CNN "Larry King Live" - Transcript

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KING: We're back. What does tonight mean for Democrats and Republicans? Let's find out from Ben Stein, the economist, former presidential speechwriter, columnist for "Fortune" Magazine, and author of "The Little Book of Bulletproof Investing." Alicia Menendez, senior adviser to NDN. That's a liberal think tank. Ari Fleischer, our old friend, the former White House press secretary for George W. Bush, a Republican strategist as well. And Representative Debbie Wassermann Schultz, Democrat of Florida, vice chairman of the DNC and supporter of Representative Kendrick Meek, the victor tonight in the Democratic Senate battle in the sunshine state.

Okay. What's your over view, Ben?

BEN STEIN, ECONOMIST, AND FORMER PRES. SPEECHWRITER: Well, I think it's a sign of how vital and lively our democracy still is with all this terrible foreign policy situation, terrible war situation, terrible recession situation. We still have lots and lots of people who want to serve in the very difficult task of elected public service. We have lots and lots of new voters coming out. We have groups that have not been represented before. I don't think we've ever had an African-American that has a very good chance of being a senator from Florida, at least not since reconstruction. I don't think we've had a Hispanic American, who has also a chance in high office from same office from Florida. I think it's a very positive night. I like tonight.

KING: Alicia, from a Democratic standpoint, how do you see it?

ALICIA MENENDEZ, SENIOR ADVISER, NDN: I just want to make a quick correction to what Ben said, which I largely agree with, which is that the seat they are looking to replace belonged to Mel Martinez. So a Hispanic has in fact held this seat.

STEIN: Wasn't he born in America? Was he not born in--

MENENDEZ: I'm not sure if Mel Martinez was born in Cuba or if he was born in America.

STEIN: I think he was.

MENENDEZ: But either way, Marco Rubio was born here so--

STEIN: He's Hispanic.

MENENDEZ: He's Hispanic.

STEIN: Yes.

MENENDEZ: No, I think this has definitely been an interesting night. I think there are lots of interesting narratives coming out of this, including the fact, you know, we here in Washington like to set these standards that, you know, either this is going to be an anti- incumbent election, or this is the year of the woman, or this is going to be insiders versus outsiders.

What we're seeing tonight, it seems, is that none of these molds fit exactly. And we're going to need to be, you know, more critical and more precise in looking at these races.

KING: Former Senator Martinez was born in Cuba.

MENENDEZ: There we go.

STEIN: Oh. Thank you for the correction. I appreciate it.

KING: All right, Ari, how do you look at it? How -- first, are you surprised that Scott is ahead of McCollum?

ARI FLEISCHER, FMR. BUSH WHITE HOUSE PRESS SECRETARY: Well, everybody knew that was going to be close race. McCollum was almost written off a few weeks ago or a few months ago. So he's had a strong comeback. We'll see how that one ends up.

But what I always try to do in a long primary season is look at the overarching trend for a few months. And the overarching trend that I think is going to continue right up until election night, is you have a huge turnout for Republicans and a much less interested turnout by the Democratic party in all primaries.

In 2006, the Democrats had three million more Democrats turn out in primaries than Republicans. And the Democrats took the House, took the Senate.

2010, exact reversal. So far in the primaries, where people have voted, 3 million more Republicans have voted than Democrats. That's a huge enthusiasm gap. And it can actually be measured over time in who shows up. That's what determines winners and losers in November. That's the biggest trend of the primary season so far, Larry.

KING: And Congressman Schultz, does that give you pause for concern?

REP. DEBBIE WASSERMAN Schultz (D), FLORIDA: Actually, what should give Republicans pause is that they are in an internecine battle for essentially the heart and soul of the Republican party. All over America, what we've seen is the extreme right wing Tea Party Republicans have been beating moderate, more mainstream Republican candidates, and essentially, strangling the chances of almost any of these races to be successful for Republicans.

America is not on the far right. We're in the mainstream, middle of the road. And to watch the Tea Party essentially strangling the Republican party, that's going to be the trend that will be talked about in the 2010 election.

KING: We'll take a break. When we come back, we will discuss the Tea Party's impact on all of this right after this.

(COMMERCIAL BREAK)

KING: Before we get back to the panel and have them go at it, let's go at it back to the big board and John King for a quick update. John?

