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CNN "State Of The Union with Candy Crowley" - Transcript


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(voice-over): Today, a painful recovery through the eyes of two governors in very different states. Michigan's Jennifer Granholm and Virginia's Bob McDonnell.

GRANHOLM: We have hit bottom and we're starting to emerge.

MCDONNELL: We cannot continue to have all of the states rely on the federal government.

CROWLEY: And the Gulf disaster. Where from here, with Admiral Thad Allen.

ALLEN: I think we can all breathe a little easier regarding the potential that we will have oil in the Gulf ever again.

CROWLEY: Then, politics with Jackie Calmes of The New York Times and Karen Tumulty of The Washington Post. I am Candy Crowley, and this is STATE OF THE UNION.


CROWLEY: Almost 19 months after President Obama took the oath of office, and less than three months before the mid-term elections, Democrats are running nervous. These are not the kind of headlines that make for winning campaigns. Still, after Friday's disappointing unemployment figures, the president argues for patience and persistence.


PRESIDENT BARACK OBAMA: Climbing out of any recession, much less a hole as deep as this one, takes some time. The road to recovery doesn't follow a straight line. Some sectors bounce back faster than others. So what we need to do is keep pushing forward. We can't go backwards.


CROWLEY: In a sign of still distressed times, Congress is set to approve this week an additional $26 billion in federal aid to state and local governments who have already shed almost 170,000 jobs this year. Even with the additional aid, thousands more state and local job losses are expected.

Earlier I talked with Democratic Governor Jennifer Granholm of Michigan and Republican Governor Bob McDonnell of Virginia.


CROWLEY: Thank you both so much for coming. First to you, Governor McDonnell. The administration has sent out the president as well as other members of his cabinet for what they are calling "recovery summer." Does it feel like that in Virginia?

MCDONNELL: Well, we are making some progress. In the last six months, Virginia has been third in the country in job creation, about 72,000 new jobs. We're trying to keep a good tax, regulatory, litigation climate, right-to-work climate, so we can help this recovery. We had major incentives pass there in the General Assembly to aid with that. Yesterday ranked us--

CROWLEY: Credit the president with any of this?

MCDONNELL: Well, I think there is plenty of credit to go around. We've got some good fundamentals in Virginia. We're at about 7 percent unemployment. But I think the stimulus probably helped a little bit. Our strong economic development initiatives have helped a lot. It was probably a team effort. But we are glad to be well ahead of some other states and hopefully in the right direction.

CROWLEY: Governor Granholm, you are still struggling in Michigan. If you told Michiganders this is "recovery summer," would they believe you? GRANHOLM: Well, I can tell you this, Candy, that they are seeing progress in really significant areas. The president was here last week talking about the vehicle industry, and how it has rebounded. So clearly we are not out of the woods, but there is progress. And for that, we are very grateful.

And I must say it would not have happened but for the Obama administration stepping in to say it's important for the nation to have a vibrant auto industry.

CROWLEY: After the Senate passed a $26 billion bill that will send more aid to states, primarily to be used to help keep teachers in their jobs -- or to re-hire teachers and firefighters, here is what Mitch McConnell had to say about that bill.


SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: The single biggest source of revenue for state governments is the borrowed money that is coming down from Washington. They are getting more from us than they are from their sales taxes, from their income taxes, from their property taxes. The states are simply being -- becoming completely dependent upon us. When does it end?


CROWLEY: Governor McDonnell, first to you, is that -- as you see it, is that true? Are you getting most of your money from some of these emergency bills sending money to states, and could you do without it?

MCDONNELL: I think it has to end soon because the federal government is running out of money. I mean, $14 trillion, which is $42,000 for every American, Candy, it's an unsustainable level of spending. We cannot continue to be a debtor nation. We've got to do what we've done here in Virginia. We've cut $10 billion in the last two years. Spending is out of control at a lot of levels of government. We have to live within our means. So Mitch is right to--

CROWLEY: Well, would your economic picture have been as good as you paint it now had it not been for the fact that the federal government stepped in and sent money to states?

MCDONNELL: Well, look, I think in the short run some of the stimulus funding has helped us in some of the areas, although we've turned some of it down and made the decisions to make the cuts that are necessary. But we cannot continue to have all of the states rely on the federal government.

