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State of the Union
Interview with Lindsey Graham; Interview with Mitt Romney; Interview With Robert Gibbs; Interview With Carly Fiorina, Robert Johnson
Aired August 05, 2012 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CANDY CROWLEY, HOST: Washington empties out for August, but there's no holiday in politics.
Today, taxes, the debt, and a five-week summer recess.
REID: We would like to have the votes before we leave here, but just can't do it.
CROWLEY: Can anything break the gridlock? A conversation with Republican Senator Lindsey Graham.
Then the Democrats offensive against Mitt Romney with Obama campaign senior adviser Robert Gibbs.
Plus, adding up a muddled July jobs report.
OBAMA: We've now created 4.5 million new jobs over the last 29 months.
ROMNEY: It's another hammer blow to the struggling middle class families in America.
CROWLEY: What the numbers say about business with BET founder Bob Johnson and former Hewlett-Packard CEO Carly Fiorina.
I'm Candy Crowley, and this is State of the Union.
CROWLEY: First today, Mitt Romney. CNN's Gloria Borger caught up with the Republican presidential nominee yesterday in Indiana, and he hit back on President Obama's proposal to raise tax rates for people making over $250,000 a year.
(BEGIN VIDEO CLIP)
ROMNEY: I think it would be an enormous mistake for us to raise taxes on anyone right now with the economy in the trouble it's in. I also hope people understand that when they talk about raising taxes on the wealthy, as the president does, he's also talking about the same tax rate that applies to small business.
(END VIDEO CLIP) CROWLEY: More of that Romney interview in just a few minutes. But I wanted to bring in Republican Senator Lindsey Graham of South Carolina. Thanks for joining us, Senator.
GRAHAM: Glad to be with you.
CROWLEY: Let me ask you first about the president's plan or his wish to raise taxes essentially on those making $250,000 and above. We now have some Democrats saying, you know what? If Republicans are going to dig in, let all these taxes expire on the middle class, on everybody. Are you willing to go that far?
GRAHAM: Well, I think you've got a lot of the Democrats saying it would be a bad idea to raise taxes on a million small businesses. Here's the point. Two years ago, President Obama said now is not the time to raise tax rates because the economy is weak. Forty Democrats, less than two years ago, voted to extend the tax cuts. I'm dying to hear how our economy is better today than it was two years ago. How it's better policy today right before this election, given the 42 months of 8 percent unemployment, 316,000 people have left the job force since the stimulus passed.
This is all politics. This is not economics. This is all politics, good for Governor Romney not buying into this construct.
CROWLEY: It is true that since that time when the president agreed to go ahead and let all of the tax cuts stay in place that we have had many, many months of job creation. Not enough job creation, the president would say, but nonetheless the recession has ended.
CROWLEY: And we're now looking at a huge debt as you know.
GRAHAM: So the Democratic Party has said our economy is in good shape enough to raise taxes on job creators? Everything is worse since he's taken office. The debt has gone up by 49 percent. The unemployment rate has gone up by over 6 percent. Gas prices are 50 percent higher. Your home values are going down. The stimulus promised a 6 percent unemployment, but now it's at 8.3 percent.
None of his policies are working. Obamacare. You were not supposed to lose your health care. Millions of people are losing their health care because it costs too much. Premiums were supposed to go down. They're going up. So the idea that now the economy is better than two years ago when President Obama said don't raise taxes, it would be bad for the economy, is all politics. It's not based on economics.
CROWLEY: So just quickly, yes or no, if the Democrats stay where they are and if the president stays where he is, would you be willing to say, fine, if we can't reach a deal, taxes go up on everyone?
GRAHAM: I'm willing to do the Bowles-Simpson plan. Not one person who has looked at this in a bipartisan way said you need to raise tax rates. Bowles-Simpson says let's flatten the tax code, let's eliminate all deductions but two, take the money to pay down rates, and to pay off debt.
CROWLEY: But that's sort of a long-term thing. These cuts are going to expire on the 31st.
GRAHAM: I'm not going to do a short-term thing that's stupid. It would be stupid in an economy this weak to raise tax rates on a million small businesses at a time they can't hire people now. If you're looking for a job, this election is not about Romney's tax returns. It's about your tax returns. Look how many millions of people are underemployed or have lost their jobs. The last thing I'm going to do is play politics with their future.
What we should all be doing is fixing sequestration in a bipartisan manner. Both candidates should pledge, if I get to be president of the United States, we're going to do Bowles-Simpson. That's what America is yearning for. And I want both candidates to step up to the plate and lead here and stop this political stuff.
