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State of the Union

Economy is Issue Number One

Aired January 25, 2009 - 11:00   ET

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

KING: And I'm John King, and this is "STATE OF THE UNION."

President Obama is making the economy his first priority, but there are new indications today the Republicans are going to fight the plan. Can he get it passed in time? We'll discuss this and much more with senior political strategist Ed Rollins and James Carville. The prison at Guantanamo Bay will be closed, but today news reports say a second release detainee has appeared in an al Qaeda video. Will the Guantanamo decision put U.S. citizens at risk? We'll get the inside story from our Pentagon correspondent Barbara Starr.

And in an exclusive broadcast premiere right here on this program, musician will.i.am short film of the Obama inauguration. All this and much, much more coming up on STATE OF THE UNION.

On Wednesday, President Obama arrived at the Oval Office for his full day as president. A conversation with a staffer, a few phone calls to foreign leaders and the Obama administration was off and running. OK, well he's had five whole days. Let's not waste any time. How is he doing? Joining me now, two of CNN's best political contributors, Democratic strategist James Carville. He's in Las Vegas today. And from New York, Republican strategist Ed Rollins.

James, let me begin with you. You're the Democrat in the bunch here. Just your first impressions of five days. Let me ask from the contrarian perspective. Did he do anything that you see concern? Anything you would pick up the phone and say Mr. President, don't do that again?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: Not really. I mean, I couldn't imagine that he had, you know, the five days are not the hardest days of any presidency. I was actually a fan of his speech to be fair. Some people thought the speech wasn't that good. I thought it was very good, but the five in front of him that are going to be much tougher than the five. I should say the 50 in front of him are much tougher than the five behind him.

And what the really challenging thing is going to be during the State of the Union and when he makes his economic announcement and what's sure to come as some major restructuring of the banks, how does he tell the American people just how precarious this financial situation is? I mean, he certainly got off to that start but I think we're going to hear a lot more from him on that subject and that's going to be pretty tough.

KING: And you've been in the White House for the honeymoon period. To James's point, Obama is remarkably popular at the moment, extraordinary good will, across the political spectrum and yet he's going to spend the next $350 billion of that bailout money. It's incredibly unpopular. He's asking for $800 billion, maybe even more in stimulus money at a time the United States already has way too much debt. At what point does the burden of responsibility start to chip away at those sky high approval ratings?

ED ROLLINS, REPUBLICAN STRATEGIST: It will come, John. Obviously he's an extraordinarily likable man and he has great skills at communicating. I think the only thing I would say to him and I think he had a great first week and a great inaugural is over and over again, he has to explain down to the smallest detail, he has to convince a lot of skeptics out there, and I'm not just talking about Republicans. I think he made a good will effort to Republicans.

Most of them aren't going to be onboard at the end of the day and he won't need them. But to the public, he has to explain he's not wasting their money. Everything I'm doing basically is to try to create jobs to get this economy moving. It's not to take care of special interests. It's to help you. You are my focus every day is to get this economy moving for you.

Sometimes presidents have a tendency to make one speech, two speeches and they think the job is done. And you've got to go back, over and over and over again. He's got those extraordinary skills and he should do that.

KING: As the plans make their way through the Congress, they will debate the details. One, you have a debate and a disagreement over the specifics. You also watch and see how the tone is. Obama came to Washington saying he wanted to reach out, he wanted to put the partisanship behind. Some question as to whether the Democrats in Congress will go around. Republicans, James, are already complaining the stimulus plan in the House was written by the Democrats and just the Democrats. And they weren't really consulted.

I want you to listen to the Speaker Nancy Pelosi speaking this morning on ABC where she says, "Well, maybe we wrote the first draft of the plan, but we're ready to listen to Republicans now." Let's listen.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI D-CALIF., SPEAKER OF THE HOUSE: Alcatraz is a tourist attraction. It's a prison that's now sort of like a national park.

(END VIDEO CLIP)

KING: That was the wrong piece of sound there. That was the speaker talking about Guantanamo Bay. We might get to that later. But James, here's what she said about the notions. "We'll take some Republican ideas, we'll see how much they can stabilize the economy, create jobs and their costs. We're open to their ideas."

If she's so open to the ideas and if bipartisanship is so important, why not invite them in for the first draft? CARVILLE: Well, I don't know. But the question is, something has to get started. And bipartisanship and I think the president made this clear in a meeting in having a discussion, he said look, we won the election. And I think that this -- they're going to bring the Republicans in a lot more on this than they were brought in during the Bush years.

But again, the first draft is a draft, and I'm sure that there will be some bartering, some harsh trading back and forth. John Boehner, that guy, he seems like a nice enough guy but I never know whether he's trying to sell me a condominium or an insurance policy. I mean, I never have an idea of where he's coming from. But I don't think this is a big thing, whether somebody wrote the original draft and say this is subject to amendment, we would be glad to hear your ideas. I just don't view that as some kind of a big insult or anything.

KING: Well Ed, to James' point, Obama did say in a meeting with house republicans, he's quoted by Eric Cantor, a member of the House leadership on the Republican side as saying this, "we have a difference here and I'm president."

And the way the Republicans took that message is "I know we have disagreements, but I won."

