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The Situation Room

Republican Presidential Field Shakeup; Obama on the Attack

Aired August 15, 2011 - 18:00   ET

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

WOLF BLITZER, CNN ANCHOR: And to our viewers, you're in THE SITUATION ROOM.

Happening now, out of Washington, indeed into America's Midwest heartland, President Obama kicks off a three-day bus tour. It includes a town hall meeting this hour.

Also, the newest Republican presidential hopeful says he wants to make sure American troops -- quote -- respect the commander in chief. Is Texas Governor Rick Perry suggesting something about President Obama?

And Iowa straw poll winner Michele Bachmann says she would reinstate the military ban on gays serving openly in the military. That's just one of the reasons CNN contributor John Avlon says she's a risky pick for the GOP. John is here to explain what he means.

We want to welcome our viewers in the United States and around the world. Breaking news, political headlines and Jeanne Moos all straight ahead. I'm Wolf Blitzer Decorah, Iowa. Stand by for the president of the United States. You're in THE SITUATION ROOM.

We're live here in Iowa, center stage for American politics right now, with President Obama here kicking of a three-state bus tour fresh off the heels of a straw poll that shook up the Republican presidential field. We will have much more on that coming up.

Also this hour, the president's town hall meeting here in Decorah, Iowa, stand by for that.

But, first, let's get some more on the bus tour that the president has had.

Our White House correspondent, Brianna Keilar, is here. She is joining us.

Brianna, the message the president is trying to bring to the Midwest heartland?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Well, certainly today we have seen a lot of criticism. We talked about that. He's also trying to create some optimism and also push some of his job- creating proposals, not new proposals, Wolf, proposals that we have already heard about, but the White House insisting this isn't a political swing, although it has all of the sights and sounds of campaign events, from the music to the mostly supportive crowd, at least at the one stop that we have seen so far today.

And, yes, it has the rhetoric. President Obama stepping up his criticism of Republicans today.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): President Obama left Washington far behind.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I am very pleased to be out of Washington...

(CHEERING AND APPLAUSE)

KEILAR: ... to rail against the paralyzing political climate in the nation's capital and try to tap into the frustration of voters concerned by an unrelenting stream of bad economic news and disgusted by the bruising debt ceiling battle.

OBAMA: Some in Congress would rather see their opponents lose than America win. We ended up creating more uncertainty and more damage to an economy that was already weak.

Now, we can't have patience with that kind of behavior anymore. I know you're frustrated. And I'm frustrated, too.

KEILAR: Cannon Falls, Minnesota, was the president's first of five stops on a three-day Midwestern bus tour that will take the president to Iowa and Illinois as well, all states he won in 2008. He will be making stops along the way, like this one at a deli, where he met with veterans.

OBAMA: How many tours have you done?

UNIDENTIFIED MALE: Two tours.

OBAMA: Two tours?

KEILAR: Republicans are criticizing the road trip as a political stunt, the RNC calling it the debt end bus tour. Presidential hopeful Mitt Romney's campaign dubbed it the magical misery tour.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The president has set about a bus tour today going to swing states, and frankly I think the American people would see him in Washington working on getting this economy going again. He seems to be more intent on trying to save his job than to try and create jobs for the American people.

KEILAR: The president had nothing new to offer on job creation, instead highlighting to a crowd of several hundred in Minnesota the proposals he's been pushing for some time, extending unemployment benefits, extending a payroll tax cut, infrastructure spending, and as Republicans accuse him of failing on jobs, he pointed a finger right back at them.

OBAMA: There is no shortage of ideas to put people to work right now. What is needed is action on the part of Congress, a willingness to put the partisan games aside and say, "We're going to do what's right for the country."

KEILAR: So why not call Congress back into session? This was the focus of a bit of a campaign back and forth today that we saw between -- almost a campaign-like back and forth I should say between Mitt Romney and the president today, Wolf, the president saying the Congress was sort of proving that they were just bickering and he challenged them to take this time in their home districts and states and then come back with I guess a bit of an attitude adjustment you could say getting ready to work, clearly trying to really elevate himself above it all.

BLITZER: If you compare the tone of the way he spoke today compared to last week, certainly the weeks before, he is becoming much more assertive, aggressive in going after the Republicans, even though he's not necessarily naming names or saying anything like that, but he's clearly trying to score political points.

