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Social Security Smackdown Looms; GOP Debates Social Security; New Poll: Perry Widens Lead; Obama Talks Jobs at 10:40AM ET; Prince Harry Helping Charity; Money Fears Rock Markets; 77 Americans Injured in Attack; Jets Scrambled to Shadow Flights; Wildfires Destroy 1,500 Homes; Church Busted for Prostitution; Bank of America to Cut Costs; The Rick Perry Phenomenon
Aired September 12, 2011 - 09:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Well, just hours from now, eight presidential candidates will square off in Tampa, Florida. Rick Perry, the front-runner and that mean, he'll also be a main target of fellow Republicans and Perry may have made the bull's eye even bigger attacking social security, a program considered sacred by millions of older votes.
Jim Acosta is in Tampa for us; Jim, let's begin, first of all, with this word of a new endorsement this morning that we have been talking about this morning.
ACOSTA: That's right. If Mitt Romney is looking for a spark for his campaign he may have gotten at least a little bit of a spark this morning in an endorsement from Tim Pawlenty, the former Minnesota governor who dropped out of the race because the campaign wasn't going so well. So Mitt Romney has some good news going into tonight's debate.
But so does Rick Perry. If you look at the new CNN/ORC poll he is in the driver's seat in this of this campaign right now.
(BEGIN VIDEOTAPE)
ACOSTA (voice-over): Texas Governor Rick Perry has ditched his cowboy boots for his running shoes staying far ahead of the Republican pack. The latest CNN/ORC poll finds Perry way out in front with 30 percent, nearest rival Mitt Romney at 18 percent.
With the rest of the field looking to play catch-up, the CNN Tea Party debate in Florida could be a social security smack down in a state where the program is crucial to seniors.
GOV.RICK PERRY (R), PRESIDENTIAL CANDIDATE: It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you paying into a program that's going to be there.
ACOSTA: After Perry doubled down on his call for an overhaul of Social Security at the last debate, Romney pounced.
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The governor says, look, states ought to be able to opt out of Social Security. Our nominee has to be someone who isn't committed to abolishing Social Security.
ACOSTA: On CNN's "JOHN KING USA," Michele Bachmann piled on.
MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: What I think is that America needs to keep its promises to senior citizens. I talk to them all will the time. I love senior citizens.
ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: You usually don't start a presidential campaign setting grandma's hair on fire, but that's what Rick Perry did when he not only calls Social Security is a Ponzi scheme. He implied he might undo it if he could go back 70 years.
ACOSTA: That kind of clash could make the debate another road sign indicating where the GOP is headed, where more conservative Tea Party candidates like Perry or more moderate contenders like Romney. The former Massachusetts governor stepped up his courtship of Tea Partiers only after his poll numbers started sagging.
UNIDENTIFIED MALE: Are you a member of the Tea Party?
ROMNEY: I don't think you carry cards in the Tea Party.
ACOSTA: Some Republicans saying there's good reason for caution. Perry's doubts about climate change might appeal to Tea Party voters.
PERRY: Just because you have a group of scientists stood up and said here is the fact, Galileo got outvoted for a spell.
ACOSTA: But centrists like Jon Huntsman worried those views could alienate independent voters and cause Republicans the White House.
JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: In order for the Republican Party to win, we can't run from science.
(END VIDEOTAPE)
ACOSTA: The biggest shocker from that new CNN/ORC poll might be Michele Bachmann. She won the Iowa straw poll just a month ago and now she is at 4 percent according to that new poll, but this debate tonight really plays into her hands.
There will be Tea Party activists, Kyra, asking some of the questions that bodes well for her and not too bad for Rick Perry either, Kyra.
PHILLIPS: It's would be interesting to watch that's for sure. Jim Acosta, thanks.
Our senior political editor Paul Steinhauser is crunching the numbers and tracking the trends for us. Paul, you just heard Jim Acosta mentioned Michele Bachmann. You know, she was the star of the Tea Party.
But as we know, her standing has plunged in recent weeks. What do you think? Has the Tea Party already moved on?
PAUL STEINHAUSER, CNN SENIOR POLITICAL EDITOR: Yes. Maybe they have. Maybe that's what our poll indicates. They have moved on to Rick Perry because remember her biggest victory was August 13th at that straw poll in Ames, Iowa.
That was the day he announced for president, Perry did and he's grabbed a lot of her support it seems. Let's go back to the poll that we were just talking about, the CNN/ORC poll, brand new this morning.
Look at this, Kyra, we broke it down by Republicans who say they are Tea Party supporters and those who -- Republicans who are not Tea Party supporters. All right, look at the left there, the upper left, we knew Perry was going to have a big support among Tea Party activists and he does.
Look at that, 38 percent to 16. Bachmann though, this is interesting, doesn't even make the top four. Here's the other point. Look at the right column, the top of the right column, those are Republicans who say they're not Tea Party activists.
Perry is doing pretty good among them as well. I mean, he's basically tied with Romney and Palin right at the top so fascinating numbers there, Kyra, from our brand new poll. One other thing I want to show you from the poll, electability.
Let's go to the next screen. Listen, we know that Republicans say -- three out of four say, they want a candidate, a nominee who can beat Barack Obama next year, the president. Well, who is that person?
Our poll indicates Republicans right now say that person is Rick Perry, 42 percent. Only 1 in 4 say Mitt Romney is the guy who can beat Obama in 2012. That's tough for Romney because his argument, Kyra, has been, you know what, you may not love me, but I am the person who can beat President Obama. Kyra --
PHILLIPS: Well, let's talk about Florida for a minute, the location of this debate where you are right now, it's taken on a new level of importance.
STEINHAUSER: Yes. You know, Florida, we always know in the general election it is such an important state. We remember how in 2008 basically decided the election, but it's also a big deal in the primaries.
Florida is going to vote very early in the primary caucus calendar this year and that's why you're seeing a lot of these candidates coming right down here to Florida. This is the first debate in Florida.
There's going to be another one a few weeks from now, as well. Florida is becoming a really crucial state in the battle for the GOP nomination.
