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ANDERSON COOPER 360 DEGREES

State of the Union Address Preview

Aired January 24, 2012 - 20:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANDERSON COOPER, CNN ANCHOR: Good evening, everyone. We are just about an hour away from President Obama's third State of the Union address. Welcome to a special edition of 360. We are live until midnight tonight.

Even as we speak, the House chamber is filling up. Some members arriving as early as possible, staking out seats along the aisle so they can get on camera with the president as he makes his way to the podium.

When he speaks, he's going to be occupying two roles tonight. Commander-in-chief and campaigner-in-chief. So tonight, expect to hear both his governing agenda and many of the themes he's going to be hitting on the stump in the months ahead. They largely focus on taxes, the economy and the government's role in it.

Any of this four remaining challengers disagree with most of them. Ron Paul took today off, the other three were campaigning in Florida, taking aim at tonight's speech and taking issue with the man giving it.

Newt Gingrich told supporters President Obama seems to be operating, quote, "on a different planet." Rick Santorum said to expect, quote, "a bunch of flowery rhetoric." Mitt Romney had this to say.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: High unemployment. Record home foreclosures. Debt that's too high. Opportunities too few. This is the real state of our union. But you won't hear stories like those at President Obama's address tonight.

Three years ago, we measured Candidate Obama by his hopeful promises and his slogans. Today, President Obama has amassed an actual record of debt, decline and disappointment.

(END VIDEO CLIP)

COOPER: Now you can decide for yourself what to think of the speech tonight. We got a team of people from all parts of the political spectrum, offering their views tonight, as well as some key players from the White House and the Republican side.

"Keeping Them Honest," though, let's begin with the promises made, the promises kept and the promises broken in the year leading up to this moment.

Tom Foreman reports.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): Rising gas prices, oil company profits, and the BP spill in the Gulf had many voters on the warpath. The president saw an opportunity.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies.

FOREMAN: But a Senate bill to cut those tax breaks by $2 billion annually failed by four votes even as gas prices stayed above $3 a gallon all year. Call that plan stalled.

Republicans came into the year still sounding alarms over health care reform. The president said, let's talk about some changes.

OBAMA: Including one that Republicans suggested last year, medical malpractice reform to reign in frivolous lawsuits.

FOREMAN: The Congressional Budget Office estimated the measure would cut deficits by about $50 billion over the next nine or 10 years, but the legislation got tangled up in bigger debates and pushed to the curve.

After eight years of fighting and more than 4,000 American lives lost, the president made good on his pledge to get U.S. troops out of Iraq. But Afghanistan?

OBAMA: This July, we will begin to bring our troops home.

FOREMAN: Some troops are returning but the president's troop surges mean there are still twice as many there as when he took office. Call this a work in progress.

The president wanted to extend the tuition tax credit for families. That went nowhere. He said he would reorganize government. A year later he unveiled a plan to combine six agencies and departments, all dealing with business, hardly the robust renovation many critics and fans expected.

(On camera): Undeniably, the president had some successes, coming through on pledges of more transparency, he made some modest changes to tax regulations, but he was hamstrung by the continuing lack of cooperation between the two major parties.

(Voice-over): And that, too, remains a work in progress at best.

Tom Foreman, CNN, New York.

(END VIDEOTAPE)

COOPER: Well, let's go to the White House now where they have been putting final touches on tonight's speech. These things frequently go right up until the last minute. President Clinton was famous for it.

Senior White House adviser David Plouffe joins us tonight after the speech.

Jessica Yellin joins us now.

So, Jessica, you've been working your sources all day. What does the president hope to accomplish tonight?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, Anderson, for weeks now, we've been listening to Republicans take center stage. And tonight, the president is going to get a huge audience and he will use it to try to define his campaign message. His aides do not want this campaign to be a referendum on his stewardship of the economy.

So tonight, he'll use the opportunity to try to define a contrasting vision, two contrasting visions about the future of the economy. So listen for him to argue that he is trying to fight for a future in which hard work can help regular Americans get ahead, but that there are forces out there that are protecting special interests and the wealthy.

He won't name them but you'll know who they are. So really, what he's doing is he's using this opportunity now to define the terms of the debate for the upcoming election before there's even a Republican nominee -- Anderson.

COOPER: So, I mean, is this a State of the Union address or is this a campaign speech?

YELLIN: Well, it's a -- it's a State of the Union address in a campaign year and he would not be the -- will not be the first president to use this to frame his campaign message. You will hear the regular laundry list of new proposals. But let's all be honest, in this kind of environment, these people are realists and you and I are realists, we know that almost none of them are likely to pass.

And so he has to use this to frame an overarching theme, a message, and his agenda going forward rather than a legislative agenda that's not really going to go anywhere likely.

COOPER: Jessica, thanks. We'll check in with you a little bit later on after the speech.

Let's bring in our panel who's going to be with us all the way through midnight. Chief political correspondent and host of the CNN's "STATE OF THE UNION," Candy Crowley, senior political analyst David Gergen, Democratic strategist Paul Begala, political analyst Roland Martin, and former Bush White House press secretary, Ari Fleischer.

