again, ricky. >> likewise, larry. >> larry: ricky martin. the book is "me." y, if you want to interview me, go to cnn.com/larryking for details. judge judy is here tomorrow night and the "dancing with the stars" finalists thursday and michael moore friday. right now it's file time for "ac good evening. >> welcome to a special edition of the program. coming up, sarah palin is speaking live in pennsylvania. >> it's one of her first speeches since the midterms. i am curious to see if she gloats just a little bit about the tea party's success. >> that is just moments away. are what he says might surprise you. >> first we start with tonight's headliner. his message embodied the tea party and as a result last

tuesday he will lead the movement's wave into washington. >> but converting campaign rhetoric to action won't be easy. thanks for joining us. >> good to be with you. >> thank you so much for joining us. we do want to talk about sarah palin a little bit. given the republican's opposition to any other stimulus is this not the government's last option to stimulate the economy? >> well, i don't think the government can create jobs or stimulate anything. i think the government is only successful when they get out of the way of the marketplace. i would like to stimulate the economy by, you know, the government's taking 25% or spending 25% of the gross domestic product. we spent 20%.

why don't we go back to 20%, give 5% back to the marketplace. >> before they accuse me of selling out. i was misquoted by the wall street journal. i will not earmark anything. i will not support earmarks. i have signed a pledge and my word of honor that i will not do that. now everybody is jumping on me before they have had a chance to ask me. i will not earmark any legislation. >> i want to put up on the screen just some basic numbers what the budget is and what the deficit is. you know these numbers.

a budget of $3.8 trillion and a deficit of about $1.3 trillion. and a second chart that will show folks where the money really goes. you have been asked over and over where you want to cut and what you have said is across the board is that correct? >> everywhere. >> here is what mystifies me. you are a doctor. 50% of your practice came from medicare and medicaid, government, federal reemburressments to you for doing -- practicing medicine is that correct? >> right. >> you have said and i have got read this right. the one place you don't want to cut is doctor reemburressment rates? >> you have been reading too many liberal bloggers. let me set you straight here. >> senator, is it correct?

>> let me set you straight. what i have said is look, if we want to cut physicians fees automatically without a vote, let's lump all federal employees in there. senators, congressmen and all 2 million federal employees and let's automatically cut their pay every year without a vote and then i am all for it. let's don't single out one set of people and say that somehow we are going balance the health care budget on one set of people. problem is if you keep reducing, for example, if physician fees go down with medicare by 30% as their are designated to do in december you won't find a doctor. i think we need to think about do we want to have doctors available to see patients. >> you have opposed cutting medicare reemburressment rates even though this is the single largest deficit hole that we are facing and reemburressing

doctors is the largest piece of that? >> you do have to figure out how to balance the medicare budget and it will take a lot of different things to do it but you can't balance it simply on one facet. what you should do is if you want to cut physician fees which you need to acknowledge have already been cut by 50%. when i started in 1993, fees are now 50% of what they were in 1993 so they have been cut by 50e%. what you have to picture is fine go ahead. there may not be doctors left seeing medicare patients so don't stick your head in the sand and say you will fix the problem and all will be well again. it won't work. you won't have any doctors to see patients. >> senator, doctor, i don't mean to be impertinent here but what was your peak income? what is the most you earned in any one year?

>> if you want to make this about me personally, you will not have a real intelligent discussion. if you want to make this about -- do i want to go into your personal past and talk about your past on this program. i don't think so. let's talk about things about how we fix medicare. >> that's what i'm trying to do. >> for example. part b is only 5 25% paid for by taxes and premiums. it is 75% paid for by the general budget. that may include talking about eligibility in the future. talking about changes in age. it may talk about changes in premiums.