CROWLEY: And neither one of them has to your satisfaction.
GRAHAM: I think Governor Romney has said he would embrace Bowles-Simpson. And the fact that he rejected raising taxes at a time that our economy is so weak is a good sign of leadership. What President Obama is doing is 180 degrees out from what he did two years ago when they had large Democratic majorities.
CROWLEY: Let me talk to you about sequestration, which basically is come the end of this year, automatic spending cuts will get into place that will cut over 10 years more than $1 trillion out of the economy.
CROWLEY: You have raised the red flag about that. You have been talking with some Democrats. Can you tell me if there's any hope out of the group you're talking with that you can keep this from happening? Because everyone sort thinks this would be disastrous. These across the board cuts.
GRAHAM: Here's what Secretary Panetta said. Half the sequestration cuts, the penalty for failing -- the super committee's failure is to take $600 billion out of the defense budget on top of the $478 we're already cutting. It also hurts special education. It hurts a lot of nondefense programs like the National Cancer Institute.
Here's what it would be for the Defense Department. The smallest Navy since 1914. You'd go from 285 ships to 232. The smallest Army since 1940. The smallest Air Force in history. We're working with Carl Levin and some other Democrats to find a way to avoid this for four months from January to May, using the Bowles-Simpson formula. No one is talking about --
CROWLEY: Bowles-Simpson for those who don't know was a deficit reduction plan.
(CROSSTALK) GRAHAM: Exactly. It rejects raising tax rates. But what we'd do is we'd go into the tax code and generate revenue, taking whaling deductions away from whaling captains, suspend the corporate jet deduction for a time so we can buy fighter jets. We'd have other cuts in the budget, mandatory spending cuts, a balanced approach to offset sequestration for four months. Here's what sequestration --
CROWLEY: Are there enough -- can I just ask you, are there enough of those loophole -- whatever you want to call them, these tax increases or these tax loopholes that you want to shut down? GRAHAM: Special deals.
CROWLEY: Special deals for people. Are there enough of those to balance out the cuts that would have to take place to bring Democrats on board?
GRAHAM: In four months, there are plenty of them. When you go --there's $1.2 trillion we give away in deductions and exemptions. But here is the bottom line. The construct of sequestration is, if politicians fail to do their job in the supercommittee, the penalty was to destroy the military. We got this wrong. We should fire the politicians, keep the soldiers. So I believe the American people are going to be outraged when they hear what comes the military's way because we couldn't get our act together in cutting $1.2 trillion in over a decade.
CROWLEY: So you're talking about a four-month deal. Do you have any reason to believe that the White House would be on board with it? I know you've talked about the vice president recently.
GRAHAM: If they watch CNN, and I'm sure they do, join us. Send a representative from the president's office to engage the senators who are trying to find a way forward. I'm willing to put revenue on the table. But not by raising tax rates. Carl Levin is willing to cut mandatory spending in a responsible way to buy us four months. I cannot tell you how important it is for our economy. If we let sequestration go forward, we destroy the military. 1.1 million jobs lost in the defense industrial complex on the civilian side. 4 percent GDP affected if sequestration goes forward.
We do dumb things in Congress. This sequestering idea was the dumbest thing.
CROWLEY: And what is the totality of tax on the revenue side that you think you could get to get this four-month deal?
GRAHAM: I think four months, you should need about $22 billion. Break it out in three buckets -- one third from revenue, no tax increases. Close loopholes, and we can find them. One third spending cuts to other parts of the government, one third mandatory. Get it done. Mr. President, we need your help. You're the commander in chief. Your secretary of defense says this is a Navy without ships, a brigade without bullets, an Air Force without trained pilots. Don't send a signal to Iran and Syria and the rest of the world that we're going to disarm. Don't use the tax cuts. Here's what OMB director Zients said. The only reason we don't have a deal on sequestration is because Republicans won't ask the 2 percent to give their fair share.
This idea of holding the Defense Department hostage to the tax debate makes me sick to my stomach. Knock it off. Find a way to avoid sequestration. Let the next Congress and the new president fix this, give them a little breathing room.
CROWLEY: I need a two-word answer from you, and that is what vice presidential pick would best help Mitt Romney? GRAHAM: You know, I think Pawlenty and Portman are in the hunt. One last thing. You didn't ask me about Harry Reid. I've been around this town for a while. I actually like Harry. But what he did on the floor of the Senate is so out of bounds. I think he's lying about his statement of knowing something about Romney. So this is what's wrong with America--
CROWLEY: That's pretty stiff. You think--
CROWLEY: -- the leader of the Senate is lying?
