CQ Transcriptwire

SPEAKERS: JOHN KING, HOST

GEN. RAY ODIERNO, U.S. ARMY

GOV. TIM PAWLENTY, R-MINN.

HOWARD KURTZ, CNN ANCHOR

[*] KING: I’m John King and this is our “State of the Union” report for this Sunday, June 28th.

The deadline for U.S. troops to withdraw from all major Iraqi cities, like it or not, is 48 hours away. We’ll ask the commander of all American troops in Iraq, General Ray Odierno, if the Iraqis are ready, and the latest timetable to get all U.S. troops home.

The Republican Party is in a tough stretch. Two leaders viewed as possible White House contenders admit marital infidelity, and Democrats are advancing President Obama’s agenda. One of the party’s 2012 prospects, Minnesota Governor Tim Pawlenty , is right here to debate the White House approach to health care, climate change, and to offer his recipe for a Republican revival.

Plus, an early peek at the next campaign in the critical battleground of Ohio. You might call it a back-to-the-future moment, as Republicans turn to two veterans in hopes of finding a new beginning. That’s all coming up on this hour of “State of the Union.”

A quick reminder this morning before we get to our guest. We continue to track the latest developments in Iran. There are now reports that Iranian protesters are being dragged from hospitals by pro-government militia. Local staffers working for the British embassy have been arrested.

And police questioned Michael Jackson’s doctor for several hours last night as the investigation into the death of the pop legend continues. Stay right here with CNN for breaking updates on both of these important stories.

But we begin today with a critical development in Iraq. Tuesday is the deadline for U.S. troops to pull out of bases in Iraq’s major cities and to turn major security operations over to Iraqi forces. It is without a doubt a major benchmark in the more than six-year war, and to some, a huge achievement. But even some U.S. generals say they would prefer more time in some cities, and there are worries the shift in power could bring a spike in violence.

The man managing this delicate shift is the commander of U.S. forces in Iraq, General Ray Odierno, who joins us now from Camp Victory in Baghdad. Good morning to you, General, and thank you for your time.

A simple question off the top. Are the Iraqis ready for these awesome new responsibilities?

ODIERNO: I do believe they’re ready, John. They’ve been working towards this for a long time. And security remains good. We’ve seen constant improvement in the security force, we’ve seen constant improvement in governance. And I believe this is the time for us to move out of the cities and for them to take ultimate responsibility.

KING: Are you doing this based on military calculations or political calculations, in the sense that Prime Minister al-Maliki has said he wants the American troops out? President Obama has said he wants them on a path to get home as soon as possible. One of your own deputies, sir, Brigadier General John Murray, said this, “Sadr City is one we wanted. The Iraqi government said no, so now we are leaving.” Are there two or three of these areas where you wish you could keep U.S. troops a little bit longer?

ODIERNO: I think sometimes it’s about strategic advantage over tactical advantage. I think again, it’s important for us to be in line with the security agreement that we signed in December.

I think from a military and security standpoint, it’s time for us to move out of the cities. We’ll still be there providing training, advising, enablers for the Iraqi security forces. I believe they’re capable of doing this. We’ll still be conducting significant operations outside of the cities and the belts around the major cities. And I still believe that this will enable us to maintain the current security and stability situation here in Iraq.

KING: But do you have the flexibility? If you see a target of opportunity, if you see something that troubles you, do you have the flexibility to act? Or do you need to go to the Iraqis and ask permission and perhaps lose incredibly valuable time?

ODIERNO: Well, again, when we signed the security agreement, we agreed to abide by Iraqi sovereignty. So everything that we do today is transparent. Everything we do today and have been doing since the 1st of January is transparent to the Iraqi government. So we will continue to be transparent, but that does not limit our flexibility. We’ll continue to coordinate with them, and when necessary, we’ll conduct the operations that we need to with their approval.

KING: I want to get up, sir, and go over to the wall, because I want to show our viewers a map of the area. And I specifically want to pull out on a point, because we have seen some incidences, some would say an uptick in violence, down in Nasariyah on June 10th, deadly violence there. In Baghdad, a couple of bombings recently. And up in Kirkuk -- let me shrink the map a little bit -- we can see it all up in the Kirkuk area. Is there a pattern to this violence? Do you believe you’re being tested and the Iraqi security forces are being tested on the eve of this deadline?

ODIERNO: I think these are some extremist elements who are trying to bring attention to their movement that’s been fractured. They’re trying to use this timeframe and this date to first gain attention for themselves, and also to divert attention from the success of the Iraqi security forces.

We have not seen increased violence across the country. We still have low levels of overall violence. However, these high-profile attacks, all they have done is kill innocent civilians, and in fact, brought the air (ph) of Iraqi civilians against the terrorist groups.

KING: I want to also show you, sir, I am putting it up on our screen. I know you probably can’t see it, but I want to show the level of troops in Iraq. We began with 150,000 in the beginning, May 2003. The peak was 171,000 in October of 2007. We’re now at about 138,000 as we’re in June 2009. When we spoke two months ago, sir, I asked you on a scale of 1 to 10, how confident you were that all American troops would be out by the end of 2011. Are you still that confident, sir? Is that still a 10 on this morning?

ODIERNO: It is. And John, actually, we’re at 131,000 today, have been now for about a month. We’ll continue to draw down slowly and deliberately over this year. What’s good is I’ve been given the flexibility to make those decisions based on the security environment on the ground. I believe we’ll continue to slowly and deliberately withdraw our forces this year, but have enough forces here to ensure that we have successful parliamentary elections next January.

KING: What do you make then, sir, if you say you’re still very confident you will keep that, the former Iraqi national security adviser is quoted in the New York Times just today saying we need to extend the status of forces agreement to 2020 or 2025. I just hope Prime Minister al-Maliki realizes we don’t have competent security forces yet.

ODIERNO: Again, I would argue there’s a difference between conducting internal counter-insurgency operations and being able to have external capacity. And I think they will have to make some decisions in the future what they want to do in terms of their external capacity. But I think that’s something that has to be discussed later on. And there’s many ways for them to do that. They can get assistance from the United States, they can get assistance from Egypt, they can get assistance from many countries. But that’ll be a decision that has to be made, in my mind, a couple of years from now.

KING: I want to also give our viewers, sir, a glimpse at the U.S. casualties. 4,317 U.S. men and women have died in Iraq over these past six years, 486 in the first year. And you see the violence and the death toll as it goes up, 95 fatalities so far in 2009. As you move into this new posture, General, are U.S. troops safer in that you’re pulling back from the major cities? Or might one argue they could conceivably be more at risk, because if they are called upon for major operations, it would be after some tragic or traumatic event that the Iraqi security forces can’t handle?

ODIERNO: Well, we’ll maintain full coordination with the Iraqi security forces inside of the cities. If they need us, our movements will be coordinated. We’ll continue to have intelligence capacity inside the cities. So I’m confident that we’ll be able to maintain the situational awareness in order to protect our troops. And our goal is to continue to lower, obviously, our casualties. We’ve continued to do that, and our goal is obviously to eliminate all casualties over time here.

KING: We’re having a military conversation, but in a sense, the success of your mission in the final years will be dependent on the political situation in Iraq. What is your take on Prime Minister Maliki? Is he up to this task? And I ask in the context that you have from time to time have been critical of his government and had to privately go to his government when it has cracked down on its political opponents. Is he a strong man or is he a democratic leader?

ODIERNO: Well, I think, first off, I think this is, you know, working in the situation, he’s had to establish a brand new democratic government while trying to maintain stability and security inside of Iraq is a very difficult task. And I think he has continued to develop his government. I think he has continued to develop his security forces, and I think they made great progress over the last -- over the last couple of years.

So I think from that viewpoint, he has done a very good job. Obviously, there’s still many political issues that have to be worked out here. Reconciliation is one. Arab-Kurd tensions, intra-Shia, Sunni-Shia. Those are all political issues that still have to be worked here. And I believe they’re in the process of doing that. And as we move to the national elections coming up here very shortly, those will be the main issues that are addressed in the lead-up to the elections.

KING: Do you think it’s possible there could be a referendum in Iraq that says you have to leave sooner?

ODIERNO: It’s unclear. We’ll see. We’re still waiting to see if, in fact, they will conduct a referendum. That will be up to the Council of Representatives in the Iraqi government as we move forward.

KING: I assume you think that would be a bad idea?

ODIERNO: Well, again -- again, my concern is moving on with our mission here. I’m focused on sustaining our mission here in 2011, our first milestone being the national election, and then continuing to improve security here so Iraqis can take over full responsibility by the end of 2011.

KING: I want to ask you a bit about the situation in neighboring Iran. We have talked from time to time about Iran meddling dangerously in your business, allowing weapon systems to come across, IEDs to come across, perhaps even training some of those who are trying to kill American men and women in Iraq. Has that situation in terms of Iran coming across the border in ways, or training people across the border, sending dangerous equipment across the border, is that better now than if we were having this conversation in the past? Or is it about the same?

ODIERNO: Well, I would say they still continue to interfere inside of Iraq. They still continue to conduct training. They still continue to pay surrogates to conduct operations in Iraq. It might be a bit less than it was, but I think that’s more based on the success of the security forces here than it is on Iran’s intent.

ODIERNO: So, again, I think they’re still attempting to interfere. They’re still attempting to have undue influence inside of Iraq. And we continue to deal with that.

We have made great progress on that front, working with the Iraqi security forces.

KING: And as you know, sir, there are some in the Congress back here in the United States and others back here in the United States who have urged more assistance to the demonstrators, to protesters in Iran.

And some have said that, you know, we have the capability, technologically, if we wanted to, say, increase Internet access, to use technology, from your position in Iraq along the Iranian border, to somehow help increase Internet access, technical communications, text messaging.

Have you been asked, sir, to do anything?

And do you have that capability if you were asked?

ODIERNO: Well, first, based on the Iraqi security agreement, we are -- we are only concerned with protecting Iraq’s security instability. And based on that agreement, I’m not authorized to do anything outside the borders of Iraq. So I think I’ll leave it at that.

KING: OK, sir. Let me come back to this important deadline. You believe you can keep this deadline and stay on the path to get U.S. troops home on schedule in 2011.

Let me ask you this question, what is your biggest worry? When do you say, OK, am I wrong here? What’s your biggest worry?

ODIERNO: Well, again, I think -- I think it has to do with if we see a breakdown in stability in Iraq; if we see a consistent increase in violence; if we see that the Iraqi security forces aren’t able to respond; if we have some event that it caused some instability, then that would cause us to, maybe, after we’re asked by the government of Iraq, to help.

I don’t see that right now. I believe we’re on the right path. And I want to make sure you understand that. I believe we are still on the right path. I think security and stability is headed in the right direction as we move through 30 June. KING: And I’ve used this test with you in the past, so let me ask it this way. On a scale of one to 10, how ready, in your view, are the Iraqi security forces to take on this added mission?

ODIERNO: Yes, I would just say they’re at a very -- they have improved significantly over the last 2 1/2 years. We’ve seen incredible increase in their capacity and capability. They have proven it in combat operations. They have proven their flexibility and adaptable. So I am much more confident than I’ve ever been in the Iraqi security forces.

KING: I want to close, sir, in our last minute, on a lighter note.

You had a guest recently. Stephen Colbert came over to spend a little bit of time. And you were ordered, I think, by a very high authority, to give him a bit of a military haircut, shall we say, an unorthodox military haircut.

We’re showing a picture to our viewers, right now, of you applying the shave to Stephen Colbert. Take us through that moment.

ODIERNO: Well, again, you know, Stephen said he wanted to join the Army. He went through basic training. So we told him, if he really wanted to be a member of the armed forces, he had to have the right haircut. And the president agreed with me on that. So we gave him a haircut.

I’ve been watching him lately. I think it’s time for him -- he needs a trim, I think, so maybe we need to give him another haircut.

KING: You ran him through a little basic training. Is he in shape?

ODIERNO: He did pretty good. He was pretty impressive. Now, it was a little bit unorthodox basic training, but he looked like he did pretty well.

KING: All right. We’ll laugh -- we’ll laugh at that. But, as we close and say thank you to you, sir, we want to make sure you know you’re in our thoughts, and the men and women serving under you are in our thoughts and our prayers as you go forward; first, this big deadline in 48 hours, and then, of course, the important weeks and months ahead.

General Ray Odierno, thanks as always for spending some time with us.

ODIERNO: Thank you very much, John.

KING: Take care, sir.

And as we take a quick break, a snapshot of troops serving in Baghdad, the capital city, of course, of Iraq.

(COMMERCIAL BREAK) KING: I’m John King and this is “State of the Union.” Here are stories breaking this Sunday morning.

Iran’s supreme leader has issued a call for unity. Ayatollah Ali Khamenei urged both sides in the bitter election dispute to quote, “not stoke the emotions of the young.”

The appeal was broadcast today on Iranian TV.

Los Angeles police have new information on the death of Michael Jackson. That information came from the singer’s personal physician. Dr. Conrad Murray met with detectives for several hours last night. Police say he was cooperative and that he provided details that will aid their investigation.

Dr. Murray was with Jackson when he went into cardiac arrest and apparently tried to revive him before he died.

The BET awards show will now include an extended tribute to Michael Jackson’s life and legacy. CNN will be the only network reporting live on the red carpet. Our coverage kicks off tonight at 6:00 Eastern, 3:00 Pacific. That and more, ahead on “State of the Union.”

Here in Washington, President Obama and Congress spent another week wrestling with health care reform. It has been, to say the least, a contentious debate, with Republicans questioning whether the country can afford this right now and whether the president wants too big a role for the federal government.

But the biggest obstacle at the moment are Democratic objections to the White House approach. Some of them aired right here on this program.

(BEGIN VIDEO CLIP)

SEN. DIANNE FEINSTEIN, D-CALIF.: Well, to be candid with you, I don’t know that he has the votes right now. I think there’s a lot of concern in the Democratic Caucus.

Controlling cost is a very major and difficult subject as long as you have a large private-sector involvement. So this needs to be worked out.

(END VIDEO CLIP)

KING: And as key senators did just that this past week, working to trim the cost of the huge price tag of health care reform, we saw several examples of Democratic in-fighting.

The liberal group MoveOn.org, for example, lashed out at Senator Feinstein and others who have raised questions about the president’s approach. Feinstein’s California one of nine states where MoveOn says it will run advertisements attacking Democrats.

(BEGIN VIDEO CLIP) ANNOUNCER: California voters sent Senator Feinstein to Washington to fight for us. That includes fighting to pass President Obama’s health care plan. But Feinstein is saying health care may just be too difficult. Senator, we don’t expect you to lead just on the easy issues.

(END VIDEO CLIP)

KING: Republicans also intensifying the air war, the Republican National Committee, for example, running its first ad of the 2010 cycle. And, separately, a conservative group turns its attention to 14 senators, mostly from more conservative states, questioning the wisdom of the president’s insistence that a government option be included in any major health care reform.

(BEGIN VIDEO CLIP)

ANNOUNCER: Remember the $400 hammer? How about that $600 toilet seat? It seems, when Congress gets involved, things just cost more. Now they’re at it again with a government-run health care plan. It’ll cost more than $1 trillion and raise taxes $600 billion.

(END VIDEO CLIP)

KING: Senate Democrats hope to begin voting on their proposal shortly after the July 4th recess. It will be interesting, fascinating to track this debate as the lawmakers go home and meet with their constituents.

KING: And we will do just that watching them.

And coming up, we’ll ask a Republican governor facing a state budget crisis whether Washington’s actions on the economy, health care, and climate change are helping or hurting. Minnesota Governor Tim Pawlenty joins us in studio next.

(COMMERCIAL BREAK)

KING: Welcome back to STATE OF THE UNION. I’m John King. When our next guest recently decided against seeking a third term as governor, the buzz in conservative circles started immediately. Sarah Palin and Mitt Romney already viewed as possible 2012 presidential contenders. And close associated of Tim Pawlenty urged activists and reporters to add the Minnesota governor to that list too.

But his day job remains leading a state with rising unemployment and a budget crisis, because a painful recession means lower revenues. And as he navigates those difficulties, Governor Pawlenty is often critical of the proposals of the Obama White House that the president says are designed to help. Governor Pawlenty joins us now here in D.C.

Welcome to STATE OF THE UNION. And let’s start with the big debate. And we’ll get to some of the policy specifics, but I want to talk first about the goals. The president says it is urgent that the United States extend accessibility to health care and have universal or near universal coverage. Do you share that goal?

PAWLENTY: Well, there are goals of three parts for health care reform, John. One is extending coverage, called access, but there are other goals, as well, which is cost containment, because it’s bankrupting cities, states, businesses, the federal government. And the third is making sure we maintain quality.

So you can obsess just about access, but if you don’t also contain costs and preserve quality, you’re in big trouble. And the federal proposal is largely modeled so far after what happened in Massachusetts. They succeeded in extending access, but the cost of that program is now double, triple, and some would say soon-to-be quadruple what they originally estimated. That would be a bad development for those of us who are concerned about the uncontrollable rise in health care costs.

KING: Well, that -- let’s go through some of the specifics. To pay for this, the president says about $1 trillion over 10 years. Let me start with the threshold question. Can we afford that right now?

PAWLENTY: Well, the president said not long ago in an interview quote-unquote, “we are out of money.” With all due respect, Mr. President, if we’re out of money, quit spending it.

And so, no, we can’t afford it. This is a nation that has got a debt load and a deficit load that is unsustainable. We’re going to have, in my view, the federal government debt crisis equivalent of the mortgage crisis within 20 years.

And notwithstanding the rhetoric, the Obama administration does not appear serious to address this out of control spending.

KING: To pay for health care, he says -- and you know the argument, he says we can’t afford not to do it. That the economic and the health crisis will only grow if we don’t do it now. But one of the ways he says he can pay for this is to squeeze substantially from Medicare and Medicaid.

Those are federal programs. It’s about 50 percent of the money in the health care system comes from the federal government. You’re a governor, you are on the receiving end, and your state and your hospitals have to pick up the tab when people without insurance come into emergency rooms and the like.

If we squeeze hundreds of billions out of Medicare and Medicaid, what happens to a governor?

PAWLENTY: John, I looked at some of the proposals that were on the table that are in Congress right now. They’re actually proposing to expand Medicaid and Medicare eligibility, to expand benefit sets. They’re talking about reducing nominally reimbursements of payments to providers.

But I think what they’re going to end up doing is running up the costs of those programs under these proposals. We share, as Republicans, the goal of health care reform, to get more access, to control costs, to improve quality. But the way to do that isn’t to have the government take over the system.

The way to do that is to give consumers good information about price and quality, and then give them financial incentives to use the system wisely and give financial help directly to those who need it.

We’ve done that in Minnesota in a variety of ways and that is the way to reform and control health care costs in this country, not to have a new federal bureaucracy.

KING: Well, you say new federal bureaucracy, the president says this public option, that if you -- you can have your private insurance, you can have what you have from your employer, if you like it, keep it. But if you don’t have that or if you want to look around in the marketplace, there will be this government plan.

And if you like that, maybe you opt out instead. Maybe it will be a little cheaper. Maybe it will offer a different mix of benefits. What’s wrong in a mix, as long as there is a mix, of having a public option?

PAWLENTY: Well, what’s wrong with it is, you have a government option in a market that is supposed to be driven by private choices. So if you’re disadvantaged, unable to pay, and the government is going to subsidize you, the question becomes, should we give that subsidy to you directly? Should we subsidize and create its own program? That’s the tradition.

But now they’re talking about something new and different, which is to say, even if you’re able to pay, even if you’re in the marketplace, the government is going to compete for your business with private entities.

The government is going to come right into the marketplace and compete. So it would be equivalent to say, you know, John, you’re a corn farmer and the government is going to put up a row of corn or a farm next to you and compete with you.

We don’t do that in the United States, it’s a different kind of model with a different kind of culture and society.

KING: Well, let me -- I want to close the circle on health care with, we don’t this in the United States, you just said. How do you take that philosophy and match it up with those who say we have to have universal coverage in the United States of America or else we fail the test?

PAWLENTY: Again, the way to do that, if you want to extend access to people who are in need or in disadvantage, then give them some help directly or in the form of a voucher, in the form of a tax credit, and then give them good information about price and quality, and at least for those who can function in a marketplace, let them go do that. That’s how you assist people in need who can’t afford health care.

But to have the government come in and say, we’re going to compete directly with the private market is another example of the partial, you know, nationalization of an industry, not unlike the mortgage industry, the banking industry, the auto industry, now the health care industry, soon you’ll see that in the energy industry.

This is a pattern with this administration of government encroaching into the private market.