KEILAR: Yes. And we saw this very much on Thursday when he was in Michigan, that he stepped it up, and he used that line about people who -- clearly talking about Republicans, though not calling them out by name, people who would want their opponents to lose, even if America doesn't win, and we heard much more of that today, Wolf.

BLITZER: Brianna, don't go too far away. We will have you back later this hour.

The itinerary for the president's bus trip has been very, very carefully chosen for some obvious and not some so obvious reasons.

Our chief White House correspondent, Jessica Yellin, is joining us now with more on this part of the story.

Jessica, what are you looking at?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, let's take a look at the places the president is visiting on his three-state tour. You know, he's focusing on joblessness and the problems in the economy, so let's look at the economy.

In Minnesota, the unemployment rate slightly better than the national average, which you know is 9.1 percent, Iowa, 6 percent, again, slightly better than the national average. In his home state of Illinois, well, they are right up there, 9.2 percent, so that's pretty much in keeping with where the rest of the nation is, so better picture most of the nation, but this area is important for another reason for the president.

These are Midwestern states the president overwhelmingly won in 2008. Only Missouri is a state he lost. He's not visiting it, but these are states he's got to hold if he wants to win reelection and take a look at how he's doing in the area. Minnesota, that is that state where he said back in 2008 I'm going to be the Democratic nominee. He famously did that fist bump with Mrs. Obama during the campaign. He's still doing well, there 52 percent approval, but in Iowa, that early voting state that launched him to the White House, below 50 percent approval. And his home state of Illinois, he's still doing well, but what you're not seeing are the states he's skipping. Michigan, he has to win there -- 45 percent approval, despite the auto bailout he gave to their crucial auto industry and helped them out, Indiana also a very low approval rating, 42 percent.

And Ohio, not a good number, 45 percent. This is a must-win for the president, so this is a region where he really needs to shore up support. Another question that comes up with this tour, with at least 14 million Americans out of work, why is the president touring rural America, where there are comparatively few jobless people?

So if you look at that through a political lens, you might see this. Democrats badly lost the rural vote in the 2010 elections. In the House of Representatives, 39 rural districts went from Democrat to Republican in the last election cycle. In fact, Republicans won control of the House of Representatives largely thanks to the support of rural voters. Now, these are not the same districts the president is visiting, but the message could reach these voters.

Other advantages to a rural tour, the administration, they already have a policy agenda for rural America and can just tout their accomplishments to some extent, and it's a good setting, as can you see, for the president to just roll up his shirt sleeves and escape Washington during the most dangerous time on the political calendar, August -- Wolf.

BLITZER: All right, Jessica, thanks very much. Good analysis.

Tomorrow, by the way, I will be sitting down here in Iowa with President Obama for a one-on-one interview. I will ask him about the economy, the campaign, national security, a whole lot more. It's an interview you will want to see right here in THE SITUATION ROOM 24 hours from now, my interview with the president of the United States.

One of the wealthiest men and the -- certainly one of the best- known investors in the world says he wants to pay more taxes. Let me repeat. He wants to pay more taxes. We're talking about Warren Buffett.

CNN's Mary Snow is joining us with the details now about what's going on.

Mary, tell us what Warren Buffett is saying.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, billionaire Warren Buffett has said in the past that the rich should pay higher taxes, but today he spelled out specifics in a "New York Times" op-ed aiming his message to the members of the congressional super committee tasked with finding ways to balance the budget. And it's gaining a lot of attention.

(BEGIN VIDEOTAPE)

SNOW (voice-over): It didn't take long for President Obama to start quoting Warren Buffett's call to tax the rich. OBAMA: Warren Buffett had -- had an op-ed that he wrote today, where he said we've got to stop coddling "billionaires like me."

(CHEERING AND APPLAUSE)

OBAMA: That's what Warren Buffett said.

YELLIN: Just as quickly as the president embraced buffet's call, critics like conservative Pat Buchanan dismissed it.

PAT BUCHANAN, MSNBC POLITICAL ANALYST: Why doesn't he set an example and send a check for $5 billion to the federal government? He's got about $40 billion.

YELLIN: In his "Stop Coddling the Super-Rich" op-ed, the billionaire investor says while he paid nearly $7 million in taxes last year, the percentage of his taxable income was less than the people in his office. That's because the super rich get tax breaks on capital gains and pay little in payroll taxes.

