me just add to that, that the crime rate in 2010 was down 6 percent for serious crimes.

BIDEN: Well, that's true about the crime rate, but you didn't have the emasculation. They've laid off over 15,000 cops, 10,000 in the last 18 months. And in Flint, Michigan, in Camden, New Jersey, the police forces are cut by almost half.

Now, look, there's a cycle here. What happens is when the economy tanks, when foreclosures increase exponentially, when homes get abandoned, drug outfits move in, arsons go way up. You have increase -- and that drives down property costs. That causes a spiral. That drives down revenue available for the cities and counties. They lay off more cops. The more cops who are laid off, the more crime that occurs. So the question is, we have an answer. What is their answer, or do they think the federal government has no obligation? I respect it if they think that, but the truth is, we can fix this problem now.

CROWLEY: You don't see it as unfair politics? This is like, oh, you're...

BIDEN: No. This is reality.

CROWLEY: ... trying to attach this to Republicans?

BIDEN: It's a little bit like saying, we had a major flood, we think we should go in and help people rebuild their homes. They may say no, that's not the federal government's responsibility, or if you do that, we ought to cut their aid to education or something.

We just have a different value set. That's all.

CROWLEY: Let me ask you, the Misery Index is out today, that's the inflation and joblessness.

BIDEN: Yes.

CROWLEY: Index is at a 28-year high. The average income for individuals is about $1,300 less than it was three years ago. You have got unemployment at 9.1 percent. Worst quarter for Wall Street in terms of investments and trading this past quarter than at any time since -- than the depths of the recession.

What's your bumper sticker here? How do you sell this for a re- election?

BIDEN: The bumper sticker says, let's get the economy moving. That's what the jobs bill is about. The jobs bill is not just the individual jobs. It's getting the economy moving. We were moving. We've created every -- 19 months in a row we've created private sector jobs. Public sector jobs are down by almost a half a million.

I mean, excuse me -- yes, that's about right, about half a million. And the second piece of this is that a lot of what's happening on Wall Street now is a consequence of their concern of what's going on in Europe and the Eurozone.

But we can control certain things, and all those independent, all -- vast majority of the respected independent validators out there say if we pass this jobs bill, the GDP will grow by 2 percent.

CROWLEY: Let me just stop you there, because Bloomberg did a thing, and I know you all have quoted Moody's and -- but Bloomberg did a survey of more than two dozen economists and they said probably, that it will be better than nothing for sure, that it will help the economy, maybe keep us from a double dip. But the jobs are more around 275,000 next year, maybe 13,000 (INAUDIBLE). Is that enough?

And when people say -- and yes, everybody wants the jobs to come back, but you all have had now two and a half years and they're not back, how do you sell that?

BIDEN: Look, we have brought back jobs. We have brought back or saved well over 3 million jobs so far. And so the fact of the matter is that's not enough.

Look, Candy, the six months before we took office, the bottom fell out. There were 5 million jobs lost. Before we got the first bill passed another 3 million jobs lost. So we started off with an 8 million job deficit that wasn't of our making.

And what are these guys now saying? Well, the way to create jobs is go back to what we did before, continue to cut taxes for the very the wealthy and unregulate Wall Street.

CROWLEY: Aren't people also saying, though, look we did almost $1 trillion in stimulus spending, and you all at that time said oh, unemployment won't go above 8 percent, GDP will be higher than it is now and it isn't, and so now we need another leap with the jobs bill.

BIDEN: No. Look, here's the deal. Nobody can look you in the eye and tell you that the Recovery Act and that stimulus did not create jobs and did not do very good things for the economy. The problem was in the beginning, the economists said that in fact we wouldn't go above 8 percent, because they didn't know until this last quarter that the economy shrunk in the last term of the Bush administration, almost 9 percent. Everybody thought it was more like 5.5 percent. And so the point was, we were all operating off of what the blue chips were looking at, and the numbers were wrong.

But the fact is, if we hadn't had that stimulus, we would be in a position now where we would be in a double dip recession some time ago.

CROWLEY: Do you think that's good enough to reelect the Obama- Biden team? It would have been worse?

BIDEN: The answer is, that's not the argument it would have been worse. It is better, number one. And number two, everything is a choice. There's a clear choice emerging here.

CROWLEY: How do you bring independents back? You've seen that huge dive, I think in Virginia where the president was the other day, 34 percent of independents is what supported that. And you know that independents brought him Virginia. And you see the same thing across the country, just don't think he's been bold enough, they don't think he's had good enough leadership, he's been strong enough.

How do you convince them to come back?