So, David, what are you expecting tonight if anything? I mean often these speeches, there's a lot of hoopla about them, not much is actually remembered about them. But this may be different because of the campaign.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: It's an opportunity for the president to issue his 2012 political manifesto. Here's what he wants to do after he's re-elected. Much of what he is going to propose obviously will not go anywhere. In fact, you know, the "New York Times" reported some time ago that President Obama's own people are saying there's only about one or two things he really expects this Congress to do, mostly on extending the payroll tax and the unemployment insurance.

But he's not looking to them to do much else. This is clearly -- he has -- it's presidential but it's mostly about politics. I've actually been involved in this kind of speech before, way back -- dating way back to 1976 when Gerry Ford made the State of the Union in a campaign year. I got to tell you, in the White House the politics of it overwhelmed the substance of it.

COOPER: And how does that work out? I mean, just take us into a White House when you're working on these speeches. What is it like?

GERGEN: Well, it's usually a big group. I mean there's a whole -- there are a lot of players who get involve because the campaign aides -- I mean President Obama's political aides have always been his sort of central advisors.

And I'm sure that David Axelrod is either getting copies of this speech in Chicago on a regular basis or he's there in Washington. I don't know where he is. But you know one of the -- the real clash is not whether it's going to be political, the real clash is whether it's going to be a laundry list or whether it's going to be much more thematic.

And the case of President Ford, going back to that example, for example, we had two different drafts, and I was involved with Alan Greenspan in writing one of the drafts. We had 18 votes out of the 20 votes to do a thematic speech. The president's speechwriter and the president were the other two votes.

COOPER: Is that right?

GERGEN: To do a laundry list. We did a laundry list.

COOPER: Is that right?

(LAUGHTER)

COOPER: Candy, what notes do you think -- I mean do you see the president hitting? We've heard already from this White House about the Buffet -- the Buffet rule.

CANDY CROWLEY, HOST, STATE OF THE UNION: Yes, I mean I -- listen, from the guests he has up sitting in the first lady's box to the previews we're getting out of there --

COOPER: One Buffet's secretary is going to be up there. CROWLEY: This is where -- yes, Warren Buffet's secretary is going to be there, the one who pays more -- higher percentage in taxes than Warren Buffet does, thus the Buffet rule.

You know, this is a time for the president, his main goal is to get out -- the rich, you know, are getting a great deal and the middle class is disappearing. This is the -- this is the debate for this year.

Every issue that comes up is wrapped around that. It is the Republicans pushing back going, you know, the rising tide, floating all the boats, the JFK quote that by the way, Speaker Boehner quoted today when pushing back against this notion of -- the, you know, want to tax the rich.

So this is time for him to set that basic theme. There'll be other things but that's what's gong to come out of it. And I said what will be interesting is, you know, we always kind of wait for that -- the nut graph, you know.

GERGEN: Yes.

CROWLEY: The State of the Union is -- and that's going to be tricky for him as it has been all along. Because he can't say it's great, he's got to say the State of the Union is better than it was when I took office.

GERGEN: Can I have a brief point after that?

COOPER: Yes.

GERGEN: And that is, a year ago, two years ago, the question was jobs, and Candy is right, they're trying to shift the argument in equality, the rich are not paying their fair share. They have already made substantial progress before this speech in shifting the question, the central question of the elections around jobs which Obama might lose to the issue of whether the rich should pay more which has got a very good chance of winning.

COOPER: And so, Ari, I mean, to the Republicans who are saying this is just going to be a divisive political speech, I mean, it does sound divisive, no?

ARI FLEISCHER, CNN POLITICAL CONTRIBUTOR: Well, we're a divided nation and the president is giving a speech that reflects the nation in which he's speaking at the time of which he's speaking. You know, I totally agree, the presidential art in an election year is to sound as if you're a president and you're governing while coming across as someone whose need is to become more popular personally and political so he can get re-elected.

And that's what's driving everything in the White House these days. As David said, the president's staff has already said, they only have one more thing to do. They basically quit for the year unless they can just get the payroll tax extended. Other than that, they're done. But you know the nation has an unemployment problem, a debt problem, a spending problem, an energy problem, the president tonight wants to solve a political popularity problem. State of the Unions really do afford presidents that opportunity. He has all the advantages going into it tonight.

COOPER: Paul, how combative a speech are you anticipating?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: This is not a particularly pugnacious president. You know, he is -- I think by his inclinations -- to me wants to bring people together. I'm always amused, as I'm sure Fleischer and David are, by folks who are looking for or trying to separate the politics from the government.

You know it's like trying to separate mathematics from physics. I took physics at the University of Texas, it was a liberal arts physics. It was called "Physics for Idiots." Well, people who try to do government without politics are idiots. Politics is a language through which a free society expresses itself in government.

And believe me, this is entirely political and it's entirely governmental, and that's entirely appropriate. But the president is -- this point that David and Candy were making about setting the agenda is his most powerful domestic tool. Two years ago, in 2010, the Republicans set the agenda. They seized the frame away from President Obama and made the agenda about who can cut spending. And that's why they won that landslide. Because the electoral question people are asking the voting booth in 2010 was, which party can better cut government spending, and of course they went for the Republicans.