i may talk about means testing and there are honest people discussing these things as we speak. but we're not really going make any point about trying to vilify doctors for making a living. >> again, i want to come back to your words across the board cuts. i want to talk about numbers for kentucky. i have a print out here that is very im nformative that shows me how much federal money has been spent. $11.7 billion to kentucky residents. would you cut that by 25% so you could balance the budget? >> we have to look at certain programs that we don't need to be doing at all at the federal level and if you eliminate some of those, then you don't have to be that way. let me finish my answer. i would say that social security and medicare i have said repeat repeatedly were not for changing any of the eligibility.

talking about reform of those 55 and understood ir. you have to immediately start making these decisions. if you don't want to have the discussion about how to fix this a wha you need to do is bring liberals on and ask how do you don't have these programs. we need to fix these programs that you can't continue to borrow money from china to pay for daily expenses. >> here is the problem. you have said as recently as today that you do not want to take a position on increasing the federal deficit level because you plan to go washington in january and propose a balanced budget. in order to close a budget gap in this next fiscal year we will have to cut 25%. >> you are mischaracterizing my position. we do have to look at social security and we do have to look at medicare. some of the cuts will be more

gradual or will deal with younger generations. you have to have rules. we have had a pay as you go rule and they have broken it. within three weeks they evade their own rules. you need to have a balanced budget amendment or rule and they have to adhere to that. we have that in 32 states. you force the legislators to make difficult decision s s we are unwilling to cut military spending. you have some liberals who are deficit hawks and are serious and say i will cut military spending but not domestic. the bottom line is the

compromises. you do have to look across the board. there are entire books written about this. there are thousands of people who can talk about that. it will include a balanced budget. i will give people different alternatives. a one-year budget, and that will have significant cuts. it may not be palatable to many people. there will be budgets balanced over two, three, four, five. what we cannot do is put our head in the sand. >> learning one thing well before you get to washington is how to filibuster. i want to ask you about specific programs. to see if you right now are willing or not to be true to what you ran on which is a balanced budget. let's go the next program. >> let me explain to you what i am for. if you want to ask questions let

me answer them. >> i haven't asked them yet. i want to ask you about a program. >> my answer to the question is nothing off limits. nothing is off limits. let me finish. the other thing is that we will locate each individual program and do a process to this. we will say can it be downsized? can it be privatized? can it will eliminated or can we not look at this program at all because sit too important that it can't be cut? we will look at this and it will look at everything within the budget and we will make those determinations but i am not prepared to look at all,000 categories and tell you exactly what we will cut other than to tell you i am serious about doing this and i will introduce a budget and i will be happy to come back in on january to go through the budget. but i think it is impossible to go through and tell you what percentage and what we will cut.

>> you have not given us a single cut yet. we will continue through some of the approach. senator, i let you finish, sir. >> a trillion dollars from obama care. we will cut a trillion dollars by appealing obama care. how about the t.a.r.p. funds? why don't we send those back? how about the unused stimulus funds? >> sir. the obama care that you love to malign, according to the congressional budget office will save over a trillion dollars over the next ten years. the t.a.r.p. money was not affect the budget. >> the tenure of the conversation does not help -- your personal agenda is geing in the way of making you a very good broadcaster.

>> you cannot name a specific cut suggests that that debases politics. i have been in politics. when you propose that budget which is balanced we look forward to having you back on and i am sure by then you will have gone through the programs and we can go through one by one and figure out where the cuts are. right now i don't see the cuts in your agenda. thank you, sir. we will be right back. (jennifer garner) there's a lot of beautiful makeup out there but there's one that's so clever, it makes your skin look better even after you take it off. neutrogena healthy skin liquid makeup. 98% of women saw improvement in their skin's natural texture, tone, or clarity. does your makeup do that? neutrogena® cosmetics recommended most by dermatologists.