So who are the wealthy? To hear President Obama tell it, they make $200,000 a year or more. That would make up 3 percent of Americans or four million people. Go up the pay scale, and according to the IRS, those making $1 million or more equal about 237,000 people. In the $10 million or more club, there are roughly 8,000 people.

Buffet wants higher taxes on those making $1 million or more. We asked Roberton Williams of the non-partisan Tax Policy Center for a scenario of what a tax hike like that would amount to.

ROBERTON WILLIAMS, TAX POLICY CENTER: The example we took a look at was raising the top tax rate on incomes over $1 million from the current 35 percent to 50 percent. If we did that, we'd gain an additional about $34 billion in revenues this year, over a 10-year period perhaps $350 billion.

YELLIN: But what about the effects on the economy? Williams says, yes, the wealthy would spend less on goods and services and on investments, but:

WILLIAMS: The investment they are making these days are mostly in government bonds, not in real economic activity that generate jobs, so neither their change in spending nor their change in investment behavior would likely have a very serious adverse effect on the economy.

(END VIDEOTAPE)

YELLIN: And, Wolf, as this debate over taxes the wealthy takes place, the Tax Policy Center points out that tax revenues are currently under 15 percent of GDP. That's the lowest level they have been since the 1950s. That's not only because of tax cuts in recent years, but because the economy is weak with incomes down. There are fewer taxes paid -- Wolf.

BLITZER: Mary Snow, thanks very, very much.

Newly minted Republican presidential candidate Rick Perry has been raising some eyebrows with this controversial remark.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: One of the powerful reasons that I'm running for the presidency of the United States is to make sure that every young man and woman who puts on the uniform of this country respects highly the president of the United States.

(END VIDEO CLIP)

BLITZER: So was Governor Perry suggesting that American troops don't respect President Obama, or did he mean something else? We're taking a closer look.

Also, Iowa straw poll winner Michele Bachmann says she would reinstate the military gay ban if, if she's elected president. Do her positions make her a risky pick for the GOP? We're looking at that as well.

And we're awaiting President Obama's town hall meeting right here in Decorah, Iowa. He's just arriving right now at the Seed Savers Exchange in Decorah. We will have live coverage of his town hall.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. The president of the United States has just been introduced here in Decorah, Iowa. We will show you some live pictures of the president. We're here at a town hall meeting at the Seed Savers Exchange. We will have coverage of his town hall. So the crowd is applauding. You hear the music behind me.

We will see the president shortly. There he is. He's walking in right there.

But while we await the president getting up to the podium, getting ready for this town hall, let me bring in Jack Cafferty. He has got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The race for the Republican nomination for president finally starting to get interesting. Looks now like it's going to shape up to be a close race among Mitt Romney, Rick Perry, Michele Bachmann, whose campaign was fueled big time by her victory in the Iowa straw poll.

Texas Congressman Ron Paul also remains a player in this, following a very strong second-place finish in Iowa. And now the big question is whether or not Sarah Palin is going to decide to make a go for it. The half-term dropout governor of Alaska managed to steal the spotlight in Iowa on Friday when she showed up at the Iowa State Fair. Palin says she thinks there's plenty of time to jump in the race, and that there's plenty of room for more people. Maybe so, but she said all that before Michele Bachmann went out and won the straw poll. It's worth pointing out there is a lot of overlap between Bachmann and Palin supporters. Both charismatic women are Tea Party favorites who appeal to anti-Washington Christian conservative voters.

And it's no small feat that Bachmann won the straw poll in Iowa. It's a key early voting state. The Iowa caucuses have been known to catapult politicians right into the White House. Does the name Barack Obama ring a bell? That was his springboard to election, the Iowa caucuses.

This all means the clock is ticking for Sarah Palin to make up her mind. Working in her favor, of course, Palin remains near the top of the pack in the polls. She would be the best-known Republican in the field if she gets in. Also, by waiting until the fall to decide, Palin could spare herself months of media scrutiny and sparring with the other GOP candidates.

So here's the question. Does Michele Bachmann's Iowa victory make it tougher for Sarah Palin to get into the race? Go to CNN.com/caffertyfile. Post a comment on my blog, or go to our post on THE SITUATION ROOM's Facebook page, which I am told is growing by leaps and bounds, and that's a good thing. It makes the bosses happy with me -- Wolf.

BLITZER: It makes the bosses very, very happy, Jack. Thanks so very much.

All right, you probably might see the president. He's behind me right now. He's introducing himself to the crowd a little bit. He's welcoming a lot of local officials. We're monitoring what the president is saying, but he's saying thanks to a lot of folks.

