once again we're waiting for president obama to address senate democrats at the newseum here in washington. we will have it for you live. there should be some interesting q&a in the session. the last name paul has earned quite a reputation in the world of politics. congressman ron paul ran for president two years ago, remains one of the most outspoken lawmakers on capitol hill and now his son is running for a senate seat in kentucky and this week dr. rand paul picked up the endorsement of former alaska governor sarah palin. does the political apple fall far from the tree in the paul family? let's find out. joining us now is dr. rand paul, a candidate for the seat being vacated by jim bunning. dr. paul, first of all the big question a lot of people have is how are you similar and how are you different from your father? >> well, the one thing that i tell people i admire most about my father is that his vote is not for sale. his vote is not for rent. people know where he stands.

the lobbyists don't even come to him. they don't bother because they know he can't buy his vote. >> what is your biggest issue in this kentucky race? if there's one thing that you want voters to remember from your campaign, what would it be? >> it's the debt. it's a great worry that i have about how large the deficit is and that it's consuming our country. i think it could get to the point where it's unmanageable. i think part of the answer, though, we have to limit their terms. i think they all stay too long and we need to bring them home. >> i'm going to ask you about sarah palin. she gave you a full throated endorsement the other day. she said while there are issues we disagree on, he and i are both in agreement it's time to shake up the status quo in washington and stand up for common sense ideas. she's also donated $2,000 to your campaign from her political action committee. what is the good and the bad of having sarah palin support you?

>> hey, i can see only good. she's the biggest endorsement any reamian candidate could get in a primary and it's huge. she has a great kinship with the tea party movement and so do i. i started this on april 15th of last year speaking to a tea party in my little town of bowling green. 700 people showed up on the square. it was the largest political event i've ever been to in warren county. every event i've been 0 to in tennessee the largest events have not been republican events. they've all been tea party events. i see sarah palin as a large national figure in the tea party movement if not the largest within the tea party movement. >> dr. rand paul, thank you for joining us. we will be talking with you more. we have tough questions in the weeks ahead. we look forward to talking to you again. as you can see president obama is at the newseum. this is the senate democratic caucus. it includes, of course, the 57 democratic senators as well as independents joseph lieberman and barry sanders. a peck on the cheek for claire

mccaskill. the president shaking a few hands. this will be opening remarks by the president and then we are expecting that he will take some questions about strategy and how the democrats will try to move forward on things like health care reform. let's bring in real quickly while harry reid delivers his opening remarks, columnist for politics daily.com and, lynn, as far as what the senate does next, it's now been pretty emphatically made by house speaker pelosi if the senate will pass the fixes to health care reform, she believes she can round up the votes to pass the senate bill as is. in other words, they have to make some fixes in a separate bill. is that the leading question for the senate democrats and what do they do with this? >> well, it could be. the big question is will they accept the compromise because the house won't vote wholesale on the senate bill. if they would, it would eliminate the need for a super majority on it. so one of the things i'll be listening for, the book end to the republican question and

answer session he had a few days ago is what practical, pragmatic compromises are the democrats going to be willing to talk about and the president and let's see if they're going to be willing to talk about it in public. >> we've heard a number of senate democrats say to us privately and quietly that they are not impressed with the communications between the white house and capitol hill, that the white house will often either do things or not do things essentially without any consultation, without proper consultation. what do you make of that complaint and those sort of tensions between the house and senate democrats in the white house? >> well, that's at least the kind of problem that's solvable as opposed to an intractable solution as something like a public option or some of the abortion related issues. communication problem is different and the substance problem, but i think the obama white house when they came in perhaps gave too much authority to congress to write the health bill and now they're trying to assert themselves and just, you know, be more forceful in making

a deal. communications are important. no one wants to feel in congress that they're out of the loop. so the messaging that goes on is very important within the white house and the senate democratic leadership. >> lynn, i want to ask you about that man, harry reid. he's up for re-election as a lot of people know. he recently came out pretty hard on president obama for what the president said yesterday about sort of a remark about how you gamble away your money in las vegas, trying to make an analogy about government spending. it was an opportunity for reid to essentially say, wait a second, that's my state you're talking about. how much trouble is harry reid in back home in nevada both for his efforts on behalf of this president but also just in general? >> well, he suffers from the leadership syndrome. that helped take down senator tom daschle who is the senate leader a few years ago in south dakota. when you're from nevada and you're a supporter of the

