>> schieffer: today on face the nation, an interview with former president bill clinton, plus tea party politics. president obama will be joining former president bill clinton this week as the former president convenes his global initiatives conference, looking for solutions to the world's most pressing problems. we'll talk to the former president on that, and we'll get his take on the current state of american politics. then, we'll turn to the uproar on the right. not since alice in wonderland has a tea party gotten the attention it's getting these days in american politics. we'll bring in two voices on the right-- columnist and former bush administration official michael gerson, and the g.o.p.'s legendary strategist and former reagan advisor ed rollins to talk about the tea party movement and where it's going. i'll have a final thought on how democrats may have missed an

opportunity to find a compromise on the tax cut debate. but first, bill clinton on "face the nation." captioning sponsored by cbs "face the nation" with cbs news chief washington correspondent bob schieffer. and now from washington, bob schieffer. >> schieffer: good morning again. we're going to welcome first to our broadcast former president bill clinton. but before we begin our interview this morning, some of you may have seen in your morning paper that we'd be talking also this morning with christine o'donnell, the surprise winner in the delaware senate primary. well, she canceled on us yesterday. she said she had scheduling conflicts and couldn't be here. we're going to have more on that later, and we're going to play the tape that began making the rounds friday night in which she said she once dabbled in witchcraft. i'm serious.

but first to former president bill clinton. mr. president, thank you for coming. welcome to the broadcast. this week, you're bringing together business leaders, world leaders, thinkers from 90 countries. i think the last i heard 40 sitting presidents and prime ministers from around the world- - all getting together to talk about your clinton global initiative, the most serious problems facing the world and how we can take action against them. you've had some remarkable successes with this over the years. but let me just ask you first, what do you think you'll be concentrating on this year? >> well, this year, we'll be focusing a lot on the economic challenges facing people all around the world, including in the united states, and what, if anything, the private people who come here and the non- governmental groups can do. i think you'll see some interesting commitments coming out that affect america-- how to create jobs from clean energy in the united states without any

kind of particular involvement from the government. how to train more people to take jobs more quickly. you know, the last economic report unemployment rate showed that posted job openings are going up twice as fast as job hires in america. that's not happened coming out of a recession in my lifetime. we're going to respond to problems in america. then we're going to look at that around the world to see what we can do, and especially what we can do to help girls and women participate in the revival of the economies of their own countries and get a fair share of the education. as always, we'll have a lot of emphasis on education and on bringing the benefits of technology to people who don't have them. i think there will be a lot of interesting side effects. terry mcaulliffe, a man you know, is bringing two electric cars to the clinton initiative because he went to china and bought two electric car companies and is moving them to

america to manufacture cars, a thousand of which he's already sold in denmark. it makes the point that we can bring manufacturing back to america and put people to work doing that, too. >> schieffer: you talk about concentrating on some of the problems in this country. i think a report that really gave a lot of people pause this week when it came out that one american in seven now lives in poverty. that's more than 10% of our population. how do we do something about that? mr. president, how did we get to that point? >> well, first of all, if you go all the way back to the early '70s, when we began to globalize the financial system without globalizing the economy, without any global economic and social supports, inequality has been increasing. as finance gets more and more of any country's economy, and basic business and manufacturing gets less, it concentrates wealth at the top.

that's been happening for 40 years. in my second term, the only four-year period in that time where the bottom 20% of working people's incomes, in percentage, terms actually went up slightly more than the top 20%. but even then, the top 1% did the best. and the middle class has been squeezed. in the last eight years before president obama took office, before the financial meltdown, 43% of the benefits of the decade went to 10% of the people. i mean, 90% of the benefit went to 10%. to 10%, 43% to the top 1%, so the middle class has been squeezed. then, we have this total collapse. people had their credit cards maxed out. they didn't have any savings. and could easily fall into poverty.