This president has already -- look, he's winning that all- important battle of setting the message frame for 2012 and it's more like, who's going to fight for the middle class. If he has that kind of a frame, he can win.

COOPER: Roland, it seems like both sides, though, Republican and Democrat, are arguing that they're fighting for the middle class.

ROLAND S. MARTIN, CNN POLITICAL ANALYST: Of course. And that's what they always say. And you never hear any of them talk about the poor, talk about those who are impoverished, especially when you look at those bottom 10 states and the poor in this country. I'm very hopeful that the president will actually say it this time. He didn't say it last year, got some criticism there.

But look, he also must expand this income inequality conversation, Anderson. Income inequality is not just about the president is going to go up there tonight and say, the rich should pay more. He's also talking about in terms of, how do we give those folks who are out there, busting their butts, working hard, trying to get ahead, and they simply don't feel as if the government is doing anything for them.

When you hear the president tonight talk about regulations, Republicans always say, Dodd-Frank, that's what's getting in the way, the point there is no. One of the reasons we're in this mess is because we didn't have strong enough regulations and so don't be surprised when you hear that as well.

And Paul is absolutely right. Forget this whole notion of sounding presidential and not sounding political. You will always going to sound political. It's the president of the United States who represents a particular party and although he speaks to all, he is going to sound that way and so Republicans will come away and say, he was too political. But he is going to sound the alarm on how do I speak to that person out there who is struggling, who wants to get ahead, and the people in Congress haven't done enough to help them.

COOPER: David, I see you're shaking your head.

GERGEN: I just don't agree that all presidential speeches. Paul Begala was absolutely on point. All presidential speeches are a mix of politics and policy, no question about it. But this president has moved substantially away from the notion of spending his time governing to the notion of spending his time campaigning.

And I think we have to recognize that he has -- and there is some validity to the Republican -- and I think the public is making this argument. You know, who's actually getting things fixed in Washington? We do have a range of problem. Neither the Democrats, the president, the White House nor the Congress seems prepared to sit down and work on some of these serious problems this year.

MARTIN: Yes, David --

GERGEN: They both want to spend the whole time campaigning.

(CROSSTALK)

BEGALA: David, that's not true.

COOPER: Well, it certainly seems like both sides acknowledgement not much is going to get done this year.

GERGEN: Yes.

COOPER: Ari --

FLEISCHER: Anderson, here's one thing viewers should be on the look out for. When the president goes through his policies, particularly on the tax side, have they gotten the support of Democrats in the Senate who are running for re-election. And often the answer is no. And this gets at the point where Paul and David are making.

The president will be political and that's his job. But he needs to also sound governmental. But if the policy that he's proposing tonight are things that have been already rejected by his own party, it really tells you that he has, as David said, given up on governing. He's going to try to make these ideas sound new and sound fresh. But all you have to do is look once and you see that his party won't even go along. But he's going to repeat a lot of those same old tax hikes anyway. MARTIN: And you know it's not the point that David made. Look, when you're the president of the United States, you clearly can't pass a particular bill. You can do your part pushing people. What you've seen this president do, though, is get out of the nation's capitol to try to go to the people and say, I need your help in this.

Look, after tonight, tonight's speech, he's going to go to these battleground states. I think the White House should not just go to Nevada, and Ohio, and those states, but also go to Mississippi, go to Alabama, go to Louisiana, got to red states that you're not going to win and make your argument as well and say, I'm also fighting for you.

And so a president has to get out there and push people as well. And so you can't just say, well, he's out there, he's not governing. Everybody has a role in this.

COOPER: OK --

MARTIN: And so Congress has a role plus him.

COOPER: We've got to take a quick break. The panel is going to stick around. We'll have a lot more to talk about. We're going to be here after speech as well, until midnight live. Let us know what you think, we're on Facebook, Google Plus, add us to your circles, follow me on Twitter, @Andersoncooper. I'll be tweeting tonight.

Up next, John King is also going to look at how the themes that President Obama lays out tonight will play in key states this fall. They've given a lot of thoughts to that.

You're watching special coverage of President Obama's third State of the Union address. The House Call to Order is just minutes away. Stay with us.

(COMMERCIAL BREAK)

COOPER: We're just about 42 minute away from the president's State of the Union address. It's all supposed to go like clockwork from here on out. At 8:30, Speaker Boehner calls the House to order. President Obama arrives on the capital at 8:40, five minutes later, into a waiting area he goes, and at one minute past 9:00, the House Sergeant of Arms will announce him.

We've already got some idea of the themes that Mr. Obama was going to hit, mostly touching on how he plans to grow the economy, restore an economy where, in his words, everybody gets a fair shot.

The question tonight and for the campaign ahead, how will that message be received among key voters.

John King, chief national correspondent, host of "JOHN KING, USA", joins us now with tonight's "Raw Politics" -- John.

JOHN KING, HOST, JOHN KING, USA: Well, Anderson, let's just start with the states the president will visit after the big speech tonight. Sure, he's speaking to the American people but then he goes out and watch his travel. He's going to go to key battleground states. Let's take a look right here on our mini magic wall.