J. KING: Larry, I'm sure they're going to go at it, especially as we show you some of these very competitive results. The Florida gubernatorial Republican primary. This is a close one. We're going to track this all the way down. Leading at the moment, conservative former health care executive, Rick Scott, 47 percent of the vote to 43 percent for the state attorney general, former Congressman Bill McCollum; 57 percent of the vote counted.

One thing I want to show you, Larry, using all of our technology tonight. You might want to say, wow, he's held on to that lead for a long time. You know the state very well. Palm Beach, Broward, Dade County, a very slow vote count. Not many votes down there. That is where the people live, as you know, in the state of Florida. So there is time and there are votes to be counted. Bill McCollum has room to come back. Rick Scott leading at the moment. We'll keep tracking that one.

The Democratic primary for Florida Senate, we have called this race for Kendrick Meek. He's the Democratic congressman. You see the check mark there, 55 percent to 32 percent. Kendrick Meek winning out despite millions of his own money spent by real estate developer Jeff Greene.

Notice these numbers here, Larry. Ari Fleischer was just making this point. So far -- let's wait until they count all the votes. So far, turnout much higher on the Republican side. And a marquee race still to be counted, as the polls close out in the state of Arizona. John McCain -- if the polls are right, the pre-election polls, he will hold off a challenge from the right in J.D. Hayworth.

Let's show you the candidates in Arizona, if we can bring that one up. John McCain, of course, the Republican presidential nominee less than two years ago, now fighting to keep the Republican nomination for Senate against the former congressman, J.D. Hayworth. Republican activist Jim Deakin also in that race.

Again, turnout a concern there, Larry. Temperatures over 100 degrees today, but Senator McCain reasonably confident. We'll be counting the votes in the hour ahead. Now back to Larry and the panel.

KING: Before we get back with the panel, let's go for a couple of moments to hear from the victor, Congressman Meek, addressing his supporters.

(BEGIN VIDEO CLIP)

REP. KENDRICK MEEK (D), CANDIDATE FOR SENATE FROM FLORIDA: We will be victorious on this night. And I want to thank every Floridian that cast a ballot in this primary election to make me the Democratic nominee, and eventually the next senator of the state of Florida.

I made the case that I am the real Democrat in this race. I also made the case that I have the will and the desire and the energy to pull a double shift, to get Florida back to work, to make sure that people have health care, to make sure that we protect our environment.

(END VIDEO CLIP)

KING: That's Kendrick Meek, who's on his way to run for the Senate, the congressman from Miami, a very effective speaker. Let's discuss the Tea Party, Ben. Are they going to be decisive in November?

STEIN: Well, they'll have some big impact, but I must say, I respectfully disagree with Congressman Schultz. She's a fine woman. I heard her speak recently at a Congress conference in Scottsdale. She's a very good speaker -- sorry, not in Scottsdale, in the desert outside of L.A.

But it's just a mistake and a myth to say that the Tea Parties are extremists. Some are, some aren't. The ones I know want lower taxes and less government spending. That doesn't sound like an extremist position. They want to be sure that before we go into wars, we have to absolutely be sure that we can win them --

KING: They don't appear to appeal to minorities.

STEIN: I've seen plenty of minorities at them, plenty of African-Americans. In fact, one of the most prominent Tea Partiers in the Phoenix area is an African-American. It's just a myth that the Democrats are trying to put out that these are extremists.

KING: Alicia, from an election standpoint, are you concerned about them. I'll get back to you, Debby. Are you concerned about the Tea Party?

MENENDEZ: I don't think Democrats need to be concerned about them. I think Republicans need to be concerned about the Tea Party. In a lot of these primaries, they've forced candidates, either like John McCain, to hook to the right on issues he's historically been very good on, like immigration, like Don't Ask, Don't Tell, which he's completely flip-flopped on in this election.

In the case of Marco Rubio, they gave him a lot of his initial support, which allowed him to win the Republican nomination, but now that he actually needs to move into a general, they're angry about the fact that he's flip-flopped on Arizona's SB-1070, their controversial immigration law. And when you look at his policies, there's a lot of chatter about the deficit, but none of his policies actually add up to reducing the deficit and driving home that Tea Party message that Ben was just talking about.

KING: Ari, what do you make of the Tea Party?