Does he have the right to make that statement? Does they have to get in line?

ROLLINS: You betcha he has the right to say that. You know, partisanship didn't start with Clinton or with Bush or with anybody else. I've been around in Washington for 40 years and it's been going all of that period of time.

I think the bottom line is if that Republicans have ideas that are meaningful that they can argue that should be in the bill, they need to put those forth. If they don't, they don't have the votes. They really are as irrelevant as they've ever been in all the years I've been around because the Democrats have sufficient votes. Now, they don't want to pass it without some Republican support, because it will give them some cover. But they have the capacity to do that.

This president had a tremendous victory. He won by 9.5 million votes over McCain. He got two thirds of the electoral votes. He's in his honeymoon period. He's going to get what he wants in this bill whether Republicans like it or not.

The dilemma with Republicans and Boehner and the rest of them and I am a Republican and I support them is they're trying to redefine themselves. They're trying to figure out who we are, how do we come out of the wilderness, are we going to be the opposition party in which we basically say, taxpayer's money is not being spent well. Or are they going to be a part of the process? That's a determination they have to make. The Senate is maybe more bipartisan than the House. The House is a pretty bitter place.

KING: And as President Obama has to make these big decisions, he has to match up his campaign promises with the reality of government and the worsening economy. One of his top economic advisers Larry Summers was on "Meet the Press" this morning and during the campaign, Obama said "I'm going to spend about $65 billion to reform health care and I'm going to get the money by rolling back immediately, the Bush tax cuts for those who make more than $250,000."

Now some economists, even liberal economists are saying don't do that, don't raise taxes this year in a troubled economy. Let's listen to Larry Summers.

(BEGIN VIDEO CLIP)

LARRY SUMMERS, DIR, NATIONAL ECONOMIC COUNCIL: They have to expire next year and they have to be allowed to expire. What the timing will be, that's something that is going to have to be worked out.

(END VIDEO CLIP)

KING: So James, how do you do that in a new administration where you promised your base during the campaign, I will repeal them as soon as possible? Now some say let's just wait. Let's let that happen at the end of next year, not at the middle of this year. And if you let it wait, you probably don't have the pot of money you need to get going on health care right away?

CARVILLE: Well, I think that letting it wait as soon as possible, and I don't think anybody when he runs for re-election in 2012, they are going to say, well, you did it but you did it in 2010 and not 2009.

I think what Larry Summers is saying makes some sense that he believes and maybe other people believe that just right now we're in the depths of this recession that we ought to put it off for a year. I can't imagine that people wouldn't understand that. You're right, some of the revenue that is not going to be there. But you know, the sooner we get out of this recession, the quicker the revenue is going to get back on stream. I think that's not going to be a big deal in a 2012 election.

KING: A big deal in the short term, Ed, are people out there saying but, you promised?

ROLLINS: I think getting the economy moving is what he promised to do. And he has lived up to most of the other promises he's made already. So I think the bottom line, this would be a much bigger fight than he thinks. Speaker Pelosi also says she wants to repeal it now. They have a lot on their plate. If they want to go and try to repeal it, it automatically repeals in a year and a half.

But if they want to fight that now, there will be lots of groups, lots of business groups who will come forward and argue that this is terrible for the economy. Larry Summers has one point of view. A lot of other economists have another point of view. You know, I think it's a fight they don't need. They have a lot of other fights to be engaged in right today. And I think that's one that they may lose or certainly may lose some of the Democrats support that they have.

KING: More substance to talk about in our next segment, but in the final seconds we have in this segment, I want to ask you both, because this is what you both have been pros at and very good at both what you've been pros at and very good at in the past, rate him as a communicator, as a president versus a candidate. It's a very different job. Ed, you first.

ROLLINS: Extraordinary communicator. I think he's next to Reagan in modern times and may even be better than Reagan over time. He's just got -- he's got a very great warmth personality. He's got great strength. He was very commanding in his speech. Everyone who nitpicked the speech I think is wrong. I think he gave a great speech in which he laid out his vision. I think he's got extraordinary skills.

CARVILLE: I would have to say an incomplete because his toughest job by far is going to be to confide and explain to the American people just how precarious our situation is and how he's doing things and explaining what's going on with these banks.

Obviously something very big on this is coming. I wouldn't be surprised if it's going to be this week sometimes. And this is going to be something that's going to happen over a long period of time. They're going to have to develop something like the fireside chats, some way to continue to communicate to the American people and give them some sense that they understand the depth of this and what they're going through, because this thing is not going away anytime soon and he's going to be dealing with this for quite a while to come. And how he does that, I think the State of the Union as a speech is about five times more important than an inaugural speech. Because that's where he's going to lay out specifics and talk to people.

CARVILLE: And that is a big role of his. I think he's uniquely suited to do that. I couldn't imagine that we'd have a better president for this time, that's better able to take people and their confidence and give them the kind of understanding they need in these issues.

But he hasn't begun to do that in any significant measure. That's going to be the thing that history is going to remember him for.

KING: An incomplete from Carville, for now.

Gentlemen, stand by. We'll be with you in just a minute. You know, Vice President Joe Biden just finished speaking out this morning. You'll be interested in what he had to say.

