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STATE OF THE UNION WITH CANDY CROWLEY

Interview with Gene Sperling; Interview with Scott Walker

Aired January 5, 2014 - 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: New year, old troubles.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): Today, health insurance in the balance and an economy on the mend.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm optimistic for the year that lies ahead.

CROWLEY: Your health care, your job, your money, what to expect from 2014? A conversation with Gene Sperling, director of the National Economic Council.

Then, is he the one?

UNIDENTIFIED MALE: The answers aren't going to come from Washington. Republican governors are going to drive America's come back.

CROWLEY: He took on public unions and became the only governor in history to survive a recall election. Wisconsin's Scott Walker is the first in our series on the Republican Party's search for itself.

Plus, same-sex marriage and faith versus Obamacare back at the Supreme Court. An explainer with court watcher, Joan Biskupic. And ready set, go, our panel ponders the deciding issues in politics this year 302 days until the midterms.

This is STATE OF THE UNION.

(END VIDEOTAPE)

CROWLEY (on-camera): Good morning from Washington. I'm Candy Crowley.

The White House and the Democratic allies on Capitol Hill have lost a full-court press for an extension of long-term unemployment benefits which expired last month. The Senate takes up the measure tomorrow. The bill provides relief to the jobless for up to 73 weeks. It's not certain to pass, but Democrats are certain the politics of the issue favor their party this election year.

Joining me is the man leading the push to restore the emergency aid, a key economic adviser to the president, Gene Sperling. Gene, thanks for being here.

SPERLING: Thanks for having us.

CROWLEY: Let me -- let's start out with unemployment benefits. Some Republicans say, hey, we're open to this, but it needs to be paid for. Others say it just encourages people to stay on unemployment till their benefits run out and then they go look for a job. And others say, wait a second, the economy is improving. This was emergency aid for the height of the recession and we don't need it anymore. So, why do you think we have to have it?

SPERLING: You know, it is true that the economy is improving, showing more momentum. Unemployment rate, in general, is falling. But what we're finding is that the worst legacy of the great recession is that there is a crisis of long-term unemployment, people who have been unemployed for six months or longer are finding it most difficult and we have to be a country that's committed to leaving nobody behind in this recovery.

And so, that requires a full-court press. It does require more bipartisan effort to create jobs. It requires the president's partnership. He's working on with CEOs to give more of those long- term unemployed a chance to get interviewed and hired.

CROWLEY: Just part of an overall strategy?

SPERLING: It is, but we as a country, have never, never the last half century, have we ever cut off emergency unemployment benefits when long-term employment has been this high. Never before. And so, you know, people have to remember that long-term -- that emergency unemployment benefits only go to people who are actively looking for a job.

For a lot of people, that keeps them encourages them to keep looking when they're getting discouraged. And I have to point out that tomorrow is actually the day that 1.3 million Americans will go to their mailbox and find that check missing, that check that they rely on to put food on their table --

CROWLEY: A lot of people say, wow, 73 months. That's close to a year and a half that you can get in some people, not everybody gets that much, long term or not. When do you say, oh, OK, it's good now?

SPERLING: No. I think one thing people should clearly understand is, first, as I said, you have to be actively looking for a job to get this.

CROWLEY: That's paperwork, Gene. You know that's paperwork. There are plenty of people that are on long-term unemployment that, you know, can game the system. So, most of them do not and we understand that.

SPERLING: Most of the people are desperately looking for jobs.

CROWLEY: Right. SPERLING: You know, our economy still has three people looking for every job. You know, we saw thousands of people looking for just a few hundred jobs here in Detroit when Wal-Mart put up ads. And I think if you look at why is there a bipartisan proposal now, why did Senator Heller, a conservative Republican from Nevada, support this?

CROWLEY: Because unemployment is really high in Nevada.

SPERLING: Yes. And he's out there talking to constituents who desperately want to work. But let me answer your question, because it's important one. People need to understand that emergency unemployment naturally tapers off. In other words, as your state goes below nine percent, those weeks go down. As your state goes below seven percent, it goes down. And my hope would be is that we'll start getting near the more normal levels of unemployment where we can cut this off. But, I do want to stress --

CROWLEY: What's normal?

SPERLING: You know, I think as you're approaching six percent nationally.

CROWLEY: So, six percent would be around the time you would think, OK, long-term unemployment benefits no longer needed, and yet, the president in his radio talk, more than radio, but nonetheless, in his Saturday talk, said that it's cruel to cut long-term unemployed out of these benefits. There'll still be long-term unemployed. You know, unemployment hits six percent. Is it less cruel at six percent than it is at seven percent?

SPERLING: I think that we -- I think what we know now is that, again, we have never cut off long-term unemployment -- emergency unemployment benefits for long-term when unemployment has been this high. And you know, this is going to affect a lot of people, Candy. Over the course of this year, 14 million Americans would be affected, 4.9 million who get -- would get unemployment benefits cut off in 2014 and then nine million people that they support.