The president is going to go to the state of Iowa. Then he's going to go to the state of Arizona. That's interesting. That was Republican last time. He's going to go to Nevada, he's going to to Colorado, and he's going to go to Michigan. Four of the states he carried last time. In all -- all four out west, Iowa, the unemployment rate is up, Colorado up, Arizona up, Nevada up, from when the president took office.

Only in Michigan is it down a little, and it's still 9.3 percent. So the president has a problem selling his -- selling his approach to the economy to the American people. That's one way to look at key battleground states.

Let's take another way. Let's clear this up. We go back to the demographics. When the president took office in 2009, January 2009, the national unemployment rate was 7.8 percent. Here's what it is now, it is 8.5 percent. The darker the green, the higher the unemployment rate. This is by county.

Now the president can argue yes, it's come down in recent months, the Republicans would argue, it's still higher than when he took office.

This is the map that matters most. Yes, the president is speaking to the entire country tonight. But if you go back to 2008 map, we know Florida is a toss-up, North Carolina, excuse me, and Virginia will be toss-ups. Most people think Pennsylvania, at least for now, you have to consider a toss-up. Ohio, Indiana was Obama's state last time. Most people think it will go Republican, let's make it a toss-up. Maybe Michigan. Iowa definitely a toss-up. Colorado a toss-up, New Mexico maybe, the Democrats think they can put Arizona in play and Nevada.

Look at that. Now I've got the president well below the 270. So, Anderson, as he speaks to the country tonight, he is speaking to the entire country. But ask his political team, there are eight, 10, maybe a dozen states they worry about most, and there they are.

COOPER: Interesting stuff. John, stick around. I want to bring back in the panel. Candy Crowley, David Gergen, Paul Begala, Roland Martin, Ari Fleischer.

Paul, it seems like we're going to hear the word fair a lot from president and talk about fairness tonight. How does the White House define fairness in terms of taxes in the tax code?

BEGALA: Well, I think he's going to couch it in terms of values in sense of a fair shake. I've heard his spokespeople on television already talking about that a fair shot, a fair shake, a fair regulation, a fair -- in other words, not in a sense he's got to be careful here. And not go too far to sort of the sense of envy that Republicans are already saying that he's playing to.

Instead, he's going to talk about opportunity. He's going to talk about empowering people. And particularly, the word I'm actually looking for more than fair is middle class. You know, in his first major address to the Congress in February 2009, he proposes economic plan. He used the phrase middle class once. And that was just in historic reference back to the GI Bill.

He spoke in Kansas on December 6th. He used the phrase middle class 26 times. So that's my drinking game. Every time he says middle class, I'm having a beer. I hope I'm hammered drunk by the time the speech is over.

COOPER: Ari, it's interesting, though, because Republicans on the campaign trail are also using the word middle class, they're throwing it around all the time as well.

FLEISCHER: Sure. And let me echo that. I hope Paul is hammered drunk by the time --

(LAUGHTER)

FLEISCHER: A good way to get through it. Look, you know, that -- and that's the advantage presidents have in State of the Unions particularly Barack Obama who is such a great speaker. They have the rhetorical upper hand. He can talk about the middle class, he can set the table, he can try to move the nation's debate to the issues that are most favorable to helping him get re-elected and stop talking about the debt and spending, and unemployment.

The big problems that he probably has run out of tools to control them with. He's only made them, in my judgment, worse. So he can talk rhetorically but the problem we have in this country is we need substance, we need policies, and really starting last August with a bus tour, the president gave up. He doesn't really talk to members of Congress anymore to try to influence legislation.

And he is much stronger and better at giving the speeches and running for re-election, maneuvering and positioning. That's what people should see tonight is all about, the maneuvering, the positioning. But you really -- in 1996 as Paul knows, Bill Clinton got a lot done with a Republican Congress in his year of re-election. Hard to see that with Barack Obama.

COOPER: Roland, you're shaking your head.

MARTIN: Yes, because look, we sit here and we get fixated obviously on middle class because those are the nice buzzwords that we see in the focus groups. But again, I hope we see a more expansive conversation. Middle class, those who are poor, also young folks as well, speaking to a broader section, you know, of this country.

Also, expect the president -- look, he's not going to go after Republicans, go after Congress, you know, in a very overt way. But do expect him to issue a challenge to them when it comes to doing their jobs. We spend lots of time looking at the top and also -- it's also important for us to hold people accountable, and say, you're getting a paycheck, do your job, Republicans and Democrats in both Houses.

COOPER: Candy, you and David during the commercial were saying that this is a big political opportunity for the president.

CROWLEY: Yes, I mean let's -- what have we been talking about now since -- well, since all last year, right? And certainly intensively in the month of January. The Republicans, they have been pounding him over the head. Now he gets a bigger audience than any of them can ever dream of, to put out his agenda, his vision of the world.

And just on -- quickly, on the middle class, the reason we talk about the middle class and the reason why politicians always do is most everybody thinks they are middle class. So that -- you know, that's a sure vote-getter there. Because everybody sort of -- well, you know, a lot of people think that they are middle class, that's where the voters are.

But the fact of the matter is, this is his turn. Because from now until who knows when, maybe June, it's going to be Republicans sort of free rein bashing him and he's taking this opportunity tonight.

