white house. falling poll numbers, twin defeats in special house elections and tepid reaction to the president's jobs package. today the politics of a struggling economy with senate majority whip democrat dick durbin and republican senator lindsey graham. then a u.n. showdown over palestinian statehood with the plo's chief representative and the israeli ambassador. then recession worries with economist ael live riv lynn and douglas holtz aiken. i'm candy crowley and this is "state of the union." the president unveils how he will pay for his $447 billion jobs plan tomorrow. public reaction to part one has been tepid. in the latest new york city/cbs poll americans are split on whether the jobs plan will actually reate jobs. as for the president's own employment, there is open democratic fear he's a

one-termer. the vibe was bad enough this week. the top obama campaign strategist sent a memo to reporters noting that the president's support from the democratic base is strong. the same cannot be said of independents. 54% disapprove of how he's doing his job. things can change between now and november 2012. the more immediate question is whether president obama has the political capital to sell his jobs plan to the public and push it through congress. joining us now, the number two democrat in the senate, senator dick durbin. thank you so much for being here. and let's just start with that question. we do see a president who's being openly criticized by democrats, whose poll numbers are falling. a weak economy. and people just not really sure this jobs plan is going to work. how do you sell that to the public and how do you pass that in the senate? >> candy, you can understand the skepticism of americans. they've watched the confrontation in washington virtually threaten to close down the government, even close down

the economy. so they're skeptical of any political promises. but when you go to the specifics about president obama's plan, you can get a positive reaction. should we give a tax credit, an incentive to small businesses across america to hire the unemployed? should we give a payroll tax cut to working families that are struggling paycheck to paycheck? should we invest in making sure that we don't lose the jobs, important jobs, of firefighters and policemen and teachers. should we put money in the economy to build america for the 21st century. people say yes to those things. the president's plan is a positive plan to move us forward. >> but let me just point out that i think some of the skepticism -- you're absolutely right -- is about this gridlock in washington, but it is also about the fact that there was about $800 billion spent in stimulus with the white house promising, as republicans point out all the time, that unemployment would not rise above 8% if we would just spend.

money in stimulus. well, it's 9.1% now. got as high as 10.1%. now you want to spend more than half that again in a 447 -- i'm sorry, more than $400 billion in jobs. so why is that going to be any more successful than the first one was in bringing down the unemployment rate which is what this is about? >> candy, you're going to have some economists on later and they're going to tell you this is one of the most challenging recessions america has ever faced. you go back to the great depression. what we did with the first effort by the president was to stop this recession from going deeper. now we've got to do something positive. look at the other side of the equation and ask what the republicans would do. they would make sure that we have no new tax burden on the wealthiest people in america and they would continue to criticize any effort to step forward and do something positive to move this economy. most americans reject that. they understand that with 14 million people out of work and

46 million in poverty, we need to step up and move this economy forward. that's the president's plan. >> many xliss say two things. in the short term now -- just the short term now and not the long term -- you shouldn't cut spending by too much and you shouldn't raise taxes. yet we now know from the white house that one of the things the president wants to do is the so-called buffett plan which is to make sure that no millionaire pays less of a percentage in federal tax than anyone in the middle class. is it a good idea right now to raise taxes on anybody right now? >> well, certainly on those who are wealthy and comfortable and wouldn't even notice it, yes. warren buffett has been honest and other people i know who have been fortunate in life and wealthy have said, for goodness sakes, you can raise my taxes if that's going to help this economy move forward. i wonder if john boehner knows what it sound like when he continues to say the position of

the republican party in america is that you can't impose one more penny in taxes on the wealthiest people. i wonder if he understands how that sounds in ohio to working families who are struggling paycheck to paycheck. >> do you think that's the point -- that's the political side of this. and do you think that is the point of this proposal, is to paint the republicans as, again, as people who will protect the wealthy at any cost? >> no, i'll tell you what it is. the president said at the outset that his plan to move the economy forward would be paid for. in other words, he would come up with the revenue to pay for tax cuts for working families and incentives for small businesses to hire. so he went after two areas. he said we've got to trim the deductions which the wealthiest people in american can take, and secondly, we have to end the federal subsidy to the oil companies, which are the most profitable and richest companies in america. that to me is a reasonable way to make sure we pay for what the