So, yes, I do think we, as a country, are going to have to take a lot of steps to deal with long-term unemployment. That is the worst legacy of the great recession. And yes, there's going to come a time where we're going to not need have emergency unemployment benefits, but we're going to have to do more. The president has challenged CEOs to work with him on making sure that the long-term unemployed are getting a fair chance to interview and hire.

And we're going to need to do things on job creation. We need to -- the presidents proposed a grand bargain for job growth. He said, let's put together lowering corporate tax -- tax rates, corporate tax -- together with infrastructure. That's the type of grand bargain on jobs that we will also have to do, because you're right, in the end of the day, we've got to create the demand and the job growth out there that gives these people who are desperately looking for work now a job to get.

CROWLEY: The president has talked about this corporate tax reform coupled with some infrastructure/job creating kind of plans.

SPERLING: Yes.

CROWLEY: The problem is that he has been unable to get it before. Now, his poll ratings are lower than they've ever been. What makes you think he can get it this year?

SPERLING: Well, look, we are building off some bipartisan cooperation in the budget agreement. And I think one of their -- the real issues for 2014 is we have more momentum in the economy unquestionably in terms of growth, in terms of job creation. Are we going to build on that momentum? There is bipartisan possibilities to pass, immigration reform, housing finance, manufacturing.

And yes, this idea of a grand bargain on jobs is designed to bring people together, something that Republicans and business leaders tend to support, lowering corporate rates, eliminating loopholes, lowering them to 28 percent rates, 25 percent, simplifying the tax code for small businesses but combining it with infrastructure is a way to do things that most Americans --

CROWLEY: -- have way this year? I mean, when he had better numbers, more public behind him, and a more sway in A Democratic Party that has to look toward a 2014 election? How can they get it done this year when he's in a weaker position what he couldn't get done last year, the year before?

SPERLING: Well, I think, you know, there's no question, Washington's been, you know, extremely dysfunctional. But I think you have to hope that there is desire everywhere to show people that we can work together and I think that it will be harmful, not just for the economy, but I think will be harmful politically if Republicans use 2014 as a year to threaten, default again on the debt limit or refuse to do bipartisan immigration reform that's already passed the Senate.

And you know, the question is the only reason people want to work together on jobs politics or are we here to try to create jobs, strengthen the middle class, deal with inequality, have each other's back in hard times? That's our goal. That's what the president's going to be pushing for in the state of the union, that's what he's going to be pushing for all year.

CROWLEY: A couple of quick questions, one on the economy. Where is it headed? At the end of this year, will we be at six percent unemployment? What will the growth rate be? What do you look ahead to this year?

SPERLING: Well, there's no question, we've seen more momentum. We expect the second half of 2013 to see growth that's been over three percent.

CROWLEY: 2014.

SPERLING: No. I'm saying for the second half of this year, you see growth will be over three percent. That goes in with significant momentum into 2014. You know, I don't want to do forecasts for 2014. I will say there's some very positive signs. You're seeing housing prices coming up. You're seeing 401(k)s come up. That's improving the balance sheets of average families across the country. You're seeing a lot of strength in manufacturing. You're seeing health care costs three years in a row now at the lowest rate of growth that we've seen on record.

CROWLEY: And --

SPERLING: These are all positive signs. The last thing I want to say is that we're also seeing 50 percent of companies saying that they're rethinking about bringing jobs back to the United States. A consultant firm just said that for the first time since 2001, the United States is the best place to do business. That's because we're doing more about our innovation. It's about lower energy costs. It's about lower health care costs and those were all promising signs.

But ultimately, Candy, it's going to depend what do we do with that momentum? Do we work together in some of the ways that we talked about? Past minimum wage, increase minimum wage? Do immigration reform, housing finance reform, manufacturing? These are things that will make a big difference in how much momentum the economy will have in 2014.

CROWLEY: Gene Sperling, thank you for joining us this morning. Appreciate it.

SPERLING: Thank you.

CROWLEY: When we return, Republican governor, Scott Walker, on Obamacare, how he would fix Washington, and whether he wants a chance to try.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Across the nation, you see in the states, governors showing that we can make things work, particularly, if you're a Republican governor.

(COMMERCIAL BREAK)

CROWLEY: During his first year in office, Republican governor, Scott Walker, faced down public unions during a budget battle. It made him a darling of conservatives and a target for Democrats. His second year, Walker became the first governor to survive a recall election. That triumph cemented him as a headline player in the Republican Party and an often mentioned possibility for a 2016 presidential run.

Adding to that chatter, his new book, "Unintimidated: A Governor's Story and A Nation's Challenge." Joining me now, Wisconsin governor, Scott Walker, who's in his fourth year in office and running for re-election for governor. So, you've been a busy guy over the past four years. We appreciate your joining us, governor.