GERGEN: Yes. I think Roland has got a good point about the poor. We'll return to it before we finish. But let's talk about the opportunity.

The Republican debates, the zillion Republican debates, they've gotten a big audience by normal standards. They got anywhere from five to seven million people. But this speech is apt to get 40 million plus. So he gets -- you know, it dwarfs anything that the Republicans have been able to do and that gives him a huge opportunity.

But there's another interesting thing, Anderson, that I think is quite -- he was way overexposed, I think, for much of his presidency. Paul Begala could address this. But he was giving primetime appearances about every 2 1/2 months. So I think he was way too overexposed.

(CROSSTALK)

COOPER: He was on -- he was on "Myth Busters" at one point.

GERGEN: Yes, exactly. I think he's been really -- I think one of the things the White House has done well and has been shrewd about is taking him off the state for a fairly long time now. He hasn't actually done a primetime appearance like this in 4 1/2 months. That's a -- that's along gap. I think that really helps him tonight because he's going to seem fresher. He's been -- he's sort of -- you know --

(CROSSTALK)

CROWLEY: Well, and he also --

GERGEN: He left the stage for others.

CROWLEY: You know, he also -- he didn't leave the stage for others. They welcomed the stage for others. And so they're so busy firing at each other, you know, why interrupt that.

GERGEN: Well, that's a good point.

COOPER: I want to take --

MARTIN: Hey, Anderson.

COOPER: Yes, we've got to take a quick break. I want to thank our panel. The State of the Union speech is set to begin just over a half hour from now. Going to be right back with my colleague, Wolf Blitzer.

(COMMERCIAL BREAK)

COOPER: Hey, welcome back. I want to bring in my colleague, Wolf Blitzer, who's going to continue our coverage together all the way through the State of the Union -- Wolf.

WOLF BLITZER, CNN ANCHOR: Thanks very much, Anderson.

It's a major speech, obviously, by the president of the United States. Tens of millions of Americans will be listening, will be watching to hear what the president has to say. He and his advisers, they know that this is a powerful potentially significant speech of his re-election campaign.

Looking at live pictures of the White House. The president getting ready with the first lady to get into a limousine on the South Lawn in the White House and make the short drive up here to Capitol Hill.

Jessica Yellin is our chief White House correspondent.

Jessica, set the scene for us at the White House.

YELLIN: Wolf, I am standing on the North Lawn of the White House where the president's motorcade is just behind me waiting for him to get in and head up to where you are.

The speech tonight is a speech for an elections year. He will hit a decidedly populist tone, talking about income inequality and look for him to speak to the concerns of undecided voters. Listen for themes about jobs, about gas prices that hit those kinds of concerns. Housing -- housing prices and concerns, and importantly about the issues of gridlock in Washington. Listen for the tone he takes when he talks about Congress and his relationship with Congress -- wolf.

BLITZER: All right, Jessica, stand by. Kate Bolduan is over at Statutory Hall that's where all the members will be going through before they enter the chamber. Kate is there with a special guest.

BOLDUAN: I am here with a special guest. We are here at Statutory Hall. This is where all the big players come before heading to the House chamber.

I'm here with Senator John Thune of South Dakota. He is incoming number three Senate Republican if I am correct because he is newly elected to be chair of Senate Conference Committee.

SEN. JOHN THUNE (R), SOUTH DAKOTA: That's correct.

BOLDUAN: So tell me, Senator, we've all heard a lot about the themes of tonight and we've seen excerpts of the president's speech. What are you expecting? What are you hope to hear from President Obama this evening?

THUNE: Well, I think this is largely a campaign oriented speech. I think the president is going to talk a lot about things he wants to talk about on the campaign this year. It is a political year after all.

But, you know, I think you are going to hear him talk about fairness, which to us is usually code for class warfare, which is code for tax increases. But I think that the president is going to try and put the pressure on the Congress.

And sort of distract and shift the blame for the way things are in the economy rather than taking the responsibility that he has now after three years in office for the policies that he's put in place.

What we've seen is the Obama record has been a failed one for the American workers and obviously, we hope to hear him speak tonight, Republicans, to say, we want to work with you on energy policy. We want to work with you on tax reform, regulatory reform on spending and debt to get this country back on the right track. BOLDUAN: Especially during an election year as you know with both sides of Congress so dug in, where are the areas of common ground the Republicans are ready to work with the president?

THUNE: Well, I mentioned several. I mean, I think that there is are real concern among people across this country and there should be frankly. The number one issue for Americans is jobs and the economy.

And if you look at things that increase the cost of people's daily lives, cost of energy obviously is an important one, gas prices almost doubled in the last three years. So energy policy that focuses on domestic production would be a really important one.

And one that I think there should be at least bipartisan support for. Tax reform is something that everybody agrees needs to be done to get the economy growing again.

And there a lot of Republicans up here who would really like to see us get tax reform and get that as an accomplishment before the election not wait until after.

BOLDUAN: So the speech tonight is the starting point and it will be a very long and very busy year in Congress to come. Thank you much, Senator Thune -- Wolf.

BLITZER: Thanks very much, Kate. You're seeing those are the two chairs, the vice president of the United States, who's also the president of the Senate, Joe Biden, will sit in one of those chairs and John Boehner, the speaker of the House will sit in the other chair.