And one other thing, you and Jim were talking about Social Security. Well, a lot of seniors here in Florida, a lot of people nearing retirement age. A very important issue for people in Florida, Kyra.
PHILLIPS: All right. Paul, thanks so much. Join us tonight as CNN hosts the Republican debate with Tea Party Express and several other Tea Party groups. That's 8:00 Eastern from Tampa right here on CNN.
All right, later this hour, President Obama will step into the White House Rose Garden to make a pitch for his jobs plan. He's going to announce that he's sending the bill to Capitol Hill tonight for the return of Congress.
And Christine Romans here to try to sort it out and explain a lot of economists weighing in now, Christine, on the effectiveness of the jobs plan, a lot of thumbs up and a lot of thumbs down.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That's right. Well, I don't know, from small business owners saying I just need demand. I don't need a tax break. I just need my business to be doing better.
So, look, the president is going to lay out this jobs bill today, his jobs plan again and he says he's going to present it to Congress, send it to Congress and he liked it to be passed, of course. And what's in here?
Well, a lot of targeted tax breaks. Many of them we have already seen. Extensions and even expansions of some of the things like the payroll tax cut, he's working for that. Current cut to be extended, all of these together, of course, a price tag of more than $400 billion.
So you've got payroll taxes to be expanded even expanded in some cases. You have the president wanting to expand unemployment benefits to extend those for a longer length of time and you have infrastructure spending in here, as well.
Up to 35,000 schools ailing and crumbling schools would be fixed up and then hiring incentives for small businesses to hire the long-term unemployed. That's a serious problem in the economy because a record percentage, Kyra, of the people out of work have been out of work for more than six months.
And we know the longer you're out of work in this economy, the harder it is to get a job. There's also tax breaks in there to hire unemployed veterans. So the president will be surrounded by teachers who would benefit from help to states to keep teachers in the classroom and also money to fix up those schools.
He'll be surrounded by first responders and also veterans who the White House at least by the optics is trying to show these are the people who would be most and most quickly helped by all of these, but how much will it really create jobs?
You know, Diane Swank, she was telling me this weekend, Kyra, that, quite frankly, this is a post-financial crisis problem in the economy. And a lot of the metrics to try to decide how we're going to create jobs based on these different measures, it's just too hard.
I mean, we -- she says the best we can hope for is the status quo. That we're kind of running in place here and we're hoping that we're keeping our head above water and that's what we have to hope for. We have to continue to spend money. Many people say just to keep what we have already, not necessarily to create millions and millions of jobs, Kyra.
PHILLIPS: We're going to be talking about pros and cons from all different perspectives. Christine, we're going to take the president's speech on jobs -- on the jobs bill live at 10:40 Eastern time. So stay with CNN. Christine will be around for analysis as well. Christine, thanks.
Now let's head overseas. Britain's Prince Harry remembering the victims of 9/11. He's taking part today in Charity Day. The event honors the 658 employees of BGC Partners who died in the World Trade Center attacks.
CNN's Max Foster joining us now live from London. So Max, who exactly is going to benefit from this Charity Day?
MAX FOSTER, CNN INTERNATIONAL CORRESPONDENT: Well, it's a whole range of different charities and one of them is Prince Harry's charity so he went along today and the way this Charity Day works is very successful.
They raise more than $10 million a year at this one charity event in london. You go along and each trade that takes place a portion of that goes to charity. So Prince Harry went along and actually conducted what we think is one of the biggest foreign exchange deals ever.
It's 18 billion euros worth of trade he made and he bumped into a supermodel while he was there wandering the trade floor, a very unusual day down there at BGC.
There you are, (inaudible) also taking part in the day. But everyone had lots of fun and the European markets, Kyra, a terrible state right now, but still raising lots of money for charity and Prince Harry helps in all that.
PHILLIPS: Which is good. And you mentioned the European markets, you know, here in the states all eyes are on Greece and inflation right now, you saw what happened to the numbers here on Friday. We're all wondering how today's going to play out, as well.
FOSTER: Yes. Just ongoing concerns about the euro zone because a lot of expectations that Greece will default. That the big subject today was Moody's, the credit rating agency suggesting or expectations really that they're going to downgrade the French banks because the French banks hold lots of Greek bonds and crisis to crisis here.
All the main markets were down. Currently down 1 percent, 2 percent, 3 percent here in Europe. They were down a lot more obviously playing badly in to Wall Street.
PHILLIPS: All right, Max foster at London. Max, thanks.
Well, just one day before 9/11, a suicide truck bomber attempts to kill as many American troops as possible. He fails. It was also in the same exact place the same province where terrorists took down a helicopter killing 30 of our own, including 17 Navy SEALs.
CNN Pentagon correspondent Barbara Starr joining us once again. Barbara, a pretty clear message just one day before the 9/11 anniversary.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, good morning, Kyra. That is exactly what U.S. commanders think that the insurgents, the Taliban were trying to send a message on the eve of the 9/11 anniversary.
Saturday, when that truck bomb exploded outside a U.S. combat outpost in Wardak province, that's an area of eastern central Afghanistan, if you will, a long time insurgent stronghold. Now 77 U.S. troops were injured, mainly with concussion injuries.
Thankfully none of them were killed. Two Afghan laborers were killed. A lot of Afghans also injured. U.S. officials say that initial calculation is this truck bomb might have been carrying as much as 1,500 pounds of explosives with an accelerant to cause the maximum damage, but barriers at the main gate of the base absorbed most of the blast.
You know, this is a typical Taliban insurgent tactic that they have seen time and again, but this time thankfully no Americans killed. Kyra --
PHILLIPS: What else are commanders telling you about U.S. forces in Afghanistan? What are they saying about this attack?
STARR: Well, you know, our own Suzanne Malveaux who continues her trip in Afghanistan interviewed General John Allen, the top U.S. commander in the country over the weekend.
He called this a high-profile attack, but said it was a demonstration that the Taliban insurgents have pretty much been pushed out of main areas and are forced to conduct these.
