[Kathleen Parker, Cnn Anchor:] Good evening. I'm Kathleen Parker.
[Eliot Spitzer, Cnn Anchor:] And I'm Eliot Spitzer. Welcome to the program. Tonight, we begin with an exclusive. CNN's Jim Acosta has the first interview with Christine O'Donnell, the controversial Republican running for the U.S. Senate seat in Delaware, first interview she has done in quite some time.
[Parker:] O'Donnell, of course, is famously known for having dabbled in witchcraft as a much younger woman. And Jim Acosta asked her all about that, Sarah Palin, Obamacare, you name it. Let's take a look.
[Jim Acosta, Cnn Correspondent:] Your latest ad says, "I'm you."
[Christine O'donnell , Delaware Senatorial Candidate:] Right.
[Acosta:] It's as if you're trying to reintroduce yourself to voters.
[O'donnell:] Yes. Yes.
[Acosta:] Why is that? Is that what you're trying to do?
[O'donnell:] Absolutely. My goal has been, since the primary, to go out and meet as many voters as possible, so that they can get to know me and I can get to know them. I have got to hear what's on their minds, so that I can know how I can help in Washington, D.C. My goal, my whole candidacy is about putting the political process back into the hands of the people. I'm not a career politician. I'm not someone who's been groomed by groomed for office. I'm not someone who's been handpicked by her party elite, by the party bosses, obviously.
[Acosta:] Right.
[O'donnell:] I'm an average American citizen. I'm an average Delawarean. I want to go to Washington, D.C., and do what most Delawareans would do. I would not have voted for Obamacare. I would not have voted for the bailouts. I would not have voted for more of the spending bills that are putting us into bankruptcy. And neither would you.
[Acosta:] Right.
[O'donnell:] That's what my message "I'm you" means. I want to do what you would do in Washington,
[D.c. Acosta:] Let me ask you one more thing about these video clips that have surfaced. Have you been embarrassed by those clips?
[O'donnell:] No, I haven't been embarrassed. And I'm not saying that I'm proud. It's you know, obviously, what they're trying to do is paint a picture of who I was 20 years ago. You know, I I have matured in my faith. I have matured in my policies. Today, you have a forty- something woman running for office, not a 20-year-old. So, that's a big difference.
[Acosta:] You said last night at your event that you would vote to extend the Bush tax cuts. Now, I have covered a lot of Tea Party rallies, and they're all about cutting the deficit. How do you extend the Bush tax cuts and cut the deficit at the same time, because the experts say it's impossible?
[O'donnell:] It is not impossible. First of all, any time taxes have decreased, revenue has increased, because what you're doing is, you're putting money back into the private citizens, who then go start businesses and create jobs based on the private sector, not government spending. They go spend that money on those new businesses that are starting. So, it happened under Kennedy. It happened under Reagan. When you decrease taxes, revenues increase.
[Acosta:] Should creationism be taught in public schools?
[O'donnell:] That doesn't have anything to do with what I will do in Congress.
[Acosta:] But do you think that it should be taught in public schools?
[O'donnell:] That has nothing to do with what I would do in Congress. My opinion on that is irrelevant.
[Acosta:] Let me ask you about Afghanistan, the president's timetable for withdrawal. A good idea or a bad idea?
[O'donnell:] We need to make our foreign policy decisions based on their effectiveness, not based on time. So we need to be looking we need to take a serious look at what's going on over there, and before we make any decisions, we need to examine whether or not it's weakening our own security.
[Acosta:] Is is Sarah Palin qualified to be president?
[O'donnell:] Is she running for president?
[Acosta:] I don't know. You tell me.
[O'donnell:] Well, again, hypotheticals. I don't know if she's...
[Acosta:] I have heard you talk on the phone with her. Does she advise your campaign?
[O'donnell:] She does not advise our campaign.
[Acosta:] Does she give you advice?
[O'donnell:] She gives me "You go, girl" advice. "Don't listen to them." If any anyone really..
[Acosta:] Does she really tell you to speak through Fox News?
[O'donnell:] Well, I heard that through she didn't tell me personally...
[Acosta:] OK.
[O'donnell:] but I heard her say something like that on "O'Reilly," you know, because, you know, if anyone knows about the politics of personal destruction, it's it's women candidates, women politicians like Sarah Palin.
[Acosta:] If the Republicans take the Senate, Senate Majority Leader Mitch McConnell or Jim DeMint?
[O'donnell:] I don't know yet, because what I would need to what I would need to see is Jim DeMint running?