KING: Let’s move on to the energy debate. The House just passed legislation, the narrowest of margins, two votes to spare, I guess not quite the narrowest of margins, but almost. The cap and trade legislation it is called. It would dramatically change the way -- if it passes the Senate, change our whole energy economy and our whole energy structure is based in this country.

The Congressional Budget Office says it would increase the energy bill of the average family about $175 by 2020. Is that an acceptable price to pay to reduce our dependence on foreign oil?

PAWLENTY: Well, John, the estimates you cite are on the low end. There are some other studies out that show it could be as much as several thousand dollars for an average family by 2020 per year. So depending on which of those estimates is accurate, it could be a very significant burden.

We all share the goal, I think, of reducing pollution and reducing emissions in this country. But we should have a debate about how best to do that. This bill that has just passed the Congress is a nightmarish, mind-boggling, overly bureaucratic, misguided bill.

I’ve been a strong supporter of renewable, clean and secure energy. I’ve been a strong supporter of finding ways to reduce emissions. But the way to do that is through conservation, doing things for base-load (ph) like nuclear energy, bringing on more fuel- efficient vehicles.

But this bill goes so far as to have the federal government micromanage and prohibit what local homeowner associations can do as it relates to the design features of local homeowner associations.

PAWLENTY: That’s one example of dozens in this bill in terms of its overreach. And it’s a cap and trade bill. It’s going to cap our job growth and trade our jobs to other countries who provide a more competitive business environment. This is the overly burdensome version that Congress has put forward.

KING: Strong language there. Cap our job growth. You were part of a regional consortium to work on something that did pretty much this. Why is the president’s approach so wrong?

PAWLENTY: Well, I think if you’re going to have an approach to reducing emissions, let’s focus on incentives to reduce emissions, like the ones I just mentioned before. But if Congress is going to consider a cap and trade bill, you’ve got to have the cap be at a level that’s reasonable and practical.

And then the allowances shouldn’t be an excuse for the federal government to raise money. If you look at President Obama’s budget, the charge that they were going to put for these allowances in the bill was a big part of how they were going to raise money for other stuff.

Now some of that has gone out the window, but this remains an extraordinarily expensive bill. We should do things to reduce emissions and pollutions, but we have to do it in a way that doesn’t wreck our economy or put unreasonable burdens on our citizens. And this bill does not meet that test.

KING: The president’s senior adviser, David Axelrod, was out on another program this morning, and says this is a phony issue, the way you call it -- the way you just characterized this. He says it’s phony and Republicans are using inaction as an excuse here, a political tactic.

PAWLENTY: Well, with all due respect to David Axelrod, why are they so opposed, on the other side of the aisle, of looking, for example, in the base load energy area of promoting aggressively more nuclear power plants? One of the biggest emitters of pollution and carbon in this country is our base load energy sector.

Nuclear power plants have no such emissions to speak of. There are next generation opportunities to process -- reprocess nuclear fuel. And yet while they kind of tip the cap at the argument, they really don’t want to do anything and won’t do anything.

Ask them to be accountable for that. That would be a major step forward as it relates to carbon emissions, and they won’t take it.

KING: I want to go back in time a little bit. You were the host governor for the Republican National Convention. And in your speech at that convention, in the middle of a heated campaign, you were talking about then-Senator Obama. And it’s clear you weren’t that impressed. Let’s listen.

(BEGIN VIDEO CLIP)

PAWLENTY: When John McCain is president, there will be no misunderstanding about where America stands and what we stand for. In this time, when don’t need a president who can just read a poll or momentarily thrill a crowd. We don’t need rhetoric or empty promises.

(END VIDEO CLIP)

KING: As a guy some think might be running against -- trying to run against President Obama down the road, rate him now.

PAWLENTY: Well, he’s only six months into his term, John, and so I think the history books should be a little broader in terms of perspective than just six months. But I’m very concerned on a number of fronts.

One is the out of control, unsustainable, irresponsible level of state -- or, excuse me, federal spending and the debt and the deficit that’s growing by the minute. That is something that is not responsible, something that’s going to, I think, snap back and bite us in ways that are going to hurt the economy in the intermediate term.

I’m concerned also about this massive government encroachment in autos, in health care, in energy and other sectors. But, you know, President Obama inherited a very tough situation. I think we need to give him more than six months before you can make an ultimate verdict on how he’s doing.

KING: One of the things he has done in those six months is pass a federal stimulus plan. This is one of the Sunday newspapers in your home state, The Star Tribune, in Minneapolis. “Stimulus cash isn’t the magic bullet yet,” saying the jobs have not yet materialized from the stimulus program.

You used some of that money to make less painful the cuts you’ve had to make at the state level. So is the stimulus plan in some ways helping a Republican governor like you?

PAWLENTY: Well, in Minnesota’s case, we pay $1 into the federal government, we get 73 cents back. On that measurement, we’re the fifth-highest payer of money into the federal government of any state in the nation. So we’re paying our share of the bill.

But here’s a stunning statistic, the GAO, the General Accounting Office, said recently of the $800 billion stimulus bill, only about $150 billion of it is really stimulative for the economy. The rest was spent on government programs, government social service programs that are not stimulative. And so this is a bill that was misdirected, mis-targeted, mis- prioritized, mis-focused. It should have put money into people’s pockets through tax cuts and bread and butter projects like roads and bridges. It didn’t do that to the extent it should have. And in that regard, the bill I think under serves this country.

KING: Tim Pawlenty is going to stay with us. Up next, the GOP brand took another hit when South Carolina’s governor acknowledged a secret trip to visit his mistress. When we come back, Governor Pawlenty’s take on what Republicans need to do to turn things around. Stay with us.

(COMMERCIAL BREAK)

KING: Welcome back to STATE OF THE UNION. Let’s continue our conversation with Minnesota’s Republican governor, Tim Pawlenty .

Governor, I want to move on to what you think ails the national Republican Party. But first, a question that is very personal to you. Your state has only had one United States senator since the election because of the disputed election between Republican Norm Coleman and Democrat Al Franken.

Your state supreme court has a ruling before it, it could come very soon. After that ruling, the next step would be for you to certify the election. Will you certify the election based on your state’s supreme court ruling, is that for you?

PAWLENTY: I’m going to follow the direction of the court, John. We expect that ruling any day now. I also expect them to give guidance and direction as to the certificate of election. I’m prepared to sign it as soon as they give the green light.

KING: And so if Norm Coleman loses at the state supreme court and says he’s going to appeal to the U.S. Supreme Court, will you give him that time or will you say, sorry, Senator Coleman, our state supreme court, our highest court in this state, has spoken, and I will follow their lead?

PAWLENTY: Well, a federal court could stay or put a limit on or stop the effect of the state court ruling. If they chose, if they do that, I would certainly follow their direction. But if that doesn’t happen promptly or drags out for any period of time, then we need to move ahead with signing this, particularly if I’m ordered to do that by the state court.

KING: And if you’re ordered to do it and they say Al Franken has narrowly won the election, you’re prepared to sign it, if the court says so.

PAWLENTY: I’m not going to defy an order of the Minnesota Supreme Court. That would be a dereliction of my duty. But a federal court could weigh in and say, don’t do that and order a different result.

KING: I want to move on to the drama in the Republican Party right now. President Obama won the election and won it quite handily. Since then and in recent weeks, we’ve seen two leading Republicans, men like you, who show up on lists of who might run in 2012, Senator Ensign in Nevada, then Governor Sanford in South Carolina acknowledging marital infidelity.

I want to play for you a snippet of a conversation, I want to very careful and tell our viewers, this is from 2007. I went down to South Carolina to spend some time with Governor Sanford, to ask him there about the ongoing Republican competition for the 2008 Republican nomination.

Even then he said the Republican brand was damaged and he also said this...

(BEGIN VIDEO CLIP)

GOV. MARK SANFORD (R), SOUTH CAROLINA: It takes time to damage a brand. It takes even longer to rebuild it. You think about Tylenol, or you think about some of the instance over time, you know, a single night you could do destruction to a brand. And it took time to build up trust.

SANFORD: I mean, the value of a brand is, in the chorus of voices out there, people have a trust in a -- in a single group or in a single product. It takes time to build or regain trust.

(END VIDEO CLIP)

KING: How much further damage to the brand of a party that says it’s the party of family values, that counts Christian conservatives among its most reliable base -- how much damage has been done nationally by the actions of Governor Sanford and Senator Ensign?

PAWLENTY: It’s hard to quantify that, John. But, clearly, there’s been damage. Any time you have leading figures who are engaged in behavior that is sad and troubling and hypocritical, other people are going to look at that and say, “Hm, they don’t walk the walk.” And so the words and the actions don’t ring true.

But it’s a sad and troubling situation with Jenny and Mark Sanford . I know them. I’m proud of Jenny for her strength and her commitment to her family and keeping that family together. And, frankly, I was glad to see her not standing at the press conference like many others have, and, kind of, charting her own path, saying, look, I’m willing to forgive him, but I’m not going to stand there and condone this in any way.

But it certainly hurts the brand. It’s hard to quantify it.

KING: Well, when you say “hard to quantify,” what do you hear?

You’re an evangelical. When you go to church and you talk to your pastor -- I travel the country quite a bit, and I’ve spent a lot of time with Christian conservatives. And they, frankly, are fed up.

They think Ronald Reagan didn’t always deliver. They think George W. Bush promised to work against same-sex marriage and he did not, in their view, deliver.

How much frustration is there that tars all of you, that the politicians are going to come to us; they’re going to tell us, “I’m one of you,” and then get elected and not do it?

PAWLENTY: Well, that’s a big part of the problem of the Republican Party. It’s not the only one. That leads into what your next question was going to be.

It really hasn’t mattered that much whether Republicans have gone to Washington or Democrat have gone to Washington, for example; on the issue of spending, the trend line’s been about the same.

Now, it’s been accelerated pretty dramatically under the Obama administration. But if you’re going to be, for example, the party of fiscal discipline and be the person talking who’s about fiscal responsibility, then you better do that.

And so hypocrisy doesn’t sell, and the Republicans have to be true to their values, be true to their principles and walk the walk.

Now, we live in a world where people aren’t perfect. You’ve made mistakes; I’ve made mistakes. There’s going to be dumb things that happen, sad things that have happened, heartbreaking things that happen. So we can’t expect perfection. But we at least have to be headed along the general correct trend lines.

KING: Since Senator McCain’s defeat in the last election, many Republicans have said they think the party, especially with younger voters, is viewed as somehow intolerant.

And some, including Senator McCain’s campaign manager, have said Republicans need to think again on the issue of gay rights and especially perhaps open their minds to same-sex marriage.

Does Governor Tim Pawlenty think that the Republicans should step aside and drop their opposition to same-sex marriage?

PAWLENTY: Well, no I don’t. I think there is a lot of data that shows a lot of younger people feel differently about that issue than older people, and that’s something we’re going to have to come to terms with down the road, in terms of a country.

But I don’t believe, nor does the Republican Party believe, that all domestic relationships are the equivalent. I believe that traditional marriage should be maintained on an elevated status and an elevated form for obvious reasons. It’s an important part of our social fabric and a cornerstone of our social fabric.

KING: After the Sanford scandal emerged, there was a little item in The Washington Post saying, well, who else is out there for the Republicans when it comes to 2012?

And they said, “A riveting reality show takes shape,” and they mentioned you, with a picture, and they said, “ Tim Pawlenty : The Geek. Minnesota earnest with a dash of bland. Is he flying too far under the radar?”

You were in Arkansas just the other night for a fund-raiser. I know your state press back home watches you every time you go out of state. Is Tim Pawlenty running for president?

PAWLENTY: You know, John, I don’t know what the future holds for me, but I do know this. I feel strongly about the values and principles for the Republican Party. I believe I have something to say about that.

So, within Minnesota and outside of Minnesota, at least as my time allows, I’m going to go out and speak to that. And I think I can make a contribution, in a positive way, for trying to rebuild this party. And it needs it.

KING: On that point of your travels, I want to circle back a little bit. Because this became an issue and could become an issue in the state of South Carolina.

When you leave your state, what is your responsibility, as the governor, to tell people where you are, how you can be reached, and the whole combination of events that could play out from that?

Because, as you know, one of the questions about Governor Sanford is did he -- was he derelict of duty?

Could he possibly be impeached for lying to his staff about where he was and not telling others in the state he was leaving?

PAWLENTY: Your staff has to be able to reach you and reach you quickly for all the obvious reasons, natural disaster, terrorism, or other events.

And so I’m very careful to make sure that numerous staff people and my security detail always know where I am and can reach me. And any governor should do that.

KING: So Sanford was derelict in his duty?

PAWLENTY: He should not have left the state and not allowed people to know how to contact him in case something happened. That’s obvious.

KING: Governor Tim Pawlenty , we thank you for joining us on “State of the Union.” We will see you, whether it be in Minnesota or one of those other plenty places in the months and weeks ahead.

Sir, thank you very much.

And so is there going to be a GOP comeback?

We’ll get out of Washington and head to Ohio, where two Republicans are already fighting hard for the 2010 midterm elections. The question is, are the voters buying it? You can see for yourself in just a moment. Stay with us.

(COMMERCIAL BREAK)

KING: In our national politics, sometimes Ohio is more watched than any other state. Let me show you why.

Look right here. This is 2008. There’s the state of Ohio. You see it blue right there, right? Barack Obama carried that state.

Well, who won in ‘04? George W. Bush won. Ohio’s red.

Who won in 2000? George W. Bush won. Ohio’s red.

Who won in 1996? That would be Bill Clinton. And Ohio is blue.

And it is a huge state. And what we have seen, over time, in Ohio, is much of what we’ve seen across the country. It used to be a Republican state. Here’s 2002, Republicans more registration by almost nine points. By nine points, they’re leading the Democrats.

Let’s fast-forward, though; 2008: Republicans, 35 percent identified; 52 percent identified themselves or leaning Democrat.

So, as we head into the 2010 cycle, this is a state we want to look at. It used to have a vibrant Republican Party. President Obama won it and won it quite handily. The Democratic governor, at the moment, has a high approval rating, but also has, as you just saw, high unemployment.

So, for an early glimpse of can the Republicans come back, we went to Ohio.

(BEGIN VIDEOTAPE)

KING (voice-over): John Kasich knows a lot of people are watching.

JOHN KASICH (R), OHIO GOVERNOR CANDIDATE: The governor’s race here in this state, it could potentially be the most important race in the country. So goes Ohio, so goes the country.

KING: For a Republican Party desperate for signs of recovery, Ohio is an intriguing state. Here, hopes that the 2010 elections will bring a new beginning rest largely on two familiar faces from the GOP past. Kasich, the leading Republican candidate for governor, was the House Budget Committee chairman and a rising star when the GOP controlled Congress in the mid ‘90s. Rob Portman is the GOP candidate for an open Senate seat. He represented the Cincinnati area in the House for 12 years and then served in the Bush administration as trade representative and budget director.

ROB PORTMAN (R), U.S. SENATE CANDIDATE: The 2010 elections is going to be about the Obama agenda and the Democratic Congress agenda and whether they’re doing the right thing. And the people will have to judge.

KING: Kasich shrugs off early Democratic attempts to cast him as part of the damaged Republican brand.

KASICH: I was the chief architect of the plan that balanced the budget, cut taxes, paid down debt and gave us one of the most prosperous times in the history of our country. That’s sort of a silly attack.

KING: He says the party is in a rut because it stopped seeking new ideas to deal with health care, energy and other challenges, and tried to separate himself from the brand voters rejected in 2006 and 2008.

KASICH: The Republican Party is my vehicle, not my master. I mean, I’m here to try to bring prosperity back to the state, make sure that families are better off. I’m not here to carry anybody’s banner.

PORTMAN: This visitor arrived by Greyhound.

KING: Portman’s ties to the unpopular Bush administration could make his break from the past more difficult. Step one is defending his cabinet record. PORTMAN: When I was the OMB director, we cut the deficit in half. When I was there, by the way, unemployment rate is half of what it is today.

KING: Step two is balancing a critique of a popular president with a call for his party to better explain what it would do differently.

PORTMAN: The Republican Party needs to have answers. You mentioned health care. The system is broken, the status quo is totally unacceptable. I agree with President Obama about that. I also disagree with his prescriptions because I don’t think it’s going to fix the very problems that he identifies..

KING: Political scientist Paul Beck at the Ohio State University says it’s a big plus for Republicans that two formidable candidates step forward.

PAUL BECK, PROFESSOR, OHIO STATE UNIVERSITY: And that’s also the problem for a party that is down, nobody wants to run. They want to wait until the climate is much more supporting of people from their party.

KING: In this next cycle, Beck sees a single, dominant issue -- jobs.

BECK: If we are a year from now and the economy hasn’t improved in a visible way, I think the Democrats are going to be in trouble and the Republicans, they are well positioned to take advantage of that kind of situation.

KING: The biggest question though is whether Republicans, here in Ohio and elsewhere, can begin to reverse troubling demographic shifts. Democratic gains in the suburbs, among Latinos, suburbs, and among 18 to 29 years olds.

BECK: It’s an ominous future for the Republicans, that they’re not doing well among young voters, I think young voters are not attracted by the old themes. There really has been a mood shift in the country, among younger people and a bigger generational divide than I have seen in a long time. You have to go back almost to the 1960s to see something that’s comparable to it.

(END VIDEOTAPE)

KING: And as we give you a glimpse here at the beautiful Ohio River, we’ll give you a promise. We’ll go back to cover those races for governor in the state of Ohio, take a look at the Democratic candidates as well in the months ahead.

As you know, one of our goals is to get out of Washington as often as we can. We traveled from Ohio to California, and stopped by many states in between. So where next? You can e-mail us at StateoftheUnion@CNN.com and tell us why we should come to your community. We want to say good bye not to our international audience for this hour, but up next, for our viewers in North America, Howie Kurtz look at the avalanche of media coverage surrounding Michael Jackson’s death.

(COMMERCIAL BREAK)

KING: I’m John King and this is our “State of the Union” report for this Sunday, June 28th. The surprising twist of South Carolina Governor Mark Sanford ’s week has made great headline. But is it legitimate news or just an invasion of his private life? Howie Kurtz kicks off our “Reliable Sources” debating that question with three top journalists.

And Michael Jackson’s death resulted in nonstop television coverage and a spike, get this, of more than 65,000 texts per second after the news was announced. We’ll examine what fuels the public’s fascination.

And something you can only see right here, James Carville and Mary Matalin go head to head on all of the day’s and the week’s political news. That’s all head on “State of the Union.”

Time now though to do at this hour, every week, to turn things over to Howard Kurtz and his “Reliable Sources.” And Howie, as I do so, both “Time” and “Newsweek” cover stories on of course the major drama that played out for middle week and continues through the weekend, the death of Michael Jackson at age 50.

KURTZ: John, that “Time” is a special issue. And look, this is a huge story. This is one of the most famous people on the planet, his music touched so many people and his appalling behavior at times also shocked a lot of people, but I think we’re in the fourth day now. Everyone still seems to be churning out stories about Michael Jackson, trying to keep this story alive, I think for ratings and circulation. We’ll talk about that later this hour and we’ll talk to you in a little bit, John.

KING: Look forward to it, Howie, thanks.

KURTZ: We have seen this scenario play out again and again, the chasing politician apologizing to his family for his sexual misbehavior, but the saga of Mark Sanford was different, right down to the way that South Carolina’s biggest newspaper exposed him.

First, of course, it was the governor’s disappearance that led to rather light-hearted coverage. Even his staff assistant, he was just taking a few days off to go hiking. But still his wife didn’t know where he was, his lieutenant governor didn’t know where he was, and then a reporter for the state newspaper discovered him getting off an international flight, and the media’s pursuit of Mark Sanford took a downright bizarre turn.

(BEGIN VIDEOTAPE)

BRIAN WILLIAMS, NBC NEWS HOST: He’s been gone since last Thursday. His wife didn’t know where, not a trace, no security, no nothing.

UNIDENTIFIED MALE: He was simply out for a long walk.

GLENN BECK, FOX NEWS HOST: He gets beat up and wants to take a couple days off, his wife knows about it, yet the media is spinning this like something was wrong, he’s irresponsible.

KATIE COURIC, CBS NEWS ANCHOR: We now know where the governor of South Carolina was and what he was doing, and he wasn’t hiking the Appalachian Trail.

JOHN ROBERTS, CNN ANCHOR: Governor Sanford spent the last few days in Buenos Aires.

SEAN HANNITY, FOX NEWS ANCHOR: He made a dramatic reemergence today when a reporter found him disembarking a plane from Argentina.

(END VIDEO CLIP)

KURTZ: Sanford took questions at a raw, rambling and very strange news conference in which he apologized again and again.

