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John King, USA

Newt Gingrich Falling?; North Korea's New Leader

Aired December 19, 2011 - 18:00   ET

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

JOHN KING, CNN ANCHOR: Good evening, everyone.

It's an important night here in Washington, the House deciding whether your taxes will go up in just 12 days because Democrats and Republicans are again engaged in a partisan showdown to see who blinks first.

That's right. Majorities in both parties, Democrats and Republicans, want to extend a payroll tax holiday that will give you perhaps $1,000 next year in your paycheck extra, but a disagreement over how to do it now makes it a real possibility taxes could go up, at least temporarily. House Republicans are plotting strategy as we speak on Capitol Hill. And we will go live to the Capitol shortly to take you inside their deliberations.

Also tonight, exclusive new CNN numbers show a dramatic shift in the race for the Republican presidential nomination. Newt-mentum is giving way to a Romney rebound. Take a look at our brand new CNN/ORC poll numbers.

Former Speaker Newt Gingrich, former Massachusetts Governor Mitt Romney now tied nationally among Republicans, each with 28 percent support. Congressman Ron Paul runs a distant third with 14 percent. The other candidates all trail in single digits.

Just moments ago, Gingrich added a media event in Davenport, Iowa, as he struggle to reverse his slide.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: The only person who profits from Republican ads attacking other Republicans is Barack Obama. And I think that's a pretty reprehensible behavior on the part of some of the candidates.

So I'm going to be honest. We will launch -- we did this Saturday morning and had some 14,000 people join us, 14,000 Iowans joined us in a tele-town hall meeting. We will set up an ask Newt every day and have an opportunity for people to call in. So, if you get junk mail, if you see a negative attack ad, whatever, you will be able to call me and ask what the facts are.

(END VIDEO CLIP)

KING: Our chief political analyst, Gloria Borger, was there at that event and joins us now from Davenport, Iowa. Gloria, let's start with the former speaker there. Telephone conferences with supporters or potential supporters. He said he won't go negative. The rules of politics tell you, that won't work. How worried are they inside camp Gingrich, perhaps beyond the candidate, that their strategy is only contributing to the slide?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: They're very worried.

As you said earlier, they added an availability today. He is trying to get his message out. Look, they don't have the money to put up the ads that would allow them to go negative against the other candidates. So they're trying to make a virtue out of it and say, you know, we're really going to be positive here, so don't pay attention to those other folks.

And they're holding these teleconferences, essentially, asking people to join their caucuses, asking people to join their campaign. The place where we just had this event, Davenport, Iowa. I talked to the two guys who set up the event. They got a call from the Gingrich campaign at 10:30 last Friday morning.

They're not Gingrich supporters. They're precinct chairman in the state. They don't know who they will support. And they had to sort of cobble it together over the weekend. Gingrich doesn't have a lot of money. He raised $500,000 over the weekend. That's not a lot of money. He doesn't have an organization. He is trying to counter that with a sort of smile strategy.

KING: I want to dig deeper into our polling numbers, Gloria, they're national numbers, to see if this is what you're picking up in the ground in Iowa as well. I was there last week and you could feel the Newt-mentum, as we call it, stalling. The question is, will it continue to stall or stop?

In our national polling, we asked Republicans, what's more important to your vote, personal qualities or a candidate's stand on the issues? -- 62 percent, more than six in 10 Republicans, say personal qualities are more important, perhaps because these candidates don't disagree on that many big issues. So then who wins there? Who most represents your personal qualities as president? Romney has 32 percent to Gingrich 21 percent.

What else is it? We state there clearly if people say personal qualities is why they're more for Romney there, what else are you picking up on the ground in Iowa two weeks and one day until Iowa votes?

BORGER: It's interesting. In just talking to folks around here in Davenport today, it seems to me that Newt Gingrich might have peaked a week too early. They like him. They think he's different.

I spoke to a couple folks today who said what they like about him is that he seems like a strong leader. And of course our polls showed that as well, that he beats Romney on the leadership issues. Some particularly evangelicals have questions about his past personal life. And they wonder whether he is a little too bombastic in Washington to actually make things work. But they like him because they feel he stands up for what he believes. However, one person I talked to today said to me, look, I like him. I think he is great. I'm just not sure he can get elected president.

KING: Gloria Borger live on the ground for us in Davenport, Iowa, 15 days until Iowa votes. Gloria, thanks.

Here in Washington tonight, vigilant is the watchword of America's top military officer as the world anxiously watches the transition of power in North Korea. So far, the Pentagon reports no unexpected troop movements following this weekend's death of the North Korean leader, Kim Jong Il.

Our Pentagon correspondent Chris Lawrence is here with the latest and the details of the concerns.

Chris, when the top military office says vigilant, when they say there are no -- so far, no unexpected or disturbing troop movements, what are they most worried about?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: They're worried about being surprised.