I think a lot of people would tell you still these high-profile attacks can cause an awful lot of havoc and awful lot of damage. Again, this time, 77 Americans injured. Most of those troops are expected to very quickly return to duty, thankfully. Kyra --
PHILLIPS: Barbara Starr from the Pentagon. Barbara, thanks.
And coming up, rumors have been swirling for weeks that Bank of America may be preparing to cut tens of thousands of jobs. Today, Bank of America's CEO addresses it.
(COMMERCIAL BREAK)
PHILLIPS: Checking stories cross country now. Military jets scrambled to shadow two commercial airline flights yesterday on the 10th anniversary of 9/11. Nobody wanted to take any chances. In both cases, passengers were acting suspiciously, but police found no real threats.
Take a look at the wildfire devastation from the air in Bastrop County, Texas. That's just near Austin. More than 1,500 homes were destroyed. Hundreds of thousands acres burned. People will be allowed back in neighborhoods today though.
And police accuse the church called the "Phoenix Goddess Temple" for running a house of prostitution masquerading as religion. They arrested 20 women and two men. Investigators say that the church offered sexual acts in exchange for monetary donations.
Well, Alison Kosik at the New York Stock Exchange where there's talk that the nation's biggest bank is restructuring and cutting thousands of jobs. Alison, can you tell us about B of A?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Sure and these rumors have actually been circulating B of A for weeks now, Kyra. That 30,000 to 40,000 jobs will be cut at Bank of America. That many branches would close.
But here's the thing, CEO Brian Moynihan, he's at an investors conference today here in New York, he didn't even announce any layoffs or branch closures today instead the CEO announced what he called a cost-cutting goal.
What B of A wants to do is cut $5 billion in costs by 2014 and what Moynihan is really doing is trying to lead B of A through a long- term turnaround plan at this point.
You know, the bank's really been in the news almost every day recently not necessarily for good news. It's shaken up its executive ranks.
It sold $5 billion in preferred stocks of Warren Buffet, that's a good thing and agreed to sell some Chinese assets, but really B of A has been hit hard both in the headlines and in its share price. Kyra --
PHILLIPS: So are job cuts and branch closures completely off the table then?
KOSIK: Not at all. You know, just because he didn't mention it today, it doesn't mean they won't happen. Cost cutting is actually sort of a buzz phrase for those actions of, you know, cutting jobs and closing branches because B of A really at this point needs to take some drastic measures.
You look at its stock price, take a look, it's down almost 50 percent this year. It's trading at about $7 a share and the shareholders are not very happy at this point. B of A also has a bunch of lawsuits stemming from the financial crisis that are just now beginning to hit.
So B of A faces billions of dollars in potential liability with those. B of A really just trying to catch a break at this point. Kyra --
PHILLIPS: All right, Wall Street, how's it taking this?
KOSIK: And B of A shares getting a bit of a break today. Shares are up a bit, about half a percent because to Wall Street, cost cutting is good news.
Overall, if you look at the market, not doing too bad considering at the open, we dropped 100 points. We did expect that big selloff this morning because of the European debt fears. It looks like though, Kyra, cooler heads prevail and not everybody ran to the exits all at once. Kyra --
PHILLIPS: All right, Alison, thanks.
Well, the White House Rose Garden in just about 20 minutes, President Obama's going to be talking about his big jobs plan there. When he steps up to the mic, we'll take you there for live coverage.
(COMMERCIAL BREAK)
PHILLIPS: Rick Perry shot to the top of the polls since joining the White House race less than a month ago and that initial surge is no surprise to people who know Texas politics. CNN's Ed Lavandera looks at the Perry phenomenon.
(BEGIN VIDEOTAPE)
ED LAVANDERA, CNN CORRESPONDENT (voice-over): Wearing chaps and riding a horse. This was Rick Perry's first state-wide political ad back in 1990.
UNIDENTIFIED MALE: I'll tell you a great story.
LAVANDERA: Legendary Texas political consultant Bill Miller remembers women posting pictures of Perry in chaps in offices all over Austin. He knew then Rick Perry had the "it" factor.
BILL MILLER, POLITICAL CONSULTANT: He's a good-looking guy. When you meet him, you get a vitality and energy off of him that you'll feel, which will surprise you.
LAVANDERA: So Miller isn't surprised to see Perry rocket to the top of the polls for the Republican presidential nomination. He credits Perry's risk taking like joining the Tea Party Movement early.
MILLER: We didn't know where it was going or how it will play out. So he's a risk taker, but a smart one because the bets he makes paid off well for him politically.
LAVANDERA: Harold Cook is another veteran political consultant in Austin. He knows a thing or two about crafting political messages. He says Perry has a great narrative, but he hasn't lock up the nomination yet.
HAROLD COOK, POLITICAL CONSULTANT: If you hope to knock Perry down as a Republican opponent, you're going to have to get in the middle of his own jobs narratives. You're going to have to knock it down a couple of notches. The notches are there to knock. They just haven't tried yet.
LAVANDERA: Cook is a Democrat and he wouldn't let an opportunity slip by without trying to burst the Rick Perry phenomenon bubble.
COOK: As easy as Perry is to underestimate, it is also kind of easy to overestimate Perry. He is not some magic monolith of a campaign here. Since 1994, the only thing you've had to do as a Republican in Texas to win your election is to avoid being the Democrat.
LAVANDERA: Rick Perry is also used to being the front-runner. He's always held the lead and he's comfortable in front of crowds. He was a yell leader kind of like a male cheerleader at Texas A & M University.
MILLER: So all that, in a weird kind of way helps him and I think makes him a better politician, a better campaigner and certainly by all accounts he is as good as campaigner as anyone seen down here in our lifetime.
LAVANDERA: But there's still months left in this race. Rick Perry can't ride off in to the sunset as the Republican nominee just yet. Ed Lavandera, CNN, Austin, Texas.