[Acosta:] You tell me.
[O'donnell:] I honestly don't know. I I love Senator DeMint. I love what he does. He's a you know, he's a principled man. But what I have said, when people have asked me who I would support in leadership, I don't know that as an outside outsider right now I am a candidate, not a U.S. senator.
[Acosta:] Is the unemployment...
[O'donnell:] Senator DeMint...
[Acosta:] Is the unemployment problem in this country Barack Obama's fault or George Bush's fault?
[O'donnell:] It's a combination of politicians in Washington losing their way. Like I said, whether it's Republicans or Democrats, our so-called leaders in Washington have lost their way and are no longer in touch with the needs of the Delawarean an any citizen, not just Delaware. So I think what we need to get our country back on track is to replace career politicians with citizen politicians.
[Acosta:] Let me make this the last thing. Your staff was very reluctant to have us ask you about these past statements that you made in the past. And I I wanted to ask you, why is that? Because aren't they...
[O'donnell:] I think...
[Acosta:] aren't they your statements?
[O'donnell:] This campaign is about the future and not the past. This campaign is about what each candidate is going to do to address the needs of the people in Delaware, how we're going to get private business jobs back in Delaware, how we're going to get our economy back on track, how we're going to empower the individual and the entrepreneur to open up those ma-and-pa businesses back on Main Street. That's what's important to the Delawareans and that's what should be important to both candidates in this race.
[Acosta:] So you're never going to talk about your time with Bill Maher?
[O'donnell:] No. Why? What I did what I said or did on a comedy show, you know, over a decade ago is not relevant to this election.
[Acosta:] All right. Christine O'Donnell, thank you for your time.
[O'donnell:] Thank you.
[Acosta:] I appreciate it. Nice talking to you.
[O'donnell:] Thank you. Anytime.
[Acosta:] All right. Good talking to you.
[O'donnell:] Thank you.
[Acosta:] Let me ask you about the health care reform law, because there are protections in there for consumers that a lot of people, even some Republicans, say are very important, such as, the law would deny would would ban insurance companies from denying coverage to children with preexisting conditions. Would you scrap that, as well?
[O'donnell:] What I want to do is create real health care reform. Things like that are absolutely crucial. We have to make sure that people with with preexisting conditions get the coverage and care that they need.
[Acosta:] So you would keep that?
[O'donnell:] But what this I want to scrap the bill and start over, with real reform, piece by piece. Nobody is disputing that we need health care reform. But this bill is a massive government takeover of the health care system that gives the government way too much power. Uncle Sam has no business coming into the examination room, getting between you and your doctor. And that's what this bill does. We need to repeal it, so that we can re reenact real reform.
[Acosta:] Is that even realistic, because I know the Republicans say we want to repeal the bill, but the president would have to sign any bill that you pass through the Congress? So, isn't repealing health care reform really unrealistic?
[O'donnell:] That kind of throw-in-the-towel mentality is what got us to this mess that we're in the first place. Repealing Obamacare is absolutely realistic. I heard a statistic this morning that one out of four Democrats are for full repeal of Obamacare.
[Acosta:] So you think...
[O'donnell:] What this...
[Acosta:] ... you could get Democrats to go on board and perhaps...
[O'donnell:] Many...
[Acosta:] ... override a veto, is what that's what you're saying?
[O'donnell:] Well, not even just necessarily here's why I think it's realistic, a couple things. Number one, a lot of Democrats are coming forward, saying, we want to start over. We want to scrap this bill. We all made a mistake. We didn't read it. We didn't know about the unintended consequences. As elected officials, our first priority needs to be taking care of the most vulnerable in our society, so we do need real health care reform. But if if the House and the Senate passes a bill to fully repeal Obamacare, so that we can clear the way to start over with true reform that helps the most vulnerable, and then the president goes and vetoes that bill, when the will of the people have been has been made very clear, if Barack Obama vetoes that the year before his reelection, he's setting himself up to be very vulnerable. And I have seen many Hillary-for-president ads running. So, if if he chooses to thumb his nose at at the will of the American people and ram this this unrealistic, unconstitutional bill down America's throats, then there will be consequences, politically, for Obama.
[Spitzer:] I think, when we look at the substance of what she says here, a lot of people are going to say, you know what, we are not so sure she's ready for the Senate.
[Parker:] You know, I happen to I feel for the girl a little bit. She was a sweet girl when was on the Bill Maher show, right? She was 20 years old. And she actually if you look at some of those tapes, she had a lot of personality. She was spunky and cute. She was just saying things I don't think she intended to be taken terribly seriously. And now that's taken on a life of its own.