And, as layoffs, big layoffs continue to spread across the country, we'll take the people's pulse at Libby's Blue Line Diner in Colchester, Vermont. "State of the Union" will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) VICE PRESIDENT JOSEPH R. BIDEN JR.: I think you'll see a fairly strong vote, across the board, out of 534 members, for this stimulus package.

(END VIDEO CLIP)

KING: That's Vice president Joe Biden, just moments ago, expressing confidence about the upcoming vote on the stimulus package. Once again, we're joined here on "State of the Union" by CNN contributors James Carville and Ed Rollins.

A broad bipartisan vote, across the board, on the stimulus package. Ed, $700 billion for the Wall Street bailout; $825 billion for the stimulus plan, and both on Wall Street and on Capitol Hill, people say we're going to need more.

At what point do members of both parties say, why are we printing all this money; are we sure of where it's going?

ROLLINS: I think you may get the next bill. I think, after that, unless there's some evidence things are working, you're not going to get more money than that.

I think there's a lot of nervous House members, including some who are Democrats that are in some of these districts that are a little more conservative.

I think that the vice president is right. I think, you know, you begin with 59 votes. I assume they get Franken in the Senate. You may get another five or six Republicans. That gives you two-thirds of the vote.

In the House, I'd be surprised if you get 15 or 20 House Republicans to go with your Democrat majorities. But beyond this next bill, unless they see some evidence that things are working, I think the blank checkbook is going to get closed.

KING: And, James, what's the political impact if, at least on the House side, Republicans just decide, you know, our districts are safe; they're conservative; even if Barack Obama won my state, my district is safe, so we're going to start voting no, and we're going to say, this is Obama's economy; this is Obama's stimulus plan, so that, in six months, if the unemployment rate has inched up near 9 percent, they can say, "Who's the president now? Blame him."

CARVILLE: Right. What the president needs to do is there needs to be an explanation of what's going on and the consequences of not doing something.

Because, right now, it's just being framed as the bailout package. And people say, gee, you just send the money up there; they get it, and it's all gone the next day.

So that's what my earlier point was, he has to really communicate with people about what's going to happen. And it's not unreasonable to assume there could be very high unemployment, here, in six months. I think the Obama team knows that.

That's why I think their big task is to reframe this into something other than a bailout, and give people a fundamental understanding of what's going on.

Because, right now, that's not happening. And Ed is right, and these Republicans, and some of the Democrats, you know, they go back in their districts and people are saying, I'm losing my job; I'm getting my pay cut, and you guys are sending them money.

He's going to have to be teacher in chief, here, communicator in chief. And I think we're going to see that. And I think his skill set matches that. And It's going to be an interesting time.

KING: Let me shift the focus, a minute. He, with great fanfare, on Wednesday, signed these new executive orders saying we're going to have more restrictions the revolving door and the lobbying here in Washington, that most Americans just can't stand, than any administration in history.

And then, within hours, he grants a waiver to the number two -- his nominee to be number two at the Defense Department, a gentleman by the name of William Lynn, who is a lobbyist for Raytheon.

Some are saying that's hypocrisy or a broken promise. Let's listen to Senator John McCain, who, remember, has said he wants to work with his formal rival, but McCain's a little annoyed about this one. Let's listen.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: I don't like it. I think it's a bit disingenuous to announce strict rules and then nominate someone with a waiver from the rules that you just announced in one of the most important jobs in Washington, the number two person at the Defense Department.

I've asked to see which areas that Mr. Lynn will be recused from, but I think we need to probably move forward with his -- with his nomination.

(END VIDEO CLIP)

KING: Do the American people care, James, that one day you say you have new rules for all who serve in my administration and then, within hours, you grant the first exemption?

CARVILLE: Yes. I think, you know, sure, it's something that they notice. And I think that the important thing for the administration to make is, is, "Look, this is all transparent. It's open to the public. This wouldn't have been an issue until we did this. We reviewed it. You know, everybody is aware of what this appointee is going to do."

And he might be an enormously talented man, and having him in there is worth some of the heat that they took. But there's no doubt it was noticed by people. It's hardly, like, a major scandal or even a minor scandal. But it was noticed and reported on.

KING: Does it matter, Ed?

ROLLINS: Well, I think the ethics package is an extraordinary package, and I think it's very important. It's what he promised and it's what the country wants.

I think if you, basically, make him live up to the agreement, which is that he will not be the deputy secretary, will not be involved in any decisions where his foreign company was -- which is hard, because it's a major defense contractor -- but if they stay true to that, then I think they can live with it, and it doesn't become controversial.

I think the most important thing, though, is he promised he was going to clean up lobbyists and the revolving door. And he has probably the toughest ethics package that I've seen in my lifetime. So I think it's a positive...

(CROSSTALK)

CARVILLE: And we're certainly more aware of this as a result of this. So I think it is a good thing. And, you know -- and he publicly said, we'll waiver, and he's not going to do this. So the discussion is in the right direction, but I don't blame the press for pointing this out, either.

KING: One of the questions for any new president is, how does he step into the ominous duty of being the commander in chief?