(END VIDEOTAPE)
PHILLIPS: All right, "Political Buzz," your rapid fire look at the best political topics of the day. Three questions, 30 seconds on the clock and playing today, CNN contributor Maria Cardona, "Newsweek" senior political columnist in "Daily Beast", John Avlon and talk show radio host, Dana Loesch.
All right, guys, Rick Perry and Social Security. Take a listen.
(BEGIN VIDEO CLIP)
PERRY: It is a monstrous lie. It is a Ponzi scheme to tell our kids that are 25 or 30 years old today. You're paying in to a program that's going to be there.
(END VIDEO CLIP)
PHILLIPS: Bomb thrower or truth teller, Maria?
MARIA CARDONA, CNN CONTRIBUTOR: Definitely bomb thrower, Kyra. It is the kind of bomb that I think it's going to come back and land right on him. You can't call something that millions of Americans depend on today a Ponzi scheme and a criminal enterprise without paying a political price for it.
You already have Republican seniors saying that they're not going to vote for him because they're afraid that if he gets the hands on their Social Security.
It's also not the way to really start the conversation about how you do fix this in the long run so I think it is going to come back to haunt him. His peers and the Republican primary use it against him as are Democrats if he ends up being the nominee.
PHILLIPS: Dana?
DANA LOESCH, RADIO TALK SHOW HOST: Well, I think that just because a lot of people depend on it doesn't mean still it isn't a Ponzi scheme and I think it's worse than a Ponzi scheme because it's mandatory.
Unlike a Ponzi scheme where you can volunteer to put your money and your effort into it. But Social Security is seriously broken and needs to be fixed and I think Perry has gone a long way with an op-ed in "USA Today."
And I think tonight's debate, he needs to still explain how he's going to make sure that retirees and near retirees are still going to be able to keep their benefits while offering the younger generation the chance to be able to have a choice of how to invest their money.
PHILLIPS: John?
JOHN AVLON, NEWSWEEK SENIOR POLITICAL COLUMNIST, THE DAILY BEAST: Well, look, Dana's framed it as a mandatory Ponzi scheme, which is I think an addition to the debate. Look, it is a good way to start a conversation and frankly it's a conversation we need to have an as a country.
Here's the line that Rick Perry needs to walk, though. He needs to make a case that Social Security isn't a bad idea. It's a broken idea. That's an important distinction and it's with a way of moving this conversation forward because we need to have entitlement reform in this country to deal with the deficit and the debt.
PHILLIPS: All right, guys, it was just weeks ago, every newscast leading with Michele Bachmann. She was the talk of the town, but since then she's taken a dive in the polls. So what does she need to do to get back in the game? Dana?
LOESCH: She needs to be very, very aggressive at tonight's debate and I think that she needs to go after Romney. I think if she goes after Perry, it's going to split the supporters between them and it's going to give Romney an easier shot.
But I think that she has to go after Romney. She has to be very aggressive and she has to perform as well as she did at the first debate. Because the last debate, it kind of knocked her out of the first tier. But again, I think some of the questions were structured in a way to perhaps kind of aid with that. She needs to be aggressive.
PHILLIPS: Maria?
CARDONA: I don't think that there's really anything she can do to get back in the game. I don't think she was really in the game. She might have been the talk of this town, but she was never really the talk of towns all across America who are looking for a real, serious mainstream leader to solve our problems even within the Republican Party.
So if you're talking about golf or tennis, she's got a better chance of winning the U.S. Open or the Masters than she does of winning the GOP primary and less chance of winning the general election.
PHILLIPS: John?
AVLON: She was never a serious first tier candidate, but she is someone able to appeal to conservative populous, Tea Party members and Evangelist. Rick Perry has come in and sucked up her oxygen.
Here's the problem. She's painted herself in a corner. She can't be more responsible and hope to get support from the Mitt Romney vote. So I agree she has to get out there and be aggressive.
But the reality is Rick Perry has absorbed her logic. When you replace Ed Rollins with your advance man, you also have a problem. This is a campaign with a lot of problems.
PHILLIPS: All right, guys. Final question, your buzzer beater. You get 20 seconds on this one. At 10:40 Eastern time, we're going to take the president live as he moves in to the Rose Garden, giving this speech on his jobs bill. What do you think? Will it pass? Maria?
CARDONA: I think it depends on whether Republicans are ready to put politics aside and do what middle class families need and what small businesses need. There's nothing in here that Republicans have not supported in the past. It is all paid for. It's the urgency of the moment. We need to work together. Can Republicans do it? I hope they can for all of our sakes.
PHILLIPS: Dana?
LOESCH: See, Republicans did support it in the past, twice already with the first stimulus and the education jobs bill, which was $24 billion. Neither of those worked. We still have unemployment at 9.1 percent. It didn't work so why would we do a failed plan again that's half the cost of what the original failed plan was? It makes zero sense.
PHILLIPS: John?
AVLON: That's just unfortunately simply wrong. Here's what's wrong about it. We need to do something. Not doing anything is not an option. And these are bipartisan plans and parts of this bill do deserve to pass. Republicans should support -- continue supporting closing loopholes. They should support free trade agreements, the Columbia, Panama and they should support a bipartisan public/private infrastructure bank. Those are the things everyone should be able to get behind.
PHILLIPS: All right. Guys, appreciate it. Thanks for weighing in.
Well, the White House Rose Garden, we told you about that. In just about 10 minutes the president's going to talk about the big jobs plan as our political buzz panel just weighed in. As soon as we steps up to that mic, we will take you there for live coverage.
(COMMERCIAL BREAK)
PHILLIPS: All right. Just minutes from now, President Obama will use the White House Rose Garden as a bully pulpit. He's sending his new jobs plan To Capitol Hill later today, and he's calling on Congress to get on board and pass it.
Let's turn now to the Best Political Team in Television. Chief national correspondent, John King, among our players, amassed in Tampa for tonight's GOP debate. The other big story that we're talking about, John. So, let's go ahead and start here with -- well, how much bipartisan cooperation can the president honestly expect on Capitol Hill as we get ready for the speech about eight minutes away?