WALKER: Good to be with you. Thanks for having me on. CROWLEY: Let me start with that book, because, you know, the fact is, I think you know and I know and most people who cover politics know that a book is almost mandatory for a presidential run. You got to lay out where you are and set out some beliefs, et cetera, et cetera. Why did you write it?

WALKER: In our case, it's pretty unique. People want to know about my biography, how I became an eagle scout or what sports I did as a kid. They're going to be disappointed because this is really a book about the reforms that we did in Wisconsin, what we did, how we did it, most importantly, why we did it. And then at the end, a little bit of a reaction is to how it can apply to other states and ultimately to our nation's capital.

So, it was a matter -- as you mentioned, we went through some pretty big attention early in 2011. The recall was the first ever where a governor was successful and I think people wanted to know what, where and why. And, we've been successful getting that out. I hope actually more than just conservatives and Republicans a lot of undecided voters here in my state and across the country read it, because I think they'll be surprised to see what they weren't seeing throughout the debate.

CROWLEY: As you know, 2014 is generally the time when pundits and people very involved in politics begin to speculate about the next presidential election. We put together a list of the most often mentioned names on the Republican side, Chris Christie, Rand Paul, Paul Ryan, Ted Cruz, Marco Rubio, Rick Perry, Jeb Bush, Scott Walker. Should your name stay on that list?

WALKER: Well, I'm focused on 2014, not just because I'm up for election, which is a given, but when I look at what the we did in Wisconsin, as I mentioned in the book, many of the states across the Midwest where they changed not only governors a couple of years ago in 2010, but they change the legislative bodies as well, real reform has happened in a number of these battleground states because a whole new team came in.

And I think 2014's incredibly important nationally, not just the whole United States House of Representatives but to win the United States Senate back because if you do that then two years later, if there's a new president, he or she can ultimately have a team that can come in and push true reform.

And that's what we've done in the key states like Wisconsin, we can do for America. So, I'm really focused on 2014 not getting ahead of the game.

CROWLEY: Sure, but we wouldn't be wrong to keep your name on that list?

WALKER: Well, you guys -- you guys can predict all you want. In the end, we're going to stay focused on getting things done. That's what governors do. We focus on getting things done, not just talking about it. CROWLEY: Let me ask you about a couple of things that came up in my earlier interview with Gene Sperling. There are two issues that are likely to kind of dominate at least the early months of Capitol Hill that is, first, the extension of long-term unemployment benefits. Basically, for people who've been unemployed for six months or more.

In the states, they can get up to a combined state and federal unemployment benefits, they could get up to 73 weeks, close to a year and a half. Where do you stand on that?

WALKER: Well, two things. One, let's be clear, the reason why the White House is so actively pushing this is they want to desperately talk about anything but Obamacare. The best thing we could do to help people who are unemployed or underemployed is fix Obamacare, replace it with a patient-centered plan that put people in charge, not the government in charge, and got rid of the uncertainty that so many small businesses here in my state and across the country talk about.

But two, the specific benefits to me, any discussion about this should be focused on what sort of reforms are we going to put in place. You know, he talked earlier, the previous segment, about people looking for work. Well, the federal government doesn't require a lot. We just made a change last year so that people had to look five times or more a week for work without our requirement change.

They could go as little as two times a week. I don't know about you, Candy, but if I was out of work, I'd be looking more than twice a week for a job. I'd be looking for every day except maybe today. I take Sunday off to go to church and pray that I could find a job on Monday, but I think there need to be reforms in that system.

I also think Wisconsin is one of the few states in America that just changed things so that adults without kids looking for work now have to be enrolled in one of our employment training programs

A couple of weeks ago, we saw there were more than 50,000 people in one of our websites here in the state, or 50,000 jobs, I should say that were open on one of our websites, one of the biggest challenges people have who are either unemployed or under employed is many of them don't have the skills in advanced manufacturing, in health care and I.T. where many of those job openings (ph) are.

Instead of just talking about extending benefits, we should talk about getting people the training they need to fill those jobs. That's much better off than just putting a check out.

CROWLEY: So, you don't, per se, have a problem with extending unemployment benefits for the long-term unemployed, but you'd like it coupled with some other things?

WALKER: Yes. That's what we did with our food stamp program. We said, if you want it, we'll help you out, but I -- I've got two boys now in college. But for years, they used to play high school football as wide receivers and they would go in and out with the plays from the coach to the sidelines, from the sidelines to the quarterback. And I got to tell you, all those years watching football, I never saw one kid get in the game who didn't have their helmet on and their gear ready.

What I suggest is that whether it's unemployment compensation or food stamps or other benefits, we should require employment training so that people are ready with the skills. They've got their gear ready to get in the game. So, when the job become available, and it will, they're ready to get the job.

CROWLEY: How about an increase in the minimum wage at the federal level?