BIDEN: I think first of all we convince them to come back, because at the end of the day, everything is an alternative, a choice. CROWLEY: So you're saying this guy is worse?

BIDEN: No, here is what we're for and here's what they're getting in the way of us being able to do. And if we continue to do what we're doing, it will continue to get better. That's why it's so important that this jobs bill be passed, so there's something positive occurring.

Look, things were moving, and they were even moving relatively well this last spring, until we got downgraded because these guys played roulette with are we going to make a deal on dealing with the debt.

CROWLEY: So you think they're the whole reason. It wasn't the uncertainty? It wasn't -- I mean, you think Republicans were responsible for that?

BIDEN: I think the Fed -- yes, I think the Republican -- look, let me make it clear. We could have had a much more significant debt reduction package, but the Republican leadership could not sell it to this new Republican Party. This is not your normal Republican Party. It doesn't mean it's good or bad. It's a different Republican Party in the House of Representatives. It's different. With a very different view than mainstream Republicans have had going into this.

And until we get a Republican Party, it's going to be hard to figure out who can we compromise with. We're prepared to compromise just like on the jobs bill. Give us an alternative. Tell us what you would do?

CROWLEY: They did. They had a McCain alternative as you know.

BIDEN: Yeah. And independent validators said it wouldn't create any new jobs. Where -- and look, well, I'll leave it.

CROWLEY: Go ahead. I can tell you were just about to say something. I'm sure I would have loved it.

When you look at the GOP field right now, who is the strongest candidate?

BIDEN: Candy, I had trouble figuring out my own field you know. And I have no idea. You know -- it's just...

CROWLEY: Would Romney be tough?

BIDEN: I think they'd all be tough. I think whoever is our opponent will be tough.

CROWLEY: But you don't -- a lot of people have used your quote about, listen, you know, they certainly have a chance.

BIDEN: Sure they do.

CROWLEY: Sort of extrapolating that you think they might win. And I think that's a jump. BIDEN: Look, I think it's a gigantic jump, but the flip of that is they're not someone looking at the camera and being honest, hey, elections, no one's guaranteed anything in an election. This is going to be a tough election. The country has inherited difficult political and economic times.

Why wouldn't it be tough? Elections should be tough. There are tough choices. CROWLEY: But you think...

BIDEN: I think we're going to win. I think we're going to win. You probably know that.

CROWLEY: Based on -- I would expect you to say that.

BIDEN: Well, based on our policies.

Look, here's, again, I've tried to say this before, you know, when you don't have a job, for whatever reason, you're not a happy man. And you're angry and you're frustrated. Why wouldn't you be angry?

I come from a family where I've seen that happen with my parents and my uncles and my aunts, but at the end of the day, they're going to have to decide, and they will decide, whether or not we're on the right path or whether or not the other team has offered a better path.

And I think it's a little bit like when people begin to focus, I think the choice is going to become awfully clear.

CROWLEY: So you don't think it will be a referendum on your...

BIDEN: No, I don't. I think it will be a choice. It's like that story I told you about, the former mayor of Boston who said don't compare me to the almighty, compare me to the alternative. Ultimately you get compared to the alternative. And that doesn't mean who is the worst, it means who would offer the best answer. And I think we have the best answer. And I think the people will conclude that.

CROWLEY: Mr. Vice President, you're going on to your next stop.

BIDEN: I am.

CROWLEY: See you after that one. Thank you.

BIDEN: Thank you very, very much.

CROWLEY: We would meet later at the Tilton Diner where the vice president said he was quite open to the idea of running for president in 2016.

Possibility? You're not closing that door?

BIDEN: I'm not closing anything. (END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

CROWLEY: The vice president is an old pro on the campaign trail. He was in the senate for more than 30 years and ran for president twice.

BIDEN: How are you? CROWLEY: He knows how to work it in a New Hampshire diner. And he's a people person. He likes to talk to voters. He likes to talk to reporters, so much so that on that day he almost forgot about submitting the official Obama campaign papers.

BIDEN: These got to be there by 5:00.

CROWLEY: That's right.

BIDEN: Oh, that's right. Oh, I forgot I got to file his papers. Maybe it can take a long time.

CROWLEY: Slip of mind.

BIDEN: I'm sorry, Mr. President, I was talking to Candy. I didn't have time to file the papers.

CROWLEY: Tomorrow.

BIDEN: Tomorrow, we can do it.

CROWLEY: Let me bring you back to some domestic questions I wanted to talk about.

BIDEN: Sure.

CROWLEY: Housing. A lot of folks have said to me, until the housing market stabilizes, until those prices begin to go back up, there can be no economic recovery. Does the administration have anything left?