now, the american people are trying to save more. they're trying to get back together. when we come out of this, we have got to have a strategy for building a middle class economy, which includes creating more jobs and you have to know where are they? they're in small business, manufacturing, and clean energy. getting financing. where is the money? the banks have enough money to make... well, they have $1.8 trillion in cash reserves, so they can make in theory $18 trillion in loans. then we have to train people to do the jobs. there are just too many jobs where the skill mismatch is there. then the second thing we have to do is to figure out how to deal with these crises that are killing the middle class. you have more than 10% of the american people living in houses that are worth less than their mortgages. and lots of other problems. we need a whole strategy to revive the middle class. i worry that we're living in a climate where there's a lot of name-calling, a lot of labeling, a lot of, you know, bad mouth the government or bad mouth big

business, but people don't talk about what are we going to do to turn this around? we've got to get out of the immediate crisis we're in that started in 2008, and then we have to realize there is a long- term trend here that can only be overcome through education and the creation of more jobs and a more balanced economy in america. >> schieffer: all right. i want to... i'm going to ask you a little bit about that in a minute. i do want to talk about some of the politics of the moment right now. this is this whole tea party thing that's going on. it is sort of the right end of what you have talked about, kind of this general frustration and anxiety out there in the country. but what do you make of it? some democrats say it's a civil war going on in the republican party. some democrats think it's a good thing for democrats. what's your take on it? >> i'm not sure it's going to be a good thing for democrats yet. we don't know.

i think, first of all, the tea party insurrection, if you will, that you see in these republican primaries reflects the feeling of a lot of americans that they're getting the shaft. that the people who caused these problems-- first of all, the banks that were responsible for the financial meltdown, they've gotten well again. everybody has got money again who is in that business, but ordinary people don't. then, they think the government that didn't exercise appropriate oversight, everybody there still has a job and health insurance and can make a home mortgage payment and can send their kids to college, and they can't. so there is a general revolt against "bigness." which, in the case of the republicans, is always directed more against the government than the private sector. it's totally understandable. the thing that bothers me about the tea party movement is two things. number one, according to the

profiles and the studies that have been done, it's being bankrolled by people who want to weaken the government so there will be even more unaccounted- for private concentration of power. and that's what got it us in the mess we're in the first place. the second thing that bothers me is it's hard to know where they stand on these specific issues. do they want to repeal the financial oversight bill? do they want to repeal rather than reform the health care thing? do they really want to repeal the student loan reform bill at a time when we've fallen from first to 12th in the world in people with college degrees and it's really important to the economy? this student loan reform for the first time allows everyone to pay their loans back as a percentage of their income. we need... i don't know where they stand, but i get why they're popular. >> schieffer: i would also bring up that it's not just in the republican party that there is some dissatisfaction. >> no. >> schieffer: there is

dissatisfaction within your party, the democratic party. i want to ask you, what do you think is happening to president obama? he comes into office very high expectations. he has the big support among independents, a lot of republicans, i think, also voted for him. and yet, now we see his approval rating is less than 50%. we see that there are all these things going around with him. 18% of the people think he's a muslim. a large percentage of people think he wasn't even born in this country. i guess what i'm asking you is, how does he get his groove back? because he seems to me to have lost it. >> well, i think first of all, we have to give our friends in the republican party their fair share of credit. i think when president obama was in the senate for a while before he started running for president. he built some friends among the republicans, they did some things together. when he got elected the first

thing he said was, "i don't want any investigations into the bush years. i want to go right ahead. we want to get this country moving again." and he kept thinking that he would find some partners in the republican party. and he didn't. i was clear that mr. boehner and senator mcconnell and... they weren't going to vote for any meaningful health care bill. they weren't going to support any student loan reform that the banks didn't like. they were going to oppose the financial oversight bill. we got a couple of republicans for that. and i think he was shocked at the intensity of the republican opposition. but they learned, from my first two years, that if you just say no, even though people hate it, you get rewarded for it because it discourages the democrats and it inflames your base. so they're doing just what they did in '93 and '94. and so far, it appears that they're being rewarded for it.