CROWLEY: Governor Granholm, could you have done without the money that the federal government has been pouring into the state of Michigan?

GRANHOLM: I -- Candy, there is no doubt that this has been critically important money for us as we make our way through this recession. Bob is right that governments have to cut. And, believe me, I have cut more out of government that any state in the country as a percentage during the time that I have been governor.

But like Bob and I and 45 other governors signed a letter to Congress asking for the extension of this Medicaid money, which is part of the emergency money that Mitch McConnell was referring to, so that we would not have to cut senior citizens or people with disabilities or children off of Medicaid. I mean, that's what this is for. This is not for bureaucracy. This is for people -- real people who need real help out here. And this bill was entirely funded. Let me say that again. This bill was entirely off-set. Everything was paid for. So this does not add to the deficit.

The Congress found a shrewd way of paying for it, and therefore it allows states to continue serve the most vulnerable populations, which is exactly what this is for.

CROWLEY: Well, it doesn't add to the deficit, but it certainly doesn't cut the deficit. And I think that was Senator McConnell's point here, was that at some point you have to start. There are always going to be needy people, are there not?

GRANHOLM: I mean, I guess the question is, how much do you cut? I mean, if you -- if we slash more people off of Medicaid, that means they show up at the emergency rooms. If you slash more teachers from the classrooms, they go on unemployment.

And there is another public system that is -- you know, I mean, to suggest that it doesn't have consequences out there when you cut the means of support in a tough economy, which, by the way, we are, in states, counter-cyclical, which means obviously that people need more help at a time when the economy is contracting, and therefore there is a demand for greater services rather than fewer.

CROWLEY: Governor McDonnell, it seems to me that we are in the middle of a -- basically a new-fashioned civil war. You have got federal government jurisdiction, and state jurisdiction. It's playing out in same-sex marriage. It's playing out in immigration. And it's playing out in health care.

So let me start first with same-sex marriage. We have seen a federal judge overturn a proposition that the people of California had voted to ban -- basically ban same-sex marriage in California. A judge has overturned that. What are the implications for Virginia in that ruling?

MCDONNELL: Well, none. Because, first of all, with both this ruling in California, and frankly the other rulings around the country on both health care and immigration, these are initial rulings made by a federal district court judge.

Obviously I think there is a great likelihood it goes to a circuit court of appeals and then perhaps the United States Supreme Court, because they involve very important constitutional questions.

Every state that has taken up a constitutional amendment on same- sex marriage has passed it. The people of California by 53 or so percent said that that was their desire to have marriage be between one man and one woman.

We've done that in Virginia. So I think the court was wrong to overturn the will of the people. And I'm hoping that ultimately, if it gets to the U.S. Supreme Court, they will agree. And so right now it has no impact on us in Virginia.

CROWLEY: Governor, let me ask you this, first of all, do you think the people of Michigan would be ready to allow same-sex marriage? And do you, from a political standpoint, believe this is a federal -- an issue that will ultimately be something that the federal government will have to decide, or is this a state issue?

GRANHOLM: Well, all of these states have adopted these constitutional prohibitions, including Michigan in 2004, by, you know, a pretty significant majority. But this is what the Constitution and the interpretation of the Constitution by the courts is for.

I mean, the judicial branch is not supposed to be a branch that simply ratifies the will of the majority if, in fact, it violates the Constitution. And that's what exactly the judge in the district court in California decided.

And the court, I think, went through very clearly, and the evidence, the facts, very long opinion, but decided that the law, as applied to these facts, clearly demonstrated that it was unconstitutional.

And so that's, I think, the appropriate place for it. And I think the court was courageous. And I am glad -- for Michigan's sake, I'm glad that it actually happened, because I would like to see this move to a higher level and affect more states.

CROWLEY: Governor Granholm, would you be willing to go up against a vote in Michigan that would -- that would ban same-sex marriage -- I mean, if you were to stay in office and that should come up? GRANHOLM: Well, I opposed it when it was on the ballot in Michigan in 2004. And I think, just, today, too, I would oppose it, even though a majority of people would disagree with me.