And we saw, this past week, that there was a missile strike on some suspected terrorist strikes in Pakistan. Whether President Obama specifically ordered that or whether it was a continuation of an operation that was in place when he assumed power from the Bush administration is a bit unclear.

But, Ed, in terms of a new president, and a young man, and relatively unknown on the national stage, how do you see the first week, as people are looking in through the prison of commander in chief?

ROLLINS: I -- I think he looks well. And that was a role I worried a great deal about in the course of the campaign. I think his commander in chief ball was very important -- we've never had one of those -- in which he reached out to the military.

I think his appointments of some very high-powered military people. National Security Adviser -- former commandant of the Marine Corps -- Jones is very important, secretary of Veterans Affairs.

I think he's surrounding himself with extremely capable people. And the most important thing is he seems to be listening to the generals. He told them to give me an exit strategy to get me out of the war in Iraq in 16 months, and they will give him good counsel.

KING: James? CARVILLE: Well, yes, it has. And one of the things is the closing of Guantanamo Bay caused a lot of uproar. And I had an idea that was given to me last night at dinner by Al Michaels, the sports broadcaster.

CARVILLE: And that was they ought to leave it open and send all those Wall Street people down there. I want to be sure that I give Al credit for that idea, but it's one of the better ideas that I heard. In reality, General Jones is just a terrific guy and the new secretary of state. They still have bad people in the world and they're still going to send missiles to blow up bad people in the world. That's not going to change under this administration. A lot of other things will. But again, I would caution us, you know, the first five days are -- have been good, but that's -- we've got a long, long way to go here.

KING: Well Ed, take me back to the first weekend in Ronald Reagan's White House. As James said, five days is a short time. What do you think of that first weekend, OK, got through that, now what?

ROLLINS: Well we had a big package, we had troubled times and we had some very tough things to accomplish. We had to build a military, we had a very aggressive package. Obviously it took us much longer. The president has a very aggressive schedule, wanting his stimulus package by the president's holiday, which is a couple of weeks from now.

We literally didn't get our tax cuts and our stimulus packages and all the rest of it for a good 120, three or four months. I think that may be more realistic. I think he may get the initial stuff, but it's a long hard trudge. Unfortunately, President Reagan was shot, we certainly hope and pray nothing like that ever happens to this president. And that sort of slowed things down but in a way also gave him very high marks and helped pass it through.

It's a long four years. You watch a couple of men who were on that stage the other day, our former presidents who began with great first weeks and ended up with very bad weeks. Two of them being defeated. One of whom this president going out with very low ratings and Jimmy Carter with very low ratings. So it's not an easy job. This man is going to need every skill he has.

KING: We need to end it there on this Sunday. Ed Rollins and James Carville, thanks for joining us on STATE OF THE UNION. We'll see you again on a Sunday quite soon. Thank you, gentlemen. And next, we'll go outside the Washington Beltway to hear from Americans just like you. This week's destination, Colchester, Vermont, when STATE OF THE UNION returns.

(COMMERCIAL BREAK)

KING: We were just talking about layoffs. Thousands of layoffs are hitting every part of the U.S. economy. The struggling economy is not only the talk of Washington, most likely the biggest issue where you live as well. Every week as we have told you, we plan to get outside the Beltway and listen to your concerns. This week, we went to Vermont. It's right up here in New England. Let's show you a little bit about Vermont. It's one of our smallest states. The population only just 621,000, the 45th largest in terms of real estate. It is only one county voted for Bush back in 2004. It is the only state George W. Bush never visited during his presidency. And Vermont, as you can see, gave Barack Obama his third largest winning margin.

Now this was once a reliably Republican state but now has a left leaning government. The governor is a Republican, Jim Douglas, but a very moderate New England Republican. Democratic Senator Patrick Leahy, Independent Senator Bernie Sanders, both with the Democrats and a Democratic Congressman, Peter Welch.

When we were in Vermont, we wanted to talk about the economy and the president's early days. No better place to get the views of average Americans than Libby's Blue Line Diner.

(BEGIN VIDEOTAPE)

KING: One week does not a presidency make, but as you watch the new president over the course of the first week, what's your first impression? Ladies first.

LEE BYRD, COLCHESTER, VERMONT: I think he's wonderful. I like what he's done so far. Of course, I always question, you know, when a new president comes on board, what does he really know until he gets into office.

KING: First impressions matter in any relationship. What do you think?

MIKE BUNNELL, COLCHESTER, VERMONT: Getting out of Gitmo was a great idea. Being from Vermont, we're passive here. That for me was the wrong thing the Bush administration did.

KING: Six hundred and 60 state jobs might be cut. Your governor says this is the toughest budget he has ever had to do. Even on Election Day when Barack Obama was winning and winning big here, IBM right up the street lays off 500 more people. What's your sense of the economy? And is there anything any president can really do to change it?

GEORGE FITZGERALD, COLCHESTER, VERMONT: I think giving the financial people all the money, not knowing where it went to was just the wrong thing to do.

KING: You say you're a big fan. Do you want your government taking billions of dollars of your money going to the big banks, going to General Motors, going to Ford?