president says, a plan to put america back to work. >> when is his jobs bill getting on the senate floor? >> it will start the debate this week. now there are going to be a lot of variations and ideas -- >> but the bill won't be on the floor to vote on this week. when is the bill going to get on the floor? >> the bill aon the cis on the . it is ready and poised. there are a couple other items we may get into this week not on the bill and some related issues that may create jobs. we'll move forward on the president's bill. >> after the recess so next month? or when will it actually begin to act on? >> i think that's more realistic it would be next month. >> okay. let me just turn you to some politics. as you know, the man who lost the new york district that used to be anthony weiner's, which has been a democratic district for more than 80 years, says that he lost because it was a referendum on the obama

administration. what does that tell you about democrats' chances in 2012 and the president's chances? >> i don't think anybody can predict 14 months from now what we're going to face and as david axelrod said in this memo you referred to, we're not talking about the president running in some black box scenario. there will be an opponent. as i listen to the republican presidential nominee candidates come forward and spout their ideas and bow to the tea party and their agenda, the tea party is not very popular in america. what they brought us to in washington twice already is a confrontation that is virtually threatened to close down the government and our economy. so i don't think people like that style of politics and that's the reality of we'll be facing in november 2012. >> james carville, a democratic consultant, a true blue democrat through and through has said that those elections should cause the because to panic. he said it is time to fire someone. that the economy hasn't gotten any better as far as people are

concerned and still the president is using the same economic team and as much as he respects them, it is time for them to go and get in some new blood to show the american people the president understands. good idea? >> i've listened to this president. he's been my friend and i've work with him nor ffor years. he is always open to ideas and contributions from everyone, from both sides. >> should he fire anybody? >> well, at this point i don't see that you would pick out one person and say that's the reason the economy's bad. that's the reason -- >> for people who think that he doesn't -- should he fire some people and get in a new team and say i'm working again, we're taking a fresh look? >> i don't think so. i'll tell you what i think. i think his team has put together a positive good plan. the american people believe that if you help working families, invest in making sure we have our firefighters an policemen

and teachers on the job, invest in infrastructure, america's going to start to move forward. what's the republican alternative? do nothing and protect the millionaires. >> senator dick durbin, thank you so much for your time this morning. coming up next -- americans are skeptical that either party can mix the economy. so what's the republican strategy? we did senator lindsay graham next. slashing service, and want to lay off over 100,000 workers. the postal service is recording financial losses, but not for reasons you might think. the problem ? a burden no other agency or company bears. a 2006 law that drains 5 billion a year from post-office revenue while the postal service is forced to overpay billions more into federal accounts. congress created this problem, and congress can fix it.

joining us now from clemson, south carolina, republican senator lindsey graham. senator, thank you for being here. i want to kind of set the stage for this discussion because we talked about how the president's poll numbers are falling. but i wanted to show our viewers the latest cnn/orc poll. the question was, who do you trust more to handle the economy? and the answer was 46% obama, and 37% republicans in congress, 15% said neither. having said that, let's take a look at how you feel and how you think republicans will look at this latest thing which is the minimum millionaires tax. the so-called buffett rule. and this because the billionaire has said -- warren buffett has said, listen, i pay a lower tax rate than my secretary.

how do you politically argue against that or would you? >> well, i just think that's a political move by the president. i think senator durbin sort of tipped his hand. how would people in ohio accept an explanation from john boehner to say no. the truth of the matter is if you raise taxes on billionaires and millionaires, it adds a de minimis amount of money to the treasury to pay off the debt. i would assume that's what they're trying to do. i think most americans are frustrated with the tax code where 1% of taxpayers pay 41% of the taxes, the top 10% play 47% and i'm in the camp of the bowles-simpson gang of six attempt to flatten the tax code. ge paid no corporate tax last year so let's do away with deductions and exemptions except for interest on your home, charitable giving with a cap. take that $1.2 trillion, buy

down rates, create jobs and pay some debt off. if you really want to address what got america into this situation, policies matter. president obama's policies are killing job growth. what i hear at home is that you can't borrow money. the reason banks are not lending money is they don't know what the rules of borrowing is going to be because of dodd frank. no one knows what their health care cost is going to be under obama health care. it's gone up 19% in 2014. there's another round of costs. when you look at his policies from health care to bush tax cuts expire. people need to know the answers. >> i know that you all think that regulations is what is making businesses sit on their money. >> yeah. that's the one i forgot. thanks. >> okay. then -- let me get back to the idea of just the fairness of millionaires paying a lower rate than those in the middle class who do pay taxes. is that something you can argue against?