Folks are already gathered. You can see members of the Senate and members of the House. They already welcomed the diplomatic corps, most of the ambassadors, foreign ambassadors have come. They've arrived up in Capitol Hill.

Members of the Joint Chiefs of Staff will be arriving shortly. Also they'll be introducing the justices of the United States Supreme Court. I'll be curious to see how many of the nine actually show up.

Dana Bash is actually inside the chamber for us right now. Dana, tell us what's going on?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: What's going on right now frankly is an old-fashioned smoozing. You have members of Congress mostly in the House at this point and here walking around, talking to each other, catching up.

You know, the House has been in session for a week, but before that, they were gone several weeks for the winter break. It's very interesting. I'm not sure if you can see on the screen, a lot of people wearing bright colors.

That's not an accident, Wolf, particularly those who are sitting on the aisle. The name of the game tonight isn't just obviously to come and to witness history and to listen to the president and have a moment as a member of Congress, as part of the body.

It's also, for some people, to get themselves on television. Some people, Wolf, who have been sitting here for hours, I mean, since like 8:00 this morning on the aisle, staking out their seats to get a shot of shaking the president's hand and getting on national television.

BLITZER: You're sitting, Dana, way up in the gallery, right?

BASH: That's correct. I'm sitting in the press gallery sort of above it all. We have a bird's-eye view, not too far from where the first lady's box is and we will see some of her guests tonight and other guest invited by House Speaker John Boehner as well as Nancy Pelosi.

The other thing I should mention is that we are waiting for Congresswoman Gabby Giffords to walk into the chamber. We're obviously awaiting her and her presence is highly anticipated because, of course, she is returning for this speech, which will be her final to witness as a member of Congress because she, of course, has decided to resign effective tomorrow.

BLITZER: All right, Dana, we're going to get back to you. Gloria Borger is with me up here on Capitol Hill. It's a lovely breezy night here in Washington D.C.

We just learned that the Agricultural Secretary, Tom Vilsack, will be the one member of the Obama cabinet who will not be attending tonight. They always have one member of the cabinet just to stay behind.

Everybody is here, the president, the vice president, the members, the speaker and all the top leaders so they want to keep somebody away, just in case, God forbid of something were to happen.

But you can see that's the south lawn of the White House. The president and the first lady, Gloria, they'll be exiting there. They'll get into the limousine and make a short drive up to Capitol Hill.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right, they will. I think, look, the "State of the Union" speech is such an important speech for the president particularly as you head into an election.

Because the challenge of this kind of speech, we all know it's an election year. You have to lay down your political markers without appearing to be too partisan to the American public.

Because what the public wants to hear from the president is his vision from the country and sense of what he's accomplished over the last year.

The challenge, I think, for Barack Obama, going forward is to make this election not a referendum on the economy, but a choice between his vision and the Republican vision.

And we heard Senator Thune say --

BLITZER: Here they go, the president and first lady walking out to the car. You can tell it's a nice night. She's not even wearing an overcut. Jessica, you're on the north lawn. They're getting in the limo on the south lawn.

YELLIN: You can see them get in and she is in royal blue. I'm told she is the only one riding out with him in the motorcade and the president actually finished working on the speech a few hours ago.

You remember back in the Clinton days sometime they'll be scribbling up until the very last minute of the "State of the Union." But this was a very disciplined process it sounds like and so it's been in the can for a few hours. That is disciplined for a White House, belief it or not -- Wolf.

BLITZER: Yes, they've been working hard on the speech. I don't know the president personally has drafted many of those paragraphs. He's revised a lot of it. Gloria, he really gets involved in this product.

BORGER: He does.

BLITZER: It is expected to last at least 45 minutes, but depending on applause, could go an hour.

BORGER: He does get involved in this product, as do all presidents. But the thing about "State of the Union" speeches is that they're written by committee, Wolf, as you know. Everybody from every department, every cabinet member has input about what he or she wants in the "State of the Union," what they want to say and in the end, it's the president's decision.

BLITZER: Yes, and the president -- this is going to be one of those historic speeches. Anderson, as we await the president, he's in the car driving to Capitol Hill.

As he gets ready to get up over here, everyone at the White House says this is a substantive policy speech. In this political election year, you know there will be a lot of politics.

ANDERSON COOPER, CNN CORRESPONDENT: Yes, there certainly is. I'm always stunned, David Gergen, at the amount of time members of Congress waste all day sitting on the aisle just to be seen shaking the president's hand. They spent hours. Some have been sitting there since 8:00 a.m. I think most people kind of think don't they have anything better to do?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: They keep justifying this extremely low approval rating by the public. The public look at this and say, this is silly. You have more dignity than this. We send you there to do serious things, not wear bright clothes and arrive 10 hours early.

COOPER: These are members of the Senate arriving as well. We're about 22 minutes away from the start of the president's speech, 23 minutes away or so.

Our coverage is going to be continuing all the way through to midnight. A lot to discuss, as we continue to wait for the president's arrival on Capitol Hill. We will take a quick break and our coverage continues in just a moment.