[Spitzer:] Look, I agree with you on that. I think all that is not only fair to her, but accurate. And I even defended her with that sort of crazy ad, "I'm not a witch," because you know what? She is trying to defuse a tough situation. But then when you step back and as you get closer to November 2 and you say, wait a minute, there are some serious issues here.
[Parker:] Well, sure.
[Spitzer:] I don't think she passes that threshold.
[Parker:] No, there are a lot of people who are cute and spunky that I don't want running the country.
[Spitzer:] Or good TV fodder. But here's the other question. Why there are so many folks like her who seem to be taking over the Republican Party? I mean, this is not Bob Dole's Republican Party anymore, thoughtful, serious people. this is people who are kind of, I hate to say it, but kind of from the fringe.
[Parker:] Careful there, Eliot. You know, I think what we have to be very cautious of here and this is an important point that you almost hit there's a sense out there. We have talked about this. There's a sense that there's this elite core of people who are designating they have designated themselves as in charge of how Americans are going to live their lives. And you have people like Christine O'Donnell and others who identify with her who feel very much left out of the conversation and marginalized. And so they're we have talked about this sort of anti-elite movement. And we are both in favor of elites, meaning smart people, sitting down at the table. But you can't be elitist. And I think that's she and others have responded to.
[Spitzer:] Look, I am not only sympathetic, but I agree with her core notion, which is that the so-called elite people in this country, in Washington, in New York, in the so-called academic centers have failed us miserably over the last decade. And so when she says in her ad, "I am you," when she says in the interview today, "I am an average person," I say, yes. I sympathize with that. We want real, genuine people. Now, there's a difference between that and I think that is wonderful, and that's why I have defended those ads and that sort of notion of her getting into politics. But there's a difference between that and policies about economics and other serious things that, frankly, just don't work and don't add up.
[Parker:] Right. Well, that ad was done by Fred Davis, as you know, and he's a brilliant ad-maker. And he kind of latched on to that Zeitgeist. And he said, the thing you need to do is look in that camera and say, it's them. They're the bad guys, and I'm just like you. And I'm going to go to Washington and fix things for you. That's a very effective message right now. And it's resonating with the Tea Party people. That's what is driving is.
[Spitzer:] It is amazing to me that the Democratic Party has not filled that enormous chasm, that void in the middle of our political that doughnut hole, where nobody from the Democratic Party has said, we are the ones who actually speak with that voice and with that empathy and that energy. Bill Clinton, as we have all been saying, would have done it. But, anyway, we're going to talk about these ideas with some extraordinarily smart people. It's time to go into the arena.
[Parker:] Smart, but not elitist.
[Spitzer:] Absolutely.
[Parker:] And joining us tonight, James Traub from "The New York Times" Magazine" and Ralph Reed, chairman of the Faith and Freedom Coalition.
[Spitzer:] Welcome to both of you. Great to see you back.
[Parker:] Hi, Ralph. Nice to see you again. Nice to see you.
[Ralph Reed, Republican Strategist:] Eliot, how are you?
[Spitzer:] Ralph, thank you.
[Parker:] Welcome, welcome.
[Spitzer:] Well, in case you haven't heard, CNN broke the spell, and we got this remarkable interview, Jim Acosta of CNN, with Christine O'Donnell. She kind of came in on her broomstick and gave an interview. And it's amazing what she said. I want your view of this. She said she wants to and she, of course, being the Republican Tea Party candidate for the United States Senate from Delaware. And she said, we are going to extend our should extend the Bush tax cuts, because it will both solve the deficit problem and help our economy expand.
[Parker:] Grow the economy.
[Spitzer:] What do you think?
[James Traub, "the New York Times Magazine":] Well, what's wrong with that? That is the official Tea Party position, isn't it?
[Spitzer:] You have been cast under the spell as well?
[Traub:] No. I mean, look, it's become, I think, Republican Party doctrine not only in the Tea Party that the Bush tax cuts should all be extended. You're right. This is a particularly hyperbolic version of what I would say is a ridiculous view in the first place. But that's the direction the party is going in right now.
[Parker:] Well, Ralph, what do you think? I mean, she obviously was not prepared for this interview and has been saving herself for FOX News and others, not meaning to go into the other news outlets. What do you think of her handling of that interview and that comment?
[Reed:] Well, I think she's doing fine. You know, I mean, she's obviously under vicious assault. I'm fascinated by the media's fixation with this woman. There's 37 governorships up or something like that, 37 U.S. Senate races, and everybody beating up on this one woman in one state. And I understand that.