gambling industry, your ears are going to perk up. he was in trouble in his november re-election even before this little flap. i think it shows how sensitive you have to be, president obama has to be. you just cannot make a joke about gambling at harry reid's expense, which is what it would have been. that's a lesson for the president. harry reid is in a big political fight for his life. >> the other thing so interesting related to harry reid, the other two people president obama has on the stage, i saw dick durbin and then i believe chuck schumer from new york. those two have started giving essentially a lot of money for other colleagues in races to try to build up their own goodwill politic politically in case harry reid does not win his re-election. dick durbin and chuck schumer want to be in a position to essentially try to appeal to be the next senate majority leader if the democrats hold on to the majority or at least the party

leader in the senate. what do you make of that? >> it's natural. now they have a their own political action committees, durbin's has been around for a while, where they do make donations to other members. so this eidea is not new. senator durbin and senator schumer would be the logical successors to senator reid. kind of amazing how we're already writing him off nine months away. >> lynn, i'm going to cut you off because president obama is at the microphones. let's listen in to the president speaking to the democratic senate caucus. >> you guys had to listen to me at the state of the union, or at least pretend to listen to me, so i'll try to keep it relatively brief, some opening remarks and then open it up for questions. first of all, i just want to thank harry reid. i recently said he has one of the toughest jobs in washington managing an institution that by

its very nature is, let's face it, you guys are a little difficult to manage. i've been a part of this cause caucus. i don't think anybody could have done a better job under more trying circumstances than harry reid and i think he deserves a huge round of applause. now let me start by saying we always knew this was going to be a difficult year to govern, an extraordinarily difficult year to govern. we began 2009 with the financial system on the brink of collapse, an economy bleeding nearly 700,000 jobs per month, a $1.3 trillion deficit and two wars that were costly in every sense of the word. we knew that solutions wouldn't come easily or come quickly. we knew that the right decisions would be tough and sometimes they would be unpopular and we knew that we might have to make

them sometimes without any help from our friends on the other side of the aisle. but we made those decisions. those actions prevented another great depression. they broke the back of a severe recession. the economy that was shrinking by 6% a year ago is now growing at nearly 6% one year later. that's because of the work that you did. harry listed some of the work that you did on behalf of the american people under these difficult circumstances. extending health insurance to 4 million children, protecting consumers to getting ripped off by their credit card companies and kids being targeted by big tobacco. some things that weren't noted or didn't get a the lot of attention. you reformed defense spending by eliminating waste and saved taxpayers billions while keeping us safe at the same time. billions of dollars of tax

relief to small businesses and 95% of working families here in america. you did all this despite facing enormous procedural obstacles that are unprecedented. you may have looked at these statistics, you had to cast more votes to break filibusters last year than in the entire 1950s and 1960s combined. that's 20 years of obstruction packed into just one, but you didn't let it stop you. as harry mentioned, though, our mission is far from accomplished because while the worst of the storm has passed, far too many americans are still hurting in its wake. i know you've seen it back home in the shuttered businesses, closed homes, you've heard it from constituents who are desperate for work and we've seen it in the burdens the families have been grappling with long since this recession had issues we've been talking

about now for years, the burden of working harder and longer for less, of being unable to save enough to retire or to help a kid with college expenses, the extraordinarily constant rising costs of health care. these problems haven't gone away. it's still our responsibility to address them. all that's changed in the last two weeks is our party's gone from having the largest senate majority in a generation to the second largest senate majority in a generation. and we've got to remember that. there was apparently a headline after the massachusetts election, the village voice announced that republicans win a 41-59 majority. we still have to lead. saving and create ing jobs has continue to be our focus in