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It's a fascinating question, Kyra, because there's a split in the Republican Party on this question now. At least early on, the House Republican leadership, the key immediate players when it comes to the debate in Washington have said, let's talk, Mr. President. We like some of what you've proposed. Not in its exact detail the way the White House puts forward about $450 billion plan. Much of it is tax cuts.
Some of it is new infrastructure spending. The House Republican leadership in part because they agree with some of the policy proposals that like to tweak (ph) them, and in part, because they've had a rough summer politically, especially after the debt ceiling debacle. They think they need to get something done. They have said we'll work with the president, but, as you noted, I'm in Tampa tonight for this Republican presidential debate.
When you listen to the candidates, they say this is stimulus deja vu, the same old failed Obama policies in their view. So, you do have a break in the Republican party right now. Not all that surprising. When you get to this point in a campaign, this point in a campaign, at some point, at some point, you get a break between the presidential candidates off it and the legislative wing of the party.
So, Kyra, the president's big challenge now is you'll see him with teachers, with firefighters, with first responders. Yes, it's a statement in Washington, but his challenge is to try get the country behind him to put pressure, put pressure, on the Republican leadership. And the big question is, can he create the urgency of now that we have to do something about jobs, and Ali Velshi is with me today.
And Ali, we have this competing pressures, competing pressures, if you will, often conflicting pressures in our politics. Deficit reduction is priority one for Republicans. Creating jobs is priority one for the president, and that requires spending some money.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes. And the issue, though, has now become so urgent that while some feel that the deficit reduction is number one, its not how the country polls and ultimately we have seen a reduction in the unemployment rate and a consistent creation of jobs, maybe that would seem true. At this point, I think most economists realize that and most Americans realize creating jobs is the number one priority. Getting the deficit under control is secondary.
So, what the president has to do, you just used the expression. He's got to create the urgency of now around this, and anything that waters this down too much is going to detract from that urgency. So, the bottom line is, it does have some very interesting provisions, cutting those payroll taxes both from the contributor and the worker.
From 6.2, they've been reduced to 4.2 percent, taking that down to 3.1 percent, extending it, doing the same thing for employers, and giving employers a payroll tax break if they create a new job or hire somebody who was unemployed. Those are actually things that probably will have some net effect.
And Republicans, if they counter it with something else, are going to have to say what -- how that's going to benefit or detract from actual job creation.
KING: So, Christine Romans in New York, I want to get more to the politics of this in a minute, but to the economics of this, we've been talking for months now. Months, even years since the beginning of the Obama presidency, the business community wants certainty in the tax climate, in the regulation climate, the market's uncertainty about what's happening in Washington.
Is this plan, $450 billion, is this something the markets say, that's the brick, a foundation we've been looking for so that we can have more confidence going forward or did they view it as tinkering around the margins?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, it's interesting because there are some folks who tell me that they need this, quite frankly, to keep the status quo so that things don't get worse. So, you don't have a tax increase when that payroll tax expires. So that you don't have a million or so people on unemployment benefits who are suddenly not out there spending those benefits in the economy. So, it's not really moving the ball forward, it's just not moving backwards.
Others say you could see -- Mark Zandi from Moody'seconomy.com says you could see 1.9 million jobs created if this was all enacted in the entirety, although, no one I talked to thinks that it will all be enacted in its entirety. Look, it's a very difficult economy right here. And what I hear from small business owners, medium-sized business owners, people and big companies, there's no demand.
People aren't looking out six months and their certainty about what's going to happen next, and they don't think this helps make certainty six months down the road. It prevents things from slipping back, and that's what they tell me.
KING: So, let's dissect the politics of this a bit. John Avalon is with us in New York. Dana Loesch is with me here in Tampa. John Avlon, to you first, the president, obviously, is trying to rally the middle of America to come to his side to put pressure on Washington to do something.
He does that, sure, he thinks there's now political pressure on the Republicans to do something after a tough summer, but he is speaking as somebody -- just look at the public opinion poll, his overall approval rating is down. His ratings on handling the economy is down. Does he have the standing on this issue now to swing the political tide?
JOHN AVLON, SENIOR POLITICAL COLUMNIST, NEWSWEEK: Well, you know, John, everything in politics is compared to what proposition, and as bad as his poll numbers are, the Republicans in Congress' poll numbers are worse. I do think people do feel the urgency, and now, on the economy, independent and swing voters, in particular. And when the president put forward a plan that was entirely bipartisan policy proposals, he was speaking to them.
And so, it's very difficult, I think, for Republicans simply to write this off as stimulus, too, because people are feeling the economic pain. They want to see Washington be able to take action, which means putting some of the hyperpartisanship aside. And finally, there's this, how cynical does it look for Republicans to oppose tax cuts simply because they come from President Obama? That's a real practical problem. It's also a policy problem. So, I think there is an obligation to act.
KING: And help us out on that, Dana, in the sense that I was talking to Michele Bachmann late last week. She was won a 50 House Republican with just a few months ago proposed extending this tax cut, essentially, the same plan of the president. It's a little different when you look at the fine print, but the Social Security payroll tax cut, give it to employees, give it to employers as Ali noted.
And I asked her, are you against it now just because he's for it? I mean, what are the politics in terms of the jobs climate and the pressures here at a Tea Party events, Tea Party -- the grass roots pressures on the Republican leadership as the president puts forward a plan that Speaker Boehner says, some of this we can work with?
DANA LOESCH, CNN CONTRIBUTOR: Right. Well -- and I understand that, and I think grassroots -- they've seen this happen before. We saw this with the first stimulus. And we were promised that this is going to get unemployment below eight percent. We would see unemployment in seven percent. It didn't happen that way. We had the $24 billion education jobs bill which was going to restore teachers' jobs, was going to help build up education. It didn't happen that way. So, we've already had two failed plans that have proposed exactly what this third second stimulus is going to propose, and so I -- we don't see the connect. We don't see how this one's going to work when it's half the cost, and it's exactly the same process. Now, the difference is, of course, this payroll tax, but it's really when you look at it, it's a game of mathematical cups.