Once he gets into some substance, we will hear what the president has to say.

But let me move on to an important story we're following right now. Republican presidential candidates Michele Bachmann and Rick Perry, they are both speaking out about the U.S. military, and their remarks for different reasons are stirring up controversy.

Our Pentagon correspondent, Barbara Starr, is joining us with details.

Barbara, what's going on here?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, as you say, both candidates talking about the U.S. military over the weekend, but their statements struck a bit of an odd chord with some of the troops and the people that we have been talking to.

(BEGIN VIDEOTAPE)

STARR (voice-over): Two top Republican candidates are already using the troops as a talking point, but some wonder what it is they really are saying.

JOHN AVLON, CNN CONTRIBUTOR: They definitely are trying to appeal to their conservative populist base.

STARR: Michele Bachmann says she might bring back the ban on gays serving in the military.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: If you became president, would you reinstitute the don't ask, don't tell policy in the military, which said that gays could not serve openly in the military?

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: The don't ask, don't tell policy has worked very well.

(CROSSTALK)

CROWLEY: Would you institute it then? Because it's been set aside.

BACHMANN: It worked very well and I would be in consultation with our commanders, but I think, yes, I probably would.

STARR: Do troops care?

AVLON: Right now the number one issue for veterans when they return home isn't whether they serve with gays and lesbians, but whether they can get a job.

STARR: Then there's Rick Perry.

PERRY: One of the powerful reasons that I'm running for the presidency of the United States is to make sure that every young man and woman who puts on the uniform of this country respects highly the president of the United States.

STARR: Did Perry seem out of touch with young veterans' concerns?

Todd Bowers has served three combat tours.

TODD BOWERS, SENIOR POLICY ADVISER, IAVA: These are not the major issues that vets are going to be watching. Right now, with a stifling economy and major employment issues for Iraq and Afghanistan veterans as a whole, that's what they want to hear about. They don't want to hear the headline blurb.

STARR: A recent congressional report calculates unemployment for Iraq and Afghanistan veterans nationwide is 11.5 percent, in Perry's home state of Texas, 13.1 percent, and in Minnesota, Bachmann's home state, 22.9 percent. Not talking about that these days could be a problem.

AVLON: They are definitely playing politics. There's no question about that. Whenever you try to politicize the military, you are by definition playing politics and you are playing to the lowest common denominator.

(END VIDEOTAPE)

STARR: Now, Perry says he thinks the troops want a president who has served in the U.S. military. And, of course, he did serve in the U.S. Air Force many years ago. Bachmann to be fair says she would consult with her commanders.

But, Wolf, many of the young troops, just like so many Americans, say, look, right now what concerns them is the economy, their health care benefits and a job once they get out of the military -- Wolf.

BLITZER: Barbara Starr at the Pentagon, good report. Thanks very much.

Let's immediately go to the president. He's here at this town hall in Iowa. He's speaking about issue number one for Americans, jobs, jobs, jobs.

(JOINED IN PROGRESS)

OBAMA: The problem is, is that we have got the kind of partisan brinksmanship that is willing to put party ahead of country, that's more interested in seeing their political opponents lose than seeing the country win.

(APPLAUSE)

And nowhere was that more evident than in this most recent debt ceiling debacle.

The fact of the matter is that our debt and deficits are manageable if we make some intelligent choices and make sure that there's shared sacrifices, as well as shared opportunities.

(APPLAUSE)

And had we made some decent decisions over just the last two, three months, had we been willing to seize the opportunity that was before us, then there is no reason why we had to go through this downgrade, because that did not have to do with economics. That had to do with politics.

It was an assessment that our Congress is not able to come up with the kinds of compromises that move this country forward. And I don't know about you, but I'm pretty frustrated about that.

(CHEERING AND APPLAUSE)

I am pretty frustrated about that because, given the challenges we face, we don't have time to play games. There are a lot of folks, a lot of our neighbors, a lot of our friends, who have been out of work too long, who have got too many small businesses that are struggling. I see a lot of young people in the audience here today, and they are thinking about what are their prospects for the future, graduating from college, knowing they have got a lot of debt, needing to find a job.

They don't have patience for the kind of shenanigans we have been seeing on Capitol Hill. They understand that now is the time for all of us to pull together and do what it takes to grow the economy and put people back to work.