(BEGIN VIDEO CLIP)

GOV. MARK SANFORD (R), SOUTH CAROLINA: I developed a relationship with a -- what started as a dear, dear friend from Argentina. I hurt you all. I hurt my wife. I hurt my boys.

UNIDENTIFIED MALE: Are you separated from the first lady?

SANFORD: Well, I don’t know how you want to define that. I mean, I’m here and she’s there.

UNIDENTIFIED MALE: Did your wife and family know about the affair before the trip to Argentina?

SANFORD: Yes.

UNIDENTIFIED MALE: For how long?

SANFORD: We’ve been working through this thing for about the last five months.

(END VIDEO CLIP)

KURTZ: And them came the e-mails that the state newspaper obtained between Sanford and his Latin lover, Maria.

So, did the press expose a lying philanderer, or invade a governor’s privacy?

Joining us now, Nico Pitney, national editor of “The Huffington Post”; Amanda Carpenter, reporter for “The Washington Times” who writes the “Hot Button” column; and Dana Milbank of “The Washington Post,” who writes the “Washington Sketch” column.

Dana Milbank, what was it about Sanford’s news conference, mere snippets we just showed there, that took an already strange story and just launched it into the media stratosphere?

DANA MILBANK, COLUMNIST, “THE WASHINGTON POST”: You know, I think already the notion of hiking the Appalachian Trail is going to have a new sort of cult meaning in our culture. But it became an instant classic, because the traditional thing you do when you get caught in these situations, you make the perfunctory apology. If you can talk your wife into it, she stands there looking pained next to you.

This was something completely different, completely unscripted and, some might say, unhinged. And I think it was oddly compelling in that way, but...

KURTZ: I like that “some might say.”

Amanda Carpenter, as Mark Sanford poured out his emotions there, do you have the sense that most journalists have any compassion for this guy, who’s in obvious pain, or is it just, yes, all right, great story?

AMANDA CARPENTER, NATIONAL POLITICAL REPORTER, “THE WASHINGTON TIMES”: Well, I think the lead-up to the story was really important, because it started out “The governor is missing.” And then people would go on Twitter and talk about, where on earth could he be? And then the strange story about the Appalachian Trail came out.

So by the time it got to the press conference, it was already a little bit laughable in some respect. And so -- and then the strange tempo of that press conference didn’t do him any favors either. He kind of came out and said, if you’ve wonder where I’ve been, and then said, I’ve got to tell you something, and then it just went on and on. And so...

KURTZ: Well, he spent the first five minutes apologizing before he told us what he was apologizing for.

Nico Pitney, some pundits say, well, you know, he really damaged himself by rambling on and on, but then we complain when politicians like Eliot Spitzer come out, read a few carefully scripted lines and don’t take any questions.

NICO PITNEY, “HUFFINGTON POST”: Yes. No, I think it was fair.

I mean, I think the wildcard in this was really his wife, who, from the very beginning, when she said, I don’t know where he is and I don’t care, I mean, if she had made an excuse, would the press have latched on to it as much as they did? And now, being completely open, talking to the AP, giving a blow by blow, she, I think, has helped make it, by kind of being willing to speak out about it, has made it a different kind of story.

KURTZ: Jenny Sanford said, among other things to the AP, that her husband kept asking for permission to go back to Brazil to visit Maria Belen Chapur, who was a TV reporter -- I guess everybody’s now seen the footage of her from several years ago, being on camera -- we can throw that up there -- there we go.

I want to talk about the e-mails. “The New York Times” reporting yesterday that the very romantic e-mails about her tan lines and her lips and her beauty between the governor and Maria were actually leaked to the state newspaper by one of her -- by her previous Argentine boyfriend.

And so Wolf Blitzer had a reporter, John O’Connor, on from the state newspaper, and he asked the question of why, since these e-mails arrived at the newspaper anonymously back in December, why nobody asked the governor about it?

Let’s take a look.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY: If you would have confronted the governor’s office with this information, you know, you could have changed history right then.

JOHN O’CONNOR, “THE STATE”: And that’s a possibility. He could have told us that they were not true. And if we didn’t have the proof to say otherwise, what would we do then?

(END VIDEO CLIP)

KURTZ: Dana, was that a mistake for the newspaper -- you get these e-mails. I mean, who knows whether they’re authentic or not -- not to question the governor, hey, is this real or is this fake?

MILBANK: I don’t think so. I mean, I think the state newspaper acquitted themselves very well. I mean, they dominated the story from the very beginning, so you get all kinds of wacky e-mails all the time in this business, and I think, given the absence of something else to raise this question...

KURTZ: Any corroborating evidence.

MILBANK: Right. I mean, I’ve got lots of e-mails purported to be from you in here, Howie, and I’m just not going to ask you about those.

KURTZ: Let’s be careful about those.

Amanda Carpenter, when “The State” finally published the e-mails, Sanford had already, as we saw, acknowledged rather painfully this affair. So was that piling on? Did we need to read what he and Maria were -- you know, the intimate conversations between them?

CARPENTER: I would say putting all the e-mails in their full form was probably a little bit much. I mean, in the press coverage, they described them as graphic, explicit. I didn’t see anything like that in there. They’re clearly intimate, and I think you could have gotten that feeling across by doing a few selections, and that would have been a more tactful way of doing it.

KURTZ: So was it just to kind of exploit the situation? Yes, there was nothing X-rated about it, but it was just so intimate, you kind of felt like you were, you know...

CARPENTER: You felt like you were invading his privacy as you’re reading it. It was just so intimate. And yes, it was uncomfortable. KURTZ: Dana talked about “The State” reporters really cracking the story. When Sanford’s office was putting out the Appalachian Trail scenario, reporter Gina Smith got -- based on a trip -- drove four hours to the Atlanta airport and waited for a flight from Rio de Janeiro and found Sanford getting off the flight and interviewed him.

Is that good reporting?

PITNEY: I mean, it’s very tenacious. I guess you could call it that.

I mean, I think also, you know, it has to be mentioned that there are other issues that Sanford is involved with that are very important. For example, the state has almost 12 percent unemployment. He’s out there denying the stimulus package that would bring jobs and unemployment...

(CROSSTALK)

PITNEY: True. I mean, there are issues beyond this affair that are quite important, and the state is going to be just (ph) important.

KURTZ: Why is it that none of those issues have gotten the 12 seconds worth of coverage this past week?

PITNEY: I think we all know the answer to that.

KURTZ: You know, as this thing exploded, and as Jenny Sanford gave interviews, and as we learned more about the girlfriend and all of that, I would read these pieces, and the pundits, they’re always sort of locked into the handicap. They would say, “This could dampen his prospects for the 2012 presidential race.”

Do you think?

MILBANK: Well, it seems pretty obvious, although I must say that, you know, given the way John Ensign sort of knocked himself out the week before, he’s probably the happiest guy in the world this week. But I think that when you look back at this, if he survives and remains there as governor, people are going to say, you know what? The guy, whatever he did, however horrible it was, what he did, he was a human being up there. And I actually think even though he broke all the PR rules, maybe people in the end are going to say, “Actually, I kind of feel bad for the guy.”

KURTZ: I think it was impossible not to have some sympathy for him as he poured out his heart, even though...

MILBANK: Right. We didn’t invade his privacy, he invaded his privacy.

KURTZ: Well, even -- when he said, I’m going to tell you more detail than you really want to know, and he did.

But when we talk about Republicans like Mark Sanford , or Senator John Ensign , or Senator David Vitter , getting embroiled in these sex scandals, does it seem to you, Amanda, that the press does an additional thrashing of them for being family values conservative Republicans, and therefore accuses them of hypocrisy in a way that they might not if they were on the Democratic side?

CARPENTER: Sure. That always becomes part of the story when this happens to a Republican. And you know what? It is fair game.

I think it’s similar to Tim Geithner not paying his taxes. I mean, if you’re going to take a stand on something -- and Sanford, family values -- it’s important that you respect your wife and the vows of marriage. So, I think that should be part of the story. That said, you shouldn’t go easy on someone like John Edwards or be afraid to report the stories just because he may not stand up for those values as adamantly as someone else.

KURTZ: Well, I don’t think that Bill Clinton or Eliot Spitzer or Jim McGreevey or John Edwards got any lack of coverage when those Democrats got into trouble in sex scandals. But there has...

PITNEY: And in fact, I mean, Eliot Spitzer -- Democrats were out very quickly saying basically if he doesn’t resign, we’re going to force him out. Republicans in South Carolina...

KURTZ: And it was “The New York Times” who broke the story about Governor Spitzer and the agency that provided those call girls.

PITNEY: Yes. Oh, yes. And I think it’s -- the double standard actually isn’t as strong as one might suggest. Democrats are held to account on this quite severely, I think.

CARPENTER: I disagree with that. I mean, when the John Edwards story came out, I mean, there was a blanket “Do not talk about this.” And maybe that was in part because it was broken by a tabloid, but when it did start to come out, I think people were very hesitant to talk about it and what his political future might be.

KURTZ: Well, people were hesitant to talk about it because we didn’t have any proof other than “The National Enquirer.” Wasn’t that the issue?

MILBANK: But also in this case, Sanford himself brought up the issue. In his list of 8,000 apologies, he was particularly apologizing to religious conservatives because it would be demoralizing for them. So he raised the issue of why it’s particularly damaging when a guy who takes this position gets into trouble (ph).

KURTZ: He apologized to just about everybody.

All right. Let me get a break.

When we get come back, one of our panelists made news by asking the president a question at this week’s news conference. And how did Charlie Gibson and Diane Sawyer do with that health care town meeting at the White House? And later, the king rules the airwaves. The sudden loss of Michael Jackson puts everything -- I mean everything -- else on the backburner. Are the media striking the right tone for the death of a troubled music legend?

(COMMERCIAL BREAK)

KURTZ: A presidential news conference usually proceeds from the AP reporter, to the network correspondents, to the major newspaper writers. But President Obama set off plenty of chatter at this week’s presser by giving the second question to a “Huffington Post” blogger. It wasn’t just the selection of Nico Pitney -- Obama has called on “The Huffington Post” before -- but the way the president seemed to invite a particular question.

(BEGIN VIDEO CLIP)

OBAMA: Nico, I know that you and across the Internet we’ve been seeing a lo of reports coming directly out of Iran. I know that there may actually be questions from people in Iran who are communicating through the Internet.

Do you have a question?

PITNEY: Yes, I did. But I wanted to use this opportunity to ask you a question directly from an Iranian.

“Under which conditions would you accept the election of Ahmadinejad...”

(END VIDEO CLIP)

KURTZ: All right.

Nico Pitney, you said the White House notified you that you would probably get a question at the news conference. Everyone assumes what we just saw was orchestrated.

PITNEY: No. From beginning to end, there was no planning involved. I was the one who posted that I was going to be soliciting -- that I was soliciting questions from Iranians. I chose the question.

The reason President Obama made that comment is because he was trying to make a point that he was taking a question from an Iranian. And it’s interesting that Dana, of all people, wrote this column very negatively. I mean, this is a person, Dana, who, when he had a chance to ask Obama a question, he approached him in the hall during the campaign and asked him not one, but multiple questions about how he looked in a bathing suit.

I mean, that to me is pathetic, and I would -- you couldn’t stage manage me into that, Dana.

MILBANK: Well, Nico has some -- evidently, some very interesting things to do.

What I have never done in my life, Howie, is worked in collusion with an administration, whether it’s this one or another one. I believe that whether it’s Nico Pitney, with “The Huffington Post,” or whether it’s Carl Cameron, with Fox News, the White House should not be calling somebody the night before saying, we are going to call on you if you ask a question on a particular subject asked in a certain way.

PITNEY: But I was...

MILBANK: Nico, the night before, sent out an e-mail to his colleagues -- “Some big news. The White House called earlier this evening and asked if I could ask a question of President Obama at his press conference tomorrow on behalf of an Iranian. I’m about to post a solicitation to the blog Facebook, Twitter, et cetera. It seems fairly like that this will happen, but as they told me, this is not 100 percent.”

PITNEY: This is exactly as I described it. I posted an initial solicitation.

MILBANK: At the request of the White House.

PITNEY: No.

MILBANK: No, it says right here in your e-mail that that’s what you did.

PITNEY: No, it doesn’t. In fact, it’s exactly what I wrote...

MILBANK: “I’m about to post a solicitation to the blog Facebook, Twitter,” after hearing from the White House.

PITNEY: Facebook, Twitter, exactly. So, my solicitation was merely over e-mail.

When I found out that the White House was going to potentially take this question, I went to a Farsi language social network site, to Twitter using a Farsi message, to Facebook. I tried to -- if I was going to have that opportunity, I was going to canvass as many Iranians as possible.

MILBANK: That’s fine.

PITNEY: So it is -- and, you know, for -- this is someone -- Dana’s column...

KURTZ: Do you think there’s some jealousy involved by maybe the establishment in the fact that you got that very prominent second question?

PITNEY: Oh, I mean, I think it’s jealousy. I think it’s hypocrisy.

You know, Dana wrote a column, as his colleague at “The Washington Post,” Greg Sargent, pointed out, hailing the “Mission Accomplished” banner moment in May, 2003, the day after.

MILBANK: What?

PITNEY: I mean, it’s...

MILBANK: Look, there’s plenty of fiction here, but I brought some other -- shall we go through the record here, Nico?

PITNEY: Go through what record?

MILBANK: Your Web site was complaining about I was not holding the Bush White House to account. I’d like to say that here’s a full list of documentation of me holding the Bush White House to account.

PITNEY: Well, I’m not sure where...

MILBANK: Your colleagues at “The Huffington Post.”

Let’s pose -- can we just pose one question, Nico? If the White House called up Fox News and said, “Major Garrett, we will call on you tomorrow if you ask a question about health care, and you ask it in a certain way?” Would you say that’s OK?

PITNEY: They didn’t say in a certain way. See, this is dishonest. And it’s been dishonesty and errors from the beginning.

Your initial piece on this posted an hour after the press conference, had two errors, which you acknowledged to me an e-mail. You said you had corrected them. It took seven hours.

MILBANK: Is that right, Nico?

PITNEY: And the signal is you are very quick to malign and very slow to correct.

MILBANK: Look, Howie, I can’t deal with fiction on this show. I mean...

KURTZ: All right. I’m going to -- you two are going to have to take this outside, because I want to get Amanda Carpenter in.

Does any of this smell like collusion to you?

CARPENTER: Well, I can tell you from -- I hear a number of claims from the right side of the issue on this, and they say that Nico is a person who worked on Democratic campaigns, then went on to go work for the Center for American Progress, where he ran a very partisan blog called “Thing Progress,” and then was asked by the White House to ask those questions. So he’s not -- I mean, the question was fair.

KURTZ: Well, I don’t think he’s not denying that you have left of center views.

PITNEY: No. I mean, I think the question is the quality of the question.

CARPENTER: But the concern from the right side of things is...

PITNEY: Jeff Gannon asked softballs. I asked a legitimate question.

CARPENTER: I’m not saying you did anything wrong, but I think the administration calling you beforehand, thinking that you are probably going to ask something sympathetic, escorting you to the front of the press room, to then ask a question in a place where everyone should get a fair crack at the president, is unfair.

PITNEY: I mean, the question, again...

KURTZ: It was a legitimate question. Let’s make that clear.

PITNEY: It was a legitimate question. Sure.

(CROSSTALK)

PITNEY: It was be a strange conspiracy, considering Obama dodged the question.

KURTZ: Well, there’s no guarantee you get an answer.

I’ve got to move on. I want to talk about ABC’s health care event at the White House.

We had Diane Sawyer calling into this program last week and ridiculing the notion, the criticism from Sean Hannity and some other conservatives, this would be an infomercial.

Let’s take a look at a couple of the questions that she and Charlie Gibson asked President Obama.

(BEGIN VIDEO CLIP)

DIANE SAWYER, ABC NEWS: Why get the government involved in something that is being done already in the private sector and, with the right initiative and impetus, could be done in the private sector without government involvement?

CHARLES GIBSON, ABC NEWS: If you add 46 million people to the insurance rolls, you can’t get an appointment now, Mr. President. How are you going to get an appointment then, when there’s 46 more million people competing for that doctor’s time?

(END VIDEO CLIP)

KURTZ: Amanda Carpenter, was it a mistake for conservative pundits and Republican Party officials, I should add, to blast this thing as an infomercial before a single minute aired, before we got to see what kind of questions were being posed both by the anchors and by the selected audience?

CARPENTER: Yes. I don’t think it was. I mean, it was kind of a catchy name, people wanted to brand it ahead of time, and I think there was some partisan reasons for doing that. And you have to expect that going into something like this.

But they gave him more than an hour. They ran into their other coverage. He was -- as expected, gave very long answers, was not challenged. There were some good questions, but I don’t think he was challenged nearly enough, particularly on end of life care issues.

KURTZ: There was a couple of times when he was challenged, but that’s a fair point. He gave very long answers.

CARPENTER: And there was no opposing viewpoints present there from another partisan...

KURTZ: Well, in the studio audience was the president of the AMA, the head of Aetna, somebody who had been a health care official in the Bush 41 administration.

But in retrospect, should they have had a Republican Party official as well to diffuse this criticism?

PITNEY: I think they could have, but I would say the questions that they asked, they asked some critical questions, but the fact that Amanda appreciated the questions, I think it’s a signal that they asked the questions from a conservative viewpoint. They didn’t ask, for example -- they didn’t press him on the public option, which is something that’s being debated among progressives and is a contentious issue there.

KURTZ: That got pushed back to the “Nightline” portion.

Dana Milbank, your take? Was it a solid 90 minutes on health care or should it have been tougher?

MILBANK: Well, it’s not even a matter of tougher. I think it shouldn’t have occurred in the first place. And I know Nico would like to make this about ideology. I don’t think anybody should be colluding with the White House.

I don’t think Diane Sawyer should be broadcasting from the south lawn. I think Charlie Gibson should be broadcasting from the Blue Room. I think when people see the White House, they should see the White House here, and the should see a free...

(CROSSTALK)

KURTZ: So your objection is to the venue? If they had done this in Kansas City or Orlando, that would be all right? There have been other town hall meetings with networks.

(CROSSTALK)

MILBANK: Conceivably, I think that he did it earlier with NBC News as well. And I think the White House is trying to exploited media, and ultimately bringing them in bed with him. Ultimately, it’s not good for the White House and it’s not good for the media, because when people, say, in Iran tune in and say, now, wait a second, is that a real question or has that been arranged in advance?

KURTZ: All right. We’ve already -- we’ve discussed that. We’re now down. And thanks very much, Dana Milbank, Nico Pitney, Amanda Carpenter.

PITNEY: Thank you.

KURTZ: Coming up in the second half of RELIABLE SOURCES, the two Michaels. The media go wall to wall covering the death of Michael Jackson, but can you cover the passing of the “King of Pop” without talking about “Wacko Jacko?”

Plus, taking a bite out of Apple. Why did it take a secret liver transplant for the CEO to produce some skeptical coverage of America’s coolest tech company?

(COMMERCIAL BREAK)

KING: I’m John King and this is STATE OF THE UNION.

Here are stories breaking this Sunday morning.

The president of Honduras has reportedly been arrested. Local media say Jose Manuel Zelaya was taken into custody this morning and transported aboard a military plane to an unknown destination. The arrest comes on the same day Zelaya had vowed to follow through with a referendum the Supreme Court had ruled illegal. The referendum would have allowed possibly Zelaya to run for another term.

Despite an uptick in violence (AUDIO GAP) already to take over when U.S. combat troops pull out of Baghdad and other cities on Tuesday. Speaking on STATE OF THE UNION, General Ray Odierno says his’s seen constant improvement in both the security situation and governance in Iraq.

Iran’s supreme leader has issued a call for national unity. Ayatollah Ali Khamenei urged both sides in the bitter election dispute to calm down. His appeal was broadcast today on Iranian TV.

Britain, though, is criticizing the arrest of British Embassy employees in Tehran. Iranian media says those workers were detained for their role in post-election protests.

Time now to go back to Howie Kurtz and his RELIABLE SOURCES.

Hey, Howie.

KURTZ: Hey, John.

You know, you led off this morning with General Odierno talking about the U.S. pullout from major Iraqi cities, which is supposed to be completed by Tuesday. And as you know, a series of bombings this week left more than 200 dead, and yet the coverage this week on cable and, to some extent, on the broadcast networks, Michael Jackson, Farrah Fawcett, Mark Sanford .

Are our priorities a little screwed up?

KING: Well, well of those things you just mentioned are legitimate news stories, but sometimes Iraq has become, I believe, the forgotten war. And we won’t forget it here for obvious reasons. There are still, as the general said, 131,000 U.S. troops in Iraq, some key deadlines coming up. The question is, will they be home on time? So it does get overshadowed, I would argue, too much. It’s a very important story, and we’ll keep covering it.

