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BASH (voice-over): Jim DeMint's announcement that he's leaving the Senate was a stunner.
SEN. JIM DEMINT (R), SOUTH CAROLINA: I honestly believe I can do a lot more on the outside than I can on the inside.
BASH: The anti-government, anti-tax conservative crusader certainly made a mark on the inside. On the Senate floor, a frequent voice of objection against legislation backed by both parties.
UNIDENTIFIED MALE: Is there any objection?
DEMINT: Mr. President, I object.
BASH: Just this week, he helped block a disabilities treaty opposed by many conservatives and he was one of House Speaker John Boehner's loudest conservative critics for a fiscal cliff proposal with $800 billion in tax increases.
DEMINT: Republicans should not be conceding that the federal government needs more money, negotiating with ourselves.
BASH: DeMint really made a name for himself in recent years as a Tea Party kingmaker, raising millions to help elect half a dozen like- minded conservatives to the Senate -- Marco Rubio, Rand Paul, Mike Lee, Pat Toomey, Ron Johnson and Ted Cruz. DEMINT: I've played a role in stocking the Senate with solid conservatives who are younger and brighter and better spokesmen than I am. And so, I know I'm leaving the Senate better than I found it.
BASH: But DeMint also infuriated Republican leaders by backing several GOP primary candidates who could not win their Senate seats. Remember Christine O'Donnell?
CHRISTINE O'DONNELL (R), FORMER SENATORIAL CANDIDATE: I'm not a witch.
BASH: CNN is told Senate Republican Leader Mitch McConnell was very annoyed with DeMint for backing O'Donnell and a couple other losing candidates in 2010, and cost Republicans the majority. At the time, DeMint told us he was unapologetic and still is.
(on camera): You're trying to send a message to the GOP establishment.
DEMINT: The GOP establishment is out. And what we're going to do is help the American people take back their government.
BASH: In the flood of GOP reaction to DeMint's surprise retirement, you didn't have to read between the lines much in the GOP leader's three-sentence statement to see some hard feelings -- thanking DeMint for his, quote, "uncompromising service." Another shocker, one of the biggest compliments came from the Democratic leader who called DeMint a friend.
SEN. HARRY REID (D-NV), MAJORITY LEADER: I've always liked the guy. And even though I disagree with so much of what he's done, I appreciate that -- I personally believe he does this out of a sense of real belief. It's not political posturing for him as it is for a lot of people. So I like Jim DeMint. I wish him well.
(END VIDEO CLIP)
BASH: Now, Wolf, remember Jim DeMint is one of the most conservative senators who worked very, very hard to block many pieces of legislation that the Democratic leader Harry Reid was trying to pass through the Senate.
And DeMint made a point of personally going over to Harry Reid's office to tell him face-to-face that he decided to resign. I can tell you as an observer of the senate watching relationships deteriorate this was surprising, but a good surprise.
BLITZER: Leaving on a good note at least with the majority leader in the Senate. Dana, thanks very much.
And I'm joined now by Senator DeMint along with Heritage Foundation founding trustee, the current president -- shall we say the outgoing president? -- Edwin Feulner. Thanks very much for coming in as well.
We're going to talk a little bit about the state of the Heritage Foundation and the state of the Republican Party, but the senator is here, the news maker. You shocked all of us. Why did you do this?
SEN. JIM DEMINT, R-SOUTH CAROLINA: Wolf, after this last election, it's apparent that we need to do more as conservatives to convince Americans that our ideas and our policies are going to make their lives better.
The Heritage Foundation is the premier think tank, research organization, the premier idea group for the conservative movement. This will give me the opportunity to help take our case to the American people and to translate our policies into real ideas at the --
BLITZER: So, you think you could be more influential within the conservative movement as the leader of the Heritage Foundation as opposed to a United States senator?
DEMINT: There's no question about it. I've --
BLITZER: What does that say about the Senate, though? I thought being a senator, one of only 100, you had a real -- you had enormous power.
DEMINT: Well, we do, and I think I've had a lot to do with changing the Senate and bringing in some folks who better reflect America into the Republican Party.
But for me, particularly since I spent most of my life doing research, working with ideas and marketing, and trying to sell those to people all over the country, this is like coming home, to be able to work with people who are like-minded at Heritage and all over the country.