BIDEN: Yes, we do. That's part of this jobs bill is providing for us the ability to go out there and help people refinance. There's about 6 million people who are at 6 percent mortgages, that's above 6 percent. They could refinance at 4 percent if the fees were waived, if -- and we're able from a federal level to have some impact on that.

And so that would save the average homeowner two grand a year. That may be the difference between being able to stay in the house, not stay in the house. And in addition to that, we continue to work with agencies, we can't directly control, federal agencies, that in fact to loosen the restrictions on the ability to refinance. And we're continuing to try to work with banks so they can get in the business of actually doing what we think they should have been doing much more of, and that is sitting down and renegotiating with people who are about to go under.

It's in their interest that the house not be foreclosed on, even if it means temporarily they take less in terms of monthly payment or in fact, maybe even draw down on the principal.

CROWLEY: The question on the super committee, one of the reasons that the trigger was put in there, and the trigger being that if they can't come up with this $1.2 trillion in savings, then the Defense Department will take half of that, and domestic spending with Medicare protected to a certain degree will also take part of it. How comfortable are you with the cuts that would go on? We all want the super committee to work, but how comfortable are you that the alternative will be huge cuts in the Defense Department, which your own defense secretary says that you just can't take?

BIDEN: They'll be very difficult. But I was the one who negotiated that. It was designed for two reasons. One it was along the lines of what you'll remember, no one else will know, the Graham- Rudman-Holis, the way to automatically reducing spending across the board that is the most equitable way to do it.

The most important thing is that we actually make a considerable down payment in drawing down the long-term debt. And so it's designed to serve two purposes: make it clear to the guys in the committee if they don't reach an agreement this is going to go into effect. In failing to go into effect, if it is a bad alternative, the only worst alternative is not to do anything about the long-term debt.

CROWLEY: Let me ask you a personal question before I let you go. You will be 70 next year.

BIDEN: No, no. I'll be 69.

CROWLEY: 69 next year, wait a minute I thought you were...

BIDEN: No, I'm 68 right now.

CROWLEY: 68. I'm sorry. I aged you a year.

BIDEN: I keep thinking I'm 40. It's hard to even say the numbers, 6-8, but anyway.

CROWLEY: I wonder when you look around, if you ever thought four more years, 2016, have you totally ruled that out in your head? You tried two times to run for president.

BIDEN: Look, my one focus now is getting the president reelected. That is the focus. And I'll make up my mind on that later. I'm one, probably the best shape I've been in my life, doing pretty well. I'm enjoying what I'm doing. And as long as I do, I'm going to continue to do it.

We'll find out -- you know, let's get the president reelected.

CROWLEY: OK, but possibility, you're not closing that door? BIDEN: I'm not closing anything.

CROWLEY: Do you ever look around when you're in one of the meetings, when big things are being done you think I'd have been good at this job?

BIDEN: Well, I wouldn't have run for president in the first place, and I don't think the president would have picked me unless he thought I'd be good at the job. But my job now and will be and remains vice president of the United States, and we've got the order right, President Obama and Vice President Biden. CROWLEY: Thank you very much. I appreciate it. You better go file.

(END VIDEOTAPE)

CROWLEY: Coming up, Mitch McConnell on leading the Republican charge against President Obama's jobs initiatives.

(COMMERCIAL BREAK)

CROWLEY: So far, the parts of the president's jobs bill are faring no better than the whole. First up that $35 billion in state and local aid to keep cops, teachers and firefighters employed paid for by a millionaire surtax. It sounded like a great idea to 75 percent of Americans polled by Gallup. It died in the senate this week, two democrats, an independent and every Republican voted against bringing it to the floor.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), KENTUCKY: This is the third time in three years the president has asked us to bail out the states. How many more times and how many more billions before someone realizes this is a very bad idea?

(END VIDEO CLIP)

CROWLEY: A Republican plan to repeal withholding tax on government contractors did attract ten Democratic senators, but that's not enough to pass a procedural hurdle and the White House threatened to veto anyway, because Republicans wanted to pay for it with $30 billion in spending cuts.

Senate Republican Leader Mitch McConnell is next.

(COMMERCIAL BREAK)

CROWLEY: Joining me from his home state of Kentucky, Senate Republican Leader Mitch McConnell.

Senator, thank you so much for joining this Sunday.

I wanted to talk to you about what's gone on so far with the jobs with the jobs bill and what's to come, because Republicans helped in, not break a filibuster, if you will, in a procedural vote. You basically got rid of that jobs bill, which would have given money to the states, designed to hire or retain firemen and policemen, and teachers.

When we look at the polling, 75 percent of Americans supported that, and yet the Republicans were against it. So how do you justify that in your mind?