GRAHAM: Yes, I do. I really do. I think he has created an issue here. I think he's making things up. And at a time when the country is just about to fall apart. Cyber security. There is a bipartisan desire to do this. There's plenty of blame to go around. But, candy, we're running out of time as a nation. Let's start talking about the real issues that matter to real people. And I just can't let that pass. I just cannot believe that the majority leader of the United States Senate would take the floor twice, make accusations that are absolutely unfounded, in my view, and quite frankly making things up to divert the campaign away from the real issues.
CROWLEY: Senator Lindsey Graham, I wish we had more time. I've got to run. Thank you so much.
GRAHAM: Thank you, Candy.
CROWLEY: Mitt Romney says President Obama's jobs plan is all wrong.
(BEGIN VIDEO CLIP)
FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: The idea of doing the same thing again and expecting a different result is, famously said, the definition of insanity.
(END VIDEO CLIP)
CROWLEY: More of the interview with Mitt Romney. And later, we'll get reaction from Obama campaign senior adviser Robert Gibbs.
CROWLEY: More now of our Gloria Borger's interview with Mitt Romney. The Republican presidential candidate who was asked if his promise to create 12 million jobs in his first term, if elected, is realistic.
ROMNEY: I can absolutely make the case that now is the time for something dramatic. And it is not the time to grow government. It's the time to create the incentives and the opportunities for entrepreneurs and businesses big and small to hire more people. And that's going to happen. You're going to see that happen in this country, but not under this president. His answer is always can't we grow government some more?
And the problem with growing government, among other things, is that it stays long after these little stimulus years, and people have to be paid, and their retirement benefits, and it becomes a burden on the real job creators, which are small businesses in this country. The burdens on small business in America are just crushing small business. We're at a 30-year low in business startups in this country. We need to get people back into business, starting various employers and putting people to work.
BORGER: So you say that you're going to add 12 million jobs...
BORGER: ... in your first four years. Why should voters think that that's realistic? I mean, that's 250,000 jobs a month.
ROMNEY: Yeah, yeah.
BORGER: That's a -- that's a lot of jobs.
ROMNEY: That's what happens in a normal process. When you come out of a kind of recession we've had, you should see this kind of job creation. We should be seeing 2,000, 3,000, 4,000 jobs per month to regain much of what's been lost. That's what normally happens after a recession.
But under this president, we have not seen that kind of pattern. We've been just, sort of, bumping along with barely enough jobs just to hold the unemployment rate about the same, above 8 percent, 42 months like that.
The idea of just giving more money to government will not get our economy going. You have to have the Steve Jobses of the world beginning businesses, making products that want to be purchased around the world. That gets Americans back to work. It allows us to create more and more jobs. More jobs creates demand for workers. That raises wages. Good things happen when you have a private sector that's thriving.
BORGER: Well, polls show that a majority of the public believes right now that you not -- that you should not allow for the extension of the tax cuts for the wealthy. And today's Wall Street Journal said that not extending the tax cuts for the wealthy would be reckless. in this economy, that -- and they say that the economy is in a desperate state so therefore you cannot take away the tax cuts for people at the top end of the scale.
Do you agree with the characterization that it would be reckless to remove those tax cuts?
ROMNEY: The great majority of small businesses pay taxes at the individual rate. So as he raises these taxes, quote, "on the wealthy," he's raising taxes on small business. That kills jobs. If your priority in this country is to punish success, vote for President Obama. If your priority is to create more success and more jobs, vote for me.
Look, I know the very wealthy are going to do just fine, whoever is elected. The middle class is the people -- that's the group of people that I'm most concerned about. They need our help -- and the poor. They need our help. They need our help with good jobs. That's going to only come if we encourage this economy by keeping the burdens on small business down.
BORGER: Well, but the president said, if the Republicans in Congress had gone along and passed his jobs bill, that there would be more jobs in the pipeline right now than there are. How do you respond to that?
ROMNEY: Well, the Republicans in Congress watched the Democrats in Congress, four years ago, pass the president's jobs bill, his stimulus bill, $787 billion of new borrowing. And they saw the results. They were told unemployment would stay below 8 percent. It's not been below 8 percent since.
His approach of just spending money on government programs did not create the jobs that America was looking for. So the idea of doing the same thing again and expecting a different result is, famously said, the definition of insanity.