2010. last year we gave small business the engines of job creation. tax relief and spending through the sba. i don't know if you are away the sba loans have gone up 70%, 80% which, by the way, indicates the degree to which there is still huge demand among small businesses, some of the banks are saying, well, we're not lending because there's not as much demand out there. there are a lot of small businesses hungry for loans. we've made progress but they're still struggling. i've proposed additional ideas to help small business start up and hire, to raise wages and expand and to get the credit they need to stay afloat. you've made some of these same proposals as well. we should put them into action without delay. we've invested -- mra [ applause ] we've invested in america's infrastructure, rebuilding roads and bridges and railways and putting people to work strengthening our communities

and our country and as you know the recovery act was designed so that a lot of that work is going to be taking place this year not just last year. many of the projects you funded come online in the next six months but we can do more and we should do so without delay. through the investments you made in clean energy startups we've not only helped put americans to work, we're on track to double our nation's capacity to generate renewable energy the next few years. i have proposed additional tax credits that promote higher sector. we should do that without delay. i think ideas like this should be pretty palatable to the other party. they seem pretty common sense, pretty centrist. we should be able to hear their ideas as well. that's why i spoke to the republican caucus last friday. i think it was to the country's benefit that we had an open and frank discussion about the challenges facing the american people and our ideas to solve them.

i have to admit i had a little fun at that caucus. now obviously on some issues we didn't agree. but on some we did and i'm reminded when it came to health insures reform in particular i sought out and supported republican ideas from the start. so did you. max baucus -- where is max? i think he can testify to spending a little time listening to republican ideas. so can chris dodd and tom harkin. considered hundreds of republican amendments and incorporated many of their ideas into the legislation that passed the senate. so when i start hearing that we should accept republican ideas, let's be clear, we have. what hasn't happened is the other side accepting our ideas. and i told them, i want to work together when we can and i meant it. i believe that's the best way to

get things done for the american people. i will call them out when they say they want to work with us, and we extend a hand and get a fist in return. last week, for example, you put up for a vote a bill i suppor d supported, conrad, greg, the fiscal commission. we were assured this was going to be bipartisan. only to see seven republicans who co-sponsored the idea in the first place suddenly decide to vote against it. now i'm open to honest differences of opinion but what i'm not open to is changing position solely because it's good short-term politics. what i'm not open to is a decision to stay on the sidelines and then assign blame. i have little patience for the kinds of political calculations that says the cost of blocking everything is less than the cost of passing nothing.

basically says if you lose, i win. that's been the politics in washington for too long and the problem is it leaves the american people out of the equation. so i would just suggest to this caucus if anybody is searching for a lesson for massachusetts, i promise you, the answer is not to do nothing. the american people are out of patience with business as usual. they're fed up with the washington that has become so absorbed with who is up and who is down that we've lost sight of how they're doing. they want us to start worrying less about keeping our jobs and more about helping them keep their jobs. they want their business done in an open and transparent way. when we took back the senate in 2007 we did so in part because we made a case that we'd be better on ethics and transparency. we backed that up by passing the most sweeping ethics reform since watergate and by beginning

to address earmark abuse. we should be proud of those accomplishments but if we're going to erase that deficit of trust that i mentioned at the state of the union, we're still going to have to do more. that's why i have proposed that we work together to make all remarks public on one central website before they come up for a vote and to require lobbyists to discuss details of their contacts on behalf of their clients with the administration or with congress. that's why working with people like dick durbin who has been vocal on this for a long time we have to confront the gaping loophole the supreme court opened in our campaign finance laws that allowed special interests to spend without limit to influence american elections. we have to get back to fiscal responsibility and i spoke about this in the state of the union. just ten years ago america had a budget surplus of over $200 billion. remember people were worried about what might happen with all these surpluses and whether it would create problems in the financial markets.

that was just a decade ago. after two wars, two tax cuts, prescription drug program, none of which were paid for, we faced a deficit of over a trillion dollars, a debt over the next decade of $8 trillion before my administration spent a single dollar. now we can't change the past but we can change the future. that's why i'm asking you to adopt a freeze in nonsecurity discretionary spending starting next year. we're still having a tough time right now given the economy is just starting to pick up steam but starting next year. that's why i'm grateful that all of you restored the pay-go rules that worked so well in the 19 s 1990s. i mentioned the fiscal commission. we may not have been able to get the votes for a statutory commission but we're going to -- i am going to appoint a commission by executive order because it's important for us to take these issues seriously.