MCCONNELL: Well, Candy, I'm sure that Americans do, I certainly do approve of firefighters and police. The question is whether the federal government ought to be raising taxes on 300,000 small businesses in order to send money down to bail out states for whom firefighters and police work. They are local and state employees.

Look, we have a debt the size of our economy. That alone makes us look a lot like Greece. The question is whether the federal government can afford to be bailing out states. I think the answer is no.

Second, it's important to note that the only thing bipartisan about these proposals has been the opposition to them, that the reasonable number of Democrats opposed each of these measures as well for the same reason.

Look, we are not going to get this economy going by continuing to shower money on the public sector. Unemployment, among public sector workers in America, is one-half what it is the private sector. We are not going to get this economy growing again by continuing to borrow and tax and spend and pump up the private -- I mean the public sector.

Washington is a boom town, Candy. You know, it's a one town in America. You know, it's the one town in America that's doing great.

CROWLEY: But the fact is that when you do ask people about this surtax on millionaires, and small businesses as you put it, but millionaires in general, people support that, when it comes to not just firemen, policemen and teachers but also the infrastructure bill that's coming up, which you're also opposed to, as I understand it, which would help put people back to work on roads and bridges and rebuilding and that sort of thing. And it seems to me that politicians are always talking about doing the will of the American people, and that the Republican Party can be seen at least politically as going against that.

MCCONNELL: Yeah, these bills are designed on purpose not to pass. I mean, the president is deliberately trying to create an issue here.

Look, the American people don't think, I'm sure, that it's a good idea, four out of five of the so-called millionaires are business owners, it's over 300,000 small businesses in our country that hire people. I don't think the American people think that raising taxes on business, small business in the middle of this economic situation we find ourselves in is a particularly good idea.

I think they'd like to see us begin to get our house in order, which with regard to the private sector, what it needs is for us to quit spending, quit borrowing, quit over-regulating and quit threatening to raise taxes. That's the reason the private sector is all clogged up.

One final point, during the month of August, when congress was out of session, I spent about half the month in my state and the rest as Republican leader. I was around the country, unprompted, everyone I asked who was in the private sector, whether it was a small business, a medium sized business or a large business, whether they were doing well and only a few of them are doing well, they all said over-regulation was the single biggest problem.

We have reached the point now...

CROWLEY: Let...

MCCONNELL: ...We have reached the point now, Candy, where this economic situation is being prolonged by the government itself.

CROWLEY: Let me show you, because I know that Republicans have always said and continue to say that regulation is stifling business, stifling jobs growth. But there are a couple of figures out there that we found from the Bureau of Labor and Statistics, one of them is on the reasons for initial unemployment claims, this is for the first and the second quarter.

Government regulation a little over 2,000 claims for unemployment were blamed on government regulation. Insufficient demand, 55,000. The National Federation of Independent Businesses did a survey. They asked small business owners, the very people you're talking to, what is the single most important problem, they said poor sales. Government regulation was at 18 percent, taxes was at 18 percent, poor sales, 28 percent of people said that's what the problem is.

So are you focusing on the wrong problem?

MCCONNELL: Well, you know why people aren't buying. They're unemployed. I mean, the private sector is not going to get going here until the government gets its foot off the throat and lets people who know how to create jobs and grow businesses do that.

Look, Candy, all of these people are not making this up. I don't think people who are running companies are making it up. They realize what is making it difficult for them to grow and expand.

New health care mandates, the financial, the lenders, the new Dodd-Frank bill, crawling all over everybody, not big banks but small banks, all over my state, making it more and more difficult for them to lend.

CROWLEY: Senator, let me...

MCCONNELL: This is to government prolonged recession.

CROWLEY: Let me pick up where we left off right after a quick break. We'll be right back with you.

(COMMERCIAL BREAK)

CROWLEY: Senator, I want to move us on to some politics here. I had a discussion with Senator Joe Biden earlier in the week, and he had something to say about Republicans I want you to listen to.

(BEGIN VIDEO CLIP)

BIDEN: This is not your normal Republican Party. It doesn't mean it's good or bad, it's a different Republican Party in the House of Representatives. It's different, with a very different view than mainstream Republicans have had going into this. (END VIDEO CLIP)

CROWLEY: Now, Senator Biden has nice things to say about you, about Speaker Boehner, about Majority Leader Cantor, but he's talking here about the Tea Party. Has the Tea Party made your job more difficult?

MCCONNELL: No. You know, what the vice president ought to be talking about is the things that we could do together. You know, Candy, they had the signing of the trade agreements that passed by an overwhelming bipartisan agreement, that the signing of the bill basically in a room without any cameras.