BYRD: No, I don't. We need to be accountable to ourselves. And those companies -- yes, there will be a loss of jobs. But I think that in this country, we got a little too entitled.

KING: So you disagree with him on that point, Obama? He supported the bailout, he's going to spend the money. You think very highly of him, but...

BYRD: Yes, I don't think we should totally bail everybody out because we need to suffer the consequences.

BUNNELL: And whose money is it? Is it our money? Is it our kids' money?

KING: Anti-war sentiment in Vermont was among the highest in the country saying yet get us out and get us out yesterday. Do you agree with that sentiment number one that we should get out? And do you think the troops will be home, the combat troops will be out of there in 16 months like he promised?

FITZGERALD: I'm not sure that's necessarily the right thing. Since we've gone in there, you know, now you kind of really have to see it through.

BUNNELL: No, we can't leave that mess. Sixteen months is an awful quick period of time.

KING: Do you think you're a little more patient than most of the state when it comes to Iraq?

BYRD: Way more patient, yeah.

KING: This is the only state of the 50 that George W. Bush did not visit as president.

(CROSSTALK)

BYRD: I don't blame him for not coming.

KING: When is it that you sit down and say, now I can make an honest assessment, is he keeping his promises, is he adapting to new challenges and crises? One of the knocks on the campaign was is he ready?

FITZGERALD: I think definitely by the end of the first term, we should have some idea.

KING: That's a lot of patience. That's four years. Americans usually aren't usually that patient with politicians.

FITZGERALD: That's true. But you really have to give him some time to see what he can do.

BYRD: We always blame the president for everything that's happening, but the truth of the matter is the Congress has to pass what he suggests, and so I look at it, I don't, you know, blame or praise the president as much as say the other people do.

BUNNELL: It's the tone that he's setting.

BYRD: Right.

BUNNELL: I think we're finally aimed the right way. KING: A great group there, and I can tell you the coffee and the breakfast, A-1. CNN's reporters have been covering the new administration from every vantage point. We'll get their take on a busy week here in Washington. Much more STATE OF THE UNION after a break.

(COMMERCIAL BREAK)

KING: It was one of the first acts of the new president, the Guantanamo Bay detainee facility to be closed within a year. Signing the order looked easy. Figuring out what will actually happen to the detainees will be much, much more difficult. Joining me now to discuss this and more, CNN senior congressional correspondent Dana Bash, Pentagon correspondent Barbara Starr, national political correspondent Jessica Yellin and our senior White House correspondent Ed Henry. Welcome all. We have a full house on this side of the table.

Barbara, I want to start with you to get your perspective on what those inside the military who defended this facility and its necessity role in the war on terror for so long. Let's first listen to Barack Obama talking about why he thinks closing Guantanamo is so critical.

(BEGIN VIDEO CLIP)

OBAMA: Our actions in defense of liberty will be just as our cause. And that we the people will uphold our fundamental values as vigilantly as we protect our security. Once again, America's moral example must be the bedrock and the beacon of our global leadership.

(END VIDEO CLIP)

KING: Inside the Pentagon, Barbara, privately, do they agree with their president that you can close Guantanamo Bay and some of the practices, the interrogation practices of the Bush administration without sacrificing safety?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, I don't know. That's the real answer. They now know that about 60 of the people that were incarcerated at Guantanamo and then released have returned to the battlefield, have engaged in further terrorist activities, so it's pretty unclear what will happen. Will people go back to the battlefield? Who knows.

But you know, what's really interesting inside the Pentagon this week, this was just really the first step in remaking the war on terror in the Obama administration. Removing the blight of Guantanamo Bay and now trying to move on to the problems of Afghanistan, putting another 30,000 troops into that country and a lot of concern that Afghanistan could wind up being Barack Obama's Iraq.

KING: Barack Obama's Iraq. Now, when Barbara Starr says something like that, I assume, Ed, in the White House, they understand first steps are important. They want to get off to a good start. This is risky, not only the Gitmo decision, but sending more troops overseas. ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: Absolutely because if you start sending more troops to Afghanistan and it doesn't work, what do you do then? There have been a lot of military experts saying that a surge in Afghanistan is not going to play out necessarily the same way that a surge in Iraq played out.

In terms of Gitmo, another thing you have to look at is the fact that there are some big potential loopholes here where if they do get a high-level terrorist suspect, the detainee, someone like Osama bin Laden, they could always go back to using some of the enhanced interrogations. Robert Gibbs was asked that at his first briefing and wouldn't really answer directly, saying they're still trying to work out the details.

So I think on one hand, the president clearly still has to get credit for keeping the campaign promise. President Bush had said he wanted to close it down, but he never issued an executive order. Week one, Barack Obama did that. But now comes the heavy lift.

KING: You say the heavy lift. I want to before I bring Jessica and Dana into the conversation, let's just say John McCain, he has said, I want to work with Barack Obama. He said during the campaign that Guantanamo Bay was a stain on the United States. And yet Barack Obama says he will close it within a year. McCain says he forgot something else.

(BEGIN VIDEO CLIP)

MCCAIN: Where are you going to send them? That decision I would have made before I announced the closure. Because I don't know of a state in America that wants them in their state. You think Yucca Mountain is a problem? Wait until you see this one.