and why not -- okay, let's say it doesn't add that much to the treasury. nonetheless, there is some fairness here. >> no. the goal is to do what with the tax code? collect taxes to run the government in a way future generations can afford. tax policy is job policy. tax code should be reformed for one purpose -- generate jobs. when you say we'll tax 1% of the economy, that's class warfare. look at what bowles-simpson did. they didn't pick on one bast or any other group. they'll make all millionaires and billionaires pay a higher right by eliminating deductions. corporations will pay the 25% top rate because they don't have the deductions and loopholes of getting out of paying. that's the model.

let's take a tax code that's so complicated that ge pays no taxes, flatten the rates to be economically competitive but get people to actually pay taxes. >> in terms of the president's jobs plan because the tax reform at this point, a lot of people don't think it can be done by the end of december. but moving aside -- moving ahead from tax reform, let me ask you, what is there in the president's jobs plan that you could support? what major item in that can you support? >> there is some. payroll tax might be one. some infrastructure spending. his $447 billion proposal is a lot like what republicans proposed the first time around. but here's where we're at as a nation. we have 11% unemployment in south carolina. and here's what i hear when it comes to hiring people. people are frozen right now. they're not going to hire. you may build a bridge in south carolina or deep in the port of charleston, that would help our economy in the short term. but if you want to have a wave

of hiring in this country you got to provide certainty. people don't know what their tax bill will be because in 2013 the bush tax cuts expire. the obama health care costs are a nightmare for job growth because it adds a tremendous amount per employee to future hires. banking. you can't grow an economy if you can't borrow money. capital is locked down in my state. you could have all the stimulus you want. until you change obama's policies that have frozen job hiring, that's made everything worse, we're going to stay right where we are, bumping along the bottom. the president either needs to change his policies -- you don't need to fire somebody, you need to -- fire somebody is good only if they do something different. but the president's policies are stifling job growth and there will be no job growth until they change. >> let me turn you then to the presidential election. you have said that texas governor rick perry has to prove that he's electable. what about him -- or what about his policies makes you and

people question -- >> all of them. >> -- whether he's electable? >> well, what i would say, number one, this is our election to lose. president obama's done everything he knows how to do to beat himself. the reason people have little confidence in president obama's policies, they're just not working. everything is worse. 2 million people unemployed after he took office. gas prices are 100% higher. home values are down. debt is up by 35%. there seems to be no relief on the who are done. >> what i'm trying to get at is, are there any republicans that are unacceptable alternatives that are currently in the field? >> we'll leave that up to the -- well, here's what i think a republican has to do to beat president obama. on day one, after the election,er who's what's going to be different in your business life, in your personal life. you're going to have certainty in your taxes. we're going to flatten the tax

code. we're going to make people pay taxes. we're going to have lower rates. we're going to replace obama health care with something that's more business friendly. get people into lending business by having a banking system that banks can actually understand. when it comes to entitlement reform, that's where the money is at. i hope this super committee will take up entitlement reform. governor perry has a good job on job creation. he needs to tell the country what he did in texas. but social security and medicare have to be on the table in a way to save these programs for future generations and that's what i want the republican party to do, look the camera in the eye and say that social security is a vital program. 50% of americans will be in poverty without social security. it is going broke. we're going to have to adjust it for younger workers, protect it for people near retirement and come up with a plan that will create jobs. >> thank you so much, senator lindsey graham out of south carolina for us today, we appreciate it. up next -- palestine wants full membership from the united nations and israel accused them

of avoiding negotiations. both sides on this very contentious debate. ♪ [ male announcer ] each of these photos was taken by someone on the first morning of their retirement. it's the first of more than 6,000 sunrises the average retiree will see. ♪ as we're living longer than ever before, prudential's challenge