(APPLAUSE)

Now, the good news is, there are things we could be doing right now that would make a difference for our economy.

Back in December, when some of my folks on the other side of the aisle were more willing to compromise, we were able to put a package together that cut taxes for families by an average of $1,000. What I have said is, let's continue this payroll tax cut into next year so as the economy is strengthening, ordinary families who are still digging themselves out of credit card debt, or seeing their homes underwater, they have got a little more purchasing power. That will be good for small businesses and large businesses, and they will hire.

We could right now say we are going to go ahead and renew that tax cut. And that would be good for the American people and good for the economy. There's no reason to wait.

(CHEERING AND APPLAUSE)

There's no reason for us to wait putting construction workers back to work all across the country. Nobody took a bigger hit than those who were involved in the housing boom when the boom went bust, so why don't we put them to work right now rebuilding our roads and our bridges and our schools all across America?

(APPLAUSE)

There's a proposal in Congress right now. Congress should pass it and get it done. There's no reason why we shouldn't be helping our small businesses and startup businesses. We have passed 16 tax cuts for small businesses, and right now we have got a bill pending that is called the American Invents bill.

It basically reforms our patent system so if somebody has got a creative idea, they can turn it into a business right away without red tape, without bureaucracy. That's who we are, a nation of inventors. This traditionally has had bipartisan support. What are we waiting for? We should pass it right now to give a spark to industry.

(APPLAUSE)

We have got pending trade legislation. Tom Vilsack and I were talking on the way over on the bus here, and the truth of the matter is, is that the agricultural sector in America, the cornerstone of states like Iowa, is doing very well, but we could be doing more.

And my general attitude is, why don't we want to open up markets so that the extraordinary bounty of the heartland of America is making its way there, but also manufacturing is making its way there? Look, we have got -- we have got a whole bunch of Kias and Hyundais here in the United States of America on our roads, and that's fine and good.

But I want some Chryslers and some GMs and some Fords on the roads of South Korea as well. We should go ahead and get those trade deals done.

(APPLAUSE)

So there are a whole host of ideas that we could be implementing right now that traditionally have had bipartisan support. The only thing that is preventing us from passing them is that there are some folks in Congress who think that doing something in cooperation with me or this White House, that that somehow is bad politics.

Well, you know what? You guys didn't send us there to be thinking about our jobs. You sent us there to be thinking about your jobs and your future.

(APPLAUSE)

Now, we do have to be thinking about how we invest in education and how we invest in infrastructure and how we invest in basic research, but still do it while the government is living within its means. And neither party is blameless on this.

The truth is, we had a balanced budget in 2000, the last time we had a Democratic president. And what we ended up doing was, we had two wars that we didn't pay for, a prescription drug plan we didn't pay for. We had two tax cuts that we did not pay for. And the result was a burgeoning debt.

And then what ended up happening was because of the recession and the lack of regulation on Wall Street, this wrenching recession meant less tax revenues coming in and more going out, because we were providing help to states to make sure teachers and police officers and firefighters weren't laid off, and to make sure that we could help small businesses and put people back to work.

So we have got a genuine problem with deficits and debt. But here again is the good news. If everybody is willing to make some modest sacrifices, this problem, we could solve. We could solve it tomorrow. We could solve it next week. If the speaker of the House had taken the bargain that he and I were talking about, we would have had it solved last month and we would not have gone through everything that we went through over the last several weeks.

(APPLAUSE)

But it does require compromise and it requires some balance.

Warren Buffett had an article published today in which he said, stop coddling billionaires.

(CHEERING AND APPLAUSE)

He pointed out that I think he made about $36 million on income. It was, I guess, an off year for him. (LAUGHTER)

But he pointed out that he paid an effective rate of 17 percent when it came to taxes, which meant that he paid a lower tax rate than anybody else in his office, including his secretary, because most of his income came in the form of capital gains, and he made a simple point. He said, look, nobody's income has gone up faster than the top 1 percent.

In fact, nobody's gone up faster than the top 1/10 of 1 percent. There's nothing wrong when it comes to closing our deficit and managing our debt to say that we should ask a little bit of help from everybody. I don't want a tax cut if it means that senior citizens have to pay an extra $6,000 a year for their Medicare. That's not fair, and that's not right.

I think it makes sense to say you know what? Let's close some loopholes that only oil and gas companies are able to take advantage of to make sure that we don't have to cut back on Pell grants for students who are trying to go to college and get a better education.