(COMMERCIAL BREAK)

COOPER: You're looking at live pictures inside the chamber on Capitol Hill. We have seen senators entering. The president is on his way. We saw him, he and first lady, Michelle Obama, leaving the White House just a few moments ago. They are en route to the capitol.

We anticipate the president entering around one minute past 9:00 for a speech that may last 45 minutes, although with applause, it could last through the hour. We will bring you the Republican response as well.

Our coverage is going to continue all the way through until midnight. Also watching along as you watch at home or wherever you're viewing this, we have assembled groups of undecided voters. Republicans, Democrats, independent voters, who will be dial testing, listening to the president's speech and giving realtime reaction to it.

We'll see how the speech is interpreted by folks sitting on different sides of the aisle. There's the president's motorcade obviously approaching the capitol. David, one of the things you're going to be listening for tonight is the response to the speech.

GERGEN: Yes, I think both Candy and I will be listening with great interest because the Republicans have chosen Mitch Daniels, someone many conservatives wanted to get in the presidential race, he decided not to do it for family reasons.

There is this longing among conservatives to find somebody else other than Mitt Romney or Newt Gingrich. And there's really interesting question, if he were to give a great speech tonight, could he suddenly catch fire? Remember, Bobby Jindal gave a terrible speech and it sunk his presidential chances.

COOPER: There had been all this talk about Bobby Jindal as the rising hope and this speech really seemed to set him back.

GERGEN: It would be an interesting political moment.

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: It's an interesting political moment at that level, but also at the level of -- look, the Democrats and Republicans at this point, by the response and the president's speech, are fighting for the agenda.

Like what are we talking about? What is the agenda going forward? The president wants to talk about fairness. Republicans want to talk about what the president has done. They are adamant.

I had breakfast with a small group of reporters and speaker. The president can run. He can hide. He can talk about all the fairness. But in the end, this election is a referendum on his policies and his results. That's the strength they want to run on. You will see this battle for who controls the talking agenda.

GERGEN: That goes back to Gloria's point earlier, the Republicans want to make this a referendum of Obama and the Democrats want to make it a choice about the future.

COOPER: Ari Fleischer, we just heard Senator Thune earlier on CNN when he hears the president talk about fairness, he hears class warfare. Explain that.

ARI FLEISCHER, CNN POLITICAL CONTRIBUTOR: The problem we had is the president who famously said there is no red America, no blue America, just the United States of America has now made it a point to talk about millionaires, billionaires, corporate aircraft, telling people not to travel to Las Vegas, if you remember his tone about that.

He's the president, of course, who also said that blue collar workers cling for their guns and religion and call the Cambridge Police Department stupid. He seems to categorize people and that say these things and that his policies follow.

The corporate jet, Anderson, is the perfect example. For heaven sakes, everybody knows famous Hollywood stars, musicians who are wealthy, they all fly on these private aircraft, but he says corporate. He vilifies an entire industry that's the private sector where jobs are created to score points. If he really meant it from a policy point of view, he should have said people shouldn't fly on private aircraft.

If they do, we're going to penalize them and make them pay more taxes instead, you have anti-corporate messaging, a bulls-eye on the back of the people who create jobs. That's what Republicans hear and I think that's what a lot of independents hear. That's why we call it class warfare.

COOPER: Paul Begala, is that class warfare?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: You'd have to ask Newt Gingrich, Rick Perry, the Republicans running for president who have been talking because Mitt Romney is so extraordinarily wealthy in part by laying off middle class people.

They have been hitting a populous drum much harder than Barack Obama ever has and they're just reflecting the public mood even in the Republican Party, people are concerned about income inequality.

Even in the Republican Party people are concerned about crushing pressures on middle class and working people and working poor. The president is, I just think, being resident with where the American public is.

Of all the things I worry about Barack Obama, he is not a divisive figure. He's not. His fondest dream is to try to unify, but he's in a divisive time and he's in a time of great inequality.

He's right when he went to Kansas and he said the defining issue of our time is whether this economy will work for people who work for a living again. He's right.

If I were giving advice, I wouldn't say that fairness means class warfare. No normal person thinks the word "fairness" is bad. I would turn it back to spending or some issue where they tend to win, but they're not going to win by telling people that being fair is somehow bad.

COOPER: It's fascination to hear two different perspectives from two different sides of the aisle. Paul saying the president is not a divisive figure. I think the Republicans have certainly painted him and believe him to be one of the most divisive figures to be in the White House for a long time.

GERGEN: -- Thursday night in Jacksonville, when CNN hosted a debate for Republican candidates. We put Paul Begala and on them on the stage. It would be fun.

BEGALA: No, thanks. I saw what they did to King.

COOPER: We're going to take another quick break. Our coverage continues. We'll be right back.

(COMMERCIAL BREAK)

COOPER: They're calling the joint session into order at this moment. House Speaker, John Boehner. I'll hand this over to Wolf.

BLITZER: He's going through the initial business, Anderson. John Boehner, the speaker, accompanied by the Vice President of the United States, Joe Biden, also is the president of the Senate.

Dana Bash is inside. Dana, we are going to hear a lot of references to taxes, to inequality. The president certainly not going to mention Mitt Romney or Newt Gingrich by name, but people are going to be able to basically discern he's talking about them.