We now know that Kim Jong Il passed away more than a day before the U.S. was even made aware of it. What they're doing now is Secretary Panetta and other officials are calling their counterparts in South Korea. They're also making sure they have the intelligence assets, surveillance, analysts, to make sure they don't get surprised if conditions in North Korea change.

This was the scenario that some military officials really feared. The officer who runs U.S. Forces Korea warned the U.S. Senate back over the summer that Kim Jong Il's death could make North Korea a more -- make North Korea more of a military threat.

He said the son now has an imperative to sort of placate the hard-liners, the military hard-liners in North Korea. He said that combined with his youth and inexperience increases the likelihood of some sort of miscalculation and makes the son in the short term less predictable.

KING: And, Chris, it's the unpredictability that is the giant question mark. I'm not sure they have a clear answer at the Pentagon. But you have a country that has six or maybe 10 or 12 nukes. No one is exactly sure of the number, has a couple hundred, maybe 500, 600 ballistic missiles.

It is the concern that the new leader or a military leadership could try to prove its resolve by doing something provocative in the region or is it that perhaps they would become -- go back into the proliferation and the arms, the marketing business?

LAWRENCE: By far, much more of a concern about the latter, John. North Korea was accused of building a plutonium reaction in Syria, until that was allegedly destroyed by the Israelis. Many are very concerned that North Korea could at some point decide to try to give some of its technology or sell some of its technology to Iran to help Iran overcome some of its problems.

But I'm also told that a lot of nations had invested a lot of time and money in slowing down Iran's program. That has been made clear to the North Koreans, that that is a red line, that any help given to Iran is a no-go and a nonstarter. But just about six weeks ago, some of the senior military officials in the region said that when they were talking to the North Koreans, the North Koreans made it clear that they thought one of the reasons that Moammar Gadhafi was able to be ousted in Libya was because he gave up his WMD program.

And they say, if that's the way the North Koreans are thinking, it makes it hard to trust the negotiations to get them to curtail their own program.

KING: Trust always an issue here. Chris Lawrence, live at the Pentagon, thanks.

CNN learned today that North Korean Kim Jong Il's death came just as the United States was set to announce a large donation of food aid in return for a North Korean promise to stop processing uranium for nuclear weapons and to readmit international inspectors.

Secretary of State Hillary Clinton this afternoon went out of her way to extend an olive branch.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON, U.S. Secretary of State: We reiterate our hope for improved relations with the people of North Korea and remain deeply concerned about their well-being.

(END VIDEO CLIP)

KING: With us now is a veteran North Korea watcher, "The New York Times" chief Washington correspondent David Sanger.

David, thanks for your time tonight.

The first question I have for you is based on all your reporting, how will this transition play out?

DAVID SANGER, "THE NEW YORK TIMES": You know, John, nobody knows.

The fact that nobody knew that Kim Jong Il had passed away for 48 hours gives you an idea of how little the top leadership has been penetrated by American intelligence, South Korean intelligence and others.

But there are sort of three leading theories. One of them is that there will be some sort of regent appointed who would oversee Kim Jong-un , the son who is in his late 20s, and see whether or not he is up to the job. He has not had very much training time. His father had had 20 years to prepare for the job. Kim Jong-un has had about one or two.

The second theory you heard alluded to in your previous report, that Kim Jong-un would feel it necessary to sort of step out and either sell weapons or do some sort of can provocative act similar to what North Korea did in 2010 when it sank a South Korean warship, when it attacked an island. This would be to sort of prove his bona fides.

The third theory and the really scary one is that the North Korean military would fracture with some supporting the son and some saying they don't want a communist dynasty. And if that's the case, then the question is, who controls the nuclear weapons? Would the United States, China, South Korea have to try go in and immobilize them? That's a pretty scary scenario.

KING: And it is a pretty scary scenario. And the country that you just mentioned that might matter the most there, has the most influence, we would think, is China. How does this play out with the Chinese leadership?

SANGER: Well, for years, the United States has wanted to start up a quiet conversation with the Chinese about what to do in case of North Korean collapse.

And when you go through WikiLeaks documents that came out a year ago, this was the subject of a lot of discussion between South Korean and American diplomats. The Chinese have never wanted to play, John, because they did not want to admit the possibility that North Korea could collapse.

And it would be a disaster for China in the Chinese mind if that happened. They would have 23 million refugees potentially coming over the border who are all hungry. They would have South Korea trying to take over the territory of the North, which would put an American ally on China's border.

So what the Chinese want mostly is stability. And they're probably more worried about the situation right now than the U.S. is.

KING: David Sanger is the chief Washington correspondent for "The New York Times."

David, thanks for your insights tonight.

And ahead, we will hear the emotional reactions on North Korea's state-run television when Kim Jong Il's death was announced.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE (through translator): I'm announcing in the most woeful mind that our great leader, Kim Jong Il, passed away due to sudden illness.