KURTZ: I would agree with you, overshadowed too much.

Thanks very much, John.

From the moment I heard that Michael Jackson had suffered cardiac arrest, I knew the media world would explode, and particularly after the gossip site TMZ reported late Thursday that Jackson had died, followed by the “LA Times,” an hour later, that’s exactly what happened.

(BEGIN VIDEOTAPE)

KURTZ (voice-over): It wasn’t just the wall-to-wall cable coverage. “NBC Nightly News” devoted more than half its broadcast to the pop star’s death and that of Farrah Fawcett.

And look, Jackson was one of the most famous and controversial people in the world. And public interest in his unexpected passing was nothing short of views (ph).

KATIE COURIC, CBS NEWS: Michael Jackson had an extraordinary career and a troubled life marked by incredible highs and terrible lows.

WOLF BLITZER, CNN: A child prodigy, he lived through illness, a sex scandal, and massive money troubles.

GRETA VAN SUSTEREN, FOX NEWS: He’s enormously talented, Bret, but there’s also such a freak show associated with him.

CAMPBELL BROWN, CNN: His life was so fascinating, so controversial and, frankly, bizarre, that we often forget how amazing a performer he was and how incredible the music is.

(END VIDEOTAPE)

KURTZ: His monster music career gave way to years of personal problems -- plastic surgery, child abuse allegations, ,and just plain weirdness. The question for me was which Michael Jackson news organizations would choose to remember in their coverage?

Joining us now in Los Angeles, Carlos Diaz, correspondent for the entertainment news show “Extra.” In Tampa, Eric Deggans, television and media critic for “The St. Petersburg Times.” And in New York, Diane Dimond, investigative journalist and author of the book, “Be Careful Who You Love: Inside the Michael Jackson Case.”

Carlos, you did relatively little on “Extra” about what I would call the dark side of Michael Jackson. Is there a tendency in the media to airbrush the unpleasant parts of the picture when someone dies? CARLOS DIAZ, CORRESPONDENT “EXTRA”: I think that, you know, we try to cover everything we can on “Extra,” but we looked at in Hollywood what people in Hollywood were saying about Michael Jackson, and that was the story. People in Hollywood -- we were interviewing Jamie Foxx the second the news came down that Michael Jackson had passed away. The first thing that the Oscar Award winner said to us was, “Let’s not remember Michael Jackson the circus sideshow, let’s remember him for his talent.” And that’s been echoed throughout Hollywood.

KURTZ: And Eric Deggans, I know some people are saying let’s focus on the musical legacy and not on his well-documented history of weirdness, but we’re journalists, and it seems to me that we should not minimize or even whitewash the -- some of the strange and disturbing stuff that went on in Jackson’s life.

ERIC DEGGANS, MEDIA CRITIC, “ST. PETERSBURG TIMES”: Yes, without a doubt, because that’s the story. He was our generation’s Elvis, and part of Elvis’ legacy as well was sort of a tortured personal story that went along with great, creative achievement. And if you don’t tell the part of the story that’s a little tough to talk about, you don’t tell the whole story.

KURTZ: And Diane Dimond, it was the Martin Bashir documentary some years back that led to the trial on child molestation allegations that you covered in 2005. You wrote a book about it. In that documentary, Jackson was seen holding hands with the boy who later became his accuser, and defended sleeping with young boys in bed, saying nothing sexual had gone on.

Let’s take a look at what Michael Jackson told Diane Sawyer after that acquittal.

(BEGIN VIDEO CLIP)

SAWYER: Did you ever, as this young boy said you did, did you ever sexually engage, fondle, have sexual contact with this child or any other child?

MICHAEL JACKSON, SINGER: Never, ever. I could never harm a child or anyone. It’s not in my heart, it’s not who I am. And I’m not even interested in that.

(END VIDEO CLIP)

KURTZ: Diane, did the coverage of that trial change Jackson’s image forever?

DIANE DIMOND, FMR. REPORTER, COURT TV: Yes, I think it did. But I think your timing might be off on that interview with Diane Sawyer. I think that was after the 1993 case.

KURTZ: I see.

DIMOND: And I think that is what started to change the perception of Michael Jackson a bit.

I remember when I first got the assignment to cover him. I’m a crime reporter. I don’t cover celebrities. And when crime and Michael Jackson and child abuse were all put in one sentence for me, it was like, what?

It didn’t even scan until 1993. 2003, I think, changed it irreparably.

KURTZ: And you’re right on the timing. That interview we just showed was from 1995. It as when he was first -- after he was first accused, and I guess that led to a civil settlement with the family.

DIMOND: And Lisa Marie was sitting by his side. He just married Lisa Marie. I remember it now.

KURTZ: Right. And then the issue came back after the 2005 trial.

Carlos Diaz, this was a guy who had it all, who grew up before our eyes, who was immensely talented. And then came the plastic surgery, the skin lightening, that scene that I’ve seen so many times where he’s dangling the baby over the balcony. And the media, of course, were drawn to these stories.

DIAZ: Well, and it’s ironic, because, you know, the stories now are that, at first, Michael Jackson put out these weird stories of sleeping in hyperbolic chambers, owning the bones of the Elephant Man. You know, Michael puts these things out because he wants to be seen as unusual, but then he kind of becomes a victim of his own circumstance, because he becomes unusual. And with the lightening of the skin, he says he has vitiligo. He says that he had only two plastic surgery procedures when it looks like he had 20.

So it’s unusual that, at first, he would put things out like this, but then spend the rest of his life defending rumors from the tabloids and from other media reports.

KURTZ: So why would he do that? Was it some kind of PR strategy on his part to appear larger than life?

DIAZ: You know, that was the way it was.

DIMOND: That’s how (ph) it was.

DIAZ: Yes. Remember in the ‘80s, when we had Prince and Madonna and Michael all trying to kind of combat their weirdness at the same time? That was really the way it was early in the ‘80s and late ‘80s, where stars were not just known for the music they put out, it was that -- because we didn’t have TMZ, and we didn’t have 24-hour coverage of entertainment news, so they could kind of like shape their own image and give questions that only they could answer.

DIMOND: And you know, Howie, Michael Jackson had the master of that, the late Bob Jones. He said to me one time, after he was out of the employ of Michael Jackson, he said, you know, the theory was, why stick with just one day of coverage? Because you media people, you’ll lap it up. So we put other the hyperbolic chamber picture and let it sit there for a few days and fester, and everybody picks it up. Then we issue a denial. Bingo -- I’ve got five days worth of coverage because you guys will do that.

KURTZ: It’s interesting that it was so calculated.

Eric Deggans, television, of course, showing clips of him as a boy in the Jackson 5 days. And talking to just ordinary people, it’s striking to me how many folks of a certain generation were touched by Michael Jackson’s music.

Have the media in this -- all of the excess of coverage that’s coming out now -- have they underestimated his importance in part as a racial trailblazer who was making music videos just when this was becoming popular in the ‘80s and a lot of the stars were white?

DEGGANS: Oh, yes. I mean, you know, one of the interesting things about Michael Jackson is -- I mean, that’s why we’re talking about him. There’s so many branches to this story.

This is a man who had a hit in literally every decade that he was a performer -- the ‘60s, the ‘70s, the ‘80s, the ‘90s, even to the turn of the new century. And the interesting thing about his emergence in the ‘80s, for example, was that he was one of the biggest artists after the disco boom to reunite white and black audiences, because the backlash against disco kind of, you know, separated white and black audience into punk and disco. And all of a sudden, he comes along and he forces MTV to start featuring black artists, and also brings these disparate audiences together.

I was a pop music artist myself in the late ‘80s, and I can tell you, I was playing clubs in Kentucky and Tennessee, and places that normally no black person could go without a bodyguard. But they loved us because they had been conditioned by Michael, and later Janet, to accept black artists.

KURTZ: If we have a couple extra minutes, we’ll ask you to sing, Eric.

DEGGANS: You don’t want that. I’m a drummer.

KURTZ: Let me turn to Diane Dimond.

Oh, you’re a drummer. OK.

Is this now going to be the new Anna Nicole Smith case, where the media are going to spend days and weeks and months, who knows, reporting on the cause of death, the drugs, who gets custody of the three kids, what happens to the money? Is this just not going to go away?

DIMOND: Yes, yes, and yes.

You know what? Look, let’s talk about the media, what part of the media.

Newspapers, cable, that’s their bread and butter, what’s happening right now. So that’s why you’re seeing so much on cable.

KURTZ: Let me just jump in. Let’s put up some of those headlines. OK, as you’re talking, we’re putting up some of the front pages to show this has been a big print story as well.

DIMOND: Right. Exactly.

I got a call from “Maclean’s” magazine, the Canadian magazine, that said help, quick, can we excerpt parts of your book? Because we’re going to do our whole issue -- we’ve thrown it out and we’re going to do the whole issue on Michael Jackson.

So it depends on, what media are you talking about? I’m sorry, I’m a longtime trained journalist, worked right there in Washington, D.C., at the White House and Capitol Hill. And when the evening newscast is 99 percent Michael Jackson, now, I have trouble with that.

Their reason for being is to tell me what’s happening in the world, all over the world, capsulize it for me, not just give me one story. So there I have a problem.

KURTZ: Go ahead, Carl.

DIAZ: There are two big differences in the Anna Nicole Smith case and Michael Jackson. I covered Anna Nicole from beginning to end, and I can cite these two big differences. With Anna Nicole, she died, and then you had a trial, like, 48 hours later. I mean, you know, because the big thing is, where are we going to bury her body? People forget that, that Anna Nicole Smith passed away, and then the big question was, where are we going to bury the body?

KURTZ: OK, but let’s stick with Jackson. Let’s stick with Jackson.

DIAZ: So with Michael Jackson, there is not going to be a trial. I mean, there’s not...

DIMOND: There’s going to be a funeral. A big funeral.

DIAZ: There will be a big funeral, but Anna Nicole Smith got the legs, excuse the pun -- the legs of that story happened when the trial hit and you had the sideshow, the judge crying and the whole thing.

KURTZ: OK. Let me just throw some numbers at you here for cable ratings on Thursday night, when we learned of the death. CNN up 937 percent at one point; Fox up 243 percent; MSNBC up 330 percent.

And the way that unfolded, Eric Deggans, is that the gossip site TMZ.com, which is part of Time Warner, confirmed an hour before everyone else that Jackson had died. CNN was still citing sources that said he had been in a coma. The “LA Times” had first reported that he had been in a coma. We now know he was dead when he got to the hospital.

Let’s look at Harvey Levin, the head of TMZ, talking about the way that coverage unfolded.

OK. I thought we had that clip. But what Levin said is that the “LA Times” has not corrected the mistake, and that everybody was afraid to credit TMZ because it’s seen as just a gossip site. The truth is, TMZ got it right. And the question is, do we treat it with enough respect?

DEGGANS: Well, you know, TMZ is a site -- they have broken a lot of big stories. They broke Mel Gibson’s profanity-laden drunk driving arrest, they broke Michael Richards’ use of the N-word. But they have also gotten some things wrong. I believe they reported that Snoop Dogg’s wife was dead when she wasn’t. So you’ve got to be careful about these stories.

They got this one right. When they tell us how they got it right, then maybe we can put a little more trust in their reporting.

KURTZ: Well, TMZ does sometimes...

(CROSSTALK)

DEGGANS: One of the things we don’t know, for example, is do they pay sources? Which is also...

KURTZ: Well, no. Actually, we do know that they do pay sources. (CROSSTALK)

DEGGANS: But did they pay sources in this case? And can I also say...

KURTZ: I’ve got to go to Carl. I only have half a minute here.

Diane mentioned the network newscasts, which led Thursday night, Friday night, of course, with Michael Jackson. Back in 1977, CBS led with another story, the Panama Canal instead of Elvis’ death. And it just seems like everybody is on this Jackson bandwagon.

DIAZ: It’s because people are talking about it. I mean, you know...

KURTZ: Is that the standard? Is that the media standard, whatever people talk about becomes the most important story?

DIAZ: Yes. It is now.

I mean, I’m not a 40-year veteran of TV journalism, but I can tell you that you cater to what everyone is talking about. That seems to be the new standard. And everyone on Thursday, everyone was talking about Michael Jackson’s death. Farrah Fawcett died five hours earlier, and it’s as if she never even existed. So that’s the thing.

KURTZ: Right. All right. Well, the question is...

DIAZ: But you’re right, it’s...

KURTZ: We’ve got to go. The question is whether we’ll all be talking about this a week, two weeks from now. And if so...

(CROSSTALK)

DIAZ: Yes, we will. Yes, we will.

KURTZ: All right.

Eric Deggans, Carlos Diaz, Diane Dimond, thanks for joining us.

DIMOND: You bet.

KURTZ: Up next, questioning cool. It’s one of the world’s hippest companies and the most secretive. Is the press turning on Apple after Steve Jobs tried to hide his liver transplant?

(COMMERCIAL BREAK)

KURTZ: Apple is the coolest company on the planet; right? The press is constantly gushing over the iPod, the iPhone, and all the other i Products. But Apple may also be the most secretive company on the planet.

And the media coverage finally turned skeptical this past week after “The Wall Street Journal” reported that Steve Jobs had secretly undergone a liver transplant.

(BEGIN VIDEO CLIP)

ERICA HILL, CNN: The Methodist hospital where doctors gave Steve Jobs a liver transplant denying the Apple CEO received any special treatment.

JEFF GLOR, CBS NEWS: He is the man behind iPods, the iPhone, and Apple Computer. Steve Jobs, perhaps the most discussed and most mysterious leader in the business world today.

UNIDENTIFIED MALE: That news ends months of speculation over his health.

(END VIDEO CLIP)

KURTZ: Remember, this is a company that wouldn’t talk about Jobs’ health problems, right up to the point when he took a six-month leave of absence that is just now ending. And despite mounting press questions, Apple still has little to say about just what is ailing its chief executive.

Joining us now to talk about the company’s coverage, Kara Swisher, co-executive editor of allthingsdigital.com, part of the Dow Jones Company. And in New York, Steven Levy, senior writer for “Wired “magazine.

Kara Swisher, you’re out in San Francisco, I should have mentioned. Steve Jobs considers his health a private matter. Now, even though “The Wall Street Journal,” which is part of your company, broke the story, do you generally agree that CEOs should be able to keep these matters out of the press?

KARA SWISHER, CO-EXECUTIVE EDITOR, ALLTHINGSDIGITAL.COM: Some of them. It depends on how much information it should have. In this situation, it’s really an interesting situation, because I don’t think they knew exactly what was going on with him. And I think a lot of these operations happened rather quickly, because his illness has sort of developed. So, I’m not sure -- I mean, he’s definitely been secretive, Apple has been secretive, it’s been a problem for the press.

The questions is, did they reveal enough or did they hold back too much? And if so what should they have done?

Did they know enough at the time that he was having these operations to be able to talk intelligently about it. So, you know, did they know when the liver transplant was going to happen? Did they know where it would lead to?

So that’s the question. Do they continually drip out information? Is that also good? Probably not.

KURTZ: But that’s certainly my impression, Steve Levy. I mean, Jobs is not just the CEO, he’s a personification of Apple. And he originally said he had a hormone imbalance and he didn’t explain why he was taking a six-month leave, and clearly tried to keep the transplant secret.

Why doesn’t the press give him a harder time?

STEVEN LEVY, SR. WRITER, “WIRED”: Well, the press has given him a pretty hard time. And I’ll tell you, this envelope of secrecy over the past few months has bred its own rumor mill. And in the blogosphere, people aren’t shy about spreading rumors. We’ve heard all sorts of things over the past few months, and some of them -- actually, one place did speculate about a liver transplant, I think.

KURTZ: Should Apple bear responsibility for the fact that there is this thriving rumor marketplace about Jobs and the company because so little hard information is available?

LEVY: Well, to a certain degree, but Kara really made a great point when she said, how would you actually get this out? Could you imagine if Apple announced Steve Jobs is going to have a liver transplant tomorrow?

What would happen to the stock? And then how responsible would they be to give every single update? Oh, the operation went fine. Oh, he seems to be getting better. Oh, today his blood pressure is down.

The stock would go crazy, and the people would just circulate around the hospital looking for every shard of information. So, I think it was good for stockholders that they didn’t really know what was going on when Steve took this leave there.

KURTZ: Well, If I’m a stockholder, Kara, and I’m making a decision based on the health of the CEO, in part, I feel like material information is being withheld from me. SWISHER: Well, the question is, what is material? I mean, it was clear from last year, from those photographs, he was a very sick man. And he took time off.

So it’s not like people didn’t -- that it wasn’t built into the stock that this was a man who had undergone a form of pancreatic cancer, that was somewhat curable, that he still wasn’t doing well, that he had some sort of relapse that wasn’t clear what he had, and then he took time off. And so, one could argue -- Apple could argue that he was in a period of taking time off.

I think the issue is they probably should release something now, that he had this liver transplant. You know, he’s not an obituary, we’re not doing these large “The meaning of Steve Jobs” pieces this week. He’s doing well.

KURTZ: No, we’re doing all the Michael Jackson pieces this week.

SWISHER: Exactly. The man’s doing well.

KURTZ: Let me ask you this, because it was last summer that “New York Times” columnist Joe Nocera did a piece about Jobs’ health, before we knew a hell of a lot. And Jobs called him a “slime bucket” in the telephone conversation, and said he would only talk off the record.

What kind of media relationship is that?

SWISHER: Well, you know, Apple is a really different company. I mean, it’s not like this is different from what it’s been before. I mean, they keep a secret over if they’re going to have a certain kind of clicker on the side of an iPod. I mean, that’s like a major state secret at Apple.

So this is in keeping. And if you go down to the health issues, they really don’t let any information out. They don’t let how the box looks out. So they’ve been very controlling about all their press throughout their history. So, this is not different or anything else.

KURTZ: Right.

SWISHER: I think he’s just incredibly secretive. And if he’s incredibly secretive about products, do you think he’s going to be forthcoming about his own personal life? Not at all.

KURTZ: Right.

Steve Levy, you’ve interviewed Steve Jobs.

SWISHER: Yes, many times.

KURTZ: And Steve as well.

You did a cover story for “Newsweek” in 2004. Does he have a way of charming journalists or has he called you names, too?

LEVY: Both, really. I’ve had a long relationship with him. And I think overall, a good one. And he can be very forceful.

You know, obviously, you serve your readers, and you maintain the best relationship you can with a company like Apple. One thing that’s going for him is their products are so good. It’s very easy to serve your readers by telling them about the products and keep a good relationship when the products are consistently good.

KURTZ: Right. And consistently successful.

I’ve got half a minute, Kara. It is hard for me not to conclude that the press is softer on its coverage on Apple than it would be on Microsoft, for example.

SWISHER: Here’s the thing. Apple did very well while he was away.

I mean, I think the problem is we put him up as this iconic figure, and then Apple did just fine when he was away. They did even better. The stock is doing even better.

I mean, the idea that there’s not a company behind this man, I always say he’s not Willy Wonka and the Apple execs aren’t Oompa Loompas. I mean, these are very talented executives

KURTZ: Right. Well, you know, we in the media tend to personalize these...

(CROSSTALK)

KURTZ: We’ve got to go.

SWISHER: Absolutely. Thanks a lot.

KURTZ: Kara Swisher, Steven Levy, thanks very much for joining us.

LEVY: Thanks.

KURTZ: After the break, second fiddles. Losing Ed McMahon this week reminds us how some TV folks have made an art of standing just outside the spotlight.

(BEGIN VIDEO CLIP)

ED MCMAHON, TV PERSONALITY: You’re responsible for what you do...

(END VIDEO CLIP)

KURTZ: He was the ultimate second banana. While Michael Jackson was a much bigger star and Farrah Fawcett, with that poster, was a teenage heartthrob, Ed McMahon grabbed his share of reflected glory for one reason -- he made Johnny Carson look even funnier. And his passing got me thinking. It takes a special talent and a modest-sized ego to be a good number two.

(BEGIN VIDEOTAPE)

MCMAHON: Here’s Johnny!

KURTZ (voice-over): Ed was the ultimate straight man. His job was to set up Johnny, whether during the monologue or a “Carnac the Magnificent” routine.

MCMAHON: I hold in my hand the last envelope.

KURTZ: If a Carson joke fell flat, McMahon gave him a chance to recover. And sometimes they just adlibbed.

MCMAHON: Now, doesn’t your dog deserve Alpo?

KURTZ: The formula was set. It’s a role that Paul Shaffer performs for David Letterman, that Andy Richter does for Conan O’Brien, that Robin Quivers fills for Howard Stern. But it’s not limited to entertainment.