not just for us but for our children and our grandchildren. let me just wrap up by saying this. i know these are tough times to hold public office. they're in the arena with you. the need is great. the anger and the anguish are intense the economy is massive and so as a consequence no matter what levers and buttons we press, sometimes doesn't move as quickly as needed to provide relief to so many of our constituents. in that kind of circumstance i think the natural political instinct is to try to tread lightly, keep your head down and to play it safe. i've said this before to the caucus, i want to say it again. for me it is constantly important to remind myself why i got into this business in the first place. why i'm willing to be away from my family for big stretches at a

time. the sacrifices so many of you have made, being subject to criticism constantly. you don't get in this for the fame. you don't get in it for the title. you get in it because somewhere in your background, at some point in time, you decided there was an issue that was so important that you were willing to stand up and be counted. you were going to fight for something. and you decided you were going to run as a democrat because there was a core set of values within the democratic party about making sure that everybody had a fair shot. making sure that middle class folks were treated fairly in our econo economy. making sure those who were on the outside had a way in that led you to get involved in public service.

and that's where we have to remind ourselves especially when it's hard. especially when it's hard. you look at an issue right now like health care. so many of us campaigned on the idea that we were going to change this health care system. so many of us looked people in the eye who had been denied because of a pre-existing condition. or just didn't have health insurance at all or small business owners who told us their premiums had gone up 25% or 30% and we said we were going to change it. well, here we are with a chance to change it. and all of you put extraordinary work last year into making serious changes that would not only reform the insurance industry, not only cover 30 million americans, but would also bend the cost curve and save a trillion dollars of our

deficits according to the congressional budget office. there's a direct link between the work you did on that and the reason you got into public office in the first place. and so as we think about moving forward, i hope we don't lose sight of why we're here. we've got to finish the job on health care. we've got to finish the job on financial regulatory reform. we've got to finish the job -- [ applause ] we've got to finish the job even though it's hard. and i'm absolutely confident if we do so in an open way, in a transparent way, in a spirit that says to our political opponents that we welcome their ideas, we are open to compromise but what we're not willing to do is to give up on the basic

notion that this government can be responsive to ordinary people and help give them a hand up so they can achieve their american dreams. we will not give up that ideal. if that's where we go, i'm confident that politics in 2010 will take care of themselves. harry, thank you very much. and president obama saying to the democratic caucus, i hope we don't lose sight of why we are here. his message particularly on health care some of the most defiant we've heard in recent weeks that may go over very well, not necessarily with the senate democrats but the house democrats who are waiting and are pleading with the white house to light a fire under the senate to make some of the changes so the house can get the votes they need. democratic strategist karen finney and matt welch, very briefly, what did you make of what he said? >> i thought it was powerful and very important for him to go in front of democrats and talk

about the importance of being a democrat because you know this white house has been under fire actually from the left for not doing enough of that. that's a very important message, an audience they know they have to be concerned about in addition to both houses of congress. >> matt welch, your take? >> he's been campaigning as if he were running for president. i think the main problem is that we've seen him actually be president for a year. there's a pretty wide gap between those kind of promises and talk and what actual governance looks like. i don't believe it's any kind of predictor for democrats suddenly finding their spine and governing like they said they were going to. >> let's hear how president obama responds. a question from arlen spector asking about jobs and the jobs bill. let's listen to the president's response. >> and then they lend it back to us and now a big part of the united states. the first part of my question is, would you support more

effective remedies to allow injured parties, unions, which lose jobs, companies which lose profits, by endorsing a judicial remedy if not in u.s. courts perhaps in an international court and eliminate the aspect of having the decisions overruled by the president, done four times in 2003 to 2005 at a cost of tremendous number of jobs on the basis of the national interest? and if we have an interest on the national interest, let the nation pay for it as opposed to the steel industry or the united steelworkers. and the second part of the question, related, is when china got into the world trade organization, 15 of us in this body opposed, there were

bilateral treaties. and china has not lived up to its obligations to have its markets open to us but take our markets and take our jobs. would you support an effort to revise, perhaps even revoke those bilateral treaty which gives china such an unfair trade advantage? thank you. >> arlen, i would not be in favor of revoking the trade relationships that we've established with china. i have shown myself during the course of this year more than willing to enforce our trade agreements in a much more serious way. and at times i've been criticized for it. there was a case involving foreign tires that were being sent and i said this was an example of where we've got to put our foot down and show that

we're serious about enforcement. and it caused the usual if fuss at the international level but it was the right thing to do. having said that, i also believe that our future is going to be tied up with our ability to sell products all around the world, and china is going to be one of our biggest markets and yaz yas going to be one of our biggest markets. to close ourselves off from that market would be a mistake. now the point you're making, arlen, which is the right one, it's got to be reciprocal. so if we have established agreements in which both sides are supposed to open up their markets, we do so and then the other side is imposing a whole set of nontariff barriers in place. that's a problem. and it has to be squarely confronted.