CROWLEY: Stay with me, Governors. We will be right back. Up next, we will turn to immigration and health care, and two very different approaches.


CROWLEY: This week, a double whammy, political and legal, to the president's overhaul of a health care system. Shortly after reform was enacted, a number of states, including Virginia under Governor McDonnell, challenged the constitutionality of a federal law that forces nearly every American to buy health insurance. The suits were given short shrift by the White House.


QUESTION: You don't think their -- their suits will be very successful? GIBBS: (OFF-MIKE)


GIBBS: My advice from counsel is that we'll win these -- we'll win these lawsuits.


CROWLEY: This week, a federal judge refused the Obama administration's request to dismiss Virginia's lawsuit. And the next day, Missouri voters went to the polls in a primary that included a referendum against mandated health insurance and fines for anyone who doesn't comply. It passed overwhelmingly, 71 percent to 29 percent.

The vote caries little practical meaning but delivers a huge political wallop to reform from a bellwether state.

The legal challenges are ongoing, and Virginia is not alone in contesting elements of the overhaul. Twenty states are involved in a similar suit. Michigan is one of them, putting Governor Granholm at odds with her Republican attorney general, who joined the suit.

We'll talk with Governors Granholm and McDonnell about health care reform next.


CROWLEY: We are back with Democratic Governor Jennifer Granholm of Michigan and Republican Governor Bob McDonnell of Virginia.

Governor McDonnell, let me move you to health care because you won a preliminary battle in the legal system, allowing your suit against mandatory health care insurance, as laid out in the Obama health care reform. If the state of Virginia, in the form of the legislature, passed a bill saying you must pass -- you must have health insurance, would that be all right?

MCDONNELL: It might be, under the state constitution. But this goes to the heart and soul of our federal system, what the 10th amendment means. Obviously, in Virginia, the home of Madison and Jefferson and others, we take these things pretty seriously.

But if the federal government can use the commerce clause to tell the citizens of Virginia or Michigan or any other state that they must buy a good or a service, and if they don't, they're going to get fined, then there's virtually no limits to federal power.

I think this is -- this is really -- this has more to do with constitutional authority of the federal government than it does with -- with health care. And I think it's wrong to have this kind of mandate, apart from the policy issues of billions of unfunded mandates on the state. But I don't think the commerce clause was intended by our founders to mandate buying a product of insurance. And that's what the case is all about. CROWLEY: Governor Granholm, the overarching picture here is that the president's health care reform remains pretty controversial, more people than not disliking it. But it's pretty even. We have seen, in Missouri, they had had a ballot initiative; 71 percent of Missourians said, no, don't -- you can't mandate that we have to have health insurance.

If you were running, and you are retiring, but if you were running and you are any Democrat across the country, would you run on the president's health care reform?

GRANHOLM: I would. Because I would want to explain it to people. I think people are listening to...

CROWLEY: But it would be risky, wouldn't it?

GRANHOLM: ... an echo chamber on the right.

Well, I mean, is it risky to say that it's important as a nation that we don't eliminate the ability for people to get insurance if they have preexisting conditions? I don't think that's risky. I think that's good policy. CROWLEY: Governor McDonnell, I want to move you to immigration. Because you have said some things recently that are Arizona-esque in their reach, talking about how you would like to fight illegal immigration in the state of Virginia.

As I understand it, you have asked the federal government to help train your state troopers so that they might, if they were so inclined, talk to anyone that's been arrested about their papers, ask for their papers, that kind of thing.

What has been the response of the federal government to your reaching out to them, saying help train my state troopers on this?

MCDONNELL: I think what we've -- we've got a bipartisan failure, frankly, at the federal level, on border security, enforcement within the states. We've just got to do -- got to do a better job.

So what I've asked is, under Section 287(g) of the federal law, there's a provision that allows Virginia law enforcement officers to be trained as ICE agents -- Immigration Customs Enforcement agents -- to be able to assist with the immigration enforcement.

They're not funded enough; they're not staffed enough. So we want to use federal law to be able to have state troopers do it. It's something that I urged Governor Kaine to do.

CROWLEY: And have you heard from the feds?