It doesn't change how much someone's going to pay. It just changes when, overall, they're going to pay it, how much they're going to get back when, and ultimately, when you consider that credit, that tax cut, in terms of taking on the cost of hiring someone else and creating jobs, it doesn't even out. So, there's a lot of difficulty there that they have to overcome.
KING: Just one second. Just joining us, you see a live picture of the Rose Garden. The president will be there momentarily. He is going to send, actually, a legislative proposal, often the president outlines ideas and asked the Congress to do the writing. This time, the administration's, tonight, going to send an actual legislative proposal up to Capitol Hill, $450 billion.
The president calls it his Americans jobs program. Ali Velshi, it's interesting the conversation we're just having. Dana makes the point that Republicans think even some of the ideas that they supported in the past haven't worked.
VELSHI: Right.
KING: And so is there anything -- we're having a debate where, you know, the Democrats have their proposals, and if Obama says we're going to spend, they call it stimulus, and they say it's discredited.
VELSHI: Right.
KING: The republicans are even saying payroll tax cuts, we've supported in the past. We're fine with keeping them, but we're not sure they're actually going to work. Is there something outside of our politics or they stuck in the same old political argument?
VELSHI: Well, there's -- so we have to bring in what those -- some of those economist views that Christine was talking about, along with what Dana is saying, and that is a tax cut in and of itself in an economy like this is only relevant for one reason, and that is if it triggers demand, if it makes individuals buy things which will create jobs or if it make businesses hire people. We don't need tax cuts for the sake of it. We do them because they're supposed to do something.
Now, Dana's right. This is some direct -- some distance in the direction of getting people to hire other people. At the same time, if you have a salary of, you know, $50,000 or $60,000 and you're seeing a little bit of reduction in what you pay as taxes along with, maybe, reduction in gas prices and things like that, that might be enough to buy a dishwasher. It might be enough to buy a new car, and then, you're starting to stimulate demand. So, it's going to happen around the margins. You do have to stimulate it, and if there's a silver bullet as a number of economists have said, it would have been fired by now, and it hasn't been fired. So, we now, by definition, are tinkering around the edges.
KING: And so how, Christine, does the president -- can the president, can Washington at large, meaning the president, working with Democrats and Republicans, change the psychology in the country? I think it was the NBC/"Wall Street Journal" poll just last week, 80 percent of Americans, eight in 10 Americans, think the economy is going to either stay the same in the run it's in or get worse in the next year.
So, if you cut their taxes, they're not spending it. They're not going out and spending it, because they're afraid. So, they're saving it which essentially takes the stimulus out of the program. How do you change the psychology of the American consumer?
ROMANS: So, it's confidence, John. I mean, we've got to get confidence restored to the system and to the economy. People have to feel like America's moving in the right direction again and that comes from leadership, leadership from this president and leadership from Congress. There are a lot of people in polls that reflect it, that quite frankly, people think that Congress is hurting the economy and hurting America, too.
And so, this sort of partisan -- I don't know, frenzy about how we're going to get out of this mess is making the mess even worse. I mean, you know, S&P commented on this. Many others have said it. Many other private economists have said it as well. So, it's confidence. We don't know what's going to trigger that confidence.
The president and the White House, they hope that it's at least another few months of unemployment benefits, keeping those few dollars back in your paycheck that you needed, that just keeping sort of the stab on the wound for a little bit longer is going to help this economy spontaneously begin to do better again. I mean, we're not sinking. The economy is growing.
It's just not growing very much. It still feels like a recession. Too many people are out of work. You know, more than 40 percent of the people unemployed have been unemployed for six months or longer. That becomes a structural unemployment problem that is dangerous, quite frankly, for people and for the economy and for our ability to innovate.
So, we got some big questions here. The thing is we want to just tread water and keep our head above water long enough for the economy to get better again.
KING: Just moments away from the president of the United States, Barack Obama, coming in to the Rose Garden. You see it there. A sunny day in Washington. He will urge the Congress to pass the jobs plan he outlined in that big speech to the Congress last week, and he will send the actual details of his proposal up to Capitol Hill later today. We're going to take a quick break. The president of the United States talking jobs when we come back.
(COMMERCIAL BREAK)
KING: We're waiting for the president of the United States -- waiting for the president of the United States to come in to the Rose Garden there. He is going to present a political argument for the jobs program he outlined in his speech to Congress last week that he will send the actual details up to the Congress later today. About $450 billion. It includes a lot of tax cuts, extending some tax like a payroll tax cut, Social Security tax cut that's been in place for sometime.
The president says that should not be taken away at this time. Some infrastructure spending, some aid to states to keep police and firefighters and teachers on the payroll at a time. I'm sure you've seen it in your state if you're watching at home where state budgets are under duress. One of the constants, one of the constants in these debates over deficit spending, job creation in Washington has been financial market volatility.
Alison Kosik is standing by in Wall Street as we wait for the president of the United States. Alison, we were talking about this few moments ago. Is there anything the president can say today or the Congress can do over the next couple of weeks or months that will take the jitters out of those traders?
KOSIK: Oh, gosh. You know what traders tell me that they really want to hear, John. They want to hear specifics on how this jobs plan will be paid for, and that's something they didn't hear in the president's speech last week. They also want to hear more specifics on his idea on how to close the tax loopholes. They want to see this tax structure here in the U.S., more competitive with the tax structure overseas. Also, the talk about repay created (ph) of some of those earnings from overseas.
They want to see if the tax -- if these companies can be taxed less because what essentially happens is companies, let's say, for instance, like Cisco Systems, they are taxed overseas in the country where they are, and then, when they bring their earnings back here to the U.S., they're taxed again. So, that's another point. But I think if you want to look overall with what traders overall want to see, they want to see specifics, how is this plan going to be paid for -- John.
KING: How's the plan going to be paid for? The president will say it's all paid for. Ali Velshi, as we wait, we're told the president is running a few minutes late. He'll be in the Rose Garden about four minutes from now, so stay with us. An important statement from the president from a policy standpoint. Millions of you are hurting and want help.