[Parker:] Well, but, Ralph...
[Reed:] That's politics. But to say that lowering marginal tax rates produces more revenue is not only economically sound; it is an established historic fact.
[Spitzer:] Well... ... can we just probe that for a second?
[Parker:] I want to just back up a minute, before you get to the economic issue. The reason people are fascinated by her with her is because she is fascinating. When you have someone stand up and say, I'm not a witch, I'm you, and it's got this black, you know... ... odd background.
[Reed:] Well, but that ad followed a pillorying that went on for weeks after she won the nomination.
[Parker:] Well, Bill Maher started that. And I am sympathetic.
[Spitzer:] Let's be frank with one another. You have been in politics. I have been in politics. Neither one of us is surprised that she gets all this attention. She is a remarkably fascinating personality. She has made herself a quixotic and interesting person. But let's put that aside for a minute, because there are real issues here. David Stockman, who was the budget director for President Reagan, after President Reagan came into office on this same theory, the Laffer curve, as it was called for many different reasons, said it was all a sham, and he said, we knew it was a sham. No serious economists believe believes that you can cut rates the way they want to without expanding the deficit, doubling it or tripling it, and damaging our economy. Nobody serious believes that.
[Reed:] Well, look, we would pine for the roughly $160 billion deficit that Bush had in his final fiscal year. OK, this president has given us a deficit which in the first year was $1.4 trillion and this year is $1.35 trillion. He's doubling the national debt in five years. He's tripling it in 10 years. And they left town without even giving America's 26 million small businesses and hundred million households any understanding of what their taxes are going to be in the calendar year 2011. It is totally irresponsible and that's why they're losing at the polls.
[Traub:] The spin that this is an act of fiscal recklessness or something, the fact is, we're talking about something rather small. The Obama administration has actually agreed, I think wrongly, to extend the Bush tax cuts, save for the top tax rate. And so the issue here is...
[Reed:] Which is saving $100 billion over 10 years.
[Traub:] Which, alas, is not as much money as it used to be. But the fact is, the idea that we would be having this political pitched battle not over the large question of, do you repeal the Bush tax cuts, but do you repeal the tax cuts for the smallest number of extraordinarily wealthy people, to whom a huge fraction of the additional revenue of the last 10 years is gone, I can't believe there's a fight about that.
[Reed:] Well, here's my question. If you had both ends of Pennsylvania Avenue for two years, you have the president and you have the House and the Senate, the largest margins since the Great Society, at any point in the last two years they could have extended the Bush tax cuts for everybody making less than $250,000 a year. They didn't do it.
[Spitzer:] Let's set the table so that it's real. What was inherited here was an economic cataclysm the likes of which we haven't seen since 1929, a direct and absolute consequence of policies that were born during the Reagan administration and metastasized during the Bush administrations, both of them. And that is what brought us down. Recovering from that, which the Obama administration has been desperately trying to do, is what's taken us to the point of the precipice.
[Reed:] Not true.
[Spitzer:] Then to go back to the same policies would be economic suicide.
[Reed:] Absolutely not true. Eliot, it was the Clinton administration in 1999 that directed Fannie Mae and Freddie Mac to underwrite 50 percent or more of the loans in every single zip code in America for people at 50 percent or below the average income in that area. They deliberately made them, by executive order fiat, underwrite loans for people who couldn't make the payments.
[Traub:] Can I raise a less exotic question, which is, the first question is, why are we so interested in her? We have to remember, she beat Michael Castle.
[Parker:] Well, there is that.
[Traub:] The entire professional Republican Party, not the whole party, but the professional party, was banking on this guy as, this is how we're going to get to a majority Republican Senate. Nobody thought this was going to happen. So she became a poster child and I think rightly so, whether you like her or not for the immense transformation inside the Republican Party.
[Parker:] That's right.
[Reed:] I think the left and the media are making a huge mistake strategically. And I think Christine O'Donnell is the greater decoy in American politics.
[Parker:] Absolutely.
[Reed:] While they're firing all their artillery at her, Sharron Angle is beating now Harry Reid, not in one, but two polls this week. Nikki Haley is going to be the governor of South Carolina. Susana Martinez is now up in New Mexico by eight. These mama grizzlies, these women candidates who are attractive and tough and smart and able are going to win from coast to coast, and Christine O'Donnell may surprise some people and win, too.
[Traub:] I don't deny that. I think that may be so.