(END VIDEO CLIP)

KING: Not in my backyard. Nancy Pelosi already this morning saying not in Alcatraz. Are the detainees going to end up in red states?

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Well, you know, John McCain -- this is actually interesting. This is one of the few issues that we would have seen this outcome had John McCain won or Barack Obama, because both of them promised to close Guantanamo Bay. In the campaign, John McCain said I will send them all to Fort Leavenworth. He had a place for these detainees. It's obviously a lot easier said than done when you're on the campaign trail than actually making it happen.

But it also interesting to hear his good friend Lindsey Graham on your show earlier today, making the case that yes, it is not going to be easy but Congress really wants to and needs to get involved in figuring out how to deal with these absolutely mind boggling tough issues and how to prosecute these detainees.

KING: I assume this controversy is in part less risky for Obama because the country is consumed with the economy right now at home in the short term at home.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: That's right. And Barack Obama knows the focus at this time is on people's own reality and their pocketbooks. I do like your idea, you would probably punish his political enemies by sending the detainees to their districts. That could probably work out politically.

But you know, I talked to some Republicans who are enormously frustrated that Barack Obama gets so much credit for signing this executive order without doing the planning in advance and saying what he's going to do. And they're just seeing him run with his political capital right now and it is really frustrating to him. This guy can do what he wants at this moment and get credit for that.

HENRY: And it's risky because Barbara said before, if one of these detainees down the road goes out and not just rejoins the battle field, but plans a terror attack against the United States, that's obviously a big if, a hypothetical, but it could happen. Then all of a sudden the rubber meets the road and there will be a lot of questions about how he is executing the war on terror. So the heavy lift is ahead.

KING: We all changing our jobs. When you change a new administration, you change your rolodex, you change the things you cover. I think anyway, Barbara you have the most fascinating job in Washington because you have 140,000 troops in Iraq and the president who was there a week ago had a very different view than the president who is there now. You have the debate about what next in Afghanistan. You have a president who is now going to call Germany, France and otherwise and say give me help where you wouldn't give George Bush help.

STARR: It is a little bit of the "Twilight Zone" in the Pentagon these days, I have to tell you. Because when you ask about this, what you get from the top, from Secretary Gates, from Admiral Mullen, the joint chiefs is yeah, yeah, that was the Bush administration. Now we have a new commander-in-chief. We will salute smartly. We will execute whatever he tells us to do. And we will move out.

But nobody has yet said whether getting troops out of Iraq in 16 months is actually a good idea. They have not gone on the record yet saying we will advise the president that that's our best military advice. Look ahead, John. President Obama may come to the Pentagon this week, sit down with the Joint Chiefs of Staff and that will be a very important signal. It will be a picture he wants the world to see, meeting with his top commanders in the tank.

KING: I want to stay with you, Barbara, on this point, because President Bush always said I listen to the military commanders, I don't listen to public opinion in the United States. I don't listen to people in Congress, my party or another party.

What is the general sense? That if they come to Barack Obama in three months, six months and say sir, we're trying. We are doing everything we can to keep your promise and get them out in 16 months, but we can't do it and here's the evidence, here's why the Iraqi political system is not ready or their troops aren't trained enough or we have this new threat over here, we need another six months, Mr. President. Maybe we need another year. Are they convinced that he will listen to them or that he will stick to what he told the American people in the campaign?

STARR: Well, I think they are certainly hoping he will listen to them. Remember, during the last administration, we had the so-called revolt of the generals where they all whined afterwards that they weren't listening to about Iraq and they were too afraid to speak up and all of this. This is their chance. The question, I think, is part of what you said. Will they actually tell the president, sir, we can't do it, your idea is just not working out. And there's Iraq and there's Afghanistan, both facing elections in those countries. In the upcoming weeks and months, both of those places about to get a lot tougher.

KING: We're going to do domestic policy, cover domestic policy in the next segment. But I want your thoughts on this. This is a big moment, the American people after George Bush, the war on terror, he was the president most associated with it and now you have such a dramatic change.

HENRY: Well I think when you're talking about allies as well, sure, it's another thing for France, Germany, the other countries to say, boy, there's a new day in America, we can work with Barack Obama. But, are they going to actually deliver on issues like setting more troops to Afghanistan?

We've been hearing from Europe, over and over, that they want to help out, but they don't actually send their own troops. Are they going to help Barack Obama that way?

And also, on Gitmo, if you go back to that, are other countries going to take some of these detainees?

It's one thing to say, boy, it's great that America is going to shut down Gitmo. But do these other countries want to take some of these terror suspects? So far, they have not.

BASH: And back to what Barbara was saying about Iraq, I mean, to me, watching what happens in Congress and, of course, at the White House, with Iraq, is going to be absolutely fascinating.

Because there hasn't been as much of a focus, because the economy is so bad and there's such a focus there, on the fact that this was something that Democrats took vote after vote after vote on, in Congress, knowing that it wouldn't go anywhere, because you had George Bush in the White House, voting to bring the troops home.

Now there's no excuse. They have somebody who ran, from the beginning, on bringing troops home. So they have to deliver. And then they have this reality at the Pentagon.