so the approach that we're taking is to try to get much tougher about enforcement of existing rules, putting constant pressure on china and other countries to open up their markets in reciprocal ways. one of the challenges we have to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and theirs are deflated in price that puts us at a huge competitive disadvantage. but what i don't want to do is for us as a country, or as a party, to shy away from the prospects of international competition. because i think we have the best workers on earth. we have the most innovative products on earth. and if we are able to compete on an even playing field, nobody can beat us. and, by the way, that will

create jobs here in the united states. if we just increased our exports to asia by a percentage point, by a fraction, it would mean hundreds of thousands, maybe millions of jobs, here in the united states. and it's easily doable and that's why we are going to be putting a much bigger emphasis on export promotion over the next several years and that includes, by the way, export promotion not just for large companies but also for medium sized and small companies because one of the challenges -- i was up in ma'am new hampshire yesterday and you saw this terrific new company started up. it only has 13, 14 employees at this point. but it has a new manufacturing technique for the component parts in l.e. dechlt light bulbs, could potentially lower the price of l.e.d. light bulbs,

cut them in half. and these folks, they potentially could market not only just here in the united states but this is a technology that could end up being sent all around the world. but they don't have the money to set up their own foreign office in beijing to navigate through the bureaucracy. they have to have some help being over there. so that's one of the things we want to focus on in this coming year is making sure that our export/import banks, our trade offices, that we are assisting not just the big guys, although we do want to help them, but the medium and small businesses that have products that could be marketed if they got a little bit of help and push from the united states government. >> sir? michael bennett from colorado. >> thanks for coming. you talked in the state of the

union very well about a number of the challenges we face as a k country which are serious. even before we were driven into the worst recession since the great depression, the last period of economic growth in this country's history is the first time middle class family income actually fell during period of economic growth, no net jobs created since 1998. household wealth the same at the end of the decade as it was at the beginning and an education system that's not working well enough for our kids. and on top of everything else, got a $1.4 trillion deficit and $12 trillion of debt. i was saying that the other way in colorado and talking about how our kids were going to have to pay this back if we didn't make this decision that we've got to face up to. my daughter, caroline, is 10. she walked out with me at the end and said, just so you know, i'm not paying that, dad. she has the right attitude, i think. just in case you're counting on

it. >> at the same time this place looks broken to the american people. our ability to make these decisions is open to enormous question in the wake of the health care discussion in particular. i had a woman the other day in glenwood springs, colorado, ask me wrp she could get her lobbyists in washington, d.c. what are we going to do differently? what are you going to do differently? what do we need to do differently as democrats and republicans to fix this institution so that our democracy can actually withstand the tests that we're facing right now? >> let me make a couple observations. having served in the senate and now seeing it from the perspective of the white house, first of all, whenever people ask me why isn't washington working, i am a fierce defender of the integrity and hard work of individual members. which is, by the way, matched up by when you look at polls people

hate congress but individual members, a will the of them, feel they are working hard on their behalf. so the problem here you've got is an institution that increasingly is not adapted to the demands of a hugely competitive 21st century economy. i think the senate in particular, the challenge that i gave to republicans, and i will continue to issue to republicans, is if you want to govern, then you can't just say no. it can't just be about scoring points. there are multiple examples during the course of this year in which that's been the case.

look, i mentioned the filibuster record. we've had scores of pieces of legislation in which there was a filibuster, cloture had to be invoked, and then passed 90 to 10 or 80 to 15. and what that indicates is a degree to which we're trying to gum up the works instead of getting business done. that is an institutional problem. in the senate the filibuster only works if there's a genuine spirit of compromise in trying to solve problems as opposed to just shutting the place down. if it's just shutting the place down, then it's not going to work. that's point number one. point number two, in terms of how we operate, we as democrats, i do think that the more open we are, the more transparent we are, the more people know exactly how things are working