FLEISCHER: I think they're great when it comes to the economic issues, Larry. I think the Republican party had lost a lot of its way when it came to spending. And the Tea Party came by as a very wise and helpful reminder that we need to reduce debt, reduce spending, and lower taxes. The fascinating thing about this discussion that leaves me a little slack jawed is anytime people say, as the congresswoman did, that the Tea Party is bad for Republicans, then why are Republicans winning in all the polls?

That's something they said, I remember, when Rand Paul won a Kentucky primary as a Tea Partier, and the Democrats said, ah ha, now we win Kentucky. Well, Kentucky now looks like it is pretty safely in the Republican category.

I think that's something they say because they really don't have a lot to say when it comes to the central issue of the race, which is the economy, jobs, and the poor shape we're in. It's the type of political distraction that gets thrown out there. But there's no evidence that supports it. If it was, Democrats would be winning in a lot more of the polls which we see heading into November. And that's just not the case.

KING: Congresswoman Schultz, how do you respond?

SCHULTZ: Larry, what Ari is saying is just absolutely not born out by the facts. Just look at the very fact that Harry Reid, until Sharron Angle was nominated by the Republican party, a hard right-wing Tea Party supporter, Tea Party essentially representative -- until then, Harry Reid was struggling in the polls. Now he's up in the polls in every major poll.

You have candidates across the country, Democratic candidates, Democratic incumbents who are up in the polls overwhelmingly, and about eight or nine of the NRCC, hand-picked moderate, young guns have gotten beat in Republican primaries and now those nominees, the Tea Party nominees, are down in the polls and will ultimately lose to our moderate, mainstream middle -- Democrats, who are pro-business and who have their finger on the pulse of their own constituencies, instead of their finger on the pulse of the people on the hard right. That's just the reality.

KING: Why do you laugh at that?

STEIN: Because the Democratic party doesn't have its pulse on the mainstream of America. The Democratic party has its foot on the neck of American business --

SCHULTZ: We sure do.

STEIN: Just like the foot on the neck of the American business, making it very, very expensive for businessmen to hire people, putting through a health care bill that 60 percent of Americans oppose, putting through a health care bill that people in business are terrified because it increases their cost for employees by so much, putting through apologies for America all around the world.

The Republicans would not be in such a strong position in the polls if people thought that Democrats were a mainstream party. They're not anymore.

KING: Let me get in a break. We'll come back with Alicia and more. And we'll get back with the very upset Debby Schultz.

But first, these words.

(COMMERCIAL BREAK)

KING: We're back until the Arizona polls close at the top of the hour. That's the race we're interested in, with Rick Scott four percentage points ahead of the attorney general, Bill McCollum. The winner will face Alex Sink in November to be the next governor of the state of Florida. All right, Alicia, Congresswoman Schultz makes it sound like this is a great year for the Democrats. Do you buy that?

MENENDEZ: I don't know that it's a great year for the Democrats. I certainly don't think it's as bad as some on the right have made it out to be. Barack Obama's approval ratings, as we said, remain relatively high. And I think voters are going to go to the polls for the general election and they're going to be faced with what is not an excellent choice. They have one party that has tried, that has put us back on a path toward economic recovery; and they have another party that simply won't play ball.

And I think when given that choice, while I admit it is not an ideal choice to make, I do think there is the possibility that voters break for Democrats in a way that is potentially unexpected.

KING: Ari, do you see any clouds on the Republican horizon at all?

FLEISCHER: Well, the trend continues to be very ongoing and consistent. And in some ways, the Democrats can't even catch a break. You had further terrible economic news coming out today about housing, with 27-year low in starts. It's as if every piece of economic data just keeps getting bad and worse and it's baked into the cake between now and November.

So the overall trend is not going to change. I think the real issue is do Republicans have enough to pick up the House? I don't believe they're going to pick up the Senate, but they're going to make such a huge dent in the Senate that for all intents and purposes, Barack Obama's agenda will have been stopped. And then the question is it sets up a huge 2012 election, where Republicans could take it all, Democrats could take it back.

That's what I think we're looking for heading into November. No matter what, even if Republicans fall short in the House and fall short in the Senate, it will have effectively stopped the Obama agenda.

KING: If the Republicans take the House, Congresswoman Schultz, a lot will be expected of them, will it not?