KING: I have to call a quick time-out here. And our thanks to Barbara Starr for coming in, as, again, I think she has perhaps the most fascinating job in Washington at the moment. When we come back, reporters share more of their insights own President Obama's big first week. And don't forget, in "State of the Union's" next hour, music producer Will.I.Am's short film of the Obama inauguration. We'll be right back.

(COMMERCIAL BREAK)

KING: President Obama's team began to come together this week. Let's talk about how they're doing and what they're doing.

With me once again, national political correspondent Jessica Yellin, senior congressional correspondent Dana Bash and our senior White House correspondent Ed Henry.

One of the most interesting questions is, for the transition of power, we not only get a new president but we get a new vice president.

Dick Cheney had a very active and a very full portfolio in the Bush administration. We're still trying to figure out what Joe Biden will do.

He was out on CBS' "Face the Nation," this morning. Let's listen to Joe Biden talk about his role and how it changes him.

(BEGIN VIDEO CLIP)

BIDEN: I'm really happy to be part of a team, but what I have to think about now is, everything I say, I am the vice president. I am not the president. I'm the vice president. So everything that I say reflects directly on the administration. And so I may have strongly held views that the president may not have. And they should be done -- that should be done between us, not for me to -- but, yes, the bottom line, it's harder.

(END VIDEO CLIP)

(LAUGHTER)

KING: Bottom line, it's harder. And it's still apparently a work in progress, because if you don't -- if you have disagreements with the president, you're supposed to keep them private. Why would you say, I have disagreements with the president?

YELLIN: This is, like, 101 in psychoanalysis.

(LAUGHTER)

If he has to say it, he's obviously grappling with it. We saw how disciplined he was during the Sarah Palin debate. We know he can learn how to watch what he says. Clearly, it's a struggle for Biden.

But he's an enormously talented guy, knowledgeable. He's clearly working out his role.

One thing we were just commenting on, all of us is, we all got an e-mail, announcing to us what his schedule would be this weekend. We never, as press, got anything like that with Dick Cheney.

(LAUGHTER)

So already, we're seeing a difference, in terms of transparency.

KING: There was a moment, this week, that should not go without mention, which is that, in the middle of the week, after signing one of the executive orders, I think, on lobbying, Barack Obama had all the senior staff there, and the president brought in the vice president to swear all these senior staff in.

And Joe Biden said, "Oh, I've got to do the oath? Oh, OK. I don't think my memory's as good as Chief Justice Roberts."

And the room starts laughing. Biden's laughing. And the president, if you looked at him, he grabbed his arm, had a sober look, like, "Cut it out."

HENRY: And so, if you want to know how that relationship is going, the president is clearly showing he's in charge, and he's trying to reign Joe Biden in, even in a light moment like that.

But I think, in all seriousness, on policy, I think where we're going to see Joe Biden mostly focused is on Capitol Hill, with Dana.

BASH: Yes.

HENRY: We're going to see him up there, and, sort of, using that experience to, sort of, be Barack Obama's chief ambassador out there -- not quite like Dick Cheney but, sort of, trying to twist arms in an a friendly way.

BASH: And that it is a transition. All of us covered the Hill. All of us have covered Joe Biden on the Hill, where the culture, as such, is that you walk up to him and say, hey, what's going on, and he talks and talks and talks.

YELLIN: And talks.

(LAUGHTER)

BASH: Yes. And -- but he's very -- has been for the past, what, three decades, very free to talk to reporters and give his personal opinion. I can't even imagine what kind of transition it is to really change that.

YELLIN: Ed's point is interesting. The dynamic between the two men is fascinating to watch.

KING: Yes. And there's another transition going on. And that would be the Republican Party which, at the beginning of the Bush administration, controlled the town, just like the Democrats do now.

And now Republicans are trying to find their way. And many conservatives see cooperation -- out in the country -- see the cooperation and the nice statements being made by members of -- their members of Congress, and they're mad at them.

The Senate Republican leader, Mitch McConnell, addressed that in a speech in Washington the other day. Let's listen.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, R-KY., SENATE MINORITY LEADER: Some will no doubt accuse us of compromise. But those who do so will be confusing compromise with cooperation. And anyone who belittles cooperation resigns him or herself to a state of permanent legislative gridlock. And that is simply no longer acceptable to the American people.

(END VIDEO CLIP)

KING: "No longer acceptable," Dana. And yet, as the Republican leader in the Senate, Mitch McConnell, tries to find a way to get along, when he can, with the new administration, the House is very different. Those guys are from safe, conservative districts, for the most part. And most of them seem to think, you know what, I can vote no.

How are the Republicans sorting this out, in the early days?

BASH: You know, it's funny you say that. Because, a couple of weeks ago, I had coffee with a Republican leadership aide in the House and said that -- was joking about the fact that they're going to put a sign on their door and say -- saying, we have one job; that's to vote no. That's it. That's the only job.

(LAUGHTER)

It's easy for them to say, in the House, as you said, because, you know, they, for the most part, are in safe seats, those who are left in the House of Representatives.

(LAUGHTER)

But in the Senate, it is very difficult. And you just heard Mitch McConnell address that. They're trying to find their way.