even if sometimes it takes long er to maintain that transparency the better off we are. i think the health care bill is a perfect example. the truth of the matter is that the process looked painful and messy but the hearings that were held did give an opportunity for the product to get refined so that i think the ultimate package after potential negotiations between the house and the senate is better than where we started. and there was a possibility and continues to be a possibility to be in discussions about what exactly that bill accomplishes. on the other hand, and i take some fault for this, at the end of the process when we were fighting through all these

filibusters and trying to get it done quickly so that we could pivot and start talking about other issues that were so important to the american people, some of that transparency got lost. and i think we paid a price for it. and so it's important, i think, to constantly have our cards out on the table. and welcome challenges and welcome questions. the republicans say that they could ensure eveinsure every am free, which is what was claimed the other day at no cost, i'd want to know. because i told them why would i want to get a bunch of lumps on my head doing the hard thing if you have the easy thing? but you've got to show me. you have to prove to me that it actually works because i've talked to every health care expert out there and it turns out if you want to reform the insurance system, if you want to make sure that people without

pre-existing conditions are able to get insurance, if you want to provide coverage for people. if you want to bend the cost curve, then you need a comprehensive bill because this is a complicated area involving one-sixth of our economy. but we should be open to that dialogue. and not underestimate the power of the american people over time despite millions of dollars of advertising to the contrary from the insurance industry and others. we should not underestimate the american people's willingness to say, okay, i've got it, and there are still going to be disagreements. some will disagree with us. but we have to constantly make our case, i think, and not play the insider's game playing the outsider's game. the last point i would make. do you know what i think would make a difference? if everybody here excused all the members of the press who are here, if everybody here turned off your cnn, your fox, your --

just turn off the tv, msnbc, blogs, and go talk to folks out there instead of being in this echo chamber where the topic is constantly politics. the topic is politics. it is much more difficult to get a conversation focused on how are we going to help people than a conversation about how is this going to help or hurt somebody politically. and that's what the american people are just sick of. because they don't care, frankly. they just want it know are you delivering for me? and we've got to get out of the echo chamber. that was a mistake that i think i made last year was just not

getting out of here enough. and it's helpful. all right. [ applause ] >> mr. president, you've told me, suggested, don't pay attention to blogs -- >> president obama encouraging all the lawmakers, all the senators, to turn us off. don't pay attention to the echo chamber. we're going to use our authority to be able to essentially turn off the president's feed for now. we're still going to monitor it and keep a close watch on the questions that senate democrats in the caucus asked the president. we will turn around the sound as it gets more interesting but, again, for the second time in the last 15 minutes, another emphatic expression by the president about health care and the need to get a complicated bill done because it is a complex process. joining us again democratic strategist karen finnian and matt welch. what do you make of it? and, again, the overall message the president is putting his cards on the table saying to his

caucus, we have to get it done. we cannot do it piece meal. >> first, i'm neither republican nor a strategist, i just throw bombs from the sidelines. what i take from it again, even though he's claiming that he wants to ignore politics for a year as if any politician ever has been able to do that, the actual content of the speech is producing politics. he wants to be able to say, we're trying to get something done and the republicans are blocking us and preventing us from being the party of no. we're trying to be bipartisan and i'm going to demonstrate that bipartisanship by bashing on republicans and at the same time i think he's making the same mistake that he made in the state of the union. he refuses to acknowledge the degree to which the health care proposal in particular and obama-nomics, which could be called bush-onomics -- is generally unpopular. americans are anxious and

rightly so. >> karen? >> i have to say as one of the 14 million people who doesn't have health care, i'm glad that he's not backing off on health care and it's an important message. again, this idea he campaigned on a set of principles and he's going to keep those promises and keep working on those promises. the other thing i thought was so important, i take issue with what you said, what he said in front of the democrats is the same thing that he said in front of the republicans, very similar to what he said during the state of the union. so in terms of sort of holding feet to the fire, i think he's doing it both with republicans and democrats. i think that's important. i think reminding both parties this is about getting something done, if you look at the tea party movement, at the end of the day they're pushing for results and sometimes when you turn on the television and see what's going on here in washington you don't see results getting made. you see a lot of bickering back and forth. >> msnbc political analyst richard wolffe, it seemed like at his remarks today, the