WALKER: You know, again, I look at that. Years ago, I worked at McDonald's when I was a kid. Actually, Paul Ryan worked down the road from me in Janesville. I worked in a small town called Delavan. Those were great jobs to start out with. My great fear is for young people like Paul and I were back then and my kids a few years ago when they worked those sorts of jobs, they'd be without work.

We have a high unemployment rate amongst young people. If we are to raise that artificially, we'd take that away. Instead, what we need to focus on is helping people find the skills they need to fill those much better paying jobs, those family-supporting career-type jobs that I just talked about. We have them here in advanced manufacturing, in welding, machining, information technology, certified nursing assistants, all sorts of great jobs out there.

One of the great challenge is we don't do enough and the federal government makes it hard for the states because they have all sorts of worker training programs with this bureaucratic mess it makes it very difficult to get people the training they need by getting through that maze and we need to change that so that people can get the training and get them to the jobs that pay more.

Artificially raising the minimum wage whether it's at the state or the federal level is not going to do that. Creating an environment where employers create jobs will do just that.

CROWLEY: If I am an unemployed American and I hear from Republicans that, yes, we should go ahead and do that provided we do the following three things, if it's a caveat approval of extending those benefits or if I am a minimum wage worker and I find -- I see Republicans who say, you know what, it's artificial, it messes with the marketplace, it might mean some teens can't get into the job market, why would I become a Republican?

How do you message that in any way to reach out to those who are disinclined to sign up for the Republican Party?

WALKER: Because in the end, what people want is freedom and opportunity. You don't get that through the mighty hand of the government. I think as a kid, when I grew up in Delavan, nobody I knew in my class said someday, my goal is to grow up and become dependent on the government.

The same way for all the great people I've met who've immigrated from other countries, be at Mexico, or India, or Germany or anywhere else, all those folks I know who are successful small business owners don't say to me that they came here because they want to become dependent on America. No. The American dream is given a chance, given an opportunity, the great thing about this country, greater than just about any country in the world, is that you have an equal opportunity but the outcome's up to you.

The problem is too many Americans right now don't have that equal opportunity and we should be making a case about how we're going to make it easier to create a job, easier to get in the workforce, easier to get the skills that they need to fill those jobs, artificially raise things. CROWLEY: That's not an uncommon argument for many Republicans that I have heard in the past saying this is about empowering people, not about, you know, raising benefits and making them dependent, but it hasn't worked. What makes this expand the Republican Party, which desperately needs to bring in something other than what's really been a shrinking base in your party? How do you resell that message?

WALKER: Yes. Yes. Candy, well, part of it though, part of the reason why it hasn't worked as well elsewhere, a good example is that reforms be put in place for food stamps this past year in Wisconsin is not often was money put in place to make things happen. I say you got to put your money where your mouth is.

Part of the reason why most states don't require childless adults to work or be employment training to get food stamps is because you have to put money behind that to fund the worker, employment training programs. We do just that. We put $17 million behind that in our last state budget because I want to make sure people have those skills. I think when people see that, when they see that what we care is about is not just people going out and looking for work but giving them the skills, giving them opportunity.

A young woman I mentioned last year named Elizabeth, on her own, before we made this requirement, went out, got the training, got the experience. I wanted to invite her to my budget address to talk about it, but I couldn't. Not because she didn't want to be there, but because she was working as a certified nursing assistant. And that night, liked her job so much, she was going to back to school to be an RN.

Those are the sorts of stories we want to tell people across my state and across America, because I think people realize that's where the real freedom and opportunities. It's not getting a check each week, each month from the government. It's by getting the opportunity and the skills needed to get out and control their own lives and their own destiny.

CROWLEY: Governor, quickly here, when Republicans on Capitol Hill agree to a budget agreement before they left for the holiday recess, Speaker John Boehner came out and really took on conservatives Tea Party-types for having an undue influence on some of his members that have blocked famously a number of things that we know that Speaker Boehner wanted to do, what do you think the role of the Tea Party is in 2014 in terms of Republican primaries or even moving into the generals? Are they on the rise in power or on the wane?

WALKER: Well, it's hard to say because there's no one monolithic group that's the tea party. What I've seen over the years is frustration build across my state and across the country, particularly, with the federal government, what people thought the government had gone too big, too expensive, too a part of our lives. Obamacare was kind of the last straw a few years ago.

People showed up at the Congressional town hall meetings and when people didn't feel like they were listened to, then they took out their frustration, particularly in the 2010 election. CROWLEY: Right.

WALKER: I think that degree is healthy if it's focused in the right way, but one of the things I said after the budget compromise is for people who didn't like it who didn't think it was good enough, the answer is not to take it out on House Republicans or in primaries, the answer is to go to Kentucky -- excuse me to go to Louisiana or go to Arkansas or go to North Carolina or Alaska, where there are senators facing real elections as Democrats and go and help in those elections and elect new Republicans to come because a year from now, things will be much different if republicans hold the United States Senate.

CROWLEY: Got to --

WALKER: Don't focus on the people in office, focus on those who you'd like to replace.