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as with all medicare supplement plans, you can keep your own doctor and hospital that accepts medicare, get help paying for what medicare doesn't... and save up to thousands of dollars. call this toll-free number now. we're waiting for sarah palin to speak at an event in pennsylvania. while we keep an eye on that event, let's bring our panel into the arena. we have john, a screen writer, nicole wallace, a former white house communique tore and director for the mccain palin campaign campaign. >> i think sit a classic example of tea party rhetoric. there wasn't a single cut he could talk about and using a very old pligs excuse that there are thousands of programs. people have written books on it.

the one thing i did applaud him is he said we should put the defense budget on the table. usually that is off limits on the right and that could become a predicate for progress. >> you have heard a couple republicans put defense spepding on the table and there is a lot of interest on the right. i think, you know, it always disappoints me when you hear a voice like this and you paint the whole republican party with his lack of specificity. paul ryan has put together a specific budget. president i worked for for president bush unsuccessfully tried to salvage social security for future generations. the only real way to to call the programs the third rail thachl

should become the first rail and the politicians should wrap both of their arms around it. >> the guy just got elected. he hasn't gotten there yet. he is not expected to have a complete plan going into the office. >> he ran as the voice of the tea party attempting to articulate answers. you don't get elected to the senate as a doctor who takes off the table the one thing that benefits him. gradual medication is subz diced by all taxpayers. he could not name a single cut

in a single program let alone the 7 trillion that is necessary to close the kaz p casm. there will not be the next step which is we have got get our arms around this in a meaningful way. >> apart from the fact that that would devastate the economy, i think we will come back and say i can't do this. it wouldn't be good for people in kentucky. >> all of these candidates, this is the bill mckay moment. when you run on an ideology. at the end it's the now what. a very strong movement. most of that is essential spending. things we have come to depend on and not just the frivolous things. now what? now what are you going do? that's when the chile hits the cheese. >> we do have to cut vast amounts of spending.

basically no one has an answer. it gets tough when you have to produce. >> it's also slowing the growth on social security, medicare. slowing the growth will do the job. he was on one of the sunday shows and said we have got to talk about social security and medicare for people under 40. the republican plan is starting 25 years from now? >> we don't want to offend anyone in the meanwhile. i said let's have a conversation. i said we are. what's the answer. it is circular.

this is the conversation. show up. they don't want to show up and have the conversation. >> bhast different is who ever thought the omb geeks could become the coolest kids in town. and the truth is four years and eight years ago the deficit was not the political issue that it is right now. there was no political will in all the halls of the white house. there was less than that in among the democrats. so you need leaders to feel the political pressure first. and now there is actually mounting pressure on the politicians in washington to do something. >> is it just the flavor of the moment then? right now it's in front of everybody. we trip on what's in front of us. everybody understands it more than ever. let's say and hope the economy picks up.

>> i don't think it's going get better any time soon. i think lit be on our front burner. >> making the tough choices, next year we will do it. >> not an emergency. the politicians don't feel the heat any more. they don't go home to their districts and have people raise their hands and say i am really stressed out. >> where was the tea party when bush was tripling the debt? >> the tea party certainly has its origins. i remember doing talk radio when he passed education reform. they became more angry when he added prescription drug benefits. their anger certainly has roots in spending under bush. >> i want to pick up something that john was alluding to. the flavor of the moment is deficit reduction. how do you get the economy moving? right now there is tension and timing is really what ben bernanke is trying to deal with. get the ship out there. but clearly we need to do something to create jobs or else there will be no revenue. >> as an omb geek -- >> come back to the show.

>> is it a good idea? >> i think on balance it is. i call it spaghetti economics. we have needed to get out of the crisis to throw spaghetti against the wall. we don't know if it's going be, you know, a fix. but he is looking at the hill. he sees that fiscal policy is going to be in total gridlock. how about err on the side of taking some action that might boost the economy a little bit. one unelected guy can cause an international economic diplomatic crisis. you got everybody jumping out the window in germany for good reason. >> and sarah palin and china. >> where is jesse james. >> everybody is saying we want to banks to lend.