“Morning Joe” wouldn’t be the same without Mika Brzezinski to serve as his sparring partner and sometimes punching bag. Regis Philbin had Kathie Lee Gifford and now Kelly Ripa. It’s a job Reg understands, having done it once for Joey Bishop’s late-night show. Alan Colmes was billed as a co-host, but he really played the liberal for Sean Hannity, whose fierce conservatism dominated that program even before Fox gave Hannity solo billing this year.

MCMAHON: Carnac the Magnificent.

KURTZ: A good sidekick understands the host knows when to jump in and when to hold back. You don’t want to shine too brightly when there’s only one star. But a terrific sidekick interjects a separate element of personality or humor that’s becoming more than a mere appendage.

The reason there will never be another McMahon is this: Carson dominated late-night television for decades before cable, before the Internet, Netflix and Facebook. Most people got three or four channels. Everyone watched Johnny, and that means they watched Ed as well.

(END VIDEOTAPE)

KURTZ: On his own, Ed McMahon probably couldn’t have become a TV star. But like a point guard who gets the ball to the big scorer, had an underrated skill on one of the most successful television franchises of all time.

Well done, Ed. Hi-oh!

Still to come, the perfect storm, how a frenetic week of news finally got us to stop talking about television’s most dysfunctional family.

(COMMERCIAL BREAK)

KURTZ: It was only this past Monday when the media world seemed agog over the news that, oh my God, Jon & Kate are getting divorced. How a self-obsessed reality show couple becomes a journalist fixation is beyond me, but now it seems especially trivial.

We’ve had the violent protests in Iran; more bombings in Iraq; the Mark Sanford meltdown; the fatal Washington subway crash; the deaths of Ed McMahon, Farrah Fawcett and Michael Jackson. Reality -- that is, actual reality, not the scripted entertainment version -- has a way of intruding on the news business, whether it’s entertaining or not.

And John King, as I turn things back over to you this Sunday morning, I enjoy these entertaining stories as much as anyone, but hard news shouldn’t take a back seat, should it?

KING: Especially not here at CNN, Howie. Hard news is our bloodline.

My daughter thinks the kids in Jon & Kate are cute, but I don’t think she’ll be watching anymore.

KURTZ: Well, they are undeniably cute. And I guess you do have to program for the whole family.

Thanks very much, John.

KING: Howie, you have a great Sunday.

KING: On the eve of a major deadline in Iraq, the turnover of security in the big cities to Iraqi forces. The commanding general of U.S. forces says he’s optimistic, but General Ray Odierno also shares with us his biggest worry.

(BEGIN VIDEO CLIP)

GEN. RAY ODIERNO, COMMANDER, MULTI-NATIONAL FORCE, IRAQ: I think it has to do with if we see a breakdown in stability in Iraq, if we see a consistent increase in violence, if we see that the Iraqis security forces aren’t able to respond, if we have some event that has caused some instability, then that would cause us to maybe, after we’re asked by the government of Iraq, to help. I don’t see that right now. I believe we’re on the right path.

(END VIDEO CLIP)

KING: Here as home, a contentious Sunday debate over health care reform, especially how to pay for it.

During the campaign, candidate Obama promised not to raise taxes on the middle class, but now a top adviser to President Obama won’t rule that out.

(BEGIN VIDEO CLIP)

DAVID AXELROD, SENIOR ADVISER TO THE PRESIDENT: He’s very cognizant of protecting people -- middle-class people, hard-working people who are trying to get along in a very difficult economy. And he will continue to represent them in these talks. But they’re also dealing with punishing health care costs. And that’s something that we have to deal with.

(END VIDEO CLIP)

KING: On health care and in the debate on energy and climate change, Republicans warn the president and Democrats in Congress are on a dangerous path, spending money the government doesn’t have and increasing the government’s reach into everyone’s lives.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL, R-KY., SENATE MINORITY LEADER: The real question is, do you want to do something that is so comprehensive that requires this kind of cuts to Medicare and to seniors, and to all of these tax increases, when we could target the things that are askew in the system and fix them without this kind of massive overhaul.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GOV. TIM PAWLENTY, R-MINN.: To have the government come in and say, we’re going to compete directly with the private market is another example of the partial, you know, nationalization of an industry, not unlike the mortgage industry, the banking industry, the auto industry, now the health care industry. Soon you’ll see that in the energy industry.

This is a pattern with this administration of government encroaching into the private market.

(END VIDEO CLIP)

KING: As you can see, we’ve been watching all the other Sunday shows so you don’t have to.

Let’s bring in the best political team on television, as we do every Sunday at this hour, and break down the issues.

Joining me here in Washington, seen only here on “State of the Union,” Democratic strategist and CNN political contributor James Carville and Republican strategist and CNN political contributor Mary Matalin.

Welcome. Happy Sunday.

MATALIN: Good morning, John.

CARVILLE: Good morning. Good morning.

KING: Let’s start with David Axelrod’s comment on taxing health care benefits.

The president, in the campaign, said it was a bad idea. Just two weeks ago Vice President Biden and Secretary Sebelius were out trying to slam the door shut on that, but a lot of wiggle room, there, James, from David Axelrod, saying we don’t want to do it, but -- but we have to deal with the punishing costs of health care reform. Why open that door?

CARVILLE: Because, in the Senate Finance Committee, Senator Grassley is making that a condition of moving the bill with some Republican votes.

Obviously, the administration may have to go along. They’re going to try to keep it as far away from the middle class as they possibly can, but the price that the Republicans are extracting is that they want to tax these benefits pretty far down the line.

I think, if the administration can protect 80 percent of the health care benefits from taxation, they’ll do all right, in the so- called “Cadillac plans.” But that’s what happened is the reality of the constitution and the politics is, is the Republicans are insisting that these benefits be taxed, and we’ll see where it goes, if there will be some compromise.

KING: Before you jump in -- before you jump in, I want everyone to hear from the voice James just mentioned. He said -- Senator Grassley -- Senator Grassley has said he would like to work on a bipartisan bill.

And James is right. He says he thinks, to come up with all this money, you’re going to tax health care benefits, but he also made clear today that Republicans aren’t going to do this for the Democrats, that if they’re going to have those tax increases to pay for it, that President Obama himself is going to have to get his hands dirty.

(BEGIN VIDEO CLIP)

SEN. CHARLES E. GRASSLEY, R-IOWA: My view and the view of a lot of other Republicans, since the president denigrated John Cain’s -- John McCain ’s effort to move in this direction during the campaign, it’s going to take, in order to win over Republicans, presidential leadership in that direction.

(END VIDEO CLIP)

KING: Mary, do you want Chuck Grassley saying, let’s open the door to higher taxes on health care benefits, as long as the president helps us?

MATALIN: It doesn’t matter what I say or what Chuck Grassley thinks. You can look at any poll. The new Republic Resurgent poll, is out, which is the Resurgent Republic answer to the DCorps (ph) poll, a very serious poll, people do not see overhaul of the health care system, right now, to be a priority.

Yes, the costs are high, and they want reform, but, by 2-1, they would rather not do it by raising taxes or increasing the deficit. And 80 percent of the middle class that David says the president’s going to protect like the health care that they have.

So this is -- the whole notion of doing all of this before we fix Social Security, before we fix Medicare, while the deficit is completely out of control, is what’s going on outside the Beltway.

And whatever they’re talking about in committee, at some point, has to connect with reality. And the reality is they’re not -- no one’s going to support taxing benefits or raising taxes to get 46 million -- and that’s a bogus number -- insured.

CARVILLE: Right, well, there’s the difference. The president thinks that we do have to do something about health care. He’s very committed to it. He wants to do something now. Resurgent Republic -- other Republicans, other conservatives said there’s no crisis here; let’s just do other things and we’ll get around to it. That’s what, sort of, politics is about. Again, in order to get something done, the Republicans, in the person of Senator Grassley, who, much to his credit, is very up-front about it, that they think it’s a good idea to tax these benefits.

I think that the Democrats are going to try to negotiate taxing as few of these plans as possible. But I suspect, if this thing is going to come out, it’s going to come out looking something like that.

KING; Well, one of the reasons they may need those Republican votes, at least in the Finance Committee, is because we have seen, in the recent weeks, a bit of a civil war among the Democrats, questioning the public option, questions whether you should have regional co-ops, questioning whether the government can afford all this at once like this.

And into this debate, now, comes the Republican National Committee, with what we might call the first television ad of the 2010 cycle.

You remember, James -- and you’re laughing, here, on the set...

(LAUGHTER)

(CROSSTALK)

CARVILLE: ... Harry and Louise.

KING: You remember Harry and Louise. You remember your friend President Clinton’s health care plan was doomed once this turned into a TV ad war and got contentious. Let’s listen to the RNC ad.

(BEGIN VIDEO CLIP)

ANNOUNCER: President Obama talks about a, quote, “public option.” When he says “public option,” that means putting government bureaucrats in charge, instead of patients and their doctors.

It’s a bad idea. Tell President Obama to work with Republicans and to stop rushing into another government takeover.

(END VIDEO CLIP)

KING: You have a Democratic president; you have a Democratic House; you have a Democratic Senate. I guess the question on the table is, are they beginning to lose control of the health care debate?

MATALIN: Well, the first Harry And Louise, lo those many years ago, there was 15 percent more support then, 15 years ago, for overhauling the health care system.

So there’s not even this -- people are not in the crisis mode about this. And if it was such a crisis, which is what we’re being able to see this Obama pattern of saying something’s a crisis -- if it was such a crisis for Democrats, why did the they stall, obstruct and get in front of every health ware reform effort of the Republicans for the last decade?

And if the Republicans sign on to anything right now that’s not undergirded by choice and competition and innovation and incentives, they will be signing a suicide pact. And they’re not going to go there.

And the inherent problem for all of this is those Democrats who think, increasingly -- again, Resurgent Republic show, and independents think like that, all those seats are up in 2010. So Obama can get these Pyhrric victories like the energy kneecapping he did this weekend, but those guys have got to run in 2010. He’s going to lose seats on these.

CARVILLE: Again, you see -- and this is -- the Republicans are going to turn around and say there’s nothing wrong with health care; there’s no crisis; the president says there is; we need action.

And that’s -- I think that’s a choice that they’re comfortable with. I think that’s a choice that the Democrats are comfortable with. As this thing...

KING: Let me interrupt you. You frame the debate like that, but will enough Democrats, Democrats on the battle in 2010, if they start to feel this heat that we can’t afford it, that the public option’s too much government?

CARVILLE: One of the things that we don’t point out -- and I was there in ‘93 -- the Republican party is almost twice as unpopular today than it was in 1993. It’s hard to remember the Republican Party actually had credibility in 1993. Right now, they’re held in the lowest esteem of any political party in modern polling.

So the Democrats don’t so much need to, kind of, fear that. Oh, you’re going to lose -- sure, we’ve got, you know, 60 Democratic senators. There’s a lot of variation. There’s a lot of things. There’s plenty of things that the president has at his disposal. He’s going to have a very busy summer. These votes are just not going to come to him. He’s going to have to politick hard for them. He’s going to have to get out there and push hard.

And the outcome of this thing is still in doubt -- I would agree with that -- but I think that the weight is that people are looking for some substantive changes here.

I think people like Senator Grassley, Senator Baucus and those -- they’re working day and night inside that Fiance committee. And it’s going to be a compromise. There’s no doubt about that. But let’s wait and see where it goes. There’s a -- as they say -- as they say in the pool halls, there’s lot of green between here and there.

(LAUGHTER)

MATALIN: The reason that Republicans -- it is true, the statistic he’s citing -- are held in such ill repute is because they stopped behaving like conservatives. James always conveniently neglects to note that all polls show a resurgence of -- while Republicans are at an all-time low, conservatism, isms and people who identify with it, are at an all-time high.

So it is not consistent with a center-right philosophy, which this entire nation, including increasing numbers of independents support, to have a taxpayer-funded, government-controlled health care or energy policy.

And it is true, when Obama throws out these big, big aspirational goals, everyone supports them. You can go to any poll and go inside. When you look at the details, there’s not one aspect of any of the these policies, the deeper you go, that are supported by any majorities. And Democrats have to run in that environment.

So you can call it a crisis, but you have to deal with reality at some point.

KING: Let’s -- let’s get a context of where we are. The 1993 health care debate, without a doubt, gave us the framework of the 1994 midterm elections, part of it. Republicans had huge gains.

The 2009 health care debate and other Obama agenda items, already framing what I think we will see in 2010. The White House says Republicans are the party of inaction; they’re the party of no. And leading Republicans, including the Minnesota governor here earlier today says, Obama and the Democrats are the party of more government.

(BEGIN VIDEO CLIP)

PAWLENTY: The president said not long ago in an interview, quote-unquote, “we are out of money.” With all due respect, Mr. President, if we’re out of money, quit spending it.

I’m concerned also about this massive government encroachment in autos, in health care, in energy and other sectors. But, you know, President Obama inherited a very tough situation, I think we need to give him more than six months before you can make an ultimate verdict on how he is doing.

(END VIDEO CLIP)

KING: Well, a bit of kindness at the end there from Governor Pawlenty. But no question, he thinks the government is spending too much now trying to reach so much. You both have been very successful running campaigns, giving advice to candidates in the past. I want each of you to put your party, James the Democrats and Mary the Republicans, it is early, the 2012 election is still down the road, but does your party, James, and does your party, Mary, have to make any adjustments now based on where the debate is?

CARVILLE: Yes. I think, look, you’re going to have to adjust a lot. You’re certainly going to adjust your position on health care as it winds its way through the legislative process. The same thing with the energy bill. I’m sure it’s going to be the same thing with the regulation bill that Congressman Frank is marking up right now.

But on all of these things, and I would ask any student of history, anybody that knows what presidents have done, I have no earthy idea, if you’re concerned about the deficit, why you would vote Republican, because there is no evidence that Republicans produce lower deficits than Democrats.

In fact, all of the evidence is to the contrary, that Democratic presidents have been much better on these fiscal issues than Republicans have. So if you look at history, I think the Democrats are on very good ground.

And by the way, if you look at the polls, people have recognized that over the years.

KING: You don’t have to saying anything if you just want to give him that look. MATALIN: I’m not giving him a look. It’s just this deficit that this president has produced in five months exceeds -- quadrupled any deficit that President Bush ever had fighting wars and all of the rest of it, and coming into a recession.

What Republicans need to do, and they are increasingly doing it, is be the proud party of no, no to this, and yes to the alternatives that they have had on the table for a long time.

Again, going to health care, but most of the policies, to have them be undergirded by competition, by innovation, by incentives, by choice, that’s how this country grew. And they have to talk more about that.

They have the plans. They have the policies. They know them. They’re smart. There was a contingent of new congressmen at our house last night on coastal restoration. These guys really know how to lead.

So they shouldn’t be -- they shouldn’t feel hesitant about saying no to this and yes to where we are. And they should remember this fact: 80 seats that Democrats are sitting in right now were won by George Bush or John McCain .

Those are seats that Rahm Emanuel , ironically, went out and recruited centrist and conservative Democrats. If Republicans can be who they really are, they can beat centrist Democrats.

KING: A quick time-out, quick time-out, I know it’s hard, but let’s take a quick time-out. We’ll be right back. Much more of our conversation with Mary and James. Stay with us.

(COMMERCIAL BREAK)

KING: We’re back with two of our favorite political veterans, CNN contributors James Carville and Mary Matalin.

I want both of you to weigh in on the big drama in Republican politics, and to some degree in national politics this past week. Governor Mark Sanford of South Carolina was missing, his staff said, oh, he’s just hiking on the Appalachian Trail, don’t worry, he’ll be back in a few days. Then it turned out he was in Argentina seeing his mistress.

He explained all of this in a sometimes rambling and certainly dramatic news conference. Let’s have a little snippet.

(BEGIN VIDEO CLIP)

SANFORD: The bottom line is this. I’ve been unfaithful to my wife. I developed a relationship with a -- what started as a dear, dear friend from Argentina. It began very innocently, as I suspect many of these things do.

(END VIDEO CLIP)

KING: Mary Matalin, how big of an impact more broadly on the Republican brand at a time the brand is a little trouble?

MATALIN: Well, it’s distracting, sex scandals trump money scandals. And so we’re distracted from Rangel’s tax evasion and Murtha’s suspect diversion of taxpayer dollars to his district. But scandal -- any scandal trumps substance.

And as we’ve been discussing, the Republicans are getting traction, if not in their name, by their very conservative principles and the policy application of them. So it’s a distraction.

Is it dispositive? No, I go back to those 80 seats. And really, I don’t think anybody in 2010 is going to say on those 80 seats, well, I was going to, but since the Democrat betrayed what I voted in the first place, I was going to vote for him, but I’m not now because a governor last year in a different state cheated on his wife. That’s just not how voters think.

KING: James, I want to go back in time for painful reasons, but when Monica Lewinsky emerged in the Clinton administration, the first reflex of many in this town was, he’s going to have to resign, there is no way. Is Mark Sanford going to have to resign or is there a way to stay in power?

CARVILLE: I hope not. And by the way, I actually thought that his press conference was very sort of compelling television. And there’s a reason that we should not like attack this. It’s a reason that airlines don’t -- you know, the reason British Air doesn’t run out ads they don’t fly Air France because they had a crash, because you never know tomorrow when you’re going to have one.

So I would prefer to be -- as opposed to leading some kind of hypocrisy, kind of family values, what do we tell the children, I think we can safely put all of that behind us. Because -- and I have no idea, but if I had to guess, there is going to be some Democrats that are going to get entangled in this kind of stuff, because (INAUDIBLE) with his people.

My favorite thing about this though is -- I can’t let this go (INAUDIBLE), the RGA passed from a 50-something white guy to a 60- something white guy in Mississippi. I think that was a sort of telling thing about today’s Republican Party, is they’re putting (INAUDIBLE) to old white guys in the South.

And if this president keeps pushing, he can keep them in that predicament.

MATALIN: Haley Barbour , who is the new RGA head, who ushered in the ‘94 Republican takeover, who is a brilliant reformer, who has experience at every level of government, that should be the essence of the resurgent republic...

KING: Now who was...

(CROSSTALK)

KING: Who was Mark Sanford ? And I ask in the context of this. Here is a guy, he has a beautiful wife. He has four great-looking kids. He’s a governor of a southern state that matters in presidential primaries. And he has angered even many Republicans by being so defiant on holding the line on spending, so much so that Rush Limbaugh lamented after all of this played of what might have been. Let’s listen.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, HOST, “THE RUSH LIMBAUGH SHOW”: I wonder if Sanford thought that he was going to get away with this? They all do, I gather. He could have been our JFK. Could have had it all.

(END VIDEO CLIP)

MATALIN: Rush is so skinny, isn’t he? He looks great.

KING: Is that sarcasm, could have been our JFK?

KURTZ: Could have had it all? Or was he somebody you looked at -- if we were having this conversation 10 days ago, was he someone you looked at as a player going forward?

MATALIN: Our JFK has to do some things that JFK, the real one, did, which was he was a supply-sider. He cut taxes, he increased defense spending. He was for -- they like to claim him, but they wouldn’t claim any of his policies today. No, our resurgence is going to be based on those very ideas that he represented. It doesn’t -- it’s helpful if you have a messenger, but it’s the message that needs to get right.

KING: James, you talked about the dramatic news conference and what great television it was. One of the things that immediately people seized on, was that unlike some other scandals like this, Jenny Sanford, the wife was not standing over his shoulder. I asked Governor Pawlenty, who was among those who might run for president in a couple of years down the road, I asked Governor Pawlenty about this, and he had this to say.

(BEGIN VIDEO CLIP)

PAWLENTY: Clearly, there’s been damage. Any time you have leading figures who are engaged in behavior that is sad and troubling and hypocritical, other people are going to look at that and say, hmm, they don’t walk the walk. And so the words and the actions don’t ring true. But it’s a sad and troubling situation with Jenny and Mark Sanford . I know them. I’m proud of Jenny for her strength and her commitment to her family and keeping that family together. Frankly I was glad to see her not standing at the press conference like many others have.

(END VIDEO CLIP)

KING: Not only was she not standing there, she has also given an interview saying I don’t care about his career, and I’ll listen to him about whether he can keep our family together.

CARVILLE: Well, Ms. Jenny, she’s pretty stout in her own right. She comes from a very affluent family on the north side of Chicago, she finished way up in the class -- I think it was Georgetown, was an investment banker when he met her. This is not some steel magnolia who’s totally dependent on the governor for her well being. I hope -- she obviously is very committed to her four boys, and if they work this out, I think we’d all be happy. We love a story of redemption. It doesn’t matter what political party we are in. But my guess is that there’s a whole lot of reconciling to do, and this woman seems to me to be pretty much her own person, is going to maintain her own dignity and her own self- esteem to all of this, and she’s done a pretty good job so far.