CROWLEY: Governor, let me ask you a final question. I know you're headed for Lambeau Field up in Green Bay. We took a look a couple of minutes ago. When the game gets started, we're told it might be real temperature, minus 22 degrees there. It could break the record for coldest game ever. What -- what will you be wearing to this game?

WALKER: Many, many layers. In fact, Bart Starr won the ice bowl against the Dallas Cowboys about a month and a half after I was born in 1967, December 31st of that year. And, nothing greater than to see us beat the San Francisco 49ers, maybe freeze them out, appropriately stated, and get on our way to the next round of the playoffs. But I'd love to be a part of history and love to see the Packers win. Go, Pack.

(LAUGHTER)

CROWLEY: I hear the 49ers actually are pretty good in the cold weather. But good luck to both teams. Thanks so much, governor.

WALKER: As long as it's not 49 -- as long as it's not 49 degrees below, I'm OK with that.

(LAUGHTER)

CROWLEY: OK. All right. Thanks so much for your time. We appreciate it. Next up, should catholic nuns be forced to provide birth control for their charities' employees? It's another high-stakes legal test for Obamacare.

And court watcher, Joan Biskupic, is here to help us make sense of the latest challenges.

(COMMERCIAL BREAK)

CROWLEY: Joining me now, Joan Biskupic, legal affairs correspondent for Reuters and the author of several books on the courts, including "American Original, The Life and Constitution of Supreme Court Justice Antonin Scalia." Thanks so much, Joan, coming to decipher the court for us. Beginning to remind me a little bit of Roe v. Wade, where a law is passed and then every couple of years, it's sort of redefined around the edges. Is that what we are likely to see with these two new issues to seem to keep cropping up, one is Obamacare...

JOAN BISKUPIC, LEGAL AFFAIRS JOURNALIST: Right.

CROWLEY: and the other is gay marriage?

BISKUPIC: Oh, yes. I think we are headed for several different disputes over the next couple of years in both those areas. In fact, both of them came on the eve of 2014 to the Supreme Court in different fashion. And I guess guile with the contraceptive mandate first, which is a provision of the Affordable Care Act a group of nuns in Denver that provide nursing home care was protesting this part of the Affordable Care Act that requires contraceptive coverage. They are actually exempt from it, but they have to fill out a form certifying their exemption and what they said was that on January 1st when that obligation kicked in, they did not want to sign the form. And the Obama administration said, look you are already exempt, you should to sign the form.

The Little Sisters of the Poor, which is the name of the group, came to the Supreme Court trying to get a stay, trying to get Obamacare blocked from applying to them for this contraceptive form and right now, that's pending at the Supreme Court. Justice Sotomayor, as the justice who oversees that area of the country could refer the matter to the full court but the next couple of days we will see whether religious groups have to sign these forms. Now this is one part of the contraceptive mandate.

CROWLEY: They say they don't want to because it makes them complicit in it?

BISKUPIC: Yes. Yes. There are other groups that you fall under it. And In fact, the Supreme Court already has a contraceptive mandate case that it's going to hear in March that's come from a for- profit business by the name of Hobby Lobby, also based in the 10th Circuit in Oklahoma. And what that group is saying is that our business owners have religious objections to providing contraceptive coverage. That case is actually about contraceptive coverage itself. The one that's right before the justices now on this emergency motion has to do with the form. The nuns say, we don't want to have to even be part of it as you say, Candy, complicit. The Obama administration has tried to minimize the filling out of the exemption form but they say, we don't want to have to do anything with it at all.

CROWLEY: So, of the cases -- the other case is Utah case.

BISKUPIC: Yes. Yes.

CROWLEY: Gay marriage, which appears to say can we stop gay marriage until we get a final court opinion?

BISKUPIC: Yes this one came out of the blue for a lot of people, as we all know. Same-sex marriage is - there's a lot of action across the United States. The Supreme Court sort of side stepped the issue last summer in the California Proposition 8 case but at the same time it also ruling in another case said that same-sex people have the same rights as married - heterosexual couples in the Windsor case. And what's happened is that lower court judges are taking the language from the Supreme Court last June and using it to enhance same-sex couples' rights and that's exactly what happened in Utah, right before Christmas a Utah judge said that Utah could not ban marriages between gay men and lesbians. And now, Utah officials are right before the Supreme Court saying please block this. Wait until the merits are decided. Don't let gay people get married in our state. And nearly 1,000 already have gotten licenses.

CROWLEY: That's hard to undo (INAUDIBLE) I think California sort of proved, right, once it's kind of (INAUDIBLE).

BISKUPIC: Well and it sends mixed signals to people in the state can they get married or can they not get married. And that's right now before the justices also.

CROWLEY: And just quickly, looking at what's on the court docket coming up, what case must we pay attention to because it will have the broadest impact?