(END VIDEO CLIP) KING: What do we really know about life inside North Korea? In just three minutes, the former head of the CIA joins us to shed light on this secretive nation.

Plus, a popular carmaker tonight files for bankruptcy -- what it means for you if you own one of their vehicles.

Stay with us.

(COMMERCIAL BREAK)

KING: Tears in North Korea as the announcement of Kim Jong Il's death was made on state-run television. Those images are the images the North Korean government wants to you see.

The story that's missing, Kim's level legacy of famine, poverty, and human rights abuses to name just a few.

Joining me now, two men who know North Korea and knew this leader better than almost any other American officials, first the retired general, former CIA Director Michael Hayden, and in Denver, Christopher Hill, who was assistant secretary of state for President Bush and was the lead negotiator with North Korea.

Gentlemen, I want to start with this threshold question to you first, General Hayden. Your biggest worry today is what?

GEN. MICHAEL HAYDEN (RET.), FORMER CIA DIRECTOR: Well, the instability in the North, that because of internal pressures, because they can't settle the leadership succession, that they do something stupid.

I don't think that's likely. Frankly, I think they turn inward. I think we will see a period in which we can't get the North Koreans to do anything externally positive or negative. It will take a period of months before this settles out.

KING: Ambassador Hill, you're the U.S. diplomat who knows this government, knows this regime best. Are you confident that they have a succession plan that will avoid instability?

CHRISTOPHER HILL, FORMER ASSISTANT SECRETARY OF STATE: No, I'm not.

I think they have certainly tried in the last few days. Probably the delay in announcing Kim Jong Il's death was part of it. But you have to remember Kim Jong Il had something like 20 years under his father as he sort of constantly was introduced to various communes and other factories and every North Korean felt they knew Kim Jong Il before he took power.

And even then it took years of sort of introspection before they came out of it. So I think the problem is much worse right now. I don't think anyone has an idea about Kim Jong-un. The one thing he kind of has going in his favor is he looks vaguely like his grandfather, who was a little more popular of a figure than his father.

KING: That's an interesting point.

I'm going to ask General Hayden to come over with me to the wall so we can map out for people watching why the stakes here are so important. First and foremost, you just start off with the map. Obviously this is the demilitarized zone, North Korea here, South Korea here. Let's just bring up U.S. bases. There are a lot of U.S. troops in this region right there.

Any indication -- General, to you first -- do we know at all what the son thinks of the United States and the West?

HAYDEN: No. We know very little about him. There is a little bit of time he spent in Switzerland at a boarding school at about the junior high level. But frankly we're trying to understand his thinking. I don't think, no one thinks that short sojourn in Switzerland turned him into someone more oriented to the West. He is his father's son.

KING: Ambassador Hill, one of our correspondents, Atika Shubert, talked to a high school roommate of the son. I want to you listen to his take.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: He was very quiet. He didn't speak with anyone. He liked the same things what every teenager likes. He knows sports. He watched also -- we talk sometimes about girls, but not too much. So he didn't go out at night. He never go out on disco or make party, never.

(END VIDEO CLIP)

KING: In your dealings with the North Korean government, any dealings with him specifically or any information? That's high school days. Any information about who he is now and what he thinks of the world?

HILL: No, very little indeed.

You always have to worry about those quiet types. But I think he was a very low-key figure. And I think it was kind of a surprise to have put him out forward as the heir apparent. I think the key question is this Chang Sung-taek, who is the brother-in-law or was the brother-in-law of Kim Jong Il. He has been out of favor from time to time, brought back in, gone back out, a bit of a controversial figure in North Korean terms.

That's led to the view among some people that he may be some kind of closet reformer. I kind of doubt it. One of the great legacies of Kim Jong Il, in addition to nuclear and famine, was the fact that he kind of really created this class of people who had all these luxury goods and are very much committed to sort of keeping this Kim cult going. I suspect Chang Sung-taek is one of those people. And I suspect they will try to do that, even if they get into some tiffs over the military about it.

KING: I'm going to take down the U.S. bases, because I to show people one of the reasons we're so worried about this. These are the North Korean nuclear facilities.

And I will bring up on top of this their missile launching facilities as well.

General, when you look at this today, knowing what you know, Chris talks about perhaps a regency, perhaps some sort of a shared power, we don't know is the short answer. Right? When you don't know, does that make you worry more or less?

HAYDEN: Of course it does.

Now, we have never seen a regency before in North Korea. We have never seen collective leadership in North Korea. This has been the cult of personality times two and clearly Kim Jong Il wanted Kim Jong- un to be the number three in that line of succession.

So if you get tensions, if you get fractures, and I think this comes later on, months from now, do any of the factions in a life-or- death struggle internally want to make use of that kind of...