MATALIN: You know, this sounds like a Mark Sanford has one and only one job, he has to make those four boys understand that this god awful betrayal has nothing to do with them, that he loves them and he needs to pray that they will forgive him. That’s his number one job.

KING: Should he quit to do that number one job?

MATALIN: I can’t speak to what -- if he can work and do this at the same time. That should be his number one priority. I think you can work and do that. That is his number one priority. And to my mind, his only road to redemption, his only road to respectfully hanging on to that seat or having any future, is to make those boys understand this wasn’t about them.

CARVILLE: To my point is he was certainly not able to financial as a governor as we saw on television. If he recovers emotionally that’s fine, I don’t think he should resign over a sex scandal, that would be ludicrous, but I don’t know how -- this thing is obviously very kind of draining on him. I cannot make a trip to Argentina all the time. The thing I kept thinking is...

MATALIN: For business, but I’ll be coming with you on these trips now.

CARVILLE: I have no how long that flight was from Boston. I know the schedule says 11 or 10 hours, whatever it is, but I got a feeling that thing must have felt like two years for him.

MATALIN: Yeah, think about that.

CARVILLE: I couldn’t -- that flashed through my mind. But he does -- his political survival, and I think there’s a lot of Republicans and the Democrats don’t have a lot of say there -- but there’s a lot of Republicans probably not crazy about the lieutenant governor getting the leg up on the next governor’s race and just to have him hanging around for the next year and a half. It will play out in South Carolina pretty interesting.

KING: And James made the point, don’t take advantage of this, but politics isn’t fair. Do you think because of Senator Ensign and now Governor Sanford, you will have a lot of Democrats saying don’t believe these Republicans when they talk family values?

MATALIN: Yeah, they’ll try, but voters are not -- just because they were irrational in the last election doesn’t mean they will be in future elections. We’re coming back to a political homeostasis. I keep citing the resurging Republican numbers, but they’re reflected in all the polls. People are going back to what -- they’re looking at policy now. They’re done with adoration, they’re done with emotion, they’re in the reality evaluation. And they are not going to hold the entire party or set of ideas or philosophy, hold it against that.

KING: He’s raising his finger. Do I give him the last word?

CARVILLE: I just want to make a point.

MATALIN: Yes, he can have it.

CARVILLE: If they go back to this, what do they tell the children, family values stuff, I would lead the attack on them. If they just leave it alone and say, you know, we’re all human beings, we’re all capable of falling, let’s concentrate on policy, then that’s fine. Let’s move on to the next thing.

KING: We’ll save this tape for the next campaign, I promise. Mary Matalin, James Carville, thanks for coming in today.

In just a moment, we’ll turn from Washington to West Virginia, Fosterville, West Virginia, to be exact, where we sat down for a great breakfast and a candid conversation about health care, the economy and coal country. Stay with us.

(COMMERCIAL BREAK)

KING: In our travels this week, we headed out to West Virginia. We were looking at some health care issues, and also a whole bunch of other things. One of the things we do, we went to this community in Fosterville. Let me show you statewide numbers here. The unemployment rate nearly 9 percent. Nearly 14 percent, the residents of West Virginia, do not have health insurance, 17 percent of them are below the poverty level.

And it is higher in some of the rural communities that we visited. I want to show you this, when we travel, we look often at church signs. But let’s capture a bit of the character of a community. And make God your first resource, not your last resort. That at the Amazing Grace Fellowship Church. This was part of our travels, to learn a little bit about rural America, what they think about the big conversations here in Washington, about health care, about the economy, about climate trade. We talked it over an amazing breakfast at Angie’s.

(BEGIN VIDEOTAPE)

KING: Do you want Washington to fix anything, or would you rather the politicians leave you alone?

SHEILA MEADOWS, WEST VIRGINIA RESIDENT: That’s a touchy one. I think they have good ideas. I really do. Some of the hard-line people would say, well, they need to just leave us alone.

KING: How about you, sir?

UNIDENTIFIED MALE: Well, I feel about the same thing. I’ve hard troubles and stuff.

KING: Your insurance cover everything? UNIDENTIFIED MALE: Yeah, they take care of me pretty good.

KING: When they talk in Washington about covering the uninsured and trying to drive down costs, do you trust them to handle this right?

KING: Or do you worry that in changing to help people who don’t have insurance that those who do might end up somehow paying the price or?

DOSS: I’d like to see them help people that don’t have health insurance. A lot of people don’t have health insurance.

MEADOWS: Especially the children, you know? There’s so many children even around here that have no health care coverage.

KING: Do you trust them to deal with it in Washington? Do you think they have the right ideas? Or do you worry about that?

ANGIE TRAMONTANO, FOSTERVILLE, WEST VIRGINIA: Oh yes, I worry about it. But, you know?

KING: What do you worry about?

TRAMONTANO: They’ll do what they want to do anyway, you know?

KING: Do you think they understand communities like this?

TRAMONTANO: Probably not. If they would come out in the little communities, you know, they would see and talk to people.

KING: You run a small business that is dependent on people having money in their pocket that they’re willing to spend. How are things now as opposed to say six months or a year ago?

TRAMONTANO: It has been slow due to the coal mines. Like a lot of the coal miners are getting laid off, losing their jobs. So that affects everybody, you know. It has really affected here.

KING: The domino effects if the coal -- if the coal economy is struggling, you struggle, too.

TRAMONTANO: Right. Right, it affects all of us, all of the businesses. That’s what my husband is into, like tires, you know, tire business for Goodyear, it affects here, his business, like everybody’s, the coal business.

KING: Right. And why is the coal business struggling right now?

MEADOWS: Because of all the other businesses that are taking cutbacks shutdowns and things like that, they don’t need the coal for the electricity to run these bigger buildings. KING: How has that changed over the years? Now in a lot of circles -- in political circles, you know, coal has a dirty name.

DOSS: Well, I don’t know. I just -- it’s looking bad right now for coal. I don’t know exactly what to say about that.

KING: When you hear -- even Al Gore has -- his organization pays for TV ads, saying, there’s no such thing as clean coal.

DOSS: I’ve heard they want to do away with coal. So I mean, if they do, this country has had it. This state here has had it.

KING: Right. Well, what would happen in a community like this if they went, cut back even more on the use of coal?

DOSS: Well, this place would look like a ghost town. There wouldn’t be nothing left of here.

KING: Do you think the president of the United States is on your side?

TRAMONTANO: It doesn’t look like it, not right now.

KING: Why?

TRAMONTANO: Because he’s against the coal mines, the coal, you know, as far as I know, he has never been close by.

KING: Do you think he’s on your side, sir?

DOSS: No, I don’t. From what I’ve heard of it, no, I don’t.

KING: How about you?

MEADOWS: I’m still debating that. You know, you have the singers and the stars that come, and they tour the coal areas, especially the strip mines, and things like that. They don’t -- they don’t get to see, you know, how hard these men work and things like that.

And sometimes I think it would do these higher-up politicians a lot of good to come and (INAUDIBLE) with these coal miners.

(END VIDEOTAPE)

KING: Politicians in a coal mine, not a bad idea. I can tell you we’re going back to West Virginia soon to spend some time in a coal mine. You see the beautiful hillsides here.

When we come back, three reporters, three of the best political reporters in the country open their notebooks on the economic debate, health care, climate change, and the future of the Republican Party. Stay with us.

(COMMERCIAL BREAK) KING: I’m John King, this is STATE OF THE UNION. Here are our stories breaking this Sunday morning. The president of Honduras has reportedly been injured during a military-led coup. A government official tells CNN Jose Manuel Zelaya was arrested this morning, taken out of the country, reportedly to Costa Rica. The arrest comes on the same day Zelaya had vowed to follow through with a referendum on term limits. The supreme court had ruled that illegal.

President Obama says he’s deeply concerned about these developments and he is calling on all parties there in Honduras to follow the rule of law.

Iran’s supreme leader has issued a call for national unity. Ayatollah Ali Khamenei urged both sides in the bitter election dispute to calm down. That appeal broadcast today on Iranian TV.

Britain has criticized the arrest of British embassy employees in Tehran. Iranian media says those workers were detained for their role in post-election protests.

President Obama has written a letter to Michael Jackson’s family rather than making a public statement on the singer’s death. Senior adviser David Axelrod says the president felt expressing his feelings privately was more appropriate.

Axelrod also says Mr. Obama believes Jackson was a magnificent performer who made an undeniable impact on music. That and more ahead on STATE OF THE UNION.

A shot of the White House there on the final Sunday in this June, a key time for the president’s domestic agenda. And joining me here in Washington to discuss it: Dan Balz, he is the senior political writer for The Washington Post, and author of the new book, “The Battle for America 2008: The Story of an Extraordinary Election.” Also with me, CNN senior political analyst Gloria Borger, and CNN senior congressional correspondent Dana Bash.

Dan Balz, let me begin with you, because in that book, I’m guessing you explore what happened during the campaign and candidate Obama saying he would not raise taxes on the middle class in his health care fight, first with Senator Clinton, then with Senator McCain.

David Axelrod this morning -- two weeks ago Secretary Sebelius, Vice President Biden were out trying to slam the door shut on that, David Axelrod seemed to open it a bit today. I want you to listen.

(BEGIN VIDEO CLIP)

(SOUND EFFECT)

KATHLEEN SEBELIUS, HEALTH & HUMAN SERVICES SECRETARY: ... the premise that 180 million Americans have health coverage through their employer, that attacks on those benefits may dismantle that marketplace. DAVID AXELROD, SENIOR ADVISER TO THE PRESIDENT: He’s very cognizant of protecting people, middle class people, hard-working people who are trying to get along in a very difficult economy. And he will continue to represent them in these talks, but they’re also dealing with punishing health care costs. And that’s something that we have to deal with.

(END VIDEO CLIP)

KING: If two weeks ago you’re trying to slam it shut, why the “but” now?

DAN BALZ, THE WASHINGTON POST: Well, he wants to pass the bill. And in order to pass the bill, it is not clear what the set of pieces are that will come together to allow him to do that. Taxing health care benefits is one option. There is a lot of potential money in that. There is resistance, particularly among unions on that that would be hit hard.

But they don’t know what the formula is to get this bill through the Senate and the House, and particularly the Senate. And there are a lot of negotiations going on in the Senate Finance Committee, as we all know, and they’re going to wait.

He’s going to lay down his principles. He is going to continue to talk publicly about what he would prefer to see, but he is certainly not drawing any firm lines at this point.

KING: And is there a risk in that, Gloria? There certainly are pros in that. As Dan says, they think it moves it along if the president sort of has a mostly -- not completely, but mostly hands-off approach. But what’s the potential downside?

BORGER: Well, the potential downside is you wait too long, and then the train leaves the station and you’re not on it.

I mean, I was talking to somebody at the White House last week, and he said to me, this bill will be written in conference committee, that essentially they’re going to see what they get out of the Senate, they know what they get out of the House, and they’re going to -- that’s where they’re really going get involved.

But these issues of how you pay for this are very difficult for this White House because they made a lot of promises during the campaign.

BORGER: That they didn’t believe in mandates; they didn’t believe you’d have to buy into this -- force people to buy health insurance. They didn’t believe in taxing health benefits.

Both of those things that they spoke about during the campaign -- they may have to, kind of, say never mind.

BASH: But the White House really has been sending mixed messages on this fundamental issue of whether or not they will go for taxing benefits as a way to pay for health care.

But guess what? Here’s the reality. They’re probably not going to have a choice.

I was standing for hours and hours outside of meetings...

(LAUGHTER)

... where the Senate Finance Committee members were meeting all this week, looking at that fundamental issue, how do you pay for a trillion-dollar health care reform bill?

And two of the lead senators, Democrats, on that, told myself and other reporters, coming out of these meetings, they just don’t see a way to do this without having taxing benefits as a critical part of paying for the president’s health care reform.

KING: And among the people in the room for those talks is one leading Republican, Chuck Grassley. He’s the ranking Republican on the committee. He comes from Iowa, where this health care debate played out in the campaign. He’s on the ballot. He wants to do something.

And he says, even though you have many Democrats now saying, I don’t even if we can afford this; I don’t know about this option or that option, Chuck Grassley says we can have a bipartisan plan “if.”

(BEGIN VIDEO CLIP)

GRASSLEY: ... if it doesn’t touch the concerns that we have about federal control of health and leading toward a Canadian-style single-payer system, then I think it can get bipartisan support.

(END VIDEO CLIP)

KING: Dan, we lived through this back in ‘93 and ‘94. The president wants Republican support. Obviously, Chairman Baucus wants Senator Grassley’s support, but he seems to be ruling out a public option there.

Is it wasted time, almost, trying to work it out with Republican if, in the end, one of your lines is you will have a option?

BALZ: Well, the question is, what’s the shape of a public option?

I mean, all of these things seem negotiable at this point. So there is -- there’s a lot of discussion under way as to how you would do this so that it doesn’t sound like it’s government running health care.

And it may be that they can find some language that’s acceptable to Senator Grassley.

I mean, Senator Grassley seems to be the last cog in an attempt to get a bipartisan bill. In many ways, the administration has moved on from that, but they’re prepared to pass with this Democrats if they have to. But they would dearly like to have Senator Grassley, who might then be able to bring more Republicans in than who otherwise might come to it.

But the -- the shape of that public plan is critical because you can lose people on the left if it’s too watered-down.

KING: And let me bring the climate change debate into this. Because many Republicans, most are to the right of Senator Grassley, saying any public option is too much government.

And now we’re hearing the same thing when it comes to this climate change bill that just passed the House, cap-and-trade system, designed to control the emissions of greenhouse gases.

Minnesota Governor Tim Pawlenty , who might be running for president pretty soon, had this to say.

(BEGIN VIDEO CLIP)

PAWLENTY: This bill goes so far as to have the federal government micromanage and prohibit what local homeowner associations can do as it relates to the design features of a local homeowner association. That’s one examples of dozens in this bill, in terms of its overreach.

And it’s a cap-and-trade bill. It’s going to cap our job growth and trade our jobs to other countries who provide a more competitive business environment.

This is the overly burdensome version that Congress has put forward.

(END VIDEO CLIP)

KING: Let me start with the threshold question to Capitol Hill. It passed the House just barely. That bill have any chance in the senate?

BASH: We don’t know yet. I mean, they’re not even going to go there until the fall because health care really is front and center in the Senate, right now. So they’ve got some time to -- to let things simmer a little bit.

But I think that is certainly one argument that Republicans are making, but the most fundamental argument that Republicans are making -- and it’s why -- it’s counterintuitive, but why they were actually excited to vote on something they knew they were going to lose in the House, because it gave them a political issue, and that is taxing.

And that is what they’re going to go home and they’re going to -- you know, they’re already preparing the ads for 2010, saying that this is something that will be a tax on your energy.

For people out there, the Congressional Budget Office said it was like $175 by the year 2020. You know, if that is something that Republicans can grab onto and get out there and allow it to resonate, that is something that could be a big political issue for them, and that’s why they’re happy about it.

KING: OK, we’ll take a time-out, here. Much more to talk about with Dan and Gloria and Dana. We’ll be back in just a minute. Don’t go anywhere.

(COMMERCIAL BREAK)

KING: We’re back with Dan Balz from The Washington Post and CNN’s Gloria Borger and Dana Bash.

I want to turn our attention to the drama playing out in South Carolina. Just this morning, Governor Mark Sanford told the Associated Press that he had thought of resigning after acknowledging his extramarital affair, but he has decided to stay in office and fight to keep his job.

As we discuss it, I want to take you back to an interview I had with the governor about two years ago. He was talking about the damaged Republican brand, at that point, the losses in 2006 and the struggles for the party heading into the 2008 cycle.

But, boy, if you listen to what he said then, you can apply it to what he’s going through now.

(BEGIN VIDEO CLIP)

SANFORD: I’m clueless, in political terms, and constantly get myself in trouble on that front, but the -- I would say this. At the end of the day, good will come out of it. I don’t know whether we’ll win the next presidential; whether we won’t win the next presidential, but, you know, the times that you grow are often times in or associated around loss.

There’s not a lot of introspection when times are going great. There’s a whole lot of introspection when times aren’t going so great. (END VIDEO CLIP)

KING: And, Gloria, as the introspection goes on in Governor -- with Governor Sanford and with his family, is there a larger suffering with the Republican party? Or will this soon be forgotten?

BORGER: It’s hard to make a judgment, in the long term, how this is going to affect the Republican Party, but I think this is a party that was just catching its breath after Senator Ensign of Nevada admitted to an extramarital affair. These are two people who are stars in the Republican Party, mentioned as possible presidential contenders in 2012.

This is the party that prides itself on family values. Sanford himself was very strong in condemning Bill Clinton. And so I think this is a party, particularly with their own religious evangelical base, who may look at the party and say, you know, you talk the talk, but you don’t walk the walk.

KING: There’s a question as to whether he can survive. He says he doesn’t plan to resign. There are some pushing to try to impeach him or to have some investigation.

KING: I talked a little bit about this with Governor Pawlenty of Minnesota this morning, because he’s a governor, he travels outside the state. I asked him if he would do what Governor Sanford did.

(BEGIN VIDEO CLIP)

PAWLENTY: Your staff has to be able to reach you and reach you quickly for all the obvious reasons, national disasters, terrorism or other events, and so I’m very careful that numerous staff people and my security detail always know where I am and can reach me and any governor should do that.

KING: So Sanford was derelict in his duty?

PAWLENTY: He should not have left the state and not allowed people to know how to contact him.

(END VIDEO CLIP)

KING: Dan, you’ve spent quite a bit of time in South Carolina. Does this survive this? Obviously there are some down there who say he will survive, simply because they don’t want the lieutenant governor to take over.

BALZ: I think that may be partly what does help him survive. The dynamics of these are very unpredictable, and we don’t know what other information may come out in coming days or weeks.

He’s obviously going to try to hang on, and he may well be able to do it. I think he was obviously a reduced figure not just nationally but even in his own state. So the question is, what effectiveness does he have left, even if he’s in office?

KING: And the next question I think is what does this matter in the big picture? Is it an isolated incident, something that we turn to because of the big drama, or does it hurt the Republican Party? The senator from his state, the senior senator from his state, Lindsey Graham , was out this morning and he offered his thoughts and prayers to Governor Sanford. But then he talked about the bigger picture. And it is Senator Lindsey Graham ’s case that the Republicans are beginning to find their footing, and he said it’s not because of anything great they’re doing. Let’s listen.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: The Republican Party has the opportunity now to get back in the game, and we appreciate the Democrats for making that possible. Without them, we would be out of the game. If President Obama had went to the middle and did all the things he said he would do in the campaign, we would probably be toast. But he has not. You know, I know bipartisanship when I see it. You pay a price for it. There has been no bipartisanship.

(END VIDEO CLIP)

KING: That’s an odd way to put it, Dana. We’re on the way back, thanks to the other guys mistakes. Is that how they feel?

BASH: Absolutely. You know what, he’s right. He’s right in a lot of ways in that it’s not necessarily because of big Republican ideas that Republicans have the chance to come back. It’s because of the fact that the guy who is in charge right now at the White House is a Democrat. People in charge right now in Congress, they are Democrats. So they are really banking on Democrats the energy issue that we were talking about as case in point. They are banking on Democrats making tactical, political mistakes that they can take to the bank, so to speak, in the election.

The big question though is who is going to be the person that takes that to the bank? Who is the leader to sort of seize on what they consider to be Democratic mistakes and run with it? We don’t know yet.

BORGER: And the big question is also what happens with the economy? I mean, if in 2010 you’re going to have a mid-term election, and if unemployment is above 10 percent, it could be a good year for the Republicans, and people don’t see the effects of the stimulus.

KING: But you’ve written about this, Dan, in the newspaper, and I assume you covered it a bit in the book. The demographic, the long- term demographic challenges, are Republicans thinking because of the spending is any of that changing or when they look at the Latino vote, the suburban vote, the young vote, do they see a big ditch?

BALZ: Well, the demographic obstacles to the Republican comeback long-term are enormous, and unless they can figure out that puzzle, they’ve got a big problem on their hands for a long time to come. Go back to this point though, I think the first thing that has to happen for them is that they have to find whether there is an audience for what they’re talking about, and some of that will result, as Dana suggested, by how successful or not President Obama is with these very big initiatives. So there is a lot on the table. Then comes the question of who can take that and lead the party beyond that. We’re a long way from knowing that.