SCHULTZ: I don't think that's actually going to happen. And let me just say, Larry, I'm certainly not painting a rosy picture for Democrats. I do think that Democrats are going to lose seats in the House and probably the Senate as well. But Americans do face a choice. The choice is a little bit different, I would characterize it a little bit different than Alicia did. It's a choice between continuing to move the country in a new direction, as she said, and backsliding toward the Bush area, which the Republicans would do, and return to the exact same agenda, where they drove the economy into a ditch; they focused on the wealthiest one percent of Americans and ignored the middle class and working families.

So those are the types of choices that our candidate across the country offer. So it's a very stark contrast and a very stark choice. I think Americans will choose to continue to move the country in the direction that it's been in, where we've got private sector job growth now from the bleeding 750,000 jobs just before President Obama took office. So I would say at the end of the day, you'll see us hold both houses. KING: Switch to another quick area. Ben, do you think this Muslim question with the center that's proposed to be built in New York will have a national effect?

STEIN: I do. I must say, I have rarely seen people so worked up about anything. It's astonishing. People are e-mailing me --

KING: Despite the fact it's a Constitutional right.

STEIN: It is a constitutional right to worship without government interference. I don't think it's a constitutional issue. It's a moral/cultural issue. I actually saw someone on your program talk about the fact that this is not really a moral issue, but a moral/cultural issue and that Mr. Obama has really stepped in it this way by backing something that is so offensive to so many Americans. If that many Americans are offended by it, even if there is a legal right to do it, I don't think it should be done. It's really, really offensive.

KING: Alicia, will it be a national issue?

MENENDEZ: I don't think so at all. I think right now most American voters are focused on one issue. That is the economy. While this may play in some redder districts, I just don't see this driving people to the polls, especially when we're going to talk about moral issues, then we can talk about providing health insurance to Americans who don't have it. We can talk about fixing our broken immigration system, so that we can keep families together. We have a lot bigger moral fish to fry than some mosque that's surrounded by two other mosques, Larry. That's the ridiculous thing about this conversation. It's not the only mosque in New York.

(CROSS TALK)

FLEISCHER: Larry, this is not a red district/blue district issue. Manhattan voted 85 percent for Barack Obama, 15 percent for John McCain, and Manhattan opposes this. This is an issue which I don't know why the president has weighed in so deeply into it and then equivocated on it. This just touches a raw nerve with a lot of people of both parties. It just doesn't feel right out of the sensitivity issue.

Yes, it's a right in this country to build a religious institution anywhere you want, but sometimes part of exercising our rights is being delicate and sensitive enough to say, but I choose not to here. And that's what I wish we would hear from the Muslim community in lower Manhattan. And that's how you start to bridge gaps and bring people together, and build it in a place where New Yorkers can say, yes, we all support it; let's put it here.

KING: Got to get a break and we'll find out what Congresswoman Schultz thinks, and whether she thinks it will be a national issue, after this.

(COMMERCIAL BREAK)

(NEWS BREAK)

KING: Congresswoman Schultz, do you think that Muslim situation in New York will be a national issue?

SCHULTZ: Um, I really don't think it will be a national issue. I think what it boils down to is it is a case of just because you can doesn't mean you should. I think the leadership of the mosque and that Muslim community in that area of New York City would be well served to sit down with the leadership in New York and in that community, and work together to build some consensus on an alternative site.

I do think the national issues that are important in the outcome of races are turning the economy around, creating jobs, and the fact that virtually all Republican candidates for Congress across the country support privatization of Social Security, deep cuts in Social Security, like Dan Webster in Florida --

STEIN: She just made that up.

(CROSS TALK)

SCHULTZ: No, no, Ben. With all due respect to you, I did nothing of the kind. There are candidates across the country for Congress --

STEIN: Will you show us the source?

(CROSS TALK)

KING: Phoenix, hello.

CALLER: Hi. I'd like to know how the Democrats plan on continuing their tax and spend philosophy and the growing deficit that it is creating within America today?

KING: Alicia?

MENENDEZ: I think that is a complicated question. On one hand, we have to get our economy back on track. This administration has made every effort to do that. And two years down the road, we certainly need to start talking about our deficit. As a young American, I am of course, concerned with our deficit. And at the same time, there is no point in talking about that until we have really revived our economy, gotten to the type of job creation that Congresswoman Schultz was talking about. Until then, the deficit is a conversation that needs to be saved for down the road.