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when the president spoke to the u.n. general assembly last year, he had big dreams. >> when we come back here next year, we could have an agreement that will lead to a new member of the united nations, an independent, sovereign state of palestine living in peace with israel. >> one year later there is no israeli-palestinian agreement. but when the u.n. general assembly opens this week, palestinian authority president mahmoud abbas says he will seek full membership, recognition of a palestinian state. that would not make palestine a state with defined borders, but it would give its officials more international recognition and the u.s. fears more power to go after israel for what

palestinians consider crimes committed in the gaza strip. the white house has vowed to veto the bid in the security council insisting an independent palestinian state be developed through direct negotiations with israel. up next, the israeli ambassador to the u.s. [ kristy ] my mom is well...weird. she won't eat eggs without hot sauce. she has kind of funny looking toes. she's always touching my hair. and she does this dancing finger thing. [ male announcer ] with advanced technology from ge,

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joining me now, the palestinian liberation organization's chief representative to the u.s. thank you for joining us. what is the current plan for the u.n.? will president abbas go to the security council? is that set? >> well, the president did announce on friday that the palestinians will submit the request to the u.n. secretary-general on friday, september 23rd, for full membership at the united nations. so the plan that after his address at the united nations general assembly he would officially request that the u.n. consider the palestinian request. >> and will the petition designate pre-'67 borders, as well as east jerusalem as the capital? >> well, i'm not that familiar with the exact language of the

draft resolution but i strongly believe that it will reiterate long-standing palestinian position. it will talk about the palestinian state in the west bank, the gaza strip with east jerusalem as its capital. it will call for two-state solution, two states, israel and palestine, living side by side in peace and security. and i believe it will also emphasize the need for negotiations to resolve the outstanding issues. >> you know that diplomatically this is very hard for the united states which, if it comes before the security council, as far as we know, is going to veto this idea. they have said this will undermine negotiations israel says it will set back the palestinian cause. is there anything right now that could be presented to you -- because lots of meetings are going on -- that would dissuade you from doing this at this time? >> well, the leadership -- the palestinian leadership said in the past that if we were presented with a viable alternative -- >> and what is that? >> a viable alternative would be

clear terms of reference to return to the negotiations, clear time frame and an end game. to the palestinians, the end game is freedom, to be able to live free and for the israeli military occupation to end. we also insisted that we cannot continue to negotiate while the israelis are planting our territory, the same land that will become our state in the future with legal settlements. that viable alternative unfortunately has not been offered to us to encourage us to sit and get engaged in israelis in meaningful negotiations. >> the united states, certainly there is feeling among some in the united states, that believe that the obama administration has taken israel to task for its continued settlements in east jerusalem and the west bank, that he has been very tough on benjamin netanyahu in israel,

and that this particular action by the palestinians totally undercuts president obama in the middle east, with israel, with arab countries, that it just diminishes u.s. power at a time when the u.s. is really pushing israel to come to the table and to stop the settlements. >> we have no interest whatsoever to undermine president obama. >> but it will, won't it? do you agree that it will? >> you know, the decision to oppose the palestinian effort is not a palestinian decision. it is an american decision. the united states decided that that he will veto any request of the u.n. security council. we wish the united states would reconsider. we wish that the united states will actually cast a vote in favor of palestinians seeking freedom, because this is the natural position of the united states. this is what we have seen in the region by the united states -- support for all the peoples in the region who are seeking freedom and independence. >> but the u.s. position is that

the territory in the statehood can only be done through negotiations with israel and therefore this will undermine that effort. so you can see that if you force the u.s. to veto this, that people on the streets in the middle east will be very angry at the u.s. at a time where it is very delicate time throughout the middle east. >> but we don't disagree with the administration that there has to be negotiations. the problem is that there are no negotiations right now. we have been engaging with the united states for over a year now. the u.s. administration knows that very well. senator mitchell who was a special envoy knows that very pel. we have been forthcoming, receptive, worked with every idea, suggestion, proposal that they have submitted to us. we urge the israelis to sit down and talk about security and borders. the same thing the united states did with israel. unfortunately, the israelis did not want to sit and engage.