They're ashamed to -- to -- to mention any of the things that they do with Republicans because it steps on their storyline. Their storyline is that there must be some villain out there who's keeping this administration from succeeding.

Look, he's -- the president's been in office now almost three years. We've had a chance to -- to look at his performance. The vice president said this election was going to be a choice. It will be a referendum, a referendum on the president and his performance. And I think they have concluded that the economy's not going to look a whole lot better a year from now, Candy, and so they're looking around for anybody else to blame other than themselves for the place that they find them.

And they got everything they wanted from Congress the first two years. Their policies are in place. And they are demonstrably not working.

CROWLEY: Polls that we keep looking at show that most people, 69 percent say that Congress is not addressing the people's problems. And those same polls show that they mostly blame Republicans. Can Republicans in 2012 withstand this kind of blowback from the public, if it holds?

MCCONNELL: Well, the president's trying to convince everybody that somebody else, anybody else is responsible for the fact that he hasn't done a very good job. It must be those millionaires. It must be those people in Congress. By the way, he owned the Congress for most of the time he's been in office. It must be people on Wall Street. It must be anybody but him.

Look, he's the president. This election will be a referendum on his performance. There are 1.5 million fewer jobs today than when he took office. The national debt has been increased 35 percent. Federal regulators are crawling all over the private sector, keeping us from coming out of this recession. This will be a referendum on his performance as president of the United States.

CROWLEY: Part of what is being said out on a campaign trail by the Democrats is using a quote from you that you said two years ago about, "The single most important thing we want to achieve is for President Obama to be a one-term president." Are you sorry you said that? You've explained it many, many times. It's a two-year-old quote. But nonetheless, the idea is, look, the Republicans' main aim here is not to help you get jobs. It's to defeat this president. Are you worried that that is catching hold?

MCCONNELL: I'm amused by that, because, obviously, as a Republican leader of the Senate, I would like a new president, but that won't happen until next year. The question is, what could we do together now? We passed trade agreements. Last week, I offered part of the president's stimulus bill, what he calls a job bill, part of it that we agree with, and the Democrats in the Senate voted it down.

They are picking unnecessary fights. There are plenty of things we can do together. The trade agreements are a good example of it. They don't want to talk about trade agreements because it steps on their storyline that Republicans won't cooperate with them to pass legislation. We will.

CROWLEY: Senator, I need a one-word answer to this, if I could get it. Will Republicans take control of the Senate in the 2012 election?

MCCONNELL: I hope so.

(LAUGHTER)

That wasn't one word.

CROWLEY: And any -- what are your odds at this point? I'll take it. I would assume you hope so. Senator McConnell, thank you so much for joining us. We appreciate it.

After the break, top stories. And then on "Fareed Zakaria GPS," an interview with Iranian President Mahmoud Ahmadinejad.

(COMMERCIAL BREAK)

CROWLEY: Now a wrap-up of the morning's top stories.

A 6.6-magnitude earthquake hit southeastern Turkey near the border with Iraq and Iran. The mayor in the town of Van says there are no casualties there, but there are reports of up to 1,000 deaths in smaller rural communities.

Coming up at the top of the hour on "Fareed Zakaria GPS," an in- depth interview with Iranian President Mahmoud Ahmadinejad. He told Fareed that, with U.S. military trainers pulling out of Iraq, Iran expects to step in.

(BEGIN VIDEO CLIP)

ZAKARIA: Since there will be a need in Iraq for training and support, will the Iranian government be providing greater support in that area?

AHMADINEJAD (THROUGH TRANSLATOR): I think we should have done it sooner, maybe seven or eight years ago.

(END VIDEO CLIP)

CROWLEY: I asked Secretary of State Hillary Clinton earlier in this program for her reaction to Ahmadinejad's remarks.

(BEGIN VIDEO CLIP)

CLINTON: Iran would be badly miscalculating if they did not look at the entire region and all of our presence in many countries in the region, both in bases, in training, with NATO allies, like Turkey. So I'm used to the president of Iran saying all kinds of things, but I think it's important to set the record straight.

(END VIDEO CLIP)

CROWLEY: Libyan interim leaders are expected at this hour to begin a ceremony officially declaring liberation.

Earlier today, doctors performed an autopsy on Moammar Gadhafi's body, confirming that he died of a gunshot wound to the head. Reuters reports he also had a bullet in the abdomen.

Thank you so much for watching "State of the Union." I'm Candy Crowley in Washington. For more "State of the Union," including exclusive content and analysis, go to our website, cnn.com/sotu.

Up next for our viewers here in the U.S., "Fareed Zakaria GPS."