(CROSSTALK)

KING: Are these troops doing anything tonight than they were 48 hours ago?

HAYDEN: On intelligence, sure. They're up in the top step of the dugout. They're looking. They're looking for signs. But I don't think we perceive an immediate threat from North to South. This stretch here is the most militarized section of land on planet Earth.

But over the past several decades, the military power of the North in terms of conventional power has been decreasing. The South and we together combined have dominance here. It is these kinds of weapons that are the wild card.

KING: So, Ambassador Hill, in the short term, two big diplomatic questions. One, I assume the South Koreans and the Japanese will be particularly careful and cautious. And what do you expect of them and the Chinese?

HILL: I would expect the South Koreans will go on much heightened alerted.

It is not just the configuration of military forces up near that DMZ. If you put a population overlay there, you would see millions and millions of South Korean citizens living within artillery range of some 14,000 North Korean artillery tubes. So the idea of some sort of military confrontation is rather apocalyptical, to say the least. That's one issue that has to be considered. From a diplomatic point of view, the Chinese have been trying their best to try to get the North Koreans back to the talks. The trouble is, the Chinese haven't really looked too much ahead of what they would do once they're in the talks. That is, we are kind of reluctant just to go into talks for talks sake.

We have been looking for some signs that once they would get to the talks, they would really be able -- be willing to deal with living up to their obligations under the agreement to denuclearize. I think that process is going to be set back even further as a result of this transition.

KING: Ambassador Hill in Denver, General Hayden here tonight, we will keep an eye on a very important part of the world.

I did a broadcast once in the DMZ, put my toe across the line. My toe has been to North Korea. I guess we could say that much. General, thanks for time, Ambassador as well.

Tonight, a showdown is brewing on Capitol Hill and your taxes are caught in the middle. Stay tuned for the latest on whether you will be paying more very, very soon.

Plus, seldom -- something we very seldom hear, words of praise for Lindsay Lohan. But they come from Hugh Hefner.

(COMMERCIAL BREAK)

KING: Welcome back.

(NEWS BREAK)

KING: And, next, we're going to go live up to Capitol Hill.

As Kate just mentioned, they can't figure out how to do something nearly everybody wants to do.

And that's keep your taxes from going up.

And you won't want to miss this.

Newt Gingrich says he's going to be positive, right? Well, Callista Gingrich, his wife, takes to Twitter.

She's fighting back.

(COMMERCIAL BREAK)

KING: Tonight, the House of Representatives should decide whether your taxes will go up starting January 1. And, well, the battle on Capitol Hill is anything but pretty.

The House will vote on a Senate bill that would extend payroll tax cuts for two months. The two-month extension, though, not good enough for most House Republicans. House Speaker John Boehner wants a one-year extension in order, he says, to eliminate uncertainty in the tax code for small businesses.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The idea of a tax policy can be done two months at a time is the kind of activity we see here in Washington that's really put our economy off its tracks.

(END VIDEO CLIP)

KING: Speaker Boehner's objection to the Senate bill does come as a bit of a surprise. On a conference call just Saturday, the speaker called the bill, quote, "a good deal."

Joining me now from Capitol Hill with the latest on the face-off, our senior congressional correspondent, Dana Bash.

And Dana, so the question is, what's going to happen this evening? House Republicans are in their meeting. They're plotting strategy. Taxes going to go up?

DANA BASH, CNN CORRESPONDENT: Well, if House speaker John Boehner is right, he's saying that it will fail. And he is saying that. As you mentioned, there was a conference call over the weekend. He got an earful, John, from rank-and-file Republicans, saying that they absolutely will not go for the short-term extension. They say a year or nothing.

And since then, as the House speaker has said, "You know what? This is what we're sticking to. We're sticking to the one year or nothing."

And unless something changes, unless Congress finds its way out of what is, frankly, utter chaos right now, 160 million Americans will see their taxes go up. Unemployed Americans will lose their benefits.

And the Senate, which you can see is right down here, they're gone. They've left for the year. And the Senate Democratic leader, he says we've done our job. We passed this two-month extension, and we're not going to come back unless the House follows suit.

KING: And so a little showdown here. You can call it a game of Chicken. You can call it a game of "who blinks first." Both parties going into a dicey competitive election year. Do the Democrats and the Republicans think they have the upper hand politically?

BASH: Both do. Democrats, certainly, are talking about what they think is more political leverage that they have. Because they say, look, what they're going to see probably late tonight is Republicans voting for what is effectively a tax increase which is an anathema to Republicans and political poison across the board.

And they are also playing up on the Democratic side a real split among Republicans, because the vast majority of the Senate Republicans just over the weekend, they voted for this. They said it's not perfect but they said that "We'll deal with a two-month extension for this payroll tax." And the House Republicans are saying no way. On the flip side, Republicans, they are hoping that the Democrats blink, because the last thing President Obama wants going into the 2012 election year is uncertainty in the economy, and that is certainly what a tax increase will do and certainly people losing their unemployment benefits.