Also an important statement from a political standpoint, the president gearing up to run for re-election, and no president in our history has been re-elected with unemployment this high with such a funk (ph) anxiety about the economy in the country. As Christine Romans described it, this is almost a keep the patient on life support piece of legislation.
VELSHI: Right.
KING: In the sense that -- is this in part -- are we asking too much? In the sense, we have divided government in Washington. Some of these big questions are not going to be settled.
VELSHI: Right.
KING: Because of the profound legitimate policy disagreement. Sometimes, people say it's just politics. The republicans have a very different view from the president.
VELSHI: Right.
KING: We're not going to settle this, perhaps, until the next election and maybe not then if we keep dividing government.
VELSHI: And even if you did settle it, John, this is an interesting point. Even if you did settle it, this recession that we came out of in theory in the middle of 2009 was so deep and so immense and so global that you are not going to see a response from it. There are some people who have just come to accept the fact that this was long, it was deep, and it's going to take a long time to recover. The Federal Reserve had predicted and the White House -- the White House predicted that we'd get back to prerecession unemployment around five percent by 2013.
And boy, when we heard that, we thought, really, 2013? That's a long way away. Now, they're talking about 2017. The fact is we are going to have to find something else, and you're right. It's not just politics. It's real policy. One thing that would be helpful given how influential the Tea Party has been in this discussion, is to push the idea of comprehensive tax reform. What doesn't go over well is this idea that company should pay less in taxes, because a lot of people think companies don't pay enough in taxes, and some, they'll pay any.
But in truth, many companies pay a lot in taxes, particularly, small businesses, and many big companies don't pay their fair share. So, if we actually figured out a way to have everybody pay a lower percentage of taxes, individuals and businesses, but we collected more money from everybody, that could be helpful. But we're going to have to find solutions all around, and you're right. Profound policy differences.
KING: Dana, is there any prospect for that? Some people have talked maybe during the Super Committee work or they get about the business of tax reform. Earlier in the summer, during -- would we have a big commission that would do tax reform? Heading into a presidential election, you'll have a field of eight candidates on the stage here for our debate in Tampa tonight. Is there the impetus, say, let's cut that deal with this president now or is it, let's litigate this in a national election and deal with it come 2013?
LOESCH: I think it's the latter. Let's litigate this and let's deal with this during the election, because, I think, for them to sign off on a plan again that's -- it's a rehash plan. That's going to burn the base. And you will see -- not writing literally, but you will see writing at the ballot box. You absolutely will. People --
KING: Burn the base, rioting at the ballot box. John Avalon, I had a conversation with Vice President Biden over the weekend. He says he thinks that Speaker Boehner, Leader Cantor have been chastened a bit by the politics of the debt ceiling debate, by the reaction to the American people over the polls, but he also said he's not sure if they have the license from their conservative base to cut another deal with the president. You just heard Dana's perspective. What happens here?
AVLON: I mean, that -- the problem is that is that -- there are policy areas of agreement, and many of them are in this proposal. When Republicans start opposing lowering the corporate tax rate or an infrastructure bank they've supported in the past or free trade rooms (ph), you know they're playing politics. That's a problem right now is that some folks would rather drag this out through an election, and we don't have that luxury.
And so -- I think there's a deeper ideological division even when the Republican Party. I think some folks on the far-right would honestly, generally, they're so skeptical about spending and government action, they would rather do nothing. That is their preferred plan. That is, I think, a political problem as well as a policy problem.
KING: Well, one of the things, some Republicans would say, particularly, on that one point about free trade, they would say, why doesn't the president send the plans up? The president keeps calling on Congress to pass them, but the White House has not sent proposals up, and some Republicans see a little bit of shenanigans from the White House perspective there.
Christine Romans, just now, we're having this conversation. We're going to have a debate tonight in which you will hear Republican candidates, I am near certain, say the president has it completely wrong. How much does that influence, whether it's a CEO deciding whether to invest at a new factory or hire 50 or 100 workers, or a trader on the floor of the markets looking at a long-term perspective when they see this volatility in the politics does that not translate into volatility in the markets?
ROMANS: One of the first things I learned covering business and markets, John, was that gridlock is good, because that means businesses don't have to worry about Washington, and they can grow their businesses. They don't have to worry about the bozos in D.C. This time, gridlock is not good, because it means that nothing is getting done and our big, big structural issues are being addressed.
I mean, you've got this very careful two-way conversation about cutting our long-term deficits and doing it quickly and doing it right, and also, keeping the oxygen flowing in the economy and not pulling back too abruptly in the wrong places so that you're starving the economy. So, you know, you need some really good bipartisan and very smart decision-making, and also some sacrifices from everybody to do it just right and guess what? No one believes that anybody who's talking about this now can do it just right.
So, you don't have confidence in any of the process, quite frankly. You see that in the markets. You see that in how businesses are holding on to their money. You see that how people are frustrated not making decisions. I mean, I've been talking to small business owners who would never expand right now.
They just wouldn't, because they don't want to deal with the uncertainty of maybe having even worse demand down the road. It's a tough cycle. It's going to take something, John, something to break out of it, and we've got 14 months until the next election. Can something happen in the intern? We certainly hope so, right?
KING: Well, we'll see what happens between now and those 14 months to the next election. Right of your screen is a live picture of the Rose Garden at the White House. One of the favorite stages for a president looking to use the bully pulpit, looking to influence public opinion, looking to get the American people to help him pressure the Congress to get something done.
On this day, it will be the president of the United States urging the Congress, particularly, the Republican House of representatives, to pass his $450 billion jobs plan. Dana, I want to go back to the politics of the moment. You just said there would be rioting at the polls. I know that's a hyperbole to a degree, and I want to make that clear. You're just using colorful language, but to the sense that Speaker Boehner and Leader Cantor have said, all right, Mr. President, we can work with you here.