BISKUPIC: All of them. All of them. I'm sorry. The same-sex marriage and the contraceptive mandate ones that are right up there now are not up there on the merit bus campaign finance on the merits. Right on January 13th when the court comes back it will hear a case having to do with presidential power over recess appointments that's important for the structure of government. We have a case involving abortion protests, we have a case involving prayer before council meetings. So lots of good culture war cases.

CROWLEY: So come back and talk us to.

BISKUPIC: OK.

CROWLEY: Thank you so much, Joan Biskupic.

BISKUPIC: Sure. CROWLEY: I really appreciate it.

BISKUPIC: Thanks.

CROWLEY: With his two-week Hawaiian vacation over, President Obama makes his way back to Washington where his policies and popularity could affect who wins control of the Senate this year. An early gauge on 2014 politics with our panel is next.

(COMMERCIAL BREAK)

CROWLEY: Joining me around the table, CNN contributor, Cornell Belcher, Stuart Rothenberg of "The Rothenberg Political Report" and Mattie Duppler for Americans for Tax Reform. Thanks all for being here, and be glad we are not in Wisconsin where it is really cold. Stuart, let me start with you and just give me the base of 2014 in January for the midterms.

STUART ROTHENBERG, "THE ROTHENBERG POLITICAL REPORT": Well, Candy, where we are starting now is very different than what I've said in October in the middle of the government shutdown, but where we are now is we are beginning the stretch really to drive here (ph) and the president's job approval numbers are down and somewhere between 39 and 40 to the Republican brand is bad. But when you look at the generic ballot that is, who would you vote if the election were today, the Republicans' numbers have popped a bit and they're either even or up a couple of points.

I think right now the House looks very difficult for the Democrats and the Senate is definitely in play. The White House is going to have to change the dynamic, change the argument so that the election is about the Republicans, Republican extremism, Republicans being uncompromising because right now, it looks like the election will be much more about the president, health care reform, and kind of the six-year itch.

CROWLEY: And an all-Republican congress, Republican majority Congress doesn't bode well for the last two years of the presidency, but I want to - I want to get you on how he changed that dynamic. I just want to back up Stu on the poll numbers. First, we have a CNN/ORC poll, registered voters, choice for Congress in 2014, 49 percent Republican, 46 percent Democrat. That is, like, so wildly different from what we saw three months ago.

ROTHENBERG: Quite a pop, yes.

CROWLEY: And the next one of registered voters, are you more likely to vote for a candidate who supports President Obama, 40 percent, who opposes President Obama, 55 percent. This is a dark way for Democrats to start an election year.

CORNELL BELCHER, CNN POLITICAL COMMENTATOR: Well, one, polls, not a pollster, but polls on the generic horse race a year out from the race is fairly useless. There's a lot of dynamics that are going to unfold in the next year or so. I think when you look at the House, I mean Stu is absolutely right, it is a tough climb for Dems. But however, given that Congress is at an historic low and you have a vast majority of the Americans saying this is the worst Congress of the generation, the idea that Congress, any member of Congress is safe, I think is taking it a little bit too far. What we do know is we have 20 seats now where Republicans sit in that Obama won that DCCC is going to put work hard to put in play. We also know that from the grassroots level Democrats are at the Congressional level, DCCC and the DSCC also raised a lot more money than Republicans right now and have they have less retirement. They only have one Democrat retirement in the House right now. So Democrats do sort of like their odds, punching chances at the House.

ROTHENBERG: Well wait a second, Cornell. 85 percent of Congress is safe. Don't say nobody is safe. You know the way the districts are drawn, just 85 percent, they're not competitive. So the question -- the question is on these competitive races, these competitive districts, and right now the White House has to change the dynamic. Midterm elections are often referenda on a president, they are very rarely referenda on the (INAUDIBLE).

CROWLEY: Let me get Mattie --

BELCHER: He went directly at me.

(CROSSTALK)

CROWLEY: Time in a minute.

BELCHER: No you're absolutely right. But the saying was true in 2006. Now, I will agree with you that the way districts are gerrymandered right now makes it almost impossible to see mass turnover. By the way, the reason why Congress is so unpopular because Congress right now does not in fact, reflect the popular will of the people.

MATTIE DUPPLER, AMERICANS FOR TAX REFORM: This is also why the House isn't (ph) that interesting, right? I mean look at what is happening in the Senate. Democrats have to be on defense and they have to run a very proactive defense and I don't know how they do that. They have 21 seats that they need to defend and we are talking about what's happened over the past couple of months. And what's happened with the past couple of months is at least that Republicans and conservatives have been consistent talking about what they don't like about Washington. And Democrats right now don't have much to defend about what's happening in Washington. You don't have Democrats who (INAUDIBLE) in front saying they are going to run, talking about Obamacare and their votes on Obamacare and you know, you were talking to Governor Walker earlier out in the states, Democrats don't really have a model to follow. They don't really have leaders at the state level who have proactive policy victories that they want to be talking about.