BORGER: Should -- should the Fed intervene at some point?
ROMNEY: Well, I think the Fed's first action, in quantitative easing, was effective to a certain degree. But I believe that the QE2, the second round of easing -- I don't think it had the impact that they were hoping for. And I'm sure the Fed is watching, will try and encourage the economy. But I don't think a massive new QE3 is going to help this economy.
I've laid out what my course is. There are five things you have to do to get this economy going. Take advantage of our energy resources, fix our schools and training programs, make sure we open up trade with foreign nations and Latin America and crack down on China when they cheat. Number four, finally get ourselves on track to have a balanced budget.
And finally, champion small business. We've got to help small business keep their taxes competitive, get regulators to encourage them, keep health care costs from driving them out of business.
BORGER: OK, Governor, I know you're not going to tell me who your running mate is. But can you tell me if you've decided or not?
ROMNEY: I have nothing for you on the vice presidential front. I give... BORGER: Nothing?
ROMNEY: I give you nothing on that.
But I can assure you that, by the third day of the Republican convention, we will nominate a Republican V.P.
CROWLEY: Senate Majority Leader Harry Reid's barrage at Mitt Romney.
(BEGIN VIDEO CLIP)
SEN. HARRY REID, D-NEV., MAJORITY LEADER: The word's out that he hasn't paid any taxes for 10 years.
(END VIDEO CLIP) CROWLEY: Team Romney says the Obama team is behind the attack. Obama's senior adviser Robert Gibbs is here when we come back.
CROWLEY: Joining me now, Obama campaign senior adviser Robert Gibbs.
Robert, thanks for being here.
GIBBS: Thanks for having me.
CROWLEY: Let us start out with Harry Reid. You heard Senator Lindsey Graham saying he thinks Reid is lying, that he is making this up, when he gets on the Senate floor and Senator Reid says, I've been told that Mitt Romney has not paid taxes for 10 years.
I spoke to a Democrat yesterday who said -- who's in touch with the Obama re-elect in Chicago, who said, if Chicago wanted Reid to stop, he would stop, but Chicago doesn't want him to. Are you just as happy to have him out here saying these things?
GIBBS: Look, I think it's important that we know the financial backgrounds of candidates. You saw Lindsey Graham, I think appropriately, talk about the role that tax loopholes play in our tax code and how much it costs average taxpayers. We're going to have a pretty big debate about tax reform in the next coming months. And we have to know what's in people's tax returns and what they are getting the benefit for.
Candy, if Mitt Romney...
CROWLEY: But he -- but Mitt Romney didn't make the loopholes. Let's make that clear. And no one is saying he did anything wrong.
GIBBS: Well, we don't -- we don't know that, Candy.
CROWLEY: You don't know it, but...
GIBBS: No, we know this...
CROWLEY: Let's go back to the...
GIBBS: No, no, let me...
CROWLEY: ... which is, do you think Harry Reid...
GIBBS: We do that every -- we do know, in the one tax return that he did put out, we found out he had a Swiss bank account that wasn't on his financial disclosure, OK?
So we do know that he has used not releasing his tax returns to hide where his money is.
But let's be honest, Candy.
CROWLEY: But it wasn't illegal. He wasn't hiding it. He put it out, right?
GIBBS: Again, after the tax return came out, he updated his financial disclosure to let the world know he had a bank account in Switzerland.
CROWLEY: But you know where I'm going with this, because you all want to couch it as he's hiding something really terrible; he probably cheated on his taxes; he didn't pay taxes; you pay too many taxes. But you have the leader of the Democratic Party in the Senate saying that Mitt Romney didn't pay any taxes, while you have Mitt Romney saying, "Yes, I did."
GIBBS: It's a time-honored tradition that presidential candidates release their tax returns, right? And the standard was set by Mitt Romney's own father, who said don't put out one or two years because those could end up being an anomaly, and he put out, I think, somewhere around 12 years. Barack Obama has put out something...
CROWLEY: A lot of folks since then haven't put out 12 years, but...
GIBBS: But Mitt Romney gave John McCain 23 years of tax returns in order to be the tryout for vice president where John McCain picked Sarah Palin. If 23 years is good enough to show John McCain so Mitt Romney can be vice president of the United States? Candy, we could put all this stuff to rest tomorrow. Mitt Romney can go to Kinko's; he can photocopy his tax returns. There are several hundred pages. He could hand them out to people like CNN; he could hand them out to reporters all over the country. And, you know what, we wouldn't talk about this tomorrow. We wouldn't say is he paying taxes; what's he paying. The whole world would know exactly what loopholes he's taking advantage of...