remarks that house democrats have been waiting for the president to make ever since that election in massachusetts, house speaker pelosi says, look, if he can get the senate to pass these fixes even through reconciliation we can then go ahead and pass the senate health care bill as is. we can get you the votes but the house democrats have been frustrated because they felt the white house is not lighting a fire under the senate. that seemed to change today. >> reporter: i think it changed today and in the state of the union. lots of references to the house having done something, waiting for the senate to do something and not just on health care. what was topic "a" today was about jobs and small businesses. this is the jobs package, the second stimulus, if you will, the house voted on earlier late last year and the senate is supposed to be picking up now. that's the priority here is to get the senate to do something on the economy, to find a path on health care and find this different tone. politics in spite of what the president said about everyone tuning out politics, politics is

important. this white house is pivoting to a more reasonable, open handed approach to republicans because that's clearly what independent voters want to see. >> karen? >> adding to that, part of what we're seeing the politics matter, also, among democrats. when you have pelosi and reid saying separate things, that does not seem like a party that is ready to lead. part of what you're seeing from the white house is taking a stronger hand, frankly, with congress in general. i think he admitted he gave them a lot of leeway in the beginning and now is going to pull some of that back and press both sides to get something done. >> wouldn't you acknowledge the president is programs the most effective spokesperson that the democrats have. there was even some democrats suggesting, look, they should plant some awfully tough questions in the session so the president could leverage this and say, look, here is what the issue really is in the manner he did last friday. >> being the best spokesman for the democratic party is like, i don't know --

>> here it comes. >> i'll just say it, not a good season for democrats. obama has not been a particularly effective salesman. he wasn't with the health care reform package and he read the country wrong saying my problem is i didn't explain it good enough. he's out there every day explaining stuff, campaigning for candidates who aren't winning. he's still much better than harry reid and nancy pelosi for sure but he, himself, is losing effectiveness because he is equating getting something done with getting something good done. there's a huge difference between those two things and i think the american people are detecting that difference and he is not and that's fundamental in 2010 as we look forward. >> we're going to keep you around. we're going to take a very quick break. the president did say something fascinating, also, a few moments ago about essentially some of the transparency getting lost in the process in the senate and paying a price for it. he took some responsibility for that. we will talk about that on the other side of this break.

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and we continue to watch president obama respond to questions. he's talking right now about the anger that is out there in the country. this is prompted by a question from senator blanche lincoln of arkansas. the previous questions came from michael bennett of colorado and arlen spector of pennsylvania. those three and several others are facing some very difficult re-election races this fall, so there's a pattern in terms of who gets to ask questions. let's listen to the president again for a few moments. >> the problem is right now we know they're not lending. and paying out big bonuses. and we know that the existing regulatory system doesn't work. so we shouldn't be spooked by this notion that, well, is now the time to take seriously in an

intelligent way, not a knee jerk way, the challenge of financial regulatory reform so that you don't have banks that are too big to fail and europe not putting taxpayers at risk and you're not putting the economy at risk? now is the time to do it. the same is true with health care. the same is true with health care. there are, i promise you, at least as many small businesses out there if you talk to them who will say i just got my bill from my health insurance and it went up 40%. and we've got to do something for them. all right? >> next question, the junior senator from the state of new york, christian gillibrand. >> mr. president -- >> we'll get a mike for you. >> thank you, mr. president. i have an issue i'd like to raise that is very important to every new yorker and to many,

many americans. and that's health care for our 9/11 responders and for all of the communities that live near ground zero. now these americans hail from every one of the 50 states and every single congressional district in the entire united states. >> right. >> and now because of exposure to toxins from the collapse of the world trade center towers, there's about 20,000 people who are sick. some of them gravely ill suffering from serious health effects, some are disabled, some have died. i've introduced legislation to provide permanent care and proper compensation for these americans. and my question is would you today commit to working with congress to pass comprehensive 9/11 health bill that's fully paid for? >> well, i would fully commit to working with you. keep in mind our budget already

significantly increased funding precisely for this purpose, so i'm not just talking the talk. we've been budgeting this as a top priority for the administration. i've confessed i have not looked at all the details of your legislation, but i know not only you and chuck but everybody here wants to make sure that those who showed such extraordinary courage and heroism during 9/11, that they are fittingly cared for and that's going to be something that we are going to be very interested in working with you on. all right? >> thank you, mr. president. >> the next question is the chairperson of environmental public works committee, senator barbara boxer. >> great to see you here, mr. president.