First the Republican side, you have senators out here who have - who have really set the stage for them. You have got Governor Walker who has pulled Wisconsin back from the brink of bankruptcy and disclaimer, I'm from Wisconsin. So I've been following that quite closely and I am quite glad that I'm not - no longer there for that game today. But you know, looking also at North Carolina, which is going to be a really tough Senate race. Governor McCrory there has done wildly popular tax reform and that's going to set the stage for Senate candidates across the nation.

BELCHER: I've heard this - I've heard this before about Democrats are down, Democrats are down. I've just heard a couple months ago in Virginia where well quite frankly, president's poll numbers weren't great, Democrats didn't have anything to say, you know what Democrats did, they won every statewide race in the state. And you know why they did? Because they're on the backs (ph) of a more diverse electorate that by the way was not supposed to turn out in an off year and they did turn out (INAUDIBLE).

Democrats are beginning to sort of learn up and down the ticket is that they do have to go out there - the Obama...

(CROSSTALK)

CROWLEY: Let me ask, you because I do think the turnout, as we say, every election is really like who gets their people out, if you have issues like minimum wage and if you have issues like long-term unemployment and if the Republicans are seen as blocking those, that is quite likely to get the Democratic base.

ROTHENBERG: Except -- that's true. Except this, that this election is not about some broad Republican theme. It might be, but it doesn't look it right now. Not about the Republican governors. The Senate election is about the map, Candy. The map is West Virginia, South Dakota, Montana, Arkansas, Louisiana, Alaska, North Carolina. So Republicans have these opportunities because of this class.

CROWLEY: Because they are in good - they're in good territory, Republican states.

ROTHENBERG: They're in red states. Exactly.

CROWLEY: Absolutely.

DUPPLER: Right. I mean look at Virginia that is one good example of kind of what I'm talking about here. In Virginia you have a governor who bucked what conservatives are about voted for one of the largest tax increases in state history and that's why when voters went to the polls they said, well there is no difference between the D and the R. Why would I vote for the guy who is inflammatory on all these other issues that really dominated that election?

BELCHER: Look. Let me tell you this. (INAUDIBLE) here and a year from now we'll look back on this any sort of Republican who is going to run on the ideal that as of today we've got 6 million people now with health care from Obamacare, if you want to call it Obamacare. And "Washington Post" ran a story a couple weeks back about sort of how rural Kentucky and another targeted Senate race, rural Kentucky, you have rural farmers who for the first time in their lives had the dignity that sort of for their family of health care, Republicans are going to run in this next term on the ideal that I'm going to take health care and power away from 6 million Americans and give it right back to the insurance industry, I think Democrats like their chances.

ROTHENBERG: Of course not going to run on that.

BELCHER: But that is their point.

ROTHENBERG: A different point.

BELCHER: Repeal and take it away.

ROTHENBERG: Cornell, come on. They are going to run on - (CROSSTALK)

BELCHER: But I've been waiting for their plan, Stu. If you have seen their plan, let us know because you're breaking news.

DUPPLER: Well they'll also be running on endemic on employment and all the issues this Candy has been covering her entire show and look what's happening under the health care law. Employers aren't going to be hiring more than 50 people in fact they're going to be firing people if they're on that cut. You don't have people that can work more than 29 hours anymore and that is an issue that's really stagnating the economy and folks who are concerned about their economic well-being will be paying attention -

(CROSSTALK)

BELCHER: You know, this is an amazing (INAUDIBLE), because we have been here, Republicans making this two years now, unemployment rate is, you know, 7 percent, 46 -- 47 straight months of job growth. The stock market ended at a record high -- at a record high last year. Your guest that was just on talked about sort of how health care costs are growing less than they ever have before. Quite frankly this ideal that the economy is in the gutter and the president hasn't done anything in the economy, Democrats should be running on this ideal that the president --

CROWLEY: A little hard to argue that the long-term unemployment benefit should stay if the economy is OK?

BELCHER: Not only long-term unemployment benefits but also (INAUDIBLE) standing in the way of minimum wage. You know what's vastly popular, red states and blue states are raising the minimum wage. Republicans are going to stand in the way and say, no we are not going to raise the minimum wage when working families are struggling at a historic way. You know what? I like our chances to run (INAUDIBLE).

DUPPLER: Doesn't matter what the minimum wage is when you don't have a job. That is really the main thing governors are focusing on and been successful at the state level. Things like North Carolina versus Virginia, we were talking about these races, is a perfect example. McCrory there passed the most proactive income tax reform corporate and personal side and has made that state the most competitive in the region when it has been the least competitive for years. So watching that as a template, you will see what pro tax reform looks like and pro employment reform looks like. BELCHER: I'm glad you brought that up because you know what the grassroots in North Carolina -

(CROSSTALK)

BELCHER: But you know what, this little thing called moral Mondays where you see an outpouring of sort of the grassroots in the way you haven't, so they have done more to generate enthusiasm and energy in our (INAUDIBLE) that I think we could have done with millions of dollars in advertising.