BLITZER: If Romney would have won, do you think you would have also made the same decision?
DEMINT: I would have thought differently about it, but this -- I told Ed four years ago, half jokingly, that when people ask me to run for president, I said the only president I want to be is president of the Heritage Foundation, because they're about ideas and their ideas are backed up by solid research.
And Wolf, the thing that breaks my heart is as Republicans, we're not doing a good job of convincing Americans that we care about every one of them, and that our policies are going to make their lives better.
BLITZER: The impression is you only care about the rich.
DEMINT: That's the impression. I'm a conservative first, and I believe that if we do a better job of helping Americans understand what we're trying to do, to showcase every place in the country that our ideas are working at the state level, that that'll help those at the federal level who want to carry those policies.
And frankly, if independents and Democrats want to work with us on conservative ideas, I can do that better at Heritage than as a part of some inside the Senate --
BLITZER: Ed, you've been at Heritage forever, right?
EDWIN J. FEULNER, PRESIDENT AND FOUNDING TRUSTEE, THE HERITAGE FOUNDATION: I have been, 35 years.
BLITZER: You know the organization. I didn't realize that based on how powerful he says he's going to be within the conservative movement. Do you feel like you've been that powerful --
FEULNER: Oh --
BLITZER: -- in galvanizing everybody out there.
FEULNER: -- unquestionably. We've co-sponsored a presidential debate with you --
BLITZER: I remember.
FEULNER: -- as a moderator. You did very well.
BLITZER: It was a great debate.
FEULNER: Wasn't it great? We are an idea factory, and ideas are the raw materials of what goes on in Washington, and if we can pull together a stronger coalition, Republican, Democrat, conservative, even some liberals sometimes on the broad issues that face us, man.
And Jim DeMint knows how to do it. He knows the marketing side as well as the issue side. It's going to be an exciting time at Heritage.
BLITZER: It's a big job, and it's not just thinking. You've got to raise money, you've got to go out there and speak, you've got a big staff, you've got a lot of work to do.
FEULNER: He does. He's got to administer 250 people. We've got 600,000 members around the country who are going to be really ecstatic when they hear the news of Jim's coming in. It's an exciting time at Heritage.
BLITZER: Not everyone is upset that you're leaving the United States Senate.
BLITZER: I'll play a little clip. The minority leader in the House of Representatives, Nancy Pelosi.
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI, D-CA, MINORITY LEADER: For them to slap the face of our veterans, of people with disabilities, of families with children with disabilities, that was one of the saddest days. So, anyone who was a party to that, well, I wish them well wherever they are going and hope that we can have more of our values represented there.
(END VIDEO CLIP)
BLITZER: She was referring to your nay vote, your vote against this international treaty to help people with disabilities all over the world. You were a bunch -- there were a bunch of Republicans who voted against it, even though John McCain and Bob Dole and others came and pleaded with you to vote for this treaty.
DEMINT: Wolf, the issues -- the rights and privileges, the opportunities for the disabled are very important. They're too important to turn over to the --
BLITZER: So, why did you vote against this treaty?
DEMINT: If it's important, why turn it over to the United Nations? There's nothing that they're doing effectively.
BLITZER: Senator Kerry says they're not turning it over. There's -- the United Nations is just the body that's going to help other countries do what we are doing here in the United States.
DEMINT: Well, if that were true, we don't need a legally-binding treaty. We can work as an international community to spread our ideas abroad. But America has set the standard for our treatment of the disabled in creating opportunities and removing obstacles. The United --
BLITZER: On this issue, even Senator McCain and Senator Dole, you say they are wrong.
DEMINT: They are wrong because the United Nations cannot take an issue of that importance and carry it effectively around the world. This is the group that wants to make Palestine a state, they're the group that wants to regulate the internet.
Wolf, if you look behind the scenes of the United Nations, this is not something that we want to turn over the rights and opportunities for the disabled to.
BLITZER: So, this was more of an expression of your disdain for the United Nations than it was necessarily the merits of the treaty?
DEMINT: Well, the -- there was a small part related clearly to the disabled, but it was under well over 100 pages of treaty of legal language that affects parental rights in other issues that are important. That's why --
BLITZER: Ed, are you with him on this, or are you with --
BLITZER: -- Bob Dole?