BASH: There's no question about it. Look, John Boehner, the House speaker said to me and to a few other reporters at a breakfast this morning that this is going to be a campaign speech by the president.

I don't think anybody at the White House would deny that with a straight face because this is the beginning of the campaign year. This is the opening salvo of the president's campaign.

What you were talking about, class warfare, that is going to be from here on out, I think what we will hear about from both sides of the aisle. But interestingly, when you talk about Congress, just watching, again, I'm inside the chamber and I have a bird's-eye view of everybody.

I keep thinking about the fact that everybody sitting here as a body has an approval rating lower than it ever has been in history of polling. You know, the whole idea of everybody trying to work together better. That was something that really came out in a big way a year ago, Wolf, when Gabby Giffords was shot.

Remember everybody -- they treated the "State of the Union" almost like the prom in that a Republican and Democrat came side by side to show b bipartisan unity. We're seeing some of that this year, some Democrats and Republicans sitting together.

But not all and it's not like it was last year. I talked to one House member earlier, a Democrat, who said, what's the point of that? Because we did that last year and then it was incredibly divisive afterwards.

BLITZER: That's Dr. Jill Biden, the woman on the right, the wife of the vice president. She's already here. She'll be in the gallery and Mark Kelly, the husband of Congresswoman Gabrielle Giffords who just announced she will be retiring after being injured very, very seriously in that gun attack a year ago.

John King is watching all this unfold. He's up here on Capitol Hill as well. John, Mitt Romney seemed to do this president a favor today by releasing his tax returns on the day of the "State of the Union" when the president is going to be speaking about the inequality of the tax system in the United States. Mitt Romney releases his returns showing that he had paid a basically 14 percent of his income in taxes when so many middle class and upper middle class are paying 25, 30, or 35 percent.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, I think one of the reasons Governor Romney did that today was a lot of it would be overshadowed by our focus on the "State of the Union" speech. You can be sure if Governor Romney ends up being the Republican nominee.

And he has a lot more to worry about than the "State of the Union" address tonight to get to that point, but if he gets there, if he can take on the Gingrich challenge and become the Republican nominee, the president will focus on it.

The president tonight will make that fairness argument. Here's my biggest question tonight, can the president convince the American people to listen not just tonight, but to listen to him as this campaign unfolds.

Because for an incumbent running for re-election in such a horrible economic time when people feel anxiety the question is, the psychology of the electorate. Yes, the president will rightly make that case, the statistics are slowly getting better, but the unemployment is still higher now, Wolf, than the day he took office.

It has come down in recent months. We haven't had an election like this since George H.W. Bush in 1992 or even Ronald Reagan in 1984 where the unemployment rate got so high, the anxiety of the American people were so high.

The question is, do they give up on the president. We talked about the economy. Do they say, no, we tried your way or do they listen to him? That is his biggest challenge and the political psychology going forward.

And this is his first chance in the election year with a huge audience to frame it to the American people saying, I know times have been tough in the months ahead. I'm going to be on your side and I will fight for you and I need you to listen, that's really his biggest challenge.

BLITZER: There's Congresswoman Gabrielle Giffords and Debbie Wasserman-Schultz, the congresswoman from Florida escorting her in. Here she is right now. Let's just listen in to this applause.

We're seeing, Gloria, Gabrielle Giffords, a welcome for her and she announced she would be retiring from Congress to deal with her injuries. But she looks great, I think.

BORGER: She does. She looks terrific and the response was as one might expect, Wolf, fabulous. What a welcome.

BLITZER: All right, they're introducing the justices of the Supreme Court. Gloria, I'm going to be anxious to see how many of them show up because there have been controversies in recent years. Some felt they weren't getting the respect. You see the chief justice, John Roberts walking in, Justice Kennedy.

It looks like he has a nice contingent from the Supreme Court. You can see who's going in right now. Let's see who else is coming in with Bader Ginsburg, Elena Kagan. You have a nice contingency from the Supreme Court. Five justices of the Supreme Court are there.

BORGER: Well, it was Justice Alito, I recall, who shook his head at the president when he challenges the Citizens United campaign on finance. That was big controversial, as they were sitting there watching him speak.

BLITZER: The first individual introduced was the dean of the diplomatic corps, ambassador in Washington who served here the longest, from Jubati, from the horn of Africa. He was the first one. He's always introduce first and he came in accompanied by (inaudible).

But there, you see the first lady of the United States. Let's listen in to the reception.

This is the third "State of the Union," Gloria, the president has delivered since taking office. For the first lady, it's her third appearance in that gallery with her special guests as well. Let's listen in.

You just heard the cabinet being introduced led by the Secretary of State, Hillary Clinton and Secretary of Treasury, Timothy Geithner and Leon Panetta. They're all walking in, Gloria, right now, members of the cabinet. They'll be applauding almost every word the president says.

BORGER: I would say, Wolf, a lot of them have had the input into what the president will be saying tonight because every line of this is gone over by their staff.

BLITZER: Every single line and the cabinet walking in. Some pretty popular members of the cabinet led by the secretary of state. Her approval numbers very, very high. There's Timothy Geithner, Secretary of the Treasury. Our coverage continues right now.