Because the bottom line is, they see the poll numbers, not just Barack Obama's poll numbers but their own poll numbers, and the fact that, in many cases, they lost because of the fact that there was such frustration in Washington, and they don't want to be part of that continuing gridlock, as Mitch McConnell called it.

KING: And, Jessica, you remember, from the Bush administration, even Republicans said, they tell us what to do; they're not really listening; they're not reaching out and consulting to us.

Do Republicans have a sense that this president will really listen, or just meet with them?

YELLIN: I think it's -- they're working that out. I mean, in this meeting he had, the president met with Republicans and Democrats in the White House. Obama said to them, listen, we're going to talk to each other, but in the end, I won.

So it was a joking statement, but it was also, at some point, it's going to be my way or the highway, guys.

And the White House really wants significant Republican sign-on to this new stimulus bill. I'm not sure he's going to get as much as he wants. And it's going to be a real challenge because he wants everyone to own this. And if Republicans don't own it, it becomes Barack Obama's problem, this economy.

KING: Ed, we have only about 10 seconds left. But is there anything in the plan now that has the Republican stamp, or is that a promise unfulfilled, for Barack Obama?

HENRY: Well, a little bit with the tax cuts, because there are some tax cuts geared toward business. People like Eric Cantor and John Boehner, some of the House Republican leaders, are happy with that. They want it to go further. But there is a little bit of their stamp. But this is mostly a Democratic bill.

KING: A Democratic bill, at the end of week one. We'll move on to week two. Dana Bash, Ed Henry, Jessica Yellin, thanks for being here.

And the current crisis on Wall Street affects not only the men and women across the country but also those right up close to the action. Up next, the roller coaster ride that is the life of a Wall Street day trader.

(COMMERCIAL BREAK)

KING: Today's front page of the New York Times has this lead story, "Obama plans fast action to tighten financial rules." The story goes on to talk about how the Obama administration will try to control hedge funds and derivative markets, strange and somewhat mysterious things for most people.

Well, let's try to make it all a bit less mysterious. Let's look at a day in the life of a working guy who goes to the office, buys himself a couple million dollars' worth of stock.

(BEGIN VIDEOTAPE)

KING (voice over): It is a breath-taking morning commute: a glimmering sunrise and a daily glimpse at the majestic symbol of American freedom and optimism.

But then comes the walk up Wall Street. These days David Henderson finds it hard to keep his spirits up. And he's looking to the new administration in Washington for help and, yes, hope.

HENDERSON: We definitely want them to rebuild trust and confidence in the system. The capitalist system does work. And it does reward people for, you know, hard work.

KING: A Henderson has been working the floor for nearly 150 years now. On the big highs, like when the Dow (inaudible) 414,000, Dave knows his joy is shared by millions.

HENDERSON: It's euphoric. Everyone loves it. You know, everyone loves an up market.

KING (on camera): Many of those Americans who loved being a part of it...

HENDERSON: Yes.

KING: ... have now lost 40 percent, 45 percent, some 50 percent or more of what they had.

HENDERSON: Most definitely. A lot of trust and a lot of confidence in the marketplace itself has gone out the window.

KING: It is the morning after the market ended up, early on, signs this will be yet another down day.

HENDERSON: Microsoft came out with their earnings this morning and it was worse than expected. And I think that, you know, put a big damper on things. And it doesn't look good.

KING (voice over): Henderson paces the floor to get his spirit...

HENDERSON: You check the dollar and see what's going on with the dollar. You check out the oil markets.

KING: ... maybe even collect a few tips.

HENDERSON: (inaudible) selling? UBS buying.

KING: An instant messaging system keeps him in touch with clients looking to trade -- vital for business but also a sad reminder of how much things have changed.

HENDERSON: I still carry some paper around with me of buy-and- sell pens. And, you know, when the computers go down, which they do occasionally, you have a buy-and-sell pad. It used to be a lot more exciting, a lot more fun. And it was a total, daily thing, from 9:30 until 4 p.m.. We wouldn't stop. We'd be running around, doing things.

KING: Now traders spend much of their day staring at computer screens. The market, Henderson says, has been corrupted by greed and risky new products.

HENDERSON: All these, you know, whiz kids, computer whiz, have decided, you know, hey, develop these new products and stuff, and the world seemed to accept it, OK -- the credit default swaps, and what have you.

And the government seemed to let everything go the way it was going, is they've taken the investor out of this equation and it's just, you know, you might as well be in Las Vegas or Atlantic City, or wherever and, you know, playing on the slots. KING (on camera): Now the government says it's going to step in and have a more heavy hand.

HENDERSON: Yes...

KING: Do you trust that?

HENDERSON: Well, not really -- not really. Usually, when the government gets involved in something, they, sort of, mess things up even more so.

KING: Does simply the fact of having a new president change anything down here, in terms of the mood, the psychology?

Sometimes the market goes on momentum.

HENDERSON: No. I don't think -- the changing of the guard doesn't change anything down here. You know, this place is going to keep operating and keep running.

Hopefully Obama can do something. But it's going to probably take time because the damage that's been done already to all the institutions, it's going to take a while to bounce back from this one.

(END VIDEOTAPE)