and today they say the palestinians don't want to return to negotiations. we are the party who needs negotiations the most, who need an end to the conflict the most. >> i'm sure that later -- obviously we will get the israeli point of view. they feel that israel's right to exist is not recognized throughout the palestinian community. but let me ask you if what your feeling is about the ability to get around this crisis. do you think there really is a chance that the u.s. or israel or the eu, somebody, could come up with something? is there a chance of that or not is. >> well, i mean the official decision was announced by president abbas on friday. he is en route to new york. he will arrive later on tonight. i'm sure there will be continued discussions. but again, unless there is that viable alternative to the palestinian people, to tell them that this time around it is not going to be a waste of time.

we don't want negotiations for the sake of going back, negotiations getting engaged in a process that will not produce peace. five days ago was the 18th anniversary of the oslo accords, an agreement that was supposedly aimed at providing palestinians with freedom and independence in 1999. at that time 200,000 settlers were living in the occupied palestinian territories. today we have 550,000 settlers living in the occupied territory. things are getting worse for the palestinians. we want to keep the hope alive among the palestinians that the two-state solution is still feasible. this is why we are taking this step at the united nations. >> it is a symbolic step for palestinians. >> we understand that it is not going to change things on the ground. israel has the upper hand. they are the stronger party in this equation. the aim of this is try to eliminate the palestinians to a more equal footing so that this

disparity that existed over the last 18 years, which allowed israel to exploit it to its advantage, can end and they can talk now to an equal member state of the united nations. their land is occupied. they are the occupier. let's sit down and solve the plane. >> thank you so much for stopping by. busy week ahead. after the break -- the response from the israeli ambassador to the u.s. a place of intelligence. ♪ across the nation over 100,000 miles of highways and bridges are in disrepair. add to that, countless distractions every mile... ♪ ...millions of ill-equipped vehicles... ♪ ...half a million cubic yards of debris... and the 38 million drivers who couldn't pass the driver's exam today. [ horn blares ] even if road signs actually did make sense.

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we are joined by the israeli ambassador to the united states, michael oren. you have said, "the palestinians risk all that has been achieved if they go forward with this," "this" being the bid for statehood recognized by the u.n. it sounds like a threat. what does that mean exactly? >> first of all, good morning, candy. >> good morning! >> good to be here. israel wants peace. israel wants peace. prime minister netanyahu said he's willing to negotiate with president abbas anywhere, any time, without preconditions on the basis of territory for peace. that's what we've been negotiating about for years. territory for peace. we know what it means, territory for peace. we know we have to make compromises. we have to work out all these difficult relationships and problems with the palestinians. palestinians want all the territory without the peace. they're end-running this peace process. over the course of the last 18 years the palestinians have achieved a lot. they have a very successful economy.

they have security in the streets. we are prepared to go on a two-state solution, jewish state living side by side with a palestinian state. all that could be jeopardized if the palestinians end-run the peace process and take the territory without the peace. >> but you heard the plo representative say we are willing to go to negotiations the day after this happens. they understand it's symbolic. they understand it doesn't change anything on the ground. but they feel that there has been very little hope that israel will come to the table because it keeps, as you know, the u.s. is opposed to the continuing development in the west bank and east jerusalem by the israelis. so why does it jeopardize anything if nothing changes on the ground, it's just a bid by the palestinians to be seen as a state that you think that eventually they shall be. >> well, the plo representative says one thing, but president abbas says a different thing. in a "new york times" op-ed in may he said that he's going to the u.n. to get this state not to make peace but to challenge

israel's legitimacy in international arenas and to try to undermine the peace process. he's also made a pact with hamas. let's not forget this. hamas is a terrorist organization. it's fired thousands of missiles at israel. it calls for not destruction of israeli but the annihilation of the jewish people worldwide. it is a genocidal organization. is this a state that's going to live in mutual respect and recognition with israel? is this a state that's going to operate on the orders of iran and bring more instability and terror to the region? i think these are very important questions. >> but even just the bringing up of this -- we know that the u.s. has said they're going to veto it if it comes to the security council. that's the route they go, it seems as though they will. if it goes to the general assembly for just sort of an increased status for palestinians, it is quite likely to pass. how does that -- why is that such a threat to israel? >> well, as mahmoud abbas said

in that article in the "new york times" and other palestinians, leaders, have reiterated since then, that they tend to use that enhanced status to go to international courts and delegitimize us. they can try to impede our ability to defend ourselves from our coasts, from the air. they can try to put sanctions on us. it is not about making peace, it is about building their conflict against us into a different level, a different field. >> from your point of view, has the u.s. done enough to try to prevent this petition from being presented to the u.n.? >> indeed, they have. they've been working tirelessly to try to prevent this happening. american diplomatic representatives have been working with other members of the quartet, the european union, the russians, the u.n., that create a format which would be acceptable to us and we are very, very close now to the american position, and to persuade the palestinians to desist from going to the u.n., to come back to the negotiating table.