Now that doesn't mean that we defend every single government program. Everybody's got to make sacrifices. There are programs that aren't working well and sometimes there are those in my parties who will defend everything, even if it's not working. We do have to make some cuts on things that we don't need, and that allows us to invest in the things that we do.

But there's got to be balance, and there's got to be fairness, and that's not just my view. The majority of Republicans agree with that view, although I have to tell you when I saw the other day my friends in the Republican presidential primary, they were asked would you take a deal in which for every $1 of tax increases we cut $10 in government spending, 10-1 ratio, and nobody was willing to take that deal.

And what that tells me is you've gotten to the point where you're thinking about politics. You're not thinking about common sense. You've got to be willing to compromise in order to move the country forward.

So here's the upshot. We do have real challenges. We're going to have to make some tough decisions and I know that during the two and a half years that I've been president we've gone through a lot of ups and downs and a lot of tough times and our job is not finished until every single American who is looking for a job can find a job, and until we have fixed the problems that caused me to run for president in the first place so that we're growing a middle class and people have basic security and they know if they are following the rules, if they are working hard, if they are looking after their families and meeting their responsibilities, that they have got a chance at the American dream.

You guys are meeting your responsibilities, you're meeting your responsibilities, you're working hard, and if you've gotten laid off and you don't have a job you're out there looking for a job. You're looking after your family and you're tightening your belt where you need it and you're still making investments to help your kids with your future. You're, you're operating with common sense and you're donating time at your church and food pantry or little league.

Well, if you're meeting your responsibilities, the least you can ask is your elected representatives meeting theirs, and so I understand that after this last mid-term you voted for divided government, but you didn't vote for dysfunctional government. You didn't vote for a broken government that can't make any decisions, can't move the country forward at all. That's not what you voted for, and so, you know, some people have been saying, well, Mr. President, why don't you call Congress back for a special session. What I've said is the last thing the people need for confidence right now is to watch folks on Capitol Hill arguing all over again.

What they need to do is come to Decorah or go to Cannon Falls or meet with their constituents back home and hear the frustration and understand the people are sick and tired of the nonsense and the political games, and hopefully when they come back in September they are going to have a wake-up call that says we need to move the country forward.

You've got to start focusing on doing the people's business. That's what everybody is expecting. I want you to help hold all of us accountable, me included. I am enlisting you in this fight because if you are - if you're making your voices heard, if you're letting people know that enough is enough, it is time to move forward. It is time for us to win the future if your voices are heard and sooner or later these guys have to start paying attention, and if they don't start paying attention that they won't be in office. And we'll have a new Congress in there that will start paying attention to what is going on all across America.

I'm confident in the power of your voice. I'm confident in your values. Those are the values that we share. I don't care whether you're a democrat or a Republican or an independent. All of us here are patriots and everybody here cares about our country and puts it first. And if we can have that kind of politics, then nothing can stop us.

Thank you very much. God bless you. Thank you.

(APPLAUSE)

BLITZER: All right. So, the President of the United States, he's a democrat, but he's in Iowa right now. A lot of Republicans have been in Iowa and remain in Iowa. It's the first contest that's coming up with the Republican presidential nomination.

We have a lot to digest of what we just heard from the president. I want to remind you tomorrow, I'm here in Iowa as well. I'll be sitting down for a one-on-one interview with the president here in Iowa. That interview will air tomorrow right here in "the situation room." the president beginning to find his groove, you just heard right now. He's beginning to get a little bit into that political campaign mojo. We'll have much more from Decorah, Iowa, much more from this town hall meeting.

Q&A coming up when we come back.

(COMMERCIAL BREAK)

BLITZER: The president answering a tough question from someone here in Decorah, Iowa. Why didn't he work harder to repeal the Bush tax cuts for the wealthy?

Let's listen in to his answer.

OBAMA: Republicans would not go along with just voting for continuing the middle class tax cuts and letting the high end lapse. And what that meant was the choice hi to make would have been to let all the Bush tax cuts lapse, including those for the middle class which would have meant that the average family saw their taxes go up $3,000 on average at a time when they were still digging themselves out of a debt hole. It would have been very bad for the economy.

We also would not have gotten insurance - unemployment insurance continued into this year. We would not have been able to do the payroll tax and so the economy would have been much weaker, and so I made a decision that it was better for us at that point to strengthen the economy because we only extended those tax cuts for another two years. And we would be able to take our case to the American people as the economy got stronger as to why we've got a different approach than the Republicans do.