KING: First day back after six months. How are things on the Hill? Better? More mature? More childish?

BASH: It is pretty unbelievable. Six months maternity leave. The specifics certainly have changed. But the chaos is still the same. It's kind of scary.

KING: Kind of scary. Great, great. That's encouraging for people watching at home.

BASH: Sorry.

KING: Dana Bash, welcome back. Thank you.

And as we noted just a moment ago, Speaker John Boehner called the Senate bill a victory and a good deal as recently as Saturday. But rank-and-file conservatives in the House pushed back. And today the speaker backtracked. Said this.

(BEGIN VIDEO CLIP)

BOEHNER: I've seen Congress kick the can down the road. Kick the can down the road. It's time to stop the nonsense. We can resolve these differences, and we can do it in a way that provides certainty for job creators and others in our economy.

(END VIDEO CLIP)

KING: One of those conservatives who's doesn't like the two- month bill and wants the one-year extension joins me now, Congressman Alan West of Florida.

Congressman, it's good to see you. You're a freshman elected with Tea Party support. A lot of people are thinking that it is the new members like yourself who told the speaker, "Sorry, sir, I know you're on the record saying this is a good deal, but we don't think it is."

Here's what the Democrats are trying to make of this. Chris Van Hollen, a member of the Democratic leadership, said, "We are witnessing a pattern of Speaker Boehner walking away from bipartisan compromises to kowtow to his extreme Tea Party wing of his caucus." He means you, sir. Is that what happened? Did you guys pull the rug out from under the speaker?

REP. ALAN WEST (R), FLORIDA: No, I don't think we pulled the rug out from under the speaker. As a matter of fact, when I flew back in Saturday morning, before I even landed, I had message upon message from friends and constituents down in south Florida saying what is this about a two-month extension? No one can do any type of proper analysis with just a two-month, and that's bad fiscal policy. As a matter of fact, we just had today the National Payroll Reporting Consortium say that the Senate amendment could create substantial problems, confusion and costs affecting a significant percentage of U.S. employers and employees.

The Small Business and Entrepreneurship Council said indeed the uncertainty regarding what happens next following the two-month expiration date will serve as additional fuel to currently low business confidence levels.

So this is not what we should be doing up here. We passed a bill that gave a one-year extension, which is something that the president said. Senator Harry Reid said and Senator Chuck Schumer said. For them to come back with this Band-Aid approach is just really, as you said, playing political chicken with the American people, who are suffering under failed economic policies. And I'm not going to stand for that.

KING: I understand that. Forgive me for interrupting, sir. You called it political chicken. I think that is a fair way to call it. I may have said it first. Some moderate Republicans, especially in the Senate side, are a bit nervous, though, because of the political environment.

Senator Scott Brown of Massachusetts faces a tough re-election campaign. He put out this statement today: "The House Republicans' plan to scuttle the deal to help middle class families is irresponsible and wrong." That's a Republican, sir. What do you say to Senator Brown?

WEST: I say very simple. I'm not up here worrying about re- election. I'm up here to do what is right by the American people. And I hate to say it: There are senators over there that are more so concerned about re-election than they're missing the boat. They should have got on board with the one-year extension that was paid for. That will make sure that we don't see a Social Security deficit as we did with this pay tax cut.

We had unemployment insurance reforms, as well as we had a two- year extension on the sustained growth rate, which is important for doctors who are treating Medicare seniors down in my neck of the woods.

Also, we had a good thing with the payroll -- not the payroll, but the Keystone XL Pipeline and the Ibolamac (ph) provision continue to provide the opportunities and the conditions for private sector jobs.

John, look. We have to be very honest. I know that the messaging machine is going to be kicking in full time. I think the American people should be absolutely appalled, and I'm embarrassed. The fact that the Senate sent over something here for just two months.

We're going to vote on this Senate amendment. I don't think it will pass. And then we're going on continue with regular order, which is something that we've established this year. We're probably going to a conference.

KING: And you say probably going to a conference. The Senate is gone. They can come back, yes, if the Democrats blink. They say they have no plans to do that.

You mentioned the messaging machine. The White House has up on its Web site in the White House briefing room, they've had a clock, saying, "If Congress doesn't act in X number of days," and the countdown going on. They've now crossed that out. If you go to the Web site, it says if the House doesn't ask. They're putting the blame directly on you.

You might have a tough reelection campaign next year. Are you at all concerned that, when we're in these meetings that we're not allowed to bring a camera into, what is the level of concern in there that, if we do this, even if we think we're right on the policy, we could pay a price for it?