FEULNER: No. Absolutely we're with him. We did some of the early background on it. Our guy Steve Groves was writing papers on this weeks and weeks ago, and we're very surprised also, frankly, that the Senate would bring it up in a lame duck session. This is something that needs full and considered --
BLITZER: They're going to bring it up again next year.
DEMINT: They might.
BLITZER: You won't be there, but they'll bring it up again next year.
DEMINT: They can bring it up, and we'll take the --
BLITZER: Should there be a compromise in order to avoid going over the fiscal cliff? John Boehner's already ready for $800 billion in increased tax revenue, not necessarily raising the marginal tax rate, on the wealthy, but capping deductions, eliminating loopholes. Are you with the speaker of the House on that?
DEMINT: Well, unfortunately, Wolf, the policies of President Obama have already taken us over the cliff. If you meet with businesses like I do all the time, they've already pared back their plans and their hiring for next year, anticipating what's going to happen.
So, we can fix this Christmas Eve if we want, but we've already hurt the economy and hurt job growth in the country.
BLITZER: Are you with Boehner?
DEMINT: I'm not with Boehner, because this government doesn't need any more money. This country needs less government. We are going to have historic levels of revenue to the government this year, but we've doubled spending in the last ten years.
BLITZER: Everyone's taxes are going to go up at the end of the year if there's no deal.
DEMINT: Well, I've -- we have already offered to extend current tax rates, that's what we should have done six months ago until we could com to some agreement, some compromise on tax reform.
BLITZER: When you say compromise, where are you ready to compromise as far as taxes are concerned?
DEMINT: Well, how we go about tax reform, there's a lot of room to work together to lower the rates --
BLITZER: Give me an example. One example.
DEMINT: I'm not sure where the Democrats are, because they have not offered a plan.
BLITZER: They say -- well, their plan is keep the tax rates, the Bush tax rates from 2001, 2003 forever, make them permanent. The top 2 percent, let them go from 35 percent to 39.6 percent, which is what it was during the Clinton administration.
DEMINT: But it's incredible to me we're even talking about it, because that doesn't solve the problem --
BLITZER: It doesn't solve it, but it's a beginning.
DEMINT: It runs the government for five or six days.
BLITZER: But it's a beginning. Every -- a billion here, a billion there. It winds up being real money.
DEMINT: But the president has known about this so-called cliff for over a year and has yet to present a plan that's comprehensive that actually reduces our deficit.
So, I'm willing to work with anyone who is willing to put a plan on the table, but our party or anyone should not sit down and negotiate with someone who would not put a plan on the table. And the president has not put a serious plan on.
BLITZER: So -- and Ed, I want you to weigh in, because we're running out of time.
FEULNER: Sure, OK.
BLITZER: But as far as a compromise on the marginal tax rate, 35 percent going up, let's say 36 or 37 percent, is that acceptable?
FEULNER: No. No. Because marginal tax rate increases, if there is any increase in revenue, it just gives them more to play with over on Capitol Hill and more to spend.
And when we talk about fairness, when the top 2 percent, $250,000 and above, are already paying 45 percent of total income tax, that's a big question of fairness there, too.
BLITZER: Who should Nikki Haley name to replace you?
DEMINT: I talked to her today, and she and I share the same philosophy, the conservative philosophy. I told her I trust her decision and I'm not going to push her one way or another.
BLITZER: A lot of speculation Congressman Tim Scott?
DEMINT: He's a wonderful person. Our whole delegation is really strong as Republicans, so she's got a tough choice to make, but I'm convinced she'll give me someone as good or better than I am I can pass the torch to. And I'm honored to have Ed Feulner pass the torch at the premier conservative organization in the country.
BLITZER: Senator DeMint, we'll have you back as the president of the Heritage Foundation in the weeks and months, years to come, thanks very much.
DEMINT: I hope so.
BLITZER: Ed Feulner, what happens? You just going to be retired? What are you --
FEULNER: Oh, no. No, no. I'll still be hanging out at Heritage in a part-time basis and --
BLITZER: Giving advice?
FEULNER: Giving you some free advice, too, over here, Wolf. I hope --
BLTIZER: You're going to give him some advice to --
FEULNER: I hope you'll have me back.
BLITZER: Ed, thanks so much for joining us.
DEMINT: Thank you, Wolf.
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