i think that it disoriented him for a while. he just kept trying and kept trying. i also think he believed that if he accomplished a lot on the legislative front that would be reflected in a better political climate. but the problem is there's a huge lag time, once you get in a deep economic hole, between digging out of it and having people feel it. so i think, you know, look, bob, if the unemployment rate were 5%, we wouldn't be having this discussion, i don't think. there would still be the conservative critique that he was for too much government, but we'd be in better shape. i think he is getting his groove back now. he's still fighting for specific things on small business and manufacturing and all the stimulus money that hadn't been spent for clean energy stuff. he's out there combating the opposition now. maybe that will make a difference. i think it will make some difference. i think we'll do better. but the democrats should focus on... people only hire us when

things are messed up. they'd much hear the republican rhetoric than ours. we only get hired when the country is in a mess. the democrats should focus on what we're going to do. >> schieffer: let me just ask you, because you mentioned 1994. that is, of course, when the republicans took the house and newt gingrich came to power in the house. a lot of people said that that's also when your administration finally began to focus and get some things done. you were having your problems going into that election. you lost a bunch of seats in the house, but after that, you did things like welfare and nafta. you got some tax cuts in. you balanced the budget. would it be good for him in a way if he lost the house and the republicans came to power and had to share some of the responsibility here? >> well, i think it would increase his chances of being re-elected. whether it would be good for the country or not, i don't know. you just said that's part of the narrative. but, yeah, we passed a balanced budget bill, but it was easy to pass the balanced budget bill

because 90% of the deficit was reduced by the budget that only democrats voted for in 1993 that the republicans beat them for. because that's what reversed "trickledown economics." that's what put the country on a whole new course. it was that budget and the people who got beat were the people who voted for it. i'm worried that we're going to beat lot of people now who voted for a lot of the policies that will bring this country into the 21st century, and then we'll have a congress that won't support building a green economy anymore. that's the thing that really bothers me. i think that, yeah, we got a lot done. i like working with newt gingrich. i could deal with all the shenanigans they pull, but i hate to see the people who are more likely to generate manufacturing and small business opportunities and more likely to train the american people to do the jobs that are open and more likely to deal with the

remainder of the mortgage crisis thrown out of office. >> schieffer: all right. >> i don't know how it will play out. >> schieffer: mr. president, i'm sorry, we have to leave it there but we do. the clock ran out. we'll be back in one minute. >> thank you.

>> schieffer: we're back now with our republican political round table. joining me here in the studio, michael gerson of "the washington post," the legendary strategist ed rollins is in our new york studio. well, as many of you read in your morning paper, we expected to have christine o'donnell, the surprise winner of that republican senate primary up in delaware with us this morning. she called us or emailed us yesterday morning and told us that she was canceling. said she had scheduling conflicts and a lot of political things she needed to do in her home state, so she couldn't be here. what we did not know at the time was that, friday night, bill maher, the comedian, had

circulated a video interview that she had done for his program back in 1999. it turned out the segment never aired. but he aired it friday night in which she said, of all things, that she had once dabbled in witchcraft. i want to play that tape for you right now. here it is. >> because i dabbled into witchcraft. i hung around people who were doing these things. i'm not making this stuff up. i know what they told me they do. >> wait, i want to hear about this. >> one of my first dates with a witch was on a satanic altar. there was a little blood there. >> your first date was at a satanic altar? >> schieffer: so, there you are. well, after we became aware of this, we emailed the campaign again and asked them if in fact was that the reason that she

decided to cancel the appearance? we got back an email that said "no, that is not the reason. we weren't aware that he had released this tape until yesterday afternoon." as for dabbling in witchcraft, whatever that is, her campaign spokesman said campaigns about what she did as a teen is hardly a worry to her or the people of delaware. ed rollins, have you ever dealt in witchcraft, first of all? and number two, what do you make of this? >> no, i haven't ever... i have a voodoo doll of one or two of some of the candidates i wanted to strangle to stick needles in in the course of a very long career but never witchcraft. the problem today is that obviously no one knew who she was or not many people knew who she was prior to last week. this is the first impressions people are going to get. right now, this campaign is about her. unless she gets her ship righted, no matter how strong the tea party is or how much move for change, at the end of

the day, people in delaware, a small state, are going to focus on her, her past statements, what she is saying now. and this is not a good start. >> schieffer: michael gerson, speaking of magic tricks, to her credit, her web site says she has now raised well over a million dollars since she won that primary. do you think republicans are going to stick with her? do you think there's any kind of explanation? i mean, was she joking in that tape? i mean, it's hard to know what to make of that? >> well, it is. i think though that her strongest supporters are not necessarily going to be turned off by this. she talks about having a religious conversion in college, which forgives a multitude of sins for many of her strongest supporters. but i think the reality here is that this adds to an aura of oddness in this case. she's seems to have decided not to answer a bunch of questions about her past and background, to focus on deficits or spending or other things.