WEST: It's not about paying a price. You just said you have to do what is right about a policy for the American people. This past year we have seen such abysmal economic growth. A GDP in the first three quarters of 0.4 percent, 1.0, 2.0 percent. We have to do something that is better to provide predictability and certainty and confidence, which is exactly what several of these groups have said about a two-month extension that does not do that.

So John, I'm not up here wanting to play games with the American people. I'm not up here worrying about political tick-tock clocks and thing that are truly immature and a reflection of the lack of leadership in the White House.

Two months is not viable, and the American people don't need us to come right back in January or February and go through this whole machination again.

So I think that it ends right here. We're going to come up with a one-year solution, which is what I voted for last week so no one can say that I don't believe in having this done. I'm voting against the short term measures.

KING: Big vote tonight for Congressman Alan West of Florida. Sir, appreciate your time tonight. We'll watch this one play out.

WEST: Yes. Thanks, John.

KING: Fascinating stuff. Thank you, sir.

When we come back, tonight's "Truth" is a lesson that kinder and gentler often doesn't work in politics. And sometimes -- sometimes -- the wife decides to come to the rescue.

(COMMERCIAL BREAK)

KING: Everybody falls down. The challenge is whether and how you get up. How Newt Gingrich deals with this question over the next few days will speak volumes. Iowa activists who a week or ten days ago said Speaker Gingrich was well ahead there now say he's in danger of slipping out of the top three. That would be a devastating blow.

Which brings us to tonight's "Truth." Newt didn't stumble by accident. He was pushed. Pummeled. And the candidate who led the charge is now reaping the benefits. Call it the Romney rebound.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I'm going to let the lawyers decide what is and what is not lobbying. But you know, when it walks like a duck and it quacks like a duck, typically it's a duck.

(END VIDEO CLIP)

KING: That was Governor Romney this weekend. Now the question of whether the consulting work Speaker Gingrich did for Freddie Mac amounts to lobbying. Proof right there that, after playing it safe for too long, team Romney realized the Gingrich threat was more real than any previous "anyone but Mitt" knew and proof that, when it finally moved, the Romney campaign moved decisively.

An inexpensive but buzz-generating Web video linking Gingrich to Democrats, Republicans love to hate. That was a Web video that hit Nancy Pelosi and Al Gore. Newt Gingrich was in a video supporting them on climate change. Then, they backed that message up with a tough Iowa attack mailing.

And that's not all. "Truth" is, Mitt the knife got some very important help.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: The fact that we know that he cashed paychecks from Freddie Mac. That's the best evidence that you can have. Over $1.6 million. And frankly, I am shocked listening to the former speaker of the House, because he's defending the continuing practice of Freddie Mac and Fannie Mae.

(END VIDEO CLIP)

KING: Most impactful, perhaps, is this Iowa attack aid from a pro-Romney super PAC.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Newt has a ton of baggage. Like the fact that Gingrich was fined $300,000 for ethics violations. Or that he took at least $1.6 million from Freddie Mac just before it helped cause the economic meltdown.

(END VIDEO CLIP)

KING: Now let's remember how volatile this race has been. So what we see tonight could prove to be a mirage by the end of the week. But consider the turn-around.

A week ago Newt-mentum was the buzz word. And the political class was chattering about the NBC/"Wall Street Journal" poll showing Gingrich with a 17-point national lead.

Tonight our brand-new CNN/ORC numbers show a Romney-Gingrich dead heat nationally. More importantly, to me anyway, accounts from Republican sources on the ground in Iowa suggesting not only a Gingrich stall but at least a bit of a Romney surge.

The "Truth" is that's a big turnaround in just a week, and it didn't happen by accident.

Joining me now to talk about the Romney rebound, Congressman Jason Chaffetz, a Romney supporter; CNN contributor and editor of RedState.com, Erick Erickson; and the former Republican congressman, J.C. Watts.

Erick, I want to go to you first, and I want to read you some notes I got with some Iowa activists today as I go to them to see if you're picking up the same kind of thing.

One anecdotal story, Christmas party Saturday night, a conservative who I did not think would be a Romney guy said, quote, "Chicago mafia will have a field day with Newt's baggage. I think Romney has the best shot of beating Obama."

Here's one here. I just talked to an activist out there, Republican activist we're in touch with quite a bit. He said, "My high school senior daughter, who will be voting for the first time, told me she is settled on Romney. She was formally Herman Cain's eastern Iowa high-school coordinator." Is that happening everywhere, Erick?

ERICK ERICKSON, EDITOR, REDSTATE.COM: It's happening across the board in Iowa. The problem is, that as much as people pooh-pooh negative ads and say they don't work or they have a visceral reaction against the person who runs them, No. 1, Mitt Romney is not running the ads. Yes, they're for him, but they're for the super PAC. They don't say "paid for by Mitt Romney." So he's got a little distance between them.

But two, negative ads work. They've always worked. They always will work. There's a reason they run them. And I'm, frankly, a little bit shocked that Newt Gingrich is playing naive, whether willfully or not, and did not plan on responding to these things. He had to know it was coming and, well, now they're taking a toll on him.