CROWLEY: Right, to the propriety -- to the propriety of the leader of the Democrats in the Senate accusing, based on a source, the Republican -- presumed Republican nominee of not paying any taxes for 10 years -- is that something that Chicago has encouraged? Do you want him to stop?
... let's be clear. I don't think anybody controls Harry Reid.
CROWLEY: But if you asked him to stop, he would?
GIBBS: You know, again, put the tax returns out. Put this whole thing to rest.
Candy, have you ever -- have you ever seen anybody go to such great lengths to not put something out? And when you generally don't put something out, isn't it because you're generally hiding something? Again...
CROWLEY: ... he might think it's private. But in the end...
CROWLEY: The visual of Mitt Romney doing his tax cuts (sic) at Kinko's is sort of throwing me, but...
GIBBS: I'll -- I'll send him the nickels, and -- I think it's a nickel a page, and we can -- but here's the thing.
CROWLEY: You will not tell Harry Reid to stop?
GIBBS: I would tell Mitt Romney, if he wants -- if he wants all this debate to go away -- and let's be clear. Harry Reid isn't the one who's made this debate. Mitt Romney has brought this to the fore. This has been something that has been talked about well back into the Republican primaries.
We did an interview on the foreign trip where ABC said, have you paid -- what's the tax rate? "Have you paid a lower tax rate than what you released?" And do you know what Mitt Romney's answer was? "I'll go back and check."
Candy, he's not at Kinko's making photocopies. He's not -- he doesn't have any intention of checking. He has gone through -- I've never seen anybody jump through more hoops to say, A, that somebody is lying but also not put out a document that would prove what the real truth is.
CROWLEY: OK. So Chicago is not going to tell Harry Reid to stop. Let me move you on.
Actually, let me take you back four years ago. Barack Obama, running for president, at a rally in Leesburg, Virginia.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: Any time you want to bring about change, it's not enough just to change political parties in the White House. We've got to change how business is done in Washington.
CROWLEY: Has he changed how business is done in Washington?
GIBBS: I think he has. I think it's been very difficult. I think the interests in this town are decidedly entrenched. It is hard to get special interests to give up their tax breaks. It is hard to get millionaires and billionaires to get rid of their tax breaks.
Mitt Romney did have one thing right in that interview. He said, if he was president, the rich would do just fine. I can assure you that, if Mitt Romney is elected president, the rich are going to do just fine. The problem is, in order to give the rich a tax cut, he's going to raise taxes on middle-class families. That's not me saying that; that's the Tax Policy Center saying that just this week.
And I think this debate is about whether or not we're going to have an economy that is tilted toward special rules and special tax cuts for the wealthy or whether we're going to invest in and support middle-class families.
CROWLEY: Do you think President Obama has changed the tone of Washington?
Remember he was going to be a different kind of politician. Hillary Clinton was old-style. He was going to come in; he was going to get consensus. He has not gotten consensus.
GIBBS: Well, he's not gotten consensus, Candy, because it is hard to get consensus when the other side of the aisle has no desire at all to build consensus.
Mitch McConnell famously said that his number one priority as Republican leader of the Senate was to prevent Barack Obama from being a two-term president. That is not exactly engendering the type of atmosphere that one needs to get political compromise.
And let's -- your last guest -- I probably can't let this pass. I mean, you have a pretty broad discussion about raising taxes on millionaires and yet bemoaning possible cuts that could have been avoided had we made some tough decisions to the military.
Let's do this, Candy. Let's preserve the size of the Navy and the Air Force by giving up tax cuts for millionaires and billionaires.
CROWLEY: In the end, more Democrats voted, actually, for sequestration than Republicans did. But I want to move you on to something else the president said during the campaign. Again, this was the one from Leesburg, Virginia, where he was asking that age-old question, "Are you better off?"
(BEGIN VIDEO CLIP)
OBAMA: Wages are lower than they've been in a decade, at a time when the costs of health care and college have never been higher. It's getting harder and harder to make the mortgage or fill up your gas tank or even keep the electricity on at the end of the month. And at this rate, the question isn't are you better off than you were four years ago; it's are you better off than you were four weeks ago?
(END VIDEO CLIP)
CROWLEY: OK, so we are now at a place where the economy is creating jobs, which he also talked about there, so there are...
GIBBS: A place we've been for 29 months, 4.5 million new jobs, yes.