Now on this debt ceiling, it's pretty straightforward. I felt that it was important for us to try to solve the problem rather than play games. And that was particularly important because if we had allowed default, if you think that the stock market gyrations this last couple weeks was bad, if we had had a default, then we might not genuinely might have gone back that a financial crisis because the truth of the matter is even though we got downgraded, I don't know if you've noticed, but when the market got all crazy, what do you think people bought? Where did they put their money to avoid risk?

They bought treasury bills so the market voted to say we have complete confidence in America right now, but if we had defaulted, that meant that we might not have the legal authority to issue treasury bills, and we would have had problems making our Social Security payments, making our payments to our troops, our veterans and so forth, and that was not a risk worth taking.

Now, I know that people would like to say, well, just, you know, do something to get these guys under control. This was a unique situation in which, frankly, you know, the collateral damage from an actual default would have been so great that I didn't want to risk the livelihoods and the well-being of millions of people even though I thought the other side was very unreasonable.

Now that's a unique circumstance. Moving forward my basic attitude is we know what to do. I'll be putting forward, when they come back in September, a very specific plan to boost the economy, to create jobs and to control -

BLITZER: All right. So the President of the United States just saying he's going to put forward a specific plan in September once Congress comes back from their five-week recess. The president will announce a specific plan to deal with the jobs and the economy. He's not announcing details right now, but he is at least saying that he will come up with a major new plan in September.

Lots to assess right here from Iowa, much more of what the president is saying. Our analysts are saying right after this, right after this.

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BLITZER: The president of the United States clearly more assertive here in Iowa picks up his steam a little bit going after the Republicans. Let's discuss what we just heard.

Joining us now our CNN contributor John Avlon. He's got an important new column up on CNN.com entitled picking Bachmann or Perry is risky for the GOP. We'll talk about that in a second as well.

Brianna Keilar, our White House correspondent is with us as well.

John, you hear the president, he's got his message. He's beginning to sound a lot more feisty if you will. What do you make of this?

JOHN AVLON, CNN CONTRIBUTOR: Absolutely. He's a passionate president Obama presenting the campaign themes for 2012, railing against the dysfunctional culture of hyper-partisanship in Washington, D.C. and really almost borrowing a page out of president Harry Truman's playbook talking about the do nothing congress in effect. Saying that hyper-partisanship is stopping bi-partisan progress from moving the country forward and that's why the economy has stalled. Presenting specific policy plans like extending a payroll tax cut or at mentioning free-train plans in particular, saying that those should be passed now. And government - Congress should be able to agree that a trade plan would improve the economy, an assertive president Barack Obama, really taking the fight of playing offense there in Iowa.

BLITZER: And Brianna, you cover the president on a day-to-day basis. He certainly is more assertive right now than he has been in recent weeks and months.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDEENT: He has been, and he's been really railing against Republicans without naming Republicans specifically. He has said or some will hear him essentially referring to Mitt Romney at times, but you certainly feel this campaign element in this back and forth that he's doing with Republicans, and really as John said railing against what he said was it's not government that's the problem, it's politics that's the problem. Clearly targeting house Republicans as well talking about brinksmanship and that bruising debt battle that we saw a couple weeks ago.

BLITZER: All right, John, explain your CNN.com column, why in the headline picking Bachmann or Perry is risky for the GOP.

AVLON: Well, the column is about really the results of the straw poll and Perry getting in, and the fact that in our current polarized environment that the parties are pushing forward candidates do not, who have the least positive chance of being able to transition to a general election.

You know, President Obama there speaking in Iowa, a swing state in a general election, but the straw poll and the caucus tends to really skew to the far right of the Republican party. So it puts forward less representative candidates, candidates who can do very well in a close partisan primary or caucus will do less in a well high turnout general election and so that's the catch-22 that's being faced right now by the parties.

As they get more polarized they put forward candidates who less representative, less able to compete in a general election, and Michele Bachmann is exhibit "A" in that.

BLITZER: John, stand by, Brianna stand by. We'll take another quick break. Much more of our coverage from here in Iowa when we come back.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack for the Cafferty file, Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Question this hour is does Michele Bachmann's victory in the Iowa straw poll make it tougher now for Sarah Palin on the get into the race should she decides to do so?