[Parker:] There's no question, though, that, when people gang up on an individual like Christine O'Donnell, it has the opposite effect. I mean, there's a lot of sympathy for her.
[Traub:] Though it hasn't so far. The last poll showed her doing quite badly behind Coons, the Democratic candidate.
[Spitzer:] Right, the Democratic nominee.
[Traub:] So, she may be a casualty. But I think Ralph may well be right about the trend that she is a representative of.
[Parker:] Yes.
[Spitzer:] Look, there is no question when you offer candy to kids sometimes it works. The question is, having lived through the Reagan administration, with David Stockman I think being the most honest articulator of what those policies really did, we know what it does. And now, of course, we have that on steroids. The numbers are that much bigger. The economy is at much greater risk. And the failure to recover and balance our budgets, whether you're a Paul Krugman or Niall Ferguson, is going to take us to a very dangerous point. And I think that's why many of us saying, look, Christine O'Donnell I happen to like her. I admire her for what she is going through and how she is handling it. But I think the substance of it is going to be very damaging to us long term, because it doesn't add up.
[Reed:] Well, what doesn't add up is raising taxes in the middle of the deepest and longest recession of the post-World War II period, punishing small businesses. Between 50 percent and 60 percent of the income that they want to tax at the above-$250,000 level are small businesses that create 80 percent of the jobs. And here's the other thing. Even if you were to take Jim's argument and repeal all of the Bush tax cuts, you have got a $1.35 trillion deficit. You would save $100 billion this year. So you're punishing the job creators. You're punishing the people who are creating the jobs, and you're moving the deficit number an infinitesimal small amount. It is a crazy economic theory. And that's why it's going down the tubes.
[Traub:] I want to go back to Michael Castle-Christine O'Donnell difference, which is Michael Castle was a professional, not even a politician. He was a professional legislator. He was a serious guy. He thought about this stuff a lot. You may think he's right or wrong. But it also strikes me that there's a kind of war on competence and professionalism going on here. And these insurgent candidates, one of the biggest things they have to advertise is, they have never done it before.
[Parker:] Right.
[Traub:] And sometimes even they don't know anything about the subject. That makes them preferable. I find that really disturbing.
[Reed:] Mike Castle voted for the Bush tax cuts as a member of the House. So, is he a nut, too?
[Traub:] No, of course not. That's not my point at all.
[Reed:] What about the 37 Democrats who said that they would not vote for extending the tax cuts only to those making under $250,000?
[Traub:] I don't think you have to be a crank to think that. I just don't agree with it.
[Reed:] Pelosi couldn't even hold her own caucus. So, apparently, you've got people in your own party, Eliot, who you think are nuts.
[Spitzer:] No. I think anybody who buys this economic theory has not studied economics...
[Reed:] Thirty-seven Democrats in the House, Eliot.
[Spitzer:] ... has not studied our history, and in fact...
[Traub:] They haven't studied economics.
[Reed:] OK.
[Spitzer:] .... and in fact
[Reed:] So that's the strategy, insult people with whom you disagree.
[Spitzer:] No, no, no, we're not insulting them. What we're saying, Ralph, is that...
[Reed:] But you're saying they're dumb. They're basically what you're saying.
[Spitzer:] No, no, Ralph, you're trying to put words in my mouth. And I think you shouldn't do that. What I'm saying is that the historical record that we look at from the Bush presidency is one where these tax cuts without corresponding cuts in spending, which we had Dick Armey sitting here the other day, and Dick Armey said he was going to cut National Public Radio and the National Endowment for the Arts. You're not going to balance a budget based on that.
[Reed:] Fair point, OK?
[Spitzer:] And, so, if that's the counterpoint, we are going into a deficit structure that is going to take us over the cliff. And, more importantly, all of these deficits that you are talking about were used to bail out the major financial institutions that took us over the cliff because of the deregulatory philosophy of President Bush.
[Reed:] No, look, it's a fair point. And the response is twofold. Number one, from 1981, when the Bush tax cuts were passed, until Reagan left I mean, the Reagan tax cuts were passed, until he left office, federal revenues doubled. So the lower taxes didn't lead to less revenue. They led to more revenue. We had a spending problem. It wasn't that we didn't have enough revenue, number one. Number two, to your point on how are we going to deal with the fiscal time bomb, everybody in Washington knows that the elephant in the room is entitlements. We have got $50 trillion in unfunded entitlements in Medicare, Medicaid and Social Security. They actuarially do not add up.
[Spitzer:] Hold on, more fireworks in a second. We will be right back.