CROWLEY: But wages are lower than they were when he took office. The cost of health care is higher. The cost of college is higher. We all know what has happened to the housing market.
So the question is, why should Americans look at this and say to themselves, am I better off than I was four years ago, since all those -- all those mile markers that he put up there have gone south? GIBBS: Well, let's be clear, Candy. The president has taken dramatic steps that will help lower our health care costs. The president has, a countless number of times, passed legislation and ideas to reduce the burden that students have and middle-class families have to borrow money to go to college.
CROWLEY: Right, but they're still up.
GIBBS: We -- we -- well, I think you -- I'm happy for to you interview some college presidents and universities and ask why we keep raising tuition tax rates. But I think the most important thing is, there's no doubt we are better off than we were four years ago.
Are we where we need to be? Absolutely not. Nobody believes that. We have worked hard to move this economy forward and we can't go backwards and try the ideas that Mitt Romney wants, which is more tax cuts for rich people and let Wall Street write its own rules.
CROWLEY: Obama's senior adviser of the campaign, Robert Gibbs, thanks for coming by.
GIBBS: Candy, thanks for having me.
CROWLEY: Up next, spinning the latest jobs numbers, plus, has President Obama been bad for business?
CROWLEY: The July jobs report was described variously as mixed, muddled, or confusing, which means it was perfect on the campaign trail, where both sides found something to be clear about.
The Labor Department reported that employers added 163,000 jobs in July, better than expected, better than last month. Yippee at the White House.
(BEGIN VIDEO CLIP)
OBAMA: We've now created 4.5 million new jobs over the last 29 months and 1.1 million new jobs so far this year.
(END VIDEO CLIP)
CROWLEY: With a group described as middle-income Americans behind him, the president said the newly created jobs are not enough but are good enough to keep going. He didn't say the names Bush or Romney, but did he need to?
(BEGIN VIDEO CLIP)
OBAMA: We're not going to get to where we need to be if we go back to the policies that helped to create this mess in the first place.
(END VIDEO CLIP)
CROWLEY: The Republican universe fixated on a different figure from the Labor Department; 195,000 households reported losing a job last month. As a result, unemployment rose to 8.3 percent. It was, as Mitt Romney would point out, the 42nd straight month of unemployment of over 8 percent, hammer blow, he said, to the struggling middle class.
(BEGIN VIDEO CLIP)
ROMNEY: Look, the president does not understand how the private sector works. He does not understand how small business works.
(END VIDEO CLIP)
CROWLEY: Romney believes the president's policies have crippled small-business employers and made them reluctant to hire. And a recent Gallup poll shows just 35 percent of business owners approve of President Obama.
Up next, who's better for business, with BET founder Bob Johnson and former Hewlett-Packard CEO Carly Fiorina.
CROWLEY: Joining me is BET founder Bob Johnson and former Hewlett-Packard CEO Carly Fiorina.
I want to put up a rendition of this business owners poll. I believe this comes from Gallup. In the first quarter, 41 percent of business owners approved of President Obama. And it fell to 35 percent.
Explain to me why that is.
JOHNSON: Well, I think the business community is looking for not just what happened in the past and how those problems came to be, the economy in a freefall and President Obama comes in, focusing on creating jobs, focusing on ending two wars, focusing on reforming health care, controlling costs and putting some 30 million people on the health care payrolls.
I think they now want to see what his future vision is for the country if he's to be re-elected.
CROWLEY: Has he laid that out, do you think?
JOHNSON: Well, I think he is beginning to lay out the framework for that. And I would encourage him to do more. I think there is an argument that the business community would like to see the president talk more about Simpson-Bowles as a sort of a blueprint for where he might go with the economy in the next election.
I think the business community is not so much concerned about taxes as they are about a tax reform, progressive tax system. They'll accept that, but also entitlement reform and a focus on reducing the growing deficit and serving that part of the fiscal problem.
CROWLEY: Carly, Republicans say -- and you are one and are helping to try to elect a Republican Senate, among other things -- have said this is about uncertainty, that businesses are sitting on so much cash, that they don't want to hire because they don't know what's going to happen with health care and they don't know what's going to happen with regulation.
Isn't that, sort of, the price of doing business? Isn't business with the government always a bit of a risk?
FIORINA: Actually, no. I think there is more uncertainty right now than there has been in a very long time, and I think that is a big reason you see a lot of businesses sitting on cash.