thanks for meeting with the k caucus. i thought it was instructive for the american people. as senator feinstein and i tell our colleagues every day, california is hurting. i think -- i know that you're aware of that and they want to see a fighting spirit in us, that we are committed, even though we've had political setbacks, to get the job done. i want to tell you as i watched you during the state of the union, listened to you, what you are doing now is really important to the folks i represent because you're showing the fighting spirit no matter what the adversity is and you're coming up with specific proposals. so i want to ask you about small business. we all know they're the job creators. 64% of new jobs over the last 15 years came from small business. your new proposal, which does mirror a couple of people i look, senator warners and others have worked hard on this, for community banks to lend. can you do that by executive

order? my understanding is you can use some of the t.a.r.p. funds that were paid back and use that or those funds that have not been used, can you use that and get this going by executive order, or do you need us to put that program into a jobs bill and, second, are you using your influence as much as you can to get the big banks to lend? they've dropped lending by $12 billion over the last year. so i wonder if you can give us an update on that. >> first of all, i have now taken trips to allentown, pennsylvania, hiohio -- >> baltimore -- >> i was in baltimore. had a great time in baltimore. just recently. new hampshire. i haven't been there yet but i'm

going to get there. everywhere i go, you talk to small business and they will tell you they are still experiencing a severe credit crunch. the larger businesses right now are able to get financing. even the medium sized businesses, the credit markets have improved. smaller businesses, even if they are making a profit and have not missed a payment, are finding that banks are averse to providing them capital. now two reasons that they cite. one is they say their bankers are telling them the regulators are looking over the shoulder toochl and the community banks feel their hands are tied.

these are independent regulators. they are diligent in doing their jobs. obviously they feel caught off guard because of the lax regulation in some cases of the banking industry before the financial crisis. you get a sense that the pendulum has swung too far in the other direction. the challenge that we've got is we've got to be careful because these are independent regulators and we don't want to politicize that. but what treasury secretary geithner and others has done is to discuss with the regulators what we are hearing in the field and to make sure that there is a consistency of approach that doesn't prevent banks from making what are good loans and taking reasonable risks. so that's one thing we're hearing. the other thing, though, that is still out there is that the

larger banks generally haven't been in this market. a lot of the smaller companies never had access to them in the first place and we want to see if we can get more of the large banks to get into this marketplace and when i met with the big bank ceos, this was something that i pushed them on. they tell me, and we have seen some confirmation of this, that they are actually ramping up some of their small business lending and setting up more aggressive divisions actively seeking out loans. so that's the effort that we're making to jawbone the private sector to do what it needs to do. in the meantime, i think it's better to do it through legislation than executive order. t.a.r.p. was a congressionally created structure with some

fairly stringent guidelines in terms of how we were supposed to approach it. it shouldn't be hard to do, though. it's a simple concept. banks have repaid money. there's $30 billion that we could take that has already been repaid, immediately apply that to a fund just so that small banks are able to provide their small business customers with regular lending. and i do think that getting that as part of a jobs package is priority number one and i know i've already talked to harry about this. my assumption is that if you combine that with the tax credits we put in place for hiring, the provisions that we've talked about to incentivize programs that can immediately start hiring people to retrofit homes and businesses and help reduce our energy costs, taking some of those immediate steps now i think will

pay big dividends down the road and the timing of it is perfect because our job last year was to make sure the economy was growing. the economy is now growing. what's happening is businesses either because they can't find financing or because they're still just dipping their toe in the water have been hesitant to hire full-time workers. and for us to start giving them some serious incentives, giving them additional access to financing could accelerate a process that otherwise could take a much longer time and, frankly, all those folks out there who are out of work right now just can't afford to wait any longer. they need it now. all right? >> we have time for one or two more questions if the question is short. >> and the answer is short. >> otherwise we'll only have time for one question. >> mr. president, i want to thank you for coming.

thank you for coming here. the answers are so good and need to be heard. you have a great sense of what the judiciary should be. i think back to president clinton's time when the other side blocked 61 of the judges. you've had some superb judges. you've talked to both republicans and democrats, some superb names and senator reid still has to file cloture. we have to spend a week of doing that and then they passed by 100-0 or 90-10. my thing is this. because of what they did last time, the greatest short aage a the most judicial crises i think in our history, will you continue to work very hard to get names as quickly as possible so