the banks are saying nobody is coming in the door with credit worthy conditions or demands. they are sitting on $2 trillion and that's why you say to ben bernanke that you will lower the interest rates a little bit. that's not going stimulate the economy at all. and that's what worries me. >> i think he is healthy. and that that creates some of what economists call the wealth that's the spaghetti we are

on in pennsylvania over whether public schools are going ban sweets, cakes, cookies, and that type of thing. so i had to bring to the private school student to show them how privileged they are.

growing threat to energy security is our number one threat as we don't produce our

god given resources here in our homeland. we ask foreign countries that don't have the strict environmental standards, we ask them to produce for us? that doesn't make any sense. or he could have said that international terrorisms attempt to destroy us at home and abrord. that is a consistent threat espshlly when you consider what some of the threats are aiming at those are serious flets. he looked beyond these and focused on something that would a affect us all forever more. his biggest fear, he said and he tougt taught me a lot is we are not passing along what it means to be an american to this new generation. i agreed with the concerns but i offered a caveat when it was my turn to respond. if we are not teaching the next generation what it means to be free and how important it is to be free, then how can we explain

the thousands of young men and women who voluntarily enlist in our military and are willing to sacrifice all for our freedom? our young men and women, my teen age son is one of them. he spent his year in iraq and he is furthering his career now. these young men and women in america who have choices to do anything, really, in the world, the world is their oyster and yet they choose to fight for freedom and yet they have never tasted anything but freedom. so how do they know how important it is to be out there fighting for and securing what it is that we have? they know how important it is to fight for our freedom and protect our constitution. they know inherently that america is worth defending. how could it be possible that we are losing the next generation when we see who it is that is enlisting in our military? perhaps these kids and so many of them are just kids. perhaps they are not able to

articulate what it is that instills in them this belief that they need to protect the blessings of liberty but they get it. and i thank god that they get it. and they are willing to lay their very lives on the line to protect and to serve something greater than self. to defend the american idea of liberty. and even considering the example of young people like our service women and men, he is right. exceptional nature of america. it is worrisome because in belief is something that every new generation for america to survive we have got pass this on to that next generation to the young kids here, to the students and to understand that we have

to go back to the beginning of our republic and to the heart of what it means to be an american. you see most countries are the results of kind of accidents of history. wars of conquest or peace treaties. we're not the product of historical accident but the product of design. we're the only kounry in history that was founded on an idea. and that ideal is liberty. we hold these truths to be self-evident. they are endowed by their creator with certain unalienable rights. and the genius of our founding fathers is they took what the declaration of independence calls the laws of nature and of nature's god. laws that are written on our

hearts and designed a constitution that enshrined the laws and they allowed people to live by them. and it's an awesome gift given to us which really was a declaration of responsibility, too. these are our charters of liberty. every american when ever he or she is challenged to define what america really stands for, we get to hold up a copy of the constitution and we get to say this is what we stand for and what we believe in. this is what it means to be an american. the constitution is the very thing that all after our politicians and men and women in uniform swear an oath to support

and to defend. it's the glue that holds us together. even with this great document, still we have to admit that something seems to be missing. especially it seems like to me it's been in the past year or two. the constitution has given us a number of amazingly valuable governing principals and institutions. it provides the checks and balances and limited federal government with enumerated powers and states rights as protected under the tenth amendment states rights. they are still the best possible protection they are not enough in and of themselveses to assure the survival and discuss of liberty or the survival of our great country. freedom doesn't just depend on the institutional guarantees or words written on a document. it's a question of culture. to most americans, freedom is not just an ideal. >> we understand the governor is coming to the end of her

comments and we will cut to a break and be right back with a panel to figure out what she was talking about. we're back with our panel.