But I think the real question to ask about the economy really focuses on small business, because small business has created the net new jobs in this country over the last 40 years. We now have fewer small businesses starting. more failing than at any time in the last 40 years. And that's because, if you talk to small-business owners, they will talk to you about uncertainty, although, now that the health care law has come into more focus, most small-business owners are saying, this is bad for me.
They listen to discussion about tax policy and they say, gee, I don't see my taxes going down; I see them probably going up. They look at the regulatory thicket that they are trying to get through. All of that puts a depressing blanket of uncertainty on top of them.
And then, sadly, you have a president of the United States in Obama who apparently doesn't understand the critical role that small businesses play in the economy and who says things like you could build your business because there are roads and bridges and teachers. No one denies that roads and bridges and teachers are important to creating an economic climate, but a small-business owner creates a business because they are willing to take a risk, a lot of risk.
CROWLEY: Do you -- do you agree with that summation of what is keeping small businesses -- and obviously large businesses are sitting on the most money -- but small businesses from thriving, hiring more people?
JOHNSON: Well, regulation is, as you said, is always part of a free market economy, where the government has a role in protecting public interests. So that's always going to be there. And I think businesses account for that.
I think, on the issue of President Obama understanding small business, I think he absolutely does. This whole question of "You didn't build it; somebody else built that" was taken out of context. All the president is saying is someone built a superhighway system, the railroads, and businesses take advantage of that. And good businesses succeed at that and some businesses don't.
And I don't think the president was trying to, in any way, to demean small businesses who use whatever government infrastructure is there to say you didn't do it. I think what he was saying is, it's all part of an ecosystem of the government stimulating private-sector growth, the government providing the stimulus or the forum for companies to grow. And some of that includes, as Carly mentioned, regulatory reform.
But I think the fundamental issue, the president does understand small business. You know, I'm in the automobile dealership business. We are the largest minority-owned automobile dealership group in the country. That's a direct result of the president making a determined decision to save the auto manufacturers and creating small-business opportunities.
CROWLEY: I want to get you two to halt here just for a second. When we come back, more with Bob Johnson and Carly Fiorina.
CROWLEY: We are back with former Hewlett-Packard CEO Carly Fiorina and BET founder Bob Johnson.
I want to ask you first, Mr. Johnson, about something you said about a year ago -- you were talking about President Obama -- because I want to ask you, on the other side of it, about these looming tax breaks.
And here's what you told Fox News: "The president has to recalibrate his message. You don't get people to like you by attacking them or demeaning their success. I've earned my success. I've earned my right to fly private if I choose to do so. It doesn't mean that I'm a bad guy."
Do you think the president has recalibrated his message sufficiently enough for business?
JOHNSON: Yeah, I think so. I think the business community is prepared to give the president a second chance for -- at re-election on the -- on the basis of that the president focusing more on what he's going to do in the future. He's established his credentials in the past, the job growth, you know, halting the country in a tailspin, health care, and all the things he's done on the war on terrorism.
So he has established those credentials. What he needs to do now is talk about the future. And I think what the business community is saying, Mr. President, talk about the future based on tax reform, based on restraint in entitlement growth, paying down the debt, and focusing on creating the environment for job growth. And I think the president is going to start delivering that message.
CROWLEY: But has not to your satisfaction at this moment?
JOHNSON: Well, to my satisfaction, he has. I just don't think the translation has come through in some of the campaign stops. And I think that's where we're getting a little bit of a disconnect, that we need to focus on that a little bit more as part of the overall campaign messaging.
CROWLEY: We did an earlier piece about the jobs figures that came out, and, you know, the private sector created over 160,000 jobs, which is pretty good. And then unemployment went up.
FIORINA: Right, because 190,000-something people lost jobs.
CROWLEY: Right. So describe for me -- I want to ask both of you this. Describe for me what you think the state of the economic recovery is.
FIORINA: OK. First, may I just say that when Bob said the president needs to focus on tax reform and regulatory reform and job creation, all that's right. And the president isn't focusing on those things. What he's focusing on is punitive tax increases for a lot of small business owners.
We have structural problems in our economy that are holding back this recovery. The first structural problem we have surrounds entrepreneurship. Too many small businesses are failing. Not enough small businesses are starting. We have a structural problem in terms of education. We have a structural problem in terms of the regulatory (inaudible), and those things have to be fixed. And we need tax reform, absolutely.
CROWLEY: So do you think the economy is -- the recovery is moving along but slowly --
FIORINA: No, I don't. CROWLEY: What do you think of the state of the economy?