KING: He's been around a long time. He's trying to run a different campaign. In part because he doesn't have the money to match these guys on television, in part because he says, in his way, this is the way to do it.

Congressman Chaffetz, I want to you listen to the former speaker right here. You're a Romney guy. Former speaker right here saying your candidate and others are throwing what he calls "negative junk."

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: Very disappointing to see some of my friends who were running put out so much negative junk. But I really wish they would have the courage to be positive, and I wish they would have the courage to have a campaign in which we matched ideas. We didn't see whose consultant could be the nastier or whose consultant could run the more clever destructive ad.

(END VIDEO CLIP)

KING: He goes on to say, Congressman Chaffetz, that all these internal Republican attacks could weaken whoever wins the nomination in the long run. You agree?

REP. JASON CHAFFETZ (R), UTAH: Well, it's a healthy part of the process. And the reality is they happen to be true. When you're sitting next to Nancy Pelosi advocating for cap and trade, that isn't going to play too well in the nation. Certainly, not in Iowa.

There's also another part of this, and that is Mitt Romney has also done a lot of positive things. I think you've seen him open up a lot more about his family.

And this party, this country is still rooted in family values. So when he talks about his longtime love affair with his wife and Ann Romney and some of the difficult things that they've gone through, I think that kind of humanization, if you will, of Mitt Romney is in combination with the exposure of the truth about Newt Gingrich is certainly playing well.

Plus, you've got key endorsements: "The Des Moines Register"; the governor of South Carolina, a very conservative, Tea-Party-oriented person in Nikki Haley.

So there are a lot of good things out there. Chris Christie. I mean, you keep going down the path, and you can see why people are starting to gravitate toward Mitt Romney. He's the best candidate to beat Barack Obama.

KING: Among the four people in the conversation, J.C. Watts, you know Newt the best. You've known him the longest. You know that he's being kinder and gentler right now. He -- maybe he has political strategic reasons for that. But you also know inside, this is a guy who has been in some pretty nasty street fights in the past, and he has that in him. Will he be able to contain it? Should he?

J.C. WATTS, FORMER REPUBLICAN CONGRESSMAN: Well, John, I'm glad I'm not a potted plant here.

But you know, the negative ads, they do work. And Newt doesn't have the dollars to respond. He's trying to do the grassroots thing. And trying to keep on it a substantive level, but that's not going to happen. He's not going to have the dollars in Iowa to talk about the flip-flops with Governor Romney on the life issue, on the marriage issue. The things that I think Iowa voters are concerned about.

But I have -- I have worked with Newt. And I think it's important to note, you know, when Newt Gingrich was speaker, we had balanced budgets. We got tax relief. We reformed entitlement programs which hadn't been done in the last 15 years. We paid down the national debt. And we did some significant things.

And John, you know; you've been around this city. Politics is a rough and tumble it's a physical sport. And when you're the speaker of the House, you're going to make enemies on the Republican and the Democrat side.

KING: But I've been around politics long enough to know that, if he wants to make that case now, when everything else in his record is being attacked, he might have to throw a forearm shifter (ph) first and knock the other guy down before he can make that case.

WATTS: Well, you know, my thing is you should always defend yourself. I think the American people as was said...

KING: If he doesn't -- if he doesn't defend himself more forcefully, do you think he can recover?

WATT: Well, I think he's trying to do it differently. And I think we've seen that -- what trying to do it differently, what that gets. Trying to keep it positive, trying to keep it substantive. You know, what's your plan on immigration? What's your plan on growing the economy? What's your plan on education? Those things don't get talked about when we get in the mud, and we've surely been there over the last week.

KING: We have. But here's some evidence to me. Congressman Chaffetz, Erick, you guys are both active on Twitter. You do a lot of politics on Twitter.

Here's some evidence to me that maybe Callista Gingrich is getting back to the hotel room at the end of the night and thinking, "We need to push back a little harder."

These are retweets. We want to be clear. She has not tweeted out anything herself. But here's a tweet she said Sunday night, @CallyGingrich retweeting @UnitedStates: "Mitt's 'Money Never Sleeps' photos. I personally don't mind it, but it won't play well in Ohio."

That photo is a promotion for Bain Video. It shows Governor Romneys and his partners at the time holding a lot of cash in their hands. The Democrats like to call it the Gordon Gecko photo. That's one right there.

Then a minute later -- a minute earlier Sunday night, @CallyGingrich tweets, re-tweeting again the same Gingrich supporter, @UnitedStates, "Poor Romney. He's just a sound bite candidate. Chris Wallace pulled the strings in his back, and he spewed consultant- approved policy."

What do you make of that, Erick?