again, we are willing to negotiate today without preconditions on all the outstanding issues. >> now do you accept the premise at this point that u.s. influence in the middle east is a lot less than it has been in the past? >> i think the situation in the middle east is very fluid. no one knows what's going to happen in the middle east tomorrow, never mind in two weeks. >> isn't that a reason for you to just stop the settlements and come to the table? is there we stopped the settlements for ten months and the palestinians didn't come to the table. we're willing to extend that for another three months and the obama administration determined that they weren't still going to come to the table with the palestinians. but i need to go back to your first question -- is american influence waning. you look across the middle east today, many people are protesting for democracy and opportunities and a future for their children. the model they're looking for is not somewhere in the east. the model they're looking forward is still the united states and when governments and leaderships in the middle east

look for peace makers, they turn to the united states. there's no alternative to american influence in the middle east. >> i want to show our viewers a poll that was done by pew researc research.this is among israelis and the question was do you approve or disaprevious of president obama's handling of the israeli-palestinian conflict. only 29% of israelis approved of how the president's handling this. 64% of israelis disapprove of how the president is handling israeli-palestinian conflict. which side are you on and why do 64% of israelis disapprove of the president of the united states? has he not been a huge ally? lots of money, lots of sharing of intelligence. right flnow he's standing betwe you an the u.n. why is it israelis don't see him as helping? >> we've have some tactical differences about how to get to the two-state solution but they've been tactical differences. those make a lot of press in

israel and they make a lot of press here. but the fact of the matter is we're very much on the same page about where we need to get to -- a two-state solution bases on a palestinian state living side by side with a jewish state in permanent and mutual peace and recognition. there are excellent security relations between the israeli government and obama administration. truly fine security arrangements. >> you'd be among those who would approve. >> a couple weeks ago we had the problem with our embassy in egypt. prime minister netanyahu called the president. president got on the phone immediately to egyms gipgs leaders and helped evacuate our embassy personnel. prime minister yetten yahoo came out and thanked president obama warmly about that. we have a very deep relationship with the united states of america. it is based on common values, common interests. we face some common enemies. it is a permanent and unbreakable relationship. >> israeli ambassador to the u.s., michael oren. thank you for joining us today. when we come back, a crucial meeting for ben bernanke and the federal reserve next week. we'll tell you what it could mean for the economy.

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here to talk about fears of a double-dip recession and a number of other things, former congressional budget office director's alice rivlin and

douglas holtz-aikan. the two-day meet something very important. >> the fed has a big problem right now as to whether there's anything else they can do to help the economy along. >> they said there wasn't. >> bernanke himself has said we did a lot, we lowered interest rates, we bought a lot of government eurobonds. the one thing they're talking about now is can they rebalance their portfolio as it were to roll off the short term eurobonds as they come due and invest in long-term eurobonds. that's called "the twist." and all it would mean is they use the powers that they have because they have a very big portfolio to put a little downward pressure on long-term interest rates. >> i think what alice is saying, had is going to be a boring two-day meeting. >> first of all, aren't long-term interest rates really already down? >> so this is more evidence that

there's really not much the fed can do to push the economy along faster. it is still well positioned if something bad happens. you worry about europe. it can step in if things start to spill over to the u.s., something starts to go wrong here, they're well positioned for that. >> but in terms of creating jobs, we're looking elsewhere. the president's jobs plan, i was interested, your initial reaction i saw was it might create some jobs but they're really expensive jobs and your reaction was there's not enough money here to make a difference. did i sum this up correctly? >> well, i think they should do many of the things that are in the president's program because it would help and because the economy does seem to be stalling and the government needs to do what it can in the short run to create more jobs and create more demand. that's what the president is trying to do. i would do it big. >> bigger than he's done it? >> well, he won't get all -- >> no, but if you could rule the