we're back with our panel. >> okay. let's do a quick whip around the table? >> i think cnn is covered on any equal time requirements that they may have. i think it was -- i think it is a su real thing. it is the merging of culture of celebrity with politics and this new weird thing that is hard to grapple with. we are fixated and can't look away but yet what is in there. >> you spend time with sarah palin on campaign. >> i am one of the people that

she didn't want to pray with. i remember on the campaign in september of 2008 having nor her an eloquent piece and using it to start a conversation with her about mccain's belief in america exceptionalism. i do find her as riveting as people who love her and people who hate her. i find her a treasure troef. she is on to something. there are a whole lot of people out there who are deeply troubled by tone in the culture that says america is just like everybody else. she is going ride the issue to nomination if people don't see what she sees. people love it when others recognize america's greatness. >> that is one of the big complaints aimed at president obama.

they don't sense that he feels that, whatever that is. >> the people of alaska voted for sarah palin and sarah palin quit. it's better to lose than to quit. she can sit there and talk about being exceptional and being better america. if she were a better person she would have stood and fought. she choose to check out and to make money. >> interjected in it was a snip it of quantitative easing and exceptionalism. what she is doing is burnish her reputation approximate say i can talk about the serious issues.

it was brilliant. >> i can do that. but i can't run a country. but i can talk and carry on and that's fine. this is not a democrat or republican. >> she was very crafty and dropping the words in. little nuggets about the economy. little nuggets about foreign policy. there would be no answer to the question that would naturally follow. but i think she has a huge problem for the republican party. i read a column that she is now -- i have heard the word used, dangerous. she is too powerful to ignore and they just fuel her power. there are a lot of people in the republican party who ix site

voters who are not leading our party. rudy giuliani is really exciting. >> how many votes did he get? >> you put him on the campaign trail and his story telling, the republican voters want to feel like our party is more brave, more strong and better capable of protecting this country. that is part of what the republican primary is about. >> we are going get those numbers. i didn't hear a single word about how she will close the debt that she is talking about. >> she is trying to blow up the sweets ban.

>> talking about basically saying that sweets in school is something that is an american right. >> bill clinton made school uniforms an issue. she has not committed any political crimes. >> this is important for our kids to get and shape and be in shape. >> she is making an important point about the proper role of government in our lives and here is what she said. who should be making decisions about what to eat? right? we don't want the government telling us whether we can have trans fat in our donuts right? >> no fat in your donuts. no smoking. she is saying get out of my life which is a very ak akian and western thing. >> main line sugar and smoke

cigarettes. >> when she talks about military service and can point to her own child, less than so few american families bear this burden. >> bring it back. >> i am for a draft so we all share the burden. i know paul is terrible. i know we all have an obligation of citizenship. >> we are at a point where the people who are heros are totally disdained by blue state america. the neither one is respected or understood in the other part of the country.

and again, i think it is a fascinating thing to understand. if we can't graping with a comment. am i say nag right? the power that that has, she doesn't -- couldn't explain what it is any better than i could. it doesn't matter this is an elector rate. these are primary voters who are agitated by the role of government that they are -- it is like the line in the movie. they are crawling through the sand. >> it was a great speech. thank you for listening and critiquing that speech. ...authentic... ...pure... and also delicious.

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we're back. i know we promised you president reagan's omb director. we will talk to him tomorrow night. it will be fascinating and it will challenge you. and we will hold another republican congressman's feet to the fire. >> that fire is getting a workout. >> the feet are getting it. >> as fascinating as you are you will never be as interesting as

sarah palin. you know what i loved about the speech? she was amazing as always. i love the way she started. i have said it before. she is a tease. if you noticed in the very beginning she says to daniel who apparently sang a song. she complimented him and said shouldn't he sing at an inauguration? not necessarily mine. but of course you know that is what she is saying. she is planting that seed. then she went through and made specific points about what the role of government should be, about having lived a christ-centered life, talking to a christian school. she hit all the right notes for her audience. >> can i make a point. i don't think there is any question that bill clinton is still the politician out there in terms of speaking and pulling an audience in. we thought barack obama is number two. he has dropped. sarah palin is the second best politician in america.