KING: Long way from it. We’ll have you all back. I have to call a time-out for time purposes here. Dana Bash, Gloria Borger, Dan Balz, thanks for coming in. Next, we head to Spring Hill, Tennessee, for an annual tradition you won’t want to miss. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) MIKE O’ROURKE, PRESIDENT, UAW LOCAL 1853: If General Motors is serious about their most competitive plants, the most competitive plant in the country is in Spring Hill, Tennessee. We’ve done everything that’s been tough over the last seven to 10 years, and we’re ready to rock and roll. But it also pains me because now we’re talking about more plant cuts, which is more jobs.

(END VIDEO CLIP)

KING: Yesterday though, General Motors announced, that’s the union president in Spring Hill, Tennessee. He’s the union president of this factory here, right here in Spring Hill, Tennessee. Well, yesterday General Motors announced that plant would not be used, that a new factory to create small cars would move to Michigan. So in Spring Hill, Tennessee, a lot of pain, but also still tradition. After the Civil War, this tradition was founded. They call it mule day. You might call it a tribute to the original hybrid.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: I’m G.W. Miller, and that’s just my initial name. I guess that’s what it was. I’ve pretty much been around the world, but this is my favorite place.

UNIDENTIFIED MALE: And so now we’re up to over 600 items, the horse, mule-drawn items, as well as old household items. This is the old wood burning kitchen stove here. The seeds started appearing on the solar equipment after the Civil War when the folks came back home missing legs.

UNIDENTIFIED MALE: Really from the days prior to and after the Civil War, this county was the premier agricultural county in Tennessee for at least 100 years. And at one time, I guess we still made, we were the mule capital of the world. People came here from many different areas of the country to buy, sell or trade their mules in the springtime. And so that later on turned into a festival to honor the mule, and mule sales still take place during the week of festivities we have here.

UNIDENTIFIED MALE: My grand daddy had a mule and my daddy had a mule, and we got a mule, and my daughter and son-in-law got mules, so it is a tradition handed down from generation to generation.

UNIDENTIFIED MALE: It’s part of our heritage. It’s part of our history.

UNIDENTIFIED MALE: It used to be the tractors. Before we had tractors, everybody used mules.

UNIDENTIFIED MALE: It needs to be preserved. If it hadn’t been for the horse, the mule and the plow, we wouldn’t be where we are today.

(END VIDEOTAPE)

KING: Great folks down there in central Tennessee. I’m John King, this is our “State of the Union” report for this Sunday, June 28. The deadline for U.S. troops to withdraw from all major Iraqi cities, like it or not, is just 48 hours away. We’ll ask the commander of all U.S. troops in Iraqi, General Ray Odierno, if the Iraqis are ready and the latest timetable to get all U.S. troops home.

The Republican Party is in a tough stretch. Two leaders viewed as possible White House contenders admit marital infidelity. Democrats are advancing President Obama’s agenda. One of the party’s 2012 prospects, Minnesota Governor Tim Pawlenty , is right here to debate the White House approach to health care, climate change, and to offer his recipe for a Republican revival.

And with Friday’s House passage of a massive climate change bill, we’ll give the last word to a man who isn’t afraid to put his money where his mouth is when it comes to energy issues.

KING: An oil wildcatter who has become convinced that America must break its addiction to oil, T. Boone Pickens right here. That’s all ahead in this hour of STATE OF THE UNION.

A quick reminder this morning before we get to our guest. We continue to track the latest developments in Iran. There are now reports that Iranian protesters are being dragged from hospitals by pro-government militia. Local staffers working for the British embassy have been arrested.

And police questioned Michael Jackson’s doctor for several hours last night as the investigation into the death of the pop legend continues. Stay right here with CNN for breaking updates on both of these important stories.

But we begin today with a critical development in Iraq. Tuesday is the deadline for U.S. troops to pull out of bases in Iraq’s major cities and to turn major security operations over to Iraqi forces. It is without a doubt a major benchmark in the more than six-year war, and to some, a huge achievement.

But even some U.S. generals say they would prefer more time in some cities. And there are worries the shift in power could bring a spike in violence. The man managing this delicate shift is the commander of U.S. forces in Iraq, General Ray Odierno, who joins us now from Camp Victory in Baghdad.

Good morning to you, General, and thank you for your time. A simple question off the top. Are the Iraqis ready for these awesome new responsibilities?

ODIERNO: I do believe they’re ready, John. They’ve been working towards this for a long time. And security remains good. We’ve seen constant improvement in the security force. We’ve seen constant improvement in governance. And I believe this is the time for us to move out of the cities and for them to take ultimate responsibility.

KING: Are you doing this based on military calculations or political calculations in the sense that Prime Minister al-Maliki has said he wants the American troops out, President Obama has said he wants them on a path to get home as soon as possible? One of your own deputies, sir, Brigadier General John Murray, said this: “Sadr City is one we wanted. The Iraqi government said no. So now we are leaving.”

Are there two or three of these areas where you wish you could keep U.S. troops a little bit longer? ODIERNO: I think sometimes it’s about strategic advantage over tactical advantage. I think, again, it’s important for us to be in line with the security agreement that we signed in December.

I think from a military and security standpoint, it’s time for us to move out of the cities. We’ll still be there providing training, advising, enablers for the Iraqi security forces. I believe they’re capable of doing this. We’ll still be conducting significant operations outside of the cities and the belts around the major cities.

And I still believe that this will enable us to maintain the current security and stability situation here in Iraq.

KING: But do you have the flexibility -- if you see a target of opportunity, if you see something that troubles you, do you have the flexibility to act or do you need to go to the Iraqis and ask permission and perhaps lose incredibly valuable time?

ODIERNO: Well, again, when we signed the security agreement, we agreed to abide by Iraqi sovereignty. So everything that we do today is transparent. Everything we do today and have been doing since the first of January is transparent to the Iraqi government.

So we will continue to be transparent. But that does not limit our flexibility. We’ll continue to coordinate with them and when necessary, we’ll conduct the operations that we need to with their approval.

KING: I want to get up, sir, and go over to the wall because I want to show our viewers a map of the area. And I specifically want to pull out on a point. Because we have seen some incidences, some would say an uptick in violence, down in Nasiriyah on June 10th, deadly violence there, in Baghdad, a couple of bombings recently, then up in Kirkuk, let me shrink the map a little bit, we can see it all, up in the Kirkuk area.

Is there a pattern to this violence? Do you believe you are being tested and the Iraqi security forces are being tested on the eve of this deadline?

ODIERNO: I think these are some extremist elements who are trying to bring attention to their movement that has been fractured. They’re trying to use this time frame and this date to first gain attention for themselves and also to divert attention from the success of the Iraqi security forces.

We have not seen increased violence across the country. We still have low levels of overall violence. However, these high profile attacks, all they have done is kill innocent civilians and in fact, brought the air (ph) of Iraqi civilians against these terrorist groups.

KING: I want to also show you, sir, I’m putting up on our screen, I know you probably can’t see it, but I want to show the level of troops in Iraq. We began with 150,000 in the beginning, May 2003, the peak was 171,000 of October 2007. We’re now at about 138,000 as we’re in June 2009.

When we spoke two months ago, sir, I asked you on a scale of 1 to 10 how confident you were that all American troops would be out by the end of 2011, are you still that confident, sir? Is that still a 10 on this morning?

ODIERNO: It is. And, John, actually we’re at 131,000 today, have been now for about a month. We’ll continue to draw down slowly and deliberately over this year. What’s good is I’ve been given the flexibility to make those decisions based on the security environment on the ground.

I believe we’ll continue to slowly and deliberately withdraw our forces this year, but have enough forces here to ensure that we have successful parliamentary elections next January.

KING: What do you make then, sir, if you say you’re still very confident you will keep that, the former Iraqi national security adviser is quoted in The New York Times just today saying: “We need to extend the Status of Forces Agreement to 2020 or 2025, I just hope Prime Minister al-Maliki realizes we don’t have competent security forces yet.”

ODIERNO: Again, I would argue there’s a difference between conducting internal counterinsurgency operations and being able to have external capacity. And I think they will have to make some decisions in the future of what they want to do in terms of their external capacity.

But I think that’s something that has to be discussed later on. And there are many ways for them to do that. They can get assistance from the United States. They can get assistance from Egypt. They can get assistance from many countries. But that’ll be a decision that has to be made in my mind a couple years from now.

KING: I want to also give our viewers, sir, a glimpse at the U.S. casualties. 4,317 U.S. men and women have died in Iraq over these past six years, 486 in the first year, and you see the violence and the death toll as it goes, 95 fatalities so far in 2009.

As you move into this new posture, General, are U.S. troops safer in that you’re pulling back from the major cities, or might want to argue they could conceivably be more at risk because if they are called upon for major operations, it would be after some tragic or traumatic event that the Iraqi security forces can’t handle?

ODIERNO: Well, we’ll maintain full coordination with the Iraqi security forces inside of the cities. If they need us, our movements will be coordinated. We’ll continue to have intelligence capacity inside the cities. So I’m confident that we’ll be able to maintain the situational awareness in order to protect our troops.

And our goal is to continue to lower, obviously, our casualties. We’ve continued to do that. And our goal is obviously to eliminate all casualties over time here. KING: We’re having a military conversation, but in a sense the success of your mission in the final years will be dependent on the political situation in Iraq. What is your take on Prime Minister Maliki? Is he up to this task?

And I ask in the context that you have from time to time have been critical of his government and had to privately go to his government when it has cracked down on its political opponents. Is he a strong man or is he a democratic leader?

ODIERNO: Well, I think -- first off, I think this is -- you know, working in the situation he has had to, establishing a brand new democratic government while trying to maintain stability and security inside of Iraq is a very difficult task.

And I think he has continued to develop his government. I think he has continued to develop his security forces. And I think they have made great, great progress over the last -- over the last couple of years.

So I think from that viewpoint, he has done a very good job. Obviously there are still many political issues that have to be worked out here, reconciliation is one. Arab-Kurd tensions, intra-Shia, Sunni-Shia, those are all political issues that still have to be worked here.

And I believe they’re in the process of doing that. And as we move to the national elections coming up here very shortly, those will be the main issues that are addressed in the lead-up to the elections.

KING: I want to ask you a bit about the situation in neighboring Iran. We have talked from time to time about Iran meddling dangerously in your business, allowing weapon systems to come across, IEDs to come across, perhaps even training, some of those who are trying to kill American men and women in Iraq.

Has that situation in terms of Iran coming across the border in ways or training people across the border, sending dangerous equipment across the borders, is that better now than if we were having this conversation in the past, or is it about the same?

ODIERNO: Well, I would say they still continue to interfere inside of Iraq. They still continue to conduct training. They still continue to pay surrogates to conduct operations in Iraq. It might be a bit less than it was. But I think that’s more based on the success of the security forces here than it is on Iran’s intent.

So, again, I think they’re still attempting to interfere. They’re still attempting to have undue influence inside of Iraq. And we continue to deal with that. We have made great progress on that front working with the Iraqi security forces.

KING: And as you know, sir, there are some in the Congress back here in the United States and others back here in the United States who have urged more assistance to the demonstrators, to the protesters in Iran. And some have said that, you know, we have the capability technologically if we wanted to say increase Internet access, to use technology from your position in Iraq along the Iranian border to somehow help increase Internet access, technical communications, text messaging. Have you been asked, sir, to do anything? And do you have that capability if you were asked?

ODIERNO: Well, first, based on the Iraqi security agreement, we are only concerned with protecting Iraq’s security and stability.

ODIERNO: And based on that agreement, I’m not authorized to do anything outside the borders of Iraq. So I think I’ll leave it at that.

KING: OK, sir. Let me come back to this important deadline. You believe you can keep this deadline and stay on the path to get U.S. troops home on schedule in 2011.

Let me ask you this question, what is your biggest worry? When do you say, OK, am I wrong here? What’s your biggest worry?

ODIERNO: Well, again, I think -- I think it has to do with if we see a breakdown in stability in Iraq; if we see a consistent increase in violence; if we see that the Iraqi security forces aren’t able to respond; if we have some event that it caused some instability, then that would cause us to, maybe, after we’re asked by the government of Iraq, to help.

I don’t see that right now. I believe we’re on the right path. And I want to make sure you understand that. I believe we are still on the right path. I think security and stability is headed in the right direction as we move through 30 June.

KING: And I’ve used this test with you in the past, so let me ask it this way. On a scale of one to 10, how ready, in your view, are the Iraqi security forces to take on this added mission?

ODIERNO: Yes, I would just say they’re at a very -- they have improved significantly over the last 2 1/2 years. We’ve seen incredible increase in their capacity and capability. They have proven it in combat operations. They have proven their flexibility and adaptable. So I am much more confident than I’ve ever been in the Iraqi security forces.

KING: I want to close, sir, in our last minute, on a lighter note.

You had a guest recently. Stephen Colbert came over to spend a little bit of time. And you were ordered, I think, by a very high authority, to give him a bit of a military haircut, shall we say, an unorthodox military haircut.

We’re showing a picture to our viewers, right now, of you applying the shave to Stephen Colbert. Take us through that moment.

ODIERNO: Well, again, you know, Stephen said he wanted to join the Army. He went through basic training. So we told him, if he really wanted to be a member of the armed forces, he had to have the right haircut. And the president agreed with me on that. So we gave him a haircut.

I’ve been watching him lately. I think it’s time for him -- he needs a trim, I think, so maybe we need to give him another haircut.

KING: You ran him through a little basic training. Is he in shape?

ODIERNO: He did pretty good. He was pretty impressive. Now, it was a little bit unorthodox basic training, but he looked like he did pretty well.

KING: All right. We’ll laugh -- we’ll laugh at that. But, as we close and say thank you to you, sir, we want to make sure you know you’re in our thoughts, and the men and women serving under you are in our thoughts and our prayers as you go forward; first, this big deadline in 48 hours, and then, of course, the important weeks and months ahead.

General Ray Odierno, thanks as always for spending some time with us.

ODIERNO: Thank you very much, John.

KING: Take care, sir.

And as we take a quick break, a snapshot of troops serving in Baghdad, the capital city, of course, of Iraq.

(COMMERCIAL BREAK)

KING: Here in Washington, President Obama and Congress spent another week wrestling with health care reform. It has been, to say the least, a contentious debate, with Republicans questioning whether the country can afford this right now and whether the president wants too big a role for the federal government.

But the biggest obstacle at the moment are Democratic objections to the White House approach. Some of them aired right here on this program.

(BEGIN VIDEO CLIP)

SEN. DIANNE FEINSTEIN, D-CALIF.: Well, to be candid with you, I don’t know that he has the votes right now. I think there’s a lot of concern in the Democratic Caucus.

Controlling cost is a very major and difficult subject as long as you have a large private-sector involvement. So this needs to be worked out.

(END VIDEO CLIP)

KING: And as key senators did just that this past week, working to trim the cost of the huge price tag of health care reform, we saw several examples of Democratic in-fighting.

The liberal group MoveOn.org, for example, lashed out at Senator Feinstein and others who have raised questions about the president’s approach. Feinstein’s California one of nine states where MoveOn says it will run advertisements attacking Democrats.

(BEGIN VIDEO CLIP)

ANNOUNCER: California voters sent Senator Feinstein to Washington to fight for us. That includes fighting to pass President Obama’s health care plan. But Feinstein is saying health care may just be too difficult. Senator, we don’t expect you to lead just on the easy issues.

(END VIDEO CLIP)

KING: Republicans also intensifying the air war, the Republican National Committee, for example, running its first ad of the 2010 cycle. And, separately, a conservative group turns its attention to 14 senators, mostly from more conservative states, questioning the wisdom of the president’s insistence that a government option be included in any major health care reform.

(BEGIN VIDEO CLIP)

ANNOUNCER: Remember the $400 hammer? How about that $600 toilet seat? It seems, when Congress gets involved, things just cost more. Now they’re at it again with a government-run health care plan. It’ll cost more than $1 trillion and raise taxes $600 billion.

(END VIDEO CLIP)

KING: Senate Democrats hope to begin voting on their proposal shortly after the July 4th recess. It will be interesting, fascinating to track this debate as the lawmakers go home and meet with their constituents. And we will do just that, watching them.

And coming up, we’ll ask a Republican governor facing a state budget crisis whether Washington’s actions on the economy, health care and climate change are helping or hurting. Minnesota Governor Tim Pawlenty joins us in studio, next.

(COMMERCIAL BREAK)

KING: Welcome back to STATE OF THE UNION. I’m John King. When our next guest recently decided against seeking a third term as governor, the buzz in conservative circles started immediately. Sarah Palin and Mitt Romney already viewed as possible 2012 presidential contenders. And close associated of Tim Pawlenty urged activists and reporters to add the Minnesota governor to that list too.

But his day job remains leading a state with rising unemployment and a budget crisis, because a painful recession means lower revenues. And as he navigates those difficulties, Governor Pawlenty is often critical of the proposals of the Obama White House that the president says are designed to help. Governor Pawlenty joins us now here in D.C.

Welcome to STATE OF THE UNION. And let’s start with the big debate. And we’ll get to some of the policy specifics, but I want to talk first about the goals. The president says it is urgent that the United States extend accessibility to health care and have universal or near universal coverage. Do you share that goal?

PAWLENTY: Well, there are goals of three parts for health care reform, John. One is extending coverage, called access, but there are other goals, as well, which is cost containment, because it’s bankrupting cities, states, businesses, the federal government. And the third is making sure we maintain quality.

So you can obsess just about access, but if you don’t also contain costs and preserve quality, you’re in big trouble. And the federal proposal is largely modeled so far after what happened in Massachusetts. They succeeded in extending access, but the cost of that program is now double, triple, and some would say soon-to-be quadruple what they originally estimated. That would be a bad development for those of us who are concerned about the uncontrollable rise in health care costs.

KING: Well, that -- let’s go through some of the specifics. To pay for this, the president says about $1 trillion over 10 years. Let me start with the threshold question. Can we afford that right now?

PAWLENTY: Well, the president said not long ago in an interview quote-unquote, “we are out of money.” With all due respect, Mr. President, if we’re out of money, quit spending it.

And so, no, we can’t afford it. This is a nation that has got a debt load and a deficit load that is unsustainable. We’re going to have, in my view, the federal government debt crisis equivalent of the mortgage crisis within 20 years.

And notwithstanding the rhetoric, the Obama administration does not appear serious to address this out of control spending.

KING: The president says this public option, that if you -- you can have your private insurance, you can have what you have from your employer, if you like it, keep it. But if you don’t have that or if you want to look around in the marketplace, there will be this government plan.

And if you like that, maybe you opt out instead. Maybe it will be a little cheaper. Maybe it will offer a different mix of benefits. What’s wrong in a mix, as long as there is a mix, of having a public option?

PAWLENTY: Well, what’s wrong with it is, you have a government option in a market that is supposed to be driven by private choices. So if you’re disadvantaged, unable to pay, and the government is going to subsidize you, the question becomes, should we give that subsidy to you directly? Should we subsidize and create its own program? That’s the tradition.

But now they’re talking about something new and different, which is to say, even if you’re able to pay, even if you’re in the marketplace, the government is going to compete for your business with private entities.

The government is going to come right into the marketplace and compete. So it would be equivalent to say, you know, John, you’re a corn farmer and the government is going to put up a row of corn or a farm next to you and compete with you.

We don’t do that in the United States, it’s a different kind of model with a different kind of culture and society.

KING: Let’s move on to the energy debate. The House just passed legislation, the narrowest of margins, two votes to spare, I guess not quite the narrowest of margins, but almost. The cap and trade legislation it is called. It would dramatically change the way -- if it passes the Senate, change our whole energy economy and our whole energy structure is based in this country.

The Congressional Budget Office says it would increase the energy bill of the average family about $175 by 2020. Is that an acceptable price to pay to reduce our dependence on foreign oil?

PAWLENTY: Well, John, the estimates you cite are on the low end. There are some other studies out that show it could be as much as several thousand dollars for an average family by 2020 per year. So depending on which of those estimates is accurate, it could be a very significant burden.

We all share the goal, I think, of reducing pollution and reducing emissions in this country. But we should have a debate about how best to do that. This bill that has just passed the Congress is a nightmarish, mind-boggling, overly bureaucratic, misguided bill.

I’ve been a strong supporter of renewable, clean and secure energy. I’ve been a strong supporter of finding ways to reduce emissions. But the way to do that is through conservation, doing things for base-load energy like nuclear energy, bringing on more fuel-efficient vehicles.

But this bill goes so far as to have the federal government micromanage and prohibit what local homeowner associations can do as it relates to the design features of local homeowner associations.