world. >> i would do it at least as big as he is proposing, but i would fold it into the other big problem which is the long run deficit. he's got this joint select committee, the 12 apostles as they are being called now, who have extraordinary powers. they can put together a plan that not only supports the economy in the short run, but much more importantly is a grand bargain to reform entitlements and reform the tax code and put us on a sustainable deficit track. >> let me ask the question in a different way. we have spent over $800 billion in the first wave of stimulus and, you know, it saved jobs, whatever, but we are still looking at 9.1% unemployment rate. the predictions were nowhere near 8%. why would another $447 billion

be different? i think it is the strategy, not the dollars. i think they would be well served to do things alice talked about. we are sailing to a tax crisis. we need a better tax code. they are permanent changes to the environment. there was a time and a place for one-time temporary targeted stimulus. it's not now. we have been growing two years, we are growing too slowly. we need permanent reforms to speed economic growth in the united states. he would be well served to focus on that. in this committee it won't be successful without presidential leadership. this is a congress that has one part republican, one part democrat. to be successful we need bipartisan solutions. that requires the white house taking the lead. that's the main challenge now. >> let me ask about a couple of specifics. one of the things the president is proposing is a tax break for businesses who hire either vets

or people who -- new hires. corporate profits are up. all i hear is how much money they are sitting on because they are so scared of what will happen next. why would more profit and more money cause them to hire more people? >> well, at the margin, i think it would. he's talking about small businesses. really big businesses with payrolls beyond the cut-off of this bill aren't going to be affected. probably big business hiring isn't much affected by it. but for small business, the payroll tax is a big deal. at the margin, it could help hiring more people, more veterans, more anybody. and that's a good thing. but it's one more complication in the tax code and i'm -- you would think the main thing the president needs to be emphasizing is the long run and the opportunity to simplify the tax code.

>> it's emblematic of the problem and the strategy. it's temporary so won't change permanent hiring positions much. it's not aimed at everybody. it's targeted on particular groups. i think that's not worked. you don't want the president picking special groups for labor treatment. you don't want temporary policies. we need better growth for everyone on a long-term basis. >> one thing we know that a lot of the temple rare tax stuff is permanent. it's hard to get it out of the system. >> it's a mess. >> for anybody that files taxes, for sure. let me ask you about the so-called buffett rule that the president will propose that no millionaire pays a lower percentage of taxes than someone in the middle class. is this another margin thing, around the margins it may help? this is introduced is this is how i will pay for my plan. we should let alice go first and be reasonable.

i'm unhappy with this. >> be reasonable so i can get him in. >> i'm fond of warren buffett. i think his basic observation that he pays too little taxes is right. the way to fix the tax code is to fix the tax code. not add another complication. >> you're nodding. >> this is politics. we already have the alternative minimum tax that is supposed to make sure millionaires pay their fair share. it's broken. lay erg the buffett tax on it won't fix it. when the president gets in trouble he start starts talking about taxing high income people. we have seen this before. >> thank you both for joining us. up next, our top stoirs and then on fareed zakaria, gps, a conversation with ge's ceo jeffrey immelt. [ male announcer ] this...is the network.

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time for a check of today's top stories. the u.s. geological survey says a 6.8 magnitude earthquake struck sikkim, india in the northern region of the country. no major damage was reported. another setback in the effort to get two american hikers released from prison in iran. josh fattal and shane bauer's lawyer said he was not able to get a signature for bail paperwork because the judge is on vacation until tuesday. fattal and bauer have been held for more than two years. fierce fighting in parts of libya between forces loyal to

moammar gadhafi and revolutionaries. anti-gadhafi forces hope to take control of sirte and bani walid. a spokesman for the government said there is no information about gadhafi's location. in west virginia a pilot was killed when he crashed his plane during an air show saturday afternoon in martinsburg. investigators are looking into the cause of the crash. no one on the ground was injured. the death toll from friday's plane crash at a nevada air show stands at nine with nearly 70 injured. there have been at least 13 deaths at u.s. air shows this year. those are today's top stories. thank you very much very watching "state of the union." tune in next week for my interview with republican indiana governor mitch daniels sunday at 9:00 a.m. eastern. up next for viewers in the united states "fareed zakaria gps."