MCDONNELL: We've been talking to them for months. We're still working through some issues on this and other things. We are trying to cooperate, or have ICE cooperate with us, as I did when I was attorney general, where they came in and helped to clean up about 500 sex offenders who were illegal that they took over for deportation. So we're working through some -- some issues. CROWLEY: Governor Granholm, I know that Michigan also has its fair share of illegal immigration problems. When you look at some of these border states and you see what Arizona felt it had to do to try to control its borders, do you have sympathy for that?

GRANHOLM: Oh, sure. I think that everybody is looking at what is happening along the border, and recognizing that something needs to be done. The question is, what and who? And I think that everybody who has been calling for comprehensive immigration reform, that is exactly the answer.

You know, I appreciate the fact that Bob McDonnell is trying to get some additional help for Virginia. Any time a Republican governor is going to Washington and asking for more resources, I think that it's an interesting thing. And I think he is being creative.

It's a whole package and I think that's exactly what is necessary to ensure that these states along the borders are -- you know, are satisfied.

CROWLEY: It sounds great, except for, by my count, we have been talking about this for a decade, since the last time we reformed illegal immigration, which was Ronald Reagan. So in the absence of that, don't states have a duty to do something to try to protect their citizens, in the absence of the federal government doing very little?

GRANHOLM: Well, certainly. Yes, I mean, there is no doubt that's what law enforcement in the states is for. Obviously you want to protect your citizens from crime, and clearly is it a crime if these illegal immigrants come in and take jobs away, or are in fact committing crimes, et cetera, that's what local law enforcement is about.

Everybody has sympathy for the states that are seeing an increase in crime as a result of the illegal immigration.

CROWLEY: Let me turn you to politics now. We are very close to the fall, which, of course, is the kick-off of the mid-terms. We see a president whose approval ratings have drifted below the 50 percent mark for approval on his job in various elements of his job, including the economy.

Are there places in Michigan where the president showing up might hurt a Democratic candidate?

GRANHOLM: No, I don't think so. Not where it would hurt a Democratic candidate. I mean, we are a little unique, Candy, because of this auto industry and what he has done to help save the auto industry. And therefore that spider, that ripple affect across our state is so pervasive.

CROWLEY: So it sounds like you don't expect the Democrats are going to take a bath this November.

GRANHOLM: Well, I certainly am not Pollyanna about it. This is going to be a tough slog, because the situation on the ground of the country is so hard. So there is a lot of anger. There is a lot of anxiety. But the question is, do the people want to go back to the Bush kind of policies which, of course, started this whole recession to begin with, or do they feel a sense of progress and momentum, and that things have turned around -- you know, turned the corner?

We are on an upswing. Yes, we are not there as fast as we would like, but, boy, if you revert to the old policies, then you will be heading downhill very quickly. And I think that's the story that Democrats need to tell.

CROWLEY: Governor McDonnell, I want to ask you a couple of political questions. The Republicans on Capitol Hill, which basically is how most people view the Republican Party, that's what's the most visible, at any rate, have in recent days rejected the state aid that you said that you welcome that helped keep teachers employed and firefighters.

They have also stood in the way, unsuccessfully eventually, of extending employment benefits for the long-term unemployed, saying that it needed to be paid for. Do you worry -- when you watch the Republican Party from your perch in the state capital, do you worry that the Republican Party looks too harsh, too uncaring?

MCDONNELL: No, because what people are concerned about, Candy, and while I was fortunate to win last year and Chris Christie, is we ran on a platform of fiscal responsibility and getting results.

Families and businesses hurting in this down economy, they are having to make tough decisions in their personal and businesses budgets, they want to see government to do the same, spend less, (AUDIO GAP), create jobs, don't trample on business and the free enterprise system that are the magnets for entrepreneurship and economic growth.

And yet we see just the opposite policies coming out of the Democrat Congress in Washington. So when we have Republicans in Congress standing up for less spending and less government control, one-size-fits-all policies out of Washington, I think they are on the right track. And I think they will be rewarded at the polls in November.

CROWLEY: Thank you so much, Republican Governor Bob McDonnell of Virginia, and Democratic Governor Jennifer Granholm of Michigan, appreciate it.


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