That’s one example of dozens in this bill in terms of its overreach. And it’s a cap and trade bill. It’s going to cap our job growth and trade our jobs to other countries who provide a more competitive business environment. This is the overly burdensome version that Congress has put forward.

KING: The president’s senior adviser, David Axelrod, was out on another program this morning, and says this is a phony issue, the way you call it -- the way you just characterized this. He says it’s phony and Republicans are using inaction as an excuse here, a political tactic.

PAWLENTY: Well, with all due respect to David Axelrod, why are they so opposed, on the other side of the aisle, of looking, for example, in the base load energy area of promoting aggressively more nuclear power plants? One of the biggest emitters of pollution and carbon in this country is our base load energy sector.

Nuclear power plants have no such emissions to speak of. There are next generation opportunities to process -- reprocess nuclear fuel. And yet while they kind of tip the cap at the argument, they really don’t want to do anything and won’t do anything.

Ask them to be accountable for that. That would be a major step forward as it relates to carbon emissions, and they won’t take it.

KING: I want to go back in time a little bit. You were the host governor for the Republican National Convention. And in your speech at that convention, in the middle of a heated campaign, you were talking about then-Senator Obama. And it’s clear you weren’t that impressed. Let’s listen. (BEGIN VIDEO CLIP)

PAWLENTY: When John McCain is president, there will be no misunderstanding about where America stands and what we stand for. In this time, when don’t need a president who can just read a poll or momentarily thrill a crowd. We don’t need rhetoric or empty promises.

(END VIDEO CLIP)

KING: As a guy some think might be running against -- trying to run against President Obama down the road, rate him now.

PAWLENTY: Well, he’s only six months into his term, John, and so I think the history books should be a little broader in terms of perspective than just six months. But I’m very concerned on a number of fronts.

One is the out of control, unsustainable, irresponsible level of state -- or, excuse me, federal spending and the debt and the deficit that’s growing by the minute. That is something that is not responsible, something that’s going to, I think, snap back and bite us in ways that are going to hurt the economy in the intermediate term. I’m concerned also about this massive government encroachment in autos, in health care, in energy and other sectors. But, you know, President Obama inherited a very tough situation. I think we need to give him more than six months before you can make an ultimate verdict on how he’s doing.

KING: Tim Pawlenty is going to stay with us. Up next, the GOP brand took another hit when South Carolina’s governor acknowledged a secret trip to visit his mistress. When we come back, Governor Pawlenty’s take on what Republicans need to do to turn things around.

Stay with us.

(COMMERCIAL BREAK)

KING: Welcome back to STATE OF THE UNION. Let’s continue our conversation with Minnesota’s Republican governor, Tim Pawlenty .

Governor, I want to move on to what you think ails the national Republican Party. But first, a question that is very personal to you. Your state has only had one United States senator since the election because of the disputed election between Republican Norm Coleman and Democrat Al Franken.

Your state supreme court has a ruling before it, it could come very soon. After that ruling, the next step would be for you to certify the election. Will you certify the election based on your state’s supreme court ruling, is that for you?

PAWLENTY: I’m going to follow the direction of the court, John. We expect that ruling any day now. I also expect them to give guidance and direction as to the certificate of election. I’m prepared to sign it as soon as they give the green light.

KING: And so if Norm Coleman loses at the state supreme court and says he’s going to appeal to the U.S. Supreme Court, will you give him that time or will you say, sorry, Senator Coleman, our state supreme court, our highest court in this state, has spoken, and I will follow their lead?

PAWLENTY: Well, a federal court could stay or put a limit on or stop the effect of the state court ruling. If they chose, if they do that, I would certainly follow their direction. But if that doesn’t happen promptly or drags out for any period of time, then we need to move ahead with signing this, particularly if I’m ordered to do that by the state court.

KING: And if you’re ordered to do it and they say Al Franken has narrowly won the election, you’re prepared to sign it, if the court says so.

PAWLENTY: I’m not going to defy an order of the Minnesota Supreme Court. That would be a dereliction of my duty. But a federal court could weigh in and say, don’t do that and order a different result.

KING: I want to move on to the drama in the Republican Party right now. President Obama won the election and won it quite handily. Since then and in recent weeks, we’ve seen two leading Republicans, men like you, who show up on lists of who might run in 2012, Senator Ensign in Nevada, then Governor Sanford in South Carolina acknowledging marital infidelity.

I want to play for you a snippet of a conversation -- and I want to be very careful and tell our viewers, this is from 2007. I went down to South Carolina to spend some time with Governor Sanford, to ask him there about the ongoing Republican competition for the 2008 Republican nomination.

Even then, he said the Republican brand was damaged and he also said this...

(BEGIN VIDEO CLIP)

SANFORD: It takes time to damage a brand. It takes even longer to rebuild it. You think about Tylenol, or you think about some of the incidents over time, you know, a single night you could do destruction to a brand. And it took time to build up trust.

I mean, the value of a brand is, in the chorus of voices out there, people have a trust in a -- in a single group or in a single product. It takes time to build or regain trust.

(END VIDEO CLIP)

KING: How much further damage to the brand of a party that says it’s the party of family values, that counts Christian conservatives among its most reliable base -- how much damage has been done nationally by the actions of Governor Sanford and Senator Ensign?

PAWLENTY: It’s hard to quantify that, John. But, clearly, there’s been damage. Any time you have leading figures who are engaged in behavior that is sad and troubling and hypocritical, other people are going to look at that and say, “Hm, they don’t walk the walk.” And so the words and the actions don’t ring true.

But it’s a sad and troubling situation with Jenny and Mark Sanford . I know them. I’m proud of Jenny for her strength and her commitment to her family and keeping that family together. And, frankly, I was glad to see her not standing at the press conference like many others have, and, kind of, charting her own path, saying, look, I’m willing to forgive him, but I’m not going to stand there and condone this in any way.

But it certainly hurts the brand. It’s hard to quantify it.

KING: Well, when you say “hard to quantify,” what do you hear?

You’re an evangelical. When you go to church and you talk to your pastor -- I travel the country quite a bit, and I’ve spent a lot of time with Christian conservatives. And they, frankly, are fed up.

They think Ronald Reagan didn’t always deliver. They think George W. Bush promised to work against same-sex marriage and he did not, in their view, deliver. How much frustration is there that tars all of you, that the politicians are going to come to us; they’re going to tell us, “I’m one of you,” and then get elected and not do it?

PAWLENTY: Well, that’s a big part of the problem of the Republican Party. It’s not the only one. That leads into what your next question was going to be.

It really hasn’t mattered that much whether Republicans have gone to Washington or Democrat have gone to Washington, for example; on the issue of spending, the trend line’s been about the same.

Now, it’s been accelerated pretty dramatically under the Obama administration. But if you’re going to be, for example, the party of fiscal discipline and be the person talking who’s about fiscal responsibility, then you better do that.

And so hypocrisy doesn’t sell, and the Republicans have to be true to their values, be true to their principles and walk the walk.

Now, we live in a world where people aren’t perfect. You’ve made mistakes; I’ve made mistakes. There’s going to be dumb things that happen, sad things that have happened, heartbreaking things that happen. So we can’t expect perfection. But we at least have to be headed along the general correct trend lines.

KING: Since Senator McCain’s defeat in the last election, many Republicans have said they think the party, especially with younger voters, is viewed as somehow intolerant.

And some, including Senator McCain’s campaign manager, have said Republicans need to think again on the issue of gay rights and especially perhaps open their minds to same-sex marriage.

Does Governor Tim Pawlenty think that the Republicans should step aside and drop their opposition to same-sex marriage?

PAWLENTY: Well, no I don’t. I think there is a lot of data that shows a lot of younger people feel differently about that issue than older people, and that’s something we’re going to have to come to terms with down the road, in terms of a country.

But I don’t believe, nor does the Republican Party believe, that all domestic relationships are the equivalent. I believe that traditional marriage should be maintained on an elevated status and an elevated form for obvious reasons. It’s an important part of our social fabric and a cornerstone of our social fabric.

KING: After the Sanford scandal emerged, there was a little item in The Washington Post saying, well, who else is out there for the Republicans when it comes to 2012?

And they said, “A riveting reality show takes shape,” and they mentioned you, with a picture, and they said, “ Tim Pawlenty : The Geek. Minnesota earnest with a dash of bland. Is he flying too far under the radar?” You were in Arkansas just the other night for a fund-raiser. I know your state press back home watches you every time you go out of state. Is Tim Pawlenty running for president?

PAWLENTY: You know, John, I don’t know what the future holds for me, but I do know this. I feel strongly about the values and principles for the Republican Party. I believe I have something to say about that.

So, within Minnesota and outside of Minnesota, at least as my time allows, I’m going to go out and speak to that. And I think I can make a contribution, in a positive way, for trying to rebuild this party. And it needs it.

KING: On that point of your travels, I want to circle back a little bit. Because this became an issue and could become an issue in the state of South Carolina.

When you leave your state, what is your responsibility, as the governor, to tell people where you are, how you can be reached, and the whole combination of events that could play out from that?

Because, as you know, one of the questions about Governor Sanford is did he -- was he derelict of duty?

Could he possibly be impeached for lying to his staff about where he was and not telling others in the state he was leaving?

PAWLENTY: Your staff has to be able to reach you and reach you quickly for all the obvious reasons, natural disaster, terrorism, or other events.

And so I’m very careful to make sure that numerous staff people and my security detail always know where I am and can reach me. And any governor should do that.

KING: So Sanford was derelict in his duty?

PAWLENTY: He should not have left the state and not allowed people to know how to contact him in case something happened. That’s obvious.

KING: Governor Tim Pawlenty , we thank you for joining us on “State of the Union.” We will see you, whether it be in Minnesota or one of those other plenty places in the months and weeks ahead.

Sir, thank you very much.

And up next, breaking international news. We’ll give you the latest on a breaking story, a military coup against the president of Honduras. Stay with “State of the Union.” We’ll be right back.

(COMMERCIAL BREAK)

KING: I’m John King and this is “State of the Union.” Here are stories breaking this Sunday morning. Despite an uptick in violence, the top U.S. general in Iraq says he believes Iraqi forces are ready to take over when U.S. combat troops pull out of Baghdad and other major cities on Tuesday. Speaking here on “State of the Union,” General Ray Odierno says sure, he has worries, but he’s seen a constant improvement both in the security situation and the government in Iraq.

Iran today, an estimated 500 protesters marched silently through the streets, just as Iran’s supreme leader called for national unity. Ayatollah Ali Khamenei urged both sides of the bitter election dispute to calm things down.

This morning, the president of Honduras was apparently the victim of a military-led coup. Jose Manuel Zelaya was arrested by soldiers this morning and then taken to Costa Rica. President Obama issued a statement saying he’s deeply concerned about these developments and has called on all parties in Honduras to follow the rule of law. CNN’s Karl Penhaul is standing by in Atlanta with more on this dramatic story. Karl?

KARL PENHAUL, CNN CORRESPONDENT: John, from what we know, President Manuel Zelaya was dragged out of the presidential palace in his pajamas by about a dozen soldiers. We do understand shots were fired and then he was bundled aboard a military plane and flown out to Costa Rica. He does seem to be well there. We have heard him talking on Venezuelan media this morning. And he is calling on the people to remain calm. He is calling on the people in Honduras to protest this action by the military, but not to use violence to react to this measure.

Now of course, the Honduran military has had a long history of involvement of politics in Honduras, and especially from the 1955 to 1982 period. But since 1982, they have stayed out of politics, at least formally speaking, and so obviously this is a great setback, something that in fact has been reflected by President Obama’s statement as well, John.

KING: And Karl, the source of this dispute here, a referendum the president wanted to have that would allow him to run for another term. The Supreme Court had said that was illegal. Do we have any sense of where the public stands on that question? Do they want this president to stay in office? And as we watch what happens on the street, how do we think public opinion will influence that?

PENHAUL: Well really, that was what President Zelaya was trying to test the temperatures today in this referendum that he had called to see if he could seek out that extra four-year term. That is something that’s becoming pretty common across Latin America of late presidents trying to extend their terms.

But he also is up against regional and political and economic power elites there that have always made life difficult for any president, they have always been pulling the strings there from behind the scenes.

But what President Zelaya has said in an address on TV this morning is for the Honduran people to remain calm. Now we do know that certain supporters of Zelaya have gathered outside the presidential palace, but according to our report so far, the situation is not violent, John.

KING: Karl Penhaul for us in Atlanta tracking this dramatic development and we will continue to follow it on CNN throughout the day. Karl, thank you very much.

And when we come back here on “State of the Union,” he made his fortune in the oil market. But he’s now convinced America needs a new solution to its energy crisis. T. Boone Pickens gets “The Last Word,” next.

(COMMERCIAL BREAK)

KING: Twenty-two newsmakers, analysts and reporters are out on the Sunday morning talk shows, but only one gets “The Last Word.” That honor today goes to T. Boone Pickens. He’s the founder and chairman of BP Capital. And Boone, as you join us, I want to just show our viewers of the map because we wanted to talk to you in the wake of the House passage of this dramatic climate change bill, and the House is saying we need to get away from our dependence on foreign oil, get to more alternative sources of energy. I want to show our viewers some of them. This is a map showing where there are major solar power production facilities.

KING: These are solar facilities that feed an electric grid in parts of the country; as you can see, most of those out in the West.

Now let’s take a look at wind. A much more national scope, here. These are wind facilities, wind turbines, again, that feed into some sort of local, regional, or national electric grid.

Now, T. Boone Pickens, the question to you. The House has passed this legislation. What do you believe -- as it now stands, is this the prescription for America’s energy future?

PICKENS: Well, it’s not complete. You’ve only done -- you’ve addressed the climate issue, but you know that wind and solar do not run 18-wheelers, so you’re going to have to address that with another resource in America.

Remember where I come from. And I started July the 8th last year, so I’m coming up on my first-year anniversary. I know what the American people want. I’m in communication with them. I have had 33 town hall meetings. I have -- I’m in touch with -- well, I’ve got 1,600,000 people signed up in my army. I’m in touch with probably 20 million on -- on energy.

So, yes, the first move was fine. But the second move has to bring in a resource that’s going to replace foreign oil. Wind and solar will not replace foreign oil.

So this is the first move. We’re right on track. Everything’s going good. And so -- but the next one is 1835. This one was 2454, was the House bill number. So house bill 1835 will be the one where we use natural gas to replace diesel in the 18-wheelers.

KING: Well, as you make the case that we need to go to natural gas to fuel our vehicles, I want to get your sense on the political climate in the country.

Because, you’re right, it’s the year anniversary of the Pickens plan. And back when you announced the Pickens plan, the price of gas was $4.11 a gallon, over $4.

Today the price of gas, on average, is down to $2.64 a gallon. As you know, the American people, when it comes to energy, their political urgency is often driven by price at the pump.

Have you seen the demand on the American people, the urgency go down with the price of gas? PICKENS: Let me -- yes. No question they’re impacted by the price. But I, when I started last year -- and as you said, it was $4.11. I remember that on the Exxon marquee as I went down the street that morning to make the announcement.

But remember this, we’re still importing the same percentage today as we did then; 68 percent of our oil is imported, and over half that comes from countries that are unfriendly to us.

So the urgency for -- on foreign oil has not changed. The price has changed. But let me tell you, I’m in touch with so many people that I’ve stirred this up.

And, you know, I’ve spent $60 million telling this story, and so -- and I’ve got a great amount of support for the $60 million. But they -- the people today know that urgency is there, and -- and they want it fixed.

KING: And you say the urgency is there and they want it fixed. I want to go through some of the particulars of this House climate change bill. It would require emissions by so-called greenhouse gases to be cut 17 percent by 2020, 83 percent by 2050.

Electricity producers would have to get at least 15 percent of their energy from renewable sources.

You have heard the counterargument. The opponents of this bill say it will hurt jobs in the United States because we’re taking things that India and China are not prepared to do, at least not at the moment. And they say manufacturers will pick up and go overseas.

PICKENS: Well, John, you’re talking about cap-and-trade here. And on cap-and-trade, let me shift -- and I’m not trying to dodge the question, but my urgency is security to America, and that is the dependency on foreign oil.

And again, this bill, the climate bill, is not going to reduce that dependency. What it is going to do, it’s going to get us on our resources. And that’s good. I’m for that. And I’m for anything that’s America. I do not like foreign oil, is where I’m coming from. However we can do it, we need to do it because of the security issue.

And so here -- let me take you to a point that came up a week ago, that, on a study that the Colorado School of Mines had sponsored, they came up with we have -- this is not confirmed because proven reserves are one thing; probable reserves are another, but the probable reserves for natural gas in the United States is 2,000 trillion cubic feet of gas.

That will be larger than the largest producer in the world, which is Russia. We will have more natural gas than Russia. We’ll have more natural gas than Iran, who’s number two, and Qatar, number three. We will move to number one with 2,000 trillion cubic feet of gas.

That is the window of opportunity that America has to go through immediately. Our leadership has to take us in that direction, and we have to get on our own resource.

But can you imagine, this year, we’ll have an outflow of probably $500 billion for foreign oil. If we could cut that down by a half, $250 billion, you think how many jobs that is. You think what that does for America.

And, you know, you can -- in 10 years’ time, you can get completely off of oil from unstable areas: Mideast, Africa and Venezuela.

KING: Well, let me come in -- I want to get to the policy in a second, but on the politics, then, if what is most important to you is weaning us off our addiction, our dependence on foreign oil, you see how much political capital was spent on this climate change bill.

The Democrats were able to pass it in the House with only two votes to spare, one of them being the speaker of the House.

Are they doing this in reverse order, in your view, in terms of our biggest energy need, our biggest national security and economic security crisis?

Should they have done the natural gas and the infrastructure in terms of our vehicles first?

PICKENS: Well, I don’t know whether -- you know, it’s not my business as to know whether it was...

KING: Is it your preference?

PICKENS: Well, of course, I’d rather go with -- with the Natural Gas Act, which is House bill 1835, and get it out of the way first, but it didn’t work that way for me. And so what did I do -- I just keep grinding until we get to where we have to be to get -- to get the security for our country.

But here, on -- on 1835, it’s a beautiful situation because they’ve got 73 sponsors, co-sponsors on it, and they’re half Republicans and half Democrats.

So 1835, I don’t think you’re going to have to trade off anything to get that bill passed. Because, you remember when I came on the scene a year ago, I said, this is totally a nonpartisan issue. It will not ever become a partisan issue. And as far as I’m concerned, I’ve kept it that way.

KING: And as you make the case for this, as you know, there are some out there, especially in oil-producing states, who say we need changes but we don’t need these sweeping dramatic changes, whether it’s cap-and-trade for climate change or whether it’s what you’re talking about, to go completely to natural gas.

I want you to listen to the governor of Mississippi, Haley Barbour , who is sharply critical of the president’s approach and says, you know what; there’s a lot of energy resources right here in the United States. (BEGIN VIDEO CLIP)

GOV. HALEY BARBOUR, R-MISS.: America has abundant, affordable energy, but the Obama administration’s purpose here is to use less American energy, to have less oil and gas. Their position on nuclear is vague at best. They have had many administration officials say that coal’s not part of the future.

(END VIDEO CLIP)

KING: What do you think of Governor Barbour there, and is he right about the administration’s approach?

PICKENS: Well, Governor Barbour is -- he and I have talked about this subject a lot -- and he was one of the ten or 15 governors that have signed up with the Pickens plan. He signed up with me early.

And so he is -- he didn’t speak of natural gas, but -- and I think there -- maybe he was talking about coal. But Haley and I are in complete agreement on using natural gas. But we don’t want to replace all of our vehicles with natural gas. I’m not suggesting that.

Go to the 18-wheelers, is where you want to go. That’s the place. Go to the MTAs; go to the trash trucks, the big users, the big polluters

Natural gas is 25 percent cleaner than gasoline, 50 percent cleaner than diesel. I mean, this is a fuel we have in America that does exactly what we want, and it’s at half the price of foreign oil. So it’s an opportunity that we’re going to look like fools if we don’t take advantage of it.

KING: You say we will look like fools, sir. I just wonder -- we’re about out of time, but do you believe the second piece, the part you care about, will pass this year, or will this political debate -- it’s become so divided -- perhaps derail what you want for the near future?

PICKENS: I don’t think so, John. I think that the way this is going to unfold, this is so needed, and I have done a good job of stirring up the American people to where they fully understand the dependency issue and the security issue.

So, consequently, I think it will pass this year, yes. I think we’ll have -- they call it -- this bill was...

KING: I need to cut you -- I need to cut you there, sir. We’re out of time. I’m sorry. T. Boone Pickens, thank you.

PICKENS: Thank you.

KING: ... on the energy debate on “State of the Union. We’ll see you right back here next Sunday morning. Take care.