FIORINA: I think we are bumping along at a very bad place. And by the way, the level of uncertainty is increasing, and now what we are facing, which we were not facing six months ago, is a simultaneous global economic slowdown. Europe is in recession. Asia is slowing. Our economy is losing steam by every measure. That's a bad place to be.
CROWLEY: Mr. Johnson, you're out there with a business you very much want to have keep succeeding. What do you think the business environment is? How would you describe the economy and what does it need?
JOHNSON: I think President Obama has sort of laid the foundation for an economic recovery. Now it's going to be slow because there's, as Carly mentioned, there are a lot of headwinds against it. Obviously something of the European debt crisis. We're beginning to see housing come back slowly both in new homes and the price of existing, old homes. And we're seeing manufacturing growth. Manufacturing growth has been sort of a star in this whole process.
And I think the president has laid that foundation. And so I think the business community is waiting on that second message. So that's where I think we need to start pivoting in the campaign. What is that message about what the world will look like after the inauguration. And when the president starts talking about that against a Governor Romney, who has yet to articulate a real clear, specific platform of how he would do it, the 12 million jobs or so, I think the president now has an opening to lay out a foundation, look what I've done to sort of stem a sort of a government that was in sort of freefall. Now this is what I'm going to do when I'm re-elected.
CROWLEY: Let me do a 180 here with the time I have left. And that is to ask both of you, if you were on Mitt Romney's team, just imagine here just for a moment, who do you think would most help him on the ticket as vice president?
FIORINA: Oh, you know, here's the truth -- I think you could make a strong argument obviously for a Marco Rubio. I think you can make a strong argument for a Tim Pawlenty, I think you can make a strong argument for a Rob Portman. Each of them brings something wonderful to the ticket. However, having said all that, I think the most important thing about this election is actually not the veep. I think the most important thing about this election is how people view the state of the economy, and the fundamentally different approaches to economic recovery that Governor Romney and the president have. Governor Romney has laid out a very specific five-point plan to get the economy going and growing again.
CROWLEY: I've got 15 seconds. If you were advising him, what would make you take a look at the Republican ticket?
JOHNSON: Nothing would make me look at the Republican ticket, particularly when I'm wearing an Obama 44 tie. But -- Rubio.
CROWLEY: Think that might help him?
JOHNSON: It's the only thing I think could help him with the one constituency that's totally not supportive of him.
CROWLEY: Like those one-word answers. Thank you so much, Bob Johnson, Carly Fiorina, thank you for being here.
Up next, what else we could buy with all that's being spent to get your vote.
CROWLEY: Finally this Sunday, money in politics.
(BEGIN VIDEO CLIP)
OBAMA: We've got folks writing $10 million checks.
ROMNEY: He's raising roughly a billion dollars.
(END VIDEO CLIP)
CROWLEY: Don't cry for them, Argentina. Mitt Romney and Barack Obama are flush with cash and friends with cash. According to the nonpartisan Center for Responsive Politics, the cost of the 2012 federal elections -- that's the White House, the Senate, and the House -- could reach almost $6 billion. That is up 7 percent from four years ago. Much of it consumed putting ads on TV.
It is a mind-boggling bunch of money. Think about what you could do with that. Think about what we do do with that. Less than a week before election day this year, Halloween. A fun fall holiday replete with costumes, decorations, and candy. Last year, Americans spent $6.8 billion on Halloween. It is expected to hit $7 billion this year. You heard that right. More money is spent in this country on Halloween than on elections.
And flashback to the primary season with all those candidates trying to raise all that money. And in the midst of it, February 14th. Americans spent more on Valentine's Day this year than in any of the last 10. $17.6 billion on candlelit dinners, heart-shaped candies, cards, flowers, et cetera. You could buy three rounds of federal elections with that kind of dough.
(BEGIN VIDEO CLIP)
OBAMA: Billionaires writing $10 million checks, just pouring -- raining down on my head.
ROMNEY: There's no question but that the president will have massive funds.
(END VIDEO CLIP)
CROWLEY: Summing up, in the 18 months before election day, almost $6 billion will be spent to influence your vote. And in the month before Valentine's Day, almost $18 billion will be spent to influence your heart. So if everyone sent their favorite candidate one third of what they spent on their favorite Valentine, maybe we wouldn't have to worry about the influence of billionaires.
Thank you for watching State of the Union. I'm Candy Crowley in Washington. Head to CNN.com/sotu for extras and analysis. If you missed any part of today's show, find us on iTunes. Just search "State of the Union." "FAREED ZAKARIA: GPS" is next for our viewers here in the United States.