ERICKSON: Well, you know, they're -- if you're retweeting something, and you're a candidate's spouse, you're endorsing it, No. 1, whatever you're retweeting, if it's negative about someone else.

But two, yes, she probably wants the campaign to amp it up a little bit. Newt has said that Callista is kind of the brains behind the operation, if you will, that she has come up with this new method for campaigning. He trusts her.

I'm thinking that he needs to listen to his wife some more. She -- sounds like she wants to throw a punch. If he doesn't throw punches, you know, we've seen new-style campaigning. Herman Cain tried it. Look what happened to him. Rick Perry tried it for a while. Look what happened to him. Newt Gingrich is now trying it. Same thing is going to happen to him. There's a reason campaigns do what they do and have so for the past hundred years, because it works.

KING: When you retweet, Congressman Chaffetz, you're not being neutral, are you?

CHAFFETZ: No. You're taking a pretty strong position on things. You also have to remember that Ron Paul and Michele Bachmann have been very aggressive against the former speaker. I think that's been very effective.

But it's also this combination of, I think, the Romney campaign has been very successful in pushing this idea, the notion that find the most conservative person that can win. And the idea that we have to beat Barack Obama is very compelling for Republicans. They want somebody who's steady, who's rooted in family values, who has a good strong family. And I think that, as much as anything, is giving people a comfort level that Mitt Romney is the right guy to take on President Obama in the fall.

KING: You get the last word.

WATTS: John, you notice this: Mitt Romney has not exceeded 25, 26 percent. Two well-funded, well-organized campaigns can't get beyond 25, 26 percent. Just remember what happened to us in '08 when Republicans went into the general election with Republicans not being united. We got our heads handed to us.

And so having a candidate not just that we think can win in the general, that's not how the process works. You've got to win in the primary before you get to the general.

KING: We'll see how -- you important points. We're going to see how this plays out. Iowa votes 15 days from tonight.

Congressman Watts, Congressman Chaffetz, Erick Erickson, thanks for joining us.

The one candidate that three of them agree should not be the Republican nominee, but a man who is surging in Iowa right now, Congressman Ron Paul will be our guest here tomorrow night.

When we come back, the Tebow effect. Think about it.

(COMMERCIAL BREAK)

KING: Welcome back. Here's Kate Bolduan with the latest news you need to know right now. KATE BOLDUAN, CNN CORRESPONDENT: Travel season, yes it is. Well, travel is becoming a bit of a nightmare, unfortunately, in the southwest and high plains states.

An early winter storm is dumping more than a foot of snow from Arizona and New Mexico to Kansas. Beautiful for some, but dangerous, yes, as well. And creating blizzard-like conditions along some major interstates, including I-40 and I-25.

A huge business story broke late this afternoon. AT&T officially gave up its bid to merge with T-Mobile. The $39 billion deal would have created the nation's largest wireless communications company, but federal regulators opposed it, predicting the merger would lead to higher prices, poor service and massive job cuts.

And a story all of you were probably involved in yesterday. Finally, this you can call the Tebow effect. "USA Today" reports Sunday's game between the Denver Broncos and New England Patriots was the highest rated NFL game of the season as millions tuned in to see the dual between quarterbacks Tim Tebow of Denver, of course, and Tom Brady of the Patriots. New England, if you don't know already, won 41-23.

KING: Convincingly. I'm a -- well, I'm a New England fan, so I'm all for Tim Tebow. I think what he's done is quite remarkable. He tried to pull it off there, but it wasn't happening.

But funny story. We're in Iowa. Remember, Rick Perry in the last debate said, "I'm the Tim Tebow of the Republican race," essentially meaning stunk the joint out so far, but he's going to win in the end.

I told him -- I interviewed him on Friday. And I said, "That may be the case. Be lucky the Iowa caucuses are not this week, because my Patriots are going to beat the Broncos."

BOLDUAN: You were right.

KING: Which they did. And we'll see if Tim Tebow works for Governor Perry.

BOLDUAN: It's a good joke. A good headline.

KING: It was.

So we are paying tribute -- that's the wrong word -- we are marking the death of the long-time South -- North Korean leader Kim Jong-Il today. Here's a moment you may have missed.

This one is back in 2000 near the end of the Clinton administration, a very controversial decision to send Secretary of State Madeline Albright to North Korea. Very awkward moment, watching the pictures there, their handshake. They walk together. Not the most gracious. And a massive parade. Madeleine Albright watched a massive parade.

Here's a very different take on the North Korean leader from the movie "Team America."

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (singing): When I change the world, make they'll notice me, and until then, I'll just be lonely, a little lonely, little me, oh, little me.

(END VIDEO CLIP) KING: You make the call at home on that one.

Congressman Ron Paul, the Republican candidate for president. He's doing very well in Iowa at the moment, will be with us tomorrow. We'll see you then.

"ERIN BURNETT OUTFRONT" starts right now.