"these things are irrelevant." but i think generally in politics, that people don't trust your views on deficits or spending until they trust you. she hasn't crossed that hurdle yet with the voters of delaware. certainly, indicates what the republican mood is. they want to support pure candidates, ideologically pure candidates, even if they're not electable. i don't think that's necessarily good for republican control of the senate. it doesn't change the fact of politics, which is bad candidates can lose, even if they're riding waves in a wave election. >> schieffer: ed rollins, some people have said to me that, in many cases, they point the tea party folk are not republicans. they're very conservative. they want lower taxes. they want small government. but someone said to me that in many ways they're more interested in just getting rid of the people who are in office than they are in who follows them. >> i think some are republicans. i think a lot are independents. i think to a certain extent what they are are people very dissatisfied with the country.

they have created a movement. they basically have become a very significant force. i think republicans have to deal with them. and they should deal with them in a positive way. they should listen to them. obviously, i've never believed, when i was the white house political director or on the congressional committee, that you endorse in the primaries. you let the process run its course and let the people pick who they want to run. obviously, the voters of delaware have now chosen. now, it's up to national people if they want to play, they have to go help this woman out. >> schieffer: we have a very short time here, michael. is this going to help republicans or hurt them? >> well, the tea party is a mixed blessing in a lot of ways. a blessing across the country but it's a curse when tea party candidates win in cases like this, because they're not particularly electable. >> schieffer: i'm sorry. we have to wrap it there. back in a moment with some final thoughts.

>> schieffer: finally house republican leader john boehner did a rare thing on this broadcast last week. he got off the talking points. i asked him about extending the bush tax cuts that expire this year. boehner gave me the g.o.p. line-- we should extend those cuts for all americans, rich and poor. democrats want to extend the cuts only to those making less than $250,000 a year. when i pressed boehner, he carefully said that was just bad policy. but if it came down to tax cuts

only for the lower and middle income groups or no tax cuts at all, he said, he would reluctantly vote for just the lower and middle income cuts. that was big news all across the country. and it set off a thunderbolt of reaction in both parties. by mid afternoon, the white house acknowledged boehner's change in position but added in a written press release, "time will tell if his actions will be anything but continued support for the failed policies that got us into this mess." blame it on a long memory, but i can remember when the first move by a president like lyndon johnson or maybe a smart aide in the eisenhower white house would not have been a snarky press release. i'm guessing lbj would have been on the phone to boehner in five minutes after seeing him on tv saying something like, "if you're serious, why don't you come over here quietly and we'll try to work out something good for both of us and the folks out there." call me a romantic, but i

believe that might have happened. as we saw, no chance it could happen today. and we're right back to the partisan war. too bad really. back in a minute.

>> schieffer: we'll see you next week right here on face the nation. captioning sponsored by cbs captioned by media access group at wgbh access.wgbh.org carly fiorina laid off 30,000 workers. when you're talking about massive layoffs, which we did... perhaps the work needs to be done somewhere else.

[ male announcer ] fiorina shipped jobs to china. and while californians lost their jobs, fiorina tripled her salary. bought a million dollar yacht. and five corporate jets. i'm proud of what i did at hp. [ male announcer ] carly fiorina. outsourcing jobs. out for herself. [ barbara boxer ] i'm barbara boxer and i approve this message. but what really happened? cnn -- not me -- cnn says his assertion about his tax record was "just plain wrong." jerry brown went out there and took credit for the fact that the people of california voted for proposition 13, which lowered taxes, which he opposed. and now he's going around taking credit for it. he raised taxes as governor of california. he had a surplus when he took office and a deficit when he left. he doesn't tell the people the truth.