KING: Ari?

FLEISCHER: Well, that is -- I think the voter, the caller put his finger on what this election is really shaping up, as a referendum on all the spending we've had. First it was the Tarp under President Bush. And then it was the 787 billion dollar stimulus that was supposed to keep unemployment below eight percent, and it broke 10 percent. And since then, we have bailed out all kinds of other people, and the taxpayers are fed up with it.

That is the overarching trend. What is driving this election. It is spending. It's debt. And it's the lack of jobs. That is what has changed what was a really powerful Democrat back-to-back 2006 and 2008 election. The voters are in stern backlash. Independent voters breaking overwhelmingly Republican. This is a big change in America.

KING: We will come back with a statement from House Minority Leader Boehner and a reply from Joe Biden and the comments of the panel right after this.

(COMMERCIAL BREAK)

KING: The House Minority Leader John Boehner called on President Obama to fire his economic team today. Here is what he said. Watch.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), MINORITY LEADER: President Obama should ask for and accept the resignations of the remaining members of his economic team, starting with Secretary Geithner and Larry Summers, the head of the National Economic Council. Now, this is no substitute for a referendum on the president's job killing agenda. That question will be put before the American people in due time.

(END VIDEO CLIP)

KING: Ben Stein is a big fan of Larry Summers, and we will have his comment. But here is how Vice President Biden responded to Boehner's speech. Watch.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: There are millions upon millions of Americans who saw their savings and their paychecks shrink, lost their jobs, their homes. Mr. Boehner is nostalgic for those good old days, but the American people are not. They don't want to go back. They want to move forward. And so folks, I am still waiting for what it is that they are for.

(END VIDEO CLIP)

KING: OK. Ben, what do you make of Boehner and Summers and --

STEIN: Actually, Larry Summers is one of the smartest guys in the world. We are incredibly lucky to have him in public service. Geithner is a total cipher. He might as well be pushing cookies at some embassy in some remote foreign country. But VP Biden has put his finger on a major problem. We don't know what the heck to do. Republicans don't know what to do. Democrats don't know what to do. Ms. Schultz does not know what to do. I don't know what to do. Nobody knows what to do.

KING: Isn't that true, Alicia?

MENENDEZ: I think there is certainly some truth to it. And I have to give it to Ben, because it is refreshing to hear somebody be that honest. We can be that honest because we are not running for office in November. At the same time, I do think there is a distinction between one party which is putting forward forward-looking solutions, innovative solutions, and another party that wants to play looking back in time and just going backwards, when we know what those policies got us. So I think that there is a distinction.

KING: Ari? Do you have a solution?

(CROSS TALK)

FLEISCHER: Well, one thing for certain is you don't raise taxes in the middle of the weak economy we have. And I'm afraid that is what we may be heading for if Congress doesn't figure out what to do with the expiring tax cuts. But two, when those tax cuts were passed in 2001 and 2003 with overwhelming bipartisan support, it led to 52 consecutive straight months of job growth in our economy. That's more than four straight years of job growth. People should not forget that.

There was a recession in 2001, September 11. And then as a result especially of capital gains and the dividend tax cut, the economy took off. And the deficit in 2007 was down to 157 billion dollars. And then you had the meltdown of 2008. And I don't attribute that to the 2001 tax cuts. That was a much bigger factor that involved both parties and involved Fannie Mae and Freddie Mac, as well as Wall Street and the whole meltdown.

But there was very recently solid job growth. And it was a result of those tax cuts that Democrats are deriding.

KING: Congresswoman Schultz, we only have about 35 seconds. Go ahead.

SCHULTZ: Thank you. We have the most credible economists that don't attribute the success of the job growth under the Clinton administration, and then the tanking of the economy under the Bush administration to tax cuts that focus on the wealthiest one percent. What we are going to be seeing is -- and what we have seen is the way we have returned to adding jobs to the private sector is through the policies of President Obama. We have gone from bleeding 750,000 jobs a month to adding jobs in the private sector. We have begun to move the country in the right direction. That is attributable to the policies that we've adopted over the last year and a half.

KING: We are out of time. We thank you all very much. Of course, we will have you back frequently.

The polls are about to close in Arizona. Stay with CNN for the latest results. Wanda Sykes is here tomorrow night. Right now, it is John Roberts and "AC 360." John?

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