Valerie in Raleigh writes where are the electable Republican women candidates such as Kay bailey Hutchison, a woman of education and intelligence, who has a chance to win voters outside the far right tea party group. The Republican Party gives us the likes of Bachmann and Palin who are unelectable to the general voters in this country.

Add some of the others strange female Republican candidates like the one who said she wasn't a witch. If you want a Republican win, give us someone who is electable.

Carla writes with the wild-eyed the witless and the weird throwing their hats in the ring, I don't think we can handle the warmed over whacko from Wasilla, too.

Dave writes even Sarah Palin isn't dumb enough to think she can actually win the presidency. So just like Donald trump she won't try. All she'll do is hang around the TV cameras hoping to get more free publicity and give stupid answers to intelligence questions. She's pathetic.

Greg in Arkansas, Sarah Palin is nothing more than pre-race entertainment and thinking that she's getting into the presidential race is like believing the celebrity singing the national anthem is going to get into the Indianapolis 500 race as a driver.

Tammy writes on facebook, I don't think Palin ever wanted to be in the race. I think she likes all the free media attention to help sell more books.

Tom writes, but which one is Lucy and which one is Ethel?

And Bryan in Colorado, Really? Is this stupid question Monday or what?

If you want to read more on the subject, go to my blog CNN.com/caffertyfile or through a post on the situation room's facebook page. Wolf.

BLITZER: Very popular page indeed. All right, Jack. Thanks very much.

Indiana's governor says his first priority is taking care of the victims of this weekend's terrible stage collapse at the state fair. We will go through that and more when we come back.

(BEGIN VIDEO CLIP)

OBAMA: We under invest in education and we under invest in infrastructure. We under invest in basic research -

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: The last time that governor of Texas ran for president of the United States, he won. That's not all Rick Perry may end up having in common with George W. Bush.

Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): He came toting a fried pork chop, a corn dog and an egg on a stick. There's a new Texan in town swigging water like its mouthwash, but his leg on a bale of hay spouting Y'alls.

RICK PERRY, PRESIDENTIAL CANDIDATE: Y'all holler out a question.

MOOS: Dropping his Gs.

PERRY: Messing around. Farming and ranching people.

MOOS: We're thinking that Texas talk sounds mighty familiar.

PERRY: (Inaudible). I said I was looking forward to get out there.

MOOS: Some critics are saying that Rick Perry is the mirror image of another famous Texas politician. UNIDENTIFIED MALE: What?

MOOS: The "New York daily news" even concocted a photo illustration showing Perry looking into the mirror and George W. Bush squinting back out. The accompanying column called Perry W-2 with much better hair.

Hair, by the way, that's looked pretty much the same since his days in the corps of cadets at Texas A&M University. In his first presidential campaign video -

UNIDENTIFIED MALE: He wore the uniform of our country as an Air Force captain.

MOOS: He sure reminds us of President Bush in a flight suit, on a farm. But Perry dismisses similarities saying -

PERRY: We're not all carbon copies in Texas.

MOOS: No less than Authority than Bill Clinton said of Perry -

BILL CLINTON, FMR. PRESIDENT OF THE UNITES OF AMERICA: He's a good looking rascal.

MOOS: When politico asked Perry whether he's armed today he declined to say saying, that's why it's called conceal. He sure doesn't conceal his touchy feely side.

In a typical encounter, he put his arm around an Iowa voter then proceeds to pat slap and squeeze her before giving a final good-bye tap. He loves to tousle the hair of kids.

Colin here not only got his hair mussed, he got his cheeks rubbed.

Hey, even a CNN producer got the cheek treatment.

UNIDENTIFIED MALE REPORTER: Governor, what are your thoughts about what appears to be a -

PERRY: Back in the pen.

MOOS: And the photographer got a late pat. Perry's got that down home charm that you know who had. Remember all that winking? President Bush even winked at Queen Elizabeth. Don't blink or you'll miss Rick Perry's wink. And guess how Perry pronounces this.

PERRY: I'm a supporter of nuclear energy.

MOOS: They both support nuclear pronunciation. And Rick Perry even winks while he drinks.

Jeanne Moos, CNN, New York.

BLITZER: Tomorrow I'll be interviewing the president of the United States, President Obama and I will sit down here in Iowa. That interview tomorrow in the "situation room" 24 hours from now. Stay tuned for that.

Until then, thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM. For our international viewers WORLD REPORT is next.

In North America, JOHN KING USA starts right now.