ROTHENBERG: One, a poll question can test well and not be decisive in directing people's votes. They may see we should extend unemployment benefits, higher minimum wage, but are they going to go to the polls to vote on that? Chances are probably not. Second thing is this economy thing is real interesting. I mean think Cornell is right. There is -- there are data suggesting we have some sort of recovery here. We have job growth. We have --

CROWLEY: Top 1 percent is getting recovery.

ROTHENBERG: As long as public doesn't feel that things are getting better, doesn't matter what the numbers are if they don't feel that.

CROWLEY: In fact there are numbers that show the majority of people over -- 50 percent of people believe that the economy will stay the same or get worse.

BELCHER: This is real important here. More Americans actually feel they won't lose their jobs anymore but the problem is they don't see their wages keeping up with rising costs. So any sort of - whether you're Democrat or you're Republican if you're on the wrong side of the issue about expanding opportunity for the middle class, you're in a bad place.

CROWLEY: Let me told you here. We'll come back. And when we return, Colorado cashes in big on legalizing weed. Our panel takes on pot politics when we come back.

(COMMERCIAL BREAK)

CROWLEY: Call it pot politics, a high stakes question of civil liberties versus public health but also a potent source of lucrative green tax revenue. Let's get the straight dope from our panel on what they think of marijuana legalization. I've done all of the puns. You don't have to anymore. But is there a political angle that can be used one way or another on the whole question of legalization of pot?

BELCHER: I think at some point we may see it. (INAUDIBLE) 58 percent of Americans think it should be legalized which is an amazing number in and of itself. At some point it will happen in Democratic primary before you see it in Republican primary. In Colorado, you know, that legalization measure won by a larger percentage than the president won in Colorado. One could argue it is a benefit for being for legalization of marijuana. It's going to be neutral until some Democrat comes out and say, you know what? I'm for legalization of marijuana and starts to mobilize a constituency around that legalization. And forces another Democrat or Republican to say, I'm not for it. And then sort of use that as a wedge issue.

DUPPLER: But I think politicians if they want to talk about this or are forced to talk about this, the smart way to do it is to talk about this as a criminal justice issue. I mean looking at statistics on marijuana incarceration or arrest or even looking at just the war on drugs and human and financial cost of that you have both conservatives and liberals saying that, this has been a failure. Our criminal justice system and our prison justice system is really something that we need to be talking about. And really over the past, I don't know, 20 to 30 years have we had a conversation about that? This might be the way to start talking about that.

ROTHENBERG: You know, political strategists want to know how an issue cuts before they take their stand. They want to be certain where momentum is and where enthusiasm is. And right now I think marijuana could become a partisan issue down the road, a few elections down the road. But right now it's bipartisan in that none of the political strategists and very few politicians want to take the gamble.

CROWLEY: I've got an idea. Going out and talk about pot, right?

BELCHER: Not quite yet. But for an outsider in a Democratic primary for an outsider I think you'll see an outsider using it as a shot before you see it in mainstream.

CROWLEY: Can you not - I know this sounds ridiculous but can you not sell it as (INAUDIBLE). OK enough of cops, you know, hauling in somebody for having an ounce or whatever it is in various states. It will save us money. It will cut down on other types of crime because they will have more time to do their thing and by the way, we can tax it and increase state revenue.

DUPPLER: I mean I'm very worried that idea that you tax to legitimatize something. This is a tactic that has not worked well for some of these - for some of these entities in the past. But I think you're right. And I think that looking at these issues - this is a conversation we're having on the national (INAUDIBLE) about having government work better and more efficiently. And if you take away the ambiguous enforcement of what is this kind of complex marijuana issue right now, you can have a streamline and better criminal justice system and this might be a good step in that direction.

BELCHER: This is bipartisan, Candy. Pot brings people together, Candy.

(LAUGHTER)

CROWLEY: Apparently. Apparently. Makes them happier.

ROTHENBERG: People are concerned about jobs and health care and what can government do and how well can it do it. I think any politician that spends a lot of resources and time talking about an issue like legalization of marijuana now is going to be criticized for not keeping his or her eye on the ball.

CROWLEY: But couldn't someone who wanted to sort of gin up those polls say let's put a referendum on the poll about pot?

DUPPLER: Maybe dispensaries will be the next big job creator.

BELCHER: I think if you look at the Obama coalition (INAUDIBLE) coalition that's -- we could go there. CROWLEY: Cornell Belcher, Stuart Rothenberg, Mattie Duppler thank you both - thank you all for joining us. And thank you for watching STATE OF THE UNION. I'm Candy Crowley in Washington. Head to CNN.com/SOTU for analysis and extras. And if you missed any part of today's show find us on iTunes search STATE OF THE UNION.

Fareed Zakaria, GPS, is next for our viewers here in United States.