We don't like all of this. If they go in to the room, one of the narratives in Washington has been -- they're on a tight leash. They don't have the room to operate. If they cut a deal with the president, they will be undermined by their own conservative base. Can they cut a deal with the president on the parameters of what the president has proposed?
Cutting taxes, the question for me is, will they give him the infrastructure spending and what I'll call the stimulus money to keep teachers and firefighters on the payroll? What do they need to get for that? Some regulate -- he's not going to give up on health care. He's not going to give up on Dodd/Frank, the financial services bill. What is their price, essentially, to give the president the stimulus part of it, the spending?
LOESCH: I don't think that they would compromise on that, because they're too concerned about their re-election campaigns. And I think that that's what it would cost them because, again, this is -- we still have stimulus money that was earmarked for education from the first stimulus that hasn't even been spent yet, and yet, after -- even after that, we still passed the $46 billion education bill. And now, we're earmarking $100 something billion out of this particular package for education again.
It just seems redundant and wasteful. And we haven't even addressed the problems that the first stimulus didn't address. So, I think that -- there's no room for Republicans to really even negotiate on that. We hear constantly from this administration, well, let's leave your ultimatums at the door, but the administration has said, well, these are my ultimatums. I'm not compromising on these. So, there's not a lot of room left for negotiation.
KING: John Avlon, where should the president's ultimatum be in the sense? Let's say the Republicans say, Mr. President, you come with $450 billion. We'll agree on a $300 billion package that has the tax cuts. It will tanker a little bit, but essentially, your package there, but we're not going to give you the infrastructure bank. That's debatable.
I think some Republicans -- what if we get a package around $300 billion that doesn't have the spending, the stimulus part of this, the direct aid to the states, the infrastructure, the construction money the president wants? Should he then draw the line and say, no, I will veto that or is that too risky for a president who's already on weak standing when it comes to the economy?
AVLON: The problem in our politics is that kind of all or nothing attitude, and I think that's why the president put forward a bipartisan plan. Dana, I think, is very eloquently described the problem in our politics which is she believes there's no room for compromise as a matter of principle, but that's the problem.
We've seen that from S&P. We've heard it from Ben Bernanke. Then, it's the political crisis has created this fiscal crisis. Now, there's an obligation to act. If you can set out what the common ground is and then build on it, and that's the entire framing of this plan. So, I think that the -- the core elements that everyone should be able to agree on.
Cutting corporate tax rate to close some loopholes, infrastructure bank. It's not going to all get through. I think, probably, one bottom line for Democrats will be extending unemployment insurance, but it's not going to all get through. That's the reality. And I think the president understands that.
KING: One of the issues, Ali, that republicans say is, OK, even if we were going to, you know, figure this out for a compromise, we already have this urgent burden of finding at least $1.5 trillion, and we're watching -- I think we're going to get the president of the United States now. The president has teachers, we are told, first responders, police, and firefighters. We're watching people come out in to the Rose Garden now.
As they flow out, we have about two minutes, we're told, until the president speaks. One of the challenge is, if you pass this plan, let's say it's, you know, $450 billion, essentially, what you're adding is .5, that 1.5 trillion in more deficit reduction is the floor for the Super Committee. Some people would like them to do more.
VELSHI: Right.
KING: Now, essentially, they're saying it's $2 trillion to do this.
VELSHI: You know, here's the problem. We are treating this, and to some degree, we have to hold the Tea Party responsible for this. We're treating it like a zero sum game. The economy is not a balance sheet. The economy is dynamic, and if more people are working and paying taxes and demand is created, all of a sudden, your deficits can reduce much more quickly than they can in a slow growing stagnant economy.
So, while we talk about cuts offsetting spending, that makes sense for most people. It makes sense in your household budget. This is why this isn't a household budget. If you can do something, if you can invest, spend, whatever you want to do, to get people to do more work, you can bring that deficit down faster than you can with just math.
KING: You see the backdrop for the president there, policemen, firefighters, teacher, construction workers. The president will be out momentarily. You say you have to hold The Tea Party responsible for this. I get a lot of angry grands (ph) when I say this. The American people collectively are responsible for this and that they elected, in 2008, a left of center president who believes the government should be pulling levers to help with this.
And then two years later, not everyone at home, people voted Democratic will send the angry grands (ph) this is not my fault, but collectively, the country did something very different in 2010, sending in a conservative Republican Congress and these Tea Party members who, sure, are responsible now. They're doing what they campaigned on to a large degree. In a sense, you can't blame them.
(CROSSTALK)
VELSHI: But we did -- you're right. Americans have to be responsible for the fact that they have fallen for those lines that the only way to reduce deficits is to cut spending. In fact, the best way to reduce deficits is to grow the economy.
KING: And the result of that is a compromise consensus has become a dirty word.
LOESCH: And I think it comes down to, ultimately, disagreements over how to increase revenue. Like, for instance, grassroots believe you increase the tax base. You don't just shift money --
VELSHI: So many conservatives say it's not a revenue problem, it's a spending problem. So, in fact, by definition, it is a revenue problem and the spending problem.
LOESCH: Both. It is. The Congress needs to stop spending. Government has to stop spending, but we also have to increase that tax base. Look at the past six decades of tax receipts. It's proven.
KING: So, Christine, you're listening to this political conversation. In the short term, in the short term, what is your prognosis on something they could do that would at least be a down payment so that CEOs, the markets say, all right, here's where I am through the next election, at least, I know that much?
ROMANS: You know, I'm not sure, and I'm going to be really honest with you, because I've talked to a lot of different economists who say - Ken Rogoff, for example, over at Harvard who wrote the book with Carmen Reinhart "This Time is Different." I mean, he studied 800 years of crisis. He says this is going to be a slow, painful slog before we get out of it.
He also says, John, that no matter who is the next president, they'll be able to say things got better, because things will get better. Just depends on who's going to the credit for it.
KING: The president of the United States, the vice president of the United States. There's a beautiful setting at the Rose Garden. This is the president's effort to use bully pulpit to try to sway the American people, and it's a beautiful day. We look at this picture now, a backdrop of people he says needs help. Let's listen to the president.
